Yen Carry Trade, Buffett's AAPL Sales, and MCS vs. CNK Price Divergence
Summary
Market Volatility: Discussion centered on macro turbulence, yen carry trade headlines, and shifting expectations for rate cuts and recession risk.
Buffett Positioning: Extensive debate on Berkshire Hathaway’s strategy, including large AAPL sales and massive T-bill holdings, likely tied to succession and portfolio simplification rather than a near-term mega-deal.
Movie Theaters: Deep dive on valuation dispersion between CNK and MCS, momentum vs fundamentals, and how liquidity, passive flows, and business mix can drive wide price gaps.
IMAX Dynamic: Examination of IMAX branding, royalties, and PLF strategy affecting attendance and economics, including how non-IMAX premium screens may underperform during IMAX-heavy tentpoles.
Hotels vs Theaters: Contrast of hotel asset valuations (higher private-market multiples) versus theater cash flows, with implications for Hotels, Resorts & Cruise Lines vs Movies & Entertainment sub-industries.
Post Bankruptcy: Highlighted as a niche value hunting ground, though complex and idiosyncratic; better sourced via specialized screens and case-by-case analysis.
Box Office Outlook: Strong near-term tailwinds from recent blockbusters and a potentially robust 2026 slate, though performance remains title- and format-dependent.
Portfolio Approach: Emphasis on avoiding crowded mimicry, being wary of momentum pair trades, and focusing on business fundamentals over short-term flows.
Transcript
welcome welcome welcome how's everybody doing hope you are doing well my name is Andrew with Focus compounding on air live with Jeff genon Jeff how's it going today it's going very well Andrew how's it going with you it's going great we hope it's going great with everybody else as well if this is the first time you're tuning in with us thank you so much for joining us be sure to check out all of our content that we push out into the investing Universe the best way to do that is to follow me on X at at focused compound uh if you're interested in getting access to investment rups from Jeff going all the way back to 2005 go to focus compound.com and of course if you want to learn more about our Money Management Services you can reach out to me at Andrew Focus compounding tocom all that information is in the description below so in today's podcast Chef we're going to be going over a lot of different things uh it's been a few weeks since we last uploaded a podcast it's been a little bit less than that since we last recorded a podcast uh but so we actually recorded a full hour and a half long podcast that did not get uploaded because um I don't know if there's storms going on or what we had internet internet connections and um unfortunately we lost that uh but uh we are ready to roll with this here today so hopefully we are good so um today is Thursday August 8th and Monday the Futures the markets were getting smoked and the buzzword that we were hearing a lot or the phrase that was talked a lot about both on CNBC and Twitter and a bunch of different financial publications was the Yen carry trade and how it somehow blew up uh the Japanese stock market was down about 11% on uh Sunday night into Monday morning in the United States and markets got smoked so curious to hear your thoughts on everything that's going on Jeff um I had told you that I've heard a few different people talk about the Yen carry trade over the past I don't know year and a half couple years um you had said that you think you've heard more about it uh recently but I think it's just people maybe I follow have been talking about it people thinking that like you know one day it could blow up it's almost like selling a premium way out of the money or something it works a lot of the time but when it doesn't it could be cat traffic so want to hear your thoughts on everything that's going on in the markets and we could go from there yeah so I don't know what happened um Yen's a currency that basically doesn't yield anything so if you're doing Factory things that have basically trying to make money on stuff that goes sideways that doesn't have yield on it like momentum things and and other things in Commodities and stuff like that I think that it sometimes uses um uh takes advantage of that and then it gets crowded right so I don't know what there is to it other than it was probably very crowded for some reason whether that's human beings or computers or human beings who are using things developed by computers or what but it's your usual thing that way right um but probably had something to do with a big change in expectations for interest rates in the short term in the United States like that in a few months that rates would come down a lot that's the only thing I could think of that was a big shift that would cause things to happen in markets all around is just expectation of a much faster possibility of a recession much faster possibility of large interest rate cuts and so you know then there's differentials between um yields in different countries and all that and like that's the thing that moved from what I can tell I don't know what else would have moved that could have caused that all around the world macro has been uh definitely a topic recently whether we're in a recession going in a recession whether rates are going to come down whether inflation is going to reignite um you know and of course with everything going on in Japan uh it seemed to have really spooked the US markets we had like a bit of this rotation trade going on where the NASDAQ was selling off and the Russell was going up and then you know jobless CA claims uh came out and it was like oh no actually we're going into recession so then the Russell you know pulled back on that because smaller companies are maybe more um sensitive to you know like the economy and whether we're going to be in a recession or not uh so want to zoom out right because it's just been kind of crazy and uh just talk about you know just investing in general uh because so much of the conversation lately has been on uh macro and a few just key stocks in the S&P 500 uh so pretty crazy but you know when the Japanese stock market closed down 11 or 12% whatever it was I instantly started thinking about Buffett obviously because I think actually one of his positions that he owns in Japan was down like 20 or 30% in a day um so lots of crazy stuff going on I don't think these are normal times that we're living through but I also have said that a lot over the past four to five years so maybe this is the new normal I don't know like is that a product of like computers trading and stuff like that you're going to get like these huge swings that that happen in the market yeah so I mean so we recorded a whole podcast where we talked about you know passive and and all that and basically what I said was like look it doesn't really matter passive and how big passive gets and everything as long as active and passive don't contaminate each other and um so that you know if if there was lots of passive that people who were actively trading weren't aware of and weren't involved with it doesn't matter because you still can develop um good uh uh like a you know you still have some people trying to figure out the actual values of things um mimicry is is sort of the problem I mean I think on that podcast that we didn't upload we also talked about Ai and or it was May maybe it was that one or a different one but you said like oh AI will get better and better over time and I said actually I think if the problem would happen that AI would start training on AI generated content on the internet eventually if we start to see a lot of that and it will devolve quickly into problems and it's the same sort of thing in markets so I I do worry about that with passive and just basically mimicry um but it's not new to markets it's humans have been capable of doing it themselves before and uh it contributed to the 1980s right we had a um crash didn't last for a long time and everything but it was a contributing factor was people using the same strategy um there was a bond market problem in the UK a bunch of companies and and firms using the exact same strategy that was sold all around you know to everybody um remember you know housing market a few firms being you know basically doing the same sort of thing so I I think that's always an issue and we just don't know how big that is um till we see what happens but whenever there's something that's very crowded and doesn't have a strong fundamental reason for why people would stick with it if they're kind of doing what everyone else is doing they're going to freak out when it unwinds you know and I had a long drive on Monday and uh so I was listening to CNBC on the drive and I don't I mean I usually have CNBC on uh I don't really ever listen to it much but it's just kind of on my computer on my thinker tool map or whatever I don't ever just like sit and actually listen you know and pay attention and stuff um but I had a long drive and it was Monday so I was like well I'm just going to listen to CNBC this is great I have a long drive but you know I'm going to be pretty um you know entertained today with everything going on and the amount of people that were coming on and just saying the FED needs to come out with an emergency cut and they need to cut by 50 BAS points or they need to cut by 75 basis points we need an emergency cut this is jal's Fault blah blah blah and you know I was just thinking I'm like man the markets are so conditioned that there is like the fed put right or that they will come out and and stimulate I mean it was the market was down sure 5% in a day or whatever and we have come back down if you're watching the screen right now looks like in July the NASDAQ peaked right just under 24% year to date um the S&P 500 was close to 20% a date and you know the nasdaq's up 9% and the S&P is up 11% this is just the price movement so not taking in the dividends of the S&P 500 but I'm like you know zoom out and look at the S&P 500 and the NASDAQ over the past you know couple of years and as soon as you get some sort of major correction everyone just starts freaking out and I was thinking I'm like you know if the FED came out and did an emergency cut my opinion is I actually think the market would sell off more because they'd be like wait actually something is fundamentally wrong here you know this is actually like a systemic issue um but you know it's it's so interesting because I think you know 10 15 20 years ago people always knew that the Fed was there to you know do different things but it's like now it it's obvious yes the FED is there and people start to freak out on a couple percentage moves uh uh you know to the downside of course not to the upside but to the downside and then people start to come out and start screaming oh no they need to come out and and cut rates immediately and the Fed was they left rates low for too long that's pretty obvious now right with inflation everything and they're going to do the other thing on the other side uh but you know that's what creates Cycles right I don't know what else to say about it I mean that's that's just that's just the way the cookie crumbles you know they don't like to switch gears quickly they like to guide of a long time ahead of time so they don't ever want to do we just raised rates and now we're just cutting them I don't see what theice problem is with that that's they're human beings so you raised rates in one month and then you bu 25 basis points and you cut them by 25 the next month something changed you change your mind you know but they're never going to want to do that so they want to make it clear far enough ahead of time and you know all of that and so it's kind of can be a little slow right um yeah so I mean expectations changed a lot I don't know what they look like now but they changed a lot for what will basically end the year at uh in terms of where the FED funds rate will be and um they're probably too high and knew that anyway earlier in the year but then there was a drastic change in that so they probably knew that they should go down to like 150 basis points or something but over a long period of time and then the market was suddenly like you need to cut 250 now you know uh and you know and we're talking about intraday like you know in the moment where these things are happening um yeah but if you just look at where inflation is and everything then they're they're yeah they might be restrictive now for the first time in a while so they would have known that and that they should gradually bring them down um yeah I thought I thought it was funny because the FED met last week right I was like could you imagine so like the previous Wednesday um could you imagine if when Wednesday or Thursday if you know PA came out and said no they're going to leave rates on change he had his press conference and then the following M day he comes out and says actually we're going to have an emergency cut and we're going to cut by like 50 basis points I mean what change between the you know the few days and Monday I mean nothing really other than I guess whatever was going on in Japan um but so far it doesn't seem like the markets have really nothing has really come out of it yet um so very interesting and of course the jobs number came out today and and jobs are a little bit stronger so people are like oh I guess we're actually not going to go into recession it gets sounds like the soft Landing is back on the table it seems to change every single uh couple of days yeah but I mean you you are inverted right to some extent not drastically but you're inverted unemployment curve have been somewhat rising and inflation been somewhat falling all of those would say that you should strongly indicate you should be cutting rates but it's like we'll do that in six months or something because we had such a long time of telling people that we were going to raise rates so it's just it takes a long time for them to switch up on that um you know most of them don't do that green span was the only one I think that really did that look ahead see what's happening adjust all the time that was more his Mantra than any of the other ones so recession talk obviously people been talking about it I did tweet out uh a few days ago that chapter 11 Finks have reached their highest level in over a decade I thought that was interesting uh so for people listening a good place to look for Value you could you know Source these different situations from like to Capital