We Study Billionaires - The Investor’s Podcast Network - TIP767: Mastermind Discussion Q4 2025: Sanofi, Remitly & Crocs w/ Stig Brodersen, Tobias Carlisle, and Hari Ramachandra

Episode Date: November 9, 2025

Stig Brodersen is joined by Tobias Carlisle & Hari Ramachandra for another round of stock pitches. They discuss Sanofi, Remitly, and Crocs. IN THIS EPISODE YOU’LL LEARN: 00:00:00 - Intro 00:01:54 - Why Hari is bullish on Sanofi’s strong vaccine and immunology pipeline (Ticker: NYSE: SNY) 00:05:30 - The bear case for Sanofi, including patent cliffs 00:19:26 - Why Stig is bullish on Remitly, highlighting operational leverage and a secular shift in digital payments and remittances (Ticker: NASDAQ: RELY) 00:43:10 - The bear case for Remitly, including pursuing the wrong strategy and excessive stock-based compensation 00:50:50 - Why Toby is bullish on Crocs, focusing on valuation and global growth (Ticker: NASDAQ: CROX) 01:02:36 - The bear case for Crocs, including tariffs and changing fashion trends 01:18:08 - Which live events we have planned for our Mastermind Community in 2026 — and how you can join Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences. BOOKS AND RESOURCES Join the exclusive ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠TIP Mastermind Community⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ to engage in meaningful stock investing discussions with Stig, Clay, Kyle, and the other community members Check out our event in Montana Join us in Omaha for Berkshire Hathaway’s annual shareholders’ meeting Tobias Carlisle's book, Soldier of Fortune Stig Brodersen’s Portfolio and Track record Listen to Mastermind Discussion Q3 2025 | YouTube video Listen to Mastermind Discussion Q2 2025 | YouTube video Listen to Mastermind Discussion Q1 2025 | YouTube video Listen to Mastermind Discussion Q4 2024 | YouTube video Listen to Mastermind Discussion Q3 2024 | YouTube video Listen to Mastermind Discussion Q2 2024 | YouTube video Listen to Mastermind Discussion Q1 2024 | YouTube video Tobias Carlisle's podcast, The Acquirers Podcast Tobias Carlisle's ETF, ZIG Tobias Carlisle's ETF, Deep Tweet directly to Tobias Carlisle Hari's Blog: BitsBusiness.com Tweet directly to Hari Related ⁠⁠⁠⁠⁠⁠⁠⁠books⁠⁠⁠⁠⁠⁠⁠⁠ mentioned in the podcast Ad-free episodes on our ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠Premium Feed⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ NEW TO THE SHOW? Get smarter about valuing businesses in just a few minutes each week through our newsletter, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠The Intrinsic Value Newsletter⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Check out our ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠We Study Billionaires Starter Packs⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Follow our official social media accounts: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠X (Twitter)⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠LinkedIn⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Instagram⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Facebook⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠TikTok⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Browse through all our episodes (complete with transcripts) ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠here⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Try our tool for picking stock winners and managing our portfolios: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠TIP Finance Tool⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Enjoy exclusive perks from our ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠favorite Apps and Services⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Learn how to better start, manage, and grow your business with the ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠best business podcasts⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ SPONSORS Support our free podcast by supporting our sponsors: HardBlock Human Rights Foundation Masterworks Linkedin Talent Solutions Simple Mining Plus500 Netsuite Fundrise Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

You're listening to TIP. In today's mastermind discussion, we're diving into three different businesses, each with its own story and set of opportunities. Hari will be pitching Sinoffi, a global pharmaceutical leader with a promising pipeline vaccines and immunology. I will be sharing my thoughts on Remedly, a fast-growing digital remittance company, helping millions of people send money across borders more efficiently. And Toby's pick is Crocs.

The football brand has gone from fashion ponsoline to global, powerhouse, yet still appears quite cheap. This mastermind format is all about testing our ideas, asking the hard questions, and exploring where we might be wrong. Over the years, I found it not only makes me a better investor, but also keeps me grounded and curious, and I hope it does the same for you. Towards the end of the episode, my co-host, Claire and I will also talk about what's next for our mastermind community, including our plans for live events in Omaha and New York City,

and how you can join us. Since 2014 and through more than 180 million downloads, we've studied the financial markets and read the books that influence self-made billionaires the most. We keep you informed and prepared for the unexpected. Now for your host, Stake Broderson. Welcome to The Investors podcast. I'm your host, Stake Broderson, and today I'm here with Hari and Toby. Jens, how are you today?

What's up, Stig? Good to see you again. Hey, Harry, how are you? Hey, what's up, Toby and Stig. Good to see you. Fantastic. And let's just jump right into the first pick. Hari, we talked about it just before we hit record and you volunteered. So let me throw it back over to you. What is your pick?

Thank you, Stake. And no pressure going first. But I've been looking into stocks that are undervalued and it's not easy in this current market. But today I have another pharmaceutical pitch. Sanofi. It's a global biopharma focused on immunology and vaccines. It's based in Europe, France, and it's well known across the globe. And I think of this company having two engines. The first one is their anti-inflammatory blockbuster drug, DuPixant, which has got approval, across multiple indications including COPD and has a decade long runway to go before patent expires.

And the second engine is their vaccines. Of course, I'm simplifying it. They have much more apart from this. But they are really well known for their vaccine, including the seasonal flu, infant RSV protection and many other really high quality vaccines. And since I have a lot of experience in SaaS software as a service business, I see vaccines very similar to software as a service. It's a subscription model because it's something that everybody takes during the flu season. It's kind of a repeat business for them. So it's a recurring revenue.

So vaccine is really their core strength and a stable source of income while they have blockbusters like Dupexant and others. They are also investing significantly in genetics and cell biology, immunology and stuff like that.

So that's kind of a bonus if they come up with any new blockbuster trucks. So the question is, okay, it's a great company. Any questions you have, I can discuss more in detail about their business, their drugs.

But the key question here is, is it a value track? That's what I was looking at when I was thinking about this company. Because they're trading in their low teens, I believe their P now is around 16. So it's not like really, really cheap, but compared to their peers like Johnson and Johnson, which is trading in mid-20s, 25. or Pfizer, which is 18, only Merck is kind of close to them in terms of P.E ratio. So even with considering their peers, I'm not even talking about our Mag 7 or Mac 10, which are all in their 30s and 40s peer ratio.

So they are well below historical S&P average PE ratio. And even among their peers, they appear to be quite low in terms of, terms of P ratio. So why such a discount? And they're yielding 4.9% dividend with the healthy buybacks. But still the question remains why. I believe one of the reasons why the market got spooked was their significant decline in their EPS in 2023. And that was unavoidable because one of their blockbuster drugs and I'm going to go butcher this name, Abagio or Abagio, I don't know how you pronounce it, it went out of patent, and the generaic came in and their revenue declined steeply because of that. On top of that,

they also decided to significantly increase their investments in R&D for future growth to compensate for the last patent. You might argue they should have thought about it. Yeah, that's a good point. Like, you know, they could have ramped up their R&E much before. But all of that resulted in a significant decline in their overall revenue in 2023. And then, of course, their EPS as well. It has kind of recovered in 2024 and hopefully we will see continued growth. So that was, that is one of the reasons why they are kind of in this spot. But what I see is that great, so a lot of bad news has been baked into the stock. Their P multiple is low.

Their price to sales is around 2.4. It's very interesting. It's like you come to max 7, it'll be 10 fold. It'll be like 24. 20. I'm used to seeing anything more than 10 in price to sales. So it's 2.4. Their 52 week high was 60.

52 week was around 45. They're trading at 48. So they're closer to their 52 week low. So it looks like a lot of bad news has been big then. So for the upside, what I see is their moat is actually twofold. One is biologic exclusivity with block versus drugs. And the second one is their scale in vaccine, manufacturing, their regulatory know-how. they have really good government relationships.

