Market Reset: Investor Called Tesla Crash, This Is Next Big Call | Fr. Emmanuel Lemelson
Summary
Geopolitical Concerns: The podcast discusses the potential economic impacts of emerging conflicts between major global powers such as China and the United States, emphasizing the need for caution in uncertain geopolitical climates.
Investment Strategy: Father Emanuel Lemlson emphasizes a value-oriented approach, focusing on buying undervalued stocks with a margin of safety, as demonstrated by his successful call on Kohl's stock.
Company Analysis: Kohl's is highlighted as a successful investment due to its low valuation and tangible book value, despite sector-wide challenges faced by big-box retailers.
Healthcare Sector: The podcast discusses investments in healthcare stocks like Centine and United Health, which are seen as undervalued and potentially resilient despite regulatory challenges and market volatility.
Short Selling Insights: The discussion touches on the role of short sellers in the market, using the example of Nikola Motors to illustrate the risks of speculative investments and the importance of thorough due diligence.
Market Outlook: Lemlson advises caution in the current high market environment, suggesting that investors focus on stable, long-term investments and avoid speculative IPOs and financial innovations.
Investment Philosophy: The podcast stresses the importance of understanding the underlying value of investments, advocating for a conservative approach that prioritizes consistent earnings and defensible business models.
Transcript
you know, let's pray for a positive outcome between this emerging conflict between Russia and NATO and the United States. Obviously, the probably the bigger conflict is the emerging conflict between China and the United States. Maybe it's a sad commentary, but typically, or at least historically, wars have been stimulative to the economy, but we should never pray for war. Let's say somebody knows nothing about the case. He's watching Trevor Milton's testimony on Tucker Carlson, and then he's listening to you. How do they make a judgment for themselves, right? what what what should they be looking at? We're very pleased to be uh joined once more by Father Emanuel Lemlson, CIO of Lemlson Capital Management and Orthodox Priest. He was on the show just a month ago, and he's made a number of correct calls, including stocks that have gone up tremendously since his last appearance, as well as the uh interview before then when he first made these calls. We'll be following up on some of these calls, as well as his new picks for us and his macro outlook. Welcome back to the show, Father. Pleasure to have you today. Thank you for joining us. >> Thank you so much, David. It was really a pleasure to join you as always. You know, I just love your show. I think it's the best show out there on capital markets and the financial world. So, thanks again for the invitation. >> That's uh quite a statement coming from you, especially since you have a podcast as well. So, thank you very much for that endorsement. Let me just flip over to this tribe. This is Kohl's. Now, you were on the show last July 10th, and since then, the stock has run up from 959 all the way up to well, um I don't know what happened here, but uh I'll let you explain that. um it went up 100% then it came back down but it's still up more than 50% since a month ago and you've been calling for this stock to go up ever since basically earlier in the year uh since basically April it's up 100%. Anyway, what is the story on Kohl's? We'll talk about uh this stock first and then we'll move on to >> some other stocks. Uh why has it done so well this year and why has it done so well since July since you were on last? >> Yeah. Yeah. Well, you know, David, I wish I could tell you. I had a crystal ball and I just saw it coming but I don't and I didn't. All I can tell you is that, you know, when you take a value oriented approach, what you're really looking for is a margin of safety. So where, as I always say, you know, speculators saying to themselves, I can pay a dollar uh today for something worth 75 cents. The value investor says the inverse of that. They say, I I can't pay a dollar for something worth a dollar. I got to pay 50 cents in case I'm wrong or some bad news comes out. So this inversion of thinking between the speculator and the investor uh almost always works out and it works out well over time. And in this case, our commentary on your show, I want to say it was April, was it April 7th? And uh again on July 10th, we just looked at the tangible book value. Could not be a more boring company. It's definitely not the next Nvidia to be sure, but the price was so low there was the risk was dimminimous in my opinion and it worked out well. And at one point I think it went up over 200% after our last show. Um uh so it it did really really well and I think that was over 74 days or something like that that it went up uh you know from our April show till it spiked around at 1.20 or $21 a share from I think it was eight at the time. So, it worked out really well. It's still up like you said at roughly 100% or something like that. We just published a Substack article on it. You can check it out. Talks about some of those numbers on our Substack, but uh yeah, it worked out really well. It's just your sort of archetypical Ben Graham style uh buying the balance sheet at a discount while everyone else is buying, you know, headlines on CNBC. And that margin of safety again proved pressure. department stores uh like Kohl's, J C Penney had a lot of trouble but basically big box retail stores all across the United States have faced a lot of pressure in mo in recent years from uh you know not just the emergence of online shopping but from a host of other macro forces as well especially if especially since people have been spending less money now. So I wonder why this particular stock has been doing you know tremendously well despite these headwinds pushing against this particular sector. I mean, I know valuations is one side of the story, but are they doing something like business-wise that sets them apart? >> Well, you know, in all fairness, of course, you had this dive in the S&P 500, the major indexes when Trump announced his tariffs, and that created great um unknowns for the market. You know, the market doesn't like what it doesn't understand. That creates fear and speculators can be very skittish. And you might say, well, most of the market activity in terms of trading volume is algorithmic. the people who write those algorithms are themselves speculators. So, you can't really escape the the personality driving this huge volume in the market. And it's understandable to a certain extent. Nobody really knew what was going to happen with the tariffs. We actually put out a podcast episode at the time, one of our more successful episodes talking about the fact that we thought it was just very strategic on Trump's part. We don't think he's a, you know, a madman when it comes to economics and and the business world in America. But, um, people didn't know what it was going to cost. A lot of that stuff and co is coming out of Asia obviously. Um although a lot of it really is coming from Vietnam and Laos and sort of these emerging economies in Asia in terms of clothing and whatnot, but it was just created a big unknown. And so here you had a price on a stock that you could say if they closed the doors tomorrow and they sold it and liquidated everything like would the common shares be covered? Like if you could ask yourself that question like if everything went wrong and the tariffs went nuts and the economy shut down like March 2020 style, could this be sold to a private equity group or a private buyer even, you know, for more than what the common uh share price is today? And would the common be covered or is there something ahead of the common? And if you can answer that question affirmatively, then you've almost derisked your decision. So you're you're really your hedge in that case is that I could be wrong but it would only take slightly good news like Vietnam to come to a trade deal and and so forth or Bangladesh whatever to come to a trade deal with the United States and some of these emerging economies and for the fear over the tariffs to pass then people would reset that price realizing that um it's not the end of the world and in in this case I think the S&P 500 went up 27% during that time so we dramatically outperformed on that uh commitment and goals >> and I think if you just zoom out of forbid. If you take this chart, at what point do you say to yourself, um, it's time to take profits. What was undervalued is no longer. And especially, you know, again, 100% run up in the last couple months was great. But if you zoom out, it's not had a good run since basically a couple years ago, it's just been a loser stock. >> So, at what point at what point do you say to yourself, okay, it's caught up to its fair value, or do you think it's still really undervalued compared to where it was historically speaking? Well, you know, I think we called it we we probably referenced it as a sort of cigar butt investment. Like we talked about Big Five at the time. A cigar butt's not a great long-term investment. In fact, it would be better to just buy great companies and hold them indefinitely than to do this. Even what Ben Graham sort of talked about this idea of price value dislocation is not the really the best way to accumulate wealth over time because what you want to do is compound your return. So a cigarette by definition is short-term. In this case, when it shot up that much, that's when we sold almost our entire position. I think we have like one share or 10 shares or something some stub position but if it shoots up that much in a day and you've got this huge return it's not going to suddenly become a great company next year or in 5 years. So it's again not the best form of investing either. This deep value balance sheet based allocation model but it it works especially in a market where the market generally is quite expensive like we just hit a new high in in the major indexes I think yesterday. So there's not that many opportunities out there. I mean we're not look there's no real like invidas around as you know as it was three or four years ago the price opportunities or what Apple was 10 or 15 years ago there I don't see that many opportunities. So you kind of go back to cigar about investing. If you've got this huge return, the stock was completely beat up and you make this I don't even know what that comes out to annualize 200% in 76 days is some enormous number annualized, you could just take your profits at that point, I think, and move on because again, it's not going to ever be a great company. Before we continue, let me tell you about protecting your most important asset, your personal information. Now, your personal information is likely out there on dozens of data broker sites you've never even heard of. These sites collect and sell your name, address, phone number, and more without your permission. That's why I use today's sponsor, Delete Me. It's a service that finds your personal data across the internet and gets it removed. And it doesn't just do it once. It does it continuously and monitors it and removes it throughout the year. All you have to do is submit your information and within a week, you get a privacy report showing where your data was found and what's been removed. The whole process is simple and it runs in the background so you don't have to think about it. Go to jointdeleteme.com/davidlinin and use the promo code davidin at checkout or scan the QR code here on screen to get 20% off on