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Welcome to hedge fun tips with Tom Hayes I’m Tom Hayes and this is your 217th videoast podcast for the week ending December 14th 2023 uh we’ll do some quick photos and then we’ll get right down to it got a ton of incredible stuff to cover today
So first and foremost uh we were up in Boston this weekend for a major swim meet um and uh let’s see Annabelle was the 10 and under Highpoint winner at the Charles River Invitational in Massachusetts this weekend and Mimi qualified for Eastern Zone championship in the 500 yard freestyle with a time of
Five 53936 uh so very very exciting and very proud of them that’s Annabelle High Point and that is Mimi with her amazing coach uh Connie and was just a great weekend and then Saturday was a 4-day meet so Saturday I took Mimi to Brown for I believe it was an ODP Camp which
Is Olympic development Camp so that’s her at Brown University we had a fun day and that’s my Lefty champ which is a big deal in water polo if you’re a lefty uh that’s a brown the bear at Brown so that was pretty cool uh more Lefty action controlling the point like a champ
That was great uh this I don’t think I shared with this when I did the Schwab Network at the nysse oh wait no no no this is Fox Business this is the amazing Christmas tree in front of fox business with these little uh you know holiday uh
People uh that’s news cor building I know some of you have seen this this is inside the Green Room this is also where Gutfeld is recorded the studio that Charles uses from one uh from Monday through Thursday the one on Friday is uh in the other building but uh pretty
Exciting there so uh you know I know some of you like the the uh behind the scenes views so I like to try and do that but uh this segment with Charles I want to go into we cover three turnaround stocks General Outlook we’re going to go here all right my next guest
Says Be Long Santa and short the Grinch I’m going to bring a great Hill Capital chairman Thomas hay sry Tom Tom I mean we got we got Santa we got the Grinch how do you go how you short the Grinch well you keep staying long and you
Continue to buy buy the dips even if Cher Pal’s a little hawkish tomorrow you know he’s going to come out he keeps talking hawkish and acting doish and that’s what we’re going to see we’re going to get back to that point then because it wasn’t maybe a week or so ago
When cherp made he read from the script yeah and the street interpreted it exactly the way he didn’t want him to right that was that day we had that big rally we really haven’t looked back since and I remember we had a series of those kind of things happen and then
There was the the the big event in w W oming where he dropped a hammer on us could could pal become frustrated with the fact that the Street’s not listening to him as long as he doesn’t say autopilot we’re going to be okay you know the key here I think the theme is
Broadening okay so moving forward buy the dips but where do you buy the dips I love the chart you put out with the Magnificent Seven down and the rest of the market up uh you look at large caps training at 18.9 times forward midcaps 13.9 times small caps 13.2 times forward
Earning so we want to look for the opportunity for out performance in 2024 mid to small on a relative basis one of the reasons I really love having you on the show is you bring ideas that a few others do really and and one of them is
They’re kind of gutsy yeah I mean you you do some serious bottom fishing VF Corp VF Corp I mean you can see this chart folks this from 2021 I mean this bad boy is like right had to do the sound effects for this one but I can see okay you’ve
Got these key moving averages maybe it’s form support here but you also like the fundamentals yeah well they don’t call me turnaround Tom for nothing I always bring turns for 2024 uh the key story here is New Management change Brack and Daryl he came from Logitech when he took
Over Logitech in 2013 the stock was down 82% if you bought when he became CEO you made a 26 bagger over the next eight years you put 5 million in you got $133 million back he’s back in he just did his kitchen sink quarter he’s deleveraging the balance sheet Vans is
Doing poorly he got a new CEO uh new president of Vans and this thing’s going to rip he’s going to apply the EU stuff that’s working for the North up 20% he’s going to apply it in the US and he’s going to create a multibagger we did I
Had the pleasure of doing pretty good with that stock as well from time to time I didn’t hold it from beginning to end but we did okay I got another sound effect for you down baxer again uh since 2022 it’s been unmitigated I guess they don’t have any fat loss drugs that’s
Right it’s the it’s the antithesis of that so this is sold off it’s down 65% uh overhype on the gp1s all the medical devices were down all the food companies were down a lot of the Staples were down uh but the fact is they’ve doubled free cash flow year on-year uh they’re
Turning it around and and here’s the problem they’ve historically traded at a 19 times PE they’re now trading at a 12 times PE how they going to solve that they’re going to spin off their slowest growing business which is the kidney business NE in the first half of next
Year that’s going to take the multiple backup to normalized level rate plus they sold off a business uh created $4 billion of cash they’re paying down debt that’s going to save1 million $180 million a year of Interest expenses on an annualized basis see and the reason
Again I love that you come it’s not just you know it’s fundamentals it’s oversold stuff and I want to give you some props September early September you gave a CCI right about here and this saying High 90s been as high as $114 a share just a
Hell of a move already but I think you’re looking for more right absolutely uh Elliot singer uh singer came in Paul singer with Elliot management activists they want they said he came in and he said uh excuse me Bor I’d like to fire you and I’d like to fire the CEO and by
The way Mrs Lincoln how was the play uh guess what the CEO stepped down last week the stock is up this is a yield play as rates come down reats go up they’ve got 45,000 cell phone towers they’re going to sell off the fiber and the small Cale business which is
Nonproductive the return on invested capital is going to go back to double digits and this thing’s Off to the Races this can work its way back up towards 200 over the next two to three years what’s the yield right now the dividing yield five and change wow yeah five and
Change in this much’s upside that’s really really great stuff appreciate it all right folks coming up how today’s CPI is going to affect tomorrow’s R decision and and we’re back so that was that then the day before that that was Tuesday I was at Yahoo at their brand new studios
In the Vado building amazing build out and you can see here me standing in front of the glass Studios and I’m facing a bullpen of like you know 75 people that were in the office everyone was in the office by the way oh by the
Way we do have an update on Vado so we’re we’re we’re not going to be talking about verado as much moving forward uh anyway so let let’s do this uh this is the control room when you walk in you can see all the action that’s happening there uh for the
Interviews I mean they just did a beautiful beautiful job there’s Julie Hyman and Josh Lipton Josh used to be on CNBC if you remember he was always from San Francisco he just came over to Yahoo Julie Heyman was on Bloomberg she’s at Yahoo She interviewed me for this
Segment that’s the cool Yahoo sign when you walk in uh Etc so we’re um by the way H as far as Fox Business I want to thank uh Charles Payne obviously Kayla ariso and Nick Palazo and for Yahoo I want to thank Julie Heyman and uh Sydney freed for having me on
Bear with me guys I was up at 3 3:00 this morning to do CNBC Indonesia so uh you know it’s been a long day but nonetheless uh here we go uh one stock we own and why and one to avoid was the theme of the segment and
Here you are me absolutely this stock is down 65% since it’s 2021 high it’s down because of the Hill Ron hillrom acquisition they used a lot of debt on that it’s underperformed expectations but we’re starting to see that turnaround margins are improving qu qually so that’s very good then they had
The supply chain issues from Co like all these companies they built up their inventory tremendously at high cost they’ve been working through that inventory for the last two quarters so we’re starting to see the margin expansion there and then of course the glp1 fear that was the final nail in the
Coffin you saw it on the uh lower lower right side of that chart yeah we can take it back for real quick and this right here yeah most definitely that was when everyone was saying everyone’s going to lose weight no one has ever going to get a medical uh procedure
Again because we’re going to be healthy but the problem is even if they’re correct and we lose all that weight we all go out and play pickle ball we have knee problems we have shoulder problems we have hip problems we play golf we get more active so uh those are the three
Reasons that it’s down we think the valuation is tremendous here which goes to our next Point yeah so let’s talk about the valuation a little bit valuation and performance as you point out and you’re looking specifically at the price to sales ratio as a measure of valuation obviously you’ve seen that
Come down also yeah it’s trading at 1.2 time sales this is very very low historically and just absolutely uh it’s also trading it’s historic PE multiple price to earnings multiple uh historically has been about 19 times because this has been a grower this business has compounded Capital return
On invested capital of double digits for decades now so this is a proven business but the PE multiple is trading down to 12 times next year’s earnings uh in opposition to its average multiple of 19 times uh and that’s largely due to the kidney business the renal care business
Is the slowest growth Division and they’re going to spend that out to shareholders so so you think that should unlock some value and just to point out to our viewers this is about I think a 10-year chart here or nearly so so it shows you definitely over the long term
Just how low that price to sales ratio is on a comp um comparative basis and so you mentioned one potential Catalyst for Recovery that is the spin-off of that renal business what are some of the other potentials well uh a couple of things first off sold off the biofarma
Business that they got $4 billion of that so that’s going to help them deleverage that’s been a weight the interest expense that’s going to take about $180 million a year of interest expense out of the business the key thing about that Renal Care spin is that once you take the slowest growth
Division out of the equation and that’s spun to shareholders what’s remaining Baxter co uh remain co uh that’s going to start to trade rate at a higher multiple because it has a higher growth rate management is uh expecting prospectively that it’s going to grow revenues at 4 to 5% the margins are
Improving sequentially as we work through the supply chain issues so we really like the story we think Baxter can work its way back to $60 over the next 12 to 24 months so it’s a longer term play there’ll be some bumps in in the road along the way but we do think
The glp hype is a little overblown here okay so what we like to ask people what the biggest risk then is for that bullish case here and you’re saying maybe it has to do with pricing power yeah I think you know management has in their assumption of the long-term
Topline growth rate of 4 to 5% that they’re going to have some pricing power and the risk to that is they have competition that has have similar products out there and they don’t innovate quickly enough but uh they’ve shown a track record of innovation even on the Pharma side with their launches
Uh their injection business Etc so we’re pretty confident that this is not going to come to Bear but it’s something to keep in mind as a risk okay so that’s your good buy looking at this whole weight loss Universe let’s talk about the stock you’re saying adios to in this
Scenario and that is Eli Lily which is your goodbye in this scenario so let’s walk through the thesis on this one you say it’s already priced for Perfection so maybe not a lot of room for error that’s correct so it’s priced in a lot of really really good news uh it’s
Historically traded at at about 27 times earnings it’s trading at 48 times next year’s earnings uh as opposed to Baxter which is trading at 1.2 time sales this is trading at 15 time sales this is unprecedented you’re paying for not 15 years of profit you’re paying for 15
Years basically of Revenue uh and uh we understand the growth we understand the valuation but this has really just gotten too head of itself even if you believe all the good things are going to happen right and we should just mention there actually happened to have been
Some news today on Eli Lily Zep bound which is their specific weight loss drug that is the uh basically counterpart to Manjaro the uh the uh diabetes drug there was a new study that came out and said people who were on it once they were off it for year they gained back
