We Study Billionaires - The Investor’s Podcast Network - TIP768: Best Quality Stock Idea Q4 2025 w/ Clay Finck

Starting point is 00:00:00 You're listening to TIP. Each quarter in our Best Quality Ideas series, we break down a quality stock, its business model, competitive advantages, valuation, and more. For this quarter, we'll be breaking down interactive brokers. Interactive brokers, or IBKR for short, is a global online brokerage that gives investors access to markets around the world with industry low costs and trading stocks, options, futures, currencies, and more. With over 4 million accounts across more than 200 countries and territories, it's the go-to

Starting point is 00:00:33 choice for professional traders, hedge funds, and sophisticated investors seeking global market access. Over the past decade, shares of IBKR have compounded at 21% per year relative to the S&P 500's return of 14.9% over that same time period. In this episode, I'll share why I believe they have a clear path to growing their number of accounts from $4 million to over $20 million, how IBKR's founder, Thomas Petterfee, came to America with nothing and built an $80 billion personal fortune, how IBKR is able to manage being a low-cost provider while simultaneously having better margin profiles than companies like Visa and META, how its focus on automation and technology has created a durable mode that competitors struggled

Starting point is 00:01:18 to rival, the company's current valuation and risks, and why I decided to add shares to my own portfolio. Interactive Brokers has a very fascinating founding story, and I thoroughly enjoyed putting this episode together for you here today. So with that, let's dive right into today's episode on Interactive Brokers. 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, Playfink. Welcome to the Investors Podcast. I'm your host, Clay Fink, and today we'll be presenting our quarterly best quality

Starting point is 00:02:10 idea series where each quarter we dive into a quality stock and consider adding it to my own portfolio. Today, we're covering interactive brokers. I wanted to get a couple of disclaimers out of the way right out of the gate here. TIP is not receiving any compensation to talk about interactive brokers today. I'm a very happy customer of their broker's product. and as of the time that this episode airs, they are not a sponsor on this podcast. The second point I'd like to make is as I was doing research for this episode,

Starting point is 00:02:40 I decided to purchase shares for my own portfolio at around $71 per share. With that in mind, I'd encourage our listeners to do their own research and come to their own conclusions about the company, as nothing we say on this show should be interpreted as a buy or sell recommendation. So with that out of the way, let's get right to it. So Peter Lynch made famous the investment philosophy of buying what you know and leveraging your own unique insights in your daily life when choosing stocks to research and invest in for your own portfolio.

Starting point is 00:03:10 So if you notice that you're continually using a company's product, that is a sign that you see their offerings as highly valuable. And this can be a good clue for us as investors. So back in early 2023, I converted all of my brokerage and retirement accounts to interactive brokers from my previous broker. The day I did that, I certainly should have bought the stock as well as it's done very well since then, but Lynch illustrated that simply buying what you know isn't the formula, but it's a good starting point in finding stocks to research. Although we shouldn't take my experience with interactive brokers and assume that others will have the same experience,

Starting point is 00:03:45 the reason I moved my account was really simple. I wanted access to invest in international markets at an affordable cost, and interactive brokers not only gives you access to a wide breadth of different markets, they also have industry low costs, which I'll be getting into more detail a little bit later. So whether you want to invest in Japan, Europe, Canada, or really about any market globally, I knew that I would be able to do just that on interactive brokers, which honestly sort of annoyed me with the previous brokers that I've used. In that experience, I also saw how painful it is to switch brokers. My previous broker, of course, doesn't want to make it easy to switch, and they'll be charging me fees to move everything. But after a handful of calls and emails in a few

Starting point is 00:04:31 weeks, I was finally able to get everything moved over to interactive brokers. So that to me really illustrated the switching costs for somebody like me and going from one broker to another, which would play to interactive broker's advantage if they truly have a superior product that would encourage investors like myself to switch. Interactive brokers, also known as IBKR, has been on my radar ever since I switched accounts. We actually discussed the stock on the show almost two years ago with Jonathan Boyer back on episode 599. The stock is owned by a couple of well-known investors.

Starting point is 00:05:05 So according to the most recent 13Fs, Brian Lawrence from Oak Cliff Capital, this is his top position in his fund it looks like at over 25% without considering the international stocks he owns of course, since he's not required to report those. So it appears that he's held that position for many years. And Lawrence has actually been featured on a show a couple of times in the past. And then we have Rob Vanall from RV Capital. He also has a sizable position in IBKR, as they bought a lot of what they own in Q1, 2023, and Q2, 20203.

Starting point is 00:05:36 If we look at the business from a high level, we have a market cap of just shy of $120 billion. Over the past decade, the stock is compounded at roughly 21% per year, excluding dividends. And related to the market cap, just a quick note here, it's important to mention here that the organizational structure complicates things a bit when you look at the stock on different investing tools. So I'm using fiscal AI, which is what I use to analyze stocks. It shows a market cap of $30 billion and it's backing out the 75.2% ownership by IBG Holdings LLC, and this is controlled by the founder, Thomas Petterfee. But the true market cap of the business is actually

Starting point is 00:06:16 around that $11, $120 billion mark. So that's just something to keep in mind if you're looking at the stock online on various tools. So their total number of accounts has grown by 20X since 2012, from $200,000 to over $4 million. And just for reference, Fidelity has over 50 million accounts. Charles Schwab has 37 million accounts. And Robin Hood has 25 million accounts. So IBKR has just a small slice of the pie and has been growing very rapidly.

Starting point is 00:06:44 So year over year, their total accounts have grown by 32%, which is honestly just amazing. Similarly, the asset value of their accounts on their platform has risen consistently. So it was $32 billion in 2012. It's over $750 billion today. Now, when I first started looking at this business a couple of years ago, I sort of naturally assumed that they were just in a fiercely competitive industry, and it would be really difficult to differentiate themselves in a field of Me Too players. So if you're looking at a commodity-like business, you tend to see lower margins and more

Starting point is 00:07:19 volatile earnings streams. But when you look at the financials of IBKR, it very much looks like the very opposite of a commodity business. So they're consistently profitable. They're generating strong and consistent earnings growth year after year. And even more impressively, the margins are just off the charts phenomenal. Gross margins are 82%. Pre-tax margins are 75%.

