Jonathan Boyar's Favorite Cheap Stocks with Catalysts

Summary

Podcast Summary: The Compound and Friends

Episode: Jonathan Boyar's Favorite Cheap Stocks with Catalysts

Date: March 27, 2026
Host(s): Downtown Josh Brown, Michael Batnick
Guest: Jonathan Boyar (Principal, Boyar Value Group)

---

Main Theme / Purpose

This episode features value investor Jonathan Boyar discussing his approach to identifying undervalued stocks with catalysts, why certain stocks — including big tech names and unique “special situation” plays — are potentially attractive in the current market, and how he evaluates company narratives, catalysts, and investor sentiment. The discussion highlights changes in market dynamics (especially regarding valuation and compression), the psychology of value investing, and presents several actionable stock ideas, with a focus on the importance of catalysts for realizing value.

---

Key Discussion Points & Insights

1. Intro to Jonathan Boyar and Value Investing Background

• Jonathan introduces himself as Principal at Boyar Value Group, highlighting his family's storied history (including ties to Chef Boyardee).
• Boyar Research, founded in 1975, serves investors ranging from hedge funds to family offices.
• Notable Moment: Jonathan recounts how having Ken Langone and Bill Ackman as podcast guests helped his own show gain visibility.
  "[Ken Langone] just made it easier after having him to get other guests. And he is such a great guy and so smart." (06:47)

2. Market Environment: "Is This a Weird Market?"

• Discussion about whether the current market is unusual, with a focus on how valuation is coming back into style after years of growth and story stocks dominating.
• Jonathan’s long-term focus: he buys with a 2-4 year timeline, not months.
• Quote:
  “Valuation matters. It depends on your timeframe...I’m looking at something two, three, four years down the line. Can I make money for my clients on it?” – Jonathan Boyar (08:43)

3. The Challenge and Psychology of Value Investing

• Value investing is “lonely;” you often buy what’s hated, misunderstood, or falling.
• Premature accumulation (“the curse of value investors”) is common.
• Importance of buying slowly—starting small, adding as momentum improves.
• Quote:
  “That's the curse of value investors. You just have to take the good with the bad…That's the price of admission for equity.” – Jonathan Boyar (10:20)

4. The Compression of Big Tech ("MAG7") Valuations

[Timestamps: 12:00–23:00]

• The “MAG7” names (Meta, Apple, Google, Nvidia, Amazon, Tesla, Microsoft) have suffered major multiple compressions, making them appear cheap on a forward PE basis.
• Debate: Are these stocks truly cheap, or are their business models fundamentally shifting (especially with high capex/A.I. spending)?
• Microsoft and Meta’s long-term prospects debated; Meta questioned for their capex in A.I. and Metaverse.
• "If you can look past the next week, you gotta be getting excited." – Michael Batnick (13:30)
• "I think these stocks are going to work. They're so dominant and they're not all created equal." – Jonathan Boyar (17:28)

5. On Catalysts and Corporate Behavior

• Investors discussed how companies may trigger a revaluation — e.g., if Meta's management signals efficiency or profitable A.I. investments.
• Quote:
  "They're eventually going to have a Zuckerberg moment... where he just said 'This is the year of efficiency.'" – Jonathan Boyar (17:00)

6. Stock Selection Philosophy and Process

• For each stock, Boyar’s team writes an extensive report, examining risks, upside, and thesis. If the thesis breaks, they re-evaluate.
• Boyar loves when everyone disagrees with his bullish ideas — signals low expectations.
• Quote:
  “If it’s overwhelmingly ‘you’re an idiot,’ does that make you more confident?” – Michael Batnick
  “Yes. Because it means it’s so hated.” – Jonathan Boyar (34:53)

7. Detailed Stock Ideas and Discussions

A. Salesforce (CRM)

• Thesis: Ingrained, irreplaceable software in regulated and slow-moving industries. Why is it so beaten down? Possible GARP rotation.
• Catalysts: Demonstrating A.I. investments boosting margins; eventual insider buying or outside activist involvement.
• "They are critically important to so many businesses... they're the survivors." – Jonathan Boyar (29:03)

B. Uber (UBER)

• Thesis:
  • Largest network/platform, poised to win both ride-sharing and delivery. Network effects and logistics dominance set it apart.
  • Bear case: Autonomy could be a threat, but "winner take all" is unlikely and Uber's partnerships/scale are defensible.
  • Bull case: Transition to asset-light, cash flow growth, buybacks, and multi-faceted moat (Uber One, integrated rides/eats/ads).
• Catalysts: Strategic partnerships with AV companies, growth in advertising, international expansion, and ongoing buybacks.
• "The only way for this thesis not to work is if there’s only one autonomous vehicle company and that’s not going to happen." – Jonathan Boyar (45:53)

C. Madison Square Garden Sports (MSGS)

• Thesis:
  • Controls Knicks and Rangers, yet trades at a huge discount to asset value. Catalysts are structural (spinout, adding minority investors, buyback).
  • Policy/Tax catalyst: Post-2027, being public could hurt tax-wise, likely forcing a sale or going private.
• "MSG Sports owns the Knicks and Rangers. You can buy them for $8B; Forbes values them at $14.75B." – Jonathan Boyar (39:06)

D. MGM Resorts (MGM)

• Thesis:
  • Owns most of the prime Las Vegas properties, is returning capital to shareholders, and holds a stake in Japan’s soon-to-be only legal casino.
  • Risk: Asset sales to private equity may degrade the Vegas experience, raising costs.
• Catalyst: Opening first legal Japanese casino in 2030, continuing buybacks.
• "The best part of the story... they're opening the only casino, legalized casino in Japan. Only one. They're projecting $6B in revenue." – Jonathan Boyar (56:01)

E. Scott's Miracle-Gro (SMG)

• Thesis:
  • Family-controlled, classically stable consumer staple, suffered writeoffs on cannabis pivot, now potentially in “for sale” position.
  • "Best consumer staple at ~9.5x EBITDA, should trade at 12-13x" – Jonathan Boyar (62:05)

F. Atlanta Braves Holdings (BATRA/BATRK)

• Thesis:
  • Owns the Atlanta Braves MLB franchise and valuable real estate (Battery Atlanta).
  • Controlled by John Malone, who is likely to simplify and sell. Could get $60/share vs. $42 now.
  • "Asset-backed stock... worth about 60 in a sale." – Jonathan Boyar (65:36)

8. Narratives, Bubbles, and Lessons from Market History

• Costco and Apple are treated as "quality bubble" stocks—investors pay richly for consistency and lock-in, not necessarily growth.
• "Costco was... a quality bubble... Walmart, GE... Investors get sucked into these great stories, and these stocks are never going to go down." – Jonathan Boyar (25:07)
• Market history: comparison made to Nifty50 stocks of the 1970s, which took a decade to recover from sky-high valuations (27:00–28:00).

9. Process for Handling Being Wrong

• Each stock is re-examined in light of new information. Admitting a broken thesis and moving on is crucial.
• "If the thesis is not playing out, you have to reevaluate it." – Jonathan Boyar (33:22)

10. Catalyst Identification

• Catalysts are essential to avoid "value traps." Typically seek a plausible event/structural shift within two-three years (e.g., spinoff, asset sale, buyout, tax changes).

---

Notable Quotes & Memorable Moments

• On Insider Sentiment:
  "You rarely see a ton of fresh capital coming into a stock unless it's a very extreme situation." – Josh Brown (32:02)
• On Value Investing:
  "It's very lonely...premature accumulation...That's the price of admission for equity." – Jonathan Boyar (10:18)
• On Market Psychology:
  "Investors have a fantastic setup...The best indicator of future returns is valuation..." – Jonathan Boyar (22:58)

---

Timestamps for Key Segments

• 06:04 – Jonathan Boyar’s background and Chef Boyardee
• 08:36 – Is this market really weird? Valuation perspectives
• 10:06 – The loneliness of value investing
• 12:00–14:43 – NASDAQ multiples and the fall of MAG7
• 17:00 – Anticipating catalysts for mega cap stocks
• 29:03 – Salesforce as an embedded, irreplaceable system
• 34:16 – Boyar’s stock selection process and write-ups
• 39:06 – MSG Sports discount and catalyst
• 45:29 – Uber’s AV partnerships and market position
• 56:01 – MGM’s Japan casino as major catalyst
• 62:11 – Scott’s Miracle-Gro as a ‘for sale’ play
• 65:36 – Atlanta Braves Holdings and John Malone
• 67:31 – Why Boyar passed on Adobe (concerns for AI and data defensibility)

---

Actionable Takeaways & Ideas

• Uber: Buy for scale, integration, and future-proofing against autonomy, not threatened by AV competition but empowered by it.
• Salesforce: Consider taking positions in dominant, data-locked software names after major deratings.
• MSG Sports / Atlanta Braves: Hidden asset value can be unlocked with corporate structure changes or forced sales.
• Scott’s Miracle-Gro: “Busted” staple companies under family control can be ripe for M&A or activist action after a bad stretch.
• MGM: Sometimes the best catalysts (first Japan casino) are years ahead—but ensure the investment case isn’t undermined before then.

---

Closing Thoughts

The episode reinforced that while value investing can be grueling and psychologically taxing, detailed process, patience, and focus on both business value and catalysts can generate superior outcomes — especially during periods of market pessimism and multiple compression. Stock picking still has a place in a market where crowd narratives dominate, but “cheap” alone isn't enough — a catalyst is critical. Boyar’s methodology and mental models offer a master class in fundamental, contrarian investing.

---

To follow or learn more from Jonathan Boyar:

• boyervaluegroup.com
• “World According to Boyar” podcast & Substack

---

For more Compound & Friends episodes and disclosures:

• Ritholtz Wealth Management Podcast Disclosures

Transcript

[Josh Brown]

Restaurant Brands is a health food chain. It's.

[Michael Batnick]

What is that?

[Josh Brown]

QSR is the ticker. It's Burger King, Popeyes, Tim Hortons and. What's the fourth?

[Jonathan Boyar]

Firehouse.

[Josh Brown]

Firehouse Subs? Yeah.

[Michael Batnick]

What's. That's not New York. That's not in New York. Firehouse Subs.

[Josh Brown]

It's Firehouse Subs. Once it's like. It's like. It's like Jersey Mike's.

[Jonathan Boyar]

Yeah.

[Michael Batnick]

My favorite fast food sandwich place.

[Jonathan Boyar]

Yeah.

[Michael Batnick]

Is Jimmy John's.

[Jonathan Boyar]

Yeah.

[Michael Batnick]

Who owns them?

[Josh Brown]

I don't think I ever have that.

[Jonathan Boyar]

Is that even. Is that public?

[Michael Batnick]

They missed the machine. Who owns Jimmy John's?

[Josh Brown]

Michael's doing research. Hang on.

[Michael Batnick]

No. Roark Capital Group. Private equity. Okay.

[Josh Brown]

Very, very intense.

[Michael Batnick]

Roark also owns other restaurant chains like Arby's, Buffalo Wild Wings and Sonic.

[Jonathan Boyar]

Oh, they're Buffalo Wild. That's good.

[Michael Batnick]

What is Sonic? Burgers.

[Jonathan Boyar]

The burgers.

[Podcast Narrator]

They have like everything. It's like corn dogs, burgers.

[Josh Brown]

But people go there for the drinks now, right?

[Podcast Narrator]

The drinks, yeah. The slushies are so good.

[Jonathan Boyar]

Well, they still have like the drive up stalls.

