Will Stablecoins Kill Visa? Plunging Alcohol Stocks; Exciting Space Stock IPOs (BFB, V, MA, CRCL)

Summary

Podcast Summary: Chit Chat Stocks – “Will Stablecoins Kill Visa? Plunging Alcohol Stocks; Exciting Space Stock IPOs (BFB, V, MA, CRCL)”

Release Date: June 20, 2025

Hosts: Ryan Henderson & Brett Schafer
Guests: Jeff Santoro & Jason Hall from Investing Unscripted
Sponsor: Interactive Brokers & Blue Chippers Club

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Introduction

In this episode of Chit Chat Stocks, host Brett Schafer steps in as Ryan Henderson is on a work trip. Special guests Jeff Santoro and Jason Hall from the Investing Unscripted podcast join the discussion. The primary topics revolve around the potential impact of stablecoins on traditional payment networks like Visa and MasterCard, the plunge in alcohol stocks, and the emergence of exciting space stock IPOs.

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1. The Rise of Stablecoins and Their Impact on Traditional Payment Networks

Ryan Henderson opens the conversation:
“I mean, should we start with stable coins? That seems to be like the hot topic.” ([02:31])

Understanding Stablecoins:

Jason Hall provides a foundational understanding:
“The idea with a stablecoin is to have a blockchain asset that has a stable value... They’re one-to-one backed by some kind of a dollar-based asset that can be highly liquid.” ([03:01])

He elaborates on USDC, backed by Circle and Coinbase, aiming to offer stability akin to traditional fiat currencies but within the crypto ecosystem.

Merchants' Perspective:

Jason Hall discusses how stablecoins can revolutionize payment processing for businesses:
“If I could make those fees go away, I double my profits as a business... Also, with blockchain-based payments, you get the money as soon as it's essentially as quick as cash.” ([04:30])

Potential Downsides and Risks:

Ryan Henderson raises concerns about regulation and the reliability of stablecoin issuers:
“Without regulation, without legislation, that’s sort of a gamble you’re taking... What if Circle is selling a bunch of short-term Treasuries real quick?” ([07:15])

Jason Hall adds:
“They might not be able to turn a million dollars worth of Treasuries into a million dollars of cash if they need to sell them quickly.” ([07:15])

Centralization Issues:

Jason Hall points out the irony in crypto's centralization:
"These are actually more and more centralized than you'd think... it flies in the face of the crypto ideal.” ([08:16])

Concluding Thoughts on Stablecoins:

Ryan Henderson expresses skepticism:
“This feels like a solution in search of a problem right now.” ([09:08])

However, he remains open to the possibility that stablecoins could offer lower fees and faster transactions, potentially reshaping the payment landscape.

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2. Current Landscape and Adoption Challenges for Stablecoins

Jason Hall highlights recent partnerships enhancing stablecoin adoption:
“Shopify partnered with Coinbase and Stripe, unlocking millions of merchants to accept USDC.” ([11:33])

Brett Schafer underscores the potential benefits for small businesses:
“There’s a lot of room to just raise prices, even if volumes aren’t that strong as they once were.” ([13:52])

Financial Overview of Circle (USDC Issuer):

Brett Schafer presents key metrics:
“$44 billion worth in circulation, 4.3 million wallets. Revenue is $1.66 billion.” ([14:04])

He notes Circle’s relationship with Coinbase and the constraints imposed by the recently passed Genius Act, which regulates how stablecoin issuers manage their reserves.

Investment Perspectives:

Ryan Henderson shares his cautious stance:
“I don’t think they are going to be massively disrupted... I’m not interested in them at all.” ([22:16])

Jason Hall counters by diversifying his portfolio:
“I own Visa and MasterCard, but I also own about 15 different crypto assets.” ([24:25])

Brett Schafer suggests monitoring Visa and MasterCard for potential buying opportunities if their stocks dip further due to stablecoin risks:
“If this causes them to go in a 30, 40% drawdown, that could be a good buying opportunity.” ([25:05])

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3. Plunging Alcohol Stocks: Brown-Forman’s 68% Drawdown

Brett Schafer introduces the topic:
“The alcohol sector has turned into a bit of a battleground... With pricing power, but stable valuations.” ([37:09])

Industry Challenges:

Jason Hall explains the dual impact of increased supply and stalled demand post-pandemic:
“Coming out of the pandemic, additional supply came online while demand stalled, leading to excess inventory.” ([39:08])

Political and Market Headwinds:

Jason Hall points to geopolitical tensions affecting export markets:
“With the trade war, there’s pressure on markets like Asia, which are key growth areas for Brown-Forman.” ([40:46])

Investment Considerations:

Brett Schafer weighs the value proposition:
“With a PE of 14 and potential pricing power, it feels like a good time to take a plunge.” ([43:02])

Ryan Henderson cautions about potential long-term declines:
“Could I buy these stocks now and have them be down 50% two years from now? Yes, I feel like I could.” ([43:57])

Consumer Behavior Insights:

Brett Schafer shares anecdotal evidence against alcohol being supplanted by cannabis:
“I don’t have high conviction in saying that alcohol is going to get entirely replaced by cannabis.” ([46:17])

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4. Exciting Space Stock IPOs: Voyager Technologies and Others

Brett Schafer shifts focus to space sector IPOs:
“Voyager Technologies... very interesting company in the space sector... Market cap around $3 billion.” ([57:16])

Company Highlights:

Jason Hall describes Voyager’s innovations in space infrastructure:
"They're working on replacements for the International Space Station, allowing larger payloads in and out of orbit." ([58:22])

Investment Risks:

Jason Hall raises concerns about governance structures:
“The founder and CEO has a 60% voting interest with only a 5% economic stake.” ([58:51])

Brett Schafer warns about dual-class share structures:
"You better trust them and they better be aligned with shareholders." ([59:08])

Potential and Challenges:

Brett Schafer acknowledges the sector's high risk but also its growth potential:
"Over the next decade, there is going to be a lot of spending within space and defense systems." ([60:15])

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5. Navigating the Pre-Revenue Stock Surge: Regensal Biosciences Holding (RGC)

Brett Schafer introduces a cautionary tale:
“Regensal Biosciences Holding Holding is up 64,000% in the last few months.” ([49:12])

Red Flags Identified:

Jason Hall critically examines the company’s press releases:
“Press releases from June 2 and December 2022 show minimal activity and potential management concerns.” ([52:09])

Brett Schafer emphasizes the importance of scrutinizing management’s actions:
“The way a company manages its press releases can tell you a lot.” ([53:33])

Investment Philosophy:

Both hosts and guests agree on cautious skepticism towards hyper-growth pre-revenue companies, highlighting the importance of due diligence.

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6. Closing Remarks and Takeaways

Brett Schafer wraps up by highlighting the excitement around space IPOs and the cautious approach needed in volatile sectors like stablecoins and alcohol stocks. He also promotes their sponsor, Blue Chippers Club, emphasizing the value of community-driven investment discussions.

Ryan Henderson and Jason Hall provide their final thoughts, encouraging listeners to engage critically with emerging investment opportunities and to remain vigilant against market bubbles.

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Notable Quotes

• Jason Hall ([03:01]): “The idea with a stablecoin is to have a blockchain asset that has a stable value... They’re one-to-one backed by some kind of a dollar-based asset that can be highly liquid.”

• Ryan Henderson ([09:08]): “This feels like a solution in search of a problem right now.”

• Brett Schafer ([14:04]): “$44 billion worth in circulation, 4.3 million wallets. Revenue is $1.66 billion.”

• Jason Hall ([58:51]): “The founder and CEO has a 60% voting interest with only a 5% economic stake.”

• Brett Schafer ([53:33]): “The way a company manages its press releases can tell you a lot.”

