Yet Another Value Podcast - $TPB: can Turning Point Brands be the third player in nicotine pouches? | Saberpoint Capital

Episode Date: October 1, 2026

Nicotine pouches might be the best new consumer category in decades: cheap to make, high margin, and sticky once someone gets hooked, the same traits that made Philip Morris a 16.5% a year compounder for close to a century. George Baxter of Saberpoint Capital has owned Turning Point Brands since his fund's first days, and he thinks the market is missing how well TPB is positioned as the third player behind ZYN and Velo, with FRE and the Tucker Carlson backed Alp now almost half of revenue.We get into whether pouch users are really brand loyal or will hop around like energy drink buyers (my straw man, using Haypp and Europe), why C-stores want a third brand on the back bar, how the new PMTA rules shut the door on VC-backed upstarts, and the cost gap from making every can in India and air freighting it here. I push back on the part that worries most people: EBITDA is falling while TPB spends on slotting fees, UFC and influencers, Alp is a 50/50 JV with a celebrity, and the longtime CEO just left with a finance guy stepping in. We finish on valuation, from $35 to $45 a share for the legacy Zig-Zag and Stoker's business to George's path to a $1,000 stock by 2030.This episode is sponsored by Trata. Trata has a lot of TPB transcripts, including two done in the past month, and you can read both for free here:https://www.trata.com/tpbv1https://www.trata.com/tpbv2Trata is two buysiders who both know a stock well talking through the risks and opportunities they see, not just trading price targets. When I'm looking at a new company, one of the first things my AI does is go see what people are saying about it on Trata.Chapters:(00:00) Intro: George Baxter and Turning Point Brands(00:29) Sponsor: Trata(01:43) Welcome, and 11 years of following TPB(02:35) TPB's history: Zig-Zag, Stoker's, vapor and Standard General(06:26) The pouch launch: FRE and the Alp JV with Tucker Carlson(07:57) Why nicotine pouches look like the new tobacco(13:00) Brand loyal like cigarettes, or fickle like energy drinks?(18:45) Why US pouch users buy at the C-store, not online(22:57) How many brands can a C-store actually carry?(26:25) ZYN, Velo, and where TPB fits(28:11) Regulatory capture, Velo Plus, and ZYN losing share(32:53) PMTA changes shut the door on the VC-backed brands(36:36) Why C-stores want a third player on the back bar(39:36) Financials: falling EBITDA, TKO deal and slotting fees(41:14) Made in India and air freighted: the $1.40 can(44:11) The PMTA path to US manufacturing and slotting fees rolling off(51:31) Valuation: what the legacy business is worth(53:43) FRE's marketing and the energy drink playbook(55:02) Alp, Tucker Carlson, and building a brand(59:56) Alp JV economics and the celebrity risk(1:04:17) Alp and FRE are the same product(1:05:17) CEO exit, insider ownership and the ATM(1:06:48) Will TPB buy more of Alp?(1:09:17) David Glazek takes over(1:13:43) The 2030 math: a $1,000 stock?(1:16:20) George's bias disclaimer and his book(1:18:25) WrapGeorge Baxter / Saberpoint CapitalLinks:Yet Another Value Blog - https://www.yetanothervalueblog.comSee our legal disclaimer here: https://www.yetanothervalueblog.com/p/legal-and-disclaimer

You're about to listen to yet another value podcast with your host, me, Andrew Walker. Today we've got George Baxter from SabrePoint Capital on. We are going to be talking about Turning Point Brands. The ticker there is TPB. It is a stock with a really passionate follower, value investors, investors who are interested in nicotine pouches, all this sort of stuff. Really fascinating gross trajectory. Lots to talk about where we are going to talk about a lot of it. So rather than continue to ramble on, I'll get right to the podcast with George.

But actually, I won't get right there because first, from our sponsor and our sponsor is trata trata.com. I've been saying it for basically a year at this point. If you like this podcast, you will like Trada. Trada is two by-siders who hop on and talk, much like this podcast about a stock that, well, in this case, generally that they're both invested in. And they'll talk about the risks, the opportunities, all that sort of stuff that they're seeing when they think about the stock. And what I really like, it's two people who know the stock well. So they're not just saying, hey, I've got this at 10 times this year's number. Do you have this at 11? Do you think it's worth 12? Like, no, they're actually going on.

they're saying, hey, what do you think about marginage security? What do you think about competitor acts doing this? What do you think about all this type of stuff? And look, I find it fascinating. My AI, one of the first things it does whenever I'm looking at a stock company, it goes, and it looks at Trada and sees what people are saying about it. If you want to try it, here's a great way to try it. Trada has not one, but not one, not two, but a lot of transcripts on TPB,

including two that were done in basically the past month. And they are offering a free trial, a free look at both of them. So you can follow the link in the show notes to see both of those transcripts, check them out. And when you like the product, and you will, you can go try the whole thing. So trata.com, t rata.com. Thanks for sponsors. And now on to the episode. All right, hello.

And welcome to yet another value podcast. I'm your host, Andrew Walker. And with me today, I'm happy to have on for the first time, George Baxter from SabrePoint Capital and fellow board game enthusiast as anyone watching on YouTube can see behind him. George, how's it going? It's going pretty well. How are you doing? I'm doing well. I'm super excited to talk about the company we're going to talk about today.

Followed them for a long time. Really excited to cover them. Before I get there, remind everyone, nothing on this podcast is investing advice. There's a full disclaimer at the end of the podcast and in the show notes if you want to go check that out. So, George, the company we're going to talk about today is Turning Point Brands. The ticker there is TPB. I followed them for 11 years. The story's really evolved. I know it's very popular among there's a concentric circle of value investors and investors who like tobacco slash nicotine, and it's very popular among both. So I've rampled enough.

I'll just turn it over to you. What is Turning Point brands, and why are you so interested in that? So like you, we've been following Turning Point brands really since our inception. We just had our 10-year anniversary at SabrePoint. And Turning Point was literally one of the first few companies that we invested in. But Turning Point's really interesting. It has a pretty long history. I won't go into too much detail, but it was a distressed debt private company initially.

And there's a company, there's an investment fund that's kind of a hybrid private equity, distressed debt slash hedge fund called Standard General. I'm just laughing because it's a trip down memory lane. And I. Yes, yes, yes, yes, exactly. Yeah, you probably played the arbitrage between standard general and turning point as we did. Way back, but at the time, when we first looked at Turning Point, they had three different products they sold. They sold or three different lines of products. They had zigzag rolling papers where they have a license essentially to distribute a zigzag within the United States.

They own some brands, some related brands in the zigzag line that are, they're labeled zigzag, but their trade dress is a little bit different. And then they also have the Stokers Moist Snuff, but they have older, so beyond Moise Snuff, they have older like Chew. Beachnut is one of theirs. They have, they're the market leader in Chew, which is a declining, a small declining market. And Moist Snuff is declining, but Stokers has managed to grow despite that decline, given its position within the market. And then they had the vapor business. And the vapor business ran into a lot of trouble after Vapgate in 2019.