And so it's not like blockbuster drugs. It's a platform. It's the relationships. And on top of that, you get currency diversification because they are outside US. So there is dollar declines, which what most people are talking about now, they're based in Europe, they have worldwide sales. Of course, 48% comes from Amer, but still kind of, you know, their entire revenue recognized.

euros. So that has a good protection as well for us. So I think for me the key takeaway is that strong company historical record of kind of being good stewards of capital owner oriented. They have been returning capital consistently in 2025. They plan to complete a five billion euros by back. And they're paying a billion euros by back. And they're paying healthy dividend. They have not misdividend, so they have been consistent in that as well. And they also kind of recently restructured their company to focus on their core business and streamline their consumer health segment as well. I remember Johnson and Johnson had done that a while ago, this is like many years ago, which really helped them focus and grow their

core business as well. And I'm hoping that. you know, Sanofi is in one such kind of, you know, phase of their life cycle. So I think that's kind of my thesis. Valuation is reasonable. They have a good, strong portfolio of blockbuster drugs and vaccines that gives them a diversified set with a good investment in new drug discovery, as well as a shareholder focused. management. So that's my page. I'm happy to answer your questions. Yeah, I think it's a really interesting pick. I saw that healthcare biopharmaceticals are all trading as cheaply so the rest of

the market as they have since 2000, something like that, which is kind of amazing. And I think, I don't know why particularly healthcare is kind of getting whacked at the moment. I don't really understand that other than maybe it's like some sort of COVID hangover or something like that, but I don't really, that's pure, I don't know why. But I did notice that the last time it got really cheap like this was 2000, which was another.com or a tech kind of boom bubble. I think that's probably where we are here where things like energy looks really cheap relative to the S&P 500 healthcare for whatever reason is really cheap relative to the S&P 500.

techs it's super expensive which everybody knows and these really, really good businesses that make lots of money, really high margins, replicable, like you say, subscription type revenue. So I think it's a really good pick. I just, do you have any idea why healthcare is getting hit so hard right now? Do you know why that's happening? Actually, that's a, yeah, very good point, Toby. I'm just wagering a guesses. By the way, even I'm not very sure. One of the reasons might be, and this is where SNY is a different category, but if there are tariffs and regulations coming into place, a lot of these pharma companies can face hurdles because a lot of their, what they call APIs, the basic ingredients are all imported right now. And if they have to switch from importing to

manufacturing right here in the US, they might increase their cost. So that's for the US based. Sanofi probably doesn't suffer from that, but still they will be caught in the mix. So that is one. In general, the environment, the second one might be, and this is based on what I've been hearing, is that a lot of oxygen is being sucked by the MAC 7, the AI stocks. So capital flows to other sectors have been quite weak because a lot of momentum is there. So that might be the other reason.

It's just people not being too interested in the pharma or the healthcare stocks as well. Not enough meme ability in the healthcare stuff. They're just consistent, like they're pretty good consistent businesses over a long period of time. but there's no possibility of them going crazy with something. They're not AI-centric enough. Correct. What I did not do is look up their stock prices during the COVID time, and I'll probably do it offline, is did it spike up?

Because these guys are vaccine specialists. They didn't come up with vaccine for COVID though. So that's one thing where I think they didn't do that well for COVID, but I should look up their price and see how did they do. But yeah, I think that's a great question, Toby. Not sure why, but these are the two probable reasons I can come up with. Could just be cyclical to it. These things happen. I mean, it's happened before with the tech boom, so maybe.

And it did very well after that period because they're all good businesses. And if they're buying back stock and got the subscription revenue, they'll do very well. Well, Harry, just like last time, I liked the peck. The last time you picked was Mark. And I think it's always interesting to look at what kind of patents they have. And so they're not as reliant on their main drug, dupiant. I'm butching that name. Compared to Ketruda, that was the, what I was looking for last time with Ketri.

I think that was like 78%. Like it was massive for Merck, whereas Zinovia is roughly a third in terms of revenue. And so lots of things to like. I'm generally not too worried about how reliant a company is on one product. Perhaps we can talk a bit more about that whenever we get to Toby's pick. But it's more a question of how we size things ourselves. And so, no, I probably wouldn't be comfortable having a big bet on something like Merck because of the Catruda, the cliff they might be facing.

But then you can size it yourself and say, well, it's just 1% or whatever. And so you have that different diversification. for this company here. And then to the point before, healthcare is lastly non-cyclical. I would also imagine if I'm going to give my two cents, why is it that their price so relatively attractively? What is it that the British are saying,

like John Bull can't stand 2%? There's a lot of 2% out there. And, you know, pharmaceuticals are just not, you know, at this scale, it's like $117 billion in market camp. You know, there's not a lot of 30% growth, whatever kind of thing in the horizon, right? So I can't help but compare pharmaceuticals to T bills.

I'm like, yeah, I kind of like that. You know, there's a certain downside, certainly higher than with T bills, but not materially higher and there's a bit more upside. And so again, I'm not saying that should be your opportunity cost. That could be one opportunity cost, but that's certainly something I like. So yeah, no complaints here for me, as difficult it is for me to evaluate the pipeline. But then I'd probably come out and say, well, you know, you could buy a basket of these. There's a lot of pharmaceuticals that seem to be relatively on sale.

And I don't know if I can even say that with a company that's trading at 16 times a PE. I know that a lot of things are going to that multiple, but it's like everything is so expensive right now. So whenever you see something like that, that's cheap? And then you're like, well, why is it that we think that it's cheap? So yeah, I guess those are just my two cents. No, thank you. I think, Skig, you completed part of my pitch I should have mentioned, which is that they're not too overly reliant on one blockbuster drug, which was the case for Merck.

So that's another good plus point. But to your point, they're looking like a T-bill. I think that's a good point. And I'm actually not looking for high returns. I'm looking for when I'm pitching SNY. I'm pitching it as a safe place to park with reasonable growth, less degree of me. mean reversion when it comes to PE because they're already at average P kind of they're in the historical range basically and you get a close to 5%

dividend which is similar to a T bill to wait so it's like T bill with growth attached to it and I don't expect like blockbuster growth or it is there is no catalyst that can suddenly improve their prospects so it's more a safe place to park your money, 5% dividend plus another 3% growth, 3 to 4% growth. You're looking at around, say, 8% to 9% if you get lucky, maybe 10%. So for the next foreseeable future, the other thing I'm looking at here is the runway, these companies won't go away or they won't kind of, you know, or not too volatile. You can hold it for a decade.

There is no risk of AI coming in and impacting them so much as in others. In fact, AI can be a tailwind for them. If you think about drug discovery, how AI is helping reduce the cost and accelerate the growth. Of course, there is always a risk of what if two people in a garage come up with something. So that's always there. But the history, yeah, if you look at these pharmaceutical companies, they go and acquire these companies. whenever they come up with because what the two people in garage can't do is fight with the regulators. And these guys are really masters of managing the regulators, not just in one country, but across the globe.

And they have all the money to leverage something like Alpha Ford from Google, which is a protein simulation and building AI-based tool. And there are many such tools coming up. So they have all the capital to leverage it. They have the regulatory strength, strength to handle regulators. And then finally, they can also go out and buy all these startups that are coming up. So that's always the case in pharma where the big stay, big, small ones prop up and the big ones acquire them. So that's how I'm looking at this pick as somewhere to park my money, say, expect like 7 to 10% growth for the next 10 years, even if there is a lot of turmoil in the market in between.

And then when there are opportunities, then you can always switch and go back to the ones that have more potential for growth. Let's take a quick break and hear from today's sponsors. All right. I want you guys to imagine spending three days in Oslo at the height of the summer. You've got long days of daylight, incredible food, floating saunas on the Oslo Fjord. in every conversation you have is with people who are actually shaping the future. That's what the Oslo Freedom Forum is.

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All right. Back to the show. I love it, Harry. It's a wealth preservation type move. It's not a meme stock. All right. Gens, I'm going to pitch my stock here in a bit. It's a small stock, at least in comparison.

And it's something that, I don't know if you see the same thing, but there seem to be some stocks in the value investing space that sometimes become popular, not necessarily popular as in the stock prices goes up, unfortunately, but more like, oh, and then a lot of people talk about it, and then they, so it's sort of like it changes. And so I never heard about remitly before, which is my pick. And now it seems like everyone's talking about it. I don't know if there's just laws of attraction. You hear about it, and then you just, you probably heard about it before.

