A Venezuelan Shakeup; Top S&P 500 Winners And Losers From 2025; The Return Of Small cap Of The Week

Summary

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Chit Chat Stocks Podcast Power Hour – Detailed Episode Summary

Episode Title: A Venezuelan Shakeup; Top S&P 500 Winners And Losers From 2025; The Return Of Small Cap Of The Week
Hosts: Ryan Henderson (“A”) and Brett Schafer (“B”)
Date: January 9, 2026

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Episode Overview

This Power Hour from Chit Chat Stocks offers a wide-ranging discussion of recent global and market events impacting investors, including Venezuela’s geopolitical changes, S&P 500’s biggest winners and losers of 2025, a deep dive into the “small cap of the week,” and updates on defense spending and AI. The hosts, Ryan and Brett, mix in their characteristic banter and audience Q&A, keeping a focus on practical takeaways for investors.

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Key Themes & Topics

1. Venezuela’s Political Upheaval and Its Investment Ripple Effects

• [05:20] Audience Q: South American/Mexican investments given Venezuela's situation?
  • Limited Direct Exposure: Most American investors can’t access Venezuelan equities directly.
  • Multinational Exposure: US and LatAm companies (e.g., Colgate, MercadoLibre, Nubank) have historical exposure to Venezuela.
  • Potential Spillover: Regional economies and businesses (airports, financial tech firms) may benefit if Venezuela stabilizes and commerce rebounds.
  • Cautious Optimism: Both hosts agree the “news is certainly more a positive than a negative,” but remain wary of actionable opportunities, highlighting significant uncertainty and required systemic change.
  • Quote – Ryan: “All this feels super speculative. We don’t know what the government’s going to look like.” [14:11]
  • Quote – Brett: “If you can get 50 million more potential customers in a country with a stable economy, yeah, that’s growing your addressable market. But how many years until that happens?” [08:17]
  • Oil Market Angle: US refineries are tailored for Venezuelan heavy crude, so reopening flows could benefit US Gulf Coast refiners like Valero, ConocoPhillips.

2. 2025’s S&P 500 Winners, Losers, and Valuation Extremes

• [16:45] Building the Dashboard:

  • Ryan constructed a full S&P 500 dashboard, noting how surprisingly many companies even seasoned investors don't know.

• [18:06] Top 5 Winners (2025):

  • SanDisk (up 790%); Western Digital; Micron; Seagate (memory stocks); Robinhood (all +200%).
    • “80% of this is memory, right?” [18:06]

• [19:55] Top 5 Losers:

  • The Trade Desk, Fiserv, Gartner, Deckers (HOKA), Lululemon.
    • Deckers and Lululemon: Surprising, given underlying business strength.
    • Gartner: Under pressure but ‘magic quadrant’ recurring consulting business discussed.

• Cycle Analysis:

  • Memory stocks boom/bust nature. Hosts believe 2025 “losers” (especially retail) may outperform memory “winners” in 2026 due to historic cyclicality.
  • Quote – Brett: “I would bet eventually on a bust happening. Just look at Micron’s stock chart.” [22:17]

• [25:19] Cheapest S&P 500 Stocks (on Forward EV/EBIT):

  • Omnicom Group, APA Corp, Allstate, Viatris, Principal Financial – all under 7x earnings.
    • “I have no clue what…APA Corp does.” [25:19]
  • Omnicom’s deep discount discussed as possible AI-disruption overhang.

• [26:41] Most Expensive S&P 500 Stocks:

  • Axon, Tesla, CoStar Group, Palantir, CrowdStrike.
  • Hosts speculate on whether these could be good candidates for shorting, with Palantir highlighted as highly valued.

3. US Housing Market: Institutional Investor Ban Proposal

• [29:57] Biden’s announcement:
  • Plan to ban large institutional investors from buying more single-family homes to protect American homeownership.
• Hosts’ Take:
  • “It’s pandering for votes… Stats show it’s maybe 0.5% of market nationally, but high in some Sun Belt metros.”
  • Disagreement on whether this would actually increase supply or affordability.
  • Quote – Ryan: “It would suck to get outbid by Blackstone if you’re looking [to buy a house].” [32:05]
  • De minimis expected impact on public homebuilders such as DR Horton, though stock sold off on the news.

4. Small Cap of the Week: Owlet (OWLT)

• [33:59] Listener Submission:
  • Owlet – develops FDA-approved smart anklets to monitor babies’ oxygen, heart rate, and more, with smartphone integration for parental alerts.
• Key Financials:
  • Revenue doubled post-FDA approval; 50% gross margin; slightly negative operating margin but improving; ~242% stock return in past year.
• Competitive Moat:
  • Only FDA-approved product of its kind; parents’ fear and “keeping up with the Joneses” could spur adoption.
• Risks:
  • Short customer life (kids grow); churn risk; “baby economy” trends can change quickly; new telehealth initiative seems undifferentiated.
• Quote – Brett: “Parents will definitely want to use this if other parents are using it… If it’s useful.” [37:40]
• Host Debate:
  • Ryan clarifies the company trades closer to 8–9x gross profit, not 4x.
  • Both see promise but acknowledge execution and product trend risk.

5. US Defense Spending & Political Moves

• [44:00] Trump’s Defense Contractor Plan:
  • Proposals to cap defense executive pay at $5M unless building new plants; limit buybacks unless R&D increases.
• Analysis:
  • Discuss complexities as most contractors (e.g., Lockheed) operate on cost-plus models, so mandates impact both government and company finances.
  • General consensus that increased defense budgets—proposed at $1.5T for 2027—will benefit the sector, regardless of political maneuvering.
  • Quote – Brett: “The legality of mandating buybacks or dividends?… But since [defense firms] are almost pseudo-nationalized, government as their only customer, maybe they can demand this.” [45:10]
  • Quote – Ryan: “If people can’t really compete with you, I don’t think it’s so wrong that the government has a big say in your unit economics.” [48:05]

6. Listener Q&A and Rapid-Fire Topics

• Bubble Watch – The AI Hype:

  • New massive fundraises: Anthropic ($10B at $350B valuation, GIC/CO2 leading); Elon Musk’s xAI ($20B).
  • Hosts skeptical on the moat/commercial opportunity of Grok xAI relative to Claude, Gemini, OpenAI.
  • “Feels like there’s… a three-horse race. Claude, Gemini, OpenAI.” [64:40]

• ASML & TSMC – Semicondutor “Moat” Stocks:

  • ASML up on analyst upgrade; now ~36x EV/EBIT.
  • Both hosts discuss pros/cons of ASML vs TSMC; ASML seen as more “unassailable” but richer in price.
  • “ASML would honestly benefit if Taiwan was destroyed… more machines in other parts of the world.” [53:23]

• Netflix & Warner Bros. Update:

  • Netflix on a drawdown but still pricey (~31x EBIT post-drop).
  • Warner Bros. possibly juicing revenue via cross-platform content licensing ahead of deal.
  • Quote – Ryan: “I do like Netflix… in a fantastic position to increase margins and grow revenue… but EV to EBIT will look very different after this deal.” [58:05]
  • Both not interested as buyers at current valuations.

• SaaS “Apocalypse”:

  • Brief mention; possibly a future discussion point.