which we've spoken about in the podcast before stocks emerging from bankruptcy um you know it's going to be a good Pond to fish and we've spent some time there we look at a lot of different things but since we've been investing together I think only one situation right um is one that we actually invested in we soon probably yeah yeah but why do you like to focus on this and somebody actually had asked is there any evidence why papers Etc on this being a good place to look for value and I don't know if there are it's it's really hard to to aggregate data and a lot of these situations are super complicated and you're dealing with the legal system and every situation is different uh so I hope there are no white papers or you know that people aren't going to do more research on this because I don't want this pocket of the market to end up like spin-offs and where you know now there's just nowhere to look for Value so um you know it's good I think in in sometimes where you don't need evidence of returns especially if you have success in that area right yeah and I like looking at spin-offs IPOs chapter 11 whatever these things that you're talking about because you can value the entire company and see what it will look like when it comes out now IPOs are like the opposite of chapter 11 everyone wants them so they tend to get overpriced um spin-offs for a time were pretty good and there may be opportunities in that they you know the thing probably with chapter 11 is similar to spin-off if you look at it whatever the papers say would suggest looking at an actual breakdown of you know websites that track it for each stock that it's been because they are wildly different depending on uh you know their performance is wildely different stock by stock so when we're talking about the mean and the median and everything it can really disguise that in a paper but also sometimes you could know some of those things ahead of time by really analyzing the business and and everything and I would say the same thing with chapter 11 I wouldn't just encourage people to go out and buy anything that is emerging from that and there's plenty of companies that you know end up going back into chapter 11 um too and because there's things wrong with them as a as a business uh but there's not many things that are underpriced unloved Etc so you got to look really hard these days for all that and that's one place to look yeah so let's talk about Buffett um sold half of his position in apple if you listened to the Berkshire annual meeting that year he sort of hinted that they were going to continue to sell stock yeah he basically said I'm going to sell a ton of apple yeah yeah yeah is like exact what with something like I foresee it being our biggest or one of our biggest positions for a long time or something and if you look at the math on that that's like okay so he could sell like 50 to 90% or something yeah yeah we actually spoke about that on the podcast where like yeah the way he phrased it was yeah we'll still be it'll still be the largest position and we'll be the largest shareholder whatever but it was like well you got a long way to sell uh for that's still to be true I want to get your your take on this because obviously a lot of people on Twitter were speculating on why he was doing this he I believe holds more treasury bills than the Federal Reserve right now his cash horde is incredibly High short term yeah because the FED is not very short term yeah yeah uhuh and he also the FED yeah right sold down some Bank of America as well and we were together last week and your take on this was different than everyone else's take that I saw on the internet so I would like to chat about that here on why you think he's selling positions I mean I think he's selling them down because of his age and that he's afraid to have someone inherit these two positions because they're they're things he might have held in 2000 or something if he knew like they're the C and jillette you know of today he doesn't want to saddle those people with positions that he wouldn't buy for the first time now he might have bought these five or 10 years ago but these are he doesn't want them to inherit those position and so I think he's going through and eliminating positions because of his age because he's not going to be around forever so not burden them with positions that he you know so they have to make the decision to sell as soon as he does whereas with oxy or something that's a new position for him he's happy to keep buying it he wouldn't be buying apple or Bank of America and he pretty much said those publicly I mean Bank of America he was like well it was a special deal and whatever but we sold our other bank things you know so I think he's trying not to make the mistake he made in the 2000s um and I think he's okay with that but if he was going to have someone inherit from him in 2000 I think he would have sold Coke and Gillette I don't think he would have forced those on them if he knew that in 2001 or two or something someone was going to take over for him so what are other people's take so that's that's not the No No most people think yeah that he's going to do a big deal or or Market timing or stuff like that yeah uhhuh and you were the only one that said well actually maybe he just does want somebody else to inherit these huge positions um yeah that he put on cash or something like that yeah I do think there's been a lot of thinking about that probably at Berkshire just the way that he talked at the annual meeting um you know Charlie dying I think too um but like um that they wouldn't manage the entire you know that Todd and Ted wouldn't manage you know 200 some billion dollars or whatever it end up being um and I think they a decade ago they he did think that so I think his thinking has changed in terms of the size of what berkshire's gotten to be in terms of the fact that their Investment Portfolio I mean uh that he couldn't find anything I think he was holding out hope that you know he'd get another uh you know not necessarily a 2008 type thing but something where prices would look attractive again and I don't know that he has much hopes that he'll get to see that at his age um and I think he wants to make sure that Burkshire is positioned the right way for that so not to saddle people with giant I mean how big was the Apple position we're talking like in billions I mean you know that's let's see it's holding end of second quarter 84.2 billion is what it was at the end of the second quarter and he sold more than yeah he sold more than 49% of the stake yeah so we're talking 100 something billion I don't remember the exact amount but it's just you know um yeah and it probably you know like your Coke and stuff is not something he expects to do great and so do you want to give like 50% or something of your portfolio to someone into something that's really overvalued mhm I think he could justify it more to himself although I think he knows that it wasn't great to keep the Coke and stuff in 2000 um but he could justify it more to himself if he's the one who has to deal with it I don't think he wants to leave it to someone else to deal with that would be my guess so what do you think he'll do with the cash right so the article says 277 billion it's earning uh you know it's earning some money um uh from uh the treasury bills I mean someone was like do we have a huge special dividend incoming do you think he's just going to let it sit on the balance sheet what do you think I mean unless you find a $220 billion thing to buy I mean you're not going to use it all up and they produce cash over time too so even if he wants to keep say 50 billion in cash which is possible at this point Burger's big um I don't think you want to keep much more than that and there's not a lot out there what's a company that's 200 billion or something that you could buy the entire thing um you can't do it in the stock market because it to buy a $200 billion it's $2 trillion probably because you're not going to buy more than 10% in the market yeah so you know that's a handful of companies um that are in in two trillion that's almost no companies you know it really is we could name them and then um even a couple hundred billion is really big and they have to be willing to sell to you if you're going to buy the whole company so it would be hard I can't really even think about what companies would be that size in the United States that would be possible there's there's almost no private companies that are that size it's it depends you know they've had and and those that are anywhere near that he's had dealings with in the past or something like um they wouldn't be new things that he's never heard of uh you know so like yeah would he at one day like to buy you know Mars Wrigley whatever stuff yeah probably something like that or whatever but you know I don't think they're plenty to sell right and everything else you can see is public companies there's there's not you know pretty much if it's two if we're talking about a couple hundred billion dollars those are public companies you could look up and and see and a lot of big companies are really small compared to that so yeah I don't know how they're ever going to use that money so how much in interest is he earning that on that 277 billion well if he's in three months and stuff what is it a 53% five I don't know what the every month you know 90 days or less is but that's what he means equivalence has 14 billion yeah it has to be under 90 days and what's that capitalized at like you know 10 times or 15 times or something you know from like a market value perspective MH yeah but if you but obviously if you put in longer term things it's less I don't know what 10 or 30e Bond 10 what's 10 year bond at 4% yeah probably something like that so um um you know he's earning more than the FED because the FED has less well the FED has some things that aren't government stuff I guess but he's earning More Than A lot of people are you have to keep in mind too because he's shorter term than everyone else he's more liquid in earning higher rates yeah 10 years at 4 rates are higher on the short term than the long yeah MH crazy crazy crazy what do you think what are your predictions for the future with everything going on right now in the economy the markets we're still kind of at all-time highs right yes we're off a little bit but is this really just a a correction on our way higher I mean is uh you know Nvidia going to go and come back down to earth you know what are your thoughts what are your predictions uh I I don't have a lot of predictions thing things are very expensive if anything ever happens that is negative things can drop pretty fast because everyone's expectations have to be of a you know really good outcome right now now uhhuh but find anything that's cheap in the small cap world no no no I mean not nothing but like you know there are things if they get overlooked I so I think year-to dat cinear is up like 80% right and Marcus is down like 10% or something so there are just random things like that where two stocks that are pretty similar um Marcus has a hotels business too and operator yeah but what's Marcus MCS Marcus down 11% that's a wild dispersion yeah that's insane but that's what happens too and this is why I've warn about the pair trading and stuff like you could look and at some point this year you'd say what these why would this keep going up and this one not go this one's cheaper I want and it'll just get worse and worse that's what happens to Value investors in these Bubbles at the end where they think oh I'll buy the cheaper and short the mark even if you like cinear you'd be like oh I could short cinar and go long Mark no just makes it worse and worse as you go what's the logic to it I don't know one's in something it's bigger it's in indexes I don't know who knows there's some logic to it that has to do with what it is as a stock and that's why it's happening probably there could be some underlying things that people could argue you can always come up with a narrative it's it's hard to come up with a narrative for explain why one's up 80% and one's down 10% you know that's pretty tough these are really really similar like really good comps for each other on the on the um movie theater side really well somebody on the movie theater side but then Marcus the hotels in commercial real estate so you have a pure play in Marcus and then a perer play in Cinemark and then I guess not so much in Marcus but and and the box office has done well over the past month or so so Twisters yeah but what but are we're saying like people are so negative on hotels that it's like a they're ascribing a large negative value to it they would have like how do you explain that kind of difference between the two uhuh that's what you kind of have to say is it something like oh hotels are so terrible that yeah unless there's you know but there's also just like you know maybe people don't look at um what the numbers that each one are and are just like look I want the Pure Play I don't want the hotels things I want that you know that happens too mhm you know when you're in a bubble thing you don't you're not really thinking about people aren't looking at the numbers and stuff they're looking at stories about things and how things are moving and everything and then also just the momentum things and stuff maybe that affects it these are high volatility stocks normally right like they've gotten very high betas for some reason over time so we've talked about it with Airlines movie theaters whatever oil companies um except for Big Blue Chip ones have that too and um so some of them get really attractive is for like momentum type stuff right and these things don't really have much in the way of yield or anything like they used to have you know so they used to look like different kinds of companies different kinds of stocks they their companies are the same but they may show up because kind of looking different as stocks I guess than they used to um because they used to have value and yield and you know like they showed up I mean they're the the companies didn't change so it's it's silly to talk about this way but like if you were literally screening the stock the fact that it doesn't pay a dividend or something like it used to exactly you know so and um and also again like it might not look as cheap on present day stuff but that's kind of dumb because like 2026 let's say will be a good year and you know people can look ahead and everything so I also