[Michael Batnick]

No offense. That's so gross. Like getting a slushy with a hamburger. Like how fat are you?

[Jonathan Boyar]

And I'm.

[Michael Batnick]

I'm fat myself. I'm a skinny fat guy. I get it. But come on. Zero percent chance. Zero percent chance.

[Josh Brown]

All right. We make a show or what? What are we thinking?

[Michael Batnick]

John?

[Jonathan Boyar]

John, I know I eat healthy, but I will make money off of it.

[Michael Batnick]

Yeah, you look healthy. You look good.

[Jonathan Boyar]

Someone out? You wanted to start it up.

[Josh Brown]

John has the best commute into Manhattan of all of us. Port Washington line.

[Michael Batnick]

That is the best.

[Josh Brown]

So the train starts there?

[Jonathan Boyar]

Yeah. And you can sleep and not miss your stop.

[Josh Brown]

Okay.

[Michael Batnick]

How long have you been there for?

[Jonathan Boyar]

2017, 2016. Move there the exact right time.

[Josh Brown]

What are the stop. What are the stops from? From Port.

[Jonathan Boyar]

You got Manhasset. Manhasset Plan Dome.

[Josh Brown]

No such. The place is planned on.

[Michael Batnick]

That doesn't exist.

[Jonathan Boyar]

Great Neck. And then there's some other ones. Bayside. If depending on the train.

[Josh Brown]

Douglas, Douglas.

[Jonathan Boyar]

Douglas. And sometimes Willis Point. Like it. It's 30, but it runs through.

[Josh Brown]

It runs through Jamaica.

[Jonathan Boyar]

No, no, no.

[Josh Brown]

Jamaica, cuz Jamaica's south.

[Jonathan Boyar]

Yeah.

[Josh Brown]

So it doesn't run through Jamaica.

[Michael Batnick]

Douglaston is like the perfect overlap. It's like the line of demarcation between Nassau and Queens.

[Jonathan Boyar]

Yeah.

[Josh Brown]

And they have a great little neck is really.

[Michael Batnick]

That's right. That's what I mean.

[Jonathan Boyar]

And Douglston, you can stop at that restaurant right there. That's the best. Which one?

[Michael Batnick]

Jimmy John's.

[Jonathan Boyar]

Not Jimmy John's.

[Josh Brown]

It's a firehouse subs.

[Jonathan Boyar]

It's a jab. It's a Italian restaurant. I'll get the name of it. That has this huge lobster dish where they put everything in it. It is like, really? You feel like crap for days. Is so good. Yeah. Now it's.

[Josh Brown]

What's. What's your go to in Port Washington?

[Jonathan Boyar]

If I want nice food? Brian Cooper. Yeah. I mean, we have like nine different sushi restaurants.

[Michael Batnick]

Jaya is great. Is it Jaya or Gia?

[Jonathan Boyar]

Gia Delicious. Yeah.

[Michael Batnick]

One.

[Jonathan Boyar]

So like a little like. Like sampling stuff.

[Josh Brown]

The doc, the dock there. Because it's too. It's like this far too far.

[Michael Batnick]

It's 40. It's 40 minutes.

[Jonathan Boyar]

Yeah. There's no reason ever to come to port. Like.

[Josh Brown]

Like you don't want. Like you don't want to go. You don't want to go out to dinner far enough that you get home and your wife's asleep.

[Jonathan Boyar]

Yeah.

[Michael Batnick]

No. You fall asleep in the car.

[Josh Brown]

Fall asleep in the car. It's like, wait, wait, what do we do? Two rounds of. Of martinis for. What are those called? Espresso martinis for? And it's like, that's too long of a night.

[Michael Batnick]

All right, John, get in here.

[Jonathan Boyar]

All righty. The Compound and friends.

[Josh Brown]

All right, episode 230. Let's do a show.

[Michael Batnick]

Whoa, whoa, whoa. Stop the clock. Here's a word from our sponsor. One of the big structural trends in global markets over the last several years has been rising defense spending. That raises an interesting question for investors. How do you position your portfolio to align with that shift? WisdomTree has built a suite of ETFs designed to offer exposure to companies connected to defense, security, and the geopolitical forces shaping the modern economy. If you're thinking about how geopolitical dynamics could influence markets over the long run, it's worth taking a closer look. Visit wisdomtree.com geopolitical opportunities to learn more.

[Josh Brown]

Today's show is sponsored by Janice Henderson Investors where we believe working together is the way to work better. Like combining your portfolio plans and our in depth strategy. Your valued assets and our valuable insights. Your mission and our vision always working in perfect harmony to find the right investment opportunities. Janice Henderson Investors Investing in a brighter future together. Visit janice henderson.com.

[Podcast Narrator]

Welcome to the Compound and friends. All opinions expressed by Josh Brown, Michael Batnick and their castmates are solely their own opinions and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast.

[Josh Brown]

Ladies and gentlemen, welcome to the best investing podcast in the world. My name is Downtown Josh Brown. I'm here with my co host. As always, his name is Michael Batnik. Hello.

[Michael Batnick]

Hello.

[Josh Brown]

You psyched for this?

[Michael Batnick]

I can't wait.

[Josh Brown]

Need some help with that? I've never seen someone do that. An adult male. That's why I brought that. Is that why you brought two?

[Michael Batnick]

What do you know?

[Josh Brown]

All right, let's see. Let's see. Boom. He stuck the landing.

[Michael Batnick]

Not to brag.

[Josh Brown]

All right, we have a special guest. First time on the show, we are super excited to welcome Jonathan Boyar. Jonathan is a principal at Boyard Value Group, encompassing Boyar Asset Management and Boyar Research. Also, the founding family of Chef Boyardee, my grandfather. Okay, Congrats on that.

[Michael Batnick]

Wait, is that a fact?

[Jonathan Boyar]

Yeah, absolutely.

[Josh Brown]

You didn't know that?

[Jonathan Boyar]

I used to get made fun of all of elementary school.

[Michael Batnick]

I don't know if we had royalty in here.

[Josh Brown]

ABCs and 1, 2, 3s. All right. Boyar Research is an independent equity research boutique founded in 1975 that counts some of the world's largest hedge funds, mutual funds, and family offices as subscribers. He is also the host of the World According to Boyar podcast. How long have you been doing the show for?

[Jonathan Boyar]

Since 2019.

[Josh Brown]

All right, dude, that's a big run. It's longer than this show's been on.

[Jonathan Boyar]

You have more episodes and more viewers. But I love it. It's the best part of my job. I don't get paid for.

[Josh Brown]

What was the show that blew up that you did?

[Jonathan Boyar]

It's funny. Ken Langone. I was. He's the greatest guy. He lives in my town. I wrote a letter to him. He had just come out with a book, and I said, do you want to promote your book? Which I don't think he needed the money. And he actually responded and he went on the show, and it just made it so much easier after having him to get other guests. And he is such a great guy and so smart. Yeah.

[Josh Brown]

And I ate at his restaurant the other day.

[Jonathan Boyar]

His restaurant?

[Josh Brown]

He opened Gallagher's in Boca Raton.

[Jonathan Boyar]

Really?

[Josh Brown]

I think it's his. Yeah.

[Jonathan Boyar]

Yeah. He's pretty good. Yeah, he's. Yeah, he. He's. He's fantastic.

[Josh Brown]

Yeah.

[Jonathan Boyar]

And just like one of the most charitable people you meet.

[Josh Brown]

Okay. But then you did another episode.

[Jonathan Boyar]

Oh, I had Bill Ackman, which helped.

[Josh Brown]

That's the one.

[Jonathan Boyar]

Yeah.

[Josh Brown]

Okay.

[Jonathan Boyar]

Bill Got Bill, got a lot of attention. I got a lot of attention on it.

[Josh Brown]

Yeah.

[Jonathan Boyar]

I was fighting him about Howard Hughes, which is this company he took over, and I became, you know, somewhat friendly with him back and forth. He agreed to go on the show and it was, it was an interesting experience.

[Josh Brown]

Yeah. Okay. All right. Well, we appreciate you being on our show.

[Jonathan Boyar]

Yes.

[Josh Brown]

And it's a really, it's. I've been saying it's a weird year in the market. Maybe it's not so weird though, from the perspective of a value investor. Maybe the aberration was 23, 24, 25. And this year, maybe some semblance of normalcy is coming back. If you view the market through the prism of like valuation versus traditional metrics, et cetera. Because there are a lot of stocks that are doing well. There are also a lot of special situation and story stocks that are doing well. And I know that's an area that you traffic in, so I don't know. Do you feel it's a weird environment or. Not really.

[Jonathan Boyar]

I mean, it's a weird environment and you talked about it earlier this week, like a tweet changes everything.

[Josh Brown]

Yeah.

[Jonathan Boyar]

And it's just. But that's a short.

[Josh Brown]

We've seen that before.

[Jonathan Boyar]

Yes, we've seen that. For one and a half administrations.

[Josh Brown]

It feels like decades now.

[Jonathan Boyar]

Yeah. But it's, you know, valuation matters. It depends on your timeframe. I'm not looking at something over a month or two months or three months. You know, obviously I track everything because it's my business, but I'm looking at something two, three, four years down the line. You know, can I make money for my clients on it? And so I just kind of take a 50,000 foot view on it. And this, this environment is creating opportunities. Yeah. I never thought I would be able to have a chance to buy Salesforce like 13 times, 14 times. It's a name I've always wanted to own. Yeah. May get cheaper, but like, I love these types of situations. I, I mean, I, I hate going through them. It sucks. But, you know, that's how you make money.

[Michael Batnick]

Let me ask you a question. So you are a, you, you view these companies through the lens of a private equity investor.

[Jonathan Boyar]

Yeah.

[Michael Batnick]

If I had all the cash in the world to buy up all of the company, take their debt, their cash, like the whole, the whole kit and caboodle. So for that to be attractive, almost by definition, these stocks have to be misunderstood. Said differently, they have to be going down. Right. Doesn't that suck? Like, how hard is that? Because these stocks don't stop going down just like that. Just because you're, you're saying the market is wrong. I am. Right. And it's like it, it makes it really hard.

[Jonathan Boyar]

It's very lonely. And a lot of times you get there, you know, premature accumulation. That's a premature accumulation. That's like, that's the case of anybody. They got a laugh. That's great.

[Josh Brown]

Yeah, we like it. The crowd loves it.

[Jonathan Boyar]

So, I mean, that's the curse of value investors. And you just have to take the good with the bad. And we usually leave the party early too. Right. But yeah, it's, you know, that's the price of admission for like equity.

[Michael Batnick]

I know, I know that's what you all say, but let me.

[Jonathan Boyar]

It sucks.

[Michael Batnick]

But, but why not you all.

[Jonathan Boyar]

You are.

[Josh Brown]

What do you mean by that?

[Michael Batnick]

Listen, I understand that nobody is going to catch the bottom. Right. That's, that's not, that's not real life. But when you love a name like, like Metta, right now is crashing. The stock is down 8%. We'll get into it. It is trading at 16 times forward earnings. I'm guessing that's attractive to you whether or not you're by meta, whatever. Why not wait for some sort of signal that the sellers are no longer in control? Like, why buy stocks as they're crashing again, not ask you to catch the bottom, but they should say, all right, like the sellers are, have backed off off the bottom.

[Josh Brown]

Like, not by the cheapest price. Risk that.

[Jonathan Boyar]

Yeah.

[Josh Brown]

But like be able to say, all right, the stock hit 100, bounced, fell back to 100, bounced again. I feel very good buying.