I believe they were the largest online vapor distributor, DTC and B2B. And so they would distribute to a lot of different vape shops and was somewhat of a roll-up. but you had Vapgate in 2019 where there were some high schoolers that actually died vaping because, and at the time, if you dug hard enough, you could find this, but most people didn't bother. They were vaping marijuana pods that were homemade that people put vitamin E in as part of their ingredients, and the vitamin E clogged people's lungs caused it where they couldn't breathe. But nonetheless, youth usage of vapor was a massive. I want to say it was in the 30% plus range for high schoolers.

And a series of laws and regulations were passed, which created the PMTA process, which is a pre-marketing authorization process that you have to have for any new nicotine product. And that's important because it plays into nicotine pouches and kind of the dynamics of what's going on today. But at the end of, I believe it was 2000, I want to say it was early, maybe it was early 2025, turning point deconsolidated their vapor business and put it into a JV that they own 49%

of and took that off of the books. But in early 2024, they really began their national launch of free, which was their first entry into the nicotine pouch market, which is really the exciting part of the story today. And later, they entered into a JV, a 50-50 JV with Tucker Carlson to launch the Outbrand, which is probably the fastest growing consumer product in the United States today. you know of you know of any size that's a great background so i guess if i was just fast forward into kind of today so great background today what you have is you've got turning points and they've got

the legacy businesses which have value you know i remember part of the thing at the time was hey zigzag these like rolling papers everything they they've got i mean when they were a private company they were like seven x levered and you looked at that and then you looked at the stock and you're like the stock trading six x and they throw off huge cash flows like they can handle this. So you've got that legacy business that has value. But the reason investors are here is the nicotine pouch business, right? And they've got FRE free. And then they've got the JV with Tucker Carlson. And nicotine pouches, you know, I think long time, anyone who's followed the markets has probably heard of at least Zin, right? Zin, nicotine poutherst. That's the big boy in the

room. But nicotine is this massive growth business for tobacco. It's the first time tobacco and nicotine have had a growth business in a long time. And here you've got turning point. with kind of two brands. And I think you're thinking, hey, turning point is a, I'll play on that growth. Is that kind of the right way to think about in frame it? Yes. I think like I got interested in turning point again. So we've been invested up really through, I want to say, 20, 23.

In 2020, there was a huge bump in all of their businesses because everybody was stuck at home. So they had ordered their vape via the, the internet, they'd order, you know, more people sat at home and smoked marijuana, so they use more zigzag rolling papers. And, you know, Stokers, you know, managed to do pretty well at that period as well. But there was a hangover that occurred as a result. The rolling paper business has a tendency to go through a stocking and de-stocking cycle, because you can deliver a box of rolling papers to a retailer and that would be enough inventory for them for half of a year. So it's a very

slow turning, but high margin business. There's a lot of volatility in the infill associated with that. So you'll have, you know, long stretches where it looks like there's no growth. I think we're kind of going through that now. There's also some secular headwinds for that business. But anyway, we're talking about nicotine pouches. Why are nicotine pouches so important? Well, Well, you know, if you think about nicotine and the consumption of nicotine, there's, if you smoke cigarettes in today's society, for one, the health consequences are enormously bad. It's, you know, each year, according to the CDC, smoking related deaths, actually exceed the peak that you had in COVID.

It's like 280,000 people every year that die as a, you know, and a lot of, you know, and, you with some connection to smoking. So it is a very socially destructive product. But historically, cigarettes were actually the best product, probably in history. If you look at stock performance over a 98-year period, there's not that many stocks that have been around that long, but one of them is Philip Morris, which now is broken up into Altria and Philip Morris International.

but that that stock had you purchased it you know 98 years ago you would have had a 16 and a half percent annual return which is absolutely phenomenal and the reason why is because it's addictive people are brand loyal and it's very cheap to make so you know you have competitive barriers there with something that that's a very low cost to manufacture product well what's interesting about nicotine pouches is they have the same type of characteristics, very inexpensive to make, very high margin. I believe with all nicotine products, ultimately, you do end up with brand loyalty. When they're in their early stages and when people first start using them, they tend to

experiment more and certainly more casual users will experiment more. but if you become a habitual user, you tend to mentally associate the nicotine relief that you get with whatever product you're used to using. And therefore, it becomes very sticky at that point in time. And, you know, it's kind of like if you're a Coke drinker, there's a lot of Coke drinkers out there.

They won't drink Pepsi on one of them. You know, unlike other products where people will switch around, nicotine has a tendency to, for people to attach to a certain, a certain formulation that they mentally associate with that relief of nicotine. And if there's a different formulation, then that becomes unsatisfying. So this market has grown from nothing really prior to COVID to today. it's about a $6.5 billion market. Right now, according to the latest Nielsen data, the market's growing at about 22%. There are ebbs and flows in that growth, but I want to say on average for the last five years,

it's been something like 37, 38 percent average annual growth. So it is an extremely rapidly growing category. And within that, turning point has managed within, you know, since they launched, their nationally launched free in 2024, between Free and Alp, you know, they've managed to take that from, you know, really nothing in their revenues to 48% as of the last earnings report. So 48% of their revenue now comes from nicotine pouch. Perfect. Okay. So I think this frames it nicely. So if I just said to like broad strokes, There's two core pieces of this thesis. First, turning point and nicotine pouches are tobacco.

And historically, tobacco, you know, you did the Philip Morris and everybody knows if you had invested in Philip Morris in 1970, then you're richer than Warren Buffett right now, right? Like tobacco is what you're saying has been a great category to invest in for all the reasons you discuss. And you think nicotine pouches will follow those reasons. And then the second thing would be, hey, you know, we've got to talk about turning point specifically versus the, versus the other plays. And, you know, there have been companies that are in great industries, you know, I'm trying to, I can't think of one off the top of my head, but companies that were in great industries, but are the Warren Buffett joke.

Hey, everybody knew automobiles were going to be the future. But if you invested in automobiles, there were, what, a thousand listed automobile companies in 1910s, three of them made it out, right? So I think you've got those two, those two overarching things. So let's have into them. First, on tobacco being a great catacart. I definitely hear you there. But, you know, I did an episode on hate.

I think a lot of, especially small value investors look at hate and they look at Europe. And a lot of what I've heard from people doing hate, but I haven't used this. So I can't say I've got personal experience, but is that something about nicotine pouches is different. And people are willing to switch between them, right? Because there's on one end, you have Coke. Or if you had a someone in your life who smoked cigarettes, they were so brand loyal, right? If they smoked Winstons and you hand them, Marlowe, absolutely. not, right? It's not the same. But there are other things like tea. People like to skip around

between different tea flavors and stuff. I think a lot of people have suggested to me that nicotine pouches are more like tea, where, hey, today I might want to try the orange mango flavor or energy drinks is a great one, right? A lot of people will have a monster one day, a Red Bull the next day. So I guess my first thing is like, why are you so confident that people are going to kind of get super brand loyal here? Well, I'll say, I think there's a narrative the one that I shared with you, that makes sense to me. It's consistent with my personal experience and others that I've observed. I think if you talk to someone who is a casual user,

that casual user will, you know, they haven't quite, you know, they've gotten the addiction so deeply into their system. And there's differences in the way that the nicotine is released and things of nature and if you've if you've ever been a nicotine addict it's kind of like being hungry right and I know personally I try every single nicotine patch that I find that comes onto the market and some of them I recognize definitely as being better than others but I personally almost always come back to using Alpen free winter green and mint because that's just that's what I tend to associate with that relief, that that satisfaction.

