Top Stocks for 2026 w/ Shawn O'Malley, Daniel Mahncke, & Clay Finck

Summary

• Exor (EXXRF) Thesis: Pitched as a discounted proxy for Ferrari with Exor trading at ~60% below NAV, supported by buybacks and a conservative balance sheet.
• Ferrari (RACE) Anchor: Emphasized as a luxury-like auto franchise with >20% ROIC, 18% EPS CAGR, strong pricing power, and repeat buyers; core to Exor’s value.
• Discount Dynamics: Complexity, friction costs, and management control explain the holdco discount, but even bearish NAV and modest discount compression can yield double-digit IRRs.
• MercadoLibre (MELI) Growth: Dominant LATAM e-commerce and payments leader with a capital-light logistics moat, 27 consecutive quarters of 30%+ growth, and long runway as online penetration rises.
• Competitive Landscape: Despite Amazon, Shopee, and Temu, MELI maintains leadership via logistics density, payments integration, and growing ads opportunity, especially in Brazil and Mexico.
• Fintech Flywheel: Mercado Pago’s merchant acquiring and lending leverage first-party data; higher NPLs than Nubank but superior risk-adjusted margins and scaling profitability.
• Meta (META) Setup: AI-driven ad relevance and engagement, rising ad pricing, and WhatsApp optionality offset capex fears; risks include metaverse drag and higher capital intensity.

Transcript

(00:00) The benefits of owning the logistics  network are obviously enormous. It's it's one   of the main reasons Amazon became so dominant in  the US. And if you want to accelerate e-commerce   adoption, there are really just two ways  to do it. And that's secure payments and   then it's fast and reliable delivery. (00:18) And especially in a region where   existing logistics networks are inconsistent at  best, being the only platform with an end-to-end   fulfillment system, it's just a massive  advantage and extremely hard to copy. And   even with Mellie's more capital light approach  compared to Amazon, they still operate close   to 100 warehouses and distribution centers. (00:37) They run their own fleet of airplanes   which are called Melly Air. And they've built  so-called Melly places, which is basically this   huge network of hundreds of third party stores  that function as pickup points across the regions   that they operate in. Before [Music] 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.  (01:04) It's a free and easy way to support  us, and we'd really appreciate it. Thank you   so much. Welcome back to the Investors  Podcast. I'm your host, Clayfink. Today,   I'm joined by Shaun Ali and Daniel Mona, hosts of  TIP's very own Intrinsic Value Podcast. Gentlemen,   so great to have you here. Great to be here.  Thanks for having us. Well, we're ringing in   the new year, the day this episode goes live. (01:29) And today, we'll each be sharing our   top stock pick for 2026. Of course, these are  not intended to be investment recommendations   and we encourage each of the listeners to do  their own due diligence before investing in   any company. So, with that, Sean, how about  we start with you today? Okay, let's do it.  (01:53) I I I would say that to call my pitch a  success in in maybe three to five years from now,   if we can look at it as being this kind of  weird bet on an overlooked Italian holding   company that did actually kind of quietly beat the  market for us largely because we were willing to   own Ferrari in a slightly unconventional way.  So that's that's sort of the setup. And yeah,   without any further ado, my stock pick today  is is technically Exerv, but that is really   a proxy for making a discounted bet on Ferrari. (02:24) So Ferrari is ultimately the company that   that I'm most interested in. And so I'll  explain what I mean by that in a moment,   but I should personally disclose that this  is a company I've personally invested in,   actually just recently personally invested in. (02:43) And because I'm in the US though,   I can't buy the Dutch shares traded in euros, but  I did buy the OTC shares with the ticker EXXRF in   the US at a price of around $85. So, all right,  let me start with a few words on Ferrari first.   Ferrari to me is one of the most special brands in  the world. It's the epitome of Italian excellence,   craftsmanship, engineering, and status.  And it's been an incredible stock to own.  (03:09) And these are vehicles that in some  cases literally appreciate over time in value.   And I mean, just think about that for a second,  how rare that is for automobiles. And so the   returns on invested capital are more than 20%  because of how high the profit margins are. And   correspondingly, they've compounded earnings  per share at 18% a year for a decade now,   which is just this incredible track record. (03:35) And and the thing is Ferrari has this   ravenously loyal customer base who takes  an immense amount of pride in owning the   vehicles. Something like 80% of all sales are  made to repeat customers. Four in every five   sales of Ferraris are to people who already own  one or have bought one previously. I mean that is   just that's astounding. And as you can guess these  are not exactly price sensitive consumers either.  (04:00) So ju just by raising prices by maybe 8 to  10% a year, customers aren't going to flinch. And   then without even increasing sales volumes at  all, they can grow sales at nearly doubledigit   rates and earnings even more thanks to operating  leverage while recycling some of that excess free   cash flow into things like dividends and  share repurchases since there's just very   little growth capex needed because it's not really  ultimately a manufacturing business. It's a luxury   business. It's a great business, you might say.  And so the the problem with Ferrari that Daniel  (04:32) and I found when we looked at it on our  podcast a few months ago is that it rarely ever   looks cheap on paper. But so there is this weird  little oddity in this corner of the Dutch stock   market where instead of buying shares in Ferrari  directly, you can buy a holding company that owns   about 20% of Ferrari's total shares outstanding. (04:59) Yet the value of those shares come at a   60% discount to the holding company's net asset  value. So obviously that hold I'm describing   is Exer. It's a publicly listed holding  company controlled by the Anelli family,   the family that founded Fiat actually.  And you might say in a way it's kind of   like basically the Birkshire Hathaway of Italy. (05:21) It does not operate businesses day-to-day.   It owns stakes in them and then reallocates  capital over time from the top down. So,   Exer does not have anything close to the  same track record or or cult following as   Birkshshire to be clear. But the idea is that  it's also a holding company with long-term bets   and a few decision makers at the top. (05:43) And Exer's roots go back over   a hundred years when Giovani founded Fiat  in the 1920s and then after a century of   mergers and restructurings and spin-offs.  What you're left with today is almost like   this multigenerational family office wrapped in a  public company shell trading at what I think is a   very attractive discount to its intrinsic value. (06:05) Wow. It it's pretty funny that you know   we go to school we learn that you know markets  are efficient. There are no free lunches in life,   especially in public markets where  all participants have access to   the same information. But in the case of  Vexer, with a discount that substantial,   you're essentially able to purchase a  stake in Ferrari and getting these other   businesses that they own essentially for free. (06:34) So perhaps when we do come across a   free lunch, then we should take notice because  they don't come around often, we should say. So   with that said, I've personally just always had  this strong bias against investments where you   know the investment case is that there's  a discount to net asset value. However,   perhaps this might be a good entry point for Exer  given that you know the discount today is around   60%. Historically it's around 25 30 to 40%. (07:02) I'd be really curious just to get your   take, Sean, on why you think this substantial  discount exists and how investors should go   about thinking about it. Yeah. So, if we keep it  very simple, Exor's net asset value, which is the   value of all of their stakes minus their debt. (07:27) And so, that NAV is worth around 36   billion e while Exer's market cap is roughly  15 billion. So you're paying about 40 cents   on the euro for the entire portfolio's  net assets. And within that, Ferrari is   unequivocally the crown jewel. Exer owns again  20% of Ferrari's outstanding shares. Actually,   in terms of voting power, it's it's more  like 30%. And Ferrari alone makes up about   two-fifths of Exer's gross asset value. (07:53) And so I think the really wild   part is that the market value of just their  Ferrari stake alone is worth more than Exer's   entire market cap as a company. So today's  price is the way you could think of it is   you're getting Ferrari stock plus everything  else in the portfolio effectively for free.  (08:17) or you could ignore any upside in value  and everything else and just see it as a chance   to essentially buy Ferrari exposure at half  the regular price in a way. So the question   then is what else do you actually get for free  in this bundling of assets and you must think for   there to be a 60% discount it must be a terrible  collection but actually I would I would disagree.  (08:40) So around Ferrari, Exer has this  eclectic mix of assets ranging from Salantis,   which is the mashup of Jeep, Chrysler, Dodge, and  Maserati that came out of Fiat's merger with a   French company called PSA to CH Industrial,  which competes globally with John Deere and   agriculture and construction equipment. (09:00) With the the funny thing about CH   being that like Ferrari, it was also spun out of  Fiat. So everything ultimately comes back to fiat   when we're talking about exer and I had never  really realized this before but fiat used to be   this mega Italian conglomerate and in a way it it  still is through Stalantis but it definitely used   to be even more diverse when you're talking  about having Ferrari and John Deere's rival   C&H all under the same corporate roof and and for  context about 3/4 of Exo's assets are in publicly   traded stocks so Ferrari CNH, Stalantis,  the diagnostic healthcare company Phillips,   and then actually one of Europe's most valuable (09:39) football clubs in Juventus, which they've   actually owned for for nearly a century at this  point, and is a publicly traded company, too,   which I was surprised to learn. And so,  football clubs are not exactly profitable   businesses in most cases, but they are  very much trophy assets that can be sold   for billions of dollars to a motivated buyer. (10:06) Forbes, for what it's worth, just valued   Juventus at around€2 billion euros, making it  the 11th most valuable club in the world. And   then just recently, we had Tether make an offer to  try and acquire Juventus that Juventus rejected.   But clearly, there is interest in acquiring this  asset. And and there's real value to it, even if   Juventus is not a huge money-making business in  its own right. And so Stellantis' future, I think,   is is maybe the part of the portfolio that looks  the worst because Chinese EVs have really burst   under the scene in the last few years and are  dramatically taking market share from Europe   and Latin America. And then there's this bigger  picture risk of self-driving cars being a further  (10:41) disruption as well. But but still you're  getting some pretty iconic car brands and some   brands focused on the US where Chinese vehicles  are banned and you're getting it at cyclical lows.   And so as as Daniel knows, we've met a handful  of deep value fund managers, especially in Omaha   last year, that are looking at the automotive  space in particular, which is not to say that   I would personally want to invest in Stellantis  on its own, but but yeah, I mean, I appreciate   the optionality it reflects as a free add-on (11:13) to a Ferrari investment. Stellantis   being a, you know, traditional automaker gives me  room for pause since that industry isn't exactly   known for shareholder value creation. But again,  you mentioned that you're essentially getting   that asset for free. Then the question  is, you know, where it goes from here.  (11:37) It looks like Stellantis is their second  largest holding with Ferrari being their largest.   And I definitely think it's right to think  of Ferrari more as a luxury company than a   traditional car maker. And their bet on Stantis  also gives me a bit of pause in management's   ability to effectively allocate capital from  here because if public shareholders start to   question capital allocation then it might be  difficult to see that discount to NAV close to   a significant degree at least in the near term. (12:08) And I see when I looked at their 2024   annual report, they've compounded net asset  value at 18% perom since 2009 while the Msei   world index has compounded at 12%. So there  is a history of good capital allocation by   management. And you mentioned there that  three4s of the assets are publicly traded.  (12:34) What about the other fourth? What else do  they own? Yeah. So the remainder is a mix of cash   about 9% of their assets also being in in private  equity. So within that private equity portion,   they own a large stake in the economist, the  business magazine that I think most people   will be familiar with, and then Christian  Louisboutuitton shoes, the luxury shoes,   and and then they've also built out a venture bets  side of things and have this asset management arm   that has backed companies like Neurolink and Brex. (13:05) So when you step back and it's cars,   tractors, healthcare, luxury, media,  European football, and a VC portfolio   all under one roof. And that is exactly the  sort of monstrosity that public markets love   to slap with a conglomerate discount. When you  first looked at Exo, Sean, you you kind of asked   me if I have any experience with such companies. (13:30) Now, I've actually invested in an Italian   holding company before. or it was a bit smaller  than XO and it wasn't based on the premise of   using it as a proxy for essentially owning  just one core asset or core stock and that   is a discount. But when I looked at the space as a  whole, I noticed that discounts tend to be larger   for companies with unclear strategies and that  seems to be the case with XR and it's less about   owning companies from just different niches or or  industries and more about the investing strategy.   I mean some companies clearly focus on on value (14:02) plays while others are focused on small   highquality businesses that can compound over  many many years and in that case you ideally   have a management team at the holding company  level that also helps through expertise and   what I found is that that expertise is often  missing when a holding company mixes a range   of different investment styles and of course  another reason for the discount could be due   to just the large concentration on just one  asset. Although Ferrari is definitely the   best company in their portfolio, but I'm (14:32) really just out here speculating.   So why do you think that the discount is  is so extreme? I do agree with you. The   lack of strategic clarity at the top is a  major factor, but I would probably bucket   the reasons for the discount into three main  things. And the first is complexity. So most   investors don't want to try and value Ferrari,  Stalantis, CNH, Phillips, a football club,   The Economist, Louis Vuitton, and a VC  portfolio all in one shot. And if you're a   luxury focused investor, the cyclical autos and (15:08) tractors are going to drag you down. If   you're a deep value industrial person, Ferrari  at a premium multiple are probably just going to   make you very uneasy to think about investing in.  If you like just clean and simple stories, adding   in Juventus and Elon Musk Neuralink inside your  Ferrari exposure would probably drive you crazy.  (15:31) And so that degree of complexity all  under one roof, I think alone deserves some   discount just because of the uncertainty  that any investor would really have about   what they're getting when they buy shares  in this company. And then just secondly,   there are friction costs. If you imagine exter  selling everything tomorrow, they're not realizing   full marks on that paper net asset value. (15:52) Obviously, large block sales of Ferrari   or or CH stock would move markets against  them. And then there also would be real tax   implications of of doing something like that. So,  a very tangible example of this, the the kind of   things that can arise and and eat up their net  asset value happened a few years ago when they   moved their legal headquarters to the Netherlands. (16:17) And so, the Italian tax authorities hit   them with this one-time exit tax bill that was  around 845 million euros to settle it. And so,   that's almost a billion euros gone in just tax  friction. And as we were talking about a little   bit before the call, Italy, as I understand  it, doesn't even normally have an exit tax.  (16:39) And so that gets into exert kind of  very special role in Italian society where   it's it's very much a business and political  family that is very well-known and prominent   and people look to them to invest in the  country's future. So it was seen as kind of   giving up on Italy by moving to the Netherlands. (17:04) And uh yeah, this 800 million euro plus   fee to leave I think was kind of a way that  the Italian government burned some bridges   with exer. And anyways, I I'm sure over time  Exer will make that back and more otherwise   I don't think they would have made the move. But  still the the point remains that there are these   unexpected costs that can very much arise. (17:23) So the market is is right to say at   least partially that this net asset value is not  instantly monetizable. It's not highly liquid at   least entirely and so therefore deserves some  degree of discount. And then the third thing   I'd mention is that an investment in Exer is  a bet on management which is true with any   company of course but in this case the capital  allocators at the top are making these huge   investment decisions as almost the operations of  the business while also sitting as as chairman   at the top of these hold codes. And so John (17:58) Elen is the CEO of Exer but he's also   the chairman of Ferrari and and Stellantis.  So not only are you trusting him to allocate   exor's capital effectively, but he's also exerting  a degree of direct influence over their invest. So   when you have a situation when the underlying  holdings of a company like Exer are public,   you can almost see exactly what  John Elen in this case is doing.  (18:28) And so if Xer traded at par with its  net asset value, then you would effectively be   paying full price for Ferrari and Phillips and  CH plus taking on the risk that Elen reinvests   your capital in mediocre ways. So typically you  would expect there to be some holdco discount   and that would actually be rational unless  you're talking about Warren Buffett which   is one of those rare exceptions that we've seen  to this kind of scenario with Berkshire Hathway.  (18:53) So where I think things get interesting is  when you actually stress test those assumptions.   Even if you haircut the net asset value for taxes  and transaction costs and you assume let's say the   private assets are marked way too optimistically  you still do not get to a world where a 60%   discount feels justified. I mean historically  exerts traded in the 25 to 30% discount range.  (19:19) to me at at 60% the market is just  effectively saying Elen must either be an   absolutely terrible capital allocator or  the net asset value numbers are completely   fantasy and I don't think either of those are  close to being true. If I were to put myself   in Buffett's shoes I think that if he were in  Elen's shoes he would consider repurchasing   shares if we if he were running this company. (19:49) I think it's pretty clear that you know   with the market valuing the shares well below net  asset value then it would be value at creative   to shareholders to repurchase shares. We look at  Bergkshire's history they started venturing into   share repurchases in 2018 and they've managed to  deploy a decent amount of capital through that   when they view the stock as attractively priced. (20:10) But I think it's safe to say that   Berkshire was never trading at a 60% discount  to net asset value. So if Xer wasn't doing share   buybacks, that would certainly give me pause if  I were owning shares in this company. I think   um I looked back at Xer's capital allocation  in recent years and since 2021, they've retired   around 14% of the shares outstanding. (20:41) So talk more about Elen and what   makes him the right guy to steer the ship for this  company. Well, when Elen stepped in, Exer was not   really in a great place. It was heading into what  would become the great financial crisis with very   high debt and then these very shaky industrial  businesses. And kind of also on top of all that,   you had this lingering risk that the the family  would just slide into complacency or or the vanity   phase as he likes to talk about it where you just  sit on these legacy assets as the second and third   generation beneficiaries of massive wealth  while the real value of that wealth slowly   decays either because of misallocations (21:18) of capital or overspending and   poor planning or some combination of all of those  things. And instead they brought on Sergio Marioni   to run Fiat and that turned into one of the  greatest corporate transformations of really the   last few decades. They would go on to buy Chrysler  during the crisis at a very very attractive price.  (21:37) They would spin off Ferrari and create  tremendous amount of shareholder value. In doing   so, they would spin off C&H and then ultimately  would merge Fiat with Pujo to create Stalantis.   And so Xer simultaneously built out a venture  arm run by people from Apple and Amazon,   deployed several hundred million in euros into  over a hundred startups, including as I mentioned   Elon Musk Nerlink and and the fintech Brex and  and tried to reposition the group as really more   of a modern tech forward capital allocator  rather than just being this remnant of an   oldworld Italian dynasty and everything (22:13) that comes with that. And so I   mean beyond the narrative that obviously the  numbers are what matter here and we can kind   of fact check the the counternarrative that  I'm suggesting here from 2009 to 2024 exer's   net asset value compounded around 18% per year  versus roughly 12% for the MCI world and over   the last decade its nav growth has been roughly  13 to 14% annually since Ferrari was spun off.  (22:45) And even if much of that more recent  success was driven by Ferrari's returns,   I'm really not sure why Elen wouldn't get any  credit for that. I mean, in business, it is so   easy to mess things up. And even if he wasn't the  original mastermind behind the Ferrari investment   decision that happened way back in the 1970s, just  being disciplined enough to not sell out of that   position over time while pushing for a spin-off  that would unlock shareholder value. I mean, all   of that strikes me as being very, very pragmatic. (23:09) And so I don't know if he's a wonderkin,   but at a 60% discount to net asset value, he  just doesn't have to be either. He just has   to be minimally competent. And I don't know,  maybe I'll make a little analogy here. It's   like a backup quarterback coming into play  in the fourth quarter with the team up 20.  (23:26) And he does not need to be Tom Brady  or Patrick Mahomes. He just needs to not make   catastrophic mistakes. So valuation matters  here is what I'm saying. If there were a much   narrower discount to NAV, then the stakes would  be higher for his performance. Are you looking to   connect with high quality 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.  (23:57) Inside, you'll meet vetted members  who are entrepreneurs, private investors,   and asset managers. 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. (24:21) We certainly do not have all the answers,   but many members have likely face similar  challenges to yours. 