• AI Bubble Funding Watch:

  • Noted rapid escalations in AI startup funding rounds.
  • Oil-rich sovereign funds leading capital inflows: “It’s funny that oil money is being poured into the tech world right now.” [64:30]

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Memorable Quotes & Timestamps

• Ryan on Venezuela Opportunity:

  "All this feels super speculative. We don't know what the government's going to look like."
  [14:11]

• Brett on Multinational Expansion in LatAm:

  "If you can get 50 million more potential customers in a country with a stable economy, yeah, that's growing your addressable market. But how many years until that happens?"
  [08:17]

• Ryan on S&P 500 Knowledge:

  “I was blown away by how few [S&P 500 businesses] I actually knew…”
  [16:45]

• Brett on Memory Stocks:

  “I would bet eventually on a bust happening. Just look at Micron’s stock chart.”
  [22:17]

• Brett on Owlet’s Moat:

  “Parents will definitely want to use this if other parents are using it… If it’s useful.”
  [37:40]

• Ryan on Defensive Contractors & Gov’t:

  “If people can’t really compete with you, I don’t think it’s so wrong that the government has a big say in your unit economics.”
  [48:05]

• Brett on AI Investment Hype:

  “It feels like there's... a three-horse race. Claude, Gemini, OpenAI.”
  [64:40]

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Segment Guide & Timestamps

• 00:00–04:13: Intro & banter, ACA subsidy and Oscar Health news.
• 05:20–15:03: Venezuela shakeup and LatAm investing fallout.
• 16:45–28:36: S&P 500 2025 leaderboard, valuation insights.
• 29:57–33:02: US institutional homebuyer ban – analysis.
• 33:37–42:08: Small Cap of the Week: Owlet – deep dive.
• 43:36–50:43: Defense spending, Trump proposals, industry impact.
• 50:54–66:48: Q&A lightning round: ASML, Netflix, SaaS, AI bubble, segment wrap-up.

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Tone and Takeaways

Ryan and Brett keep their tone conversational, wry, and practical, regularly poking fun at market fads, government moves, and their own gaps in knowledge. The emphasis is always on how news translates (or doesn’t) into actionable investing decisions, encouraging listeners to stay skeptical, do their own research, and focus on long-term fundamentals.

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Final Thoughts

If you missed the Power Hour live, this episode delivers a whirlwind of macro news, actionable research ideas (Owlet), and sharp debate on market hype cycles. Fans of global investing, valuation work, and spirited co-host rapport will find it especially engaging.

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Transcript

[A]

Welcome to Chit Chat Stocks, the podcast that helps you discover your next great investment. I'm one of your hosts, Ryan Henderson, and I am joined as always by the one and only Brett Schaefer. This is our weekly Power Hour episode. We do these every Thursday live at 5pm Eastern Time on YouTube. So if you ever want to get any questions to us live, head on over to YouTube, look up chit Chat Stocks and feel free to ask away in the comments. Thank you everyone for tuning in. We have a full slate today. We've got defense spending upgrades. We've got massive news out of Latin America, very controversial geopolitical news that we'll discuss and we've got a number of other topics as well. I'm going to go over some 2025 numbers from the S&P 500 and some of this stuff might surprise you, but I'm going to go through some of that blackrock in the news, a lot of government news which we don't typically do, but I'm going to stop there. I'll let you introduce yourself here, Brett. What are you most looking forward to talking about today?

[B]

Well, Ryan, I have a new business venture to propose to you and it is a daycare. You getting ready to start one of those? I think they're quite profitable from what I've been hearing. Chit Chat Stocks daycare. You ready? Is that the third leg of the business model?

[A]

It's I try not to talk and most things political on the show just because that's not the kind of show that we are. But it's becoming harder and harder to disaggregate the two, it seems, especially given the current administration. So we got to talk about some of this stuff. I was thinking through all of this. Imagine if you're just like a, an actual daycare operator in Minnesota and when people ask what you do now, you have to tell them that. And everyone just thinks it's a gimmick.

[B]

Yeah, exactly. It's, it's quite the story. Yeah. And it is in our home state is home state of Washington potentially I guess as well. But yeah, let's get back to some other topics. I have a fun small cap of the week. I appreciate one of the listeners giving a really interesting company, medical device company helping out the what we call the baby economy, which is probably quite lucrative. We have a little bubble watch, obviously some updates on AI stuff and a lot of good listener questions with some stuff we may or may not be able to talk. Well on oil stocks, ASML rally, Netflix drop is lemonade a turnaround play. I'll say hand up. I've been completely off on that one. At least I haven't. We'll check the stock price live, but I think I've been very bearish on them. The stock's been doing quite well. And then question may be about the memory semiconductors and memory shortage, although I don't know exactly how much we will have any expertise on that. But the first thing I'll say is talking about government subsidies. There's news this week, Ryan, that may have saved my Oscar Health shares as well as the rest of the Oscar health bag holders. The ACA subsidies may return. Here's a quote for you. The emerging framework would extend the expired enhanced ACA subsidies over two years while adding income caps, anti fraud measures and other provisions designed to draw GOP support. The legislation will require 60 votes to clear the Senate where Republicans have a 5347 majority and also need to be approved by the GOP controlled House. It's important I guess because maybe they'll get some more customers out there. But I think this is all in all great news for Oscar. How there's more steps to be had before it gets finalized. But betting against the subsidies stopping or sorry, I did a double negative there. Betting that the subsidies are going to stop once they've already started. It's usually a poor sign and I'm hoping this is good progress for the company. You might not like it politically, but hey, you got to invest in the world you see and hopefully they can make some money on it.

[A]

What is without spoiling too much, what's your current return on Oscar?

[B]

Ooh, let's see what the stock price is at today. It's not, it's not going to be crazy. Stock price is at about 17 I think my cost base is in the 14 to 15 range, but I actually don't remember. Maybe that's good or bad, but it's been all right. Been kind of a wild ride. It goes up to 20, back down to 15, up to 20 basically. On any news surrounding the healthcare stuff which has just been either we're get rid of getting rid of all government spending or we're going to add on all these ACA subsidies. It's been a whole mess but I think overall, you know, Oscar Health will do just fine. We have a question here in the chat, Ryan, that can probably lead off the elephant in the room in the Venezuela discussion. Question here from Tyler. Welcome back in 2026. Tyler. Any thoughts on South America and Mexican investments? Given the situation In Venezuela. I'll let you go first, Ryan.

[A]

Yeah, so any takes that I have are going to be stolen probably from our Latin American correspondent Ian Bisak. But it seems like, well, generally speaking there aren't a lot of Venezuelan companies that American investors can invest in directly. So there's, it's not like all of a sudden the floodgates have opened, go find every undervalued security in Venezuela type of thing. However, there are a lot of businesses that are American businesses, had Latin American businesses that have historically done a lot of business in Venezuela. So some of the ones I'm thinking of are like Colgate. That was called out by Ian BZ as well. Apparently they have a huge market share in, in Venezuela and other Latin American economies. Mercado Libre, I believe around 20% of their revenue came from Venezuela prior that was in, I think around 2013, 2014. And obviously it was a much smaller revenue base than they have today. And then there's the potential knock on effects of local economies around Venezuela as well. So this is something that I hadn't really considered but once again, shout out to Ian Bizek because he kind of raised awareness to this. There's been sort of a big refugee crisis from Venezuelan citizens pouring out of Venezuela to other countries. Colombia, Chile I believe as well.