[Michael Batnick]

It's like develop a little bit of a base.

[Jonathan Boyar]

I think for us, the way we do that and we sort of do what you're saying is just buy it slowly. I'm not going to take like for some accounts. I started buying CRM 20 points ago. Idiot. I mean, exactly. But it's only, you start off slow and you see how it is. And momentum is a very powerful thing. So once you start seeing it go up, you might want to add to it. But the hardest thing I found, or one of them as an investor is to buy stocks after they go up. So it's like you can't have your cake and eat it too.

[Michael Batnick]

No, that's a great answer. You buy slowly over time.

[Josh Brown]

Let's go to chart one, Michael.

[Michael Batnick]

All right, so this is the third longest streak since 2017 of times where the NASDAQ 100 has not made an all time high the longest streak ended in 2023. Prior to that it was 2019 and it's been 100 days. And these names which were all in the Q's top November sounds about right. This was all anybody wanted to own for the past decade. Three years, five years over any time frame. It was all about Apple, Amazon, Google, nada, Nvidia, Tesla. And they're not hot right now and in fact they're the opposite of hot. So let's throw up the next chart please. And what's interesting about this market is that it's really all been multiple compression. Everybody is expecting, rightfully so, that Meta, which just reaffirmed their guidance of $115 billion in CapEx, it's going to hit their margins, it's going to hit their earnings and their ca and their, and their cash flow. But these stocks are getting, I don't know, cheap. I don't know what else to call them.

[Josh Brown]

For the people listening, Nvidia 19.8 is that forward.

[Michael Batnick]

So the, the, the average forward PE for Nvidia for the last five years is 48. It's now under 20. For Amazon it's 32, it's now 22. Microsoft is trading at a market multiple growing 20% a year. I mean you gotta be licking your chops for.

[Josh Brown]

And Meta's the cheapest one out of all these.

[Michael Batnick]

Like again, I am not suggesting that the news is going to all of a sudden get better tomorrow. The sellers are in control. We spoke about this last week. The sellers have the upper hand, there's no doubt about it. But my God, if you can look past the next week, you got to be getting excited.

[Jonathan Boyar]

I mean Microsoft's perfect example as a firm. It's our largest holding by far because we bought it right in 2007, 2008 and really never sold or sold very little. So the last 90 days have been extremely painful.

[Michael Batnick]

33% drawdown, it's been horrible. Yeah.

[Jonathan Boyar]

But now for accounts that I never bought it for because it was too expensive, this is great. I can buy one of the best companies in the world at a market multiple because people are being shortsighted. That's, I mean this is like Google last year.

[Josh Brown]

I mean what if they're not being short sighted?

[Jonathan Boyar]

Then I'm wrong. But I, I don't.

[Josh Brown]

What do you think? But what do you think? Let's, let's do this. This last MAG7 valuation fall.

[Michael Batnick]

All right, so just to tie a ball on this story, the average forward pe for the Max 7 names has been coming down you can now have the basket for 21 1/2 times forward earnings. And you know how all of the time investors look backwards and they say oh I wish, yeah, even recently I could have bought Google at whatever the price was and you know the story was wrong.

[Jonathan Boyar]

Yeah.

[Michael Batnick]

Again I don't know if and when investors start to change their mind but my God is this, this is probably going to look like a gift.

[Josh Brown]

So, so here's my question. What do you think the sellers that are willing to part with the Mag 7 names at 21 times earnings they're selling the stock today hard meta meta in particular what are they thinking as are they being forced liquidated because they're on margin? It can't be Everybody. Is it ETFs that people are redeeming and that's a for seller or are there people making the judgment call? I don't think this is a good value here.

[Jonathan Boyar]

I think it's a few things. One, selling begets selling. I mean the people are totally agree. So that, that's one thing. Pod shops, they're, they're de risking and they all just sell at the same time.

[Josh Brown]

I mean these the easiest stocks on earth to sell.

[Michael Batnick]

I don't think nobody who's selling today, not nobody. The people that are selling today don't care about three years. Right. They care about tomorrow and fair because it probably is going lower because the sellers have control.

[Josh Brown]

So is that what you mean by shortsighted? Somebody selling the stock for a reason that today will look stupid in three years?

[Jonathan Boyar]

Yeah, exactly. They just have different time horizons than we do and they might be able to put the money into something that has better momentum and make money that way. To me the game I'm playing is if they're giving it away, I'll take it. I'm not gonna ask questions why are they selling it? Well I'm asking questions why they're selling it because I want to make sure that I'm not making a mistake. But they just have different perspectives.

[Josh Brown]

Well what if somebody said to you here's why I'm selling it. These Companies have had 40 and 50% gross margins for 12 years. They were asset light. That was the whole story. They were able to put up double digit growth as far as the eye could see and really had no competition. And margins were insane. Like nobody ever could have predicted a company this profitable at this growth rate going on for as long as it did. And now these companies are taking a hundred percent, give or take of their free cash flow and pouring that into Heavy asset sort of investing and they're no longer the same companies margins won't survive it. And that's why I don't think 21 times is too cheap to sell some of my stock.

[Jonathan Boyar]

I think they're eventually going to have a Zuckerberg moment like a couple of years ago where he just said this is the year of efficiency. They look at their stock prices.

[Josh Brown]

Is that what you think the catalyst is for these stocks to work them saying okay we hear you. No more, no more reckless capex.

[Jonathan Boyar]

Or they start showing profits from what they're doing. I mean something one of the other

[Josh Brown]

half I think that's worse.

[Michael Batnick]

I think they're committed. If they back off it's like wait a minute. Yeah, hold on. How much money did you guys waste? Are you kidding me?

[Jonathan Boyar]

Or that's not going to spend as much in the future. They're going to make sure that we get a certain amount returned to shareholders. It's certainly possible. Or their like something like Microsoft, they could have been a lot more profitable than they were. They just were. Supply constraint. They chose and I think it's a good long term move and something as a long term investor I applaud. They're putting their chips into Copilot which is probably the worst AI thing ever and investing in growth. So I can't fault them for it. So I think these stocks are going to work. They're so dominant and they're not all created equal.

[Josh Brown]

I'm glad you went there. I think Meta has a serious problem on its hands. Nobody understands beyond more aggressive monetization of reels via a stronger algorithm. Nobody understands anything else that they're doing. They're making huge bets, GPU purchases, striking up data center financing partnerships, giving away a large language model that nobody seems to be interested in, which is Llama and people are look and then acquiring people's companies just to hire the employees. And people are looking at this and they're being like could you maybe just do reels? Yeah, like what? What is all this getting us? And I think that that sets Meta apart. At least with Microsoft they own Azure.

[Jonathan Boyar]

Yeah.

[Josh Brown]

You could understand where the investments are leading to. Azure literally can't back off because Amazon won't and Alphabet won't. These are three, the three clouds that matter for AI. So Microsoft can't back off. Meta could back off in two seconds.

[Jonathan Boyar]

Yeah.

[Josh Brown]

They could basically say all right, similar to the Metaverse we may have gotten over our skis into areas that aren't profitable enough and we're going to Rejigger whatever we're doing. And I think the street will like it.

[Jonathan Boyar]

They'll love it.

[Josh Brown]

But does he want to do it?

[Jonathan Boyar]

Well, he's already done it with, you know, the Metaverse, which was an absolute disaster debacle.

[Michael Batnick]

$90 billion. They burned 90 billion billion.

[Jonathan Boyar]

It's. No, it was, it was terrible. But I. At least he was able to admit his mistake and, and move on. And the stock's been off to the races since.

[Michael Batnick]

The stock's down 8% today.

[Jonathan Boyar]

Y.

[Michael Batnick]

They didn't report earnings yesterday. The market isn't crashing. I would guess that outside of the last time this probably happened. A down 8% day. 2022 was liberation day. No, it's probably Liberation day. And then prior to that, what? I don't know, 2022, like in a single day, it was probably, probably Covid. It's down 8% today on note News now there's news about a lawsuit, $375 million and more things coming down the pike, but my God, down 8%. Now all of the risks that we're talking about, nobody's going to be like, whoa, this is so profound. Yeah, no shit. It's trading at 16 times forward earnings. Microsoft is under 20 times forward earnings. I think everybody well understands the risk. And I, I think last week, in the past couple of weeks, we're like, why wouldn't the market just fall in bed already? Like, it seems like isn't. Like it's. There's enough news and enough excuses, you know, let's just get it over with.

[Jonathan Boyar]

Yeah.

[Michael Batnick]

And I think what we were talking about, a lot of people were talking about is the, the taco thing.

[Josh Brown]

Right.

[Michael Batnick]

Like he's going to cave. I think maybe the market is getting, is, is pivoting to, hey, wait a minute, he could have caved on the tariff stuff because that was a one sided decision. He might say to Iran, hey, we're done. And they might say, well, we're not done. Like, it's not. He can't just snap his fingers and end this thing because everybody's like waiting for the tweet. Like, nobody wants to get too bearish because God Forbid we remember April 10, Liberation Day, where he's like, you look

[Josh Brown]

up, but we're saying Meta is down 8% because we're not sure if Trump is going to. No, no, no. Have a true story.

[Michael Batnick]

No, no, no, no. Nothing to do with that. I'm just saying in the market. Bring it back to the market more generally.

[Jonathan Boyar]

Yeah. I mean, in terms of what you're Saying yes, it has to be. Both sides have to potentially make a deal or Trump goes in, says, you know, mission accomplished. I mean I hate using those words. And, and they open the, they say you better open the strait otherwise every other country is going to say is going to basically revolt. So if he leaves, they're going to be forced to open it up or they're not going to make any, Iran's not going to make any money. So he actually has a way out of there. But yeah, we still have a long way to go from like the Trump put that's, you know, still have 15% or so. And that 15% happened in like two days. But yeah, it certainly could happen. You know, it might be healthy to have a washout. I mean it's going to be miserable to deal with.

[Michael Batnick]

The bond market is freaking out a lot more than the stock market is. The stock market seems to be sort of, you know, it's down today, down another one and a half percent. I think people are, people are anxious right now. Yeah, investors are not feeling too good. All the things that they own are getting killed. Right. Nvidia looks like it's hanging on by, by a thread. I like this setup.

[Jonathan Boyar]

Yeah.

[Michael Batnick]

And I don't like the, I'm not saying like I like that stocks are going to bounce tomorrow or next week. Like yeah, if sellers are in control. I keep saying that it's true but for the back half of the year I think investors are very shortsighted and it's hard to imagine the current environment changing. But let's just say that we do get through this, that we are on the other side of the war. I don't know if it's July or September or whatever. We are in a midterm election year. This seasonally has not been great for stocks. The washout is complete. Like there's nobody's bullish. 40% of the index is already in a 20% drawdown. Microsoft is down 34. Netflix. We get it right. Nothing's working. Things can get better quickly. I think investors every time and I'm not saying that this be a V shaped rally but bulls can come back. We've seen it time and time again.

[Jonathan Boyar]

The best indicator of future returns is valuation and valuations are now starting to get into the realm of reasonable. So I think investors have. You're right. Investors have a fantastic setup. Much better than they had four or five months ago or whenever. You know, Microsoft was selling at 32, 33 times. Earnings story hasn't changed dramatically.

[Josh Brown]

The sentiment has changed.

[Jonathan Boyar]

The sentiment has changed and this is exactly like Google February of last year. Business was great, but people were like, what's going to happen in the future? And that changed on a dime. And the stock basically, I think it doubled.