And so I think that over time, you may have this experimental phase, but ultimately you tend to gravitate towards a particular brand. Now, I own hate, and I do think that there is definitely an element of experimentation, but it could also be a difference just as to how these things are distributed in Europe versus they in the United States you might it could be that if you go to Europe for instance

they'll have shops in Switzerland which are just nicotine pouch shops and literally they'll have it you know it looks like an iPhone store right with all these bins and all of these different displays of different nicotine pouches. I don't really have that United States. We have something similar for vague, but we don't have that for nicotine pouches. So I don't think, you know, and usually most of the distribution, the vast majority of

the distribution in the United States, goes through the convenience store channel. And I think based off of conversations that I've had with buyers, like the buyers at Custard, you know, 7-Eleven, They, you know, you don't want to walk into a convenience store. It's supposed to be convenient. You walk in and you want to be able to make a decision, make it quickly. So they will tend to consolidate these brands down to a more limited number, right? So usually you'll get, you know, if you think about cigarette brands, you know, really there's probably six or seven brands that are really out there that are, that, you know, that have room within that convenience channel. And that's their main point of distribution. So, you know, part of my reasoning is anecdotal. Perhaps there's cultural differences. Perhaps it's a difference in just distribution. I will say that it's certainly within HAPE's interest to promote the idea that, you know,

people want to have a lot of selection because that's one of the things they can provide is a very broad selection that you can't get in a convenience. store. But you could perhaps in Sweden. You know, the other thing in Sweden, I believe about a third of all sales are done online for nicotine pouches. Conversely, in the United States, it's about 4%. It's crazy. When I talk to my friends, as you know, if you do nicotine pouches, I mean, you're doing a lot of them per day. And when I talk to my friends, so many of them, you mentioned convenience stores. And even here in New York City, so many of them just go to the bodega and get the pouches. I'm like, you know, I know the hate bowl case. I've really looked at it and I'm always like, guys, you just do hate it.

It would be like Amazon Prime. You would save tons of money. It would be on your doorstep every day. You wouldn't have to stop in the bodega and like waiting line. And they're like, no, I just like the C-Stars. And I don't know if that's just because it's early or what, but I'm just shocked. It's not more than 4%. One buyer that I talked to about it said that it's part of, for one, we're a car culture here in the United States.

So, you know, people, it becomes part of their habit. It's like getting their morning coffee. But it's weird because morning coffee needs to be fresh, right? So I kind of get the method to I go to the Starbucks and get the morning coffee. Whereas nicotine vouchers, you buy it. Maybe you pop one in your mouth. But, you know, it's there. Dave, we think about it relative to cigarettes.

You know, with cigarettes, everybody's always trying to quit. Right. And interestingly enough, even though you could get a better deal, getting cartons. People don't buy cartons because they're like, okay, I'm going to go in. I'll buy a pack or two. This is the last one. I don't want to buy, you know, a whole bunch of them, right? And if you're buying online, really, you know, usually there's a $70 or $75 or $80 limit.

So you're going to have to buy, you know, 15 cans or so just to be able to push up over that limit, you know, to get the free shipping. Otherwise, you're paying $8 and it destroys any sort of, you know, for the shipping and it destroys any sort of value that you may be saving, getting it cheaper online. So I wonder if part of it is just this carryover that we've had with cigarettes where, you know, people are always having kind of have it in the back of their minds. Like, I'm doing this today, but I'm not necessarily committed to it. You know, I may want to get off of this at some point in time. So I don't want to have these things laying around with, you know, multiple, multiple camps.

I'm not that way. We order it online all the time. And there's some other reasons we do that, but I won't go into it, that help us get a little bit of information. But I do think that maybe that's a carryover. And it is interesting. There's a lot of people that just won't buy online. I was just laughing because you said, you know, the cigarette habits and they buy it and they're like, this is my last pack, which people who are know who've smoked, like that is very much the mindset. Maybe it's because most of my friends who do

nicotine pouches are single men who are still youngish. But, you know, my friends who do nicotine pouches, I'm not sensing any, oh, this is my last nicotine pouch. I'm sensing a lot of, this is part of who I am. I do nicotine pouches, but, uh, I'm curious though. Andrew, you know, I would challenge you when you interact with those people that your friends that use nicotine pouches, you know, how many of them do switch around and try a lot of different products. And do, and if they do, I mean, for me, I wake up in the morning. I put a nicotine pouch in.

I pretty much have a nicotine. I have one in right now. I mean, I'm always using a nicotine pouch unless I'm eating or sleeping. Okay. So, you know, I'm just constantly using it. And this is one of the reasons why this is such a great product because the instances for usage, like, if I was smoking a cigarette, my wife would murder me, right? Because I'm smoking inside.

So I've got to go outside. and then I'm a pariah. You know, people see me smoking and like, oh, that person makes bad life decisions. Now I can make bad life decisions and nobody knows it. But, you know, the health aspects are a huge reason why this is such a good product. But the convenience, I think, can't be understated. If you're on an airplane for four hours, you can't smoke a cigarette, you can't vape, but you can use a nicotine pouch, right?

If you're in an elevator, a movie theater, I mean, go. across the working at your desk and you cannot crack a beer at 11 a.m. if you're working on the Choose your Big Bank desk, but you absolutely can toss in a nicotine pouch and

you know you couldn't if you said hey I just took a marijuana gummy or I went and hit some marijuana people would be like what the you know you're going to get fired but you can so it is very interesting thinking about that but so I'm with you right like it is a growth business it is a growth business with great characteristics and great tailwinds

obviously much healthier than smoking, so they ride the smoking adoption, young people won't buy this. They've got a lot of its business. I think this starts to bring us nicely into, you know, just because something's a great business does not mean that the company works, right? There's going to be industry structure and everything. Having a selling a soft drink was a great business, but if you didn't invest in Coke or Pepsi, you know, those took off. The other one's not so great.

You mentioned cigarettes in the C-suite, right, in the convenience stores. And you said, hey, they kind of consolidated down to seven brands and there's limited shelf space. And while I do hear you, like part of the reason they consolidated down was there were these huge legal liabilities, there's a huge fixed cost. And if I look, you know, in my mental mind, if I look at a 7-Eleven, and I think about energy drinks. And energy drinks just kept coming to mind as I thought about this on both the good and the bad side. But I think of energy drinks. They've got eight different brands and they've got 15 different flavors of every energy drink taking up a huge, a huge space. But I think about soft drinks. You know, it is Coke and Pepsi, but

they've got multiple flavors of Coke and Pepsi. They have Dr. Pepper. They've got a 7-Eleven brand. So they're willing to stock a lot of these things. So I guess my first pushback to you on just the thing would be, because this starts to narrow it down to YTPB would be, hey, is there really going to be room for multiple? You were saying there's going to be limited. I'm worried there could be just kind of unlimited if everything's going through the C-Suite side. Well, according to the conversations I've had with the buyers based off of their metrics, it's the velocity is higher when you have fewer brands. And a lot of that is because people come in and usually when you're coming into,

you're feeding an addiction when you're buying a nicotine product. A Coke or something like that, you may be thirsty, right? And a lot of things are going to satisfy that need. But to meet that addiction, like that's one of the things why you're literally going to the convenience store. That is the purpose. You may pick up a Coke or you may pick up something else, but that's where you're there. And maybe, you know, it's a Chinese menu effect where you have so many different things that people have a harder time finding what it is they want.