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. (24:47) 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@theinvestorpodcast.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. (25:21) Each week, Shan 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. (25:39) 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 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. (26:04) I don't watch American football,   but I think even I got the the analogy here.  And I mean, just looking at the numbers,   it certainly looks like Aken just did a phenomenal  job. and you should give him credit for holding   Ferrari for so long. That decision alone created  an enormous amount of value for shareholders.  (26:22) And I guess the concern investors have  now is simply that nothing else in Exo's portfolio   looks remotely like Ferrari. So while the returns  especially over the last decade look impressive   after selling some of its Ferrari stake due  to valuation, you just got to ask yourself   what will drive returns for the next decade. (26:39) And also like I said before the the   skill set required to hold a long-term compounder  through volatility or when it is already trading   at a premium it's very different from the one  you need to actively buy and sell value plays   or value situations well and if I look  at Exo's portfolio right now they seem   to own a lot of those right now and you just  have to place as you mentioned before a lot   of faith in in the management team because  in Europe many holding companies are still   very family controlled with concentrated  voting power. So as minority shareholders,   you just largely rely on on management to (27:11) allocate capital well. And exor is   un unapologetically still a family vehicle.  I mean the control of votes in a way that is   almost similar in spirit to having a dual share  class that you see a lot with with tech founders.   I don't love that Elen earns an 8 figureure  pay package from Exer plus the compensation   he gets from roles at Ferrari and Stantis. (27:36) But to me, the important thing is   what's happening at the share count level. They've  been shrinking the share base by roughly 3% per   year for the last two years. And they've actually  done some really unique ways to approach that and   and create shoulder value. And so one of those  being they did this reverse Dutch auction to   buy back stock aggressively earlier in in 2025. (27:55) And so the way it worked was that Exer   published a price range that they'd be willing  to purchase shares within and then asked existing   shareholders to provide their asking price that  they would be willing to sell their shares at.  (28:14) And then the company ranked these asking  prices that they received from cheapest to most   expensive and then executed 1 billion euros  worth of buybacks at the lowest price ask   rates which could be below the market price at  at that time. And so it's a pretty subtle thing,   but I I'd imagine that this actually saved them  maybe tens of millions of euros versus doing   repurchases in the open market where especially  in a less liquid stock, they could really move   share prices just with their own repurchases. (28:41) So what that ultimately translates   to is them being able to buy back even  more shares per dollar of of repurchase   and that just creates more value for ongoing  shareholders. So the CEO comp is not modest.   I don't feel like Elen as the patriarch of the  Anelli family now needs to be paid millions of   dollars to be incentivized to run the business  well. But overall again things are being done   pretty pragmatically and the shareholder actions  are are mostly friendly and when you have a 60%   margin of safety that helps make a lot of these  concerns more digestible. at a 10% discount to net  (29:19) asset value. I would probably have  harder opinions on CEO comp or the pace at   which they do they do buybacks. And then just so  financially the the balance sheet is conservative   too which I appreciate as a shareholder. (29:39) The vast majority of their debt   is is fixed at low rates and then the company  carries an A minus credit rating. So there's   no obvious solveny risk lurking here. here. I  mean, this is not a levered rollup that just   falls apart completely in a downturn in the next  financial crisis. I mean, this is a company that   already survived the last great financial  crisis and has persisted for for a century,   which is a rare thing to to come across. (30:02) And so, another thing that they've   done is they've made their financial  reporting much more transparent,   which I would think in theory should  contribute to the net asset value discount   narrowing. And under this new treatment as  an investment company in line with IFRS10,   they now mark their holdings to fair value through  the income statement and treat dividends and sales   of proceeds as operating cash flows. (30:26) So you can't just look at the   reported earnings at face value because they're  they're distorted by swings in prices of their   investments. And it's the same thing with with  Birkshshire Hathway. So they've also deconolidated   most of the underlying companies for further  reporting clarity and then they've begun auditing   the net asset value numbers that they publish. (30:44) And so again all of this should boost   investor confidence over time because to me I  see them making a real commitment to transparency   that makes me feel more confident that the  NAV discount at least is not going to widen   dramatically further. I guess anyone who has ever  tried digging into holding companies, and I know   that all three of us have done that in the past. (31:10) I actually looked at Burkshire Hathaway   for our podcast a couple of months ago, and we all  can appreciate those changes for for transparency   reasons. And it's just not always easy to to  fully grasp what's going on in these holding   companies. It can be complex um at best, and in  this situation, more transparency is is probably   not enough to materially reduce the discount. (31:28) But since I would assume that is a huge   part of your bull thesis for exo, how about  you walk us through how you're thinking about   the upside, what has to go right for exit to  deliver great returns in the next in 2026,   but also in the next couple of years. (31:46) For me, the the right way to   think about exer is is not trying to estimate  their reported earnings per share next year or   five years from now, but to think about how  fast the net asset value can grow over that   period of time. And so where might then the  discount to NAV settle out longer term. And   so in what I would call a pragmatic bare  case, so not the worst outcome imaginable,   but a plausible version of reality where  things don't work out nearly as well as hoped.  (32:16) I modeled net asset value growth selling  way down to around 5% a year and then the discount   narrowing only a little bit from a record high of  approximately 60% as we said a number of times to   about 50% over the next 5 years which is still  very much above average for the typical discount   to exer that we've seen over the last decade which  is why I would call this a longer term bare case   who knows what'll happen in the short term but  longer term that feels pretty bearish and So yeah,   I mean that that's a pessimistic take.  You're assuming they become a mediocre   capital allocator and the market remains (32:48) extremely skeptical over time. Hence   that large discount remaining.  And even still in that world,   the combination of just a little bit of modest  net asset value growth plus a bit of discount   compression gets you a roughly 10% annualized  return over the next 5 years. That that's the   IR math and it's one heck of a margin of safety. (33:11) And just in a base case, I assume that net   asset value could compound at a little bit more  typical rate of about 7% a year. That would be in   line with global equity markets historically. And  with the discount to NAV closing from 60% to 40%,   which again that 40% is still at the high end of  where Exer's discount has historically traded,   well off of that from today's prices that  you'd be expecting like a 15 to 16% rate   of annual return over the next 5 years. (33:37) if that very basic outline of   things comes true. And then in my bull case,  which I don't even think is that bullish,   I have net asset value growing at 9% a year  and then the discount closing to something   more normal like 30%. Which I really do not think  is is all that heroic for a holdco with such a   gym of an asset like Ferrari at the center. (34:00) And in that case, you'd be talking   about expected returns north of 20% annually.  And and none of that includes the incremental   benefit of additional buybacks made at such a  big discount to NAV that shrinks the share count   or the small dividend they actually pay out. (34:18) But but you know Daniel and I on our   show we like to use these very rough frameworks  to guide our thinking. And so that is kind of   how I put things together. That's my mental  model for exer. And to me the main point is   is not whether the irr is 16% or 18%. It's  completely speculative. Really the takeaway   is that even if things go noticeably worse  than they have in the past, if NAV growth   very severely decelerates and the discount  stays pretty wide, you can still plausibly   earn doubledigit returns from here because you're  starting so cheap relative to such a high quality   anchor asset. And so for me, the range of (34:49) outcomes is dramatically skewed in   our favor. That's really what I see having  a margin of safety to mean. And there's a   relatively low likelihood of having our capital  destroyed. I mean, this is not some high-flying   speculative AI bet. I do like how you think  about the company's valuation. As they say,   if you can eliminate the downside, then  all you really have is upside. That's left.  (35:15) And as I was reading through last year's  annual report, I noticed that in March of 2024,   Exer sold €3 billion euros worth of its Ferrari  stake. And as we know, Ferrari has done a lot of   the heavy lifting when it comes to compounding  NAV up to this point. What are the biggest risks   you see in the stock and the company today?  Yeah, I think the big one here is that this is   ultimately at its core a Ferrari anchored thesis. (35:49) If Ferrari's business stumbles badly or if   the market rerates it from a luxury compounder,  which is how it's been priced since IPO to a   valuation closer to just being to a premium auto  company like Mercedes-Benz, then both exerts an   asset value growth and the perceived quality of  the portfolio would take very significant hits.   I don't think that's very likely. That would  be something of a worst case scenario. And   so I'm fairly bullish on Ferrari long term. (36:13) So to me, the risk really actually   is that Exer slowly sells down its Ferrari  stake and then recycles the proceeds into   lower quality or at least harder to underwrite  assets. So more cyclicals, more venture bets,   more private markets, maybe some big acquisitions  that we don't necessarily like. And that   would be really the the red flag to me. (36:36) They they've already trimmed a few   billion euros of Ferrari as as you said Clay  and they've done that to as they say reduce   concentration and to fund new acquisitions  and I I think that has spooked investors a   little bit and so I mean from the Anelli family's  perspective I don't think they see it that way.  (36:56) you know, they they want to  diversify their wealth, but for me,   I would rather have them convert almost all of  their net asset value into Ferrari rather than   sell it down so that the thesis becomes even  clearer that you're just buying Ferrari at a   discount. And that would be very attractive if  it meant buying Ferrari at a 30 or 40% discount.  (37:15) I think that would really be the best way  to remove that that NAV discount over time by just   simplifying the story. And so it it's all these  other investments and concerns about investments   they'll make in the future that make things a  lot messier. But like I said, I mean ultimately   this is the kind of the trade-off we're making  is that it's a familyrun company and they are   trying to diversify and protect their wealth. (37:40) So the last thing they want to have is   100% exposure to Ferrari just so that it  makes the thesis more convenient for me.   