[Josh Brown]

It's pretty rare to see this much multiple compression though in an era where earnings are growing.

[Michael Batnick]

It's all compression.

[Josh Brown]

Yeah, but, but like earnings are growing at the rate that they are and there really hasn't been an earnings growth scare.

[Michael Batnick]

So, so that's the only thing that matters ultimately. Do we think that earnings are going to be resilient? Do we think they're going to continue to grow the way that they've been growing? Because if they do, stocks are screening by and if we start to see margin compression and we start to see falling earnings growth, then yes, stocks will continue to get killed.

[Jonathan Boyar]

I'm a stock guy, I'm a stock by stock guy. I have no idea what's going to happen with the indexes and the earnings for it. But I just know now we have a whole host of businesses that are really good companies, high quality businesses selling significantly below what an acquirer would sell for. And listen, I think probably now if you're going to buy an index, I would say still buy the S&P 500 equal weight. I still, you know, there's a lot of mean reversion there. I think the Russell 2000 has a long way to go. There's a lot of mean reversion there. But you know, for those who want active management, I think, you know, it's, I hate the term stock pickers. Market is the most self serving.

[Josh Brown]

But, but wait a minute, chart 4. The internal logic of the market this year is to sell the most expensive stocks you own. And here it is illustrated the deciles of the S&P 500 where you have the most expensive stocks, those are the hardest hit on performance. The 10th decile, 20 negative 25% like they are. They're taking the most speculative stocks and beating them the worst.

[Michael Batnick]

And what is Costco doing here? I know we've mentioned this a million times and like John, I'm sure you're, you've scratched your head at Costco.

[Jonathan Boyar]

That was, I did a talk on it last week and Costco was, you know, basically the thesis was, you know, there's been three periods where there's a quality bubble where investors get sucked in to these great stories and these stocks are never going to go down and they'll pay anything for them. And Costco, Walmart, ge, they're all like that investors are either going to get creamed in these stocks or they're going to go nowhere for a decade.

[Michael Batnick]

It's very hard to make the case for Costco's quality bubble making sense. We all know it's a great business. Yeah, but 50 times earnings, how do you make money like that?

[Jonathan Boyar]

You can't. I mean, you can.

[Michael Batnick]

Are they going to grow 30%?

[Jonathan Boyar]

I mean, they have to sell a lot of $50.

[Josh Brown]

You could have said the same thing at 30 times earnings, and then it went to 50 times earnings.

[Jonathan Boyar]

That's why you can never short these things. You cannot short on valuation, but you can avoid them.

[Josh Brown]

Do you agree with me that Costco and Apple are being treated the same? These are companies that are never going to be able to grow to match the multiple. They have the multiple because investors know at a minimum they're going to do the number.

[Jonathan Boyar]

Yeah, I think that's fair.

[Josh Brown]

And I think lock in. Costco has the same consumer lock in. If you have a Costco membership, you don't wake up and say, I feel like going to Target. That's, that's one. Apple ecosystem functions the same way. Every product you buy is going to work with the Apple ecosystem and all the services are going to be Apple services. And by the way, if you use some other product that Apple has nothing to do with, like Claude or ChatGPT, Apple's getting paid anyway.

[Jonathan Boyar]

Yeah.

[Josh Brown]

Okay, so Costco, Apple, there's a small handful of names like that. They're getting these 30, 40, 50 times earnings multiples because people know that at a minimum, they may not grow fast, but the numbers gonna, the numbers are gonna hit.

[Jonathan Boyar]

Yeah, that's fair.

[Josh Brown]

That's how you get a quality bubble.

[Jonathan Boyar]

You get a quality, but they burst. They always do. They burst in. You know, Nifty50 is the prime example. My father started our business in 1975.

[Michael Batnick]

Was this the chef?

[Jonathan Boyar]

Yeah, yeah. He took off his chef hat and then turned into a stock market guy. And what a pivot. It was a pivot.

[Josh Brown]

One of the all time.

[Jonathan Boyar]

And he did it at the best time to buy stocks. So 1975. So the Nifty50 has crashed. And I've heard this story since I was like six years old. They took every stock that was selling in 1972 at an average of 42 times earnings and shot them one at a time.

[Josh Brown]

Sears, Coca Cola, Hewlett Packard. Like, like blue, Polaroid, Polaroid. But these were companies that, they looked bulletproof.

[Jonathan Boyar]

They, they look bulletproof and they, they were fantastic businesses. Took 10 years. 10 years for the stocks to mag

[Josh Brown]

7 reliving the nifty 50 experience now.

[Michael Batnick]

No way. Throw the John throw chart 2 up. Look at the forward PEs of these stocks. Meta is at 17 times but from

[Josh Brown]

where they came from, it doesn't matter.

[Michael Batnick]

They're not at 17.

[Josh Brown]

It doesn't matter.

[Michael Batnick]

They're not at 40. It's at 17. This is not a bubble. I'm not saying that the stocks have to work. It's not a bubble.

[Jonathan Boyar]

I think it got way overheated in the 70s. This is, I mean listen, not every one of those seven stocks are going to do great. One or two or three probably will. And yeah. Are we in a bubble there? I have no idea.

[Josh Brown]

So funny we don't have Tesla here. Tesla's 190 times earnings right now.

[Jonathan Boyar]

Yeah, I mean that's just, it's a jockey bet. I would never touch it.

[Michael Batnick]

So you mentioned Salesforce.

[Jonathan Boyar]

Yeah.

[Michael Batnick]

What gives you the confidence? Because this is like the question everybody's mind is how are these software companies really? And I don't know. And nobody knows but you.

[Josh Brown]

They don't know.

[Michael Batnick]

Nobody knows. But what gives you the confidence? Because what is Salesforce trading at 13 times? Forward earnings, whatever it is, what gives you the confidence that the earnings are going to be there?

[Jonathan Boyar]

One, we're still doing our work on it. We just started buying it. But they're ingrained in every single process. They are critically important to so many businesses and it's, they're not going to make a claw chat bot to do everything for, you know, your database, your marketing, your payment system. I think there's, there's going to be the haves and the have nots in that software arena.

[Josh Brown]

You see them as one of the survivors.

[Jonathan Boyar]

They're the survivors.

[Josh Brown]

They have all the data system of record for so many businesses that literally could, couldn't do anything without them, especially in regulated businesses.

[Jonathan Boyar]

Try getting in the healthcare business and changing your records to a clawed shop out that has no oversight.

[Josh Brown]

The FDA won't allow it. Yeah, yeah. There are many businesses where you use a certain product because it conforms to the standards that your regulator has decreed are your standards. And then it's not even about efficiency. It's just about like legally we, we're

[Jonathan Boyar]

using this and they're also, these are slow moving industries. I mean they're not adopting overnight. It's gonna take years and years.

[Josh Brown]

The customer base of Salesforce.

[Jonathan Boyar]

Yeah, yeah, exactly. And they're so data locked. I mean to me I put that as A head scratcher. I have no idea why it is sold off. And Benioff is, you know, borrowed $25 billion to buy back a ton of stock. And I think that's a good move. He just has to one cooled the stock based compensation a little bit and he has to not stop making dumb acquisitions.

[Josh Brown]

He did a. A wave of layoffs last year as the stock was falling and that didn't do the trick. Yep, it keeps going down. So it's almost. It almost seems like all he can really do is find a way to demonstrate that their own AI investments are improving earnings faster than they are losing any business.

[Jonathan Boyar]

Yep.

[Josh Brown]

And if he can do that, people will stop selling. But I don't know how long it takes to do that.

[Michael Batnick]

I was about to make that same point, the stop selling thing. Like at some point anybody who wants out of Salesforce will have sold. And if you haven't sold today, you know, maybe the next 10% is like the real wash. Who knows.

[Jonathan Boyar]

You have a rotation. You have the growth guys selling and the value guys starting the garp and then the value guys come in and that's. That happens.

[Josh Brown]

You look at the 13F to see what other value shops are buying these. These stocks.

[Jonathan Boyar]

Not in CRM in particular. But yeah, I like to see what some of these other are there funds

[Josh Brown]

where when you see them coming in you say all right, I, I respect these guys. I know. I know how smart they are. And does that give you like added confidence?

[Jonathan Boyar]

I mean I like looking at, you know, Jana does a great job starboard.

[Josh Brown]

Well, they're back in Salesforce is my point exactly. Okay, they are. Yes. Multiple. Multiple value oriented activist funds are back in Salesforce.

[Jonathan Boyar]

The. Yeah, it's.

[Josh Brown]

And they've been there before.

[Jonathan Boyar]

Yeah.

[Michael Batnick]

You know, it's not great though. Why don't you don't see insiders rushing to buy.

[Jonathan Boyar]

Well, Benioff is so long the stock.

[Michael Batnick]

Yeah, but he's. Forget about him. I understand. But a lot of the other executives

[Josh Brown]

you rarely do attack because of sbc.

[Michael Batnick]

Yeah, the comp. I get it.

[Josh Brown]

That's how they get paid in the first place. So you rarely see a. A ton of like fresh capital coming into a stock unless it's a very extreme situation.

[Jonathan Boyar]

But if Benioff made an open market purchase now.

[Josh Brown]

Well, the guy, the guy at ServiceNow did the stock down another 30 points, right?

[Jonathan Boyar]

Yeah.

[Josh Brown]

So it didn't even help. I think the guy at ServiceNow did it at 130 and the stock's 100. So I don't Even know. I don't even know. I, I don't know the dollar amount. I just think investors are not convinced that these companies are going to be able to utilize AI as a tailwind. They just see AI as headwind, headwind, headwind.

[Michael Batnick]

So that story will change. I'm almost sure of it. Not knowing anything. I'm a tourist here. Yeah, but this idea that the incumbents are just going to sit there and do nothing and not adopt, not take the best features of AI and incorporate into their system, that story, that narrative will shift.

[Jonathan Boyar]

Yeah. And you also have to just take a bigger picture. Look this, we're talking at the last three, six months. You know, we look at everything in terms of, in terms of years. Eventually they will solve this problem and move on. These are the best companies in the world that are well funded and now selling at reasonable multiples.

[Michael Batnick]

All right, so you look at companies. So, okay, you're slow to buy. If you are taking a years long approach, which I appreciate, you are a true investor. What does it look like when you're wrong? And I assume when you're wrong, it's really ugly.

[Jonathan Boyar]

Yeah, it's. You have to be able to admit your mistakes and which is the hardest thing in this business to do. But when you're wrong, you have to constantly look, why did we write down and we have our research. So I literally write it down, why do we want to own the stock? And if the thesis is not playing out, you have to reevaluate it.

[Josh Brown]

So let's stop there. I want people to understand this. When you guys get bullish on a stock, or maybe even you research stock and decide not to get bullish, either way, there's a whole write up about the risks, the possible upside, what you like about it, what you might be worried about. Like, so that way when the story changes and stocks down, I don't know, 20%, you could say, well, let's revisit why we wanted to buy it in the first place. Are all of these things still true or has something changed and what is it? And that's gotta be helpful.

[Jonathan Boyar]

It's unbelievably helpful. About 95% of our portfolio, we have written an extensive research report sent out to some of the biggest hedge funds, mutual funds in the world. So, and we do that first. We actually write it up first. Send it to the, Send it out

[Josh Brown]

before you'll buy it for your own.

[Jonathan Boyar]

Before you buy it. I have strict rules in place on that. Yeah. Getting the feedback from some of these people. And when they'll tell you you're crazy or, or whatever it is that's helpful.

