The Compound and Friends - Eli Manning comes by to talk investing, should you buy the Reddit IPO, Warren Buffett's new letter

Episode Date: February 28, 2024

On this TCAF Tuesday, Michael Batnick and Downtown Josh Brown are joined by Eli Manning and Drew Sheinman! Listen to Michael's dreams come true in real time as he sits across the table from his hero, plus hear all about Eli's foray into finance with BVG! Then, at 45:27 hear a new episode of What Are Your Thoughts with Josh, Michael, and special guest Aaron Dillon! They discuss Berkshire's annual letter, Reddit's IPO, the streaming malaise, and much more! Thanks to Rocket Money for sponsoring this episode! Cancel your unwanted subscriptions by going to: https://rocketmoney.com/compound Find more from Aaron at: https://agdillon.com/agdillon_about/ Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com Instagram: https://instagram.com/thecompoundnews Twitter: https://twitter.com/thecompoundnews Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Ladies and gentlemen, welcome to the Compound and Friends. On tonight's very special show, Eli Manning, former New York Giant, two-time Super Bowl MVP, all around amazing, amazing guy, came by, hung out with Michael Batnick and I, and we just had, I think, one of our best conversations ever. And Eli is now working head down in private equity, learning the business, making relationships. And he just, you could tell how excited he is about this new challenge

and how much fun he's having. It just, it really just like permeates the conversation. And if you haven't watched it yet on YouTube, now you get to listen to it. So that's coming up next. And then immediately following, it's an all new, what are your thoughts with Michael and I? We get into the Berkshire Hathaway letter. We take a look at the Reddit IPO, which is coming public either this week or next. I'm not 100% sure. We get into a mystery chart.

Michael makes the case for a popular financial stock. We talk Warner Brothers and Paramount and all kinds of stuff that's going on in the markets right now. So please stay tuned for that. Before I send you over to the Eli conversation, I want to mention our sponsor, Rocket Money. Awesome sponsor, awesome product. This is a personal finance app that finds and cancels your unwanted subscriptions, monitors your spending,

and helps lower your bills so that you can grow your savings. Rocket Money has over 5 million users, has saved people a total of $500 million in canceled subscriptions. Stop wasting money on things you don't use. Cancel your unwanted subscriptions by going to rocketmoney.com slash compound. That's rocketmoney.com slash compound. All right, I'll send you there now. John Duncan, do your thing. So Eli, I spent literally an hour and eight minutes on Saturday watching all 373 of your touchdowns.

That's weird. No interceptions, though, right? No. Wait, you don't do that every day? Try not to. Try not to. Michael Eisen has this thing, like all the Eli Manning stats and whatever. So, an hour and eight minutes.

Unbelievable. What a throwback. There you go. What was your favorite name of a catch? I can't... I didn't remember how many touchdowns you threw to Kevin Boss. It just kept showing up year after year after year. You know what's a great flash in the pan?

That you made his crown and what happened after Larry Donnell. Yeah, Larry had a good year. He had like a three touchdown gameouchdown game, I think. Versus Washington, at Washington. So, all right, here's what I want to ask you on your touchdowns. Isn't it amazing that the recollection, like, yeah, against Washington, the data points, so you don't forget that. Your two most famous plays famously are non-touchdowns, actually.

Right. The Tyree and the Manningham throw, which is the best throw in Super Bowl history, in my humble opinion. The San Antonio Holmes was up there, too. Pretty good. I think that's one and two. All right.

So, your most famous touchdown throws. I'm sorry. Your two most famous throws are that. And then I would say probably three and four, which I'm not going to let you say. Three and four are the Victor Cruz one, the 98-yard one, and then the Odell one, obviously.

Okay. So, take those four off the table. What comes the 98-yard one, and then the Odell one, obviously. Okay, so take those four off the table. What comes to mind as the one that might be, like, under the radar? I mean, I think Manningham and the— Sam Fran? Sam Fran on the post. I knew it. Man, that's a tight throw. It's versus kind of single high.

And you're getting your ass kicked. Yeah, and it was kind of drawn up, a little bit drawn up in the dirt, which is, that's a tight throw. It's versus kind of single high. I do get your ass kicked. Yeah. And it was kind of drawn up, a little bit drawn up in the dirt, which is like your favorite ones. It was like a play we ran a bunch. I hit Victor Cruz on his little underneath shallow route over and over. And we finally said, hey, they're kind of cheating the safety backside to Akeem Nix a lot. So we said, let's put Manningham on the other side.

Let's put him on a post. So if the safety's tight and taking away Victor and they're doubling him, they take away the tight end on the end break. We usually have like a comeback on the outside. We said, let's just put him on a post. You know, if it's not there, no big deal. And sure enough, they took away Victor.

They took away the end. They doubled Hakeem, hit Manningham. And the pocket was clean. And the pocket was clean on that one. On that one. So I thought you were going to say that. One throw that stood out to me, I don't remember,

I remember this game, I don't remember the throw until I saw the replay. In 2015, we were in Miami. And it was like only a 10-yard throw, but it was, Odell was in the corner of the end zone. His feet were down.

Yeah. Your throw was like two yards out of balance. And he was, do you remember that one? Yeah. It was like a little bootleg, kind of rolled right. And he kind of ran a little

into back to the, had to lead him back downhill a little bit. That was a good game. That was a fun one. Odell had another bomb in that game. That was like a special play.

We'd always, it was like a slant, you know, like a common football play is called a sluggo, a slant and go. And it's usually versus man or single high

where they run the slant, the corner jumps it and you throw like a go route down the sideline. And so this team from Miami was playing a lot of quarters. So there's a safety, and we ran a ton of slants. We say those safeties are going to be looking to jump the slant. Let's run like a different version of this sluggo where he runs the slant, and we kind of pump off the safety. And then he goes vertical just right up the hash.

And kind of kept waiting. It was going to be a check. It was like, hey, when you see it, get to it. And we just never got quite the look, never got the look. And finally, it was right there in the fourth quarter, tight game. They had made it close, and we got the look, gave them the little signal, and it could not have gotten more open. So it was like one of those deals where we were patient.

We said, hey, we're not going to call it. We want you to check to it because we don't want to waste it. It's only good versus specific look. And we finally got the look. You had a lot of weapons over your career. Just like taking myself back to memory lane. Amani, Plaxgo, Steve Smith, Nix, Manningham, Victor, Odell, obviously. Like, holy shit, man.

Yeah. And, you know, a lot of Steve Smith's one that gets, his name gets kind of forgotten in the mix sometimes, but he was so good early on that rookie year. A big part of us winning the championship and winning the Super Bowl that year. That's our downplay. Was his coming around and him, like, kind of learning the system.

And we gave a lot of the slot receiver, which he was, a lot of reads. They could see the coverage, and their route would change based off leverage, coverage, everything. And like Amani wasn't great at that because he had been in the league so long it was hard for him to adjust. Plaxico wasn't great at that.

Steve Smith was the first person that got it, and we were able to grow. And some of those plays that were my least favorite were now starting to be some of my favorites. And he did it really well. And then Victor watched him, learned from him. And then when Victor came on, he took it to a whole new level. Yeah, I think he had 1,500 yards in his first season, something like that. Yeah, and it was all, like, on three different routes.

Not routes, three different plays that he could adjust the routes. And we just, like, we can't be wrong. Like, whatever leverage, he can see it. And it's hard. Like, running full speed and seeing a coverage and changing your route. It like not, not many people can do it. I always joke with Victor. It's like, Oh, you're slow enough that you can see it. And it all can happen. If you're too fast, like everything's happening too fast. You have like the perfect speed where you could, you know, analyze everything and see it. And we were on the same page.

Drew, what were your most memorable touchdowns? Yeah. I was afraid you were going to ask that question. We'll put those on screen later. Actually, watching his is my most. Well, I agree with that. John, do you want to click us in? Official three claps. All right.

So excited to have you guys here. This is. All right. The compound is going. All right. Welcome to The Compound and Friends. All opinions expressed by Josh Brown, Michael Batnick, and their castmates are solely their own opinions and do not reflect the opinion of Redholz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions.

Clients of Redholz Wealth Management may maintain positions in the securities discussed in this podcast. You're hosting, so you take it away. I printed the intro. I've never done that before. Okay. So I warned Eli. Okay. I gave him a heads up. All right. Do we have tissues? We do? All right. All right. Just in case. Okay. All right. Joining us in the studio today is Eli Manning and Drew Scheinman. Drew, I'll do your intro first because Eli's going to take a minute. Drew co-founded BVG, which stands for Brand Velocity Group, in 2019 with Steve Leibowitz and Austin Ramos. BVG is what's called an independent sponsor. It's a fancy way of saying they don't invest

through a traditional fund structure. They raise money on a deal-by-deal basis. Prior to starting that, he was senior vice president of brand ventures at WMEIMG. Can I have some water, please? Thank you. Sorry. Okay. Drew was the chief marketing and revenue officer for the Breeders' Cup, president of Simon Brand Ventures and VP of business development for Madison Square Garden, Coca-Cola, the Baltimore Orioles, and the New York Mets. Drew has helped athletes become business owners and was involved early on with one of my favorite shows from the 90s, MTV's Rock and Jack. I remember that.

How great was that? It was musicians and athletes playing ball together very concept very cool very simple premise yeah athletes wanted to be musicians musicians wanted to be athletes bring them all together in an experience that fans could enjoy there's a clip of that going around last week with a method man uh resurface method man clips playing rock that's great yeah yeah you guys do your research. We love that. Yeah, for sure. All right, and now Eli Manning, New York Giants legend, two-time Super Bowl MVP, future Hall of Famer, deal with it, haters. I will be at Canton when you get in.

Eli's post-quarterback career is off to a great start with the Manning cast and all the investing that you're doing, which we will dive into today. Eli is also a philanthropist supporting Hackensack Medical Center and Tackle Kids Cancer. But for those of you who might not remember or who were too young to see all of it, let me remind you who Eli Manning, the football player, was. Most of these numbers were fairly easy to find, but if anything is like a little bit off that's chachi bt. We could blame that for them All right. Here we go Eli played 236 games for the giants over his 16-year career He started in new york

And he ended here Not the easiest place to play let's say that The only quarterbacks that have played more games with a single franchise are Tom Brady, Brett Favre, and Dan Marino. Maybe you've heard of them. Eli is seventh all-time in completions, yards, and touchdown passes. On the field, Eli was cool as ice and cold as hell. You really put a lot of effort into this.

That's mine. When the game was on the line, you just knew he was going to deliver. I feel like I'm reading my wedding vows here. Eli set an NFL record in 2011 with 15 fourth quarter touchdown passes. That's one ahead of the 14 recorded by Johnny Unitas and some other dude with a giant head that wore number 18 for the Indianapolis Colts.

During his career in the fourth quarter, he's thrown for a total of 75 touchdowns. That's more than Phillip Rivers, Aaron Rodgers, Ben Roethlisberger, Matt Ryan. Eli had 37 games. That's it. I'm almost done. All right, there you go. Eli had 37 game-winning drives.

