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Chit Chat Stocks
Private Credit Drawdown; Ackman's Latest Antics; Nike's Outlook; Tesla's Delivery Woes $NKE $TSLA
01:03:27
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- [00:00]
A
This episode is presented by Interactive Brokers. You research your investments, but did you research your broker? In 2025, IBKR retail clients averaged a 19.2% return, beating the S&P 500's 17.9%. Over time, the broker you choose makes a difference. If you want to learn why, head on over to ibkr.com 2025. More on this later in the show. 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 by the one and only Brett Schaefer. We are doing our weekly Investing Power hour episode today. We do these live on Thursdays at 5pm Eastern Time on YouTube. So if you ever want to ask us any questions, want to tune into the live show, just head on over to YouTube 5:00pm Eastern Time on Thursdays, look up Chit Chat stocks and ask away. It's a little bit of a lighter week, news wise. We do have some interesting tidbits, interesting headlines I think as well. We've got Bill Ackman. We're going to try not to talk too much about SpaceX because we're saving that for a special episode. We've got alternative asset manager drawdowns. So private equity, private credit is finally in the hot seat after quite a run for a decade. So we can talk about that as well. We got Nike earnings, Tesla's delivery numbers, some important stuff out of that, and small cap of the week as well. But without further ado, Brett, welcome to the show. Where do you want to start?
- [01:35]
B
Yeah, I just have a lot of tweets I found this week, random articles. Did you see? Well, first we went back. We're on the way to the moon. We as in the United States and the globe, I guess we can say the whole globe is on the way to the moon. Three people from the US and one from Canada. The. Did you see this? Did you watch the launch?
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A
I didn't watch the launch. Heard about it, but I did not watch. Did you?
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B
I did. And no matter what a launch is, if you're watching it live, you get nervous. I'm like, oh, gosh, please go, go, please go. Well, please go well, please go well,
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A
no matter how many times rockets are launched. Yeah, I know exactly what you mean.
- [02:16]
B
It just maybe it's not the best industry to invest in. You know, nicotine sugar is better. That's better.
- [02:22]
A
The fact that you're watching it, I don't know. For some reason it feels like a bigger moment and you just kind of Feel like something's bound to go wrong. But yeah, it exciting. I mean it is timing up well with all the space enthusiasm from Margarets. I. I've said it before but and I know we're launching right into SpaceX. I think the valuation is going to surprise everyone. Like even the most optimistic forecast, I think it will surprise.
- [02:58]
B
We can, yeah, we can talk update on that potential valuation in Bubble Watch. I also want to ask, did you see that another maybe startup DIY media company and technology got acquired by OpenAI? Did you see this?
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A
I did and I like the show but I find it a little perplexing. For one, it feels sort of like a vanity project almost from OpenAI's perspective. Like OpenAI, they successfully raised their latest round and they turn around and buy this pretty successful tech podcast show. But what's the tie in with OpenAI? And they said that they're going to let it run with total editorial independence, which I guarantee isn't true. They'll stop talking about Claude suspiciously.
- [03:58]
B
Yeah, that's sure.
- [03:59]
A
Okay, but if it's just maintain the editorial independence, why are you buying a random news show or a random tech podcast? It feels.
- [04:10]
B
I agree, I agree. I was also fascinated to see and this makes me optimistic on our potential as a podcast. Even though they are bigger, but it's not like they're anything as big as CNBC or some of the big sports shows or Joe Rogan out there. They projected to do 30 million in revenue this year. Maybe we need to renegotiate. Right, with our sponsors now. I'm just kidding. We have, we have great sponsors that they.
- [04:33]
A
No, yeah, it is surprising because I think they just do such a good job with production. It must be because you don't really see that like the view count doesn't seem extraordinary, but they've got a quite the slate of ads, sponsors, they've got quite the, quite the look to the show. It feels like a big budget production.
- [04:55]
B
Yeah, sure, sure. And I heard some arguments. I was discussing this on Twitter with some people because I was like, hey, look at their numbers. Like okay, on Spotify they have about double the follower count of our own show. And yeah, they're bigger on YouTube, bigger on Twitter, but people were arguing that they have a very, very high value listener base. They also go every day and they're also three hours. But I would be curious to how many people actually watch the full three hour show because if you're pitching advertisers, hey, you're going to be at hour two and a half Here. And how many people actually get to that point or live watching during that. Yeah, I know they had 50,000 people watching the show today. It's because they got acquired and they were announcing that during the show.
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A
It.
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B
I would just, I don't, I don't understand the revenue numbers. And that's probably just testament to how good their marketing team is because, like, hey, they did a bang up job getting about 20 sponsors for their show.
- [05:56]
A
No, yeah, I mean, they do a really good job. This is a good chance to say, if you're looking to buy a podcast, we are available. We are available. Let's get into the meat of the show here. I want to talk about alternative asset managers.
- [06:16]
B
Oh, okay. What are these? What is this? For any listener that doesn't know, this is private equity.
- [06:23]
A
Right, there's private equity, Some of these are private credit. But basically they are public companies that run basically various private investment rounds. And it really varies on the alternative asset manager what they're investing in. So Blue Owl might look a lot different than Apollo or Carlyle Group or whatever.
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B
So.
