2 AI-Proof Stocks We're Watching: Waste Management (WM) & Viking (VIK)

0:01Emmet:This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome? That's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required. Compatibility and availability varies 18+. welcome to stock club the podcast where we find and discuss stocks that anyone can buy many of which we believe will go on to grow your wealth mike had a great idea at the end of last week's show which absolutely coincidentally a regular listener of ours colin moran wrote to me via whatsapp uh with the same idea on the same days we recorded which was is why don't you guys next week talk about businesses that have nothing to do with AI.

0:57Emmet:Businesses that look like they're going to continue growing but are not underpinned by this kind of AI story. So I wrote back and said Colin you're a mind reader and he is because that's exactly what we're going to do.

1:15Emmet:So Mike and I set about researching a whole bunch of companies. I'm going to give you the names of businesses that fit the mold but we're not going to focus the bean with them today businesses for example like kava which is this hot trend in america it's a restaurant brand with loads of room to expand across america and i think you could argue it's anything but ai are a stock that mike discussed on a previous show called dutch brothers or dutch bros if you're gonna read literally bros um don't worry i know i know um which is they're kind of differentiating with better coffee but really the the cost per store is high another example of a business that has ostensibly nothing to do with ai although we could argue ai is touching everything is on holdings um or indeed nike or planet fitness or even luxury car maker ferrari there's so many businesses that certainly we could argue are not really investing heavily in AI and Mike and I have invested heavily in the conversation around AI in recent stock club podcasts so we both picked a company that we are companies that we very much like and we're going to give them a whirl a day in the sun now these unloved AI-less businesses so Mike how are you this week and have you picked a company or as i just learned second ago companies uh yeah i have i went i went beyond the script um but i think it's important to have these conversations as well because i feel like every every episode every week like investicon as well it's ai ai ai ai um which i know ai ai oh like old mcdonald's firm but it's ai ai oh but it makes it a weird time to be a long-term investor right now because the companies that are truly being rewarded are predominantly you know cyclical manufacturers uh memory chips anything to do with the kind of data center construction um so in terms of like you know these are niche specialists uh around cooling the electrical grid silicon wafers basically any step in that in that infrastructure process build out and build out is kind of the underlying term there because it is a build out do you know what i mean it's that these demand oh yeah simply like They can't be sustainable long term.

3:41This is a defined phase in which all these companies are spending big to build the foundations. So Google isn't going to spend half its revenue every year in perpetuity on CapEx. That's not how business works. So in picking stocks we want to own for 20 years, it is tough to justify a lot of names, especially at these levels and valuations. And realizing that they are cyclical. You know, we're in the middle of a boom bus cycle. just the boom is kind of on another level we haven't seen before um and then on top of that you know for this level of interest and investment to be so concentrated on one particular area that money has to come out of somewhere else so there's only a finite amount of cash in this ecosystem or it's a big amount of cash and it's a big ecosystem but that money if it has to go into you know a trade that is buying up memory chips it comes out of somewhere else so there are opportunities elsewhere i thought it thought it would be interesting if we're looking at a timeline that spans decades and not quarters to focus on those ever-present business models and industries that are not only suffering from the outflow but will also just continue to operate essentially untouched from any a hype whatever happens because all technology is essentially have a slight question mark on it now of what is going to be the impact of ai trying to find the businesses that just do not have that question mark it's kind of tough because it's it's we're having this conversation about you know there's no such thing as ai stocks david gardner said that at investicon and he's right too and in the sense of you know if ai is going to be the same impact of the internet was in the late 90s and early 2000s there are no internet companies there are businesses that utilize this new technology and ai is at that level for sure um so finding something that is immune i suppose to that that doesn't have that question mark is going to be tough

5:37Emmet:um yeah but it's not that the tech doesn't underpin the the way forward like i can imagine ferrari headquarters wherever is that rome or milan or wherever can you imagine the chief leather stitcher coming in and being told here mate you're gone uh we're replacing you with ai and we'll get the union no way that ain't happening but we do know that ai is going is in ferrari whatever's happening up in their control systems and in their software of course ai is is embracing businesses everywhere but what we're saying here is that there are a whole pile of beautiful, amazing, bulletproof, growing businesses that, yeah, AI will push a few bits forward, but fundamentally the demand for their product and the product that they deliver will not or would not have changed in the absence of AI.