It's harder for the clerk to find what they want. I've done hundreds of checks on these things and I can't tell you how many times the clerk has no clue what they're looking for. And they have a hard time, you know, going through all the different nicotine pouches to find. the right one at these stores that have, you know, really a large selection. So I personally believe that over time, we will narrow this down to basically one or two competitors that are not large, big tobacco today and the big tobacco competitors. And I think there's a space for those, but there's not room. for five or six, right?

So let me guys. Of the smaller, of the smaller players. You know, I, when I look at this, I, everybody remembers Philip Morris buying Swedish match, everybody. Philip Morris bought Swedish match. The, the big player is in and then, what is it, Vell, that that has, is the other player. Velo. Yeah. Velo is British America tobacco through Reynolds.

And you're buying CPB and free and all. And I, you're basically saying, hey, you know, those big players are going to be big. they're probably the dominant players, and there's going to be room for the third player, you know, the Dr. Pepper to the Coke and the Pepsi. I guess my question would be why would it be TPB, why it be free and help? And then as I think about this, you know, were they just so well positioned? Because you mentioned regulation. I think we should start talking regulation at some point.

These guys kind of had the foresight to get approved before the government really like put a pause on all of these authorizations. and now they've got 6% market share or so. And I do wonder as the government, you know, they've said and there've been kicks and stars, but the government's going to be more receptive to rolling out these things. I do worry that as Zinn, you know, the legacy Zin is, I think it's a very dry product and I think Alpin free are very moist. Zin's got a new moist product coming out. As everybody starts rolling out moist products and the products improve and you kind of get

the optionality in Sweden, like is there a place for out to hold on to this 5% market share? I could see a world where everything goes to Zinn and Vell for a lot of reasons, or I could see a world where you kind of address it where it fractures into 20 different brands. And I'm kind of worried that the world we're in is perfect for CPB. But as the PMTA, like gets restricted, we go to one of those other two worlds and TPB isn't quite a winner there. So let's be, so let's think about this for a second. So a big part of what big tobacco is is regulatory capture and distribution. Exactly.

Yes, yes, yes. And these changes are being stimulated by big tobacco, right? If it was the case and big tobacco, you would think they're moderate, you know, they're intelligent people. Though, you know, I think execution, we could talk about some dumb things that have happened or at least my perception, maybe I'm dumb. But big tobacco has pushed for this liberalization. And part of it is like you're saying. They looked at what happened with VAPE where you had the PMTA come in.

And if you're following the rules, then you couldn't compete because you couldn't innovate, right? Any new product had to go through the PMTA process and it took years. and you couldn't have flavors. Well, 70 to 80% of all vape now is disposable Chinese flavored vapes that are completely illegal. They're black market products. I think, you know, they have to protect this market because this is the future for their businesses. And they have to be able to have innovation. With respect.

So one of the reasons I really got excited about TPB when I first got involved, I just got involved, I tried all of the different nicotine pouches, and I wasn't addicted by that at that time, but I tried all the different nicotine pouches, and Free was the best among all of them at the time. Later, Velo Plus came out, and Velo, by the way, the first one was just, it was just sawdust in the little sashay, horrible. And you could, it almost tasted fake. But Velo Plus came out, and that's a very good. product. There's no question. And they are, uh, in terms of dollar market share growth, they're dominant. They've gone from, you know, essentially like a two or three share under the old

vello to a 20 share today. Um, so they've just been stealing a tremendous amount of market share from Zen. It is a better product. There's no question about that in my mind, uh, uh, than, then Zen was. And it is a moist product. Well, Velo launched at exactly the same time that Alp did. And Alp is the fastest growing on a percentage basis of nicotine pouch, you know, among the ones that are of any size, of any real size. So, you know, they've managed to grow right alongside them. I've tried all of them. I've tried the new On, which is a moist pouch.

And it's supposed, you know, it's supposed to, their cell is kind of the feel. Most people feel like it's really weird, like they've got slime in their mouth or something. There are some that like it. There is the Zen Ultra that's been launched, and that's right now just getting into distribution. But if you look at that, if you take Zen and Zen Ultra and add them together, they're growing 2% year over year. So most of what is happening with Zen Ultra, to the extent that it's taking share, it's taking share. from Zen, from the original Zen, which is bad for Philip Morris because Zen is a premium product. It's the most premium product. It sells for substantially more than any of the others.

And it's interesting. It is made, I think one of the reasons the market, you know, last year I want to say the market grew something like 37%. I think one of the reasons why the market has slowed is because Zen has slowed. So last year, I think at the beginning of the year, I want to say Zen, was something like 78% share. Today, that's down to about 54. And the reason why is because they, even though the market, you know, they're growing a little bit, the market is growing much faster.

It's funny because that, in many ways, that supports your thesis because if you just do the math, what's happening is the people who are like Zinn, even though it is an inferior product, the people like Zinn are probably sticking with Zin, and the newcomers are going with a superior product and that very much support your stickiness. And even if you bought into my straw man that, hey, there's competition coming, all this sort of stuff.

Well, there's a big brand of people who are already pretty sticky on free and allp and everything. So. Well, and I think another thing to recognize here, to the extent that the PMTA is opening up, that's going to benefit the larger incumbents more than it's going to benefit the smaller players. So we, you know, we talked a little about PMTA. used to work. If you had a tobacco-derived nicotine product, your PMTA had to have been filed prior to two, like some date in 2020. If it was synthetic derived, then it had to be before 2022. And then you were grandfathered with respect to enforcement. The FDA came out with new enforcement regulation in May of this year that said, if you file your PMTA and, it has been accepted, meaning that it has enough scientific breadth that they feel like they

could make a marketing order determination, then you can start marketing and selling your product into the market. And already, you've seen British American tobacco start to sell flavored vape pods. Zen is going to sell a 1.5 milligram product. And they'd, They've issued new flavors that have not received a marketing order, and they did not have filings prior to those prior deadlines. The smaller players, like SESH, Lucy, Joey, Juicehead, those players had an advantage in that they had filed prior to the deadline, and they're almost all private equity backed.

The game plan for them, the exit for the private equity or venture, was that you go and you get into the large C stores, which only represent, you know, call it, it's roughly, it's roughly, like, 32% of all of the C stores that are out there are owned by operators that own 300 or more stores. You go and you pay your slotting fees, you get into the large C stores, you show consumer acceptance,

because the larger players couldn't innovate because they had to go through the PMTA process, if you had something that was resonating and taking share, they would buy your company, right, and integrate it into their suite. Yep. Well, now there's no reason for them to buy your company, right? Because they can go and file a new PMTA and do their own innovation and adopt whatever it is that you have that's resonating. So I think the door has been shut for a lot of these smaller players, and it's just a matter of time before they run out of money.

So I think the way you're framing this is, hey, the industry with PMTA, with regulation opened up, the big boys are going to dominate, but we're in a TPB is in a nice position where there's always room for a third or fourth, right? The seven pluses are all too small and they're kind of dead, right? they're competing against now unleash big people. We kind of are in the nice place where, yes, we're never going to be able to out-compete Zinn. We're not going to be the largest brand. But, you know, we're at 5 to 6 percent. There's no reason we can't stay there or people who don't want to be Zin.

