The Canadian Investor - Top 10 Acquisitions & Why Simon is Selling This Stock

Episode Date: August 8, 2022

In this release of the Canadian Investor Podcast, we discuss the following topics: Diversification vs Diworsification Investing in a Recession Top 10 Acquisitions of All Time Why Simon is selling a position Tickers of stock discussed: GOOG, ACN, EQIX, ASML, PINS Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Sign up to Stratosphere for free 🚀 our platform for self-directed stock investing research. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense. Signup for Shakepay and get $30 🇨🇦 See omnystudio.com/listener for privacy information.

Welcome back into the show. This is the Canadian Investor Podcast, made possible by our friends and show sponsor, EQ Bank, which helps Canadians make bank with high interest and no fees on everyday banking. We also love their savings and investment products like GICs, which offer some of the best rates on the market. I personally, and I know Simone as well, is using the GICs, which offer some of the best rates on the market. I personally, and I know Simone as well, is using the GICs on a regular basis to set money aside for personal income taxes in April of every year. Their GICs are perfect because the interest rate is guaranteed, and I know I won't be able to touch that money until I need it for tax time. Whether you're looking to set some money aside for a rainy day or a big purchase is

coming through the pipeline or simply want to lower the risk of your overall investment portfolio, EQ Bank's GICs are a great option. The best thing about EQ Bank is that it is so easy to use. You can open an account and buy a GIC online in minutes. Take advantage of some of the best rates on the market today at eqbank.ca forward slash GIC. Again, eqbank.ca forward slash GIC. This is the Canadian Investor, where you take control of your own portfolio and gain the confidence you need to succeed in the markets. Hosted by Brayden Dennis and Simon Bélanger. The Canadian Investor Podcast. Today is August 7th, 2022. My name is Brayden Dennis, as always joined by the one, Simon Bélanger. Simon, I was tasked with uploading the episode for Thursday. And everyone got it on Wednesday.

So you're welcome. Yeah, yeah. No, it was kind of funny how it happened. But at the end of the day, most people, I think, not most people, but we know a lot of people listen to it in their commute. So they got it first thing Thursday morning just a bit earlier than usual. One day I will figure out how to properly schedule that but until then today we are talking about a few fun topics. Mondays we talk about you know things on our minds, strategies, portfolio management. Thursdays are news, keeping up to

date with what's going on. You're going to talk about investing in recessions and why it's always not so bad. It doesn't need to be the doom and gloom that people make it out to be. We're going to talk about diversification, some acquisitions in tech, and then you're going to talk about something that you've done with your portfolio recently. We've been following this one for a while now. So it's good that you're bringing this one up. Yeah, I think it'll be a fun one. It's weird recording in the morning, but hopefully we have more energy. Yeah, it's Sunday morning. What is going on? So weird. But here we are. I'm going to talk about diversifying versus de-worsifying for my

first segment here today. So today, Simone, I hold 19 stocks. I had to actually go check and press the sum button on my Excel spreadsheet because I thought, I thought it was 17, but it's creeped up over the past a month or two. And that's just because I've been aggressively deploying. I think for the most part, while the market's been not so fun. Now people know that who are on join tci.com, but for those who are not,

I hold 19 stocks today. Now, I want to add Equinix potentially this month, so that may creep up to 20. And 20 will be by far the most individual securities I've owned in terms of sheer number. Usually, historically, I've been around somewhere between 14 to 17. But since I'm so hesitant to sell, I find some wonderful business and I'm compelled to own a piece of it. Now, I try my best not to have portfolio ADD, but I think 20 is actually a really solid number. I think it's a comfortable number for many people. But this is slightly misleading because 60% of my portfolio is concentrated into just five stocks. So I am actually very concentrated.

