The Best One Yet - Warren Buffett’s epic annual event, Planet Fitness’ innovative real estate strategy, and almond milk vs. Dean Foods dairy

Episode Date: May 6, 2019

The annual Berkshire Hathaway shareholder meeting showcased 88-year-old legendary investor Warren Buffett, so we broke down his 6 hours of one-liner business takeaways. Planet Fitness shares are up 75% in the last year, so we’re focused on its innovative real estate strategy that feeds off the retail-pocalypse. And Dean Foods is America’s biggest dairy company, but the stock is down 62% in 2019 because of alt-milk.Learn more about your ad choices. Visit podcastchoices.com/adchoices Hosted on Acast. See acast.com/privacy for more information.

This is Nick. This is Jack. This is Snacks Daily. It is Monday, May 6, and this is the best Snacks Daily we've ever whipped up. Markets barely budged last week. But they were at record highs. Crazy stuff happened over the weekend. You got the jobs report on Friday, which was very strong. Unemployment's lowest rate since 1969. But then yesterday, Trump announced slash threatened that China's going to get a whole bunch of new tariffs starting Friday. We're talking an extra 25% on those things. Markets might freak out today. By the way, what a birthday present for my wife. Happy birthday. Molly. Seis de Mayo. Technically, we celebrated on Sanco de Mayo, aka Sanco de Mali.

Molly goes way back to our freshman year, Middlebury College Day. Incredible story. Happy birthday, Molly. But three other wonderful stories we got in the podcast. First up, Warren Buffett and his Berkshire Hathaway annual shareholder meeting happened this weekend. It was pretty cool. It was like the burning man of investment events. A little bit of Cirque de Soleil in there.

We're going to break the whole thing down for you like you were 88 years old. Oh my God. Hit me. What's next? Second story is Dean Foods. This is America's large. dairy company. It's struggling. It's losing to almond milk. Jack, I've got nipples. Could you milk me? Third and final story, Planet Fitness. It announced its earnings. Its stock is up 75% in

the last year. We're fascinated by everything about this. Especially one thing. It's real estate strategy. We will jump into that. It reminds us of a nature show. Now, before we hit all those stories, Jack and I were doing all the research on boxes. Trying to find, like, the perfect fast food box. It's a pet project passionate about us. Exhibit A is Burger King. They just launched last week, anti-happy meals. Now, this is not just a dig at McDonald's. They're called real meals, and they're getting it real emotions. Yeah, their point is that not every day is happy.

Shocker. You're like, you have some real emotions, and you can express them in your happy meal. And you can't just eat that away with fried fries? So can I tell you the five different anti-happy boxes? Can we go through the colors here? Well, they like one in particular. They include a whopper, a soda, and some fries. And the first box is called the Pist Box, which comes in red.

Second is salty. I like how that one's teal. I just kind of like that color. Third is sad, which naturally is blue. This one, we're going to pronounce yes, it is purple because... Because sometimes you're in a great way. And the last one is DGAF, don't give an F, and that comes in black. Now, this isn't just a McDonald's take. They're doing this because it is a particular start of a very particular month. This is Mental Health Awareness Month, and Burger King is acknowledging that you don't always have to pretend that every day is a great day and that you're happy. But you can express yourself through a nice 3 a.m. indulgence. with a brown paper box.

Burger King, all about the feels, in touch with emotions. Now let's hit our three stories. Before we do, listen to these keywords. You're tuned in the snacks daily. We spoke to the lawyers and we got to get something legal out the way. It snacks about to hear ain't food. It's air candy. They don't reflect the views of the robberhood family.

It's all informational just so. You know, we're not recommending any securities. It's not a research report or investment advice. Not an offer or sale of a security. Snacks is digestible. Business news for you Rapper Her Financial LLC

Member Fenra Slash SIPC For our first story Berkshire Hathaway just had its legendary annual shareholder meeting over the weekend And this was all about

Warren Buffett It lasted for three days Started Friday Finish Sunday I'm looking at the agenda here Friday there was a little like shopping thing You gotta kick things off with that

Packet pickup in a cocktail reception Everyone wants a nice gift Saturday was all about speeches And Sunday was a lovely 5K To raise money for church You've got to end it with some sweat, right? So this is Burning Man for investors. But we're talking exactly like that.