[B]

Argentina, Brazil. Yeah, basically every country.

[A]

And it's put a bit of a strain on the resources for those countries. That was something that was talked about, was basically. Now keep in mind, a lot of this is uncertain. There might still be. We don't know what the government's going to look like in Venezuela a year from now. But in a world where the Venezuelan economy starts opening back up again, you see companies coming into Venezuela and reinvesting a lot of money there and citizens pouring back in. I think you can see you're probably going to see a benefit at a lot of the airports. You'll probably see a benefit for commerce generally. I think Mercado Libre would be a beneficiary and you'll probably see benefits for the local economies. Local, I mean other countries around there, Brazil, Colombia, Argentina, I don't know what companies will be direct beneficiaries of that necessarily, but I'll leave it open to you. I, I haven't taken any action or invested at all since the news dropped.

[B]

Yeah, we're a long ways from them having their leader ousted to having a Javier Milei in, in their country with a democratic election. There's a lot of progress to be made. I mean we don't even need to get through all the GE political stuff where they have militias and terrorist groups and everything. But I think the airport one, that's probably one of the first beneficiaries because you're going to see people have to travel to and from the country to start building up a capitalist economy. And then second, yes, the clear winners will probably be the same winners of every other country that are the multinationals in South America. Speaking of Nubank, MercadoLibre, if you can get 50 more potential customers in a country with a stable economy, yeah, that's growing your addressable market. But how many years are we going to have until that happens? I'm not so sure the 10% bump in MercadoLibre share price was really warranted. Maybe the stock is undervalued anyways. But when are they going to re enter the market in a meaningful way? When is the economy going to actually recover and is it actually going to be successful? That seems like a pretty low likelihood if we're going to be speaking frankly here. But on maybe the oil front, there's some potential benefits here. I'm not sure. I think for me an example of how the oil market is an absolute crapshoot. One interesting thing I've seen a lot of, and again, I'm stealing this from people, but a lot of smart people said is that when you look at the United States oil production, it actually doesn't. And I always forget there's light, sweet and heavy and sour, whatever, all the different types of crude oil. But the stuff that the fracking and the Texas and North Dakota basins are producing is actually not useful for the Gulf coast refineries. The Gulf coast refineries are made for Venezuelan type oil, so that could benefit those companies, which I think are Valero, ConocoPhillips, stuff like that. But besides that, you know, is this another step into getting capitalism back in Latin America? Yes, but there's a lot more steps to go. You know, we talked about this with Bizek about what was it in late 2025? About hey look, is there a huge trend here where we're getting from this kind of the socialist era of the region to capitalist? And he kind of gave a yeah, maybe, but let's wait and see. And this is kind of one step in that. But there's many, many other things that need to happen. And hey look, it's, it's positive obviously for business so far, but let's see.

[A]

Yeah, I can't see how it would be a negative for business or businesses in the area, but the yeah, I don't see many actions I can take here as an investor because I'm not an energy investor to begin with. I think maybe if you have like a very unique view. It's an industry that you know really well. You've spent a lot of time in the oil and gas space. Maybe there is some benefits to be had here and some trades you can make that'll be beneficial. I've heard Canadian oil companies, especially in the Calgary area could potentially be hurt by this, but that's not how I invest and I was actually a tough.

[B]

Industry to invest in anyways.

[A]

Yeah, I was actually getting. So this news dropped, I think on must have been Saturday.

[B]

Yeah, 7am in my time it was midnight. It was right in the crack of dawn when where you are.

[A]

Wow. The I was going to invest in Mercado Libre on Monday regardless. That was kind of my plan. I wanted to buy some shares because I actually thought it was a good opportunity like ignoring Venezuelan news. And it was up like 12% when I checked Monday morning, which to me I just have a hard time buying anything when it's up 12% in a day, honestly. But this was. I don't know if it's really warranted. I think it's easy to just say Venezuela was 20% of revenue a decade ago. Well, it was probably generating I think around $100 million in revenue, which would be a fraction of today's business for MercadoLibre. Now obviously there's more angles, more things they can sell, more offerings that they can have to customers and they have a big employee base there as well. But I think it's going to be a long time, maybe it won't even happen before. Venezuela actually contributes significantly to the top line for Mercado.

[B]

Mexico and Brazil and Argentina what matter more? And probably the stabilization of the Argentina hyperinflation is what matters way more over the next five years. We have a good point here though from the Investing for Beginners podcast which is either Dave or Andrew. So thank you for the questionnaire and go listen to their show. If you are a beginner investor and want to learn how basically this whole thing works. They say someone said that they think Mercado Libre will benefit from this, particularly the Pago segment. So maybe along with the airport, some of the first businesses that can enter just because they're more asset light from a physical infrastructure standpoint will be the Mercado Pagos or the new banks of the world to kind of get that banking engine going. You know, I like the thesis there. Yeah.

[A]

It's just. I don't know, all this feels super speculative. We don't know what the government's going to look like.

[B]

We have a comma here that says keep. Don't think too hard, Ryan. Just buy. Just buy. 10 years, you won't care. Might be right, but still, 12% of the day, I have the same feeling. Just wait.

[A]

It's just a good. I can't do it. Honestly. As sort of as big as the Venezuelan news is, it kind of means nothing for my investments at the moment. Like, I can't. I still haven't found anything necessarily actionable about it. It's certainly not a. Like, if you were thinking about investing in MercadoLibre anyways, this news is certainly more a positive than a negative, I would imagine.

[B]

Sure.

[A]

But yeah, I'm not investing in anything specifically based on this news.

[B]

Maybe send an apology form to Lockheed Martin and the F35 seems to work well given that high budget. But yeah, for an investing perspective, not so much. Maybe if we don't want to talk more government stuff, do we want to do your roundup? Your list, your fiscal AI based list. S&P 500 winners, losers and cheapest stocks. Kind of a fun thing to do at the start of every year.

[A]

Sure. And I will. If you had to guess what percentage of the s and P500 companies. If I just started listing them all off and I said, do you know the. Do you know what this company does? What percentage do you think you could get right now?

[B]

This reminds me of. There was a Jeopardy. Viral clip, at least on fintwit, that none of the contestants knew what ETF stood for. Which I gotta say, that's quite, quite a shame. Uh, I think there should be a investing slash finance focused Jeopardy game. I. I don't think we have the chops to put it on. Uh, but it would be a very, very fun thing to do if you said the 500 companies. I'm gonna go through. Look at your list here. Just based off of these companies, I think I could. I think I could do half. I think I get half. If you're generally like, all right, well, you have Seagate on this list. They do hard tribes. Like, if I. If that's all I need to know about the business, I. I don't know much besides that. Yeah, I think I get half on that level.

