Michael Batnick (1:12)

I would hope so.

Adam Parker (1:13)

And he's like the only person I

Josh Brown (1:14)

would say now you do that.

Adam Parker (1:15)

He can get away with it. Like, right?

Michael Batnick (1:17)

Like it.

Adam Parker (1:17)

Actually, Todd Brandon works and we're very.

Josh Brown (1:20)

Well, It's a very well known person, so. So you called Rob.

Adam Parker (1:24)

We were talking about it, and then he called our mutual friend and was like, did I.

Josh Brown (1:27)

Did you laugh hysterically?

Rob Sechin (1:29)

I could not. I could not.

Adam Parker (1:31)

Because it resonated. He's done it to him, too. He's tip to hip.

Rob Sechin (1:33)

Tip to tip or tip to hip?

Josh Brown (1:36)

Tip to hip is okay. Tip to tip is a lot.

Michael Batnick (1:40)

Does this guy also.

Rob Sechin (1:42)

You can't. You can't.

Josh Brown (1:43)

No, no, no, no.

Adam Parker (1:44)

He's amazing.

Rob Sechin (1:44)

He's amazing.

Josh Brown (1:45)

It's Michael Jordan.

Michael Batnick (1:47)

No, no, no. I had a great joke that was not appropriate for their ways.

Josh Brown (1:51)

Yeah, let's not do that.

Rob Sechin (1:52)

The equivalent of him.

Josh Brown (1:53)

All right, boys, you ready to rock today? Something tells me this is going to be one of the alltimers. I. I just. It's in the air. I don't know if it's spring. I don't know if it's you guys. Maybe a little bit of both. I'm. I've been looking forward to this all week. What about you?

Michael Batnick (2:06)

All month.

Josh Brown (2:06)

All month.

Michael Batnick (2:08)

Where's home base for you?

Rob Sechin (2:11)

Depends on who's asking. But mostly for the irs.

Josh Brown (2:15)

Mostly for.

Adam Parker (2:18)

If you guys don't mind. Oh, yeah.

Rob Sechin (2:20)

Oh, sorry, Bob.

Michael Batnick (2:21)

You look very smiley. You taking edible before you come on?

Rob Sechin (2:23)

No, this is me, bro.

Josh Brown (2:24)

He's pumped. I'm telling you. It's in the air.

Michael Batnick (2:27)

All right.

Josh Brown (2:27)

Oh, I hear it really is.

Adam Parker (2:28)

Remind me. Wire on the right or the left?

Josh Brown (2:31)

Wire on your left.

Adam Parker (2:32)

Thank you.

Josh Brown (2:33)

All right.

Rob Sechin (2:34)

Is it smashing down my flow?

Michael Batnick (2:36)

You look great. I had flow back in the day. I was nice. 18 year old, had some hair. Not anymore.

Rob Sechin (2:43)

It's possible again these days.

Michael Batnick (2:46)

No, it's not. Josh, is it possible?

Josh Brown (2:48)

No. You have to go to turkey. Then it's possible. It won't be your hair, though. It'll be from a dog.

Michael Batnick (2:53)

But you can get beside the dog.

Josh Brown (2:55)

You can get a dog.

Rob Sechin (2:59)

All right.

Michael Batnick (2:59)

All right, let's pod.

Adam Parker (3:00)

All right, two seconds.

Michael Batnick (3:01)

Two seconds. So what else is going on, boys?

Josh Brown (3:05)

Oh, I heard a crazy story about you.

Rob Sechin (3:10)

You look nervous. You're sweating.

Josh Brown (3:12)

You were doing closing Bell with Leslie Picker, and right before the segment, you looked up her credentials to make sure that she was up to the level to ask you why you think the market's going up or whatever. She's gonna ask you.

Adam Parker (3:28)

That's not true.

Michael Batnick (3:29)

There's no way it's not true.

Adam Parker (3:30)

I did look credentials, but that was only because I was trying to just resonate with something about her background. It wasn't to see if they were up to this.

Rob Sechin (3:38)

Trying to connect.

Michael Batnick (3:39)

Sounds crazy. You know, the first time Adam was on, he was super duper sweaty.

Josh Brown (3:43)

She's not mad about it, but she thought it was funny.

Adam Parker (3:45)

Crazy sweaty, you know, And I really feel bad she took it that way. I was actually.

Josh Brown (3:48)

No, no, no, not in a bad way, but she's just like, all right, am I good now?

Rob Sechin (3:53)

No.

Adam Parker (3:54)

She was very impressive. I've been one. I've been out with her many, many times before. I just. I just looked her up.

Michael Batnick (3:58)

That is awkward.

Adam Parker (3:59)

Sometimes you're like, oh, you went to ucla. Do you know, whatever? I was just trying to connect, you know, And I didn't have. I didn't. I didn't prepare.

Josh Brown (4:06)

I was. I was. I was screwing with her on the commercial breaks. I was looking up. She was up for a Gerald Loeb award, and I was asking the producers to verify what is that. No. Can you please verify that Leslie was nominated for this award? That's Shout. Shout out to Leslie Picker.

Adam Parker (4:21)

Yeah. All right. All right. I hope she sees that. I genuinely.

Josh Brown (4:25)

She loves. She loves you.

Adam Parker (4:28)

Episode 239 oh, wow.

Josh Brown (4:30)

2 39.

Michael Batnick (4:32)

Whoa, whoa, whoa. Stop the clock. Here's a word from our sponsor. Support for this show comes from public.com if you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge on Public.

Josh Brown (4:47)

You can now create AI agents that handle all of these tasks on your behalf. Just describe what you want to do in plain English, like if the Vix

Michael Batnick (4:56)

hits 25, buy a put option on the S&P 500.

Josh Brown (5:00)

Or if my cash balance goes above $20,000, move the excess into my direct index. You approve the workflow and your agent handles the rest.

Michael Batnick (5:11)

Monitoring the market, watching your conditions and executing your strategies exactly as defined. Public is the world's first agentic brokerage, an investing platform driven by your intent, not just your clicks.

Josh Brown (5:21)

Oh, NPs. You can also get full read and write access to your account via the public API.

Michael Batnick (5:28)

Go to public.com compound and earn an uncapped 1% match when you transfer your portfolio. That's public.compound paid for by Public Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SIPC advisory services by Public Advisors LLC, SEC registered advisor.

Josh Brown (5:46)

Complete disclosures available at public.com/disclosures this episode is sponsored by Clearbridge Investments. Amid rising geopolitical tensions and continued market uncertainty, investors are looking for stability. Even before recent developments in the Middle east, stocks backed by real assets were gaining momentum and can offer more predictable cash flows as volatility increases. Position your investment portfolio for wider equity participation with fundamentally driven Clearbridge active equity strategies. Clearbridge, a Franklin Templeton company. Go to clearbridge.com to learn more. Welcome to the Compound and friends. All opinions expressed by Josh Brown, Michael Batnik 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. Rob we've done this 239 times so far. 238. Going into 239.

Rob Sechin (7:06)

And this is my virgin experience. I kind of rank it.

Josh Brown (7:09)

The we ran out of people and

Rob Sechin (7:11)

then bottom of the order.

Josh Brown (7:13)

All right guys, they didn't trust you

Adam Parker (7:15)

to go on solo either.

Rob Sechin (7:16)

They had to like I needed training wheels.

Josh Brown (7:19)

Training wheels. Well, if AP is here, we know it's going to be okay. Adam Parker is one of the fan favorites on this show. Let's do your intro first. Adam is the CEO and founder of Trivariate Research. Prior to Trivarit Research, Adam was the founder and lead portfolio manager of Trivariat Capital, an equity long short hedge fund. Adam is also an investment advisor board member for Rob's firm, New Edge Wealth. That around when did you guys first meet?

Rob Sechin (7:50)

A few years ago.

Josh Brown (7:51)

All right, all right. And making his first appearance on the Compounded Friends. I'm so excited about this. Rob Sechin is the CEO, managing partner and co founder of New Edge wealth and co managing partner of New Edge Capital Group. Rob was an advisor at Morgan Stanley, a director at Lehman Brothers was not his fault and a director at ubs. Prior to founding New Edge, he has been recognized by both Barrons and Forbes as a top 100 financial advisor. Give it up for Adam and Rob. Welcome to the show, guys. All right, question one. No, I'm kidding. We have to start, guys. We have to start with software. There was another blow up overnight and into today in ServiceNow. This seems to be like a recurring nightmare where every week it's another or Every month it's 1, 2, 3 of these stocks. They're already in 50% drawdowns and then they report what looked like a good quarter on the surface and they go even lower. Start there. Is there an end in sight? What do you think?

Adam Parker (8:57)

Do you want me to go or

Rob Sechin (8:57)

do you want to go? It's up to you. I'll start. I mean, I'm not ready to call a bottom in the group, but certainly there's a lot of value being created. It's oversold. We've owned a lot of positions. As you know, we owned Adobe at one point in time. We keep trying to rotate into the higher quality names so maybe we can participate if there is a turnaround. But it seems like these, these stocks are guilty until proven innocent. And this trend of short software long semis is going to be in place for as long as it's in place. You look at what More Capital always says every now and then. Louis Bacon Something comes along and knocks you into a different atmosphere. Something came along and knocked them into a different atmosphere and it's not changing and it may not be changing for a while. But that doesn't mean that value is not unlocked at some point in the future in the form of Earnings that

Josh Brown (9:55)

sustain, you know, it's a good sign. I want to call Fidelity and ask them if they could hide my software positions from me so that when I log in I don't have to look at them. I already know they're down.

Adam Parker (10:05)

I have a view on this.

Josh Brown (10:06)

Yeah, I assumed you did.

Adam Parker (10:09)

I want to be kind of like, you know, I feel like I start all my meetings recently with like everything I'm saying could be wrong just because it feels like the uncertainty is more than normal. So I feel like I got to bookend my comments. But like. And we've had some pretty bad calls this year, I'd say at the sector level. I'm just saying I'm pretty self. I'm pretty honest about that. Like we've had some good calls and bad. We've been recommending healthcare that's been crap. Like I could go through it, but we've been seeing the ball clearly on software. It's a good call we've had and our call has been when the multiples contract like they have, what comes next is they miss on earnings and then eventually they miss on sales. And so I'm not surprised on now at all. It's one of the ones that people love and defend the most. And the reason I think these companies are going to miss on earnings is because the analysts have 80% gross margin and the same net margin every year going forward, 27, 28, 29 in their models. And. And how are they going to attach all the AI tools that their customers need without some spending? And if you're JP Morgan CTO or Morgan Stanley cto, you're going to pressure them on pricing eventually because you're going to realize, wait, guys, we can attach our own tools. We have a massive organization so there may be value gets but I think what's going some of the names but I think what's going on is they miss first on earnings and then eventually they miss on sales. And what the analysts are so used to doing is saying I'm calling my CTO contacts. They're telling me they're never getting rid of now I call the IR guy. We think it's a SaaS apocalypse. We cry in our beer together. And none of that's what's going on. It's not about today's fundamentals. It's about the distribution of outcome of 2030 fundamentals. So some will work and some won't. But the median software company is going to be bad.

Josh Brown (11:35)

So you UBS finally last week came out and said it's not the bottom. And here's why we talk to CTOs and they're all using the same term, cost containment.

Adam Parker (11:45)

Yeah.

Josh Brown (11:45)

None of them are gonna accept this automatic role. Right.

Adam Parker (11:48)

They're gonna pressure pricing. Right.