Starting point is 00:07:43 And these margin levels are better than Visa, better than Nvidia, better than meta, and these are some of the most profitable businesses in the world. So if you just look at the growth and the margin profile, this very much looks more like a SaaS business or a technology business. So clearly, IBKR is doing something right here. We'll be getting into what that is during this episode. So the company was founded by Thomas Petterfee in 1978, and he actually stepped down as CEO in 2019. So he's been very involved in this business for a very long time. Amazingly, he owns nearly 70% of the shares, valuing his stake at around $80 billion. This makes him the 24th wealthiest person in the world, according to Forbes at the age of 81.

Starting point is 00:08:28 There was a wonderful article that was recently published by Colossus that profiled Petterfee. That I'll be sure to get linked in the show notes as well. Really fun and good read on learning more about pedophie. And when tuning into a recent interview with Petrfee, it's almost comical how blunt and straightforward he can be. When asked about his business and the success he's had, he instantly chimed in and explained that, you know, business is very simple. It's all about trying to give your customers a better deal than they could possibly get anywhere else. That's the secret to business. And I think that simple idea explains why IBKR has been so successful in continuing to gain share in the discount

Starting point is 00:09:07 brokerage industry and consistently grow their number of customers, they've proven that they are able to provide a very compelling offer to their customers. And obviously, I myself, I'm a good example of that as I felt compelled to switch platforms myself. So let's get more into what exactly this business does. So Interactive Brokers, it's an online brokerage business. It provides electronic market access to a range of stocks, options, futures, currencies, commodities, crypto, and more. Petterfee is all about giving a comprehensive offering, both in terms of the types of financial instruments customers have access to, and then the geographical reach in terms of the markets

Starting point is 00:09:47 they're plugged into. And in addition to having the most comprehensive offering, they also want to offer the lowest trading commissions, the most attractive interest rates for margin loans, and the most competitive interest rates on deposits. So some of the audience might be thinking, IBCR having low fees doesn't really mean anything because we live in a world of zero commission trading. But zero commission trading doesn't necessarily mean that the all-in cost of trading is truly free. The reality is that these zero commission competitors actually have an all-in cost that is higher than what's offered on IBKR. So most of these brokers, you can think of like the Robin Hoods of the world, they offer

Starting point is 00:10:28 zero commission trading and rely on something called payment for order flow. That's when they route your trade orders to specific market makers in exchange for a small payment. It's how they make money even on these so-called commission-free trades. The catch is that these trades might not always be executed at the absolute best available price. The difference might be fractions of a cent per share, but over time, these small inefficiencies add up, particularly for active traders or these very large orders. So if we walk through a quick example, let's say you place a trade of 100 shares for Google, and you do that on Robin Hood. Instead of Robin Hood sending that order to exchanges, they will send it to a company like Citadel or Virtue, and they will execute the trade

Starting point is 00:11:14 either against their own inventory or they will send it to the exchange themselves. And they're thinking about maximizing their profit, not your profit. So executing these trades is, certainly very profitable for these firms. And it's so profitable that they're willing to pay Robin Hood for that order flow. Although the amounts aren't published by Robin Hood publicly, in 2024, it's estimated that they made well over $1.5 billion in revenue from payment for order flow. This comes out of somebody's pocket, and of course, it's the end customer that ends up paying for it. Interactive brokers takes a fundamentally different approach. They do not depend on payment for order flow for their IBKR Pro users, which means their priority

Starting point is 00:12:00 is executing trades at the best possible market price rather than profiting from payment for order flow. Instead of routing orders to these middlemen like Citadel and Virtue, Interactive Brokers connects directly to dozens of exchanges and dark pools around the world through its own smart order router, which automatically seeks out the best available prices across all venues in real time. However, for their IBKR Lite users, which is a service they launched in 2021, they actually do rely on payment forwarder flow. So that's an important distinction to keep in mind as well. And yes, IBKR does charge commissions, but they're often tiny compared to the total savings

Starting point is 00:12:41 you get from the better execution and the lower spreads. Their pricing model is also extremely transparent. You can choose between a tiered structure that passes along exchange rebates and fees, or a fixed structure that bundles everything together. And either way, you see exactly what you're paying for as a customer. Now, this model plays to interactive brokers benefit, especially if you're an active trader that's making hundreds or thousands of trades per day, or maybe even have a very large AUM, maybe $100 million or more.

Starting point is 00:13:11 But for a customer like myself, there's little money to be made for IBKR. And it's important to mention that Interactive brokers isn't really targeting the individual investor that's looking to buy and hold stocks and not do much trading. Their highest priority target customers would be someone like a quant firm that highly values the speed of execution and the price they're getting for the trade. Although us value investors likely don't care for quant investing, with 10,000, Technology and AI continuing to develop and rapidly increase in our world, the amount of AUM at these quant firms continues to increase as well, providing a natural tailwind for clients

Starting point is 00:13:50 on IBKR. So their core customer base is really professional and institutional traders, hedge funds, proprietary trading firms, and high net worth individuals who value access to global markets, low margin rates, and precision trade execution. But one of the primary drawbacks I would mention is that they don't have this slick user face like you'll find at many other brokers like Robin Hood, for example. Thomas Pederphy's philosophy with interactive brokers has always been about building the most complete and efficient trading platform in the world, not just for US stocks, but

Starting point is 00:14:24 from nearly every major asset class in market globally. I think a good way to think about the brokerage industry is to sort of put it into two categories. of the retail brokers, the Robin Hoods, Charles Schwabbs, and Fidelity of the world, and then the institutional prime brokers like Morgan Stanley, Goldman Sachs, and UBS. Interactive brokers is primarily built for the institutional customers, but they still allow retail investors like myself to use the platform as well. And while many of these brokers are primarily focused on the U.S., interactive brokers

Starting point is 00:14:57 is available practically all over the world. Although I do love the company that Petterfee has built over the years, I'm a very happy customer. What I enjoyed learning about even more was Petrify's background. He has quite an inspirational story, and I'd encourage you to look up some of the interviews he's done out there on the web to learn more about him. Pedderfy was born in Hungary in 1944, towards the end of World War II, and he grew up in a communist country. The Pederfy family lost their land during the First World War and lost their remaining assets to the communist state after the Second World War.