A lot fewer sculptures. Less drug consumption. Kind of same level of smugness if you got to be able to go. So we got to say that what is Berkshire Hathaway? So Berkshire Hathaway is like basically letting someone else invest for you. Have you ever wished that you could not have to invest in like your smart buddy could do it for you? Yeah, you had like some access to some wonder boy or girl who could do it. The Wonderboy is 88 years old.

His name's Warren Buffett. and he takes money from investors and he buys stocks with it or buys entire companies with it. And then at the end of every year, Warren Buffett and his team at Berkshire Hathaway, look at a scoreboard, a single scoreboard. It is Berkshire Hathaway stock versus the S&P 500. And then they try to see, did we beat S&P 500 last year? And six of the last seven years, Berkshire Hathaway stock, which you can invest in, has done better than the S&P 500, which is the rest of the market.

Now, here's who's at the top of Berkshire Hathaway. You got Warren Buffett, legend from Omaha, Nebraska. Born and raised. 88 years old. Boy of the Great Depression. Then you got his sidekick, which is vice chairman Charlie Munger, coming in at what age? 95. This guy was a World War II veteran, amazing, posted in Alaska.

He was a meteorologist there. So these are both self-made men, by the way. And they've built an empire of successful investing. Okay, so out of the three days, we didn't focus on the 5K, we didn't focus on the welcome gifts. Jack and I want to jump into what we thought were the fascinating six-hour interview with Warren and Charlie. One questionable investor asked Warren. He said, hey, Elon Musk and Tesla, they're thinking about adding their own car insurance like branch because they have so much access to data. And Warren basically laughed and he said that company has no chance in auto insurance.

Now, the reason he brought this up, because one of the biggest investments Berkshire Hathaway is made is in insurance. They also own GEICO. Yeah, like one third of Berkshire Hathaway is insurance companies. Okay. So then the second big investment. question that got asked had to do with Kraft Heinz. That's been a hugely unsuccessful investment by Warren Buffett. They had to write down the value by like $3 billion. And Warren said that was actually a good company, but any investment can turn bad if you pay too much. Jack, wake up, stick that on a pillow. It's kind of like a motivational thing you put on the mirror, I think. They also touched on

Wells Fargo. Yes, Warren Buffett is one of the biggest investors in Wells Fargo. Wells Fargo. Wells Fargo has become really big investing in scandals. And Warren's response was several years ago, the Los Angeles Times wrote an article, basically illustrating these sketchy sales practices that have caused Wells Fargo all the problems. And then verbatim, Warren Buffin said, management ignored that article they shouldn't have. They should not have. Now, this was the big kicker. This was the thing everyone was curious about. Amazon. Amazon. Jeff Bezos. Warren Buffett's Berkshire Hathaway just made, for the first time ever, this legendary investment company, their first investment in Amazon. Warren is a simple man. He was raised like eating corn in a cornfield. Yeah, he's doing these

calculations like with an abacus. Right. You know? And so Amazon's whole business model has been a little too confusing, a little too complex. So he hasn't invested. But Warren said Jeff Bezos has achieved a miracle. And he tends not to invest in companies that require a miracle. Then Warren being Warren kicked it up a notch and said, you know what? He would like a blood transfusion with Jeff Bezos to keep him on that punch. We wish we were making that up. We're not, but we respect the honest. So this isn't the first investment in tech by Berkshire Hathaway. They also invested $40 billion. in Apple. And they also admitted that they missed out on Google. In fact, they screwed up. They should have invested in it. Literally said that. So Jack, what is our takeaway for our buddies

over at Berkshire and our good buddy, Bowren? It's time to start thinking about the post-Warren Berkshire Hathelin. Now, ages. Remember, Warren is 88 and his vice chair is 95. Those are the two leaders, and they're both going to be retiring soon. We know it. They've got an army of disciples who've been trained by Buffett. Warren is a legendary mentor. Now, young manager, are the ones who convinced him to invest in Apple and Amazon. And he said that. That's a sign of the future. But honestly, you cannot teach the instincts that Warren cultivated in that cornfield

during the Great Depression. For our second story, Planet Fitness just released earnings. But we found a fascinating story in its real estate strategy. We also found a fascinating story about where it's based. Nashua, New Hampshire. Fantastic, Tim. I know this company because of the commercials that say this is a judgment-free fitness. Right.