Josh Brown (11:50)

But how much of the, how much of the earnings power of the software group for the last few years has just been like, we are indispensable. We are the system of record for these customers. They can't get rid of us. We also have the ability to raise prices and nobody does shit. And now it's not so automatic.

Adam Parker (12:06)

I think that's right. And I think the other thing is like when it comes to software selection, kind of maybe perversely, the ones you want to buy are the expensive ones. You don't want to buy cheap stocks.

Josh Brown (12:15)

I heard you saying that. Could you explain what you mean by that?

Adam Parker (12:17)

If you take this premise that maybe we all know individuals are idiots, but the market collectively is smart. When you get stocks that get cheap, on average, they're cheap for a reason, which is the probability they're disrupted is higher. So the ones that are more expensive, the security software Cadence and synopsis, like they're more expensive for a reason, which is their technological obsolescence risk is lower. And so when you go back and study like what works in the rebound, it's not the slow growing ones that are cheaper, it's the fast growing ones. So some of these are going to work. I kind of view it a little bit like a lot of software is going to turn into like, you know how like a company wants to fire a million people so they hire McKinsey and McKinsey says you should fire a million people. And then they fire a million people. They say, yeah, the experts sold to do it. Some software is going to turn to that. Right? Because imagine you're at Morgan, you're at New Edge and you're like, I cloud coded some security, Rob. Let's implement it. Right?

Josh Brown (13:09)

Yeah.

Adam Parker (13:09)

And then somehow there's a breach of all the advisors, like you're fired and he's probably fired for being a dipshit for listening to. So you're just going to pay Crowdstrike or Palo Alto or whatever just because you have to have an expert in case something goes wrong. Like you may get some of that happening in software for sure. But the ones that are more expensive are more expensive for a reason. And that reason is they're less likely to get disrupted.

Josh Brown (13:28)

It's got to be hard because I know you're Claude coating your face off. I know your team Is like, like my team, like every firm. The people that are involved with tech are going crazy right now at every company in America. It's hard to then look at the board and look at stock prices and be like, I want to fade this.

Adam Parker (13:48)

I'm close with a number of his employees and one of his guys who's a stock picker comes to a lot of our events and he won the best stock picker at our main event last year and has crushed it in

Rob Sechin (13:58)

tech and all technology based. I mean, he listens to this.

Adam Parker (14:03)

Give a shout out.

Rob Sechin (14:04)

So Jay is his name. He's unbelievable. He's done great, talented. But we've leveraged tech throughout the start of our ecosystem. It was a tech enabled solutions firm. We built new edge on top of institutional grade infrastructure. We didn't start it out of a private bank. It wasn't an idea in my basement. It wasn't built upon my practice. It was built on infrastructure on Rails. And that infrastructure allowed us to bring in technology, plug and play different things and try them religiously. We rolled out cloud enterprise to everybody a month ago. So we're trying to be on the front edge of, of kind of everything we do. In portfolio management we have a very quantitative approach. You know, I slept at a Holiday Inn last night when I go on tv because the reality of it is, is we're sometimes reverse engineering the story out of the math that drives the positioning that we're going into. And you can see, you can see a lot of these things. But I am amazed. It's like I have 15 analysts working for me at my fingertips. So when I was a banker back in the days at Morgan Stanley and doing analysis, some MD would come to me that we'd iterate and then I'd go back to him two days later I am doing that same thing. We're working on an acquisition right now. Several. And I'm doing that same thing. And it's instant feedback. So you can, you can kind of interact.

Adam Parker (15:31)

Make me think of, he's probably like me where like I just have too many interns, right? Because I say yes, can my daughter, can my nephew.

Josh Brown (15:37)

I know the feeling.

Adam Parker (15:38)

The problem is like they don't have any skill. It used to be I'd be like, hey, go, go. Tell me all the acquisitions Microsoft made in the last five years and summarize what technologies are buying now. They do two seconds to go back. So I don't want to do it for the other nine days and nine hours and 40 days.

Josh Brown (15:53)

The intern fans, the machine you know,

Rob Sechin (15:56)

I would tell you, I would tell you that the intern. Now the average is gonna be good to great and the great is gonna be game changing for the enterprise. I just can see efficiency happening all over the place. So while we might not lay anybody off as a result of this, I can tell you our pace of hiring will slowly slow.

Josh Brown (16:21)

I'm hearing this everywhere.

Rob Sechin (16:22)

And then ultimately profitability is gonna explode as a result of productivity. And I think that's endemic.

Josh Brown (16:29)

So here's the problem then. So then here' you have, I don't know what it is, 150, 200 enterprise SaaS, companies in the public markets. Forget about pricing because no one's gonna be able to pull off a big enough increase. The real problem is most of these companies are selling by headcount. And what we're all saying here is headcount may not shrink, but it ain't gonna grow to the extent that it used to anywhere.

Rob Sechin (16:59)

I'd like to know his view on that. Because the reality of it is what does that mean for profitability for these companies? If they still have essential kind of infrastructure and tools, doesn't that ultimately make their profitability explode as well? And isn't that a positive thing at some point? And so should we just watch themselves?

Michael Batnick (17:21)

We have charts for this, John. So ironically, throw up Charge 5 so ServiceNow reported this morning down 18%. Not bad. They're headcount by department.

Rob Sechin (17:30)

It was my final trade two days ago or yesterday.

Josh Brown (17:34)

The earnings. Have you learned nothing from me?

Rob Sechin (17:35)

I do it all the time.

Michael Batnick (17:37)

Yeah, we've all been there. Q1 20, 25, 26,698 employees. Q1 2026, 29,732. John, go to the next chart. Their stock based comp is exploding like they have. Have they not gotten the memo at all that the street does not like this? Look at that. It's breaking out.

Josh Brown (17:57)

SBC didn't matter until it really mattered.

Adam Parker (17:59)

Yeah, stock based competition is now we're going down like the twig down the branch, down the tree. But like it's just a beta factor. So when tech outperforms the ones with lots of stock bay comp outperform when underperforms the ones with lots of underperform. So it's just a beta factor because it's like an R and D intensity factor. But you know, you could have died on that hill, you would've lost a lot of money on the stock based comp hill over the last 15 years. So I got you gotta manage risk around it but like, I kind of agree with Rob's point. Or big time. I agree with it. Like, it's about productivity. And the question is, like, what's in the price? Look at Walmart maybe as the ultimate poster child, like, what would make the market go parabolically higher? One of the things would be Walmart gets on. It says in 2030, we'll have less employees than we have now. Right.

Josh Brown (18:38)

Which might actually end up being the case.

Rob Sechin (18:39)

It might.

Adam Parker (18:40)

And there's a reason it trades at whatever 38 times forward earnings. It's not because they have 3.5% net margin or whatever the number is now. It's because you're in the prices 5 or 6 eventually that they're going to nail predicting how many jugs of milk are in everything.

Rob Sechin (18:51)

I think that's too early, is his point. We are at the tip of the spear for these companies, figuring out whether they can make that migration, figuring out the implications for the business. You guys probably are too. We are too. We're learning as we go and we're learning at a pace that I've never seen before.

Michael Batnick (19:12)

Gee, I wonder why Wall street hates why the country hates Wall Street. You just said, what would make Walmart really go parabolic? If they come out and say, by 2030, we're gonna have less employees.

Adam Parker (19:22)

So economists and stock people are, have never been more incongruous. Like, if you, if you. I remember when I was at Morgan Stanley, our economists would say stuff like, I want capital spending and I want hiring. And I'm thinking, if I own a stock and they announce either of those two things, I'm selling it immediately. Right. Like there's a giant disconnect between.

Josh Brown (19:37)

That doesn't sound good.

Adam Parker (19:38)

Right, right. Like I don't want hiring at my company.

Josh Brown (19:40)

Or like more potential customers with higher paychecks.

Adam Parker (19:43)

Yeah, that's all bad. More healthcare. But so they, the GDP and the economy are kind of different than picking stocks. Right? I mean, look, you had a guest on last week or the week before, a personal friend and favorite Encore. Encore. Crawford.

Josh Brown (19:58)

Do you know 70,000 people and counting have watched that episode? She is such a star.

Adam Parker (20:02)

I know her for a really long time.

Josh Brown (20:03)

I met her through you.

Adam Parker (20:04)

And you skipped. You skipped a couple of things about her in her bio, one of which she has a PhD from Stanford and the other is she has the number one performing growth fund in the last 12 months in the entire of all growth managers. All right, but we told her after, she's very modest. But she said, yeah, she said something that is totally awesome. Okay. And I've stolen it from her for the last week, which is people who are like bearish on. I don't, don't get it. Like they, like they, they. If you think like it's a bubble and it's over.

Josh Brown (20:28)

Nonsense. She said it's nonsense.

Adam Parker (20:29)

Yeah, yeah. And everything sounds smarter when she says it for sure. But like I just feel like, you know, we're on the precipice of it. It's like, you know, the reason there's earning estimates that are 18% for the S&P this year and 17 next year and 43 in tech this year and 25 in next year is because you're just, you're like in the, in the, in the. We might be in the fifth inning of the stocks, but we're in the first inning of like it hitting the number.

Michael Batnick (20:51)

You think that's why small caps are breaking out? Part of the reason.

Josh Brown (20:56)

Yeah. Maybe something, you know that the s and P493, so no, MAG7 earnings are supposed to be up 15 point, let's call it 16%. There's gotta be some AI productivity in there.

Adam Parker (21:09)

There's gotta be, has to be, there's gotta be.

Josh Brown (21:11)

Why else, why else would that happen?

Rob Sechin (21:12)

No, there is, it's not 8% GDP growth, but there is underlying economic strength. Right. You can definitely just, if you look at the price action of just about everything, whether it be spreads it is telling you that there is a miss between positioning and what's happening in the underlying economy. I don't think there's anybody better at reading the tea leaves than Tom Lee. I think we could all agree that this is the best data guy out there. Tom Lee sees around corners. Frigging unbelievable. And how does he see around corners? He's watching these cross asset movements. Right. And you know, one thing that scared me, you might have said it on your show, is he kind of thinks there's going to be this like mid year pullback that scares the shit out of everybody.

Josh Brown (22:03)

Test the new Fed chair.

Rob Sechin (22:05)

Yeah. So.

Josh Brown (22:06)

And meaning if I don't know why something that the market doesn't expect, there'll be a big overreaction.

Rob Sechin (22:12)

Yeah, okay.

Adam Parker (22:13)

Yeah.

Rob Sechin (22:13)

So. But when he's looking at these things and seeing what's happening in, you know, quality names like the semis and what's happening in software, he's listening. And many don't. Right. Many get sucked up in the headline narrative of what's happening in the war and they start to think second and third derivative effects of what that, what could be. But what is it today? What is it?

Adam Parker (22:44)

Yeah, I mean I think if earning like the way to think about it might be if The Street's got 43% earnings for tech and yeah, a lot of it's micron Nvidia but let's just say it's got 43% growth and let's say the real number's 30 and it's got 25 next year and the real number's 15. Tech's not going to be 45% cheaper in a year because it stayed flat for the entire next 12 to 18 months. Unless there's a much bigger growth scare coming in 28 or 29 or something like the odds are just the absolute level of growth is high enough that things work. And so I think the market woke up to that a few weeks ago. But like where could people be complacent? Like I did a big risk dinner this week with a bunch of risk officers and like exciting. Nobody thinks. Yeah, it's not, it's not.