Half of their weight now they’re still a lot lighter than they used to be but nonetheless that was hitting the stock a little bit in today’s session so just something to think about as well for folks so competition with lower prices is one of the other things that you’re
Looking at expectations are these type of drugs the GP ones uh number one you got to pay the ,000 or $1,400 a month or it starts to come back uh both on this one and we we you know it’s expected on the other ones uh but it’s expected that
The price of these drugs is going to uh erode from 14,000 a year down to 3,000 a year over the next decade uh and it’s going to become a me too product there are already multiple companies that make similar drugs so there’s going to be more and more enter the fry well and
Then there’s the question of okay and who exactly is going to pay for it when you’re looking at this thing let’s go here so in other words is insurance going to cover it yeah and and so far the jwelry is still out because if you
Look at the excess cost of a diabetic is about $9,000 a year for the insurance companies right now some of these top tier drugs are4 to $18,000 a year so the math equation doesn’t work just yet that might get better but best case scenario they’re expecting the analyst and and
You heard before about 15% of the morbidly obese people will be on it within 10 years so that’s kind of a relatively small portion of the population if you think about the top 10% of households 190,000 of income if they’re self-pay $144,000 a year is a
Lot of money you know and what about the other 90% of the population that may need it yeah okay so what could go right for Eli Lily and therefore wrong for your thesis here if we can get that to come up I think we’re a little fro oh
There we go insurance coverage begins to accelerate yeah I I think uh as the costs come down the the equation May improve for insurance companies to start to cover they may say if we put them on this at $5,000 a year $7,000 a year we’re going to have to pay for a lot
Less procedures down the road as their health gets better um the other thing is they have an Alzheimer’s drug that that’s uh expected to be approved maybe the results will be better than expected that could be a complete Game Cher uh so there are some positive catalysts here
Certainly that uh could change this thesis and and we do think it’s going to continue to put out great products uh it’s just we’re not willing to pay this current okay and just quickly do do you have positions in either Baxter or lily we own Baxter we have no position in
Lily and we’re back um and then these were the New York Stock Exchange photos I don’t think I got a chance to share them uh from when I was on Schwab network uh that’s an amazing Christmas tree in front of NYSC I mean there’s nothing like New York City during the
Holidays that’s uh the CNBC um Mike Santelli back there and then uh more tree more tree uh that’s um Nicole pedales who I was on her show that was the person who was on right before me uh and I think that’s it for that and then finally we had uh we also
Had um last night everyone loves Phil Yin from Cgtn as well as I want to thank Phil and I want to thank Mona zby been a busy week um oh that explains why because it’s not here okay so we’re going to go ahead I’ll just show you this this one H fun tips we go and here it is Phil Yen and
Mona zby so um uh this one was all about the fed the inflation the Outlook Etc and everyone loves uh Phils back and forth so here we go for more on uh the economy and reaction Thomas Hayes we need him badly for this founder chairman managing member of great Hill capital
Good to see you if um if if you’re piloting the plane and the FED says what they said are you pushing all the engines now forward at maximum speed because there really isn’t anything to worry about the FED just gave you uh the biggest green light you’re ever going to
Get yeah no question I mean what a difference a few weeks makes uh you know I’ve been very constructive on the economy I and markets in particular going into year end but on October 22nd there was a major headline in the Wall Street Journal that said quote another Black Friday may be
Another Black Monday may be around the corner and I made a joke of that publicly I said well there’s only two Mondays left in the month of October so they’ve got a 50-50 shot and sure enough here we are at alltime highs in the Dow
The FED did in fact give the green light but I think you have to be nuanced where you go chasing and and uh you can chase the higher priced High multiple large cap stocks or you can find incredible Bargains in the midcap and small cap that are trading at much lower
Valuations I I I love it look anybody watching the show is is probably a normal investor I’m I’m guessing um and if you’re a normal person you have what we call fomo which is you’ve been worried in January you’ve been worried in February you were you made excuses
Why you weren’t going to buy certain things or certain sector and then you mentioned October where it got a little bit scary but here we are you have missed out probably on a lot of gains and you’ve got 3 weeks left in December and and we all know what the answer is
When you’re scared of missing out and you get greedy you’re going to buy almost everything what are we buying okay so I would suggest being Nuance actually earlier this week two days ago uh the market was up and all basically all of the Magnificent 7 were
Down that is a sign of broadening that’s very healthy that’s what you see in a b Market uh when you have very narrow leadership it’s not the best scenario now that we have the broadening happening uh large cap is trading at 19 times next year’s earnings a little bit
Above average the historic average midcaps are trading at 13.9 times next year’s earnings and small caps are trading at 13.2 so we’re focused on turnaround plays they don’t call me turnaround Tom for nothing Phil uh we like uh VF Corp is a company that we own
And the reason we bought it they have Northface Timberland Vans Supreme Dickies it’s Fallen 85% from its prepandemic highs they just got a new CEO he did his first quarter the kitchen sink quarter his name is uh Bracken darl he came from Logitech when he joined
Logitech the stock was down 82% in 2013 over the next eight years BF right that’s your turnaround play what BF cor what what happened to the jobs what happened to the college uh payments that were doe and and we’re all supposed to be saving money and consumer stocks were
Getting hammered all those discretionary stocks including the one you just mentioned are all part of a giant basket that everybody was worried about what happened what happened is you can never count out the US consumer when they have a job and somehow J Powell has navigated
The uh the Holy Grail the uh Immaculate disinflation where he was able to bring down inflation without destroying the jobs market and when Americans have jobs they spend money period over and out never bet against that and then what’s this about these these two rate cuts
That the FED is quote hinting at because of the The Dot Plot I don’t want to get too technical here but the bottom line is the expectation now is for at least two rate Cuts in 2024 what is that going to depend on I I guess you’re obviously if you’re bullish
You’re betting on that if not more but how should the average investor view this I’m bullish and I’m betting on less than that so they’ve got three in the Dot Plot for next year and then they’ve got some more in 2025 expecting uh the FED funds rate to be down to
3.6% by 2025 H end of 2025 I’ll take the over on that I don’t think they’re going to need to cut as much as they think I do think this the economic engines are humming uh and after maybe a couple of cuts it might be a midcycle type of
Situation like 1995 where they can just let the economy run and and they’re not going to have to take rates down as aggressively as the market is pricing at the moment in other words if the if the economy is strong why do they need to cut right I mean the whole purpose of
Cutting is that if you need to stimulate the economy but if the economy is is on fire it doesn’t make sense that the FED would would would cut am I reading that correctly yeah there is a lag effect so they don’t want to be too aggressively restrictive particularly in the face of
Inflation coming down which we saw in the PPI which is a better forward indicator than CPI which is kind of uh backward Ward looking ppi is a leading indicator so I think they just want to get ahead of because deflation is a much harder problem to solve than inflation
Inflation we know what we have to do deflation can last for many many years as we’ve seen throughout the world over the last few decades so I think what they’re saying is we’re on it we’re not going to let uh too much disinflation kick in we will be at the wheel and uh
And the economy’s fine jobs are are fine the econom is strong earnings are expected to go 12 12% next year and by the way the most important thing is uh all these CEOs were prepared for a recession that never came this year so they cut cost they were they were very
Conservative and margins are expected to go up 60 basis points next year expanding margins if you read the headlines from this year you would have hid in a corner and and this is an incredible turnaround uh that’s why I guess we can call you turnaround Tom I
Had I think you had a pretty good year this year I’ll see you soon Tom thank you sure thanks so much Phil in other news and we’re back so that was cgtn America and then finally this morning I was had the privilege to be on CNBC Indonesia
With Maria katerino thanks to Maria and fitria Ang granny all about the FED here you go chairman and managing member great Hill Capital Thomas J haes hi Thomas hi Maria great to be with you yeah great to see you uh Indonesian Market has uh uh give uh get back a
Early uh Christmas grief from the fat after the fat decide to hold interest reach uh how uh will the US market response Wall Street uh and then dojn index are reportedly having a big uh because of it Thomas yeah well Maria uh chairman Powell achieved something that no one
Thought he would be able to do we call it the immaculate disinflation he was able to bring down inflation without destroying the jobs market and now that he’s done his doish pivot uh towards cuts the market has really taken out off with the Dow Jones hitting all-time Highs at
37,000 I think moving forward we’ll continue to see gains through year end Santa Claus will come to town at Santa Claus rally but the opportunity now is is looking at those stocks that have been left behind because a lot of our gains in the US in the first you know
Seven or eight months have been driven by Tech large capap Tech uh but the S&P the large cap index is trading close to 19 times next year’s earnings we want to focus on the midcap index which is trading at only 13.9 times forward earnings or even the small cap index
Trading at 13.2 times next year’s earnings that’s where the the bargains are going to be as this rally broadens out to more and more stocks participating moving forward okay uh Thomas the vat also hint uh at cutting interest rate two times uh next year’s and uh when do you think when do you
Think that the fat uh will start lowering interest rates many predict April or May what about your predictions yeah looking at the Dot Plot it looks like it could start as early as March uh it was uh unexpected that the FED would acknowledge that they’re going
To cut three times next year the FED funds future have now started to price in double that uh so the FED funds Futures move from four four Cuts expected next year to six Cuts uh so I think we could start to see a 25 basis point as quickly as March uh if not
March then may for sure and uh it could be backto back uh so they are they have definitely pivoted and it was a unan unanimous decision so expect easing in in the first half this uh of 2024 so what are the United States economic conditions uh right now that
Will make the fat start lowering interest rate yeah well I think the the next key data point is going to come next week uh with the fed’s favored uh inflation core pce and the expectations is that the core pce will be at 2.3% uh that would be down from
3.7% uh I think that you know once you start to see three 2.3% you’re getting really close to the Target uh that’s what the FED wants to see and that should give them the green light to to start to cut uh at least one cut in the
First half of next year so for the verse interest rate cut how big do you predict uh it uh how H how big do you predict the drop Will be yeah I I think they’re going to stick with the 25 basis point Cuts do a cut
See how the market responds see how the economy responds see how inflation expectations respond and uh and if they’re successful with that that will be the path that they follow not only are they expecting down to 4.6% by the end of 2024 but they actually guided to 3.6% by the end of 2020
So they are anticipating more Cuts than maybe just two weeks ago that they were anticipating okay well even though it has signals of reductions interest rate the FED also warned uh that EV Force to reduce inflations to the 2% Target will change and where still uncertain does
