#289: The Best Performing Stock in the S&P 500

0:00It was that free cash flow that funded a 25 % increase in quarterly dividend. So not only did you get a five bagger in 2025, you also got a dividend check in the post.

0:21Emmett, how are we getting on? Good to see you, Mike. How are you doing this week? Good, good. Yeah, I just heard some angle grinding outside my window. So I'm hoping this will be a smooth recording. They're rebuilding France outside your window, bit by bit. Sometimes it feels like that. But I think we're safe for now anyways. If anyone can hear any awful droning in my background, please know I can hear it a lot worse than you can. It's a bit like the screaming baby on a plane, you know. If you can hear it, you know the parents are going absolutely nuts. Yeah. And eventually as a parent, you kind of build this thick skin where you're like, look, I'm sorry everybody, but I can't deal with your emotions.

0:58I can only deal with this kid and mine. And then eventually everyone just has to buy into it. yeah yeah that's what i think that's what uh noise cancelling headphones were truly made for they're magnificent the uh apple airpods i think are the greatest invention of the last five years they properly lock out sound and they're so compact and wonderful and generate more revenue for apple than most companies will generate in 10 lifetimes yeah and they know how to charge for it as well you can get and i know there are differences in quality and all the rest but i They have a pair of headphones now for the last year.

1:34And I think I bought them for 30 quid. And you get the Apple AirPods for 300 quid for the same cordless plug-in, Bluetooth, whatever else. But are they good? Are your 30-buck ones good? They're good enough for me, but I don't take a lot of phone calls with them and stuff. I think that's maybe the difference, you know? Well, here comes a shameless plug. I've started to do them in recent weeks. But on that very subject, I was watching a video of there was like 10 audio files, complete experts in listening. And they had a blind test of the 20 top, alleged top headphones on the marketplace. You know, Bose noise reduction and Sennheiser this and the other and Rode and all this.

2:17And these ones here, which I'm holding up, I forget what brand they are. So sorry to those who do not have YouTube on at the moment. came out as number one and i bought them uh on amazon they were like 170 dollars which when compared to uh bose nose noise cancelling and all the others is a tiny fraction and the sound quality from those are absolutely brilliant uh we'll probably have to put it in the show notes now it's a shameless plug but uh they are so comfortable and noise cancellation is unreal it proves what a shameless plug or what an unmotivated unfinancially motivated plug it is because i don't even know what they're called i hope they didn't pay you for this because they're not getting their money the christmas hamper has a try better next year later in it yeah a d influencer yeah okay we've got a we've got a fun show today we do wanna kick off first yeah you're right well uh i would like to think of it as that mike i don't really call it sales messages but in fairness, I am working on something at the moment for Horizon, where I'm going deep into the 35 stocks identified by Nexus 1, Nexus 2, and Nexus 3, which is hot off the press, as regular listeners know.

3:37Specifically, I am going to pick my favorite from each of the three services and publish it to Horizon just before Christmas. And my head and my heart are definitely aligned, And I've already made my decision because I think the three I've picked will rise to create fortunes for anyone who just buys them and puts them under the mattress. And as mentioned in a recent podcast, we are repositioning the whole of My Wall Street. And specifically, we're also repositioning Horizon in several ways. And as you know, as of yesterday, we have repriced it to$3 ,000 a year on mywallstreet.com or$2 ,999 a year.

4:20However, if you email Frank before the 22nd of December, he'll send you a link to buy it and lock in last week's price, which is a tiny fraction of where we are now and where we're going to keep it and where we're going to bring it. and also while i'm on it by the way mike this week's buy alert in horizon is the last of the year it's the december buy alert um and i'm going to i guess identify the one that i have had the strongest feeling with 50x and in a strange crossover i had an insight to this company back in May when I attended a wedding. And I spoke to one of the most senior people in the business in the small hours of the night and decided not to quote them because I was stone cold sober.

5:14And I had declared my interests. I spoke to this very senior person from this business for an hour and they were like an open book. And I kind of reminded them of my interests, but they were not too bothered and uh i thought to myself i'm never going to ever quote anything i'll just use it to inform my thinking and in that report i'm going to publish just before christmas about my three favorite uh uh stocks from nexus i will elaborate a little bit on that point i just made uh because i'll also do a bit of a year wrap up a personal uh year wrap up a wrap of the things, my highs and lows of my personal life.