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Key Takeaways

1. Stablecoins Pose Competitive Threat: While stablecoins like USDC offer lower fees and faster transactions, regulatory uncertainties and potential centralization challenges pose significant risks to traditional payment networks such as Visa and MasterCard.

2. Alcohol Stocks in Flux: Companies like Brown-Forman are experiencing significant stock declines due to increased supply and stagnant demand, compounded by geopolitical tensions affecting key markets.

3. Space Sector IPOs on the Rise: Emerging companies in the space industry, such as Voyager Technologies, present high-risk but potentially high-reward investment opportunities, especially with advancements in space infrastructure.

4. Caution with Hyper-Growth Stocks: Pre-revenue companies exhibiting explosive stock gains, like Regensal Biosciences Holding, warrant careful scrutiny due to potential management and operational red flags.

5. Importance of Due Diligence: Evaluating management structures, press release strategies, and company fundamentals is crucial in making informed investment decisions, especially in volatile or emerging sectors.

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Disclaimer:
Nothing discussed on Chit Chat Stocks by Ryan, Brett, Jeff Santoro, Jason Hall, or any other podcast guest constitutes formal advice or recommendations. Please conduct your own research before making investment decisions.

Transcript

[Ryan Henderson]

Foreign welcome to Chitchat Stocks. On this show, host Ryan Henderson and Brett Shafer analyze businesses and riff on the world of investing. As a quick reminder, Chitchat Stocks is a CCM Media Group podcast. Anything discussed on Chitchat Stocks by Ryan, Brett or any other podcast guest is.

[Brett Schaefer]

Not formal advice or recommendation.

[Ryan Henderson]

Now please enjoy this episode.

[Brett Schaefer]

Welcome to the Chit Chat Stocks podcast. My name is Brett Schaefer and as you can maybe tell for anyone watching the show, Ryan is absent this week. He is on a not a vacation but a work trip. Couldn't make it. He had a big name change at his company and some other stuff that they had to get through. But we have some special guests from Investing Unscripted subbing and for Ryan today, shout out Jeff Santoro, Jason hall, host of the Investing Unscripted podcast. They've been on the show before. Jason and Jeff, welcome to the Investing Power Hour.

[Ryan Henderson]

Thanks for having us. Happy to be here.

[Jason Hall]

It's awesome to be. It's awesome to be back on. It's been. It's been a minute. It's good to be back on though.

[Brett Schaefer]

Yes, it has. Yes it has. We got a lot of discuss. We're going to be talking stable coins. A lot of audience members wanted us to talk stable coins. We'll be talking that in relation to the payments, networks, banks, some IPOs, little bubble watch. Really anything the three of us want to discuss. But first, before we get started, I want to talk about our presenting sponsor, Interactive Brokers. It is the professionals gateway to the world's markets. They offer commissions starting at $0 on US listed stocks and ETFs. They have international trading in over 200 countries. You can trade options, futures, currencies, bonds, funds and more than 160 global markets from a single unified platform. We love it over here at Chit Chat Stocks because of its ease of use, you know, affordability and the ability to trade international markets, which we know and love. When placing your money with a broker, go with a broker you can trust. Make sure your broker is secure and can endure through good and bad times. We use IBKR here. It is a phenomenal platform and you can go to ibkr.com Interactive Brokers is a member of SIPC. All right gentlemen, what do we want to talk first?

[Ryan Henderson]

I mean, should we start with stable coins? That, that seems to be like the hot topic.

[Brett Schaefer]

Let's do it. Yeah. Who. Anyone have any thoughts on these? I see. Where do we even want to begin with stable coins? Because to me it seems like there's A lot of narrative out there, people coming at it from so many different angles. And from my perspective, I'm no expert on them. I kind of get confused on what is actually happening.

[Jason Hall]

I can. Jeff, do you want to start or you want me to start?

[Ryan Henderson]

Go ahead.

[Jason Hall]

So just the basic idea of what stablecoins do, just for anybody, I think most, most of your listeners and viewers probably know, but just to be clear about it, the idea with a stablecoin is to have a blockchain asset that has a stable value. Because one of the problems with crypto as a tool for commerce and those sorts of things is the volatility, right. It's the reason people use dollars. And the dollar is the global trade currency because generally you know how much a dollar is going to be worth in a week, in a month, in a year. Right. And you don't have that with most cryptos. The idea of stable coins is they're one to one backed by some kind of a dollar based asset that can be highly liquid, right? So circle, right? They're the big name. That's with the USDC coin. They're the major entity behind it, along with coinbase. The idea is that for every dollar you give them to get $1 worth of stablecoin, they're going to own some dollar based denominated asset, right? So it's stable, the price is there, but it's also, it's backed by something real that most people think of as money, right? So that's the whole idea. Now bring that back to crypto. What's the whole point? Why in the hell would anybody want to use this? If I'm a business, if I'm a merchant, one of the problems with traditional credit card acceptance, payment processing, all that kind of thing, there's really, there's two challenges. The first one is the cost. The second one is the velocity of money, the cost structure. If I run a little convenience store, my profit margins are probably 3 to 4%, right? They're super low. Between what I'm paying on interchange fees to Visa, MasterCard, the fees to the banks, all of like all of those fees combined, the payment processing company, there's really those three layers of fees. If I could make those fees go away, I double my profits as a business, right? So it can be substantial. The other thing too is that the average small business has like a few weeks worth of working capital in the bank. And with these payment processing networks, you, you, somebody swipes a card, you give them their good that they bought from you, but you don't actually get your money for weeks, right? Days to weeks before it actually flows into your accounts. So that's the velocity of money part of it. That is what, building blockchain based payments. Why it's so compelling for a lot of businesses is because you get the money as soon as it's, it's, it's essentially as quick as cash, right? You get the money, it just has to be actually worth money. Right. Hence stablecoins.

[Brett Schaefer]

Okay, well it seems like it will benefit the merchants, if we're just saying the merchants in general as a whole entity here. Are there any downsides? Does anyone suffer because of stablecoins? What's kind of the bear case for why no one will want to use them?

[Ryan Henderson]

I'm not an expert on this either, but here's my understanding. So the issue before this, well, so we had this Genius act that was just passed through the Senate, right. So it's going to go to the House Representatives. We'll see what happens there. And my assumption is something will come out of this that gets signed into law. But in the absence of that, I think the risk was you're putting a lot of faith in these companies like Circle or like Tether, which has already had some issues, that they're actually going to keep those dollars that the stablecoins are pegged to in safe assets and not be super spec, super speculative with them. So without regulation, without legislation, that's sort of a gamble you're taking, at least in my mind. Now the Genius act as I've understood it based on some articles I've been reading about, it does seem to put some pretty good restrictions around what you can and cannot take those fiat dollars and invest them into. But I don't think it eliminates all risk. So if one of the things you're allowed to put those dollars in is short term Treasuries and then there's a bank run on stablecoin and all of a sudden millions of people want all their cash back. Now Circle is selling a bunch of short term Treasuries real quick, right. Which could have broader implications for the whole economic space.

[Jason Hall]

They might not be able to turn a million dollars worth of Treasuries into a million dollars of cash if they need to sell them quickly.

[Ryan Henderson]

So maybe there's something in place where only a certain percentage of your cash, you know, can be in Treasuries and some of it has to be in just cash. Right. I don't know, like, I don't know that level of detail, but so I To me though, like, here's what I can't stop thinking about. There's the world in which this stays unregulated and unlegislated, in which I could see the benefit of being an investor in a company like Circle or you know, it's. Or in crypto generally. Right. There's that speculative aspect to it that I think draws people in.

[Jason Hall]

And the miners, because the miners would replace the interchanges and the gas fees that they get for processing these transactions. They would be a beneficiary.

[Brett Schaefer]

And when you say miners, you mean say the cryptocurrency miners, the ones that are using their computer systems, data centers to say it's create the cryptocurrency. I'm just trying to bring all the list.