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A
But yes, for the most part it is public companies that raise money from public markets also raise money from,
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B
I
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A
believe, other investors as well. I'm not totally sure how that works. And then they invest largely in private assets. Sometimes that's bonds, debt, sometimes it's equity. But ultimately these are harder to liquidate, but they also don't have to have the mark to market. So that's where a lot of people get conflicted with alternative asset managers, especially like public, publicly run private equity situations where it's like their public competitors are seeing massive drawdowns, but the private equity holder just doesn't, doesn't mark it down because they say, well, we don't see it. We don't have to mark it down just because public investors do. So anyways, news came out this week that Blue Owl, I believe it's Blue Owl Capital, which is a fairly large alternative asset manager, I should say was a fairly large alternative asset manager. They are capping redemptions on their private credit fund at 5% after steep request levels. So to kind of give some context on this, for anyone who's not familiar with the machinations on how these work, basically if you're running a private credit fund, really any fund, you can gate the amount of money that's able to be withdrawn during a certain period, whether it's like monthly, quarterly, depending on what you set up in the agreement with your limited partners or your partners in general, you can limit how much money goes out the door. This is a quote from the CNBC article talking about it. It says the firm's flagship OCIC fund, with about $36 billion in assets under management, received redemption requests of about 22% of shares outstanding during the first quarter. The firm said, now there is real reason to do this. Sometimes it is because you're getting. Investors are getting scared and they want to pull out money. In the case of private credit or private equity, sometimes you cannot liquidate your assets fast enough or you can't find an appropriate buyer at the right price to be doing it in a sustainable or reasonable way for the rest of your investors. So it makes some sense sometimes to gate redemptions. But here's what kind of throws me off. Blue Owl and it was 22% redemption requests for the shares outstanding for their biggest fund. It was 40% for their smaller fund. So really high. Blue Owl is saying that there's a disconnect between what investors believe and what's really happening specifically around AI software. They talked about this in their letter, like basically the same case that a whole bunch of people have made that like AI is not going to disrupt software, yada yada. And that is what's causing the issues or the investor concern for Blue Owl. But software only accounts for 20% of their portfolio exposure. So there's probably concern beyond that, I imagine from the investors looking for redemptions. Anyways, this is. We'll see what happens with this. You. They do reserve the right to gate redemption. So there's nothing, I guess, illegal happening here. There are famous stories of this kind of thing happening. Michael Burry did it with Scion Capital back in the day. That was kind of the famous episode in the big short movie. But the bigger theme here is that alternative asset managers across the board are seeing big drawdowns. I'm going to rip through some of these. Brookfield Asset Management down 32% from highs. Carlyle Group 33%, Blue Owl down 66%. Apollo 39, Blackstone 44, KKR 46 and Aries Capital Management 46% as well. So some of these are almost getting cut in half. Do you have any interest or would you ever own some of these alternative asset managers?
- [11:03]
B
Yeah. We have a comment here from Tyler. One of the. Tyler's joining. Thank you. Hopefully the other Tyler can join us as well. Although I know everyone has their personal lives. Tyler says the Ponzi doesn't work if everyone requests their money back at the same time. I don't know if I would call it a Ponzi because it's. There's underlying businesses here. But I get the sentiment that this is the downside of their business model where no matter what happens, you're investing in things that are not as liquid, that you can get out of rapidly, but your investors, you know, rapidly meaning one quarter might want to get out if the feelings are bad. And it doesn't matter if you say, look, we're going to prove over the next three to five years here that our investment strategies sound, that software is fine, all that good stuff, but your AUM might be significantly smaller if you can't convince your investors to stay. I think that's the problem with this business. I don't necessarily like these business models because of this. It has been a very good industry. Yeah. Tyler says Ponzi. No. Incorrectly valued assets. Yes. Yeah. You know, people can argue what the proper valuation of this is, but people, people argue what the proper valuation of anything is. I don't think it's a bad business. Like people talk about, oh, private equity, evil private, blah, blah, blah. That's not what I'm. I think people kind of go about it the wrong way there. I think it's just the asset or. Sorry. I think people understand what I'm saying. The liquidity mismatch where people might want their money if they get nervous, but they can't get it back and it's just tough. And if you're still earning fees on that. Yeah, that's, that's where things get a little bit sticky. But if I look at the actual businesses, they're fine. I mean, they were super popular a couple years ago. AUM just kept going up and to the right. Up and to the right. You get more fees. More fees, Yeah. I mean, I don't know what, what cockroaches are lurking, as Jamie Dimon famously said sometime over the last 12 months, which he says they're definitely lurking in private credit. I'm not going to pretend to be an expert. I've read quite a few, like, journalist stories about the industry and it seems like there's potentially some things under the hood that could be messy, for example. And I think this is how it works. I would probably need a diagram in front of me to make sure. But banks today, instead of doing a lot of this off balance sheet stuff, securitizations, what have you, they lend to the private credit funds. So big bank, JPMorgan, right. They lend to the private credit funds and the private credit funds are doing a lot of this riskier lending out of the purview of the regulators and that's where people are worried that things could get mishandled. We had the thing with. What was it? First parts. I have no idea if I'm getting that name wrong, but the auto one, I think you had that as a story, Ryan, where they double counted the receivables for collateral and stuff like that. Things are just going to get a little messy in that front. It comes back to, I think for when you're looking at one of these managers, who do you trust to one market the best, gather the best AUM and has the best performance track record. I kind of look at Blackstone and kkr. They probably have the longest track records there. That's the one I trust the most. But do I love these business models? Not. Not really, no.
- [14:31]
A
Me neither. And part of it is you just don't really know what you own under the hood. And part of it is you own a lot. So it's hard to know what exactly you all have exposure to. You're basically just taking a bet on management. The thing that I hate is sort of the. They win both. Companies like this win both ways with the whole we're a public company investing in private assets because they're like, we don't have to mark anything down because we don't. We're not seeing the, the downside. And sometimes that's true. Sometimes public market investors are overreacting to news, whatever. Like maybe we could take this AI software example. Maybe as the private business owner, they haven't seen the downsides to their business, but they don't have to mark down their assets. But then when it comes to redemptions, they can also say we can't sell our assets fast enough so we're going to keep all this money in. Sorry. And this is the part that irks me. And I saw someone saying Blue Owl is gating redemptions and the first comment was, are they gating management fees too?
- [15:41]
B
Because they could do that. They could do that. That would be a nice thing to see. It's showing that you're aligned with shareholders.
- [15:49]
A
Yeah, I imagine most of these companies.
- [15:52]
B
Oh, they're not.
- [15:53]
A
I'm guessing Blue Owl will not be gaining management fees. The. But that's kind of the part that irks me is like you get to prohibit investors from taking their money out while you are collecting management fees. If, if you decide, hey, we're not going to take any management fees while we're gating redemptions. That's. That's okay with me, but I just don't like the idea that you potentially have underperforming assets and you're still just harvesting fees.