Josh Brown (23:23)

Rob wasn't invited to that.

Adam Parker (23:25)

No.

Josh Brown (23:25)

Okay, Rob. I wasn't either.

Adam Parker (23:26)

Yeah, it's Rob. Not his, not his crew but like

Josh Brown (23:30)

annual value like risk.

Adam Parker (23:32)

What people are like. If you say what are people complacent about? It's probably that everybody thinks oil eventually is going to come lower and probably faster. So like right now nobody's taking their numbers down for input costs in industrials or for you know, select, you know, energy sensitive consumer because they just think, ah, you know, second derivative of Hormuz news is positive. If I get bad Hormuz news market's down 40bps. If I get good, it's up 150. So like you know, whatever it's.

Josh Brown (24:04)

Nobody wants to look, like, nobody wants to look like an asshole again. You're going risk off.

Adam Parker (24:08)

You called 17 to last zero. Like tariff problems. So I'm not, I'm not being the Hormuz problem guy, right. So like people are a little bit, you know, so I'm not saying that's going to happen but I just think people are playing for. So like on the Fed, like I'm not sure cutting rates is going to be bullish for multiples.

Rob Sechin (24:24)

Like it wasn't happening. Frankly, how can it even happen? It creates an inflation expectation problem that is going to be pretty dramatic. I think it's why you have to own some energy in the portfolios is kind of like a, like a tail hedge to this.

Josh Brown (24:39)

Do you think most market participants would prefer the price of gasoline go back to 3 and change versus another 25 basis point rate cut. I do, I do too.

Adam Parker (24:50)

Yeah, for sure.

Michael Batnick (24:51)

Yeah, yeah, no doubt.

Josh Brown (24:52)

Well there's a higher likelihood of that to Rob's point.

Adam Parker (24:55)

But also like it depends where you're on the cycle. Like when it was the end of 2022 and you perfectly covered your Nvidia, Tesla and Meta shorts which are all down 65% and you started buying the Max long on January 1st. You're Logic.

Rob Sechin (25:06)

Actually it was Dec.

Adam Parker (25:08)

Okay, okay. You gotta get the position. You're big, you run a lot, you gotta get back. Okay, so then your logic was well, the Fed's closer to the end of the hiking cycle than the beginning. Eventual accommodations coming. The Fed action is going to be super bullish for multiples. Nailed it. Right. But the question is now three plus years later, if they get incrementally dovish, is that really like awesome or is it because like stuff's slowing and therefore like at some point.

Rob Sechin (25:29)

Yeah. It becomes a growth scheme.

Adam Parker (25:30)

Yeah, it's a little bit different.

Josh Brown (25:31)

I'd rather have the gas price come down. Is the semiconductor rally the most out of control thing you've ever seen? No, it's not.

Adam Parker (25:37)

No.

Rob Sechin (25:38)

I think it's justified too.

Adam Parker (25:39)

Is it the most out of control? I've seen a lot of out of control.

Josh Brown (25:42)

I think it's so completely out of control. The pace of it and the relentlessness.

Michael Batnick (25:46)

Micron is bigger than Johnson and Johnson.

Adam Parker (25:49)

So look, I'm, you know, I used to. Hold on, hold on, hold on.

Josh Brown (25:54)

Last 16 days, 35% for the semis. 16 days. It is the best rolling 16 day. I know it's a random number. Best rolling 16 day period in the history of the SMH. Never before. Yeah, and I understand the reasons. I'm not, I don't live in a cave but like people will just buy anything semi related.

Adam Parker (26:17)

I think when you look, when you look at semis and you look at tech, you really have to look at it like even software. Look at Software X, Microsoft. And with Microsoft, when you look at semis, you know your tech book is going to look like it grows more slowly and is more expensive than the tech index. Unless you're overweight in Micron because Micron trades at four and a half times next year's earnings and is growing like 100%. Right. So you know, we know it's cyclical

Rob Sechin (26:40)

but you got to see something that comes along and challenges a proud probability of that outcome.

Josh Brown (26:49)

And I don't know if them earning enough.

Rob Sechin (26:51)

Right. That is right. And as long as I don't know what that thing is, it's hard to see right now, but. And the pianos don't hit you in the face, they hit you in the back of the head.

Josh Brown (27:00)

Nvidia has grown earnings substantially in each of the last four quarters. Stock has not gone up.

Adam Parker (27:06)

I think the stock will go up and go up a lot.

Josh Brown (27:08)

I know, but I'm saying two things can be true. You can have a stock price that just refuses to go along with incredible fundamental news, which is all we've ever seen.

Adam Parker (27:18)

Micron's estimates, plus or minus enough. Somebody can. I'm sure somebody will comment on this, but like, There were roughly 50 bucks in earnings in earnings per share for next year before they reported, and they're roughly 100 now. Yeah, it's the magnitude. One of the things we're doing right now we're researching is look at all the companies where two years earlier the analyst estimates were most off, like, ever.

Michael Batnick (27:40)

And those are. Those are the best stocks.

Adam Parker (27:41)

And this guy. Yeah. In both directions. Look at the ones where they weigh off too high too, just to see if there's a pattern. But, like, this is one of the bigger free cash flow estimate misses ever in 25 years in the market.

Michael Batnick (27:51)

I want to.

Adam Parker (27:51)

So when you say it's crazy, like, yeah, the price action is massive, but it's also one of the crazier.

Josh Brown (27:56)

It's quite. Because it was such a huge change and nobody knew it was coming.

Adam Parker (28:01)

Like rough water. Mag. Two people had like, like a billion and a half in free cash flow for next year. And it was like three and a half billion over two years. And now it's 80 billion over the two. Like the magnitude is like zeros off.

Josh Brown (28:12)

Yeah.

Michael Batnick (28:13)

Adam, I want to do one last thing on software before. Before we leave that. So you talk to a lot of. You have a lot of hedge fund customers. I'm imagining that nobody wants to touch software, although I'm sure there's a lot of dip buyers that got their hand burned. But ServiceNow, for example, so they report this number, number of customers with $5 million. ACV John, chart three, please. And they went from 434 customers paying $5 million up to 630 in Q1 with a 97% retention ratio. Now their margins came down, but this is still a good business.

Rob Sechin (28:45)

100.

Michael Batnick (28:46)

The problem is nobody sits on the macro.

Rob Sechin (28:48)

I mean, you're gonna have to manage all this, but the stock is down.

Josh Brown (28:52)

But it's scary. They did 22% revenue growth. They hit the Numbers and the Stock still lost 20% of its value after being down 50 something percent. Isn't that scary?

Michael Batnick (29:03)

So when you talk to your clients like are they, what's their view? Is everybody like I could this, I can this on investable, how do I, how do I buy this?

Adam Parker (29:10)

So the only thing I'd parson on what you asked me is I think it really depends if you're long only or a hedge fund. Right. Most hedge fund money like they don't have to own any of this stuff. Let's do long only or they could pair off. Right. So it's really more the long only guy who is what he is. He's a software analyst. Like why does GM make cars? Software analysts. He's got to pick winners, losers in the group and identify how to outperform the software Benchmark. And the PM's job is to figure out what exposure to the Agri group should be. So I think most analysts are going to say I want to own stuff where the revenue is accelerating. And if you look at a two by two grid of beat on revenue, beat on earnings, missed on revenue, the worst bucket is what now reported which is you find on revenue and you miss on earnings because the market doesn't know where the clearing margins are. But you just expose the fact that like your margins in the out year

Michael Batnick (29:57)

are lower and margins came down. Their guidance for margins came down.

Adam Parker (29:59)

So it's not trading 18% lower today it is, it might be trading 4% lower on 2030. Like you have to warm yourself up to that idea of like the uncertainty on the margin profile just change. There are assets including now could be one of them. And I'm just not smart enough to know that. This could be like a great entry point in a two or three year. But I need to see some price action that we all know are going to shake our head. Yes. Where a company misses and doesn't, what

Josh Brown (30:22)

does that go down? That's it, that's like a miss and stock doesn't move.

Adam Parker (30:25)

I haven't seen a single penalty for missing that hasn't been harsh. Today was the first day where I thought a couple beatings were good. URI Texas Instruments up massive and you know, but if we track this thing, the penalty for missing versus reward for beating ratio and not only has it been very skewed toward the penalty harsher, but it's like cheap stocks missing are going down more than expensive stocks that are missing.

Michael Batnick (30:47)

So what type of market does that

Josh Brown (30:48)

happen in a toppy market?

Adam Parker (30:52)

Like yeah, I think the good news, I guess is more companies are beating than missing. So that's why the market's fine. But like if more companies start missing, like we can't buy stuff where we don't have any evidence. Like the best thing ever is like, you know the old days, like caterpillar misses and it's on and you're like, all right, game on. Like, I mean missing is on.

Rob Sechin (31:12)

Missing.

Adam Parker (31:12)

Yeah, but we're not seeing missing's annihilated, right? Yeah.

Rob Sechin (31:15)

Yeah.

Josh Brown (31:16)

Put this tech multiple compression chart up. This is a thing. What do you guys make? What do you guys make of this? I think it's seven. Here we go. So let me narrate this for the people that are listening, not watching. We're starting in 2020, right around Covid time. We were at 16 times for text forward PE ratio peak out in the 2021 bubble at 28.7, fall to a low of 18 and a half during the year of efficiency 2022. Then we rally through 2024. We hit an all time. Not all time, all time in this chart 32 times. Forward earnings drops early 2025 to 21, back to 31 at the end of 2025. One of the best years ever. And now here we sit at 19 huge D ratings on forward earnings very quickly, very fast, very unexpected. I don't remember reading any strategist.

Adam Parker (32:11)

Micron's estimates are up 100%.

Josh Brown (32:12)

I mean, is that all this is? Is the growth rate growing faster than

Adam Parker (32:16)

the estimates are for 43% growth in earnings this year, then that, that you can have multiple being high because the E went down or cause the E was nothing, the P went up and in this case it's more.

Josh Brown (32:27)

The E is going up really fast and pricing is.

Adam Parker (32:29)

I'll give you one nugget. If you look at the S&P 500, the whole 500 Q126 versus Q125 year over year growth. 45% of the entire S&P 500's growth was from Micron and Nvidia.

Rob Sechin (32:41)

If you believe this. This geopolitical risk leads to slower economic trajectory. Markets are going to pay up for that growth and you're going to see that go right back up.

Josh Brown (32:52)

Because if there are less companies growing, they'll go right back to the old playbook or just the E. If the

Adam Parker (32:57)

E comes in and it's on multiple, the stocks will be 40% higher or, or Micron will be up or whatever. So it's, it's a, it's It's a multivariable world and you just showed one variable or whatever the criticism.

Josh Brown (33:09)

Yeah.

Michael Batnick (33:09)

What were you telling client? What did you make of the stair step lower during, during the war, the fact that the market just wouldn't puke. What was that telling you? I know it's hindsight now, but it

Adam Parker (33:20)

made me more bullish.

Michael Batnick (33:21)

Same.

Josh Brown (33:22)

Yeah, we didn't have like a, we didn't have a panic. We went lower.

Adam Parker (33:26)

I came into the year.

Rob Sechin (33:26)

So that's, that's actually what kept us invested completely through that. Now we did upgrade quality. Like I said, when you get any volatility, it's a great opportunity to kind of pivot to a higher quality name in the same sector that's not getting derated as much or has shown more resilience in their.

Josh Brown (33:46)

Oh, could you say, wait a minute, we can now own this?