6:29Emmet:So, you know, so it's really like... It's real world businesses, I think. That's the term we need to highlight is the real world companies who operations are just outside of this technological advancement not that they're untouched it's probably the wrong word because they aren't yeah um but just in terms of just those businesses that live in the real world and operate outside of this kind of bubble we're in because we need to kind of prick that bubble every now and then because every episode we're talking about it and it's impossible not to talk about uh so the business i'm talking about is actually not one business it's three and i think even outside of this ai conversation i just think it is one of the most impenetrable moats on the public markets right now it has to do with landfill ownership so he said when you're describing there he said these beautiful businesses i'm not sure you describe this as a beautiful business like with all that preamble i've actually just showed up today to talk about garbage in the u.s but it's true um so it's maybe not an interesting market but it is very interesting market dynamics so in 1980 the total number of u.s landfill sites was sitting around 10 000 that number is down to around about 1500 today and not only that but there's planned reductions for another 400 more to be taken offline by 2040 and like it makes sense between environmental laws and then zoning laws and restrictions it's pretty much impossible to open up a new a new landfill in the u.s the only meaningful expansion we're going to see in of capacity is going to be from extending existing sites because jesus christ could you imagine if they opened up a new dump they bought a patch of land besides your house and they're like yeah that's where the new dump is going no bother and that just it's not feasible anymore so what that essentially means is that power is completely consolidated within the existing incumbents with very little if no chance for any disruption whatsoever so the top three private landfill owners in the US are waste management, a favorite of mine, heard it on the stock before, Republic Services in two, and then Waste Connections in three.

8:38So when it comes to market share, there are two ways of analyzing market share. The first is publicly traded market share. So of the total landfills, water controlled by public companies, these three control about 70%. So Waste Management is the clear leader with around 35%. Republic Services in the mid-20s, and then waste connections in the low teens uh they're then followed up by a few smarter players gfl environmental clean harbors casella but there's definitely a big three and that's important you always talk about the rule of three on this podcast there is a big three um now outside of publicly like outside of those landfills owned by public companies it is a bit more fragmented as you can imagine like you know a lot of dumps are owned by individual operators you know municipalities so that 70 percent number goes down to about 35 when it comes to u.s total market share and like when we talk about that it does come down a bit but it's still a big chunk of a very limited resource you're talking about 35 within the control of three companies and that is going to grow um so regular retirement requirements have made it more and more difficult to run smaller landfill sites without you know the necessary resources the environmental kind of step through these companies have to go through and then just the expertise as well to meet demand so what i believe is going to happen is that these mom-and-pop shops will eventually become and are already this has been the strategy for years and years for these major waste managing companies is they become acquisition targets for the big three and that's where the kind of capacity growth opportunities come up for these companies like when you are the biggest fish in like a consolidative industry it's great because no one can get big enough to come up and challenge you uh so it's not it's not it's an oligopoly and my argument here is to just go and buy the oligopoly buy the big three uh waste management republic services and waste connections and just sail off into the sunset and come back in 20 years i really think for like safe reliability picks that as an investment idea is one of the stronger arguments out there right now long-term so i have a question these

10:52Emmet:businesses sorry to sorry what are we going to say no no the and i'm probably just drawing on your memory of living in new york so when you live in in brooklyn or or williamsburg or anywhere small town america is it likely that your garbage is going to be lifted by one of those big three is the first question. And the second question is, do you have choice or dare I suggest, is it a cartel? Because I, many years ago, a friend of mine owned a sandwich shop in Dublin, pretty simple business. She made sandwiches and she ran out of bread one day and the guy selling the bread right across to the sandwich shop across the road would not sell her bread because he said, I don't do that side of the street.

11:37Emmet:And I remember saying to my friend, that's insane. That's mafia-like cartel. Well, famous mafia connections to the waste management. I didn't want to go there. Waste and the ice business are the two historically mafia-centric businesses, if I understand correctly. But is it a cartel, and do you have a choice? So when you live in America, could you go with waste management or the other guys, or the guys who lift the garbage, were the guys who lift the garbage and you pay them end of? i don't like i'm assuming i have to make jumps for all of america and their waste management issues but it's coverage coverage areas you know i mean this is a region that is covered by waste management because it has the landfill less coverage and the access to the landfill etc etc and it all comes down the whole investment thesis around this idea is just landfills their controlled assets by a very small group.

12:34And that's where the cartel aspects of a company. It's a monopolistic market for sure. For sure.