You just didn't pay attention. So the company I want to talk about is Remitly trades on the NASDAQ under the ticker R-E-L-I. R-E-L-I, if you want. What a coincidence. So Remidly, U.S.-based FinTech company operates digital remittance and cross-border money transfer platform. And so it was found in 2011 and then went public 10 years later. And as of 2025, Remitly serves millions of active customers.

8.5 due to the most recent filing, and they have more than 5,000 remittance corridors. And so a corridor would be US to Mexico, for example, which is also the biggest corridor, I should say. And they mainly generated the revenue through two streams. So they had transaction fees and then foreign exchange spreads. They're also starting now to have memberships and there are other ways to make money, but those are sort of like the two main streams. The transaction fees varies by corridor, payment method, and delivery speed.

and 93% of payments are sent and received within an hour. And the reason why they can do it so fast is because remotely have pre-funded accounts in different countries. And so their internal system would say, now we're moving the money, but the money doesn't cross border. That happens afterwards. And so the current take rate is 2.24% if anyone is curious. So the U.S. is the main market, the main cent point, I should say.

But as Remedia scale, it has become increasingly less important, which is also something they really want to emphasize. So this is a company that grows revenue with 30 plus percent. They have a lot of operational leverage, and I would say it's scale. They probably have a normalized EBIT at around 10x. Now they have really what got me excited about this stock was that I learned they had less than 12 months payback period on the customer acquisition, and they say that their ratio to a lifetime value is roughly around six.

And so they are firing on all cylinders, at least so far at my pitch. Then there are a lot of things I don't like, but that's probably one of the reasons why it looks so appealing, at least at first glance. The founder, Matt Oppenheimer, he's the CEO, owns a bit more than 2% of the outstanding shares. The biggest investor is noticeable a process, which is another company that I pitched here earlier in the mastermind discussion. They invested heavily in the private rounds.

And then number two and three, the usual suspects, Vanguard and BlackRock, and you can probably imagine why. And so if we talk a bit about competitive advantage competitors, now I'm a little hesitant to say that here on TAP we use Ys. We actually don't use remitly. And so why is that? I don't think our process is too different from what I presented here. I think it was two quarters ago whenever I talked about the reason why we used Google Cloud.

And then I actually pitched Microsoft. And so typically what happens, or at least in our company, what happens is that we have a certain need, which was in our case, you know, we have people in five different countries and we need to pay everyone. So how do we do that? And I spoke with our CEO and I said, how can we send money reliably at the lowest fees? And she said, why don't you use wise? And they was like, done.

And so I can't say that necessarily our process is very, very sophisticated. I would say that there is a level of being sticky to it, even though you can't at all compare it to something like a cloud provider. It's not that difficult to transfer, even though there is an element of inertia there. And so why do I pitch remitly whenever I would say that we're using wise? You can also say that NetProModers score, which is something some investors look at,

people like Wise more than they like Remitly. So why shouldn't we be talking about wise? Well, I would say that they've started to compete more and more in the same space, but Remitly has historically been the better choice in helping migrant workers send remittances. And you can more at least traditional think of wise as the company for small companies, such as TIP, you know, we have 20 people. And so it's a small company, but it's more a business to business. Remidly certainly has a leg up whenever it comes to the unbanked.

And one of the things I like whenever I am exploring a new product or service is that I like to speak with engineers. I think that for the lack of better words, I feel like engineers are a bit more, I'm going to say untainted. It sounds terrible whenever I say it out loud. But like, I come from a background in finance, which is we're very tainted. So whenever I speak with engineers, they think very much and very well about the product. And so they come at this from, hey, the best product wins. And I'm always simplifying as I'm saying this. But I think it's a very healthy way of looking at it.

I think they're very good at looking at facts. They're very good at looking at properties. And so whenever I come from this from my background in finance, we're like, yeah, having a good product, that's pretty good. But it's not always the best product that wins. Finance itself is notorious for selling complicated, useless products that they can charge high fees for, and then they can put some red tape around it and lobby some politician. So it's really difficult to compete in that.

And so that's a different game. And I wish that we would play the game of engineers. Apparently the finance people are not always doing that. And so it goes to my second point here, because some of you are probably, I don't know, perhaps some of you are thinking, what about stable coins? Isn't stable coin so much better than remittances? Like all that fiat currencies, that's so last year. We should send stable coins.

It settles automatically or it settles really, really fast, the fees are really low. Why do we need Remidly? And so I would argue that Remidly is this interesting intersection where it's a much better and cheaper product than the Western unions of the world. They don't have the same cost structure. They don't have the physical branches. But then they're also ingrained in the financial system in a different way than stable coins. And so perhaps an engineer would rightfully say, You have this stable coin.

It might be tied to the US dollar. It doesn't depreciate the same way as a Filipino peso does. That's a better product. Why wouldn't we just be sending from one phone to another? And I would argue that there are a few reasons why Remitly is very powerful in this in 2025. As you probably also said a long time ago, I don't have a position in Remitly because I have a lot of concerns. I'll get to later. But right now, I'm still in the middle of my...

a bull thesis here. So local legislators want to use remitly because it's part of the traditional banking system. And the banks wants to have remitly as a customer because the cheapest way for a bank to get funding that is through deposits. Plus, banks also tend to lobby politicians quite a bit. And so staple coins are for the same reason met with a lot of skepticism from local governments on the receiving end. And then I would also say the savings argument is, wonderful in theory. And it probably makes a lot of sense. Let's say you engineer, you make $200,000, $400,000 a year, and you're in a high-income country. So whenever you look at the data from Remittly, they're saying that roughly 15% of the sender's paycheck may go to emergencies.

But for the recipient, it's very often their main income. And the recipient, they don't really think too much about the M2 money supply expanding. They need the cash. they need it within the next hour, and they need to buy groceries. And by the way, the local government amending them to use fiat currencies, because they have their own incentive to do that. And so because you still need to convert that to the fiat currency, you can't really, there are a lot of things you can't do with stable coins, including that. And so you still need a service like Wise, Remedley, or PayPal, or Western Union, for that matter.

And so I'm not saying this because I am pro or con stablecoin, but I'm looking at the of this from a business case. And I've stayed in an extended period of time in third world countries, and I've met the recipients of remittances. And I think it's important whenever you're sitting in a First World country and thinking about what kind of banking needs that you have, they're just very different. And so let's take the example of the Philippines, which is the third largest market for Remittly after Mexico and India. And in the early days of Remedley, they only had the U.S. to the Philippines corridor. And I used... the Philippines because we have 11 members of our team there.

And so it allowed me to do a bit of Skullbuck research on Remedley specifically. And so if you're a Filipino construction worker in the US and you want to send money back to your family, there is a decent chance that some, if not all of them, don't have a bank account. And even if they do, it's very much used to you either use G-Cash or Maya. And so if you're not familiar with them, which I don't expect anyone to listen to this would necessarily be. they're deeply entrenched in the local payment infrastructure because they're owned by telecommunication

providers. And you likely bought your smartphone through those companies because that's the most efficient way of doing it. And so that is how the ecosystem works. And so if you're in a country where a lot of people that are unbanked, the app serves as a way for people to pay for their goods and services. And so it's different enough for Wise and Western Union for them to have a competitive advantage, but it's also different enough for something like stablecoin. And so remitly right now have roughly a 3% of the tam, of the $2 trillion tam in remittances. And right now, they're growing really, really fast. Whenever I look at some of the risks, and I've sort of like being quite positive so far. So let's talk about some of the less exciting stuff. So whenever I first

learned about their opportunity. I was quite excited, you know, 3%. It's growing really fast. They have a clear cost advantage to the Western Union's of the world. So like that seemed to be to be a home run. And then they made the announcement that they're going to expand their tank by 10x. And so they're saying, okay, you know, remittances, that's great. But there's 1.5 billion freelancers and or in the gig economy, one way or the other. And and millions of small businesses. businesses. And so the example that they used would be, hey, you might be a US-based company, but you outsource some things, say, in the Philippines. So you're already sending, they want to target or they are targeting people who are already using remittally. And then they're saying,

oh, now I also have a team, say, in the Philippines or India. Now I will still use remittly for those payments. And so at face value, who wouldn't want to have a tam that's 10x bigger? And And whenever I heard it, I was actually less excited about the pick because I like the pitch of saying, hey, we have 3% of a growing market and we do things better in remittances. We can go where other people can't go. Like we understand the local market really well. So for example, they wrote out this CFAR product to the 1.9 millions in the world. Think about someone who works on the cruise ship and they have very specific needs, their

international waters, and they do things a certain way. So they really understand those needs. So I like the idea of being able to understand them better. But then whenever you can't lean into that, whenever you're saying, I actually want to compete with wise of the world, because the time is much bigger. Then the question is, can they do wise better than wise can? And I'm sort of like using that as a metaphor for a lot of their competitors. And I don't know. know if they can. So using this terrible example, I was still talking about the Philippines because I have some local knowledge there.