Starting point is 00:15:35 Pederfy's father fled the country when Pederfy was only two years old after divorcing his mother. Petrophy recalls that when he was a child, he once asked his mother why she was crying and she said that they were going to starve to death as she was unable to find a stable job to put food on the table. Although many books were hard to come by in a communist country, Pederfi was able to get his hands on a few of the classics, and this is where he learned about capitalism. As a socialist country, virtually all industries were owned and controlled by the state. So in Pedofy's words, since the people didn't own the businesses, the people weren't rewarded for working hard or coming up with new ideas. So nobody worked hard and nobody came up with new ideas. This led to the standard of living in the country just to be incredibly low. And ever since he saw the Statue of Liberty on the little stamps

Starting point is 00:16:28 that came from the U.S., he knew that he wanted to move there. He almost called it an excellent marketing ploy from the United States. So after a rough upbringing in a country that was devastated by the war, Pederfee managed to get a one-way ticket to New York at the age of 21 in 1965. It seemed like he was pretty lucky to be able to make his way to the U.S. in the manner he did. He didn't speak any English at all. So he went out and he learned computer programming before he even learned English. This is a classic rags to riches story. He started from nothing.

Starting point is 00:17:03 And by 1977, he had saved up $200,000 and he bought a seat on the American Stock Exchange for $36,000 to start building an American dream of his own. He was on the floor trading options based on the values he came up with himself. and in one instance, he ended up losing $75,000 on just one trade due to what he described as insider trading. That experience taught him to hedge all of his trades in case things go against him. He was very mathematical in his attempts to rebuild his capital base, and he eventually hired others to execute these trades for him and profit from the markets and efficiencies. By 1982, his operation went by the name Timber Hill. And at this time, his firm was just making a killing.

Starting point is 00:17:55 He was very mathematical in finding all these inefficiencies in the market. He developed these handheld devices that had the data the clerks needed to place profitable trades. And when his team tried to enter the Chicago Board Options Exchange, they passed a rule that analytical devices could not be used on the options floor. So he is well ahead of his time and had these tools that simply nobody else had or knew how to make, of course. The exchanges made it difficult for his team to place profitable trades in real time. But they just could not stop pedophie from continuing to dream up these new solutions working around the roles they had in place. So in 1987, he achieved what he first set out to do in 1971, which was to create the first full,

Starting point is 00:18:44 fully automated trading system in Wall Street history. The machines he ended up developing could place trades without human intervention. A NASDAQ employee was shocked to find that a computer was placing trades on its own with no human insight. And NASDAQ wasn't aware that Petrfee had actually hijacked the terminal's data line to feed his automated system. You know, other traders, they were manually typing these orders, they weren't pulling prices from the feed and pushing him through these algorithms like Pederfee was.

Starting point is 00:19:17 So they told Petterfee that he would have to be entering his trades by keyboard just like everybody else. Pederfy thought, that's no problem. So he developed a machine that would automatically type on the keyboard for a person. And this of course did not make the NASDAQ employees any happier. So as you can probably see, it's in Pederfee's DNA to automate as much as possible. And this is carried through all the way to the way interactive brokers operates today. In addition to the options business, he also started a market-making business in 1993.

Starting point is 00:19:54 This extended from New York to Chicago to San Francisco and then to Frankfurt, London, and Hong Kong. Goldman Sachs made multiple offers to purchase the market maker, and Petterfee declined all of them. He set out to build a platform that would give ordinary investors the same technological advantages that he created for himself. This business would become known as interactive brokers. Petterfee was far ahead of his time during the 1990s. You know, the financial landscape then would remain overwhelmingly analog. But eventually, Wall Street would come around to Petterfe's innovative ways and he would become the broker of choice for many professional traders.

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Starting point is 00:24:33 Go to Shopify.com slash WSB. That's Shopify. dot com slash WSB. All right. Back to the show. In May of 2007, interactive brokers would go public, but its Options Division,

Starting point is 00:24:49 Timber Hill, it's still generated over 80% of the company's revenue. So this is very much a trading business instead of a brokerage business. So this is important to keep in mind when you're looking back

Starting point is 00:25:00 at previous years financials and stock performance. I think, you know, the stock performance in its early years of being public weren't that great. And part of the reason for that was because the option division made up a substantial portion and it was in decline while the brokerage business was on the up and up. So interactive brokers, they actually didn't need to go public in 2007. Pederfee still owned nearly all the business. And he took the company public to try and put the company's name and brand in the public domain, since he just hated spending. on advertising. This is actually one of the things I like to look for in stocks is like finding these companies that are almost like a family business. They think very long term. They focus on the

Starting point is 00:25:42 customers. And it's almost like they don't need or don't really want to be publicly traded, but they happen to be for all these idiosyncratic reasons. These points that I mentioned on, you know, hating to spend on advertising, trying to get the company's name out there and be frugal and whatnot. This hits on a couple of the concepts I discussed last week on my episode on intelligent fanatics. Intelligent fanatics tend to be frugal, and they just hate wasteful spending. And of course, they're always looking to innovate and find new ways of doing things. I would definitely call Petterfee an intelligent fanatic. Rather than paying investment bankers hefty fees to go public, Petterfee chose to do a Dutch auction to save $80 million in the process,

Starting point is 00:26:24 and he would sell 10% of his business. But this also meant no roadshow and not much attention generated on Wall Street, so it didn't seem to do a lot from a marketing standpoint, as Interactive Brokers is actually still a fairly underfollowed business today. Fast forward to 2017, Petrfee decided to shut down the options maker, Temper Hill, as the brokerage side of the business was growing and growing and requiring more attention, the advantages that Temper Hill had in the earlier days just didn't exist anymore. So there were little profits to be made in it, and selling off that portion of the business allowed them to put all of their attention on the brokerage side.

Starting point is 00:27:04 I think this is a good signal that management does, in fact, think long-term and is forward-looking, and they try not to be wasteful in how they spend their time with different business segments that, especially the ones that are becoming worse over time. It can be difficult to accept that short-term pain and let go with some of those profits, but it's clearly something they strive for in building an enduring business. Think ahead five, 10, 20 years and where things are heading. As I mentioned, Pederfy is as obsessed today about automation as he was when he was just getting started in the industry. And due to this intense focus on automation and their industry low fees, they're becoming the broker of choice for many hedge funds and professional traders who understand

Starting point is 00:27:47 the importance of trading costs and fully appreciate the service that interactive brokers offers. So in that profile that Colosses put out, Pederefy was asked, what's the secret? He responded, it's all common sense, hard work and common sense. That's my story. And then I wanted to share another quote I ran into from Pederfy that was back in 2014. I quote, when I entered into this business some four. 40 years ago, I was a computer programmer. And ever since that time, I have remained a computer programmer and surrounded myself with other computer programmers. So unlike other businesses,

Starting point is 00:28:22 we do not put as much focus on sales, which may be a problem, but we focus on building technology. Our forte is to automate everything and everybody. That gives us the opportunity to service our customers at a much, much lower cost than our competitors do. And for that reason, we can charge very low commissions. So it's magic. The magic is called automation, end quote. So in 2019, interactive brokers would launch IBKR Lite. This is designed for more of a long-term buying hold investor rather than an active trader. IBKR Light offers unlimited commission-free trading on U.S. exchange listed stocks and ETFs. And it requires no account minimums and it doesn't charge inactivity fees. So this positioned them to appeal.