- [16:23]
B
You research your investments, you analyze markets, you manage risk. But did you research Your Broker? In 2025, IBKR clients outperformed the S&P 500. Retail clients averaged 19.2% while hedge fund clients averaged 28.91%. Compared to the indexes 17.9%. IBKR's lower trading costs, competitive rates, efficient execution and access to more than 160 global markets helps investors keep more of what they earn and put more capital to work. Over time, the brokerage you choose makes a difference. If you care about performance, find out why the best informed investors choose. Interactive brokers@ibkr.com 2025interactive brokers is a member of SIPC. Sure. We have a comment here that says Blue Owl is definitely the most reckless of the big private credit firms. Private credit, private equity. People who specifically cover the industry really seem to love Apollo and kkr. Yeah, let's add Apollo to the mix. I think they have a long standing track record as well. Blue Owl. I think that's a great word to use, reckless. If I'm an investor in this industry, I want someone that's going to survive over the long term. The business models can be good if you survive. Gather more aum. I bet a basket of Apollo. KKR and Blackstone does fine going forward, but with a lot of lenders, it's just tough for me to get into that industry without being an expert because you don't know what's lurking and it all comes down to trust. So that's what I'll say at the end of the day. Do you want to talk about Ryan? I was trying to make a good segue here to this mortgage talk. You know, people, people locked in to existing assets. Yeah. Did you see this chart?
- [18:11]
A
Which part are you referring to?
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B
This mortgage chart that I shared. I'm trying to transition to an entire another topic.
- [18:18]
A
I thought you were talking about the Bill Ackman shenanigans which we can touch on in a second. But let's start with this.
- [18:27]
B
Okay? Okay. Okay. Let me share this chart with you. I think it's a very nice looking chart. Some people were calling it as a joke. If you don't understand this, that's fine. That means you're not on the Internet as much as me. They're calling it the rate replacement. You understand this? It's a bad joke.
- [18:42]
A
I don't follow that one.
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B
But it's a very, very, very Bad joke. The essentially in housing there's been the rate lock in where people had really low, what sub 3% mortgages, sub 4% mortgages. And they outnumbered, you know, the existing ones that were at the current rate, which is about kind of hovered in between the high fives to 7% over the last few years. But if you look at this chart, since the rate hikes from the Fed because people have been slowly moving to new houses, we've seen from 2022 through to today the percentage of mortgages that are above 6% climbing higher and the percentage of mortgages that are sub 3% going lower and they finally crossed. So there's more 6% rate mortgages than 3%. We have a long ways to go, I would say before all the 3% mortgage go mortgages go away because they're still at 20% and I feel like that's that 20% that'll finally normalize the housing market. But it may take what, five years for that to happen. Fascinating chart either.
- [19:51]
A
Yeah. I mean, if you look over the last three years or so on that chart, it's basically gone from 25% to 20% of the share of share of mortgages that are below 3%. So fairly stubborn, you could say. But I think a lot of the
- [20:07]
B
number of 6% is going up pretty quickly.
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A
Right. I think a lot of that is refinances would be my guess. People that were, I mean, you saw it, you saw the massive spike in sub 3% mortgages and what was that, 2020 in that chart? Maybe you can.
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B
2021. Yeah. 2020, late 20, 20, 2021, early 2022.
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A
Probably a lot of refinances there. I, I feel like we've talked about this maybe four years in a row. I don't know what the supply unlock is for existing home inventory for like people that are locked into these sub 3% mortgages. Maybe it's just a slow drip.
- [20:47]
B
I think so as well. Yeah. Look, Seattle has finally seen an unlock. I kind of follow that market closely. Our home market. 30% growth in inventory year over year. Yeah.
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A
Wow.
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B
I think each state, each region, depending on what happens, there's going to be a kind of a slow unlock and I think we'll, we'll. Affordability will finally arrive, I hope.
- [21:09]
A
Yeah. I remember thinking like, I think this was three years ago and unaffordability, home affordability was the worst it had, I think, ever been when rates initially spiked and home prices didn't come down. And basically we came to the conclusion that either rates can come back down or home prices can come back down, but ultimately people can't that there will not be a lot of home buyers at current prices given the median income. Or the third option was that the median both of them stay the same. Home prices and rates and the median income just creeps up over the next 20 years. Until we get to like a good equilibrium, we're going to mix them both.
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B
We're getting a mix of everything.
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A
I think it seems to be a blend of all of them. Speaking of, that data was from Fannie Mae, so let's pivot to this.
- [22:00]
B
Here to Hackman, what's the general up to? What is he having his soldiers, you know, marching on the front lines for? I need to unblock him from Twitter just for content. The podcast purposes. Him and Elon I should probably unblock and look at what they're doing just for entertainment. But sorry, you go what is he up to?
- [22:23]
A
Maybe I'm just not thinking of enough people. But I don't know if there's any billionaire that has thrown his reputation away as much as Bill Ackman over the last three or four years. Like it just feels like he has torched his reputation in public. And I was scrolling through his Twitter, it is. He spends a shocking amount of time on Twitter. If I were an investor, I would be concerned by that in his funds. The so he tweeted on March 27 Fannie Mae and Fannie and Freddie are stupidly cheap. Asymmetry at its best. They could be a 10x and it could happen soon. Now keep in mind, Fannie Mae and Freddie Mac are both traded otc. They aren't super high trading volumes. Following his Tweet, shares jumped 50% in, I believe both of them. Now it's up like 35% over the last four or five days. This he on December 30th last year he posted the exact same thing. Basically, Fannie and Freddie are stupidly cheap. It may Everyone should buy whatever.
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B
Are you insinuating something?
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A
Right it I know this isn't well, I don't think this is technically illegal, but he's literally just padding his stats for quarter end every time.
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B
Allegedly. Let's say allegedly. If someone wanted to so we don't get in trouble. If someone wanted to pad their stats for quarter end, this is what they would do.
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A
Yes, someone with a big platform would tweet out how cheap they are on the last trading day or the last few trading days of the quarter, hoping that the stocks would jump and then your net Asset value that you could report to your investors would be significantly higher. What a terrible look for someone who up until like the last five years has had a phenomenal investment track record. It just feels like phenomenal.
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B
Let's. Good.
