Sanofi (SNY): Pitched as a steady compounder with vaccines as recurring revenue and blockbuster Dupixent; trading near ~16x P/E with ~4.9% dividend and active buybacks, plus euro-based diversification.
Pharma Setup: Discussion emphasized Healthcare undervalued versus the S&P 500/Tech, with concerns around patent cliffs, regulation, and tariffs but resilient subscription-like vaccine demand.
Sanofi Thesis: 2023 EPS hit from loss of exclusivity and stepped-up R&D seen as largely priced in; focus on biologics moat, vaccine scale/regulatory know-how, and a “T-bill with growth” profile targeting 7–10% annual returns.
Remitly (RELY): High-growth Digital remittances platform with ~30%+ revenue growth, fast transfers, strong CAC payback (<12 months) and LTV/CAC ~6; benefits from corridor depth and last-mile partners serving the unbanked.
Remitly Risks: Competitive pressure from Wise/PayPal/Western Union, strategy drift into B2B/gig payments, elevated stock-based compensation, and regulatory realities versus stablecoins were highlighted.
Crocs (CROX): Value pitch with ~21% FCF yield, ~6x earnings, and a $1.3B buyback; international growth (notably China), strong 58% gross margins, and potential M&A optionality, offset by HeyDude underperformance, tariff exposure, and fashion cyclicality.
AI: Capital crowding into AI noted, yet pharma could see AI tailwinds in drug discovery; healthcare viewed as relatively insulated from AI disruption while benefiting from AI-enabled R&D.
Portfolio Framing: Position sizing and basket approaches in pharma discussed; SNY presented as a wealth-preservation anchor, while CROX offers higher volatility with multiple catalysts and clear risk markers to monitor.
Transcript
(00:00) I see vaccines very similar to software as a service. It's a subscription model. It's something that everybody takes during the flu season. It's kind of a repeat business for them. So, it's a recurring revenue. So, vaccine is really their core strength and a stable source of income while they have blockbusters like Dupixent and others. (00:24) Okay, it's a great company. But the key question here is is it a value trap? Before we dive into the video, if you've been enjoying the show, be sure to click the subscribe button below so you never miss an episode. It's a free and easy way to support us and we'd really appreciate it. Thank you so much. >> Let's just jump right into the first pick. (00:49) Hari, we talked about it just before we hit record and you volunteered, so let me throw it back over to you. What is your pick? >> Thank you, Stake. No pressure going first, but I have been looking into stocks that are undervalued and it's not easy in this current market. But today I have another pharmaceutical pick, Sanopy. It's a global biioarma focused on immunology and vaccines. (01:20) It's based in Europe, France and it's well known across the globe. And I think of this company having two engines. The first one is their anti-inflammatory blockbuster drug dupixent which has got approval across multiple indications including COPD and has a decade long runway to go before patent expires. And the second engine is their vaccines. (01:53) Of course I'm simplifying it. They have much more apart from this but they are really well known for their vaccine including the seasonal flu infant RSV protection and many other really high quality vaccines and since I have a lot of experience in SAS software as a service business I see vaccines very similar to software as a service it's a subscription model because it's something that everybody body takes during the flu season. (02:25) It's kind of a repeat business for them. So, it's a recurring revenue. So, vaccine is really their core strength and a stable source of income while they have blockbusters like Duplexent and others. They're also investing significantly in genetics and cell biology, imology and stuff like that. (02:54) So that's kind of a bonus if they come up with any new blockbuster drugs. The question is okay, it's a great company and happy to have you know any questions you have I can we can discuss more in detail about their business their drugs but the key question here is is it a value trap? That's what I was looking at when I was thinking about this company because they are trading in their low teens. (03:21) I believe their P now is around 16. So it's not like really really cheap but compared to their peers like Johnson and Johnson which is trading in mid20s 25 or Fizer which is 18 only Merc is kind of close to them in terms of PE ratio. So even with considering their peers, I'm not even talking about our MAC 7 or Mac 10 which are all in their 30s and 40s P ratio. (03:57) So they're well below historical SNP average P ratio and even among their peers they appear to be quite low in terms of P ratio. So why such a discount? I'll answer that in a bit. and they're yielding 4.9% dividend with the healthy buybacks. But still the question remains why? I believe one of the reasons why the market got spooked was their significant decline in their EPS in 2023. (04:30) And that was unavoidable because one of their blockbuster drugs and I'm going to butcher this name or go orio I don't know how you pronounce it. It went out of patent and the generative came in and their revenue declined steeply because of that. On top of that they also decided to significantly increase their investments in R&D for future growth. (05:01) to compensate for the lost patent. You might argue they should have thought about it. Yeah, that's a good point. They could have ramped up their R&D much before, but all of that resulted in a significant decline in their overall revenue in 2023 and then of course their EPS as well. It has kind of recovered in 2024 and hopefully we will see continued growth. (05:26) That is one of the reasons why they are in this spot. But what I see is that great. So a lot of bad news has been baked into the stock. Their P multiple is low. Their price to sales is around 2.4. It's very interesting. It's like you come to maximum it'll be 10fold. It'll be like 24 20. I'm used to seeing anything more than 10 in price to sales. (05:52) So it's 2.4. Their 52- week high was 60. 52- week was around 45. They're trading at 48. So, they're closer to their 52- week low. So, it looks like a lot of bad news has been pigged in. So, for the upside, what I see is their mode is actually twofold. One is biologic exclusivity with block and drugs and the second one is their scale in vaccine manufacturing their regulatory knowhow. (06:29) They have really good government relationships and so it's not like blockbuster drugs. It's a platform. It's the relationships and on top of that you get currency diversification because they are outside US. So if there is dollar declines which what most people are talking about now they're based in Europe they have worldwide sales of course 48% comes from air but still their entire revenue recognized in euros. (06:59) So that has a good protection as well for us. So I think for me the key takeaway is that strong company historical record of being good stewards of capital owner oriented they have been returning capital consistently in 2025 they plan to complete a 5 billion euros buyback and they're paying a healthy dividend they have not missed dividends so they have been consistent in that as well and they also kind of recently restructured their company to focus on their core business and streamline their consumer health segment as well. I remember Johnson and Johnson (07:40) had done that a while ago. This is like many years ago which really helped them focus and grow their core business as well. And I'm hoping that Sani is in one such kind of phase of their life cycle. So I think that's my thesis. valuation is reasonable. They have a good strong portfolio of blockbuster drugs and vaccines that gives them a diversified set with a good investment in new drug discovery as well as a shareholder focused management. That's my pitch. (08:22) I'm happy to answer your questions. >> Yeah, I think it's a really interesting pick. I saw that healthc care bioparma pharmaceuticals are all trading as cheaply. So the rest of the market as they have since 2000 something like that which is kind of amazing. I don't know why particularly healthcare is kind of getting whacked at the moment. (08:43) I don't really understand that other than maybe it's like some sort of co hangover or something like that but I don't really that's pure I don't know why. But I did notice that the last time it got really cheap like this was 2000 which was another dot or a tech kind of boom bubble. I think that's probably where we are here where things like energy looks really cheap relative to the S&P 500. (09:06) Healthcare for whatever reason is really cheap relative to the S&P 500. Tech's super expensive which everybody knows. These are really really good businesses that make lots of money really high margins. replicable like you say subscription type revenue. So I think it's a really good pick. Do you have any idea why healthcare is getting hit so hard right now? Do you know the do you >> actually >> yeah very good point Doby I'm just wagering few guesses by the way even I'm not very sure one of the reasons might be and this is where SNY is a different (09:42) category but if there are tariffs and regulations coming into place uh a lot of these pharma companies can face hurdles because lot of their what they call APIs the basic ingredients are all imported right now and if they have to switch from importing to manufacturing right here in the US they might increase their cost. (10:10) So that's for the US-based Santa probably doesn't suffer from that but still they will be caught in the mix. So that is one in general the environment. The second one might be and this is based on what I've been hearing is that a lot of oxygen is being sucked by the max 7 the AI stocks. (10:35) So capital flows to other sectors have been quite weak because lot of momentum is there. That might be the other reason. It's just people not being too interested in the pharma or the healthcare stocks as well. >> Not enough meme ability in the healthcare stuff. >> Sort of they're just consistent like they're pretty good consistent businesses over a long period of time, >> but there's no possibility of them going crazy with something. (11:02) They're not AIcentric enough. >> Correct. What I did not do is look up their stock prices during the COVID time and I'll probably do it offline is did it spike up because these guys are vaccinists. They didn't come up with vaccine for COVID though. So that's one thing. >> That's one thing where I think they didn't do that well for CO but I should look up their price. (11:25) But yeah, I think that's a great question Toby. >> Not sure why but these are the two probable reasons I can come up with. could just be cyclical, too. These things happen. It's happened before with the tech boom, so maybe. And it did very well after that period because they're all good businesses and if they're buying back stock and got the subscription revenue, they'll do very well. (11:46) >> Yeah. Well, Hari, just like last time, I like the PEG. The last time you picked was Merc. It's always interesting to look at what kind of patents they have and so they're not as reliant on their main drug, Dupant. I'm butchering that name completely. Compared to uh Kitruda that was the uh what I was looking for last time with I think that was like 70 80% like it was massive for Merc whereas the main drug here for Zenovia is roughly a third in terms of revenue and so lots of things to like um I'm generally not too worried about how (12:22) reliant a company is on one product. Uh perhaps we can talk a bit more about that whenever we get to Toby's pick. But it's more a question of how we size things ourselves. And so no, I probably wouldn't be comfortable having a big bet on something like Merc because of the Katruda the cliff they might be facing. (12:40) But then you can size it yourself and say, well, it's just 1% or whatever. So you have that different diversification for this company here. And then to the point before, you know, healthcare is largely non-yclical. I would also imagine if I'm going to give my two cents, why is it that they're priced so relatively attractively? What is it that the British are saying like John Bull can't stand 2%. (13:02) There's a lot of 2% out there and pharmaceuticals are just not at this scale where it's like 117 billion in market cap. You know, there's not a lot of 30% growth whatever kind of thing in the horizon, right? So, I can't help but like compare pharmaceuticals, compare them to T bills and like yeah, I kind of like that. (13:20) There's certainly a downside, certainly higher than with T bills, but not materially higher and there's a bit more upside. And so, again, I'm not saying that should be your opportunity cost. That could be one opportunity cost, but that's certainly something I like. So, no complaints here for me as difficult it is for me to evaluate the pipeline, but then I I'd probably come out and say, well, you know, you could buy a basket of these. (13:40) There's a lot of pharmaceuticals that seems to be relatively on sale. And I don't know if I can even say that with a company that's trading at 16 times a PE. I know that a lot of things that go into that multiple, but you know, it's like everything is so expensive right now. So, when we see something like that, you're like that's cheap. (13:57) But then you're like, hm, well, why is it that we think that it's cheap? So, yeah, I guess those were just my two cents. >> No, I think thank you. I think stick, you completed part of my pitch I should have mentioned, which is that they're not too overly reliant on one blockbuster drug, which was the case for Merc. (14:18) So, that's another good plus point. But to your point, they looking like a T- bill, I think that's a good point. And I'm actually not looking for high returns. I'm looking for when I'm pitching SNY, I'm pitching it as a safe place to park with reasonable growth, less degree of mean reversion when it comes to PE because they're already at average PE. (14:42) They're in the historical range basically and you get a close to 5% dividend which is similar to a T bill to weight. So it's like T- bill with growth attached to it and I don't expect like blockbuster growth or it is there is no catalyst that can suddenly improve their prospects. So it's more a safe place to park your money 5% dividend plus another 3% growth 3 to 4% growth you're looking at around 8% or so 8 to 9% if you get lucky maybe 10%. (15:21) for the next foreseeable future. The other thing I'm looking at here is the runway. These companies won't go away or are not too volatile. You can hold it for a decade. There is no risk of AI impacting them so much as in others. In fact, AI can be a tailwind for them. If you think about drug discovery, how AI is helping reduce the cost and accelerate growth. (15:46) Of course, there is always a risk of what if two people in a garage come up with something. So that's always there. But the history, if you look at these pharmaceutical companies, they go and acquire these companies whenever they come up with because what the two people in garage can't do is fight with the regulators. (16:06) And these guys are really masters of managing the regulators not just in one country but across the globe. and they have all the money to leverage something like Alpha 4 from Google which is a protein simulation and building AI based tool and there are many such tools coming up. So they have all the capital to leverage it. (16:29) They have the strength to handle regulators and then finally they can also go out and buy all these startups that are coming up. So that's always the case in pharma where the big stay big small ones prop up and the big ones acquire them. So that's how I'm looking at this pick as somewhere to park my money safe expect like 7 to 10% growth for the next 10 years even if there is a lot of turmoil in the market in between and then when there are opportunities then you can always switch and go back to the ones that have more potential for growth. (17:07) >> I love it Hari. It's a wealth preservation type move. It's not a meme stock. And what's fun about that? Uh, all right, Jensen, I am going to pitch my stock here in a bit. It's a small stock, at least in comparison. I don't know if if you see the same thing, but there seem to be some stocks in the value investing space that sometimes become popular. (17:33) Not necessarily popular as in the stock prices goes up unfortunately, but more like, oh, and then a lot of people talk about it and then they so it's sort of like it changes. And so I never heard about Remetly before, which is my pick. And now it seems like everyone's talking about it. I don't know if that's just laws of attraction. (17:51) You heard about it and then you just you probably heard about it before, you just didn't pay attention. So the company I want to talk about is Remittly trades on the NASDAQ under the ticker rely if you want. What a coincidence. So, Remittley um US-based fintech company operates digital remittance and crossber money transfer platform. (18:14) It was found in 2011 and then went public 10 years later. And as of 2025, Remitly serves millions of active customers, 8.5 due to the most recent filing. And they have more than 5,000 remittance corridors. And so a corridor would be US to Mexico, for example, which is also the biggest corridor I should say. They mainly generated the revenue through two streams. (18:39) So they had transaction fees and then foreign exchange spreads. They're also starting now to have memberships and there are other ways to make money, but those are sort of like the two main streams. The transaction fees varies by corridor, payment method, and delivery speed. And 93% of payments are sent and received within an hour. And the reason why they can do it so fast is because Remittly have prefunded accounts in different countries. (19:05) And so their internal system would say now we're moving the money, but the money doesn't cross border. that happens afterwards. The current take rate is 2.24% if anyone is curious. So the US is the main send point I should say but as Ramidia scaled it has become increasingly less important which is also something they really want to emphasize. (19:27) So this is a company that grows revenue with 30 plus%. They have a lot of operational leverage and I would say at scale they probably have a normalized EBIT at around 10x. What got me excited about this stock was that I learned they have less than 12 months payback period on the customer acquisition and they say that their ratio to lifetime value is roughly around six. (19:49) And so they are firing on all cylinders at least so far in my pitch. Then there are a lot of things I don't like but that's probably one of the reasons why it looks so appealing at least at first glance. The founder Matt Oenheimimer he's the CEO owns a bit more than 2% of the outstanding shares. (20:06) The biggest investor is notable process which is another company that I pitched here earlier in the mastermind discussion. They invested heavily in the private rounds and then number two and three uh usual sEXs Vanguard and Black Rockck and you can probably imagine why. And so if we talk a bit about competitive advantage competitors now I'm a little hesitant to say that here on tip we use wise we actually don't use remitti. (20:36) So why is that? And I don't think our process is too different from what I presented here. I think it was two quarters ago whenever I talked about the reason why we use Google cloud and then I actually pitched Microsoft. And so typically what happens or at least in our company what happens is that we have a certain need which was in our case we have people in five different countries and we need to pay everyone. (21:00) So how do we do that? I spoke with our CEO and I said how can we send money reliably at a the lowest fees and she said why don't you use wise and they was like done and so I can't say that necessarily our process is very very sophisticated I would say that there is a level of being sticky to it even though you can't at all compare it to something like a cloud provider it's not that difficult to transfer even though there is an element of inertia there so why do I pitch remittly whenever I would say that we using wise is you can also say that net promoter score which is (21:32) something some investors look at people like wise more than they like remittly so why should we be talking about wise well I would say that they've started to compete more and more in the same space but remitti has historically been the better choice in helping migrant workers send remittances and you can more at least traditional think of wise as the company for small companies such as tip you