all US plans. Join delete me now and take control of your privacy today. >> Okay, let's move on to another stock that you talked about, Centine. I believe you talked about liking Sentine >> last time you on the show. It's at a huge dump though. Um, are you still long the stock? >> Yeah, we are. It's the second largest position in our portfolio. Our largest position is in United Health. I had intended to talk about United Health in our last episode when I joined you, but uh didn't get around to it. I was going to talk about it today. Uh today, I think Sentine's up four or five% last time I checked. I think it's down about 13 or 14% though since we last spoke on July 10th. Um but that doesn't bother me at the time. I I said, you know, let's see where it's at in a quarter or in a year. So, we have anywhere from two to 11 months left to see how it performs. I have no doubt we'll be proven right on it. I'd be surprised if we were wrong. A very boring company, really adversely affected by the Trump administration's changes to Medicaid and Medicare. And when they withdrew their guidance, it created a lot of fear, but still not that difficult to figure out the math in terms of what their EPS is going to do. And then just yesterday evening, Buffett announced, I think he bought 5 million shares at $1.5 billion stake in United Health, which is in the same industry sector. And then uh of course it's raising names in that sector because people realize this is a very unloved sector, very unpopular and things are going to be just fine. They may not have the same lofty EPS uh goals that they had only a couple months ago, but again it's so incredibly discounted and in the case of United Health, you've also got a dividend. Now United Health has encountered some extraordinary uh rough patches, so to speak, with the assassination of their former CEO. It gave rise to a lot of ethical uh questions and moral questions. is what happened with Luigi Manion of course who shot him in the back. A terrible tragedy for the CEO and his family. But when these sort of things going terribly wrong and a company becomes culturally toxic, it becomes radioactive. But if the underlying economics of the company are good and these companies are also facing regulatory scrutiny, people get scared by that especially retail. But a lot of the times these regulatory matters pan out with a payment or some sort of resolution. The company actually improves um its operations if they've done something wrong. And if the company's really moving in the right direction under new leadership, it's okay for investors then to allocate capital to that that model. And again, very very cheap. So I think United Health and Centine are still great investments. That's not investment advice. Do your own research as I always say, but uh for me at least, I would say I'd be very surprised if it doesn't outperform the market in the upcoming quarters. Uh certainly with >> the overall macro uh thesis on healthcare stocks right now. Well, it's a it's a business model in the United States. Again, adversely affected by changes in the Trump administration's policies, but there's not a lot of alternatives either for the United uh for Americans. So, these large health insurers, they provide a service which is uh ubiquitous. So, they're not going to go away. Their earnings may be adversely affected. But if the earnings, for example, just using rough numbers here, let's say it goes down 30%. But, you know, the company now is trading at a P& of you know, say four or five or something and there's no going concern risk. there's, you know, there's they have enough of a defensible moat and people are locked in. In Santine's case, they can just raise their prices, which they're going to do. They're going to repric in their different markets. And if you listen to what the the leadership is saying within the company, it's very clear that they'll be able to address uh their earnings power and their their margins will be defensible, I believe, going forward. So what you're left with is a a company that has a remarkably long track record of consistent earnings, which is what you really want, consistent earnings, no loss, extremely negative sentiment, partly tied to United Health and the sort of the cultures awareness of these companies may have been unethical in the past and need to be fixed. And then an opportunity to buy uh assets, productive assets at a huge discount. Again, the inverse of the the speculator's mindset. It's like the prices keep going up and it's a it's a green light. I should jump in now. It's going to keep going up. the value investor has the inverse of that way of thinking. They say, "Well, I have no clue what the price can be tomorrow, but the price is so low and it's below demonstrable uh appraisal of their intrinsic value that we we should be safe even if we're wrong. Uh you know, worst case scenario, we you know, we'd have a you know, uh we'd mitigate our losses if we were wrong substantially because the price is so low already. And in the case of United Health, we've got a a decent dividend as well." >> Okay. Uh Nike, can you give us an update on Nike? Uh it's another stock that you liked. Let me just pull up this chart here. It's uh Yeah, it's done like it's up like 40% >> this year uh since April's lows. But uh anyway, I'll let you talk about that. >> Yeah, I mean it's a great company. We've we've followed footwear for a really long time. We u had been critics of Sketchers in the past, although we've also been long. We've been short Sketchers. So, you look at a company like a Sketchers versus a Nikes. You can really see the difference between a company that really invests in R&D and produces a better product. Nike's got this really interesting uh technology they're developing with 3D printed shoes trying to make a better fit >> all the time. And uh >> 3D printed shoes. Have you ever tried one of those? >> No, I haven't. >> I haven't either. Wow. >> I haven't. But you know, >> you know, there's only so many really truly iconic American brands. You know, you think of like Harley-Davidson or, you know, McDonald's or something or Coca-Cola. I mean, Nikey's right up there with it. And it's an important product that I think you said last time, Dave, you keep your shoes for a long time, but most people cycle through them. They have to replace them. I know there's a niche market for collectors, but it's just such an incredible product. Yeah, I think they got a little bit way worse and their shoes were ugly and people are like, "Oh man, that thing's ugly." And there's a lot of effort to uh clone the Hoka model with these gigantic, you know, uh bases of their shoes. I think that's a little bit of a fad. Frankly, I'm not sure how much u real health benefits that provides. But, you know, it's not that hard for these companies to iterate models quickly. So if they make a mistake and they get into doing something wrong that's misguided or it's just ugly. And I agree some industries are just ugly lately. But they can fix that. It's like a fixable problem. So um you know when you see it trading I think at the time first time I talked about David back in April it was trading at like the lowest it like 20 years or something. I mean what else do you want? It's Nike for crying out loud. You know you don't have to be a rocket scientist to figure out that that's probably going to be a safe investment at that price. So yeah, I think it dramatically outperformed the S&P 500 as well like the big five that we talked about on your show. >> Where do you find value right now? Which sectors, which uh particular subsectors, any stocks that we haven't talked about yet? >> Well, it's hard to find right now because the markets are high and there seems to be a lot of euphoria, but there's the healthcare stocks like we talked about Centine and United Health. >> Yeah. >> Um again, not investing advice, but that's what we're owning. It's just what we're doing. Do your own homework. Uh, but I hate saying this because shorting is such a terrible business, but there's value on the short side. Shorting could not be more unpopular. They're like basically almost like criminals in the market. Even though time and time again they're doing the best research. Um, the short sellers have all but disappeared. That should be a great indicator that maybe there's more opportunities on the short side, but I hate to I hate to promote short selling because it's just a terrible business. It's unlimited risk. I don't want anyone to do it who's listening to your show, but there's things that I think are just great short ideas. Well, uh, you recently wrote about Nickeola, which is a, uh, a company involved with the production of EV trucks. Uh, they were famously involved in the SPAC a couple years ago, but I'll let you give you give us more details about that. Um, let me just show the piece that you've written real quick before we jump into a video. For over a decade, a unique vantage point has defined the author's work. Um, our investigation begins with Trevor Milton, the enematic founder of Nicola Motors. His story is widely disseminated a meteoric rise culminating in a staggering $ 34 billion valuation for a company that went public via a spa um when Nicola's house of cards began to fall. Milton in a dramatic interview with Tucker Carlson cast himself as the innocent prey of a hit piece orchestrated by short sellers in a shadowy deep state conspiracy. Okay, I'm going to play a video clip for the audience from your channel. But before we show that, just evaluate what you wrote. Is that true? Is he is was he right? Was that an accurate account of, you know, actual events? >> Oh, yeah. I mean, it was a huge wipeout. There was tens of billions of dollars lost and and shareholder capital was destroyed. Uh Milton himself did pretty well. He got away with about a billion dollars. So, I think you just have to follow the money trail to figure out where the victims are at. I mean, it it should just be simple math, right? They're like second grade math. Like, who are the losses? You've got a probably a bunch of pension funds and been private equity funds and stuff where you got a bunch of people who probably don't even know they're invested in those funds that many many layers of decision makers allocating to these they're not really IPOs they're reverse mergers a spa and you know it's kind of an old story. There's no real value creation. I think the company at the time of its IPO, its its spack IPO, had $36,000 in revenue, which was tied to solar panels being installed on Trevor Milton's house. And they achieved a $34 billion valuation. And there was quite a detailed short report put out on the company. I'm not aware of a a really comprehensive reputation of those points in that report. And the company collapsed. Like many spaxs have, they weren't alone. It's just the size of the Nickeola wipeout and the damage it's done to shareholders. But I'm sure Trevor Bolton's not the only one who walked away with a decent payday. I'm sure there's plenty of investment bankers who did quite well and earn fees at the IPO. And you know, the people who really you never read about that aren't in the headlines, the ones they do very well as well. They make a killing on these things, these IPOs. And then speculators and people who sort of buy into the the narrative get hurt because they're they don't know what the balance sheet shows that there's no revenues, that they're basically pre-operational, and that there's a lot of hopes and dreams involved, but that's awfully speculative. So he was he was prosecuted. He I think it was four or five years brushing. He did he was found guilty of securities fraud and uh he was ultimately