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A
It's good. I wish he would just stop tweeting. Honestly, I really liked following his investment analysis when he was sort of a younger investor. But now the intermixing of politics and everything, it just feels.
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B
It's tiresome. You're saying you're going to desert as a, as a soldier, you're going to abandon the front lines. He needs your help. Okay.
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A
It is a prime example of person makes a lot of money, thinks he has expertise in every domain. And you see it all the time with investors that do well. Anyway, I found this frustrating.
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B
That's, that's good for me because I have no money and I already think I'm an expert in every domain.
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A
Yeah, exactly. Do we want to talk about some real news here? Some Nike earnings?
- [25:30]
B
Sure, yeah. The company. What? I didn't even look at the earnings because I know you had them as a topic. Bad. Doing bad.
- [25:39]
A
Pretty bad. I got to tell you, you never invest in fashion. Is aging very, very well. Don't break that rule. Would be. Don't break that rule. Nike's revenue was flat year over year on a reported currency. Constant Currency was down 3%. Wholesale revenue was up 5%. Direct revenue was down 4%. Gross profit. Gross margin shrank a little bit. So gross profit declined 3%. Earnings per share down 35%. Here's the revenue growth by region. North America up 3%. That's okay. Europe, Middle east and Africa up 2%. Greater China down 7. And then the rest of Asia and Latin America up 1%. China. Nike's China revenue went from 8 and a half billion in 2021. It was a big chunk of their growth engine, honestly. Eight and a half billion in 2021 to six billion DOL. It's down 30% over the last four years. My question is, what's going wrong for them in China right now? Do you think this is just the Chinese economic conditions? Because we have seen that like Ferrari shipments to China are down like almost cut in half over the same time consumer spending.
- [27:05]
B
Yeah, it's been pretty weak. This is probably part of the pop. I mean it lines up pretty perfectly with the popping of their housing bubble which we don't really see in Western markets, English speaking markets. But it was for all that we can understand, just as big as our gfc, but maybe handle a little Bit cleaner, I guess given that they have no democracy. We don't need to get into that. But they're also at the same time for Nike, I believe there's been a lot of local competition within sportswear shoes. Is it called anta, something like that? Yeah, yeah, there's local competition and I would guess, I mean if I was a Chinese person, like, hey, there's a local national champion now they make high quality sneakers like Nike. I would, I would be like, oh, let's try those out. That seems better.
- [27:56]
A
Yeah. Whether this is general economic conditions and the housing bubble affecting consumer spending or more just consumer habits changing, this is the double edged sword of growing in China for any business, but especially for a fashion company, largely a fashion company. I think this is something you should keep in mind if you are a Lululemon shareholder today. Because China is the fastest growing market for them by far. It's the majority of their new store expansion is going to be in China. They're investing heavily into it. Funny enough, despite all these consumer issues or economic condition issues in China, Lululemon's not, not having any issues it seems. So my bold prediction, five years from now, Lululemon has more revenue than Nike China.
- [28:57]
B
Wow, that'd be bigger. You should buy Lululemon stock that is trading pretty cheaply if you believe this. Can't do it.
- [29:06]
A
Nah, I can't.
- [29:07]
B
The only one I've owned in the past is Crocs. That's a special use case. That's just, it's, it's, it's its own beast. I feel like that's the end. They're buying back so much stock. I, I, I've been still following them on emerging modes research which people can check out in the, in the show notes for, for my email newsletter. But that, yeah, like Lululemon's just tough. I had it as a psychological long. I think at some point last year I thought there was maybe a good chance of a turnaround. Yeah. It's just so unpredictable. Apparel is. How am I just some nerdy finance guy going to predict fashion trends and you have to predict. You can't. There's nothing durable about them.
- [29:51]
A
If you invested $10,000. Let's, let's, you know what, this is a good chance for us to do our fiscal plug here.
- [29:59]
B
Fiscal plug. Yeah. Yeah. We're bringing out Ryan's tweet threads for fiscal AI.
- [30:05]
A
Let's pull it up right here. 10 years, 10 year chart for Nike. For Nike, $10,000 invested. If you invested $10,000, you would now have $8,400. You would have lost $1,600 over a decade.
- [30:23]
B
Hey, and 10 years, about 10 years ago is when we met Phil Knight for five seconds. Do you remember this?
- [30:29]
A
Yeah, yeah, that's true. I think he was long then than he is now. I think he was long gone from Nike by that point.
- [30:36]
B
But, well, you know, he still owns, he still owns the, you know, a bunch of the company. Yeah, Nike update. Good. Every week we gotta have another reminder. Don't invest in apparel. And I have another rule that I've made. Don't invest in restaurants.
- [30:56]
A
Restaurants. I know it.
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B
Restaurants. Yeah, it's tough.
- [31:00]
A
Restaurants are tough. I feel like habits change like they do in, in apparel. Chipotle seemed bulletproof for 10 years. Now comp sales are very poor and there seems to be sort of an exodus from consumers for that brand.
- [31:20]
B
We might be in the age of kava now. All right, let's hit some listener questions. We have someone in here that says first time listener. What are yalls investment strategy? Hey, maybe someone's from the south there or what do you guys like investing in? All right, well, I guess I can maybe start my philosophy. I have three pillars to my investing philosophy. Any longtime listeners heard this before? I care about valuation, management and business quality. Business quality, meaning is there a moat? And I really like moats that I think can widen over a five to ten year period. That's, that's the type of businesses I care about. It can be across all sorts of sectors. There are some that I like to avoid. Apparel, you know, discretionary because, well, it comes back to one of my frameworks which is emerging moats. That's why I called the newsletter I write emerging moats and that's why I care about those things. I really invest all across the board. Looking at my portfolio right now. There's E commerce, there's fintech, there's financials in general, there's a consumer Internet company. There's a lot of stuff I'll invest in. Industrials. The sectors are not necessarily important. It's really. Again, am I finding good management teams that I like? And that's always up to the individual investor. The stock's trading cheaply based on a three to five year time horizon. I guess I should mention our time horizon rides similar. We're not next quarter people. We want to go on to a three to five year time horizon and then again, business quality. And do I think it can get better? Ryan, any anything else from you?