But it got me thinking about diversifying versus diversifying when I was looking at my portfolio on Friday. Because diversification is good for the obvious reasons. And concentration, meaning having a large portion of your portfolio or net worth in just a few securities or just a few assets, It can also be good for the obvious reasons. It can create life-changing wealth, but it can also destroy it. Now, to fight de-warsifying, the act of adding new stocks just for the sake of it and shiny object syndrome. I'm curious to hear what you do here, but I use a hurdle rate of a stock I like right now that I already own, that I would consider owning more of. To give you an example, I really over the past few months have been trying to add to U.S. large caps,

in particular Accenture, ASML, and Equinix. Ironically, actually, the first two are European businesses, but they trade on U.S. exchanges. They're wonderful businesses and gigantic companies for sure, but I'll probably own them at some point. But here's the way I have to think about this. Selling something first to add something else is generally an act they try to avoid. It's something that I don't do. It is one of the reasons I will sell stock, but it is the last option for me.

I have to have extreme conviction to do some sort of swap. And I do this to avoid getting 30 stocks all of a sudden. And two, I use this, what I was mentioning, a hurdle rate of a business I already own. So is company A really better? Is company A making my portfolio better by switching it out for company B? This is what I try to think of.

And when I'm talking about company A as my hurdle rate, something I already own, something I like the price of today, and I like its prospects moving forward. So I've been adding, as you know, I've been adding to Google for about three or four months now. Every month, I've been DCAing it. And I'm looking at those new names. I'm like, well, do I like it more than Google here as I build this position up and clearly the answer has been no because i keep adding to it um what do you do how many are you holding today i think i have i counted

quickly and i just counted individual businesses because i have a few etfs but those i kind of okay i don't really count because it's a basket right tons of companies and i tend to not pay as much attention to those yeah you're like uh 2437 yeah so without those i'm at 19 uh so i'm right around there but i would be more comfortable with 15 that would be my sweet spot again maybe like a range of 13 to 17, a bit like you said, just because I have some names where now I was looking at it as I saw your segment and there's some names where they're really small. So I even get into the question, is it even worth having a position in there keeping track when it's just say, you know, half a percent part of my portfolio type of deal. And this leads well to your last

segments people are going to have to listen to that because you have sold a position very recently and so will that bring you to eight or does that bring you now to 19 you were at 20 that brings me to 19 yeah so i was at 20 yeah you just saw i had 19 and you're like oh i gotta have 19 too i wish it would be that but no it's's something I've been thinking about a while. And when we get to that last segment too, I'll talk about a company that, another one I'm thinking about selling. Oh, another one.

Okay, well, I'm going to hear it live too. All right, Simon, hit us with your segment. I like this. Dude, do you mean gloom is so annoying and uh this is this is what the people need to hear yeah exactly so you know obviously there's a lot of talk about macro specifically recession and inflation i think they're the two that we we hear about the most in the during like on the news headlines and stuff like that so obviously stats Canada came out recently with its May 2022 economic data and show that the economy was flat during the

month however if the projections are correct for June the economy will have grown 1.1 percent for the second quarter and we wouldn't yet be in a traditional definition of two consecutive quarters of decline in GDP, which would be the traditional definition of recession. But at least when I was doing the research here, I noticed that there are economists that don't define recession in the way that we typically hear. So that two consecutive quarters of GDP decline. So most economists would actually say it's a significant decline in economic activity spread across the economy lasting more than a few months. So this means a decline in industrial production, employment, personal income, and GDP

decline. So quite different than the traditional definition that we hear. But the reason why people, I think, go to the GDP definition of two consecutive quarters is usually when that happens, it does mean that we're in a recession. But the National Bureau of Economic Research in the US uses a broader set of metrics like the ones I just talked about. So right now, just based on that, if we use a broader set of metrics, it's probably debatable that we're in a recession because employment numbers, for example, are pretty good. Although Canadian ones tend to be struggling a little more than U.S. ones. But overall, they're relatively strong. We have seen some sectors like tech here.