12:39Emmet:And I mean, if you own the landfill near small town, middle town America, it makes sense that you therefore are their provider of garbage lifting services. And there's no point, no competitor can really go after it unless they're paying you to use their landfill. So it is kind of a very nice business. 100 % like it's it's mission critical to society as a whole and like you're not gonna really see any threats to it anytime soon AI or otherwise I do you know when you go through an investment thesis and you're like thinking about okay what can really affect this business not being here anymore in 10 20 years and obvious stuff and like it's hoi polloi and it's up in the air thinking but obvious stuff does come to your mind how is a company that owns 30 or whatever 20 of all the landfills in america gonna go apart from like major internal fraud and like misdeeds by management and stuff there it really looks like a really safe pick in that sense like obviously there's critiques too and how fast is this industry going to grow in the next 20 years, which is a fair one because you think about it, it's one of these businesses that has to operate as it does, but it's not a high-growth one.

13:58We're not talking about memory chips here. And that's just why we've been talking about AI for the last two years exclusively is because of the speed of that growth. But given that there's an almost monopolistic nature to the top three especially, you're going to have incredible pricing power. So it's going to be kind of one of these inflation-plus businesses. it's not going to be a big high 20 every year but it's going to keep ticking over like that on top of that as well you're going to have the bolt-on acquisitions we mentioned these mom-and-pop shops they're just going to want to be up for grabs they're going to want to retire whatever else there's going to be plentiful pickings there for these top businesses to slowly but surely expand and get return on return on investment for what they're spending their cash flows you know what i mean and then other parts as well like there's this thing called landfill renewable natural gas projects which essentially captures the methane gas that comes from landfills and then converts it into pipeline renewable natural gas is the term it's amazing i read

15:01Emmet:about a new scientist a couple of years ago it's absolutely brilliant when you talk about proper green economy that stuff makes a lot of sense yeah yeah and then this is funny as well lastly i was debating whether i should even throw this in but if you read any of their investor material they are all spouting about efficiency gains from ai which that was funny given the theme of the episode but obviously this doesn't discount anything we've been saying about the non-ai investment thesis it doesn't make a thesis either but i thought it was an interesting point but it's like a safe harbor statement now exactly throw it into everything you know it's like and we're gonna make more money because of ai boss i'm not sure sherwin williams paint company back in the day yes yeah yeah but there are like isn't if you're talking about profit growth this is an opportunity there because there is like it's an incredibly labor-intensive industry and if if we're ever looking for automation to come in the type of jobs it should be is you know separating recycling in these facilities do you know what i mean like it's in this is the kind of jobs okay well look if you are going to replace jobs these are the type of jobs you should be replacing uh not to say that they're less worthy job but like as in that it gives probably the least desirable is that a fair way to say of rubber separators like isn't that is a job for a robot so uh stuff like that uh route planning then automated trucks eventually is on the plan as well so yeah my argument is just buy three and forget about them sail off to your uh sail off to your private islands and there are no major distinctions across like valuation margins growth rate they all fall in similar brackets with like obviously slight gaps market cap wise waste management is twice the size of waste connections at about 90 billion republic services falls in the middle um and yeah look it's one of these trades you you wouldn't you'd probably get fired if you were an investment banker and you were getting judged on quarters and yearly targets.

17:00But as a retail investor, someone who's long-term focused and someone who can kind of sit out all of the noise in between, I think it's fairly bulletproof and important for this argument today as well. It's AI proof as well.

17:25Emmet:from a 50-page restoration block or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required. Compatibility and availability varies 18+. I wonder if you worked in waste management, a lifer, and you kind of were used to just lift and stuff and throw it in a landfill. When you look at something, do you just go, I'd love to dump that? You look at the Golden Gate Bridge, go, I'd love to stick that in a landfill. or you look at Statue of Liberty and go, I'd love to stick that in.

17:58Emmet:Like, I wonder, is there no escaping the job? It's like, I've been lifting stuff for 35 years and thrown it in that big hole. I can't get away from it. No matter what I look at, I want to throw it in a big hole because there's money in that big hole. Anyway, this segment was brought to you, folks. Anyway. By Emmett's imagination. Emmett also studied physics as well. He's talking about throwing a Golden Gate Bridge in a bin. So, yeah. Well, it's that imaginative part of your brain that brings us to new places, Mike. So anyway, next time you look at a thing, just go, I'd love to stick down a landfill, make a few books from it.