don't I think cmark has way more anal coverage than Marcus and everything and maybe there's other reasons but I mean we could look at Marcus right obviously we've followed the company on here uh a few different times but current market cap 44 million Enterprise Value 536 million price to sales6 evit sales .8 10year medium margins on ebit about 10% um if you look at where this company was at pre-2020 you're talking pretty regularly at least for a handful of those years at least 70 million in operating profit right um at an EV right now of 536 million if you get back to let's say pre-2020 levels this thing's pretty cheap you know that's just on the business itself can thinker swim or whatever you using there do a longer term chart like five years or longer yeah no so we're using qu but we could do yeah do you want 10 years here's 10e chart got if you chart the two against each other yeah I just would just say that I think there's more of a Divergence than you might have expected uhuh um in recent uh results let's see what we have here so the yellow is Marcus and blue is cinar okay and and how far back do we go there that's 10 right yeah mhm we could go 20 yeah yeah so uh but if you go back like 5 years or something um you'll see that you there you go so this is what I meant it's just this five year it's pretty good indication of that what happened that's wild that is wild even look at that look at I mean 2020 obviously everything jumped out but like look at the bottom of 2020 October 2020 I mean these things traded like neck and neck with each other and then the pull data every week they should be we we know what it is at I mean like this is so yeah um and then they just so what month is that so that's early okay when is that so where did they start diverging it was back a little before April was that looks like February yeah February February okay and then it just February 23rd you know which is fine cinemar cheap good stock but like I what it got some momentum or something it showed up on something that this is It's value with momentum now so you got to go for it and the other one's just value with with no momentum but they're this they're not like they can't really be that different like you know does have the hotels thing yes Sark does have Latin American things I can give you a little bit on that but the circuits are so similar in in the United States and just uh they're so similar these are very very comparable businesses and and that's great if you own Cinemark that's terrific but one of the things that happens there is people who own marcet probably feel like oh I made a mistake or something people own Cinemark think I made a great decision I don't think we should take seriously anything that happened between the two in the last six months like something will happen I don't know what but that is really wow yeah this is a six-month chart right now so for people listening cine Mar's up about 80% over the past six months and Marcus is down 5.6 if you look at a three-year chart cin Mark's up 65% Marcus is down um about 177% uh let's see 5-year chart well they both you know suck even you can see that they used to huge Divergence yeah yeah they used to track very closely and then there's a big Divergence so uh I'm going to Tweet this out I'm going to ask people what the uh that Divergence is here between these and then we'll we'll bring this back up on the next podcast we'll just read everybody's response what do you think people are going to say I bet you people will reference Marcus um having exposure to hotels and C Mark not andark being a pure play um it'll be interesting to see if anyone talks about like the momentum factor that you just referenced my guess is not really okay I think that most people today don't want to own a value stock unless it's moving for some reason something randomly started moving and so then we all crowd into the thing that's moving and not the other one but it could be but like this to me is when we talk about the Yen carry trade or any of those things to me it's more like this it's like h a trend reinforced itself I don't know why we come up with the narrative that's why cinar is amazing and Marcus is is terrible and there was an exact date that like it's not like it gradually happened either if you look at this it's like there it is I just think it started moving and some people and computers and things said here's something cheap and the future is good and it's on the move and I want to own it now whereas when it was before they said it's a cheap movie theater stock yeah 2025 will be better than 2024 2026 will be better than 2025 okay it's a value stock okay but I don't want to own it until it starts moving now it started moving and now I'm in you know mhm I mean if you're a large fund though and you are investing in theaters or you're bullish on you know the box office for the next couple of years I mean you're not going to buy Marcus you're just going to go for the it's got it probably is momentum factor and it makes it worse because now its size is by market cap so because of that you almost on a relative basis it remember it doubled cuz it's up 80 the other one's down 10 that's that's a doubling in terms of its size in any index waiting and things not there AR a lot of indexes and Market doesn't have a lot of float and so there's there's other things like that but cine Market is definitely the one that's more likely that if something were to people to get excited about it cine Market is more capable of taking excitement from institutions and having that translate to a higher price than Marcus would be but I'm saying these are like to me you know Marcus is a control company and there's and all that but to me these These are the difference between a stock factor and like a business factor I think it's hard to come up with real business Factor explanations for why that would happen when it happened um and it's not like they're always 100% merried you can see that there is a little bit there where there was a Divergence where uh before I I mean I can only find one in I mean this is only the second time in five years that we see anything that looks at all like things are slightly moving differently for even a period of a few months so anyway I just find it fascinating but I think that if we were more knowledgeable about lots of different businesses and watching everything all around the world we would be able to find more examples of this of like why is this happening you know and um that's very 2000s reminiscent to me why is Electronic Arts doing this and Activision doing that who know it's one's become a name that people are into now and the other one isn't and that was a very 2000s thing that like stocks not just Industries and stuff but particularly favored stocks and things and and some of that is just like a broader concept of momentum and all of that I think but also the passive things we talked about what about the passive things well how big is cin Marcus market cap versus Marcus now it it's it's a lot bigger because I mean it's like I mean in terms of float and stuff it's like 10 times or something right it's big because in terms of market cap before they were um it was only it was about four times by market cap I think before cinemar was is bigger than Marcus but then you know um we had the Divergence that we just talked about now and then also there's a float issue it's not huge but there is a float issue where there's more economic ownership um in Marcus although it's mostly voting ownership but let's actually tweet this out right now we could go over it on the thing what's going on with this Divergence between cnk and Marcus yeah let's see do we do that what's going on with this okay so you can get an instantaneous answer you should ask CH GPT what why they're diverging um yeah so yeah let's pull this screenshot there we go okay let's see what people say about it I mean do you think Marcus is a good place to uh or it's a good time to invest I mean look at the only other times the few other times that there was a Divergence it wasn't this big and the Gap did close um yeah I think it's good yeah you know mhm what's going on with this diver between cnk and MCS yeah we'll see what people say about that uh the question actually that somebody had sent in was about Marcus they had emailed it to you and um we didn't know that we were going to bring it up we just by chance start chatting about it uh let's see the person says he recently invested in Marcus I've tried to Value movie theaters and hotels separately I arrived at a similar come to that of your write up where you attempted to Value Marcus hotels by looking through transactions in the industry for hotels similar to the ones Marcus owns so that post was from 2020 I believe you go back to focus compound Ty Marcus that's when we last uh did that and went through and value at a bunch of different hotels and stuff right so this does get to a big factor they he talking about there where if you value it as a sum of the parts and you put a very low eBid on multiple on Hotel and very high on I mean very high on hotels and very low on movie theaters which was not the case say 10 years ago or something if you looked at how people appraised them they would be more similar multiples but if you do that then it does kind of make it like the waiting of Marcus versus cinear is it's way more weighted to hotels but if you look at it from the perspective of um the actual eida of where it's coming from you know Marcus is is not as much a hotel company as people might think so it can happen for that reason I I guess but that's weird I mean hotels are more susceptible to recession than movie theaters big time but lower rates are also good for hotels whereas they're not that helpful for movie theaters so you're much more economically protected in a movie theater than a hotel thing but it's not a b big deal it's they're not a bad credit risk or anything Marcus so so the question that he had sent in was the individual said I can't wrap my head around uh why hotels trade at such high multiples he said I believe mentioned in your podcast recently that you think hotels have been expensive historically relative to movie theaters and I totally agree Hotel reachs trade at 10 to 12 times even iida individual transactions are done at similar multiples if not more Marcus Rec s recently sold a 225 room hotel in Oklahoma at a 13.6 times 2019 EBA down multiple blah blah blah uh and then he asked why do you think a cyclical asset like hotels where revenue and profitability tends to drop in downturns and an asset that requires constant m maintenance trades at such low yields question mark when you approach valuing a company like Marcus would you value hotels as what the industry values them or think of them in terms of a DCF question mark given that the hotels at markets likely won't be sold I tend to favor the second method that doesn't come out to anything better than 12 times free cash flow as opposed to 12 times iida but that value derives substantially from how the market values them so he's really just talking about how do you think about valuing uh Marcus as relates to the fact that they have hotels but then more so a larger question of why do you think cyclical assets like hotels uh tend to trade at higher valuations is that just because they don't have a ton of free cash flow is it more of an asset thing what is that well I would value them based on the free cash flow so like they said at DCF um I think because there's a private market for hotels whereas there isn't lately for movie theaters right so people can't compet to something that's a private transaction they're seeing what it trades for in the market it and so they see it move all the time that way and and it's however popular it is that way um you know I I don't really know the logic of it exactly I mean I think hotels could be seen as a super durable asset and like other real estate that way and so you know it's not crazy that they could be seen as um better um having a higher multiple than than hotels uh hotels than movie theaters but yeah I mean I would rather think that generates more cash over time movie theaters aren't seen as being very durable obviously in hotels are so hotels straight more in line with you know apartment buildings or something I guess you could think of them that way where you feel like there's total durability to the asset class whereas you don't with movie theaters that would be a good explanation so people responded to the tweet it says uh yeah real time right here customer trans preferring IMAX where which is also public compan we spoke that's absolutely true Marcus doesn't do IMax 100% true why is that cuz it's it's cheaper for them not to do IMax and I think that that's potentially an issue but I should point out it's not like they have worse screens they have plenty of great screens they just aren't using IMAX technology and paying IMAX royalties on it that's the decision that they made is that the right decision you know I I don't know that I agree with them in the long run with that because I think there's some risks to that that whether IMAX is or isn't better screens better technology that you're going to have it's easy for people to know the brand name IMAX invests a lot in the brand name getting you know your Christopher Nolan and stuff to talk about that they film in IMAX and everything and um so saying that you have premium large format screens is not the same thing as saying you have IMAX um so was that a mistake that they made maybe but they then make more money paying less out because of it so we don't know all the details of those deals but you give up money when you make a deal with IMAX where they get a big cut of it mhm mhm so it says that uh as it relates to the IMAX cinar has the upper hand Marcus noticeably underperformed when Dune 2 came out yeah but Marcus is a Midwestern uh thing it'll overperform with Twisters right versus Cinemark Dune 2 is a very yeah Dune 2 is not for midwesterners it's not for Red State people no uh Twisters is Dune 2 isn't yeah uh and then uh number two he said cnk has exposure to the Latin America Market where movie watching Trends are arguably better so that was one of them uh and then the other one Marcus losing theater market share instead of Mark gaining it also maybe investors are worried about Marcus Hotel lodging business in a recession yes Bute but again I agree Divergence shouldn't be this wide yeah the hotel thing makes a lot of sense sure uhhuh the the G Capital he gave more