Can we get to the interview part? 37 game-winning drives. It's 12th all-time, more than Joe Montana. And Eli didn't just put up numbers. He also won championships. In 2008, Tom Brady and the 18-0 New England Patriots were on their way to having arguably the greatest single season in the history of the National Football League until they played my New York football giants and Super Bowl MVP Eli Manning. A few

years later in 2012, the Giants beat the defending Super Bowl champion Green Bay Packers who were 15 and won that season. They went to San Francisco for the NFC championship game in which we won in my favorite non-Super Bowl Eli performance ever. And finally, Eli went on to beat Tom Brady and Bill Belichick for a second time in the Super Bowl in Lucas Oil Stadium, the house that Peyton built, which must have been the cherry on top. He's one of five players in NFL history to win multiple Super Bowl MVPs alongside Tom Brady, Joe Montana, Terry Bradshaw, and Bart Starr. All right, Eli, let me just tell you real quick what you mean to me and why I'm so

excited to have you on today to get to tell you this. 2011 was the hardest year of my life. I was 26 years old, unemployed, lost my mother that summer after a long battle with cancer. Traveling to Green Bay for the divisional round of the playoffs to see you kick the shit out of the Packers was one of the best days of my life. You gave me light when my life was very dark and I love you for that. So thank you. The world has changed a lot for me

since you came into the league in 2004 until you left in 2020. I found a career thanks to Josh. We built a very successful business together. I got married and had two kids. Over that time, you were one of the constants. There was nothing like going to a new season with number 10 at the helm, knowing that we had a chance to compete.

So on behalf of Giants fans everywhere, Eli, thank you for everything. Thank you. Thank you for having me on. Thank you for that great introduction. I might bring you with me everywhere I go. Just introduce me. That was worth the buildup. There was a payoff.

That was good. That was good. You want a minute? No, I'm okay. Honestly, I thought I was going to be in tears, so I'm very proud of myself. We're all very proud of you. Guys, thank you so much for doing this.

This is absolutely amazing for us. We're both lifelong Giant fans. Everyone we know are lifelong Giant fans. And private equity fans too, I guess. We love it. Let's start off with how you guys hooked up and what the mission is and what you're doing together. I'll start it off on how we met. It really started with Drew calling my marketing agent, what, four years ago.

How many times did you have to call? Just once. They knew each other. Dude, rock and jock. They went back in their old days of doing marketing and doing NFL and doing sports. And they knew each other. And Drew was already a partner at BBG and they were acquiring or just acquired a company called Barbecue Guys, which is doing e-commerce, grilling, outdoor living, patio furniture, everything, kind of creating the outdoor lifestyle, kind of building family and experiences around

your outside entertainment. And so they're based out of Louisiana. So Drew called my agent and said, hey, would the Mannings maybe be interested in investing in this company? I know they're from Louisiana. They're all about family and just think that there's a lot of common ground. And sure enough, we did. We liked the deal. We looked at it, invested in it. Eventually, we all, my whole family became brand ambassadors for it, did commercials for it, still doing work for it. And kind of after that, I retired from the NFL and I had gotten to know Drew and Steve and Austin, all the partners. And I said, hey, can I sit in on some of these calls about barbecue guys? Just don't have a whole lot going on.

It's COVID. I'm retired and just want to learn a little bit more about business. And I just appreciate their getting to know them, kind of their views on business, their philosophy around it, around the culture, the importance of that. And so it started there, grew into other, you know, listening on other companies that they're pursuing. And just they said, hey, would you like to kind of do this a little bit more and be a partner? And I said, well, I enjoy, I enjoy working with you. I enjoy the people that I'll be hanging out with and like kind of your way of looking at business and the companies that you want to maybe acquire. It kind of made sense with how I looked at the world and looked at companies and looked at business. So it's been a good two

plus years since I've been a partner. Private equity is traditionally a very sort of sharp elbow type business. There are sharks there, right? Like when I think of private equity, I know he wasn't private. I think of Gordon Gekko, like that type, that type of character. What you guys are doing at BVG is the complete antithesis of how most private equity, you're not even a fund, of how most private equity funds operate. Talk about the genesis of why you're doing it the way that you're doing it. So part of that is, I've been a white space guy my whole career.

I joke often that this is the most massive white space to be a good human being and be a great investor. So great opportunity. We saw an opportunity to disrupt the industry and to bring different values and really care about people, the employees of the companies that we would buy and make a difference and do well by doing good and to really turn the industry upside down, which we've done. Obviously,

getting Eli on board has helped to really amplify our story and our message. But we have to do the work and we have to really say and do what we're going to commit to doing to the companies we buy. You had great timing with the barbecue brand during COVID, a period of time where everyone was reinvesting in what it's like to be at home. And people did furniture and home entertainment systems and just like their own personal space. Everyone became a smoker of meat. Everyone was smoking meat. Everyone was baking. Okay. But it's not an accident that you realized what a great match the Manning family and their whole vibe and ethos would be with that idea. Was it like divine inspiration that just occurred to you like in the middle of the night? Or like what made you realize this is going to work really well? I think the key to talent being involved in

business and brand ventures is authenticity. And what could be more authentic than the Manning family from New Orleans being involved in barbecue guys for all the right reasons? And that was the impetus to take the discussion forward. One thing Eli didn't share when I got introduced to their investment managers, the RIAs, which is who we're talking to here. Of course. The heads up was like, be careful, Drew. These guys are tough mofos. I said, that's awesome because they're actually going to understand the value of a great deal.

And they did. And that's how they advised the Mannings and convinced them with the right. Oh, his advisors are tough. His advice. Well, they better be. Well, they better be. He needs gatekeepers. But then on our side of the world, you want to deal with people who are smart.

I think one of the challenges in dealing with the athlete celebrity world is oftentimes they don't have that expert advice or counsel. And it's all about trust. But that basis and the authenticity is what brought the Manning family to that deal. With private equity, traditionally, you lever it up with debt, right? There's synergies, which just means people get fired, employees are the first to go. What you guys are doing is incredible. For the audience, what are you doing that's – you guys are breaking the mold. So a large part of what we're doing, we're talking to those family-owned companies,

entrepreneurs who built a great company and really care about their employees and care about their legacy and care about their families. So we've turned the model upside down. Most private equity firms, as you talk about, come in, buy companies, cut costs, fire employees. We're investing in employees. We're aligning them with share the gains, which Eli could talk about. But we're changing the model dramatically. But for those CEOs and those family founders, they actually can take a great ride. And as you said, sharp elbows, past experience being on Wall Street, it doesn't have the best reputation.

But in this case, they could take a great ride with great owners. People are going to be collaborative and not intrusive and add so much value from the transaction. So the transaction doesn't have to be what's best for the owner versus what's best for their longtime employees. You guys have a situation where, hey, this is going to work out for everyone. Can you tell us more about how that works? Yeah. And Drew mentioned we have a program called Share the Gains, where we will give 10% of our carried interest to all the employees at the company.

So everybody gets to be a part of the success. And hopefully, that's what it is. We come in and have a great success. One day, we'll sell it. And obviously, we'll make a profit, but everybody should make a profit. That should be a part of a success. I just assume when I got into this world and was learning about private equity, that was the way it was. Hey, if you sell a company, everybody benefits.

When you win a championship in football, it's not just the players and the owners that get the Super Bowl ring. It's people in the equipment room. It's the trainers. It's the cafeteria. Everybody gets to say, hey, we're champions. Hey, look, I got a ring. How cool is this? It's not that way in business and companies, and we want to try to create that.

And this is just one of the ways. And we try to provide coaching to the employees. And there's going to be other ways down the road. We can give them more of the pie. And so we just want to – I think when everyone's working towards that common goal and they understand if I do my job well, if I work my tail off and I make this company better, then I should be rewarded for it. And that's the idea that you can be rewarded for that. Eli, you grew up around money. Your dad was a stockbroker. Your older brother, Cooper, has been in the business, the financial business for a long time. What is it like being a rookie and having to learn the industry, the language?

I mean, I sort of assumed that, like, you know, you were working with them, but you were sort of a figurehead. You're part of the team. You're doing the work. Right. First off, it's the first time my dad has ever been introduced as a stockbroker

ever in the history. Archie Manning also played football. Archie Manning, the stockbroker, world famous. Yeah, he was known just picking the stocks all over. It just sounds funny. But yeah, he was for a little bit after he retired. He got into the, I wouldn't say I was learning a whole lot from my dad from the stockbroking business. But, you know, I think it was always, I always had an interest in business. I always had an interest in learning about a business. How does a business work? How do you start a business?

How do you go public? All those questions I had. But I just didn't have a whole lot of time to pursue these things. Even as a player, when I got to know great friendships and relationships with people in the business world, they had an idea. I was like, hey, I'll put you in touch with my people who look at this stuff and they'll make the decisions. It's not personal. It's not me. I just don't have time to look at it. I got to, you know, get in this playbook and learn what's going on. So I always kind of pushed it off and I would get updates and kind of, you know, hear the cliff notes about things. But

it was when I retired, I said, I really want to dive more into this and just learn. Just learn about businesses, learn about a profit-loss statement, learn about difference between private equity and venture and hedge fund and all these things and kind of feel where I might want to get involved and where I could be impactful to a company and kind of dip my feet in. And like you said, I am a rookie, but I've, you know, coming in, you know, kind of talking with, with Drew and the team about, you know, the diligence behind a company, looking at, uh, you know, past statements and where they think the growth's going to go, how we can save costs where, you know, then going out

there and, and fundraising and trying to sell it to institutional brokers or family offices or high-net-worth individuals. So you're selling a product and selling a company and an idea and selling our company that we're good people and we're going to do a good deal on this. So it's been new, and it's been fun, and it's been challenging at times. I'm in some uncomfortable situations, things I have not done before and trying to figure it out. And I got to kind of know when I, you know, I'm okay saying, you know what? I don't really have the answer to that question. Let me, let Drew answer that question.

I don't, I would not. I don't think anyone's disappointed. Right. Exactly. If you say, hey guys, it's my second year in the industry. Drew is here for the technicals. I think it's one thing we talked about a little bit. It's kind of like a playbook.

Not everybody needs to know the whole playbook. The quarterback does. He's got to know everything, the assignments of the offensive line, receivers, running backs. But the receiver doesn't need to know what the offensive line is doing. And right now, I was thinking about it. I'm basically the kicker. I don't know what anyone's doing.

I know how to kick the ball, and that's it. And eventually, I want to grow to maybe being a long snapper or something. A big part of getting Eli involved in private equity is part of a strategy because most athletes, as you probably know, are involved in venture. I like to joke, like, they want to create the next three unicorns because one unicorn is not enough. So seeing private equity as an asset class where you're buying companies that are making money.