You know, I'm a Dr. Pepper drinker. If you want to be a Dr. Pepper drinker instead of a Coke, there's 10 percent of the market who does that. And we're well positioned to take that 5 to 10 percent. And by the way, the market, as you said, is growing strong double digits. So you're just like kind of riding multiple ways there. Is that kind of the right way to frame it? So there's a couple of things.

One, those smaller players, I don't really view turning point as competing very much with the big players. If you talk to the buyers at the C stores, they need to have something other than Velo, Zen, and on. They need to have some other products that they're selling because of the discounting cadence. Right. So one of the things, there's going to be a certain customers, a certain percentage of customers that will always buy the cheapest product. And they always want to buy something on sale. The problem with the big tobacco is the cadence for those discounts. The cadence is set by big tobacco.

They give you a calendar and they say, this is when we're going to go and we're going to sell on, you know, at a discount. turning point has had the flexibility, and I think some of the other smaller players can do this as well, they're like, you can determine the cadence of promotion, right? We'll give that to you. So it provides them, and it relieves some of the competitive, you know, you really don't want an oligopoly that is going to be able to dictate terms to you.

And with the cigarettes, they already have a lot of power because they'll go and they'll say, like, for instance, your rebates that you get for volume, that they're all tied together between cigarettes and the nicotine pouches, which the smaller players obviously can't do that. But these C-Stores still want to have a portion of that back bar allocated to another player to give them flexibility and to give them a little bit more leverage with respect to the larger players. Turning point fits that very well because one of the questions,

you're asking as a C-store buyer is, is this company going to be around? You know, is, you know, if you look at these venture back, they've got a cash burn and then they're done, right? They can try to raise another round, but that's less favorable today in the current regulatory environment that it was in the past because of the lack of an exit. And Turning Point has a sales force. You know, you want to be able to have, and if you look at Altria, all of the big players have large sales forces. They'll have people that'll come into the convenience store. They'll see out of stocks. They'll help with the merchandising, how things should be positioned, which helps improve sales. Well, Turning Point can offer that because they have their own sales force,

which they've been growing. In 2024, they have 100 regional salespeople to support ZigZag and Stokers. Now they're at about 260 on their way to about 320. And that's, they think, that will be enough for them to be able to support their national presence. Let me go to, let's start talking financials a little bit. So they reported Q2 earnings. You know, things are growing nicely here. I'm just eyeballing it. Revenue for Q2 up $116 million last year to $140 million this year.

So they're growing very quickly. But earnings are actually going down, right? EBITDA is going to go from $120 million in 2025 to the midpoint of the guide right now is $75. million. So, EBITDA is going down. Now, there's a reason, right? They're, they're investing into these hypergrowth brands, free and all. So they would tell you we're making investments. They did a big TKO partnership. They're paying in Q2. I know there were a lot of slotting fees in stuff in Q2. So they're paying for growth. But I think a lot of people look at them investing this much into growth and are worried that they're kind of buying market share and investing,

you know, especially the TKO partnerships. I know there was a trot a call with a bull and a and the bear kept saying, hey, I wanted to like this, but that TKO partnership, I think is 20 million a year, that is a big, big fixed cost for this company. So I think there's a lot of people who are worried they're buying the growth and kind of hoping that the economics justify it later. And it could be, you know, when you've got a legacy company, a company that's a legacy cash cow, a lot of people are used to looking at it through cash cow lens. And then when it becomes a growth company, there is a little bit of a turnover, you know, just look no further than Google. It used to be the best cash flow in business on the planet. Now they're getting to hyper-skiller CAP-X. Is that good or bad?

Who knows? But there are a lot of people who are there for the cash flow who are looking saying, wait, we're spending what on CAP-X? So there might be a little bit of that here. I threw a lot out there. I'd love to hear your thoughts on that. So it's good, you know, we're getting into this year. I think turning point's biggest flaw has been their lack of communication. They went into this year as an investment year. I was surprised. There's two things that there's a couple of things that happened. One, this year they thought that they would have domestic manufacturing, which is huge. I thought that they would have it by Q1. It is yet to come to fruition. And that's largely tied to regulatory reasons. I can tell you that they have, they have the equipment that's there

in Louisville. And it's, you know, they have one line that's running. and it's running the spec. But they can't, you know, they have not started manufacturing domestically because they have been waiting to get PMTA, a PMTA marketing order. And they're within this pilot program where both Philip Morris International and Altria have received marketing orders for their products in the pilot program. So Philip Morris and Altra are producing domestically U.S. And I think the gross margin is like 15% better if you're domestic.

Yes. Well, and it's actually, so right now to produce a can for a turning point, I estimate it costs about $1.40. Right. So they've got to pay about a dollar to, they produce them all in India. They pay about a dollar to the to the domestic or to the, to the, to the, to the co-packer in India per can. And then they've got to pay for air freight because it's all air freight. Why?

Because the pouches are moist, if you stick it on a ship for six weeks, there's a good chance they could dry out. Oh, interesting. Okay. Yeah. So it's all air freight. That adds somewhere in the neighborhood of 20 cents a can, 20 to 25 cents a can.

It's elevated right now because of the war in Iran. and what that has done to fuel prices. And then you have a 16% tariff that's on top of that, right, because there's a tariff on Indian imported goods. So if they produced it domestically, that $1.40 would likely go down to about $0.65 and possibly lower. Because, you know, they're contemplating using other machines. that are more efficient. So in my mind, my question was going to be, hey, everyone gets the same

benefit domestically. But I think what you're saying is these guys are actually operating with one hand tied behind their back because their competitors are already producing domestically. They're not. So you're just evening the cost structure out there. Okay, that's right. And for them to be able, when you, under the PMTA, you have to designate your manufacturing. And if you want to designate new manufacturing, it has to be substantially equivalent to your old manufacturing, which typically means like the same suppliers, the same chemical consistency of every ingredient. It becomes very difficult,

particularly when it's done in a foreign country. And if you go and amend your PMTA prior to approval, then it can be deemed to be a new PMTA, which puts you at the back of the line for review. So if they get their marketing order, then they can supplement, right? And once they supplement, then they can designate new manufacturing

and that's a much easier process. So that was the holdup before. But what's exciting is under the new, and I think this is happening, you had a large increase in PMTA expense in the second quarter. It went from like a couple of hundred grand to over $3 million last quarter. I think they'd filed the new PMTA

or they're in the process of filing. a new PMTA. And once that PMTA has been accepted, they can start demand manufacturing at that time. So I don't think it's a question of if. I think it's a question of when. And it could be, you know, it could be any day now, right? I mean, it could take a while. I mean, you know, you still have to go through the process of the FDA getting back to you.

And, you know, once you file, since we don't know if necessarily they have filed yet, but I suspect that it's in process because they have to have studies that go and support the new filing. And of course, in that new filing, they would designate U.S. manufacturing. I think that that will happen probably at the latest in the second half of next year. But I think it's on the way. And I think that they were anticipating that they would have gotten a marketing order earlier. And they'd have that domestic manufacturing. And that would make up for a lot of the slotting fees.