18:33Emmet:So that's a good one, Mike. I mean, the one thing I'd say, I presume you or a lot of our listeners anyway, remember New York City. Certainly not remember, but know that New York City went bankrupt in the early 70s. I'm not too sure. I'm going to kind of say around 74, 75, New York City went bankrupt. The entire city had run out of money and as a consequence, the critical services that keep a place going, the police force, the fire brigade, the garbage trucks, were no longer able to be paid. And there was big troubles, literally, in Little China, in New York and everywhere else. and specifically when you look at photographs of the city at that time it doesn't take long to deduce the criticality of your bins aka your garbage in america being lifted because there was mountains of garbage building up everywhere all over the city it was something to see and it's worth googling but even in our own lives if you miss bin day as we call it in ireland or garbage lifting day maybe it's called in america i'm not sure uh you get a mild kind of oh no oh, I got to manage two weeks of garbage now.

19:42Emmet:And that's not what I do. I've only got seven days of bandwidth in my thinking. Like you realize the criticality of it. And then when a virus kicks in or we're hit in Ireland by inclement weather, which is like two inches of snow for two days and everybody just goes home and drinks tea and watches telly, you realize, geez, the bins weren't lifted this week. What are we going to do? So it is a utility that we ignore because it's unglamorous it's always been done since you were born you stick to stuff you don't want outside the gate and someone comes along and takes it once a week but really this is the very thing you want to own the thing that the minute it's gone just panic absolutely and it's just that long term you have to match with the long-term mindset because the stocks haven't done that well over the last few years and whether that's you know just the boring the boring bin company is no match for what's happening in ai or whatever else they're coming down from high valuations which the stocks that quality with that kind of mode are gonna are gonna justify those high valuations um so that's why you have to think long term with it but i think in terms of in terms of an untouchable thesis i think it's it's up there there's no untouchable thesis but it's it's high up on my list yeah yeah yeah no i'll give you that so my stock mike is very opposite it is absolutely not a utility and it is i guess the preserve of the privileged because the company i'm going to talk about i mentioned on stock club a couple of years ago about how impressed the i was and my wife and i were on our viking river cruise that we took along the danube river which flows through the middle of Europe through many countries um so I'm going to pitch Viking cruises which as the anti-ai ai is not to do with us business and at that time you might remember Mike that I I when I went on the Viking cruise we were accidental customers because the cruise was bought from my dad who had changed his mind he was like I don't even want that I was like what are you talking about man you dropped a lot of money on this and he was like you take it so So meanwhile, my wife and I headed off and had a wonderful event.

21:53Emmet:And as I said at the time, it completely knocked my socks off. So with that in mind, and considering that almost every company today is desperate to tell investors how we'll benefit from AI, I'm going back to Viking because its growth story has nothing to do with algorithms and data centers and chatbots and routers and scooters are cool and some the stuff we talk about here with excitement that nobody has experienced it's all to do in the real world do you know what i mean it's oh yeah yeah not as not as sexy as bin day but no no it's not as sexy as bin day and it's a little less sexy than a ferrari and it's probably more sexy than a cab of salad but all of these things uh serve human beings with things you can experience and touch whether looking out the window at your garbage being lifted or getting onto a cruise ship um and it's built on something uh far more human and and specifically viking unlike waste management and friends is targeting affluent travelers who want to explore the world in comfort so for those who didn't hear my previous rantings on the company viking operates more than 100 river ocean and expedition ships but it shouldn't be confused with a conventional cruise operator operator like maybe royal caribbean or the likes because its ships have no casinos they have no water slides they have no children's clubs and racing tracks and all that kind of stuff uh which for me is a plus right because i'm not into that let's step by our dinner business entertainment um tends to focus in in the viking setting on on the history of the place you're in uh the quality of food you're served when you're on the ship the culture of the destination as opposed to you know someone diving five stories into a swimming pool that's actually on the ship and broadway shows and pool parties and crushing beer cans on your forehead or whatever happens on some of the other ones so the typical the typical viking customer as i saw with my own two eyes is older they are wealthier and they are to put a label and they're more often than not retired so like just to illustrate that point when i went on it my wife and i were the youngest on the ship by i would almost say a generation which is funny because i was like 49 at the time which at that age you're rarely the youngest in the room but what makes the company less exposed to whether or not its customers are employed um than other businesses that are depending on younger people who have a wage or salary um is that their cruisers vikings cruisers can hit the road on holiday whenever they want so there's this there's no kind of peak rush for whatever your local whatever your country's um known holiday season is in ireland they say the first two weeks of august is the builder's holiday and you know the month is usually quiet in ireland in august or whatever but they viking doesn't need to entertain that because as I said, it's customers have the money and they have the time to travel whenever they want.