Rob Sechin (33:48)

Yeah. Especially if you're, especially if you're a long, only relative investor in a certain class, whether that be dividends, value growth, and you're kind of managing to a benchmark in a portfolio construct. And you can say, okay, now I can own this. I could never own this. I mean, for so long we never owned Nvidia until It traded below 30 times earnings. We waited it and we missed a lot in doing that, but boy, did we buy it at the right time. So if you can still employ your discipline and when volatility creates the opportunity to upgrade quality and you can move from X to yield, you do it. And that leads to a lot of

Josh Brown (34:29)

outperformance volatility, though, to your point, within a reasonable, within a reasonable ban, like not a free fall, where all of a sudden it's like, wait a minute,

Rob Sechin (34:38)

that's that whole different atmosphere thing, liberation.

Josh Brown (34:41)

We didn't get that this year.

Rob Sechin (34:42)

And you won't get it from geopolitical. You get those from financial issues. Right. So this credit issue that we kind of. I don't really believe, you know, I know a lot of people do, but I've been an ardent defender of the equity that sits beneath and the economy being strong enough that these private equity firms are not walking away from these businesses. And the credit's gonna be fine. And the market's kind of telling you a little more, at least the more public markets that spreads are remaining contained. And listen, a lot of the credit in private credit sits at the highest tier of the capital stack. So you gotta wipe out a lot before they're wiped out, right?

Michael Batnick (35:22)

Yeah.

Rob Sechin (35:23)

So from my lens, it is that. That is more of a concern than anything. Because that's the liquidity that feeds the ecosystem that we all thrive off of the financial conditions. Now, I will say that if you cannot raise money going forward. We talked about this on the other show. The reality of it is, is if your forward ability to raise capital from private investors has been impaired and that was your growth strategy, right, Toast. And though they're not coming back right away, but the institutions are staying in because they see that. They see the value of this. You're going to be more discerning because you have to be because you don't have as much capital. And so the strong are going to get stronger. They're going to get financed in. The weak are going to require more investment. And some of them will get it

Adam Parker (36:15)

by KKR or something. Maybe buy some kkr.

Josh Brown (36:19)

Those stocks might be bottoming.

Michael Batnick (36:20)

Look at this. So Blackstone.

Adam Parker (36:22)

Yeah, yeah. No, I mean, maybe Blackstone. I mean, I didn't know which one you're going to show, but I.

Rob Sechin (36:28)

Tax law sold. Not me, the team tax. I sold Blackstone. I got a lot of shit on it on the show because I always said you championing these things, it was just tax loss.

Michael Batnick (36:38)

So you bought something else.

Rob Sechin (36:39)

We didn't buy something else in the space, but we would likely go back in to Blackstone.

Michael Batnick (36:44)

All right, so Blackstone got whacked off today. It's down 6%. And this is the private credit fundraising on a gross basis by quarter. Okay, down almost in half, not quite 3.3 billion in the prior quarter, down to 1.9 billion. This is gross, not net. Okay, So I don't think there were outflows. So a dramatic, dramatic slowing.

Rob Sechin (37:02)

But not to think about this.

Josh Brown (37:03)

This is the media narrative pausing people who are about to allocate 100%.

Rob Sechin (37:10)

I mean, and it's also human nature in advisors, we're advisors to say, hey, do I want to try to take advantage of this and steer into the eye of the storm? Most people don't do that. Most investors, the success that we've had as a company, period, is identifying areas where forward returns are headed higher but

Josh Brown (37:34)

pricing has not come down.

Michael Batnick (37:37)

It's a slow storm. That's it.

Rob Sechin (37:38)

So that's right. But let's use a different example in when we had the tech crisis and venture companies having trouble raising money and it re rated down and they pivoted to venture debt, there was an enormous opportunity in venture debt because they didn't want to sell equity at those levels. And if you steered into that storm just in a different way, what it led to is higher forward returns. And you see that episodically in markets. So I think one of the, one of the great challenges that advisors have is keeping investors invested. And how you do it is by identifying the high optionality within the underlying crisis, they will have a greater probability of success on the other side.

Josh Brown (38:28)

But if I read ahead, if I read a headline that said six months from now great news or it would say horrible news, all of these leveraged loans are now trading 20% cheaper than where they were. The thrust of that article would be written as a way to bash the private credit industry. But then I would say I love it. I haven't bought any of this shit yet. This is my opportunity 100%. I don't think I agree with you. I don't think most people think that way. Number one. And for financial advisors in particular, what do you think most of their clients would say back to them? Hey, let's buy some of this asset class that the Wall Street Journal is screaming bloody murder over on the COVID of the newspaper. Why would we wanna do that? That sounds crazy.

Rob Sechin (39:16)

And I would say, did you see Blackstone's partners step in to buy, you know, take a gigantic chunk of their own money and buy this? You think they're doing that? Cuz they have massive concerns about the asset class.

Adam Parker (39:30)

Kkrc just bought 10 million bucks of stock. That's why I mentioned KKR. I didn't know the box, but I saw they bo. You know my pushback I got was somebody was like yeah, well the guys got a billion dollars. I'm like yeah, but people don't like throw 10 million out on purpose. Like you know, the person's signaling purchase.

Josh Brown (39:46)

But right now, the pricing, the price, with a few examples, it's not like that leveraged loan market is in distress. It isn't. It's not like there are these massive discounts.

Rob Sechin (39:56)

But the narrative gets sucked in and pushed out so quickly.

Josh Brown (40:00)

Like the equities better than the products would be my, would be my comment.

Adam Parker (40:04)

Oh for sure.

Josh Brown (40:05)

I like the equities better. I'd rather be a GP.

Adam Parker (40:08)

That's.

Josh Brown (40:08)

I mean if I could buy KR and blacks, I got like 20.

Adam Parker (40:11)

I got like pitched a year ago from somebody on, on a private credit pocket and I was looking at, it was like, it was like unlevered 13% private credit return. And I was like unlevered. Sorry, I don't want to be like the annoying client, but who's lending to me at 13% on levered because like how many I Mean, what is this? Is it like nail salons in Orange County? Like who, who needs 30% for me, like this, this math doesn't make sense. So stocks are probably, you know, on a two year view, you know better

Michael Batnick (40:37)

if the stocks are cut in half, the credits, the private credit's still training one for one.

Josh Brown (40:40)

That's my point. You're not getting a discount in the underlying. You sure are getting a discount if you come in at the GP level. Buy the stocks. So. All right, you want to do this chart with the highs.

Michael Batnick (40:51)

Yeah, so there's. So part of the narrative over the last couple of weeks is yeah, we're hitting all time highs, which is awesome. Feels good, feels better than being down. But there's not a ton of stocks making 52 week highs. So this chart is from Jason Gepfort, sentiment trader. So he's looking at The S&P 500 return after the first record. It's specific, but whatever. After the first record high in one month. And under 5% of issues are at a 52 week high. That's kind of odd. Under 5% and it's, it's a mixed bag to down. It's, it's, it's not great. Positive. 33% of the time, one month out, 33% of the time, two month out, 42% of the time, three month out, six month out. I mean these are not great numbers. And it's not. And it's not like one time this happened. Oh shit. In 29. All right. 83, 90, 93, 95, 20, 15 and 20.

Adam Parker (41:42)

Do you want me to shit on this or. Yeah, please, go ahead, please. Okay, I'll just start by saying I don't think this kind of stuff is helpful for predicting subsequent returns. This is not statistically significant. The market's way more concentrated, different than it used to be. You guys are financial advisors. I'm not. But I can empirically show you that any kind of breadth metrics do not effectively help you make money. They're usually volatility gauges. So if I were one of Rob's advisors or Rob and somebody said I'd like to time my market entry here, I would say you will destroy value using this kind of data over your career. Whether it's VIX or moving average conversions

Josh Brown (42:16)

versus you don't like probabilistic forward returns studies.

Adam Parker (42:21)

I know this isn't statistically significant. I know it's not like, you know, it's all like, how relevant is the 1929 data to 2026 second half? Like all you really said is that there's some big stocks that are up a lot. So not, you know, and not all of them are.

Michael Batnick (42:33)

Okay, good, good debunk. Let's, let's take a quick look at.

Adam Parker (42:36)

But it like I want to just caveat like that could work right now. I'm just saying if you gave me a thousand of these charts over the next few years, I'll take the under and more than 500.

Josh Brown (42:44)

I actually don't think anybody invests based on that. I think people use that.

Adam Parker (42:48)

But you want to be fully invested in equities. You don't want to make one month market calls.

Josh Brown (42:51)

I struggle. I think people use stuff like that to justify something that they're already going to do anyway when it comes time to buy.

Rob Sechin (42:58)

I promise you when it comes time to buy, none of your clients are going to want to buy. So if they were super smart and got out at exactly the right time, they've got to stay in the game. The question is how you're positioning within staying in the game. And I think it's gotten a little tougher because of the index concentration and you have markets so you can't kind of pick your spots within that in many cases. And so a lot of times you can use math to marry both technicals and fundamental factors in a way that can maybe put you in a better position on either side of that move.

Adam Parker (43:37)

And you guys know better than me like it all is a function of like how rich the person is and how much assets that are one. You know, if you got Mr. And Mrs. Richbags who are 80 with 200 million bucks at Microsoft stock, like they're solving a different problem than some guy, you know, it's all a function. What's the charity, what's the taxes like? So it's really hard to make a blanket statement about that. But like I definitely wouldn't be deploying saying like let me sell my S and P exposure.

Michael Batnick (43:58)

Let me give us something else.

Adam Parker (43:59)

Breadth metric from 1929.

Michael Batnick (44:00)

You might like this, you might not. Tell me if this makes sense to you. John Chart 10. Todd Sohn shared this. The semiconductor sector is 16% of the market. The S and P energy, healthcare, staples and utilities are 19%. Talking about touching tips, these things are very close.

Rob Sechin (44:22)

Why isn't that, why isn't that, why isn't that rational?

Michael Batnick (44:26)

Why is this not rational right now I'm asking you guys, what is the

Josh Brown (44:32)

profitability of these staples and utility stocks

Michael Batnick (44:34)

versus well if, okay, I would guess you would know better than me. That if you add up the profitability, just the earnings and maybe that's not the right metric of energy, health care, Staples and utilities, especially health care in there, it would dwarf semis, but maybe not because of Nvidia.

Rob Sechin (44:49)

Well, here's the thing. I'm sorry, no, you.

Adam Parker (44:51)

I love it, I love it.

Rob Sechin (44:52)

I didn't mean. It is. What is happening to forward guidance is really. What is the driver the prices are following 2030.

Adam Parker (45:02)

What's the 2030 distribution of outcomes?

Rob Sechin (45:04)

Yeah.

Adam Parker (45:05)

And what's the constitution? The S and P is a quirky index. Like, you know, it's 35%, the great eight, you know, Broadcom plus the other seven, it's probably 60%. An AI ETF, semi ETF. I mean if you take like G Vernova and Vistra and Constellation and it's all AI Eaton, Electrification and their derivative

Josh Brown (45:24)

beneficial sons of industrials.

Adam Parker (45:26)

Well, he said, sorry, it's about the forward expectations. Like that could be wrong. It could modify itself. But like. Yeah, what you just said is semis have been better than energy stocks. Yeah, no shit.

Josh Brown (45:34)

So, but like, hold on, is there an upward boundary?