Our typical threshold is companies with $10 million more EBITDA. So real companies. Real companies. So the athletes are now seeing what Eli's doing and seeing the value of that. And based on deals we've done, we've brought a number of other athletes in as investors because they want to evolve. Like Carmelo Anthony was an investor with us with their score sports uniform company. It was his first investment in private equity, which was great to get him, educate him, transition that over. And part of that was Eli's leadership to

help others understand what private equity is all about. I hadn't really thought about that, but now that you say it out loud, most of the athletes that you hear about involved in deals, very successful deals, they tend to be Bay Area. I think the venture guys got to them first and showed them all the potential of those types of deals. And you hear about the successful ones. Yeah. You don't hear about the companies that make it, of course.

And there are more of those than the- The percentage of private equity is higher. What is it about private equity, about venture, about the deal structure of it? Maybe it's excitement. What do you think it is that attracts athletes to the space? Well, I think for me, I think with private equity is that, you know, you get the opportunity, at least with us, we're, like we said, we're independent sponsors. We're doing kind of one deal at a time.

We're finding a company. We're acquiring it. Then we go raise the money for it. And for me— These SPVs? SPVs, yeah. So do you try to raise the money based on what type of investor might be interested in that specific company?

Yes. So that's very smart. It's very curated, exactly, to your point. Okay. So you have the right investors in the right deals. Not just money, but people that can help. Got it. And obviously, Drew talked about Score Sports.

It's a youth sports apparel uniform business. So, we got athletes, but they are writing real checks, but they can also introduce us to different people from their world, whether it's youth soccer, whether it's basketball leagues, or camps, or church leagues, different people in these social connections. Yes. And they can benefit from it. They make introductions. They can kind of earn some more equity possibly through their connections and helping the company grow. And so I think that's the idea about it. But for me, it made sense just from a marketing standpoint. I've endorsed a lot of companies.

It's kind of the same thing, except now you have ownership in the company. But hey, you got to sell it to people. You got to, we got to grow it. And, and when I did a marketing campaign, technically it didn't matter whether the campaign did well, or we sold more of a certain product or not. Um, but now it does like you're, you're kind of truly invested in it. And so it's a little, I think easier to sell something when it's an effect, um, you know, kind of how, how you're going to do on this deal. Well, now it's more like the rest of your career. Now it's like skin in the game. Like you're on a team and it's not just like, here's my time for shooting the commercial. Now it's like, I know the founder of this business. I know who the employees and I really want this

to work for the investors. Exactly. And that's, okay. So Eli, are you, are you actively, um, raising money for these deals? Like where do you fit into the BVG family? Yeah. Everywhere. He's all in. Yeah. Just, uh, from, from athletes that might, might be it to team owners to this people I've met from golf to anything that, you know, I think that was like kind of the uncomfortable part at first. Like I've never asked anyone for money. I've never said, hey, you should invest in this deal. I've never, you know, I've said, hey, you should drink

or you should eat Quaker oats. Like I've done it at a commercial. It's a little different saying, hey, eat, you know, eat a bowl of this rather than, yeah, give me a check for a couple hundred thousand dollars, you know, trust in this. And so I think I just had to understand kind of like how people have come to me before. Say, hey, I got this great deal. I just say just had to understand kind of like how people have come

to me before and say, hey, I got this great deal. I just say, all right, talk to my team. If you can convince them, then we'll do it. It's like nothing personal. So same thing. Some people said yes. Some people put us in touch with the right people. Some people said no. But a lot of them afterwards say, hey, we passed on this one, but we like to see the deal flow. Keep things coming. We want to see your next deal. And some said yes and like it and you have opportunities. So you're just, you know, growing that relationship and that friendship and getting more comfortable doing something that you're doing for the first time. You probably have to act as a little bit of a gatekeeper also so that his time doesn't get wasted. This is probably a lot of people that

maybe they're serious, maybe they're not, but they would just love to take the meeting because it's Eli. So how do you think about making sure he's accessible but not too accessible? Eli is insanely excellent at managing his time with all the things he has going on. The best time management skills I've seen of any executive I've ever – That's my kryptonite. I'm like the worst at that on earth. Every engagement, I give credit, I think, to his mom, to Olivia, because she managed the kids and the family at Archie, the stockbroker.

I mean, I made the football player. So that's a big part of it. But I will say as a partner, and we take partnership very seriously, he's all in. He's never not been involved in a meeting that we request or we say it's important and of course he's still on coughlin time i can't believe you didn't bring that up because he was here before you guys were you know that right showed up at the meeting so he's always showing up but i think it's it's a great point because we're very careful about how do we utilize eli for the right benefits you know 20 minutes early or late well so that's five but it's

coughlin was five and i was always kind of five minutes before the five minutes. Was he like among the most influential people in your professional career? 100%. Like outside of your family members, like who else would you throw into that category? I mean, that's the great thing about being an athlete.

You have great coaches that can really mold you and teach you just how to prepare, how to get ready, how to be mentally strong. So David Cutcliffe was my coach at Ole Miss for five years. And a huge impact for someone when you're 18 to 22, 23 years old. And his big deal was do the common things uncommonly well. So really paying attention to the small details and every little thing you do.

Make sure you do those small things better than anybody in the world. And then the big things will come. And, and so that was his approach. And then Tom Coughlin, you know, my head coach for, for, for 12 years, I'm 23 years old. I come in, I'm a rookie, I'm a baby. And when he leaves, I'm 35 years old. I have three kids, you know, become like a grown man and, and, you know, with him for every day for basically nine months out of the year and his impact just on preparation. He talked a lot about if he had four hours to cut down a

tree, the first three hours he's sharpening the ax. And that's his mindset. You don't win games on Sunday. You win it Monday through Saturday in your preparation, in your work, in your commitment to details. And then you go out there and you just react to what's going on. You trust in your training. You trust in the work. Michael believes in that. Look, this is the compliment of fact. But that's it.

Preparation, right? He had it. He obviously practiced it, you know, so the tears didn't come out. Got the tears out of my system. Yeah, you got them out of the system. You knew what to expect. But I'd love to go back to your great question because, you know, private equity is insanely competitive. Last I checked, we have a world-class competitor. We're

all very competitive. We like to win. So competition doesn't scare us. So private equity, success of private equity is all about the quality of the deals, quality of the companies you can acquire. Because if you find the right company, the capital is there. So Eli is an integral part of sourcing companies as we're pitching new companies, coming to the table for the right reasons to show how authentic we are and how committed we are to being different. And that's how you win at the end of the day. I know this community that we're talking to, there's a lot of deal flow out there.

And we love to engage in an opportunity to see more of that for the right reasons. I have a great deal. We'll talk after the show. Yeah, there we go. I'm curious, why that way instead of, why not raise money for a fund where you don't have to sell individual deals to investors, you don't have to call and get rejected? And now show me the next one. Like, why do it that way?

I think at the right time, we will pursue that, but it's not the right time for us today. And it's very, and the other part about back to the community of bringing deals to us, being an independent sponsor, you could be very entrepreneurial. And by our nature, we are entrepreneurs. We started out with nothing and here we are today with great success. So that's very enticing. And I could say in my network, a lot of people have come to me and said, hey, Drew, we now know somebody we like and we trust in private equity. Here's two deals and how they could participate in the economics, obviously all above board with compliance approval.

But that's highly motivating for where we are today. At the right time down the road, we may pursue a fund. From the seller's perspective, and I don't know this, so I'd be curious. It almost feels like that would be a more alluring offer if the private equity firm is coming to me and saying, we're not just throwing you into a fund. This is something really specific that we're going to do. We're going to bring in the right investors. We're going to structure this and custom tailor it to your business and your business's future. To me, that sounds like you would almost have an edge versus, I don't know, like a $10 billion fund.

No question. Okay. You sound like you're more than a kicker, by the way. You've advanced from Eli's kicking. Yeah, yeah, yeah. I mean, I've been around for a little bit. Yeah. But I don't know private equity well at all.

No, you don't exceptionally well. That's what drew me a little bit to BBG is that it wasn't a fund. And so like a fund, you're not forced to, hey, we got to put money out. We got to spend this money. We have it. And you might do a deal that's maybe not the perfect deal. It's not a great deal. With us, we can be very patient in the fact that, hey, we're going to look for the right deals.

We don't have to do a bad deal. We need to. We're a small fund. We're kind of getting our feet wet. We're new to this in the sense of we don't have tons of deals out there. We need to get these right. They need to be good deals for us. And so that's what drew me to it is that, you know, you're being selective on making sure we're doing good deals. How do you guys feel about exits? Like what's your, what are you telling investors for a new deal in terms of how much time?

How badly do you need the capital markets to be in good shape? Or any of these potential IPO candidates? I'm just curious how you think about that. They're all good considerations. So you have to think through very carefully. A typical private equity is three to five years. So we're no different than that today. Now, with our share of the gains program over time,

we may evolve and have greater flexibility with the right type of investors and LPs to extend that out, right? If you want to and have that flexibility, it might make sense to do that. Okay. There's been just an enormous surge in athletes building brands,

becoming business people. The lines are really starting to blur between what Draymond's like still playing and he's doing the podcast and he's on TNT and he's doing all sorts of other shit at the same time. Where do you see this trend going?

Like, is there sort of like an oversaturation coming? How much can we take of all of these people having their own brands and their own businesses? How much room is there? I guess is what I'm saying.

Yeah, I mean, it's definitely changed over the last, you know, 15 years. I guess, is what I'm saying. Yeah, I mean, it's definitely changed over the last 15 years. I mean, when I was still playing or early on in my career, you really didn't talk about anything besides football. You didn't talk around in the locker room much. You didn't talk about deals. You weren't going on podcasts or going on shows

or doing interviews about anything financial. It was like, don't talk about that. You don't want anyone to think you care about anything else besides football. And I told a story about an off-season going back and had an offensive lineman. I asked where he was training for the off-season. He said, well, I'm kind of just did a lot of work, got my real estate license, preparing for life after football. And after a few weeks of practice, I was like, hey, if you don't start blocking better, you're going to be doing that real estate thing full time. And sure enough, he was like,

so that was the mindset. Like, you know, if you weren't all in, then, then you were gone. This is such a short life to be a professional athlete. And obviously there's the ones that have been doing it for a long time at the top of the game. And, and you know, there's just so much more exposure. You hear about these deals of guys invested early in a company. And so word gets out. Other athletes hear that and they're saying to their financial advisors, hey, I want to get in some deals. Like I want to get in, you know, some of these early deals, which can be dangerous. But I think, you know, the contracts are getting bigger.

They have money to spend. Hopefully they're spinning it the right way. They are investing it. They are putting it out there to invest. I think that's the positive thing. That's a good thing. But, you know, like you said, a lot of these athletes are, they are, yeah, they're on their own podcast or doing shows or they're out there. And that's just kind of the way the world goes with social media, with everything, everything you do is, is kind of to be seen or it can be seen. And so you just want to make sure the things you're putting out there are worthy to be seen.