I'm thinking about with some layoffs, whether it's a Shopify, whether it's big tech announcing that they're either slowing down hiring or even cutting some jobs. So, you know, the news is, I would say overall, not great, but I think it's important to put things in perspective here. And as investors, I think it will create some investing opportunities. And that's something they don't talk a lot about, you know, in those headlines, they tend to focus on the bad. But, you know, there are a lot of opportunities that could be available for investors before and there's some conflicting very positive news that's coming out as well exactly like i mentioned i mentioned this last

week but the mdna and earnings call from both payments companies, Visa and MasterCard, were both like, man, we're not seeing any issues with consumer spending. They wouldn't, Alfred Kelly, the CEO of Visa, wouldn't come out and say, we don't see any issues with consumer spending in writing on their mdna if he didn't really believe that because that would be like kind of reckless for him to do so so like there's it's not all bad so you got to try to find some good in there as well yeah and what i've noticed and i'm sure you've noticed that too is okay there are some struggles i don't think you know we're not naive some companies are definitely struggling here but like brayden said i think you have to look at things on a company by

company basis even some sectors right some sectors might be doing well as a whole but some others may be all over the place and i'm thinking tech here so we're seeing some companies really crush it some companies doing okay not great not bad kind of things just going along and some just not doing great so i think it's really important that you look at the company and you know just think about google for example you know google's doing great on the ad front but if you compare it to a snap it's not snap is not doing well so they're both in a similar kind of sector if we'd like but completely different results and outlooks yeah that micro level performance matters especially when you're owning individual securities right like every

single earning season snapchat puts out their numbers and everyone's like oh no digital ad spend is at risk because they report earlier before everyone else and then the big dogs report and it's like oh never mind snapchat just sucks yeah exactly so and even if we're going into downturn in terms of the broader economy economy not every single business will be impacted in the same ways. And like I mentioned, it could create some buying opportunities because the overall market may be pessimistic and then putting a cheaper valuation on a company that's still doing really well. So there are also some companies that are economy dependent but that are very strong so they may see some short-term headwinds here but over the long terms they're like the backbone of the economy and i would be thinking here some examples would be the rail companies so canadian

national rail or cp i think would be great examples because obviously they would be affected with a recession or economic downturn but they would probably be very resilient if you owned them for five and ten years and just looking at their share price they're definitely not trading cheaply they're still they've actually rebounded quite nicely recently but I would suspect if the economy starts slowing down and data clearly shows that we're heading into a broader recession, these two companies will probably see a contraction in their multiples and a slowdown. So it could be a good opportunity here for investors. And the last thing I'll mention here is good companies that are tied to necessities should be doing quite well even into a recession because people in a recession will tend to focus their spending on things they have to buy, not things they would like to buy. consumer staples I'd even add in there some alcohol manufacturers if that's something you're open into investing in because typically these will also do well in a recession so I think just

putting things into context yes it's fine you know the mainstream media CNBC Bloomberg whatever it is you know it catches the headlines when it's like bad economic data. But have a look at it, put it into perspective and, you know, try to use that information to create some opportunity for you for potential investments. The luxury consumer has not slowed down for a second i don't know if you saw uh lvmh's uh results they had like 35 top line revenue growth i didn't see it but uh i'm aware of them i know they've been doing well overall recently gosh like people are gonna buy their louis vuittons regardless dude that company is insane have you seen their like a a visual of the conglomerate of the companies that they own

no but i know they own a lot of luxury brands yeah it started as insane yeah all the all the like women's makeup companies all of the high-end alcohols, watch companies that you'd recognize. It is insane. It is so insane. 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

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All right, let's talk about a segment here called the top 10 acquisitions of all time. Just in general, they are mostly done by big tech. The way that this person came up with this, the source for this is a guy on Reddit called 10K Reader. He has so many followers, it's insane. And he posts these threads on how to analyze financial statements and stuff. It's quite educational. So shout out to him, 10K Reader. Now, I'm going to go from greatest acquisition to the

top 10. I guess I should count from the 10th to the greatest acquisition of all time. So I'll count in that order. And the way that this is calculated is the purchase price versus the absolute dollar return estimated by market cap contribution. So what he did, the multiple for the business, and then extrapolated that to the purchase price to come up with some sort of estimated current contribution to market cap. Now, of course, that is impossible to come up with an absolute number. And so that's why it's just an estimation.