know we have 20 people and so it's a small company but it's more a businessto business. (22:01) Remittly certainly has a leg up whenever it comes to the unbanked. One of the things I like whenever I am exploring a new product or service is that I like to speak with engineers. I think that for the lack of better words I feel like engineers are a bit more I'm going to say untainted. It sounds terrible whenever I say it out loud but like I come from a background in finance which is we're very tainted. (22:25) So whenever I speak with engineers they think very much and very well about the product and so they come at this from hey the best product wins and I'm oversimplifying as I'm saying this but I think it's very healthy way of looking at I think they're very good at looking at facts they're very good at looking at properties and so whenever I come from this from my background in finance we're like yeah having a good product that's pretty good but it's not always the best product that wins you know finance itself is notorious for selling on (22:54) complicated useless products that they can charge high fees for and then they can put some red tape around it and lobby some politician so it's really difficult to compete in that and so that's a different game and I wish that we would play the game of engineers apparently the finance people are not always doing that it goes to my second point here because some of you are probably thinking what about stable coins isn't stable coin so much better than remittances like all that fiat currencies So last year we should send (23:25) stable coins. It says really really fast. The fees are really low. Why do we need remitti? And so I would argue that remitti is this interesting intersection where it's a much better and cheaper product than the western unions of the world. Like they don't have the same cost structure. They don't have the physical branches. (23:44) But then they're also ingrained in the financial system in a different way than stable coins. Perhaps an engineer would rightfully say you have this stable coin. It might be tied to the US dollar. It doesn't depreciate the same way as a Filipino peso does. That's a better product. Why wouldn't we just be sending from one phone to another? And I would argue that there are a few reasons why remittly is very powerful in this in 2025. (24:13) I should probably also have said a long time ago, I don't have a position in remittley because I have a lot of concerns I'll get to later. But right now I'm still in the middle of my both thesis here. So local legislators want to use remitti because it's part of the traditional banking system and the banks wants to have remitti as a customer because the cheapest way for a bank to get funding that is through deposits. (24:37) Plus banks also tend to lobby politicians quite a bit. And so stable coins are for the same reason met with a lot of skepticism from local governments on the receiving end. And then I would also say the savings argument is wonderful in theory and it probably makes a lot of sense. Let's say you're an engineer, you make 200,000 $400,000 a year and you're in a high income country. (25:03) So whenever you look at the data from remittley, they're saying that roughly 15% of the sender's paycheck may go to mittenses. But for the recipient, it's very often the main income. And the recipient, they don't really think too much about the M2 money supply expanding. They need the cash. They need it within the next hour and they need to buy groceries. (25:24) And by the way, the local government are manding them to use fiat currencies because they have their own incentive to do that because you still need to convert that to the fiat currency. There are a lot of things you can't do with stable cards including that. And so you still need a service like wise remittley or PayPal or Western Union for that matter. (25:44) I'm not saying this because I am pro or con stable coin, but I'm looking at this from a business case. I have stayed an extended period of time in third world countries and I've met the recipients of remittances. I think it's important whenever you're sitting in a first world country and thinking about what kind of banking needs you have, they're just very different. (26:04) Let's take the example of the Philippines which is the third largest market for remitti after Mexico and India. And in the early days of Romeley, they only had the US to the Philippines corridor. And I used the Philippines because we have 11 members of our team there. And so it allowed me to do a bit of skullbot research on remitt specifically. (26:24) If you are Filipino construction worker in the US and you want to send money back to your family, there is a decent chance that some if not all of them don't have a bank account. And even if they do, do you either use GCash or Maya? So, if you're not familiar with them, which I don't expect anyone listening to this would necessarily be, they're deeply entrenched in the local payment infrastructure because they're owned by telecommunication providers and you likely bought your smartphone through those companies because that's the most (26:51) efficient way of doing it. And so, that is how the ecosystem works. And so, if you're in a country with a lot of people that are unbanked, the app serves as a way for people to pay for their goods and services. It's different enough for Wise and Western Union for them to have a competitive advantage, but it's also different enough for something like stablecoin and so remitt right now have roughly a 3% of the $2 trillion TAM remittances. (27:20) And right now they're growing really really fast. Whenever I look at some of the risks and I've sort of like been quite positive so far, let's talk about some of the less exciting stuff. So whenever I first learned about the opportunity, I was quite excited. You know, 3% it's growing really fast. They have a clear cost advantage to the Western Unions of the world. (27:42) So like that seemed to be a home run. And then they made the announcement that they're going to expand their tank by 10x. They're saying, okay, remittances, that's great, but there's 1.5 billion freelancers in the gig economy one way or the other and millions of small businesses. So the example that they use would be hey you might be a US-based company but you outsource some things say in the Philippines they want to target or they are targeting people who are already using remitti and then they're saying oh now I also have the team say in the (28:15) Philippines or India now I will still use remitti for those payments and so at face value who wouldn't want to have a tam that's 10x bigger whenever I heard it I was actually less excited about the peg Because I like the pitch of saying, hey, we have 3% of a growing market and we do things better in remittances. (28:36) We can go where other people can't go. Like we understand the local market really well. So for example, they wrote out this Seafar product to the 1.9 millions in the world. Think about someone who works on the cruise ship and they have very specific needs. They're international waters and they do things a certain way. (28:56) So they really understand those needs. So I like the idea of being able to understand them better. But then whenever you're saying I actually want to compete with wise of the world because the TAM is much bigger. Then the question is can they do wise better than wise can? I'm sort of like using that as a metaphor for a lot of their competitors. (29:20) And I don't know if they can using this terrible example. I'm still talking about the Philippines because I I have some local knowledge there. You go there and it's more than 7,000 islands, more than 150 languages spoken. The Spaniard said 460 years ago, hey, let's name all of these islands after King Philip II and called the country the Philippines. (29:43) And so you really need to understand the importance of why is this different from region to region and why is it that some people want it to their mobile wallet and some people want it in cash and why is it okay some places to pick up that cash or why do you need other places to actually have the cash delivered to your door. (29:59) you can provide a very different service than neo banking. But if you try to compete with them on their terms, you might run into different problems. And so that is one thing I'm concerned about. And then then the other thing I am sort of concerned about, I don't know if I read too much into it, but a lot of companies talk about their vision and they talk about how everyone is very excited about that vision. (30:23) And I've always been a bit skeptical about whether or not employees are truly that passionate about the company's vision. I don't know, perhaps it's because I'm cynical. I don't know if I am. Whenever I had my first job as a commodities trader, I don't think any of the commodities trader were passionate about delivering electricity through solar grids. (30:44) I don't think that was why they got up in the morning. If you ever walk into a trading floor, there are lots of other dynamics that people are more passionate about, especially the paycheck. There's ton of stuff going on on the trading floor that it's kind of crazy. And so whenever I I hear about a company talking about how passionate everyone is about XYZ, I'm thinking well perhaps that is true for Remidly the way that they are empowering migrant workers. (31:09) If they become yet another neo bank, how passionate can you really rally people to be? Anyways, that's another a bit more self- risk. I'm probably reading too much into it. Jans, I have a section here more about the valuation, but before I get to that, I want to throw it back over to you guys. >> Hey Stig, I think this is a very interesting pick for me because I use one of these services to send money back home to India many times. (31:37) I've been using it for multiple decades now. And I have seen this entire space evolve from the time when it was too cumbersome and we had to wait for a week to now when they promised to have it within hours. What also I observe is when you're bringing up this corridors whether it's US to Philippines or to India to Mexico, it's almost like Uber versus Lyft versus Ola or the Chinese equivalent. (32:07) Each corridor has its own pick. So it's not really like a network effect that you see here. Usually they are like a service and a corridor and I can pick and choose and based on the rates the switching costs are very low. So that's one thing I have observed as a user. Zoom is another very popular for us to India. (32:32) It's now acquired by PayPal and this space is really evolving and there are many players like Square is another one. Wise is another one. So the key questions I have are two. One is what's their mode? There is no network effect. They're offering a service that others are offering too. I don't see say between zoom and wise and remittly. (32:56) What's the difference? That's probably you might have looked into for me I've been using zoom. So maybe I'll try remittly next time to see how they charge. And the second question I have is I was looking at their growth. It's definitely one of the highest with like 40% plus growth almost year-over-year. But their P ratio and I was like is it stock price or P ratio? It's like 249 or 250. (33:23) Is that correct? Uh >> yeah, I I should probably make the disclaimer in the beginning. So it's bit of an inflection point. What you see there is yes it is true but it it's of an amount because they're just in profitable whereas like hey if you have $1 in profit what is your multiple going to be the reason why I would normalize let's say IT would be I would say for this type of business what kind of margin operating margin would you typically have at scale and then I would say is that realistic to get to that point so that was why I came up with (33:51) this significantly lower votable >> yeah so the two points there one is is it at a stage where it's like the early days of car manufacturers in US or railroads in US where there's so many players it's hard to pick a winner that's one second is what's their mode what's their prospects for scaling and actually not only being profitable but grow into the valuation that they have been offered already um and how do you see the competitive landscape are there other players that can actually hinder their growth Yeah, great questions, Hari. And I wish (34:30) I knew the answers to all of them. I would say if I start with mode, they've been specifically asked about it. It's always interesting to hear what the CEO would say that mode is, and then you can sort of like compare it to whether you agree with them. But they would say that they have a flywheel where scale really matters. (34:49) They say that they create trust by allowing you to send remittances fast at fair prices. That gives them scale. they would then lower their fees because they can now they have more scale and on and on and on it goes then you can perhaps make the argument is it a race to the bottom in that case perhaps you're right and I think you can also say well if it's about scale well what about PayPal what is their capacity to suffer that's one of the issues I have with remitti and one of the concerns I have where I like a company to be very good at one thing it's great if they're (35:19) good at other things but very often you're good at one thing and it comes at the expense of something else. If you're good at other things, you can perhaps say, and I'm going to use an example of say Spotify, they became really really good in podcasting because they were only looking at music and podcasting at the time. (35:38) Whereas for Apple Podcast, I don't know what podcasting is on Tip Cook's list. It's probably 852 on his priority list. So, I can see why someone would say, "Oh, remittly, they're so much better than a small arm of PayPal." But then that goes to my other point about now they're sort of like shifting strategy and they're saying well already using the infrastructure we have now we just want to send bigger payments and more payments through the pipes that we already set up whereas I'm looking at this more like huh are you now a new bank I think their advantage is that (36:11) they are serving the underbanked and it makes a difference to them whether or not they have 3% of the somewhat smaller bit At least if you look at in payments overall it's a very very small space. So if they can do that really really well and there's one way they can do that in this region of this country and then if they can be very specific about how the recipient want that money and they they've set up their infrastructure. (36:36) Now is that a mode? Probably not. I think you have a point whenever it comes to that. Can it be imitated? Probably not. Payments are tricky. You need scale and you need focus. And so if I put on the bull hat, I would say they both have scale and they have that specific focus that they're now turning away from, which I'm not really too happy about. (36:59) Are you looking to connect with highquality people in the value investing world? Beyond hosting this podcast, I also help run our tip mastermind community, a private group designed for serious investors. Inside, you'll meet vetted members who are entrepreneurs, private investors, and asset managers. (37:18) people who understand your journey and can help you grow. Each week, we host live calls where members share insights, strategies, and experiences. Our members are often surprised to learn that our community is not just about finding the next stockp, but also sharing lessons on how to live a good life. We certainly do not have all the answers, but many members have likely face similar challenges to yours. (37:40) And our community does not just live online. Each year we gather in Omaha and New York City, giving you the chance to build deeper, more meaningful relationships in person. One member told me that being a part of this group has helped him not just as an investor, but as a person looking for a thoughtful approach to balancing wealth and happiness. (38:03) We're capping the group at 150 members, and we're looking to fill just five spots this month. So, if this sounds interesting to you, you can learn more and sign up for the weight list at thevesspodcast.com/mastermind. That's thespodcast.com/mastermind or feel free to email me directly at clay@theinvestorspodcast.com. If you enjoy excellent breakdowns on individual stocks, then you need to check out the intrinsic value podcast hosted by Shaun Ali and Daniel Mona. (38:36) Each week, Shawn and Daniel do in-depth analysis on a company's business model and competitive advantages. And in real time, they build out the intrinsic value portfolio for you to follow along as they search for value in the market. So far, they've done analysis on great businesses like John Deere, Ulta Beauty, Autozone, and Airbnb. (38:57) And I recommend starting with the episode on Nintendo, the global powerhouse in gaming. It's rare to find a show that consistently publishes highquality, comprehensive deep dives that cover all of the aspects of a business from an investment perspective. Go follow the intrinsic value podcast on your favorite podcasting app and discover the next stock to add to your portfolio or watch list. (39:22) Now, what is the process of scaling? Well, they've been asked about that on the earnings calls and they're saying, "Oh, we just have so many opportunities, not just with more corridors, but there are so much more to gain each corridor." They keep on saying that the marketing dollars that they pay out, less than 12 months for them to get it back and then there are 6x returns. (39:42) So, if you trust that there's a lot of growth coming, but then why are there a better product than what you're using? I don't think I have a good response to that. Hari, >> thanks Duke. Along the same lines, I've noticed that Western Union and MoneyGram have been in the value screeners for years and years and years because they their competition. (40:04) They're losing that competition, I guess. But I know this is the next subject you're going to talk about, but how do you think about the valuation? How do you think about the valuation given the comps? >> If I look at a company like Seni without knowing too much about the company, I feel like I can discount those cash flows. (40:22) Whenever I'm looking at something like Remittly, I'm all over the place. And so I read a few hundred pages on the company. So the 10K last six earnings call, few other sources. Yo, it's kind of like in that spot where you're like, I kind of feel I understand the company, but I don't really understand any of it. Because every time I read something new, I'm like, "Oh, I didn't know that at all about the company. (40:44) " I'm sure there is going to be a genius out there who knows how to use Chat GT for this. I continuously try to use chat gypt and I find it somewhat useful but then you sort of like just print out a few hundred pages and you just start with the ace and you're like okay and perhaps it's just me that's oldfashioned in terms of understanding a company at least for me probably because I'm a slow learner I need to go through the earnings calls really to understand the qualitative aspects of the business and then I need to discount everything the (41:09) co is saying because everything sounds so rosy it's probably not the case whenever I'm looking at a company that's trading hitting at call it a bit more than two times revenue. It doesn't really look like it has any margins. I would say that it has. Whenever you're making that type of return on marketing, for example, you would put as much as you can into marketing and then it looks like you just don't make any money. (41:32) But that's one of the reasons why it's growing like 30 or 40% a year. You sort of like have to normalize it. If you put me on the spot, and again, it really also depends on how long the runway is that you grow. I like to think, you know, today at the time of recording is trading at $14 and change. I think that it's probably trading around a 50% discount and intrinsic value. (41:53) But whenever you make that, at least for me, I'm like I'm doing like a bull case, a base case, and then a bare case. And then the question is, well, are those three scenarios realistic? But the more tricky thing is you need to put probabilities on those three scenarios. And that's really tricky. And then another thing that's really annoying to me is the level of stockbased conversation. (42:15) I kind of feel like I should have started with that, but I always start with how much I dislike stockbased conversation at that level. So I wanted to end here. And so it sort of like is what it is. It's historically been more than 10%. Now it's just below 10% of revenue and we're talking about a $3 billion