Adam Parker (45:37)

The probability you were going to show a chart that I wasn't going to shit on was incredibly low.

Rob Sechin (45:44)

Especially from a competitor.

Adam Parker (45:45)

I don't even know how you know what that is.

Josh Brown (45:47)

Is there, is there an upward bound to, to this?

Adam Parker (45:49)

Of course. What is it, six months before semi estimates proved to be too high?

Rob Sechin (45:55)

Okay, I have to disclose that we are happy consumers of strategics.

Adam Parker (45:58)

Yeah, Trent's a great guy and I like, I, I'm not. There's no, there's no credit. I'm just. There's a big world, lots of people doing interesting stuff. But like, I just think when it comes to like statistical significance or this kind of. It's an interesting observation, but like, it kind of makes more sense to me. Like you said, you asked me a while ago, like, is this the craziest thing you've ever seen? Like, I've seen a lot of crazy stuff. Not really. It's more crazy to me when like zero revenue stuff goes crazy or, you know, like that's a little bit more weird to me than Micron Chase. At four and a half times next year's earnings. The earnings are 100% higher than they were a few weeks ago. And there's a shortage, as far as I can see, in their core product. And you can't produce anything without.

Michael Batnick (46:30)

How does the price, how does the price find balance? Like, I know it's when buyers and sellers, you know, Sort of match up. But like how should investors think about. I can't buy this now.

Josh Brown (46:39)

So sandisk Micron, like how do you invest?

Rob Sechin (46:43)

Usually this is just the fact of the matter. The price movement once it starts until something knocks it off that. That trajectory.

Michael Batnick (46:53)

An object in motion stays in motion.

Rob Sechin (46:56)

I do and it's absolutely.

Josh Brown (46:58)

You know what I say all the time And I say this on the show especially, people say, I took a profit. I took a profit. Nothing wrong with taking a profit. And then I look at the.

Rob Sechin (47:06)

Sure there is. You pay taxes.

Michael Batnick (47:08)

That's a great buy signal.

Josh Brown (47:09)

I look at the chart and the chart always looks like this grind higher. And my comment is like, okay, but why today? Why don't you just trail it if you're nervous, throw it. Throw a like a 10 day moving average, stop loss, trail it behind the share price and let the market take you out. Why are you deciding that this evaluate

Adam Parker (47:30)

the sell expose and say did my sell work versus some, some comparable basket bait adjusted and that destroys value.

Josh Brown (47:36)

Not even English.

Rob Sechin (47:36)

I love.

Adam Parker (47:38)

I'm saying like do real work. Like do evaluate whether that trading decision makes sense. Like I, I'm with. We're all agreeing. I just, you know, we do this for a living. I get people's portfolios.

Josh Brown (47:46)

I was saying, you have a stock that's been going up for three years.

Adam Parker (47:48)

I'll say today's the day you took a profit. I'll say it differently. I'll say it. Do you think if you buy stocks that were just up 100% today, you'll make more money? Or should you buy stocks that were just down 50% for sure obvious to who? Not obvious to everyone who cares what it already did. All you're trying to think about is what do I do today and what's going to happen the foreseeable future.

Josh Brown (48:12)

Care what it already did if it's gone parabolic and you're the last asshole buying it. If it's a grind higher that went. That took time, I can buy that chart. Yeah, I do and I do not.

Michael Batnick (48:25)

A stock that doubles in three months, that's different.

Josh Brown (48:27)

It's the rate at which it went up.

Adam Parker (48:29)

Actually, I'm not saying I'm surprised, so there's no surprise in my voice, but you actually had a good idea there. And we'll study that. We can look at like stocks that have gone up. Oh, I've already done this 100% and

Josh Brown (48:39)

I will send you my work on the subject. It's called the best stocks in the market. I will not get Bullish on a stock stock that just went from 30 to 60 in a week. I understand it could go to 90, but if you just don't do those and focus on the stocks that climb, that's institutions.

Michael Batnick (48:55)

You know why you can't study that? Because a lot of the stocks that go from 30 to 60 today, that's the meme shit. And that didn't exist in the back test.

Adam Parker (49:01)

Okay, so we can study that. We can study everything.

Michael Batnick (49:04)

No, no, no. My point is there was not the Reddit board were not here in the 80s.

Josh Brown (49:12)

Can we do something that you just wrote up Spin off playbook.

Adam Parker (49:16)

Yeah.

Josh Brown (49:16)

Okay. This is original Adam Parker research

Rob Sechin (49:22)

Tribe variant.

Josh Brown (49:23)

I'm going to quote you to you and then I'd love you to go off King.

Adam Parker (49:28)

Hopefully this isn't as bad as my health care call.

Josh Brown (49:30)

No, no, no, no, no. You said. In 2025 the median spinoff reached a 26 year peak transaction size of 3.3 billion across 11 transactions so far this year, only one spinoff has been completed. Comcast spun off. Versant.

Adam Parker (49:48)

Okay, channel you and I both call on.

Josh Brown (49:50)

That's right. But two have been announced. MSGs and GPC which you'll tell us about. Several more are rumored. 20 spinoffs were announced in 2025 that have yet to be completed. And six of these companies are mid cap or larger. In today's research, we provide context around the spinoff performance, analyze historical market reactions and supply our playbook for the future. I wanna say one thing before you go.

Michael Batnick (50:15)

What is a spinoff?

Josh Brown (50:16)

I love spinoffs. Dating back to my time as a retail broker telling stories, begging for money. We pitched the parent companies of spinoffs ritualistically, almost didn't matter what it was because the pitch to the people on the other end of the phone was you own3com, guess what you're also gonna get Palm like that would be. And people wait. I get two.

Rob Sechin (50:40)

People love catalysts.

Josh Brown (50:41)

I get two. Love a catalyst and I get two stocks for the price of one. They didn't understand the fact that the price of the parent would adjust on IPO day. They just love the idea remain co.

Michael Batnick (50:52)

Wait, Rob Adam, for real? I know I called you Rob Adam. Why do people. Why do companies spin off companies?

Adam Parker (50:58)

Usually I think the premise unlock shareholder value would be a tax reason, right? It's usually a tax reason. So like.

Josh Brown (51:04)

Like if you.

Adam Parker (51:05)

Meaning. Meaning like if I'm. We both used to work in Morgan. If I'm Morgan Stanley and I sell Discover because I made a ton of money on it If I, if I sell it, I. To somebody else, I have to pay taxes on it. If I spin it, there's a massive tax. So there could be. I would say that's the primary driver, but it could be unlocked value. You think there's an underappreciated asset? It could be that there's new management

Josh Brown (51:27)

of the SpinCo, which would be more focused on that one business.

Adam Parker (51:30)

Capital structure optimization. Dis synergy. Like there's a list but valuation. But I would say, yeah, say taxes are usually the driver. Now. I, I guess, like there's. There's a lot of things. Like first of all, like what you used to sell, I would say I can empirically show is not a good idea. Spin coast. Do better than remain coast. I'll go back to.

Josh Brown (51:49)

I'll go back to 1998 and apologize to people.

Adam Parker (51:52)

The spin coast. Typically on average, you better than the main coast. But you know, it's an interesting point you're making. You maybe think of something really kind of interesting, which is one of the signals that works in quant and it's kind of pesky and it works, is a signal called low price. So we think about how stupid that is. Like, low price means it's no denominator. Like just generally like stocks with a lower price. Stocks with a higher price. And you could study that.

Josh Brown (52:15)

Retail people like to buy low prices.

Adam Parker (52:17)

They think it's like $2 is better than 4 independent of like denominator.

Michael Batnick (52:21)

Yeah. By low.

Adam Parker (52:22)

So you're logically two stocks instead of one. It's kind of funny and probably used to work.

Josh Brown (52:27)

It did work. Yeah.

Adam Parker (52:29)

But recently, in the last decade plus, since there's been like computers, you know, the spin codes usually do better because typically when they spin them, they know the numbers and the estimates are pretty achievable for the next couple quarters. They have a path toward margin expansion or something the market likes. And usually they're spinning something in a different industry. So, you know, there's some, some rationale I think. You know, we have a lot of clients that are law firms and, and boards and managements of companies. And I think they're just all looking to unlock value. If you're a 40, 30, 50 billion market cap company. 20, 30, 40, you're sort of thinking like, is there a plan I can get like big? Can I get to 100 billion someday? How do I do it? How do I unlock value? And so you're just looking at transactions. You're just saying, like, can I buy something? Can I sell something? Can I do something with my capital structure. And I think more importantly, if you're a good person, you probably want to be perceived as a good steward of capital over your tenure managing the company. So I think spincos are topical.

Josh Brown (53:19)

You're saying the spin is better than the parent or the parents.

Adam Parker (53:22)

On average, the spin's better than the Remain. Co.

Josh Brown (53:25)

But on average is tricky because some of these are so specific.

Adam Parker (53:28)

Generally you want to buy the spinco, not the remain.

Josh Brown (53:31)

Okay, Yeah. I mean it makes sense to me just anecdotally thinking about some of the big winners from spinoffs that I like. Zoetis coming out of Pfizer, G. Vernova. G. Vernova's a monster. Like some of these I think of are 10 baggers and I remember what they came out of the original 12

Adam Parker (53:47)

month performance out of the UTX spin where you got, you know, Carrier and Otis and Sandis.

Josh Brown (53:53)

Was it a 2025 spin or 2024?

Michael Batnick (53:56)

Maybe 2022, I think.

Adam Parker (53:58)

Yeah, a couple years ago. Yeah.

Josh Brown (53:59)

Okay. I mean this is.

Adam Parker (54:00)

But we, we just think generally, if you're a human being analyzing stocks like where, where can you add value? Machines are going to kill you in a lot of places, but humans are going to add value whenever there's like a management decision making, creating or destroying value. So I love analyzing stuff like M and A.

Josh Brown (54:12)

Can we show your charts? Oh, shit. I know. We got him.

Adam Parker (54:15)

I know. Yeah.

Josh Brown (54:16)

All right, John, let's go through this. You could just narrate for us like briefly what each of these.

Adam Parker (54:20)

I'm surprised you find this is super interesting. I, I just, I mean, thanks for anytime. You throw our work on the screen. I'm trivariot, ladies and gentlemen.

Michael Batnick (54:28)

Come all in.

Adam Parker (54:28)

Thank you. No, I guess I just think that the law firms and the bankers are pitching management teams on doing stuff and one of the things that they can point to success for is spending. And I'm just surprised there haven't been more. You can tell on the left there's been 20, 30 of these things a year and there's only been a couple recently. And I just feel like there could be a wave of these things going forward. Generally mid cap companies do it, not mega cap companies. It's going to look at the return,

Josh Brown (54:54)

look at the returns. Spinco is black, remainco is blue.

Adam Parker (54:58)

Yeah, maybe, maybe. I don't know what the next slide is. Can you show me what else you download? A couple more, maybe. Flip ahead. How many did you put?

Josh Brown (55:05)

Every single thing.

Adam Parker (55:06)

Keep going, keep going.

Josh Brown (55:06)

I'll show you the Even the ones you didn't publish. I found them.

Adam Parker (55:09)

Omar, keep go see what you have. Keep going. I think there's like a line chart. Yeah, the one on the right here is the mean industry group relative return. So this is how the stock did versus its industry. Because I didn't want it to be like, like sandisk was awesome and you're not normalizing for the industry. Right. So the black line is the typical spin co performance and that x axis is the number of days. So like kind of 252 trading days in a year. So two years out the average spin beats its industry by 10% and the average remain kind of lags by a couple.