But I think you did a pretty good job estimating this. I agree with most of them. Some of them, some of them you could definitely debate. Coming in at number 10, Disney's acquisition of Marvel. Now, Disney bought Marvel for $4.2 billion. Disney bought Marvel for $4.2 billion. They estimate here that the total contribution to Disney's market cap is $13.3 billion. So that is quite significant and obviously a great return in absolute dollar returns. So this is not in percentage terms turns it is in absolute dollar returns so just like how much is contributing to their current market cap next up again disney acquiring espn they estimate that

the 188 million dollars disney spent to buy espn now contributes 26 billion dollars to their market cap which is kind of nuts it seems like a lot yeah i feel like yeah i don't feel like espn's as valuable as he's estimating here but that that's just me just because it's all about it's not really about the name when it comes to sport is just having the rights to certain certain broadcasting right that's why you know a lot of companies streamers right now or are fighting over streaming rights that's why professional sports are doing so well because it's something that you can watch live so it's worth a lot of money to advertisers if they want you to be watching those ads while you watch it those those streaming rights would be worth a lot of money in the hands of an amazon for instance though oh yeah yeah definitely because they're and you'll see it when these media or broadcasting contracts

come up for the big four in north america and even when you look at soccer or football in europe i mean i think you're gonna start seeing some pretty crazy numbers because apple's in the in the space now amazon's in the space now, Amazon's in the space, and they'll be competing with the ESPNs, with all the US broadcasters as well. All right, up next, you're going to see a lot of Google in here because Google acquired Maps for $70 million. They estimate that close to $28 billion return contributing to Google's massive market cap. They acquired a bunch of mapping companies as well that they all kind of bundled in and integrated to make their maps technology.

And it works well. It is estimated that eBay's acquisition of PayPal for $1.5 billion turned into $45.6 billion at one point. Now, this is an interesting one because they're no longer together, but eBay fumbled this one. They fumbled the bag on the PayPal acquisition, and it's no longer relevant relevant so we can move on. Booking.com was acquired by Priceline for $135 million. Now today, Booking.com is the holding company and owns Priceline as one of them. So it's kind of like a Kushtar acquiring Circle K type of situation where all of a sudden the asset you acquired is the business. It is the global presence. That's the only real comparable I can think of that everyone may be familiar with, with the convenience stores.

So Booking.com is now the giant and all the assets they own like kayak and it's a bunch of them yeah i mean it's probably just a branding thing right they just figured that the name was better than the book.com is a lot bigger than priceline in terms of like gross booking values yeah no no i know but the fact that they kind of changed their their name and everything and now prriceline is underneath that umbrella. If Priceline bought it, they probably figured like, oh, it's still better to use that booking.com name over Priceline. Yeah, that's what I meant. Yeah.

Google acquired Android, so the operating system for the smartphones, for $50 million. the operating system for the smartphones for $50 million. It is estimated that it contributes over $100 billion and $112 billion to the market cap of Alphabet today. Now, for these tech ones, you look at this and you're like, okay, of course it was a great acquisition. It deserves to be on the list of some of the greatest acquisitions of all time. But Google would have invested a ton of engineering resources post-acquisition. So total cost, $50 million is not true, but that is what they bought Android for.

So it helps them get a start for their engineers to to start working on it and and acquire the talent from from the android team yeah it kind of makes me think of marvell too right for disney where yeah they bought the properties but it's all like disney's marketing and creation and yes they had these kind of base stories but it's them that really brought those you know back in the spotlight because i think when they acquired it they it wasn't worth all that well i mean they acquired for four billion but still it wasn't seen as that great of a purchase at the time if if I remember correctly. Yeah, it was looked at as very expensive. Yeah, exactly.

Look at it now. Apple Computer bought Next Computer for $430 million. Now, I don't know how this one's estimated, but it is estimated that it was $126 billion return to Apple's current market cap. This one would be, I'm interested to see how they, how they estimated this because of course it was a very important acquisition

for them to get jobs back, um, to get Steve jobs back and to really build that the first personal apple computer that really took off but again like how how does this contribute to like how is that how do they like measure this contributing to the market cap i don't know but i guess he just wanted this to be on the list because it is very important to Apple's story. And perhaps Apple doesn't become Apple today without doing that way back when for $430 million. Next up, YouTube was acquired for $1.65 billion by Google. It is now estimated worth over $160 billion in market cap. And I think that is extremely conservative.

