The Compound and Friends - Jonathan Boyar's Favorite Cheap Stocks with Catalysts

Episode Date: March 27, 2026

On episode 235 of The Compound and Friends, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Michael Batnick⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Downtown Josh Brown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ are joined by Jonathan Boyar to discuss: finding value in a volatile market, Mag 7 valuations, the only publicly traded basketball team, how Uber could win big on autonomous, and much more! This episode is sponsored by WisdomTree and Janus Henderson Investors.  Learn more about OPPJ and the broader suite of geopolitical opportunity ETFs at https://www.wisdomtree.com/geopolitical-opportunities  Learn more about Janus Henderson Investors at https://www.janushenderson.com/ Sign up for The Compound Newsletter and never miss out: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠thecompoundnews.com/subscribe⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Instagram: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠instagram.com/thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Twitter: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠twitter.com/thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ LinkedIn: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠linkedin.com/company/the-compound-media/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ TikTok: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠tiktok.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

Restaurant Brands is a health food chain. What is that? QSR is the ticker. It's Burger King, Popeyes, Tim Hortons, and what's the fourth? Firehouse. Firehouse subs. Yeah.

That's not New York. That's not a New York. Firehouse subs. It's very small. I had Firehouse subs once. It's like Jersey Mikes. Yeah. My favorite fast food sandwich place is Jimmy Jones.

Yeah. Who ones them? I don't think I ever had that. Is that public? They missed the machine. Who owns Jimmy Jones? Michael's doing research. Yeah, he's on.

No. Rourke Capital Group, private equity, okay. Very, very intense. Warc also owns other restaurant chains like Arby's, Buffalo Wild Wings, and Sonic. Oh, they're Buffalo Wildlings and Sonic. What is Sonic? Burgers? The burgers.

They have, like, everything. It's like, it's... Cornedogs, burgers. But people go there for the drinks now, right? drinks. Yeah, the slushies are so good. Well, they still have like the drive-up stalls. No offense, that's so gross. Like, getting a slushy with the hamburger.

Like, how fat are you? And I'm fat myself. I'm a skinny fat guy. I get it. Come on. Zero percent chance. Me's zero percent chance. All right. Are we going to make a show or what? What are we thinking? John, you're a fast.

I, no, I eat healthy, but I will make money off of it. Yeah, you're looking healthy. You look good. Someone up. up. John has the best commute into Manhattan of all of us. Poor Washington line. That is the best.

So the train starts there. Yeah. And you can sleep and not miss your stop. Okay. How long have you been there for? 2017. 2016. Move there the exact right time.

What are the stops from Port? You got. Manhasset. Manhattan. No such place is Planned Dome. Planned Dome. That doesn't exist. Great neck.

And then there's some other ones. Bayside if, depending on the train. Douglasson sometimes, I don't know, a Willis point. Like, it just, it's 30. But it runs through Jamaica? No. No Jamaica. Because Jamaica's South.

Yeah, yeah. So it doesn't run through Jamaica. Douglason is like the perfect overlap. It's like the line of demarcation between NASA and Queens. Yeah, and they have a great. Little neck is really. That's right. And Douglason, you can stop at that restaurant right there.

That's the best. Which one? Jimmy Johns. Not Jimmy Jones. Is these firehouse subs? It's a Japanese restaurant. I'll get the name of it that has this huge lobster dish where they put everything in it. It is like, you feel like crap for days.

It is so good. Yeah, yeah. What's your go to in Port Washington? If I want nice food, Brian Cooper. Yeah. I mean, we have like nine different sushi restaurants. Jaya is great. Is it Jaya or Jia?

Gia. Delicious. Yeah. Fun of the one. It's good. So good. Like a little. like sampling stuff there.

We don't come up there because it's too it's like this far too far. It's 40 minutes. There's no reason ever to come to port. Like you don't want to go, you don't want to go out to dinner far enough that you get home

and your wife's asleep. Yeah. No, it works. You fall asleep in the car. Fall asleep in the car. It's like, wait, wait, what do we do two rounds of, of martinis for? What are those called espresso martinis for? And it's like, it's that's too long of a night. All right, John, get in here.

All right. The Compound and Friends. All right. Episode 2.30. Let's do a show. Whoa, whoa, whoa. Stop the clock. Here's a word from our sponsor.

Today's episode is brought to you by Wisdom Tree. Wisdom Tree believes Japan is entering a new era. Corporate reforms and stronger shareholder policies are changing the game. And investors like Warren Buffett have taken notice. The Wisdom Tree Japan Opportunities Fund, Ticker, O, P,P, J is designed to invest in Japanese companies positioned to benefit for macroeconomic policies, industrial innovation, and shifts in trade and consumer behavior. Learn more about OPPJ and the broader suite of geopolitical opportunity ETFs at wisdomtree.com slash geopolitical dash opportunities.

Today's show is sponsored by Janice Henderson investors, where we believe working together is the way to work better, like combining your portfolio plans and our in-depth strategy. your valued assets and our valuable insights, your mission, and our vision. Always working in perfect harmony to find the right investment opportunities. Janice Henderson investors investing in a brighter future together. Visit Janice Henderson.com. Welcome to the compound and friends. All opinions expressed by Josh Brown, Michael Batnik, and their castmates are solely their own opinions and do not reflect the opinion of Redholz wealth management. This podcast is for information purposes only and should not be relied upon for any investment decisions.

Clients of Ridholt's wealth management may maintain positions in the securities discussed in this podcast. Ladies and gentlemen, welcome to the Best Investing Podcasts in the world. My name is downtown Josh Brown. I'm here with my co-host, as always. His name is Michael Batnik. Hello, hello. I'm psyched for this?

I can't wait. You need some help with that? I've never seen someone do that, an adult male. That's why I brought him. Do that. Is that why you brought two? What do you know? All right, let's say.

Boom. He's stuck the landing. Not to brag. All right. We have a special guest first time on the show. We are super excited to welcome. Jonathan Boyard. Jonathan is a principal at Boyar Value Group,

encompassing Boyar Ascent Management and Boyar Research. Also, the founding family of Chef Boyard D. My grandfather. Okay. Grats on that. Wait, is that a fact? Yeah. Absolutely.

You didn't know that? I used to get made fun of all of elementary school. I don't know if we had royalty in here. Are you kidding me? ABC's in one, two, threes. All right. Boyar Research is an independent equity research boutique founded in 1975 that counts some of the world's largest hedge funds, mutual funds, and family

offices as subscribers. He is also the host of the world according to Boyar podcast. How long have you been doing the show for? Since 2019. All right. Dude, that's a big run. It's longer than this show's been on. You have more episodes and more viewers, but I love it.

It's the best part of my job I don't get paid for. What was the show that blew up that you did? It's funny. Ken Langone, he's the greatest guy. He lives in my town. I wrote a letter to him. He had just come out with a book. And I said, do you want to promote your book?

Which I don't think he needed the money. And he actually responded. And he went on the show, and it just made it so much easier after having him to get other guests. And he is such a great guy and so smart. Yeah. And I ate at his restaurant the other day. His restaurant?

He opened Gallagher's in Boca Raton. Really? I think it's his. Yeah. He's pretty good. Yeah, he's fantastic. Yeah. And just like one of the most charitable people you meet.

Okay. But then you did another episode. I had Bill Ackman, which helped. That's the one. Yeah. Okay. Bill got a lot of attention. I got a lot of attention on it.

Yeah. I was fighting him about Howard Hughes, which is this company he took over. And I became, you know, somewhat friendly with him back and forth. He agreed to go on the show. And it was, it was an interesting experience. Yeah, yeah. Okay. All right.

Well, we appreciate you being on our show. Yes. And it's a really, it's, I've been saying it's a weird year in the market. Maybe it's not so weird, though, from the perspective of a value investor. maybe the aberration was 23, 24, 25. And this year, maybe some semblance of normalcy is coming back if you view the market through the prism of like valuation versus traditional metrics, et cetera, because there are a lot of stocks that are doing well.