reasons too okay go ahead sure I was going to say the gaining and losing of Market Shar is tricky because you know different movies come out at different times so you have to be careful you know like um like where I I used to live was the biggest theater for twisters in the country the cut there which is a cinemar one so that's big but that's not normally the case usually you know a New Yorker or La theater something is your biggest so it depends on what movies are coming out so that's always going to be a case like I know pulled people coming out of Civil War the a24 movie because there was they wanted to figure out their um like political leanings right but it's not that good of a poll because anyone who watches an a24 movie is going to lean more left than right anyway it really doesn't have to do with the fact that it was a movie that was political that might have contributed to it but you have an indie movie like that you're always going to have a real skew an a24 movie is not going to play in like Iowa the way that it plays in New York or something so um yeah and you saw Dune 2 right yeah mhm yeah no D Dune 2 is not a lot of talking very moody very beautiful that's the director that you have there it's one of his more accessible movies actually because some of his others are even not so much for General audiences but yeah that's not that's not the same as as Deadpool and Wolverine or something you know it's placed a different audience yeah mhm so the other reasons he gave you said Marcus pushing cash from movies to hotel vers Cinemark likely reimplementing dividend policy after debt level stabilize and then four cinar is more liquid no big players going to touch family-owned Marcus Marcus is definitely cheap but I could see why some people would avoid it yeah and I think all those are possible reasons huge Divergence though well it's just interesting because it's not like I'm saying there's a price Divergence has existed for a long period of time there got to be a big Divergence in a short period of time like something seems to happened there right so but so I wonder that but but so if this was instead of Marcus and Cinemark this was you know the Yen and the you know pick another currency or something we'd come up with some wild explanations of why this must be happening to two things that otherwise should be similar and I don't always know if if that's true or just something happened with Trends I think any of those things might explain why something started to happen in the first place but it looks to me like it was some self- rein enforcement there of the trading activity in the stock itself then reinforced things about it it's hard to believe that that was a narrative that caught on and if people didn't see the stock moving it would behave the same way I kind of feel like it there just I see that so when you say are there things that are cheap or something yeah but they're the things that people won't want that way because they're the things that are you know if you look at that chart most people are going to want the one that started to move in that correct direction right yeah mhm it's a worrying sign if the thing you're most comparable to is going up like that and you're not what's wrong with you you know there must be something that I'm missing right so now what for Marcus then what are some I mean at these price levels it sounds like you think it's pretty cheap and it's definitely something uh yeah and I'm not saying the cin Market is expensive I mean I I have to look at exactly what's happened since it went up by that amount but um but it was cheap for a while and not moving and then it moved faster than it got you know business did not improve 90% or what 80% or whatever for camark in that period of time um yeah so that's just what happens with stocks sometimes they lag sometimes the fundamentals and then other times they race ahead of them and I'm not saying it's bad it's still nowhere near where it was before or anything and you know um I'm just pointing out a Divergence between two things that are awfully similar um so I I yeah I think that's um I mean let's look at quick FS probably has it what's the share turnover which I think is a large explanation for why this happens in stocks like this 523 per. okay and then marus in cinar let's compare it to Marcus Marcus is at oh 78% yep so um if you look at volume we could just look at volume recently too that's a good indication so if we go to cinamark um mean yeah OTC markets will be fine that'll give it to us uh volume today when recording this is 3 million right okay so I don't I don't think a lot of people want to just be in markets for the long term or be in a s Mark for the long term so if you don't want to be in a stock for the long term then you know you want stuff to be happening now and you start to focus more on what's Happening Now now I think than just like it's not enough for it to be cheaper we we talked about this with value things like is it enough for something just to be cheap I don't know um that's not how uh the machines are programmed Jee they like momentum they like inflections they like numbers that are incrementally getting better year forear quarter of quarter and moving to the upside yeah and and then the way it works too is this stuff becomes self-reinforcing because some of the these just go on price too right so they're just buying the thing that's working you know so if it's working uh the price is going up yeah and I don't know how how some of these things work that we're talking about that's Way Beyond what I'm capable of understanding but I I think some are as simple as if it if something moves up strongly after earnings then that's a sign that things are positive there and that can be fed into how you're uh in into what makes a good stock versus not a good stock but that's tricky because that's not exactly the same thing as knowing whether earnings were good or not it's you're taking everyone else's assessment of it you know and then deciding what to do about it based on that but you're basically saying okay they beat or something because I saw that the stock Rose a bunch after that so there's interesting ones like that we've talked about that off the air about some that fascinate me where they have all their up moves after on news and earnings and stuff and then when there's no news they go down you know even if the trend is to be fairly flat or up each quarter you can see this pattern that that it's up constantly on news and then it's down smaller amounts all the time when there's no news and so it's mostly evening out that way but it is fascinating that it's NE that there are stocks that are almost never down with news or and are but yet manag to be down because they go down all days where there isn't news basically yeah so to me that that's odd right but again it's with something that is no one is holding on to right it's just being churned so much so it's whatever you know that's like George Soros type stuff his Alchemy of Finance what was his book about reflexivity yeah yep sure yeah a lot of these things are reflexive yeah so that's Way Beyond you know what I think we can really cover in a podcast um with having much interesting stuff to say about it but there's just there's some things that are more about the stock as a stock I think sometimes than about the stock as a business mhm mhm what are your thoughts on the box office the Deadpool exceed your expectations I mean we had spoken about before we didn't know how well it could do because it was a rated R movie um uh I I said the best com Fort was uh doctor strange and the um uh Multiverse Madness so that probably did 185 million or something opening domestic um and dead Wolverine did it finish at 210 205 where was it it's I think it was projected at 205 and maybe finish at 210 or something um so did better yeah um worldwide box office 9003 million yeah that's big yeah it will be a it will definitely I don't know if it'll make a billion two a billion four I don't know what it'll do exactly but it'll be big I mean it's going to be about double the other two probably it you know Deadpool 2 and Deadpool they probably only made 700 something worldwide I would bet 750 740 I don't know so uh I'd be surprised if they made a lot more than that so we're talking about something that's almost going to be up 100% from that but now why is that is that because of the crossover with Wolverine Wolverine is one of the most popular character and play I mean Hugh Jackman is not ex we don't really have movie stars anymore but Hugh Jackman's awfully close to being a movie star and Wolverine's like Spider-Man it's a character that's in a league of its own in terms of um pop culture and everything so now if you did it again would it be as big no but it's closest to uh what was it no way home is that the one I'm thinking of uh where they had the three Spider-Man team up right so if you kept doing that it's not going to work every time but it's a sequel that had so this is a third sequel in that so the Spider-Man that was kind of the third sequel too a third movie that Standalone and uh you introduc something that's totally new but also plays to The Nostalgia of the last 25 years and has the actual actors from it yeah that's that's really big yeah I mean if you ever did a James Bond movie where somehow you figured out a way to have you know three living actors or something who have played the role all appear in the same one somehow yeah it would probably make it bigger but since you can't do that Marvel can with multiverses and things but most can't come up with a reason that they can do that um you're you're always going to have um bigger uh numbers from that so it was impressive but like we said it was you know it was within 10% or 20% or whatever maybe outperform 10 or 20% of what I said was likely we thought it was going to be the biggest move of the Year domestically it will not be probably worldwide it will not be because inside out I don't think any think can be an inside out too what are you excited for for the rest of the year do you think alien will do well no [Music] but it it will Beetlejuice could do well I don't know that's one that could break out but I also said you could have Fury Road or whatever breakout so who knows but yeah Beetlejuice is one that um is the same thing where it's a giant uh it's a huge time uh between the movies right but if they're pitching it kind of like it's a kids movie and and then the kids parents are the ones who actually like Beetlejuice and know what that is so that's what they're going for there um it's perhaps a little too long you want to maybe go back to something that's you know we're in a point where it should be like 90s to 2000 Nostalgia not you know this is a little old you know it was the same thing with the flash where Michael Keaton was in that one going back to Batman 89 or or whatever the the um it's a little old it was better to do the Spider-Man ones where it's going back to you know and X-men too actually Spider-Man and X-Men are pretty close in terms of when they came out the you know both of them the original ones so yeah going back 25 years for your Nostalgia it works pretty well John Huber responded saying I think there is no real explanation other than a mispricing MCS also got booted from one of the passive indices earlier this year yeah wow interesting but we see what we want to see because I think John is more of a fundamentals investor too probably so uhhuh uhhuh interesting well Marcus then I guess uh good time for people listening uh to do some research on on the company you do have the box office uh strengthening into 20 uh 25 and 2026 so you should get a couple good years out of that um mhm you've had a couple good out uh blockbuster movies come out recently yeah when's avar coming out is that next year who knows um there are some updates on something I James Cameron 2026 is very very strong I would say right now but the caveat with that right is it looks strong now but people's tastes can change and this is why this always happens what's green lit now sounds like a good idea and then by the time you get there you go o those things are off Trend now and you know because it takes so long so if if we were looking at Barbie and oppenheim everything we wouldn't say oh this looks so amazing and if we were looking at a bunch of superhero movies not that long ago we would have said oh Blue Beetle and this and that that's okay they'll do fine you know but then there's just less appetite for that by the time the movie actually comes out so but years ahead of time we' say oh yeah that'll do great that'll just be another superhero one that'll do fine um so the summer right now the summer of 2026 is like overpacked with things whereas we've been under with uh most of the on that that we have um so there there's some adjustments too we I like I mentioned the Spider-Man thing I have no idea if there even will be a Spider-Man by then there's one date that could be possible if there is going to be one but it's not announced and um so that be a Sony one you know one of those is what I mean and uh obviously there was things with Marvel where they're going to do uh Dr Doom stuff so that could be big too um but we're talking a couple years from now basically but 2025 could be better than 20 24 I just think that 2026 looks more like a really good year right now so usually if people think that next year in your industry is going to be better and the year after that's it's going to be even better then they start to move so it doesn't surprise me that cin mark would be going up or something somebody said I followed market for a while and the stock looks very cheap on a breakup slash some of the parts but how do you unlock value with dual class shares if who single class and activist would definitely come in do you believe that to be true oh oh yeah that's that's very possible sure and we talked about the Paramount decision before so obviously companies who there can be vertical integration in the industry now so like Sony's buying Almo Draft House you could people companies can buy cinear and um Marcus Marcus is a family control company everything but they can make offers for either one to buy the whole thing which obviously would be something that wasn't possible before what about five years ago something like that um yeah it used to be the impossible that Studios can buy theaters but now they can so there could be offers at some point for that sure got it cool well I want to thank everybody so much for tuning in with the both of us on the focus compounding podcast if this is the first time you're joining us be sure to check out all of our content that we push out on the internet if you have a question that you'd like for us to go over on the podcast or maybe look at a stock on quick FS or a particular industry that you'd like us to go over uh email it to me at Andrew Focus compounding docomo every time that we upload a podcast and if you're interested in learning about our Money Management Services like I said the beginning be sure to reach out to me at Andrew at Focus compounding tocom I want thank everybody so much for tuning in with the both of us and we will see you in the next podcast take care