That mean that next year’s the interest rate will definitely decrease or will it remain at the 2% inflation standard if it’s not already 2% won the interest rate uh go down yeah I think at this point they they acknowledge they have a dual mandate number one is maximum employment and
Number two is price stability so so long as inflation stays in line I think they will cut because they don’t want to see unemployment Spike higher and there is a lagged effect of all the tightening that they’ve done in the last year and a half
So I think they want the landing to be soft or no landing at all and that’s going to require at least a couple of cuts to to smooth things out after such aggressive tightening provided that their favored gauge like uh core pce continues to stay subdued and inflation expectations continues to stay subdued
If those two things remain in place they’ll continue forward with the uh the path of cuts well moving on to the in a mid of global uh uncertainty what are the main challenges and uh issue that vet will pay attentions to in deciding uh its policies yeah I I think first and
Foremost is going to be the inflation numbers that’s that’s number one to them core pce they’ll pay attention to job openings which have been falling which they like to see um uh and they’re going to look at average hourly earnings those are kind of the three key things that
They’re going to keep on their radio OB radar obviously they’ve got to keep an eye on energy they got to keep an eye on GE geopolitical uh issues that could impact energy but leaving that aside uh I think all the numbers that are of their purview are moving in the right
Direction and gives them the green light to move ahead with some level of normalization and easing in the first and and second half next year okay uh after uh the fat has a plan to cut rat until three times next year what are your predictions for United States
Economic growth in 2024 it will uh grow aggressively enough for next year’s or just uh conservative yeah we have a perfect combination earnings are expected to grow 12% next year uh which no one was anticipating uh just a few months ago so so estimates have continued to hold in
High and actually start to move up that’s number one and number two margins are actually increasing uh margins are expected to go up uh 70 BAS points in in 2024 and that’s because you had all these CEOs preparing for a recession that never came in 2023 and now they’ve
Got the Cost Cuts in place they’re running efficiently and uh and the E economy is turning up so all of this points to a very very positive uh 2024 both economically and also constructively for uh us indices and and just to look at uh we saw a weakening of
The dollar which is going to uh it’s the weakest since it’s been since August that’s going to help multinationals with their earnings as well on the foreign exchange so a lot of things are pointing in the right direction for 2024 well thank you Thomas J chairman managing
Member great Hill capital thank you for your time to discuss with us and thank you for your Insight to us have a good day and we’re back finally want to thank um Reuters for including me in the response to the jobs report last week that was great and let’s move on here
The quotes of the week I want to cover all of which are very very important are Buffet whether we’re talking about socks or stocks I like buying quality merchandise when it’s marked down that’s been the theme of this since day one uh if you and then here’s Charlie Munger if
You buy something because it’s undervalued then you have to think about selling it when it approaches your calculation of intrinsic value that’s hard but if you buy a few great companies you can sit on your a okay you can sit on your ass there’s Charlie that’s a good thing so um couple updates
Today uh the market just absolutely ripped higher Vado was up 10% um uh as was Intel in the morning and you know we’ve talked about these for quite a while uh verado we were up uh 2x plus uh 100 to 125 % gains since March I mean off the charts uh some of
The options were up as much as 450% uh 4 4.5x or 350% so we took profits on vernado we bought the thing when no one wanted it in March uh it was uh trading at 40 uh 40% of Book value we sold it today just around Book value I do think this will
Work a lot higher over time I think it’s run a lot in a short period of time and pigs get slaughtered and I think there are cheaper things that are higher quality I mean they are the best assets in New York City uh people are coming
Back to the office um uh but this is not a buy and hold forever and we think uh between the hybrid of what we gained on the opt some of the options were giving us credit for like $38 to $40 and we bought it you know depending on the
Account between 13 and 16 and it’s been you know uh 8 7even eight n months uh so uh you got to ring the register so we did made a lot of money on that you guys were all part of it thank you uh and then Intel we could have kept a trailer
On that but we we just decided uh we want to have some cash um and then Intel um Intel you know bought between 24 and 26 uh this thing has been a beast it’s run straight up and what we figured out today uh same type of story we had some
Options on it depending on the account at up uh 3.5x uh you know in in some cases in less than a year seven eight nine months some cases about a year uh and near you know uh vernado was uh more than a double um uh you know 125% on the stock you know
225 2.25x um intel was almost a double a little bit less than a double from 25 uh but the options were giving us credit for it so with with some of the options up 3.5x that uh uh multibagger there and nearly a double on the stock in less
Than a year we took profits uh now why did we take profits because as we said it’s predominantly a PC business and we believe you know they had the big conference today stock was up huge in the morning up to 47 and we’re like all right we got to we we got
To take some profits because more or less 95 to 100% of the PC business is now priced in and that’s the business that we can count on and that’s why we got into the stock we did take all the options off we took about
75% of the stock off at a at a huge profit as well uh but we did keep 25% on because we do believe in G singer and we do believe that he actually will deliver on this Foundry business and on these Advanced chips uh and all the other
Things so we did keep a good chunk of stock on just like we kept a bit of rolls re rolls resources uh uh Rolls-Royce uh we kept a little bit on after we took profits from a quick 3x on that stock last week um so we’re going
To keep a little trailer on Intel and pretty big trailer for the future because we do think it can move a tremendous amount of higher it’s just moved a tremendous amount in a short period of time and we want to free up some capital for uh cheaper
Opportunities right now uh to put money to work you know if intel drops back into the 30s we may we may put back on the full position but uh uh this was a win and we’re going to we’re going to take them ring ring ring amazing stuff
Um so look the theme is the seeds planted in 2022 have blossomed hugely in 2023 think Amazon Google semiconductors last fall when no one wanted them we were pounding the table like crazy go back to our October notes and podcasts uh and then the seeds that are uh have been planted
And got super planted in the last you know couple of weeks like nobody’s business in the case of china and Baba those are going to be the ones that are going to Blossom like no one’s business in 2024 so great seeds in 2022 huge rewards from them 2023 great seeds in
2023 huge rewards from them in 2024 um uh and small caps and Banks and and all the things we’ve talked about planning and you know Stanley Black and Decker blah blah blah you know all the names um okay so uh uh is there anything else I wanted
To say about that no but you know you guys were along for the ride congratulations and uh uh you will have a Merry Christmas because of that and uh and I’m grateful because you invested the time and the whole thing but you know when you’re dealing with those type
Of Trades that aren’t the most highquality businesses in the world uh that’s what Munger said and we knew where we wanted to get out before we got in and we knew that we’d want to uh on all three verado Intel uh um Rolls-Royce Etc uh and we knew which
Ones we wanted to keep a trailer on for really great things to come which we’ve done and we may we may add back if the market serves it up but we’re completely happy to um participate in the way that we have left on uh on those Okay
So uh got all the thank yous all right let’s move on to I love this Seth Claren we covered this last week but he said sometimes buying early on the way down looks like being wrong but it isn’t you know we you know some of the um Vado
Stock we bought in the high teens and some we bought in the low teens uh same with Intel some we bought in the high 20s some we bought in the low 20s but it gets you to an amazing average uh and um and it’s you know just the same across
The board uh you know Cooper the whole the whole the whole story all right um and we went through that great example on meta last week which uh if you didn’t listen to that go ahead and check it this is the S&P chart as great as this
Run has looked like we have run so much in such a short period of time if you zoom out which we talk about a lot on this this is a chart from uh Bank of America and Bloomberg kind of looks like we’re forming what they call a cup and handle
So you had the huge move off the 20 covid lows uh now we’ve spent two years consolidating sideways with basically no gains the measured move on this when you have these cup and handles implies that uh this Market can move up to 5600 and if you listen to yard Denny on Charles
Payne before I was on the show on Tuesday uh he was calling for uh S&P 6000 by 20 end of 20 2025 uh and that’s in line with this measured move to the 5600 plus election years for an incumbent tend to be pretty good uh from the general Indy standpoint
I don’t think it’ll be as good as this year from the under the surface non-m magnificent 7 I think it’ll be one of the best years ever small cast Banks Emerging Markets those are the themes for 2023 dollar weakening 2024 dollar weakening and I think that the tech you
Know we haven’t sold our Amazon we haven’t sold our alphabet but I think they’re going to do less well they’re going to be slower movers probably slightly less than the general indices High single digits to uh mid teens Max uh for an election year you figure 12 to
15% range um I think 8 to 12 is a better but under the surface the small cap catchup which won’t move the needle on the indices midcaps uh some of these turnaround stories that have low weightings in the indices are going to rip doubles and plus and all these seeds
Are going to be monster crops in 2024 so we’re excited but just looking forward if you think you missed anything you you’re really going to miss it if you miss 2024 because then you you’ve missed everything uh but this is really just getting ready to launch and uh even more
So you’ll see the small caps and the Hang sang which we’re going to cover in a minute uh they’re just coming off the mat like it’s like buying at the pandemic lows if you feel like you missed it uh you’re you’re really going to miss it if you miss this op this is
Going to be one of the Great as amazing as 2023 was wait until these things play out in 2024 the indices are going to be like you know snore and like it’s going to be like Cooper standard it’s like everyone always asks me about Alibaba and and
Like you you we’ve had like you know a negative contributor with Alibaba and everything else is like up multip multi Baggers all day long and all anyone wants to talk about is Alibaba and um but that’s you know that that’s the joke right you know everyone uh one focuses
On everything that’s worked it’s just what hasn’t uh but that’ll be the opposite story in 2024 um you know when uh everyone will have missed it because they sold in the hole in the 70s and 80s just like they did with semiconductors and Tech last
Year uh and it’s just the way the game works uh wish it were different wish it were easier but uh it is what it is now oh and biotech by way I mean unbelievable these things uh by and I said when it comes it comes all at once
Baba and biotech have done nothing for a year and a half they’ve just been grinding sideways wasting our time talking about it while while we got all these other things going that were like doubles triples uh no one cares about them but these two are going to be
Beasts in 2024 and I’m I’m grateful that everything else did so well that we could rebalance and get huge exposure to them going into 2024 where um I’m so excited for uh what’s going to take place there but they’re they’re already starting to outperform the biotech and we’ll see the
Others uh soon enough uh this is interesting this is from uh Goldman Sachs and it talks about some people are like nervous like well if if the fed’s cutting rates doesn’t mean bad things are happening um that is recency bias from the 2000 if you go back before them 95 and the best
Example 80 to 82 if you’re cutting in a re if it’s recessionary Cuts you get bad Market outcomes if it’s expansion cycle Cuts you get great outcomes 80 to 82 you cut from the peak that’s probably the best analog uh set the stage for an 18-year bull market rally I think we’re