It's the kind of gym where, typically go to the gym. You're really pushing and get that extra rep in. You don't need to get that last rep. Planet Fitness, just go home. Skip the last set. What are you still doing there? They explicitly ridicule, like, huge meatheads who are throwing weights around in the commercials. It's a great place for socializing.

Also, I noticed last month they announced that teens, 15 to 18 years old, can work out for free in Planet Fitness all summer. Very nice. Give them back to the kids. So the company is expanding quickly. They just announced some pretty big numbers. Last quarter, they opened 65 new gems, which is, up to 1,700 nationwide. Now, the revenues are growing fast. They're up 23 percent. And they're really caught on to some pretty key stuff. Well, one key thing we noticed is that this wellness trend we like

to talk about on snacks daily, it's expensive. Oh yeah, it's not cheap. Those Lulu lemon pants I talk about, they cost like 120 bucks. Asaibals, you're throwing back 12 bucks. Throw on some extra almonds and coconut. That's like a whole lunch for three. That's a budget you need to allocate. Now, Planet Fitness has caught onto that trend, but they're doing it at cheaper price. 10 bucks per month is the entry-level membership at Planet Fitness. And they've caught on so well, the stock is up 75% in the last year. The stock has been seriously blowing up since its 2015 IPO. Now, it barely budged after last week's earnings report, so we dug a little deeper and found

a fascinating storyline. A fitness company is indirectly benefiting from what Amazon is doing. Okay, get this. If you're Google, Planet Fitness new locations, what are the first thing? Nick just did this. This was classic snack style right here. found a new location opening up in Rockland, Maine. And I jumped at this story because I've been to Rockland, Maine. He's a rocker. Proud New Englander here. The ferry takes off to Vinylhaven. And I noticed

there's this J.C. Penny Plaza. It's been shut down for a couple years. It's really big. It's a ghost town. It's a hundred and fifteen thousand square feet. And guess who's moving in? Planet Fitness. Exactly. And it's been vacant for two years. So it probably got that real estate for like nothing. Turns out when you look a little deeper, Planet Fitness has been doing this all over the place. It has 1,700 locations now, and it's been expanding into places that used to be retail stores that have died in the age of Amazon. Basically, with the retail apocalypse, it's opening up new opportunity. Another great example. Coles. Coles has average store size of 80,000 square feet, and they really want to boost their wellness sales. So they're actually going to take a quarter of their store,

25,000 fee, and rent it out to Planet Fitness. Planet Fitness jumping into where the retail Apocalypse has hurt retail. Getting rent for super cheap and coals will benefit because people are going to grab a protein shake on the way out. So Jack, what's the takeaway for our buddies who are microbenching over at Planet Fitness? Chaos creates opportunity. Now, this business line, retail, has been hurt badly, but with that big hurt has come a big opportunity. Gims. Gims are coming in and taking up the space that retail used to occupy. So it's riding that retail apocalypse trend, just like it's riding the wellness trend. You wouldn't have expected this. Our third and final story, Dean Foods, the United States' largest dairy producer might be selling the farm.

I've got some conflict of interest. This story is about dairy dying. This is hard for Jack. He's like sitting down. He's sweating a bit. Vermont's a big dairy's day. I was raised by my dad telling me that milk does a body good. Jack was baptized in a bowl of like leftover lucky charms milk. That's mostly true. So Dean Foods is the biggest milk manufacturer in the U.S. It has 58 manufacturing facilities. That's a concerning term, by the way. Which I think just means dairy farms. weird way to say. Across 29 states. They make milk half and half ice cream, butter, sour cream. They got like 50 brands that you've been running across in the aisles here. What else

they got? Friendlies is their brand. Really? Land of Lakes butter is their brand. Love that O in there. Garolick Farms. It's a classic. This is all Dean Foods. And they have like 30 other local milk brands. You probably know if you're from there. Now, they report earnings later this week, but what we did find out over the weekend in a Wall Street Journal article was that 38% over the last 10 years. That's how much their sales are down. And they've been. And they've brought in investment bankers, which is not a good sign. It means they're considering spin-offs or breaking itself up or selling the farm. If a company invites in a bunch of bankers, they're going to be doing something big. Well, it's either a really good thing or a really bad thing, and it's definitely not good for

Dean Farms. It's not just like a lunch situation. All right. So we're going to break this down about what's going on with Dean Foods dairy from the demand side and then the supply side. Boom. On the demand side, veganism is not good for dairy. You don't eat dairy if you're a vegan. Literally. Also, So conscious eating trends in general, that's not good for dairy either because most milk is produced on like factory style big corporate farms. So you got more people realizing they're allergic. You got like ultra-pasteurized milk, which basically just means highly processed milk. And then boom, you've got the rise of the alternative milks here.