Not extremely conservative. I'd say it's worth over $200 billion in market cap for sure with some decent multiples given its growth rate, which is decelerated a bit, but it's such a good business yeah i think um because they have it before um you know i don't want to spoil the next one but i think it should be higher than the next one i'll just say that just because i think there is much more value in youtube then why don't you present the next one i don't want to ruin it Facebook acquired Instagram for $1 billion. It is now estimated that it is worth over $175 billion in market cap, which I also agree is very conservative. I think that Instagram's worth,

most people back a year ago or two ago, I would hear people say that Instagram is worth $300 billion. I tend to agree. I think that you could make the argument either way, which one's worth more, YouTube or Instagram. I think that they're both obviously incredibly valuable assets. They both make gobs of cash. I'd have to see them broken out line by line. I think it would be close.

And this is indicating that it is close. Yeah, I think it might be close, but I think there's just more potential competition for Instagram. And we're seeing with their shift right now that they want to be a bit more like TikTok. So I think for that reason i mean i think youtube is on its own uncontested whereas instagram has constantly some competition that's why i put more value on it you're right i think it's a bit modier i think that's true uh and coming in at

number one now again this is i think instagram and YouTube are probably the greatest acquisitions of all time, but you could make the case that Google acquiring DoubleClick way back when, I don't have the date on this, but a while back, they bought this startup called DoubleClick for $3.1 billion back in the day for them to jumpstart their ability to display what we currently now know as Google search ads, Google AdWords. It was their quick foray into building that business into an advertising business with their search and uh it is now estimated that it contributes over 180 billion dollars to the market cap again probably more like yeah you know like so that's the search that's a precursor to their ads business essentially that's that's right okay that's right uh it was called double click what they acquired and this is another one of those things where it's like how much has that technology changed since the acquisition under the ownership of google probably night and day but it really

helped them jump start that that business which I call the greatest business in the world, which is Google Search. And the auction and how all that tech works for buying keywords, it's all started with their acquisition of DoubleClick. There it is. That's all 10 of them. No, it's an interesting thing. It would be interesting to go back to because i feel like you looked at more recent history so just looking back if uh you know i maybe i'll do it for the 80s and 90s some of the bigger acquisitions back then to see how much they um added value over time

you notice how there's no microsoft ones on here yeah even though they've been so acquisitive lately they they have had some really good ones and some really bad ones yeah exactly i'm trying to think especially when remember when we did the list of the worst yeah we did a list i'm trying to think of some absolutely terrible ones that steve bomber did yeah yeah all of them were steve bomber we should add them to like do a chart of with these so worst acquisitions of all time the compact one that was bad oh yeah there are some really really bad one you just really wonder what they're they're thinking at the time and if you want to hear them just go back i think when was it during i think it was during the holidays that

we released it or in december if i remember correctly it think it was during the holidays that we released it or in December, if I remember correctly. It was over the holidays. Yeah. So it would have been late December 2021. We did a list of the largest acquisitions of all time in tech. Yeah, exactly. We did like 25 of them. So you can go back and listen to that. 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. Here on the show, we talk about companies with strong two-sided networks make for the best products. I'm going to spend this coming February and March in an Airbnb in South Florida for a combination of work and vacation and realized, hey, my place could be a great Airbnb while I'm away. Since it's just going to be sitting empty, it could make some extra income.