Yen Carry Trade, Buffett's AAPL Sales, and MCS vs. CNK Price Divergence
Summary
Transcript
welcome welcome welcome how's everybody doing hope you are doing well my name is Andrew with Focus compounding on air live with Jeff genon Jeff how's it going today it's going very well Andrew how's it going with you it's going great we hope it's going great with everybody else as well if this is the first time you're tuning in with us thank you so much for joining us be sure to check out all of our content that we push out into the investing Universe the best way to do that is to follow me on X at at focused compound uh if you're interested in getting access to investment rups from Jeff going all the way back to 2005 go to focus compound.com and of course if you want to learn more about our Money Management Services you can reach out to me at Andrew Focus compounding tocom all that information is in the description below so in today's podcast Chef we're going to be going over a lot of different things uh it's been a few weeks since we last uploaded a podcast it's been a little bit less than that since we last recorded a podcast uh but so we actually recorded a full hour and a half long podcast that did not get uploaded because um I don't know if there's storms going on or what we had internet internet connections and um unfortunately we lost that uh but uh we are ready to roll with this here today so hopefully we are good so um today is Thursday August 8th and Monday the Futures the markets were getting smoked and the buzzword that we were hearing a lot or the phrase that was talked a lot about both on CNBC and Twitter and a bunch of different financial publications was the Yen carry trade and how it somehow blew up uh the Japanese stock market was down about 11% on uh Sunday night into Monday morning in the United States and markets got smoked so curious to hear your thoughts on everything that's going on Jeff um I had told you that I've heard a few different people talk about the Yen carry trade over the past I don't know year and a half couple years um you had said that you think you've heard more about it uh recently but I think it's just people maybe I follow have been talking about it people thinking that like you know one day it could blow up it's almost like selling a premium way out of the money or something it works a lot of the time but when it doesn't it could be cat traffic so want to hear your thoughts on everything that's going on in the markets and we could go from there yeah so I don't know what happened um Yen's a currency that basically doesn't yield anything so if you're doing Factory things that have basically trying to make money on stuff that goes sideways that doesn't have yield on it like momentum things and and other things in Commodities and stuff like that I think that it sometimes uses um uh takes advantage of that and then it gets crowded right so I don't know what there is to it other than it was probably very crowded for some reason whether that's human beings or computers or human beings who are using things developed by computers or what but it's your usual thing that way right um but probably had something to do with a big change in expectations for interest rates in the short term in the United States like that in a few months that rates would come down a lot that's the only thing I could think of that was a big shift that would cause things to happen in markets all around is just expectation of a much faster possibility of a recession much faster possibility of large interest rate cuts and so you know then there's differentials between um yields in different countries and all that and like that's the thing that moved from what I can tell I don't know what else would have moved that could have caused that all around the world macro has been uh definitely a topic recently whether we're in a recession going in a recession whether rates are going to come down whether inflation is going to reignite um you know and of course with everything going on in Japan uh it seemed to have really spooked the US markets we had like a bit of this rotation trade going on where the NASDAQ was selling off and the Russell was going up and then you know jobless CA claims uh came out and it was like oh no actually we're going into recession so then the Russell you know pulled back on that because smaller companies are maybe more um sensitive to you know like the economy and whether we're going to be in a recession or not uh so want to zoom out right because it's just been kind of crazy and uh just talk about you know just investing in general uh because so much of the conversation lately has been on uh macro and a few just key stocks in the S&P 500 uh so pretty crazy but you know when the Japanese stock market closed down 11 or 12% whatever it was I instantly started thinking about Buffett obviously because I think actually one of his positions that he owns in Japan was down like 20 or 30% in a day um so lots of crazy stuff going on I don't think these are normal times that we're living through but I also have said that a lot over the past four to five years so maybe this is the new normal I don't know like is that a product of like computers trading and stuff like that you're going to get like these huge swings that that happen in the market yeah so I mean so we recorded a whole podcast where we talked about you know passive and and all that and basically what I said was like look it doesn't really matter passive and how big passive gets and everything as long as active and passive don't contaminate each other and um so that you know if if there was lots of passive that people who were actively trading weren't aware of and weren't involved with it doesn't matter because you still can develop um good uh uh like a you know you still have some people trying to figure out the actual values of things um mimicry is is sort of the problem I mean I think on that podcast that we didn't upload we also talked about Ai and or it was May maybe it was that one or a different one but you said like oh AI will get better and better over time and I said actually I think if the problem would happen that AI would start training on AI generated content on the internet eventually if we start to see a lot of that and it will devolve quickly into problems and it's the same sort of thing in markets so I I do worry about that with passive and just basically mimicry um but it's not new to markets it's humans have been capable of doing it themselves before and uh it contributed to the 1980s right we had a um crash didn't last for a long time and everything but it was a contributing factor was people using the same strategy um there was a bond market problem in the UK a bunch of companies and and firms using the exact same strategy that was sold all around you know to everybody um remember you know housing market a few firms being you know basically doing the same sort of thing so I I think that's always an issue and we just don't know how big that is um till we see what happens but whenever there's something that's very crowded and doesn't have a strong fundamental reason for why people would stick with it if they're kind of doing what everyone else is doing they're going to freak out when it unwinds you know and I had a long drive on Monday and uh so I was listening to CNBC on the drive and I don't I mean I usually have CNBC on uh I don't really ever listen to it much but it's just kind of on my computer on my thinker tool map or whatever I don't ever just like sit and actually listen you know and pay attention and stuff um but I had a long drive and it was Monday so I was like well I'm just going to listen to CNBC this is great I have a long drive but you know I'm going to be pretty um you know entertained today with everything going on and the amount of people that were coming on and just saying the FED needs to come out with an emergency cut and they need to cut by 50 BAS points or they need to cut by 75 basis points we need an emergency cut this is jal's Fault blah blah blah and you know I was just thinking I'm like man the markets are so conditioned that there is like the fed put right or that they will come out and and stimulate I mean it was the market was down sure 5% in a day or whatever and we have come back down if you're watching the screen right now looks like in July the NASDAQ peaked right just under 24% year to date um the S&P 500 was close to 20% a date and you know the nasdaq's up 9% and the S&P is up 11% this is just the price movement so not taking in the dividends of the S&P 500 but I'm like you know zoom out and look at the S&P 500 and the NASDAQ over the past you know couple of years and as soon as you get some sort of major correction everyone just starts freaking out and I was thinking I'm like you know if the FED came out and did an emergency cut my opinion is I actually think the market would sell off more because they'd be like wait actually something is fundamentally wrong here you know this is actually like a systemic issue um but you know it's it's so interesting because I think you know 10 15 20 years ago people always knew that the Fed was there to you know do different things but it's like now it it's obvious yes the FED is there and people start to freak out on a couple percentage moves uh uh you know to the downside of course not to the upside but to the downside and then people start to come out and start screaming oh no they need to come out and and cut rates immediately and the Fed was they left rates low for too long that's pretty obvious now right with inflation everything and they're going to do the other thing on the other side uh but you know that's what creates Cycles right I don't know what else to say about it I mean that's that's just that's just the way the cookie crumbles you know they don't like to switch gears quickly they like to guide of a long time ahead of time so they don't ever want to do we just raised rates and now we're just cutting them I don't see what theice problem is with that that's they're human beings so you raised rates in one month and then you bu 25 basis points and you cut them by 25 the next month something changed you change your mind you know but they're never going to want to do that so they want to make it clear far enough ahead of time and you know all of that and so it's kind of can be a little slow right um yeah so I mean expectations changed a lot I don't know what they look like now but they changed a lot for what will basically end the year at uh in terms of where the FED funds rate will be and um they're probably too high and knew that anyway earlier in the year but then there was a drastic change in that so they probably knew that they should go down to like 150 basis points or something but over a long period of time and then the market was suddenly like you need to cut 250 now you know uh and you know and we're talking about intraday like you know in the moment where these things are happening um yeah but if you just look at where inflation is and everything then they're they're yeah they might be restrictive now for the first time in a while so they would have known that and that they should gradually bring them down um yeah I thought I thought it was funny because the FED met last week right I was like could you imagine so like the previous Wednesday um could you imagine if when Wednesday or Thursday if you know PA came out and said no they're going to leave rates on change he had his press conference and then the following M day he comes out and says actually we're going to have an emergency cut and we're going to cut by like 50 basis points I mean what change between the you know the few days and Monday I mean nothing really other than I guess whatever was going on in Japan um but so far it doesn't seem like the markets have really nothing has really come out of it yet um so very interesting and of course the jobs number came out today and and jobs are a little bit stronger so people are like oh I guess we're actually not going to go into recession it gets sounds like the soft Landing is back on the table it seems to change every single uh couple of days yeah but I mean you you are inverted right to some extent not drastically but you're inverted unemployment curve have been somewhat rising and inflation been somewhat falling all of those would say that you should strongly indicate you should be cutting rates but it's like we'll do that in six months or something because we had such a long time of telling people that we were going to raise rates so it's just it takes a long time for them to switch up on that um you know most of them don't do that green span was the only one I think that really did that look ahead see what's happening adjust all the time that was more his Mantra than any of the other ones so recession talk obviously people been talking about it I did tweet out uh a few days ago that chapter 11 Finks have reached their highest level in over a decade I thought that was interesting uh so for people listening a good place to look for Value you could you know Source these different situations from like to Capital which we've spoken about in the podcast before stocks emerging from bankruptcy um you know it's going to be a good Pond to fish and we've spent some time there we look at a lot of different things but since we've been investing together I think only one situation right um is one that we actually invested in we soon probably yeah yeah but why do you like to focus on this and somebody actually had asked is there any evidence why papers Etc on this being a good place to look for value and I don't know if there are it's it's really hard to to aggregate data and a lot of these situations are super complicated and you're dealing with the legal system and every situation is different uh so I hope there are