The Canadian Investor - BEP, Paypal, Facedrive and two great investing concepts

Episode Date: February 8, 2021

In this week’s episode, we discuss Paypal’s and Brookfield Renewable Partners recent earnings release. Braden gives his thoughts on Facedrive’s as an investment. We then discuss a few RRSP concepts as well as the upcoming March 1st CRA deadline to apply contributions to the 2020 tax year. We finish the episode by talking about two concepts that should help you identify businesses that represent a good long term investing thesis. Tickers of stocks discussed: GME, PYPL, BEP-UN.TO, BEPC.TO, FD.V Want to send us a question? Check out our Anchor.fm link in the description below and leave us a voice message! Getstockmarket.com Candian Investor Pod Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital --- Send in a voice message: https://anchor.fm/the-canadian-investor/messageSee omnystudio.com/listener for privacy information.

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Joined by Simon Belanger. Another Saturday recording, Simon. So we are fresh. We're ready to hit this episode hard. How are you doing? It's a beautiful sunny day here right now. Yeah, I'm doing great. I think we might try to do Saturday's recordings once in a while because like you just said, I feel a lot fresher than recording after a long day at work. So it should be a good one, I think. also record like late in the week too and it's just like it's a it's a tough scene um okay so let's talk about we got lots of stuff to talk about simone's gonna talk about some earnings

uh before that obviously last week we talked about the mania that ensued needs no introduction and a lot of those companies, you know, some of the Wall Street bet favorites are down in a major way. I think GameStop's back to like a $4 billion in market cap. These things happen, right? And it's important to recognize that they happen more often than not. And some people make boatloads of money if they time it correctly. And I saw an interesting thing, right? This is statistically probably what happened is that a few people made a boatloads of money, including hedge funds, by the way.

made a boatloads of money, including hedge funds, by the way. There are some hedge funds that were long the stock and made boatloads of cash. So like this notion that it's like retail versus hedge funds is like, no, it was retail versus like one hedge fund. So these things happen, right? And it's important to remember that they happen more often than people remember. And it's important to remember that they happen more often than people remember. Speaking on that same note, Suman, I texted you about that FaceDrive company. Did you look into it?

I mean, I looked a little bit into it. It's just based on the financial. It's quite something. I mean, it's just a lot of keywords and kind of reminds me of well-held technology, but even worse, to be honest. But I'll let you elaborate on that. Yeah, I mean, well's good at selling some telehealth play when the revenue mix is not really from telehealth. That's one thing.

That's a legitimate business, though. They operate a fairly legitimate business. FaceDrive, ticker FD on the Toronto Venture Exchange, just hit $5 billion in market cap. This company does $700,000 in sales. Like $700,000 in sales is not a lot for any company. It's like a thriving small business does $700,000 in revenue a year this thing is worth 5 billion in market cap is a stock promotion on steroids the management team i looked into their past all have a bit of a sketchy past

they're very smart about how they do this by the way uh we can get lots of trouble for calling things the F word and it ends with odd so I'm talking about fraud you can get in lots of trouble so this is not investing advice of course do your own due diligence but this company in my mind is a zero zero. Like a legitimate zero. Hindenburg Research, the short seller, came out with a report in July of the summer of last year talking about how it's probably a zero.

They have a super low float, meaning that the stock's really illiquid and they just pump it. The insiders pump it. It's gone to outrageous valuations what the business does is they claim they are a environmentally friendly ride-sharing program like only have electric vehicles and uh they have two active i went on the app they have two active drivers in the city of toronto which is their target market two drivers so if i'm gonna take this ride sharing program there's like two of them

they're across the city like no how on earth are they gonna compete with uber and lyft yeah i mean it might work in ottawa but toronto you need more than two drivers right more than two drivers anyways it's this uh so the main three like verticals i was looking at in the hindenburg research report is uh electric vehicle ride sharing which is a business that just really doesn't exist food delivery that have 17 active restaurants on the app 17 dude that's like one block like that ain't enough um And they like sell their own merch. Like what a joke, man. This company is a zero.