And so you go there and, you know, it's more than 7,000 islands, more than 150 languages spoken. The Spaniards had 4006 years ago, hey, let's name all of these islands after King Philip the second and call the country the Philippines. And so whenever you go, you really need to understand the importance of, you know, why is this different from region to region? And why is it that some people want it to the mobile wallet and some people want it in cash?

And why is it okay some places to pick up that cash or why do we need other places to actually have the cash delivered to your door? Like there are a lot of things. You can be very nimble and you can provide a very different service than neobanking. But if you try to compete for them on their terms, you might run into different problems.

And so that is one thing I'm concerned about. Then the other thing I am somewhat concerned about, and I don't know if I read too much into it, but a lot of companies talk about their vision, and they talk about how everyone is very excited about that vision. And I've always been a bit skeptical about whether or not employees are truly that passionate about the company's vision. And I don't know, perhaps it's because I'm cynical, I don't know if I am. Whenever I had my first job as a commodities trader, you know, I don't think it's a business

any of the commerce trader were passionate about delivering electricity through solar grids. I don't think that was why they got up in the morning. If you ever walk into a trading floor, there are lots of other dynamics that people are more passionate about, especially the paycheck, but there was a ton of stuff going on on the trading floor that it's kind of crazy. And so whenever I hear about a company talking about how passionate everyone is about XYC, I'm thinking, well, perhaps that is true for Remitly the way that they are empowering migrant workers. If they become yet another neobank, how passionate can you really rally people

to be? And so, anyways, that's another bit more self-risk. I'm probably just reading too much into it. Jan's, I have a section here more about the valuation, but before I get to that, I want to throw it back over to you guys. Hey, Stig, I think this is a very interesting fix for me because I use one of these services to send money back home to India many times. I have been using it for multiple decades now. And I have seen this entire space evolve from the time when it was too cumbersome and we had to wait for a week to now when they promise to have it within hours. And it's almost like what also I observe is when you're bringing up this corridors,

whether it's Philippines or to India to Mexico. It's almost like Uber versus Lyft versus Ola or the Chinese equivalent. Each corridor has its own pick. So it's not really like a network effect that you see here usually. They are like a service and a corridor and I can pick and choose. And based on the rates, the switching costs are very low. So that's one thing I have observed as a user. Zoom is another very popular for US to India.

It's now acquired by PayPal. And this space is really evolving. And there are many players like Square is another one. Wise is another one. So the key questions I have are two. One is what's their remote? There is no network effect. They're offering a service that others

are offering too. I don't see as say between Zoom and Y's and Remitly, what's the difference? That's probably you might have looked into. For me, I've been using Zoom so maybe I'll try Remitly next time to see how they charge. And

the second question I have is I was looking at their growth. It's definitely one of the highest with like 40% plus growth almost year over year. But their P ratio and I was like, is it stock price or P ratio. It's like 249 or 250. Is that correct? Stig? I should probably make the disclaimer in the

beginning. So it's a bit of an inflection point. So what you see there is probably, yes, it is true, but it's of an amount because they're just unprofitable. Whereas like, hey, if you have one dollar in profit, you know, what is your multiple going to be? The reason why I would normalize, let's say, maybe it would be, I would say for this type of business, what kind of margin, operating imagine what you typically have a scale. And then I would say, is that realistic to get to that point? Yeah. So there are two points there. One is, is it at a stage where it's like the early days of car manufacturers in US or railroads in US where there's so many players, it's hard to pick a winner. That's one. Second is, what's their moat? What's their prospects for scaling

and actually not only being profitable, but grow into the valuation that they have been offered already. And how do you see the competitive landscape? Are there other players that can actually hinder their growth? Yeah, great questions, Harry. And I wish I knew the answers to all of them. I would say if I start with mode, they've been specifically asked about it.

It's always interesting to hear what the CEO would say that mode is, and then you can sort of compare it to whether you agree with them. But they would say that they have a flywheel, where scale really matters. They say that they create trust by having allowing users and remittances, fast at fair prices. That gives them scale, and you can then, they will then lower their fees because they can now they have more scale and on and on and on it goes.

And so then you can perhaps make the argument is then, is it a raise to the button in that case? Perhaps you're right. And I think you can also say, well, if it's about scale, well, what about PayPal? what is that capacity to suffer? And that's one of the issues I have with Remitly and one of the concerns I have where I like a company to be very good at one thing.

It's great if they're good at other things, but very often you're good at one thing and it comes at the expense of something else if you're good at other things. And so you can perhaps say, and I'm going to use an example of, say, Spotify, you know, they became really, really good in podcasting because they were only looking at music and podcasting

at the time. Whereas for Apple Podcast, I don't know what podcasting is on Tip Cook's list is probably 852 on his priority list. So I can see why someone would say, oh, remitly, you know, there's so much better than a small arm of PayPal. But then that goes to my other point about now they're sort of like shifting strategy. And they're saying, well, you know, we already use the infrastructure we have. Now we just want to send bigger payments and more payments through the pipes that we

already set up. Whereas I'm looking at this more like, huh, I are now a new bank that's, I think their advantage is that they are serving the underbanked. And it makes a difference to them whether or not they have 3% of the somewhat smaller written space, at least if you look at in payments overall, it's a very, very small space. So if they can do that really, really well, and there's one way they can do that in this region of this country. And then if they can be very specific about how the recipient want that money and they've set up their infrastructure. Now, is that a moat? Probably not. I think you have a point whenever it comes to that. Can it be imitated? Probably not. Payments are tricky. You need scale and you need focus. And so if I put on

the bowl hat, I would say they both have scale and they have that specific focus that they're now turning away from, which I'm not really too happy about. Now, what is the process of scaling? Well, they've been asked about that on the earnings calls. And they're saying, oh, we just have so many opportunities, not just with more corridors, but there are so much more to gain in each corridor. They keep on saying that the marketing dollars that they pay out, less than 12 months for them to get it back, and then there are six X returns.

So if you trust that, there's a lot of growth coming, but then why are they a better product to then what you're using, I don't think I have a good response to that. Thanks, too. I've noticed that Western Union and Moneygram have been in the value screeners for years and years and years and years because they're competition. They're losing that competition, I guess, but I just wonder how, and I know this is the next subject you're going to talk about, but how do you think about the valuation? How do you think about the valuation given the comps?

That's basically my question. If I look at a company like Sanofi, I feel I can, without knowing too much about the company, I feel like I can discount those cash flows. Whenever I'm looking at something like Remitly, like I'm all over the place. And so I read a few hundred pages on the company. So the most, the 10K, last six earnings call, a few other sources. So it's kind of like in that spot where you're like, I kind of feel I understand the company, but I don't really understand any of it

because every time I read something new, I was like, oh, I didn't know that at all about the company. I'm sure, you know, there is going to be a genius out there who knows how to use chat tip T for this. I continuously try to use chat Tbti and I find it somewhat useful. But then you sort of like just print out a few hundred pages and you just start with the A's and you're like, okay, and perhaps it's just me that's old-fashioned in terms of understanding a company.