[A]

I think that's probably a fair guess I would have going into this. So just for context, I put together a full dashboard on fiscal AI of every single company in the S&P 500 I just wanted to basically be able to quickly like if I want to figure out the cheapest stock in the S P500 on whatever multiple most expensive whatever I want to be able to pull it. So I built a dashboard and I went one by one with every single company adding them and I was blown away how few of them I actually knew and obviously the majority is weighted towards big tech. But when you, if you were to go through an equal weighted S&P 500 I wouldn't know half of the businesses probably so much energy like a ton of energy companies. I just found it very surprising if you asked me like what percentage of us large caps would you know? I would have guessed much higher before I started doing this list. But let's go through it. This is the top five biggest winners in the S&P 500 from 2025. The biggest losers and the cheapest stocks on a forward EV to EBIT basis. So the five biggest winners SanDisk up 790% it's all memory.

[B]

80% of this is memory, right?

[A]

Western Digital Micron, Seagate, all those memory Robin hood, it's number five. All of those are basically above 200% returns.

[B]

AI AI AI AI. Degenerate economy. Not surprised.

[A]

Yeah, honestly. Yeah, it's none of those interest me frankly. We can talk about the memory segment here in a second but yeah, I'm.

[B]

Going to give you a potential to have a hot take. Are you worried about Kalshi and Polymarker with Robinhood's market, with Robinhood's business?

[A]

I don't think so.

[B]

We're in the hype cycle. You think, you think we're kind of in the little mini bubble with the prediction markets because it Robin, I would.

[A]

Rank it anyways but I think it's, I think it's just a matter of time until there's heavy regulation on the prediction markets. And I think it's going to really hurt Kalshi and Polymarket if I had.

[B]

To rank people the companies that were at a risk one it would definitely be the sports bettors because they're kind of doing the same thing. And it's also the degenerate economy that maybe it's slowly getting into the mainstream but anyone our age knows that it's really ruining a lot of young guys finance financials and it should be probably regulated more. Second and maybe the Robin Hoods of the world kind of those day trading apps and then the rest would be the traditional brokers and I don't think they have any threat to that at all. But I was derailing you. Those are the five biggest winners. Who are the five biggest losers?

[A]

The five biggest losers are. The worst loser was the trade desk. Second biggest was Fiserv, which is probably most known for their Clover point of sales system.

[B]

Yeah, they got Clover down here. I was shocked. Mercado Libre and Clover.

[A]

Well, I'm pretty sure their Argentine business is one of the primary reasons that the stock has collapsed is because they.

[B]

Were kind of faking the same store or the growth because it was constant currency. Or maybe not constant currency. Yeah.

[A]

That it was just primarily due to hyperinflation in Argentina. The third worst was Gartner. That that was maybe the most surprising one from this list. I didn't realize they'd been crushed so bad.

[B]

Considered an AI loser. Yeah.

[A]

Fourth was Deckers, which is home to the HOKA brand, which kind of surprises me because if you look at like just sales, HOKA is still kind of on a tear and the company's doing quite well. And then fifth was Lululemon. So here's my question to you. Which cohort here, the biggest losers or the biggest winners, do you think will have a better 2026?

[B]

That's a great question.

[A]

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[B]

Sort of the trade desk. Did you know it's still trading at a 44 times? Peiser looks cheap. Gardner is probably it's overrated how much they're going to get hurt. But who knows? This AI stuff could disrupt them. I do think Deckers and Lululemon probably do fine. And I would bet that memory like it has for the last 30 to 40 years, it always booms and busts even more in a more extreme manner than the rest of the semiconductor markets. So maybe the Boom continues in 2026, but I would bet eventually on a bust happening. It's just look at Micron stock chart. This almost always happens and it makes sense.

[A]

Like what are you gonna do it? If Micron's revenue starts growing triple digits, it doesn't make sense for the stock to stay at the same price. So like, even if you know that a downturn could come, it isn't surprising that you see the memory chips kind of trade in tandem. Memory chip businesses trade in tandem and have big years up 300% and big years probably down 30 or 40%. But yeah, I would probably bet on the losers honestly here to have better returns on average. The Gartner Gardener's the one that I'm maybe the most interested in, honestly from this list. I, I don't love, like, we kind of talk poorly about consultants all the time, but they have a lot of recurring long standing relationships with businesses that I don't think are going away necessarily. And I, I would guess that the AI risk is overstated. I mean the ma, the Gartner's magic quadrant. Brett, how's the world gonna disrupt that?

[B]

Yeah.

[A]

It'S kind of hilarious that they can just like, they just basically ranked companies and now companies are like, we're ranked number one.

[B]

I don't even know what they do. They deliver. It's kind of, they're kind of a meme company. We deliver actionable, objective insights to executives. Well, PE is 21. Price to free cash flow, 14 and a half. It's all right. Three year revenue growth, 7%. 10 year revenue growth, 12%. They've had a little bit of a slowdown here. You're right. We don't love consultants ethically, but it's a good business. Did you see, you probably didn't see this very small piece of news. JP Morgan got rid of all of their, the outsourced proxy voting services. I forget what those things are called. Icc, I think for their asset management. So anyone. So they're all doing it internally now. That's a good step. You know, trim the fat, save, save a little cost.

[A]

Yeah. None of the. All the biggest losers and all the biggest winners. Neither one interests me. Now the top five cheapest stocks. Here's the part where I basically realized I don't know half the US economy, Omnicom Group is the cheapest. I have no clue what to do. Apa Corp. Allstate, Viatris, Principal Financial. Now it's hard for me to say I'm interested in any of those. They all trade at less than seven times forward operating income. But let me give you the most expensive here. Actually maybe I'll let you guess it.

[B]

Can you guess expensive in S and P? Can you? Robinhood. Robin in there.

[A]

I'm going to go on a forward EV to.

[B]

Okay. What EBITDA sure has to be in there. Palantir has to be in there. I don't think Rocket Lab is going to be an S P because they're not profitable. I'd say Palantir and Ramen are for sure in there.

[A]

Robinhood is not in here. I don't think they, I, I don't think analysts guide on EBIT for them. So they, they can't qualify here but probably on a free cash flow basis they would.

[B]

Sure. Palantir though. Correct.

[A]

Palantir is in there. Palantir is the fourth most expensive.

[B]

Oh, who's above Palantir?

[A]

Keep in mind this is non GAAP because it's analyst estimates. The most expensive is Axon.

[B]

Oh yeah.

[A]

Tesla.

[B]

Yeah.

[A]

Costar Group, Palantir and CrowdStrike.

[B]

Yeah, those are, those are some great picks. Would you short this basket in 2026?

[A]

Yeah, maybe.

[B]

I think I will.

[A]

I won't. I don't sure but if I were to, I would not have a problem shorting this basket.

[B]

If you had the short or go long or be cash. I think I go short. Not your entire portfolio, obviously. Omnicom Group is a marketing agency. Advertising agency. So think Mad Men. And I guess that makes sense they're trading at five times earnings because I bet the entire industry thinks they're going to be replaced by AI. Who knows if you're an AI if you think that is. Well, if you think that's not going to happen. Five times earnings. Pretty cheap.

[A]

All right. We've got a couple people that guessed some of the companies on the list but that's it for S P500. Again, I think it's fun to do this every year and just see the best performers, see the cheapest, most expensive stocks and it's kind of a fun way to potentially get new idea. Generation is it's old school but just go one by one, look at a quick business description. Face multiple, face forward multiple and it could at least maybe inspire some future research. Do we want to talk about the housing market?