[Jason Hall]

They're doing the calculations. Right. And these are, honestly, it's funny, these are actually more and more centralized than you'd think. It's not as decentralized as the whole. Like the utopian idea of crypto is all of the entities that exist are very large centralized entities, which again, it flies in the face of the crypto ideal, which is kind of ironic.

[Ryan Henderson]

Well, that's what I'm getting at. This is what I struggle with as it pertains to stablecoins and the legislation that just was passed. And the Circle IPO is like a binary thing. Right. There's the wild wild west sort of crypto idealist world where this is going to be an alternative financial system and it's going to replace the dollar. And then there's this, no governments.

[Brett Schaefer]

Yeah.

[Ryan Henderson]

Decentralized, all that stuff. And now there's this centralized, regulated, legislated aspect of it. So to me, if we just keep going down that path, don't we just end up where we already are?

[Brett Schaefer]

I'm thinking the exact same thing with.

[Ryan Henderson]

Just faster money and lower fees. Yes. So maybe it ends up in a good place. Maybe that is a good innovation. Maybe that's a good future to live in where it's just as stable, it's just as safe as cash and dollars and credit cards. But the fees are lower and it moves faster.

[Brett Schaefer]

Cool.

[Ryan Henderson]

But I don't know, I just can't help but think this feels like a solution. In search of a problem right now.

[Brett Schaefer]

Let me play a devil's advocate with a follow up here. You mentioned the gas fees. Creating these things, I guess isn't free. Like there is some total cost of.

[Jason Hall]

Well, there's a computer using electricity and somebody had to buy the computer and set it up and it has to run right yeah.

[Brett Schaefer]

So can those fees, if we compare those to say Visa and MasterCard though their 0.1% that they charge, can that be lower? And then second, again, I'm trying to play devil's advocate here.

[Jason Hall]

Yep.

[Brett Schaefer]

With the credit card companies, can people get convinced to switch off of their existing credit cards? It feels like, like is there a way to replace, you know, the cash back stuff, all that within the stablecoin system if the profit pool is going to be lower.

[Jason Hall]

So I. Go ahead, Jeff.

[Ryan Henderson]

And then I just, I don't know enough to. Your first question about like how the fees shake out in the end. I don't know enough about this to say anything with certainty, but my general operating system for the financial system generally is somehow someone's going to figure out how to make money on fees to be the middleman. I don't care what the technology is, I just feel like it. We'll let, we'll, we will end up there at some point and on a long enough timeline. I do think you could see this erode credit cards because remember there was a time when people were pro. I'm imagining there was a time when people were probably hesitant to use credit cards. Right. Like the thing. Jason and I were talking about this the other day. Like will the three of us ever get to a point where we're totally comfortable leaving credit cards and using stable coins? Maybe. But is it likely that a kid who's 2 years old right now is comfortable doing that when they're our age? Much more likely possible, yeah. So on a long enough timeline, I think almost anything can be disrupted. I just don't know that it's going to be in the time frame that most investors in a company like Circle are imagining.

[Brett Schaefer]

I'm just waiting for a deposit insurance and then it's essentially replicating the banking system.

[Jason Hall]

So here's. I think there's a couple of things we're leaving out. Number one, I'm glad you mentioned deposit insurance because that's one of the things I'm thinking about. So a big part of the story that's happening now in real time this week is Stripe and Coinbase and Shopify. Right. You have a massive like Rails of E commerce business which is Shopify that is now partnered with one of the biggest payment processors and Coinbase, which is one of the co creators of USDC with Circle and has a massive interest in Circle. Right. That have, are unlocking, you know, millions of merchants access to be able to accept one of the. I think it's USDC is The biggest. It's bigger than Tether, I believe, right, Jeff? It's the. It's the biggest. Yeah, I think so. Unlocking that, I mean, that's a bit. That is a big story, right. In terms of continuing to move closer and closer to something, reaching market acceptance. And as somebody that has used the Shop app a lot more like I'm using that. I'm still using Amazon the most, but by far the number two is the Shop app for buying from individual merchants for all kinds of things, right?

[Brett Schaefer]

Yeah. Tracking shipments. I mean, there's still. I have it on my phone. There's a lot to be desired with it, a lot of improvements to be made. But there's potential there.

[Jason Hall]

There is. Right. So again, if these are precisely. So, yes, Shopify has tons of big brands that use Shopify, the Shopify system, but it's still the majority of the revenues are derived from small businesses that are the ones that can directly benefit from lower fees and improve velocity of money. Right. So that's great. Here's the key. Here's the catch, though. They are going to have to create some incentives. You're going to have your early adopters, of course, that are going to use it. Right. And there's a lot of people that hold Stable coins because you do get a really high yield on it. Now, the yield you're getting is in stablecoin, but again, if it's backed by dollars, it's technically better. All right, so you got your early adopters that are just. They're going to use it because they. They're. They're on board already. But then you're going to have to start convincing people that it's better. Like, why is it better? You sure? Okay, great.

[Ryan Henderson]

You.

[Jason Hall]

You make a little more money. That's great. Sure. I love you. I want you to do well. But why would I not just use my AmEx card that I'm getting these points for that pay for my vacation.

[Brett Schaefer]

Every year, the whole ecosystem of that.

[Ryan Henderson]

Yeah, right. I'm not.

[Jason Hall]

That's the magic.

[Ryan Henderson]

Stablecoin.

[Jason Hall]

Yeah. I mean, that's the magic bullet. That's it. And the bottom line is that we did. Jeff, we did a video that I think it published on our YouTube channel yesterday, kind of talking through this. And what the whole idea of stablecoin leaves out is credit cards. Okay. Not debit. All right? Debit is cheaper than credit to process already. So it's still not as cheap as Stablecoin. But we haven't talked about what is going to replace credit. I was Talking to somebody. I can't remember who it was. I think it's a friend of mine here in town who was talking about his grandfather that opened a small business 60 years ago.

[Brett Schaefer]

Right.

[Jason Hall]

A long time ago. And when credit cards became a thing, they were paying him to accept the card. Right. And, and the reason why is the network effect strength back then was the merchants. Now, the network effect strength is the payment is the, is the network. Right, the payment network. And once that shifted, Then Visa and MasterCard, American Express, Discover can say, okay, you want access to our 1 billion cardholders? All right, it's going to cost you this percentage. So that part of the structure kind of got built. And then as the credit card offerors were competing with one another, the points programs, the loyalty rewards programs, somebody's got to pay for that. The merchants always pay for it. Which of course comes back to all of the consumers at the end of the day. So do I think blockchain can potentially replicate credit in the same way that it can replace the Rails for debit payments? Sure, why not? But again, there has to be money to cover the cost of these things. And that's the thing that I haven't seen crypto provide a real answer for yet.

[Brett Schaefer]

Yeah, let me, let me put some numbers on Circle for anyone that doesn't even know about this industry, because you might think, well, this is kind of just some fairy tale thing that people always talk about blockchain. It is a sizable business. There's 40 at least. These are the numbers I have from their IPO documents. $44 billion worth in circulation, 4.3 million wallets. Revenue is $1.66 billion. And they pay a lot out to Coinbase given their relationship. And I think the main reason today people own it or use USDC is you can get 4.1% interest, similar to a high yield savings account if you hold it at Coinbase. I'm not sure the exact relationships here, but I think, yeah, there is. Given the fact that they're not a bank. And then according to this genius act that has just passed, they can really just hold cash and cash equivalents, you know, treasury bills, money market funds, and, or putting it in a high yield savings account. I think there's limits on how much they're going to be able to offer customers until that can get fixed. And then I also agree that the big roadblock is consumer adoption, because I'm someone that follows American Express. I think something like 60% of their revenue comes from those interchange fees, which are going to be Higher than with stablecoins. But they also have the annual fees paid for credit card holders and the really high amounts of net interest income that they get from making, you know, credit card loans. That gives them the ability to provide a ton of value to their customers. You know, not the merchants, but their, you know, the shoppers using their cards. Will the stablecoin companies be able to replicate that? Maybe, but there needs to be some more work, I think.