And so, at least for me, I probably because I'm a slow learner, I need to go through the earnings calls really to understand the qualitative aspects of the business. And then I need to discount everything the CEO is saying because everything sounds rosy. It's probably not the case. But let me try and answer your question. Whenever I'm looking at a company that's trading at, call it a bit more than two times

revenue, it doesn't look like it has any margins. I would say that it has. Whenever you're making that type of return of marketing, for example, you would put as much as you can into marketing, and then it looks like you just don't make any money, but that's one of the reasons why it's growing like 30 or 40% a year. So you sort of like have to have to normalize it. And so if you put me on the spot, and again, it really also depends on how long the runway is that you grow. I like to think, you know, today at the time of recording is trading in 14 change. I think that it's probably trading around a 50% discount and intrinsic value.

But whenever you make that, you also, like, at least for me, I'm like, I'm doing like a bull case, a base case, and then a bare case. And then the question is, well, the question is, are those three scenarios realistic? But the more tricky thing is you need to put probabilities on those three scenarios. And that's really tricky. And then another thing that's really, it's really annoying to me is the level of stock-based conversation. I kind of feel like I should have started with that.

but I always start with how much I dislike stock-based compensation at that level. So I wanted to end here at the end. And so it's sort of like, it is what it is. It's historically been more than 10%. Now it's just below 10% of revenue. And we're talking about a $3 billion market cap company. And so I like to think that now it's matured enough. I know today $3 billion is nothing.

But for me, $3 billion is still a lot of money. And I feel like they have matured enough for them not to, have that kind of cash and equity mix. The CEO has to his credit set no to the last three stock rents because, you know, he's been under a lot of scrutiny in terms of the stock dilution. Now they authorized a $200 million stock buyback program to offset that. And we also talked about the last time whenever I was pitching Uber, full disclosure, I'm now a long Uber. But then they're saying, oh, then we just offset the, you know, the stocks that we issue. But as you know, the money doesn't come from nowhere, like they're real cash that they have to make. And so the way they talk about it

and sort of like pretend that everything is fantastic, but the way they talk about it is that they're saying, look, now we're starting to generate healthy cash flows. We can pay our people a bit more. I think they call it like the cash equity mix have changed. So now they don't give us much inequity. And added to that, they would say we're not diluting shareholders as much because now we're buying back stocks. But then you also have to counter that with the fact that Apparently, they have a ton of growth opportunities, and the money that they are spending on buying back stocks could also be used to those growth opportunities. So it sort of like depends on how you look at it.

I feel like, and like you mentioned, I'm not long remotely, I need to understand the business a bit better. And I think I need to understand the strategy better. They're saying, we are not going to be another neobank. And we're not, we are still going to cater to those who are underserved. So we don't have to compete with the bigger players. I still don't know if that consistent with the strategy that they're pursuing. And I kind of feel like, and I don't know why they're saying this,

I would imagine it's probably good for the stock, but it sounds good to go out and say, our time is now 10x. In reality, it's typically better to be a big fish in a small pond than a small fish in a big pond. I guess that's my non-response, to how I think about the evaluation. 50% of intrinsic value considering a ton of different assumptions.

Good one. Thanks. Thanks, Stig. Ari? No, I think it's a tough one. Stick, I think it can go either way. I think it's almost like a borderlining venture, but I was just thinking when you're talking about stockwax compensation,

you should visit Valley, Silicon Valley once. And I want to see the expression on your face when you hear about the stock base compensation and dilution that goes on here. Yeah, I don't know if there's a way about it. I mean, perhaps that's just the way it is today. What are you seeing, Harry? I think if you look at companies like meta and many others, actually,

just not to single them out, but many companies, stock fix compensation is the way that employees are incentivized and many times your stock component is much higher than your base salary. So I think dilution, when many of these tech companies buy back shares, it's basically they're buying back there, Stockholm.

But this has been for decades. I think Buffett had spoken about it long time back. Nothing changed. Yeah. And the other thing, I always like to see how well the CEO understands capital allocation. Of course, we're spoiled because we all been raised by the church of Buffett and Munger. But they're saying our team are thinking like owners. and they have equity in the business,

and that's why I think like owners. As a business owner, I could not disagree more. And it might be one thing, if you're a business of five people, 10 people, everyone can truly impact your direction of the business. If you're thousands or tens of thousands of people, and by the way, for admittedly, it's not performance restricted share you,

and it's like, if you don't get fired, if you don't mess up, you get free shares. It's part of your compensation. Does that really make you think like an owner? Sure, I can see why it makes you think more like an owner that not getting anything at all. But what if you got a bonus specifically? Let's say that your responsibility is the corridor between the U.S. and India.

Shouldn't you have a bonus cash bonus, perhaps then be forced to buy shares in the open market? But shouldn't you have specifically on what you can change for you? and not on the company of all and what the market sentiment is. Like, to me, that is not thinking like an owner. Perhaps that is how they think about it. To me, it just seems like, really? Is that really how you think that employees are thinking about their stock-based comp? And I don't know, Harry, perhaps I'm just way too cynical.

Does it work in practice? Yeah, I think that's a very good point. But also, I think there is the other component of competition for talent. So it's almost like a bidding war. You might have heard about like, you know, folks in the LLM with the LLM skill set from open eye getting $100 million offers. That's almost like buying a startup of one. So it's basically bidding war.

It's supply and demand. That's how I see. For great talent, there is a lot of demand with multiple competitors. So many times it was very popular a few years. back, it was called as green mail, which means many companies would pay really talented people, talented people, high stock options and salaries just to keep them on bench so that they don't go to the competition. So a lot of irrational things happen, but there is a lot of capital flooding around the market. So, and then there is a lot of competition. Let's take a quick break

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All right. Back to the show. Yeah, that's a good point, Hardy. And especially for the two-sided marketplaces, which is just really, really hard to start. And once you have it, like, it's wonderful, but like building it is like really, really difficult. You need a lot of, spend a lot of money in engineers. You need to spend a lot of money on marketing.

And a lot of these startups, they are cash poor, but equity rich. So from their perspective, it does make sense to issue equity and then later find a way to buy back because if you don't get there, what does it really matter? And they need to get there. And they don't have the cash to get there. So I can also understand the other side. I guess as a stock investor, I'm like, don't dilute me 10% a year, even with this wonderful growth. Like, I think there's also a question of probabilities where I'm like, one thing is, I think they can grow with 30%.

But if I know I'm going to be eluded by 10%, there's something with the probabilities there. And I kind of feel I have a higher conviction at me being diluted 10%, then I have a conviction in the company continue to grow 30%. No, I think, Stig, you have a valid point. though, but I think the hope is growth will cure all sins. So if a company is growing at 100, 200% revenue, then whatever they're doing, the hope is like, don't worry, our fee might be high, but eventually we'll give it the returns. Well said. Well, said, all right.

Toby, you're up. Thanks, Stig. My pick is Crox. It's the ugly shoemaker. I've got crocs in my mid-cap value fund. I think it's, you know, my branding is acquirers multiple, so I've always been looking for companies that can get taken out in a private equity transaction. I think this is one of the clear opportunities that I've seen in a long time.

Current market cap is $4.3 billion, which is very modest in this market. I'm actually surprised there's the second biggest one we've pitched today, but I thought I was going to have the smallest one we pitched today, that Stig snuck under me with remitly. Stock price, last I checked, was $79 and change. Enterprise value was $5.9 billion. So this thing's net debt to the tune of $1.6 billion. On a $4.3 billion market cap, that might sound like a lot,

but they had free cash flow last year of more than $900 million, between $900 and a billion. So they're like a little bit over two times. They're a little bit over 1.6 times free cash flow. So I think they cover their debt pretty comfortably. they have a $1.3 billion buyback authorization, which is 25% of the outstanding stock, where it's currently trading, which I hope they're deploying aggressively in this market, because the stock is very, very cheap.

In 2022, it was $180, so at $79, it's more than halved over that period of time. If you had a look at the business, you wouldn't know that. The business has done pretty well through that period. I think it was likely that the stock got well ahead of itself at $180, but it's too cheap at $79. So it grew 9% last year, which is pretty good growth. The international growth is better still. International business grew 16% first second quarter of this year. China's growing 64% a year.