sentenced to four years in jail. Never spent a day in jail, I don't think, though. He was ultimately um his uh he was absolved by President Trump. He got a presidential pardon. So interesting story. Uh but he's going to be okay. As I say in our podcast, he'll be okay with ruining 700 million he's got left after legal fees. >> His investors probably not. Here's the uh video clip that you put together. >> You trusted the market. You believed in justice. >> Nicola shares are tumbling after a short seller called the company quote an intricate fraud built on dozens of lies. >> Then the unthinkable. A giant fell. Billions vanished. Trevor Milton. A name whispered then shouted across Wall Street. In a lifetime of listening to stories about innocent people wrongly prosecuted, I have never heard anything like what happened to Trevor Milton. He cried foul, a quote hit piece. He called it a deep state conspiracy orchestrated by quote evil forces. >> So a short seller is a person or a fund that actively bets against you that your stock is going to collapse. So unlike a regular investor that buys shares and they hope that the stock goes up, short sellers buy shares um and they force it down. So it's like a it should be it should be completely illegal. >> What was your reason for pardoning Trevor Milton? >> But what if the very architects of the accusation were the true manipulators? What if that quote hit piece was a spotlight? >> I'm going to leave that uh here and people can check out the entire clip. I'll leave that in the clip here. People can check out the entire clip on Father Emanuel's podcast. I'll link it down below the video that you can watch. Uh, Father Emanuel, why is your story relevant even today? I mean, what lessons can we draw as investors from this incident? >> Yeah. You know, I I got to say I feel that I I have a a very um well, a sort of special knowledge, if you will, of the situation because the lawyer who represented Trevor Milton uh in his defense and ultimately, in my opinion, was more than likely involved in his presidential pardon, although he denies that. His name is Brad Bondi, and he's the brother of the sitting attorney general. And incidentally, Brad Bondi is the same lawyer that my the targets of my short reports hired to defend them, namely Ligan Pharmaceuticals and Viking Therapeutics, two companies that in my opinion are complete frauds. That resulted in my unlawful prosecution for 10 years. Milton was prosecuted for 5 years. I was prosecuted for 10 years. He spent $180 million in legal fees, 100 million from Nicola of shareholder capital, 80 million out of his own pocket presumably from share sales at the IPO. Paid to Bondi and his firm. went to trial and lost and he claims he's a victim. I went to trial and actually won against the US government. So, I'm watching this episode on Tucker Carlson. First of all, I completely lost respect for Tucker Carlson because I don't think he's being in any way honest during that show, but I think the whole episode was completely misleading. So, I get up one night at like 1:00 a.m. I'm watching this Tucker Carlson episode about Trevor Milton and I'm like, "This is a bunch of crap, frankly." So, and I know the people involved. You know, this this Bondie character, he's a shadow lawyer. I call him sloppy Brad Bondie because he can't do anything right. Doesn't really win at trial as evidenced by the Trevor Milton loss. But he's got all these connections in the deep state. If you think the deep state's just the mythology, it's not. I'm here to tell you it's real. And you know, it's guys like Brad Bondie that epitomize it. So, you know, you're watching this guy all of a sudden his sister becomes attorney general and like his clients like Trevor Milton pretty soon they're getting like presidential pardons and other clients um like Caroline Amnesty are getting charges dropped against them. And you look at the whole thing like you know our entire system is corrupt. our legal system's corrupt. And if our society, if our democracy is not predicated on a healthy and sound legal system, if it's predicated on sort of these consolidation of power amongst these deep state shadow figures that u again that Brad Bond in my opinion epitomizes, um we're in real trouble because the securities market, for example, David, is predicated on sound law, right? I mean, when you buy a stock, you have to make sure that your security interest, like your right entitle to that stock, is protected by sound laws. So if the legal system becomes like a banana republic because of people exploiting it like Brad Bondi then it's a real problem for all market participants. So we did that episode to just sort of bring it to say look we know the people involved. You know obviously I had a very close connection with Trump myself. You know I've sat in the room with this guy Brad Bondi. I know who he is. I know how he operates. I know how he gets things done. He was a former high ranking official at the SEC. Direct ties and friendships to commissioners. former counselor to two um commissioners including Paul Atkins, the current um chairman of the SEC and the strings they pull behind the scenes. We start to get into in that episode, but if you want to really look in the CDI underbelly of Wall Street and you want to see what short sellers are looking at and what they're doing when they're exposing fraud, uh in my appraisal, there's no question that Nicola was a fraud. I'm not here to judge Trevor Milton. That's God's job. Um but you know, other >> How did you know? I mean, >> let's say somebody knows nothing about the case. He's watching Trevor Milton's testimony on Tucker Carlson and then he's listening to you. How do they make a judgment for themselves, right? What what what should they be looking at? >> Well, you if you're inclined to first jump into the accounting right away. >> Yeah. >> Like I gave the example, a company with $36,000 in revenue. So, historically, David, when a company goes public, they usually have a track record of revenues or revenue growth, and they need to access public markets for capital to continue to grow. What is a spa? It's a company that's like you're investing in this back, you don't even know what they're going to acquire or what they're going to merge with. And when the investors find out, it could be nothing but a bunch of smoke and mirrors, which is what Nickelo was. In this case, the the one that really kind of made headlines is that Trevor Milton, we talked about this in the episode, says that they had this functional hydrogen fuel cell truck, but it really wasn't functional. They did a commercial and everything. It was just rolling downhill. It gave the investors the impression that it was fully functional. And but there are many allegations against the company. You can find them in the shortseller report by a company called Hiddenberg Research. Nate Anderson was the author. I think he did great work. Um, as most of the short sellers do. And you know, you could read that report if you're inclined to, but you could also just look again at the math and say, where is the 34 billion? Where did it go? If there was real in technology or IP and and Melton, by the way, had the history of other failed endeavors prior to that. But listening to him in the interview and if you're not even slightly financially sophisticated, you might believe what he's saying. But anyone who has a monocum of experience in Wall Street realizes that nothing he's saying is adding up. And Tucker Carlson again sort of giving him this exculpatory platform to cleanse himself, if you will, of his sins, in my opinion, where he's able to go on the show and and write his own narrative and nothing's really seriously challenged. And Dr. Carlson's acting surprised and it's really really political. Tucker Carlson's a political uh commentator really. He may come off as an investigative journalist, but he's really not. And I think that that's so destructive to markets because if we create narratives that have nothing to do with the truth, you could mislead so many investors and not getting them to actually think critically. And I would say start with the financial statements, read the reports, listen to what they're saying carefully. You have to do that as an investor. You can't buy narratives and stories because we're really living in a truth a post-truth era where the truth is relative. Everyone thinks it's it's what they make of it or what they say on a podcast. But there is something as real as a transcendent truth, a real truth. And that's really what we're trying to get to. >> Well, here here's what I think. If even if you haven't done the due diligence on looking into the financials yourself, you just look at the price chart here that I have on the screen. And you can see that short sellers drove the stock to basically zero. It's now a penny stock. But >> if you were to believe that markets are Yeah. If you were to believe that markets are a discounting mechanism, in other words, the collective group of people involved in the markets use all available information to make a decision and then execute on that decision, you would think that the markets are fair in that sense. In other words, if it is indeed true that what Trevor Milton was saying is accurate and then he was being wrongly accused of all these things and people were unfairly shorting him, well, smart investors would have picked up on this and then bought the stock back. But that's not what's happening now. Right. >> Yeah, you're exactly right. Yeah, you're right. I mean, what you're referring to, uh, David, is efficient market theory, EMT. And it's in the long run, it's true. The market generally gets things right. Enough people figure it out. It's in the short run, you find these big price value dislocations like Kohl's or Big Five or whatever. In the long run, the market generally gets it about right. Um, but how could it be that, you know, 34 billion in value and what's left? Where's the technology, the transformative technology? Where's all the things he was going to do? And I don't want to get into all the weeds on it, but they were extraordinary claims. And so again, it's an old story of the guy who goes to Wall Street, sells oceanfront property in Arizona, and people buy it without doing any real due diligence. And then the question is, where does the money end up in the end? And there's a lot of people who were harmed by that spack. Not only that spec, we shorted a lot of spacks during that time, by the way. And you know, but he's not he's going to be just fine with the remaining 700 million, as I always say, but most investors in Nicola can't say that. So it's a well trained like a good leader, a good CEO, a great business visionary creates long-term value, right? There'll be ups and downs of course, but great companies create value for their shareholders who are the real owners of the companies. When there's a corporate governance problem and it becomes a smash and grab operation, which is what a lot of spaxs were, that's a disregard for stewardship of other people's capital. And when Wall Street is dysfunctional, it becomes a wealth transfer operation for that. And again, you don't see the investment banks the role they play or the lawyers who they the role they play behind the scenes. Guys like Brad Bondie were very well compensated and you know just going on a tangent for a second here. You know he was protecting like in pharmaceuticals that we had criticized publicly. He lied a great deal in order to do that. But in my opinion this was a company was killing for profit. Forget hydrogen cell trucks. The pharmaceutical industry they'll kill for profit. And there's lawyers that will defend that because