[B]

Yes. Ryan, I'm going to save you here. You got almost, I don't know what to call this maybe Pompliano. You're mistaking Blackrock and Blackstone.

[A]

Oh, yeah, this was more so just.

[B]

A. Oh, you're in on the joke. You're in on the joke.

[A]

Yeah. All asset managers are prohibited. Well, in theory prohibited, but black, we'll see what happens.

[B]

Illegally. Yeah, I've nothing to say on that one. The defense stuff would be. Are you want to talk defense or this?

[A]

Well, I, I am curious on your opinions here. So real quick, for anyone that didn't hear, here is a post from.

[B]

The.

[A]

President of the United States. Also, by the way, I don't know if we ever talked about it, but did you see Truth Social is merging with like some.

[B]

I mentioned it on Budget Bubble Watch, I believe. Unless we didn't have time for it on an episode. Yeah, merging with a fusion energy company. Two fake businesses coming together for.

[A]

Have we ever had like such blatant like promotional activity out of the literal President of the United States?

[B]

Two promotional companies coming together. Yeah, it's, it's, it's interesting. Let's just put it that way. All right, back on topic. What was, what was, what was the tweet.

[A]

He says for a very long time, buying and owning a home was considered the pinnacle of the American dream. It was the reward for working hard and doing the right thing. Doing the right thing. But now, because of the record high inflation caused by Joe Biden and the Democrats in Congress, that American dream is increasingly out of reach for far too many people, especially younger Americans. Some of that is, is accurate. It is for that reason and much more that I am immediately taking steps to ban large institutional investors from buying more single family homes. And I will be calling on Congress to codify it. People live in homes, not corporations. I will discuss this topic and more in Davos. Whatever. What do you think of this?

[B]

It's, it's pandering to give votes. It's not. I think the stats I see is that it's 0.5% of the market. Now I believe some of the highest numbers I've seen out there is during, I think it was maybe the 2021, 2022 building boom or that the, the House, whatever House price appreciation boom. Some of the sun built areas had 20% of new builds go to these asset managers, which is high. But these are the places that are seeing the highest level of price corrections. I mean your market, Ryan, was one of the cities mentioned and it has the sharpest correction in the whole nation. It seems a lot cheaper now. So would banning them help with This. I don't think so. In what scenario is reducing supply going to help? I mean, sure, maybe more people will rent, but reducing supply or demand supply because the home builders build stuff directly to sell to these asset managers. I would think it would reduce supply of homes because I didn't realize a large corporate buyer.

[A]

I did not realize that some of the like builds were intentionally.

[B]

Yeah, it's the build to rent. Yeah.

[A]

Okay. Yeah. It. I mean, it would suck to get outbid by Blackstone if you're both, like, if you're looking.

[B]

Making anecdotally. It's a bad story. Yeah. Doesn't play well.

[A]

Like just hilariously sounds just awful. But.

[B]

Yeah.

[A]

I don't know if.

[B]

Yeah. Does it solve anything? Yeah.

[A]

Is the right approach? Yeah, it kind of. We'll see what comes of it. Dr. Horton traded down on this news, which I am a Dr. Horton shareholder. Still. It. I honestly didn't. I think a very small percentage of their homes are sold to asset managers for build to rent. But it would, like you said, it would potentially curtail their building efforts.

[B]

Right. Because if you can have a large corporate buyer out there to kind of be the bottom level, Dr. Horton, the big home builders can say, all right, if we build this, maybe we sell it at a cheaper price, but, you know, if we oversupply the market, we'll be able to sell it to these asset managers who will rent it out. I don't think. Whatever it's. I. I think it's gonna affect nothing. Yeah. Just as the. What's going on now has nothing to do with the price, the unaffordability.

[A]

All right, let's shift gears here. What do we think of a small cap of the week? You. You prepared one this week for us.

[B]

And actually listener gave me a lot of the notes here.

[A]

A recommendation from. I was talking offline with Travis Hoyam, recurring guest, about this stock. He's been talking about this on his channel. And although I didn't prep the notes, this would have been my next probably small cap of the week.

[B]

All right. All right. A lot of people have interest. It is Owlet. O W L T is the ticker. Here's what a listener said. Sorry. To the listener in the subsection. I don't have your name, but regardless, thank you. And Brennan then wants to contribute to our offline conversations. Well, not on the show, but they are online. Subscribe to the substack. Be part of the free tier. I think if you follow us on Stub Stack, you can also join. But just join the chat it's very fun. We have a lot of lively discussions. Here's what they said. Quote, small cap of the week Outlet. They are a small company that makes anklets for babies that monitor their oxygen, heart rate and other vitals and sends that information to an app that can be downloaded to monitor a newborn's health while they sleep. Currently, they are the only FDA approved device of their kind. Parents love their children and want to protect them as much as possible. And the outlet Dreamstock helps protect their children. There are any abnormal readings and notifications sent to the app that will alert the parent to go check on their child. First, I like the pitch, nice little elevator pitch there. And second, it makes complete sense, especially because we just imagine it. You're a family, you're with another family and they go, oh, you don't have the outlet suck. I couldn't live with. I couldn't. My baby wouldn't survive without it. You have to get them the outlet suck kind of that, you know, what do they say that not the billionaire next door, but keeping up with the jones is, you know, oh, they're using this. Is my baby going to be safe if I'm not using this kind of that competitive arms race there. If we look at the numbers, revenue growth from 2019 has been choppy and that's probably because they got their device taken off the market before it was FDA approved. So before it was just a direct D2C offering. Now it's fully FDA approved and they're working in the insurance market. We're not going to talk the details on that. I don't know the full details on that for this episode, but if you're going to, if you're going to research this stock further, this is something you'd want to look into. But since they have been FDA approved, it's doubled. Revenue has doubled in the last two years. We have 50% gross margin, negative 11% operating margin, but it is improving. And in the last quarter they are operating margin or operating profit, positive, negative Last 12 month free cash flow, but just barely. And I'd say it's steadily growing. Stock trades at four times gross profit. Probably need to make some assumptions on what you think the operating margin will be, but that's not screamingly cheap on a top line number. They brand themselves as smart infant monitoring. Other news, I guess they're moving internationally. You know, there's babies all over the world. I guess they have 85,000 subscribers, which I think is probably to their premium subscription tier. I'm not sure exactly what they're doing. They're also making a telehealth product which I don't necessarily like because that's an extreme commodity. We've seen none of those businesses actually turn into, you know, good roi. I mean teladocs, the most famous example there. So gut check. I don't like that part of the business. But seeing the growing subscriber base moving internationally, that looks nice, especially with this FDA protection being the only product out there at the moment. Balance sheet looks fairly clean. Little bit of debt, some common stock warrant liabilities. And I think parents will definitely want to use this if other parents are using this and if it's useful. So, yeah, pretty interesting and a lot of good. I will say doing the research for the smallcat the week. A lot of use of the fiscal AI data and charts. Use our link. Fiscal AI chitchat. Get 15% off any paid plan. Ryan, what are your thoughts?