It's sort of surprising because I thought that Crocs is something you could copy pretty easily in China, but it hasn't been so far. It's performing reasonably well in Western Europe. I think the six times P, 21% free cash flow yield, growing 9%. It all sounds pretty good. So the natural question is where we are. And the answer is they've made a bad acquisition or the acquisition hasn't really worked

out. I don't necessarily say that it's a bad acquisition. But they bought this hey dude, which make different kind of ugly shoes. You know, there's a little bit of fashion in this business that those ugly shoes were very fashionable and attractive for a period of time, but they've, the sales have declined. line 7 to 9% this year. So for whatever reason, that fashion perhaps moving on a little bit and Crocs itself, that clog shape, that ugly clog shape that everybody knows. The same thing could happen to it. I did a little channel check when I was at Jiu-Jitzy with my boys because

all the boys take their shoes off and they leave them on the ground. And so I counted out how many of them were crocs and how many of them were other things and crocs were one-third of the shoes on the floor, which I was kind of surprised. about because my boys wear natives. They didn't have the clogs on my crocs. My daughter wears the crocs. So we do have some crocs in the house. And she collects the little gems that click into the shoes. So there is at least for 12 year old girls in Los Angeles, they're still, they're still cool enough that they'll wear them and wear them around. So they bought this hey dude thing, $2.5 billion. It's not really, it hasn't worked out so far. Maybe they can stabilize it. Maybe they can

turned it around. I don't know. But I think it's like $2.5 billion is like two and a half times, three times free cash flow. So if it turns out it's a donut, I don't think it's the worst thing in the world because the rest of the business is still throwing off so much cash. The other big problem that they have is the tariffs because they get all of their shoes are made in Vietnam and China and so on. And so they are impacted by the tariffs. So, They've also got some competition risk from, so I mentioned natives. Natives are a small competitor, but Birkenstocks are still out there. There's another type of ugly shirt people can wear.

So the risks that I think are, hey dude is a problem, not working out very well, but I think that's survivable. The tariff impact is going to be bigger and we don't know. I don't think necessarily how that works out. But I do think they solve that problem eventually, but they do have a huge exposure to tariffs. the other possibility is that it's a fattish kind of consumer fashionable brand that if the fashion goes away and Crocs have been around for a long time

in and out of fashion a few times and so when they get cheap they get really really cheap the business gets really really cheap this business has been a net net it was in my net net screens for a long time it's been in my acquires multiple screen on and off for the last few years because it did get very expensive and then it got cheap again then it got expensive and now it's got cheap again So in this sort of, I like it, I don't mind stocks that do that get expensive and cheap because I think you can buy and sell them, which is what I have done through the Acquirers Fund.

And we're currently a buyer. Again, we're an owner. We have it for a little while now. The other problem that they have is that they're sort of their lower end choose. So they have some pricing cap, but I still think they're pretty competitively priced. And they still get pretty good margins on the pricing where it is. the tariffs may impact that, so I don't really want to rest the whole thesis on that, but I do think they get surprisingly healthy margins on issues.

Their gross margins, like 58%, even through all of this. I don't know how much of the tariffs have actually impacted yet, but their gross margins are higher this year than they were last year. So I don't know exactly how they're doing that. They're kind of tech margins at like 58%. Big margins on shoes that are easily copied make me nervous because it means that somebody else out there could say, well, I want 60% margins.

I can make plastic injected shoes in a slightly different style. It's more fashionable and attractive. And maybe they can compete that away. But for whatever reason it hasn't happened so far, I think there's a component of Crocs where they're worn in like the healthcare, lots of nurses and doctors wear them in hospitals for foot protection because they're reasonably comfortable and you can hose them out when you finish using them. So I think the valuation on this is obviously compelling where it is 4.3 billion.

for a billion dollars in free cash flow, six times earnings, 1.3 billion dollar buyback. All of that stuff tells me that it's very, very cheap. So the question is, is it so risky with all these other things that are going on that that overwhelms that sort of level of cheapness? I have answered that question myself because I've bought a position and I think that the cheapness here overweighs the risks, but there are, I acknowledge that those risks are out there and somebody else could easily reach a different conclusion to that one. but I think there are some interesting tariff, some interesting catalysts.

The first one is just resolving the tariffs. I don't think that we're going back to a no tariff world, but I think that some tariff certainty would be a huge advantage for these companies because once they work out what they have to do, they will resolve the problem. They'll restructure in some way. They might make them at a slightly high price. It might be a slightly more cumbersome process,

but they'll figure that out. So I'm not too worried about that. But the chopping and changing all the time makes it hard. and the implementation is going to be a hard period. And so I think that is one of the reasons why it's trading where it is, because that remains unclear how they're going to do that. But I do think that all of these things are sort of resolvable in a pretty short period of time, if they do.

And I think given the cheapness, the buyback, all of these things sort of going wrong at the same time, tariffs and hey dude and the general cyclical weakness, I think for stocks that are not mag seven. I think that this is a particularly attractive opportunity, for more speculative opportunity. I think if you want certainty, then go with Harry. If you want a little bit more volatility and upside, then my pick is the one for that. But there is some risk in this stock. But I do think there are a lot of ways that you can win and you're going to know along the way whether you're winning or not.

And so watching the hated acquisition, watching how the tariffs get resolved, watching what they do with the buyback, I think the clear parts that if they execute and they get it right, the stock works out. And if it doesn't, then you should have an early warning sign that you can get out. So I think the stock is just simply too cheap where it is. I saw that sketches got taken out. Sketches is like a different kind of business model. I get that. But still a footwear company, US base, they did that acquisition at $13 billion, I think. So it's certainly. the size is right if someone wants to take this thing out or if someone else wants to bite and bolt it on to an existing shoe business. I think a financial crisis, they could pay a pretty big premium to where it's trading. That's not really what I expect to happen, but I think that it's worth pointing out that that's a possibility. So the downside risks are tariffs, hey dude, and just the fashion fattishness of the shoes. But I think that the amount of cash they're generating the margins sort of seem to suggest that those aren't issues right now. The core brand is still attractive and still attractive in the US, still growing internationally, growing very

fast in China. I don't really understand why. It makes no sense to me, but they are doing that. And there's lots of ways that this business can win tariffs get figured out. They resolve hey dude. They've got Sydney Sweeney selling Hey Dird, which was their big issue. That was something that people were joking about on Twitter that once you get Sydney Sweeney selling something it does really well, So American Outfit of jeans, they got her in those jeans and that did really well. And so the memes for a while were like trying to get her to sell Intel chips and stuff like that. But it turns out she is selling the hey dude shoes. So maybe that's what that brand needs to sort of turn itself around.

Who knows? So that's my pick. Crocs at 79 bucks and I hold it. So I'm eating my own cooking. If it doesn't work out, I'll let you know. Actually, I was looking forward to talking about this pick once I saw what. you're going to discuss because my daughter also has a lot of crocs. I see when I go to parks, a lot of kids wearing crocs. But for me, the kind of surprising point that you brought

up is like, they are successful in China, in China, when microchips are being copied and people are complaining about IP theft and all their stuff. How are they happy to do it? I think they deserve higher multiple just for that. So great pick, by the way. I think this is one of the lowest P ratio I have heard in the recent picks that we have discussed. And they have been forever though. Yeah, it feels so simple to do, but I don't know why people are not copying it or why there are no copycads who can come up with.

I don't know whether, do they have patents to be that this protecting them? I don't know, but I think they've been around for so long that the patents must have rolled off. Because I know that those native shoes are the same, almost the same idea, same material like injection molded into a shoe, and they don't seem to have any problem. Yeah, I guess the tariff, so would you say tariff is the only factor now that injects some uncertainty? Of course, Hediod, that's baked into the price already.

So do you think the uncertainty of tariffs are also baked into the price that we are paying less for uncertain dates part of time. Yeah, I think the margin that they're earning, maybe the margin is a little illusory at like 58%. That's a fat. Like I said, those are tech margins for a shoe that should be pretty easy to copy. So there's a fashion part of this that makes, that people require the Crox brand clogs.