There are also a lot of special situation and story stocks that are doing well. And I know that's an area that you traffic in. So I don't know. do you feel it's a weird environment or not really? I mean, it's a weird environment. And you talked about it earlier this week, like a tweet changes everything. Yeah. And it's just, but that's a short term.

We've seen that before. Yes, we've seen that for one and a half administrations. It feels like decades now. Yeah. But it's, you know, valuation matters. It depends on your time frame. I'm not looking at something over a month or two months or three months or three months. Yeah, obviously I track everything because it's my business.

But I'm looking at something two, three, four years down the line. you know, can I make money for my clients on it? And so I just kind of take a 50,000 foot view on it. And this environment is creating opportunities. Yeah. I never thought I would be able to, you know, have a chance to buy Salesforce like 13 times, 14 times. It's a name I've always wanted to own. Yeah. May get cheaper. But like I love these types of situations. I mean, I, I hate going through them. It sucks. But, you know, that's how you make money. Let me ask you a question. So you are a, you view these companies through the lens of a private equity investor.

Yeah. If I had all the cash in the world to buy up all of the company, take their debt, their cash, like the whole, the whole kick and caboodle. So for that to be attractive, almost by definition, these stocks have to be misunderstood, said differently, they have to be going down, right? Doesn't that suck? Like, how hard is that? Because these stocks don't stop going down just like that. Just because you're not. You're saying the market is wrong, I am right, and it's like, it makes it really hard.

It's very lonely. And a lot of times you get there, you know, premature accumulation. That's a cure. Pre-mature accumulation. That's like that's their case of any value. I got to laugh. That's great. Yeah, you like it.

The crowd loves it. I mean, that's the curse of value investors. And you just have to take the good with the bad. And we usually leave the party early too. Right. But yeah, it's, you know, that's a price of admission for like equity returns. I know. I know that's what you all say.

But let me. It sucks. But why not? You all. You are. What does he mean by that? Listen, I understand that nobody is going to catch the bottom, right? That's not real life.

But when you love a name like, like meta right now is crashing. The stock is down 8% we'll get into it. It is trading at 16 times forward earnings. I'm guessing that's attractive to you, whether or not you're by meta, whatever. Why not wait for some sort of sign? that the sellers are no longer in control. Like, why buy stocks as they're crashing? Again, not asking you to catch the bottom,

but they're just like, all right, like the sellers have backed off. Off the bottom, like not by the cheapest price, risk that. Yeah. But like, be able to say, all right, the stock hit 100, bounced, fell back to 100, bounced again. Yeah. I feel very good buying it now.

It's like developed like a little bit of a base. I think for us, the way we do that and we sort of do what you're saying is it's buy it slowly. I'm not going to take, like for some accounts, I started buying CRM, you know, 20 points ago. Idiot! I mean, exactly, but it's only, you start off slow. And you see how it is.

And momentum is a very powerful thing. So once you start seeing it go up, you might want to add to it. But the hardest thing I found, or one of them as an investor, is to, you know, buy stocks after they go up. So it's like you can't have your cake and eat it too. No, that's a great.

That's a great answer. You buy slowly over time. Yeah. Let's go to chart one. Michael? All right. So, this is the third longest streak since 2017 of times where the NASDAQ 100 has not made an all-time high. The longest streak ended in 2023.

Prior to that, it was 2019. And it's been 100 days. And these names, which were all investors. When did the Q's top, November? That sounds about right. This was all anybody wanted to own for the past decade, three years, five years, over any time frame. It was all about Apple, Amazon, Google, meta, Nvidia, Tesla.

And they're not hot right now. In fact, they're the opposite of hot. So let's throw up the next chart, please. And what's interesting about this market is that it's really all been multiple compression. Everybody is expecting, rightfully so, that meta, which just reaffirmed their guidance of $115 billion in Kappex, it's going to hit their margins. It's going to hit their earnings and their cash flow.

But these stocks are getting, I don't know, cheap. I don't know what else to call them. For the people listening, Nvidia 19.8, is that forward? So the average forward PE for Nvidia for the last five years is 48. It's now under 20. For Amazon, it's 32. It's now 22.

Microsoft is trading at a market multiple, growing 20% a year. I mean, You've got to be licking your chops for some of these things. And that is the cheapest one out of all these. Like, again, I am not suggesting that the news is going to all of a sudden get better tomorrow. The sellers are in control. We spoke about this last week.

The sellers have the upper hand. There's no doubt about it. But my God, if you can look past the next week, you got to be getting excited. I mean, Microsoft's perfect example. As a firm, it's our largest holding by far. Basically, we bought it right in 2007, 2008, and really never sold or sold very little. So the last, you know, 90 days have been extremely painful. 33% drawdown.

It's been horrible. Yeah. But now for accounts that I never bought it for because it was too expensive, this is great. I can buy one of the best companies in the world at a market multiple because people are being short-sighted. That's, I mean, this is like Google last year. I mean. What if they're not being short-sighted? Then I'm wrong.

But I don't think they are. But what do you think, let's do this last max-7 valuation fall in. All right. So just to tie ball in this. story. The average forward PE for the max seven names has been coming down. You can now have the basket for 21 and a half times forward earnings. And you know how all of the time investors look backwards and they say, oh, I wish. Even recently, I could have bought Google at whatever the price was in it. You know, the story was wrong. Again, I don't know if and when investors start to

change their mind. But my God, this is this is probably going to look like a gift. So here's my question. what do you think the sellers that are willing to part with the mag seven names at 21 times earnings, they're selling the stock today? Hard. Meta in particular. What are they thinking as are they being forced liquidated because they're on margin? It can't be everybody. Is it ETFs that people are redeeming and that's a force seller?

Or are there people making the judgment call? I don't think this is a good value here. I think it's a few things. One selling to get selling. I mean, the people are... Totally great. So that's one thing. Pod shops, they're de-risking.

And they all just sell at the same time. I mean... He's the easiest stocks on earth to sell. I don't think... Nobody who's selling today... Not nobody. The people that are selling today don't care about three years.

Right? They care about tomorrow and fair because it probably is going lower because the sellers have control. So is that what you mean by short-sighted? Somebody's selling the stock for a reason that today will look stupid in three years. Yeah, exactly.

They just have different time horizons than we do. They might be able to put the money into something that has better momentum and make money that way. To me, the game I'm playing is if they're giving it away, I'll take it. I'm not going to ask questions. Why are they selling it? Well, I'm asking questions why they're selling it because I want to make sure that I'm not making a mistake. But they just have different perspectives. What if somebody said to you, here's why I'm selling it.

These companies have had 40 and 50% gross margins for 12 years. They were asset light. That was the whole story. they were able to put up double-digit growth as far as the eye could see and really had no competition and margins were insane like nobody ever could have predicted a company this profitable at this growth rate going on for as long as it did. And now these companies are taking 100% give or take of their free cash flow and pouring that into heavy asset sort of investing and they're no longer are the same companies.

Margins won't survive it. And that's why I don't think 21 times is too cheap to sell some of my stock. I think people, I think they're eventually going to have a Zuckerberg moment like a couple years ago where he just, you know, he just said, you know, this is the year of efficiency. They'll, you mean, they look at their stock price. Is that what you think the catalyst is for these stocks to work, them saying, okay, we hear you. No more reckless CapEx. Or they start showing profits from what they're doing.

I mean, something like... I think that's worse. I think their pot committed. If they back off, it's like, wait a minute. Hold on. How much money did you guys waste? Are you kidding me? Or it's not going to spend as much in the future.