It's worth $5 billion in market cap. Be careful out there. Don't try to chase gains on this thing. Oh my God. I hate that short sellers on this who are like trying to call out something that's not worth what it is. And they're getting their faces ripped off because it just keeps going higher and higher. So be careful out there with that one. That's a calling it now. February 6th, 2021 face drive ticker FD on the venture exchange is a zero.

So, uh, all right, same. And let's move on to some more optimistic news. You've been listening to some conference calls this morning. Two companies you own reporting some good results. So I'll let you take the floor. Yeah, so the first one has been more of a Canadian twist to it. So it's BEP, so Brookfield Renewable Partners. It was a really great year from Brookfield. I'm not going to do a deep dive or anything like that because we have talked about them before, but their funds from operation increased 6%. They'll increase their

dividend by 5%. So they're kind of in that target range that they keep saying I believe it's five to nine percent every year what really was highlighted to me in management is a couple of things when they were talking so the first one they're really getting their purchasing power when it comes to wind turbine is really showing right now because they have really good connections with the big manufacturer of wind turbines and that's one of their big segments so they have a really a cost advantage when you compare them to smaller players there another thing that was really interesting from the conference call obviously they invested a lot in 2020 they had 4.6 billion invested across 10 transactions they completed the merger of terraform Power. And a

lot of these transactions are not only to acquire businesses that produce renewables right now, so basically adding the cash flow from that, but it's also that those businesses have project in the pipeline as well. And there's a lot of organic projects as well in the pipeline for Brookfield Renewable. It's been really a great year obviously for the stock in terms of return. It's been one of my biggest, actually it's my biggest holding, so full disclosure on that. I'm not saying 2021 will give you as good returns. It might be flat in 2021 just based on the fact that they had the crazy run up in 2020. But I really don't think you can go wrong with them on a long term horizon. So 10, 15, 20 years

in the future. And you have to think too, that the Biden administration in the US will be quite a bit, will help him quite a bit in terms of their big push towards renewable energy. And they're really seeing as well a lot of corporation and governments around the world really pushing for that renewable energy. So, I mean, they're really on the right side of it. They're one of the biggest players in the world when it comes to that. So I can only see them you know it's i

don't see any issues with brookfield at least in the the near to medium term um you have any any comments on them brayden before i move to the next one no i i don't i mean great year excellent year for shareholders that's for sure uh you've benefited from that many people have benefited from that i own the asset management business which owns 61 percent of bep uh so that's that's my play there but uh yeah great year and congrats dude you're crushing it with this one yeah yeah really it was a great conference call to like and uh again i I think we've said it before, whether it's the Brookfield Asset Management or Brookfield Renewables or BIP, any of their subsidiaries, the management is really great over there. So now on to the next one, PayPal. So PayPal had quite a year.

I mean, it's no surprise with the pandemic. A lot of people switched over to digital payments. They already had a really good base. And their year was quite amazing. surprised with the pandemic a lot of people switched over to digital payments they already had a really good base and their year was quite amazing despite ebay representing a smaller smaller and smaller portion to their revenues so a lot of the people that were kind of bearish on paypal a few years ago a lot of them were pointing to the fact that eBay was still a big part of their revenues. Well, even despite that, I'll tell you some of the highlights and their numbers. And it's just it's crazy. So in terms of active accounts, so they had 377 million active accounts. So

that includes 29 million active merchant accounts. That's a 24% increase year over year. They added 72.7 million new active accounts. That's a 95% increase year over year. They obviously blew their target out of the water because they were not predicting a pandemic with their forecasts early last year. Customer engagement has really increased year over year as well. I won't go into too much detail for that, but revenues as a whole has increased 21% a year over year to $21.45 billion. And their free cash flow, and obviously a metric that we like, is $5 billion for the year, and that's a 23% of revenue. So the free cash flow margins are just quite something. And there has been an increase