Starting point is 00:29:10 to more of a broader audience, such as investors like myself, and not just institutions and more sophisticated traders. Not unlike their other offerings, IBKR Lite does use payment for order flow. The reasoning is that IBKR Lite users will have lower account balances, fewer trades, and will have less of an appetite to borrow on margins. So as a result, it makes sense why IBKR would utilize payment for order flow, and it would be more beneficial for the IBKR Pro users to have sort of their own technology to get the best trading prices available.

Starting point is 00:29:44 IBKR Lite is another example of the management team thinking long term in their strategy. It took a lot of time, energy and resources to build out these capabilities and to earn a measly initial return on investment. But as they attract more users to their platform, give those users exposure to their comprehensive offers, and further increase their brand exposure over time, these early investments will pay dividends for many years into the future. As I mentioned at the top, Pederfy stepped down as CEO in 2019. In Milan Gallic, a long-term executive who joined the company in 1990, he succeeded Petterfy as CEO. Today, Pederfy is still highly involved in running

Starting point is 00:30:21 the sales and marketing department, and he always enjoys the challenge of cracking a new problem, finding new solutions. He's come to find out that he was actually wrong about the potential benefits of marketing and it being a total waste of money. So we'll see if they up their marketing spend over time in the years ahead. When we look at the business today, they primarily make money in three different ways. As you'd expect, IBKR earns commissions on trades. This represents around one-third of their business or revenue. They also earn net interest income, which is over half of IBKR's revenue. So this segment includes a few different categories. So they earn interest on customer deposits, you know, cash deposits, and then they keep a portion of that interest for

Starting point is 00:31:05 themselves and then pay out the remainder to customers. So IBKR Pro users receive interest that equates to the federal funds rate minus 0.5%. And they also require a cash balance of $10,000 or more to start earning interest. So this segment also includes the interest earned on margin loans extended to customers. This is another important segment of their business since many traders will utilize some level of margin. And then the business also generates revenue from market data fees, payment for order flow, risk exposure fees, and other income. These combined generate less than 10% of revenue. So primarily you're looking at commissions on trades, the interest you're earning on the cash, the margin loans, and then I'll get into a couple of the other segments here shortly.

Starting point is 00:31:52 So as far as the commissions go, IBKR seeks to offer low commissions to deliver an attractive value proposition to their customers. On their website, they're totally transparent with the commissions they charge, which helps, of course, build trust with customers. They tend to refer to their customers as traders, and of course, some of their customers are going to behave more like a buy-and-hold investor that isn't making trades daily. But for customers who are trading much more often, the lower commissions obviously serve as a good selling point for them. For the interest earned on cash, this benefit tends to favor the institutional

Starting point is 00:32:26 investors as the interest rate they earn increases based on the amount of cash you have on the platform. Other prime brokers that IBKR competes with, you know, big banks like Morgan Stanley, JPMorgan, Goldman Sachs. I actually don't see interest rates published online, which speaks to interactive broker's culture of providing transparency to customers. Alongside the growth in client accounts, the company has also seen as significant amount of growth and their total net interest income. And, you know, of course, this makes up a good portion of the business today. As I mentioned, this line of item also includes the spread they earned on margin loans. As of the time of recording, margin balances sit at an all-time high, and pedophie stated on the

Starting point is 00:33:07 most recent earnings call that if there's a sudden dislocation in the market, he would expect risk-taking and thus margin loan levels to decrease. Their margin rates are also very attractive relative to their competitors. On the website, they even showcase this chart that shows their margin rates versus their peers. It depends, of course, on how much you plan to put on margin, but broadly speaking, you're looking at around 5% margin rate for interactive brokers versus 10 to 11% for competitors such as E-Trade, Fidelity, Schwab, and Vanguard. And given that interactive brokers has automated this segment, it's relatively low risk on their end because they're able to automatically execute margin calls if the client's account balance isn't

Starting point is 00:33:53 sufficient and it needs to be liquidated since they haven't put up enough collateral. The great thing about net interest income is that it's incredibly high margin. And over the years, it's making up a greater and greater share of their overall business. One concern that investors have related to the business is the possibility of interest rates going down, which might be a concern that's a bit overstated since they actually pay an interest rate roughly equal to the federal funds rate minus 50 basis points. So whether the federal funds rate is 3% or 7%, the math is still the same in terms of what they get to keep. But, you know, there's of course second order effects to what the federal funds rate is. So, you know, as a federal

Starting point is 00:34:34 funds rate changes, it's going to change how much cash clients desire holding in their accounts and how much margin they're going to be taking on. So if interest rates continue to decline, that might lead to clients holding less cash because it's less attractive in terms of the interest they're earning. However, lower interest rates also makes borrowing more attractive. So it's sort of this push and pull effect. But generally, I think as the interest rates decline, they tend to see sort of a bit of downward pressure on the net interest income they're generating. So this is one concern. I just want to understand a little bit better is, you know, how much could this net interest interest income figure decline. This figure has increased substantially since the start of

Starting point is 00:35:21 2023. And I would hate to invest today to only see this favorable trend reverse the other way. So it's important to keep an eye on this metric as a KPI. One of the reasons this metric has just done so well in recent years is because they've increased their level of assets on the platform so significantly. This has been a very favorable trend for them. So I would think about you know, how much is the federal funds rate going to impact customers desire to hold cash on the platform? So if the federal funds rate goes to say 2% or lower, I think that could put some serious downward pressure on the net interest income they're earning. And then also, there's a potential of just a major economic downturn. So, you know, if we enter a downturn,

Starting point is 00:36:06 some people lose their jobs and whatnot. This could lead to a decline in the amount of cash held on their platform as customers have a need to dip into that liquidity for one reason or another. So I think investors and interactive brokers sort of have to accept that there is some cyclical element to this business in the sense of being directly tied to the financial markets. When markets are volatile and going up, IBKR tends to do very well. When markets are falling, they might have some headwinds in terms of the revenues they're able to generate. but over time, I would expect revenues to continue to increase as a result of their growing

Starting point is 00:36:44 number of customers over time. Lastly, I'd also like to touch on the securities lending segment as this segment is also a contributor to their business. Securities lending is essentially when investors allow their stocks to be temporarily loaned out to other market participants, oftentimes to short sellers, and in exchange, they get interest income. Interactive brokers manages this process, of course, automatically through its securities lending program, where clients can earn an additional yield on their long-term stock holdings.