[Michael Batnick]

Does that make you excited or. Or does I question?

[Jonathan Boyar]

I. I love it. I love when I. The more feedback I get, the better.

[Michael Batnick]

No, but I'm saying if. If it's overwhelmingly. You're an idiot, does that make you more confident?

[Jonathan Boyar]

Yes.

[Michael Batnick]

Okay.

[Jonathan Boyar]

Because it, it means it's so hated.

[Josh Brown]

It tells you where the positioning is.

[Michael Batnick]

So when you're buying these stocks and maybe it's overgeneralizing, are you just assume that there's a lot of multiple compression? Right. Everybody hates a stock. Are you anticipating that the narrative will change the multiple and. Or do you think that there's like an earnings acceleration story?

[Jonathan Boyar]

You never really want to count on multiple expansion. It shouldn't be the primary driver.

[Michael Batnick]

All right, so you're betting on the business.

[Jonathan Boyar]

Exactly. We're looking, what is this business worth? We have to slap a multiple on it. But you don't want to say, okay, this has to go to the historical multiple. But so, I mean, we do that. We look. What. What does it look like at a historical multiple, but also what does it look like? You know, one of the companies maybe we'll talk about later is Cooper. You know, if you use a historical multiple, it goes from 70 to I think 120.

[Michael Batnick]

What is Cooper?

[Jonathan Boyar]

Cooper.

[Josh Brown]

Cooper, the. I. Yeah, yeah. I used to sell that stock in 1999. It's contact lenses.

[Jonathan Boyar]

Yeah. Contact lens and women's health.

[Michael Batnick]

So how do you get involved in a contact lens?

[Josh Brown]

It was used to be called. The Cooper companies still call that.

[Jonathan Boyar]

Exactly.

[Michael Batnick]

Okay, how does it get on your radar?

[Jonathan Boyar]

One of our analysts that they get paid to read found it, started looking at it, then activists started. You know, Jan is in it and this Browning that is.

[Josh Brown]

But the thing with a stock like that is one of the biggest long term winners I've ever seen.

[Jonathan Boyar]

Oh, yeah. Myopia is huge.

[Josh Brown]

I think I was selling the stocks people at $2 and I think like non split adjusted. It went to like $500. Yeah, I didn't last that long. But I'm saying. But like that's an example of a stock where it's a small cap still. Yeah, it was a small cap 30 years ago. It's just off the radar of regular investors.

[Jonathan Boyar]

We love that. Yeah, I mean, that's where that's.

[Josh Brown]

So I was gonna say this is your kind of market right now. Those stocks are shining.

[Jonathan Boyar]

They. They. Well, not Cooper. And that's where the opportunity is.

[Michael Batnick]

Sucks.

[Jonathan Boyar]

Yeah, well, yeah, no, it's Pull up.

[Michael Batnick]

Like I'm just.

[Josh Brown]

Pull up 30 years.

[Michael Batnick]

I'm just tasting. Keep going.

[Josh Brown]

That's a compounder.

[Jonathan Boyar]

It's a great business. And there's things. Well, it's not enough just to find a great business that's cheap. That's like two out of three. You need to then have a catalyst because then you get. Otherwise, you get sucked into a value trap. So we're looking. Is there a reason for the stock to go up in value over a reasonable period of time? And to us, reasonable is two to three years.

[Michael Batnick]

Is that the hardest part? Because how do you find, how do you predict a catalyst?

[Jonathan Boyar]

We have to kind of tell a story.

[Josh Brown]

You have to use your imagination.

[Jonathan Boyar]

You have to. You have to tell a story.

[Josh Brown]

Well, so let me throw one at you then. You guys have probably done work on Adobe.

[Jonathan Boyar]

We passed.

[Josh Brown]

Okay. So did most people, obviously.

[Jonathan Boyar]

Yes.

[Josh Brown]

OpenAI shut down. Sora.

[Jonathan Boyar]

Yeah.

[Josh Brown]

Out of nowhere. Decided. No, nobody had any notice. The team working on it. They were in meetings with Disney the night before. Disney's pulling back its billion dollar investment. Sora, if you created stuff on the app, they'll let you access it for a certain period of time. That's it gone. Adobe popped today. I mean, not much of a pop, but it was green and a red tape. Specifically, you have like sort of a catalyst there. I don't know if that's enough. So I guess the question is, let's say you have an idea what's going to turn Salesforce around. Let's say you think Dreamforce is next month. Ish.

[Jonathan Boyar]

Yeah.

[Josh Brown]

Okay. Dreamforce, they're going to unveil agent force 2.0 and they're going to have, I don't know, Jensen Huang is going come back on stage or whatever it is.

[Jonathan Boyar]

Yeah.

[Josh Brown]

And that's going to be the catalyst. That day comes and goes and the stock doesn't give you the reaction you want. Is your job then as a value investor to start thinking of the next catalyst or do you have to revisit your bullishness? Or how do you handle like a failed. Not a failed, but like a missed opportunity for a rally?

[Jonathan Boyar]

Yeah, I think that that wouldn't necessarily be the type of catalyst we would look for. Want me to give you a quick example?

[Josh Brown]

Yeah.

[Jonathan Boyar]

Madison Square Garden Sports, and that's one where we were somewhat involved in. So MSG Sports, it owns the Knicks and the Rangers. Enterprise value of msg sports is $8 billion. So you can buy the. You can buy the Knicks and the Rangers for $8 billion. For when the Forbes value of both is 14.75 billion.

[Michael Batnick]

All right, but everybody knows that, so why, how. There's no free lunch. Like why is the market valuing? James Dolan does.

[Josh Brown]

Because of ownership.

[Jonathan Boyar]

But if you actually do the work and you look. The predecessor company of Madison Square Garden Sports is msg, which owned, you know, which owned the MSG networks.

[Josh Brown]

Radio City.

[Jonathan Boyar]

Yeah, it owned Rio City, it owned the Garden, the Christmas everything. If you invested that when we initially profiled it was right after the spinoff, you would have been up like 8, 900%. The S&P was up 606, 650. I could be off by a little bit, but significant outperformance. So people take a very short term view, I think. Or maybe they see this guy can't get a winning basketball team and you know, won't buy the stock, but he does what's right for shareholders in the long term. He sold Cablevision for a price that we never thought we could get.

[Josh Brown]

Which his father built.

[Jonathan Boyar]

Yes. Yeah. So he's a seller, he could sell this thing. And, and we got frustrated so we wrote a letter in June of this year telling them they should do three things.

[Michael Batnick]

Did you get banned from the Garden?

[Jonathan Boyar]

I. That's. I'm very afraid of it.

[Josh Brown]

Well, they used to use facial recognition software in the cameras. I'm not taking you to a game.

[Jonathan Boyar]

I was going to sue them on one of their transactions and then I realized you cannot get into the building if you have an active lawsuit on them. So, yeah, not suing them, but Basically we outlined three things. One, they should do a spin out, put two publicly, turn it into two publicly traded teams.

[Josh Brown]

This is MSGs.

[Jonathan Boyar]

Yes. So you make the Knicks as a, as a company and you make o' Rangers as a separate publicly traded company

[Josh Brown]

without the broadcast rights. Just the team itself.

[Jonathan Boyar]

The broadcast rights is with Sphere right now. Which makes no sense.

[Josh Brown]

No sense at all.

[Jonathan Boyar]

Yeah, that was why I sued. It makes no sense and it was a lot of self dealing with. So I said we should do that. The second thing is they should take a minority. They should get a minority shareholder involved to demonstrate the value.

[Josh Brown]

Just let somebody buy in, which will set a price.

[Jonathan Boyar]

Exactly.

[Josh Brown]

Okay.

[Jonathan Boyar]

And if you look at the roster of shareholders, Silver Lake owns 9%. KKR, which just bought. Arkos, owns like 2 or 3%. Bill Gates foundation, although, who knows, owns 3%. There are tons of people who would do this. Pennsylvania is getting involved in a big way. They should do that. And then three, they should use the proceeds to buy Back shares.

[Josh Brown]

The NBA allows this?

[Jonathan Boyar]

Absolutely.

[Josh Brown]

The NBA now allows multiple owners. Like it's not the NFL.

[Jonathan Boyar]

Yeah.

[Josh Brown]

So an outside person could come in, buy a chunk of stock directly from the company at a price, and then that resets the narrative about what everything in there is worth.

[Jonathan Boyar]

Yes. And they already are.

[Josh Brown]

The Knicks, a $10 billion franchise, standalone.

[Jonathan Boyar]

If the Lakers are. I believe they are. If Las Vegas is going to get a team that they think is going to go for between seven and $10 billion with no history, the Knicks are worth a lot more.

[Josh Brown]

What is this guy going to get for the Cowboys? He could. He could get $15 billion, I think, easy, Right? So the Knicks could be worth 10, easy. This market cap, you're saying is 14, and it includes the Rangers?

[Jonathan Boyar]

No, market cap is 8 billion.

[Josh Brown]

8 billion. Excuse me. And it includes the Rangers.

[Jonathan Boyar]

Exactly.

[Michael Batnick]

How much does Dolan own of this?

[Jonathan Boyar]

He controls it. He has like, I think 60, 70% voting. But he announced. I think it was February 7th. I could be wrong. On the date that he is now exploring, and him not now exploring means they're gonna do it. They're splitting it off into two teams. Whether we had anything to do with it or not, I have no idea.

[Josh Brown]

So it'll be an msgr, which will be the Rangers.

[Jonathan Boyar]

Yes. And msgk, which will be the Knicks.

[Josh Brown]

And you can invest directly in the Knicks.

[Jonathan Boyar]

You can buy. Yeah, exactly. For anyone.

[Josh Brown]

You get to go to the annual shareholder meeting.

[Jonathan Boyar]

Yeah.

[Michael Batnick]

That's exciting.

[Josh Brown]

I feel like you're going to do it.

[Michael Batnick]

Is this the only publicly listed NBA team?

[Josh Brown]

No. Oh, NBA.

[Jonathan Boyar]

Yes. Yes. You have the Atlanta Braves for baseball.

[Josh Brown]

Wasn't Cleveland publicly traded at one point?

[Jonathan Boyar]

Yeah. And it went private because it makes no sense to be a publicly traded.

[Josh Brown]

The Celtics were public when I got into the business.

[Jonathan Boyar]

Yeah. Yeah. It was a great bar mitzvah gift.

[Josh Brown]

Yeah. People. Okay.

[Jonathan Boyar]

And there's Jewish.

[Josh Brown]

Hold on, hold on. So if. If they speak it, what does that mean for the shareholders? They would get. If they have 100 shares, they get 60 shares of one, 40 of the other.

[Jonathan Boyar]

Yeah. It's. Figure out a way. A way of doing it. And there's another catalyst there which we identified starting at the end of. I think it's 2027. If you are a publicly traded company. And for most companies, this doesn't matter. Your top five executives, they don't have to be named executive five. Top five employees.

[Josh Brown]

So players.

[Jonathan Boyar]

Players can't be deducted for income tax purposes.

[Josh Brown]

There's your catalyst.

[Jonathan Boyar]

They're screwed. They cannot be a Public company.

[Josh Brown]

So. Okay, so. Okay, so if they're a public. So what does that mean? They have to sell it to someone.

[Jonathan Boyar]

They have to go private. I mean, how can they. They had, I think, $175 million last year in payroll and. No, in earnings, and 150 in, like, their top five people were like, 150. So, like, you can't deduct it. I mean, that they're. That's your catalyst. That's.