in certain expenses, but it's been just a ban a year for PayPal. And they're having an investor day, I think in the next couple of weeks, and they'll basically project their five-year plan. So I do like that because it shows that Dan Schulman and the management at PayPal, they really have a long-term approach, and I do like that. And one of the couple of things that came out from when Dan Schulman was speaking on the conference call is they really saw an acceleration of digitization, basically pushed forward three to five years due to the pandemic. And they really believe they've done

surveys with their clients that this will probably not stop once the pandemic stopped. The biggest factor behind that is people love the convenience. So a lot of people that were not already used to shopping online or using PayPal services, the pandemic actually forced them to use it. And now the feedback they're getting is that people are really enjoying the convenience of that. One of the big surprises for them was the buy now, pay later functionality that they have installed in PayPal. It's really exceeded the management expectations. So they said that was their biggest surprise for the year. They mentioned crypto quite a few times. It surprised me how many times Dan Schulman mentioned that on the conference call. But their plan, based on what they were saying, is really working with regulators and central banks to kind of become the rails of the new digital payment space and financial services space going forward.

So I do like the approach that they're taking towards that. And I own PayPal, and I know that they're at a all-time high right now. And I'm looking at adding more. It's just, um, yeah, five, 10,

15 years in the future. I think they're going to be, uh, become one of the Goliaths in the digital payments industry. And they've done nothing but execute what you're saying. Exactly. They've been, they've been crushing it i mean

shocking they had an amazing year in a pandemic when you know digital payments needs to be the future uh so a lot of that acceleration was pulled forward and it leave it leaves me to a question when i think about paypal and i'm curious to hear your thoughts on this is when i think about paypal what's a 300 billion in market cap now close to that yeah i don't all right let me look it up but that sounds about right yeah yeah okay well you check that and then okay so it leads me 315 in market yeah okay. So it leads me to the question that while big tech is reporting this last week with blowout numbers, it's like a $1.7 trillion company did what in revenue growth? it's a lot of like, how is this even possible? When I'm reading the reports and seeing the results of how the law of large numbers with these big companies,

it's incredible how sustained these growth rates have been with the likes of Amazon, Microsoft, Apple, the fan mags. And I'm wondering, well, first of all, we must have been just so underpricing them like microsoft was just so underpriced five years ago and these sustained growth rates just keep passing what anyone was thought was possible so i'm looking at what companies are growing in that category a couple hundred billion in market cap, you know, not the mega cap companies. Which ones are we just underpricing their sustained growth and right now just look so expensive when you look at the multiples? And PayPal kind of comes into that conversation,

right? It's going to be very difficult for them to not do well in this ecosystem right like that's the kind of business you want to own so i'm curious on to hear your thoughts like it feels like a like a company that could have a t on the market cap in this decade um and it's i think we could be underpricing things like this, even when we look at like a price to earnings or price to sales. And it just looks so expensive, right? So I'm curious your thoughts on that. Because if you're adding to it here, right, you're like, you know, it's you know, it's not cheap by any traditional measure, right? you know it's not cheap by any traditional measure, right?

As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using Questrade as our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense. And with them, you can buy all North American ETFs, not just a few select ones, all commission-free so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award-winning customer service team with real people that are ready to help if you have questions along the way. As a customer myself, I've been impressed with Questrade's customer service. Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly. Switch for free today and keep more of your money. Visit Questrade.com for details.

That is Questrade.com. Yeah, it's definitely, I'm not going to go ahead and say that it's a cheap stock. It is not by any traditional measures. But just the fact that, you know, one of the things that I love about PayPal, and you really want to keep an eye, especially on those kind of fine fintech plays, tech plays, is you want to see continued innovation. And you don't want to see them kind of staying or sitting on their laurels and really PayPal is and Dan Shulman with his leadership I think they're really continuing to innovate and one of the things I didn't mention is next year they'll have the functionality where let's say if I think it's still going to be in the U.S., but someone could have, for example, Bitcoin in their PayPal account and PayPal will basically facilitate the payments.