Josh Brown (55:36)

So I mean that is statistically significant.

Adam Parker (55:38)

It's a real number.

Josh Brown (55:38)

And that's robust across sectors?

Adam Parker (55:40)

Pretty much, yeah. Pretty much, yeah.

Josh Brown (55:41)

I mean, okay. Yeah. Love it.

Adam Parker (55:43)

Yeah.

Josh Brown (55:43)

Well done, well done. Now Rob, would you like to unveil your research on spinoffs?

Rob Sechin (55:49)

We don't have that in the bag. It's trivariance.

Adam Parker (55:53)

But no, but you know, why would,

Rob Sechin (55:55)

why would we do it twice?

Josh Brown (55:58)

I wanted to ask you about some of your favorite stocks this summer. So let's, you, you, you and your team gave us a couple to talk about. Let's, let's hear what you think.

Michael Batnick (56:07)

We're skipping spring. Is this like these are only going

Rob Sechin (56:08)

to work in the summer?

Josh Brown (56:09)

Yeah, only for, only for the summer.

Rob Sechin (56:11)

I don't buy these until the summer. I don't know.

Adam Parker (56:14)

It is right outside.

Rob Sechin (56:15)

I don't know if I can operate with that level of precision. However, I think it's a balanced way to think about how you invest at this time and possibly going into summer. And it's a marriage of putting together the highest conviction names that are at their all time highs. No question. Married with some beneficiaries of that in energy, NRG specifically and Married with Energy, you know, producers that I think could benefit from further crisis in the Middle East. And then for the sake of Adam, we put in Gilead because we think you gotta have a healthcare name in there. And so you're putting weight on two different skis and adding something a little different that I think is reasonably attractive.

Josh Brown (57:03)

Yeah, Broadcom here. King of this from your team. King of custom silicon data center networking infrastructure position to win as hyperscalers spend more. I mean this stock has obviously been a huge winner. I know you guys have made a lot of money with it. You still like it here?

Rob Sechin (57:19)

We do. The object in motion stays in motion. They're on track for 60% revenue growth this year. They have industry leading profitability. They're a leader in both custom silicon data center networking hardware.

Josh Brown (57:34)

The market is not stupid. Could you have more take this stock to where it's taking it?

Rob Sechin (57:38)

No, not at all. I think where the market was stupid was in April of 23 where you had all the other names doing what they were doing and this one was left behind and it was trading as a teenager.

Michael Batnick (57:50)

Oh my God. I just said it's at a trillion. It's two.

Rob Sechin (57:53)

Yeah, it's, it's, it's unbelievable.

Josh Brown (57:55)

Lamb research. I love this. I love this stock. It's up. We wrote it up for best stocks in the market last August. I think it's up 170% since then. I want to point out we wrote it up at an all time high. People were angry. Like now you're saying you like it, it's up however much it's up. Another I always like always like stocks

Adam Parker (58:17)

at higher prices than I used to.

Josh Brown (58:18)

Not like stocks.

Rob Sechin (58:18)

It's up 297% over the last year.

Josh Brown (58:22)

I mean they basically control their entire monopoly.

Rob Sechin (58:26)

They're essential in the chip manufacturing equipment.

Josh Brown (58:32)

What is NRG?

Rob Sechin (58:34)

So NRG's a derivative beneficiary of what's happening in AI. Power's the bottleneck. You know, Vstra Energy as well. We were on Vstra. We had such a move. It was I think the number one performing stock. I'm trying to think of the vst.

Josh Brown (58:48)

That thing was insane.

Rob Sechin (58:49)

And we bought it in January at the end of the year. And it moved so much that we decided to diversify. Cause NRG was lagging. So we kept vstra. We added NRG under the same portfolio theme. It's down from its highs in February. It's down about 20%.

Josh Brown (59:05)

Taking natural gas and getting that into the electricity that the data center needs.

Rob Sechin (59:11)

They need it and they're big in this bring your own power deals where they sell directly to the data centers. Which is kind of a unique and novel strategy. And I think it's going to work. And it's trading at 16 times right now.

Josh Brown (59:25)

APA. APA is more of a blast from the past for me.

Rob Sechin (59:29)

Yeah, just an EMP name. It is up 58% year to day. It's off 14% from its recent high.

Josh Brown (59:37)

You need Iran to stay up to stay long this time or do you like it?

Rob Sechin (59:40)

Either way, you need things to not open quite as quickly. I think this is gonna be a beneficiary of America doing what we're doing from a production standpoint and it's a great combination of a lot of diversified production across regions products they have a healthy total yield 12% between buybacks and dividends it trades at seven times.

Josh Brown (60:07)

It's crazy.

Rob Sechin (60:08)

This is an interesting business to us. And then lastly Gilead which has.

Josh Brown (60:13)

You did that for Adam?

Rob Sechin (60:14)

Well yeah.

Adam Parker (60:15)

Diversification.

Rob Sechin (60:17)

Diversification.

Josh Brown (60:18)

No the stock looks. Stock looks great. Great. It's actually been a strong in this group with the group has sucked for a while but this is one of

Rob Sechin (60:25)

the good ones this is one of the winners I think you have to have some exposure in this space again this is the upgrade in the quality they're dominant in HIV they're doing unbelievable things in oncology they have 50 drugs in various stages of development. They're enormous and you have to be enormous to be able to do what they're doing and there's upside in their pipeline based on progress. So we tried to think I asked the team this is not me I'm going to take no credit. This is Jay Peters, this is Cameron Dawson this is Brian Nick our investment team they're super and I asked him I said I want a balanced view where you have option we can ride the current wave we're riding. You have optionality to the crisis so three names ride the current wave. Right. Power and then the two semis you have option to crisis in the Middle east and then we get some stability where you're not going to have a lot of price performance. We want a healthcare.

Josh Brown (61:22)

Are you surprised that the healthcare stocks aren't getting any credit in advance of being perhaps the biggest beneficiaries of utilizing AI?

Adam Parker (61:34)

So look it's been our. Why aren't people figuring out barriers overweight. It's been a terrible call. Unlike the software one this has been a bad call and I trying to figure out like what could untether me from the thesis. I'm trying to be like intellectually honest like could anything change my mind long

Rob Sechin (61:50)

term should be no by the way.

Adam Parker (61:52)

Yeah and I'm worried about it because I don't want to be the jerk.

Josh Brown (61:54)

Is that your thesis? AI is going to be bigger for these companies than most.

Adam Parker (61:59)

So what the market's telling me is there's a 0% chance healthcare is the best performing sector over the next five years and I think it's like 30 or 40% I just start with like I want to arbitrage that difference. I think the whole point of all of this is that we live longer and we're more productive while we're alive. So if I Take that premise. I don't understand how healthcare revenue per share is going every year, 30s in a row. In SB 500 we have lots of old people that demand services. Tool diagnostics, drugs, managed care, hospitalization, whatever. That's steady. We have tons of businesses with lots of employees, low margin and lots of revenue. Meaning as long as I can predict my customer employee behavior, margins should go up. Is a classic AI productivity potential. They do, as he just pointed out beautifully, have low correlation to AI semis. So you don't want to buy low correlation meaning like they suck. But there are a bunch of healthcare stocks, Lilly and others, that are up 10% or more in the last six months and are uncorrelated. There's some good stocks, so there's. Some of them could work. I'm very tethered to the thesis and

Josh Brown (62:54)

bullish and I do think sense to me.

Michael Batnick (62:56)

Which names do you like?

Josh Brown (62:57)

It's just not working.

Adam Parker (62:57)

McKesson, Cardinal, Sinkora, Quest, LabCorp, you know, even stuff that blew up recently because like you're, you're still younger.

Rob Sechin (63:04)

I got the big five.

Adam Parker (63:05)

You can't go to the doctor and not end up sending something to LabCorp request. There's zero chance they won't grow above GDP. And there's still dudes with like when we were kids with the glass microscope. But the thing like the efficiency potential is massive, right? And I would even say managed care. Unh, had a good point this week. Stock was finally up. Like I run a business, let me

Rob Sechin (63:22)

tell you, I'm not brave enough.

Adam Parker (63:23)

Let me tell you who raises pricing on me 9% every year. And guess who doesn't give me 9% more services. So like I think they're gonna earn more money in 2030. And I don't think there's any political will from either side to change the algo. If you tell me that some party's gonna come in and implement massive austerity, then I'll change my mind.

Josh Brown (63:41)

So it sounds like healthcare away from big pharma.

Adam Parker (63:44)

I think there's still some good big pharma. I mean I'm not against Lilly and Merck and other stuff.

Rob Sechin (63:48)

Lilly's unbelievable.

Adam Parker (63:49)

But I'm not embedding yet. What I'd like to do is be correct on a five year view. And then there's all kinds of like computational chemistry ETFs that retail guys are buying. And I'd like to sell my correct overweight into that euphoria five years from now. But that's. I got a lot of good shit's got to happen before I get to that call.

Josh Brown (64:07)

Yeah, I want. I want to ask. I want to ask you. I want to ask you about. About New Edge and founding the firm and. Adam, by all means, chime in. Like. Like, when I first met you, you were ubs. You had one of the biggest teams in the firm. You were not talking about going independent, but I'm sure you were thinking about it, as most people at large firms often do. What have you learned since coming into the RIA space? Obviously, you've built a massive platform, big firm, hired a lot of people, met a lot of people. What are, like, some of the things that you think you've learned in the last couple of years since doing that? Well, first off, was it four years ago?

Rob Sechin (64:50)

Five.

Josh Brown (64:50)

Five years.

Rob Sechin (64:50)

Okay, five years ago. And we've grown from 8 billion to 105 billion in assets.

Josh Brown (64:56)

So amazing.

Rob Sechin (64:57)

It's been a.

Adam Parker (64:58)

It's not as good as Micron. It's not as good as Micron as it is, but pretty good.

Rob Sechin (65:01)

But I think the things that I've learned are, one, there's a lot of noise in the ecosystem. Not everybody says can do what they say they can do. And what that does is it creates a lot of paralysis in this migration that we're seeing from advisors at big firms to advisors at More Entrepreneur. I mean, look at what you've done here. I walk into this office and think, oh, my God, this is great. I mean, you're adding value in a different way, and you're adding value by sitting center. And when you're a client of the street versus a competitor of the street, you have a structural advantage that's very meaningful. You. You don't have one arrow that you can pull out of your quiver. Let's say you were doing a loan for somebody. You're going out to multiple providers. You have tools.

Josh Brown (65:53)

So if you're sitting at Goldman Sachs, you're doing that loan through Goldman Sachs. If you're a customer of Goldman Sachs, give me a quote. Okay, I'm going to go to rbc, see what they say.

Rob Sechin (66:02)

You're not with them.

Josh Brown (66:03)

Yeah, I agree with that.

Rob Sechin (66:03)

You're across from them. And yet New Edge is a gigantic client of Goldman JP Morgan. All the different banks, all the different capital markets groups, all the different asset managers. And I do think size and scale matters. There's something else that's kind of happened in the industry, and I don't want to mask the good fortune and luck that I had in doing this in 2000. Just as this was taking off at the higher end. Not 20002020 at the higher end of the market during COVID It looks easier than it is.

Josh Brown (66:36)

Oh, I couldn't agree more. Say more about that.