market cap company. (42:32) I'd like to think that now it's matured enough. I know today $3 billion is nothing but for me $3 billion is still a lot of money and I feel like they have matured enough for them not to have that kind of cash and equity mix. The CEO has to his credit said no to the last three stock grants because he's been under a lot of scrutiny in terms of the stock dilution. (42:54) Now they authorized a a $200 million stock buyback program to offset that. And like we also talked about last time whenever I was pitching Uber. Full disclosure, I'm now long Uber. But then they were saying, "Oh, then we just offset the stocks that we issue." But as you know, the money doesn't come from nowhere. (43:14) They're real cash that they have to make. And so the way they talk about it and sort of like pretend that everything is fantastic, but the way they talk about it is that they're saying, "Look, now we're starting to generate healthy cash flows. We can pay our people a bit more." or they I think they call like the cash equity mix have changed. (43:31) So now they don't give as much inequity and added to that they would say we're not diluting shareholders as much because now we're buying back stocks. But then you also have to counter that with the fact that apparently they have a ton of growth opportunities and the money that they are spending on buying back stocks could also be used to those growth opportunities. (43:49) So it sort of like depends on how you look at it. I feel like and like I mentioned I'm not long remitt. I need to understand the business a bit better. And I think I need to understand the strategy better. They're saying we are not going to be another NEO bank. We are still going to cater to those who are underserved. So we don't have to compete with the bigger players. (44:13) I still don't know if that's consistent with the strategy that they're pursuing. And I don't know why they're saying this. I would imagine it's probably good for the stock. that it sounds good to go out and say, "OM is now 10x." In reality, it's typically better to be a big fish in a small pond than a small fish in a big pond. That's my non respponse, Toby, to how I think about the valuation. (44:36) 50% of intrinsic value considering a ton of different assumptions. >> Good one. Thanks, Tri. >> No, I think it's a tough one. It can go either ways. I think it's almost like a borderlining venture, but I was just thinking when you're talking about stockways compensation, you should visit valley Silicon Valley once and I want to see the expression on your face when you hear about the stockbased compensation and dilution what goes on here. (45:04) >> Yeah, I don't know if there's a way about it. I mean perhaps that's just the way it is today. What are you seeing Hari? If you look at companies like Meta and many others actually just not to single them out but many companies stock picks compensation is the way that employees are incentivized and many times your stock component is much higher than your base salary. (45:30) So I think dilution when many of these tech companies buy back shares it's basically they're buying back their stock comp. So, but this has been for decades. I think Buffett had spoken about it long time back. Nothing changed. >> Yeah. I always like to see how well the co understands capital allocation. Of course, we spoiled because we all been raised by the church of Buffett and Monger, but they're saying our team are thinking like owners and they have equity in the business and that's why they think like owners. (46:00) As a business owner, I could not disagree more. And it might be one thing if you're a business of five people, 10 people, everyone can truly impact your direction of the business. If you're thousands of or tens of thousands of people and by the way for remediance restricted share unit, it's like if you have a pulse like if you don't get fired, if you don't mess up, you get free shares. (46:27) It's part of your compensation. >> Does that really make you think like an owner? Sure. I can see why it makes you think more like an owner that not getting anything at all. But what if you got a bonus specifically? Let's say that your responsibility is the corridor between the US and India. Shouldn't you have a cash bonus perhaps then be forced to buy shares in the open market? Who knows? But shouldn't you have specifically on what you can change for you and not on the company overall and what the market sentiment is? Like to me (47:00) that is not thinking like an owner. Perhaps that is how they think about it. To me it just seems like really is that really how you think that employees are thinking about their stockbased comp? And I don't know Hari perhaps I'm just way too cynical. Does it work in practice? >> Yeah, I think that's a very good point. (47:19) But also I think there is the other component of competition for talent. So it's almost like a breeding war. You might have heard about folks with the LLM skill set from Open Eye getting $100 million offers. That's almost like buying a startup of one. So it's basically bidding war. It's supply and demand. (47:42) That's how I see for great talent. There's a lot of demand with multiple competitors. So many times it was very popular few years back. It was called as green mail which means many companies would pay really talented people high stock options and salaries just to keep them on bench so that they don't go to the competition. So a lot of irrational things happen when there is a lot of capital flooding around the market. (48:14) Yeah, that's that's a good point, Hari. And especially for the two-sided marketplaces, which is just really really hard. And once you have it, it's wonderful, but building it is like really difficult. You need a lot of spend a lot of money engineers. You need to spend a lot of money on marketing. And a lot of these startups, they are cash poor, but equity rich. (48:33) So from their perspective, it does make sense to issue equity and then later find a way to buy it back because if they don't get there, what does it really matter? and the need to get there and they don't have the cash to get there. So I can also understand the other side. I guess as a as a stock investor I'm like don't dilute me 10% a year even with this wonderful growth. (48:57) I think there's also a question of probabilities where I'm like one thing is I think they can grow with 30%. But if I know I'm going to be diluted by 10%. there's something with the probabilities there and I have a higher conviction in me being diluted 10% then I have conviction in the company continue to grow 30%. So um thank you Hari I think you bring up a great point and I think I'm probably just too oldfashioned whenever it comes to that. (49:22) >> No I think Steve you have a valid point though but I think the hope is growth will cure all sins. So if a company is growing at 100 200% revenue or then whatever they're doing the hope is like don't worry our fee might be high but eventually we'll give you the returns. >> Well said well said. (49:47) All right Toby you're up. >> Thanks Steve. My pick is Crocs. It's the ugly shoe maker. I've got Crocs in my midcap value fund. You know, my branding is acquirers multiple. So, I've always been looking for companies that can get taken out in a private equity transaction. I think this is one of the clearer opportunities that I've seen in a long time. Current market cap is $4. (50:12) 3 billion, which is very modest in this market. I'm actually surprised it's the second biggest one we've pitched today, but I thought I was going to have the smallest one we pitched today, but Stig snuck under me with Ridley. Stock price last I checked was $79 and change. Enterprise value is $5.9 billion. (50:30) So, this thing's net debt to the tune of $1.6 billion on a $4.3 billion market cap. That might sound like a lot, but they had free cash flow last year of more than $900 million, between $900 and a billion. So, they're a little bit over 1.6 times free cash flow. So, I think that they cover their debt pretty comfortably. They have a $1. (50:50) 3 billion buyback authorization, which is 25% of the outstanding stock where it's currently trading, which I hope they're deploying aggressively in this market cuz the stock is very, very cheap. In 2022, it was $180. So, at $79, it's more than haveved over that period of time. If you had a look at the business, you wouldn't know that the business has done pretty well through that period. (51:11) I think it was likely that the stock well ahead of itself at 180, but it's too cheap at 79. So it grew 9% last year um which is pretty good growth. The international growth is better still. International business grew 16% second quarter of this year. China's growing 64% a year. Sort of surprising because I always thought that Crocs is something you could copy pretty easily in China but it hasn't been so far. (51:39) It's performing reasonably well in Western Europe. The six times P 21% free cash flow yield growing 9%. It all sounds pretty good. So the natural question is why are we where we are? And the answer is the acquisition hasn't really worked out. I don't necessarily say that it's a bad acquisition, but they bought this Hey Dude, which make different kind of ugly shoes. (52:02) There's a little bit of fashion in this business that those ugly shoes were very fashionable and attractive for a period of time, but the sales have declined 7 to 9% this year. So for whatever reason that that fashion perhaps is moving on a little bit and Crocs itself that clog shape that ugly clog shape that everybody knows the same thing can happen to it. (52:23) I did a little channel check when I was at jiujitsu with my boys cuz all the boys take their shoes off and they leave them on the ground and so I counted up how many of them were Crocs and how many of them were other things and Crocs were onethird of the shoes on the floor which I was kind of surprised about because my boys were natives. (52:40) They didn't have the clogs on Crocs. My daughter wears the Crocs. So, we do have some Crocs in the house. And she collects the little gems that click into the shoes. So, there is at least for 12year-old girls in Los Angeles. They're still cool enough that they'll wear them and wear them around. So, they bought this Hey Dude thing, $2.5 billion. (53:01) It's not really It hasn't worked out so far. Maybe they can stabilize it. Maybe they can turn it around. I don't know. But I think it's like $2.5 billion is like two and a half times three times free cash flow. So if it turns out it's a donut. I don't think it's the worst thing in the world cuz the rest of the business is still throwing off so much cash. (53:21) The other big problem that they have is the tariffs because their shoes are made in Vietnam and China and so on and so they are impacted by the tariffs. They've also got some competition risk from so I mentioned natives. Natives are a small competitor, but Birkenstocks are still out there. There's another type of ugly that people can wear. (53:42) The risks that I think are hey dude is a problem not working out very well, but I think that's survivable. The tariff impact is going to be bigger and we don't know. I don't think necessarily how that works out. But I do think they solve that problem eventually, but they do have a huge exposure to tariffs. Yeah, the possibility is that it's a fattish kind of consumer fashionable brand that if the fashion goes away and and Crocs have been around for a long time in and out of fashion a few times and so when they get cheap they get really really cheap. (54:10) The business gets really really cheap. This business has been a net net. It was in my net screens for a long time. It's been in my acquirers multiple screen on and off for the last few years cuz it did get very expensive then it got cheap again. Then it got expensive and now it's got cheap again. I like it. (54:27) I don't mind stocks that do that get expensive and cheap because you can buy and sell them which is what I've done through the acquirers fund and we're currently a buyer again we're an owner we have owned it for a little while now the other problem that they have is that they're sort of they're lowerend shoes so they have some pricing cap but I still think they're pretty competitively priced and they still get pretty good margins on the pricing where it is the tariffs may impact that so I don't really want to rest the whole thesis on that but I do (54:54) think they they get surprisingly healthy margins on issues. Their gross margins like 58% even through all of this. Like I don't know how much of the tariffs have actually impacted yet, but their gross margins are higher this year than they were last year. And so I don't know exactly how they're doing it. (55:09) They're kind of tech margins at 58%. Big margins on shoes that are easily copied make me nervous because it means that somebody else out there could say, "Well, I want I want 60% margins. I can make plastic injected shoes in a slightly different style that's more fashionable and attractive. (55:26) Maybe they can compete that away. But for whatever reason, it hasn't happened so far. I think there's a component of Crocs where they're worn in like the health care. Lots of nurses and doctors wear them in hospitals for foot protection cuz they're reasonably comfortable and they you can hose them out when you finish using them. (55:41) I think the valuation on this is obviously compelling where it is $4.3 billion for a billion dollars in free cash flow, six times earnings, $1.3 billion buyback. All of that stuff tells me that it's very, very cheap. So the question is, is it so risky with all these other things that are going on that that overwhelms that sort of level of cheapness? I have answered that question myself cuz I've bought a position and I think that the cheapness here overweighs the risks, but I acknowledge that those risks are out there and and somebody else could (56:13) easily reach a different conclusion to that one. But I think there are some interesting catalysts. The first one is just resolving the tariffs. I don't think that we're going back to a no tariff world, but I think that some tariff certainty would be a huge advantage for these companies because once they work out what they have to do, they will resolve the problem. (56:31) They'll restructure in some way. They might make them at a slightly higher price. It might be a slightly more cumbersome process, but they'll figure that out. So, I'm not too worried about that. But the chopping and changing all the time makes it hard. And the implementation is going to be a hard period. And so I think that is one of the reasons why it's trading where it is cuz that's remains unclear how they're going to do that. (56:51) But I do think that all of these things are sort of resolvable in a pretty short period of time if they do. And I think given the cheapness, the buyback, all of these things sort of going wrong at the same time, tariffs and hey, dude and the general cyclical weakness I think for stocks that are not mag seven. I think that this is a particularly attractive opportunity for more speculative opportunity. (57:15) I think if you want certainty then go with Harry. If you want a little bit more volatility and upside then my pick is the one for that. But there is a little bit of risk in this stock. But I do think there are a lot of ways that you can win and you're going to know along the way whether you're winning or not. And so watching the hated acquisition, watching how the tariffs get resolved, watching what they do with the buyback, I think that the clear parts that if they execute and they get it right, the stock works out. And if it doesn't, then you (57:44) should have an early warning sign that you can get out. So I think the stock is just simply too cheap where it is. I saw that Sketches got taken out. Sketches is like a different kind of business model. I get that. But still a footwear company, US-based. They did that acquisition at $13 billion, I think. So, it's certainly the size is right if someone wants to take this thing out or if someone else wants to buy it and bolt it on to a to an existing shoe business. (58:11) I think it financial crisis, they could pay a pretty big premium to where it's trading. That's not really what I expect to happen, but I I think that it's worth pointing out that's a possibility. So, the downside risks are tariffs. Hey, dude. And just the fashion fattishness of the shoes. (58:31) But I think that the amount of cash they're generating, the margins sort of seem to suggest that those aren't issues right now. The core brand is still attractive and still attractive in the US, still growing internationally, growing very fast in China. I don't really understand why. It makes no sense to me, but they are doing that. (58:46) There's lots of ways that this business can win. Tariffs get figured out. They presy Sweeney selling Hey, Dude, which was something that people were joking about on Twitter that once you get Sydney Sweeney selling something, it does really well. So, American Outfittered jeans, they got her in those jeans and that did really well. (59:04) And so, the memes for a while were like trying to get her to sell Intel chips and stuff like that, but it turns out she is selling the Hey Dude shoes. So, maybe that's what that brand needs to sort of turn itself around. Who knows? That's my pick. Crocs at 79 bucks and I hold it. So, I'm eating my own cooking. If it doesn't work out, I'll let you know. (59:22) Actually, I was looking forward to talking about this pick once I saw what you're going to discuss because my daughter also has a lot of Crocs. I see when I go to parks a lot of kids wearing Crocs. But for me, the kind of surprising point that you brought up is like they are successful in China when microchips are being copied and people are complaining about IP theft and all this stuff. (59:51) How are they able to do it? I think they deserve higher multiple just for that. So great pick by the way. I think this is one of the lowest P ratio I have heard in the recent picks that we have discussed and they have been forever though it feels so simple to do but I don't know why people are not copying it or why there are no copycats who can come up with I don't know whether do they have patents Toby that is protecting them. (1:00:19) I don't know, but I think they've been around for so long that the patents must have rolled off because I know that those native shoes are the same almost the same idea, same material like injection molded into a shoe and they don't seem to have a any problem. So would you say tariff is the only factor now that injects some uncertainty? Of course that's baked into the price already. (1:00:41) So is do you think the uncertainty of tariffs are also baked into the price that we are paying less for uncertainty at this point of time? >> Yeah, I think the margin that they're earning maybe the margin is a little illusory at like 58%. Like I said those are tech margins for for a shoe that should be pretty easy to copy. So there's a fashion part of this that makes people require the Crocs brand clogs but they're so like they're reasonably priced shoes. (1:01:09) They're like sub 50 bucks for the most part. 40 or 50 bucks which we pay for kids shoes because kids last for about six months in their shoes before they grow out. So put them in whatever and then when they grow out that's what happens. But they keep on it's re up for Crocs or reup for natives for the boys. (1:01:25) The fashion part of it I can't quite get my head around and I do think that that's the main risk with this thing. Having said that they are still growing and they are still attractive to kids. So I I think that for the most part for the moment that is okay. and the fact they've been around for so long, but they have always been cheap as an investment proposition. (1:01:41) They've been cheap most of the time. They occasionally become expensive, but most of the time they've been cheap for the last 10 or 20 years. >> I like it, Toby. Um, whenever you send it my way, I was like, of course, the numbers are so great. Like, not lots to complain about there. There were a few things I wanted to highlight. (1:02:01) One of them is, hey, dude, even though that you already talked about it. So uh 2.5 million to your point and the deal was made through the highs of co then the deal closed in 2022 and I think optically it didn't look too expensive. It's like 4.4 times revenue and 10ish aida but it seemed to be a growing brand and then it turned out that it wasn't and so they had an impairment test of 700 and change million dollars. (1:02:26) So it's what roughly a third of the value of the acquisition. And that's also why if you look at the latest filings that they're doing their adjusted gap number and then their gap number because