But there are still so many people who don't even think about hosting on Airbnb or think it's a lot of work to get started. But now it is easier than ever with Airbnb's new co-host network. You can hire a local quality co-host to take care of your home and guests. It's a win-win since you make some extra money hosting on Airbnb, but can still focus on enjoying your time away. Find a co-host at airbnb.ca forward slash host. That is airbnb.ca forward slash host. Juicy segment of the show. Let's hear it. Yeah. So switching to, I guess, another tech company. So I was alluding to it and I've been saying I was going to keep a close eye on this position. So I finally sold my Pinterest position. Like I mentioned earlier on in terms of the amount

of position or holdings that we have, This one was relatively small because I had just started done a starter position. So it was never more than 1% of my holdings. And right now it was representing about 0.5% before I sold it. So not extremely meaningful. But again, I do want to keep the number of positions that I own a bit smaller. And this was just one where it really wasn't going the way I thought and my premise changed over time. So first, my original thesis here was that Pinterest has just started monetizing its users and ARPU, which is average revenue per users, was way below Facebook. So my idea here was that they could just increase that ARPU pretty significantly, but without necessarily going to the Facebook range, which is about $50 for US and Canada versus $486 for Pinterest at the time. So even if they got to $15, I thought, you know, it was a really

good case for Pinterest here. So the other thing here in my premise, and one of the biggest issues with Pinterest is that their monthly active users or MAUs would stabilize because they had been flat or kind of trending down, but I was banking that they would stabilize and in turn they would monetize their users even more so well what happened quite a few things happened since then to their credit our poo has increased so our poo has increased from 17% year-over-year to a dollar fifty four it's good but still a long way from facebook so you can make a case that there's a lot of room to still grow here and facebook's like 40 dollars are true i'm pretty

sure like usd uh for canada and us it's higher it's 50 yeah is it really yeah oh my god yeah exactly okay so like canada ands and i think probably world you're probably right where it's probably around 40 but i was looking at canada and u.s but here the dollar 54 is definitely across oh yeah you did mention up here yeah 50 for u.s canada but you're probably right for the whole world that's a big gap though is what you're getting at yeah exactly so in terms of art proof for pinterest alone um it recently increased 17 like i said to 1.54 but that's across the board the previous number i mentioned at 486 was for canada and us meus unfortunately have not stabilized and that's been the biggest issue on my

end especially here for the most profitable markets so canada and the us they're clearly above their other markets they're down eight percent for us in canada year over year in terms of their maus and that's following a five percent decline from q2 2020 to q1 of 2021. that's important because their arpu is 582.82 for Canada and US right now compared to $0.86 for Europe and $0.10 for international. So there's a really huge gap here between their ARPU for North America versus rest of the world. And global MAUs, which is all of their markets combined, was down 5% to $433 million. And it's still 4% above their 2020 levels, but not great considering that growth is all within the less profitable markets in terms of MAUs. So those are the two main issues, I would say, on my end.

So why did I sell? Well, one of the things I've been saying for a while is I needed to see their AMAU stabilize, which clearly has not happened. And two, something we talked a little bit in this episode is the ad market is challenging right now. We're seeing expenses go up for businesses, which means that at some point they'll need to cut expenses. And if they want to minimize their impact on their margins, one of the things that is pretty easy to at least reduce spending on is ad spend. And reducing ad spend or at least maximizing your ad spend is something businesses will look at which could affect the ad market and what we've been seeing in the ad market recently is that some players

like an alphabet or google are doing just fine but we're also seeing other players like a meta snap twitter roku facing some headwinds and i would go as far as saying that there is more companies struggling in the ad market than there are some doing extremely well. But the ones that are doing extremely well hone a lion's share of the market. So because of that, I think there's a pretty high probability that things won't improve anytime soon for Pinterest and it could actually get worse. I'm not saying it will here, but my assessment right now is that I can use it and deploy while use this money and deploy it elsewhere, where I think my expected long term return on investment will exceed Pinterest. If anyone holds Pinterest,

I do hope it does turn around. I mean, I think it would be a great story if it would. But for me, the conviction and just the fact that it was such a small position in my portfolio, it just made it kind of time for me to decide and sell that holding. I think that it's important that you provide that context because it is so small of a position for you that I'm like, following the story, I don't have the conviction anymore for it to make sense to hold it, right? Like, it's not like you're, you're like a Pinterest truther. You're just, it's like very small, small position for you. Now, I agree with pretty much everything here. The ARPU increasing over time, I don't see how they don't continue to get that done.