[Jason Hall]

Sure, they can replicate it, but somebody's got to pay for it, right? Right. So we circle back again.

[Ryan Henderson]

I guess this is my whole thing like that we just end up back where we are.

[Jason Hall]

Like that's, I think a good, a good example that we're living through right now is the transition from cutting the cable to streaming. Nobody's paying less now than, than they were, you know, 10 years ago.

[Ryan Henderson]

You might have been seven or eight years ago, like when it was, you know, when we were just all starting to cut the cord. But it's working its way back, right?

[Jason Hall]

Yeah, no, it totally has.

[Brett Schaefer]

Totally.

[Ryan Henderson]

The other, the other thing I can't, you know, there's so many other questions I have about both stablecoins generally the genius act. So, you know, reading about the genius act, it, it talked about how there's like three buckets of who can issue stable coins, right? There's banks and then there's like companies. Like there could be like Amazon Coin and Walmart Coin. And then, but then there was a thing that under, I think $50 million worth of assets, then it's regulated by states. And then once you kick over that 50 million threshold, then it like kicks to the, then it has to go to like the federal legislation, but it has a year to do that. So like there's going to be all these weird little loopholes where there's a coin regulated by Iowa that someone's doing something funky with somewhere else. And it's not, it, it's $51 million. So in a year it'll be regulated by like there's all these weird things that I just, you know, people are going to find loopholes in because they always do. Same thing with know your customer stuff, right? Like all of the anti money laundering, anti crime aspects that are built into the financial system. There's some of that in this act. But again, like what are the loopholes? What are the ways around that? I think those are things that, that have to be, you know, have to shake out over time. And the last thing is, you know, we're three people who pay a lot of attention to this because it's a stock story, it's an investing story. I like what's going to convince someone who pays no attention to all this, like back to the consumer adoption, to give up FDIC insurance.

[Jason Hall]

Yeah.

[Brett Schaefer]

And a free card like the cards. Again, there's the fee cards like the travel or airline ones, but.

[Jason Hall]

Right.

[Brett Schaefer]

Most credit cards pretty affordable for the consumer to have if you pay your bills on time.

[Ryan Henderson]

And now what? You have to have an account at Coinbase or some other website or you have to have a digital wallet or, you know, it's just there's so much clunkiness that I, I just think we're really a really far away from mass adoption. Even if this goes in the most generous direction for the next five or ten years.

[Jason Hall]

I'm. What I'm trying to decide is when this goes live, how long is it going to be before we hear about a merchant on Shopify that got wiped out of $100,000 of stablecoin that they kept because stupid lack security on their end? Somebody got their password.

[Brett Schaefer]

Right.

[Jason Hall]

And it wasn't an fdic.

[Ryan Henderson]

Yeah.

[Jason Hall]

And it wasn't in an FDIC insured account. So they no fallback. And I'm sure again, I'm a Shopify shareholder and I plan to be for years. And I'm sure they're working on things to try to help prevent those things from happening to their merchants. But I mean there's just so many aspects of the reason the banking system is the way it is. There's reasons. Right. Like those fees we talked about. There's reason those fees are in place. And part of it is because the payment processors are so dominant they get to set the fee. I mean, they set the price. They're not just price takers anymore. But the big thing is the merchants are going to want to have access to people that have money. Right. And people that use credit cards on these rewards programs are the people that always have money. Right. So they're using the card because they get the points and then they pay it off every month. Right. Those are the perfect customers to have and you don't get those for free.

[Brett Schaefer]

Okay, I want to do another topic, but to close things out, bring it back to a stock related question. Visa, MasterCard. Think American Express 2 have dipped on this news. You know, the announcements from the rumors about Amazon. You talked about Shopify, Coinbase and Stripe. If it dips more, you know, gets to a price you feel is reasonable. Are these companies given the stablecoin risk, you guys would be Willing to add to your portfolio or do you own them today?

[Ryan Henderson]

I don't own them. So we were talking to a colleague, Jason and I, about three or four years ago at a get together. I won't say who it is. And they told us at the time, he told us at the time he had just sold all of his visa and MasterCard because he was so convinced that blockchain was going to be the future. So we of course, did what all people do who are investors in the same room. We argued about it for three hours. And my pushback, and this is, I will admit I'm coming at this from a low level of like deep understanding.

[Brett Schaefer]

Right.

[Ryan Henderson]

I've only really started to dig into this, but my gut reaction, and I think I still feel this way, is Visa and MasterCard and American Express are businesses that have been around for a very long time. They know exactly what has made them successful and they're aware of blockchain. So I just, I can't imagine a scenario where they get massively disrupted over the long term to the point where they're no longer worth being invested in because they didn't see the threat from stablecoin or from blockchain or from crypto generally disrupting them. Like, it just doesn't seem like this is one of those disruptions that will come out of nowhere. And I don't, I don't think they have their heads in the sand. I don't think they, they're blowing this off. So my sense is they will find a way to live in this new world to what extent it exists and to thrive in it, even if maybe the margins are a little lower. Maybe they don't, they don't deserve today's valuation, right? Maybe they're not going to be as dominant in the future. But A, I think, I think that future's further off than other people do. And B, I think they could probably still be fine businesses, you know, even if a little less dominant. That's my take on it. I don't, I'm not interested in them at all. So, like, I haven't really given much thought myself about whether I would or not buy, but I don't know that I would be selling out like our friend did a few years ago and, and just throwing my hands up and saying they're done.

[Jason Hall]

I, I own Visa and MasterCard, but I also own about 15 different crypto assets. So I want to be clear. Anybody out there, any crypto bros that think I'm just a stodgy investor that won't change. So yeah, I actually own more crypto than I do Visa and MasterCard. And I'm not selling my Visa and MasterCard.

[Brett Schaefer]

All right, that's good. I own neither. They're on the watch list. But I think this is a small risk right now. Could turn into a bigger risk at some point. But like Jeff said, these are high quality businesses with competitive advantages. And the time you get to buy high quality businesses is when there is some sort of uncertainty that popped up. So if this causes them to go in a 30, 40% drawdown, that could be a good buying opportunity. TBD though, I, I don't think right now the stocks aren't cheap. They're only down 10. I, I just.

[Jason Hall]

Look, they're never cheap, but they're never, if you look at the margins they get, I mean, they get better margins than like really good software companies do. So just be mindful that you're never going to get a great value on these.

[Brett Schaefer]

Hey, never say never. Never say never.

[Jason Hall]

Fair.

[Ryan Henderson]

Fair.

[Jason Hall]

Okay, fair.

[Ryan Henderson]

But let's just say you did get it. But let's just play this out for another minute or so. Let's say you did get this incredible discount to what you think the company is worth, right. If you get a 30, 40% drawdown like you said, Brett, I still think you need to step into that potential purchase as an investor thinking about position sizing because yeah, there's a 30% drawdown that gives you that opportunity, but it's not for no reason. So I think that big of a drawdown has to present enough risk into your thesis that you want a that margin of safety that that drawdown has provided. But also balance a position size in your portfolio that you're comfortable with just in case the worst case scenarios that cause the drawdown come true. Right. So that's the last way I would think about it.

[Brett Schaefer]

Okay, let's hit another topic I wanted to ask, since you guys are guests on the show, you're not on every week like Ryan and I, you have different, you know, everyone's investing styles are different. What areas or stocks or what areas of the market have you guys interested today? I know a lot of people get, at least right now, you know, there's a lot of stuff that's trading at richly valued prices and some people claim that, you know, oh, you should just take your money and go home right now. But I think there's plenty of opportunities out there and I'm kind of, you know, no matter what market environment there is, there's something interesting to look at Jason. Jeff, what have you guys been interested lately?