Starting point is 00:37:16 The firm matches borrowers who need to short a stock with investors who hold those shares, and in return, both the investor and interactive brokers share in the income generated from the loan. What makes this service valuable is that investors continue to benefit from the price appreciation of their shares as well as the dividends, and they're earning some extra income on top. The drawback for many shareholders, though, is that oftentimes the rate earned on lending out shares is pretty low. So it's really not worth taking the time for many people to lend out their shares. One easy segment to overlook in terms of growth is their cryptocurrency segment as well.

Starting point is 00:37:54 I know a lot of our listeners aren't into cryptocurrencies and neither is pedophie, but he listens to his customers. So if his customers want something in this financial space and interact with, interactive brokers is able to provide that service and automate it, then they will add it as a part of their business. So they introduced crypto trading in 2021. When we look at a competitor like Coinbase, they have over 100 million verified accounts and they have higher fees than IBKR. So many sophisticated traders are bound to discover interactive brokers and switch over to their platform and want those lower fees. However, Coinbase compensates for this by offering trading for

Starting point is 00:38:35 over 250 coins, while IBKR is limited to the top 12 coins or so. In their most recent earnings call, Interactive brokers shared that crypto trading volumes are up 87% since the last quarter and up 5x since the previous year. Interactive Brokers also provides a white label solution, allowing banks, hedge funds, and financial advisors to offer their own branded trading platforms built on Interactive Brokers' global infrastructure. This business-to-business service powers many financial institutions behind the scenes, expanding interactive brokers reach beyond its direct retail and institutional clients. Overall, interactive brokers has a unique position in the market by offering low trading

Starting point is 00:39:20 costs, low margin rates, and high interest on cash through their automated platform and direct market access and placing trades. It just makes it really difficult for competitors like Schwab, Fidelity, Morgan Stanley, to compete. And to a large extent, they tend to focus more on. on the wealth management and client relations side and not so much trying to be the most efficient player. Due to their intense focus on being technology enabled, in my mind, I sort of see them more as a tech company than a financial services company. In addition to being the low-cost provider,

Starting point is 00:39:53 I also mentioned earlier that they post pre-tax profit margins of 75%. This illustrates their level of scale and just how efficient they are. Better yet, they continue to improve their offerings, invest in expanding their offerings and growing their scale, and they're able to spread out all these fixed costs over a larger and larger customer base, which allows them to increase their modes over time. When it's all said and done, the primary driver of growth for interactive brokers is going to come from bringing in more customers, which they've done an exceptional job at doing over the years. Today, they have over 4.1 million accounts.

Starting point is 00:40:29 Unfortunately, they don't provide a breakdown of the accounts by region and whatnot. Over the five years leading up to 2024, the number of accounts grew by 36% per year. What I also really liked about their level of growth is that they spend very little on advertising. They have one of the lowest marketing budgets of all of the online brokers, yet they've consistently outgrown many of their competitors. The SG&A line item, which includes their advertising expense, is just 5% of revenue. This is a very good sign for investors because they're able to generate growth simply by having a superior offering in the market. Most companies have to push their products to their customers

Starting point is 00:41:09 through marketing, but few companies have the luxury of naturally pulling in customers without having to put in the time, money, and effort required to bring them in and entice them to join their platform. They also have a really attractive referral program that incentivizes users who like the product to share it with others. Referring customers can earn a $200 payment, while the new customer can receive up to $1,000 in the IBKR stock. As a fan of the platform myself, I've referred several of my friends and family members to interactive brokers. What's also interesting to consider are some of the differences between a sophisticated

Starting point is 00:41:48 trader or sophisticated investor and your average retail trader or retail investor. There's sort of this joke that goes around that the Robin Hoods of the world attract the retail crowd and operate under the infamous 90-90-90 principle, which states that 90% of retail traders lose 90% of the value of their account in 90 days. While reality might not be quite this bad, I believe that there's likely some truth to it as investors on Robin Hood tend to trade more often and haven't developed a sound investment philosophy. And if investors are losing in the market, it's not likely that they'll be sticking around for a really long time. And for investors that do make money in the market, an increase in their level of

Starting point is 00:42:34 sophistication over time, they're more likely to eventually graduate to other brokers that have more of a comprehensive offering and offer all-in lower trading costs. On the flip side of Robin Hood, IBKR attracts a more sophisticated investor that tends to make money in the markets over time. and they understand the importance of trading costs. So investors naturally gravitate to the lowest cost provider. You know, I kind of think of people who shop for groceries. They just naturally gravitate to Costco if they live close to a Costco. And since these investors are more successful with their investments, they tend to have more money. So more is at stake with each individual

Starting point is 00:43:13 trade, making the transaction costs that much more important. And as their account balances grow, of course, that only plays into IBKR's favor. Interactive Brokers platform is by no means perfect, though. The company's practically run by software developers, so the user interface is not great. I wouldn't be surprised if some retail investors set up an account to test it out and just don't like the interface, so they leave, which you could argue they aren't looking for customers that want the best user interface, so they're attracting a certain type of investor on their own. I should also mention on the previous point about interactive brokers attracting more of a sophisticated investor.

Starting point is 00:43:54 They're, of course, attracting the gambler type of investors as well and some of these non-sophisticated types of investors. So as with many things in life, it's not totally black or white. These are just generalities I'm sharing. Interactive brokers also doesn't have the best customer support. So if you run into issues on the platform, you might have a hard time getting connected with support. And it seems that the support team is much more focused on helping all.

Starting point is 00:44:17 onboard new customers rather than, you know, assisting existing customers. I recall hopping on the phone a couple of times when getting my accounts moved over in 2023. I really didn't have any issues working with them. They did their best to help me. And since I've been onboarded, there's really never been a case where I needed to contact them as the platforms always worked quite well for me. But I also don't have very sophisticated needs relative to some professional traders. I haven't used margin. I haven't lent out my shares, and I've just placed basic currency trades and just basic buy and sell orders on stocks. I also checked with a couple of members of our Mastermind community.