there's a money trail. So you don't have to be like a great financial analyst. You don't have to go to Harvard and get an MBA. You don't have to be an expert security analyst. You just got to ask really basic common sense questions which are who was enriched and who was hurt? Where's the enduring value? Look, Henry Ford, he created enduring value, right? Sam Walton created enduring value. Steve Jobs and created enduring value. Warren Buffett, same thing. You know, >> I mean, these are like smash and grab jobs that, you know, it was a his it was like a mania during the pandemic. There were a lot of spaxs. most of them are gone. But you have to sort of be able to recognize just how bad Wall Street is and how there's a network of people making that and those people get enriched while everyone else gets hurt. And in my opinion, that's what Nicolo was. It's it's not even an opinion. I mean, it's verifiable. Huge amount of shareholder value just destroyed 34 billion. And uh the guys, and it's not just uh Trevor Milton. There's a lot of investment bankers who did very very well, I'm sure, on that spec. So, walk us through an average investor's decision-making process to avoid getting hurt in a like in a similar trap going forward. There's going to be this this is not the last spack. This is not the last IPO. This is, you know, there's going to be more of these, right? How do we spot them? >> Yeah. You know, some basic rules, David, I'd say make a checklist for yourself. Just avoid IPOs. All why do it? I mean, you can find price dislocation on companies with 20 years of history. Why do an unknown? That's like going on a blind date. Like what if the girl was ugly? You know, like you don't want to go on a blind date. Like find a girl that you know is beautiful. Go on a date. Like find a find a balance sheet with a 20-year history that looks beautiful and consistent. People succeed by saying >> because there's more upside potential. That's that's the logic, right? >> Well, you know what you're buying. You're kind of guessing at what you're buying with an IPO. You're like hoping it's going to work, right? But if you can look at 20 years of financial performance, you know what you've got, right? So, I would say avoid IPOs. I would say definitely avoid financial innovation. Not all that financial innovation is bad, but like why get into innovative things that you don't really understand and avoid things you don't understand. It, you know, there's an analogy out there that, you know, investing is not like um diving in the Olympics. You know, you don't get extra points for, you know, it being complex or complicated. You can just focus on really simple things you understand. And successful people say no often, but really successful people say no almost all the time. So your success might very well be predicated in all the things you say no to. And that's okay. You don't have to swing at every pitch. Like right now the market is very expensive. You don't have to if is money burning hole in your pocket. Like if it is, that's a problem. Maybe you just sit on the sideline and say, you know, I don't have any really great ideas. Like I'll just sit on my cash. That's totally defensible. You don't have to have ideas all the time. Every day you wake up and you got to trade something. You know, this saying that, you know, as activity goes up, returns go down is very, very true. So if you find that every day you wake up, you've got to trade something. and you're going to beat the market, like chances are the results are not going to be that good. So, I would say just set some boundaries, keep it simple, things you understand, long track records, and then all these like list of nodes. You're going down your checklist and maybe you got like five or 10 things on there, you're probably going to sleep better at night and you're probably going to get better than average returns with really simple common sense stuff. So, you know, if you're reading financial statements or a press release from a company and you don't really understand what they're saying, they're talking about like an adjusted non-GAAP EPS or some there's even crazier terms out there like, I don't really know what they're talking about. Guess what? It's not cuz you're dumb. It's not because you didn't go to Harvard to get an MBA. It's because they don't want you to know what they're talking about. A great CEO can explain his company in very simple terms that are understandable and should. So like whether you're talking to your financial adviser or you're listening to a conference call. The second you feel bewildered or confused or think you know a lot of investors they're human right like we're all human. So you got pride you got a little bit of ego like maybe I'm kind of I don't understand that I'm not as smart as I thought but I'm not going to say anything. You start thinking that way they got you. It's no such thing as a dumb question. Ask you can get on these conference calls. You can ask questions to the management team. Do it sometime. Ask question. Look hey look explain this to me. If you're a financial adviser is explaining all this stuff and you're like you don't really know. Don't feel stupid. like ask basic questions. If they can't give you basic answers, move on. There's no shortage of companies out there. Tomorrow is going to be another day, by the way. Every day the market produces something new and unexpected. So, as it's as the saying goes, patience is a virtue. It's certainly true with capital allocation. >> So, we got a few minutes left. Let's close on this. We've got a couple months left before the end of the year. The last quarter is coming soon. What should investors be watching for? uh events, news, um deadlines that can move markets. >> Yeah. Well, I mean, I think we should all be very concerned about the geopolitical turmoil. You know, let's pray for a positive outcome between this emerging conflict between Russia, NATO, and the United States. Obviously, the probably the bigger conflict is the emerging conflict between China and the United States. Nobody really knows for sure what that will mean for capital markets. Um maybe it's a sad commentary but typically or at least historically wars have been stimulative to the economy but we should never pray for war. We should pray for peace in the world. War is a horrible thing and we see wars breaking out all over the world right now. And um you know I don't know that Americans this current generation has thought about what the world would look like if it's a Chinaentric world which it seems to be heading towards and maybe what we witness right now in the west and the United States in particular is sort of the the fits and screams of um an empire on the decline. I don't like that at all. I'm American. I grew up mostly in America. But what will that mean for capital markets? And if the conflict between the US and China, for example, if China were to invade Taiwan, what would that mean for capital? So there's all these really big issues that no one's really lived through before, it does very much so look like a peace meal start to World War II. You know, if you're going to buy anything, just know what it is. Make sure it's stable. Like we talked about Flower Foods last time on your show, David, the the you know, they make Wonderbread and Dave's Killer Bread and all the things that actually beat the S&P 500 as well since our last show. It could not be more boring. But even if World War II breaks out or continues to break out, whatever you think about World War II, like people are going to buy milk and eggs and bread. I talked about the last show, you know, company's paying a dividend, providing a product you understand, don't take wild risks at a market when the market's so expensive and there's so many unknowns in the world right now. There's tremendous suffering in Ukraine right now. There's tremendous suffering uh in Palestine and in Gaza, in Israel, in Iran. There's all these conflicts. We don't really know where it's going to go. I would just say be all the more reason to be very cautious. you know, some of the greatest investment thinkers um in history like Benjamin Graham, for example, the mentor to Warren Buffett, he was a product of the Great Depression. He he lived through the 1929 crash where stocks collapsed, the index up to 90%. That made Ben Graham who he was, the idea of if I could buy a dollar bill for 50 cents, I'll be safe. He was the product and he was forged in great tumult. So don't you know everyone looks a little smarter during good times like we're in now like including myself it's easier to look a little smarter when everything's going up but it's going to be those trying times which will happen in the future that people will get a little bit of a clearer sense of what it means to understand the actual security underlying your investment whether it's equity or bonds whatever it may be real estate you've got to understand it and you got to be comfortable with it and say to yourself what if this wasn't traded on the market every day what if I couldn't see a price every millisecond would I be comfortable owning this even If the stock market was closed for a week or a month or 3 months, which has happened to store by the way, would you be comfortable owning it and sleeping at night, knowing what the company was, how it produced its revenues, how it treated its shareholders, what the culture of the management team was like? If you do that, I really think you'll sleep better at night. You'll feel comfortable. The geopolitical stuff won't mean as much, but invest like the worst is yet to come because sooner or later, there are going to be some very, very bad things happening. That's the story of history and you should always be investing in that way. >> Okay. Excellent. Thank you very much, Father Emanuel. I know you have to get going, so I'll let you go here. Where can we follow you and uh learn more from you? >> Yeah, absolutely, David. You know, of course, there's lemlson capital.com, our website, there's amvona.com where if you do want to read more about our very public fight with US government and earlier this uh year by the former vice president, Michael Pence joined our legal team and his legal group as 27 other organizations and a fight to get back our legal fees from US government and my unlawful prosecution. But probably the best place to follow us is our podcast, which you can find across all of social media, but it's a very visual podcast. So maybe YouTube is the best place to watch it, though. We don't have a really big following on YouTube yet. But if you go to just Lemlson onx or YouTube or Facebook, LinkedIn, you'll find us. Rumble, you'll find us on all those places. And uh we'll hope you'll take a chance take a moment to watch this podcast, especially at episode 44. You played a clip from talks a little bit about some issues that I think your followers might find very, very interesting and understanding again, you know, sort of um the CD underbelly of of Wall Street. It's always there. It's always been there. So, being aware of it, I think, is incredibly important. But, um, really grateful for the invitation again, David. I absolutely love your show. Best show out there. And I hope we can do it again soon. >> Appreciate that. Thank you very much. Well, definitely. Um, a lot of volatility to come and we'll follow up on some of your picks from today. They've been extraordinary since the beginning of the year since you've been on. So, um, congratulations so far and a very good year on your picks. So, we'll follow up. >> Thank you very much. Put the links down below. Yeah, follow Emanuel there and we'll speak next time. Don't forget to like and subscribe.