[Jason Hall]

Jeff, you want to go first? You want me to go first?

[Ryan Henderson]

You can go first.

[Jason Hall]

So I think we're in this weird position with interest rates and with the Trump, Trump's administration's, what they're doing with, with taxes and government efficiency, particularly around renewables, where there's, I think there's a lot more opportunity than there is, than there is risk. One at one stock in particular that I like, I think like a lot right now is Brookfield Renewable. So this is the. It's basically like the operating entity of the Brookfield family for, like renewable energy, like utility scale, renewable energy stuff. Everything from hydroelectric dams to solar farms to power transmission lines that connect those assets, wind farms, like all those things, and they're all over. They're in like 35 countries. So as much as, like, this is a US centric mindset right now that sent a lot of these stocks lower. It is a massive global opportunity that they participate in. And Brookfield uses Brookfield Renewable to operate these assets. Most of the investment is done at Brookfield Asset Management. So they're, I mean, they have a trillion dollars in assets under management. So they have a lot of very wealthy people and organizations around the world that bring them billions of dollars and say, okay, here's $2 billion. You've got it for 10 years. And we want to invest in energy transition, right? So Brookfield Renewable is going to go out and find some deals and source them, is going to take an equity stake in a minority equity stake. But then Brookfield Asset Management, one of their funds, is going to be the majority owner. So that relationship is really important. They're not just like dropping down debt on the Brookfield Renewable. So it's not like one of those like master limited partnership structures where they just get all the debt and the crap and the corporate parent just kind of gets the cash flows. It's structured differently. The stock's down a pretty good bit, the yield's pretty high. And I think as much as there's concerns about interest rates weighing on that business and legislation changing the incentives, the global story is very, very compelling. They get cash flows on these assets, they sign 25 year contracts on these assets. So very stable, predictable cash flows, investment grade. So they have really good access to low yield costs. So basically they know how much their money costs and they know what they can get for these assets and we get to just kind of ride along as investors and participate.

[Brett Schaefer]

Wow. Fascinating. Yeah. It seems like again, there's the Narrative with the renewable stuff that may be driving the stock down. Yeah, well, seems like maybe low risk, decent upside, like a very, very stable company down.

[Ryan Henderson]

Yeah. Jason and I agree on this over the long term, but we've been arguing about more short term stocks in this space. But here's the way I think about it. There are certainly short term and maybe even medium term headwinds in this country as it pertains to renewable energy. Right. This is an administration that is openly hostile towards it and pro oil and coal and gas and things like that. Interest rates are not helping the situation. We'll see if we get rate, you know, rate cuts later in this year. But even if we do, we're still going to be at rates that are higher than we've seen, you know, in a while. My thinking on this is it the economics of renewable energy, at least as I understand it. And Jason, you follow the space better than I do, so you can let me know if I'm wrong on this. The economics of.

[Jason Hall]

You're wrong.

[Ryan Henderson]

Thank you. Appreciate that. The economics. Were you going to say industries, I think are going to outweigh political interests at some point? Right. The cheapness of solar and wind power is probably at some point going to just outweigh any political opposition towards it. So I'm long term bullish on the renewable space. My struggle is, and I'm not going to come on an investing podcast and pretend like I have an answer on this because I think if everyone's being honest, they struggle with this too. I just have a hard time buying any of these stocks right now because I could see another 50% drawdown from here. And I know you're not supposed to think that way, or some people say you shouldn't, but that's my struggle at the moment. Like, do I think renewable energy will be bigger 30 years from now than it is now? Absolutely. Like I would. I'd be very certain about that. But could I buy these stocks now and have them be down 50% two years from now? Yes, I feel like I could. So it's a space I'd like to dig into a little bit more to build some conviction because maybe I just start dollar cost averaging into some of these businesses that I have this long term belief in, but that's my struggle with that space. Just to kind of build off what you talked about, Jason.

[Brett Schaefer]

Seems like a lot of stuff blows up, not literally, but the stocks and the business models end up blowing up in the sector. I guess the Brookfield one makes a lot of sense to Me, because while you're not betting on, hey, we have this solar roof tile that may have terrible unit economics and we're relying on the subsidies to make that happen. Any areas for you, Jeff? I know you mentioned here something. Well, I don't have the notes in front of me, but. Yeah. What's interesting you, what's. What are you researching at the moment?

[Ryan Henderson]

I'm interested in the macro at the moment. Like, I can't stop thinking about what the second half of this year might look like with the impact we've yet to see with tariffs. So I'm sort of a macro watcher of the companies I think will be impacted to kind of see what they're saying. So it was pretty quiet on that front. I think through this last earnings cycle. You got a lot of generic slash, maybe. Yes, tariffs will impact this much on margins, blah, blah, blah. I'm curious to see if that changes in the next couple of quarters. I, I have an AI interest that is not what I think is like the headline interest in AI. When people talk about AI, you hear a lot about the chip companies, right? What's Nvidia doing? What's their data center Reven, who's benefiting from that? What's Meta doing? What's Google doing? Or Alphabet, I should say. I'm interested in the companies that, on the enterprise side that are building these agentic AI products into their product suites. Right. So I think about companies like Adobe doing it with Creative Design. I think about a company like ServiceNow doing it with all other backend technology that they offer enterprise companies. Because, you know, my, my view of AI at the moment is that it's mostly a parlor trick for most people. Right. Like you can go to ChatGPT and have it do fun stuff. Hey, these are the ingredients in my refrigerator, right? Make me a recipe.

[Brett Schaefer]

Random images. Yeah. Make amazing.

[Ryan Henderson]

I'm being a little bit flippant, but, like, it's helpful. It's cool. It does neat stuff. But like, it's kind of a parlor trick at this point in terms of like mass adoption. I keep saying, like, when my parents use AI on a daily basis, I'll believe it's here. But I do think the funny thing.

[Jason Hall]

Is when that happens, Jeff, they probably won't even really be thinking about the fact that they're using AI.

[Ryan Henderson]

No, no, that's my point. Yeah. Like, I used, I use the, I use mobile smartphones as my analogy. Right. Like, you see people, our parents ages. You see people, our grandparents ages. Like navigating the iPhone. No. Problem. Right. If, if you had shown me that picture in 1994, I would have been like, what is happening? What is this future? You know, this is crazy. So I think when I get to the point where like yeah, people older than us, right, whatever age that is, are using it on a daily basis and maybe not even realizing they are, I think that's when it'll be here. I think we're further away from that future than a lot of evangelists think we are. But I do think the place we're going to start to see it much quicker and it'll actually be helpful is in enterprise software and in our day jobs where we all have aspects of our jobs that are annoying, that take a lot of time, but you have to do them. I have to click all these buttons in this stupid screen every day to do this thing. When AI can start doing that stuff for us, I'll start to say, okay, that's interesting. So I'm keeping an eye on the enterprise software companies specifically that are talking a lot about it, building it in because right now it's a lot of talking about it and building it in and spending and I want to start to see them say our AI revenues were up 80% year over year or whatever. Like I want to start to see customers of them paying up for these AI features that they're building in. So like that's, that's one area that I'm interested in following because I don't think AI is a fad. I think we're in some level of a bubble when it pertains to like the infrastructure spending potentially. But I want to see when it starts to get into our lives in a meaningful way. And I think enterprise software might be the next place that happens.