They're going to make sure that we get a certain amount return to shareholders. It's certainly possible. Or their share... But like something like Microsoft, they could have been a lot more profitable than they were. They just were supply constraint. They chose. And I think it's a good long-term move. and something as a long-term investor, I applaud,

they're putting their chips into co-pilot, which is probably the worst AI thing ever, and investing in growth. So I can't fault them for it. So I think these stocks are going to work. They're so dominant. And they're not all created equal. I'm glad you went there.

I think meta has a serious problem on its hands. Nobody understands beyond more aggressive monetization of reels via a stronger algorithm. Nobody understands anything else that they're doing. They're making huge bets, GPU purchases, striking up data center financing partnerships, giving away a large language model

that nobody seems to be interested in, which is Lama. And people are looking, and then acquiring people's companies just to hire the employees. And people are looking at this and they're being like, could you maybe just do reels? Yeah.

Like what is all this getting us? And I think that that sets meta apart. At least with Microsoft, they own Azure. You could understand where the investments are leading to. Azure literally can't back off because Amazon won't and Alphabet won't. These are the three clouds that matter for AI. So Microsoft can't back off. Meta could back off in two seconds.

They could basically say, all right, similar to the Metaverse. we may have gotten over our skis into areas that aren't profitable enough and we're going to rejigger or whatever we're doing. And I think the street will like it. They'll love it. But does he want to do it? Well, he's already done it with, you know, the metaverse, which was an absolute disaster. Tobacco.

$90 billion. $90 billion. It's, no, it was, it was terrible. But at least he was able to admit his mistake and move on. And the stock's been off to the races since. The stock's down 8% today. Yeah. They didn't report earnings yesterday.

The market isn't crashing. I would guess that outside of the last time this probably happened, a down 8% day. 2020. Was Liberation Day? No, it's probably liberation day. And then prior to that, what, I don't know, 2020, like in a single day, it was probably COVID. It's down 8% today on note news. Now, there's news about a lawsuit, $375 million and more things coming down the pike, but my God, down 8%.

Now, all of the risks that we're talking about, nobody's going to be like, whoa, this is so profound. Yeah, no shit. Yeah. It's trading at 16 times forward earnings. Microsoft is under 20 times forward earnings. I think everybody well understands the risk. And I think last week in the past couple of weeks, we're like, why wouldn't the market just fall in bed already?

Like, it seems like there's enough news and enough excuses. Let's just get it over with. And I think what we were talking about, a lot of people were talking about is the taco thing, right? Like he's going to cave. I think maybe the market is getting, is pivoting to, hey, wait a minute. He could have caved on the tariff stuff because that was a one-sided decision.

He might say to Iran, hey, we're done, and they might say, well, we're not done. Like, it's not, he can't just snap his fingers and end this thing. Because everybody's, like, waiting for the tweet. Like, nobody wants to get too bearish, because, God forbid, we remember April 10th Liberation Day where he's like, you look up and you're saying meta is down 8%

because we're not sure if Trump is going to have a truth for the Iran? No, no, no, no, nothing to do with that. I'm just saying, in the market, bringing it back to the market more generally. Yeah, I mean, in terms of what you're saying, Yes, it has to be both sides have to potentially make a deal, or Trump goes in, says, you know, mission accomplished. I mean, I hate using those words.

And they open the, they say you better open the straight. Otherwise, every other country is going to say is going to basically revolt. So if he leaves, they're going to be forced to open it up or they're not going to make any, Iran's not going to make any money. So he actually has a way out of there. But yeah, we still have a long way to go from like the Trump. put. It's still 15% or so. And that 15% happened in like two days.

But yeah, it certainly could happen. You know, it might be healthy to have a washout. I mean, it's going to be miserable to deal with. The bond market is freaking out a lot more than the stock market. The stock market seems to be sort of, you know, it's down today, down another one and a half percent. I think people are anxious right now. Yeah.

Investors are not feeling too good. All the things that they own are getting killed, right? Invidia looks like it's hanging on by a thread. I like this setup. And I don't like the, I'm not saying like that stocks are going to bounce tomorrow or next week. Like, yeah, the sellers are in control. I keep saying that.

It's true. But for the back half of the year, I think investors are very short-sighted. And it's hard to imagine the current environment changing. But let's just say that we do get through this, that we are on the other side of the war. I don't know if it's July or September or whatever. We are in a midterm election year.

This seasonally has not been great for stocks. The washout is complete. Like, there's nobody's bullish. 40% of the index is already in a 20% drawdown. Microsoft is down 34. Netflix. Like, we get it, right? Nothing's working. Things can get better quickly.

I think investors every time, and I'm not saying that there's be a V-shaped rally, but like, balls can come back. We've seen it time and time again. The best indicator of future returns is valuation. And valuations are now starting to get into the realm of reasonable. So I think investors have, you're right. Investors have a fantastic setup. much better than they had four or five months ago or whenever Microsoft was selling it 32, 33 times earnings.

Story hasn't changed dramatically. The sentiment has changed. The sentiment has changed. And this is exactly like Google, February of last year. Business was great, but people were like, what's going to happen in the future? And that changed on a dime and the stock basically, I think it doubled. It's pretty rare to see this much multiple compression, though, in an era where earnings are growing. It's all compression.

Yeah, but like earnings are growing. at the rate that they are. And there really hasn't been an earnings growth scare. So that's the only thing that matters, ultimately. Do we think that earnings are going to be resilient? Do we think they're going to continue to grow the way that they've been growing? Because if they do, stocks are screaming by. And if we start to see margin compression and we start to see falling earnings growth,

then, yeah, stocks will continue to get killed. I'm a stock guy. I'm a stock by stock guy. I have no idea what's going to happen with the indexes and the earnings for it. But I just know now we have a whole. whole host of businesses that are really good companies, high-quality businesses, selling significantly below what an acquire would sell for. And listen, I think probably now, if you're going to buy an index, I would say still buy the S&P 500 equal weight. I still, you know, there's a lot

of mean reversion there. I think the Russell 2000 has a long way to go. There's a lot of mean reversion there. But, you know, for those who want active management, I think, you know, it's, I hate the term stock pickers market is the most self-serving. But wait a minute. Chart four. The internal logic of the market this year is to sell the most expensive stocks you own. And here it is illustrated. The deciles of the S&P 500 where you have the most expensive stocks, those are the hardest hit on performance. The 10th decimal, negative 25%.

Like they are taking the most speculative stocks and beating them the worst. And what is Costco doing here? I know we imagine this a million times. And like, John, I'm sure you've scratched your head at Costco. I did a talk on it last week, and Costco was, you know, basically the thesis was, you know, there's been three periods where there's a quality bubble, where investors get sucked in to these great stories. These stocks are never going to go down, and they'll pay anything for them. And Costco, Walmart, GE, they're all like that. I mean, investors are either going to get creamed in these stocks or they're going to go nowhere for a decade.

It's very hard to make the case for Costco's quality bubble making sense. We all know it's a great business. But 50 times earnings, how do you make money like that? You can't. I mean, you can. Are they going to grow 30%? I mean, they have to sell a lot of dollars. The problem is, you could have said the same thing at 30 times earnings.

And then it went 50 times earnings. That's why you can never short these things. You cannot short on valuation, but you can avoid them. Do you agree with me that Costco and Apple are being treated the same? These are companies that are never going to be able to grow. to match the multiple. They have the multiple because investors know, at a minimum, they're going to do the number. Yeah, I think that's fair.

There's lock-in. Costco has the same consumer lock-in. If you have a Costco membership, you don't wake up and say, I feel like going to target. That's one. Apple ecosystem functions the same way. Every product you buy is going to work with the Apple ecosystem and all the services are going to be Apple services. And by the way, if you use some other product that Apple has nothing to do with, like Claude or ChatGPT, Apple's getting paid anyway. Yeah. Okay. So Costco, Apple, there's a small handful of names like that. They're getting these 30, 40, 50 times earnings multiples because people know that at a minimum, they may not grow fast, but the numbers are going to hit.