Market Reset: Investor Called Tesla Crash, This Is Next Big Call | Fr. Emmanuel Lemelson
Summary
Transcript
you know, let's pray for a positive outcome between this emerging conflict between Russia and NATO and the United States. Obviously, the probably the bigger conflict is the emerging conflict between China and the United States. Maybe it's a sad commentary, but typically, or at least historically, wars have been stimulative to the economy, but we should never pray for war. Let's say somebody knows nothing about the case. He's watching Trevor Milton's testimony on Tucker Carlson, and then he's listening to you. How do they make a judgment for themselves, right? what what what should they be looking at? We're very pleased to be uh joined once more by Father Emanuel Lemlson, CIO of Lemlson Capital Management and Orthodox Priest. He was on the show just a month ago, and he's made a number of correct calls, including stocks that have gone up tremendously since his last appearance, as well as the uh interview before then when he first made these calls. We'll be following up on some of these calls, as well as his new picks for us and his macro outlook. Welcome back to the show, Father. Pleasure to have you today. Thank you for joining us. >> Thank you so much, David. It was really a pleasure to join you as always. You know, I just love your show. I think it's the best show out there on capital markets and the financial world. So, thanks again for the invitation. >> That's uh quite a statement coming from you, especially since you have a podcast as well. So, thank you very much for that endorsement. Let me just flip over to this tribe. This is Kohl's. Now, you were on the show last July 10th, and since then, the stock has run up from 959 all the way up to well, um I don't know what happened here, but uh I'll let you explain that. um it went up 100% then it came back down but it's still up more than 50% since a month ago and you've been calling for this stock to go up ever since basically earlier in the year uh since basically April it's up 100%. Anyway, what is the story on Kohl's? We'll talk about uh this stock first and then we'll move on to >> some other stocks. Uh why has it done so well this year and why has it done so well since July since you were on last? >> Yeah. Yeah. Well, you know, David, I wish I could tell you. I had a crystal ball and I just saw it coming but I don't and I didn't. All I can tell you is that, you know, when you take a value oriented approach, what you're really looking for is a margin of safety. So where, as I always say, you know, speculators saying to themselves, I can pay a dollar uh today for something worth 75 cents. The value investor says the inverse of that. They say, I I can't pay a dollar for something worth a dollar. I got to pay 50 cents in case I'm wrong or some bad news comes out. So this inversion of thinking between the speculator and the investor uh almost always works out and it works out well over time. And in this case, our commentary on your show, I want to say it was April, was it April 7th? And uh again on July 10th, we just looked at the tangible book value. Could not be a more boring company. It's definitely not the next Nvidia to be sure, but the price was so low there was the risk was dimminimous in my opinion and it worked out well. And at one point I think it went up over 200% after our last show. Um uh so it it did really really well and I think that was over 74 days or something like that that it went up uh you know from our April show till it spiked around at 1.20 or $21 a share from I think it was eight at the time. So, it worked out really well. It's still up like you said at roughly 100% or something like that. We just published a Substack article on it. You can check it out. Talks about some of those numbers on our Substack, but uh yeah, it worked out really well. It's just your sort of archetypical Ben Graham style uh buying the balance sheet at a discount while everyone else is buying, you know, headlines on CNBC. And that margin of safety again proved pressure. department stores uh like Kohl's, J C Penney had a lot of trouble but basically big box retail stores all across the United States have faced a lot of pressure in mo in recent years from uh you know not just the emergence of online shopping but from a host of other macro forces as well especially if especially since people have been spending less money now. So I wonder why this particular stock has been doing you know tremendously well despite these headwinds pushing against this particular sector. I mean, I know valuations is one side of the story, but are they doing something like business-wise that sets them apart? >> Well, you know, in all fairness, of course, you had this dive in the S&P 500, the major indexes when Trump announced his tariffs, and that created great um unknowns for the market. You know, the market doesn't like what it doesn't understand. That creates fear and speculators can be very skittish. And you might say, well, most of the market activity in terms of trading volume is algorithmic. the people who write those algorithms are themselves speculators. So, you can't really escape the the personality driving this huge volume in the market. And it's understandable to a certain extent. Nobody really knew what was going to happen with the tariffs. We actually put out a podcast episode at the time, one of our more successful episodes talking about the fact that we thought it was just very strategic on Trump's part. We don't think he's a, you know, a madman when it comes to economics and and the business world in America. But, um, people didn't know what it was going to cost. A lot of that stuff and co is coming out of Asia obviously. Um although a lot of it really is coming from Vietnam and Laos and sort of these emerging economies in Asia in terms of clothing and whatnot, but it was just created a big unknown. And so here you had a price on a stock that you could say if they closed the doors tomorrow and they sold it and liquidated everything like would the common shares be covered? Like if you could ask yourself that question like if everything went wrong and the tariffs went nuts and the economy shut down like March 2020 style, could this be sold to a private equity group or a private buyer even, you know, for more than what the common uh share price is today? And would the common be covered or is there something ahead of the common? And if you can answer that question affirmatively, then you've almost derisked your decision. So you're you're really your hedge in that case is that I could be wrong but it would only take slightly good news like Vietnam to come to a trade deal and and so forth or Bangladesh whatever to come to a trade deal with the United States and some of these emerging economies and for the fear over the tariffs to pass then people would reset that price realizing that um it's not the end of the world and in in this case I think the S&P 500 went up 27% during that time so we dramatically outperformed on that uh commitment and goals >> and I think if you just zoom out of forbid. If you take this chart, at what point do you say to yourself, um, it's time to take profits. What was undervalued is no longer. And especially, you know, again, 100% run up in the last couple months was great. But if you zoom out, it's not had a good run since basically a couple years ago, it's just been a loser stock. >> So, at what point at what point do you say to yourself, okay, it's caught up to its fair value, or do you think it's still really undervalued compared to where it was historically speaking? Well, you know, I think we called it we we probably referenced it as a sort of cigar butt investment. Like we talked about Big Five at the time. A cigar butt's not a great long-term investment. In fact, it would be better to just buy great companies and hold them indefinitely than to do this. Even what Ben Graham sort of talked about this idea of price value dislocation is not the really the best way to accumulate wealth over time because what you want to do is compound your return. So a cigarette by definition is short-term. In this case, when it shot up that much, that's when we sold almost our entire position. I think we have like one share or 10 shares or something some stub position but if it shoots up that much in a day and you've got this huge return it's not going to suddenly become a great company next year or in 5 years. So it's again not the best form of investing either. This deep value balance sheet based allocation model but it it works especially in a market where the market generally is quite expensive like we just hit a new high in in the major indexes I think yesterday. So there's not that many opportunities out there. I mean we're not look there's no real like invidas around as you know as it was three or four years ago the price opportunities or what Apple was 10 or 15 years ago there I don't see that many opportunities. So you kind of go back to cigar about investing. If you've got this huge return, the stock was completely beat up and you make this I don't even know what that comes out to annualize 200% in 76 days is some enormous number annualized, you could just take your profits at that point, I think, and move on because again, it's not going to ever be a great company. Before we continue, let me tell you about protecting your most important asset, your personal information. Now, your personal information is likely out there on dozens of data broker sites you've never even heard of. These sites collect and sell your name, address, phone number, and more without your permission. That's why I use today's sponsor, Delete Me. It's a service that finds your personal data across the internet and gets it removed. And it doesn't just do it once. It does it continuously and monitors it and removes it throughout the year. All you have to do is submit your information and within a week, you get a privacy report showing where your data was found and what's been removed. The whole process is simple and it runs in the background so you don't have to think about it. Go to jointdeleteme.com/davidlinin and use the promo code davidin at checkout or scan the QR code here on screen to get 20% off on all US plans. Join delete me now and take control of your privacy today. >> Okay, let's move on to another stock that you talked about, Centine. I believe you talked about liking Sentine >> last time you on the show. It's at a huge dump though. Um, are you still long the stock? >> Yeah, we are. It's the second largest position in our portfolio. Our largest position is in United Health. I had intended to talk about United Health in our last episode when I joined you, but uh didn't get around to it. I was going to talk about it today. Uh today, I think Sentine's up four or five% last time I checked. I think it's down about 13 or 14% though since we last spoke on July 10th. Um but that doesn't bother me at the time. I I said, you know, let's see where it's at in a quarter or in a year. So, we have anywhere from two to 11 months left to see how it performs. I have no doubt we'll be proven right on it. I'd be surprised if we were wrong. A very boring company, really adversely affected by the Trump administration's changes to Medicaid and Medicare. And when they withdrew their guidance, it