But they're so, like, they're reasonably valued, they're reasonably priced shoes. they're like sub-50 bucks for the most part, 40 or 50 bucks, which we pay for kids' shoes because kids last about six months in their shoes before they grow out, so put them in whatever and then when they grow it, that's what happens. But they keep on, it's re-up for crocs, or re-up for natives for the boys. The fashion part of it, I can't quite get my head around, and I do think that that's the main risk with this thing.

Having said that, they are still growing and they are still attractive to kids. So I think that for the most part, for the moment, that that is okay. And the fact they've been around for so long, but they have always been cheap. Like as an investment proposition, they've been cheap most of the time. They occasionally become expensive, but most of the time they've been cheap for the last 10 or 20 years. Whenever you send it, my way, I was like, of course. The numbers are so great. Like, not lots to complain about there.

There were a few things I wanted to highlight. One of them is, hey dude, even though as you already talked about it. So, 2.5 million to your point. And the deal was made through the highs of COVID. Then the deal closed in 2022. And I think optically, it didn't look too expensive. It was like 4.4 times revenue and 10-ish EBITDA. But it seems to be a growing brand. And then it turned out that it wasn't. And so they had an impairment test of 700 and change million dollars. So it's roughly a third of the value of the acquisition. And so, and that's also why you look at the latest findings that they're doing their and adjusted gap number and then their gap number because otherwise it looks too brutal. And that's all all fine and well. You can of course

ask the question, what is that telling off whenever that happens? Does that mean that the management are not good at acquisitions? Does it mean that the management like to do acquisitions, even if it doesn't create value, which is something a lot of CEOs like to do because it's fun to make acquisitions. And it's kind of like interesting. If you look at the story of Crocs, they went back in the day, they went for more than $67 to less than a dollar. Talk about something that's in fashion and then not. But then there are a lot of things that were happening at the time. And so the reason why they could do the turnover was also because they caught it to the very core. So at the time, they were doing a bunch of stuff. They were doing like sandals and brain boots and apparel's and like,

so they caught all the other way. They closed a lot of locations and then they're refocused on the core brand and the core product. And that turned out to be successful. And then come COVID, they started to diversify again and they fail. So I think that there's a there's a risk there. And you could say that it's already been priced in. And I would completely agree with you. It's priced in. What is not priced in is, are they going to do it again and destroy value? Then there's the other thing that you already commented on, Toby, about, like, it's something that's fashionable one way or the other.

So whenever you go through the earnings calls, they're very happy about the fact that they're number one in TikTok store in the US. And so whenever I read it, I was like, oh, this is bad. And it was kind of ironic because I can see why the management is excited about being number one, like who doesn't want to sell a product, that's number one. But in there also lies, you know, the risk because right now they're number one, Tick's a store end. I don't have any stats on this, but I'm quite sure you don't stay number one in Tickok

for that long. That's the entire point of TikTok in the first place. And I say that for someone who's never been on TikTok. So I can only speculate. So what happens whenever you're not? And so last week, for example, you know, I was speaking with Toby about Ray Rose. I know I'm making quite a jump here because we're talking about Pux Halloway and BNSF. and they're not cool.

You know, you know what I mean? Like BNSF is not a cool company, but it doesn't really matter. It's the law of physics that determines why you're using railways. It's not whether or not you're number one on TikTok. And so I don't want to go too hard on Crocs as I'm going this through that. You know, even, you know, now we're talking about Buffett, you know, it's like even the best fail on some of the deals, you know.

Kav Thines was, you know, written down. more than $15 billion and only four of them was attributed to to Berksa Heatherway. But like, and of course that's from a very different baseline. But like mistakes happen and they also happen for Berksie Heatherway. But I can't help but think about a company like Crox where perhaps they're sitting there and they're saying, look, we need to diversify. We can't rely too much on this one thing that's in fashion. And perhaps you as a stock investor just really want to size your position and get your

shareholder return. That's really the play that you want to see them do instead of doing all these other things. And so I did beating up on the management a bit, but then they also took a bit of a debt. Previously, they've done a really good job paying that back. And so I don't know. I like the numbers for sure. And I would argue much of that is priced in. The last thing I would say, and this is more a personal preference, and this is not necessarily

about Crocs per se, but it's more if I buy that. stock, I already have to think about selling it the minute I would buy in. That's the nature of it. And I would need to follow whether or not it stays cool or it doesn't stay cool. And I think that's a different type of investment where you have to think about, are you looking for some kind of multiple expansion? Is that how you're going to get paid? How much is coming back in buybacks?

How would you think about it if it was dividends, you would get a very attractive yield. And so this is a company that has 23% operating margin that there was negative 10 years ago. And so there was a bit more stress around it and you need to think about when you sell. But if you know how to solve that, you'd be richly rewarded. I really like your pick, Toby. Thanks, Dig. Yeah, I think it looks like it's trading like it's in distress, but I don't think it's in distress. It's throwing off a billion dollars in free cash flow.

So it's worth, if the business is in decline, then I think you've got a lot of time to figure that out, but it is a stock that's traded cheaply a lot of the time. But it's also traded, it's traded, it's had its booms as well. So there's a possibility of like a win-fall in this one. There's also a possibility of a loss. So it's worth, I think it's worth taking a look at, but as you say, you need to monitor. It's not one that you can set and forget. All right, Jans, as always, thank you so much for your time.

It's always a lot of fun whenever we have these chats here once a quarter. As always, I would like to give you the opportunity to give a handoff to anything. you like. Toby, take it away. I have a new book, Soldier of Fortune. It's about Buffett and Sun Tzu and the ancient art of risk-taking. It's for sale. It's for sale on Amazon, Kindle, hardcover, paperback, audio coming soon. I'm really excited about it. I also have two fun Zieg, which is deep value, mid and large cap, deep, which is small and micro, Acquireasmultable.com, and I'm on Twitter at Greenback, G-R-E-E-N-B-A-S. It's a funny spelling. I might have to change it one day, but Stig, thanks so much for having me.

Harry, good seeing you again. You bet. Thank you so much, Toby. Can I just sneak in one question? So you said it's also going to be an audiobook format. Are you going to do the audio? I'm not. No, I have a guy who he does NPR Atlanta. He's got a superb voice. It sounds so much better than I do. So I'll be getting him to, he's recording it right now. Okay. Cool, cool, very cool. Hari? Hey, Toby, looking forward to the book and Mike Gopi and Espion. Especially the audio version. So interesting topic and timely one too, I guess, looking at the markets.

Well, you can all reach me on my Twitter handle, Harry Rama or my blog, bit's business.com. Looking forward to continuing the conversation, especially last time there was very interesting comments about my pick. And kind of, you know, we had offline conversation. Always like it because I want to make sure that any of my blind spots are. are covered. And I got to connect with someone who actually works in the pharma industry. So strengthening my case. So great. I'm looking forward to the conversation. Thank you, Toby and Stig, for having me. Thank you, Harry. And Toby and Hari, I look forward to next quarter where we're going to do another round of our mastermind discussion. So thank you once again. Perfect. Thanks,

Stig. Thank you. In this second part of the show, my co-host, Cliffing, and I wanted to put together a short segment to discuss the live events we host here at TIP. Hey, Clay, what's going on? Not too much, Dig. Always great chatting with you here during these segments, talking about what's happening here at TIP. Yeah, and Clay, it is one thing to connect online. And of course, with modern technology, it's very convenient.

But the relationship and connections that you make whenever it's in person is just very, very different. And you just wrapped up the live events we have in Big Sky, Montana for the summit event. And then also you did New York City for our mastermind community. Since you were in Montana first, why don't we talk about that first? Yeah, of course. It's one thing to, you know, plan a couple of events that are, you know, two weeks apart. But then it's a, you know, you can get a bit traveled out once you've done it and organized everything there. But yeah, we just wrapped up the two live events in the past month or so.