otherwise it looks too brutal and and that's all fine and well. You can of course ask the question what is that telling off whenever that happens. (1:02:45) Does that mean that the management are not good at acquisitions? Does it mean that the management like to do acquisitions even if it doesn't create value which is something a lot of cos like to do because it's fun to make acquisitions and it's kind of like interesting if you look at the story of Crocs back in the day they went from more than $67 to less than a dollar. (1:03:04) Talk about something that's that's in fashion and then not but then there are a lot of things that were happening at the time and so the reason why they could do the turnover was also because they caught it to the very core. So at the time they were doing a bunch of stuff. They were doing like sandals and rain boots and apparel and like so they cut all of that away. (1:03:21) They closed a lot of locations and then they're refocused on the core brand and the core product and that turned out to be successful and then come co they started to diversify again and they fa they fail and so I think that there's a risk there and you could say that it's already been priced in and I would completely agree with you. is priced in. (1:03:43) What is not priced in is are they going to do it again and destroy value. Then there's the other thing that you already commented on Toby about it's something that's fashionable one way the other. So whenever you go through the earnings calls they're very happy about the fact that they're number one in Tik Tok store in the US. (1:04:03) And so whenever I read it I was like h this is bad. Which is kind of ironic because I can see why the management is excited about being number one. Who doesn't want to sell a product that's number one? In there also lies the risk because right now they're number one in Tix store and I don't have any stats on this but I'm quite sure you don't stay number one in Tik Tok for that long. (1:04:24) That's the entire point of Tik Tok in the first place. And I say that for someone who's never been on Tik Tok. So I can only speculate. So what happens whenever you're you're not? Last week for example, you know, I I was speaking with Toby about railroads. I I know I'm making quite a jump here because we're talking about Halaway and BNSF and they're not cool. (1:04:43) You know, you know what I mean? Like BNSF is not a cool company, but it doesn't really matter. It's the law of physics that determines why you're using railways. It's not whether or not you're number one on on TikTok. I don't want to go too hard on Crocs as I'm going through the X. You know, even, you know, now we're talking about Buffett. (1:05:02) Even the best fail on some of the deals. you know, Kuffines was written down by more than $15 billion and only four of them was attributed to Berkshire Haway. And of course, that's from a very different baseline, but like mistakes happen and they also happen for Bergie Heatherway. But I can't help but think about a company like Crux where perhaps they're sitting there and they're saying, "Look, we need to diversify. (1:05:25) We can't rely too much on this one thing that's in fashion." And perhaps you as a stock investor just really want to size your position and get your shareholder return. That's really the play that you want to see them do instead of doing all these other things. I'd beating up on the management a bit, but then they also took a bit of a debt previously. (1:05:43) They've done a really good job paying that back. So, I don't know. I like the numbers for sure. And I would argue much of that is priced in. The last thing I would say, and this is more a personal preference, and this is not necessarily about Crocs per se, but it's more if I buy that stock, I already have to think about selling it the minute I would buy in. (1:06:04) That's the nature of it. And I would need to follow whether or not it stays cool or it doesn't stay cool. And I think that's a different type of investment where you have to think about are you looking for some kind of multiple expansion? Is that how you're going to get paid? How much is coming back in buybacks? How would you think about it? If it was dividends, you would get a very attractive yield. (1:06:24) This is a company that has 23% operating margin that and there was negative 10 years ago. And so there was a bit more stress around it and you need to think about when you sell, but if you know how to solve that, you'd be richly rewarded. I really like your pig, Toby. >> Thanks, Dick. I think it looks like it's trading like it's in distress, but I don't think it's in distress. (1:06:44) It's throwing off a billion dollars in free cash flow. So if the business is in decline, then I think you've got a lot of time to figure that out. But it is a stock that's traded cheaply a lot of the time, but it's also traded it's had its booms as well. So there's a possibility of like a windfall in this one. (1:06:58) There's also a possibility of a loss. So it's worth I think it's worth taking a look at, but as you say, you need to monitor. It's not one that you can set and forget. >> All right, Jans. Uh, as always, thank you so much for your time. It's always a lot of fun whenever we have these chats here once a quarter. (1:07:16) As always, I would like to give you the opportunity to give a hand off to anything you like. Toby, take it away. I have a new book, Soldier of Fortune, that's about Buffett and Sunsu and the ancient art of risk-taking. It's for sale. Uh, Stings Go on Too. It's for sale on Amazon. Kindle hard coverver paperback audio coming soon. (1:07:40) I'm really excited about it. I also have two funds. Zigg, which is deep value, mid and large cap. Deep, which is small and micro. Acquirers multiple.com. And I'm on Twitter at greenback gr. It's a funny spelling. I might have to change it one day. But Stig, thanks so much for having me, Harry. Good seeing you again. >> You bet. Thank you so much, Toby. (1:08:00) Can I just sneak in one question? So, you said it's it's also going to be an audiobook format. Are you going to do the audio? >> I am not. No, I have a guy. He does NPR Atlanta. He's got a superb voice. It sounds so much better than I do. So, he's recording it right now. >> Okay, cool. Cool. Very cool. Hari. >> Hey, Toby. (1:08:17) Looking forward to the book and my copy and especially the audible version. Interesting topic and timely one too, I guess. Looking at the markets. Well, you can all reach me at on my Twitter handle hurryama or my blog bitsbusiness.com. Looking forward to continuing the conversation. Especially last time there was very interesting comments about my pick and we had offline conversation always like it because I want to make sure that any my blind spots are covered and I I got to connect with someone who actually works in the pharma industry. (1:08:50) So strengthening my case. So great looking forward to the conversation. Thank you Toby and stay for having me. >> Thank you Ari and uh Toby and Hari. I look forward to next quarter where we're going to do another round of mastermind discussion. So, thank you once again. >> Perfect. Thanks, Stig. Thank you. >> In this second part of the show, my co-host Cliffing and I wanted to put together a short segment to discuss the live events we host here at TIP. (1:09:18) Uh, hey Clay, what's going on? >> Not too much, Diego. Always great chatting with you here during these segments talking about what's happening here at TIP. Yeah, and Clay, it is one thing to connect online and of course with modern technology, it's very convenient, but the relationship and connections that you make whenever it's in person, it's just it's just very very different. (1:09:40) And you just wrapped up the live events we have in Big Sky Montana for the summit event and then also you did New York City for our mastermind community. But since you were in Montana first, why don't we talk about that first? >> Yeah, of course. It's one thing to, you know, plan a couple of events that are two weeks apart, but then it's uh, you know, it can get a bit traveled out once you've done it, uh, and organized everything there. (1:10:01) But yeah, we just wrapped up the two live events uh, in the past month or so. First, we hosted our summit event in Big Sky, Montana to hang out in the mountains just with some wonderful people, talk investing, do some fun activities like hiking and fly fishing and pickle ball, and just enjoy some really amazing meals alongside Kindered Spirits. (1:10:20) It's actually the first time we've hosted such an extensive event. It was actually 5 days. We were all out in Montana. I definitely learned a lot in putting it together and we had just a really great group of people. And some of the attendees included uh some members of our mastermind community. We had four people from the tip team. (1:10:37) Sean and Daniel made it from the intrinsic value podcast and then several from the audience as well. So the views in Montana are just unbelievable. If anyone is based in the US and hasn't been, I think it's just a wonderful place to visit. The altitude, I'll be honest, was a bit much for me. But other than that, I just really enjoyed my time there. (1:10:56) And when I step back and think about the in-person events we host, I hesitate to say what we do is investment conferences. That's sort of what I think some people think of it as. I kind of prefer calling them live events, but in a sense, they are an investment conference. So, one of my friends who isn't a tip listener, he asked me why were we in Montana, you know, why I was in in the mountains of Montana for work. (1:11:21) And I told him that we were hosting a small conference, but instead of getting dressed up in suits and gathering in a conference room at the Marriott, we're going to the mountains to talk stocks, go hiking, go fly fishing, and yeah, just have a lot of fun. But that doesn't really sound exactly like a conference to me. So, it's an oversimplified way of putting it, but that really is the goal with all of our live events. (1:11:44) We want to try to create just a fantastic experience by making our attendees feel comfortable, give them the opportunity to do some fun things and meet some wonderful people. And then we also hosted a couple of presentations at the house we stayed at in Montana. So, my friend Joseph Shaposhnik, who has been a guest a few times on the show, he gave a talk on his investment approach, uh, assessing management teams and how he went about launching his ETF. (1:12:06) And then Sean and Daniel from our intrinsic value podcast. They also did a presentation. They talked about the portfolio they've built throughout 2025 and pitched Uber stock which you've talked about here on the show which helped create a lot of fun discussions throughout the weekend. And there was a running joke to really get Sean going. (1:12:24) You just had to ask him about Lululemon as he's quite passionate about the stock and the brand and the stock's been hammered this year. I'm sure many in our audience have followed along with that one. But anyways, I think we have some great ideas that we'll take from the summit and implement into some of the things we do in the future. (1:12:40) >> Yeah, and including fortunately, I did make my way out to Montana, but after watching the event video, I mean, I I surely wish I had. You know, they say that a photo is worth a thousand words, and I don't know if I can add that a video is worth a a million. If you're watching this on YouTube, we are running a video of the event right now. (1:13:00) We're really excited to be here in Big Sky Montana for our TIP summit event. Uh we have a few people here from tip and everyone else is getting in here throughout the day. I look forward to just bringing everyone together to network, connect, build some good relationships and overall just enjoying our time here in Big Sky. (1:13:23) Hey, from the Beehive Basin in Montana and Daniel and I are taking on the mountains and repping the Intrinsic Valley community. >> So, thanks a lot for uh coming and you know being uh so kind with your time and answering questions and everything. Really just again really appreciate all of you being here. But Clay, you also just came back from New York City and I just I love the energy there. (1:14:00) How was it? >> Yeah. Well, Montana is certainly much different than New York. One of our team members from the Philippines actually made the trip to join us. And uh yeah, kind of tried to tell her, hey, New York's nothing like Montana. So, I tried to prime her a little bit. But New York was just great as well. (1:14:16) For someone that's lived in the Midwest my whole life, one weekend there is probably enough for me given how different it is. So, we did host our mastermind community events for the third year there. And there are a lot of things that I like about hosting events in New York. One of the things that I think is most important is that it's fairly centrally located. So, we have a global community. (1:14:36) It can be tough to bring a lot of people together. We have many members who are based in New York and Toronto. So, that really helps. And what we did was we hosted a couple of dinners that each had around 30 attendees. The food scene in New York is just unreal. I'm sure you know that. (1:14:52) It's probably one of my favorite parts. And there's just so much to do there, too. Many of our members will bring their spouse and go to a show or two or connect with other members and go and walk Central Park or grab a coffee with them in the morning. And we had members come from all over Canada and all throughout the US. (1:15:09) And one of my goals in putting together each live event is to try and make it better than the previous year. And I feel like we achieved that with New York. We just had some fantastic members make it. Uh the dinners were great and we're already making plans for uh next year's trip to make it even better. (1:15:26) And members also appreciate that they're able to bring a spouse or friend to our events. I found that members tend to bring their spouse to New York instead of Omaha, which I certainly don't blame them for. And in addition to the two dinners we hosted, we also hung out at the one Vanderbilt Observatory where we went up to the 93rd floor, grabbed a drink and checked out a new view of the city from one of the tallest buildings in New York. (1:15:49) And uh that building was actually completed in 2020 and uh it's definitely quite an experience as well. >> Oh man, Clay, that that sounds amazing. I'll be the first to say I love New York City. You and I have a similar background. I grew up in this beautiful rural area and just miles and miles of John Deia Green, let's say as far away from New York City as you can probably imagine. (1:16:13) And so similar to you, you know, as much as I love New York after a weekend or I think I could probably do four or five days, then I'm like, okay, this is great, but I need I need a breather now. But, you know, I uh I married a wonderful city girl and to your point, I brought her both to Omaha and to New York and and guess what? She she likes New York City better. (1:16:31) I don't know why. Clay, talk about the plans we have for 2026. >> Yeah. So, stepping back a bit, I think uh when I look back at the history of TIP, we've very much been a podcasting company, right? Most of our revenue historically has been generated through advertising. But in recent years, we've been leaning more and more into the category of live events. (1:16:51) One of the reasons for this, as you and I have found, Stig, is that there's just so many interesting people in our audience. Just going down the list of our attendees from New York, for example, one member has acquired half a dozen software companies in the past two years. Uh David Fagan, who we've had on the show before, he runs his own successful accounting practice and has made multiple small business acquisitions himself. (1:17:16) One member runs a number ofarmacies. We had a few asset managers attend. The list goes on, but we all have that common interest of value investing. So, we're still in the early stages of planning our events for 2026, but we do have a good idea of what we'd like to do. Montana was a bit difficult for us to get to in 2025. (1:17:34) So, we're going to focus primarily on Omaha and New York City. Omaha, of course, isn't the most popular tourist destination, but for those who are in the value investing niche, that happens to be where the Bergkshire Hathway meeting is. Buffett's going to be less involved than he historically has been since he stepped down from the CEO role, but this past year we had more than 50 people at our events and dinners in Omaha. (1:18:00) So, we expect a pretty good turnout again in 2026. For those who haven't been to Omaha, the Berkshire meeting is scheduled for the first Saturday of May and we'll be hosting a couple of dinners and socials for our mastermind community. And we also recognize that there are many people in our audience who are interesting in going to Omaha or interested in checking out our live events, but they aren't necessarily interested in committing to our community. (1:18:26) So, we decided to offer six paid seats to the audience for those who would like to sort of have an avenue to connect with a lot of wonderful people in person during their time in Omaha. So, our group is getting rather large at this point for being in Omaha and having limited space, which is why we decided to limit the number of seats. (1:18:43) But in case anyone's interested uh in learning more or would like to jump on a call to chat about Omaha, uh you can shoot me an email at clay@theinvestorpodcast.com to learn more, we'll be vetting each person who attends the events. So, we do the same for those who are just interested in meeting with us in person. (1:19:00) I've also added a link in the show notes that explains how to attend the Bergkshire meeting. Bergkshire requires you to own one A or B share to get a credential to attend the event. So, we explain all of that on our website. The process really isn't that complicated. And I would also say that what I've said every year, and that's if you plan to go to Omaha, I would recommend booking your flights and hotels as soon as possible. (1:19:23) Too often I see people uh wait until a few weeks before and are frustrated to find what the flight prices are at or find that all the hotels are booked. And then our second event, jumping ahead to later in 2026, that's going to be in New York City. We plan to do some things to make that just a really fun experience as well. (1:19:42) Carry some of the things over that we did in Montana. It would likely be in September of 2026 and we plan to bring in some speakers, add an extra day during the weekend. And similar to Omaha, we'll be opening up a select number of seats for those who are just interested in attending the live event. And finally, for anyone who is just interested in the mastermind community, maybe it's the first time you've you've heard about it. (1:20:04) This is our paid community of around 120 vetted members. In the community, we collaborate online, host weekly live Zoom discussions, talk stocks, talk markets, and it's a place to network and connect with our other members who are interested in value investing. So, um, you can head to our website at the investorspodcast. (1:20:22) com/mastermind to learn more or add your name to the wait list to apply to join. All right, Clay, thanks for joining me. I'll be the first to say that I can't speak highly enough of our mastermind community. And of course, someone sitting out there might be saying that I'm I'm pretty biased, but I guess where I'm coming from is that it's hard to make friends in your 40s, or at least it is for me. (1:20:44) And I met some of the highest quality people you can meet through our community. But you and Kyle have managed to do and and the caliber of people that you have attracted. It's just it's just second to none. So for me the mastermind community is really this perfect intersection between investing business and finding friends who who are on this journey they call life. (1:21:03) So thanks everyone for tuning in. Uh this was all that Clay and I had for this week's episode. >> Awesome. Thank you Ste. I've been looking at this company, you know, Alphabet, and not that people didn't know the company in 2018, but it looked so big, you know, market cap more than $700 billion, and it just seemed to have such a long runway of growth, and I bought into it. (1:21:26) And since then, now today, it's a multi-t trillion dollar company. It still looks like it can grow at really high rates for a very long time. And so it's also with that mindset that I look at Uber and I think, well, this could probably get to a trillion dollars within the next decade.