And we want to help. From my experience starting Talent Brand Ventures at Endeavor and then now being partners with Eli and what we're doing, Private Equity, we've seen the world from a very unique vantage point. And we work with a lot of talent across different deals. But we want to help the RIA community and those that are involved in that because I think we have great experience and wisdom and have learned a lot of talent across different deals, but we want to help the RIA community and those that are involved in that because I think we have great experience and wisdom and have learned a lot. And that correction, I think, is critical to your point. There's so much going on. The correction is the path to the future. And part of that is the education and the different mindset of those people on the other side who we go to help make those deals. they have to learn. And we're here to help educate them.

We'll let you guys get out of here soon. But before we do, Eli, you were pretty tight-lipped as the quarterback of the New York Giants. And there was always stories from your teammates. Eli's hilarious. He's a prankster. He's got a personality. Now the world is seeing it with the Manicast

and everything else you're doing. What was that like being so, I mean, I know you, just being so guarded in front of the media for all those years. I think he just, you know, for me, I think I, that was a play that I thought I had to, I had to make just being in New York. You have so many, uh, papers and TVs and stations talking about the giants. And I'm talking about New York where if you, if you say something and all of a sudden, you know, someone's going to say, well, he's a goofball, or he's not serious, or he's not focused. Like, I mean, they're all competing against each other. They're all looking for one little story, one little thing that hit that's different from what the other people are saying. And so I was

very, you know, conscious of that, of not giving them anything that they could, you know, say I wasn't committed to doing my job and playing quarterback for the New York Giants. And that was my number one focus. I didn't want to give anyone opportunity to say anything differently. And so I think it was when I did retire and I said, well, I don't really have to worry about it anymore. I don't have to worry about someone saying I'm not focused or not serious about what I'm doing. I'm on a show where I sit on my couch and watch football and make fun of my brother's forehead. It's not that serious a job. Obviously, we're doing business, and it's fun. I get to be around good people. I get to learn

about businesses. Every meeting that I sit in with Drew and the team, and we're looking at a company, I'm like, I'm learning something new, a new word. You know, the first one was EBITDA. Now it's GARP. Growth at a reasonable price. That's my favorite. A big GARP guy. Just throwing that out left and right in the streets. Yeah.

Just like, hey, how's your GARP game? Strong to quite strong. Are y'all doing a lot of GARP? You're looking at a lot of GARP companies? We're all about GARP. Yeah, all about GARP. Where did Chad's powers come from? Chad just came, you know, was doing a show.

Think fast, run fast. Yeah, think fast Gar. Yeah, where did Chad's powers come from? Chad just came, you know, was doing a show. Think Fast, Run Fast. Yeah, Think Fast, Run Fast. Doing a show for ESPN on places, kind of doing a history of college football. And we said we wanted to try out, go undercover and try out. Penn State does these two open tryouts still for people to walk on, or they call them run-ons. And so we called Coach coach franklin and said hey can we try out and went undercover and and and did it and just started you know amazing just

started making up stuff and think fast run fat i don't know what that means that means nothing i don't you know never never said that in my life it was just i felt like i had to talk i had to say something there by myself i'm mic'd up you know to me. How many people told you after that that has to be a show? Like everybody, right? Yeah, heard it. Now it is. I mean, it's just. And Glenn Powers.

Yeah, it's got, yeah. Are you guys involved? Are you guys paid in producing that? Omaha is involved, and I'm an executive producer. But I've sat with, you know, sat with, you know, as they're writing the scripts and just talked about what, you know, what a locker room's like or what's going on, what would happen. And so, you know, obviously they're writing the scripts and it's talked about what, you know, what a locker room's like or what's, what's going on, what would happen. And so, you know, obviously they're much better at it. And I think they, you know, they chose Glenn Powell just because we have

similar bodies, obviously. It's made, made a lot of sense, but I've gotten to know Glenn and talked to him. We're kind of go back and forth. I gave him some hard time about one of the early times we were on a, on a zoom together, you know, kind of, you know, talking about this. I said, well, one of the early times we were on a Zoom together, you know, kind of talking about this. I said, well, Glenn, I did see you throw a pass in Maverick. And you're like, we need a lot of help. You know, we're going to have to go to some camps.

We're going to have to really put in the effort. He's like, if you didn't know how much baby oil was on these balls, they were all lubed up for that beach scene. They did the beach scene. Yeah, he's throwing the balls. It was like a repeat of the volleyball. It was a callback. Exactly. So having fun with it.

But yeah, the fact that there's a, a show, a scripted series being made after a, a character that I, you know, came up with is, is like mind blowing.

I would never imagine that or assume that or guess that in my entire life. Do you have a strong opinion about two, two things that have just started really since you stopped playing? But I think they have a big impact or they will. Do you have a strong opinion on name image likeness for college athletes and sports betting? And I think it's supporting the game right now. I don't think it's really crossed over into any negative outcomes. But how do you think about those two things, which you really didn't have to deal with while you were playing?

I'm okay with NIL. I'm fine with college players earning some money. They are in a business. It's a big money business of college sports and TV, and so I'm fine with them getting something. I don't think you should be paying high school guys to come to that school. I kind of feel weird about that. I think it's like once you're in college and you become the starter and you're playing like, Hey, you know, if the guy wants to do an endorsement deal or a guy gets some money or everybody's getting the same amount, I think they should be getting something. But like, I think there's no loyalty to your school anymore. You're not

going to a school because, Hey, I love this offensive coordinator. I've felt like if I'd never played a down of football in my life, this is to be the school I go to. I love the campus. I love the people, the atmosphere. That's not in consideration anymore. It's all about, oh, they're paying me $50,000 more, so I'm going to go here. And then that's why they're not happy after a year and they transfer. And now you can transfer so easily, which I don't like that idea. I think you should go back to the old way where if you transfer, you should have to sit out right away.

I think that will put more thought process into where you're going to school. Make sure you're going to the right spot. Are you fine sitting two years? I used to be fine. I sat two years, and then you played three years. These kids don't want to do that anymore. I think I'm okay with it, but they got to they got to hone in a little bit. It's you can't create the Wild Wild West, which it is right now. And I think the sports betting has been going on

forever. And I'm fine. I'm fine with that as well. And I think just like fantasy football, I think has made the game of football and all sports more popular. You're getting to know the players. You're getting to know the whole league and not just your favorite team. I think with sports betting, you're watching more games. You're watching all sorts of football to basketball to any sports. And if you want to throw a wager on it and do your homework and study on it, then I'm fine with that as well. Would you guys do deals in that space if they came to you?

With the right kind of deals, we'd consider it, for sure. Because both of them seem like they would make sense. If the right level of growth of the company and the right opportunity to continue to grow and evolve, we'd look at that. So I know we have them for a finite time. No, I'm good. Drew, thank you for coming.

This was amazing. Eli, thank you so much for coming. This was really a thrill for thank you so much for coming. This was really a thrill for me. You guys are amazing. I love the story. And we will follow your career with great interest, as they say. Perfect.

I'll see you in Kedden. Thank you. Thank you so much. Guys, thank you so much. You can introduce me. Thank you. All right. Thanks, everyone, for listening. Very special guests.

Drew, thank you so much. Very special guest. Eli, you guys have been amazing. We appreciate it. All right. That's it from us, guys. Thank you so much. Very special guest, Eli. You guys have been amazing. We appreciate it. All right, that's it from us, guys. Thanks for listening. We'll talk to you soon. Thank you, guys.

That was great. Thank you. Good job. Thank you. I think we're going to do it one more time just to make sure. Exactly. So I want to hear that again. We weren't recording.

What's that? You're opening. Oh, I mean, I can't believe I didn't cry. Does Eli get to keep that? I can't believe I didn't cry. Did you like it to keep that? I can't believe I didn't cry. All right. all right. Ladies and gentlemen, welcome to the world famous Compound and Friends flagship show, What Are Your Thoughts? I think I'm saying that right.

I don't even know what's going on anymore. Guys, it's Tuesday night. It's 5 o'clock. So you know what that means. It's an all-new edition of What Are Your Thoughts with myself, downtown Josh Brown, and my co-host, Michael Batnick. Michael, say hello to everyone. Hello. Hey, something really magical happened over the last day or so. The comments about Michael Batnick went like uniformly positive. went like uniformly positive.

People just fell in love with the way you introduced Eli Manning and tied it into like your personal story. And people just can't get enough. They love it. I think you're going to have to do that for every guest from now on. Can you muster that much emotion for our next few podcast guests? You know what? This is too much sharing for Eli, but it's bigger than sports, Josh. I remember being in front of my house in 2005, the second time I got kicked out of college, sitting in my dad's car, crying tears of failure and humiliation.

dad's car crying tears of failure and humiliation. And on Sunday, when my dad was in my office standing right here, reading that letter and crying tears of joy, it was very, very emotional for me. Yeah. And Eli was like, so it's as much about me as it is about Eli. No, but listen, everyone has that thing in their life. For some people, it's a book that they read at a really important juncture in their life. For some people, it's a sports hero. For other people, it's an album that they listen to on repeat. That's a thing. So this was your thing. That's my guy.

This was so cool. But the fans really picked up on that. And you didn't cry. You held it together. But it sounds like a lot of other people had a tear in their eye watching you get to tell him that stuff. I love it. Very special for me. That's like a top five moment in compound history for sure.

So congratulations and really, really great job emceeing that interview. All right. Hey, everybody. It's a big show tonight. And I want to let you know that we are sponsored by Rocket Money. Rocket Money is a really cool app. It saves you money. It brings sanity to your life.

It's a personal finance app that finds and cancels your unwanted subscriptions. It monitors your spending, and it helps you lower your bills so that you can grow your savings. Michael, what else am I missing here? I love this thing. So every week it tells me how much I spent compared to the prior week. Every time I get a refund, it says refund detected. Every time my wife is spending money on something, it says large transactions detected. And I say, hey, what's this? And she goes, how did you know? Rocket money. That's how I know. I'm a sleuth. That's cool. Rocket money has over 5 million users,

has saved people a total of 500 million in canceled subscriptions. I love it. Yeah. I really do. So here's how you find out more. RocketMoney.com slash compound. Stop wasting money on things you don't use. RocketMoney.com slash compound.

All right. Do you read the Berkshire annual letter like everyone else working in finance yeehaw okay what what uh what what was your like your maybe not takeaways but like your general impression i thought he uh i thought he rose to the occasion this is the first one obviously since charlie munger passed away and it starts with a full page encomium for his best friend slash lifelong business partner. And I thought it was beautiful. He didn't go over the top. He didn't write 400 pages. But he said, the way he phrased it was, Charlie's the architect of Berkshire.