- [33:05]
A
No. For me, the name of Brett's Newsletter, the Emerging Moats newsletter is really what I am looking for in businesses. I want a company that has some competitive advantage, but I am confident or I feel confident that the competitive advantage will grow over the coming years. That's really the business I look for. Usually that ends up being network effects like Airbnb or like maybe they're the low cost provider and they continue to sort of drive down costs more and more. That's like an Amazon, for example. Those are really a lot of the businesses I look for is basically, do they have an emerging moat? Sometimes we'll venture out outside of that or I will. And then I've given myself a rule which Brett has had to hold me to a couple of times. Anything I buy, I have to hold for longer than three years because that is enough time for me to really gauge whether my thesis is actually playing out. There's too many times where I end up reacting to price action over a short time frame when I really haven't had enough concrete evidence of whether or not the business is actually evolving the way I'd want to.
- [34:24]
B
All right, we also have a question regarding Phil Knight. Is he really like he was betrayed in the movie air? Well, he's very old. When we saw him and what's funny, the only thing I really remember is that we had a picture with him, which I always feel a little embarrassed with, but I thought it was cool. But him and his friends, he was worth, what would you say, $30 billion, something like that. And they're, they were eating really limp looking subway sandwiches on like a white plastic table. I just thought, huh, he's still, he's still hanging out with the regular folks before he heads to his private suite.
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A
Yeah, he, we didn't really talk to him. We just saw him and asked to take a picture. And you know, funny enough, it was in like this sort of big tailgate area. No one really knew who he was,
- [35:09]
B
which I thought was first. I got, I got it. I read Shoe Dog. I knew.
- [35:14]
A
Yeah. And then we took a photo and a lot of people started to figure out who he was. Let's, let's shift gears. Unless we've got. We've got another question from Tyler here. Has Ryan added to his Monday position? I have not. Honestly.
- [35:28]
B
Buybacks adding to the position?
- [35:30]
A
Yeah, sure, I'm adding to by that.
- [35:32]
B
Did you see WIX their tender offer?
- [35:34]
A
Yes.
- [35:35]
B
Did you see this? 30%.
- [35:37]
A
32, basically.
- [35:38]
B
Right? 32.
- [35:40]
A
32, yeah. Basically took out almost a third of their share count in one gulp at $92 a share. And the stock dropped today?
- [35:49]
B
I'm pretty sure. Yeah, the stock's below that figure.
- [35:52]
A
That is insane to me.
- [35:56]
B
It's just tough. It's just there, there's potential disruption in the website building market.
- [36:01]
A
Yeah, yeah there is.
- [36:05]
B
But
- [36:07]
A
I don't, I don't think it's going to bleed that bad. Like I still feel like they have a leadership position and people are going to want, even with the modern day tools, I think people are still going to want a drag and drop solution to customize their own websites and to actually build a lot of the performing functionality around their website as well. So order intake, what are bookings, payments processing, that kind of stuff usually requires like partnerships from, from the platform hosting this, the website for you. So that's not going to be all of them. I do think there's probably some customers that will churn, but I think their core business partners will stick around.
- [36:58]
B
Well, they'll have to come up with solutions. I mean they're just going to have to improve and compete with the, the LLM website building types and they're gonna have to come up with their own solution with that, which it looks like they have. It's just an uncertain time period. Yeah, that's, that's pretty much it. But that's going to be. And we should highlight our sponsor Fiscal AI. Use our link Fiscal AI slash chitchat. That's going to come up with one really funny shares outstanding chart which is going to be flat and then boom. It's going to be like a wall of a cliff. But given their SBC numbers it's going to grow back in just a couple of years. But yeah, Ryan, you're the one that works with Fiscal AI. Any new features or features to tease for ads? Ad this week?
- [37:47]
A
I'm going to tease the MCP now for those unfamiliar it's basically like the API plugin for your LLM. So if you've got like, if you're a regular user of Claude, you probably know that sometimes it hallucinates a bit on the financial data. You're not always sure where the financial data came from. You can plug in the Fiscal AI MCP now it hasn't been totally commercialized yet but it is doable. You can plug it in for into Claude and then you've got basically institutional grade database plus all the CLAUDE capabilities so modeling becomes easier, all that stuff. We do have a question. Oh and I will say the Nike China revenue, all that stuff. KPI's very accessible with Fiskel AI chitchat. Gets you 15% off and you automatically get two weeks free. So no card required. It's worth checking out. Question from Ryan Burns here in the chat. Any thoughts on the FDA fast tracking of nicotine pouches being stalled or slowed? Turning Point Brands is down, exclamation mark.
- [39:07]
B
There's some TPB boys out there. They love Turning Point brands. I've seen them at the substack chat. Fillmore's international lobbyists and lawyers. They gotta be celebrating tonight. It's like that Scarface meme. Printing the money. Right? That's all it is.
- [39:22]
A
I know. I can never tell. I see a lot of young male investors that pitch Turning Point Brands and talk about how superior the products are to Zynth their nicotine pouch products. I can never tell if they're just like, you know, when you're a fan of the business, so then you become a fan of the product, or if it's like truly superior kind of thing. I, I do think nicotine pouch space is getting more competitive. My guess is that Zinn's market share will be significantly lower in five years.
- [40:02]
B
Yeah, that's, that's not a bad way to put it. I, I, I tend to agree. Turning Point braids. The chart is quite ugly. It looks like a Bill Hwang chart with Paramount or Farfetch. It's like a, it's like a, it's just like a, it's like a parabola, both directions. It's in a rapid 50 drawdown here. I, I don't know about the exact business development with this. All I would say is nicotine pouches are probably going to keep growing. They're probably going to keep growing internationally, which turning Point brands might struggle a little bit with. And I would recommend listening to our interview with Fabio from Mindset Capital. Capital Mindset. Mindset Capital or Capital Mindset? There's two businesses and I get dyslexic every time.
- [40:52]
A
It's capital mindset. Yeah. Wow. 50% drawdown in a month.