Starting point is 00:44:56 So one of our members is a member from Dubai. He manages assets for clients, and he uses interactive brokers. He's been on their platform for more than a decade. He let me know he's really liked it, really appreciates the broad access to markets all around the world, seem to have no issues with it. I was chatting with one of our other members the other day. This is a member that's based in the U.S., but manages a fund that invests all across Asia. And he informed me that he actually uses Goldman Sachs as his broker, because interactive brokers

Starting point is 00:45:26 apparently doesn't provide access to every single market in Asia. So take that for what it's worth. It sort of surprised me that Goldman Sachs had access to markets that interactive brokers doesn't, but I know that interactive brokers is certainly continuing to expand their reach and continuing to just be the best option for customers. They're not going to offer everything that all their other customers provide, but I think they hit on a lot of what customers need. So when I look at the business's moat and competitive advantages, I think it comprises of several factors. So back on episode 727, I covered Hamilton-Helmer's book, Seven Powers, and the book outlines the seven

Starting point is 00:46:05 competitive advantages a company can have. So I'm going to go down the list here and mention a few that apply to Interactive Brokers. So scale economies, interactive brokers has the scale to earn higher returns than many of their competitors are able to do so. So competitors could try and replicate the offering that IBKR has, but they would either be disrupting themselves if they already have the user base or if they don't have the user base, they would need to scale up significantly in order to capture the returns that Interactive Brokers is able to, at least initially.

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Starting point is 00:50:11 many of the other prime brokers. So for another prime broker to replicate interactive brokers offering, they would be sacrificing probably one of their cash cows, which many companies just aren't willing to do. So IBKR is just so good at automation and providing the lowest cost. to a large extent, their competitors aren't even trying to compete with them in that domain. So to help illustrate the counter positioning at play, let's compare and contrast the offerings of Charles Schwab and Interactive Brokers and the pros and cons of each for customers. So as I mentioned earlier, Charles Schwab has 37 million client accounts relative to

Starting point is 00:50:48 interactive brokers 4 million. The primary value proposition for Charles Schwab is that it's beginner-friendly and it's easy to use. And they also offer wealth management and advisory services as well as in-person branches, and they have $0 stock in ETF trading. Their weaknesses lie in higher all-in trading costs, higher margin rates, limited access to international markets, and it doesn't cater too well to active or sophisticated traders. After outlining these, you can clearly see why interactive brokers would be positioned to capture share from a player like Charles Schwab.

Starting point is 00:51:24 All of Charles Schwab's weaknesses play right into IBKR's strengths. So IBKR caters to a more advanced, globally minded investor, who values low costs, comprehensive tools, and access to nearly every market and asset class. In essence, while Schwab dominates the mass market with convenience and accessibility, IBKR wins by serving the sophisticated trader who prioritizes precision, control, and global reach. So it's pretty unlikely that Schwab would attempt to stop the growth of interactive brokers because it would practically mean overhauling their entire offering. Incumbents like Charles Schwab faced the classic Innovators dilemma outlined by Clayton Christensen.

Starting point is 00:52:04 Now, that's not to say that all 37 million accounts from Schwab are going to move over, but I think that as interactive brokers continues to improve their offering and more investors see the potential of their platform, they will continue to capture share from some of these other players. Next, we have switching costs. So this one sort of cuts both ways. Once Interactive Brokers is able to gain new customers, the likelihood of them switching to another platform is low, but this also applies to their competition as well. So luckily for IBKR, in many cases, their offering is significantly better than the competition,

Starting point is 00:52:38 which we can see in the numbers. Since their growing accounts so fast, you can see that many customers see value in their service, even in the light of the switching costs, you know, someone like myself overcame these switching cost and made the jump. Next, we have branding. I think branding does play a bit of a factor, but I don't think it's significant. They're not doing a lot of marketing. They have pretty subpar customer service, and that certainly doesn't help with the brand.

Starting point is 00:53:03 But I think it's worth mentioning here that it might play a smaller role relative to some of these other ones. And then finally, we have process power. So process power can relate to the company's culture or simply their way of doing business. I think this one definitely plays to IBKR's advantage. Their culture of being highly focused on reducing costs and increasing the level of automation has created a strong competitive advantage that is just really difficult to replicate. I'll talk more about this here shortly when discussing the management team.

Starting point is 00:53:34 Now, the question is, how long will interactive brokers be able to grow? Petrfee has shared that he sees strong potential for growth, both in the U.S. and internationally. Today, around three-fourths of the revenue does come from the U.S., and Petterfee sees the number of accounts growing substantially well into the future. So right now, they have their sites set on reaching 20 million accounts up from 4 million today, but they certainly don't intend to stop there. And this is one of the things I look for in the companies I buy. I like to see a clear path to above average rates of growth for at least the next five years. I think that's certainly the case with interactive brokers here. Earlier, I talked a bit about payment for order flow,

Starting point is 00:54:16 which enables brokers in the U.S. to offer commission-free trading, but payment for order flow is predominantly a U.S.-based phenomenon. It's actually banned in many other markets, and this makes IBCR uniquely positioned to continue to capture share internationally since they have less competition outside the U.S. International customers also place a high value on broader market access, which also place to their favor. And U.S. investors, you know, a lot of times they just want to stick with the U.S. And historically, of course, that's worked well for them. But investors outside the U.S., I think they tend to want access to a number of different markets. So let's take a look at the management team, incentives, and capital allocation decisions here.

Starting point is 00:54:59 So, of course, the company is led by Thomas Pederfei, no longer the CEO, but he's still very involved in the business and his chairman of the board. I prefer companies run by owner-operators as they tend to run the business in a way that generates the most value in the long term without taking excess risk. Pederfee understands the brokerage business as well as anyone and has been through multiple cycles and navigated a number of different crises. And as a side note, I sort of assume that IBKR was not in the S&P 500 since Petterfee owns so much of this business. I think there's actually some roles around float and whatnot and how many shares are trading. But it turns out that the stock got added to the S&P 500 in August of this year,

Starting point is 00:55:39 2025, which may help the stock get more attention over time, as historically it's been fairly underfollowed. Perhaps that's part of the reason why the stock's done so well as of late. Share repurchases for the business are practically non-existent and are likely difficult because Petterfee owns so much of the business, so there's little flow to be purchased. And they do pay a very small dividend, so it's clear that Petter fee does see opportunities to redeploy capital internally by enhancing their existing offerings, adding new offerings, and entering new markets. And like other founder-led businesses, they also maintain a very strong balance sheet.