no white papers or you know that people aren't going to do more research on this because I don't want this pocket of the market to end up like spin-offs and where you know now there's just nowhere to look for Value so um you know it's good I think in in sometimes where you don't need evidence of returns especially if you have success in that area right yeah and I like looking at spin-offs IPOs chapter 11 whatever these things that you're talking about because you can value the entire company and see what it will look like when it comes out now IPOs are like the opposite of chapter 11 everyone wants them so they tend to get overpriced um spin-offs for a time were pretty good and there may be opportunities in that they you know the thing probably with chapter 11 is similar to spin-off if you look at it whatever the papers say would suggest looking at an actual breakdown of you know websites that track it for each stock that it's been because they are wildly different depending on uh you know their performance is wildely different stock by stock so when we're talking about the mean and the median and everything it can really disguise that in a paper but also sometimes you could know some of those things ahead of time by really analyzing the business and and everything and I would say the same thing with chapter 11 I wouldn't just encourage people to go out and buy anything that is emerging from that and there's plenty of companies that you know end up going back into chapter 11 um too and because there's things wrong with them as a as a business uh but there's not many things that are underpriced unloved Etc so you got to look really hard these days for all that and that's one place to look yeah so let's talk about Buffett um sold half of his position in apple if you listened to the Berkshire annual meeting that year he sort of hinted that they were going to continue to sell stock yeah he basically said I'm going to sell a ton of apple yeah yeah yeah is like exact what with something like I foresee it being our biggest or one of our biggest positions for a long time or something and if you look at the math on that that's like okay so he could sell like 50 to 90% or something yeah yeah we actually spoke about that on the podcast where like yeah the way he phrased it was yeah we'll still be it'll still be the largest position and we'll be the largest shareholder whatever but it was like well you got a long way to sell uh for that's still to be true I want to get your your take on this because obviously a lot of people on Twitter were speculating on why he was doing this he I believe holds more treasury bills than the Federal Reserve right now his cash horde is incredibly High short term yeah because the FED is not very short term yeah yeah uhuh and he also the FED yeah right sold down some Bank of America as well and we were together last week and your take on this was different than everyone else's take that I saw on the internet so I would like to chat about that here on why you think he's selling positions I mean I think he's selling them down because of his age and that he's afraid to have someone inherit these two positions because they're they're things he might have held in 2000 or something if he knew like they're the C and jillette you know of today he doesn't want to saddle those people with positions that he wouldn't buy for the first time now he might have bought these five or 10 years ago but these are he doesn't want them to inherit those position and so I think he's going through and eliminating positions because of his age because he's not going to be around forever so not burden them with positions that he you know so they have to make the decision to sell as soon as he does whereas with oxy or something that's a new position for him he's happy to keep buying it he wouldn't be buying apple or Bank of America and he pretty much said those publicly I mean Bank of America he was like well it was a special deal and whatever but we sold our other bank things you know so I think he's trying not to make the mistake he made in the 2000s um and I think he's okay with that but if he was going to have someone inherit from him in 2000 I think he would have sold Coke and Gillette I don't think he would have forced those on them if he knew that in 2001 or two or something someone was going to take over for him so what are other people's take so that's that's not the No No most people think yeah that he's going to do a big deal or or Market timing or stuff like that yeah uhhuh and you were the only one that said well actually maybe he just does want somebody else to inherit these huge positions um yeah that he put on cash or something like that yeah I do think there's been a lot of thinking about that probably at Berkshire just the way that he talked at the annual meeting um you know Charlie dying I think too um but like um that they wouldn't manage the entire you know that Todd and Ted wouldn't manage you know 200 some billion dollars or whatever it end up being um and I think they a decade ago they he did think that so I think his thinking has changed in terms of the size of what berkshire's gotten to be in terms of the fact that their Investment Portfolio I mean uh that he couldn't find anything I think he was holding out hope that you know he'd get another uh you know not necessarily a 2008 type thing but something where prices would look attractive again and I don't know that he has much hopes that he'll get to see that at his age um and I think he wants to make sure that Burkshire is positioned the right way for that so not to saddle people with giant I mean how big was the Apple position we're talking like in billions I mean you know that's let's see it's holding end of second quarter 84.2 billion is what it was at the end of the second quarter and he sold more than yeah he sold more than 49% of the stake yeah so we're talking 100 something billion I don't remember the exact amount but it's just you know um yeah and it probably you know like your Coke and stuff is not something he expects to do great and so do you want to give like 50% or something of your portfolio to someone into something that's really overvalued mhm I think he could justify it more to himself although I think he knows that it wasn't great to keep the Coke and stuff in 2000 um but he could justify it more to himself if he's the one who has to deal with it I don't think he wants to leave it to someone else to deal with that would be my guess so what do you think he'll do with the cash right so the article says 277 billion it's earning uh you know it's earning some money um uh from uh the treasury bills I mean someone was like do we have a huge special dividend incoming do you think he's just going to let it sit on the balance sheet what do you think I mean unless you find a $220 billion thing to buy I mean you're not going to use it all up and they produce cash over time too so even if he wants to keep say 50 billion in cash which is possible at this point Burger's big um I don't think you want to keep much more than that and there's not a lot out there what's a company that's 200 billion or something that you could buy the entire thing um you can't do it in the stock market because it to buy a $200 billion it's $2 trillion probably because you're not going to buy more than 10% in the market yeah so you know that's a handful of companies um that are in in two trillion that's almost no companies you know it really is we could name them and then um even a couple hundred billion is really big and they have to be willing to sell to you if you're going to buy the whole company so it would be hard I can't really even think about what companies would be that size in the United States that would be possible there's there's almost no private companies that are that size it's it depends you know they've had and and those that are anywhere near that he's had dealings with in the past or something like um they wouldn't be new things that he's never heard of uh you know so like yeah would he at one day like to buy you know Mars Wrigley whatever stuff yeah probably something like that or whatever but you know I don't think they're plenty to sell right and everything else you can see is public companies there's there's not you know pretty much if it's two if we're talking about a couple hundred billion dollars those are public companies you could look up and and see and a lot of big companies are really small compared to that so yeah I don't know how they're ever going to use that money so how much in interest is he earning that on that 277 billion well if he's in three months and stuff what is it a 53% five I don't know what the every month you know 90 days or less is but that's what he means equivalence has 14 billion yeah it has to be under 90 days and what's that capitalized at like you know 10 times or 15 times or something you know from like a market value perspective MH yeah but if you but obviously if you put in longer term things it's less I don't know what 10 or 30e Bond 10 what's 10 year bond at 4% yeah probably something like that so um um you know he's earning more than the FED because the FED has less well the FED has some things that aren't government stuff I guess but he's earning More Than A lot of people are you have to keep in mind too because he's shorter term than everyone else he's more liquid in earning higher rates yeah 10 years at 4 rates are higher on the short term than the long yeah MH crazy crazy crazy what do you think what are your predictions for the future with everything going on right now in the economy the markets we're still kind of at all-time highs right yes we're off a little bit but is this really just a a correction on our way higher I mean is uh you know Nvidia going to go and come back down to earth you know what are your thoughts what are your predictions uh I I don't have a lot of predictions thing things are very expensive if anything ever happens that is negative things can drop pretty fast because everyone's expectations have to be of a you know really good outcome right now now uhhuh but find anything that's cheap in the small cap world no no no I mean not nothing but like you know there are things if they get overlooked I so I think year-to dat cinear is up like 80% right and Marcus is down like 10% or something so there are just random things like that where two stocks that are pretty similar um Marcus has a hotels business too and operator yeah but what's Marcus MCS Marcus down 11% that's a wild dispersion yeah that's insane but that's what happens too and this is why I've warn about the pair trading and stuff like you could look and at some point this year you'd say what these why would this keep going up and this one not go this one's cheaper I want and it'll just get worse and worse that's what happens to Value investors in these Bubbles at the end where they think oh I'll buy the cheaper and short the mark even if you like cinear you'd be like oh I could short cinar and go long Mark no just makes it worse and worse as you go what's the logic to it I don't know one's in something it's bigger it's in indexes I don't know who knows there's some logic to it that has to do with what it is as a stock and that's why it's happening probably there could be some underlying things that people could argue you can always come up with a narrative it's it's hard to come up with a narrative for explain why one's up 80% and one's down 10% you know that's pretty tough these are really really similar like really good comps for each other on the on the um movie theater side really well somebody on the movie theater side but then Marcus the hotels in commercial real estate so you have a pure play in Marcus and then a perer play in Cinemark and then I guess not so much in Marcus but and and the box office has done well over the past month or so so Twisters yeah but what but are we're saying like people are so negative on hotels that it's like a they're ascribing a large negative value to it they would have like how do you explain that kind of difference between the two uhuh that's what you kind of have to say is it something like oh hotels are so terrible that yeah unless there's you know but there's also just like you know maybe people don't look at um what the numbers that each one are and are just like look I want the Pure Play I don't want the hotels things I want that you know that happens too mhm you know when you're in a bubble thing you don't you're not really thinking about people aren't looking at the numbers and stuff they're looking at stories about things and how things are moving and everything and then also just the momentum things and stuff maybe that affects it these are high volatility stocks normally right like they've gotten very high betas for some reason over time so we've talked about it with Airlines movie theaters whatever oil companies um except for Big Blue Chip ones have that too and um so some of them get really attractive is for like momentum type stuff right and these things don't really have much in the way of yield or anything like they used to have you know so they used to look like different kinds of companies different kinds of stocks they their companies are the same but they may show up because kind of looking different as stocks I guess than they used to um because they used to have value and yield and you know like they showed up I mean they're the the companies didn't change so it's it's silly to talk about this way but like if you were literally screening the stock the fact that it doesn't pay a dividend or something like it used to exactly you know so and um and also again like it might not look as cheap on present day stuff but that's kind of dumb because like 2026 let's say will be a good year and you know people can look ahead and everything so I also don't I think cmark has way more anal coverage than Marcus and everything and maybe there's other reasons but I mean we could look at Marcus right obviously we've followed the company on here uh a few different times but current market cap 44 million Enterprise Value 536 million price to sales6 evit sales .8 10year medium margins on ebit about 10% um if you look at where this company was at pre-2020 you're talking pretty regularly at least for a handful of those years at least 70 million in operating profit right um at an EV right now of 536 million if you get back to let's say pre-2020 levels this thing's pretty cheap you know that's just on the business itself can thinker swim or whatever you using