But if they do continue to reduce the Ferrari  position dramatically, to me that would ultimately   be the sign to consider exiting the position. And  I should say though, they have not expressed any   interest in doing that. They have said that their  goal is to keep it around 40% of net asset value.   And so when you look at the the sell-off that they  did, they trimmed the position from 43% to 39%.  (38:08) So I I do believe them when they say that  they're not really trying to fundamentally exit   the position, but maybe they're just just  trying to manage it at that two-fifths cut   off. And and yeah, I mean, you touched  on this at the beginning, Clay, the big   criticism here is that there's no clear catalyst. (38:24) This is not an event- driven trade where   you can point to a spin-off or take private.  And so in a way it is maybe just classic value   investing where you buy a collection of assets at  a big discount, let the underlying assets continue   to compound while buybacks quietly shrink the  share count in your favor and then just trust   that over time either that discount will narrow  or you'll still do at least fine or good enough   because you started from a dirt cheap entry  point. Right. And so as long as Ferrari remains   the crown jewel that's worth more than (38:54) Exer's entire market cap,   just to emphasize that again, and the discount  stays abnormally wide, I am very happy to bet   that a rational family owner with a pretty  decent track record can keep compounding net   asset value in the background here, at least  well enough to generate satisfactory returns   for me. So yeah, that's it's the pitch. (39:19) Not the sexiest pitch ever, but   uh you can see why I like it. Excellent. Well,  thank you so much, Sean, for the very thoughtful   pitch. And for those who aren't familiar with Sean  and Daniel, they host the Intrinsic Value podcast,   and they do a stock deep dive every single week. (39:37) So, if you've been following along with   the show, you're not going to find an episode on  Xer as the time of this episode goes live. It's   actually going to be released a few days after.  And then, um, Daniel's pick will be released the   following week. So, please stay tuned uh  to learn more about these picks. Daniel,   please take it away. Yeah, thanks, Clay. (39:58) I mean, I don't know if my pick   is the most sexiest either, to be honest, but um  yeah, since today's call is about our top stocks   for 2026, I wanted to pick a company where I  generally see next year as the moment things   could could turn around. And as Sean already  knows, there was and still is a company in   our intrinsic value portfolio where I felt  2026 might be the inflection year. That was   actually the company I plan to pitch today. (40:24) I had even finished all my notes and   then literally an hour later and I texted  Clay about it. The CFO spoke at a conference   and let's just say the tone of that presentation  changed the timeline a bit. I would say the core   thesis still holds, especially at the current  valuation. But the setup for 2026 just doesn't   look as clear anymore. Anyway, that company  was PayPal. So, after a very long introduction,   here I am not pitching PayPal today. (40:48) And instead, I thought I would   pitch a company that is Mad Libra. And then  a funny way, it's not entirely unrelated to   PayPal because often people describe Macad Libra  as the Amazon and PayPal of Latin America, which   isn't a perfect analogy, but it captures the basic  idea, which is that this is a company that built   both the dominant e-commerce platform, and it's  also one of the most powerful payment ecosystems   in the region. Yeah, I mean, I I was excited to  see you uh switch your pick to Marcato Libre.  (41:19) This is a company that's been on my  radar for quite some time, especially since   uh one of our members of our mastermind community  pitched it. I presented it to the group and I   remember he compared the early days of Marcato  Libre more to eBay than to Amazon. And one stat   that just really struck me is this company's  history of consistent high levels of growth.  (41:48) So back then they delivered something  like 23 24 quarters of 30% plus topline growth   and now that's ticked up to 27 straight quarters.  And that's just something that no other publicly   traded company has ever done. Yeah, it's  impressive. It's impressive. I mean the   eBay comparison might be even more fitting. (42:08) eBay is far from having achieved   almost 27 consecutive quarters of 30%  growth. But in the first couple of years,   Macado Libra followed eBay's business model  of facilitating mostly online auctions. And it   took them a couple of years, but then they  realized, okay, well, there's this other   business model which seems to be a lot better. (42:26) So, at that point, they decided to   move away from auctions and become more of a  marketplace similar to Amazon. And obviously,   with the benefit of hindsight, that  turned out to be a very smart decision.   And I also like the eBay analogy because the two  companies have something in common that Amazon   never had, and that's a payment operation. (42:46) eBay acquired PayPal to create trust   and reduce friction at a time when people  were still nervous about buying online. I   still remember that 15 years ago. My parents  never trusted eBay and thought the seller would   likely never send the product. And to their  defense, that happened from time to time.  (43:04) Now, Latin America is probably about  five to six years behind the US when it comes   to adopting new technology. And that's actually  one of the key parts of today's pitch because   Macado Libra benefited from that dynamic in  a big way. And to some extent, they still are   benefiting from it. They couldn't simply acquire  a PayPal equivalent because well, nothing like   that existed in Latin America at the time. (43:24) So, they decided to take matters   into their own hands and just build  it themselves. And that's how Macau   Pago was born. And that decision created a  very powerful flywheel. Once Melly offered   a trusted seamless way for millions of people  to pay, those people suddenly started to to go   online and shop for things like clothing online. (43:43) And they've never done that before. And   that flywheel just started spinning.  So you had more buyers, which led to   more sellers. Then more sellers brought more  product variety. And that in turn drew even   more bias into the entire Mac Libra ecosystem. (44:02) Well, CL already mentioned the phenomenal   track record of growth here, but what excites  me even more is how much runway I think still   lies ahead. And so I've looked into this space a  little bit when I've done research for New Bank.   And what I found was that over the next decade,  Latin American e-commerce is expected to grow to   ker of of almost 11%. And so that is driven by  millions of more people starting to shop online   for what would really be the very first time and  ultimately increasing their shopping frequency as   a result of that increased convenience. (44:36) And so today, just for context,   e-commerce penetration in Latin America is  only around 14 to 15%. Whereas in the US,   you're talking about 24%. The UK is close to  30% and then China is an illegal its own well   above that. that and there's really no structural  reason why Latin America can't at least follow   a similar trajectory even if it's to a lesser  extent over the coming years and and decades.  (45:02) As payments digitalize, as  logistics improve, and as trust increases,   the region's online penetration should naturally  converge toward the levels we've already seen in   more mature markets. That is one of the broader  secular trends that really is true across the   entire world, but especially in this region. Yeah,  that's what makes me so interesting to me. I mean,   even if you think about places or regions like  South Asia, you see that actually a lot more   people shop online than if you compare to the  US or the EU. And South America and especially   Latin America could become something like (45:32) this. And a company with this kind   of growth history should naturally be slowing  down by now, but it really isn't. I mean,   Clay already mentioned it and you just repeated  it. a streak of 27 consecutive quarters with 30%   growth which is just unheard of at this  scale. Like no company ever did it and   to me it just sounds completely surreal. (45:51) And that momentum comes mainly   from two places. So first you have the  massive tailwinds of what is essentially   a multi-deade super cycle for Latin American  e-commerce. Then second Libra's overwhelming   dominance in the markets where it operates. (46:10) And to bring the flywheel back into the   conversation, Melly didn't just build a payments  operation to support the marketplace. They also   took a lesson from Amazon and started building  out a logistics network. And what's impressive is,   at least to me, how they did it because Amazon  chose, as we all know, this this fully integrated   approach, highly capital intensive route, and  they spent billions to own nearly every piece   of the infrastructure. And Melly took a bit more  of a flexible and a less capital heavy approach.  (46:34) They own and they operate their  fulfillment centers and basically the backbone   of the network moving goods from distribution  centers into major city hubs. But once the   package is inside the city, then they hand it off  to so-called local delivery service partners or in   short DSPs who handle the last mile delivery. (46:53) And this hybrid model just gave Melly   the speed and reliability that it needed to  compete with Amazon but without anywhere near   the same capex burden. And it's one of those  reasons why they have been able to scale so   efficiently and why their logistics network has  become such a powerful mode across Latin America.  (47:11) Correct me if I'm wrong, Daniel, but  I mean the part of the reason why Melly built   its own logistics network was that third  party delivery services were just not good   enough, right? I mean that that's my  understanding. And so in e-commerce,   speed and reliability are everything. (47:28) And Latin America does not have   and did not have the same infrastructure  as the US. And so packages just took too   long to deliver or sometimes they would never  arrive at all from what I've heard on various   subreddit forums about Marcato Libre. And and  so the need for a network owned and operated by   Marcato Libre itself was probably even larger  than the need for Amazon when they made that   decision to try to fill that gap in the market. (47:57) So, I mean, if that was the problem in   the first place, I'd be curious to hear why  you think Melly did later bring third party   delivery partners back into the ecosystem. Yeah,  know that's that's a good question because it is   a bit counterintuitive, but I would say that  the key thing to understand here is that by   the time the package reaches the city hub, most  of the infrastructure problems already solved.  (48:23) The DSPs that Melly works with at that  stage, they are mostly small and local delivery   companies that know the area pretty well. And  in many cases, they have Melly as their own or   at least their primary customer. And that makes  them just far more reliable than the state-run   carriers that used to handle the the entire  journey basically. And the benefits of owning   the logistics network are obviously enormous. (48:41) It's it's one of the main reasons   Amazon became so dominant in the US. And if  you want to accelerate e-commerce adoption,   there are really just two ways to do it.  And that's secure payments and then it's   fast and reliable delivery. And especially in  a region where existing logistics networks are   inconsistent at best, being the only platform  with an end-to-end fulfillment system, it's just   a massive advantage and extremely hard to copy. (49:07) And even with Mellie's more capital light   approach compared to Amazon, they still operate  close to 100 warehouses and distribution centers.   