Yeah, that's fair. That's how you get a quality bubble. You get a quality, but they burst. They always do. They burst in. you know, Nifty 50 is the prime example. My father started our business in 1975. Was this the chef? Yeah, he took off his chef hat and then turned into a stock market guy. What a pivot. It was a pivot.

One of the all-time. And he did it at the best time to buy stocks. So 1975. So the Nifty 50 has crashed. And I've heard this story since I was like six years old. They took every stock, you know, that was selling in 1972 at an average of 42 times earning and shot them one at a time. Sears, Coca-Cola, Cooleod, Packard, like Blue Chips. Polaroid.

But these were companies that they looked bulletproof. They looked bulletproof. And they were fantastic businesses. Took 10 years, 10 years for the stocks to. Is the Mac 7 we living the nifty 50 experience now? No way. Throw the chart two up. Look at the forward PEs of these stocks.

Matter his at 17 times. But from where they came from. It doesn't matter. They're not at 40. It's at 17. This is not a bubble. I'm not saying that the stocks have to work. It's not a bubble.

I think it got way overheated in the 70s. This is, I mean, listen, not every one of those seven stocks are going to do great. One or two or three probably will. And yeah, Are we in a bubble there? I have no idea. We don't have Tesla on here.

Tesla's 100 times earnings right now. Yeah. I mean, that's just, it's a jockey bet. I would never touch it. So you mentioned Salesforce. What gives you the confidence? Because this is like the question in everybody's mind is how are these software companies really?

And I don't know. And nobody knows. And they don't know. Nobody knows. But what gives you the confidence? Because what does Salesforce trade yet? 13 times forward earnings, whatever it is? What gives you the confidence that the earnings are going to be there?

One, we're still doing our work on it. We just started buying it, but they're ingrained in every single process. They are critically important to so many businesses. And they're not going to make a clawed chapbot to do everything for your database, your marketing, your payment system. I think there's going to be the haves and the haves-nots in that software arena. You see them as one of the survivors. They're the survivors. They have all the data.

They're the system of record for so many businesses that literally couldn't do anything without them. Especially in regulated businesses. Try getting in the healthcare business and changing your records to a clawed shopout that has no oversight. Well, the FDA won't allow it. Yeah. Yeah, there are many businesses where you use a certain product because it conforms to the standards that your regulator has decreed are your standards.

And then it's not even about efficiency. It's just about like legally we're using this. And they're also, these are slow moving industries. I mean, they're not adopting overnight. It's going to take years and years. The cost of our base of Salesforce. Yeah, exactly. Right.

And they're so data locked. I mean, to me, I put that as a head scratcher. I have no idea why it is sold off. And Benioff is, you know, borrowed $25 billion to buy back a ton of stock. And I think that's a good move. He just has to, one, cool the stock-based compensation a little bit. And he has to not stop making dumb acquisitions. He did a wave of layoffs last.

year as the stock was falling. And that didn't do the trick. It keeps going down. So it's almost, it almost seems like all he can really do is find a way to demonstrate that their own AI investments are improving earnings faster than they are losing any business. And if he can do that, people will stop selling. But I don't know how long it takes to do that.

I was about to make that same point, the stop selling thing. Like, at some point, anybody who wants out of Salesforce will have sold. And if you haven't sold today, you know, maybe the next 10% is like the real wash. Who knows? You have a rotation. You have the growth guy selling and the value guys starting the garp and then the value guys come in. And that's, that happens every time. Do you look at the 13F to see what other value shops are buying these, these stocks? Not in CRM in particular, but yeah, I like to see what some of these other. Are there funds where when you see them coming in, you say, all right, I, I, I respect these guys. I know, I know how smart they are. And,

Does that give you, like, added confidence? I mean, I like looking at, you know, Janet does a great job, Starboard. Well, they're back in Salesforce is my point. Yeah, exactly. Okay. Oh, they are? Yes. Multiple value-oriented activist funds are back in Salesforce.

Yeah. And they've been there before. Yeah. You know, it's not great, though? Why don't you don't see insiders rushing to buy? Well, Benny Off is so long the stock. Yeah, but he's, forget about him. I understand.

But a lot of the other executives. Well, I rarely do. You rarely do with tech because of SBC. Yeah. The cop, I get it. That's how they get paid in the first place. So you rarely see a ton of like fresh capital coming into a stock unless it's a very extreme situation.

But if Benioff made an open market purchase now, the stock would red. The guy at service now did. The stock's down another 30 points. Right. Yeah. So it didn't even help. I think the guy at service now did it at 1.30. And the stock's 100.

Yeah. So I don't even know. I don't even know. I don't know the dollar amount. I just think investors are not convinced that these companies are going to be able to utilize. AI as a tailwind. They just see AI as headwin, headwin, headwin. So that story will change.

I'm almost sure of it, not knowing anything, I'm a tourist here. But this idea that the incumbents are just going to sit there and do nothing and not adopt, not take the best features of AI and incorporate into their system, that story, that narrative will shift. Yeah. And you also have to just take a bigger picture. Look, we're talking at the last three, six months, you know, we look at everything in terms in terms of years. Eventually they will solve this problem and move on. These are the best companies

in the world that are well funded and now selling it reasonable multiple. All right. So you look at companies. So, okay, you're slow to buy. If you are taking a years long approach, which I appreciate, you are a true investor. What does it look like when you're wrong? And I assume when you're wrong, it's really ugly. Yeah. It's you have to be able to omit your mistakes and which is the hardest thing in this business to do. But when you're wrong, you have to constantly look, why did that, I write down and we have our research. So I literally write it down. Why do we want to own the stock?

And if the thesis is not playing out, you have to reevaluate it. So let's stop there. I want people to understand this. When you guys get bullish on a stock or maybe even you research stock and decide not to get bullish, either way, there's a whole write-up about the risks, the possible upside, what you like about it, what you might be worried about. like so that way when the story changes and stocks down, I don't know, 20%, you could say, well, let's revisit why we wanted to buy it in the first place. Are all of these things still true? What's or what, or has something changed and what is it?

And that's got to be helpful. It's unbelievably helpful. About 95% of our portfolio, we have written an extensive research report sent out to some of the biggest hedge funds, mutual funds in the world. So, and we do that first. we actually write it up first, send it to the, send it out. Before you'll buy it for you. Before you buy it, I've strict rules in place on that.

Yeah. Getting the feedback from some of these people and when they'll tell you you're crazy or whatever it is. That's helpful. Does that make you excited or does I question? I love it. I love when I, the more feedback I get, the better. No, but I'm saying if it's overwhelmingly you're an idiot, does that make you more confident? Yes.

Okay. Because it means it's so hated. It tells you. the positioning is. So when you're buying these stocks, and maybe it's overgeneralizing, are you, let's just assume that there's a lot of multiple compression, right? Everybody hates a stock. Are you anticipating that the narrative will change the multiple and or do you think that

there's like an earnings acceleration story? You never really want to count on multiple expansion. It shouldn't be the primary drive. All right. So you're betting on the business. Exactly. We're looking. What is this business worth?

You know, we have to slap a multiple on it, but you don't want to say, okay, this has to go to the historical multiple. But so, I mean, we do that. We look, what does it look like at an historical multiple? But also, what does it look like, you know, one of the companies, maybe we'll talk about later is Cooper. You know, if you use the historical multiple, it goes from 70 to, I think, 120. What is Cooper?

Cooper, the I? Yeah. Yeah, I used to sell that stock in 1999. It's contact lenses. Yeah, contact lens in women's health. So how do you get involved in a contact lens company? It used to be called the Cooper companies. Exactly.

So call that? Exactly. Okay. How does it get on your radar? One of our analysts that they get paid to read, found it, started looking at it. Then activists started, you know, Jan is in it and this browning company. That is, but the thing with the stock, like, that is one of the biggest long-term winners I've ever seen. Oh, yeah.