[Brett Schaefer]

Yeah. And hey, if there's an overbuild on infrastructure that can help some of these software companies, they're not the ones that are going to be hurt by that. Yeah, fascinating stuff. Yeah. I have not thought of the renewables for a long time. Maybe, hey, it's been a tough few years for that sector. Maybe it's the time to start digging in. We have some other topics we're going to be talking, I think an interesting company, Brown Foreman and Alcohol, former compounder that is down 70% from all time highs. But first we have to talk about another one of our sponsors, Blue Chippers Club. It is a tight knit community of stock focused investors that you can join and it was started by two friends of ours. Let me just go off script a little bit. For example, I did a research report this week for the podcast on a company called the Real Brokerage. I can post notes on it on Twitter x whatever you want to call it and you don't really get much in response except some spam bots. But if I post it on the Blue Chippers Club, a nice little summary of the report with a link to the substack, I get some thoughtful responses and we get some conversations, some pushback on the ideas and really helping everyone become a better investor together. If you are interested in joining, head on over to bluechippersclub.com and hit apply. Tons of listeners of the Chitchat Stocks podcast have started to join. The link for that will be in the description or reach out if you have any questions. Okay, let's talk Brown Foreman. The stock is in a 68% drawdown. I guess for anyone that doesn't know they're the maker of Jack.

[Jason Hall]

I need to pour myself a Jack Daniels before we talk about this.

[Ryan Henderson]

You could not have picked. You could not have picked help.

[Brett Schaefer]

Help with volumes. They need a lot of help here.

[Ryan Henderson]

This is right in Jason's wheelhouse. The man loves whiskey.

[Brett Schaefer]

They used to trade at a PE of 40 but it's now dropped down to 14. But when I look at the numbers from our friends at not Finchat anymore Fiscal AI, their operating earnings don't look that appealing. I'm seeing here on the chart their fiscal year. I think it would be their fiscal year that ends in April of 2016. Just over a billion dollars in operating income last 12 months, $1.16 billion. So it's barely grown, which I was surprised to see given that it usually trades at a premium valuation. Have you guys followed this company? I think they're. The alcohol sector has turned into a bit of a battleground because there's people that think it's turning into cigarettes and it's going away. And then there's other people that think, hey look, these are good companies with pricing power and this is the one time we're getting them at 15 times earnings. Jason, it seems like you have some thoughts here, so why don't you go first?

[Jason Hall]

Yeah, I'm a bit of a whiskey collector, so I follow. And as an investor, of course I'm going to pay attention to what's going on with Brown Forman, but basically what's happened with the spirits industry is coming through the pandemic. Volume skyrocketed and demand went higher and a lot of people started buying more like moderate to high end spirits. So Brown Foreman Jack Daniels, Woodford Reserve, Old Forester. There's another one I can't remember, that's. They have. They own four whiskeys. They also own a couple of Irish whiskey, four bourbons. They own an Irish whiskey, some Scotch, gin, rum. They have a full portfolio, but the whiskey business is a pretty big part of their mix.

[Brett Schaefer]

And their volumes are Jack Daniels. Right?

[Jason Hall]

That's. Oh, yeah, no, that's a pretty substantial portion. But what's. So what's happened is coming out of the pandemic, two things happened. A lot of additional supply came online. I can't remember the name off the top of my head, but there's. They're basically a contract producer for the spirits industry, a company based out of Indiana that does a tremendous amount of production for a lot of the industry and a lot of supply came online. And then demand just kind of stalled. And we have a lot of excess inventory across the industry right now. A lot of the distributor channels have been focused on selling through. So it's put a lot of pressure on a lot of the industry, including Brown Forman. Now, the other thing that we're seeing too is a really fertile market for. For Brown Forman is Europe and Asia. And now with the trade war, and we've seen this before, going back to the first Trump administration where the EU literally put in retaliatory tariffs against the state of Kentucky. Now, of course, Jack Daniels is a Tennessee product, but the, a lot of their, their whiskey. So the, the reason they went after Kentucky was because whiskeys. And at the time, the. I can't remember his name, the speed was the speaker of the House or the majority.

[Ryan Henderson]

Oh, Mitch McConnell.

[Jason Hall]

Mitch McConnell, right. So there were reasons why they specifically targeted. But the point is that we're in another political environment that could be unfavorable for really where the company's looking for a lot of their growth and that's selling into Asia. So that's another headwind. And where I'm trying to kind of figure out, and you've got something brought up on the screen is does this represent a value opportunity and just kind of a weird place in the cycle where demand is going to recover, or is this kind of like buying Coca Cola in 2003 or 2004, where you're getting a good business and a dominant leader, but the secular trends around consumption are disfavorable. And yeah, you'll make money, but you're not going to beat the market.

[Brett Schaefer]

Right. You went from. For that Coca Cola example most of the 20th century, just more consumption More volume growth, and then that kind of switched in the 21st century and the whole business model changed. Didn't make them a terrible business, but it's not one you wanted to buy at 40 times earnings. Let me just for the listeners that aren't watching here, I pulled up a chart quite easily on fiscal AI. As a side note, use our link fiscal AI chitchat. Get 15% off any paid plan. It has whiskey shipment volume going back to, say, July of 2022, and it's declined at over 5% a year. And that is that kind of COVID bullwhip effect that Jason was talking about. I think the big question which I've seen people debate endlessly is, is it secular or cyclical? I don't know yet, but I feel like at this price, 70% drawdown PE of 14, you still have probably plenty of pricing power within these products. The fact that, you know, they're not the reason that the bar sells you a $20 drink in. @ least in Seattle, there's, you know, a bottle of Whiskey is maybe 20 to $50 or maybe even more. But there's, I still think again, with the premiumization and stuff like that, there's plenty of room to just raise prices, even if volumes aren't that strong as they once were. Hey, for me, it feels like a good time to, to take a plunge and maybe take a position in one of these things.

[Ryan Henderson]

It's, I think it's, it's hard. There's recency bias in all of this with. Because, you know, the debate I hear is, like you said at the beginning of this topic, Brett, like, is this, are alcohol companies, alcohol sales going to go the way of tobacco? Because now people can, you know, marijuana is legal in more than half the states, I think. And you know, you would want, you would have to assume at some point it becomes federally legal, even if that timeline might be further out now. But that's only happened in the past, you know, 10, 15, 20 years. If you want to go back to like the first state to, to, to legalize, you know, cannabis in any way. But the proliferation of it is really over the past couple years. And I'm just, I don't know that I'm ready to say humanity has decided they don't want to have alcohol anymore after a few years of legal cannabis. Like, people have been drinking for millennia. So, you know, but I think the.

[Jason Hall]

Question since the first person got some funny honey.

[Ryan Henderson]

Right? But the question we all have to ask is, yeah, what type of let's, I think the way you'd step into an investment right now in a company like this is if, if consumption never increases from here, what's this company worth? Right? Or maybe you even want to map it out. If, if consumption. You know that chart you just showed whiskey sales down 5% over the past couple years. So let's say you, you map out, all right, if consumption drops by 2% a year for the next 10 years, what does that look like in terms of what's this business worth? I think you have to kind of step into it maybe with that level of margin of safety thinking. Or maybe you roll the dice right now and just figure like, okay, small, reasonable position in my portfolio, risk versus reward. I think this will recover. And if not, it doesn't kill me because it could be the case that people just drink less moving forward. I don't know. I don't think it ever goes away entirely, but for health reasons or because there's alternatives out there, you know, maybe it does change direction over the long term. But yeah, I mean, that, that bullwhip effect that Jason and you just talked about over in terms of like the pandemic boom, overproduction, too much, you know, too much supply. I'd wait for that to shake out before I made any like, definitive long term predictions on this industry.

[Brett Schaefer]

I'd rather be in alcohol than cannabis. Maybe I'm speaking too anecdotally, but I grew up in a big cannabis market, the Pacific Northwest, one where legalization was very early. I think it was right when I was either in middle school or in high school. And there was this initial boom and we had one of those where I think it was, you didn't even need to have the limited amount of licenses. So all the pot shops, dispensaries just blew up. And there's so many out there and a lot of people started using it. But I have found that a lot of my friends have started to quit because they would rather just have an occasional drink. So it's not. I would have high conviction in saying that alcohol is not going to get entirely replaced by cannabis. And I would actually say cannabis probably is going through at least some states, an initial boom, bust cycle, and then it's going to have some sort of stable consumption going forward.