Halfway through the secular bull we’ve got another you know through the end of the decade Orly into next decade before the Millennials turn 41 and then demand will Wayne and we’ll have you know Corrections uh along the lines of what you saw in 2000 um uh but that’s you
Know 8 years off we got huge huge Runway these are expansionary Cuts you’ll see that as that plays out then you had uh weekly Advanced decline you’re seeing breath when breath uh expands uh this is on a global basis great things happen you could see it coming out of the um uh
Finan great financial crisis in uh 2009 that led the way for multi-year bull that after the debt crisis in uh EU debt crisis in 11 and 12 multi-year bull then after the 1516 stuff with China by the way the last time we had this many outflows institutional outflows in China um was uh
2016 oh gosh where is that chart um I don’t know why that one is not up okay so I’m gonna actually show it to you here uh see here we go going to show it to you on my phone because I can’t pull it up fast enough on the Twitter all
Right it’s not coming up let’s see okay so here it is okay so I put this out and what you can see here is that the last see those red bars there there you go the last time you had that much institutional outflows look at the Blue Line on the Alibaba chart was
2016 and that straight up Alibaba basically went from 79 to 21 over the next 18 months after you had the outflows after pessimism got that bad those of you who weren’t around in 15 and 16 CH it was like the end of the world in China exactly like it is right
Now look at those outflows look at the line the blue purple pendicular line and what happens to Baba I mean it’s it’s just and you were just in the same dold drums it’s just mindboggling so um so that’s what we have to look forward to in 2024 and this expanding breath is exactly
What happened also in a after the 2015 and 2016 China debacle uh and you were Off to the Races uh same thing coming out of covid the expansion and just now coming out of of uh the 2022 Tech and crypto sell off uh Off to the Races so all of these things are
Pointing to good things and then for autos for Cooper standard uh this came from my buddy over at Morgan Stanley and um art Jonas uh wrote this the USR 2024 forast we’re starting to knock on the door we’re coming off the Flatline here last year when we bought Cooper
Standard uh at 550 and now you got SARS starting to knock on the door of pre pandemic levels 2017 when it was at uh you know about 17 million uh the bull case for next year is 16.5 million the base case is 16 million and the bare
Case is 15 I think it’s going to be closer to the bull case uh which means like what I said if we can get to 85% of 20 17 production I think they can get over5 67 a share then it’s just going to be a question of the multiple trough
Multiple of 10 Peak multiple of 20 uh and uh that’s going to be more Harvest from the seeds planted in 2022 and a number of seeds planted in 2023 if you remember the stock got down to $12 for a minute uh and we were able
To jump on it uh with the new clients took advantage of that so pretty exciting all right some stuff from my buddy over at RBC uh slomer is the author Robert and uh thanks to my buddy who sent it over uh so you can just zoom
Out get a better view as as much as it looks like we’re ripping the face off we are just you know cup handle just starting to break through and going to see that oh there’s that um um similar chart this is the uh performance of the S&P versus bond
Starting to outperform again and then um cup and handle breakout measured move lot higher S&P weekly S&P daily uh what did I want to see here okay um D okay Russell 2000 so Dow Jones broke out to new highs yesterday Russell 2000 I think this is where enormous
Opportunity is for the next few years uh position accordingly uh love this and then the other place that there’s enormous opportunity in my view look Europe is just start getting ready to break out uh xus Tokyo hang sang okay uh you can’t give this thing away it’s toward the
Bottom of the downtrend it’s going to break out and take off you’re going to watch just look at the dollar I’ve been to this movie before look just think about how negative was everyone in March when I was pounding the table on Vado okay how negative was everyone last
October when I was pounding the table on Tech and semiconductors now you can’t get enough of them right the same is going to be true with hang hang and this is the last bargain left in the world ladies and gentlemen I mean everything else has started to run this is the last
Bargain uh rates are rolling over 10year yields rolling over dollars rolling over everything is coming into place as we had laid out according to plan and even the Looney is getting strong and remember everyone was laughing at me I said you want to be long the Looney all
My buddies up in Canada uh so there you go uh oil you could everyone wanted it and and it’s been the worst thing performance the last few weeks I think it’s probably getting ready for a bounce um all right uh so that’s that moving on was there something else Russell
Small cap again 10year yields I mean can you believe the 10year yield broke down below four I mean it’s just it’s it’s exciting to see this stuff play out because you know what when the whole world is against you and you’re running into the fire and uh and
Getting criticized and then all of a sudden everything works out all at once um there’s something to be said for that and I think many of you listening to this are developing that uh intellectual rigor and emotional discipline where you’re going to be seeing many multi-baggers of your own uh before long
So uh here’s from Teemu uh article from Bloomberg with those kinds of emotions Skeptics question whether the app success is sustainable customers got hooked on scrolling through the app to find too cheap to believe Bargains like a sonic toothbrush for $328 or an airpod like earbuds for $2.98
But take away the millions of dollars in subsidies and marketing and will people stay the tech industry is littered littered with one-time wonders like wish.com Groupon pets.com that spent heavily on subsidies only to find they couldn’t convert users into loyal customers Teemu may not be able to offer its current low prices indefinitely
Which could result in the erosion of its key value proposition which is something for nothing my editorialization wrote Morgan Stanley analyst including Simeon Gutman in the recent report entitled The Teemu effect the data could suggest Teemu is burning through new Shoppers without generating stickiness after initial trials on the platform there
There are signs U’s growth could be shortlived about 44% of its Shoppers are spending Less on the platform while just 22 are spending more according to surveys by Morgan Stanley an indication it’s burning through New Deal hungry Shoppers without converting them into loyal customers Teemu Shoppers skew
Female young and low income more than half have annual incomes of less than $50,000 and 58% are younger than 45 according to the firm T by the way this is characteristic of all of these uh crap things that burned out like wish and uh Groupon and everything else uh
Teu objected to any comparison with wish.com of course the e-commerce Sensation that became the most downloaded e-commerce app in the world in 2018 as it struck marketing deals with the Los Angeles Lakers and soccer World Cup players and then saw its Revenue collaps after it pulled back on
Subsidies you know it’s just like life how you start out in a relationship is how you end up and um you know you got to set the boundaries and what they’re doing is they’re training people give me stuff for free and the minute they stop getting stuff for free they’re going to
Be gone and that business is going to collapse our platform and supply chain are distinctly different from those of wish.com the company said in its statement adding it can substantially offer low prices by cutting out middlemen between producers and consumers isn’t that always the story all right moving right along crown
Castle CEO to step down amid Elliot pressure shares gain um so uh we’re getting some uh wind behind our sales we’re we’re early to the party on these and then other people see the value and give us a little bit of help Walt Disney uh earnings power the most
Important driver of shares in coming years Morgan Stanley they raised the price Target to 110 whoop ddoo um Nelson pelts was out today with his proxy fight so they’re going to have to move fast to get these initial IES in place China vows to boost domestic demand and bid for 2024 recovery That
Grew 5% in 2023 so I don’t know you it’s so funny we’re pointing fingers uh when we’re going to grow like at half the pace but nonetheless uh and then guess what Advanced Auto Parts got an activist pushed by uh activist to move on the world pack sale which I’ve covered in
Some of my public TV appearances uh I think I covered that on Charles P P so these guys are saying hey Legion Partners asset management is you know rattling the making some noise to uh Shane o Kelly the new CEO like hey I know you saying you don’t have to sell
It and blah blah blah get it done it’s noncore use the cash return the cash to shareholders let’s rock and roll and um uh oh and they’re also they also happen to be in VF Corp who are these guys I should give them a call sound like Smart Guys nonetheless all right JP
Morgan calls Amazon and alphabet its top picks for 2024 and I bet that mega mega cap Tech rally will continue uh they’ve had huge games this is a sign of opinion follows Trend right so they’re going to downgrade the Chinese stocks that are down and they’re going to upgrade what’s
Up where were they on meta last year when it was $88 um I don’t know I mean I don’t have any near-term plans to sell them because they’re just great quality long-term businesses and I want some exposure to magnificent 7 and I own them at such a
Low basis that it doesn’t matter but um it’s kind of comical I think these are going to do fine but they’re going to underperform uh where what we’re loaded up on uh small mid Emerging Markets Etc are going to be the name of the game biotech biotech deals are heating up why
2024 could be an even hotter for mmaa remember I’ve always talked about deals and drugs while it grinded sideways for a year well now it’s starting to take off and break out amen huah Wall Street Journal it’s biotech stocks time to shine opinion follows Trend price goes up articles follow wait till the
Upgrades come biotech stocks undergo recovery after a year of wreckage wreckage it’s the same price it bottomed last May or last March it retested it in October it’s basically gone nowhere for a year year and a half how is that wreckage oh and by the way
It’s starting to break out now but it’s the financial times they always write that kind of nonsense on their headlines you just got to accept it Fox Business uh Intel CEO touts AI everywhere initiative ahead of event and that’s why when the thing hit 47 this morning I
Said buy the rumor sell the news uh and that’s you know ch- Ching Russell 2000 on but we did kept keep a trailer because we do believe in this guy uh Russell 2000 on Pace for best month versus andp in nearly 3 years okay and the article of the week how it started
Remember just October 22nd this was our cover picture for our article of the week another quote Wall Street Journal another Black Monday may be around the corner and if you remember my joke was well they’ve only got two Mondays left in October so they uh you know they got
A 5050 chance like a coin flip so that’s how it started pessimism beyond belief how it’s going all Time new highs on the S on the uh on the Dow Jones Industrial so those are the TV things you did here’s what the stock market looked like in October here’s the blue
Box okay it’s taken off since here’s what the bond market looked like taken off since here’s what the dollar looked like it was strong and it was the end of the world it’s rolled over these this is all we were talking about all October was buy stocks buy bonds short the
Dollar and that was going to lead to an Emerging Market trade so um here’s from September 21st you can see this now the dollar is down to I think 96 so it collapsed down from there uh here’s bonds the tlts back up over uh towards 100 here was the commitments of Traders
Which we covered every week for like three weeks I said guys gals this is like 2018 hedge funds haven’t been this this short bonds since the bottom before you had a monster rally they are the the dumb money look what’s going to happen and boom bonds have absolutely ripped
One of the biggest rallies in the shortest amount of time and by the way you’ll get a pullback here but just getting started this is going to persist I think you could probably go to 120 on the uh TLT so um and this was the the
Article on September 28th I said this is going to be another failed breakout if you remember when the 10year yield was going to 5% now it’s collapsed below four uh took us a couple more more weeks than we expected but that’s the name of the game October
4th uh we talked about you know does this look like the end of the world I was on the the kayak in Portugal with my family I was like it’s not the end of the world ladies and gentlemen there are opportunities there’s a pony in this