5:58But anyway, so the buy alert this Thursday today is going to have the stock that I am so convinced is going to be a wonderful generational investment. And if you want to get Horizon at last week's price, email frank at mywallstreet.com. M-Y-W-A-L-L-S-T.com. We should have chosen a business name. that home ah it's like i've gone through my one of my secret missions in life is to get made of purged the second t in emmet when people write to me with two t's i find it very off-putting did i have this rant already on stock club well i don't know if it's on stock club i've heard this that multiple times yeah you know of course you have because i really like what is this there is no second t in emmet that that isn't a person maybe you're getting compared to warren buffett maybe it's a compliment well it is but do you know those who who i think imagine there's a second t in emmet might have encountered a 2t emmet in their life because that person's parents also had the same mental tick and named their child two t's nice and round two e's two m's two t's yeah on a weighing scale it kind of looks nice yeah very very nice add the second t maybe no there's a lot of there's a lot of reasons here for it but we're getting distracted we are so the point is that we went I me I have to point at me I went and did it again I have to correct not only people and I had to spell my name one t but with my wall street it's my wallst.com um so email frank at my wallstreet.com and he will send you a special link for last week's price on horizon and it's three grand a year now you will get it a teeny weeny three figure fraction of that amount And then we are done, folks.

7:47We are repositioning this business. And I ain't joking. So there you go. Mike, yesterday, when you pitched me the idea of talking about the year's largest gainer and the biggest loser from the S &P 500, as you saw, I was pretty taken aback when you told me that the winner was none other than the old tech dinosaur Western Digital, which has seen a 400 % increase so far in its share price in the year that has been 2025. Now, in that tiny window between our chat last night and us recording on the evening of Tuesday, 2nd December, there's been a new entrant to the S &P 500, which has knocked it off the top spot.

8:32And I'm only prepared for Western Digital, although the new number one, SanDisk, is a spinoff of Western Digital. So I think we can pull it off. I think I can pull this off, Mike. I can talk about the best performing stock and the second best performing stock because they are first cousins once removed. Yeah. Okay. Sounds good. That's a bit of a mea culpa by me. So I just checked the chart. I check it every now and then the best performance and the worst performance, the S &P 500. And it was, I think, updated on Friday without Sandisk Corporation, which was added on Friday. So there we are. Well, you know, it's life in the fast lane, Mike.

9:17And if there was ever a stock that was kind of easy to talk about in this thing, Sandisk Corporation was spun off from Western Digital at the start of the year. So it does kind of fit into this whole thing. Well, if you look at Western Digital's 10-year revenue chart, like I have here in front of me, it's anything but beautiful. It's like Austin Powers' teeth. There's a few up, a few down, one up, one down. There's no rhyme or reason to it, but sure enough,$1 ,000 invested in week one of January 2025 is worth about$5 ,000 now in Western Digital. And another thing, last night when we were chatting, and you said to me, Western Digital has been the number one performer.

10:01You'll remember I said to you, they made the calculator when I was in school. I remember them. They made my calculator. And you said, yeah, possibly, but I was wrong. I looked it up and they made the moss semiconductor chip inside my calculator and there's only one possible way that could be inside my head I guarantee you I opened my calculator for a look around when I was in class like I know I did so when you said it was western digital I was like oh yeah yeah they made my calculator they didn't they made the guts of my calculator now western Western Digital has been in existence since the 70s.

10:39So it just doesn't feel like this hyper-relevant, super future-enabled company, but surely it is. And it started as this tiny semiconductor startup, I guess, making chips that, as I said, powered early calculators and certain computer components. And then as personal computers took off in the 1980s, it shifted from chips to the technology that helped those computers store information, making are moving into hard drive controllers and then full hard drives themselves. And by the 1990s, Western Digital became one of the leading names in PC storage. And some listeners might recall buying an external hard drive to back up their computer.