[Ryan Henderson]

Here's the other thing that I think is worth thinking about because again, the cannabis boom is recent. Over the course of, if we look at the long term, what I've noticed anecdotally in my friend group, and I'm 45, so my friend group is middle Aged people. If I just went on anecdotal evidence, I'd say, wow, so many people I know have, because we legalized in New Jersey a couple years ago. So a lot more people in my age are, I would say, like either occasional or maybe even regular users where they never were before because it was illegal and hard to get and all that kind of stuff. But you know what else happens when you, with most people, when you get to your mid-40s, you start drinking less because you, you know, the, the hangover that would go away by 11am the next day now takes three days. So there, there's that aspect of it too. Like, like up the quality.

[Jason Hall]

You, you drink less, but you, you, you move up the quality of Braun Foreman. Right, right. That's exactly the point.

[Ryan Henderson]

Yeah, it's just a very, I guess my, my what I'm trying to get at is it's a very short time frame, I think, to be making grand Prague, you know, grand predictions on where things are, are heading. And yeah, there's the boom, bust cycle that you just described, Brad. I think is, is real, but, you know, the last thing I'll say is someone said this and it's one of those obvious statements that made me kind of chuckle. You know, I don't know, maybe I'm wrong about this. I'm not a cannabis user, but it is a weed. Like, it's called weed for a reason. And I don't know that we're ever going to get to a place where someone's like, oh, this is my preferred brand of this versus that. I think it kind of gets you to the same point, or at least that's my understanding. But people do choose Woodford Reserve over Jim Beam over whatever, whiskey because they like the taste, whatever. Right. So I just don't know that we'll ever get the brand loyalty in the cannabis industry that you see in some of these other things. Which just makes it in my mind, like, it'll just be like a crappy commodity forever. Yeah, yeah.

[Jason Hall]

And then there's like everything else of brands. There's plenty of people that have a bottle of Jack Daniels on their home bar because they remember their grandfather had a bottle of Jack Daniels on the home bar. So those, like, emotional switching costs, I've started calling it, or I think they're real and they carry over to spirits in ways they won't carry over to cannabis.

[Brett Schaefer]

Okay, anything else on that, guys? Or should we move on to another topic?

[Jason Hall]

Let's roll. Now we have a few minutes left. Let's Keep rolling.

[Brett Schaefer]

Yeah. Have you guys. Well, I don't want to. Asking whether we're in a bubble or not is, you know, that's a tired question. But have you been tracking some of the 2021 esque market developments that we've seen from some of these pre revenue companies? And did you see. Maybe it was on our shared note document, so perhaps you clicked on it. This herbal medicine company from China that is up 64,000% in the last few months.

[Ryan Henderson]

You know what I call that? I call that a good start.

[Brett Schaefer]

That would be quite. I mean you could retire on that. Yeah. Regensal Biosciences Holding Holdings, RGC is the stock listed on the nasdaq. Maybe they should investigate them. I don't know. Here's an article from Bloomberg Incorporated in the Cayman Islands. Of course, of course. Firm aims to treat neurological disorders like ADHD and autism through traditional herb based medicines. That's about it. So I don't even know if you call them.

[Ryan Henderson]

I just bought some shares while we were talking. I'm, I'm in.

[Brett Schaefer]

Yeah, I, I say this as a bit of a joke and again this company has a market cap of $31 billion as I guess yesterday. I don't know what it's trading at. Well, markets closed today, so that was where it closed yesterday. What do you think about some of these pre revenue companies hitting 10 billion dollar revenue or sorry, $10 billion in market cap, $20 billion in market cap. Does it affect how you invest? Do you just kind of ignore it? Does it excite you at all? How do you go about it and trying to balance that risk or not in your portfolio?

[Ryan Henderson]

I ignore all of this almost entirely and, but I also, I sometimes wonder if that's because of just again like age, right? Like I, because what I think about when I hear when we hit these bubbly times, right, we, you know, 2020, second, half of 2020, all of 2021. Before we hit that long downturn in 2022, we certainly were in that place, right? SPACs every other day, NFTs, everything you. I thought I was the world's greatest investor. Everything I did went up. And then you live through 2022 and you watch everything fall apart. And there's companies now that have not come anywhere near their 2022 or 2021 highs, even if they're good businesses, right? It was just a crazy time and it does feel like we're heading back into that direction. What I worry about is I don't want to be like an ageist here. So I'll say less experienced investors who are seeing numbers like this and thinking to themselves, oh, man, all I got to do is, you know, this thing's going, going to the moon. Let me buy some shares. And because they haven't lived through the other side of it yet, so I ignore it. But I'm also like, I've been through enough of these ups and downs as an investor to know that the downs come. So, yeah, I find these just to be entertaining stories to, you know, make funny memes about on the Internet. But it doesn't change how I think about investing at all.

[Brett Schaefer]

Jason.

[Jason Hall]

Yeah.

[Ryan Henderson]

I should probably shares too, because.

[Jason Hall]

My guess is Regency might have some pretty good lawyers. So I'm just, I'm just not gonna.

[Brett Schaefer]

No comment. Kind of a little. A little monger. Little monger.

[Jason Hall]

I have, I have nothing to add that couldn't possibly get me in trouble.

[Brett Schaefer]

Yeah. Yeah. Okay.

[Ryan Henderson]

There was a good.

[Jason Hall]

You know what? Screw it. I'm gonna say it. They. They have. There is zero in any of. Okay, go look at, look at their. I'm trying to be nice here. Press release on their website announcing the Ford stock split that just happened this week. Press release on June 2, pre announcing that the split was going to happen. Before that on their investor relations website was a press release from December of 2022 when their chief medical officer resigned.

[Brett Schaefer]

Yeah. Yeah.

[Jason Hall]

Nothing else between there.

[Brett Schaefer]

Form your own opinions on that?

[Jason Hall]

Yeah, do the math.

[Brett Schaefer]

Yeah, that brings up a good point as maybe even a lesson for listeners here. The way a company manages its press releases can tell you a lot. I looked at, for example, we don't have to go through all them, but they do one every day. Oklo or oklo, the nuclear energy startup. Oklo is the ticker. Just go check out their press releases. There are some companies, I don't want to use the term. I have a nickname for them that are very aggressive in their press release strategy and that can kind of give you a hint on what management actually cares about.

[Jason Hall]

How interested would you be if a company issued two press releases within a four week period promoting that their CFO bought stock?

[Brett Schaefer]

Yeah, it wouldn't get me excited. I think it might be a red flag.

[Jason Hall]

Yeah.

[Brett Schaefer]

Yep, that sums it up.

[Ryan Henderson]

Yeah. You. I mean, when, when you learn about the way that like Warren Buffett and Charlie Munger invest in Berkshire Hathaway. Right. You read about them and you see there's like this. I, they, they. I actually do think there's a little bit of like a. God, I wish they could all be like this kind of vibe with how they do it. It's, it's so. And they have the track record to back it up. Right. It's everything you'd want. Not every company needs to be that. And we've seen some lesser lack of track record. Companies try to do the same thing. Like, we're not going to have many press releases. We're not going to do earnings calls. And you know, that works if you are, have a good track record, but it's hard if you don't. Right. Investors do want information. So I think it's unfair to hold companies to that standard. But there is certainly another end of the spectrum if you view how management teams handle public relations. Right. There's certainly a far other end that we're talking about now with some of these companies. And, and it's, it's very clear that the, the, the, the efforts on the PR side are to get people to buy the stock and not to get the company to do things that makes people want to buy the stock. And you can learn a lot about a company by seeing which of it is right. It's, there's the. We want our stock to go to the moon because we have this amazing product that people love or we want our stock to go to the moon.