Pile I wrote on October 12th got to got to dig in and uh and rock and roll and then on the 19th I talked about the only chart that matters was the bond chart didn’t quite snap back yet and now it’s abs absolutely ripped from those low
Levels and then finally um uh the uh another Black Monday may be around the corner headline October 26th article uh of the week and then finally on October 31st week sisters flush stock market and uh that’s when we talked about PayPal um I laid out the case for why we
Own it it was trading at 5140 that day uh they’ve since reported results so I want to update the thesis I think it’s uh over $60 now maybe $62 but it really $50 $60 doesn’t mean anything we’re not in this for 20% we’re in this for
Doubles and triples so um okay so third quarter results remember new CEO big Catalyst the guy came from into it ran the small business which was half of the thing into it was like one of the biggest multi Baggers of all time you think Logitech was great with um um Brack and
Daryl TS in comparison to what happened with Inuit with Um with Alex Chris so here we go um payment volume was up 15% uh year onye uh operating income 4% uh n Gap was up 8% and oper cash flow of 1.3 billion with free cash flow of 1.1 billion there was an adjustment based on selling off
The uh buy now pay later in Europe to KKR bottom line is trailing 12 ballpark $5 billion they uh are expected to buy by the way buy back a total of $5 billion doll of stock in 2023 return that to shareholders growing revenues this year 7% and this is the turnaround year this
Is not the growth year you’re going to see how many times this new CEO talks about this is a growth company we will gain profitable revenue and we will do it now this guy is no joke I’ve never seen such an aggressive thing he said the word we’re going to win like 10
Times in the conference call this guy is a competitive Beast this is my kind of CEO so um so there you go revenues you can go through all this stuff uh payment volumes up mid teens net revenues up 8% margins were a little bit softish but he
Explained why and how they’re going to get it back they fired a bunch of unprofitable customers in Southeast Asia and Latin America they’re like get out of here you’re not making us money we’re only doing profitable growth going forward lean mean money-making machine I love that uh non-gaap BPS up
20% okay EPS was better than expectations they raised guidance everything that you want to hear they did they’ve got $15 billion in cash uh they reduced the share count this year by about 7% 75 million shares um so what else do you want to know I
Mean this thing is got the Catalyst of a new CEO the plan to get it done increased guidance beat on the results plenty of cash plenty of cash flow let’s go through some more highlights here because we got a lot of AMA questions uh payment volume’s growing we cover for that cash
Flow uh free cash flow total payment volume yeah 5.2 billion free cash flow on a tril 12-month basis that’s only going to go up got 4330 million active customer and Merchant accounts $1.5 trillion in total payment volume 24 billion payment transactions nothing compared to this ladies and gentlemen I’m telling you
This is a beast now they’ve got a stable coin which all these crypto people are saying is going to be a huge huge deal I have no idea I’d rather have it than not have it I don’t you know it’s not in my model but apparently that’s going to be
A big deal and then you look at the business it’s so much more um robust than you think about at first glance um it’s not just a PayPal that we know as consumers they have huge Enterprise business huge lending business huge buy now pay pay later uh crypto everything that people could want
And he’s going to package it so it’s not so confusing into one value package and he talks a lot about the credit card the 3% cashback PayPal card is ripping right now so they’ve got everything anyone could ever want and they’re going to just jam it down the customer throat why
Because it’s great for the customer it’s great for PayPal and it’s great for the owners uh payment volume just keeps going up ladies and gentlemen and by the way if you think inflation is going to be above trend for the next 3 to 5 years guess what that does the nominal value
They get the same percentage on a greater and greater volume even if units don’t go up uh because that’s what they get paid on is the ticket uh not the margin which is exciting so uh they talk a lot about venmo total payment volume you can go through this
The transactions per active account went up dramatically so existing customers are using it a lot more operating expenses decline 12% they are slashing burning running an efficient lean mean profit making machine uh you can see Gap EPS free cash flow we covered Capital allocation share repurchasing Machine is on tilt and
That’s going to continue he gets it this guy knows how to run a multi bagger one of the greatest multi Baggers of all time let me just pull up the chart so you guys can get tuned in here because I’m excited about this one especially because everyone is despondent about it
This thing is going to be a beast Okay so this is Paypal okay and it just come off the mat $50 now it’s $62 here’s what he did at into it and his business was the grower and he did it through Acquisitions and he did it through cutting cost and running an
Efficient thing from while he was there running the small business unit from $20 to $700 so what do you want to talk about 5times 7 35 bagger Brack and Daryl only did a 26 bagger and these are the guys running our positions uh it’s pretty damn exciting
That’s all I can tell you so um now I have no idea where I was but we’re going to find it here okay all right uh okay so this was his first earnings call you know talks about how he’s excited and everything how it’s a growth company which is key because at
These multiples it looks like a value company which is what got me interested so he’s going to re accelerate growth that’s not even in my model he doesn’t even need to re accelerate growth uh for this thing to double but if God forbid he does that and we get multiple
Expansion it’s look uh I’m energized I’m more energized and have been more conviction and Clarity than I expected over how we win I mean this guy says win every single minute growth vectors out there higher velocity uh blah blah blah okay first how do we differentiate in solving the most critical customer
Problem second what are the unique growth vectors and how do we accelerate our impact for customers and shareholders uh oh this is really interesting he’s like we’re not looking for answers we know exactly what needs to be done we must simply execute okay and that’s what this guy’s doing growth
Outcomes and what’s important to these C okay listen to this over 70% of the adult population has used used PayPal in the past 5 years in the United States um they also just launched the venmo teen account uh and he talks about when you have a product that’s a verb I’m going
To venmo you it’s it’s like hugely extremely valuable I mean what other tissues do you buy other than Kleenex um over 25 million customers have used PayPal rewards in the last 12 months which he’s talking about with the credit card Etc so he’s going to tie these all
Together simplify them they got the stable coin first regulated stable coin by a Global Payments company it’s pyd connecting our PayPal and venmo ecosystems together and creating one of the most robust peer-to-peer networks in the world Um okay 35 million Merchant accounts blah and where he made his money is in the small businesses and that’s what PayPal is all about uh we got that they’re using a ton of AI they’re using automating stuff cutting a lot of jobs a lot of slowness in the in
The operation right now and overlap he’s cutting all that out which is why the operating margin is got is is starting to improve uh when and then for everyone that was worried about brain tree because of lower margins he goes we can win in the market and take share with
Brain tree serving the largest Enterprises such as Adobe booking.com door Dash Ticketmaster and Uber I mean I use Uber so much every time I travel or I’m in the city and that’s all paying myself because brain tree has that business and I get a piece of the action
I’m going to use Uber more uh you know $450 billion in volume out of an estimated 4 trillion to 5 trillion of global large Enterprise e-commerce that’s approximately 10% flowing through us people think of PayPal they think of the stupid little button on the website or the Rinky Dink websites uh you know
This thing is is the engine between behind 10% of the big businesses and they’re going to get more and more share with this guy this guy got me so excited about what he’s doing with the company uh and that’s not that’s not even why I got into it that’s one of the
Reasons like we didn’t even need all this this guy is going to make it amazing uh PayPal three margin expansion in brain tree that’s what everyone was worried about that’s what he’s focused on um okay high quality customer growth and okay so this is is focused high quality customer growth and profitable
Revenue growth going forward PayPal will be focused on generating real profit for the company unprofitable growth is counterproductive to long-term prospects of this or any other growth oriented company as management team will Guided by margin accretive Revenue growth okay so he’s not going to do dumb uh dilutive
Acquisitions this guy knows about margin L lases are focused on operating leverage and making sure we manage our cost Bas with Relentless attention and commitment cost Bas complex structure is slowing us down accelerate our Revenue growth while reducing our expenses helping to further Drive our operating leverage uh going to move at lightning
Speed and get there as quickly as possible this guy is on the Move Renewed Energy excitement at PayPal leading us forward uh okay so the active accounts declined by 2.8 million as we quote continue to flush out lowquality customers predominantly in Latin America and Southeast Asia as a reminder we said
This would be a year where we churn off lower quality activities and in which total accounts would decline and that’s exactly what they’re doing anything that doesn’t make them money they’re getting rid of it because they don’t want to service it so um positioning ourselves for a return to growth in our customer
Burs turning to volume growth we reported total payment volume of uh 15% growth in spot we covered that uh okay and by the way for those of you who think this is you know monotonous this is how you win this is how you find the best investments you look under
Every single Rock You attention to detail is absolutely Paramount to getting multi-baggers they don’t just fall on your lap and like you just buy something because it’s down and hope for the best and you’re going to find that those of you who listening to the AMA
Sections we get one or two really great ones a week but most of them are just nonsense that uh are money losing bad management garbage things and that’s where people miss the point of bottom picking is because they’re buying crappy things that are down versus buying good
Things that are just temporarily out of favor and Buffett talked about that all the time temporarily on the operating table not dying um okay Jus for okay so you can go through this on hedge fund tips.com by the way this is opinion not advice go to hedge fund
Tips.com click on turn terms um okay 75 B we now expect approximately 75 basis points of margin expansion were slightly increasing our expectations for full year 2023 non-gaap EPS which we now expect to approximately $4.98 representing 21% EPS growth from last year this increase reflects the benefit of Q3 outperformance and changes
To our tax rate assumption in addition we now expect free cash flow of 2023 to be at least 4.6 billion uh we working on plans to accelerate profitable growth all right question and answers uh bra trade biggest surprise and margins so the biggest okay so this guy asked him like what
Surprised you the upside and downside you’ve been here for four weeks you barely found the coffee machine he said um ubiquitous platform is globally recognized with PayPal venmo is a verb and that’s something that’s tremendous in the US and has opportunities beyond the Us rewards buy now pay later cash
Back cards all those tremendous within our group as I mentioned earlier we have to put them together in a core value proposition and that’s something we’re doing right now uh we have a beach head now with brain tree which I’m really excited about I think we’ve earned the
Right to now expand margin and make sure we’re really pricing to value and ensuring that we’re delivering what we need across the board and then I think about the biggest surprise I really didn’t think is around the data data that we have across this two-sided Network allows us to do things that
Others just can’t allows us to do things that others just can’t personalize branded check out we can now recognize people that check out with our data and create an experience that is frictionless that is personalized that drives conversion for our Merchants we think we’re just scratching the surface