Mastermind Discussion Q4 2025 | Sanofi, Remitly & Crocs Stock Deep Dive (TIP767)
Summary
Transcript
(00:00) I see vaccines very similar to software as a service. It's a subscription model. It's something that everybody takes during the flu season. It's kind of a repeat business for them. So, it's a recurring revenue. So, vaccine is really their core strength and a stable source of income while they have blockbusters like Dupixent and others. (00:24) Okay, it's a great company. But the key question here is is it a value trap? Before we dive into the video, if you've been enjoying the show, be sure to click the subscribe button below so you never miss an episode. It's a free and easy way to support us and we'd really appreciate it. Thank you so much. >> Let's just jump right into the first pick. (00:49) Hari, we talked about it just before we hit record and you volunteered, so let me throw it back over to you. What is your pick? >> Thank you, Stake. No pressure going first, but I have been looking into stocks that are undervalued and it's not easy in this current market. But today I have another pharmaceutical pick, Sanopy. It's a global biioarma focused on immunology and vaccines. (01:20) It's based in Europe, France and it's well known across the globe. And I think of this company having two engines. The first one is their anti-inflammatory blockbuster drug dupixent which has got approval across multiple indications including COPD and has a decade long runway to go before patent expires. And the second engine is their vaccines. (01:53) Of course I'm simplifying it. They have much more apart from this but they are really well known for their vaccine including the seasonal flu infant RSV protection and many other really high quality vaccines and since I have a lot of experience in SAS software as a service business I see vaccines very similar to software as a service it's a subscription model because it's something that everybody body takes during the flu season. (02:25) It's kind of a repeat business for them. So, it's a recurring revenue. So, vaccine is really their core strength and a stable source of income while they have blockbusters like Duplexent and others. They're also investing significantly in genetics and cell biology, imology and stuff like that. (02:54) So that's kind of a bonus if they come up with any new blockbuster drugs. The question is okay, it's a great company and happy to have you know any questions you have I can we can discuss more in detail about their business their drugs but the key question here is is it a value trap? That's what I was looking at when I was thinking about this company because they are trading in their low teens. (03:21) I believe their P now is around 16. So it's not like really really cheap but compared to their peers like Johnson and Johnson which is trading in mid20s 25 or Fizer which is 18 only Merc is kind of close to them in terms of PE ratio. So even with considering their peers, I'm not even talking about our MAC 7 or Mac 10 which are all in their 30s and 40s P ratio. (03:57) So they're well below historical SNP average P ratio and even among their peers they appear to be quite low in terms of P ratio. So why such a discount? I'll answer that in a bit. and they're yielding 4.9% dividend with the healthy buybacks. But still the question remains why? I believe one of the reasons why the market got spooked was their significant decline in their EPS in 2023. (04:30) And that was unavoidable because one of their blockbuster drugs and I'm going to butcher this name or go orio I don't know how you pronounce it. It went out of patent and the generative came in and their revenue declined steeply because of that. On top of that they also decided to significantly increase their investments in R&D for future growth. (05:01) to compensate for the lost patent. You might argue they should have thought about it. Yeah, that's a good point. They could have ramped up their R&D much before, but all of that resulted in a significant decline in their overall revenue in 2023 and then of course their EPS as well. It has kind of recovered in 2024 and hopefully we will see continued growth. (05:26) That is one of the reasons why they are in this spot. But what I see is that great. So a lot of bad news has been baked into the stock. Their P multiple is low. Their price to sales is around 2.4. It's very interesting. It's like you come to maximum it'll be 10fold. It'll be like 24 20. I'm used to seeing anything more than 10 in price to sales. (05:52) So it's 2.4. Their 52- week high was 60. 52- week was around 45. They're trading at 48. So, they're closer to their 52- week low. So, it looks like a lot of bad news has been pigged in. So, for the upside, what I see is their mode is actually twofold. One is biologic exclusivity with block and drugs and the second one is their scale in vaccine manufacturing their regulatory knowhow. (06:29) They have really good government relationships and so it's not like blockbuster drugs. It's a platform. It's the relationships and on top of that you get currency diversification because they are outside US. So if there is dollar declines which what most people are talking about now they're based in Europe they have worldwide sales of course 48% comes from air but still their entire revenue recognized in euros. (06:59) So that has a good protection as well for us. So I think for me the key takeaway is that strong company historical record of being good stewards of capital owner oriented they have been returning capital consistently in 2025 they plan to complete a 5 billion euros buyback and they're paying a healthy dividend they have not missed dividends so they have been consistent in that as well and they also kind of recently restructured their company to focus on their core business and streamline their consumer health segment as well. I remember Johnson and Johnson (07:40) had done that a while ago. This is like many years ago which really helped them focus and grow their core business as well. And I'm hoping that Sani is in one such kind of phase of their life cycle. So I think that's my thesis. valuation is reasonable. They have a good strong portfolio of blockbuster drugs and vaccines that gives them a diversified set with a good investment in new drug discovery as well as a shareholder focused management. That's my pitch. (08:22) I'm happy to answer your questions. >> Yeah, I think it's a really interesting pick. I saw that healthc care bioparma pharmaceuticals are all trading as cheaply. So the rest of the market as they have since 2000 something like that which is kind of amazing. I don't know why particularly healthcare is kind of getting whacked at the moment. (08:43) I don't really understand that other than maybe it's like some sort of co hangover or something like that but I don't really that's pure I don't know why. But I did notice that the last time it got really cheap like this was 2000 which was another dot or a tech kind of boom bubble. I think that's probably where we are here where things like energy looks really cheap relative to the S&P 500. (09:06) Healthcare for whatever reason is really cheap relative to the S&P 500. Tech's super expensive which everybody knows. These are really really good businesses that make lots of money really high margins. replicable like you say subscription type revenue. So I think it's a really good pick. Do you have any idea why healthcare is getting hit so hard right now? Do you know the do you >> actually >> yeah very good point Doby I'm just wagering few guesses by the way even I'm not very sure one of the reasons might be and this is where SNY is a different (09:42) category but if there are tariffs and regulations coming into place uh a lot of these pharma companies can face hurdles because lot of their what they call APIs the basic ingredients are all imported right now and if they have to switch from importing to manufacturing right here in the US they might increase their cost. (10:10) So that's for the US-based Santa probably doesn't suffer from that but still they will be caught in the mix. So that is one in general the environment. The second one might be and this is based on what I've been hearing is that a lot of oxygen is being sucked by the max 7 the AI stocks. (10:35) So capital flows to other sectors have been quite weak because lot of momentum is there. That might be the other reason. It's just people not being too interested in the pharma or the healthcare stocks as well. >> Not enough meme ability in the healthcare stuff. >> Sort of they're just consistent like they're pretty good consistent businesses over a long period of time, >> but there's no possibility of them going crazy with something. (11:02) They're not AIcentric enough. >> Correct. What I did not do is look up their stock prices during the COVID time and I'll probably do it offline is did it spike up because these guys are vaccinists. They didn't come up with vaccine for COVID though. So that's one thing. >> That's one thing where I think they didn't do that well for CO but I should look up their price. (11:25) But yeah, I think that's a great question Toby. >> Not sure why but these are the two probable reasons I can come up with. could just be cyclical, too. These things happen. It's happened before with the tech boom, so maybe. And it did very well after that period because they're all good businesses and if they're buying back stock and got the subscription revenue, they'll do very well. (11:46) >> Yeah. Well, Hari, just like last time, I like the PEG. The last time you picked was Merc. It's always interesting to look at what kind of patents they have and so they're not as reliant on their main drug, Dupant. I'm butchering that name completely. Compared to uh Kitruda that was the uh what I was looking for last time with I think that was like 70 80% like it was massive for Merc whereas the main drug here for Zenovia is roughly a third in terms of revenue and so lots of things to like um I'm generally not too worried about how (12:22) reliant a company is on one product. Uh perhaps we can talk a bit more about that whenever we get to Toby's pick. But it's more a question of how we size things ourselves. And so no, I probably wouldn't be comfortable having a big bet on something like Merc because of the Katruda the cliff they might be facing. (12:40) But then you can size it yourself and say, well, it's just 1% or whatever. So you have that different diversification for this company here. And then to the point before, you know, healthcare is largely non-yclical. I would also imagine if I'm going to give my two cents, why is it that they're priced so relatively attractively? What is it that the British are saying like John Bull can't stand 2%. (13:02) There's a lot of 2% out there and pharmaceuticals are just not at this scale where it's like 117 billion in market cap. You know, there's not a lot of 30% growth whatever kind of thing in the horizon, right? So, I can't help but like compare pharmaceuticals, compare them to T bills and like yeah, I kind of like that. (13:20) There's certainly a downside, certainly higher than with T bills, but not materially higher and there's a bit more upside. And so, again, I'm not saying that should be your opportunity cost. That could be one opportunity cost, but that's certainly something I like. So, no complaints here for me as difficult it is for me to evaluate the pipeline, but then I I'd probably come out and say, well, you know, you could buy a basket of these. (13:40) There's a lot of pharmaceuticals that seems to be relatively on sale. And I don't know if I can even say that with a company that's trading at 16 times a PE. I know that a lot of things that go into that multiple, but you know, it's like everything is so expensive right now. So, when we see something like that, you're like that's cheap. (13:57) But then you're like, hm, well, why is it that we think that it's cheap? So, yeah, I guess those were just my two cents. >> No, I think thank you. I think stick, you completed part of my pitch I should have mentioned, which is that they're not too overly reliant on one blockbuster drug, which was the case for Merc. (14:18) So, that's another good plus point. But to your point, they looking like a T- bill, I think that's a good point. And I'm actually not looking for high returns. I'm looking for when I'm pitching SNY, I'm pitching it as a safe place to park with reasonable growth, less degree of mean reversion when it comes to PE because they're already at average PE. (14:42) They're in the historical range basically and you get a close to 5% dividend which is similar to a T bill to weight. So it's like T- bill with growth attached to it and I don't expect like blockbuster growth or it is there is no catalyst that can suddenly improve their prospects. So it's more a safe place to park your money 5% dividend plus another 3% growth 3 to 4% growth you're looking at around 8% or so 8 to 9% if you get lucky maybe 10%. (15:21) for the next foreseeable future. The other thing I'm looking at here is the runway. These companies won't go away or are not too volatile. You can hold it for a decade. There is no risk of AI impacting them so much as in others. In fact, AI can be a tailwind for them. If you think about drug discovery, how AI is helping reduce the cost and accelerate growth. (15:46) Of course, there is always a risk of what if two people in a garage come up with something. So that's always there. But the history, if you look at these pharmaceutical companies, they go and acquire these companies whenever they come up with because what the two people in garage can't do is fight with the regulators. (16:06) And these guys are really masters of managing the regulators not just in one country but across the globe. and they have all the money to leverage something like Alpha 4 from Google which is a protein simulation and building AI based tool and there are many such tools coming up. So they have all the capital to leverage it. (16:29) They have the strength to handle regulators and then finally they can also go out and buy all these startups that are coming up. So that's always the case in pharma where the big stay big small ones prop up and the big ones acquire them. So that's how I'm looking at this pick as somewhere to park my money safe expect like 7 to 10% growth for the next 10 years even if there is a lot of turmoil in the market in between and then when there are opportunities then you can always switch and go back to the ones that have more potential for growth. (17:07) >> I love it Hari. It's a wealth preservation type move. It's not a meme stock. And what's fun about that? Uh, all right, Jensen, I am going to pitch my stock here in a bit. It's a small stock, at least in comparison. I don't know if if you see the same thing, but there seem to be some stocks in the value investing space that sometimes become popular. (17:33) Not necessarily popular as in the stock prices goes up unfortunately, but more like, oh, and then a lot of people talk about it and then they so it's sort of like it changes. And so I never heard about Remetly before, which is my pick. And now it seems like everyone's talking about it. I don't know if that's just laws of attraction. (17:51) You heard about it and then you just you probably heard about it before, you just didn't pay attention. So the company I want to talk about is Remittly trades on the NASDAQ under the ticker rely if you want. What a coincidence. So, Remittley um US-based fintech company operates digital remittance and crossber money transfer platform. (18:14) It was found in 2011 and then went public 10 years later. And as of 2025, Remitly serves millions of active customers, 8.5 due to the most recent filing. And they have more than 5,000 remittance corridors. And so a corridor would be US to Mexico, for example, which is also the biggest corridor I should say. They mainly generated the revenue through two streams. (18:39) So they had transaction fees and then foreign exchange spreads. They're also starting now to have memberships and there are other ways to make money, but those are sort of like the two main streams. The transaction fees varies by corridor, payment method, and delivery speed. And 93% of payments are sent and received within an hour. And the reason why they can do it so fast is because Remittly have prefunded accounts in different countries. (19:05) And so their internal system would say now we're moving the money, but the money doesn't cross border. that happens afterwards. The current take rate is 2.24% if anyone is curious. So the US is the main send point I should say but as Ramidia scaled it has become increasingly less important which is also something they really want to emphasize. (19:27) So this is a company that grows revenue with 30 plus%. They have a lot of operational leverage and I would say at scale they probably have a normalized EBIT at around 10x. What got me excited about this stock was that I learned they have less than 12 months payback period on the customer acquisition and they say that their ratio to lifetime value is roughly around six. (19:49) And so they are firing on all cylinders at least so far in my pitch. Then there are a lot of things I don't like but that's probably one of the reasons why it looks so appealing at least at first glance. The founder Matt Oenheimimer he's the CEO owns a bit more than 2% of the outstanding shares. (20:06) The biggest investor is notable process which is another company that I pitched here earlier in the mastermind discussion. They invested heavily in the private rounds and then number two and three uh usual sEXs Vanguard and Black Rockck and you can probably imagine why. And so if we talk a bit about competitive advantage competitors now I'm a little hesitant to say that here on tip we use wise we actually don't use remitti. (20:36) So why is that? And I don't think our process is too different from what I presented here. I think it was two quarters ago whenever I talked about the reason why we use Google cloud and then I actually pitched Microsoft. And so typically what happens or at least in our company what happens is that we have a certain need which was in our case we have people in five different countries and we need to pay everyone. (21:00) So how do we do that? I spoke with our CEO and I said how can we send money reliably at a the lowest fees and she said why don't you use wise and they was like done and so I can't say that necessarily our process is very very sophisticated I would say that there is a level of being sticky to it even though you can't at all compare it to something like a cloud provider it's not that difficult to transfer even though there is an element of inertia there so why do I pitch remittly whenever I would say that we using wise is you can also say that net promoter score which is (21:32) something some investors look at people like wise more than they like remittly so why should we be talking about wise well I would say that they've started to compete more and more in the same space but remitti has historically been the better choice in helping migrant workers send remittances and you can more at least traditional think of wise as the company for small companies such as tip you know we have 20 people and so it's a small company but it's more a businessto business. (22:01) Remittly certainly has a leg up whenever it comes to the unbanked. One of the things I like whenever I am exploring a new product or service is that I like to speak with engineers. I think that for the lack of better words I feel like engineers are a bit more I'm going to say untainted. It sounds terrible whenever I say it out loud but like I come from a background in finance which is we're very tainted. (22:25) So whenever I speak with engineers they think very much and very well about the product and so they come at this from hey the best product wins and I'm oversimplifying as I'm saying this but I think it's very healthy way of looking at I think they're very good at looking at facts they're very good at looking at properties and so whenever I come from this from my background in finance we're like yeah having a good product that's pretty good but it's not always the best product that wins you know finance itself is notorious for selling on (22:54) complicated useless products that they can charge high fees for and then they can put some red tape around it and lobby some politician so it's really