[A]

I'm interested. You got one number wrong there. You said four times gross profit. I think it's eight or nine times gross profit. It's about four times revenue. Four, four to five times revenue. The. It is interesting where if you look at the sales for the business, they peaked in 2021 and then as the FDA forced them to pull it off the market, you saw this massive drawdown. But the fact that they've been able to kind of reinvigorate demand and I believe they have FDA clearance now as well on a couple different products, it, it does look promising. The stock is up, I think almost 300% over the last year. Let me double check this. Total return 242% over the last year. So it isn't that there aren't returns in front of it. I think medical devices can be decent businesses. I have not usually had great history investing in medical device companies, but what.

[B]

What history do you have?

[A]

I guess Evoluce would not really count as a medical device.

[B]

But remember the dental one Vivo, their therapeutics. Remember that one, the microcap?

[A]

Oh, the one that was like blatant insider dealing.

[B]

Yeah. We never invested, I guess.

[A]

Yes, I, I do. I do remember that. That was terrible. I, I don't know, I sometimes just worry that it feels like, especially for the baby economy, there's new stuff all the time and it, like what's trendy with kids and monitoring babies seems to constantly change. But I don't know. I honestly haven't paid a whole bunch of attention to the baby economy. I imagine there is probably some pricing power for people that use your devices because it feels like essential, but. All right folks, before we move on, we need to tell you where we get our data from. Fiscal AI Fiscal AI is the complete stock research platform for fundamental investors. I use the platform pretty much every single day. You'll see the charts in our podcast, you'll see it in our newsletter. This is our one stop shop for stock research. They've got up to 20 years of financial data on all companies globally, including the largest company specific segment and KPI data set on the Internet. That includes metrics like Du Lingo's daily Active users, Oracle's backlog, Rocket Labs, revenue per launch and literally millions more data points. They've also got earnings call transcripts, ownership data, equity research reports, and much, much more. If you want complete financial data at your fingertips, you need to check out Fiscal AI. And if you use our link Fiscal AI Chitchat, you will automatically get two weeks of Fiscal Pro for free. No card required. If you want to upgrade, our link will also get you 15% off. Again, that's fiscal AI chitchat. The link will be in our notes.

[B]

If you regularly listen to Chit chat stocks then we know you love analyzing individual companies. We do too. That is why I, Brett Schaefer, co host of the show, decided to start writing the Emerging Moats stock research service. Emerging Moats produces regular stock research reports on companies with emerging competitive advantages, regular updates on stocks I own and on my watch list and has full transparency to my portfolio transactions and returns. I cover under the radar Emerging Moat companies with prior research reports on Oscar Health, Kraken Robotics, the real brokerage and much more. Emails will be sent out on a weekly basis. Explore the service today and find your next great stock by going to emerging moats.com the link will be in the show Notes. The thing with baby stuff is you churn out by definition within a couple of years and then things seem to get popular and then not popular.

[A]

Yeah, exactly.

[B]

So that's the one downside of the market. This company looks interesting.

[A]

Yeah. These aren't subscribers for life, that's for sure. Adults the adult dream sock new it's whoop for babies.

[B]

Yeah, we have someone in the comment that says have we officially locked in the picks for the 2026 stock competition? We have. I think we had it in between 40 and 50 so it's going to be a tight race. I have Ryan and I there as well. I think I put down I had to pick between one of our. We had. We had multiple on our show. I believe I gave myself. This is before the Venezuela I believe I gave myself Mercado Libre, so good start, good start there. I did pick that before the news, so it's been a good start. But I forget what I gave you, Ryan. I think it was either Adobe or someone else.

[A]

The sass apocalypse is back. So you gave me it started.

[B]

I picked one of your three. One of your three. You can also switch it to any of your three. But I figured if it was one of your three. Yeah, but yeah, 40 to 50 on there, Ryan, and I have, I guess, through 2026 to decide what the prize is going to be besides bragging rights. But thank you to the listeners that joined. A lot of interesting picks and kind of deep value stuff, smaller stuff, larger stuff, momentum stuff. It's going to be fun to see who wins.

[A]

Yeah. All right, do we want to talk defense spending?

[B]

Let's.

[A]

We're going to do a whole episode on this, by the way. Tease there. There will be a full episode for.

[B]

Defense spending, but we have two pieces of news this.

[A]

Let's go through the news.

[B]

All right. Do you want to do another. Another tweet? A lot of tweets this week. Or truth truths and then we can talk the budget proposal as well.

[A]

Sure. Yeah.

[B]

Yeah.

[A]

Let's go through the truth post. I don't know what they call it.

[B]

I think it's called truth.

[A]

Is it like when you put. Is it. When you post it? Is it called the truth?

[B]

Like you're. I don't know. I don't know. I've gone on there once to try. I think I went on there yesterday to see if something was a real post, but. Yeah, what did the. What our dear leader say?

[A]

Oh, okay. I, I thought you were gonna go through it. No. Quick. All I have is a quote here. I'm sure you can look it up while I'm reading this, but this is from someone quoting the post says President Trump says executives of US Defense contractors will no longer be allowed to make more than $5 million unless they build new and modern production, production plant plants. He also said that Lockheed Martin and other government contractors shouldn't be buying back stock if they aren't spending enough on research and development. I'm gonna let you talk first. I have a hard take against this.

[B]

But yeah, I mean, that sums up the post. I tried to look it up. The site's littered with ads, so I, I couldn't get to it. On the one hand, yeah, you could argue that these companies are a little stodgy, but I would argue. On the other hand, there's Competition coming from the likes of Palantir and Andrew to kind of get their behinds and in gear, so to speak. Bring a little competition back to the space. The legality of mandating whether whether some company should be able to buy back or dividend a stock or not. I guess in almost any other circumstance. 100. Yeah. I would say the government shouldn't be able to do this, but the fact that they are the customer or the, the contractor with the government, maybe there's a way they can legally say like look, your contract, you're not going to win any contracts since they are like 90% of the business. So that in this case, like there might be some validity to the. That I believe it's the right way to go about it, but there might be some legal way to actually take action here. Yeah, it's, it's interesting. It relates to. Again, I'm having trouble having coherent thoughts because I'm not sure exactly what's happening there. But one thing that is clear, at the same time, they're throwing out the first number for the 2027 defense budget, which is next year as $1.5 trillion. It's not locked in yet, but that would be up $500 billion in a single year. I would like to know what exactly is going to be allocated here? Is it shipyards? UUV software? I would say this is not a bad time for Kraken Robotics to try to win some contracts. But I feel like for the companies that can reinvest with a good roic, it's just, it's a good time for that.

[A]

The funny part here is that a lot of these contractors operate on a cost plus model, so. Or at least a portion of their business. So if you're like, you need to be increasing spending. It's basically the government increasing spending because they're just billing you for the costs plus I think a certain margin. So maybe that's why the budget needs to go up is they walked right into that one. I get what you're saying where if they are, if they have a contract to be the exclusive provider of a certain product.

[B]

And, and they're like wasting money on it or something. Yeah.

[A]

And they are paying themselves out big sums. Or you feel like you're not getting the level of innovation that you want.

[B]

High executive salaries. Yeah. But you can try to just go to someone else maybe. I don't know.