Starting point is 00:56:13 On the recent earnings call, the CFO stated, we have no long-term debt. Profit growth drove our firm equity up 22% over the prior year to $19.5 billion. We maintain a balance sheet geared towards supporting growth in our existing businesses in helping us win new business by demonstrating our strength to prospective clients and partners, while also considering overall capital allocation, end quote. So during the banking crisis in early 2023, many firms got caught off guard as interest rates swiftly rose and the value of long-dated treasury bonds fell. But interactive brokers was not in such a position since they just don't take that sort of

Starting point is 00:56:51 risk on the balance sheet. And they tend to favor very short-dated bonds, you know, rolling these bonds over at 30 days, maturity or less. So as interest rates rose, interactive brokers directly benefited from this because they were continually rolling over these bonds at higher and higher rates, whereas competitors like Charles Schwab, they all of a sudden saw many of their long-term bonds were underwater in light of the decrease in bond prices. And if you look at the stock price between IBKR and Charles Schwab since the start of 2020, you can just see how much better Interactive Brokers has navigated this economic cycle.

Starting point is 00:57:26 So since the start of 2020, shares of Interactive Brokers are up 6x, while shares of Charles Schwab are only up 2x. The company also has no long-term debt, so they have an extremely conservative balance sheet, as I mentioned. All too often, financial institutions get too levered up and believe that the good times will last forever, and this should play to Interactive Brokers' favor should high return opportunities present themselves in the future, such as making an acquisition at good prices. Interactive Brokers has a very tenured management team, and the company actually requires that all of the executive team have experience as a computer programmer. The current CEO, Milan Golic, he joined IBKR in 1990 as a software developer after being recruited by

Starting point is 00:58:10 Petrfee. The CFO, Paul Brody, he joined the company as treasurer all the way back in 1987, and you just go down the line, and they've pretty much all been around for many years, definitely more than a decade for most of them. And this is a testament to Petrophy and the culture he's built. Not only does he understand how to provide a superior value proposition to customers, but he's also done the same for many of his employees, since they tend to stick around for essentially their entire careers. All of the managers seem to be fairly compensated. In 2024, Petterfee earned $750,000 and wasn't given any shares as a bonus. In the footnote to the proxy statement, it shares that Petterfe's salary is capped at 0.2% of net income. The CEO earned a total compensation of $17 million,

Starting point is 00:58:57 And the CFO earned around $6 million. When I compare these amounts to competitors like Charles Schwab and Robin Hood, it looks totally reasonable to me. While the aggregate amounts are roughly in line with the competition, IBKR in aggregate tends to pay out less in stock to the management team. And the compensation committee determines bonuses for the management team based on three financial measures related to the company's performance. So you have adjusted income before income taxes, adjusted pre-tax profit margin, and three-year adjusted net revenue growth. This seems well aligned with common shareholders as it focuses on a combination of growth, profitability, and efficiency.

Starting point is 00:59:35 As a result of their compensation arrangement, the management team, with the exception of pederfy, has seen the number of shares they own gradually increase over time. One of the drawbacks with the management team that one could argue is that they are primarily led by software engineers, so they aren't client-facing. This is good in the in the sense that they highly value being a tech-enabled platform and being highly efficient. But since Petterfee is really involved with the sales and marketing side of things, it seems that they could benefit from building out a better sales team to capture greater market share. But it's pretty hard for shareholders to complain that, you know, this is a $120 billion

Starting point is 01:00:12 company that's reported growth of 32% in their number of accounts in the most recent quarter. Next, let's talk about the valuation and risks. To be frank, the valuation is probably my least favorite thing about this business. The market certainly likes this stock in 2025. The market cap of the company, as of the time of recordings, around 119 billion. Net income or the profit the business generates is around 3.7 billion. That gives us a trailing PE ratio of 31. That will be fairly high for many value investors, let's be honest. But it's important to keep in mind just the company's runway for growth, how they've been able to consistently increase their number of accounts year after year and thus increase their earnings.

Starting point is 01:00:53 power, and also considering how well managed the businesses and how differentiated their offerings are. In their most recent earnings report, adjusted income before taxes grew by 45%. So the earning side of the equation is currently growing very rapidly. Now, they may be slightly over-earning because of the recent interest rate cuts by the Federal Reserve. In September, they cut rates by 25 basis points, and in October, they cut by another 25 basis points. So I would expect a bit of a headwind to their net interest margins, but nothing too substantial in the near term, all else equal. I expect any headwinds on this front, however, to be easily overcome by their rapidly increasing account growth. So the recent quarter, they had account growth of 32% year over year,

Starting point is 01:01:40 and customer equity increased by 40%. When looking at the valuation, it's also important to keep in mind the strong balance sheet they have in place. So a company with additional capital and their reserves, like Interactive Brokers, is of course going to be valued higher than a company that doesn't have that war chest set aside. So think of a company like Berkshire Hathaway, for example, with all this cash they've built up. So Interactive Brokers excess capital not only protects them during a Black Swan event, such as the Great Financial Crisis, but it also helps enable their growth as large institutions will trust that they are a partner that's built to last and built for the long run.

Starting point is 01:02:20 But truth be told, the PE ratio today is in the higher range based on historical standards, as the market is pricing and higher levels of growth in the near term as a result of their recent excellent performance. Should the next few quarters disappoint that I wouldn't be surprised to see the multiple re-rate to where it has historically been, closer to 20. overall, the long-term thesis for interactive brokers is very simple. They have a superior and differentiated product. I foresee them rapidly growing accounts over the next decade, and as a result, I would

Starting point is 01:02:50 expect the net income to compound at at least 15% per year on average, and thus, shareholder returns should coincide fairly closely with the growth and earnings over the long term. What also makes me bullish on interactive brokers is that since this is a global business, they benefit from the overall growth of stock investing and investing in general globally. There are studies that show that there's a correlation between broadband internet access and higher stock market participation. So as more people emerge out of poverty, enter the middle class, and as more people in the middle class move up into the upper middle class for their region, this provides a natural tailwind

Starting point is 01:03:30 of individuals who are interested in investing in the stock market. Interactive brokers has customers in over 200 countries and territories, which for all intents and purposes is practically the entire world. Petrfey has shared that he sees continued growth in accounts of 30% per year without really any advertising. If they decide to pull the lever on advertising and really crank up their growth a bit, we could see growth of 40% or more in some years, which is pretty crazy to think about. They certainly have the capital to spend on advertising if they wanted to.