difficult to compete in that and so that's a different game and I wish that we would play the game of engineers apparently the finance people are not always doing that it goes to my second point here because some of you are probably thinking what about stable coins isn't stable coin so much better than remittances like all that fiat currencies So last year we should send (23:25) stable coins. It says really really fast. The fees are really low. Why do we need remitti? And so I would argue that remitti is this interesting intersection where it's a much better and cheaper product than the western unions of the world. Like they don't have the same cost structure. They don't have the physical branches. (23:44) But then they're also ingrained in the financial system in a different way than stable coins. Perhaps an engineer would rightfully say you have this stable coin. It might be tied to the US dollar. It doesn't depreciate the same way as a Filipino peso does. That's a better product. Why wouldn't we just be sending from one phone to another? And I would argue that there are a few reasons why remittly is very powerful in this in 2025. (24:13) I should probably also have said a long time ago, I don't have a position in remittley because I have a lot of concerns I'll get to later. But right now I'm still in the middle of my both thesis here. So local legislators want to use remitti because it's part of the traditional banking system and the banks wants to have remitti as a customer because the cheapest way for a bank to get funding that is through deposits. (24:37) Plus banks also tend to lobby politicians quite a bit. And so stable coins are for the same reason met with a lot of skepticism from local governments on the receiving end. And then I would also say the savings argument is wonderful in theory and it probably makes a lot of sense. Let's say you're an engineer, you make 200,000 $400,000 a year and you're in a high income country. (25:03) So whenever you look at the data from remittley, they're saying that roughly 15% of the sender's paycheck may go to mittenses. But for the recipient, it's very often the main income. And the recipient, they don't really think too much about the M2 money supply expanding. They need the cash. They need it within the next hour and they need to buy groceries. (25:24) And by the way, the local government are manding them to use fiat currencies because they have their own incentive to do that because you still need to convert that to the fiat currency. There are a lot of things you can't do with stable cards including that. And so you still need a service like wise remittley or PayPal or Western Union for that matter. (25:44) I'm not saying this because I am pro or con stable coin, but I'm looking at this from a business case. I have stayed an extended period of time in third world countries and I've met the recipients of remittances. I think it's important whenever you're sitting in a first world country and thinking about what kind of banking needs you have, they're just very different. (26:04) Let's take the example of the Philippines which is the third largest market for remitti after Mexico and India. And in the early days of Romeley, they only had the US to the Philippines corridor. And I used the Philippines because we have 11 members of our team there. And so it allowed me to do a bit of skullbot research on remitt specifically. (26:24) If you are Filipino construction worker in the US and you want to send money back to your family, there is a decent chance that some if not all of them don't have a bank account. And even if they do, do you either use GCash or Maya? So, if you're not familiar with them, which I don't expect anyone listening to this would necessarily be, they're deeply entrenched in the local payment infrastructure because they're owned by telecommunication providers and you likely bought your smartphone through those companies because that's the most (26:51) efficient way of doing it. And so, that is how the ecosystem works. And so, if you're in a country with a lot of people that are unbanked, the app serves as a way for people to pay for their goods and services. It's different enough for Wise and Western Union for them to have a competitive advantage, but it's also different enough for something like stablecoin and so remitt right now have roughly a 3% of the $2 trillion TAM remittances. (27:20) And right now they're growing really really fast. Whenever I look at some of the risks and I've sort of like been quite positive so far, let's talk about some of the less exciting stuff. So whenever I first learned about the opportunity, I was quite excited. You know, 3% it's growing really fast. They have a clear cost advantage to the Western Unions of the world. (27:42) So like that seemed to be a home run. And then they made the announcement that they're going to expand their tank by 10x. They're saying, okay, remittances, that's great, but there's 1.5 billion freelancers in the gig economy one way or the other and millions of small businesses. So the example that they use would be hey you might be a US-based company but you outsource some things say in the Philippines they want to target or they are targeting people who are already using remitti and then they're saying oh now I also have the team say in the (28:15) Philippines or India now I will still use remitti for those payments and so at face value who wouldn't want to have a tam that's 10x bigger whenever I heard it I was actually less excited about the peg Because I like the pitch of saying, hey, we have 3% of a growing market and we do things better in remittances. (28:36) We can go where other people can't go. Like we understand the local market really well. So for example, they wrote out this Seafar product to the 1.9 millions in the world. Think about someone who works on the cruise ship and they have very specific needs. They're international waters and they do things a certain way. (28:56) So they really understand those needs. So I like the idea of being able to understand them better. But then whenever you're saying I actually want to compete with wise of the world because the TAM is much bigger. Then the question is can they do wise better than wise can? I'm sort of like using that as a metaphor for a lot of their competitors. (29:20) And I don't know if they can using this terrible example. I'm still talking about the Philippines because I I have some local knowledge there. You go there and it's more than 7,000 islands, more than 150 languages spoken. The Spaniard said 460 years ago, hey, let's name all of these islands after King Philip II and called the country the Philippines. (29:43) And so you really need to understand the importance of why is this different from region to region and why is it that some people want it to their mobile wallet and some people want it in cash and why is it okay some places to pick up that cash or why do you need other places to actually have the cash delivered to your door. (29:59) you can provide a very different service than neo banking. But if you try to compete with them on their terms, you might run into different problems. And so that is one thing I'm concerned about. And then then the other thing I am sort of concerned about, I don't know if I read too much into it, but a lot of companies talk about their vision and they talk about how everyone is very excited about that vision. (30:23) And I've always been a bit skeptical about whether or not employees are truly that passionate about the company's vision. I don't know, perhaps it's because I'm cynical. I don't know if I am. Whenever I had my first job as a commodities trader, I don't think any of the commodities trader were passionate about delivering electricity through solar grids. (30:44) I don't think that was why they got up in the morning. If you ever walk into a trading floor, there are lots of other dynamics that people are more passionate about, especially the paycheck. There's ton of stuff going on on the trading floor that it's kind of crazy. And so whenever I I hear about a company talking about how passionate everyone is about XYZ, I'm thinking well perhaps that is true for Remidly the way that they are empowering migrant workers. (31:09) If they become yet another neo bank, how passionate can you really rally people to be? Anyways, that's another a bit more self- risk. I'm probably reading too much into it. Jans, I have a section here more about the valuation, but before I get to that, I want to throw it back over to you guys. >> Hey Stig, I think this is a very interesting pick for me because I use one of these services to send money back home to India many times. (31:37) I've been using it for multiple decades now. And I have seen this entire space evolve from the time when it was too cumbersome and we had to wait for a week to now when they promised to have it within hours. What also I observe is when you're bringing up this corridors whether it's US to Philippines or to India to Mexico, it's almost like Uber versus Lyft versus Ola or the Chinese equivalent. (32:07) Each corridor has its own pick. So it's not really like a network effect that you see here. Usually they are like a service and a corridor and I can pick and choose and based on the rates the switching costs are very low. So that's one thing I have observed as a user. Zoom is another very popular for us to India. (32:32) It's now acquired by PayPal and this space is really evolving and there are many players like Square is another one. Wise is another one. So the key questions I have are two. One is what's their mode? There is no network effect. They're offering a service that others are offering too. I don't see say between zoom and wise and remittly. (32:56) What's the difference? That's probably you might have looked into for me I've been using zoom. So maybe I'll try remittly next time to see how they charge. And the second question I have is I was looking at their growth. It's definitely one of the highest with like 40% plus growth almost year-over-year. But their P ratio and I was like is it stock price or P ratio? It's like 249 or 250. (33:23) Is that correct? Uh >> yeah, I I should probably make the disclaimer in the beginning. So it's bit of an inflection point. What you see there is yes it is true but it it's of an amount because they're just in profitable whereas like hey if you have $1 in profit what is your multiple going to be the reason why I would normalize let's say IT would be I would say for this type of business what kind of margin operating margin would you typically have at scale and then I would say is that realistic to get to that point so that was why I came up with (33:51) this significantly lower votable >> yeah so the two points there one is is it at a stage where it's like the early days of car manufacturers in US or railroads in US where there's so many players it's hard to pick a winner that's one second is what's their mode what's their prospects for scaling and actually not only being profitable but grow into the valuation that they have been offered already um and how do you see the competitive landscape are there other players that can actually hinder their growth Yeah, great questions, Hari. And I wish (34:30) I knew the answers to all of them. I would say if I start with mode, they've been specifically asked about it. It's always interesting to hear what the CEO would say that mode is, and then you can sort of like compare it to whether you agree with them. But they would say that they have a flywheel where scale really matters. (34:49) They say that they create trust by allowing you to send remittances fast at fair prices. That gives them scale. they would then lower their fees because they can now they have more scale and on and on and on it goes then you can perhaps make the argument is it a race to the bottom in that case perhaps you're right and I think you can also say well if it's about scale well what about PayPal what is their capacity to suffer that's one of the issues I have with remitti and one of the concerns I have where I like a company to be very good at one thing it's great if they're (35:19) good at other things but very often you're good at one thing and it comes at the expense of something else. If you're good at other things, you can perhaps say, and I'm going to use an example of say Spotify, they became really really good in podcasting because they were only looking at music and podcasting at the time. (35:38) Whereas for Apple Podcast, I don't know what podcasting is on Tip Cook's list. It's probably 852 on his priority list. So, I can see why someone would say, "Oh, remittly, they're so much better than a small arm of PayPal." But then that goes to my other point about now they're sort of like shifting strategy and they're saying well already using the infrastructure we have now we just want to send bigger payments and more payments through the pipes that we already set up whereas I'm looking at this more like huh are you now a new bank I think their advantage is that (36:11) they are serving the underbanked and it makes a difference to them whether or not they have 3% of the somewhat smaller bit At least if you look at in payments overall it's a very very small space. So if they can do that really really well and there's one way they can do that in this region of this country and then if they can be very specific about how the recipient want that money and they they've set up their infrastructure. (36:36) Now is that a mode? Probably not. I think you have a point whenever it comes to that. Can it be imitated? Probably not. Payments are tricky. You need scale and you need focus. And so if I put on the bull hat, I would say they both have scale and they have that specific focus that they're now turning away from, which I'm not really too happy about. (36:59) Are you looking to connect with highquality people in the value investing world? Beyond hosting this podcast, I also help run our tip mastermind community, a private group designed for serious investors. Inside, you'll meet vetted members who are entrepreneurs, private investors, and asset managers. (37:18) people who understand your journey and can help you grow. Each week, we host live calls where members share insights, strategies, and experiences. Our members are often surprised to learn that our community is not just about finding the next stockp, but also sharing lessons on how to live a good life. We certainly do not have all the answers, but many members have likely face similar challenges to yours. (37:40) And our community does not just live online. Each year we gather in Omaha and New York City, giving you the chance to build deeper, more meaningful relationships in person. One member told me that being a part of this group has helped him not just as an investor, but as a person looking for a thoughtful approach to balancing wealth and happiness. (38:03) We're capping the group at 150 members, and we're looking to fill just five spots this month. So, if this sounds interesting to you, you can learn more and sign up for the weight list at thevesspodcast.com/mastermind. That's thespodcast.com/mastermind or feel free to email me directly at clay@theinvestorspodcast.com. If you enjoy excellent breakdowns on individual stocks, then you need to check out the intrinsic value podcast hosted by Shaun Ali and Daniel Mona. (38:36) Each week, Shawn and Daniel do in-depth analysis on a company's business model and competitive advantages. And in real time, they build out the intrinsic value portfolio for you to follow along as they search for value in the market. So far, they've done analysis on great businesses like John Deere, Ulta Beauty, Autozone, and Airbnb. (38:57) And I recommend starting with the episode on Nintendo, the global powerhouse in gaming. It's rare to find a show that consistently publishes highquality, comprehensive deep dives that cover all of the aspects of a business from an investment perspective. Go follow the intrinsic value podcast on your favorite podcasting app and discover the next stock to add to your portfolio or watch list. (39:22) Now, what is the process of scaling? Well, they've been asked about that on the earnings calls and they're saying, "Oh, we just have so many opportunities, not just with more corridors, but there are so much more to gain each corridor." They keep on saying that the marketing dollars that they pay out, less than 12 months for them to get it back and then there are 6x returns. (39:42) So, if you trust that there's a lot of growth coming, but then why are there a better product than what you're using? I don't think I have a good response to that. Hari, >> thanks Duke. Along the same lines, I've noticed that Western Union and MoneyGram have been in the value screeners for years and years and years because they their competition. (40:04) They're losing that competition, I guess. But I know this is the next subject you're going to talk about, but how do you think about the valuation? How do you think about the valuation given the comps? >> If I look at a company like Seni without knowing too much about the company, I feel like I can discount those cash flows. (40:22) Whenever I'm looking at something like Remittly, I'm all over the place. And so I read a few hundred pages on the company. So the 10K last six earnings call, few other sources. Yo, it's kind of like in that spot where you're like, I kind of feel I understand the company, but I don't really understand any of it. Because every time I read something new, I'm like, "Oh, I didn't know that at all about the company. (40:44) " I'm sure there is going to be a genius out there who knows how to use Chat GT for this. I continuously try to use chat gypt and I find it somewhat useful but then you sort of like just print out a few hundred pages and you just start with the ace and you're like okay and perhaps it's just me that's oldfashioned in terms of understanding a company at least for me probably because I'm a slow learner I need to go through the earnings calls really to understand the qualitative aspects of the business and then I need to discount everything the (41:09) co is saying because everything sounds so rosy it's probably not the case whenever I'm looking at a company that's trading hitting at call it a bit more than two times revenue. It doesn't really look like it has any margins. I would say that it has. Whenever you're making that type of return on marketing, for example, you would put as much as you can into marketing and then it looks like you just don't make any money. (41:32) But that's one of the reasons why it's growing like 30 or 40% a year. You sort of like have to normalize it. If you put me on the spot, and again, it really also depends on how long the runway is that you grow. I like to think, you know, today at the time of recording is trading at $14 and change. I think that it's probably trading around a 50% discount and intrinsic value. (41:53) But whenever you make that, at least for me, I'm like I'm doing like a bull case, a base case, and then a bare case. And then the question is, well, are those three scenarios realistic? But the more tricky thing is you need to put probabilities on those three scenarios. And that's really tricky. And then another thing that's really annoying to me is the level of stockbased conversation. (42:15) I kind of feel like I should have started with that, but I always start with how much I dislike stockbased conversation at that level. So I wanted to end here. And so it sort of like is what it is. It's historically been more than 10%. Now it's just below 10% of revenue and we're talking about a $3 billion market cap company. (42:32) I'd like to think that now it's matured enough. I know today $3 billion is nothing but for me $3 billion is still a lot of money and I feel like they have matured enough for them not to have that kind of cash and equity mix. The CEO has to his credit said no to the last three stock grants because he's been under a lot of scrutiny in terms of the stock dilution. (42:54) Now they authorized a a $200 million stock buyback program to offset that. And like we also talked about last time whenever I was pitching Uber. Full disclosure, I'm now long Uber. But then they were saying, "Oh, then we just offset the stocks that we issue." But as you know, the money doesn't come from nowhere. (43:14) They're real cash that they have to make. And so the way they talk about it and sort of