So if a customer wants to buy something online and use their Bitcoin to do so, so PayPal will facilitate that. And then the transaction to the merchant, the merchant can still receive U. receive us dollars if he wants to receive it and that's just it just shows whether you're bitcoin bull or not doesn't matter it's just it's just an example to show that they're really embracing new technologies they're really putting some new functionalities there's a lot of organic growth as well and one of the interesting questions to dan shulman was like oh what's your strategy on M&A, right? Acquisitions. And they said, look, we have certain criteria as we look at when we look at acquisition, but we also have a lot of really valuable internal resources and we can really develop a lot of these tools.

So it has to make sense for us to make an acquisition. And on the most part, they would only consider an acquisition if really it makes more sense for them to acquire technology or company or the workforce related to that than developing it internally. So that's really what I'm looking at. So innovation, I think, is probably the biggest factor in continuing growth for these type of companies. So I personally think that the sky is the limit for PayPal and they're really doing kind of I mean, I don't really have anything bad to say with with the results that came out. And they're just yeah, it's like a free cash flow machine and they have a positive cash position compared to their net debt.

So, yeah, it's just a great business. And I think that's how people should look not only at PayPal, but those other big tech companies. Just the innovation part, I think, is the most important. Yeah, innovation and optionality, I believe, are the two secret sauces for sustained growth rates, especially probably on the optionality side. Okay, well, thanks for that, Timo. That's a great year. I'm looking at the metrics here you have on the Google Doc

from their presentation. It's like, oh, I think they did pretty good in 2020. So good for them. I'm still an idiot and waiting. I have this, maybe I'm naive. I have this hope that Stripe is going to go public one day and uh i'm just missing out on like aiden and paypal and square as i wait for what i think is the best company in the bunch which is actually actually private, which is Stripe. So that's okay. Moving forward, I'm going to talk about something that I've been thinking about a lot lately,

mostly just because of the books I've been reading. It talks about something called the twin engines. So the twin engines is a concept of what makes great stock returns. If we were to look back at all the huge winners in the last couple decades, monster winners and periods of just vast outperformance of the market there's something very common between them so you either have a company like we're talking about that just continues to grow at huge rates that the market's underpricing it's like they can't possibly continue to grow that fast and then they do kind of like amazon there's like there's no way they continue to have 45 top line revenue growth for another decade and then they do it so that's one way to have exceptional returns which is very difficult

right like it's it's hard to be conservative in your assumptions and throw on like a 45% revenue growth number on it. Like most people would think you're out of your mind. So that's like one way to have exceptional returns. But another way that's actually more common with big winners is growth plus multiple expansion. When I say multiple expansion, just like the earnings multiple. So something that's trading, like an Apple in 2015, that's trading at 12 times earnings for a company that's growing earnings per share at 30% a year, that's a big disconnect. So usually that means that the market has something wrong. The market has a narrative that's incorrect.

So in Apple's example, it was that there's no way that the iPhone can continue to dominate. This is a tech hardware play. And we've seen what happens with the other phone makers. They kind of die. We've seen what happened to BlackBerry. We've seen what happens with the other phone makers. They kind of die. We've seen what happened to BlackBerry. We've seen what happens to Nokia. There's just no way they continue to dominate this ecosystem. So Apple trades at 12 times earnings because of that narrative.

For a company that's growing extremely fast, creating a moat, developing an ecosystem, customers love the product. They're addicted to the products. And, you know, the growing earnings at 35% a year and have $100 billion in cash on the balance sheet. So when that happens in the market realizes, okay, this is sustained dominance from a company, we're going to throw on now like a 25 or 30 times earnings multiple. Now, right away, the company's going to 3x just on that multiple expansion. So it went from like a 10 to a 30. So there's that multiple expansion. But then also the sustained growth on top of it

to, you know, maintain that multiple expansion when it gets there. And that's called the twin engines, because one, you have growth, and two, you have multiple expansion. And I'm trying, I've always tried to find those companies. And screeners are great for that. Screeners are great for trying to find a disconnect between growth and value and i just wanted to mention it because i see so much about people say oh i'm a value investor oh i'm a growth investor it's like sure whatever you want to call it but do you like