Of the opportunity there and so that is a big opportunity that gets me very excited uh blah blah blah space okay Growth Company manage Opex improve growth and driving profitable growth ah this is very important uh from the CFO I really view Q3 as the low point
And we’d expect to see Improvement in the profile in Q4 re accelerate profitable growth in the business we expect to be able to do that uh Drive profitable growth sequential performance improvement over a number of quarters we have enough levers at our disposal to be able to deliver on
That pretty rare to be able to have an asset as powerful as venmo becomes a verb in languages a tremendous demog graphic teen venmo why not baby venmo I mean come on babies have cell phones nowadays all right so uh spending and managing money so there’s just so much here this
This call is amazing I wish I was able to do it earlier but uh profitable growth true to the north Total Focus uh laying out our clear plan to win okay so he ends it with wanting to win that’s the name of the game all right so here’s
A clip from April 20th with Liz Clayman uh we had already owned it uh on that day it was trading at like $15 here’s what happened next and today it was well over $30 I think it uh 32 or something it was up 10% today and I’m just like
All right ring the register uh it’ll go higher but you know it’s just uh time value money it’s not going to be another 125% gain in the next 6 months that I that I’m pretty damn sure about so uh we did that now we’ll deployed to what’s cheap and uh huge opportunities out
There uh fear and greed’s getting a little high except for the fact that when it gets this high in the beginning of multi-year moves after you’ve Consolidated for a few years like after 15 and 16 by the way hint hint China uh you had this multi-year run year and a
Half run in the US equities uh sentiment was already elevated same thing in 2020 after the huge move off the lows and that consolidation in the fall then you ran up again same thing in early 2021 ran up again I think this is more of a beginning of a multi-year breaking out
Of this cup and handle two-year consolidation no gains on the embassy since uh early 2022 almost two years with no gains now we’re just getting ready to to lift off to that 5600 Target over the next couple of years uh fear and greed is certainly getting higher so
We you know we’re keeping an eye look we rang the register on a bunch of stuff today we got tons of cash uh and everything else will move higher into the year end Chase so Arc uh top 30 weights in the ark Innovation fund uh earnings revisions in the last
60 days the earnings power of these stocks has risen by 70% Yes you heard me right 70% she’s got a lot of Biotech in there ladies and gentlemen so that is going to be uh so while everyone is uh uh you know pooping on that fund they
All want to buy oil and gas which I think is probably ready to bounce but uh because why opinion follow Trend uh cumulative earnings of these top 30 is down 177% in the last 60 days so um you know Choose Wisely what can I tell you earnings growth of next year the biggest
Earnings Growers are going to be Health Care you can’t give away Health Care this year uh biotechs within that then communication Services uh followed by infotech consumer discretionary Etc um but what does everyone want you know energy materials are going to be the garbage ones so um earnings estimates tick back up again
246 for next year they were holding in strong they dipped a little bit in October opinion followed Trend now that Market’s going up they’re picking back up uh and you see a big jump 12% earnings growth but the big story there is not just the earnings growth it is
The margin expansion 70 basis points expected CEOs were planning for a recession that never came in 20 23 it actually came the first two quarters of 2022 which we’ve been saying for a year and um uh so now they’ve got cost down they’re running efficient machines productivity enhancements from AI or
Whatever buzzword you want to use and um and top lines growing so it’s a good mix for next year I think with that said uh the formal podcast is over the ask me anything question section starts now if you want to stick around here we go Jason Patel uh Tom how many activist
Investors were you ahead of in this cycle LOL so cool uh CCI crown castle VF Corp Disney Advanced Auto Parts I’m sure more it’s really impressive it’s becoming a foregone conclusion all right no question there but thank you for the kind words Jason Patel ail Garcia I’ve been watching for a couple
Of months I’m big supporter of your content thank you very much I’ve never done one of these but I figured I’ll pitch in I’ve been looking at PT they’ve announced a big investment in growth for the next couple years and it’s a solid business all the restaurants I pass have consistent lines
Thoughts I appreciate your time PT I don’t know this one but we’re going to learn it or at least take a quick look to start with okay so PT this thing ipoed looks like it shot up to $55 after the IPO and now it shot down to $14 it’s trading at
$16 let’s take a look at the numbers the thing I don’t love about these I like to be in businesses that have been through many cycles but let’s take a look and see what we got here um so first and foremost uh does casual quick server restaurants in the United States to
Chicago style hot dogs okay there you go and Italian beef sandwiches Char grilled burgers chopped salads crinkle cut french fries homemade chocolate cakes and chocolate shakes I think I’m a buyer of the product and not the stock but let’s just see if I can be convinced otherwise
Um why does this always happen let’s see minus minus minus no that’s not going to work Z so I got to just make this smaller there we go that wasn’t so hard okay same thing every ask me anything question one of these weeks I’ll get it right okay maybe by episode
300 all right so um we only got a few years of data uh they dropped obviously during covid they picked back up they’re back into growth solid operating Income okay making a little bit of money so this is a growth Story I mean this uh they got 12 million of cash on their balance sheet let’s see what do they have in terms of debt 287 million all right what are they doing in terms of cash from operations is
Okay free cash flow negative L return on Capital uh I don’t know I think I got to try their hot dogs before I do anything but uh leave in all serious I think what you have here um AVL is you have a trade at best this is not a super highquality business you’d
Really have to have some Edge on the growth plans and on Management’s track record of delivering and the product Etc the product sound right up my alley I got to be honest with you and the stock is down you know 65% I like that too uh they are inflecting into profitability
That’s also good their balance sheet I’m not thrilled with um but I’d have to know the product better so uh based on the numbers because there aren’t enough Decades of them I like companies with Decades of data and lots of Cycles I can analyze um I would say
Uh trade at best worth exploring but not the type of business we do as you listen more and more AVL you’ll get a better understanding for the businesses that we do and we like establish boring season free cash flowing businesses uh with durable Moes uh and this is just a
Little too speculative for what we do that does not mean it won’t work and I think you maybe on to something I can’t wait to try those Chicago dogs and change my mind Bob Johnson in honor of Charli MERS passing Charlie talked about how going public with a position can
Create a bias where one defends a position would love to get your advice and perspective on how you thread these choppy Waters thanks Bob so we’re going to get the uh these are all from like last Thursday when I think bab was $69 opinion follows Trend so I got like four
Baba things all these nervous angry people but here’s the deal um first off I acknowledge you for sending in the question Bob because I’m sure a lot of people have the same question um you know Charlie merer bought Alibaba at $225 with double leverage so um you know and because he used leverage
Out of the gate he couldn’t buy down and even bring down his basis and even get it to you know it would be the it’s it’s not dissimilar from The Meta trade I mean this thing you know the meta trade there were a lot of people who bought meta we
We covered this last week you know dropped from whatever 350 uh down to 150 and a lot of people bought at 150 and it was a good value at 150 but when it dropped to 88 they uh they puked out at the bottom they they lost their courage
And then they didn’t have or they did it on Leverage at 150 and didn’t have dry powder to average in so they could be down at 110 basis even if it went down to $80 against them and now it’s at at $327 or wherever it is so the people who
Bought that’s what the claran quote was all about at the beginning of the podcast um the people who bought at um at um 150 made double in less than in in just about a year if they stuck with it and they made more than that maybe
Triple if they bought in the hole when it moved against them like we did with range resources like we’ve done with Baba uh like we’ve done with many of them I mean what’s what’s served up in the last two weeks and what served up
Last fall at $58 we were able to get a ton at 61 and then a ton between 69 and change and 73 and 75 in the last two weeks I mean you don’t get opportunities like that and when it when it rain you know when it rains Mana from
Heaven you got to pull out the bucket not the thimble and that’s what we were able to do and it wasn’t that we were going above our maximum weight position the weight had gotten so small because everything else in the portfolio went up huge that Baba became such a small
Position I said I got to bring this back up to uh a serious siiz position because this is a serious size opportunity so that’s the story there um uh the thing about going public at the position that’s like a that’s for Traders and gamblers I mean I’m buying a
Business that’s growing their free cash flow if they grow if they stop growing their free cash flow and they just have negative prints over and over then then the thesis has changed the business has changed I changed my mind but these people that say oh I’m going long this
And they don’t even know why they own it that’s why they have to change their mind because they have no reason they have no clue why they own it to start with so it goes against them they don’t know why it’s going against them and they puke in the hole because they never
Knew why they owned it to start with and you know thank God those people exist or I’d be out of a job like those are the people I buy from so uh there we go Nate Kelsey uh turn around Tom you’ve highlighted many companies that have been crushed by inventory gluts from
Supply chain problems blah blah blah I okay so he writes a very nice question with a million words it’s it’s going to take us till tomorrow to read his whole thing he’s asking about ha hannes Brands we did Hayes Brands about a month ago I
Took a pass uh he’s making a case that the debts going to be paid off look uh that they’re generating enough free cash I I think you’ll be okay with this why not why not buy the debt see what the bonds are doing because if the bonds are down
50% let’s say you’re going to put a million dollars into the position bonds are training at 50% why not do 500,000 in the bonds and do 500,000 in the equity so if you’re wrong and it goes bankrupt at least you get 100% of your money out you’ll be money good with the
Bonds provided they’re fully secured and their assets to liquidate and then if and then if you’re right you got the you know you got a double on the bonds and you probably have a five bagger on the stock with a lot less risk that’s the
Way I would play this uh but I won’t play it because I don’t like the business uh even though I think the trade’s going to work so let’s just take a quick look here and um uh this has always been a garbage business by the
Way so all right so the free cash flow positive they’re they’re starting to inflect probably an inventory yeah inventory story uh revenues have just gone nowhere for 10 years this is why I said I didn’t want it the last time um because it’s just like it’s like a dead
Annuity this this is what they call a cigar butt this is what Buffett got away from Munger talked him into buying higher quality businesses uh with higher Returns on Capital because basically your return in the stock is going to be the average of your return on invested
Capital over the long period of time and when it diverges from the uh return on invested capital for a long period of time that’s when you get these doubles and triples and that’s what we do all day long um uh but a lot of people get sucked into the Vortex of um buying
Something just because the price is down versus buying a good business and uh you know this has historically yeah let me take a look at the balance sheet here I mean I think this is going to work I’m not going to participate so I think you did okay work here Nate and
I think you got a pretty good pick but there’s so many better opportunities not because they’ll go up more than hannes because if hannes Works it’ll go up a lot but if it doesn’t work and you don’t have the bonds uh you’re going to get bub kiss so