[A]

But this is one of those weird, almost pseudo nationalized businesses where it's like Lockheed Martin and other defense contractors are obviously their own Independent companies. But when your biggest customer is the US government and it takes significant clearance in order for anyone to actually compete with you, like if people can't really compete with you, I don't think it's so wrong that the government has a big say in what your unit economics are allowed to be.

[B]

Yeah, that's fair, but let's not get too crazy about it. But on the other hand, that's different from capital returns.

[A]

True.

[B]

Because that's the opposite side of the equation. Like if you say, hey, look, you got to research, invest in R and D and what have you. I did a little in just unlocking Martin. I'm sure the other ones are similar. I believe if you. And some of the R and D might be messy, but their average R&D versus average spend on buybacks and dividends, I think they spent five times as much on buybacks and dividends versus R&D on average over the last five years. So there might be a case there that some of these large defense contractors are under investing. I think what I saw was Lockheed does like 70 billion in revenue and does only a 1.5 billion in R and D, which felt a little low to me. But hey, they're getting the performance they're getting. I mean, it feels like their capabilities are quite strong at the moment.

[A]

I thought there, I thought reactions to all this was kind of funny where initially he's like, President Trump said like, we're gonna prohibit them from buying back stock. Investors were like, whoa, that, you know, that's ridiculous. And we're not gonna let the executives get paid more than 5 million. Yeah, now we're getting somewhere.

[B]

And then the defense budget's one and a half trillion dollars in. Oh, okay. Okay.

[A]

This is all good news. All right.

[B]

Yeah, I think it's gonna wash out positive as a little tease for our episode. It's gonna wash out positive for the defense industry. They're gonna let them eventually. Okay, look, just, maybe just the cash piles up in your balance sheet, eventually be able to special dividend it. This is. It's not going to be a concern, but yeah, I think that'll be a fun episode, especially looking at some of the smaller players in the space, the crack on robotic types, you know, looking for the next Palantir. Right. Although that one obviously is a little overvalued today.

[A]

Yeah.

[B]

But I think that's, that's really it on it. It's always. It's confusing given that the chaos coming out of the government. But maybe we can get some of the listener Suggestions? What stands out?

[A]

Questions from the substack chat.

[B]

Yeah, ASML rally. Have you seen them? They're in an all time high.

[A]

Yeah. And it was all from one analyst upgrade. Like it all stemmed from one analyst upgrade, which made that shocked me the power of one.

[B]

Someone in their 20s just putting out a little research note. It's wild.

[A]

It is. It's a massive moat. I know that's, I'm not charting new territory there when I say that, but you're going to get lumpy revenue growth. It kind of to me feels like, and maybe I'm wrong for thinking this and maybe this is like a flaw in my investment approach, but it feels like the cat's out of the bag with asml. Like it's when everyone is considering. When you go and you rank moats and you see investors rank the widest moats in the world and the companies that are at the top, the, the cat is obviously out of the bag. That.

[B]

Ryan, I'm gonna give you. Let me give you a little pushback here. 2025, you could buy twice 2 points in 2025. You can buy them at an EV to EBIT of 20. We're now at 36, unfortunately, but trailing on trailing, really? I'm using your, I'm using good old fiscal AI right now.

[A]

Well, shame on me. But it just, I don't know, 30.

[B]

Well, right now, 30. I mean, plus 36 times earnings. They're not an aggressive grower.

[A]

Let me put it this way. Do you think they get above 15% annual earnings per share growth over the next decade?

[B]

That's a good question.

[A]

I think it could be around that.

[B]

It could be around 15. Yeah, I would say, I would comfortably say 10 to 12%. But the thing of what gets people excited about this business is what also gets people excited about the Ferraris and the Hermes of the world is, is it feels very predictable. True. I, I guess I'm waiting to come out to the other side of the AI. Boom and bust. If it doesn't happen, it doesn't happen. But that's, that's what I'm waiting for. If, if I really slammed up an opportunity to buy ASML or tsmc, I'd probably favor asml just given the Taiwan stuff because ASML would honestly benefit if Taiwan was destroyed. We need more machines in other parts of the world, but I'd wait for that. If it doesn't happen, you know, just leave it on the sideline.

[A]

All right, let's, let's pull this up now. Taiwan Semiconductor, asm EV to ebitda.

[B]

Look at that. You're looking at the speed of fiscal AI in the live stream.

[A]

So would you rather own oh boy. Bugged out.

[B]

It's hard to see.

[A]

Would you rather own ASML at 35 times EV to EBIT or Taiwan Semiconductor? Let's go straight to the company page then if it's not gonna populate for me at Interesting. Something's bugged out. Well, forward EV to EBIT 19. I'm guessing it's probably low 20s trailing low 20s trailing Taiwan Semiconductor or mid 30s ASML.

[B]

Yeah. Which one is more exposed to the AI cycle? I'd rather buy. My gut says ASML over the long term, but it seems pretty equal tsmc.

[A]

I think I'd go tsmc.

[B]

Yeah, but they have competition and it's going like ASML is none. China can't even. They're like a government mandate to try to compete with them and they can't.

[A]

Yeah, I don't know why I have this prejudice against asml.

[B]

You hate the Dutch.

[A]

Yeah, I don't know. I just feel like it's so I gotta get rid of the bias of like other people own it, so I can't.

[B]

Yeah, it's fair. All right, let's see. Memory stuff. We can't talk about that. Except for that the stocks are up. Netflix drop and a Warner Brothers update. It looks like Warner Brothers really wants to go with Netflix. According to the reporting, Netflix is now on spicy spicy little drawdown. It's not bad. I think they're down to a 30 times earnings. Let me pull up their EV2 EBIT or preferred metric for talking about stuff on the show. 32 times? No, 31 times. Trailing figures. Ryan, any interest now during this drawdown, did you know you could have bought them at 10 times in 2022? Did we buy? No.

[A]

So you're about to make a trade based on a friend's text.

[B]

But which U do you listen to is it? We could buy a house in Tulum.

[A]

Get optioning those options. We could lose everything. Or let's do a little research, get your head in the trade and make the investment decision that's right for you. Learn [e-mail] TradeSmart why do growing businesses love working in Slack?

[B]

Let's ask Christia. Ari bikes Running things in Slack saves me so much time.

[A]

AI summaries save 97 minutes per week. What say you, Rocks from Gosney?

[B]

Slack helps us build community.

[A]

It helps us build connection.

[B]

Your partners, vendors and customers all in one place.

[A]

Take us on home. Ashley From Carraway. If we didn't have Slack tomorrow, I would explode. Well, let's not let that happen. Visit slack.com podcast to get 50% off Slack Business Plus.

[B]

It was 10 times trailing in 2022. Let's pull out the graphing line right now. 13 13.

[A]

Wow, that is so. Okay, I have, I have quite a bit of thoughts on Netflix. I listened to the interview with Reed Hastings, which by the way, that was.

[B]

He's doing ski resorts now. It doesn't matter.

[A]

It was the most outrageous ad load I've ever experienced on a podcast.

[B]

That's a pitch for ours. Yeah. No pre rolls for us.

[A]

Yeah. And then he introduced mid rolls too for I guess that was new. Anyways, I do like Netflix. I think they're in a fantastic position to probably continue to increase margins and grow revenue at an above average rate. I think Warner Brothers makes sense under their umbrella. And if they're able to do any sort of bundling with HBO or at least like cross post the content, that's great. It the EV in that EBIT EV to EBIT calculation is going to look very different after this deal.