making money because if you want to make money, you got to do both. It's what Warren Buffett has done. It's what Charlie Munger told Warren Buffett. Yeah, sure. I mean, you could find really cheap multiples of stocks, but if you can find great businesses trading at wonderful prices or wonderful businesses trading at wonderful prices, now you have the twin engines. You have multiple expansion and growth. So i'm thinking about that a lot lately

um and trying to find that disconnect and that's where growth and value are actually attached at the hip and i believe that to be a great way to execute a long-term strategy and i and i know you're aligned on that one simon yeah yeah i mean i agree with all of that the only thing i would say is the best better strategy is buying gamestop at four dollars and then you know selling it at 300 bucks a share but aside from that i think because that's so repeatable and so easy to do right of course exactly obviously i was being facetious but uh no no i definitely agree with what you said yeah yes that's a twin engines i'm going to talk about another conceptual concept after but

it is february now and this is about the time of the year people start thinking about their taxes so simon let's talk rsps uh what do you got for us yeah so i guess uh per psa right at the deadline is coming up for uh at on march 1st 2021 if you want to contribute to your rsp and apply them apply those contributions to the 2020 tax year. So just remember that. The other thing I wanted to say is, you know, we had an interesting comment from someone who said he's a taxation lawyer in Canada and, you know, gave us some props for the show, which was very nice. But he gave us a few horror stories with some clients. And one of them was people passing away while they still have a huge balance in their RRSP when they're retired and basically saying that the government takes roughly 50% of that. So I'm not sure exactly if that's all 100% accurate or not,

but regardless, it just shows the importance of having a plan for withdrawals for your RRSP. TFSA is not, you know, obviously TFSA, there's not that penalty. You're already taxed on it. Any gains that you make, you can just withdraw them, no issues. A lot of people don't think about this, but if you have a year or two or potentially more, about this but if you have a year or two or potentially more and even if you're in 30s or 40s where your income is significantly lower that's actually not a bad opportunity to look into withdrawing RRSP because that means that your tax bracket would be lower and you could withdraw your RRSP and just

direct the funds into a TFSA for example example, if you have room, or if you don't, a taxable account, which taxes would be a bit friendlier there. The reason why I'm mentioning that is people, a lot of people are just focused on, you know, RSP when they retire. And it is true what he's saying is, I think we've been kind of programmed into thinking that it's always RSPs, right? It's always, you get bombarded with that info from all the financial institution at this time of year towards the end of the year as well. And we always think, you know, people automatically think that they have to contribute to RSPs and it may not be the best solution for people. But at the same time, having a withdrawal plan is really important just a few notes of cautions when you are withdrawing from an RSP is

that there is basically withholding taxes that are applied by the financial institution so this applies to every province except Quebec Quebec is a bit different I believe the rates are higher in Quebec. So if you withdraw up to $5,000, the withholding tax rate from the financial institution is 10%. From $5,001 to $15,000, it's 20%. And from $15,000 to anything above that is 30%. The reason why I'm mentioning is when you withdraw those that withholding tax is actually to make sure that you pay your your income taxes on those amount but those rates might not actually be the rates your effective

rate so even if you get taxed at 20 you know let's say the 20% bracket from $5,000 to $15,000, well, your effective rate could be 25%, 30%, 35%. So don't get the false impression that you've already paid your taxes on it because chances are you'll have a nasty surprise when you do file your taxes because you'll owe even more. So just make sure you plan accordingly for that and that you're aware that the withholding tax may not cover all the taxes that you need to pay when you do withdraw RSPs. But yeah, just something I wanted to mention. That comment that we had from our listener definitely brought it up to light. I know the deadline's coming up, but it's something that people should consider when making and withdrawing from their RSPs. Excellent point.