That said rates are coming down refinancing is going to open so all right I’m I’m kind of like convincing myself here um you know a lot of this is Instinct also from just seeing these things over the years through Cycles um see how much debt yeah $3 billion of
Debt 190 of cash so you just have to see when everything matures what’s the cost of capital what’s their plan to to generate free cash flow do they have enough to service the I mean this is all you have to get comfortable with here is whether it goes bankrupts or not let me
See if he talked about this uh rates First Step maturity is November 2026 giving them time to refinance okay generate 450 million in free cash flow pay down 400 reduceed inventory by 600 million sold through all the inventory um I don’t know Nate I’m stuck on this one
I think you’re on the right track I see what you’re getting at here I would just here’s what I would do I I I see by your analys you’re going to wind up doing this trade and if you are going to do this trade what I would do
Is do 50% of the debt if it’s trading at at least at a 40% discount to par um so bet on the refinancing and then you know if it’s if it’s down 40% by you know 600,000 a debt and 400,000 a stock the stock you’ll get a five bagger on the
Debt you’ll get you know whatever 80 to 100% you’ll collect a little um uh high yield in the meantime while you wait and at least you’re covered if they actually do go BK uh I I don’t know I mean this one’s kind of interesting I I I
Would it’s not a good enough business where I’d ever put client money in it but like if you’re just risking with your PA you maybe you take a flyer on it uh I think it’s interesting I think you did good work good contribution Laura uh that’s for investing taab
Um two question I know you have a small position in Asos why didn’t you buy for farfetch currently on the brink of bankruptcy but interesting to know why you didn’t choose them because they had no history of return on invested Capital they were startup I couldn’t analyze their operations through Cycles um Asos
Had a moat through many cycles they destroyed the moat they brought in the suit from McKenzie to fix it um I think it’s a good enough business that even if he works overtime he’s not going to be able to completely destroy it and God forbid he actually fixes it then you got
To super multibagger but again he hasn’t shown me anything where I want to lean in but I’ve got enough that you know it’ll it’ll be a nice trade if it works and if he does some constructive things it might be something I lean into and
Own for a long time uh but farfetch was just you know it was a one hit wonder from from covid and uh no history just a me too product like um what’s that one uh in the US with it that started with an S uh wasn’t the real real it was like
They’d send stuff to women every month um anyway whatever there you go no one remembers everyone knew what it was in 2021 rasa R thoughts on Sir okay uh Liberty Media Siri merger maybe grossly undervalued look Sirius has been grossly undervalued for decades um I don’t think
That’s going to change every value guy has looked at it never works so people listen on their um mobile devices they listen to hedge fund tips with Tom Hayes they don’t listen to Howard Stern anymore so uh let’s just take a look here of late you know the big winner in
Uh John Malone companies has just been John Malone no one else so I’m going to just you know he’s a legend he’s done great things throughout his career but of late everything’s just been a you know it’s been a complete loser for three four years so uh let’s see
The problem with this business rasa and your objective analysis is correct it’s just it’s been cheap forever it’s a lowquality dying business and this is a cigar cigar are but where you’re trying to get the one last puff this is not a growth business this is not really something you want it’ll work
Probably for a trade so what is it um LSX ma l yeah look it’s going to work higher as a trade rasa more likely than not but I just I I don’t really want to own that business uh Ronan bitten um thank you for all your hard work like your opinion
On fizer I you know someone asked this a few weeks ago when it was um I think 31 and I said n not yet if it gets into the those 20s I might be interested I you know the interesting thing about this is they have the same similar Technologies to
Modna and Mna was out today saying they’re going to cure cancer uh and they might by the way um but we’ll participate through our biotech exposure um the thing about fizer was the patent cliff and then they they guided that their C genen acquisition or when their acquisition wasn’t as creative as they
Thought it would be Um I mean it’s getting cheap enough and the dividend is is uh pays you a lot while you Wait but if I Recall they got a lot of deceleration before they re re accelerate I mean it’s um see Yeah I mean you know they needed that uh oral weight loss drug they’ll probably wind up getting one but uh that was a hit to the stock they need something something new they need to buy something or do something that’s going to move the needle um so far they haven’t where is
Uh is have forward expectations here so they’re expected to get back to 350 by 2025 I got my eye on it I wasn’t tempted to do anything today although we have some cash now from taking profits on Intel and bernado I’ll I’ll tell you one thing Ronan I I
Mean I think if you buy it here and you have a 3 to five year view you’re going to make 5% a year uh and you’ll probably have I I’d like to buy it under 20 somewhere between 20 and 25 if I can do that it would get more interesting but I
Just don’t see any Catalyst for this and when things aren’t perfectly clear to me I just I just pass so in the low 20s I’ve got to revisit it just because I have to but at this level I just it could could perfectly turn I just think
It’s there’s so many better places to put money that have growth stories that have turnaround Catalyst in place this thing’s not showing me anything yet um so I’m going to pass but I think your instinct is correct I just want to see it a bit lower all right turn around Tom from Stephen
Frampton uh they say only the greats can nickname themselves and phillian just used yours on TV are you Kobe Bryant AK a the self-proclaimed black mamba of investment I don’t know I’ve never been called a black mamba but can tell you one thing um I wish I had come up with
It a friend actually called me what do you turn around Tom so I was like oh that’s pretty catchy nonetheless uh my other question is about how so many people can be wrong Phil Yin laid it out pretty well media was bearish hedge funds were bearish everybody how can so
Many people who Proclaim to do this for a living be wrong for the Dow to reach all-time highs plenty of people must be buying the stocks though for someone new to the markets like me it’s pretty mind-bending wondering if you can comment on this well Stephen stick
Around because if you haven’t been with us for the last two three four years uh you know that the kind of Guiding Light of this is opinion follows Trend and people you know investors it’s just human beings are Lemmings they they chase what goes up they puke out what
Goes down because they don’t know what they own so when you know Wall Street is the only store in the world that when they hold a clearance sale everyone runs out of the store you put garbage trinkets on sale at Walmart and people are beating themselves up waiting to get
In on Black Friday Friday and you put the highest quality cash generative growing businesses on sale mark down 50% 75% you know in Wall Street the bigger the discount the more people run away in Walmart the bigger the discount the more people run towards I guess it goes to
Show you uh people don’t want to see Treasures marked down they want to see trinkets marked down but that’s just human nature opinion follows Trend that will never change you’ll get better and better and Discerning between trinket and treasure that’s where all the money is made and that takes years of
Experience but you can probably shorten your learning curve quite a bit by uh listening to people who have that experience so uh Henry Gil uh your teachings have helped me more than you will ever know thank you Henry I appreciate that could you please take a look at Borg Warner the stock
Appears to have double bottomed at approximately 3250 with good free cash flow imminent spinoff to uh some of its Legacy uh IC I don’t know I like Cooper standard let’s see Borg Warner I looked at Borg Warner when I was looking at Cooper standard um you know one’s up 3x one’s
Up 30% so that tells you everything you need to know about Borg Warner uh TR I don’t buy it based on chart patterns um I think this is going to do fine I I don’t know if they do more of the uh used car or new car let’s just see if I
Pulled this sheet here yeah B Warner supplier hire for automotive powertrain application oems whe manual automatic torque Ford accounted for 13 Volkswagen I think I think this one’s going to be okay on the same B basis as Cooper standard but I don’t think it has the same type of
Leverage um or upside so why take a similar amount of risk because all you really betting is what is industry production going to be and who’s got the most operating leverage to take advantage of it Um you know this was basically a less risk much less reward play play to put in place in 2022 when we did Cooper standard um and that’s not what we wanted we wanted the Charlie Munger trade where he took 10 million turned it into 80 million and then put the 80 million in
China turned it into a half a billion uh in a handful of years that’s the trade we wanted and um that’s what we did so this is just looks fine it’s kind of a snoozer I mean you you probably get a double over the next three years
So that’s great I mean I think you found a nice business at a decent price um good work John Weller have enjoyed learning your investor techniques much happier since avoiding the Speculator and swing trading approaches can you explain educate a bit more when to leave a stock
Uh exited fast at 60 but maybe regretting this I’m still in Boeing so it rised to 220 been a rough ride to 180 now Rising back to 240 Boeing seems like a forever hold but very interested in your thoughts on these two companies of when to exit you have to
Know when you’re getting out before you get in we knew when we were getting out of intel on the basis of the PC business uh and we’ve even talked about it uh and then what we would hold for the flyer business of the Manana Foundry AI change
The world business so we kept a little on for that same thing with uh Vado we got in at a 60% discount to book and we sold at book so yeah it’ll trade above book the pendulum swings aggressive on both sides but you know you also have
Irr and uh we got that return in such a short period of time and the options used to return so much that we just didn’t want to be pigs we want to find other things that could triple in such a short period of time so um double and triple in case of the
Options so um the answer to your question is first off you have to know what you’re doing so start by reading the intelligent investor by Ben Graham understand how to discount cash flows do security analysis is a good place to start Seth claran margin of safety it’s not an easy fix
You don’t get conviction to bet against the crowd and stick with it when they’re all laughing and then wind up with doubles and triples they don’t give away multi baggers for free I i’ I’ve said that since day one if you don’t do your work I mean I know the businesses I own
I know what I would be willing to pay and what they would Garner in the part in the private markets that’s why I love public markets so much because the private markets would never offer up the prices that the public market that is is based on irrational exuberance and uh
Depressed despondency from time to time uh the prices that they’ll trade these same assets where the cash flows are relatively steady on a on a predefined growth trend for the type of high quality moded businesses that we buy so as far as fast and all um you know if
You don’t if you don’t know where fair value is before you get in based on your analysis of the C discounted cash flow of the earnings growth of the cash flow growth of the multiple uh and you’re just buying on the basis of momentum I would not even invest I would either
Outsource to someone who knows what they’re doing or spend three years and learn learn to do what you’re doing um that’s not a twom minute ask me anything answer but there’s not one company we buy that we don’t know where we’re exiting and the only thing that will
Change that is if the fundamentals get dramatically better than what we expected when we got in and that’s few and far between usually the fundamental didn’t get that bad for the price to go down 65% and they don’t get that much better for the price to go up double if
You look at the Microsoft example where the thing traded sideways uh from uh for seven years bomber’s cash flow growth was actually greater in percentage terms when the stock did zero over seven years than when Saia did for the next seven years and the stock was up 1500% so it’s
A coiled spring and sooner in the short term things trade on a motion in the long term they trade on fundamentals as far as Boeing be a hold forever Boeing is not a hold forever Boeing is a cyclical business okay and we we’re just coming out of the cycle probably works