like pretend that everything is fantastic, but the way they talk about it is that they're saying, "Look, now we're starting to generate healthy cash flows. We can pay our people a bit more." or they I think they call like the cash equity mix have changed. (43:31) So now they don't give as much inequity and added to that they would say we're not diluting shareholders as much because now we're buying back stocks. But then you also have to counter that with the fact that apparently they have a ton of growth opportunities and the money that they are spending on buying back stocks could also be used to those growth opportunities. (43:49) So it sort of like depends on how you look at it. I feel like and like I mentioned I'm not long remitt. I need to understand the business a bit better. And I think I need to understand the strategy better. They're saying we are not going to be another NEO bank. We are still going to cater to those who are underserved. So we don't have to compete with the bigger players. (44:13) I still don't know if that's consistent with the strategy that they're pursuing. And I don't know why they're saying this. I would imagine it's probably good for the stock. that it sounds good to go out and say, "OM is now 10x." In reality, it's typically better to be a big fish in a small pond than a small fish in a big pond. That's my non respponse, Toby, to how I think about the valuation. (44:36) 50% of intrinsic value considering a ton of different assumptions. >> Good one. Thanks, Tri. >> No, I think it's a tough one. It can go either ways. I think it's almost like a borderlining venture, but I was just thinking when you're talking about stockways compensation, you should visit valley Silicon Valley once and I want to see the expression on your face when you hear about the stockbased compensation and dilution what goes on here. (45:04) >> Yeah, I don't know if there's a way about it. I mean perhaps that's just the way it is today. What are you seeing Hari? If you look at companies like Meta and many others actually just not to single them out but many companies stock picks compensation is the way that employees are incentivized and many times your stock component is much higher than your base salary. (45:30) So I think dilution when many of these tech companies buy back shares it's basically they're buying back their stock comp. So, but this has been for decades. I think Buffett had spoken about it long time back. Nothing changed. >> Yeah. I always like to see how well the co understands capital allocation. Of course, we spoiled because we all been raised by the church of Buffett and Monger, but they're saying our team are thinking like owners and they have equity in the business and that's why they think like owners. (46:00) As a business owner, I could not disagree more. And it might be one thing if you're a business of five people, 10 people, everyone can truly impact your direction of the business. If you're thousands of or tens of thousands of people and by the way for remediance restricted share unit, it's like if you have a pulse like if you don't get fired, if you don't mess up, you get free shares. (46:27) It's part of your compensation. >> Does that really make you think like an owner? Sure. I can see why it makes you think more like an owner that not getting anything at all. But what if you got a bonus specifically? Let's say that your responsibility is the corridor between the US and India. Shouldn't you have a cash bonus perhaps then be forced to buy shares in the open market? Who knows? But shouldn't you have specifically on what you can change for you and not on the company overall and what the market sentiment is? Like to me (47:00) that is not thinking like an owner. Perhaps that is how they think about it. To me it just seems like really is that really how you think that employees are thinking about their stockbased comp? And I don't know Hari perhaps I'm just way too cynical. Does it work in practice? >> Yeah, I think that's a very good point. (47:19) But also I think there is the other component of competition for talent. So it's almost like a breeding war. You might have heard about folks with the LLM skill set from Open Eye getting $100 million offers. That's almost like buying a startup of one. So it's basically bidding war. It's supply and demand. (47:42) That's how I see for great talent. There's a lot of demand with multiple competitors. So many times it was very popular few years back. It was called as green mail which means many companies would pay really talented people high stock options and salaries just to keep them on bench so that they don't go to the competition. So a lot of irrational things happen when there is a lot of capital flooding around the market. (48:14) Yeah, that's that's a good point, Hari. And especially for the two-sided marketplaces, which is just really really hard. And once you have it, it's wonderful, but building it is like really difficult. You need a lot of spend a lot of money engineers. You need to spend a lot of money on marketing. And a lot of these startups, they are cash poor, but equity rich. (48:33) So from their perspective, it does make sense to issue equity and then later find a way to buy it back because if they don't get there, what does it really matter? and the need to get there and they don't have the cash to get there. So I can also understand the other side. I guess as a as a stock investor I'm like don't dilute me 10% a year even with this wonderful growth. (48:57) I think there's also a question of probabilities where I'm like one thing is I think they can grow with 30%. But if I know I'm going to be diluted by 10%. there's something with the probabilities there and I have a higher conviction in me being diluted 10% then I have conviction in the company continue to grow 30%. So um thank you Hari I think you bring up a great point and I think I'm probably just too oldfashioned whenever it comes to that. (49:22) >> No I think Steve you have a valid point though but I think the hope is growth will cure all sins. So if a company is growing at 100 200% revenue or then whatever they're doing the hope is like don't worry our fee might be high but eventually we'll give you the returns. >> Well said well said. (49:47) All right Toby you're up. >> Thanks Steve. My pick is Crocs. It's the ugly shoe maker. I've got Crocs in my midcap value fund. You know, my branding is acquirers multiple. So, I've always been looking for companies that can get taken out in a private equity transaction. I think this is one of the clearer opportunities that I've seen in a long time. Current market cap is $4. (50:12) 3 billion, which is very modest in this market. I'm actually surprised it's the second biggest one we've pitched today, but I thought I was going to have the smallest one we pitched today, but Stig snuck under me with Ridley. Stock price last I checked was $79 and change. Enterprise value is $5.9 billion. (50:30) So, this thing's net debt to the tune of $1.6 billion on a $4.3 billion market cap. That might sound like a lot, but they had free cash flow last year of more than $900 million, between $900 and a billion. So, they're a little bit over 1.6 times free cash flow. So, I think that they cover their debt pretty comfortably. They have a $1. (50:50) 3 billion buyback authorization, which is 25% of the outstanding stock where it's currently trading, which I hope they're deploying aggressively in this market cuz the stock is very, very cheap. In 2022, it was $180. So, at $79, it's more than haveved over that period of time. If you had a look at the business, you wouldn't know that the business has done pretty well through that period. (51:11) I think it was likely that the stock well ahead of itself at 180, but it's too cheap at 79. So it grew 9% last year um which is pretty good growth. The international growth is better still. International business grew 16% second quarter of this year. China's growing 64% a year. Sort of surprising because I always thought that Crocs is something you could copy pretty easily in China but it hasn't been so far. (51:39) It's performing reasonably well in Western Europe. The six times P 21% free cash flow yield growing 9%. It all sounds pretty good. So the natural question is why are we where we are? And the answer is the acquisition hasn't really worked out. I don't necessarily say that it's a bad acquisition, but they bought this Hey Dude, which make different kind of ugly shoes. (52:02) There's a little bit of fashion in this business that those ugly shoes were very fashionable and attractive for a period of time, but the sales have declined 7 to 9% this year. So for whatever reason that that fashion perhaps is moving on a little bit and Crocs itself that clog shape that ugly clog shape that everybody knows the same thing can happen to it. (52:23) I did a little channel check when I was at jiujitsu with my boys cuz all the boys take their shoes off and they leave them on the ground and so I counted up how many of them were Crocs and how many of them were other things and Crocs were onethird of the shoes on the floor which I was kind of surprised about because my boys were natives. (52:40) They didn't have the clogs on Crocs. My daughter wears the Crocs. So, we do have some Crocs in the house. And she collects the little gems that click into the shoes. So, there is at least for 12year-old girls in Los Angeles. They're still cool enough that they'll wear them and wear them around. So, they bought this Hey Dude thing, $2.5 billion. (53:01) It's not really It hasn't worked out so far. Maybe they can stabilize it. Maybe they can turn it around. I don't know. But I think it's like $2.5 billion is like two and a half times three times free cash flow. So if it turns out it's a donut. I don't think it's the worst thing in the world cuz the rest of the business is still throwing off so much cash. (53:21) The other big problem that they have is the tariffs because their shoes are made in Vietnam and China and so on and so they are impacted by the tariffs. They've also got some competition risk from so I mentioned natives. Natives are a small competitor, but Birkenstocks are still out there. There's another type of ugly that people can wear. (53:42) The risks that I think are hey dude is a problem not working out very well, but I think that's survivable. The tariff impact is going to be bigger and we don't know. I don't think necessarily how that works out. But I do think they solve that problem eventually, but they do have a huge exposure to tariffs. Yeah, the possibility is that it's a fattish kind of consumer fashionable brand that if the fashion goes away and and Crocs have been around for a long time in and out of fashion a few times and so when they get cheap they get really really cheap. (54:10) The business gets really really cheap. This business has been a net net. It was in my net screens for a long time. It's been in my acquirers multiple screen on and off for the last few years cuz it did get very expensive then it got cheap again. Then it got expensive and now it's got cheap again. I like it. (54:27) I don't mind stocks that do that get expensive and cheap because you can buy and sell them which is what I've done through the acquirers fund and we're currently a buyer again we're an owner we have owned it for a little while now the other problem that they have is that they're sort of they're lowerend shoes so they have some pricing cap but I still think they're pretty competitively priced and they still get pretty good margins on the pricing where it is the tariffs may impact that so I don't really want to rest the whole thesis on that but I do (54:54) think they they get surprisingly healthy margins on issues. Their gross margins like 58% even through all of this. Like I don't know how much of the tariffs have actually impacted yet, but their gross margins are higher this year than they were last year. And so I don't know exactly how they're doing it. (55:09) They're kind of tech margins at 58%. Big margins on shoes that are easily copied make me nervous because it means that somebody else out there could say, "Well, I want I want 60% margins. I can make plastic injected shoes in a slightly different style that's more fashionable and attractive. (55:26) Maybe they can compete that away. But for whatever reason, it hasn't happened so far. I think there's a component of Crocs where they're worn in like the health care. Lots of nurses and doctors wear them in hospitals for foot protection cuz they're reasonably comfortable and they you can hose them out when you finish using them. (55:41) I think the valuation on this is obviously compelling where it is $4.3 billion for a billion dollars in free cash flow, six times earnings, $1.3 billion buyback. All of that stuff tells me that it's very, very cheap. So the question is, is it so risky with all these other things that are going on that that overwhelms that sort of level of cheapness? I have answered that question myself cuz I've bought a position and I think that the cheapness here overweighs the risks, but I acknowledge that those risks are out there and and somebody else could (56:13) easily reach a different conclusion to that one. But I think there are some interesting catalysts. The first one is just resolving the tariffs. I don't think that we're going back to a no tariff world, but I think that some tariff certainty would be a huge advantage for these companies because once they work out what they have to do, they will resolve the problem. (56:31) They'll restructure in some way. They might make them at a slightly higher price. It might be a slightly more cumbersome process, but they'll figure that out. So, I'm not too worried about that. But the chopping and changing all the time makes it hard. And the implementation is going to be a hard period. And so I think that is one of the reasons why it's trading where it is cuz that's remains unclear how they're going to do that. (56:51) But I do think that all of these things are sort of resolvable in a pretty short period of time if they do. And I think given the cheapness, the buyback, all of these things sort of going wrong at the same time, tariffs and hey, dude and the general cyclical weakness I think for stocks that are not mag seven. I think that this is a particularly attractive opportunity for more speculative opportunity. (57:15) I think if you want certainty then go with Harry. If you want a little bit more volatility and upside then my pick is the one for that. But there is a little bit of risk in this stock. But I do think there are a lot of ways that you can win and you're going to know along the way whether you're winning or not. And so watching the hated acquisition, watching how the tariffs get resolved, watching what they do with the buyback, I think that the clear parts that if they execute and they get it right, the stock works out. And if it doesn't, then you (57:44) should have an early warning sign that you can get out. So I think the stock is just simply too cheap where it is. I saw that Sketches got taken out. Sketches is like a different kind of business model. I get that. But still a footwear company, US-based. They did that acquisition at $13 billion, I think. So, it's certainly the size is right if someone wants to take this thing out or if someone else wants to buy it and bolt it on to a to an existing shoe business. (58:11) I think it financial crisis, they could pay a pretty big premium to where it's trading. That's not really what I expect to happen, but I I think that it's worth pointing out that's a possibility. So, the downside risks are tariffs. Hey, dude. And just the fashion fattishness of the shoes. (58:31) But I think that the amount of cash they're generating, the margins sort of seem to suggest that those aren't issues right now. The core brand is still attractive and still attractive in the US, still growing internationally, growing very fast in China. I don't really understand why. It makes no sense to me, but they are doing that. (58:46) There's lots of ways that this business can win. Tariffs get figured out. They presy Sweeney selling Hey, Dude, which was something that people were joking about on Twitter that once you get Sydney Sweeney selling something, it does really well. So, American Outfittered jeans, they got her in those jeans and that did really well. (59:04) And so, the memes for a while were like trying to get her to sell Intel chips and stuff like that, but it turns out she is selling the Hey Dude shoes. So, maybe that's what that brand needs to sort of turn itself around. Who knows? That's my pick. Crocs at 79 bucks and I hold it. So, I'm eating my own cooking. If it doesn't work out, I'll let you know. (59:22) Actually, I was looking forward to talking about this pick once I saw what you're going to discuss because my daughter also has a lot of Crocs. I see when I go to parks a lot of kids wearing Crocs. But for me, the kind of surprising point that you brought up is like they are successful in China when microchips are being copied and people are complaining about IP theft and all this stuff. (59:51) How are they able to do it? I think they deserve higher multiple just for that. So great pick by the way. I think this is one of the lowest P ratio I have heard in the recent picks that we have discussed and they have been forever though it feels so simple to do but I don't know why people are not copying it or why there are no copycats who can come up with I don't know whether do they have patents Toby that is protecting them. (1:00:19) I don't know, but I think they've been around for so long that the patents must have rolled off because I know that those native shoes are the same almost the same idea, same material like injection molded into a shoe and they don't seem to have a any problem. So would you say tariff is the only factor now that injects some uncertainty? Of course that's baked into the price already. (1:00:41) So is do you think the uncertainty of tariffs are also baked into the price that we are paying less for uncertainty at this point of time? >> Yeah, I think the margin that they're earning maybe the margin is a little illusory at like 58%. Like I said those are tech margins for for a shoe that should be pretty easy to copy. So there's a fashion part of this that makes people require the Crocs brand clogs but they're so like they're reasonably priced shoes. (1:01:09) They're like sub 50 bucks for the most part. 40 or 50 bucks which we pay for kids shoes because kids last for about six months in their shoes before they grow out. So put them in whatever and then when they grow out that's what happens. But they keep on it's re up for Crocs or reup for natives for the boys. (1:01:25) The fashion part of it I can't quite get my head around and I do think that that's the main risk with this thing. Having said that they are still growing and they are still attractive to kids. So I I think that for the most part for the moment that is okay. and the fact they've been around for so long, but they have always been cheap as an investment proposition. (1:01:41) They've been cheap most of the time. They occasionally become expensive, but most of the time they've been cheap for the last 10 or 20 years. >> I like it, Toby. Um, whenever you send it my way, I was like, of course, the numbers are so great. Like, not lots to complain about there. There were a few things I wanted to highlight. (1:02:01) One of them is, hey, dude, even though that you already talked about it. So uh 2.5 million to your point and the deal was made through the highs of co then the deal closed in 2022 and I think optically it didn't look too expensive. It's like 4.4 times revenue and 10ish aida but it seemed to be a growing brand and then it turned out that it wasn't and so they had an impairment test of 700 and change million dollars. (1:02:26) So it's what roughly a third of the value of the acquisition. And that's also why if you look at the latest filings that they're doing their adjusted gap number and then their gap number because otherwise it looks too brutal and and that's all fine and well. You can of course ask the question what is that telling off whenever that happens. (1:02:45) Does that mean that the management are not good at acquisitions? Does it mean that the management like to do acquisitions even if it doesn't create value which is something a lot of cos like to do because it's fun to make acquisitions and it's