Myopia is huge. I think I was selling the stock to people at $2. And I think, like, non-split adjusted, it went to like $500. Yeah. I didn't last that long. But I'm saying, but like, that's an example of a stock where it's a small. Small cap still. Yeah.

It was a small cap 30 years ago. It's just off the radar of regular investors. We love that. Yeah. I mean, that's where you get. So I was going to say, this is your kind of market right now. I love it. Sox are shining.

They, well, not Cooper. And that's where the opportunity is. This stock sucks. Yeah. Well, yeah, no. It's pull up like, pull up 30 years. I'm just teasing. I keep going.

That's a compound there. It's a great business. And there's things, what, it's not enough just to find a great business that's cheap. That's like two out of three. You need to then. have a catalyst because then you get, otherwise you get stuck into a value trap. So we're looking, is there a reason for the stock to go up in value over a reasonable period of time? And to us, reasonable is two to three years. Is that the hardest part? Because how do you

find, how do you predict a catalyst? We have to kind of tell a story. You have to use your imagination. You have to tell a story. Well, so let me throw one at you then. You guys have probably done work on Adobe. We passed. Okay. So did most people, obviously. Yes. Open AI shut down SORA Out of nowhere Just decided Now, nobody had any notice The team working on it

They were in meetings with Disney the night before Disney's pulling back Its billion dollar investment Sora if you created stuff on the app They'll let you access it for a certain period of time That's it gone Adobe popped today I mean

Not much of a pop But it was green and a red tape Specifically you have like sort of a catalyst there. I don't know if that's enough. So I guess the question is, let's say you have an idea what's going to turn Salesforce around.

Let's say you think Dreamforce is next month, ish? Okay. Dreamforce, they're going to unveil Agent Force 2.0 and they're going to have, I don't know, Jensen Wang's going to come back on stage or whatever it is. And that's going to be the catalyst. That day comes and goes, and the stock doesn't give you the reaction you want.

Is your job then as a value investor to start thinking of the next catalyst or do you have to revisit your bullishness or how do you handle like a failed, not a failed, but like a missed opportunity for a rally? Yeah, I think that wouldn't necessarily be the type of catalyst we would look for. Let me just give you a quick example.

Madison Square Garden Sports. And that's one where we were somewhat involved in. So MSG Sports, it owns the Knicks and the Rangers. Enterprise value of MSG Sports is $8 billion. So you can buy the Knicks and the Rangers for $8 billion when the Forbes value of both is $14.7.5 billion. All right, but everybody knows that. So why, there's no free lunch. Like, why is the market valuing?

James Dolan. Because the-Dolan discount. Because of ownership. But if you actually do the work and you look, the predecessor company at Madison Square Garden, sports is MSG, which owned, you know, which owned the MSG networks. Radio City. Yeah, it owned Rio City. It owned the Garden.

The Christmas thing. Everything. If you invested that when we initially profiled it, which was right after the spinoff, you would have been up like 8, 900 percent. The SMP was up 600, 650. I could be off by a little bit, but significant outperformance. So people take a very short-term view. I think, or maybe they see this guy can't.

get a winning basketball team and, you know, won't buy the stock. But he does what's right for shareholders in the long term. He sold Cablevision for a price that we never thought we could get. Which his father built. Yeah. So he's a seller. He could sell this thing. And we got frustrated. So we wrote a letter in June of this year telling them they should do three things. Did you get banned from the garden? I'm very afraid of it. Well, they use facial recognition software in the cameras. I'm not taking it again. I was going to sue them on one of their transactions, and then I realized you cannot get into the building

if you have an active lawsuit on them, so not suing them. But basically, we outlined three things. One, they should do a spin-out, turn it into two publicly traded teams. This is MSGS? Yes. So you make the Knicks as a company,

and you make a Rangers as a separate publicly traded company. Without the broadcast rights, just the team itself. The broadcast rights is with sphere. right now. Okay. Which makes no sense. Oh, what? Yeah.

That was why I sued. It makes no sense. And it was a lot of self-dealing. So I said, we should do that. The second thing is they should take a minority, they should get a minority shareholder involved to demonstrate the value. Let somebody buy in, which will set a price. Exactly.

Okay. And if you look at the roster of shareholders, Silver Lake owns 9%. KKR, which just bought Arcos, owns like two or three percent. Bill Gates. foundation, although, you know, who knows, owns 3%. There are tons of people who would do this. P.E. is getting involved in a big way. They should do that.

And then three, they should use the proceeds to buy back shares. The NBA allows this. Absolutely. The NBA now allows multiple owners. Like, it's not the NFL. Yeah. So an outside person could come in, buy a chunk of stock directly from the company at a price. And then that resets the narrative about what everything in there is worth.

Yes. And they already... Are the Knicks a $10 billion franchise, stand-alone? If the Lakers are, I believe they are, if Las Vegas is going to get a team that they think is going to go for between $7 and $10 billion with no history, the Knicks are worth a lot more. What is this guy going to get for the Cowboys? He could get $15 billion, I think. Easy.

Right. So the Knicks could be worth $10. Easy. This market cap, you're saying is $14 and it includes the Rangers. No, no, Markab is $8 billion. $8 billion, excuse me, and it includes the Rangers. Exactly. How much does Dolan on of this?

He controls it. He has, like, I think, 60, 70% voting. But he announced, I think it was February 7th. I could be wrong on the date that he is now exploring, and him now exploring means they're going to do it. They're splitting it off into two teams. Whether we had anything to do with it or not, I have no idea. So it'll be an MSGR, which will be the Rangers? Yes.

And MSGK, which will be the Knicks. You can invest directly in the next. You can buy, yeah, exactly. For anyone. You get to go to the annual shareholder meeting. Yeah. That's exciting. I feel like you're going to do it.

Is this the only publicly listed NBA team? No. Oh, NBA, yes. You have the Atlanta Braves for baseball. Wasn't Cleveland publicly traded at one point? Yeah, and one private because it makes no sense to be a publicly traded team. The Celtics were public when I got into the business. Yeah, yeah, yeah, it was a great bar mitzvah gift.

Yeah, people were, right, right, okay. And there's one. Wait, you're Jewish? You couldn't tell. Hold on, hold on. So if they split it, what does that mean for the shareholders? they would get if they have 100 shares, they'd get 60 shares of 1, 40 of the other? Yeah, it's figure out a way of doing it.

And there's another catalyst there, which we identified. Starting at the end of, I think it's 2027, if you are a publicly traded company, and for most companies, this doesn't matter, your top five executives, they don't have to be named executive, top five employees. So players. Players can't be deducted for income tax purposes. There's your catalyst. They're screwed.

they cannot be a public company. So, okay, so, okay, so if they're a public, so what does that mean? They have to sell it to someone? They have to go private. I mean, how can they, they had, I think, $175 million last year. In payroll? No, in earnings. And 150 and, like, their top five people were like 150.

So, like, you can't deduct it. I mean, that's your catalyst. They're deducting the salaries that they're paying and they might not be able to for the top five players, which is probably the most. It's not really going to help you. So a week's pay, a day's pay for. Right. And Brunson's up for another contract soon.

And that's not going to be a, that's not going to be a fun. No, Jayland's locked. All right. Hey, can we talk about Uber? Yeah, absolutely. So Josh talks about it all the time. Josh is a shareholder. I think this might be simple.

We talk a lot about like Waymo and Autonomous being on their lawn. What if Uber is just selling off because of the delivery aspect of it, which I didn't realize, you have a slide up here, chart eight, please. I didn't realize that delivery. was 33% of their, what is this, of their revenue? What is this chart showing us? Top right. Top right. I think that's, yeah, those are, those are.

Oh, 50s. Oh, okay. No, ride hailing. Deliver, there is. Yeah. 30, I had no idea. It's a third of their revenue. All right. So guess what?

If DoorDash is getting killed, I get it. DoorDash stock is getting killed. Yeah. And so Uber's a third of their business. Michael's talking about like with higher gas prices or people pulling back from delivery food. Yeah, but normalize it. Yeah. In two years, who cares?