Now, the interesting thing about the slotting fees is when, and they're all bespoke, right? Every contract is different with every major C store owner. When you have slotting fees, typically you'll pay like a break, a break in fee to get on the shelf just to be there. Yep. And that has been highly competitive because you had all these VC backed players whose only strategy is to be in the large C stores. They don't have a regional sales force. If you look on LinkedIn, none of them have more than 50 employees. And their sales force is maybe 10 people versus Turning Point that's got 260, right?

And Turning Point is able to go into those independent single owner stores that are on a route for a guy who literally has product in the back of his car, right? And he comes in, checks on them, you know, sells them free and out, where for the, you know, the other smaller competitors, they've got to rely on Cormark and McLean. And when they're, when the salespeople for Cormark and McLean show up at the independent retailer, you know, there is a whole, a whole array of products. Who knows if they even talk about your product when they're selling in there. So you don't have that that interaction. But once we, and I'm getting to the to the slotting fees, once we get past a year, usually you get into a rebate situation where there's a history of how the product is sold, assuming it is sold

relatively well, then instead of paying on average, maybe $1,000, $1,200 per store, which is hot, you're going to pay 50 cents a can. And if you look at the volumes for free, that probably cost you about $260 a year per store. For Alp, since Alp has about 11 share in the stores where it's present, that's probably about $500 a year. But that's a significant difference from $1,200 to $1,200. So all, and we start annualizing those third quarter,

we'll have some, and then fourth quarter, you'll have many more. And then when we get to the first and the second quarter next year, you know, we will have annualized all of those big fees. And so I expect those to come down significantly improving margin. Plus, those break fees are coming down. Because the C stores are expanding their allocation to nicotine pouch. You can go and, you know, I used AI. I just said read every major C store. commentary about nicotine pouch. And they talked about adding shelf space because it's a higher margin product for them. They only get like a 10% margin or 11% margin for cigarettes,

where they're getting 25, 30 for nicotine pouch, plus they were getting these really high slotting fees from the smaller players. But those, I think when the smaller players now, since they're weak and they really can't afford to keep doing this indefinitely. They can't afford to pay as much. The space has been increased. And in some cases, they're physically adding more fixtures to be able to sell more pouches in the back panel. Those fees, and the company will tell you this, those fees have started to come down. They came down this year versus 2025. And the new contracts are less than the contracts they were using before. Plus, you know, we're probably halfway done with free as far as it's the stores where it's going to have to pay those contra revenues because they don't pay them in the, you know, the single owner stores.

And the independence, there's no, you know, there are no slotting fees. And Turning Point has an advantage from a cost perspective relative to these smaller players because they have that regional sales force that's selling into those. And there's another advantage here as well, which should improve margins, is that once you're ubiquitous and you're in 70 to 80% of the major players, all the regional and independent C stores pretty much have to carry your product, right? Because customers expect it, right? Once you get into the point where it's a ubiquitous product and it's on every shelf, you're going to have customers coming and looking for it at these smaller, with these smaller competitors, you can imagine a salesperson going into a single, you know, a single owner's shop and saying, you don't have free on your shelf. Well, 7-Eleven does. Circle K does across the street. You're going to have, you know,

consumers coming in here expecting to see this product and it's not going to be there. Let me, a hard switch. We've been going on with an hour, and I, I feel silly asking it at this point, but I've still got a lot of questions, actually, but let's just talk valuation real quick, right? As you are talking, the stock is trading about $60 per share. The market cap is about $1.2 billion. I think net debt here is about $300 billion. So I don't think anybody would call us crazy if we said the EV here is about $1.5 billion.

You can tell me if I was off on anything. No, no. Actually, no, net debt. I'm not subtracting the cash. They're pretty much net debt neutral because they raised this stuff, about $1.25 billion. How do you think about stock at 60? We can just start there. How do you think about fair value here?

So I think the legacy business is probably worth somewhere in the neighborhood of call it $35 to $45 a share. Okay. So that's zigzag and stokers for the most part. So you think that covers 75% of the market cap here, giving you free and out for, you know, $300 million-ish $15 per share. And clearly I think they're worth more than that. Yeah. And just to kind of give you to frame. So Alp is the big story.

like free is great free is done well they've grown well but they they've really oh and i will say there's efficacy to the short thesis um that they're not getting great returns for their marketing spend uh marketing spend's always difficult and part of the problem they've had with free has just been recognition a lot of people didn't even know what it was right they've never seen it before So they've been making a real effort to get visibility. UFC was a big part of that. They have signed up a ton of different influencers to talk about free. And I think from a brand recognition, just knowing that it's out there,

I think that's probably helpful. But as far as getting a great ROI on that, that really remains to be seen. think there's reason for skepticism with respect to free. Al, has not spent. Can I just pause you on free real quick? Because I've got a lot of free is interesting. You mentioned the UFC thing. Just, you know, the one, now you're painting a different market charge than this, but the, the bull case for this I keep coming back into is energy drinks, right? Where Coke and Pepsi failed in their efforts for energy drinks. And Monster and Celsius, now they're partnered and they use the Coke and Pepsi distribution, but Monster and Celsius and Red Bull had great success there.

And when I think about that, those are younger male adjacent products. I guess Celsius is not quite, but a lot of the success came from alternative sports. Like, you know, energy drinks were a huge advertiser on UFC. And when I think about like, they're kind of, there's just a lot of similarities there where I say, hey, free takes a UFC advertising spot. It's got a different vibe. They're going after the influencers and they're competing against tobacco. which, I mean, Coke and Pepsi are marketing machines, but they're through traditional marketing.

Tobacco hasn't had to market in the U.S. in decades, right? So they're going after, free is going with very aggressive, very creative advertisements, and they're competing against guys who basically didn't need an advertising. I find that framing, fascinating, that parallel story fascinating. So I'll pause there, and I really want to dive into Alp because I think that's a fascinating piece of it as well. So, yes, there. I mean, you've had this moratorium essentially on advertising related to tobacco products. And big tobacco is largely, like I said, they've become distribution and regulatory capture

engines, right? They have better international relations to the State Department, right? I mean, they're powerful in terms of their ability to maneuver in the legal system. Turning point has a bit of that. They've obviously been operating in the. this environment for many years. They have a very adept legal department. But Turning Point has been an innovative scrapper. They're not going to win on discounting. They're not going to win on scale, right? So they have had to rely on building brand. And I would argue

Alp has been more successful in that endeavor than free. It had the natural advantage of the of Tucker Carlson, which is huge. He's probably the most widely watched conservative commentator. And sales through conservative commentators, oddly, I mean, they're, it's extremely lucrative, like it tends to generate a lot of sales that they tell their viewers they should buy something that there's a good chance they're going to. But for free, you know, they, so they have been much more aggressive than, traditional big tobacco.

But again, they don't really have the experience doing that. In the past, Stokers, I mean, like you mentioned before, this was a distressed company. They spent no money, right? None. I went and visited them in 2017 in their headquarters. And it hadn't been renovated, I think, since the 1960s. And if you wanted a Coke, you had to buy it in the vending machine, right? And in their manufacturing, they had a guy in the back who would take parts of old machines and put them together and fix new machines with these scraps.