kind of like interesting if you look at the story of Crocs back in the day they went from more than $67 to less than a dollar. (1:03:04) Talk about something that's that's in fashion and then not but then there are a lot of things that were happening at the time and so the reason why they could do the turnover was also because they caught it to the very core. So at the time they were doing a bunch of stuff. They were doing like sandals and rain boots and apparel and like so they cut all of that away. (1:03:21) They closed a lot of locations and then they're refocused on the core brand and the core product and that turned out to be successful and then come co they started to diversify again and they fa they fail and so I think that there's a risk there and you could say that it's already been priced in and I would completely agree with you. is priced in. (1:03:43) What is not priced in is are they going to do it again and destroy value. Then there's the other thing that you already commented on Toby about it's something that's fashionable one way the other. So whenever you go through the earnings calls they're very happy about the fact that they're number one in Tik Tok store in the US. (1:04:03) And so whenever I read it I was like h this is bad. Which is kind of ironic because I can see why the management is excited about being number one. Who doesn't want to sell a product that's number one? In there also lies the risk because right now they're number one in Tix store and I don't have any stats on this but I'm quite sure you don't stay number one in Tik Tok for that long. (1:04:24) That's the entire point of Tik Tok in the first place. And I say that for someone who's never been on Tik Tok. So I can only speculate. So what happens whenever you're you're not? Last week for example, you know, I I was speaking with Toby about railroads. I I know I'm making quite a jump here because we're talking about Halaway and BNSF and they're not cool. (1:04:43) You know, you know what I mean? Like BNSF is not a cool company, but it doesn't really matter. It's the law of physics that determines why you're using railways. It's not whether or not you're number one on on TikTok. I don't want to go too hard on Crocs as I'm going through the X. You know, even, you know, now we're talking about Buffett. (1:05:02) Even the best fail on some of the deals. you know, Kuffines was written down by more than $15 billion and only four of them was attributed to Berkshire Haway. And of course, that's from a very different baseline, but like mistakes happen and they also happen for Bergie Heatherway. But I can't help but think about a company like Crux where perhaps they're sitting there and they're saying, "Look, we need to diversify. (1:05:25) We can't rely too much on this one thing that's in fashion." And perhaps you as a stock investor just really want to size your position and get your shareholder return. That's really the play that you want to see them do instead of doing all these other things. I'd beating up on the management a bit, but then they also took a bit of a debt previously. (1:05:43) They've done a really good job paying that back. So, I don't know. I like the numbers for sure. And I would argue much of that is priced in. The last thing I would say, and this is more a personal preference, and this is not necessarily about Crocs per se, but it's more if I buy that stock, I already have to think about selling it the minute I would buy in. (1:06:04) That's the nature of it. And I would need to follow whether or not it stays cool or it doesn't stay cool. And I think that's a different type of investment where you have to think about are you looking for some kind of multiple expansion? Is that how you're going to get paid? How much is coming back in buybacks? How would you think about it? If it was dividends, you would get a very attractive yield. (1:06:24) This is a company that has 23% operating margin that and there was negative 10 years ago. And so there was a bit more stress around it and you need to think about when you sell, but if you know how to solve that, you'd be richly rewarded. I really like your pig, Toby. >> Thanks, Dick. I think it looks like it's trading like it's in distress, but I don't think it's in distress. (1:06:44) It's throwing off a billion dollars in free cash flow. So if the business is in decline, then I think you've got a lot of time to figure that out. But it is a stock that's traded cheaply a lot of the time, but it's also traded it's had its booms as well. So there's a possibility of like a windfall in this one. (1:06:58) There's also a possibility of a loss. So it's worth I think it's worth taking a look at, but as you say, you need to monitor. It's not one that you can set and forget. >> All right, Jans. Uh, as always, thank you so much for your time. It's always a lot of fun whenever we have these chats here once a quarter. (1:07:16) As always, I would like to give you the opportunity to give a hand off to anything you like. Toby, take it away. I have a new book, Soldier of Fortune, that's about Buffett and Sunsu and the ancient art of risk-taking. It's for sale. Uh, Stings Go on Too. It's for sale on Amazon. Kindle hard coverver paperback audio coming soon. (1:07:40) I'm really excited about it. I also have two funds. Zigg, which is deep value, mid and large cap. Deep, which is small and micro. Acquirers multiple.com. And I'm on Twitter at greenback gr. It's a funny spelling. I might have to change it one day. But Stig, thanks so much for having me, Harry. Good seeing you again. >> You bet. Thank you so much, Toby. (1:08:00) Can I just sneak in one question? So, you said it's it's also going to be an audiobook format. Are you going to do the audio? >> I am not. No, I have a guy. He does NPR Atlanta. He's got a superb voice. It sounds so much better than I do. So, he's recording it right now. >> Okay, cool. Cool. Very cool. Hari. >> Hey, Toby. (1:08:17) Looking forward to the book and my copy and especially the audible version. Interesting topic and timely one too, I guess. Looking at the markets. Well, you can all reach me at on my Twitter handle hurryama or my blog bitsbusiness.com. Looking forward to continuing the conversation. Especially last time there was very interesting comments about my pick and we had offline conversation always like it because I want to make sure that any my blind spots are covered and I I got to connect with someone who actually works in the pharma industry. (1:08:50) So strengthening my case. So great looking forward to the conversation. Thank you Toby and stay for having me. >> Thank you Ari and uh Toby and Hari. I look forward to next quarter where we're going to do another round of mastermind discussion. So, thank you once again. >> Perfect. Thanks, Stig. Thank you. >> In this second part of the show, my co-host Cliffing and I wanted to put together a short segment to discuss the live events we host here at TIP. (1:09:18) Uh, hey Clay, what's going on? >> Not too much, Diego. Always great chatting with you here during these segments talking about what's happening here at TIP. Yeah, and Clay, it is one thing to connect online and of course with modern technology, it's very convenient, but the relationship and connections that you make whenever it's in person, it's just it's just very very different. (1:09:40) And you just wrapped up the live events we have in Big Sky Montana for the summit event and then also you did New York City for our mastermind community. But since you were in Montana first, why don't we talk about that first? >> Yeah, of course. It's one thing to, you know, plan a couple of events that are two weeks apart, but then it's uh, you know, it can get a bit traveled out once you've done it, uh, and organized everything there. (1:10:01) But yeah, we just wrapped up the two live events uh, in the past month or so. First, we hosted our summit event in Big Sky, Montana to hang out in the mountains just with some wonderful people, talk investing, do some fun activities like hiking and fly fishing and pickle ball, and just enjoy some really amazing meals alongside Kindered Spirits. (1:10:20) It's actually the first time we've hosted such an extensive event. It was actually 5 days. We were all out in Montana. I definitely learned a lot in putting it together and we had just a really great group of people. And some of the attendees included uh some members of our mastermind community. We had four people from the tip team. (1:10:37) Sean and Daniel made it from the intrinsic value podcast and then several from the audience as well. So the views in Montana are just unbelievable. If anyone is based in the US and hasn't been, I think it's just a wonderful place to visit. The altitude, I'll be honest, was a bit much for me. But other than that, I just really enjoyed my time there. (1:10:56) And when I step back and think about the in-person events we host, I hesitate to say what we do is investment conferences. That's sort of what I think some people think of it as. I kind of prefer calling them live events, but in a sense, they are an investment conference. So, one of my friends who isn't a tip listener, he asked me why were we in Montana, you know, why I was in in the mountains of Montana for work. (1:11:21) And I told him that we were hosting a small conference, but instead of getting dressed up in suits and gathering in a conference room at the Marriott, we're going to the mountains to talk stocks, go hiking, go fly fishing, and yeah, just have a lot of fun. But that doesn't really sound exactly like a conference to me. So, it's an oversimplified way of putting it, but that really is the goal with all of our live events. (1:11:44) We want to try to create just a fantastic experience by making our attendees feel comfortable, give them the opportunity to do some fun things and meet some wonderful people. And then we also hosted a couple of presentations at the house we stayed at in Montana. So, my friend Joseph Shaposhnik, who has been a guest a few times on the show, he gave a talk on his investment approach, uh, assessing management teams and how he went about launching his ETF. (1:12:06) And then Sean and Daniel from our intrinsic value podcast. They also did a presentation. They talked about the portfolio they've built throughout 2025 and pitched Uber stock which you've talked about here on the show which helped create a lot of fun discussions throughout the weekend. And there was a running joke to really get Sean going. (1:12:24) You just had to ask him about Lululemon as he's quite passionate about the stock and the brand and the stock's been hammered this year. I'm sure many in our audience have followed along with that one. But anyways, I think we have some great ideas that we'll take from the summit and implement into some of the things we do in the future. (1:12:40) >> Yeah, and including fortunately, I did make my way out to Montana, but after watching the event video, I mean, I I surely wish I had. You know, they say that a photo is worth a thousand words, and I don't know if I can add that a video is worth a a million. If you're watching this on YouTube, we are running a video of the event right now. (1:13:00) We're really excited to be here in Big Sky Montana for our TIP summit event. Uh we have a few people here from tip and everyone else is getting in here throughout the day. I look forward to just bringing everyone together to network, connect, build some good relationships and overall just enjoying our time here in Big Sky. (1:13:23) Hey, from the Beehive Basin in Montana and Daniel and I are taking on the mountains and repping the Intrinsic Valley community. >> So, thanks a lot for uh coming and you know being uh so kind with your time and answering questions and everything. Really just again really appreciate all of you being here. But Clay, you also just came back from New York City and I just I love the energy there. (1:14:00) How was it? >> Yeah. Well, Montana is certainly much different than New York. One of our team members from the Philippines actually made the trip to join us. And uh yeah, kind of tried to tell her, hey, New York's nothing like Montana. So, I tried to prime her a little bit. But New York was just great as well. (1:14:16) For someone that's lived in the Midwest my whole life, one weekend there is probably enough for me given how different it is. So, we did host our mastermind community events for the third year there. And there are a lot of things that I like about hosting events in New York. One of the things that I think is most important is that it's fairly centrally located. So, we have a global community. (1:14:36) It can be tough to bring a lot of people together. We have many members who are based in New York and Toronto. So, that really helps. And what we did was we hosted a couple of dinners that each had around 30 attendees. The food scene in New York is just unreal. I'm sure you know that. (1:14:52) It's probably one of my favorite parts. And there's just so much to do there, too. Many of our members will bring their spouse and go to a show or two or connect with other members and go and walk Central Park or grab a coffee with them in the morning. And we had members come from all over Canada and all throughout the US. (1:15:09) And one of my goals in putting together each live event is to try and make it better than the previous year. And I feel like we achieved that with New York. We just had some fantastic members make it. Uh the dinners were great and we're already making plans for uh next year's trip to make it even better. (1:15:26) And members also appreciate that they're able to bring a spouse or friend to our events. I found that members tend to bring their spouse to New York instead of Omaha, which I certainly don't blame them for. And in addition to the two dinners we hosted, we also hung out at the one Vanderbilt Observatory where we went up to the 93rd floor, grabbed a drink and checked out a new view of the city from one of the tallest buildings in New York. (1:15:49) And uh that building was actually completed in 2020 and uh it's definitely quite an experience as well. >> Oh man, Clay, that that sounds amazing. I'll be the first to say I love New York City. You and I have a similar background. I grew up in this beautiful rural area and just miles and miles of John Deia Green, let's say as far away from New York City as you can probably imagine. (1:16:13) And so similar to you, you know, as much as I love New York after a weekend or I think I could probably do four or five days, then I'm like, okay, this is great, but I need I need a breather now. But, you know, I uh I married a wonderful city girl and to your point, I brought her both to Omaha and to New York and and guess what? She she likes New York City better. (1:16:31) I don't know why. Clay, talk about the plans we have for 2026. >> Yeah. So, stepping back a bit, I think uh when I look back at the history of TIP, we've very much been a podcasting company, right? Most of our revenue historically has been generated through advertising. But in recent years, we've been leaning more and more into the category of live events. (1:16:51) One of the reasons for this, as you and I have found, Stig, is that there's just so many interesting people in our audience. Just going down the list of our attendees from New York, for example, one member has acquired half a dozen software companies in the past two years. Uh David Fagan, who we've had on the show before, he runs his own successful accounting practice and has made multiple small business acquisitions himself. (1:17:16) One member runs a number ofarmacies. We had a few asset managers attend. The list goes on, but we all have that common interest of value investing. So, we're still in the early stages of planning our events for 2026, but we do have a good idea of what we'd like to do. Montana was a bit difficult for us to get to in 2025. (1:17:34) So, we're going to focus primarily on Omaha and New York City. Omaha, of course, isn't the most popular tourist destination, but for those who are in the value investing niche, that happens to be where the Bergkshire Hathway meeting is. Buffett's going to be less involved than he historically has been since he stepped down from the CEO role, but this past year we had more than 50 people at our events and dinners in Omaha. (1:18:00) So, we expect a pretty good turnout again in 2026. For those who haven't been to Omaha, the Berkshire meeting is scheduled for the first Saturday of May and we'll be hosting a couple of dinners and socials for our mastermind community. And we also recognize that there are many people in our audience who are interesting in going to Omaha or interested in checking out our live events, but they aren't necessarily interested in committing to our community. (1:18:26) So, we decided to offer six paid seats to the audience for those who would like to sort of have an avenue to connect with a lot of wonderful people in person during their time in Omaha. So, our group is getting rather large at this point for being in Omaha and having limited space, which is why we decided to limit the number of seats. (1:18:43) But in case anyone's interested uh in learning more or would like to jump on a call to chat about Omaha, uh you can shoot me an email at clay@theinvestorpodcast.com to learn more, we'll be vetting each person who attends the events. So, we do the same for those who are just interested in meeting with us in person. (1:19:00) I've also added a link in the show notes that explains how to attend the Bergkshire meeting. Bergkshire requires you to own one A or B share to get a credential to attend the event. So, we explain all of that on our website. The process really isn't that complicated. And I would also say that what I've said every year, and that's if you plan to go to Omaha, I would recommend booking your flights and hotels as soon as possible. (1:19:23) Too often I see people uh wait until a few weeks before and are frustrated to find what the flight prices are at or find that all the hotels are booked. And then our second event, jumping ahead to later in 2026, that's going to be in New York City. We plan to do some things to make that just a really fun experience as well. (1:19:42) Carry some of the things over that we did in Montana. It would likely be in September of 2026 and we plan to bring in some speakers, add an extra day during the weekend. And similar to Omaha, we'll be opening up a select number of seats for those who are just interested in attending the live event. And finally, for anyone who is just interested in the mastermind community, maybe it's the first time you've you've heard about it. (1:20:04) This is our paid community of around 120 vetted members. In the community, we collaborate online, host weekly live Zoom discussions, talk stocks, talk markets, and it's a place to network and connect with our other members who are interested in value investing. So, um, you can head to our website at the investorspodcast. (1:20:22) com/mastermind to learn more or add your name to the wait list to apply to join. All right, Clay, thanks for joining me. I'll be the first to say that I can't speak highly enough of our mastermind community. And of course, someone sitting out there might be saying that I'm I'm pretty biased, but I guess where I'm coming from is that it's hard to make friends in your 40s, or at least it is for me. (1:20:44) And I met some of the highest quality people you can meet through our community. But you and Kyle have managed to do and and the caliber of people that you have attracted. It's just it's just second to none. So for me the mastermind community is really this perfect intersection between investing business and finding friends who who are on this journey they call life. (1:21:03) So thanks everyone for tuning in. Uh this was all that Clay and I had for this week's episode. >> Awesome. Thank you Ste. I've been looking at this company, you know, Alphabet, and not that people didn't know the company in 2018, but it looked so big, you know, market cap more than $700 billion, and it just seemed to have such a long runway of growth, and I bought into it. (1:21:26) And since then, now today, it's a multi-t trillion dollar company. It still looks like it can grow at really high rates for a very long time. And so it's also with that mindset that I look at Uber and I think, well, this could probably get to a trillion dollars within the next decade.