created a lot of fear, but still not that difficult to figure out the math in terms of what their EPS is going to do. And then just yesterday evening, Buffett announced, I think he bought 5 million shares at $1.5 billion stake in United Health, which is in the same industry sector. And then uh of course it's raising names in that sector because people realize this is a very unloved sector, very unpopular and things are going to be just fine. They may not have the same lofty EPS uh goals that they had only a couple months ago, but again it's so incredibly discounted and in the case of United Health, you've also got a dividend. Now United Health has encountered some extraordinary uh rough patches, so to speak, with the assassination of their former CEO. It gave rise to a lot of ethical uh questions and moral questions. is what happened with Luigi Manion of course who shot him in the back. A terrible tragedy for the CEO and his family. But when these sort of things going terribly wrong and a company becomes culturally toxic, it becomes radioactive. But if the underlying economics of the company are good and these companies are also facing regulatory scrutiny, people get scared by that especially retail. But a lot of the times these regulatory matters pan out with a payment or some sort of resolution. The company actually improves um its operations if they've done something wrong. And if the company's really moving in the right direction under new leadership, it's okay for investors then to allocate capital to that that model. And again, very very cheap. So I think United Health and Centine are still great investments. That's not investment advice. Do your own research as I always say, but uh for me at least, I would say I'd be very surprised if it doesn't outperform the market in the upcoming quarters. Uh certainly with >> the overall macro uh thesis on healthcare stocks right now. Well, it's a it's a business model in the United States. Again, adversely affected by changes in the Trump administration's policies, but there's not a lot of alternatives either for the United uh for Americans. So, these large health insurers, they provide a service which is uh ubiquitous. So, they're not going to go away. Their earnings may be adversely affected. But if the earnings, for example, just using rough numbers here, let's say it goes down 30%. But, you know, the company now is trading at a P& of you know, say four or five or something and there's no going concern risk. there's, you know, there's they have enough of a defensible moat and people are locked in. In Santine's case, they can just raise their prices, which they're going to do. They're going to repric in their different markets. And if you listen to what the the leadership is saying within the company, it's very clear that they'll be able to address uh their earnings power and their their margins will be defensible, I believe, going forward. So what you're left with is a a company that has a remarkably long track record of consistent earnings, which is what you really want, consistent earnings, no loss, extremely negative sentiment, partly tied to United Health and the sort of the cultures awareness of these companies may have been unethical in the past and need to be fixed. And then an opportunity to buy uh assets, productive assets at a huge discount. Again, the inverse of the the speculator's mindset. It's like the prices keep going up and it's a it's a green light. I should jump in now. It's going to keep going up. the value investor has the inverse of that way of thinking. They say, "Well, I have no clue what the price can be tomorrow, but the price is so low and it's below demonstrable uh appraisal of their intrinsic value that we we should be safe even if we're wrong. Uh you know, worst case scenario, we you know, we'd have a you know, uh we'd mitigate our losses if we were wrong substantially because the price is so low already. And in the case of United Health, we've got a a decent dividend as well." >> Okay. Uh Nike, can you give us an update on Nike? Uh it's another stock that you liked. Let me just pull up this chart here. It's uh Yeah, it's done like it's up like 40% >> this year uh since April's lows. But uh anyway, I'll let you talk about that. >> Yeah, I mean it's a great company. We've we've followed footwear for a really long time. We u had been critics of Sketchers in the past, although we've also been long. We've been short Sketchers. So, you look at a company like a Sketchers versus a Nikes. You can really see the difference between a company that really invests in R&D and produces a better product. Nike's got this really interesting uh technology they're developing with 3D printed shoes trying to make a better fit >> all the time. And uh >> 3D printed shoes. Have you ever tried one of those? >> No, I haven't. >> I haven't either. Wow. >> I haven't. But you know, >> you know, there's only so many really truly iconic American brands. You know, you think of like Harley-Davidson or, you know, McDonald's or something or Coca-Cola. I mean, Nikey's right up there with it. And it's an important product that I think you said last time, Dave, you keep your shoes for a long time, but most people cycle through them. They have to replace them. I know there's a niche market for collectors, but it's just such an incredible product. Yeah, I think they got a little bit way worse and their shoes were ugly and people are like, "Oh man, that thing's ugly." And there's a lot of effort to uh clone the Hoka model with these gigantic, you know, uh bases of their shoes. I think that's a little bit of a fad. Frankly, I'm not sure how much u real health benefits that provides. But, you know, it's not that hard for these companies to iterate models quickly. So if they make a mistake and they get into doing something wrong that's misguided or it's just ugly. And I agree some industries are just ugly lately. But they can fix that. It's like a fixable problem. So um you know when you see it trading I think at the time first time I talked about David back in April it was trading at like the lowest it like 20 years or something. I mean what else do you want? It's Nike for crying out loud. You know you don't have to be a rocket scientist to figure out that that's probably going to be a safe investment at that price. So yeah, I think it dramatically outperformed the S&P 500 as well like the big five that we talked about on your show. >> Where do you find value right now? Which sectors, which uh particular subsectors, any stocks that we haven't talked about yet? >> Well, it's hard to find right now because the markets are high and there seems to be a lot of euphoria, but there's the healthcare stocks like we talked about Centine and United Health. >> Yeah. >> Um again, not investing advice, but that's what we're owning. It's just what we're doing. Do your own homework. Uh, but I hate saying this because shorting is such a terrible business, but there's value on the short side. Shorting could not be more unpopular. They're like basically almost like criminals in the market. Even though time and time again they're doing the best research. Um, the short sellers have all but disappeared. That should be a great indicator that maybe there's more opportunities on the short side, but I hate to I hate to promote short selling because it's just a terrible business. It's unlimited risk. I don't want anyone to do it who's listening to your show, but there's things that I think are just great short ideas. Well, uh, you recently wrote about Nickeola, which is a, uh, a company involved with the production of EV trucks. Uh, they were famously involved in the SPAC a couple years ago, but I'll let you give you give us more details about that. Um, let me just show the piece that you've written real quick before we jump into a video. For over a decade, a unique vantage point has defined the author's work. Um, our investigation begins with Trevor Milton, the enematic founder of Nicola Motors. His story is widely disseminated a meteoric rise culminating in a staggering $ 34 billion valuation for a company that went public via a spa um when Nicola's house of cards began to fall. Milton in a dramatic interview with Tucker Carlson cast himself as the innocent prey of a hit piece orchestrated by short sellers in a shadowy deep state conspiracy. Okay, I'm going to play a video clip for the audience from your channel. But before we show that, just evaluate what you wrote. Is that true? Is he is was he right? Was that an accurate account of, you know, actual events? >> Oh, yeah. I mean, it was a huge wipeout. There was tens of billions of dollars lost and and shareholder capital was destroyed. Uh Milton himself did pretty well. He got away with about a billion dollars. So, I think you just have to follow the money trail to figure out where the victims are at. I mean, it it should just be simple math, right? They're like second grade math. Like, who are the losses? You've got a probably a bunch of pension funds and been private equity funds and stuff where you got a bunch of people who probably don't even know they're invested in those funds that many many layers of decision makers allocating to these they're not really IPOs they're reverse mergers a spa and you know it's kind of an old story. There's no real value creation. I think the company at the time of its IPO, its its spack IPO, had $36,000 in revenue, which was tied to solar panels being installed on Trevor Milton's house. And they achieved a $34 billion valuation. And there was quite a detailed short report put out on the company. I'm not aware of a a really comprehensive reputation of those points in that report. And the company collapsed. Like many spaxs have, they weren't alone. It's just the size of the Nickeola wipeout and the damage it's done to shareholders. But I'm sure Trevor Bolton's not the only one who walked away with a decent payday. I'm sure there's plenty of investment bankers who did quite well and earn fees at the IPO. And you know, the people who really you never read about that aren't in the headlines, the ones they do very well as well. They make a killing on these things, these IPOs. And then speculators and people who sort of buy into the the narrative get hurt because they're they don't know what the balance sheet shows that there's no revenues, that they're basically pre-operational, and that there's a lot of hopes and dreams involved, but that's awfully speculative. So he was he was prosecuted. He I think it was four or five years brushing. He did he was found guilty of securities fraud and uh he was ultimately sentenced to four years in jail. Never spent a day in jail, I don't think, though. He was ultimately um his uh he was absolved by President Trump. He got a presidential pardon. So interesting story. Uh but he's going to be okay. As I say in our podcast, he'll be okay with ruining 700 million he's got left after legal fees. >> His investors probably not. Here's the uh video clip that you put together. >> You trusted the market. You believed in justice. >> Nicola shares are tumbling after a short seller called the company quote an intricate fraud built on dozens of lies. >> Then the unthinkable. A giant fell. Billions vanished. Trevor Milton. A name whispered then shouted across Wall Street. In a lifetime of listening to stories