I am the general contractor. And Charlie was content to let me spend most of the time in the spotlight. But really, I was just acting on his orders. I thought that was really, you're going to say that someday about me. That's like our relationship. Yeah, exactly like that. No, but I thought that was like a really nice way to phrase it and in a very succinct tribute. I thought that, yeah, the tribute to Charlie was great. The thing that I love about reading Warren Buffett is he says the same damn thing every year. And he's been saying the same thing every year since 1950, which is buy good businesses, wait, don't bet against America. It's very simple. And I love the reminder of that because 24 hours after reading it, I always forget.

reminder of that because 24 hours after reading it, I always forget. So every 365 days I get to remind myself of why he's Warren Buffett and I'm a bald idiot. He, uh, he, I thought, I thought did a nice job of like in, in one paragraph explaining the influence that Charlie Munger had on him, where like he was, so he said, I bought Berkshire Hathaway. Charlie Munger said it was a terrible decision because at that time, Warren was still under the sway of his earliest mentor, Ben Graham. You can almost say the spell. Fine, we could say that. And what he was looking for were companies

like Berkshire Hathaway, which were terrible companies, but at such great prices that it didn't matter how bad they were. And that was Buffett's investment strategy. And Charlie talked him out of it and said, look, that works on a small scale. Ben Graham was operating during the depression and he's like a university professor. That doesn't work running an investment partnership or a public company insurance business. You really can't scale that because there are not enough pieces of shit to buy that are going to survive.

So being talked into, how about this? Let's buy amazing businesses and it doesn't have to be the cheapest price. It could just be a good enough price. And that was an unlock for a young Warren Buffett. And that, if you look at their most successful investments ever, they're mostly in that group of companies and it's not, uh, you know, horrible businesses bought at perfect prices. So I thought he did a really good job bringing that idea back to the forefront

for people that have never read a Berkshire letter before. One thing that I think as a reader of Buffett's letters, like one thing that stands out is integrity, which is obviously lacking in this business. In the late 50s, when did he close his partnership? Was it late 60s? I think it was the early 60s because the first Berkshire Hathaway letter that he ghost wrote for the CEO was 1965, I think. All right. So whatever it was, he wound up the partnership because he didn't think that the conditions were favorable for him to be able to earn the type of returns that he was used to

delivering for shareholders. And nobody does it. Everybody rides the fees and rides it out, but he returned their money. He gave them a few options, told them that he would help them. And he did that. And most recently now he's 93, he's obviously made tens of billions of dollars, but nevertheless, nobody talks like this. And this is what I mean. He said, just in terms of setting expectations, he said, Berkshire should do a bit better than the average American corporation and more important, should also operate with materially less risk of permanent loss of capital. Anything beyond quote, slightly better though, is wishful thinking. This modest aspiration wasn't the case when Bertie, that's his sister, went all in on Berkshire, but it is now. Nobody talks like that.

He's like, listen, if you think that I'm going to be able to do going forward what I did in the past, you're delulu. It's not going to happen. Here's why. Nobody is in a position where they're managing money the way that he is. So he's not charging an investment management fee. So he doesn't have the incentive to convince people to stick around. If somebody wants to sell Berkshire stock, that's not a person that's paying him a fee,

and they have to find another buyer to take it from them. So he has permanent capital. So it's hard to talk that way. Let's say you manage a $10 billion hedge fund, which is huge still in this day and age, and your specialty is small caps. You obviously can't do the same type of investing in small caps at $10 billion that you could do at $100 million. There's just no chance. You need much bigger market cap stocks to play in, and you're probably giving up a lot of alpha. But here's the problem.

to play in and you're probably giving up a lot of alpha, but here's the problem. You're charging 2% in management fee and you need to charge that because you hired all these great analysts. So you're surrounded by talented people and they have to get paid. So that's why nobody else talks that way. Because if you were that $10 billion fund manager and you start telling people, hey, expect much lower returns, they're going to pull their money out. And then you have to start firing the talent that you've amassed, which will then affect the performance of the fund no matter how much it shrinks to.

So it's almost like there's a Rubicon in hedge fund management. And for different categories of hedge fund, it's at different levels. But Buffett is not a hedge fund management. And for different categories of hedge fund, it's at different levels, but Buffett is not a hedge fund. So he doesn't have that constraint where he needs to be able to charge enough to pay all these people. It's just not the way that he structured. And, you know, other people have figured this out. That's why so many hedge funds have set up overseas insurance subsidiaries, because they would love to have a property casualty insurer because they would love to have a property casualty insurer throwing money into an investable pot the way that he does. He just beat everybody to the punch and figured this out 50 years ago.

And that is, I think, one of the main sources of their enduring advantage. But still, at this size, they have $163 billion in cash. Is that the number? Something like that, yeah. It's a lot. It's a lot. So size has really become the enemy of what they could realistically do at this point. He said that just in terms of their size,

like them versus the rest of the S&P 500, they occupy 6% of the universe in which they operate. So he said there remain only a handful of companies in this country capable of truly moving the needle at Berkshire. And they have been endlessly picked over by us and by others. Some we can value, some we can't. And if we can, they have to be attractively priced. He's just not going to have, everyone's saying like the cash pile, the cash pile, when is he going to pull the trigger? What's he going to buy? There are very few companies, as he just said, they're all fairly valued for the most part.

Yeah. He's not going to quote unquote, pull the trigger because the elephant gun is now even too big to shoot an elephant. It's like, honestly, at this point, it's like an anti-tank. The target that you would fire at with that amount of money, I mean, what could you buy? Well, he could have during COVID if he were not involved in the airlines and all that stuff. If there were a 30% decline in four weeks that wasn't caused by all those sort of reasons, he'll buy something. He just couldn't back then. Dave Wilson saying, buy Visa or MasterCard.

Do you know how big those market caps are, Dave? Visa's what, $600 billion at this point? It doesn't matter. He's the largest shareholder in America Express. That in no way helps. I was on with Eamon Javers. He was doing the 7 o'clock CNBC show on Friday night, the night before the filing came out. And we were just joking around, like, what would he buy? I was saying Amazon, but he was trimming Amazon as recently as last summer. So that's not the secret stock. In Barron's, Andrew Barry said he thinks it's a financial because even though the secret stock that he's accumulating is hidden, they updated to say that their exposure to the financial sector is up by a billion dollars. So then it's like, well, which financial?

And Barry guessed BlackRock and two others, I forget. I don't know. You know what he could buy? It's $100 billion market cap. I don't know what the enterprise value is. Knowing nothing about this company, I'm just throwing out a name. Deere.

Trades for 12 times forward earnings. Yeah. I mean, certainly. I don't know if he wants that much cyclical exposure to agriculture per se. Oh, no, it was interesting. Did you read what he wrote about- He's invested in Deere before. Yeah, he has. He sold it. You know what? Did you see what he wrote about utilities? No. Maybe, I forgot. Just how much the environment has changed and how they're cheap for a reason and how regulation is really just doing a ton of damage. I thought that was really interesting. Yeah. And he's obviously one of the biggest utilities in the country. I mean, Berkshire Energy has, I don't know, the mid-American energy might be the biggest utility in the country, I think.

Or it's number two or whatever. One thing that I thought about was just what a great job they've done on succession. For 10 years, people said the biggest risk to Berkshire is when Warren or Charlie pass away. The stock will instantly sell off. This stock, Charlie Munger passed away and the stock went vertically higher. I don't think related to that. I think it's just a great time to be in the insurance business right now for a variety of reasons. And so it's a terrible time to be buying insurance. It's a great job to be in the insurance business.

So obviously that thesis did not play out. And actually, Berkshire Hathaway got to the point where it had an RSI of 83, which Sean and our research team pointed out has only happened four times total, including this one since 1995. So not only did the death of Charlie Munger not sink the stock, it actually never rallied harder, which is pretty remarkable. What does this statement mean? Berkshire now has by far the largest gap net worth recorded by any American business.

What do they mean by that? You know, I read that. It's funny you mentioned that. I read that five times. I was like, I've never heard of gap net worth. I don't know. Is it just assets minus liabilities? I'm not sure what it is.

Is it just book value? I don't know. He's saying record operating income in a strong stock market led to a year-end figure of $561 billion. The total gap net worth for the other 499 S&P companies was $8.9 trillion. By this measure, Berkshire now occupies 6% of the universe at which it operates. So that's not market cap, obviously.

No, it's net worth. Yeah. He's saying the net worth of Berkshire is equal to 6% of all of American business, or 6% of the whole S&P 500. So that's sort of interesting. That's sort of interesting. That's sort of interesting. All right. I know we're going to talk a lot more about Berkshire Hathaway later this week with a very special guest.

So I don't want to step on the content. We'll just tell people to tune into the compound on Friends on Friday. And you are in for a treat. What's next? All right. Let's stick with goats. Friday and you are in for a treat. What's next? All right, let's stick with goats. Every time we talk about Druckenmiller being bearish on TV or any of these guys, we always make the case that, yeah, but he could change his mind tomorrow. Like literally.

Every time. Yeah. And also what he says does not necessarily have to be congruous, believe it or not, with how he's invested. He could think something, but also respect that the market is doing whatever it's doing. That might not be in line with what he's saying publicly. Not that he's trying to mislead people, but the point is, watch what they do, not what they're saying. Of course, unfortunately, you can't watch what they do, at least in real time. So Brandon Bailo at Market Plunger 1 tweeted, Stanley Druckenmiller's latest 13F just goes to show how much of a goat he is.

Bailo at Market Plunger 1 tweeted, Stanley Druckenmiller's latest 13F just goes to show how much of a goat he is. The dude preached recession and hard landing, but somehow owned both NVIDIA and Eli Lilly in size and killed it. We are not worthy. Yeah. Yeah. So this is what this should tell you. If you're still listening to these dumb who are trying to scare you out of your retirement portfolio by telling you what Druckenmiller just said on Bloomberg television. Maybe you need to rethink your sensitivity to the financial media and how much shit you're watching because it just might not be for you. I think an adult can watch somebody like Stanley Druckenmiller and say, OK, wow, I don't love how negative he sounds.

And I know how amazing he is as a trader. But it's also possible that the things he's saying either don't come true or that he changes his own mind. And maybe I won't react. The problem with prolonged exposure to, quote unquote, Druckenmiller content is it's a guy with strong opinions and he delivers them really well and he could scare the shit out of you. Look, I had to learn this. I went to the Iris Zone Conference in 2010. That's 14 years ago. I sat in the audience at – they do it in the Opera House on the west side of Manhattan.

What is that called? Lincoln Center. The David Geffen Theater in Lincoln Center. I sat in the audience, one of, I don't know, 4,000 people. Most of the people there are like hedge fund marketers, but whatever. I'm in the audience. I'm live blogging it. The post is probably still up. He was fire and brimstone for 40 minutes. He had slides. Here's why America as we know it is coming to an end and the stock market is probably going to get cut in half very soon, just like it did in 2008 and blah, blah, blah. And like none of it, none of it came

true. I doubt he was invested that way. I think he just was like doing, like doing his thing. None of almost anything he said over the last decade plus has come true. And yet I'm sure he's done just fine. Better than just fine. That's my point. A year later, I was back at Lincoln Center. Or two years later, 2012, none of the shit he predicted happened. Everything was fine. Like there was a debt crisis in Europe. Okay. Everyone understood that.