[Josh Brown]

They're deducting the salaries that they're paying and they might not be able to. For the top five players, which is the most. Yeah, it's not really going to help you.

[Jonathan Boyar]

So a week's pay, A day's pay for.

[Josh Brown]

Right. And Brunson's up for another contract soon. And that's not going to be a. That's not going to be a fun.

[Michael Batnick]

Jalen's locked.

[Josh Brown]

All right.

[Michael Batnick]

Hey, can we talk about Uber?

[Jonathan Boyar]

Yeah, absolutely.

[Michael Batnick]

So Josh talks about it all the time. Josh is a shareholder. I think this might be simple. We talk a lot about, like, wh. MO and autonomous being on their lawn. What if Uber is just selling off because of the delivery aspect of it, which I didn't realize. You have a slide up here. Charted, please. I didn't realize that delivery was 33% of their. What is this? Of their revenue. What is this chart showing us? Top right.

[Jonathan Boyar]

Top right. I think that's. Yeah, those are.

[Josh Brown]

Oh, okay.

[Jonathan Boyar]

No. Ride, Hail, deliver.

[Michael Batnick]

There it is. Yeah. 30. I had no idea. It's a third of their revenue. All right, so guess what if DoorDash is getting killed. I get it. Doordash stock is getting killed.

[Jonathan Boyar]

Yeah.

[Michael Batnick]

And so Uber's a third of their business.

[Josh Brown]

Michael is talking about, like, with higher gas prices, are people pulling back from delivery food.

[Jonathan Boyar]

Yeah, but.

[Josh Brown]

Yeah, I know.

[Jonathan Boyar]

Is it.

[Josh Brown]

Yeah.

[Jonathan Boyar]

In two years. Who cares? They are. They're the absolute winner. They have the best network, the narrative.

[Josh Brown]

Thank you so much. Let's let him.

[Jonathan Boyar]

Let him. Hold on.

[Josh Brown]

I want you. I know you wrote up Uber.

[Jonathan Boyar]

Yeah.

[Josh Brown]

Okay. Just lay out for my. To answer Michael's question, lay out why the Uber approach to autonomous is not only not just defensive, but actually has the ability to win the same way they won in ride hailing.

[Jonathan Boyar]

They are, I think in the bet. They're in pole position for this.

[Josh Brown]

Nobody thinks that. You and I.

[Jonathan Boyar]

Wrong.

[Josh Brown]

You and I and Dara. Nobody else.

[Jonathan Boyar]

Yeah. And I think, you know the only way for, in my opinion, for this thesis not to work is if there's only one autonomous vehicle company and that's not going to happen.

[Josh Brown]

Why would that be the case?

[Jonathan Boyar]

I don't think it will be. That's how I lose. Yeah, that's how both of us lose.

[Josh Brown]

If Waymo gets 80% market share, then

[Jonathan Boyar]

they can have their own app.

[Josh Brown]

There's no point in their. And they have their own app. Then there's no point in Uber existing.

[Jonathan Boyar]

Exactly. But that's not going to happen.

[Josh Brown]

Why would anyone think that that's how this is going to play out? Because they're used to these winner take all ecosystems in tech and they think this is tech, but it's not. It's logistics.

[Jonathan Boyar]

This is a logistics company that is well run and they have scale. The network is, you know, as a value investor, it's still, you know, it's now, it's cheap, but it's. They have by far the biggest network. The biggest network is going to win if you have an autonomous vehicle company and waymo is paying $120,000 or whatever it is for a car. How many cars are they going to get for 4 o' clock in Manhattan? Yeah, they can't. They need to satisfy demand.

[Josh Brown]

All right, so a couple things I want to ask you about this. They have in the last two months, three months, put out a barrage of partnership announcements. I love it. Yeah, I love it.

[Jonathan Boyar]

Street hates it.

[Josh Brown]

The street hates it. They are using their own balance sheet now to invest in there being more players in the ecosystem. So they gave lucid money and they're going to buy 10,000 cars from Lucid. Then they do a deal with Rivian. We're going to buy up to 50,000 cars from Rivian. Now they don't want to own these cars at all, but they have to put their balance sheet into the pot and commit billions of dollars so that an ecosystem will arise. If you don't have Lucid out there in Rivian and all these other OEMs making cars.

[Jonathan Boyar]

Yeah.

[Josh Brown]

Then there is a potential that Tesla and Waymo just take the whole thing away.

[Jonathan Boyar]

It's the same thing that, that Travis did when he was investing in the network. He, he subsidized the drivers. That's what they're doing, the same thing.

[Josh Brown]

They lost money on the drivers just to make sure that there were enough drivers.

[Jonathan Boyar]

The biggest network wins and Uber by far. And now they're getting into. I think there was an announcement today. It was some Eastern European country. They're going to have AV there. Every, every day there's a new announcement.

[Josh Brown]

Yes.

[Jonathan Boyar]

Pony AI.

[Josh Brown]

Pony AI. The city is called with A K? Yeah, yeah, it's like Yugoslavia.

[Jonathan Boyar]

Yeah.

[Josh Brown]

I don't know. Clarksonburg, it's in Cluxenberg. No, but the point is they're doing this all over the world. They're doing this in the uk so they're now. But that's a narrative violation. And people said Uber is asset light. It's the app, it's the network, it's the services, it's who owns the car is somebody else's problem. Those are just things that depreciate. Yeah, but now for better or for worse, they're going to own some of this stuff.

[Jonathan Boyar]

Yeah, but that's a temporary thing. And this is not going to be like the hyperscalers doing 100% of their cash flow.

[Michael Batnick]

You said their cat, their capex is light.

[Jonathan Boyar]

No, very light.

[Josh Brown]

They're a cash flow machine. Uber, how much in cash flow? They are, they expect to do this

[Jonathan Boyar]

year like 10 billion, I think, right? It was. And they were burning cash like 4 or 5 at the time of the IPO.

[Josh Brown]

And they're buying that stock.

[Michael Batnick]

10 billion cash flow, buying back stock growing 20% and 30. And 15 times. Right.

[Josh Brown]

30% growth.

[Michael Batnick]

It's $150 billion market cap.

[Jonathan Boyar]

It's. I think it's 18 times EBITDA. I think, I just think, I just

[Josh Brown]

think the Waymo rolling out in cities without them has scared off growth investors because they think they're walking into a trap where. Oh my God, we're competing with Google. Yeah, I think, I think what they don't see is that it's very unlikely one company is gonna own every autonomous vehicle in the world. Yeah, it's extremely unlikely.

[Jonathan Boyar]

They don't even. A Google funded company does not have the capital.

[Josh Brown]

I don't even think Waymo has that as their ambition to be the only autonomous car on the road. I think they just wanna be the best.

[Jonathan Boyar]

And also just in terms of autonomy, it's still not ready for prime time. Look what happened in, in San Francisco. In the beginning of the. Or la. In the beginning of the year they still only mostly rolled it out in warm weather, clients, climates, and most of Uber's growing their rider base. I mean it's kind of a New York view that it's only in the big cities. But it's not, that's not, that's, it's factually incorrect. They're, they're growing significantly in kind of second, third, fourth tier cities.

[Josh Brown]

Waymo does not have delivery.

[Jonathan Boyar]

Yes. And that's a competitive advantage.

[Josh Brown]

It's a competitive advantage because what Uber has said is that their best customers who spend the most money on the platform are back and forth between eats and rides.

[Jonathan Boyar]

Yeah.

[Josh Brown]

And the best of that segment are the X million like myself. Who are Uber 1 users.

[Jonathan Boyar]

Yes.

[Josh Brown]

Who are getting money back for some of, some of these transactions.

[Jonathan Boyar]

And advertising is growing. I mean, there's so many ways for them to win.

[Josh Brown]

Yeah.

[Jonathan Boyar]

That it's, I, I scratch my head.

[Josh Brown]

I don't understand why the stock's not 125. It makes no sense to me.

[Jonathan Boyar]

I, I, it, it'll get there.

[Josh Brown]

I think so.

[Michael Batnick]

It's not a good market right now.

[Jonathan Boyar]

It's, it's not a good. Things are working and I, I think people stop believing Elon and his like crazy dreams.

[Michael Batnick]

Tesla's in a 24 drawdown. That stock's getting whacked off pretty good.

[Jonathan Boyar]

But every time he opened his mouth

[Josh Brown]

about that's over now.

[Jonathan Boyar]

Yeah. But now it's Waymo.

[Josh Brown]

Now it's Waymo and not.

[Jonathan Boyar]

Right.

[Josh Brown]

There was a moment where anything Elon said about autonomous cabs, uber would lose 8%.

[Jonathan Boyar]

Yeah.

[Josh Brown]

And now the stock is more afraid of Waymo.

[Jonathan Boyar]

Yeah.

[Josh Brown]

Which is ironic because they're operating in partnership with Waymo in two cities.

[Jonathan Boyar]

Yeah. In Atlanta and somewhere.

[Josh Brown]

I think people wanted more Waymo partnerships in more cities. And now that doesn't look like that's going to happen.

[Jonathan Boyar]

I mean, Waymo, I think is doing a giant negotiation. They're, they're trying to figure out and showing, you know, Uber, you need, we need each other.

[Josh Brown]

And last, last thing on this. Jensen Wang has been going out of his way to do autonomy and robot stuff at every public speaking event.

[Jonathan Boyar]

Yeah.

[Josh Brown]

He really is trying to transcend LLMs. Okay. And what they announced for OEMs, it's like this combination of software and chips that will enable Mercedes, Cadillac, Volvo, Volkswagen, Porsche, you name it. To make any car an autonomous car.

[Jonathan Boyar]

Yeah. It's not just going to be Elon licensing his technology.

[Josh Brown]

That's right. So now Nvidia competes with Tesla on. They don't call it full self driving, but on autonomous technology for cars.

[Jonathan Boyar]

Yes.

[Josh Brown]

Do you think that plays into Uber's favor? Because it will lead to more autonomous cars that aren't wayos on the road.

[Jonathan Boyar]

The more players, the better.

[Josh Brown]

Right. How do people not understand this?

[Michael Batnick]

All right, they don't get it. You guys, you guys get it.

[Josh Brown]

People in the world, we're either the

[Jonathan Boyar]

smartest or dumbest or we're going to

[Josh Brown]

lose half our money.

[Michael Batnick]

Let's talk about another narrative violation. Vegas is dead.

[Jonathan Boyar]

Dead.

[Michael Batnick]

Okay, then how come the ratio of MGM to the S&P 500 is sitting a seven month high? If, if Vegas is dead, why is the premier brand in Vegas doing pretty darn okay relative to the overall market?

[Josh Brown]

MGM is a Macau.

[Michael Batnick]

I'm talking to John.

[Josh Brown]

Okay, well, can you tell him that?

[Michael Batnick]

Okay, okay, okay. Is MGM not the biggest premier provider of rooms in Las Vegas?

[Jonathan Boyar]

They. They absolutely are, but MGM also, MGM also had kind of a bad year last year, so it could be a little catch up. But MGM's a super interesting story.

[Michael Batnick]

Wait, hang on. You tell me that China's so hot right now, that's why MGM is doing well?

[Josh Brown]

No, I just think the driver of the publicly traded casino stocks over the last 10 years has been Macau more than Vegas.

[Michael Batnick]

All right, John, what's going on with mgm?