They are the absolute winner. They have the best network, the narrative. Thank you so much. Let him cook. Hold on. I know you wrote up Uber. Okay. Just lay out to answer Michael's question.

Layout why the Uber approach to autonomous is not only not just defensive, but actually has the ability to win the same way they won in ride hailing. They are, I think, in the best, they're in poll position for this. Nobody thinks that. They're wrong. You and I. You and I. And Dara, nobody else. Yeah.

And I think, you know, the only way for, in my opinion, for this thesis not to work is if there's only one autonomous vehicle company. And that's not going to happen. Why would that be the case? I don't think it will be. That's how I lose. Yeah. That's how both of us lose.

If Waymo gets 80% market share, then there's no point in their, and they have. and they have their own app. Yeah. Then there's no point in Uber existing. Exactly. But that's not going to happen. Why would anyone think that that's how this is going to play out? Because they're used to these winner-take-all ecosystems in tech, and they think this is tech.

But it's not. It's logistics. This is a logistics company that is well-run. And they have scale. The network is, you know, as a value investor, it's still, you know, it's now it's cheap. But it's, they have by far the biggest network. The biggest network is going to win. If you have an autonomous V-Evester.

vehicle company and Waymo is paying $120,000 or whatever it is for a car, how many cars are they going to get for 4 o'clock in Manhattan? Yeah. They can't. They need to satisfy demand. All right. So a couple of things I want to ask you about this. They have in the last two months, three months, put out a barrage of partnership announcements.

I love it. Yeah. I love it. Street hates it. The street hates it. They are using their own balance sheet now to invest in. there being more players in the ecosystem. So they gave Lucid money.

And they're going to buy 10,000 cars from Lucid. Then they do a deal with Rivian. We're going to buy up to 50,000 cars from Rivian. Now, they don't want to own these cars at all. Yeah. But they have to put their balance sheet into the pot and commit billions of dollars so that an ecosystem will arise. If you don't have Lucid out there in Rivian and all these other OEMs making cars,

then there is a problem. potential that Tesla and Waymo just take the whole thing away. It's the same thing that Travis did when he was investing in a network. He subsidized the drivers. They're doing the same thing. They lost money on the drivers just to make sure that there were enough drivers. Yeah. The biggest network wins.

And Uber by far. And now they're getting into, I think there was an announcement today. It was some Eastern European country. They're going to have AV there. Every day there's a new announcement. Yes. It's, uh, pony AI. Pony AI.

The city is called, what the fuck? With a K? Yeah, I, yeah. It's like Yugoslavia. Yeah. I don't know. Cluxenberg. It's in Cluxenberg.

No, but the point is they're doing this all over the world. They're doing this in the UK. So they're now, but that's a narrative violation. And people have said Uber is asset light. It's the app. It's the network. It's the services. It's, who owns the car is somebody else's problem.

those are just things that depreciate. But now, for better or for worse, they're going to own some of this stuff. Yeah, but that's a temporary thing. And this is not going to be like the hyperscalors doing 100% of their cash flow. You said their caprax is light, no? Very light. They're a cash flow machine, Uber. How much in cash flow are they expected to do this year?

Like $10 billion, I think? Right. And they were burning cash like $4 or five, at the time of the IPO. And they're buying that stock. $10 billion in cash flow, buying back stock growing 20% in that. 30. And 15 times, right? 30%.

It's $150 billion market cap. I think it's 18 times EBITI, I think. I just think the Waymo rolling out in cities without them has scared off growth investors because they think they're walking into a trap where, oh, my God, we're competing with Google. Yeah. I think what they don't see is that it's very unlikely one company is going to own every autonomous vehicle in the world. Yeah. It's extremely unlikely.

They don't, even a Google funded company does not. have the capital. I don't even think Waymo has that as their ambition to be the only autonomous car on the road. I think they just want to be the best. And also just in terms of autonomy, it's still not ready for prime time. Look what happened in San Francisco in the beginning of the, or L.A. in the beginning of the year, they still only mostly rolled it out in warm weather climates. And most of Uber's growing their rider base. I mean, it's kind of a New York view that it's only in the big cities, but it's not. That's not, it's factually incorrect.

They're, they're growing significantly in kind of second, third, third, fourth tier cities. Waymo does not have delivery. Yes. And that's a competitive advantage. It's a competitive advantage because what Uber has said is that their best customers who spend the most billion the platform are back and forth between eats and rides. Yeah. And the best of that segment are the X million like myself who are Uber One users.

Yes. who are getting money back for some of some of these transactions. And advertising is growing. I mean, there's so many ways for them to win. Yeah. That it's, I scratch my head. I don't understand why the stock's not $125. It makes no sense to me.

I, it'll get there. I think so. Well, it's not a good market right now. It's not a good market. Not a lot of things are working. And I think people stop believing Elon and his like crazy dreams. Tesla's in a 24% drawdown. That got stock's getting whacked off pretty good.

But every time he opened his. mouth about... That's over now. Yeah, but now it's Waymo. It's... Now it's Waymo and not... Right, there was a moment where anything Elon said about autonomous cabs, Uber would lose 8%.

Yeah. And now the stock is more afraid of Waymo. Yeah. Which is ironic because they're operating in partnership with Waymo in two cities. Yeah. In Atlanta and somewhere else. I think people wanted more Waymo partnerships and more cities, and now that doesn't look like that's going to happen.

I mean, Waymo, I think, is doing a giant negotiation. They're trying to figure out and showing, you know, Uber, you need, we need each other. And I don't know. Last thing on this, Jensen Wang has been going out of his way to do autonomy and robot stuff at every public speaking event. He really is trying to transcend LLMs. Okay. And what they announced for OEMs, it's like this combination of software and chips, that will enable Mercedes, Cadillac, Volvo, Volkswagen, Porsche, you name it,

to make any car an autonomous car. Yeah, it's not just going to be Elon licensing his technology. That's right. So now Nvidia competes with Tesla on, they don't call it full self-driving, but on autonomous technology for cars. Yes. Do you think that plays into Uber's favor

because it will lead to more autonomous cars that aren't Waymo's on the road? The more players, the better. Right. How do people not understand this? They don't get it. You guys get it. Why are we the smartest people in the world?

We're either the smartest or dumbest. Or we're going to lose half our money. Let's talk about another narrative violation. Vegas is dead. Dead. Okay. Then how come the ratio of MGM to the S&P 500 is sitting a seven-month high? If Vegas is dead, why is the premier brand in Vegas doing pretty darn okay relative to the overall market?

MGM is a Macau? I'm talking to John. Okay. Well, can you tell him that? Okay, okay. Is MGM not the biggest premier provider of rooms in Las Vegas? They absolutely are. But MGM also had kind of a bad year last year, so it could be a little catch-up. But MGM's a super interesting story. Wait, how are you going on? You're telling me that China's so hot right now. That's why MGM is doing well?

No, I just think the driver of the publicly traded casino stocks over the last 10 years has been Macau more than Vegas trip. John, what's going on with MGM? And it's been held back a little bit because of polymarket and all that kind of stuff. But I think those fears are a little bit overblown. One of the most exciting things for us about MGM. And it has great management. A shameless plug. I'd Bill Hornbuckle on my podcast.

He's great. He's done a great job. They're returning about 45% of their – they've retired 45% of shares since – This does look very good technically. Yeah, it does. Wait, 45%? Since 2021. The problem, though, is how they're doing it.

They're selling the land to private equity out from under themselves, which then leads to rents being jacked up, which then leads them to start charging $8 for an ice coffee. And it's turning the players off. And gambler social media has grown very negative, not on MGM specifically, but on just the vagus experience. Yeah, so buying back stock is great. Borrowing money to do it, not as great. and then turning over the property ownership to private equity is probably not like a free ride. I think the escalators are about 2% a year. So they just have to grow more than 2% a year to kind of make up for it.