[B]

That's fair. That's fair.

[A]

Taking out a lot of debt to do it. And the other thing that I find interesting, and I'm sure Netflix is probably aware of this, but it appears I've been doing quite a lot of streaming on flights and stuff for like watching.

[B]

You've been a traveler. Yeah, you've been a busy traveler.

[A]

Back.

[B]

Back two days ago.

[A]

It appears that Warner Brother, Warner Brothers Discovery has been licensing their content to pretty much every platform out there. And I wonder if they juiced earnings and revenue before this by just letting every single platform have their content.

[B]

Could be right. I'm not, I'm not sure. I don't follow the. I don't follow the space well, but yeah, Netflix, we'll see. I looked up, talking about that debt load, I looked up their free cash flow. They're generating 9 billion. So just say maybe they'll be on a 10 billion run rate within the Netflix core business. You add on the cash flow coming in from Warner Brothers Discovery, probably a little bit higher. They'll be able to manage that, whatever debt load they take in pretty easily. But you're right, that's going to take away from capital returns for a long while and that is debt. Yeah. It still doesn't interest me. The stock is coming down, but it is from a very premium valuation. A lot of people keep asking, hey, what about this Netflix dip? What about this Netflix dip? It's not, it doesn't, it doesn't do it for me.

[A]

No. It's got to come down more. I also thought it was very like from a shareholder's perspective. Listening to Reed Hastings made it seem like, wow, you know, great, what a great operator.

[B]

It sounds him, though.

[A]

It sounds so many hell on earth to have worked there.

[B]

20 attrition.

[A]

20 attrition and I was 10. You remember the open compensation policy? Everyone could see.

[B]

Well, they admitted that was bad.

[A]

Yeah. What a. Like, I mean, you just, you were just like bound to have petty conflicts.

[B]

Oh, yeah, yeah. It got results. But yes, definitely a hard place to work. It's kind of, I guess I've used two Mad Men references today. It's so what. That's what the money is for company. It's funny that they, they license Mad Men and that that's what made it.

[A]

Popular, but yeah, if you had to buy one company around the streaming sector.

[B]

Oh, not. Let's look up Disney. Let's look up Disney's valuation right now. Right. This would be your only other choice.

[A]

It's untouchable. I, I, as long as Iger's around, it's untouchable.

[B]

The king. The, the mad king.

[A]

Yeah. Seriously.

[B]

Oh, let's see. We'll just use EFI to ebit. That seems to be our one of choice for live streams or for Disney is 19. It's all right.

[A]

Did you know if you invested $10,000.

[B]

It'D be $10,000 right now?

[A]

It would be. Let's see. Come on, work with me. Fiscal 10 years. $10,000 would be 12,000 today.

[B]

Good. Yeah, they've had a little bit of a comeback.

[A]

Someone says Comcast. Tyler says Comcast.

[B]

Sure, sure. Nintendo. That would be my bet. No, they don't count.

[A]

Yeah, they probably don't count.

[B]

What other ones are there? Paramount, Comcast, Disney, Netflix, Roku sounds a lot better.

[A]

No Man's Land.

[B]

Yeah, let's see what their stock price is. I think along with the trade desk, they're probably getting hurt by Amazon's DSP. I don't know. It's a tough space. YouTube's eating everything.

[A]

So competitive. Yeah, YouTube. There you go. If you can own one, you Google.

[B]

I guess the spin off. The spin off there. All right. Do you want to do a little AI bubble watch update. Anthropic and Xai are raising money. $30 billion. Just a little tiny. $30 billion this week. Okay. Anthropic funding round quote. Anthropic, the developer of Claude, plans to raise $10 billion at evaluation of $350 billion, according to people familiar with the matter. GIC Singapore Sovereign wealth fund and CO2 plan to lead the new financing. Am I saying CO2 correctly?

[A]

I think so.

[B]

All right. The funding round. The third mega deal in the past year follows a $13 billion investment in September that valued the company at $183 billion. I think they want to shore up this balance sheet in case the AI bubble burst because they are burning a lot of money right now. Although it's not as bad as OpenAI. And then I'm going to read off another one here. Xai which I should say is how many years old? Like 3 years old. Xai Elon Musk artificial intelligence company completed a $20 billion Series E funding round. $20 billion Series E. And this company, how old are they? It's coming from Qatar. Valor Equity Group, Stepstone, mgx, Baron Capital Group and Fidelity.

[A]

What is. It's funny that like oil money is just.

[B]

I guess. Yeah.

[A]

The thing being poured into the tech world right now, the it's all Grok grock.

[B]

I know it feels like no one uses them.

[A]

Like.

[B]

Yeah, I. I don't understand it because it feels like there's. It's a three horse race. Claude Gemini Open air or chat GPT.

[A]

I don't see the like real commercial use, frankly, for grok. Other than tweet replies and people asking, hey, Grok, make this person into a bikini or something.

[B]

Which seems to be. Need more data center investments for that. I'm gonna get a really good ROI.

[A]

Quad makes the most sense.

[B]

Yeah, they're growing like crazy. That's the Amazon pitch, right? The short term Amazon pitch. Little catalyst coming in 2026. Huh?

[A]

This will be a markup on operating income. Will look good for Amazon.

[B]

That income. Net income.

[A]

Net income, sorry.

[B]

Yeah.

[A]

Which will make the earnings multiple look real cheap.

[B]

Oh. Oh, yeah, they're gonna. People are gonna love that. The all caps tweets, earnings per share, beat expectations, blah, blah, blah. Everyone's gonna go nuts.

[A]

It will. It will.

[B]

Yeah.

[A]

A lot.

[B]

All right, we're long. Maybe we'll say the lemonade one for next time because I don't want to look bad.

[A]

So if it drops in the next week, you'll be validated.

[B]

Well, I'll. I'm not afraid to talk about it, but yes. I said some bearish things online and people have bookmarked it apparently and have been replying to my tweet from like two years ago in the last few months. That's the best of us.

[A]

That's commitment to. Yeah, let's talk in two years.

[B]

They call them. They call them the lemon. The Lemon Apes. That's a good name.

[A]

That's a good name. It is a good name.

[B]

All right. I think that's what I want to.

[A]

Do at some point. Top meme stock contenders. Like if we thought what companies do we think?

[B]

Yeah, it's fair point. Although right now a lot of companies have been memed. So maybe we have to do it during a. During the bear market. If a bear market happens this year, a little. Little drawdown.

[A]

I feel like the future most ripe when everything's getting memed.

[B]

That's true. That's true.

[A]

Can't do it. When the capital flows out the. I don't know. It's. Maybe we next power hour could be.

[B]

A fun power hour segment. I agree. All right, I think that's going to do it. Thank you, everyone for joining. Thank you for joining the live stream. We kicked it off strong in 2026. As a disclosure, we are not a financial advisor. Anything we say on the show is not formal advice or recommendation. Ryan I or any podcast guests may hold securities discussed in this podcast, may have held them in the past and may buy, so hold them in the future. Thank you, everyone for tuning in and we'll see you next week.