about innocent people wrongly prosecuted, I have never heard anything like what happened to Trevor Milton. He cried foul, a quote hit piece. He called it a deep state conspiracy orchestrated by quote evil forces. >> So a short seller is a person or a fund that actively bets against you that your stock is going to collapse. So unlike a regular investor that buys shares and they hope that the stock goes up, short sellers buy shares um and they force it down. So it's like a it should be it should be completely illegal. >> What was your reason for pardoning Trevor Milton? >> But what if the very architects of the accusation were the true manipulators? What if that quote hit piece was a spotlight? >> I'm going to leave that uh here and people can check out the entire clip. I'll leave that in the clip here. People can check out the entire clip on Father Emanuel's podcast. I'll link it down below the video that you can watch. Uh, Father Emanuel, why is your story relevant even today? I mean, what lessons can we draw as investors from this incident? >> Yeah. You know, I I got to say I feel that I I have a a very um well, a sort of special knowledge, if you will, of the situation because the lawyer who represented Trevor Milton uh in his defense and ultimately, in my opinion, was more than likely involved in his presidential pardon, although he denies that. His name is Brad Bondi, and he's the brother of the sitting attorney general. And incidentally, Brad Bondi is the same lawyer that my the targets of my short reports hired to defend them, namely Ligan Pharmaceuticals and Viking Therapeutics, two companies that in my opinion are complete frauds. That resulted in my unlawful prosecution for 10 years. Milton was prosecuted for 5 years. I was prosecuted for 10 years. He spent $180 million in legal fees, 100 million from Nicola of shareholder capital, 80 million out of his own pocket presumably from share sales at the IPO. Paid to Bondi and his firm. went to trial and lost and he claims he's a victim. I went to trial and actually won against the US government. So, I'm watching this episode on Tucker Carlson. First of all, I completely lost respect for Tucker Carlson because I don't think he's being in any way honest during that show, but I think the whole episode was completely misleading. So, I get up one night at like 1:00 a.m. I'm watching this Tucker Carlson episode about Trevor Milton and I'm like, "This is a bunch of crap, frankly." So, and I know the people involved. You know, this this Bondie character, he's a shadow lawyer. I call him sloppy Brad Bondie because he can't do anything right. Doesn't really win at trial as evidenced by the Trevor Milton loss. But he's got all these connections in the deep state. If you think the deep state's just the mythology, it's not. I'm here to tell you it's real. And you know, it's guys like Brad Bondie that epitomize it. So, you know, you're watching this guy all of a sudden his sister becomes attorney general and like his clients like Trevor Milton pretty soon they're getting like presidential pardons and other clients um like Caroline Amnesty are getting charges dropped against them. And you look at the whole thing like you know our entire system is corrupt. our legal system's corrupt. And if our society, if our democracy is not predicated on a healthy and sound legal system, if it's predicated on sort of these consolidation of power amongst these deep state shadow figures that u again that Brad Bond in my opinion epitomizes, um we're in real trouble because the securities market, for example, David, is predicated on sound law, right? I mean, when you buy a stock, you have to make sure that your security interest, like your right entitle to that stock, is protected by sound laws. So if the legal system becomes like a banana republic because of people exploiting it like Brad Bondi then it's a real problem for all market participants. So we did that episode to just sort of bring it to say look we know the people involved. You know obviously I had a very close connection with Trump myself. You know I've sat in the room with this guy Brad Bondi. I know who he is. I know how he operates. I know how he gets things done. He was a former high ranking official at the SEC. Direct ties and friendships to commissioners. former counselor to two um commissioners including Paul Atkins, the current um chairman of the SEC and the strings they pull behind the scenes. We start to get into in that episode, but if you want to really look in the CDI underbelly of Wall Street and you want to see what short sellers are looking at and what they're doing when they're exposing fraud, uh in my appraisal, there's no question that Nicola was a fraud. I'm not here to judge Trevor Milton. That's God's job. Um but you know, other >> How did you know? I mean, >> let's say somebody knows nothing about the case. He's watching Trevor Milton's testimony on Tucker Carlson and then he's listening to you. How do they make a judgment for themselves, right? What what what should they be looking at? >> Well, you if you're inclined to first jump into the accounting right away. >> Yeah. >> Like I gave the example, a company with $36,000 in revenue. So, historically, David, when a company goes public, they usually have a track record of revenues or revenue growth, and they need to access public markets for capital to continue to grow. What is a spa? It's a company that's like you're investing in this back, you don't even know what they're going to acquire or what they're going to merge with. And when the investors find out, it could be nothing but a bunch of smoke and mirrors, which is what Nickelo was. In this case, the the one that really kind of made headlines is that Trevor Milton, we talked about this in the episode, says that they had this functional hydrogen fuel cell truck, but it really wasn't functional. They did a commercial and everything. It was just rolling downhill. It gave the investors the impression that it was fully functional. And but there are many allegations against the company. You can find them in the shortseller report by a company called Hiddenberg Research. Nate Anderson was the author. I think he did great work. Um, as most of the short sellers do. And you know, you could read that report if you're inclined to, but you could also just look again at the math and say, where is the 34 billion? Where did it go? If there was real in technology or IP and and Melton, by the way, had the history of other failed endeavors prior to that. But listening to him in the interview and if you're not even slightly financially sophisticated, you might believe what he's saying. But anyone who has a monocum of experience in Wall Street realizes that nothing he's saying is adding up. And Tucker Carlson again sort of giving him this exculpatory platform to cleanse himself, if you will, of his sins, in my opinion, where he's able to go on the show and and write his own narrative and nothing's really seriously challenged. And Dr. Carlson's acting surprised and it's really really political. Tucker Carlson's a political uh commentator really. He may come off as an investigative journalist, but he's really not. And I think that that's so destructive to markets because if we create narratives that have nothing to do with the truth, you could mislead so many investors and not getting them to actually think critically. And I would say start with the financial statements, read the reports, listen to what they're saying carefully. You have to do that as an investor. You can't buy narratives and stories because we're really living in a truth a post-truth era where the truth is relative. Everyone thinks it's it's what they make of it or what they say on a podcast. But there is something as real as a transcendent truth, a real truth. And that's really what we're trying to get to. >> Well, here here's what I think. If even if you haven't done the due diligence on looking into the financials yourself, you just look at the price chart here that I have on the screen. And you can see that short sellers drove the stock to basically zero. It's now a penny stock. But >> if you were to believe that markets are Yeah. If you were to believe that markets are a discounting mechanism, in other words, the collective group of people involved in the markets use all available information to make a decision and then execute on that decision, you would think that the markets are fair in that sense. In other words, if it is indeed true that what Trevor Milton was saying is accurate and then he was being wrongly accused of all these things and people were unfairly shorting him, well, smart investors would have picked up on this and then bought the stock back. But that's not what's happening now. Right. >> Yeah, you're exactly right. Yeah, you're right. I mean, what you're referring to, uh, David, is efficient market theory, EMT. And it's in the long run, it's true. The market generally gets things right. Enough people figure it out. It's in the short run, you find these big price value dislocations like Kohl's or Big Five or whatever. In the long run, the market generally gets it about right. Um, but how could it be that, you know, 34 billion in value and what's left? Where's the technology, the transformative technology? Where's all the things he was going to do? And I don't want to get into all the weeds on it, but they were extraordinary claims. And so again, it's an old story of the guy who goes to Wall Street, sells oceanfront property in Arizona, and people buy it without doing any real due diligence. And then the question is, where does the money end up in the end? And there's a lot of people who were harmed by that spack. Not only that spec, we shorted a lot of spacks during that time, by the way. And you know, but he's not he's going to be just fine with the remaining 700 million, as I always say, but most investors in Nicola can't say that. So it's a well trained like a good leader, a good CEO, a great business visionary creates long-term value, right? There'll be ups and downs of course, but great companies create value for their shareholders who are the real owners of the companies. When there's a corporate governance problem and it becomes a smash and grab operation, which is what a lot of spaxs were, that's a disregard for stewardship of other people's capital. And when Wall Street is dysfunctional, it becomes a wealth transfer operation for that. And again, you don't see the investment banks the role they play or the lawyers who they the role they play behind the scenes. Guys like Brad Bondie were very well compensated and you know just going on a tangent for a second here. You know he was protecting like in pharmaceuticals that we had criticized publicly. He lied a great deal in order to do that. But in my opinion this was a company was killing for profit. Forget hydrogen cell trucks. The pharmaceutical industry they'll kill for profit. And there's lawyers that will defend that because there's a money trail. So you don't have to be like a great financial analyst. You don't have to go to Harvard and get an MBA. You don't have to be an expert security analyst. You just got to ask really basic common sense questions which are who was enriched and who was hurt? Where's the enduring value? Look, Henry Ford, he created enduring value, right? Sam Walton