[Jonathan Boyar]

And it's been held back a little bit because of Poly Market and all that kind of stuff, but I think those fears are a little bit overblown. One of the most exciting things for us about mgm, and it has great management. Shameless plug. I had Bill Hornbuckle on my podcast. He's great. He. He's done a great job. They're returning about 45% of their. They've retired 45% of shares since.

[Josh Brown]

This does look very good technically.

[Jonathan Boyar]

Yeah, it does. With 45% since 2021.

[Josh Brown]

What the problem though is how they're doing it. They're selling the land to private equity out from under themselves, which then leads to rents being jacked up, which then leads them to start charging $8 for an iced coffee. And it's turning the players off. And social media, gambler, Social media has grown very negative. Not on MGM specifically, but on just the Vegas experience. So buying back stock is great. Borrowing money to do it, not as great. And then turning over the property ownership to private equity is probably not like a free ride.

[Jonathan Boyar]

I think the escalators are about 2% a year. So they just have to grow more than 2% a year to kind of make up for it. So now they're kind of more of a cap light business.

[Josh Brown]

But you've heard that whole thing that I've laid out.

[Jonathan Boyar]

Absolutely.

[Josh Brown]

Do you follow Vegas policy on Instagram?

[Jonathan Boyar]

No, no.

[Josh Brown]

He is going in on. Because they sold the land out for them from under themselves. And then they use that as an excuse to like, all right, we shrunk the float, we bought back stock. But it's degrading the experience.

[Jonathan Boyar]

Yeah, that could be the case, but there's a lot of growth in there.

[Josh Brown]

What do they own? MGM.

[Jonathan Boyar]

They own. God. MGM Park. Yeah, all those.

[Michael Batnick]

Chart 14.

[Jonathan Boyar]

Yeah, there you go. They have. And then they have the regionals.

[Josh Brown]

Aria, I didn't know they owned the Cosmopolitan.

[Jonathan Boyar]

Yeah, they are.

[Michael Batnick]

That's where I say they own everything, basically, except for the win. The.

[Jonathan Boyar]

The best part of the story. And what the street, really. It's not even in anyone's estimates. 20, 30, they're going to be opening the only casino, legalized casino in Japan. Only one. They think it's going to be a. They're going to own 43% of it. They are projecting, I think, something like $6 billion of revenue.

[Josh Brown]

How do they get that?

[Jonathan Boyar]

That's. That's their projection based on. No, no, no.

[Josh Brown]

How did they get to be the only casino in Japan?

[Jonathan Boyar]

A lot of lobbying. Hornbuckle is really good at it.

[Josh Brown]

Okay.

[Jonathan Boyar]

He's.

[Josh Brown]

He's also made the right connections.

[Jonathan Boyar]

Exactly.

[Josh Brown]

Had the right.

[Jonathan Boyar]

And they only own 43% of it because that. That was the way you need a Japanese partnership.

[Josh Brown]

Same as operating in China.

[Michael Batnick]

Hornbuckle. Sounds like a name from a Taylor Shodden show.

[Josh Brown]

Hornbuckle.

[Michael Batnick]

Yeah. It's great.

[Josh Brown]

Yeah, that's definitely a concealed carry guy.

[Jonathan Boyar]

So, just guessing, just to give you an idea, all of those Las Vegas casinos had about eight and a half billion dollars of revenue. They think they're going to get 6 billion or so from Japan alone.

[Josh Brown]

When is it open?

[Jonathan Boyar]

2030.

[Josh Brown]

So that's the catalyst is in four years, they're going to have a Japanese casino.

[Jonathan Boyar]

I mean, there's other. There's other things. Bet MGM is starting to, like, inflect. They were losing 200 million. Now they're making $200 million a year. And they're smart allocators. I'll give you an example. New York, in its wisdom, they were going to build all these casinos there, and MGM was in pole position to do it. They pulled the roll.

[Josh Brown]

The Nassau county ones, or this was

[Jonathan Boyar]

gonna be in Westchester.

[Josh Brown]

Oh, okay. I didn't even hear about that.

[Jonathan Boyar]

And MGM was gonna do it, but because the New York state legislator is incompetent, at the end of the day, they said, we're gonna have to tax you more this. That. They kept changing the terms. He pulled out. He said, I'm not dealing with this. I want. You know, as much as I want to be in New York, I want a profitable operation. And I like that. I like the discipline. And the other thing about that story is Barry Diller, who I have a lot of respect for, IAC owns about 25% of it.

[Josh Brown]

They own 25% of it.

[Jonathan Boyar]

MGM. Yeah.

[Josh Brown]

Oh, how? How?

[Jonathan Boyar]

Through I. They. They bought it. Joey bought it. Levin bought it during COVID He couldn't put money fast work fast enough in the private markets, so. Or to buy a whole company. So he bought stock. And their whole IAC's whole thesis is going from offline to online. And they saw with gaming, it's going from offline to online.

[Josh Brown]

So that's where Dara comes from, that family tree.

[Jonathan Boyar]

Exactly.

[Michael Batnick]

And Diller and John Malone.

[Jonathan Boyar]

Yes.

[Michael Batnick]

Going back.

[Jonathan Boyar]

They go way, way back.

[Josh Brown]

Can we talk sphere?

[Jonathan Boyar]

Yeah, absolutely.

[Josh Brown]

I'm going to see no Doubt in May. Super excited.

[Jonathan Boyar]

Yeah.

[Josh Brown]

My wife, all her friends, we're all going. I'll probably go back in October to see Metallica because I just. I can't stay away. I am in love with the sphere. Why is there still only one? And what do you tell people that are in the stock? Because it's worked out huge. There are people that would say if Jim Dolan is involved in it, it can't work.

[Jonathan Boyar]

Yes.

[Josh Brown]

Okay. Those people in this world exist 100%. This has worked. He looks like a genius to me.

[Jonathan Boyar]

And full disclosure, in my opinion, I was so against doing this because I thought it was just the risk reward wasn't there.

[Michael Batnick]

Which part?

[Josh Brown]

Because they incubated this inside of MSG.

[Jonathan Boyar]

Yeah. To do $2 billion to put a sphere in the middle of the desert just seemed like this was part of

[Josh Brown]

MSG when they built it. It got spun out.

[Michael Batnick]

You know what's weird? The inflection point happened with the wizard of Oz.

[Jonathan Boyar]

Yeah. They saw you take one show that cost like $100 million or whatever it does.

[Michael Batnick]

They were charging 200 bucks a ticket and it was working.

[Podcast Narrator]

Yeah.

[Jonathan Boyar]

And now there's going to be. Unless it gets blown up, God forbid. One in Abu Dhabi.

[Josh Brown]

So, John, this was $25 stock in the middle of last year. It's 108.

[Jonathan Boyar]

Yeah.

[Josh Brown]

Could you buy it here?

[Jonathan Boyar]

Oh, that's what you talked about earlier. It's very hard to buy a stock after it's gone up so much. That's more of a behavioral finance thing. But I think you probably will make money.

[Josh Brown]

How many spheres can the world profitably support?

[Jonathan Boyar]

What they're. What they're doing is the one in Vegas, I think is 18,000 seat. They're trying. They're doing smaller ones. They announced one in Maryland that's like 20 miles outside of Washington, DC. They're doing one in Abu Dhabi, but they're doing a cap light they are.

[Josh Brown]

They bring in outside investors for each product project.

[Jonathan Boyar]

Exactly.

[Josh Brown]

Okay.

[Jonathan Boyar]

Or for a significant portion of it.

[Josh Brown]

So who puts money like a shopping mall developer that. That wants to attract more bodies to

[Jonathan Boyar]

the mall or an Abu Dhabi government. It just, you know, there's, there could be a lot of them.

[Josh Brown]

Will it lose the magic when there are a lot of them?

[Jonathan Boyar]

I think that's the fine line. And we were talking earlier about imax. That's, you know, it's sort of a special kind of thing. Like, like an imax. This is kind of like an IMAX on steroids.

[Michael Batnick]

It's a premier type of destination event.

[Jonathan Boyar]

Absolutely. But yes, you have to be really careful about losing the. The last.

[Josh Brown]

What. What are your favorite stocks that are about to do what this fear just did?

[Michael Batnick]

Give us your best winners.

[Josh Brown]

All right, everybody grab your pen and pencil. No pressure notes here. No, no. What do you like? What do you like? What's on your buy list right now? What do you like of your. I know the coverage universe is large.

[Jonathan Boyar]

Yeah.

[Josh Brown]

But like, what do you think of these things?

[Michael Batnick]

What is spaghetti meatballs right now

[Jonathan Boyar]

talking about a stock that's done well, but still to buy it. MSGS is up there.

[Josh Brown]

Still.

[Jonathan Boyar]

Still. I would also. If you don't have a position in Uber, I don't understand why. You should certainly do it. Scott's miracle grows interesting.

[Josh Brown]

All right, tell me about, tell me about escrow.

[Jonathan Boyar]

Scott is a family control business. We love these family control businesses. They basically put. They took lit about 1 billion or 2 billion dollars on fire going into cannabis.

[Josh Brown]

Right. That one didn't work.

[Jonathan Boyar]

It was a horrible, horrible idea.

[Josh Brown]

Smg.

[Jonathan Boyar]

Smg.

[Josh Brown]

Okay. New York Stock Exchange.

[Jonathan Boyar]

Yeah. Controlled by the Hagendorn family. James is crazy. He lived right down the street from me. He would fly his own plane to Ohio two or three times a week to work there. The guy's nuts.

[Josh Brown]

Wait, he lived on Long island and

[Jonathan Boyar]

flew to Ohio two or three times a week.

[Josh Brown]

Okay.

[Jonathan Boyar]

He flew himself.

[Josh Brown]

Oh, he's.

[Jonathan Boyar]

And he told me. And he would. No, literally. And he said he would read the Wall Street Journal on the way there.

[Josh Brown]

Which seemed as he flew.

[Jonathan Boyar]

Yeah.

[Josh Brown]

All right. This is a $3.6 billion market cap. It looks like the stock at 62.

[Jonathan Boyar]

Yes.

[Josh Brown]

Looks like it topped at 70 twice in the last year. You think at some point it's going to break through?

[Jonathan Boyar]

It's one of the best consumer staple companies trading at nine and a half times. EBITDA should trade at 12, 13 times. This is a company. You have a 70 year old guy or 69 year old guy who has to be exhausted. The last couple of years have been an absolute disaster. He's going to. My guess, he's probably going to sell this thing.

[Josh Brown]

Why?

[Jonathan Boyar]

Covid was tough for this Covid and pot.

[Josh Brown]

Oh yeah, look at this.

[Michael Batnick]

Yeah, there's no more sellers. Let me ask you another question. Do you follow floor and decor?

[Jonathan Boyar]

I've heard people talk about it, but I don't know why.

[Josh Brown]

Okay.

[Michael Batnick]

It's like a premium flooring company that has gotten annihilated. They took a lot of business from Lowe's and Home Depot. Nobody wants to own the stock for reasons that are very obvious. Anything the housing set. Well, I guess this. Is this a housing play?

[Jonathan Boyar]

It's a housing play. And what's interesting about a huge percentage of their sales are come from Depot and Lowe's, but they bring people into the store. There's also very little private, private label competition there.

[Josh Brown]

So you think at 69 years old he's going to say, you know what the right thing to do here is find a buyer.

[Jonathan Boyar]

And his. He doesn't own all of it. It's as a family. It's a trust or however it's set up. And I think that they might be tired of the stock languishing. They wouldn't cut the dividend even though they should have.