there do a longer term chart like five years or longer yeah no so we're using qu but we could do yeah do you want 10 years here's 10e chart got if you chart the two against each other yeah I just would just say that I think there's more of a Divergence than you might have expected uhuh um in recent uh results let's see what we have here so the yellow is Marcus and blue is cinar okay and and how far back do we go there that's 10 right yeah mhm we could go 20 yeah yeah so uh but if you go back like 5 years or something um you'll see that you there you go so this is what I meant it's just this five year it's pretty good indication of that what happened that's wild that is wild even look at that look at I mean 2020 obviously everything jumped out but like look at the bottom of 2020 October 2020 I mean these things traded like neck and neck with each other and then the pull data every week they should be we we know what it is at I mean like this is so yeah um and then they just so what month is that so that's early okay when is that so where did they start diverging it was back a little before April was that looks like February yeah February February okay and then it just February 23rd you know which is fine cinemar cheap good stock but like I what it got some momentum or something it showed up on something that this is It's value with momentum now so you got to go for it and the other one's just value with with no momentum but they're this they're not like they can't really be that different like you know does have the hotels thing yes Sark does have Latin American things I can give you a little bit on that but the circuits are so similar in in the United States and just uh they're so similar these are very very comparable businesses and and that's great if you own Cinemark that's terrific but one of the things that happens there is people who own marcet probably feel like oh I made a mistake or something people own Cinemark think I made a great decision I don't think we should take seriously anything that happened between the two in the last six months like something will happen I don't know what but that is really wow yeah this is a six-month chart right now so for people listening cine Mar's up about 80% over the past six months and Marcus is down 5.6 if you look at a three-year chart cin Mark's up 65% Marcus is down um about 177% uh let's see 5-year chart well they both you know suck even you can see that they used to huge Divergence yeah yeah they used to track very closely and then there's a big Divergence so uh I'm going to Tweet this out I'm going to ask people what the uh that Divergence is here between these and then we'll we'll bring this back up on the next podcast we'll just read everybody's response what do you think people are going to say I bet you people will reference Marcus um having exposure to hotels and C Mark not andark being a pure play um it'll be interesting to see if anyone talks about like the momentum factor that you just referenced my guess is not really okay I think that most people today don't want to own a value stock unless it's moving for some reason something randomly started moving and so then we all crowd into the thing that's moving and not the other one but it could be but like this to me is when we talk about the Yen carry trade or any of those things to me it's more like this it's like h a trend reinforced itself I don't know why we come up with the narrative that's why cinar is amazing and Marcus is is terrible and there was an exact date that like it's not like it gradually happened either if you look at this it's like there it is I just think it started moving and some people and computers and things said here's something cheap and the future is good and it's on the move and I want to own it now whereas when it was before they said it's a cheap movie theater stock yeah 2025 will be better than 2024 2026 will be better than 2025 okay it's a value stock okay but I don't want to own it until it starts moving now it started moving and now I'm in you know mhm I mean if you're a large fund though and you are investing in theaters or you're bullish on you know the box office for the next couple of years I mean you're not going to buy Marcus you're just going to go for the it's got it probably is momentum factor and it makes it worse because now its size is by market cap so because of that you almost on a relative basis it remember it doubled cuz it's up 80 the other one's down 10 that's that's a doubling in terms of its size in any index waiting and things not there AR a lot of indexes and Market doesn't have a lot of float and so there's there's other things like that but cine Market is definitely the one that's more likely that if something were to people to get excited about it cine Market is more capable of taking excitement from institutions and having that translate to a higher price than Marcus would be but I'm saying these are like to me you know Marcus is a control company and there's and all that but to me these These are the difference between a stock factor and like a business factor I think it's hard to come up with real business Factor explanations for why that would happen when it happened um and it's not like they're always 100% merried you can see that there is a little bit there where there was a Divergence where uh before I I mean I can only find one in I mean this is only the second time in five years that we see anything that looks at all like things are slightly moving differently for even a period of a few months so anyway I just find it fascinating but I think that if we were more knowledgeable about lots of different businesses and watching everything all around the world we would be able to find more examples of this of like why is this happening you know and um that's very 2000s reminiscent to me why is Electronic Arts doing this and Activision doing that who know it's one's become a name that people are into now and the other one isn't and that was a very 2000s thing that like stocks not just Industries and stuff but particularly favored stocks and things and and some of that is just like a broader concept of momentum and all of that I think but also the passive things we talked about what about the passive things well how big is cin Marcus market cap versus Marcus now it it's it's a lot bigger because I mean it's like I mean in terms of float and stuff it's like 10 times or something right it's big because in terms of market cap before they were um it was only it was about four times by market cap I think before cinemar was is bigger than Marcus but then you know um we had the Divergence that we just talked about now and then also there's a float issue it's not huge but there is a float issue where there's more economic ownership um in Marcus although it's mostly voting ownership but let's actually tweet this out right now we could go over it on the thing what's going on with this Divergence between cnk and Marcus yeah let's see do we do that what's going on with this okay so you can get an instantaneous answer you should ask CH GPT what why they're diverging um yeah so yeah let's pull this screenshot there we go okay let's see what people say about it I mean do you think Marcus is a good place to uh or it's a good time to invest I mean look at the only other times the few other times that there was a Divergence it wasn't this big and the Gap did close um yeah I think it's good yeah you know mhm what's going on with this diver between cnk and MCS yeah we'll see what people say about that uh the question actually that somebody had sent in was about Marcus they had emailed it to you and um we didn't know that we were going to bring it up we just by chance start chatting about it uh let's see the person says he recently invested in Marcus I've tried to Value movie theaters and hotels separately I arrived at a similar come to that of your write up where you attempted to Value Marcus hotels by looking through transactions in the industry for hotels similar to the ones Marcus owns so that post was from 2020 I believe you go back to focus compound Ty Marcus that's when we last uh did that and went through and value at a bunch of different hotels and stuff right so this does get to a big factor they he talking about there where if you value it as a sum of the parts and you put a very low eBid on multiple on Hotel and very high on I mean very high on hotels and very low on movie theaters which was not the case say 10 years ago or something if you looked at how people appraised them they would be more similar multiples but if you do that then it does kind of make it like the waiting of Marcus versus cinear is it's way more weighted to hotels but if you look at it from the perspective of um the actual eida of where it's coming from you know Marcus is is not as much a hotel company as people might think so it can happen for that reason I I guess but that's weird I mean hotels are more susceptible to recession than movie theaters big time but lower rates are also good for hotels whereas they're not that helpful for movie theaters so you're much more economically protected in a movie theater than a hotel thing but it's not a b big deal it's they're not a bad credit risk or anything Marcus so so the question that he had sent in was the individual said I can't wrap my head around uh why hotels trade at such high multiples he said I believe mentioned in your podcast recently that you think hotels have been expensive historically relative to movie theaters and I totally agree Hotel reachs trade at 10 to 12 times even iida individual transactions are done at similar multiples if not more Marcus Rec s recently sold a 225 room hotel in Oklahoma at a 13.6 times 2019 EBA down multiple blah blah blah uh and then he asked why do you think a cyclical asset like hotels where revenue and profitability tends to drop in downturns and an asset that requires constant m maintenance trades at such low yields question mark when you approach valuing a company like Marcus would you value hotels as what the industry values them or think of them in terms of a DCF question mark given that the hotels at markets likely won't be sold I tend to favor the second method that doesn't come out to anything better than 12 times free cash flow as opposed to 12 times iida but that value derives substantially from how the market values them so he's really just talking about how do you think about valuing uh Marcus as relates to the fact that they have hotels but then more so a larger question of why do you think cyclical assets like hotels uh tend to trade at higher valuations is that just because they don't have a ton of free cash flow is it more of an asset thing what is that well I would value them based on the free cash flow so like they said at DCF um I think because there's a private market for hotels whereas there isn't lately for movie theaters right so people can't compet to something that's a private transaction they're seeing what it trades for in the market it and so they see it move all the time that way and and it's however popular it is that way um you know I I don't really know the logic of it exactly I mean I think hotels could be seen as a super durable asset and like other real estate that way and so you know it's not crazy that they could be seen as um better um having a higher multiple than than hotels uh hotels than movie theaters but yeah I mean I would rather think that generates more cash over time movie theaters aren't seen as being very durable obviously in hotels are so hotels straight more in line with you know apartment buildings or something I guess you could think of them that way where you feel like there's total durability to the asset class whereas you don't with movie theaters that would be a good explanation so people responded to the tweet it says uh yeah real time right here customer trans preferring IMAX where which is also public compan we spoke that's absolutely true Marcus doesn't do IMax 100% true why is that cuz it's it's cheaper for them not to do IMax and I think that that's potentially an issue but I should point out it's not like they have worse screens they have plenty of great screens they just aren't using IMAX technology and paying IMAX royalties on it that's the decision that they made is that the right decision you know I I don't know that I agree with them in the long run with that because I think there's some risks to that that whether IMAX is or isn't better screens better technology that you're going to have it's easy for people to know the brand name IMAX invests a lot in the brand name getting you know your Christopher Nolan and stuff to talk about that they film in IMAX and everything and um so saying that you have premium large format screens is not the same thing as saying you have IMAX um so was that a mistake that they made maybe but they then make more money paying less out because of it so we don't know all the details of those deals but you give up money when you make a deal with IMAX where they get a big cut of it mhm mhm so it says that uh as it relates to the IMAX cinar has the upper hand Marcus noticeably underperformed when Dune 2 came out yeah but Marcus is a Midwestern uh thing it'll overperform with Twisters right versus Cinemark Dune 2 is a very yeah Dune 2 is not for midwesterners it's not for Red State people no uh Twisters is Dune 2 isn't yeah uh and then uh number two he said cnk has exposure to the Latin America Market where movie watching Trends are arguably better so that was one of them uh and then the other one Marcus losing theater market share instead of Mark gaining it also maybe investors are worried about Marcus Hotel lodging business in a recession yes Bute but again I agree Divergence shouldn't be this wide yeah the hotel thing makes a lot of sense sure uhhuh the the G Capital he gave more reasons too okay go ahead sure I was going to say the gaining and losing of Market Shar is tricky because you know different movies come out at different times so you have to be careful you know like um like where I I used to live was the biggest theater for twisters in the country the cut there which is a cinemar one so that's big but that's not normally the case usually you know a New Yorker or La theater something is your biggest so it depends on what movies are coming out so that's always going to be a case like I know pulled people coming out of Civil War the a24 movie because there was they wanted to figure out their um like political leanings right but it's not that good of a poll because anyone