created enduring value. Steve Jobs and created enduring value. Warren Buffett, same thing. You know, >> I mean, these are like smash and grab jobs that, you know, it was a his it was like a mania during the pandemic. There were a lot of spaxs. most of them are gone. But you have to sort of be able to recognize just how bad Wall Street is and how there's a network of people making that and those people get enriched while everyone else gets hurt. And in my opinion, that's what Nicolo was. It's it's not even an opinion. I mean, it's verifiable. Huge amount of shareholder value just destroyed 34 billion. And uh the guys, and it's not just uh Trevor Milton. There's a lot of investment bankers who did very very well, I'm sure, on that spec. So, walk us through an average investor's decision-making process to avoid getting hurt in a like in a similar trap going forward. There's going to be this this is not the last spack. This is not the last IPO. This is, you know, there's going to be more of these, right? How do we spot them? >> Yeah. You know, some basic rules, David, I'd say make a checklist for yourself. Just avoid IPOs. All why do it? I mean, you can find price dislocation on companies with 20 years of history. Why do an unknown? That's like going on a blind date. Like what if the girl was ugly? You know, like you don't want to go on a blind date. Like find a girl that you know is beautiful. Go on a date. Like find a find a balance sheet with a 20-year history that looks beautiful and consistent. People succeed by saying >> because there's more upside potential. That's that's the logic, right? >> Well, you know what you're buying. You're kind of guessing at what you're buying with an IPO. You're like hoping it's going to work, right? But if you can look at 20 years of financial performance, you know what you've got, right? So, I would say avoid IPOs. I would say definitely avoid financial innovation. Not all that financial innovation is bad, but like why get into innovative things that you don't really understand and avoid things you don't understand. It, you know, there's an analogy out there that, you know, investing is not like um diving in the Olympics. You know, you don't get extra points for, you know, it being complex or complicated. You can just focus on really simple things you understand. And successful people say no often, but really successful people say no almost all the time. So your success might very well be predicated in all the things you say no to. And that's okay. You don't have to swing at every pitch. Like right now the market is very expensive. You don't have to if is money burning hole in your pocket. Like if it is, that's a problem. Maybe you just sit on the sideline and say, you know, I don't have any really great ideas. Like I'll just sit on my cash. That's totally defensible. You don't have to have ideas all the time. Every day you wake up and you got to trade something. You know, this saying that, you know, as activity goes up, returns go down is very, very true. So if you find that every day you wake up, you've got to trade something. and you're going to beat the market, like chances are the results are not going to be that good. So, I would say just set some boundaries, keep it simple, things you understand, long track records, and then all these like list of nodes. You're going down your checklist and maybe you got like five or 10 things on there, you're probably going to sleep better at night and you're probably going to get better than average returns with really simple common sense stuff. So, you know, if you're reading financial statements or a press release from a company and you don't really understand what they're saying, they're talking about like an adjusted non-GAAP EPS or some there's even crazier terms out there like, I don't really know what they're talking about. Guess what? It's not cuz you're dumb. It's not because you didn't go to Harvard to get an MBA. It's because they don't want you to know what they're talking about. A great CEO can explain his company in very simple terms that are understandable and should. So like whether you're talking to your financial adviser or you're listening to a conference call. The second you feel bewildered or confused or think you know a lot of investors they're human right like we're all human. So you got pride you got a little bit of ego like maybe I'm kind of I don't understand that I'm not as smart as I thought but I'm not going to say anything. You start thinking that way they got you. It's no such thing as a dumb question. Ask you can get on these conference calls. You can ask questions to the management team. Do it sometime. Ask question. Look hey look explain this to me. If you're a financial adviser is explaining all this stuff and you're like you don't really know. Don't feel stupid. like ask basic questions. If they can't give you basic answers, move on. There's no shortage of companies out there. Tomorrow is going to be another day, by the way. Every day the market produces something new and unexpected. So, as it's as the saying goes, patience is a virtue. It's certainly true with capital allocation. >> So, we got a few minutes left. Let's close on this. We've got a couple months left before the end of the year. The last quarter is coming soon. What should investors be watching for? uh events, news, um deadlines that can move markets. >> Yeah. Well, I mean, I think we should all be very concerned about the geopolitical turmoil. You know, let's pray for a positive outcome between this emerging conflict between Russia, NATO, and the United States. Obviously, the probably the bigger conflict is the emerging conflict between China and the United States. Nobody really knows for sure what that will mean for capital markets. Um maybe it's a sad commentary but typically or at least historically wars have been stimulative to the economy but we should never pray for war. We should pray for peace in the world. War is a horrible thing and we see wars breaking out all over the world right now. And um you know I don't know that Americans this current generation has thought about what the world would look like if it's a Chinaentric world which it seems to be heading towards and maybe what we witness right now in the west and the United States in particular is sort of the the fits and screams of um an empire on the decline. I don't like that at all. I'm American. I grew up mostly in America. But what will that mean for capital markets? And if the conflict between the US and China, for example, if China were to invade Taiwan, what would that mean for capital? So there's all these really big issues that no one's really lived through before, it does very much so look like a peace meal start to World War II. You know, if you're going to buy anything, just know what it is. Make sure it's stable. Like we talked about Flower Foods last time on your show, David, the the you know, they make Wonderbread and Dave's Killer Bread and all the things that actually beat the S&P 500 as well since our last show. It could not be more boring. But even if World War II breaks out or continues to break out, whatever you think about World War II, like people are going to buy milk and eggs and bread. I talked about the last show, you know, company's paying a dividend, providing a product you understand, don't take wild risks at a market when the market's so expensive and there's so many unknowns in the world right now. There's tremendous suffering in Ukraine right now. There's tremendous suffering uh in Palestine and in Gaza, in Israel, in Iran. There's all these conflicts. We don't really know where it's going to go. I would just say be all the more reason to be very cautious. you know, some of the greatest investment thinkers um in history like Benjamin Graham, for example, the mentor to Warren Buffett, he was a product of the Great Depression. He he lived through the 1929 crash where stocks collapsed, the index up to 90%. That made Ben Graham who he was, the idea of if I could buy a dollar bill for 50 cents, I'll be safe. He was the product and he was forged in great tumult. So don't you know everyone looks a little smarter during good times like we're in now like including myself it's easier to look a little smarter when everything's going up but it's going to be those trying times which will happen in the future that people will get a little bit of a clearer sense of what it means to understand the actual security underlying your investment whether it's equity or bonds whatever it may be real estate you've got to understand it and you got to be comfortable with it and say to yourself what if this wasn't traded on the market every day what if I couldn't see a price every millisecond would I be comfortable owning this even If the stock market was closed for a week or a month or 3 months, which has happened to store by the way, would you be comfortable owning it and sleeping at night, knowing what the company was, how it produced its revenues, how it treated its shareholders, what the culture of the management team was like? If you do that, I really think you'll sleep better at night. You'll feel comfortable. The geopolitical stuff won't mean as much, but invest like the worst is yet to come because sooner or later, there are going to be some very, very bad things happening. That's the story of history and you should always be investing in that way. >> Okay. Excellent. Thank you very much, Father Emanuel. I know you have to get going, so I'll let you go here. Where can we follow you and uh learn more from you? >> Yeah, absolutely, David. You know, of course, there's lemlson capital.com, our website, there's amvona.com where if you do want to read more about our very public fight with US government and earlier this uh year by the former vice president, Michael Pence joined our legal team and his legal group as 27 other organizations and a fight to get back our legal fees from US government and my unlawful prosecution. But probably the best place to follow us is our podcast, which you can find across all of social media, but it's a very visual podcast. So maybe YouTube is the best place to watch it, though. We don't have a really big following on YouTube yet. But if you go to just Lemlson onx or YouTube or Facebook, LinkedIn, you'll find us. Rumble, you'll find us on all those places. And uh we'll hope you'll take a chance take a moment to watch this podcast, especially at episode 44. You played a clip from talks a little bit about some issues that I think your followers might find very, very interesting and understanding again, you know, sort of um the CD underbelly of of Wall Street. It's always there. It's always been there. So, being aware of it, I think, is incredibly important. But, um, really grateful for the invitation again, David. I absolutely love your show. Best show out there. And I hope we can do it again soon. >> Appreciate that. Thank you very much. Well, definitely. Um, a lot of volatility to come and we'll follow up on some of your picks from today. They've been extraordinary since the beginning of the year since you've been on. So, um, congratulations so far and a very good year on your picks. So, we'll follow up. >> Thank you very much. Put the links down below. Yeah, follow Emanuel there and we'll speak next time. Don't forget to like and subscribe.