Rob Sechin (66:39)

And you need a good partner. So I did not start New Edge. We did an LBO of a business with a tremendous partner in Parthenon Capital. And that operating business threw off cash flow again. It was an infrastructure business providing institutional grade infrastructure in the 401k industry to fidelity, John Hancock, Paychecks, creative planning. And they had a great business, but they wanted to do something else. So we bought the business and we built a wealth business on that same infrastructure that was bulletproof cheating. Starting halfway up the mountain. I didn't have to go in and worry about. Dude, I had a tech team. I had not only a tech team, but I had profitability to hire the best and brightest. Okay? So the good fortune that came from that simple decision of not worrying about how my computer was gonna turn on in the morning. That's why I love these entrepreneurs that do this grassroots and bootstrap this unbelievably hard.

Josh Brown (67:40)

It's way harder than it looks.

Rob Sechin (67:42)

And now you have partners that can help you get from A to B. So when I think about what we do is we have a fully evolved ecosystem where you can join us and use the platform turnkey. Here's everything you got. All the support, the compliance, the anything you need. Or we are going to sponsor you in your entrepreneurial endeavor. And we have the best business in the world to do that. That's run by my partner, Alex Gossip. We also had some very fortunate hires and partners in this business. Chuck Worden, who was the founder of the business that we bought, Parthenon, who's the private equity firm. John Strauss, who ran every major private bank on Wall Street. J.P. morgan, Morgan Stanley, UBS ran them all. Bob McCann joined us. So we had UBS and Merrill Lynch. So we had these credentialed folks that. That when you're looking off the cliff and you're an advisor and you're getting ready to jump, you still can't see the bottom. Okay. And you want to know that there's knowledge, know how in people down there that are going to help you navigate every decision whether you're starting your own thing on our platform that's run by

Josh Brown (68:54)

Alex Goss to that point, like somebody coming. Somebody coming out of an environment like a Bank of America or a Morgan Stanley. There might be things they don't love about those banks, but the one thing that's undeniable is they have a ton of support. Like they don't wake up in the morning. Like this is my whole.

Rob Sechin (69:12)

That's what was missing in the marketplace is this fully supported DNA. And so I'm no longer the CEO. You introduced me as the CEO. I am the founder.

Josh Brown (69:21)

Okay.

Rob Sechin (69:22)

So I made a big hire last year.

Josh Brown (69:24)

You hired somebody to talk to, to speak to that CEO role so that you could be Rob Seachen.

Rob Sechin (69:32)

I can be Rob Seechin.

Josh Brown (69:33)

I did the same thing.

Rob Sechin (69:34)

So it is a great thing. We hired James Jesse, you know him from Morgan Stanley days. I'm sure James Jesse ran Morgan Stanley International. But then he went with Devesh and helped start Iconic. Okay. Wanted to come back east coast. That was our good fortune. We also, because of the, because of the profitability from the business that we bought, we're able to hire people like Cameron Dawson, who I think is one of the most fascinating thought leaders in the industry. So when you marry all those things together and you can create an entrepreneurial environment that is doing the right thing. And trust me, net present value of doing the right thing creates more value than anything. So great technology. They're not rolling out enterprise anthropic, not a single firm yet they're trying it. They're test. We are fully rolled out. They're not using tech. The better price, execution, visibility in the assets. They're not partnering with Adam, they're not partnering with Tom Lee. They're not working with families. They're not surrounding those families with high end intellectual capital. And they don't have access to each other's shit. And we have access to, to everything. And so when you have a better mousetrap, it is undeniable that the migration will happen when there's more confidence and less confusion. But everybody tries to tell that story and not everybody can deliver that story. And as such, advisors haven't moved in mass yet. Once a few of the big ones fall, as you know, you think the

Josh Brown (71:09)

wirehouse exodus hasn't even really started.

Rob Sechin (71:12)

It's, it's, it, it's here. Wow.

Josh Brown (71:15)

Because I so the corner.

Rob Sechin (71:16)

I know like five.

Josh Brown (71:17)

I know five guys that were five billion plus dollar teams, duos. Just that one firm that have left in the last two years.

Rob Sechin (71:27)

How many bots started? That started about two years ago. You can't believe our pipeline.

Josh Brown (71:32)

Yeah.

Rob Sechin (71:33)

You just can't. And the one thing that I would say is firms that can't address the entrepreneur that wants to have their own cio, not Cameron and others that want to have that we have those bookends in a leader that has operated in the wires and in probably one of the best firms in the independent space and iconic. I think that is confidence inspiring. And I think we've become a partner of choice. I mean it's growing 70%.

Josh Brown (72:05)

If you have advisors in your ecosystem, let's say you had.

Adam Parker (72:09)

By the way, I just want to say that was like a highlight of

Josh Brown (72:12)

this, this great speech.

Adam Parker (72:13)

It was just electric.

Josh Brown (72:14)

Yeah.

Adam Parker (72:14)

I'm just saying.

Rob Sechin (72:15)

I, I mean I guess you didn't about this.

Adam Parker (72:17)

No, no, I loved it. I just think like you, you, you. I'm not saying the stock part wasn't great, but I'm just saying like the EQIQ combo that just came out from describing this business was, was electric.

Rob Sechin (72:26)

That's why I do more.

Adam Parker (72:28)

Seriously, you felt it, right? It was all of a sudden a fuse guy, he was cooking.

Josh Brown (72:31)

It was awesome. If you have an advisor who's a card carrying new edge, like all the way in, who comes to you guys and says, you know what, this has been great. But what I really want is to have my firm under its own name and my own cio. So now you have a place where that person can go where they don't have to leave.

Rob Sechin (72:48)

Come in.

Josh Brown (72:50)

So I think that's powerful.

Rob Sechin (72:51)

Right turn, left turn. We have businesses over here that we bought into. Card carrying businesses. Remember when we buy you in, you are owning the same stock that we did in the lbo. No difference. Not like some of the firms that had failed in the past. We have the advantage of being the vitamin water versus the Gatorade. Right. And all this we second mover advantage. And it's been pretty powerful to identify the flaws of our predecessors. And what ends up happening is if you just do the right thing for the advisors, meet them where they are. I think you're advantaged in this too, guys. You're a firm that was started by advisors for advisors. That is a huge advantage because why are you going to do something that damages yourself? Now what I recognized is there could be a better day to day nuts and bolts leader than me. I am a champion of the organization. I have one concern. How do those advisors then believed in this field of dreams that we bought and built? How do we drive value for them both in their practice, in serving their clients and then ultimately in the equity value that they've taken on in our company. And I take that very seriously. And if it means shooting myself, yeah, well, I don't care.

Josh Brown (74:14)

So this is a very big thing. Wow. It's a very. It's a very. By the way, very well done.

Rob Sechin (74:19)

Thank you.

Josh Brown (74:20)

This is a very big thing. At a certain point, you have to make the decision, what is my highest value to the firm? Is it sitting in eight meetings a day and micromanaging 50 people, or is it being me and bringing in professionals to handle the business?

Adam Parker (74:36)

I think no matter what you do, you have to think about that right now. Obviously, I'm at a different business and it's a small scale, but we have guys who, whenever I've become very self conscious about this, when I'm in front of my computer typing and one of the quant guys who works for me is standing behind me, me, I know they're thinking like, this guy doesn't know how to use a computer. Like, the best use of trivariance time is not when I touch the keyboard,

Josh Brown (75:01)

not when you are grinding physically doing it.

Adam Parker (75:03)

If I am doing something, they're like, no, don't do that. And so I started realizing, like, all right, like, we got. And it's like. And all this AI stuff too. Like, it's like, we got to be, you know, so I don't know. I mean, that's. Honestly, I never.

Josh Brown (75:17)

You like, but you.

Adam Parker (75:17)

I never really heard you articulate that. That I'm not surprised at all. But it was awesome listening to that.

Josh Brown (75:22)

You like the entrepreneurial part, though, of what you're doing?

Adam Parker (75:24)

I love it. Yeah, I totally love it. I don't like, you know, you're not

Josh Brown (75:29)

one of these guys that's like, just let me do my research. Like, you actually enjoy building the business.

Adam Parker (75:33)

I like thinking about what the enterprise is going to look like. You know, we have this newsletter business that you know about, Trifecta. We've got, you know, we'll probably end up doing, you know, some stuff on the asset management side. I'm doing some stuff with investor relations, who I did stuff for law firms and boards. I'm joining the board of a public European company next week is when it's official. So, like, I'm just always trying to do new stuff and learn stuff. And I'm like, kind of. I like doing the work and I like talking to people.

Josh Brown (75:56)

Do other guys who sit in your old seat as chief strategists on Wall street come to you and say, hey, what's it like being independent?

Adam Parker (76:05)

It's a little bit like your conversation you were just having, which is like you might have disgruntled issues with the big firm and the bigness disease of the big firm. You work at.

Josh Brown (76:16)

But you're getting a lot from.

Adam Parker (76:18)

But you're also getting a lot. And so when you go on your own, like you're going to be washing the dishes and putting the mayo in the sandwiches the first couple years, and you've got to decide, like, hey, am I rich enough to take the risk? And if it doesn't work and you know, or whatever, there's like, considerations that go into it.

Josh Brown (76:31)

Michael and I were literally licking envelopes. Like, in real life, we don't have

Adam Parker (76:36)

a dishwasher at Triberit. And like all the young kids don't understand that. Like, I'm the one who washes their mugs. And that's like today. That's still like, like, like so, you know, so like whatever. Like you gotta, you gotta do that. But like, at the end of the day, for me, it was worth it. I was a point where I wanted to take a shot. And I love it. But like, I love listening to you. You guys talk about, you know, everybody does it differently.

Rob Sechin (76:58)

Yeah, but I don't know anybody that would say anybody. I, I want to go back.

Josh Brown (77:04)

I wish I could go back. I've never heard it. It's like moving to Florida. Does anyone say, shit, this is terrible.

Adam Parker (77:09)

You're talking, you're talking to a guy who's on a 720 tonight.

Josh Brown (77:13)

Hey, last, last thing we want. We wanted to get to bmnr. Okay. So Tom Lee launched. What is. How do I explain it?

Michael Batnick (77:21)

It's a ether treasury company. Yeah, it's like, it's like microstrategy before ether.

Josh Brown (77:25)

All right. So Tom Lee launched. You got added shortly after.

Michael Batnick (77:29)

And they're. They're doing. That's what they're doing. Right. They're like $0.05.

Rob Sechin (77:33)

Treasury company. I think Ethereum's a bit different than bit mine or bitcoin. Rather. Ethereum. BMNR is bitmine. I, you know, when I looked at this, I thought this was a charlatan's game. For a long time. I even on it on tv.

Josh Brown (77:49)

And then you said, let me in.

Rob Sechin (77:51)

Well, then I started to do some work. I started listening to Tom and seeing the things.

Josh Brown (77:56)

They thought microstrategy was bullshit.

Rob Sechin (77:59)

No, I just did. Thought the whole ecosystem. Yeah. I was a non believer. I still think now I'm an evangelist.

Michael Batnick (78:07)

What changed?