By 2012, markets are recovering. He's back on stage. He's got a whole other story. Nobody holds it against him. He's a deep thinker. Guy's a deep market thinker. He's entitled a whole other story. Nobody holds it against him. He's a deep thinker. Guy's a market guy's a deep market thinker. He's entitled to have opinions. You are entitled not to react every time he gets on TV.

Is, is Druck the anti Buffett? Like, you know, the bear, like the, the bears just hate Buffett and the bulls love him. Druck's the guy that the bears really love druk is the macro goat i've never met druk i actually don't have the right to refer to him that way stanley druk and miller is the macro goat there and some of the greatest trades of all time um but and track record and track record his so he was in he was in uh market wizards and i forget exactly what it was

but i think he's never had two down months in a row never had a down quarter something beat just beyond absurd yeah like absurd but the bears love but the bears really love him like like is he the buffett of the bears even if he's not always bearish he's the macro buffett he's the macro buff okay so that must really piss off like his acolytes who are like trying to short the market every, every month when they see that he's long Nvidia and Eli Lilly, which is a trader. It's a kryptonite to, to, you know, the bear case to have stocks doing that. They, they look at those stocks, like two massive bubbles and he's riding them long. They must, they must feel betrayed. I think the thing, the thing that Druckenmiller has spoken

about publicly that's so impressive is how much he knows himself. And when you're trading, when you're investing, it's not just about you versus the market. It's about you versus yourself. So he spoke about how if he was cold, he would just sell everything, start from a clean slate, which makes a lot of sense, but it's really difficult to do. When he would get back into the market, he would do it slowly, put a fishing line in the water, not jump all the way back in headfirst. He's just an incredibly impressive trader. So he would never stand in front of an audience and say, hey guys, you should all trade the way I trade. Like you should change your opinion three times in one day and be leveraged long, then leveraged short,

then finish the day leveraged long. He would never advocate that style of investing to the general public because he's a bright guy and he understands that most people cannot do what he does. But the media doesn't care when they get a hold of him and they get him talking, they present it like Stanley Druckenmiller with a warning for investors. It's like, don't do that.

Because people can't control themselves and they don't know better. They don't understand what's really going on. This is a macro hedge fund manager who, by the way, is in retirement, just talking about how he feels in this moment, not giving financial advice to people saving for retirement. And I totally understand it. The media cannot help themselves. They always have to go that next step. And here's why you need to pay attention because it's a, it's a, it's

an engagement game. And I guess I understand it, but that's not his fault at all. He's not the one presenting his views that way. What's this 10 biggest single day market cap gains? Um, on Thursday after NVIDIA reported earnings, they gained a $247 billion in market cap. Not a bad day. If I didn't own it, I would be the biggest NVIDIA hater on the planet. Are there 20 companies that size?

I don't know, something like that? This is so stupid. All right. I guess it'll continue until they miss earnings. And guess what? It's still trading great. Unbelievable. I'm not giving anything back. The stock will go up $240 billion every time they report an earnings beat until they don't.

And I guess it'll take the elevator down. All right. Speaking of watch what they do, I just wanted to throw this in here. Insider selling is becoming a story. And I don't blame the insiders for selling. Stocks arely. Uh, but some pretty notable people at some pretty big companies are unabashedly taking chips off the table. Uh, Jeff Bezos sold 50 million shares of Amazon over the course of nine trading days this month. That's 8.5 billion for those of you playing at home. And I understand relative to his stake, that's not that much money, but it's like a lot of money.

And he has a new, you know, a fancy new wife, and she definitely knows how to spend, but this is not that. This is not covering her Rodeo Drive bills. That's not what's going on here. This is something else. Mark Zuckerberg sold 1.8 million shares of Meta for $400 million in the last two months of last year. JP Morgan's Jamie Dimon just sold 822,000 shares of JP Morgan this month.

That's about $150 million. Dimon is not worth $80 billion. Like, that's like serious money for him personally. He has not sold a lot of stock historically. It's his first sales of J.P. Morgan in the entire 18-year period that he was the CEO. So, and the stock's at an all-time high. So, just, you know, just file that away. Zuckerberg hadn't sold Meta for almost two years prior to these sales. Wow. Good for him.

Unbelievable. Bezos was selling less than $3 billion a year prior to 2019. Now it's $3 billion in four days in 2020. And now, Sean writes, that's triple in the last nine days. So these are meaningful sellers in my view. And there's a lot of other sales, but these are just like some of the big marquee names. So I thought that was worth pointing out. Sean mentions these are conducted under trading plans. These aren't shocks. These trading plans get announced in advance. And it's a way that insiders could

sell without people looking and saying, oh, what do they know that's coming? You know what I mean? But still, the amounts are big. I wanted to ask you about recruiting loans. Did you ever fully understand how this stuff works? The wire houses, recruiting advisors, and how they record it as debt. Did you fully understand that stuff? That part, no. Honestly, that part was new to me. I thought that was interesting. It makes a ton of sense. So this is really interesting. This is Advisor Hub, and they're writing about Morgan Stanley. Their recruiting loan balance is now at $4.3 billion. Their recruiting loan balance is now at $4.3 billion.

So this is Mason Braswell. He says this is the fourth straight year of increases for Morgan Stanley's recruiting loan balance. It rose 5.5% last year. And that's because they are keeping up the recruiting pressure on rivals. So Morgan Stanley pulls talented advisors from other large firms. and the way they do that is with a signing bonus. But the signing bonus looks like a loan. Right, because if you leave before the period of the contract, the advisor owes the money back. So they're recording these as loans, I guess, until they're retired because enough time has passed.

So they – or they owe – they record it as money that they owe the advisor is the right way to phrase it. So 4.35 billion is a lot of money. That's up 229 million from the prior year. So the loan growth of these things slowed in 2022, but now it seems to be picking up speed again. And when you ask, when somebody says like, why would anybody be in the Wirehouse channel?

This is the reason why. It's lucrative. This is billions of dollars out there being handed to advisors just for doing the job they were already doing. And to be clear, it's Wirehouse to Wirehouse or maybe broker dealer. Yeah, RIAs maybe not doing this maybe broker

dealer to wire house it's not it doesn't go the other way around right uh this is also interesting the recruiting loans are forgiven over 9 to 12 years i didn't realize these things went that long so you are really selling yourself into i don't want to say like servitude because these are people making millions of dollars but you are really like giving yourself over to one of these firms for a long stretch of time. If you take a check. Now you just can't leave. Yeah. And then one other thing here. Oh, so Morgan Stanley had been doing a really good job at slowing down how much they had to pay brokers to work there because they were finding other ways to generate assets and almost making themselves useful to the advisors. So they

bought a whole bunch of stuff like E-Trade and some of these corporate stock businesses where they would be able to funnel potential wealth management clients to their advisors. And that would enable them to have to like not pay people off as much to work there. So that's something that James Gorman was doing a really good job with. And I would imagine that's something that they probably want to continue. It's better, I think, to source the clients for your advisors than have to write these ridiculous checks to advisors just for staying there or for coming there. Anyway, do you think that these deals just really move up and down with the stock market? The amount of them, the size of them, they seem very pro-cyclical to me. Yes. You're not writing checks in a bear market when everything's getting more expensive.

Your assets are going down. Your fees are going down. Your borrowing costs are going up. You're not doing that in a bear market. No way. I wonder maybe if this kind of thing should be tracked as an indicator of some sort, although it's probably coincidence or slightly lagging. Maybe there's nothing leading about it. It's just like the firm has a record quarter and they allocate like another $100 million to- Yeah, when these companies are flush, they'll spend money and when they're not, they'll cut back.

All right, so I mean, this is another indication that we're really back in like a serious Wall Street bull market. It's a bull market. So there's a lot of aspects of Wall Street that haven't come back yet. IPOs are a notable thing. But outside of that, a lot of aspects of Wall Street are, it looks like 1997. All right.

Speaking of 97 or late 90s, last week, the NASDAQ 100, this room bespoke. Oh, I'm sorry. We're going to throw these charts up real quick. Here's Morgan Stanley, five-year chart. That's okay. No man's land. Here's UBS. This one looks better, and they have now fully digested that Credit Suisse leviathan that they swallowed up.

This thing looks like it wants to break out. It probably looks more like the other European banks. I like this one better than Morgan Stanley. But that's pretty much the story. Those are the two biggest wealth managers in the United States. I don't think Wells Fargo has kept pace. And Bank of America's Merrill Lynch unit seems like it's shrinking. So it's really like a two-horse race now, which is also interesting.

But OK, let's keep moving. But okay, let's keep moving. Last week, for the first time since dot, dot, dot, March 2000, the NASDAQ 100 made a new all-time high on a day it gained 3%. Now, that doesn't mean anything. It happened a hundred, I'm sorry, it happened 22 times from 1998 to 2000. So while it is true that it happened at the top, it doesn't necessarily mean that it has to be the top. Wait, what exactly happened? What exactly happened was the NASDAQ 100 made a new all-time high on a day it gained 3%.

So in other words, normally when it makes the new high, it's not also like a huge gap up day. Yeah. Yeah. Yeah. I mean, it dribbles up. It doesn't normally do what it did last week. I don't want to say normally because it did it 22 times in the late 90s. It hasn't done it this cycle. Right.

Right. So you only really get that when you have big tech stocks reporting blowout numbers. In this case, we really only needed one. This is Jason Gepford, sentiment trader, flagged this. Unusual situation developing. The NASDAQ composite is up nearly 3% with fewer than 55% of issues advancing. All five precedents occurred between 1999 and 2001, which was on the way down. So again, just unusual, very odd, odd environment. I have to tell you, I think the chip rally is masking some serious weakness. And I think the NASDAQ is still in this process of topping out. Where's the weakness?

Because the QQEW closed at an all-time high today. Yeah, I think Apple's going to have a lot of trouble getting back to its high and printing a fresh one. I think Alphabet's in the penalty box for a quarter or two, and that's a best-case scenario. They're like bud lighting themselves right now in full view of the investing public, and people just do not want to go anywhere near that thing. They are not reassuring anyone. They are going to now re-release Gemini a month after launching it in another few weeks, they claim, and try to fix all this bullshit that's built into the algorithm. And I think people are going to laugh at it when it comes back online. They're going to have a million people on social media trying to find poke holes in it. And I'm a long-term investor in Alphabet. This is probably the most pessimistic I've been about the stock since I've owned it. Tesla's in a 19% drawdown from its

high, having one of its worst years ever. And that's just year to date, dude. Like one of its worst years ever, year to date. I just have to reiterate. So yeah, some of these names- Basket case. You're at Apple, doesn't look great. Well, I'm telling you one by one, the big important stocks are bleeding. Now, here's why that's bullish.

I don't subscribe to this theory that the market can't do well without these names. Maybe statistically it needs them, but there are amazing charts all over the S&P 500 right now. Hang on. Every sector. Meta, Microsoft, and Amazon all look very, very strong. So yeah, Apple doesn't look good. Tesla doesn't look good.