25:06Emmet:And the interesting thing is that demographic is steadily expanding. So the number of people mature, retired, have a disposable income that they can afford, such a type of holiday is growing. And then when you add to that, you have the proposition drives huge loyalty. I saw it with my own two eyes. I was at a dinner on the Royal, I mean, say the Viking long ship and they had offered, they'd announced over the speaker system if you book next year's vacation now, you get a hundred bucks off. And my wife and I looked at each other and went, that is a very small discount for a pretty big decision.

25:49Emmet:Like, I mean, these, a lot of people over dinner were saying, and there's no sense of irony. They were like, you know what? I'd like to book next year's, but I don't know if I'll still be alive. yeah that was actually a conversation and and you know you you realize that these are there's like i would say that with i suppose a pinch of irony a pinch of comedy in the hope that it's evident that i will be but nobody knows but these people would say oh i'd love to get a dog but you know i don't want him to survive me so i was surrounded by people who were very much um expressing an awareness of their mortality but anyway horizon horizon a viking where we're saying book down get 100 bucks off like these holidays were really really expensive many many many thousands of dollars and you get 100 bucks off to lock yourself in next week but that type of loyalty was there people were doing it but isn't there the thing about uh cruises in general it's like people who go on cruises go on cruises that is their holiday that's their thing oh you bet and i i made the mistake uh for many many moons ago we did we've only done two cruises and i did one North Royal Caribbean and we boarded in Barcelona and did one around Europe and it just wasn't to our taste but I do remember meeting someone on that ship who had been on 50 cruises 50 and they were very proud that they could go up and speak to the captain or go down to the engine room and have kind of privileged access that wasn't extended to other types of cruises but you're absolutely right but but viking has become the dominant river cruise operator for outbound north american passengers with about three times the market share with its nearest competitor which is pretty amazing and it's also successfully extended the brand into ocean and expedition cruises without abandoning this kind of distinctive identity that is very much uh norwegian and the whole um look and feel of the ships is quite scandinavian but they have now these ships that will go up and explore uh the poles and around the kind of the nordic regions where it's not your average kind of caribbean cruise and its latest results really provided compelling evidence that demand is really really strong so the second quarter revenue uh increased 16 and a half percent to nearly$2.2 billion.

28:10Emmet:And their adjusted EBITDA rose about 18 % to about$750 million on adjusted earnings per share, a buck 31 per share, which was up from less than a dollar a year ago. The capacity that they had increased by about 11%, and yet Vikings still achieved occupancy of 95%. And I don't think there's a hotelier in the world who wouldn't find those numbers eye-watering to have an occupancy of 95%. And then it's net yield. It's a measure of revenue earned per passenger cruise day. You know the way every industry has one number that matters the most? Yeah, the North Star kind of. Well, yes, their North Star is net yield.

28:53Emmet:So the revenue earned per person per day after certain expenses. And it cruised on up. to uh it's cruised on up 6.2 percent to about 645 bucks so what emmet well this is a very attractive combination viking is adding ships and carrying more passengers while earning more from each of those people um per passenger day and this implies that the the company is retaining a really strong pricing power rather than just depending solely on capacity expansion um i will mention though that when we were docked when my wife and i were docked or moored or whatever it is you do with a long ship a long boat um when it was roped up to the side in vienna the ships were stacked beside each other and it was a very long mooring there was loads of them like loads of mall parked in a row but by several deep so to disembark if you're on one of the outer ones because Danube River is really wide I mean it's it's so impressively wide if you come from Dublin or Cork and you're used to looking at the River Liffey or the Lee or the Banner any of those but you're like what when you look across the Danube it is big and these things are stacked but if you're in one of the outer ones you had to walk through one or two adjoining ships that you're a tethered to and and what and another thing just as a as a as a rant well i have the soapboxes you could if you had a balcony and your balcony to balcony on one of those ships you were tethered tethered which you could shake hands with the person at the adjoining balcony albeit for just a few hours and we didn't have that experience but it was evident that that was thing now so here's something else cruise companies also enjoy an unusually useful indicator of future demand because of what i said customers book and pay deposits well in advance and as of august 9th which what is it today we're recording the 8th september so just a month ago viking had already sold 90 96 of its core capacity for this year so you could say this year sold out but for a few few rooms here and there and 53 for 2027 that's wild over half of next year's uh beds if you like or pillows are sold out you know what i mean so that that is really great because that business now has predictable revenue advanced bookings for this year 26 totaled 6.39 billion which was 13 percent of the equivalent position a year ago and for 2027 advanced bookings has reached 4.71 billion dollars 21 percent higher than this year so more importantly advanced bookings per passenger cruise day were also higher up six percent for 2026 and now up 10 for 2027 so viking and therefore enters each season knowing that how much of its inventory has already been sold and that gives really valuable revenue insight for an industry that otherwise appears quite unpredictable And before I kind of dock this boat, like the company thinks is not standing still.