- [40:59]
B
Yep. Earnings weren't that great, according to Wall Street. And this latest nicotine pouch thing. I guess. So, yeah, maybe, maybe it's a better buy here if we look. Let's look at the Overview. Market cap. 1.4 billion. And then there's that nicotine pouch revenue that's growing really rapidly, I think. What is it in the hundred hundreds of millions? It's below 500 million. So, you know, given those really, really fat margins of that business, you could be getting some good value. And there's, there's nice cash cows. From the chewing tobacco and rolling papers.
- [41:40]
A
So, yeah, okay, let's do a little. I don't know if dumpster diving is the proper term, but digging for treasure, let's say. Okay, I found a new stock trading at its lowest valuation ever, although it hasn't been public that long. A business that you and I are fairly familiar with, Universal Music Group trades at 14.9 times its earnings before interest and taxes. Would you ever own this?
- [42:16]
B
Oh, that's a good question. It feels like something that's. It's worth owning. Earnings are going to be stable. You have price increases coming across the music streaming services. Is there just. This is considered an AI loser? Is that it?
- [42:38]
A
I honestly don't know.
- [42:39]
B
Maybe. I. I bet it's considered an AI loser because AI music, an AI copyright, singe the AI like songs that are similar to certain songs and they just take over playlists and stuff like that. There's just been countless millions and millions of these songs being created. I feel like that's it. I'd want to look at. They have a data point, I believe, of, like, what Spotify's market share is of the music play that's from these big labels, because it feels super durable. I mean, people still listen to the Beatles and old music, and I feel like they will 50 years from now.
- [43:13]
A
Yeah, I mean, there's the back catalog, which is going to be valuable forever, but there's also. I think the appeal of signing with a big label is still pretty high for a young artist. Like, it's not. The path to artist independence, like success is not that clear if you don't partner with a big label.
- [43:39]
B
So
- [43:41]
A
my gut says these, these businesses are going to be just fine. And then Spotify is sort of the rising tide that lifts all boats. It's going to be. They're going to raise prices and it's just going to trickle through to these big labels. So I, I'm interested. You know what the biggest thing that deters me is?
- [44:00]
B
So good, so good, so good. New spring arrivals are at Nordstrom Rack stores now. Get ready to save big with up to 60, 60% off rag and Bone, Marc Jacobs, free people and more. How did I not know Rack has Adidas? Because there's always something new. Join the NordicLub to unlock exclusive discounts. Shop new arrivals first and more. Plus, buy online and pick up at your favorite Rack store for free. Great brands, great prices. That's why you rack.
- [44:29]
A
Quick break. This surprised me.
- [44:31]
B
The most useful advice I get now
- [44:33]
A
doesn't come from experts. It comes from regular people on TikTok. What works, what doesn't. No filters. Download TikTok and see for yourself.
- [44:46]
B
Bill Ackman, he loves UMG.
- [44:49]
A
That's the biggest thing. Yeah. I don't want to be associated.
- [44:53]
B
Yeah. So we have Tyler saying, absolutely no way I'm listening to AI music. That is brain rot. Well, here's the thing with the AI. Play the recommended playlist. I feel like we all are. We just don't know about it. But I get your point. I have the same feeling. Bill Ackman was trying to promote another comment here. Bill Ackman was trying to promote UMG in some kind of SPAC scheme a few years ago. Yes, you are right. We are well aware of this and all of Bill Ackman's antics. Bill Spackman. Bill Spackman. The Spark. Do you remember this? The Spark. It's kind of like ebitdar. Do you remember? It was a special spec. Of course it was a special spec. The general one. Do any. Anything else? Yeah. Universal Music Group is fascinating business. I'd say maybe. Maybe it's one you can do for your next research episode. Although I thought we already had a choice there. I forgot.
- [45:46]
A
Doordash.
- [45:47]
B
Doordash, then you research episode. DoorDash, then UMG. That's. That's a good lineup to me. What about
- [45:56]
A
Tesla?
- [45:57]
B
Tesla or SpaceX? Yeah, let's do Tesla.
- [45:59]
A
Let's talk Tesla.
- [45:59]
B
Quick, quick.
- [46:00]
A
Tesla talk. They reported their delivery numbers this morning. Delivered 358,000 vehicles in Q1. Maybe you can pull this up on fiscal. Because they break it out by model. I believe so. 358,000 vehicles in Q1. Missed analyst estimates by about 7,000 vehicles. So fairly large miss. The thing that. And I've never really been able to wrap my head around this or how they manage this, but they produced 408,000 vehicles. So they produce 50,000 more vehicles than they delivered second quarter in a row where they've out produced what they've delivered that the 50 million excess production is the most.
- [46:51]
B
50,000. 50,000.
- [46:53]
A
Sorry. 50,000 excess vehicles produced is the highest spread they've ever had on that figure. So are there any concerns over inventory build? I mean, it seems like.
- [47:04]
B
Yes.
- [47:04]
A
Right.
- [47:04]
B
Come on, Come on.
- [47:05]
A
Yeah, yeah. We've seen this historically a number of times and it kind of like delivers in production. Sort of ebbs and flows, it seems.
- [47:17]
B
Yeah.
- [47:17]
A
So I can't tell if like this is them catching up to demand, but it certainly doesn't feel that way.
- [47:28]
B
There is a little bit of timing at quarter end. Maybe, but no one seems to care. Stock's down a little bit, but it's still nowhere near any sort of multiple of what the automotive business should be. I saw a fascinating chart, I think in the Wall Street Journal, which there probably should be a game that every time I mentioned the Wall Street Journal, people should have to drink because I do mention one article at least a week where they had across the entire EV industry in the United States after the EV credit went away, just demand fell off a cliff and the whole supply chain is suffering. They're also seeing in China, first time ever, byd, I believe, reported a profit decline. And the Chinese government is getting actually into the mix within the EV sector, which is hilarious. The Chinese government, who is all ultra competition, is saying, you guys are being too competitive. We need to rationalize this market a bit. So the Chinese market is super intense and EV demand is falling off a cliff in the United States. Yeah. Margin is going to be tough and it's no surprise that you produce 400,000 something vehicles. You only deliver or sell 360,000. Cash flow is going to be a concern this year if that continues. Who's this chart? BYD.