And for some reason, people think, you know, contributing to their RSP is just kind of always, like always a great thing to do. Like how could it ever be a bad thing to do? And there's lots of scenarios where it just doesn't make sense to contribute to it or to continue to contribute to it. If you have a pension, you're going to have high income. If you have a business that has income that you're going to be getting even after retirement, you got to think about all those cash flows because it could be horribly tax inefficient to

be using an rrsp so if your tfsa is maxed and you're contributing it might make a whole lot of sense to have it in a non-registered account and pay typical capital gains taxes and that is a conversation that people need to start having because the rsp is is a yes but maybe not right so somebody consider if you have if you already have a lot in your rsp you don't need to necessarily keep contributing to it because depending on how you're you're withdrawing on it and your retirement and how many years like we're getting into some complex like financial planning now but it just might not make sense to keep contributing to it so people need to start having those conversations yeah exactly just make sure you have a plan i think that's the

most important thing is having a plan for your RSPs, whether it's for your contributions, but also for withdrawing, whether it's a bit before your retirement or while you're at retirement. Make sure you have the plan. Make sure you take your whole financial situation into consideration, and then you'll be able to assess whether it makes sense for you or not. Yes, sir. And it's unfortunate because the number where an RRSP becomes tax inefficient is just not high enough anymore for what people need to retire. Which is, you know, not to get too Debbie Downer, but it's just not that tax inefficient if you actually hit your retirement number. So something to consider. As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using Questrade as our online broker for so many years now.

Questrade is Canada's number one rated online broker by MoneySense. And with them, you can buy all North American ETFs, not just a few select ones, all commission-free, so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award-winning customer service team with real people that are ready to help if you have questions along the way. As a customer myself, I've been impressed with Questrade's customer service. Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly. Switch for free today and keep more of your money. Visit questrade.com for details. That is questrade.com. Okay.

That is questtrade.com. Okay. Bottleneck businesses is the last topic for today and something that I talked about on another podcast a while back. I don't think I've ever mentioned it on this podcast. And it's in my framework for what I think of good businesses are. I use this term. This term I stole from Chuck Aker. And I don't know if he originally coined this term,

but he's getting the credit for it right now in this podcast. So bottleneck businesses, and for those people who don't know Chuck Aker, he runs Aker Capital Management. They have been exceptional capital allocators. And I think the way he thinks about the world and the way he thinks about investing, a lot of people can learn from. And it's all on his site, the Aker Capital Management. He has a really cool concept called the three-legged stool, bottleneck businesses, what he thinks are great businesses. And, uh, and if you blog posts, you can learn a ton. So that's, that's acre capital management. So bottleneck businesses, I don't actually really like the name of it. So I kind of want to rip off acre and then rename it

because when I think of bottleneck businesses, I think of as bad because in the corporate world, you know, a bottleneck is not good. It's just kind of clogging your process. So, but in this, in this scenario, so bottleneck businesses, what they are is if you think about a bottleneck, it goes from a wide diameter to a small diameter. So think of it as like a funnel, right? Things are being funneled to this business. So there's a few characteristics I think that bottleneck businesses have is, to be honest, a lot of them are monopolistic.

Let's not kid ourselves. a lot of them are monopolistic. Let's not kid ourselves is that they're fed more opportunity because of how good their business model is. And it is a, they're funneled opportunities. And if they don't exist, the value chain kind of falls apart. So that's that kind of monopolistic thing to it, right? So the example I always use, I know I talk about payments so much on this podcast, but I mean, it represents what my net worth is in. So how about that? If you think about digital payments,

most importantly, like the credit card acceptors, the merchant and consumer connection, the rails that have been made by Visa and MasterCard. If a business is to grow and accept payments online and execute some strategy or even just grow sales, that's good for these digital payments companies. So they are given opportunity without even investing in it. And that's why you see their free cash margins like over 40%. They turn so much of revenue into free cash flow. And it's because they don't have to invest a lot of CapEx anymore.