Google's whatever. But I have to reiterate, the equal weighted version of the NASDAQ 100 closed at an ATH today. It's never been higher. So there's not a lot of weakness around. It's a lot of strength. No, I think you have money coming out of those really big stocks and finding a home elsewhere. And that could continue.

I just think it's, I think the leadership change the leadership changeover that seems like it's happening here is going to be a little bit bumpier than what we've experienced so far. You might be right. You might be right going forward. But just to reiterate, the rally is broadening out. It's not narrowing. Yeah.

Which is great. My point is, I like that it's broadening out away from tech as well. So it's not fully reliant on tech the way that maybe it was in November or October or whatever. RRSP too. The Equal Weight S&P looks freaking great. I agree.

It's a beautiful thing. I'm looking at some really big, really important stocks in every sector making all-time highs. Walmart, McDonald's, JP Morgan. There's sex out there. People are having sex, definitely. Costco. Very sexy stock. The Reddit IPO. I'm really fascinated by this. Oh, who could that be? John Reddit?

Look, it's Aaron Dillon, everyone. What's up, fellas? Yo, in the chat, you'll go crazy for Aaron Dillon. Guys, Aaron is a friend of Michael and I, and he is one of the, I would say, acknowledged experts in pre-IPO startups. So companies that are on the runway. And Aaron helps investors get access to those companies if they're interested you know, high net worth people, accredited people. Uh, but Aaron writes about the stuff and he's got a YouTube channel that we linked to below. What's your, uh, someone asked, are you Tim Dillon's brother? No, no, he is not. But he's great. Tim Dillon's great.

But we were Tim Dillon fans here on the, on the show. Uh, what's your, what's your read? No pun intended on the the Reddit S1 filing and the price chatter? Tell us what's going on. Yeah, so Reddit is an interesting one, right, Josh? So they raised at a $10 billion valuation back in 2021. Not anymore. There's some blood on the field with this one coming out. The target valuation for the IPO is at $5 billion. And it's an interesting business.

It's a social media platform. Yeah, what is the business model? It's an ad business. Yeah, you got it. And actually, they just sold a $60 million per year data deal to Google to train AI. That's a lot of money. So maybe I can fix some of these large language model issues. That's a great business, but there maybe I fix some of this, fix some of these large language. That's a great business,

but there's like three customers for that. Yeah. Well, there might be more, but I think that could be, it's an interesting business. There's no expenses related to that, Josh,

right? That goes right to the right to net income. So it's pretty interesting, pretty interesting model, but you know, they're losing money. They lost $91 million last year. That is a 42% improvement over 2022.

And their revenue is at $804 million. This is the S1, right? And that's at 20.7%. That's a full year, $804 million full year 2023? You got it. That's right. And that's growing 20% versus 2022. So a lot of social media platforms are not growing 20%.

We know Twitter is not. Snap is definitely not. That's right. And there aren't any others really left so that's right all right it's a growth story we haven't seen an ipo in social media in it feels like seven or eight years long time when's the last one last one snap snap snap pinterest you're right yep that's right i don't really know but it's it's a decimated category not decimated because it's not money being made, but they just aren't companies.

That's right. They come and go really fast. They do. So this is the last one to drop. I mean, it's the last one I could think of that's big, at least in the US market. What's the user base? They have 73 million daily active unique users.

That's up 22% from last year. So they're growing their user base. That's a lot of daily unique users. There's not a lot of those. Reddit's an interesting business, too. I mean, it's different than social, than like a Facebook or an Instagram. There's no pick. It's a different kind of user, right?

I think that's what my point is, a social media user than your normal social media platform. Aaron, what did you say the revenue was? $804 million. So at $5 billion, I feel like I would buy that. That's more than I would have guessed. It's an interesting model. Listen, it's interesting. Look, they're losing money, Josh.

I think that's the key thing, right? Can I ask how? Please, how? A lot of expensive servers. Seriously, Michael, I don't know. That question, I don't know. I need to dig into the S1 to get into the reasons on why they're spending over $900 million in expenses.

Was it $100 million in stock-based comp? I mean, that's so much money. Yeah, they just announced this past week their CEO, or in the S1, that their CEO got $193 million compensation. Yeah, that's why they're losing money. They paid the CEO $200 million last year. Yeah, the COO had a nice one, too. So that's why they're losing money. They paid the CEO $200 million last year. Yeah, the COO had a nice one too. So that's definitely a drag. Some of that's restricted stock. Some of it's options. It's got a vest, but they're pulling that.

Aaron, you keep saying it's an interesting model. I call it a feudalistic model. They have content moderators, similar to Wikipedia, who are volunteers. Like Wall Street Bets was set up by a content moderator whose job it was to enforce the rules of the thread. And so if somebody came on there promoting a crypto coin or something, they would have to kick them out. That's a payless and some would say thankless job. Oh, yeah. That's so they say in the S1, one of their risk disclosures is how important it is that moderators continue to work for free.

Yeah, well, that's like kind of that's kind of a really big risk. Well, they had a bit of a revolt last year, too, Josh, if you remember. Right. So they they they used to allow their data to be downloaded. And there was APIs for that and other things that developers could use to get access to it. And they shut that off because they wanted to start selling it for AI, for AI language model training. So they took that jewelry away from the moderators. And the moderators are using got really salty about that. So there was a little

rift between that. So it is certainly a risk. OK. I feel like that salary is a lot more money than most publicly traded CEOs make who are profitable and doing more than $800 million in revenue. Now, for what it's worth, though, the CEO, I got to tell you, the CEO is one of the original founders, right? So Alexis Ohanian was the other fellow. The fellow Steve Huffman was the original founder. They started this business and they sold it to Condé Nast back in 2006, I think it was, for $10 million. And what, they bought it back?

No, they brought him back as CEO, because Condé Nast really didn't do much with it. And then they brought Huffman back, and now he's running it. So this is going to be his big payday, this guy. So I'm glad. I'm happy for him. They cut out Alex Ohanian completely. He's not even mentioned in the s1 that's weird that there's a founder who's like out there alive and well and he just like kind of got screwed over and he was the chairman for a while too like when he came

in they were doing like 10 million of revenue and he kind of brought this thing back and then brought huffman back and it got it back on track to generate a lot of revenue. Is this a user base that advertisers really care about reaching? Is this a high income? Because I don't use it, but I'm not putting it down. It's just labyrinthine to me. I can't figure out what to do there. Maybe because all I ever do is promote myself, and it's not a good self-promotion platform.

So I'm at a loss for why I would use Reddit, but like what, like what is the, what's the ad play here worth? Yeah. So I listened to a podcast with a fellow that was on Reddit's product team when they kind of turned the ship around and started driving a lot of revenue. His thing was they built a lot of tools to do just that, right? To help promote advertising or made a big difference and focus. They also hired a big sales team to go out and make that happen too. The other point that they made was that it's just really influential. So when you Google something, the Reddit like shows up on the first page, man. So like I heard that argument on that stuff and they read it. When Twitter was a public company, that was always the argument. We have a tiny user base, but it's the right user base. It's like the most widely read journalists and politicians.

And I heard that argument about the influence and it didn't work. Or at least Twitter was not great at convincing advertisers that that mattered. Right. And that's why it never worked. Still are. So, okay. One of the risks in the S1 is that Wall Street bets could gang up and decide they want to destroy the stock.

Right. This has got to be the first company in history where a prominent risk factor is that its own customers could kill it if they're dissatisfied in some way. That is wild stuff. What are we to make of that? Okay. So listen, what's interesting about Reddit, so their top 75,000 users, they're actually making space for them in the IPO to participate directly. Which is really cool. It is cool. It is cool. So I think it's a

tip of the cap to the risk that you just said, right? And I think they hope if those folks are participating with their own balance sheet, that maybe they'll be kind, right, in how the stock is performing. Okay. So they're saying there's 75,000 users of Reddit that based on how much they use it will be allocated a piece of the IPO if they want it. They're inviting, yeah. Inviting them to participate in the IPO. Yeah. So they'll still use their own dollars. Yeah. We've seen that before. We've seen companies go out of their way to make sure that their users get to participate. I think that's smart. Good PR. Yes. I wonder how many people will take them up on it or if they'll even tell us.

It's interesting. I mean, I don't know what price they would give it to. I'm assuming it's participating directly in the IPO. They get the same IPO share price as everybody else. Why do they think Wall Street Bets wants to kill it or might want to kill it? I have no idea. I mean, I would think the opposite, that these guys would be, they're power users. They spend so much time. There's like an affinity and a passion for it. Right. I mean, the only thing I could think of is like what happened last year with the CEO where they don't like the strategic direction that the business is going.

So they try to deep six it or slap it around. So these guys get back on track for what they want to have happen. But yeah, I would think they would want the stock price to go up. Who invested in this thing at $10 billion three years ago? Yeah, it was not pretty, man. They had Fidelity and Tencent were the two big ones that were in there. Fidelity led that round. So they're going to take it on the chin in a big way.

I feel like they'll be fine. In macro, yeah, I think they'll definitely be fine. Michael, are you buying and selling Reddit at a $5 billion valuation on $800 million and trailing 12-month revenue? You taking a shot or what? No, I'm not a user of the platform. So I, like you, Josh, I don't really understand. I don't really understand that.

Well, I'm curious, though, Aaron, what you're hearing about demand on the street. Is this going to be a flop or are people lining up to aggressively participate? Yeah, so it's interesting. So in the secondary market, Michael, before this thing was going public, it was trading around $5 billion. So kind of the market, private market, private pre-IPO stock market had it in at $5 billion. So I think it probably could hold in there. It's going to be interesting to see.

Anytime one of these pre-IPO stocks goes public, naturally, the public markets are their own unique animal, right? Not always kind. anytime one of these pre-IPO stocks goes public, naturally, the public markets are their own unique animal, right? Not always kind. So it's usually, this company being having negative net income, OK, I think for everybody that I'm talking to, they're not, they don't understand that. That point that you brought up earlier, Michael, is how is this company losing money if they're making $800 million a year? That means they're making $800 million a year? That means they're spending $900 million a year. What are they spending that on? What are they spending? Right? So that's the question I'm hearing from everybody. It sounds like you would be more

surprised if this popped 20 versus took it on the chin a little bit. I agree with that. Yes, I agree. One thing we've learned this year, though, is a negative debut doesn't necessarily mean all is lost. Arm Holdings was a complete flop. The rap on Arm Holdings is this is SoftBank just trying to get liquid because all their other shit looks terrible. And that really turned out to have been not a great sale for them, but a great buy for the public. Hey, you're going to keep us updated. If this IPO market ever wakes up,

we're going to have to bring you on more often, okay? Yeah, done, man. Ready to play? There's a lot of companies that are just like Reddit, Josh, down 50% in the secondary market. So it's cool that these guys are going because it might unlike the floodgates. There's at least six or seven companies

that are in the same situation. Big rounds, big primary rounds in the private market and now down 50% in the secondary market and private. So hopefully this opens it up and these guys start to come IPO. Hey, Aaron, tell everybody where they could watch your stuff on YouTube. We have a link below the show. But for the people listening to the podcast, where do they go? Yeah, it's This Week in Pre-IPO Stocks. And of course, you can go agdylan.com

to check it out too. All right. Awesome. We're going to have you back soon. Thank you so much for doing this. We appreciate it. Thanks, Aaron. Thanks, fellas. Appreciate you guys. All right, Doug. All right, Josh. Aaron Dillon, ladies and gentlemen. Last time we spoke about streaming, I had a bit of egg on my face because you were talking about a deal coming up. And I said, no way. Why would that happen? And then literally 12 hours later, there was rumors of Warner Brothers and Paramount coming together.