- [48:50]
A
This is BYD's total EV deliveries and they are down. What is this, 25% year over year. Yeah, 30% year over year. Pretty. Yeah, Quite the drop. Do you know who's actually performing okay in this space? Neo.
- [49:12]
B
Neo. Yeah. Come back for the ages.
- [49:15]
A
Yeah, that stock was completely left for dead. I think we actually had a question on Twitter as well.
- [49:22]
B
Oh, about Asia.
- [49:24]
A
Is it worth taking an Asia stock basket approach?
- [49:28]
B
I have it written down at the end of the day document here. Ryan, is it time to buy a basket of Asian market ETFs? They have fallen due to energy shortage in due to the Iran war. Sorry, I say like an American. I, I don't know. I like some individual stocks in places like Korea and Japan. Vietnam seems very cheap. Philippines seem cheap. Philippine stock exchange is interesting if we ever get a chance to buy it. What, what expertise do we have in these markets? It's tough.
- [50:00]
A
Yeah, I, I don't know if I would take a basket approach necessarily. I, I would probably be more inclined more. I, I'd like to pick the businesses honestly, like Coupang Grab. I don't own Grab, but I like the business model. The. I would like to go one by one and market by market because investing in China is very different than investing in Japan.
- [50:28]
B
For example, some of these ETFs like Taiwan 30% TSMC. So you got to look at the underlying. I'm good with the holdings of these ETFs. Yeah, I know that might, that might. I will. I'd rather have 100%. Someone says. How long released do you think Tesla has before the valuation starts to collapse? If we assume the trends continue with revenue, no idea. Again, our working assumption is a merger with SpaceX. You guys will forget. All the listeners will forget about it in two years if it doesn't happen. But if it does happen, you heard it here first. Is that our stance, Ryan?
- [51:04]
A
Yes, it is. We have another question. Will the SpaceX IPO directly impact Tesla's share price as muskers move capital to SpaceX? No. Here's what I think. Well, that's an interesting thesis, actually, but
- [51:18]
B
I think
- [51:20]
A
this is until we hit some sort of true, true bear market recession, whatever. Musk can play around with this as much as he wants. If Tesla is suffering, he'll say, I'm going to merge Tesla with SpaceX at a certain share price or whatever, and he'll get another slap on the wrist and he'll be fine. And Tesla shareholders will be fine. I really think revenue and business performance has absolutely nothing to do with how Tesla's stock price will perform over the next few years, especially with SpaceX coming. Public revenue, gross profit and operating earnings have been horrendous. If, if you told someone that they're going to fall off a cliff over the next three years in 2023. I'm pretty sure the stock's almost up over that time, despite a huge collapse.
- [52:22]
B
Let's, let's look, let's confirm with fiscal. But I'll do. Honestly, magic 2023. Yeah, it's a little higher. Yeah, it was in the 200s in 2023 and now we're at 360. But if you think it's going to be a slow burn from here, it's honestly, you know, that's, that's, that's a better short than that. If you don't think it's going to go up like one of those 10x runs again. That's a good point. And maybe this is time to talk finally about SpaceX again. They filed confidentially for the IP, confidentially for the IPO. Apparently it's coming in late June or July, and unfortunately for us plebeians, we do not get the S1 yet, so we will be delaying that. Apparently it comes out a couple of weeks before the actual announcement. So we'll do a special episode on the S1 late May, early June, we'll See, but what just came through the line or the news wire? The news line, I don't know. I'm calling it. That is from Bloomberg. About an hour ago, SpaceX boosted its target IPO valuation above $2 trillion as the world's most valuable startup gears up to pitch. Potentially the biggest ever market debut. Didn't.
- [53:41]
A
It's only getting 750 billion.
- [53:45]
B
750 billion would have been an earlier in 2025. Then they merged with Xai and Twitter in late 20. No earlier this year, which should be worth it. And then they originally pitched 1.5 trillion and now they bumped up to 2.
- [54:02]
A
Yeah, it should have hurt their valuation if anything. But no to show this chart, this is since the fourth quarter of 2022 and I'm just going to talk through it because people might not be able to see it.
- [54:15]
B
Yeah, the bottom of the bear market there.
- [54:17]
A
Operating profit for Tesla is down 68% since that time. Stock price is up 234%. I'm telling you, it. The fundamentals, the business performance, it simply doesn't matter. Today they missed on deliveries and I. It's down, but this was it.
- [54:38]
B
Yeah, it's down. It's not like 5%.
- [54:42]
A
Okay, all right. Well we're one Elon tweet away from that bumping back up.
- [54:49]
B
It's usually high beta to the, to the Nasdaq and do you want to. Do you want to talk about what? A listener actually had a nice question on this and what, what the. What old Muskie might be doing to the NASDAQ here.
- [55:03]
A
Yeah.
- [55:05]
B
Okay. Here's a question from the substack check again. You can. It's a little bit wonky with the newsletter, but the substack check is totally free. If you sign up for the emerging modes free tier and you just join the chat on the app, you don't have to pay for anything. We talk a lot about the podcast there. Not sure if you guys previously talked about it, but if not, we'll love your thoughts on the recently confirmed NASDAQ changes that accelerate new public companies to the NASDAQ 100. These changes will allow newly public companies to be added to the index up in 15 days rather than the historical three months. Additionally, adjustments were made to float minimums and multiples for market capitalization based on the initial flow. Float minimum was 10% but SpaceX will float 5% and have a 3x market cap multiplier for weighting purposes. Reddit seems to think this will have a retail. Have retail as bag holders for SpaceX and OpenAI. Yeah, it's probably fair. I agree with them. Kabuki had a substack. People might think I'm crazy saying this guy's name, but it went somewhat viral. He had a few quotes, I think. Makes sense. Quote, NASDAQ recently circulated a NASDAQ 100 index consultation. They are officially seeking feedback from investors on proposed updates to their index methodology. But let's be real. This consultation is NASDAQ speak for letting us know what they are going to force feed us like a baggy foie gras duck. Did I say that right? We're not very cultured people. A thinly veiled blueprint for how to forcefully transfer wealth from the retirement accounts of passive retail investors directly into the pockets of corporate insiders and early investors. Yeah. I think my first thinking is if you have a $2 trillion valuation and it's at what, 150 times sales and you're transferring the ownership from insiders to retail. Yeah, that's. That's tough. Yeah. Don't invest. Get out of your index funds. Maybe don't do that.