They've already built this ecosystem and it's going to continue to grow. And they're fed more opportunities because of how good their business is. And that as other people grow, they're doing a lot of the innovation and growth for you. Businesses that I think are becoming quite bottleneck right now is Shopify. As people excel and make wonderful businesses online and sell great products and have this awesome e-commerce experience. Shopify is benefiting from that because there's the transaction fees, there's the SaaS subscription. So they're being fed more opportunity than other constituents, and they're really important in that ecosystem. And if they were to go away, it would be a real shock to the system.

Like if Shopify was to go away for a day, that'd be really bad. Apple, maybe by nature, is a bottleneck business. You know, if you want to exceed on the app store, you have to play in their ecosystem. You have to play by their rules. And they're just fed more and more opportunity as other people want to engage in their ecosystem. So companies that are creating that moat, creating that importance, maybe a little monopolistic in nature, those businesses are the ones that I want to own for the long term and just possess

a lot of really good qualities. So I really like the concept of the bottleneck business and it helps me really think about companies that are being given more opportunity because of not only the sector that they play in, like they have that tailwind with them, but also like all these people innovating inside and excelling and being successful inside of that ecosystem just benefits the mothership. And I've been thinking about that a lot lately.

So I love this concept. So that's the bottleneck biz there, Simon. Yeah, yeah, no, it's a great business model, obviously. And I mean, I think you explained it quite well. I think I was using the funnel business model, but I think we were talking about the same thing earlier. It's the same thing. It should be probably called the funnel.

I think the reason that Acre calls it the bottleneck I think the reason that Acre calls it the bottleneck is because of the concept that if they didn't exist in the value chain, it would be really, really hard to replace them and the whole value chain might fall apart. Like imagine if Visa and MasterCard just didn't exist. It would be a nightmare. Like everyone operates on top of their rails commerce would just come to a halt like tomorrow right so that's maybe the bottleneck nature of it right yeah a good example too is um you know for people the infrastructure space has a lot of those on a different kind of level right if you think of toll roads when that's the only option well there you go that's a bottleneck business you don't have a choice if you want

to use the road you have to pay up if not then good luck finding another way exactly it's very hard to replace that good or service and get the same result. Right? Yeah, toll roads are a good way to think about it. Maybe I should buy more Brookfield based on that. Hey, I don't think he can go around. I think I'll be buying more Brookfield regardless. So I think that does it for this episode, guys. We talked about some earnings.

We talked about RSP season coming up. Bottleneck businesses. The twin engines. You can see the twin engines and bottleneck businesses kind of written into my framework that I have on the back when you make an account for Stratosphere. So if you go to getstockmarket.com,-e-t stock market.com it brings you right to my site there stratosphere and that those concepts define what i think are great

businesses in the model portfolios and the real money portfolios and for the top pick section here i am i have paypal and square the ones that you own and the top picks they keep going higher and higher and I'm a loser for waiting for Stripe to go public but that's okay it's a long game Simon but uh I think I think you're winning I think you're winning this game it doesn't matter to be honest as long as your winners outweighs the losers and you're beating the benchmark i think anything beyond that is just gravy yes sir that does for this week guys we'll see you next week as always every monday you're posting them for every monday right simone yeah yeah still doing every monday if ever for whatever reason we can't do it for the monday we'll post it on our Twitter. If you're not familiar with our Twitter handles,

we have it in the notes of the show, the Twitter for the show, but also Brayden and I's personal Twitter on there. Get Braydo Capital to a thousand followers, please. Don't forget to follow mine either.

No, no. That second. Pump Braydo Capital to a thousand thousand i'm just kidding simon's posting lots of good stuff especially if you like crypto you're uh the fiat bit of everything himself i love it okay guys we'll see you guys next week uh give it five stars by the way this podcast i'm patting myself on the back and And Simon, you should do the same. This podcast is absolutely exploding right now. We are having strong growth in the viewership. So we appreciate all of you. And we will continue to do this.

Thanks so much. See you next week. Bye-bye. The Canadian investor is not to be taken as investment advice. Braden or Simon may own securities mentioned on this podcast. Always make sure to do your own research and due diligence before making investment decisions.