They were just very, very good at running with no money. That's a difficult transition to running into a situation where you're building a brand and you're having to spend a lot of money. Right, which is what I think there's growing pains that they're suffering right now. If you look at a lot of the free advertising to me, and I'm trying to schedule a conversation with their head of marketing, I think it's good from the standpoint of getting people to recognize that it exists. And also, by the way, getting more penetration to stores obviously satisfies that to some degree. But what it struggles with is creating an identity. I think free is kind of like, what does it represent? If you look at their advertising, it's kind of all over the place.

A lot of it's kind of funny, silly, which for me is not consistent with the intensity associated with the TKO partnership. I think it would be better if they had something similar to what you saw from Under Armour because it's supposed to be an intense brand. Like the logo is, own your edge, you know, power, feel, flavor,

because they sold these higher nicotine strengths. That was one of their distinguishing characteristics is that they had 12 and 15 nicotine strengths. So I think that their marketing message is somewhat muddled. They've spent a lot of money. And I think if you have something like the, the TKO partnership, which is not just,

just ultimate finding championship. It's formula drift, which is really cool. The National Bull Riders Association, Zufo Boxing, and World Strongest Man. All of those things are about intensity, right? And I don't think that they've done a great job at communicating intensity. And so, you know, personally, the brand building, the fact that like, if I pick up an Alpcan, people will look at me and they'll go, oh, that guy uses Alp. I know a little bit about this person because I know that Tucker Carlson, you know, he is an advocate of that brand. Can I close you there?

Let me ask, because we're going way over an hour and I have two. I'm sorry. We haven't even talked about the management. So I have a question on management and a question on Alp. And then I've got like a lot of other questions that we might have to say for another day. But let me start with the question on Alp because you mentioned it. You pulled up. you know, ALPA is a JV with Tucker Carlson. It is phenomenally successful, you know, so they don't

disclose much of it, but if you look at their financials, I don't think I'm breaking news. They have a net income contributing to non-control and interest. They have a JV with Tucker Carlson. If you, you know, half the earnings, that's the NCI there. Half their earnings are going to Tucker Carlson. Half their earnings are the same with them. It's responsible for, you know, in Q2, all of their net, more than all of their net income is the ALP business, if they're the NCI split that I just told you is to be believed, right? So I'll be growing quickly. It's related with Tucker Carlson. Politics aside, you know, the history of celebrity endorsed brands, like startup brands, is not great for the company that partners with them for a lot of reasons. You know,

the brand equity travels with Tucker. And even if you've got them really under contract, you know, every time that contract is up, he goes to you and he says, hey, I get more equity, or else I go over to Philip Morris and you guys have this product and I start advertising. And so just like all the economics tend to suck out to the celebrity over time. So they've got this partnership and, you know, they hit the ATM and I want to talk management and capital allocation in a little bit of the time we have of. They hit the ATM in Q2 pretty aggressively. And I think people were saying, hey, this is them building up a war chest to go buy the Alps

stakeout or to buy, you know, go from 50% to 80% or something, you know. And I worry about having their big growth brand, the big grant that's driving all that economics driving a lot. I worry about it being partnered with a celebrity, basically, because I think the long term that puts you in a tough spot. So how do you think about the Alp and the Tucker Carlson relationship there? So I think initially Tucker Carlson was that there's like a core set up users of Alp that are very intense and very tied to Tucker Carlson. And that probably explained the first 12 months of success. I mean, he talked about it constantly on his podcast. But over time, I think they have managed to capture the spirit of Tucker Carlson in that he's a rebel. He's,

you know, he has his own thoughts that he is, uh, uh, independent, irreverent, uh, somewhat conservative, right? Or conservative. And then they did the deal with Connor McGregor, who is also, very controversial, very independent, very much a rebel. They've, and I forget the name, there's a new, there's a blogger that, uh, that writes about intensity and discipline. He's like a, you know, known for bow hunting and for high intensity workouts. They continue to focus on this archetype that, is kind of the rebel archetype.

And that is the brand. And they're moving, not necessarily moving away from Tucker, but diversifying beyond Tucker with the brand, with the type of people that they're associating with. One of the brilliant things about Alp, and I think Frees marketing team could learn a lot from this, is that Alp focuses on personality and association, like the association of a person's personality and their traits. with the traits of the brand. So I think, you know, Alp, there's no question,

Alp is a superstar. Free is quite good if you look at the growth. Yes, right now, given the headwinds that they have with slotting fees and marketing, which, by the way, one of the things that is clear, management is not unaware of, you know, the spending. And that's a lever that they can pull relatively easily. to reduce the marketing spend.

And I think that I think we'll see, or not necessarily reduce, but at least eliminate that marketing spend, which has been less efficient and focus more on the marketing spend that has been efficient, which I think we will see in the coming quarters. One of the nice things with Alp is, you know, if you're a clothing brand, if you're Under Armour and you've got Steph Curry and Steph Curry leaves, like all the Steph Curry fans kind of leap, right? it doesn't have the attachment.

If you're out and you've got Tucker Carlson or whoever, and Tucker Carlson goes, well, as you argued earlier, the product is pretty addictive. And I think the product might went out over the... Well, and here's something that anybody who used to the product knows, Alp and Free are the same product. There's no difference, right?

The only difference is Free looks like this, and Alp looks like this. you know literally i think they take the free uh like you know they're making alp in the machine and they have the free cans running through the or at the alp cans running through the machine and then they don't switch out the product you know they they're making winter they just change the label on it hands right let's end talking management here again again i can't believe we've gone now aren't having addressed this but so i i think it's interesting here lots of stuff we talk about with management, but we are recording this. Is it September 30th today? It is September 29.

September 21st. They announced that the CEO is leaving, the long-time CEO is leaving. Not a long time, but he's been there since, I think, 20-22. Maybe I'm sure my age. I thought that was a long time. So the CEO is leaving. It says personal circumstances. Andy's quoted in the press release, which gives you something safe, but he's leaving pretty suddenly, and the executive chairman's taking over. And the executive chairman is a finance type. You know, his background is working at Standard General, as you said. And then I would layer on to like that overarching question, which is basically what do you think of at the management team is the right group? You know, the, if you look historically, like, I was a little surprised there, insider ownership isn't very high here.

Pays pretty good. The exec chair sold three million of stock at over 100. They hit the ATM pretty hard in Q2. You know, just I guess I would just marry that into. you, hey, you now have a finance type who doesn't have a ton of stock here, who's running the thing, insider ownership isn't that great. You know, they have a history of repurchases when the stock's a lot lower and they have a history of insider selling and hitting the ATM when, to be fair, the stock was in the triple digits,

not the 60s. But I kind of look at all that and say, hey, you know, am I fully aligned? Are they kind of signaling, hey, we don't think the stock's that cheap. So I threw a lot out there. I'd love to just get back in. Yeah. So let's start with the ATM really quickly, since it's related to Al. they don't have enough money to buy out.

Okay. Alp last quarter probably did, based off of our analysis, we think they did enough where if you just annualized last quarter, it's about $208 million worth of revenue. Okay. Growing 300% year over year. Okay. So with something that's growing that fast, you would probably rationally pay 10 times sales for that. Well, that's $2 billion, right? And so Tucker's stake would be a billion dollars. They don't have the balance sheet to buy it. Okay. So I don't, I believe they're hitting the ATM. They will buy more of Alp. They will consolidate it because Alp is essentially just a marketing arm with a couple of salespeople. All of the growth in Alp, there's not, there's not really been any slotting fees paid.