So now they're kind of more of a cap light business. But you've heard that whole thing that I've laid out. Absolutely. Do you follow Vegas policy on Instagram? No, no, no. He is going in on because they sold the land out from one of themselves. And then they use that as an excuse to like, All right, we shrunk the flow.

We bought back stock. Yeah. But it's degrading the experience. Yeah, that could be the case. But there's a lot of growth in there. What do they own, MGM? They own, gosh, GM. Park.

Yeah, all those. Chart 14. Yeah, there you go. Alagio. They have, and then they had the regionals. Aria. Oh, they own the condomalus. I didn't know they own the cosmopolity.

Yeah, they are. That's what. All right. See, they own everything, basically. Except for the win. The best part of the story in what the street really, it's not even in anyone's estimates, 2030, they're going to be opening the only casino, legalized casino in Japan. Only one.

They think it's going to be a, they're going to own 43% of it. They are projecting, I think, something like $6 billion of revenue. How did they get that? That's their projection based on. No, no, no. How do they get to be the only casino in Japan? A lot of lobbying. Hornbuckle is really good at it.

Okay. He's also... You made the right connections and had the right plan and they like it. And they only own 43% of it because that was the way... You need a Japanese partnership. 100% as the same as operating in China. Hornbuckle sounds like a name from a Taylor Shuttleons show. Hornbuckle?

Yeah, it's great. Yeah. That's definitely a concealed carry guy. So... Just guessing. Just to give you an idea, all of those Las Vegas casinos, had about $8.5 billion of revenue. They think they're going to get $6 billion or so from Japan alone.

When is it open? 2030. So that's the catalyst. Is in four years they're going to have a Japanese casino? I mean, there's other things. Bet MGM is starting to inflect. They were losing $200 million. Now they're making $200 million a year.

And they're smart allocators. I'll give you an example. New York and its wisdom, you know, they were going to build all these casinos there. and MGM was in poll position to do it. They pulled the wrong. These the Nassau County ones? Yeah, this was going to be in Westchester. Oh, okay.

I didn't even hear about that. And MGM was going to do it. But because the New York state legislator is incompetent, at the end of the day, they said, we're going to have to tax you more, this, that. They kept changing the terms. He pulled out. He said, I'm not dealing with it.

I want, you know, as much as I want to be in New York, I want a profitable operation. And I like that. I like the discipline. And the other thing about that's, story is Barry Diller, who I have a lot of respect for. IAC owns about 25% of it. They own 25% of the MGM? Yeah. Oh, how? How? They bought it. Joey bought it, Levin, bought it during COVID. He couldn't put money fast,

worked fast enough in the private markets, or to buy a whole company. So he bought stock. Oh, wow. Their whole, their whole, IAC's whole thesis is going from offline to online. And they saw with gaming, it's going from offline to online. So that's where Dara, Dara comes from that family tree. Exactly. And Diller and John Malone. Yes. Go way, way back.

They go way, way back. Can we talk sphere? Yeah. All right. I'm going to see No Doubt in May. Super excited. Yeah. My wife, all her friends, we're all going.

I'll probably go back in October to see Metallica. Yes. I just, I can't stay away. Yeah. I am in love with the sphere. why is there still only one? And what do you tell people that are in the stock? Because it's worked out huge.

There are people that would say, if Jim Dolan is involved in it, it can't work. Yes. Okay, those people in this world exist. 100%. This has worked. He looks like a genius to me. And full disclosure, I was so against doing this because I thought it was just the risk reward wasn't there.

Which part? Because they incubated this inside of MSG. Yeah, to do $2 billion. to put a sphere in the middle of the desert to seem like... This was part of MSG when they built it. It got spun out. You know, it's weird. The inflection point happened with The Wizard of Oz.

Yeah. They saw, you take one show that costs like $100 million or whatever it does. They were charging $200 a ticket and it was working. Yeah. And now there's going to be, unless it gets blown up, God forbid, one in Abu Dhabi. So, John, this was $25 stock in the middle of last year. It's 108. Yeah.

Could you buy it here? Hard. That's what you talked about earlier. It's very hard to buy a stock after it's gone up so much. That's more of a behavioral finance thing. But I think you probably will make money. How many spheres can the world profitably support? What they're doing is the one in Vegas, I think, is 18,000 seat.

They're doing smaller ones. They announce one in Maryland. That's like 20 miles outside of Washington, D.C. They're doing one in Abu Dhabi, but they're doing a cap light. They are. They bring in outside investors for each project? Exactly. Okay.

Or for a significant portion of it. So who puts money like a shopping mall developer that wants to attract more bodies to the mall? Or an Abu Dhabi government. It's a, you know, there could be a lot of them. Will it lose the magic when there are a lot of them? I think that's the fine line. And we were talking earlier about IMAX. That's, you know, it's sort of a special kind of thing.

Like an IMAX, this is kind of like an IMAX on steroids. It's a premier type of destination event. Absolutely. But yes, you have to be really careful about losing the luster. What are your favorite stocks that are about to do what the sphere just did? Give us your best winners. All right. Everybody grab your pen and pencil.

No pressure. No, no. Like, what are you like? What's on your buy list right now? What do you like of your, I know the coverage universe is large. Yeah. But like, what do you think in these days? What is spaghetti meatballs right now?

I, talking about a stock that's done well, but still to buy it, MSGS is up there. Still? Still. I would also, if you don't have a position in Uber, I don't understand why. You should certainly do it. Scott's Miracle Grow is interesting. All right. Tell me about Esquil. Scott is a family control business. We love these family control businesses. They basically put, they took lit about $1 billion or $2 billion on fire going into cannabis. That one didn't work. It was a horrible, horrible idea. This is SMG. SMG. Okay.

New York Stock Exchange. Yeah. Control by the Hagendorn family. James is crazy. He lived right down the street from me. He would fly his own plane to Ohio two or three times a week to work there. The guy's nuts. Wait, he lived on Long Island and flew to Ohio?

Two or three times a week. Okay. He flew himself. Oh, he's on. And he would, and he would, no, literally. And he said he would. read the Wall Street Journal on the way there, which seemed as he flew. Yeah.

All right. This is a $3.6 billion market cap. Yeah. Looks like the stock at 62. Yes. Looks like it topped at 70 twice in the last year. You think at some point it's going to break through? It's one of the best consumer staple companies trading it nine and a half times,

EBITDA should trade it 12, 13 times. This is a company. You have a 70-year-old guy or a 69-year-old guy who has to be exhausted. last couple of years have been an absolute disaster. He's going to, my guess, he's probably going to sell this thing. Why, COVID was tough for this? COVID and pot. Oh, yeah, look at this.

Yeah, there's no more sellers. Let me ask you another question. Do you follow floor and decor? I've heard people talk about it, but I don't know. Okay, it's like a premium flooring company that has gotten annihilated. They took a lot of business from Lowe's and Home Depot. Nobody wants to own the stock for reasons that are very obvious. And he can the housing set, well, I guess this, is this a housing play?

It's a housing play. And what's interesting about a huge percentage of their sales are come from Depot and Lowe's, but they bring people into the store. There's also very little private label competition. So you think at 69 years old, he's going to say, you know what, the right thing to do here is find a buyer. And he doesn't own all of it. It's as a family. It's a trust or however it's set up. And I think that they might be tired of the stock languishing. They wouldn't cut the dividend even though they should have. So they own it, they control it. Yes. An activist can't really do anything.

An activist can get annoying. Like we were, we talked about Unifirst. Yeah. You know, that was a family, the Croati family owned, controlled 70% of it. Engine capital and to some extent ourselves got annoying and, you know, got them to sell. A lot of the way that you explain these catalysts and these ideas reminds me so much of Mario. My first boss. Okay.