- [56:59]
A
It does feel like they're. I mean, it's going to be probably, what, 5% or more of NASDAQ 100 at a $2 billion valuation? Probably something like that.
- [57:10]
B
Yep.
- [57:14]
A
Makes me a little angry, honestly. But I'm gonna. You know what, Let me pose it to you this way. If you were a shareholder of NASDAQ,
- [57:26]
B
the 100, the QQQ or something?
- [57:28]
A
No, no, no. Shareholder of the company, nasdaq, would you be okay with them doing this purely so they can have the listing fees?
- [57:41]
B
Sure, maybe. I don't know because look, there was a commenter, and I'm stealing this in the future, on the Kabuki post that said that he has given NASDAQ a new nickname, OTC plus. Speaking of, that's brand deterioration. Right.
- [58:02]
A
Speaking of flawed exchanges, have you seen the exodus from the London Stock Exchange going on?
- [58:10]
B
Yes. I thought that's happened over the last decade.
- [58:13]
A
I mean, it has, but there was another one two weeks ago, maybe. Ashtead Group renamed itself to Sunbelt Rentals. It's the parent company of Sunbelt Rentals, which is like the biggest competitor to United Rentals. Change their name, change their primary listing from the London Stock Exchange to the nyse. Wise is planning a move as well. Ferguson recently did this, which I think is like the largest H Vac company in the world.
- [58:40]
B
As an American, I like it because I don't have to do currency exchanges on my. On my analysis they'll have US Dollars. That I think was the biggest. We did a whole episode on stock exchanges. I think that's the biggest bear case is pure globalization and digitization of financial markets means that everyone can just list in the United States and then there's just a winner take all for the U.S. exchanges.
- [59:05]
A
Yeah. Or at least the largest companies. Right. British American Tobacco, apparently considering a move as well. Being active.
- [59:13]
B
Wow.
- [59:14]
A
Being pressured by activists.
- [59:16]
B
Good, good, good. That's good work.
- [59:18]
A
I do get annoyed with the having to think about the exchanges like the, the currency exchange.
- [59:25]
B
Hey, maybe they can fix their IR pages. Because you know what I can tell the companies from Europe is if I have to Google search the company name, quarterly results and then click on a direct link instead of going to their IR page and being able to figure out where it is, it's like they don't know how to design a website
- [59:42]
A
that I'm going to give this. I'm going to turn this into a shameless plug for fiscal. That is one of the biggest benefits for me about fiscal is that it's standardized investor relations pages. So it's just brought into the same place because I was so sick of it, of trying to navigate UK companies. IR.
- [60:00]
B
Yeah, yeah.
- [60:01]
A
IR sites.
- [60:03]
B
Let's see. Lastly, on SpaceX, did you see E Trade is going to win the retail wars on this?
- [60:10]
A
No, no. What is this?
- [60:11]
B
So this was CNBC reporting. The brokerages are competing for who will feed the individual investors who want to buy SpaceX at 200 times sales. And E Trade is apparently winning and say is going to get the distribution to sell to retail. Kind of. Get what I'm saying, Ryan? So you have to be an E Trade customer to do this while Robinhood and Sofi are going to be out of the picture. I think to me, I envision it like the Joker scene in the Dark Knight where he splits the pool cues and they're going to do the tryouts where he's like, all right, who's going to feed me my money? You're all going to. No one's making money here. I'm just going to bully you until I get this cheap, cheap distribution. But E Trade's the one that came to the table. If you were rational, why would you not use Robinhood here?
- [61:00]
A
I know. Well, I guess I don't really know E Trade's user base. I don't know how big that is, but. I find it all a little disheartening. If this gets bid up past true,
- [61:16]
B
you can just bully everyone.
- [61:18]
A
Well, if this is successful. If this listing IPO is successful and it's above 1 1/2 trillion, it goes to show how much of the world now simply just does not care about or doesn't look at fundamentals, which is whatever. Maybe they've outperformed me, but it's. It makes me very anti passive. It makes me like become one of the index fund bear truthers.
- [61:49]
B
Oh, yeah, Join. Join the club. Life's too short to I never want to be.
- [61:54]
A
Yeah, it is.
- [61:55]
B
We're going to make the T shirt eventually. Let's see before we close things out, we have Rod Alsman. I believe this is Rod. Past guest. Really recent guest that says W L or just Rolex. Maybe retailer or distributor should become the major majority US Revs this year. Could see them relocating at some point in the next few years. That'd be interesting. We have someone that's saying, I'm Noah, the short seller and I'm shorting the usa. That's a good way to end it. Okay, thank you, Noah.
- [62:29]
A
Unfortunately, if we're just talking about like indexes, I could see that being okay.
- [62:35]
B
Yeah, maybe.
- [62:36]
A
Maybe that might be too bold of
- [62:39]
B
a take, but we have someone here that says Morgan Stanley owns E Trade. Okay, that makes sense because Morgan Stanley and Spit and the Musk Empire have a giant relationship. So maybe that. Maybe they're doing them a favor. All right.
- [62:56]
A
I don't think so. We had a small cap of the week that we didn't get to.
- [63:02]
B
I know we have so many people that ask that sometimes. Sometimes it doesn't get to us or sometimes we don't get to it. Yeah, I think that's going to do it. I can leave things out of here. As a disclosure, we are not financial advisors. Anything we say on this 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, sell, or hold them in the future. Thank you everyone for tuning in and we'll see you next time. I finally had a light bulb moment
- [63:45]
A
about a stock we've all heard about growing at 18% a year and a 15 pe. I shared this insight in a special deep dive report to subscribers of my research service, Value Spotlight. The report is called a Generational Reigniting Human Connections through a Tangible Network of Intangible assets. Chit chat listeners can get a discount to my research@stockwriteup.com. that's stock W R I T E U P dot com.