32:18Emmet:Its core capacity is expected to increase 15 % in 2027 after growing 7 % in 2026. and it continued taking delivery of new river and ocean vessels and has exercised options for two additional ocean ships, which are scheduled for 2032. And that expansion is supported by a great balance sheet that investors wouldn't usually associate with the cruise industry. Viking finished June, just gone a couple of months ago, with$4 billion in cash, access to an undrawn-down billion-evolving credit facility and net leverage of just 1.2 times EBITDA and deferred revenue that's the money collected for future travel is at five billion dollars okay now let's let me just talk about the opportunity which extends beyond adding births because Viking can increase customer spending through other things and when I was reading and doing my research for this podcast on Viking it reminded me a little of Airbnb which I've watched very closely for for quite some time because the question one could raise about Airbnb is where does future growth come from beyond what we see and when I look at when I was looking into Viking it seems that they they can increase customer spending through air travel land extensions shore excursions my missus and I did a few of those and they were absolutely terrific I can also bring and they can also bring its established brand into new destinations and selling additional holidays to previous guests so the challenge really for this business as i see it is maintaining the exclusive exclusivity and service and quality and really the food is something else so it really felt special and when i went when we were there you are not going to leave that uh dining room with less or more than you wish you could have eaten because they will offer you a second of everything or a third of everything if you're so inclined and and like the end was really high quality but what can go wrong and i think every listener who's been who's lived for more than the last four years will recall big things can happen to this industry um that's that that would be my favorite yeah because i think investors have been stung like isn't it was the poster boy for that whole period oh it certainly was we've all seen the really unsavory unglamorous notion of being locked up in a steel container sitting on a body of water while something has to flush its way through the biological system.

34:58Emmet:But parking there for a minute, I mean, it's a capital-intensive company. I mean, these businesses need massive capital. New ships require really big investment, and even the old ships require big investment to keep fresh and new and clean. And any disruption caused by war or terrorism or indeed extreme weather, the Danube went to its highest and lowest levels in recent times. We alighted at one small town. I've forgotten what it was called. And they put a mark on the wall as to where the Danube had risen the winter before. And it was 20 feet above our head and was an all-time high in an ancient city.

35:36Emmet:So this extreme weather, another pandemic, of course, as we said, can really affect itineraries immediately. And credit notes are being handed out. and it's a messy, I'm sure it's a horribly messy industry once one of those unforeseen events comes to play. And Vikings Affluent customers are probably more resilient than the average vacationer. So like if you were due to cruise in October and something happened and they go, hey, look, would you do it in January and we'll give you 20 % back? If you're retired and fairly well off, you'd be like, yeah, okay, whatever, it sounds okay. Like there's a flexibility that's in their base that doesn't exist if you're doing it to, let's say, school holidays.

36:17Emmet:And then one other thing, and I know I'm really going on about it because I do like this business, is the leadership is another issue to watch because the founder, a guy called Torgsten Hagen, recently moved to executive chairman. And I love businesses that are run by the founding CEO. He handed the reins over to Leah Telatac, and I ended up watching a 25-minute YouTube video about her. She was the CFO. She's now the CEO. She's been decades with them. She knows everything about the place and I'm sure she's very good. I have no reason to doubt her. It's the same. Waste Management just announced their CEO transition for coming next year.