Oat milk, which Nick loves, almond milk, which my fiancee loves, flax milk, which is apparently a thing. I know. I would bathe in any of these milk similar to your baptism situation. So demand for dairy is down. And as my fiance says, no other. mammals drink milk. It's true. I asked babyhood. I think she has this shirt for that one. Now, on the supply side, interestingly, politicians love dairy farmers. Oh my God. I want New Hampshire big dairy states. And those are big political states. And that has driven subsidies for the dairy industry.

But get this, here's the weird chart situation. You've got demand falling on the one hand. Supply, though, is rising. Big. It doesn't match market forces, but due to the political support, milk production has been up, 10 years in a row in the United States. So Jack, what's the takeaway for our buddies over at Dean Foods' milk? Dean Foods business isn't looking good, but its stock is a pure play dairy investment. Sometimes it's like it's hard to invest in a trend. You see a trend out there, but you can't see a company that just embraces that. Here's some trends that you might, you know, be interested in. Robotics. Cord cutting. Autonomous self-driving cars. The gig economy, wellness brands. There you go. It's sometimes hard to find a company that perfectly fits those things.

But here's the fascinating thing about Dean. When you look at its business model, 96% of it is dairy products. So when you're looking for an investment in like your thing, you want to find like the Dean foods of dairy. Right. And Dean is all over milk in a way that almost looks unhealthy like it's obsessed. Now just to wrap things up for Dean, they have invested and they own a majority stake of good karma, which is a flax milk company. One of the smaller of the alternative milks. Like the kind of the younger cousin.

So they made it maybe a little late. Jack, can you whip up the takeaways for us? Yeah, I'm still thinking about a Vermont baby boy getting baptized in whole milk. That's an image everyone should have. Right, so Berkshire Hathaway has beat the S&P 500 again last year, but investors are wondering about the post-Warren era. We're waiting for our invite, but we'll just wait another year. Planet Fitness is benefiting from chaos in retail. If you see a mall closing, it may be getting treadmills.

And finally, Dean Foods. is not loving the milk alternative trend, but it is a pure play investment in dairy. And few companies are. All right, time for our snack fact of the day. This one we whipped up over the weekend. Post-Kentucky Derby. Post-Kentucky Derby. So the Kentucky Derby is the kickoff of the Triple Crown horse racing events. Get things going, including a few midgeal. It's also gender neutral. They allow guy horses and female horses. We're talking Colts and Phillies, but interesting distinction here between the two. The horses must carry a jockey of a certain weight. Now, the Colt is a male horse. It must carry a jockey 126 pounds. And for the Phillies, the maximum is

is 121 pounds for their jockeys. And if the jockeys weigh less than that, they need to carry weights in their pockets because 126 and 121 is how much they must carry. Now, pro tip, in case you're thinking of jumping on a horse for one of these things, that weight that you'd throw on actually is like a little less efficient. They say that dead weight is heavier than living weight. I had a dime every time I've heard that. We love to have you guys on the podcast. Remember, to help Keep Snacks Daily growing. You can go down and drop a rating in your iTunes app. That'll help get us noticed. We loved potting with you today.

We'll pod with you tomorrow. Can't wait. The Robin Hood Snacks podcast you just heard reflects the opinions of only the hosts who are associated persons of Robin Hood Financial LLC and does not reflect the views of Robin Hood Markets, Inc. or any of its subsidiaries or affiliates. The podcast is for informational purposes only and is not intended to serve as a recommendation to buy or sell any security and is not an offer or. sale of a security. The podcast is also not a research report and is not intended to serve as the

basis of any investment decision. Robin Hood Financial LLC, member FINRA SIPC.