Still just rumors. Well, worse than that. Worse than that. It's not good. Here's from Lucas Shaw. it's not good. Here's from Lucas Shaw. Warner Brothers discovery shares tanked on Friday after the company reported sales shrank by 7%

in the final quarter of the year. That same morning, S&P put Paramount on credit watch. So here's the numbers. Advertising revenue in the TV networks division dropped 12%. This is at Warner Brothers. Dropped 12% to 1.9 billion. That's half of their business.

That's half their revenue. Revenue of the film and TV studios was $3.2 billion, down 18% from a year earlier. It's direct-to-consumer business. That's maxed just 5%. The company lost almost 3 million subscribers. But Lucas is on it. He's not fooled.

He says, Warner Brothers has convinced some outlets to report that streaming business is profitable. It's direct-to-consumer business is profitable, but that includes all the HBO services via cable. HBO used to make more than $2 billion in profit a year. The direct-to-consumer business didn't clear $200 million. So it's a

f***ing disaster. These stocks are down 20... That's Lucas Shaw at Bloomberg. That's Lucas Shaw at Bloomberg. Jeez, Bianca. These stocks are down 25% year-to year to date and Paramount just hit another low down 65% since it was spun out. Just a real, a total shit show.

These companies are so fucked up right now. Warner Brothers Discovery is such a train wreck. So basically David Zasloff, who is backed by John Malone, who controls this thing as the primary shareholder and kind of orchestrated this to be put together, right?

So you had Discovery and that was like really not a standalone thing. Let's mash it with Warner Brothers. Well, AT&T was dying to get out of content. And so they were selling Warner Brothers. Well, AT&T was dying to get out of content. And so they were selling Warner Brothers, HBO, and they smashed it together with Discovery, which had its own app. And they built the HBO Max app.

And the idea was more content is the only way to survive. Now, though, you tie the CEO's compensation to the cash flow. What do you think he's going to do? He's closing production. He's shutting down movies, shutting down shows. They made entire movies and then wrote them off for taxes. They did take care of a big portion. They took care of, I think, $15 billion worth of debts.

Yes, but at what cost? They're making less content as a result. They're not cutting costs by like, let's not reorder Dunkin' Donuts pods for the Keurig. They're literally shutting down their future by stopping production and not doing follow-up seasons to popular shows. So, yeah, now they could tell Wall Street, hey, look how much we improved the cash flow and look how much debt we paid down. Okay, but at what cost your future basically now tnt has the nba not for much longer like how are they going to pay for that they're going to bid against apple for for the friday night games or apple's not there so so tnt, has the best pregame show

in the country. Everybody loves watching Shaq and Charles Barkley. So maybe that's the way they convinced the NBA to not price them completely out of the, the, the state, uh, the sweepstakes. Um, but you need live sports to give people a reason to tune in Monday, Tuesday, Wednesday, Thursday. Otherwise, HBO is a Sunday night phenomenon. Like we watch HBO on Sunday night. That's when they give us The Wire and House of the Dragon, which is coming back, and Sopranos and Sex and the City and Oz. And that's like just the HBO thing. There's not enough else happening on max to make me turn this app

on as much as i turn on netflix i go to i check in um i pop into max once a week and it's just nothing there's nothing there this shit that you saw already and that and that is the problem and here's the other thing they're doing one of the ways they're paying down all this debt is licensing their their content to other platforms so now now you could watch the Batman on Netflix, which is cool because it's easy, but it's not cool because the money that they're making from doing that is keeping them from signing the next million, you know, subs who don't need to subscribe.

So I don't know what happens to these companies. I don't know how a merger is the answer. Who does that help? Well, again, it was a failed theory. The theory was if we don't build this, we're dead. That was probably true. I get it. No, they were-

The second theory was, we need to get really big. They were probably in trouble either way. I'm just saying at this point, what is a Paramount-Warner Brothers marriage? Who does that help? Well, it's two different, that's not going to happen. Paramount is in talks to be bought by Larry Ellison's son and a private equity group that has done a lot of media and entertainment deals recently.

They've never done anything on this scale. But prior to him coming in, that was the scoop. It was Paramount and Warner Brothers. Yes, but I'm saying that's over now. Right. They've said that's over. Paramount will probably be acquired by Skydance or whatever the hell it is. The whole thing or parts?

Yeah, no, they'll buy the whole thing and they'll find a buyer for CBS. You probably have to sell that to a cable company for nothing or an overseas buyer that just wants to have influence in America. But you have to, you must get rid of MTV, Nickelodeon, CBS. You must get rid of these things.

Oh, so much garbage and debt. Every day you don't, they're worth less than the day before. It's literally like owning an iceberg in August. So that'll happen. And then they'll keep Paramount, which is a great asset, has an incredible content library. And if they were smart, they would do what Sony did. Sony didn't build an app.

Sony sells, it's an arms dealer. All of these app companies are so thirsty for content. Sony is like, here you go. How much you want for Spider-Man? How much you want for this? For that, we have 50 year film library and we make 10 originals a year and we'll sell them to the highest bidder all day. That's Sony's business. They're not burning $2 billion a year trying to sign subs. They never bothered. So that looked stupid three years ago. Now it looks brilliant. And I think that's probably the future for Paramount. They become another content arms dealer. You want another Top Gun movie? No problem. We'll make it.

We'll sell it to you. You want more Barbie? That's what they'll do. Netflix was the roadrunner, or maybe I'm getting this analogy backwards and Warner Brothers and everybody else followed them off the cliff except Netflix stopped short and ran the other way. Are these stocks investable?

I don't think so. It's crazy that I feel like Paramount is more investable just because they're closer to selling themselves. I'd much rather own Paramount. Warner Brothers has a better content, bigger content library. If I had to,'d much rather own Paramount. Warner Brothers has a better content, bigger content library.

If I had to, I'd rather own Paramount. Warner Brothers is a disaster. I mean, the whole thing is a disaster, basically. And Zaslav's another guy paying himself hundreds of millions of dollars. It's quite remarkable. And John Malone is 84 years old. And I don't know what's going to happen here.

So why aren't there any other, no other activists want to come in and go against him? Is that the deal? You can't. No, no, no. You can't be an activist in a John Malone company because he owns all the votes. What are you going to do? Convince him? You have a BlackRock Vanguard State Street owns some of the stock and he owns most of it. Yeah.

Most of his companies are tracking stocks. They're not even, they're not even like technically a stock like the Atlanta Braves, I think. And XM Sirius both have tracking stocks. That's like, it's like buying a bootleg of a movie. It's almost, the whole thing is just a messy situation. So I don't want to be anywhere near these. All right. We have a couple of minutes left. What do we have to get to? I'm going to make the case. I'm going to make the case for a stock that I added to today. I don't know if this is quite a Buffett stock, but it's-

Oh, I said this one. I said this one. Yeah, yeah. It is a Buffett stock. It's a pretty damn good business and it's trading at a fair price. It's trading at like 18 or 19 times forward earnings. It's a fair price. A lot of the damage is behind them. And technically, the stock's acting well. So I add it to my Schwab position today. Here are the ways in which this is a Buffett stock. Number one, it's been around for 50 years.

You know he puts a high value on companies that have survived multiple cycles, decades. That's one. Two, a market share leader in its space. We can have an argument about the moat, but I don't think Schwab's competitive position is in any doubt at all. There's one competitor. Competes with Fidelity in a real sense and no one else. So that's good. Number three, he probably knows Chuck personally. So knowing the founder, even though Chuck's not operationally running the business, that's probably in Buffett's eyes a good thing. Number four, it's a financial business and Buffett understands financial business is better than any other type of business. And number five, this is a great

company at a good price. And guess what? That's the definition. What better way to invest in America than owning the assets that own America? You know what? I might buy this thing. We'll see what happens. All right. Great. Great. Great. Make the case. I agree with you. I have a mystery chart for you. Can't wait. Throw this bad boy up, John. All right. My hint is I own it. I talk about it relentlessly. I mean, dude, it's enough with the stock already. It's a one year. I mean, come on.

It's mooning, but it's mooning, but it's mooning. It's mooning. This is, I think, this has 20% left in it based on current fundamentals. Is this the market cap? No, this is the stock price. It's the stock price. Oh, you know what? My bad.

Then I apologize. I thought this was Uber again. What did you think it was? I thought it was Uber again. No, that's not even what Uber's chart looks like. Okay. Actually, this is what Uber's chart looks like. Kind of.

Well, it isn't. Okay, so this is a stock that you own. It's mooning. It mooned on my birthday. Oh, is this Shake Shack? Damn right it is. You got a mooner. Can I show you something?

Put the next chart up. Okay. This is how long I've owned the stock. It came public early 2015. I never sold it. I've added to it over time. It has been a horrendous hold. As you could see, there were moments in 2022 where it was at the same price it was at when it came public.

One second. It's still not back at its all-time highs. But the orange line, Michael, is quarterly revenue. Good for them. They are now over a billion-dollar annual run rate, $286 million as of last quarter. And if the revenue continues this way, it's because they keep opening up stores. And yeah, you're going to have swings in the stock. But I think ultimately this thing should be 20% higher than where it is. It's a $4 billion market cap. I think it should be

$5 billion on over a billion in revenue, solidly profitable, and staying long. I like it. That's my mystery chart. All right. Hey, everybody. Tomorrow's Wednesday. That means a brand new episode of my favorite podcast, Animal Spirits, starring Ben Carlson and Michael Batnick. Make sure to look for that. And later this week, an all-new Compound and Friends, an all-new special guest. We're going to have an amazing conversation. We're all going to get a lot out of that, so make sure you look for that.

Ben is doing Ask the Compound on Thursday afternoon. And if you missed it, Eli Manning on The Compound is currently live on our YouTube channel. So make sure you don't miss it for long. That's it from us tonight. We appreciate you tuning in and we'll talk to you soon. Whether you're just getting started as an investor or you're managing a multi-million dollar portfolio, Ritholtz Wealth Management has the solution for you. It all starts with building the right financial plan. To speak with a certified financial planner today, visit ritholtzwealth.com. Don't forget to check us out at youtube.com slash the compound RWM. Make sure to leave a rating and review on your favorite podcasting app. If you love investing podcasts, check out Michael and Ben every Wednesday morning on Animal Spirits.

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