I think that they probably will. But down 8% monthly active users year over year for the North American, US, and Canada market. I'm just thinking that's not a business I would want to own if I was the founder. That's not a business I would want to own if I was the founder. I'd be like, 8% of my user base churned on a free application? That is brutal. That is not a good place to be, even if I can monetize the users that are sticking around, those power users, even if I can monetize them better.

Overall, the whole Mu base is shrinking and what's the catalyst for that to turn around exactly user base right like what is the catalyst for pinterest to all of a sudden bring in a bunch of more people who like the platform that you know are looking for gifts are looking for recipes are looking for crafts. How does that tam all of a sudden find a catalyst to grow? And I think that you've come to that conclusion. There probably isn't one. Yeah, I mean, there and and one thing I didn't mention here is there's a lot of competition for eyeballs right in this space. So whether you want to admit it or not like clearly instagram's a competitor here because if people are on instagram they can find probably some similar

inspiration that they could on pinterest tick tock for sure exactly so there's a lot of competition and the fact that they're using losing at a pretty rapid pace to their North American users. Almost double digits down on MAUs, very close. Exactly. And that's really what's alarming. I've always thought the premise too for me is that it's an engaging platform. And when you go on Pinterest, you're usually open to purchasing things, which I think has some validity still because we're seeing those ARPU numbers go up. But again, I think those ARPU numbers have to go up so significantly to outweigh the shrinking in

user base that it really starts creating a problem. And we're seeing the largest increases in ARPU from their lowest monetized base. And that's nice. But when you're monetizing at, you know, 10 cents per user, even if you increase 15, like 50%, it's not going to be a lot, it's not going to make a huge impact on your end numbers. So those are some reasons to in addition to what I mentioned that I think it will be difficult for Pinterest and I lost about I think 40 or 45 percent on that position overall I mean it's not it was a small position it's not really it's pretty insignificant in my portfolio but I just wanted to tell people how much I lost in terms of a percentage because I do know a lot of people don't want to sell a position

because they have these arbitrary price point so you know I know a lot of people don't want to sell a position because they have these arbitrary price point so you know I know a lot of people in my situation would be like you know what I'm I don't believe in it that much but I don't want to sell until I get to my you know initial purchase price which I think is an a mistake if you don't believe exactly a trap if you don't believe. Exactly. A trap if you don't believe in the company, if you still don't believe, you don't believe any longer in the story, then why are you holding on to the company? Because it might go up if all the stars align.

I don't think that's a good strategy personally. Holding for arbitrary price points should be avoided at all costs. I think it is one of the most common do-it-yourself investor mistakes known to me. I think it is one of the most critical mistakes that should be avoided at all costs. It makes no sense. It holds no merit other than your own bias towards your finances. And that should just be avoided at all costs. And ego, I think.

I think a lot of it is ego because people don't want to admit they were wrong. And I was wrong here. Like, I'll just admit it. It's okay. I had a premise. It didn't play out as I thought it would. Obviously, I knew there was a chance it would not play out. That's why I didn't put 20% of my portfolio in it.

And it didn't. And it is what it is. You move on and you look for some better places to invest your money. Thanks so much for listening to today's episode of the Canadian Investor Podcast. If you have not given a rating on the Spotify player or the Apple podcast player, leave us a review. It makes us feel good. And trust me, we read all of them. We read every

single one of them. So on the Apple podcast reviews. So thank you very much for doing that. Simon, we got, it looks like we both have to look at our portfolios and do some potential portfolio management, look at our conviction in each name. It's been a while since I've done that. I like to do that probably every quarter. I didn't do it in Q2, so I think it's time for me to do that. And you'll see those results come out for subscribers on join TCI.com. That is the Patreon page to support the show. We don't do any of that pay to play garbage. So for us to support the show is ad supported and through the Patreon at join TCI.com.

And then you get to see what me and Simone are doing with our own personal portfolios. You get to see our returns. Both of us have smashed the market over the long run and I hope we continue to do so. That is join tci.com. Thank you so much for listening, folks. We'll see you in a few days. Bye-bye.

The Canadian Investor Podcast should not be taken as investment or financial advice. Brayden and Simone may own securities or assets mentioned on this podcast. Always make sure to do your own research and due diligence before making investment or financial decisions.