who watches an a24 movie is going to lean more left than right anyway it really doesn't have to do with the fact that it was a movie that was political that might have contributed to it but you have an indie movie like that you're always going to have a real skew an a24 movie is not going to play in like Iowa the way that it plays in New York or something so um yeah and you saw Dune 2 right yeah mhm yeah no D Dune 2 is not a lot of talking very moody very beautiful that's the director that you have there it's one of his more accessible movies actually because some of his others are even not so much for General audiences but yeah that's not that's not the same as as Deadpool and Wolverine or something you know it's placed a different audience yeah mhm so the other reasons he gave you said Marcus pushing cash from movies to hotel vers Cinemark likely reimplementing dividend policy after debt level stabilize and then four cinar is more liquid no big players going to touch family-owned Marcus Marcus is definitely cheap but I could see why some people would avoid it yeah and I think all those are possible reasons huge Divergence though well it's just interesting because it's not like I'm saying there's a price Divergence has existed for a long period of time there got to be a big Divergence in a short period of time like something seems to happened there right so but so I wonder that but but so if this was instead of Marcus and Cinemark this was you know the Yen and the you know pick another currency or something we'd come up with some wild explanations of why this must be happening to two things that otherwise should be similar and I don't always know if if that's true or just something happened with Trends I think any of those things might explain why something started to happen in the first place but it looks to me like it was some self- rein enforcement there of the trading activity in the stock itself then reinforced things about it it's hard to believe that that was a narrative that caught on and if people didn't see the stock moving it would behave the same way I kind of feel like it there just I see that so when you say are there things that are cheap or something yeah but they're the things that people won't want that way because they're the things that are you know if you look at that chart most people are going to want the one that started to move in that correct direction right yeah mhm it's a worrying sign if the thing you're most comparable to is going up like that and you're not what's wrong with you you know there must be something that I'm missing right so now what for Marcus then what are some I mean at these price levels it sounds like you think it's pretty cheap and it's definitely something uh yeah and I'm not saying the cin Market is expensive I mean I I have to look at exactly what's happened since it went up by that amount but um but it was cheap for a while and not moving and then it moved faster than it got you know business did not improve 90% or what 80% or whatever for camark in that period of time um yeah so that's just what happens with stocks sometimes they lag sometimes the fundamentals and then other times they race ahead of them and I'm not saying it's bad it's still nowhere near where it was before or anything and you know um I'm just pointing out a Divergence between two things that are awfully similar um so I I yeah I think that's um I mean let's look at quick FS probably has it what's the share turnover which I think is a large explanation for why this happens in stocks like this 523 per. okay and then marus in cinar let's compare it to Marcus Marcus is at oh 78% yep so um if you look at volume we could just look at volume recently too that's a good indication so if we go to cinamark um mean yeah OTC markets will be fine that'll give it to us uh volume today when recording this is 3 million right okay so I don't I don't think a lot of people want to just be in markets for the long term or be in a s Mark for the long term so if you don't want to be in a stock for the long term then you know you want stuff to be happening now and you start to focus more on what's Happening Now now I think than just like it's not enough for it to be cheaper we we talked about this with value things like is it enough for something just to be cheap I don't know um that's not how uh the machines are programmed Jee they like momentum they like inflections they like numbers that are incrementally getting better year forear quarter of quarter and moving to the upside yeah and and then the way it works too is this stuff becomes self-reinforcing because some of the these just go on price too right so they're just buying the thing that's working you know so if it's working uh the price is going up yeah and I don't know how how some of these things work that we're talking about that's Way Beyond what I'm capable of understanding but I I think some are as simple as if it if something moves up strongly after earnings then that's a sign that things are positive there and that can be fed into how you're uh in into what makes a good stock versus not a good stock but that's tricky because that's not exactly the same thing as knowing whether earnings were good or not it's you're taking everyone else's assessment of it you know and then deciding what to do about it based on that but you're basically saying okay they beat or something because I saw that the stock Rose a bunch after that so there's interesting ones like that we've talked about that off the air about some that fascinate me where they have all their up moves after on news and earnings and stuff and then when there's no news they go down you know even if the trend is to be fairly flat or up each quarter you can see this pattern that that it's up constantly on news and then it's down smaller amounts all the time when there's no news and so it's mostly evening out that way but it is fascinating that it's NE that there are stocks that are almost never down with news or and are but yet manag to be down because they go down all days where there isn't news basically yeah so to me that that's odd right but again it's with something that is no one is holding on to right it's just being churned so much so it's whatever you know that's like George Soros type stuff his Alchemy of Finance what was his book about reflexivity yeah yep sure yeah a lot of these things are reflexive yeah so that's Way Beyond you know what I think we can really cover in a podcast um with having much interesting stuff to say about it but there's just there's some things that are more about the stock as a stock I think sometimes than about the stock as a business mhm mhm what are your thoughts on the box office the Deadpool exceed your expectations I mean we had spoken about before we didn't know how well it could do because it was a rated R movie um uh I I said the best com Fort was uh doctor strange and the um uh Multiverse Madness so that probably did 185 million or something opening domestic um and dead Wolverine did it finish at 210 205 where was it it's I think it was projected at 205 and maybe finish at 210 or something um so did better yeah um worldwide box office 9003 million yeah that's big yeah it will be a it will definitely I don't know if it'll make a billion two a billion four I don't know what it'll do exactly but it'll be big I mean it's going to be about double the other two probably it you know Deadpool 2 and Deadpool they probably only made 700 something worldwide I would bet 750 740 I don't know so uh I'd be surprised if they made a lot more than that so we're talking about something that's almost going to be up 100% from that but now why is that is that because of the crossover with Wolverine Wolverine is one of the most popular character and play I mean Hugh Jackman is not ex we don't really have movie stars anymore but Hugh Jackman's awfully close to being a movie star and Wolverine's like Spider-Man it's a character that's in a league of its own in terms of um pop culture and everything so now if you did it again would it be as big no but it's closest to uh what was it no way home is that the one I'm thinking of uh where they had the three Spider-Man team up right so if you kept doing that it's not going to work every time but it's a sequel that had so this is a third sequel in that so the Spider-Man that was kind of the third sequel too a third movie that Standalone and uh you introduc something that's totally new but also plays to The Nostalgia of the last 25 years and has the actual actors from it yeah that's that's really big yeah I mean if you ever did a James Bond movie where somehow you figured out a way to have you know three living actors or something who have played the role all appear in the same one somehow yeah it would probably make it bigger but since you can't do that Marvel can with multiverses and things but most can't come up with a reason that they can do that um you're you're always going to have um bigger uh numbers from that so it was impressive but like we said it was you know it was within 10% or 20% or whatever maybe outperform 10 or 20% of what I said was likely we thought it was going to be the biggest move of the Year domestically it will not be probably worldwide it will not be because inside out I don't think any think can be an inside out too what are you excited for for the rest of the year do you think alien will do well no [Music] but it it will Beetlejuice could do well I don't know that's one that could break out but I also said you could have Fury Road or whatever breakout so who knows but yeah Beetlejuice is one that um is the same thing where it's a giant uh it's a huge time uh between the movies right but if they're pitching it kind of like it's a kids movie and and then the kids parents are the ones who actually like Beetlejuice and know what that is so that's what they're going for there um it's perhaps a little too long you want to maybe go back to something that's you know we're in a point where it should be like 90s to 2000 Nostalgia not you know this is a little old you know it was the same thing with the flash where Michael Keaton was in that one going back to Batman 89 or or whatever the the um it's a little old it was better to do the Spider-Man ones where it's going back to you know and X-men too actually Spider-Man and X-Men are pretty close in terms of when they came out the you know both of them the original ones so yeah going back 25 years for your Nostalgia it works pretty well John Huber responded saying I think there is no real explanation other than a mispricing MCS also got booted from one of the passive indices earlier this year yeah wow interesting but we see what we want to see because I think John is more of a fundamentals investor too probably so uhhuh uhhuh interesting well Marcus then I guess uh good time for people listening uh to do some research on on the company you do have the box office uh strengthening into 20 uh 25 and 2026 so you should get a couple good years out of that um mhm you've had a couple good out uh blockbuster movies come out recently yeah when's avar coming out is that next year who knows um there are some updates on something I James Cameron 2026 is very very strong I would say right now but the caveat with that right is it looks strong now but people's tastes can change and this is why this always happens what's green lit now sounds like a good idea and then by the time you get there you go o those things are off Trend now and you know because it takes so long so if if we were looking at Barbie and oppenheim everything we wouldn't say oh this looks so amazing and if we were looking at a bunch of superhero movies not that long ago we would have said oh Blue Beetle and this and that that's okay they'll do fine you know but then there's just less appetite for that by the time the movie actually comes out so but years ahead of time we' say oh yeah that'll do great that'll just be another superhero one that'll do fine um so the summer right now the summer of 2026 is like overpacked with things whereas we've been under with uh most of the on that that we have um so there there's some adjustments too we I like I mentioned the Spider-Man thing I have no idea if there even will be a Spider-Man by then there's one date that could be possible if there is going to be one but it's not announced and um so that be a Sony one you know one of those is what I mean and uh obviously there was things with Marvel where they're going to do uh Dr Doom stuff so that could be big too um but we're talking a couple years from now basically but 2025 could be better than 20 24 I just think that 2026 looks more like a really good year right now so usually if people think that next year in your industry is going to be better and the year after that's it's going to be even better then they start to move so it doesn't surprise me that cin mark would be going up or something somebody said I followed market for a while and the stock looks very cheap on a breakup slash some of the parts but how do you unlock value with dual class shares if who single class and activist would definitely come in do you believe that to be true oh oh yeah that's that's very possible sure and we talked about the Paramount decision before so obviously companies who there can be vertical integration in the industry now so like Sony's buying Almo Draft House you could people companies can buy cinear and um Marcus Marcus is a family control company everything but they can make offers for either one to buy the whole thing which obviously would be something that wasn't possible before what about five years ago something like that um yeah it used to be the impossible that Studios can buy theaters but now they can so there could be offers at some point for that sure got it cool well I want to thank everybody so much for tuning in with the both of us on the focus compounding podcast if this is the first time you're joining us be sure to check out all of our content that we push out on the internet if you have a question that you'd like for us to go over on the podcast or maybe look at a stock on quick FS or a particular industry that you'd like us to go over uh email it to me at Andrew Focus compounding docomo every time that we upload a podcast and if you're interested in learning about our Money Management Services like I said the beginning be sure to reach out to me at Andrew at Focus compounding tocom I want thank everybody so much for tuning in with the both of us and we will see you in the next podcast take care