36:58Emmet:Yeah, and it's an uncertainty. It is, but when you see someone like that where they've clearly been brought in as the succession plan, I've been in the company for years, decades, you know, it's almost ensuring in the sense of. Oh, we don't want to change with our new CEO. It's just we're letting the old guy retire. No problem. Yeah. We just want this business to be run exactly as it has been running. And there's a comfort in that. Do you know what I mean? That's right. It's so true. I mean, we have repeatedly discussed the importance, or at least the favorable opinion we have of companies run by the founding CEO.

37:38Emmet:But when I watch the video of the new CEO, Leah Telatac, you're kind of like, I have no reason to believe that she will operate or behave or think any differently to the founder. She was his right hand woman for decades. She knows how he thinks. she knows how he behaves not to say that she's there to replicate exactly the way he thinks or behaves but the culture i'm sure is ingrained in her head um but the haggens family controlling position also leaves ordinary shareholders with very little influence so if you're an investor in businesses because you love casting your vote yeah good luck with that because whatever vote you cast is probably gonna be lost in the wind and finally finally uh what what i would say about Viking is that quality is not a protection against overpaying.

38:29Emmet:Like it really does command higher valuation than the large mass market cruise operators like Celebrity and Royal Caribbean or Caribbean, if you're in America. And it carries less leverage and possesses, I suppose, a more distinctive brand. So the premium is probably justified, but it doesn't leave a lot of room for disappointment if bookings weaken or if cost rises or something kind of nasty happens. So my bottom line is this Viking combines lots of qualities that you and I might value. It has a great brand, great demographics, or at least I should say favorable demographics, very visible demand.

39:08Emmet:It has great pricing power. And my goodness, it is pricey if you are price sensitive and has a credible path to long term expansion. And it's selling, as I said, to older affluent travelers in a carefully curated way. You can go up some nunnery up a hill where these nuns have been making peach snaps since the like 1500s. You go up, they feed your pile of the snaps to drive you back. You're delighted. And you paid only 300 bucks. Where if you'd have went there in a horse and carriage, the nuns would have given you the snaps for nothing, you know. But anyway, I just want to say that shares are inevitably going to encounter rough waters, considering all those risks inherent in travel.

39:47And that's been very smooth sailing so far. it's only recently public in 2023 2024 that's right that's right and when i was watching their

39:56Emmet:ipo video hagan and the new ceo she was as much part of the bell ringing and the the face of the business as he is uh was rather so it would that that succession was there but you're right it is new they've had a lovely so here's my outro here we go here's my outro in a market preoccupied with artificial intelligence. This distinctly human growth story deserves a place on our watch list. This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks.

40:38Emmet:Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required compatibility and availability varies 18 plus the end so yeah um and then also actually this keeps coming up more and more research i'm doing in fairness now my last two stocks the month have been in kind of med tech space but an aging population as well one of the key demographic trends we're going to experience over the next 20 to forever really but in an investing sense you know you don't really go past 20 years is a global aging population and like that can manifest in so many different ways and like obviously you're looking at it through a striker is a perfect example like knee and hip surgeries and those kind of elective surgeries but here's another one where older retirees love cruises and there's going to be more rich older retirees as it comes along in the next 10 20 years than we've seen before so yeah it's good business incentive you're you're right and sorry i know an anecdote doesn't make data i say it a lot but i've met so many lovely that everyone on the ship was was an american except myself and the wife everyone and that's because we bought through an american operator for reasons i won't go into but um the the they were also lovely but they're all like we're gonna spend what we've got baby i don't care what that costs i'm going the last check is gonna bounce and there was a kind of comedic thread going that everybody was there to spend everyone else's inheritance that's quite nice too if you're just the vendor where you're like hey everybody let's go see the nuns it's only 300 bucks and they just throw their wallet down and get on the bus do you know what i mean yeah yeah anywho good stuff okay um right good that's the ai the anti-ai i'm enjoying this let's not talk let's talk less about ai for a show or two i will try but it is almost impossible it's very hard it's very hard so like john turnus is coming in now it's his first event this week or next week I'm sure the Oli's going to talk about his name do you know what I mean it's just impossible to avoid it but we'll see we'll endeavour we'll see what we can come up with for next week but for now Emet thank you for joining me and thank you everyone for listening we'll talk to you next week I want to date with Rawls Carty says Rawls?

42:58Emmet:Raka asks this is the love story of real hinge couple Carty and Raka written and read by me Nicola Dynan Listen to the free audiobook now.