So you worked for Mario Gabelli from what year to what year? I think I was there right out of college, so 2002 for a couple of years. Your dad say that that was a good idea? Like, go learn from Mario. Go learn from Mario. He's the bad. I love Mario. He is fantastic.

He's still doing it. He's still doing it at 83, 84 years old. Yeah. I met him a bunch of times on the set at CNBC. Yeah. He's so entertaining. Yeah. Like, I remember the host just like basically turning the mic over.

Yeah. Like, stop. Like, they weren't even trying to ask questions anymore. he would just go. Yeah. And he just had like so much to say about so many companies. I was at a conference. So you learned a lot about presenting your ideas from the Gabelli School, sort of.

I think, I mean, he's a master at it. So I can't say I'm anywhere close to him. I was at a conference where he presented last week. He went through 83 slides in about six minutes. Yeah. And he had the audience like, and I had to present after him, which was awful. Is he in his 80s now? 82, 83.

He's the same generation as like Cooperman and... They're best friends. All those guys went to Columbia together. Exactly. Who else is in that posse? Cooperman, him, and... Was Jeremy Siegel in that group or...

He went to Warden. Yeah. I think it was... Rosenblatt? I mean, all those old school... All those old school value guys, like the names are escaping you, but the two of them are super good friends.

I mean, they all... What a fucking legend. Yeah. And he was at the... exact right time. 70s, 80s, when, you know, finding these intrinsically valued companies. That's how him and the coupon, like, they love stocks. Yeah.

He lives. Love stocks. Yeah. Give us one more for the road. One more. One more that you guys like. Atlanta Braves. Okay.

Tell us the story. And I just don't do sports companies. This just happens to be, same thesis as before with the. Don't buy Atlassian by accident. Don't buy team. B-A-T-R-K or you. B-A-T-T-E. RK.

Yes. So what's the story here? This is one of those Liberty Media freak shows? Well, it was spun out. So now it's an asset back stock. Unlike the Dolans, yeah, I kind of have a rational owner of Atlanta Braves. Stock's selling about 42. We think it's worth about 60 years so in a sale based on a small premium to Forbes value.

Meloda is still the owner? He's the controlling shareholder. He's 82, 83. He's simplifying his empire. I was going to say, I can't understand. I call them freak shows, not the companies, the structure. Yeah. I don't know.

I'm an investor in Live Nation. Stock has done unbelievably well. It's doubled. Yeah. But like some of these other things with the five letters on them, I've given up over the years. So what's the story? You own Atlanta Braves and you own real estate and something called the battery in Atlanta, which is office towers, et cetera.

And he's going to sell in the next year or two. You think he can get 60 for this? Yes. This is like a go-private? Yeah, because like the Knicks, they can't afford to be a public company. Do you like when public companies own a lot of land like St. Joe or Howard Hughes, you mentioned? Yeah. Do you like those types of investments in general?

I've never had success with them because I think they require more patience than I have. I think it depends, depends on the story. What I hate is when companies give their own NAV based on the land at the end of the presentation. That's like the kiss of death. Why? Because I don't want that, you know, they're talking their own book and I don't like promotional management. Okay.

That's a turnoff to you. Yeah. I want someone just tell me the story, not tell me to buy the stock and let me make my own decision. Gotcha. What's the last stock you looked at that you passed on?

Dobie was probably up there. Why? Why did you pass? Because I just don't know if they're going to be a survivor. They don't have the, like, they don't have the data the way that CRM does.

What they said, they see themselves as the layer that sits on top of whatever else, LLM people want to use. Maybe. I said, well, what happens when people decide they don't need the layer? Because they're like professionals, very comfortable interacting with our tools. They have workflows built in Adobe.

All we have to do is take these engines that are powerful and put them underneath. And people will never give up their subscription because we are the company that makes it easy to use AI to do design. That sounds plausible on the surface. And actually, they haven't really lost anything when you look at their earnings reports. That stock never stops going down. So the street is just telling them whatever you think your strategy is, you're dead. So I put in this order. Uber, I'm Uber confident that I'm right.

CRM, probably. Adobe, I just don't know. And I don't want to invest in something. Too hard to tell. Yeah. What about Apollo, companies like that, the all-time investment managers? Any read there? I'm starting to, we're starting to look at it.

You know, we've spent more in the financials on like insurance companies, a company like Markell, which is run by Tom Gaynor, is something that's more interesting to us. Who knows what's going to happen in the private credit space? Is this going to be a disaster or not? Some of those have to be buys, though. Yeah, probably. You can't have this much damage without some value being created.

Also, with so much of this capital locked up, you can create some sort of a model that tells you what the cash list are going to be. You could even assume the worst. case. All right, they bleed 5% a quarter. Let's just a system goes on three years. What's the worst case? And what's it worth? But the problem is, are they not going to have any, you know, carry going forward? Just the value of their... So part of me feels like the software spook won't end until somebody gets bought out.

Do you think that that's a plausible scenario where one of these big SaaS software companies gets a real bid either from a strategic or from like Silver Lake and a big consortium of private buyers or are they just too big? I think they may be too big, but what I think a big buyout or a multiple buyouts are going to help

is making small and mid-cap stocks do well. They've underperformed for like 15 years and terrible over the last five years. That I think that M&A boom is going to happen there. Interest rates just need to settle. You know, the world has. to have some sort of semblance of order. Because what did not put a floor under these stocks?

Yes. If we get like, if we get like buyouts for some notable mid-cap, yeah, non-meagap software companies just get taken. Yeah. People all of a sudden will say, all right, maybe I'm not going to sell this so fast. Yeah. But they're not happening yet. Yep.

No, I mean, it's going to take a while. I mean, it also just started. I don't even know what the reaction would be in the share price of the buyer these days. I can picture a collapse. Yeah. Like, like think about it. Like if a big C. CRM, like a sales force, said, okay, that's too cheap.

We're buying this competitor, ABC. Yeah, but they can't buy it with their own stock now because they're own stock. Nobody wants their own stock. Yeah, so it's hard. Okay. But maybe on the smaller ones. But I think for a regular non-software company, that's going to be the Renaissance on small and mid-cap investing.

Last thing, how are you feeling about the Knicks in the playoffs? How far do you think we go? Every year they go one step further, right? That's right. So, you know, we'll lose in the finals. Well, you don't have to worry about some teams that you've had to worry about over the last couple of years as much as you used to. Yeah. Right?

It's a crapshoot. Pacers are off the board. Yeah. I don't know. Do you think... Although Boston's strong in Detroit is... He came back. Yeah.

I thought we had this year. All right. All right. Dude, do you have fun on the show today? This was great. This was a lot of fun. We had a blast talking to you, learning from you. I want to tell people where they can go to get more information about Boyer and how they can get smarter by following your ongoing research.

What would you tell people? Just visit Boyer Value Group.com. We also have a substack for like the regular retail type investors and go there and just listen to me on the world according to Boyer. All right. How often are you putting the shows up? Not enough. All right. But like, I do it when I can get a great guest who's interesting.

Okay. So you're not doing like a regular paste thing. It's just like, hey, I got somebody new. Yeah, exactly. Okay. You know, you could get Michael Batnik, I think. I would love to have both of you. All right.

We'll do it sometime. Sounds good. Ladies and gentlemen, this has been the compound and friends with our friend Jonathan Boyer. Please follow him everywhere he's putting on information. Very, very bright, very intense research and an all-around great guy. And I think you'll learn a lot from him. Thank you so much for listening. Thank you for watching.

Special round of applause for John Duncan. Nicole, Rob, Graham, Sean, Chart Kid, Matt, the whole team, Daniel. Who am I missing? Travis? Katie. All right. Are we kicking ass this year? We are, right? We are.

All right. Guys, thank you for all that you do. We appreciate. I know the audience appreciates you as well. All right, that's it from us. Thanks for listening. Talk to you soon. I've got the next box to the group shut for our day.

There you go.