It's all been, you know, just literally they, this year, they started having those regional salespeople take out with them when they went and sold free. And then there's been a few, you know, relatively decent size sea stores that have started to pick them up because of, you know, relate, you know, them contacting the small team that outpass. So they, and with the. the relationship with Connor McGregor and some of the other UFC fighters, I would argue that Alp is probably more associated with UFC than Free is, despite the fact that Free has paid all this money. So there's some conflict in terms of the marketing strategy between the two, and they need to resolve that and join them together and really probably adopt more of the Alp methodology for the marketing for free. My suspicion, the way that will be done is not through

a purchase of the entire business, but it'll probably be for some fraction of it. My guess would be, you know, they go from a 50% ownership to a 70, but then though Tucker is still an owner, he probably is not going to have the same type of management influence that he has today. Let's go to TurningPoint's overall management. So I mentioned the executive chairman, stepping in CEO, finance background. Obviously, the stock's done quite well since he joined and they took over, but you still were your finance background taking over. How do you think about just like the overall Turning Point management? So David Glacick, he was the PM who was in charge of Turning Point, which was the most successful investment that Standard General had made.

Standard General has had some duds. There's no question. but Glacic you know that I think they bought their stake for half of turning point essentially that it was originally I believe all debt which was converted into equity for $11 million back in I believe it was 2010 um Gleysic has been engaged I think this is I think this is a difficult situation it's been more of a co-CEO type situation where Glacic has had interaction with on a regular basis, all of the major business heads within the business.

And at the end of the day, I think Glacic was more of Graham's boss. And I think that's not a great situation. But I think Glacic is a very smart guy. He wanted to, he was in a great position as exactly. executive chairman because if it, you know, the business doesn't do well, then he doesn't necessarily take the bullet. It would be the CEO that would take the bullet. But here, him stepping up and becoming CEO, then, you know, he won't be able to avoid any missteps. He's going to own them all from here on out. I don't think he would take that position given that I think he was getting

paid about $3 million a year as executive chairman. He wouldn't have taken that position unless he knew he had a very strong hand. This year was an investment year. I think there have been, you know, some relatively aggressive and undisciplined, maybe undisciplined, maybe harsh, but there's been some unsuccessful marketing efforts. You do have the brunt of having paying those slotting fees and not getting, the benefit from them because you're not getting maturity of the product on the shelf. And then you do have the effect of the annualization. So he's stepping in at a very opportune time.

And like you said, the board doesn't own much stock. Collectively, I think they own 5%. The largest holder is Larry Wexler, the former CEO. The former CEO, that's right. Yep. Okay. And I think his stake is like 2.5%. I think, that Glacic owns about half of 1% of the business. Turning Point has 11 different activist shareholders that currently own the stock, and they own over 10% of the stock today. Okay. If this doesn't, you know, we don't see results that come through in the near term,

given Glacic's operational history on his resume, Now, I do think he has been engaged and has been involved with a turning point running it for some time. I don't think he's going to be there for very long. So, and I think he's smart. I think he knows that. I think he knows he's under the gun. And he has a massive incentive because he's jeopardized the $3 million that he was getting with relatively a lot less risk. by stepping up and taking this position.

He also captures a lot more of the upside, right? We have yet to see his employment contract, but my suspicion is that he will be able to have a lot more of economic benefit upon the success of turning point. We will see. I think that's a very important thing to watch. But it was the first thing I did when they filed the chain. I looked at the ACAs because I was like,

oh, a finance guy who was exec chairman going to CEO, like sometimes you can get. get really interesting signals in that 8K, but I don't believe he starts off October 1 and they didn't provide the new contract yet. But I haven't provided me very interested. I think I will be watching for that very carefully. Look, I think Gleysick is smart. I've spoken with him several times. I think I do think that he has a thoughtful approach. What I liked about Graham is Graham was a salesperson and he had a tremendous amount of humility. And I felt like Graham had the ability to recognize and recognize places where he was weak

and then have someone fulfill that. And he was a good enough judge of character that he would be able to do that. We will see with David if he can execute. I think he believes he can. It's an open question. but my view on this stock, you know, we talk about valuation. The way I think of it is, I think this market grows anywhere from 10 to 30% Kager from now until 2030. Right now, you know, we, if you look at like online share, they have over 50% of all online sales,

include third-party online sales between Alp and free. Most of that is Alp. you know, I think it's very rational to think that they could have a 10 share. If you take the share that they have in the stores that they're in today and you assume 70% penetration of the universe of stores, then, you know, you get to, you know, right now Alp in the stores where it's selling, they have about 11 share. And the stores where free is selling, they have about a 6 share. So I think a 10 share at the end of that picture is very doable. But if you just assume they maintain that share and they get the penetration, the door penetration, and the market grows at 20%.

You're talking about $1,000 stock at about 36 times earnings, right, in 2030. Okay. For a $60 stock today. So I would like to talk about this more. I am so sorry that we are running an hour and 20, so we're just running so long. I have to go. This has been super fascinating.

I really enjoy this. I just noticed that on top of Azul, you have lost cities, and I'm pretty mean law cities players. We're ever in the same city. We're going to have that. But, George, it's been fascinating. I've learned a lot about the economics of the business,

all that sort of stuff. Appreciate you coming on. Looking forward to having you on again, and we will go to that. I do want to give one disclaimer to all of this, and I try to be better about it, but I am very biased. You know, I've publicly said that this is the best idea I've had, you know, in my career,

because I can see the path. So I suffer from a lot of confirmation bias. I suffer from, you know, consistency bias. I did write a book. By the way, I'm going to plug my book now. Understanding behavioral bias, a guide to financial decision making that I wrote with the neuroscientist David Krasig. So I do have...

I wish I'd known that before, but I will say, too, at least you admit to the, you understand the behavior by which you admit. But look, also, there's false conviction. There's people who haven't done the work and have conviction. That's a very dangerous place to be. And then there's people who've done the work. And like, yes, ultimately you can be right or wrong.

But the way you make alpha is you find, it's really hard to find great ideas. And I think I do too many ideas. It's really hard to find great. When you've done the work and you have a great idea, you're kind of in this seat to swing hard, right? So you've done the work. What else are you going to do? You know, index find?

Yeah. Play video games. I don't know. Well, I will tell you this. Some things have unfolded in ways that I did not foresee and ways that I didn't anticipate, like the domestic manufacturing, which, by the way, I can't under, I mean, we're talking about an incremental 90 to 100 million EBAA based off my projection run rate by the end of the year. in terms of, you know, increment that you'll get from just if you could have the entire production produced domestically.

So all of that is bored. I think Glac exceeds that. I mean, I think, like, I look at the incentives and to show me story with his execution, I do think that he's been very deeply involved up to this point. But, you know, I think it looks at as favorable setup now as, I've seen since I've been following it. All right. Let's end it there. This is my great. George. We'll talk soon. Thank you. Have a good one.

A quick disclaimer. Nothing on this podcast should be considered investment advice. Guests or the host may have positions in any of the stocks mentioned during this podcast. Please do your own work and consult a financial advisor. For 50 years, Canadians have wondered what the names of IKEA furniture mean. Like Natopa, the guardrail for children's beds. Natopa means giving your favorite person room. to grow. It means their safety

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