11:27And if so, there's a decent chance that it was a Western Digital drive. I hereby swear that they certainly did one in red. I had a lovely Ferrari red external terabyte that I bought a good few years ago. So anyway, the big turning point for Western Digital came around 2012 when it bought Hitachi's storage division, which overnight made it the largest hard drive maker in the world. Then in 2016, it acquired SanDisk, which, as we said, is a brand our listeners now know. They're like, we know SanDisk. We've heard of that one before. Sure, you have. You're at the top of this podcast. uh this podcast and and it's also a brand you probably know because it makes these little ssd chips memory chips that you put in gopros and digital cameras and the likes and as you said it divested again it started this year so um a month ago western digital reported a really strong uh start to fiscal 2026 so my question is have they built a time machine no through the magic of accountancy this business reported its end of q1 2026 a week ago so you you see this sometimes you see a q1 2026 being reported as we're still thinking about christmas decorations for 2025 and that's one this one of the companies and it reported about 2.8 billion dollars in revenue in the quarter which was up 27 year on year profitability was up a whole pile gross margins was up to about 43 44 earnings per share was up and the company generated 599 million dollars in free cash flow which i guarantee annoyed the cfo the chief financial officer was could we do anything can we sell lemonade i want that 599 million free cash flow to hit the 600 million it just feels right a cfo really does not like a 599 number it just it's around but that's what they reported hard luck i'm sure the bonus was still good and it was that free cash flow that funded a 25 increase in quarterly dividend so not only did you get a five bagger in 2025 you also got a dividend check in the post you fluke um mike is fluke an irish expression like your jammy fluke is that pure irish or um is it an international expression like if you're running on a soccer pitch and you kick football with your big toe and it just basically glides through the air and goes into the goal a lot of people say you're a jammy fluke is that pure dublin is that pure irish just that international that's a good question it's a fluke fluke is a stop would you ever call someone a jammy fluke when you're playing golf 100 yeah or a fluky shot a fluke is a fish i'm pretty sure fluky shot yeah yeah uh but uh right well maybe we'll claim a question i mean the irish we've claimed a lot maybe we'll spend maybe spend the next hour of the podcast discussing fluke yeah a fleek but anyway look so you're you're a fluke if you bought a western digital in gen in january that's the truth so let me tell you what's going on at the western digital party because there's a party going on in there and two letters describe the party and our listeners know what it is it's letter a and a letter i and i'm gonna dive into that for a minute ago so there was for a minute i should say not a minute ago that time machine thing has my brain addled there was a wall street journal uh article published in september that really was very good because it explained how hard drives are experiencing a really unexpected revival thanks to the explosive growth of AI because AI has turned chip makers like NVIDIA, of course, into these market darlings.

15:27But companies like Western Digital are really enjoying this renaissance and the strongest period in years because of demand for data or data storage, I should say. And why? Why is more storage required? Well, AI is completely changing the storage landscape in two ways. Number one, companies are keeping far more data for training instead of overwriting it. And anyone who worked anywhere 10 years ago would know you just overwrite the old stuff. It was never needed again, which I never twigged in the world we're in now. And even here in my Wall Street, we keep all data and have done for several years.

16:09And AI systems themselves, the second reason, they're generating vast amounts of new content. So companies are keeping every little one and zero generated from their machine, from their company, and also keeping all the feedback that's coming from AI, whether it's text and images and video. And all of this needs to be stored somewhere. And as a result, industry analysts now expect global hard drive revenue to roughly double from its 23 levels within the next couple of years. And Western Digital is positioned right at the center of this store my stuff boom. About 90 % of its revenue now comes from cloud customers, which kind of shows how it's effectively high capacity drives are behind the hyperscaling of data centers.

17:00So the company is also benefiting from other things like long-term supply agreements and improved pricing power and all that kind of stuff that underpins the whole 40 % revenue growth thing. But when you look ahead, when you look at Western Digital, this company that in January had you thrown the name down in the middle of the table, I would have said, nah, not what we're talking about. It now suddenly has very, very bright prospects. and in the more immediate term it's preparing to introduce hammer technology h-a-m-r technology which is going to enable hard drives exceeding 30 terabytes uh to to a backup and restore facility for those and then basically it it puts them and strengthens them in their duopoly they're in a duopoly with a company called Seagate so even as these SSD cards gain traction really hard drives are cheaper so the big bulkier volumous way of storing data is still the cheaper way to do it and they will always or well at least for the foreseeable future continue to handle the bulk of data center workloads now in the immediate future in the next quarter they're expecting everything to go rosy they're looking at 20 revenue growth improving margins um all the stuff like every number is is going to improve according to them in the in the weeks and months ahead so kel surprise western digital is a key beneficiary of accelerating data creation across cloud and ai workloads and now it's heavens above it's indispensable so put that inside your classroom calculator i wish i had to tweak that in the 80s opened up the open up the calculator and went i'm buying i'm in i'm all in i think there'll be an ai thing someday and it's going to go into their company yeah well what's fascinating about this is just the general rising tide lifts all boats and i assume that these stocks were coming from a low base but of the top five performers in the s &p 500 this year four of them yeah are within storage and memory so we have sandisk uh western digital the top two then micron and seagate are four and five or four and five and five and four whichever order they're in the only one that's outlying there is uh robin hood actually surprisingly so it's interesting to see that obviously they're a big factor within ai but it was almost as if people only realized this in the last year or so do you know what i mean because the stocks before it, the kind of cooling companies like Comfort Systems and Zivertiv is the other one.

19:53Those kind of obvious pick and shovel plays for the data center build out and everything else, they were identified much earlier. Whereas this year very much seems that memory and storage is the key theme and the performances, all of those stocks have tripled since the start of the year with sandisk since it's um sandisk since it's play spin-off jesus where am i today sandisk since it's spin-off um i think it's up four or five fold so it is crazy to see a one particular industry which is like made up of sleepy companies like sandisk used to make floppy disks western digital is around since the 70s putting chips and calculators c-gauge is around for ages as well so micron is pretty pretty old too like these aren't like high they're obviously high tech but they aren't the kind of cutting edge stuff yeah it's just that it seems to be an industry that maybe was underlooked um it seemed for a long time it's quite cyclical these stocks and so it's just it's it's really really having its moment so far in 2025 but i just thought it was fascinating that of the four of the top five high performers were all within a very close, you could throw a blanket on them in terms of industry.