[Josh Brown]

So they own it, they control it. An activist can't really do anything.

[Jonathan Boyar]

An activist can get annoying. Like we were. We've talked about Unifirst. You know, that was a family the Croati family owned. Controlled 70% of it engine capital and to some extent ourselves. Got annoying and you know, got them to sell.

[Josh Brown]

A lot of the way that you explain these catalysts and these ideas reminds me so much of. Mario is my first boss. Okay, so you work for Mario Gabelli from what year to what year?

[Jonathan Boyar]

I think I was there right out of College. So 2002, for a couple of years.

[Josh Brown]

Your dad say that that was a good idea? Like, go learn. Go learn from Mario.

[Jonathan Boyar]

Learn from Mario. He's. He's the best. I love Mario. He is fantastic.

[Michael Batnick]

He's still doing it.

[Jonathan Boyar]

He's still doing it at 83, 84 years old.

[Josh Brown]

Yeah, I, I met him a bunch of times on the set at cnbc. Yeah, he, he's so entertaining. I remember the host just basically turning the mic over. They weren't even trying to ask questions anymore. He would just go and he just had so much to say about so many companies.

[Jonathan Boyar]

I was at a conference last year.

[Josh Brown]

You learned a lot about presenting your ideas from the Gabelli School.

[Jonathan Boyar]

Sort of, I think. I mean, he's a master at it, so I can't say I'm anywhere close to him. I was at a conference where he presented last week. He went through 83 slides in about six minutes.

[Josh Brown]

Yeah.

[Jonathan Boyar]

And he had the audience like. And I had to present after him, which was awful.

[Josh Brown]

Is he in his 80s now?

[Jonathan Boyar]

82. 83.

[Josh Brown]

He's the same generation as like Cooperman

[Jonathan Boyar]

and they're best friends.

[Josh Brown]

All those guys went to Columbia together.

[Jonathan Boyar]

Exactly.

[Josh Brown]

Who else is in that posse?

[Jonathan Boyar]

Cooperman, him.

[Josh Brown]

And was Jeremy Siegel in that group

[Michael Batnick]

or he went to Warden.

[Jonathan Boyar]

Yeah, I think it was Rosen. I mean all those old school value guys, like the names are escaping, but two of them are super good friends. I mean they all.

[Josh Brown]

What a legend, right?

[Michael Batnick]

Yeah.

[Jonathan Boyar]

And he was at the exact right time. 70s, 80s, when you know, finding these intrinsically valued companies.

[Michael Batnick]

That's right. Him and the coupon, like they love stocks.

[Jonathan Boyar]

Yeah. He lives. Love stocks.

[Michael Batnick]

Yeah.

[Josh Brown]

Give us one more for the road.

[Jonathan Boyar]

One more.

[Josh Brown]

One more that you guys like.

[Jonathan Boyar]

Atlanta Braves.

[Josh Brown]

Okay, tell us the story.

[Jonathan Boyar]

And I just don't do sports companies. This just happens to be same thesis

[Josh Brown]

as before with the don't buy Atlassian by accident. Don't buy team B A T, R

[Jonathan Boyar]

K or you be a T R K. Yes.

[Michael Batnick]

So what's the story here?

[Josh Brown]

It's one of those Liberty Media freak shows.

[Jonathan Boyar]

It. Well, it was spun out, so now it's an asset backed stock. Unlike the Dolan's. Yeah. I kind of have a rational owner of Atlanta Braves stock selling about 42. We think it's worth about 60 or so in a sale based on a small premium to Forbes.

[Michael Batnick]

Malone is still the owner.

[Jonathan Boyar]

He's the controlling shareholder. He's 82, 83. He's simplifying his empire.

[Josh Brown]

I was going to say, I can't understand. I call them freak shows. Not. Not the companies, the structure. Yeah, I don't know. I'm an investor in Live Nation.

[Jonathan Boyar]

Yeah.

[Josh Brown]

Stock has done unbelievably well. It's doubled. Yeah, but like some of these other things with the five letters on them, I don't. I've given up over the years.

[Michael Batnick]

What is this? So what's the story?

[Jonathan Boyar]

You own the Atlanta Braves and you own real estate and something called the Battery in Atlanta, which is, you know, office towers, et cetera. And he's gonna settle in the next year or two.

[Josh Brown]

You think he can get 60 for this?

[Jonathan Boyar]

Yes.

[Josh Brown]

Is it like a go private?

[Jonathan Boyar]

Yeah, because like the Knicks. They can't afford to be a public company.

[Josh Brown]

Do you like when public companies own a lot of land like St. Joe or Howard Hughes you mentioned, do you like those types of investments in general? I've never had success with them because I think they require more patience than I have.

[Jonathan Boyar]

I think it depends. Depends on the story. What I hate is when companies give their own nav based on the land at the end of the presentation. That's like the kiss of death.

[Josh Brown]

Why?

[Jonathan Boyar]

Because I don't want that. You know they're talking their own book and I don't like promotional management.

[Josh Brown]

Okay. That's a turn off to you?

[Jonathan Boyar]

Yeah. I want someone just tell me the story, not tell me to buy the stock and let me make my own decision.

[Josh Brown]

Gotcha. What's the last stock you looked at that you passed on?

[Jonathan Boyar]

Dobie was probably up there. Why?

[Josh Brown]

Why did you pass?

[Jonathan Boyar]

Because I just don't know if they're going to be a survivor. They don't have the like, they don't have the data the way that CRM does.

[Josh Brown]

What they said they see themselves as the layer that sits on top of whatever LLM people want to use.

[Jonathan Boyar]

Maybe.

[Josh Brown]

I said, well, what happens when people decide they don't need the layer because they're like professionals, very comfortable interacting with our tools. They have workflows built in Adobe. All we have to do is take these engines that are powerful and put them underneath and people will never give up their subscription because we are the company that makes it easy to use AI to do design. That sounds plausible on the surface. And actually they haven't really lost anything when you look at their earnings reports, that stock never stops going down. It's so the street is just telling them whatever you think your strategy is, you're dead.

[Jonathan Boyar]

So I put it in this order. Uber. I'm uber confident that I'm right. CRM, probably Adobe, I just don't know. And I don't want to invest in something.

[Josh Brown]

It's too hard to tell.

[Michael Batnick]

What about Apollo companies like that, the alternative investment managers. Any read there?

[Jonathan Boyar]

We're starting to look at it. We spent more in the financials on insurance companies. A company like Markel, which is run by Tom Gaynor, is something that's more interesting to us. Who knows what's going to happen in the private credit space? Is this going to be a disaster or not?

[Josh Brown]

Some of those have to be buys though.

[Podcast Narrator]

Yeah.

[Josh Brown]

Probably have this much damage without some, some value.

[Michael Batnick]

With so much of this capital locked up, you can create some sort of a model that tells you what the cash flows are going to be. You could even assume the worst case. All right, they bleed 5% a quarter. That's eight. Let's just go on three years. What's the worst case and what's it worth?

[Jonathan Boyar]

But the problem is are they not going to have any, you know carry going forward just the value of their

[Josh Brown]

do you so part of me feels like the software spook won't end until somebody gets bought out. Do you think that that's a plausible scenario where one of these big SaaS software companies gets a real bid either from a strategic or from like Silver Lake and a big consortium of private buyers or are they just too big?

[Jonathan Boyar]

I think they may be too big but what I think the a big a buyout or multiple buyouts are going to help is making small and mid cap stocks do well. They've underperformed for like 15 years and terrible over the last five years. I think that M and A boom is going to happen there. Interest rates just need to settle. The world has to have some sort of settlement.

[Josh Brown]

Wouldn't that put a floor under these stocks? If we get buyouts for some notable mid cap non mega cap software companies just get taken.

[Jonathan Boyar]

Yeah.

[Josh Brown]

People all of a sudden will say all right maybe I'm not going to sell this so fast. Yeah, but they're not happening yet.

[Jonathan Boyar]

Yeah, no. I mean it's going to take a while. I mean it also just started.

[Josh Brown]

I don't even know what the reaction would be in the share price of the buyer these days. I could picture a collapse.

[Jonathan Boyar]

Yeah.

[Josh Brown]

Like, like think like think about it like if a big CRM like a salesforce said okay that's too cheap, we're buying this competitor abc.

[Jonathan Boyar]

Yeah. But they can't buy it with their own stock now because their own stock,

[Josh Brown]

nobody wants their own stock. Yeah.

[Jonathan Boyar]

So it's hard.

[Josh Brown]

Okay.

[Jonathan Boyar]

But maybe on the smaller ones. But I think for a regular non software company that's going to be the renaissance on small and mid cap investing.

[Josh Brown]

Last thing, how are you feeling about the Knicks in the playoffs? How far do you think we go

[Jonathan Boyar]

every year they go one step further. Right?

[Josh Brown]

That's right.

[Jonathan Boyar]

So you know we'll lose in the finals.

[Josh Brown]

Well you, you don't have to worry about some teams that you've had to worry about over the last couple of years as much as you used to. Yeah, right.

[Jonathan Boyar]

It's, it's a crapshoot Pace.

[Josh Brown]

Pacers are off the board.

[Jonathan Boyar]

Yeah.

[Josh Brown]

I don't know like I Do you

[Jonathan Boyar]

think although Boston's strong and Detroit is.

[Josh Brown]

He came back.

[Jonathan Boyar]

Yeah.

[Josh Brown]

I thought we had this year.

[Jonathan Boyar]

All right.

[Josh Brown]

All right, dude, you have fun on the show today.

[Jonathan Boyar]

This was great. This was a lot of fun.

[Josh Brown]

We, we, we had a blast talking to you, learning from you. I want to tell people, people where they can go to get more information about Boyar and how they can get smarter by following your ongoing research. What would you tell people?

[Jonathan Boyar]

Just visit boyervaluegroup.com we also have a substack for like the regular retail type investors and go there and just listen to me on the World According to Boyer.

[Josh Brown]

All right, how often are you putting the shows up?

[Jonathan Boyar]

Not enough.

[Josh Brown]

All right.

[Jonathan Boyar]

But like, I, I do it when I can get a great guest who's interesting.

[Josh Brown]

Okay, so you're not doing like a regular pasting. It's just like, hey, I got somebody new.

[Jonathan Boyar]

Yeah, exactly.

[Josh Brown]

Okay. You know, you could get Michael Batnik, I think.

[Jonathan Boyar]

I would love to. I would love to have both of you.

[Josh Brown]

All right, we'll do it sometime.

[Jonathan Boyar]

Sounds good.

[Josh Brown]

Ladies and gentlemen, this has been the compound and friends with our friend Jonathan Boyar. Please follow him everywhere. He's putting out information. Very, very bright, Very, very intense research and an all around great guy. And I think you'll learn a lot from him. Thank you so much for listening. Thank you for watching. Special round of applause for John Duncan, Nicole, Rob, Graham, Sean, Shark Kid, Matt, the whole team. Daniel. Who am I missing?

[Michael Batnick]

Travis, Katie.

[Josh Brown]

All right, are we kicking ass this year? We are, right?

[Jonathan Boyar]

We are.

[Josh Brown]

All right, guys, thank you for all that you do. We appreciate it. I know the audience appreciates you as well. All right, that's it from us. Thanks for listening. Talk to you soon.

[Jonathan Boyar]

You know what?

[Michael Batnick]

I've got the ice class figure of Chef Boyardee.

[Jonathan Boyar]

There you go.

[Michael Batnick]

Campbell's something. Going to zero.