First, we hosted our summit event in Big Sky, Montana to hang out in the mountains just with some wonderful people, talk investing, do some fun activities like hiking and fly fishing. and pickleball and just enjoy some really amazing meals alongside Kindred Spirits. It's actually the first time we've hosted such an extensive event. It was actually five days. We were all out in Montana. I definitely learned a lot in putting it together. And we had just a really great group of people. And some of the attendees included some members of our mastermind community. We had four people from the TIP team. Sean and Daniel made it from the Intrinsic Value podcast. And then several from the audience as well. So the views in Montana are just unbelievable. If anyone is based in the U.S. and hasn't been, I think it's just a wonderful place to

visit. The altitude, I'll be honest, was a bit much for me, but other than that, I just really enjoyed my time there. And when I step back and think about the in-person events we host, I hesitate to say what we do is investment conferences. That's sort of what I think some people think of it as. I kind of prefer calling them live events, but in a sense, they are an investment conference. So one of my friends who isn't a TIP listener, he asked me, why were we in Montana? You know, why I was in the mountains of Montana for work? And I told him that we were hosting a small conference, but instead of getting dressed up in suits and gathering in a conference room at the Marriott, we're going to the mountains to talk stocks, go hiking, go fly fishing, and, yeah,

just have a lot of fun. But that doesn't really sound exactly like a conference to me. So it's an oversimplified way of putting it, but that really is the goal with all of our live events. We want to try to create just a fantastic experience by making our attendees feel comfortable, give them the opportunity to do some fun things and meet some wonderful people. And then we also hosted a couple of presentations at the house we stayed at in Montana. So my friend Joseph Sheposnik, who has been a guest a few times on the show, he gave a talk on his investment approach, assessing management teams and how he went about launching his ETF.

and then Sean and Daniel from our intrinsic value podcast. They also did a presentation. They talked about the portfolio they've built throughout 2025 and pitched Uber stock, which you've talked about here on the show, which helped create a lot of fun discussions throughout the weekend. And there was a running joke. To really get Sean going, you just had to ask him about Lulu Lemon, as he's quite passionate about the stock and the brand and the stock's been hammered this year.

I'm sure many in our audience have followed along with that one. But anyways, I think we have some great. ideas that we'll take from the summit and implement into some of the things we do in the future. Yeah, and Clay, unfortunately, I did make my way out to Montana, but after watching the event video, I mean, I surely wish I had. You know, they say that a photo is worth a thousand words, and I don't know if I can add that a video is worth a million. We'll link to the video in the show notes if anyone wants to check it out. But Clay, you also just came back from New York City, and I just, I love the energy there. How was it? Yeah, well, Montana is certainly much different than New York. One of our

team members from the Philippines actually made the trip to join us. And yeah, we kind of tried to tell her, hey, New York's nothing like Montana. So try to primer a little bit. But New York was just great as well. For someone that's lived in the Midwest, my whole life, one weekend there is probably enough for me, given how different it is. So we did host our Mastermind community events for the 30 are there. And there are a lot of things that I like about hosting events in New York. One of the things that I think is most important is that it's fairly centrally located. So we have a global community. It can be tough to bring a lot of people together. We have many members who are based in New York and Toronto. So that really helps. And what we did was we hosted a couple of

dinners that each had around 30 attendees. The food scene in New York is just unreal. I'm sure you know that. It's probably one of my favorite parts. And there's just so much to do there, too. Many of our members will bring their spouse and go to a show or to or connect with other members and go and walk Central Park or grab a coffee with them in the morning. And we had members come from all over Canada and all throughout the U.S. And one of my goals in putting together each live event is to try and make it better than the previous year. And I feel like we achieved that with New York. We just had some fantastic members make it. The dinners were great. And we're all. already making plans for next year's trip to make it even better. And members also appreciate that

they're able to bring a spouse or friend to our events. I found that members tend to bring their spouse to New York instead of Omaha, which I certainly don't blame them for. And in addition to the two dinners we hosted, we also hung out at the one Vanderbilt Observatory, where we went up to the 93rd floor, grabbed a drink and checked out a new view of the city from one of the tallest buildings in New York. And that building was actually completed in 2020 and it was definitely quite an experience as well. Oh man, Clay, that sounds amazing. I'll be the first to say, I love New York City. You and I have a similar background. You know, I grew up in this beautiful rural area and just miles and miles of John Deereen. Let's say as far away from New York City as you can probably imagine. And so similar to

you, you know, as much as I love New York after weekend or or I think. I think I could probably do four or five days. Then I'm like, okay, it is great, but I need to breathe them now. But, you know, I married a wonderful city girl. And to your point, I brought her both to Omaha and to New York and guess what? She likes New York City better. I don't know why. Clay, talk about the plans we have for 2026. Yeah, so stepping back a bit, when I look back at the history of TIP, we've very much been a podcasting company, right? Most of our revenue historically has been generated through advertising, but in recent years, we've been leaning more and more into the category of live events. One of the reasons for this, as you and I have found Stig, is that there's just so

many interesting people in our audience. Just going down the list of our attendees from New York, for example, one member has acquired half a dozen software companies in the past two years, David Fagan, who we've had on the show, before, he runs his own successful accounting practice and has made multiple small business acquisitions himself. One member runs, a number of pharmacies. We had a few asset managers attend. The list goes on. But we all have that common interest of value investing.

So we're still in the early stages of planning our events for 2026, but we do have a good idea of what we like to do. Montana was a bit difficult for us to get to in 2025. So we're going to focus primarily on Omaha and New York City. Omaha, of course, isn't the most popular tourist destination, but for those who are in the Valley Investing niche, that happens to be where the Berkshire Hathaway meeting is. Buffett's going to be less involved than he historically has been since he stepped down from the CEO role.

But this past year, we had more than 50 people at our events and dinners in Omaha. So we expect a pretty good turnout again in 2026. For those who haven't been to Omaha, the Berkshire meeting is scheduled for the first Saturday in May, and we'll be hosting a couple of dinners and socials for our mastermind community. And we also recognize that there are many people in our audience who are interesting in going to Omaha or are interested in checking out our live events, but they aren't necessarily interested in committing to our community. So we decided to offer six paid seeks to the audience for those who would like to sort of have an avenue to connect with a lot of wonderful people

in person during their time in Omaha. So our group is getting rather large at this point for being in Omaha and having limited space, which is why we decided to limit the number of seats. But in case anyone's interested in learning more, would like to jump on a call to chat about Omaha. You can shoot me an email at Clay at the Investorspodcast.com to learn more. We'll be vetting each person who attends the events. So we do the same for those who are just interested in meeting with us in person. I've also added a link in the show notes that explains how to attend the Berkshire meeting.

Berkshire requires you to own 1A or B share to get a credential to attend the event. So we explain all of that on our website. The process really isn't that complicated. And I would also say that what I've said every year. And that's if you plan to go to Omaha, I would recommend booking your flights and hotels as soon as possible. Too often I see people wait until a few weeks before and are frustrated to find what the flight prices are at or find that all the hotels are booked. And then our second event, jumping ahead to later in 2026, that's going to be in New York City.

We plan to do some things to make that just a really fun experience as well, carry some of the things over that we did in Montana. It would likely be in September of 26 and we plan to bring in some speakers at an extra day during the weekend. And similar to Omaha, we'll be opening up a select number of seats for those who are just interested in attending the live event. And finally, for anyone who is just interested in the mastermind community, maybe it's the first time you've heard about it. This is our paid community of around 120 vetted members in the community. We collaborate online, host weekly live Zoom discussions, talk stocks, talk markets.

And it's a place to network and connect with our other members who are interested in value investing. So you can head to our website at theinvestorspodcast.com slash mastermind to learn more or add your name to the waitlist to apply to join. All right, Clay, thanks for joining me. I'll be the first to say that I can't speak highly enough of our mastermind community. And of course, someone sitting out there might be saying that I'm pretty biased. But I guess where I'm coming from is that it's hard to make friends in your 40s, or at least it is for me. And I met some of the highest quality people you can meet through our community.

I mean, what you and Kyle have managed to do and the caliber of people that you have attracted, it's just second to none. So for me, the mastermind community is really this perfect intersection between investing, business, and finding friends who are on this journey they call life. So thanks everyone for tuning in. This was all that Clay and I had for this week's episode. Awesome. Thank you, Sting. Thank you for listening to TIP.

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