Its way higher but uh uh and maybe back up to all-time Highs but uh this is probably not one I would hold forever uh they do have a duopoly so there is a sense of mope but you have that China provider coming on uh but I you know
Look I I think this is is going to work higher but this is not a buying hold forever this is not a super high quality it just happens to be a duopoly so it works through Cycles if you buy in the down cycle like 2020 or you got another
Bite at the Apple last year when everyone was just selling everything for no reason um and those are the times to buy it but those are trades just like vernado is a trade vernado is not a hold forever Intel’s not a hold forever although this last piece might be a hold
For some time if they get it right uh but you know um that’s that so that’s that J Vios great content is always keep it coming beauty of an auction driven markets his emotions play an important role and people overreact to the upside more importantly downside Bob is clearly
The lad by the way any thoughts on a value play on Paramount we did Paramount a couple weeks ago we said it was a trade I’m not going to do it again it’s a trade based on being sold um the balance sheet is garbage but as rates
Come down it’s better there is value there um uh so it’s doubled since then not doubled it’s up 50% probably goes up a little more I don’t see anyone paying more than $25 or $30 for this but I’m welcome to be proven wrong and if they
Hold it then maybe over the next five or 10 years if they can refinance the debt this thing can work its way back up to 50 or 60 um so I would say it’s a trade it’s not a great business and then it’s a trade that’ll probably work Julian Glock
Um okay wanted to ask whether Alibaba remember all the Alibaba questions that came in last week when everyone was desponding want to ask whether Alibaba is really compatible to us Western socks can we apply the same rules for this company as the Fantastic fundamentals valuations don’t seem to matter much unfortunately is the
Growth um is the growth of any worth the stock not taking off due to Chinese political and economic issues as long as those issues are prevalent Baba seems not to move up properly American companies don’t come with the baggage therefore isn’t the risk higher yeah if you believe that but if
You actually believe you’re buying a high quality asset when it’s out of favor uh you tune out the noise and you got the same noise going now with the CCP and all this BS and capital flight that you had when institutions were fleeing right here in 2015 and 16 I
Showed you on my cell phone it’s on my Twitter account hedge fund tips where the hell is this thing all right there same outflows this is the result stock was here same nonsense that you’re talking about and next thing you know the thing was up from 60 or $70 up
To $300 first to 200 then it checked back take out the we sisters then up to $300 and the fundamentals are much better this time so something will change when when everyone least expect it it’ll start running up no one will believe it everyone will crowd in uh the
Talking heads will be all over it at $250 they won’t be able to get enough this is the great growth story China is back blah blah blah and that’s when we will be laying off to never be again ever in China because they’re going to hit a demographic clip in about four to
Five years ago four to five years from now and they’re going to be the next Japan and they’re absolutely toast but between now and then with the large part of their population at 34 the next 3 to five to six years is going to be a beast
Of a growth and as much as G tries full-time to destroy that he won’t be able to because there’s Tailwinds they’re just coming out of what was a complete hard attack and the the marathoner can’t run the marathon 2 weeks after the heart attack they opened the country 11 months ago it’s getting
Better but uh you know there’s some hiccups and um those hiccups will be worked out and this is the perfect shake out the last week sisters which is why we lean the hell in in the last week week and a half and uh this is going to
Be another range resource to be a huge multibagger over years and um uh and to answer your question is if that’s what’s holding the stock back then why didn’t it hold the stock back in 2015 and 16 when all the headlines were the same and
China was the end of the world in China and then all of a sudden you had a multibagger and why wasn’t it a problem when G was the same leader in 201516 and when everyone was getting the hell out of China in 2015 and 16 because
It was uninvestable and all the same BS and you can look them all up on Google it’s the same thing over and over again so you can say this time’s different and maybe you’ll be right and I’ll run that risk but you know since day one I’ve
Always had one hard and fast rule if anyone in my positions went to zero would I live it another day and with Baba it could go to zero tomorrow and I’d still have a great year in 2023 and uh and it could happen in 2024 because if I knew for certain everything about
Everything I could just put 100% of my money double levered in one stock like Charlie Munger did at 225 and he got his face ripped off I would never do that uh maybe that’s why Charlie’s a billionaire he was make willing to take those big
Swings but I want to live to see another day and I’m perfectly happy doubling every few years versus trying to double overnight and um you know that’s just me so uh you know there’s always things you don’t know that you don’t know but for my money uh you know it’s funny I was
Telling a friend I said you know those eight or 12 other companies that have all just been ripping higher in the last couple of months and with the options Stu you know the stocks are up you know 50% 100% the options are up multiples I
Said not one of them is as good of a business at a good price as Alibaba not one company in my portfolio is a better investment inside of my framework they all fit the framework that’s why they’re all working but um Baba is 100 times better business at a 100 times better
Price so I just wait patiently while everyone you know types up all this stuff and gets all upset and emotional I you know I just wait and as everything else goes up I get more money and when Baba pukes out to 65 I’ll buy more um
Maybe it won’t but um uh and then all of a sudden it’s going to be 150 and then it’s going to be 200 and say oh Tom you were so smart no I wasn’t so smart I just bought a great business at a good price I knew what I owned I already know
Where I’m getting out before I get in uh and uh that’s that and you know um the guys who bought meta at one 50 and puked it out at 80 when they would have had a double by now even if they didn’t buy more down at 80 which they should have
And then they would have had1 $100 or $15 basis and then they’d have a triple now that it’s at 327 I can’t help those people because they didn’t know why they bought it so they didn’t know why they sold it and if anything that I’m trying
To teach you is helpful uh is how to understand what you own and once you own high qual which is why we don’t go for these businesses that have two years of financials how the hell can you know what you own you haven’t seen it operate through through Cycles it could be a
Leveraged model that works like crazy when money’s free and then you hit one Hiccup and the guy goes over the handlebars down the hill and he’s toast all his front teeth are out his nose is disjointed he’s never going to recover so uh we want to see ones that have been
Hit by linebackers two or three times in the last couple of decades how did they did they get up did they play another game did they go on to win a Super Bowl is it such a good business that they’re going to win another another Super Bowl
And if I’ve got another Super Bowl prospector that’s building the new roster with a Shane o Kelly with a Brack and Daryl you know with a Joe Sai you know God forbid uh then so be it and uh and that’s what we do over and over and I think you’ve seen enough multi-baggers
In the last 12 months to know that it works and um and it’s going to continue to work and if you think the seeds that we planted in 20122 uh blossoming in 2023 have been amazing wait till you see the seeds that we planted in 20 23 how they blossom in
2024 so with that said uh we’ll be back next week but uh same time same place for those of you celebrating holidays right now happy holidays for those of you who have them coming Merry Christmas uh but we’ll see you before then and in the meantime make it a great one bye for
Now
25 Comments
Finally a podcast that isn’t entirely BABA therapy. Let’s get back to BABA once it’s $125+
What is the best strategy to enter crypto trading for someone with more or less than $5,000 to invest?
Was hoping for a PayPal deep dive, thanks! in Italy PayPal is used as a verb. i say it regularly with my clients.
"Ti paypallo domani" = i'm gonna pay you tomorrow.
"Per pyapallarmi ecco il mio QR" =. use my qr code to pay
"paypallami quando puoi, nessuna fretta" = Pay when you can, no rush
Ad so on… i say it everyday and only upon you mentioning the Venmo equivalent, realized how powerful it is and how casually we use it here.
Also funny story, couple of days ago a client said "i do not have a PayPal account" and instantly said "are you crazy? how can you live without one? you are the first one i meet without PayPal since ever!"
Sure enough he opened an account the very same day.
Anyway, just wanted to share the situation here in Italy!
Thanks as always!
Tom we are in sync! I admittedly followed you in into Vornado after soing some of my own DD. On Wednesday i sold out entirely. Something about having a junk bond rating come out while i was up 90% told me to collect and go😅
Turn around Tom, strikes again!
Great pod. Nice of you to run thru PayPal ER. Besides BABA what’s on sale here. I.E. where are you putting new capital to work?
The amount of times I've used 'opinion follows trend' in financial conversations with friends over the years I've been watching, I almost feel like I owe you a royalty for its use (lol). And I'm always curious who jumps off the videocast at the transition before the AMA section begins. I feel the AMA section offers as much, if not more, in depth analysis and educational opportunities.
The economy is slowing. Interest rates are a function of inflation and GDP. As both of those continue to moderate rates will continue to come down. Unless you believe something has structurally changed since COVID, the economy is likely to revert to the mean and average growth around 2%. This is where rates are heading.
Another fantastic vid Tom. Your vids are such great value. Much appreciated as always.
Hey Tom, I started watching your videos about 6 months ago. All your picks follow the same process, but your Vornado pick has been incredible to follow. The amount of pessimism when office real estate hit the lows, and you stayed strong.
The videocasts are amazing thank you for sharing your wisdom!
like your style and inside track on stocks
Thank you Tom!
Hey Tom thank you for another amazing video. It takes a lot of courage to be public about contrarian ideas and deserves respect. Thank you.
This man just sold me on Paypal.
Great video! Not worried about BABA when you have CPS at $5, PODD at $126.55, C at $40, DAVA at $48, GE at $70, ASO at $13. fwiw my BABA cost basis is $70
i really love the analogies
Forcing my kids to listen to the last 10 minutes over Christmas. So good. Wish that I knew what i know now when i was younger…
Love the podcast, been watching every single one since early this year. Been extremely valuable to me. Thanks for all the great work that you share!
You work 40 years to have $1 million in retirement. Meanwhile, some people invest just $10,000/$50,000 in a Bitcoin coin for just a few weeks or months and become billionaires through a bold move that you can make too. Bitcoin has grown tremendously in the last month. I pray that everyone reading this finds success in life. You have a chance today. I am truly grateful to have found a source that allows me to grow my finances to a profit of at least $5,000 per week. Many thanks to you, Ms. Diane Knapp.
Another fantastic episode from Mr. Tom Hayes. I watch every week. Please don't stop when you have trillions under management!
So happy I found your channel a few months ago. Huge game changer for how I have to think. THANK YOU
Great episode. Really appreciate you sharing sell moves/ rationale- very educational/ generous. Love the deep dives, e.g. PYPL here. The weekly BABA is helpful as it’s a hard master. World class performances from your daughters too- well done.
As long as he doesn’t say “autopilot” 😂
Cheers!
Hey Tom, I’ve been following the show for over 6 months now and look forward each week to the next episode.I have an AMA question for a future show: What are your thoughts on a turnaround in Spirit Aerosystem SPR. I haven’t started a position in it, I started a position in Boeing BA when it pulled back below 180.
Thank you for the time and effort that you put into the program each week!
Turn Around Tom – can you explain how “options” juiced your returns for VNO? How did that work and what was the process?