[Brett Schaefer]

Right? Yeah, the product is the stock.

[Ryan Henderson]

Full stop.

[Brett Schaefer]

Yeah. Yeah.

[Jason Hall]

I would go so far as to say that. And this might be pushing a line, but I'm going to say it anyway. If you know somebody that made thousands and thousands of percent in gains on a stock in a matter of weeks or months, they got lucky or they broke the law.

[Brett Schaefer]

Yeah, probably two. Yeah, the two. The two got lucky or they broke the law. Yes.

[Jason Hall]

That's it. That's it.

[Brett Schaefer]

Yeah. Okay, let's talk a real company. One that I think is exciting and kind of shows that the IPO market is getting unfrozen a bit, which I find exciting. You know, new companies end up studying Voyager Technologies. I don't have the ticker in front of me, but it seems like a very interesting company in the space sector. Not like literally space. Space and Defense debuted last week, soared around 100%. I'd say the IPO market is definitely opening up. We're seeing a ton of companies come public, which. Does that mean you should buy them on the day of the ipo? Not necessarily and probably not. But hey, you can build up a lot of these companies on your watch list and they can be fun to study. Not an expert on this company, but it looks like they are taking advantage of going public when there's a lot of positive thoughts on defense and space systems. So perusing their website, they do space infrastructure, signals intelligence, communications and defense systems in space. And actually just read this morning that they are doing some work around the replacement for the International Space Station. I think the timing of the IPO also helps because there's the hype around, you know, the quote unquote golden dome that could have $100 billion in funding. You know, if you're one of those contractors that can be quite lucrative. But the business is not too big today. Net sales of $144 million in 2024, up 6% year over year. I think the stock has a market cap of around $3 billion. Losing a bit of money. $48 million loss from operations. Yeah, this company has a high valuation today, but.

[Jason Hall]

Positive gross margins. They're actually making gross margin. That's something. So our friend Tyler Crowe, Misfit Alpha, he did a write up about it that had a ton of stuff. He really dug into the S1 and there's definitely things to like, you know, they're. They have the largest of the. What do they call it? Like the thing that you connect the outside of the space stations if you attach your craft to. No, no. Like it would open up into space. The whole thing.

[Brett Schaefer]

I don't know. Satellite. No, no. You can tell.

[Ryan Henderson]

I'm not an expert on this word games with Jason. Anyway, they have the largest something in space.

[Jason Hall]

Yeah. So anyway, the point is that it's kind of a bit of a game changer. And they have these. That's going to be. That it'll. It allows you to be able to get far larger things in and out of space stations and things in orbit, so.

[Brett Schaefer]

Gotcha.

[Jason Hall]

So they, they have some neat. They have some neat technology and they're. They seem to be in a good place. They're definitely looks like they're favored. They've got a big DOD contract. It's kind of like there's no set ending. So that's good.

[Ryan Henderson]

And they have other big customers too. Lockheed Martin is a customer. Some of the other big defense companies.

[Jason Hall]

I have one data point. One data point that makes me shudder. The founder and CEO has a 60% voting interest in the company. He has a 5% economic interest in the company he owns, but he can vote 60% of the shares.

[Brett Schaefer]

Yeah, you better have confidence in him, whoever he is.

[Jason Hall]

Yeah, yeah. The, the dual class, it's become so more common and it just. That seems egregious to me, you know, 5% gets you 60.

[Ryan Henderson]

Yeah, well, it goes, it goes back to, I mean, I don't know anything about him or this company when I say this, but like it goes back to what we were just talking about. Right. Like what is, what is management's incentive? You know, it's why you should read the proxy statement before you buy a stock, see how they're being incentivized.

[Brett Schaefer]

Yeah. And there, I think there's two, like there's downsides and upsides of the dual class share structure, but it does add risk because you are essentially putting all your trust in this one person and they can have that long term vision. They can ignore any activist investor. They can essentially do at the end of the day whatever they want. But.

[Jason Hall]

Well, it's.

[Brett Schaefer]

You better trust them and they better be aligned with shareholders.

[Jason Hall]

Yeah. You could get Kevin Plank, which is great for the first 10 years and then it's been terrible since then. Right. So that's, that's the risk.

[Brett Schaefer]

Yeah. It can unravel quickly if it can.

[Jason Hall]

Yeah, it really can.

[Brett Schaefer]

Yeah. But, but you also have the, the metas. The meta platforms of the world.

[Jason Hall]

Exactly. Yeah. Well, so start with a good business. I don't. We're not sure if this one's a good business yet.

[Brett Schaefer]

Yeah, exactly. What it. I kind of like this sector today though because. And it could be wrong, but I feel like over the next decade there is going to be a lot of spending within all this stuff where they are playing.

[Jason Hall]

Yep.

[Ryan Henderson]

Yeah, yeah, I agree. Generally I don't know that I put my faith in the golden dome, but.

[Brett Schaefer]

We'Ll see if that happens.

[Ryan Henderson]

Yeah, yeah. But even absent of that, I mean we, we do have a space force now. Like you don't hear much about it, but that actually did happen. So I, I do think you're going to see more spending in this space for sure.

[Brett Schaefer]

And the launches with new companies coming online like Rocket Lab and you know, you still have SpaceX out there.

[Jason Hall]

Really interesting too. Yeah, yeah, there's some neat stuff out there. There's some good companies that are doing like good economic things.

[Brett Schaefer]

Yeah, yeah. Definitely not a low risk industry. You're not selling candy bars or maybe Jack Daniels whiskey, but is as Lou.

[Jason Hall]

Whiteman says, space is hard. I mean SpaceX blow up a rocket this week, so.

[Brett Schaefer]

Yeah, I saw that, I saw that last night. Yeah. You can literally have your product just blow up.

[Ryan Henderson]

SpaceX blows up a rocket every week though.

[Brett Schaefer]

Yeah, not every week. R and D budget. R and D budget. Yeah. Maybe once, once a quarter. Once a quarter. That's a good. That's a good pace. All right, Jason, Jeff, running long. Thank you for joining the Investing Power hour today. Quick elevator pitch. Why should people listening to your podcast Investing Unscripted?

[Jason Hall]

Nobody has more fun arguing with one another than me and Jeff.

[Brett Schaefer]

I agree with that.

[Ryan Henderson]

That's a good way to say it. Well, here's my elevator pitch. You guys do such a great job at chit Chat. Stocks of breaking down companies, talking about specifics, financials, things like that. That's why I listen to. Our vibe is more like two guys who like to talk about investing just asking each other questions. Our tagline is asking the difficult questions about investing. Notice we did not say answering them. We'll give our answers, but we encourage people to kind of come to their own conclusions. So we don't act as experts. We just sort of sound like two guys at a bar talking investing and investing.

[Jason Hall]

There's picking stocks, and then there's everything else around personal finance and investing. Right. And we like to have those other conversations, too.

[Brett Schaefer]

All right. Yeah. That's why the name Investing unscripted is perfect. I'll have the link to all the platforms within the show. Notes, video search, Spotify, Apple Podcasts, YouTube, or really, wherever you get your podcast, Investing Unscripted, it'll pop up. Give them a follow. Let's hit the disclosure and get out of here. Jason, anything else before we leave?

[Jason Hall]

Thank you. This was. This was great. Appreciate it. It's always fun to be on.

[Brett Schaefer]

All right, let's hit the Disclosure.

[Ryan Henderson]

Thanks for having us.

[Brett Schaefer]

We are not financial advisors. Anything we say on the show is not formal advice or recommendation. Ryan, I. Well, Ryan's not here today. 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 for the few people that came on the live stream and asked a couple of questions. You can do that every Thursday when we go live with the Investing Power Hour or listen wherever you get your podcasts and we'll see you next time.