They run their own fleet of airplanes which are  called Melly Air and they've built so-called   Melly Places which is basically this huge  network of hundreds of third party stores   that function as pickup points across  the regions that they operate in. Yeah.  (49:32) I mean as this business has been on my  radar, one of the things that has been a bit   difficult for me to wrap my head around is the  competitive position. You know, Sean and I being   based in the here in the US, I think we would say  when we hear e-commerce, we think Amazon, right?   But when you look at some of these international  markets, it becomes a bit more competitive.  (49:50) I think you have multiple different  players. So, as I mentioned, many people think   of Amazon when they hear e-commerce. But when you  look at Marcato Libre, you know, they're competing   with players like Shopppee, who's based out of  Asia, Teimu, and you know, these are companies   that are incredibly successful in their home  markets and have also made attempts to uh compete   in Latin America as well, especially Brazil, which  happens to be Melliey's largest and most important   market. Do you think these competitors (50:20) will be able to steal share from   Melly or do you think they're just all going to  coexist in these Latin American countries? Yeah,   so Melly operates in in close to 20  countries, but the markets that really   matter are Brazil, Mexico, and Argentina. (50:39) And those three alone account for   about 80% even a bit more than that of all  e-commerce activity in in Latin America. And   what's interesting is that this hasn't always been  the case. Venezuela, for example, used to be one   of Mellie's biggest and most promising markets and  then hyperinflation hit. The economy collapsed and   the opportunity essentially disappeared overnight. (50:58) And there are a few other examples like   that. And that just shows you how much more  dynamic and sometimes unstable that region   can be. What's remarkable to me is that none  of this throughout that its entire history   has stopped me from compounding. through its  entire history whenever one market struggled   another country picked up the slack and  both the marketplace and macardo parag also   naturally protected against inflation at least  when we talk about high inflation that is not   yet hyperinflationary but to actually answer your  question about competition me is a top two player   in every market it operates in even in (51:30) Mexico a market where you would   naturally expect Amazon to dominate  just because of its proximity to   the US has maintained the the leadership position   And in Brazil, which is the crown jewel of Latin  American e-commerce, the only two players that   really operate at scale are Melly and Amazon. (51:49) And there as well, Melly is the clear   leader, typically holding roughly three times  Amazon's market share in most of the countries   where they go head-to-head. And that gap  hasn't been narrowing down either. Even if   Amazon has actually been investing quite a lot  of money in those markets, that gap has been   pretty stable across the last years basically. (52:12) And Shopppee is relevant in Brazil too,   especially in those low ticket categories,  but its business relies heavily on external   carriers and promotions. And it hasn't yet proven  it can actually be profitable the way it operates   right now over the long term. So if I had to  bet, I would go with the highly profitable,   fast growing incumbent with physical  infrastructure and just a much more developed   flywheel than an unprofitable foreign company. (52:38) Even though that phrasing might be not   totally fair for what Choppy has done in the  last couple of years and I would argue it's   it's kind of similar for Timu. I've talked  to people who live in the region and to me   it seemed that Timu has a similar position  in Latin America as it does in Europe.  (52:55) So many people use it but it's nowhere  close to Amazon in the EU or the US and Madu   Liu in Brazil. And it almost seems as if  you buy something when you're willing to   take a gamble on both shopping times and most  importantly on product quality. And to me that   just doesn't sound as sustainable. (53:13) So if I had to summarize it,   I think it will be extremely difficult for any  outside competitor to beat me on the combination   of logistics density, payment integration, and  the network effects that come from running the   the entire ecosystem basically end to end. But  also don't think that e-commerce is a winner   takes it all market or it doesn't have to be. (53:32) Most regions except for the US maybe   settle into more of an oligopoly position  with a massive runway ahead for Latin   America. There's plenty of room for multiple  players to grow. So it doesn't necessarily   have to be at Mellie's expense should  shopppee or timu keep growing in that   region. I mentioned it earlier that you and  I covered New Bank on our show and now it's   a a holding in our intrinsic value portfolio. (53:57) So we're we're familiar a bit with with   Latin America, but we also know that fintech  and banking in that area of the world is just   incredibly complex, maybe the understatement of  of the year. So I I wouldn't want to ask you to go   deep into the weeds here, but I am curious whether  New Bank and Melly through Marcato Pago are are   actually competitors, and if they are, how do they  stack up against each other in your opinion? I'm   the one who did a lot of the work on New Bank. (54:23) you've now done most of the work on   Marcato Libres. So it'll be very interesting  just to kind of compare the perspectives   there and because you know I mean we've been  blown away by the numbers that New Bank has   been consistently putting up for quarter after  quarter now and New Bank is actually even trying   to expand into the US with a banking charter. (54:41) So some very big ambitions coming out   of that company and and yet at the same time we've  also made it clear that this is a business model   where we're both a little bit out of our depth as  I sit here in the US and Daniel sits in Germany   trying to figure out what's actually happening  with the the end consumer in Latin America.  (55:00) Obviously even just saying Latin America  is a massive generalization. So it's a big dynamic   market with just so many moving parts that are  hard to fully grasp all the forces at play.   Well, I mean, both companies offer credit  cards and both operate in the biggest   Latin American markets like Brazil and Mexico. (55:18) So, there's definitely some competitive   overlap, but New Bank, as the name kind  of suggests, is fundamentally a neo bank,   and its core strength are low funding costs  and an incredibly trusted consumer brand   and also a cleaner and more traditional credit  portfolio. And Marcato Pago, on the other hand,   was born out of the commerce ecosystem. (55:37) And you can see that DNA everywhere.   It started as the payment solution for  Mellie's marketplace, then expanded into   off-platform payments and eventually even into  offline acquiring. So they basically sell these   point of sale devices, especially mobile ones  to small shops and local merchants. And that   essentially does two things at once. First,  it drives more payment volume through MacOG.  (56:02) And second, it becomes kind of a bridge  that brings offline merchants into the digital   economy. And that's a big deal in a region where  roughly 85% of merchants are still entirely   offline. So for many of them, a Melly point of  sales device is the first step toward eventually   listing products online and becoming part of  the broader ecosystem that that Melly offers.  (56:25) And the part of Mac Power that  I personally find easier to understand   than New Bank is its access to firstparty  behavioral data. When they issue loans,   whether to merchants or consumers, they can base  those decisions on thousands of data points.   So they know what products you browse for.  They know what you ended up buying, how many   products you returned, and how you paid for them. (56:44) And they have so much data to decide who   should get a loan and who shouldn't. And also  how to price them. It just makes me a lot more   confident that I can understand this business. And  perhaps it's one of the reasons why Macau Pago is   willing to take on slightly more risk than Eubank. (57:03) One of the best ways that you can see this   difference is in so-called NPLs, which stands for  non-performing loans. And analysts usually look at   two checkpoints. So loans that go delinquent after  15 days and then loans that go delinquent after 90   days. And new banks NPLs are noticeably lower  than Macau Pagos, which simply means a smaller   share of its borrowers end up missing payments. (57:25) And the flip side of that is that Macau   Pago earns risk adjusted a margin of a little  over 20% which is roughly double the margin of   new bank. And this is basically after you account  for all the credit losses that both of them face.   So in other words, you could say that Macalo  Pago takes more risk, but it also gets paid   significantly more for taking that risk. (57:47) And most importantly, probably   both of them carry more reserves than needed to  cover all expected losses. So neither of these   companies is out there gambling with credit  cards or or loans that they give out to other   merchants or or consumers. And still this  is the part of the business that would come   under pressure if one of the major economies  me operates in were to experience a serious   downturn and more risk obviously beautifully  and and stable or improving environments.  (58:15) But it can cut the other direction  if if macro conditions deteriorate quickly.   I think everyone listening is going to be familiar  with the risks that come with investing in   emerging markets and Marcato Libri is obviously  exposed to many of them as well. For example,   you just look at the high inflation environments. (58:34) You look at in countries like Argentina   and Venezuela, but the company just has a  phenomenal track record of navigating these   storms and a lot of that comes down to management.  Right. Marcos Galperin. He's the co-founder of   Melly and he's been leading the company for  more than two decades and he's consistently   steered through every macro crisis the region  has thrown at him and all while keeping this   long-term vision intact for the company. (59:04) He's also made these remarkable   decisions that are very shareholder friendly  along the way. So Melly might be the only large   tech company that I've seen with stock-based  compensation running at about 1% of revenue   and this means that there's essentially  no dilution for existing shareholders.   So for a company operating at this scale  and still growing as fast as they are,   I think that is just very hard to find. (59:30) The one thing that can look odd   at first glance is the margin profile.  Normally, you would expect margins to   expand for a company like this, but with Melly,  it's almost the opposite. Operating margins,   they were north of 30% in the mid 2000s,  and today we're in the low to mid teens.   How about you talk more about that? Yeah, that's  a great point. It's it's a bit counterintuitive,   but the decline started around 2017. (59:55) And that was a time where largely   the result of deliberate reinvestment showed up  in the financials. And there was a period when   the company aggressively expanded all of all  of the investments they wanted to do for the   long term. So we're talking about the logistics  network. We talking about expanding free shipping   subsidies to accelerate adoption. They also  began scaling Macago at about that time frame.  (1:00:15) So beyond the marketplace, when  you expect to scale a payment provider,   you have to do a lot of investment up front  and you only get the benefits of that later   on. And each of these moves temporarily compressed  operating margins but dramatically strengthened   the long-term competitive position of the company. (1:00:34) So in other words, the margin volatility   was one of those long-term strategic choices  of the CEO to take more market share and just   solidify Mel's position. And today margins  are picking back up again. As you mentioned,   they're in the low teens right now  because most of the heavy lifting   from at least that investment cycle is now done. (1:00:53) Utilization of the logistics network is   increasing and the fintech business has reached  scale in in their biggest markets. Although there   is still plenty of room for margin expansion.  That's definitely part of thesis if you look   out 5 to 10 years. We didn't even talk about the  ads business that Melly just rolled out last year,   for example, which is growing very quickly and  is obviously a high margin business. And I think   there's no reason why you shouldn't expect  similar numbers to what Amazon has put up.  (1:01:19) They, like I said, just started out.  So I think there's a lot of growth coming from   that. And overall, I wouldn't be surprised  if we see margin declines from time to time.   There will be new investment cycles. And just  this year, there was another free shipping   initiative that put pressure on margins. (1:01:38) or generally say I see this as   a positive thing first of all because more people  come into the ecosystem and second of all because   the more people come into the ecosystem the  more money you will save on your logistic   network because it just gets more efficient  every time. So yeah, I believe it will be a   while before Melly starts optimizing for margins. (1:01:55) There's still way too much growth ahead   to start reinvesting in in the business now.  And yeah, I guess that's it. That's that's   pretty much most for my pitch. I basically  switch from what you could call a deep value   pitch by now with PayPal to a company that is  probably on the more expensive side uh which   is usually not where I look for opportunities. (1:02:15) But this stock traded down about 25%   from alltime highs uh at the time of recording  and factoring in its growth. It's not trading   at unreasonable levels or or valuations. And  it's really a pick that if you believe in it,   I would say you need to hold it for  probably four to five years and it could   be a fantastic company over the next decade. (1:02:33) sounds a lot like New Bank and and   Marcato Libre people love to compare it to to  Amazon and in some ways it's a good comparison in   some ways it's lacking one of the big differences  is that Marcato Libre does not as far as I know   have the same kind of cloud computing ambitions as  Amazon which has really become just a juggernaut   of their profitability and then as you said  and we didn't have a ton of time to linger on   it but what makes me most excited about Marcato  Libre is probably the advertising opportunities   you've seen Amazon become one of the largest (1:03:01) advertising platforms in the world. Um,   and with companies like Uber that I've I've  pitched to Clay in the past and Daniel,   we've talked about at length before, advertising  is really materially increasing their their   profit margins on an otherwise I would say  difficult business and this is probably an   equally difficult business if not more so, but  there's a lot of potential to the upside if they   can implement digital advertising at scale. (1:03:27) At least that would be my thought.   Totally. Yeah. Yeah, totally. I mean, I honestly  look forward a lot to when I pitch this stock in   a deep dive on our show to you, Sean, in a couple  of weeks because I think there's so much more to   talk about and so much more to get excited about. (1:03:44) Yeah, I'm I am just totally with you   guys on the advertising business.  Uh that definitely excites me. I   think advertising is a tough nut  to crack, but if they can do it,   the potential upside is just enormous. And that  should be no surprise given my pick today. So,   thank you Daniel for the wonderful pitch here. (1:04:06) Uh I was very surprised you put this   together uh on the Saturday night. So, thank you  for grinding out that last minute research to for   the discussion today. And had you guys shown me  these two picks ahead of time without saying who   was picking what, I would have said Daniel was  pitching Xer, but and Sean was pitching Melly.  (1:04:24) So, I like that you both try and think  outside the box from your more conventional   investing styles. So, while you guys have been,  I would say, a bit more creative with your picks,   I hope you'll forgive me today for  simply selecting a Magnificent Seven   player that's trading slightly out of favor. (1:04:49) And my hope is that this pitch will   hopefully nudge you guys to cover it on  the Intrinsic Value podcast this year.   I'm sure we will at some point. Slowly but  surely, we're making our way through the   S&P 500 and and the fact that we're a year into  covering a different company every week on our   podcast. We still have not done all of the MAG 7. (1:05:08) Maybe that's surprising to people,   but I I guess we've taken our time with this  one. Well, it it certainly is a fun one to cover,   and maybe it depends on how you look at it.  On the one hand, there's just so much to talk   about. On the other hand, it can be very  controversial. I'm sure some listeners are   going to love the pick. Some listeners are  going to hate the pick for various reasons.  (1:05:27) So, my pick today is Meta. First,  I'll mention that I did recently purchased   shares for my own portfolio. My average purchase  price is around 648 a share and it's currently   around 3% of the portfolio. I'd love to  add more. I just have a hard time selling   existing positions to to fund a new position. (1:05:51) So zooming out, unfortunately when it   comes to investing, I can just be a slow learner.  Meta is one of those stocks that I've watched for   the longest time and you know obviously we're  all familiar with the company and you know   just given the level of controversy with this  name and the regulatory pressure they face,   it's gone through a number of significant  draw downs which gets a lot of investors   interested at different points in time. (1:06:16) But I I never really acted in   size with this name. But I hopefully wanted to  correct that mistake from the past. So the first   draw down I witnessed was in 2018. If investors or  listeners remember this was during the Cambridge   Analytica scandal. The stock fell by around  40%. And I temporarily owned the stock for a   short period of time before locking in a profit. (1:06:40) And part of what kept me from really   betting big on Meta was simply this bias I had  against investing in very large companies. So   in 2018 the market cap dipped below 400  billion and it's just like you know how   much bigger can it really be? At that point  in time you know you had Apple that was like   the only trillion dollar company at the time.  Well today Meta is a $ 1.5 trillion company.  (1:07:05) So, they've nearly 4xed their market  value over that period of time. It also wasn't   until just recently that I appreciated the  service that Meta is providing to advertisers. So,   I've been running Meta Ads for a small  e-commerce company over the past couple of   years and I saw firsthand how advertisers are  able to view the data behind their ad spend.  (1:07:30) So you can see the number  of impressions, the number of clicks,   the click-through rate, the number of  conversions, cost per acquisition. There's   all this data that really gives advertisers  exactly what they need to understand the   performance of how every dollar they're spending  is performing in terms of return on investment.  (1:07:50) And it reminds me of the old saying,  half of my advertising doesn't work. I just   don't know which half. And Meta just completely  eliminates that problem. So, in my research on   Meta, I came across an interview all the way back  from 2018. It was with Pat Dorsy of Dorsy Asset   Management, and I thought it was such a great  line that I had to share it here today. So,   in the interview, he said something to the effect  of, "If God invented an advertising platform,   it would be called Facebook." And really, the  biggest breakthrough with Meta was being able   to measure the return on ad spend. So when (1:08:22) you look at billboards or radio   advertising, these may never go away. Just digital  advertising has proven to be significantly more   effective for businesses wanting to market their  products and grow. So Meta and Google or Alphabet,   which is in the intrinsic value portfolio. (1:08:40) Uh these two have really been   the dominant players in digital advertising. And  over the past decade, when I look at their stock   returns, it's been surprisingly correlated  between the two. But when we look at 2025,   we saw a pretty drastic divergence. So here,  as of the time of recording in mid December,   shares of Alphabet are up around 70%  on the year, which is just phenomenal.  (1:09:05) It's been labeled an AI winner now,  and shares of Meta are up around 9%. But Meta's   business has been firing on all cylinders. They  have revenue growth over 25% in the most recent   quarter. And they're capitalizing on immense  pricing power as well as the average price   per ad grew by 10% year-over-year. It's funny  to me and probably to you, Sean, as well that   we now talk about Alphabet as a winner of 2025. (1:09:30) And for a long time, we heard about   our stock pick that Alphabet is actually lagging  behind OpenAI. And now it worked out pretty well,   which of course is great for us. But I've  actually gone through a very similar journey   with me as you did, Clay. It's been  on my mental watch list so many times,   but I never ended up pulling the trigger. (1:09:47) And it's funny because looking   back at the Max 7, it feels like their success was  so obvious. But in reality, and you mentioned it,   they kind of redefined how much companies can  grow at the scale that they had reached even 10   years ago. I mean, you mentioned that in 2018,  Apple was the first publicly traded company to   ever reach a trillion dollar market cap. (1:10:06) And that milestone really seemed   like it wouldn't be surpassed that quickly again.  And now less than 10 years later, we have more   than 10 companies that have crossed that mark. And  some are worth multiples of that. So if anything,   that has taught me that there's still plenty  of opportunity even in the biggest names,   especially when they're beaten down by  either temporary issues or just general   doubts about the management as it has been  the case with Zuckerberg now multiple times.   Yeah. I mean, it also sort of points to how (1:10:37) If if I were to wrap some sort of   narrative around this, I think the internet has  just enabled just this winner take all dynamic   where you look at digital advertising for example,  just Meta and Alphabet have just eaten this market   as it continues to grow at double digit rates. (1:10:57) So the recent draw down in meta is   really primarily driven by fears related  to their capex spend. So AI capex is just   all the rage with many of these mag 7 stocks. In  2025, Meta is going to spend around $70 billion   on capex. And since they don't have the capacity  that they currently would like to have, which is   uh pretty remarkable, they do expect  significant growth in capex in 2026.  (1:11:22) So they clearly don't want to  undersshoot their compute needs that they've   had in recent years. So Zuckerberg mentioned  on their recent earnings call that they do   expect this additional spend to yield good  results and you know of course they believe   that otherwise why would they do such a thing  but he made the additional point that if it   turns out that they overinvest in these compute  needs then they would be able to allow other   companies to use that compute should they not  really need it. So that's the big question that   the market is really trying to figure out  is will Meta's huge AI spend turn out you  (1:11:57) know like the metaverse spend  for example that didn't really deliver any   positive returns for investors but if we look  back historically at Meta and understand the   bigger picture Zuckerberg clearly has a history  of being a good capital allocator and overcoming   the challenges that the business has faced. (1:12:16) So if you zoom all the way back   to the mid 2000s, Facebook blue uh was started  one year after MySpace and Facebook managed to   overtake MySpace which was pretty remarkable given  that it was the number one social media platform   and one of the most popular sites globally. (1:12:36) And then you have the transition   from desktop to mobile in the early 2010s  2011 to 2014 time frame. They started out,   you know, their mobile had a pretty terrible  experience. And then in the years that followed,   mobile would end up generating  around 90% of their revenue,   which again is just another example  of Zuckerberg being able to weather   through these storms and these transitions. (1:12:54) And in the span of just a few years,   they essentially transformed their  entire business. And then in 2012,   they had the purchase of Instagram. They bought  it for just $1 billion. It had no revenue, 13   employees. And today it's estimated that Instagram  generates nearly $100 billion in revenue per year.  (1:13:14) And then 2014 they made another  home run acquisition and buying WhatsApp   for 21 billion. And they've also integrated  what's been successful for other social media   companies. So for example, you have stories after  Snapchat released those. Uh they integrated the   same feature on Instagram and Facebook blue. (1:13:32) And then with the rise of Tik Tok,   they were very fast in launching reels.  In their most recent earnings call,   they shared that Reals crossed a $50 billion  ARR. So Zuckerberg has a long history of   navigating the company through these periods  of constant change and uncertainty. And with   the capital and resources at their disposal, I I  just like the riskreward profile at this level.  (1:13:57) So Meta generates the vast majority  of their revenue uh from advertising on their   family of apps. Think Facebook Blue,  Instagram, and WhatsApp. And my thesis   is that AI will be a big driver for the business  going forward. So by all measures, the strength   of this business only seems to be improving  whether you're looking at margins, growth in   active users, time spent on the platforms, etc. (1:14:23) And if anyone is looking for a company   that will be a beneficiary to the trend of AI, I  think that Meta is certainly a good candidate. So,   you know, many are speculating on how all these  companies will be able to capitalize on AI spend   in the future. I think it can be argued that Meta  has been doing this for more than a decade now.  (1:14:47) Social media apps like Facebook are  being run by AI and machine learning already. So,   them alongside Alphabet have been at this for a  while now. So, I wanted to talk a bit more about   why AI will be a tailwind for Meta. So I have  four points here. First is AI is going to make   it easier for users and content creators  to generate content and meta themselves   even as tools that allows users to do this. (1:15:12) So since creating new content will be   easier, I think it's pretty reasonable to assume  that more content is going to be generated going   forward. Second, it's just not enough just  to have the content. Meta needs to be able   to deliver content that is relevant to users. (1:15:32) So, as AI continues to improve their   algorithms and recommendation models improve,  engagement on the platform will increase. I mean,   we've been seeing that for many years now,  and this isn't speculation. Engagement   across all of Meta's apps are improving.  So, it's already happening. And third,   more engagement on their platforms means  more ads are going to be delivered to users,   which brings me to my third point. Meta has the  models that deliver advertisements to users.  (1:15:57) And as their models continue to  improve as a result of AI, this essentially   means that their ads will continue to be  more effective at converting and delivering   more value to advertisers. As a result,  they can charge more for ads over time,   which gives them more pricing power. (1:16:18) And lastly on this point,   I would mention that AI also makes it easier for  advertisers to spin up new creatives and test them   out in their campaigns. So, you know, it's cheaper  and easier to run different ads, which will allow   advertisers to put together more effective  campaigns. And perhaps AI will also remove   some of the barriers to entry for advertisers. (1:16:39) for example, some just don't have the   technical experience to figure out how to run  ads, how to test new creatives. And I think that   Meta is just going to make advertising on their  platform more and more accessible over time. So,   if one were to hire an agency to do this  for them to manage their digital ads, it can   quickly cost thousands of dollars per month. (1:17:04) then it's certainly in Meta's best   interest to try and remove that  barrier for as many businesses   as possible who just don't have the time or  don't have the capital to run ads today. So,   I think the opportunity in Meta is getting  some exposure to the potential upside of   AI's capabilities while also getting  that upside at a reasonable price.   So really quickly on the valuation here, when  I adjust for a one-time income tax provision,   Meta trades for an adjusted PE of around 22. (1:17:34) And if we look at the S&P 500 and   exclude the MAG 7, the market's also trading at  a similar level. So essentially, the market's   telling us that Meta should trade in line with  your typical company in the S&P 500, which I just   don't think is giving them enough credit. It's  similar to how for an extended period of time,   Alphabet traded below that that of the market  and yet Alphabet continued to publish solid   results and quietly be at the forefront of AI. (1:18:03) When we look at Meta today, top lines   growing north of 20%, profits are up a similar  level and the company's deploying more than $40   billion into share repurchases in addition to  paying out a small dividend as well. And lastly,   I would mention a few embedded call options that  investors get when investing in Meta. So WhatsApp,   they currently have over three billion  monthly active users and they're in the   very early stages of monetizing this platform. (1:18:26) So I think in the coming 5 years,   WhatsApp is going to be a significant  contributor to earnings growth. They   also have reality labs. I think virtual  reality, augmented reality. You know,   this segment doesn't give me too much  inspiration or interest me too much in   terms of what it will deliver going forward. (1:18:46) Perhaps it'll be another profitable   division for them down the line by generating, you  know, broad appeal for consumers or enterprises.   I'm not going to place a big bet on that segment  specifically. And then lastly, the company has   released an open- source LLM, and it's estimated  to be the number four player behind Anthropic,   OpenAI, and Alphabet or Google's Deep Mind. (1:19:07) So, that pretty much sums up the   pitch. I'd be really curious to hear what you  guys think. It's a good one, Clay. And and gosh,   I remember really looking into Meta for the  first time in 2022 and reading Azoth Motorin's   valuations of the company at that time and I  was just pretty wild that from its peak in 2021,   the stock was down nearly 80% in 2022. (1:19:33) And I for a company that has   more than one in three people on Earth just  using Facebook with this track record of of   incredible growth and and profitability and and  really shareholder stewardship. It really makes   me question the whole idea of of efficient  markets that we're we're taught in schools.  (1:19:53) Volatility of that magnitude is just  not supposed to happen at companies like Meta. And   clearly in hindsight it shouldn't have happened.  And so that was a missed opportunity for me. And   I I was probably too smart for my own good. And  that I remember wanting to be very disciplined   and feeling like, okay, even though intuitively  this looks to be pretty clearly a point of extreme   pessimism in the market on arguably one of the  best businesses in the history of capitalism.  (1:20:19) I also did not want to be investing in  businesses that I didn't feel like I could fully   wrap my head around. And I was I was taking  inspiration from Buffett and how he tends to   avoid tech companies. I I remember really wanting  to pull the trigger and being proud of myself for   not having done so because I hadn't done the prior  research to know the company well enough and just   to feel comfortable with understanding their mode. (1:20:44) And so that experience honestly was sort   of the inspiration in a way for what Daniel and I  do now. I mean we cover a ton of companies and we   only invest in a handful of them but now we have  this extensive watch list of names where we have   done the necessary homework such that if one of  those companies has an extreme dislocation like   Meta did then we have the confidence and kind  of the ground set to be able to act on that.  (1:21:10) And so the concern now with  Meta that that I have at least is that   the metaverse investments are pretty clearly  looking to be a flop which is what the market   was worried about rightly in 2022 maybe  just to an extreme extent and then now   you're looking at them having the fourth best LLM.  And unfortunately I'm not sure having the fourth   best is is going to take them very far. (1:21:32) And so there were all these   headlines earlier this year about them  signing top AI researchers to contracts.   that would honestly make some of the most  famous athletes in the world blush to how   much they were paying these people and then yet  we just really have not seen the payoff from   all that spending just like with the metaverse  and that's a little bit of a yellow flag to me.  (1:21:49) So I think you could look at this and  say okay Meta is undergoing a phase shift. It's   not the capital light business it once  was as it's making these huge bets on   the future. But so far one of those bets  with the metaverse has really gained no   traction and and does look like a money pit. (1:22:08) And then with the other area they've   invested significantly into with AI they are  pretty clearly a lagard. So it's hard to say   to what extent their investments in that area are  going to pay off for them. Even though I I do hear   your point that for really in a way they've been  monetizing AI for for something like a decade now.  (1:22:26) And just for me, I think it falls into  the too hard bucket of, you know, there's two core   areas that they're dumping capital into. And  the thing we have to remember with investing   is it's the future returns on capital that will  drive our experience as shareholders and not   necessarily the historic returns in capital which  are obviously very very attractive in this case.   And so it seems like a business where the  capital intensity is fundamentally changing.  (1:22:50) And that doesn't have to be a bad  thing, but it just means that buying Meta   today is potentially a very very different type of  business than it was like a decade ago. And so I'm   not going to be here to say that I'm I'm shorting  Meta. I don't think Meta can be a good investment   but just to provide maybe a little bit of of push  back and you know just to say that as the capital   intensity scales up which is something you could  say really about any of the mag seven companies   including our portfolio company Alphabet and as (1:23:18) the law of large numbers continue to   kick in given their existing size and just how  difficult it is to find attractive opportunities   to redeploy capital that actually move the needle.  I could easily imagine over the next decade that   Meta would produce somewhat mediocre results,  but I'm just feeling a little bearish. So,   I don't know. Yeah, I mean, your  your points are certainly well taken.  (1:23:43) To the point about the doomsday  scenario that ASWAT Motorin published,   I mean, you aren't getting the bargain price that  investors were getting in late 2022, but sometimes   good investing is all about just trying to hit  these base hits and just avoiding the losers.  (1:24:03) So if you can consistently  pick up great companies at fair prices,   then I think that will fare well for a lot of  investors. But to the point on the metaverse,   as Stig likes to say, capitalism is just brutal.  And I think that's exactly what we've seen with   the bets on the metaverse. Meta could be a great  case study that can illustrate that many projects   a business will work on just simply won't work. (1:24:23) But the ones that do work will make up   for the losers many times over. And I totally  get the capital intensity concern. it it is a   legitimate risk and you are putting a lot of faith  in management and Zuckerberg and understanding the   returns they believe they're going to get on this  spend and the numbers are just unbelievably large.  (1:24:48) Meta is still burning billions of  dollars in cash in their reality labs division and   just the other day they announced that they'll be  reducing their reality lab spend uh by 30% which   the market reacted positively to but with that  said I still think that the majority of their   increased capex is to build out their existing  infrastructure that underpins their core business   of their family of apps and this historically  of course has delivered a positive return on   investment and I think that management has a  good feel for what that will look like at least   in the near term. We'll see what happens if they (1:25:20) continue to increase this year after   year for the next decade how how that will end up  panning out for them. But much of the reason that   Meta sold off in 2022 was due to them making these  largely speculative investments in the metaverse.  (1:25:38) Now, I would say that they're really  doubling down on what's already working. And   these AI systems are already driving higher  engagement and better ad performance. So,   the return on investment is showing up in  the numbers today. As I mentioned earlier,   ad pricing is up 10% year-over-year, which  is a direct reflection of their investments,   delivering strong growth for the core business. (1:25:57) And, you know, I'm not sure that Meta   has to have the best LLM to win. What really  matters I think is optimizing their models for   their own proprietary data and specific use  cases. And on the point about whether Meta   should license from OpenAI or Google instead of  spending all this capital themselves, I I just   don't think this is a direction they could go. (1:26:26) Um, you know, the core of Meta's   business depends on real-time ranking,  recommendations, and ad delivery. And   the latency requirements are so tight that those  models have to run on Meta's own infrastructure.   And on top of that, they can't ship all of this  data on user behavior to an external model without   running into privacy and regulatory issues. (1:26:52) And lastly, I don't think they want   to hand over control of a core part of their  business to another big tech company. Well, you   said yourself at at the beginning of your pitch,  Clay. There's just so much to talk about and so   much to consider when we're talking about Matter.  And personally, I'm just very interested in how   they want to monetize WhatsApp. As you said, there  are three billion people and I'm one of them.  (1:27:11) And I know that I'm the only one here  on this call using WhatsApp every single day. So,   I'm thinking this is huge potential.  And at the same time, I don't really   know how they're going to monetize it. I don't  think it has the same potential as, let's say,   Instagram. And I don't really know where to  place the ads in a way that it doesn't hurt   the the user feeling when they use WhatsApp. And  still, it's 3 billion people. So, it it could be   a phenomenal driver of revenue in the future. (1:27:35) And by now, it's basically not   monetized at all. What gives me confidence as  well in the most recent investments and you   mentioned it is that it's almost certain that  there will be demand for more data centers and   compute infrastructure in the decades ahead. (1:27:54) And so even if it turns out that   Meta won't need all of it themselves, there  will most likely be a way to monetize all   of those data centers at at least a  decent return. And on the other side,   what gives me a bit of pause is that  at least when I look at the past track   record of their investments, I think they  never really managed to invest successfully   outside of its main social media operations. (1:28:11) And when you just gave us the numbers,   Clay, it honestly blew my mind that Meta's app  still see these increases in usage. It probably   says more about my personal preference and the  bubble I live in than anything else. But from my   perspective, it feels like people are generally  trying to consume social media more consciously,   which is a polite way of saying just  less social media consumption. But   clearly that's not what the data shows. (1:28:36) And um I would definitely not   put my personal opinion above the data that that  is clearly true. I mean, if the core business   weren't still compounding the way it is, there  would be a good argument to make that Zuckerberg   is spending heavily to find the next big thing  because growth is actually slowing down and that   would obviously not be a bullish interpretation. (1:29:00) But with the core business or the core   app still getting stronger every single  year and with the current investment cycle   being much more adjacent to the core business  than metaverse ever was, I don't think Meta   should trade anything close to an average S&P 500  multiple. So yeah, I really like the pitch and if   your goal was actually to convince us to finally  cover Meta on the show and I saw that Sean is not   as bullish, I can tell you that mission has been  accomplished because I would definitely go for it.  (1:29:24) Yeah, it's funny. I think Meta  is one of those companies if you talk to   the regular everyday person that they would not  see this as one of the greatest businesses here   in the United States. You know, company,  you know, I think a lot of people think of   Facebook Blue an app for older demographics. (1:29:50) Uh all the kids are on Snapchat and   Tik Tok and whatnot, but it's just remarkable that  the family of apps are still growing. And I think,   you know, even us, I think we sort of  see Facebook Blue as an app for older   demographics and all the younger demographics are  going to other apps. But I think Instagram does   attract that younger demographic. And then even  when you look at the the advertising business,   I think most people would assume that, you  know, who's going to buy something that they   see on Facebook, but the reality is that people  do. And I think there are even some cases where   I myself uh end up seeing an ad on some of (1:30:21) these apps and end up eventually   purchasing. And part of it is is they just keep  delivering that to you. You might not buy it on   the first impression, but maybe the sixth  or seventh impression you finally are like,   "Hey, I'm going to pull the  trigger on that." But I think   we would all love to use social media less. (1:30:41) And knowing who you are, Daniel,   I think that um I just don't think most people  are as disciplined as you. I think that a lot of   people just fall prey to the algorithm. And  the reality is that these apps are getting   better at delivering content that's relevant  to users. And that might be my polite way of   saying that they're becoming more addictive. (1:31:00) So, I do appreciate your guys'   feedback on this pick today and I look forward  to tuning into your episode on meta and your   upcoming episodes on Xer and Marcato Libre. And  I'm sure you'll find some things on Meta that I'm   overlooking when you do some more digging. (1:31:20) And lastly, I just wanted to   congratulate you guys. You just crossed the  one-year mark since launching the Intrinsic   Value Podcast. What you've done in the past  year is just incredible. And along the way,   you've been just incredibly supportive of  me, you know, doing the presentation you did   uh with our group in Montana and doing a couple  presentations for our mastermind community.  (1:31:44) How about we just close it out by  talking a little bit about the show for those   that haven't tuned into it yet? What can  listeners expect from the Intrinsic Valley   podcast in 2026? Thank you for saying so, Clay.  Yeah, more of the same, I hope, in the best way.   We're going to just keep continuing to grind  through different companies every week,   pouring dozens of hours of research into each one,  and then just sharing our findings with the world   completely for free on our podcast and in our  intrinsic value newsletter while trying to build a   portfolio publicly of our highest conviction bets.  And like I said, doing so completely transparently   for anyone at home to follow along with. (1:32:20) And we've got a ton of really fun   episodes planned for the new year. So yeah, just  keep tuning in or start tuning in if you haven't   before and you can go through our whole archive  of content to get up to speed on the stocks that   interest you most. Yeah, perhaps a good episode to  start with is actually the one we just published,   which is the one-year portfolio update. I  think we published it a couple of weeks ago.  (1:32:43) And you know, for context, as Sean  just said, whenever we find companies on the   show that we feel are great opportunities, we  include them in our show portfolio. And since   it has been almost 1 year since we started, we did  an episode looking back on many of our positions   um the thesis and performance and just discussing  how we want to position ourselves for 2026.  (1:33:05) So yeah, it might be a good one to get  an overview of what we have done last year and   what we will do more of in 2026. And then I'll  just quickly say for folks who do want to take   their investing to the next level, Daniel and I  run a group called the intrinsic value community,   similar to the mastermind group and and  this one is devoted really entirely to   sharing and discussing stock ideas in depth. (1:33:31) And so you've got to apply and interview   to be considered. It's a small but special group  to join if you're admitted. We host weekly calls   digging into stock ideas, having debates about  them, or we also will have private talks given by   guest speakers. Folks like Adam Cecil and William  Green have have joined in the past, as has Clay.  (1:33:50) Uh we also do stock pitch competitions,  organize private dinners in Omaha during Birkshar   Weekend, and really just a whole lot more. It's a  lot of fun. So, if you're looking for like-minded   investors to support you on your investing  journey, because investing can be lonely work,   and to connect with on finding new stock ideas  or or just to get feedback on your ideas,   I'd really encourage you to join weight  list for a spot in our group at the   investorspodcast.cominttrins community. (1:34:20) Excellent. Well, I'll be sure   to get all that linked in the show notes. The  podcast, the newsletter, the community. Um,   especially if you're a podcast listener, I'd  encourage you to just get on your podcast app now   and hit follow on the Intrinsic Value podcast. (1:34:38) But Sean, Daniel, uh, it's such a   pleasure working with you guys. Thank you  so much for joining me here today. And,   uh, cheers to the new year. Cheers to the new  year. Cheers. Thanks for having us. We are 50   episodes into the Intrinsic Value podcast now. (1:34:58) Every week we invest 40 hours   researching companies to find outstanding  opportunities and build a portfolio from   scratch. And there is obviously some selection  bias there. We only choose companies that we   find interesting and the first place to cover on  the show. And yet we still say no to about 80% of   the companies we cover. Well, as Buffett  said, the great thing about investing is   that you can choose the times to swing. (1:35:18) Today, after almost a year of   building our portfolio, we will  take a look at how things went.   And there's quite a lot of news  today. We will sell one company,   enter into another position, and add to an  existing one. So, I would say stay tuned.