Starting point is 01:04:03 and I would be very happy to do a sponsorship read here on the show in case anyone from Interactive Brokers, Advertising Department or Marketing Department, or maybe even Petrfee himself is currently tuning into this episode. And as with many wonderful companies, there's always the potential for optionality. So in 10 years, IBKR is very likely to have added many offerings that they just don't have today. One example of an offering they've added recently is IBKR Forecast Trader. This tool lets eligible clients trade binary, yes or no contracts on future events, for example.

Starting point is 01:04:39 One can bet on whether the Fed will lower interest rates during the next meeting. This segment is a small part of their business, but could be a major contributor of growth going forward. And Petterfee has also shared that they do not anticipate getting into the sports betting industry, but perhaps that will be an area that they eventually enter as well and just shake things up in that industry. Turning to risks, I definitely think there are risks. for investors in this stock.

Starting point is 01:05:05 The first risk I would highlight is economic and cyclical risk. IBKR is deeply tied to overall market activity and investor sentiment. So in a prolonged economic downturn or bear market, their revenue streams would almost certainly contract and its stock price would likely move in tandem with broader equity markets. Trading volumes tend to decline when investor risk appetite falls. And as I mentioned earlier, margin loans on the platform are, are at an all-time high today, so the appetite for risk is higher than usual. And there is some cyclicality to this business. During the good times, they tend to rise more, and during the

Starting point is 01:05:42 tough times, they tend to fall more. It's also important to remember that client equity on the platform is going to be highly correlated to the value of the stock market. If we go through a bare market, that's going to be a natural headwin for the company that they're going to have to face. So if you aren't bullish on stocks over the next 10 years, then this probably isn't the right bet for you. And all you have to do is look at the share price movement here in early 2025 to see how painful it can be to hold when the broader market's falling. So in just a few months, the stock dropped by nearly 40% during the tariff tantrum before recovering and storing to make new highs. And IBKR is likely seen a number of newer investors who are treating the

Starting point is 01:06:20 stock market more like a casino. You know, this could lead to inflated account numbers. When markets fall and accounts just get wiped out, you know, people are using too much leverage, You might see some customers leave the platform and never come back, which is just a natural part of the stock market, especially with how volatile things have been over the past five years and how much money a lot of people are making in the market. The next risk I would highlight is really related to Thomas Petterfee. He's still highly involved in the business. That's a very good thing for investors, but he won't be forever.

Starting point is 01:06:51 He's 81 years old. The company will need to prove that they're able to continue executing on their strategy once he's exited the business. By now, I think he's put a really strong team in place, but we shouldn't assume that they will be the same business without him as he's the founder and he's made this business, his life's work. It also can be ignored that pedrophy owns over 70% of the shares. While I don't believe it's public information what happens with his shares when he passes away, I would assume that it would remain in the family. He has three children. One of them is a director at the company. So this is, of course, a risk. Perhaps his errors decide to sell down shares after his passing, putting continuous

Starting point is 01:07:31 sell pressure on the stock, or the market discounts the value of the company once he's out of the picture. This is one of those looming risks that's really difficult to quantify. In light of all this, I decided to wait this stock, a 2% position in my own portfolio. It's enough to keep me following the company and capture the potential upside from here and give me room to add to my positions should the stock have a significant pullback like it did earlier this year. I like to invest in companies where I have high conviction that the business is going to be much larger five to 10 years into the future. For a company like IBKR, there will certainly be bumps along the way, but account growth is just so robust that it's hard for me to imagine that this won't be a much

Starting point is 01:08:16 larger business in five to 10 years. Currently, they're growing accounts around 30%. That's a fairly accelerated growth relative to much of their history. And in the most recent earnings call, Pederfee mentions that he does expect this high level of growth to continue for the foreseeable future. And I see that as a pretty good sign given how straightforward he tends to be in his communications with not mincing words. As an investor who's happy with consistent earnings growth of 15% or more, I'd like to see their account growth continue to be in excess of 20% for the next five years or so. I also like to invest alongside some of the greatest business people in the world. So Petterfee, he's certainly in that camp, at least in my eyes. In my view, he's an unconventional

Starting point is 01:09:01 CEO who's willing to make these short-term sacrifices for the benefit of long-term shareholders. And I think that shareholders are certainly in good hands with the team he's built around him once he passes the torch. I think there's a lot to like about this business. I'm excited to follow along in their journey as an investor, and I'll continue to be a very happy user of their platform for many years into the future. I think that pretty much wraps up the discussion on interactive brokers. Before I let you go, I just wanted to mention some of the calls we have coming up with our TIP Mastermind Community. For those not familiar, the Mastermind Community is a place to connect with high-quality individuals who share a passion for value investing. With the end of

Starting point is 01:09:40 2025 coming up, many of our members will be presenting a portfolio review to share what stocks they hold the lessons they've learned from the past year and just lessons from their overall investing journey and take questions from the group. We have several members in the group with pretty impressive investment track records. One member has a diversified portfolio of stocks and generated a 19% annual return since 2015. Another member has compounded at over 30% per year over the past decade. In generating these really high returns, he's actually been utilizing leaps and long-dated

Starting point is 01:10:13 options, so a lot of our members are interested in learning more about that strategy. Both of these presentations will be with the group on Zoom in about a month or so. Also, on November 25th, I'll be hosting a social hour with the community to discuss current investment opportunities in the market. And my co-host, Stig Broderston and Kyle Greve will also plan to host a year-end portfolio review as well. To apply to join the community, you can visit theinvestorspodcast.com slash mastermind. That's theinvestorspodcast.com slash mastermind. That wraps up today's episode on IBKR. Thanks so much for tuning in. I hope you got some value out of this discussion. If you have feedback on this episode or just want to share some of your notes on the company, feel free to

Starting point is 01:10:58 shoot me an email at Clay at theinvestorspodcast.com or shoot me a note on LinkedIn. I'd be very happy to hear from you. With that, I hope to see you again next week. Thank you for listening to TIP. Make sure to follow, we study billionaires on your favorite podcast app and never miss out on episodes. To access our show notes, transcripts or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only, before making any decision consult a professional. This show is copyrighted by the Investors Podcast Network. Written permission must be granted before syndication or rebroadcasting.

We Study Billionaires - The Investor’s Podcast Network - TIP768: Best Quality Stock Idea Q4 2025 w/ Clay Finck

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