Rob Sechin (78:07)

And I'll help change your mind. What I'm seeing is a misunderstanding of what certain parts of the crypto ecosystem are. And I think people think crypto is like a coin. It's infrastructure, it's a value Added network that you build apps on and anytime you drive usage, which is why BMNR bought Mr. Beast. Visibility Usage to the network. Network, you can profit from the network. And when you think about what's happening in traditional finance, it's fragmented, it's intermediate, and it's slow, and it doesn't run 24 hours. And every one of them's trying to figure out how do we get to tokenization, digitization. And they don't know how to do it. And Ethereum flips that, that it's the safest of all them. It's programmable, it's real time, it's always on. And BMNR is a holder. And why they got me involved is there's a huge gap between institutions that have capital and they need help to translate it, structure it, and make it usable for them in traditional finance. And the next phase isn't about about speculation. It's about integration of the financial services platforms onto an entirely new architecture. Okay. And when you start to see what's happening in that community and you start to see how it's being ignored by tradfi is what they call it defi being ignored by tradfi. And there's a bridge of the two

Josh Brown (79:56)

hearing this, the New York Stock Exchange just says they want to be the capital of tokenized assets. Right?

Rob Sechin (80:02)

So they'll build that on Ethereum.

Josh Brown (80:04)

They will.

Michael Batnick (80:04)

So why not? If I just buy Ethereum, if you're bullish on it, you can't.

Rob Sechin (80:07)

And that's the beauty of it, right? That's the beauty of it. Because what you're becoming when you buy, let's say, bmnr, and I'm not promoting bmnr, any source of Ethereum, but that's what I know, because that's the company that I'm the lead independent director on. They are doing things so that you can earn what is called a staking yield. You can make investments into businesses that are going to be beneficiaries. They call it moonshots. They invested in Mr. Beast. Gotcha.

Josh Brown (80:37)

If you own BMNR, you get the benefit if there is one of the investments that the company is making, it's not just the price of eth going up.

Rob Sechin (80:46)

And by the way, when you validate, and they have a whole business that they call Maven, which is a validator of transactions, and you get paid to validate. You are getting a 4%, 3, 4% yield.

Josh Brown (81:01)

And so you're earning the gas fee, you're earning the gas fee as a node.

Rob Sechin (81:05)

So you're becoming a toll road and then what you want to do is ensure usage and that's why I use this as the example. Apps are being developed. So layer zero is kind of the foundational layer layer security and transactions happen on that layer. Then layer two or apps or DAPPS is what they're called. Sorry, I didn't mean to spit on everybody are being built to do functional things, specialty nodes on that and it's going to happen quicker, more safely. So when you think about the threat that AI has to everything in technology, wow. Wouldn't it be great to have this immutable safety layer that sits beneath that. And so I'm going to tell you I believe in this wholeheartedly. Now there's others like Solana that are trying to do this more cheaply but the bulletproof version of this is this Tom Lease. He's around corners. We already know it. He's seen this years ago. Ethereum as an asset. You can own the token which will give you that yield. To your point Michael Adam, how out of you?

Josh Brown (82:17)

He's not in yet. He's not out.

Adam Parker (82:20)

I'll go with a crazy pitch of a different kind.

Michael Batnick (82:23)

What does that mean?

Adam Parker (82:24)

I'm going to pitch a stock of a different kind. I think Nvidia will be worth 10 trillion market cap by the end of this decade.

Josh Brown (82:31)

What is it now?

Adam Parker (82:32)

4.8. And I think it's misunderstood a little bit.

Michael Batnick (82:37)

Bit.

Adam Parker (82:37)

I think it's a sector, it's not a stock. I think it's really hard to get

Josh Brown (82:41)

off the CUDA platform.

Adam Parker (82:42)

I think it's really hard to get off the CUDA platform. I don't think that like it's, you can do anything kind of modeling wise in AI of scale without everyone working

Josh Brown (82:52)

in AI is on that platform.

Adam Parker (82:54)

They lost money for 15 years coding this CUDA stuff like the amount of install base that's there. They're moving full speed ahead. Like it's just going to be hard to get off it. They're going to grow 15% a year for five years. The revenue is going to double at least, least the cash flow is massive and anytime you get one of these like 12 month periods where it like pauses out it's a good time to buy some before it like flies.

Josh Brown (83:12)

I'm not selling any.

Adam Parker (83:13)

Yeah, so I, I, I, I just

Rob Sechin (83:15)

you and me got on that.

Adam Parker (83:16)

I don't never selling it like my, my, my view is like yeah sure tactically I don't like it when they blow out the quarter and the price to sales comes in and acts but like I, I just think they're gonna grow way faster.

Josh Brown (83:29)

They have to buy back. Do you think they're gonna ever buy that back? A meaningful amount of stock there'd be. Seems like it's the lowest valuation Nvidia has traded at in a while.

Adam Parker (83:37)

Just, just keep investing upstream and downstream. They're going to trade is the power side right? Like we talked about earlier. Like so they got it, they got to make sure. But like how can you function and do anything without their infrastructure? So like just think of it as a sector like stop telling me it's 4.8 trillion and it's bigger than the energy, healthcare and utility. Like that doesn't matter. What matters is it's a sector that's massively fast growing to the technology that matters.

Josh Brown (83:56)

Their case on Nvidia was all these deals are circular, blah blah, blah. No one's saying that anymore. The bear case is now how about

Adam Parker (84:05)

the big, all the big companies? The bear case was, I think one of the bear cases that I don't like is like oh, all the capex comes from hyperscalers and it's like six companies. It's like no it's not AWS. Like Amazon isn't one company, 80 million

Josh Brown (84:16)

customers, thousands of companies.

Adam Parker (84:17)

So it's not the right way.

Josh Brown (84:18)

The bear case is that tpus from Google and other companies.

Adam Parker (84:25)

It doesn't matter, matter. It's like it's okay, it's great. Like you know, look you, those of us who have followed it, you know Jensen for 25 years would say like, sure, there's a lot of like bullshit that he spewed in the 25 years. Like I'm not saying, you know, but like I, I think there's really somebody just the installed base of folks who are on this platform and the investors they made up and downstream. So like yeah, I don't see how you could be bullish on the S&P 500 in a three to five year view and not be bullish.

Michael Batnick (84:53)

Well I was going to say if you think Nvidia is 10 trillion then surely you think S and P is going to 10,000. Thousand.

Adam Parker (84:57)

Yeah, they're both, both. I wrote the SP was under 10,000 three years ago. I wrote, I wrote three years ago. 20, 30, 10,000 PS and I think

Michael Batnick (85:06)

it's, it's not conservative.

Adam Parker (85:07)

It's not even like weird math. It might be conservative. I mean where, where are we? You're talking 30, 35% in four years.

Josh Brown (85:13)

That's like that far.

Adam Parker (85:14)

Long term returns that right?

Josh Brown (85:15)

Yeah.

Michael Batnick (85:16)

All right.

Adam Parker (85:16)

Sounds like a headlining number.

Josh Brown (85:17)

Guys. Did we have fun on the show today or what?

Rob Sechin (85:19)

We did. Hey, I. I heard at the beginning of the show with Tom Lee you were making a little fun of me with my accent. Wonder wondering where he must get offset.

Michael Batnick (85:30)

Do it, do it, do it.

Josh Brown (85:31)

Come on. Beginning of the show with Tom Lee. You're making a little bit of fun of me.

Adam Parker (85:37)

Did you get by the way?

Josh Brown (85:38)

Did you get from.

Michael Batnick (85:40)

By the way?

Josh Brown (85:41)

Why do you talk like your Foghorn Leghorn if you're from Pittsburgh? I don't even understand what.

Rob Sechin (85:46)

You know. We haven't got your.

Adam Parker (85:49)

That's got to be the title of the. You guys are always looking for a title. I think. Foghorn. I think you just got it. So you just got it.

Rob Sechin (85:55)

What happened is I got very confused to do it. I got very confused. I grew up 26 years in Pittsburgh and then I moved to Connecticut and they didn't mesh well. So I was a yinzer. That kind of. I kind of d Yins My. My, my Josh.

Adam Parker (86:12)

I win our side bet on the number of times he was going to mention Tom Lee on this call. I had. I had. I. I had nine. And he. And he and he. So I. I get a little. I get a little big.

Josh Brown (86:20)

Can I say one thing to you? This is a true story. I never. And I never told you. You and I have had some of the all time great brawls on halftime report, all in good nature. You and I.

Adam Parker (86:32)

Right?

Rob Sechin (86:33)

I didn't know that.

Josh Brown (86:34)

I know that. I. Because I keep track. I write them down each day.

Adam Parker (86:38)

We've never had. You and I have never had one.

Josh Brown (86:39)

No, no. You. You and I are golden. No, but Rob and I are good, too.

Adam Parker (86:42)

Is Rob a dick, is what you're saying? Is this coming out now? Is there late sometimes?

Josh Brown (86:46)

Listen, we're on the show.

Rob Sechin (86:47)

This is where I get body stuff.

Adam Parker (86:48)

What's going on here?

Josh Brown (86:49)

You've been on the show for a long time. Since we were in Englewood Cliffs.

Rob Sechin (86:52)

Yeah. 13 years.

Josh Brown (86:53)

There was one time where you were saying something and I wasn't even on the show, but I was like tweeting at the judge and the judge texts me, goes, why don't you come on? And you and Rob could have this. You and Rob could have this. I don't know if you remember this.

Rob Sechin (87:14)

I was.

Josh Brown (87:14)

People won't believe me, what I'm saying. I was literally in the gym at a hotel. I must have been in like Arizona or something. So I remember looking outside, it was a sunny day, 12 o' clock in the afternoon. I swear I was working out. I swear to God. I go live on the show, other people are in this hotel gym looking at me wearing like Lulu and I'm debating you. Anyway, this is the point of the story. Somebody that I'm friends with texted me and said when you and Rob go at it over a stop, not nothing ever besides the stock, he goes, it reminds me of fighting with my brother. Like brothers. I never told you that story.

Rob Sechin (87:51)

That's really cool.

Josh Brown (87:52)

But I, I truly, I think you're a brother. I really do.

Rob Sechin (87:54)

I appreciate it.

Josh Brown (87:55)

I love the debates that we have.

Rob Sechin (87:56)

Me too.

Josh Brown (87:57)

It sounds like these days we agree on a lot of things. I agree with almost everything you said today and thank you so much.

Adam Parker (88:03)

You know what I agree with? I agree with 105 billion and a lot in the pipeline. I agree with that.

Josh Brown (88:08)

Very much agree.

Adam Parker (88:09)

Do you agree with that?

Josh Brown (88:10)

Who could deny this success?

Rob Sechin (88:11)

Do you agree with that?

Josh Brown (88:11)

I agree.

Rob Sechin (88:13)

Thank you so much.

Adam Parker (88:14)

It was fun to be on with you.

Rob Sechin (88:15)

It was really fun being here with both. This, this a great program.

Josh Brown (88:18)

All right, well, we're going to come back from dinner. We're going to do the second half of the show. Guys. We, we, we appreciate you. I want to let everybody know they should follow Adam and check out Trivarit research and Trivector research which who is that for?

Adam Parker (88:32)

Trifecta research is for advisors and individuals. It's a $1,200 a year. We do a lot of like ETF analysis, insights, videos, talk about what we learned from institutions. So I'd love, love for people to join.

Josh Brown (88:42)

Awesome dude. And if you want to learn more about New edge, go to newedge.com www.newedgewealth.com newedge wealth.com all right, guys, thank you so much for watching. Thank you for listening. Special thanks to Adam Parker.

Adam Parker (88:55)

Love being here.

Josh Brown (88:56)

Rob Secchin, we'll talk to you soon.

Rob Sechin (88:59)

Take it easy.

Josh Brown (89:02)

Is that good?

Adam Parker (89:02)

Yeah.

Rob Sechin (89:03)

What a blast. That was a Dr.