21:06Yeah, yeah, yeah. And I'm sure you've encountered on Twitter the likes, these kind of infographics about the entire AI ecosystem. And at the core of it is an NVIDIA chipset, but it sits in a rack, it sits in a room. It sits in a room that needs electrical power and coolant and it needs security. And then there's like hundreds of adjacent companies and industries benefiting from the rise of AI. And as you astutely said, this kind of external storage is one. Well, I suppose if you dived in, you probably would have seen it coming a year ago. But alas, I certainly didn't wish I had. Yeah, yeah. And then just to mention as well, in terms of these memory chips with Micron, there's three players in that industry.

21:49There's Micron and then two companies that aren't on the S &P 500. They're not really on the US markets, which is Samsung and SK. Hynix, SK Hynix. So if you are interested in looking at those kind of industries, that's pretty much an oligopoly between those three that have dominated the kind of memory chip market as well. So that's the best performance stock and kind of the best performing industry, really. So if you put 10 million in in January, you'd have 50 million today. Such relatable numbers. Everyone's like, yeah, I can picture that. So tell us, so what would have happened if you put 10 million into the worst performer i won't put you on the mathematical spot start by telling us what is the worst performer of the year well you'd have three minutes um so the worst performer of the year is fyserv uh fyserv it's paying fyserv oh yes oh yes yes yes rv payments company it's been around since 1984.

22:50yeah um it's funny all these businesses are ancient we're talking about today for whatever reason went public back in 1986 and actually at its all-time high at the start of the year it was an 800 bagger it was up over 80 000 since its apo right not not so much the case anymore still a hundred by i think it's about a 200 bagger but yes that's that's really come down to earth in the past nine months what a bummer i'm only up 200 fold oh well i tell you what if you were up 800 fold in february you would be feeling that heat You would. Yeah. My heart goes out to them a small bit. But it provides payment processing, card transactions, e-commerce payments.

23:29And particularly, and what me and you and most people listening will know is the POS systems. So if you're going into a shop or a restaurant, you know, the little plug-in thing you can have on your phone, the little white box or the iPad they spin around and they ask you to tip, you know, 2 euro for your coffee that costs 3 euro. So, do you know the brand Clover? Oh, yeah, yeah. I see it around. Yeah, you've seen them before. It's a lovely white device. Got a nice logo. Exactly, yeah. Very similar to Square. It's one of the little white yolks. You know, you kind of put on your phone or then they have the iPads as well.

24:03It's a lot more than just Clover, although that's kind of the main consumer-facing brand. Then it does a lot of B2B as well. So it does software platforms for banks and credit unions, digital banking solutions, account processing, card issue of services, a lot of stuff like that. So there's a lot going on behind the scenes. We're probably going to discuss a lot of Clover today because there's a good bit of kind of... I'm glad this is a very interesting story. I'm glad we kind of talked about PyServe on the show because it's a very interesting kind of corporate... I'm not going to say backstabbings or anything, but a little bit of corporate warfare going on here.

24:39But just to give you, before we get into it, like a kind of an idea of the scale. of Fiserv. I think it turns about 10 ,000 financial institutions and 6 million merchant locations all around the world. It processes about 90 billion transactions annually. It's a huge giant. I think it was worth around 100 billion at the start of the year. And it's got this huge ecosystem that basically enables banks and businesses to manage, move and accept money all over the world. um so that's Fiserv the company now Fiserv in 2025 is not very rosy picture it's a very poor year already it was down about 40 for the first 10 months of the year coming into Q3 earnings and then Q3 earnings was where the cat really came out of the bag so it was already performing and then these results came out and the stock fell 44 in one day um this was a hundred billion dollar company at the start of the year and now it's moving around like a penny stock which I guess if you're going to be the worst performing s p 500 stock you're going to have days like that but basically the the top line figures management made a severe scalp to fall your forecast it went from expecting earnings of 10 bucks and 15 cents a share to 8 bucks and 50 cents a share it's best revenue growth to go at 10 from the start of the year it's now only expect three and after four percent um so there's a few reasons given for that kind of top line interestingly was kind of the macroeconomic pressures in argentina of all places as so from 2024 yeah i know that's what you're expecting from 2024 of the 16 organic growth it achieved in the year 10 of that was responsive was came from argentina which i found very interesting this year not so much if anyone's kind of following your man javier mile um going through it needs a bailout from the us i think whatever is happening in argentina it's not great especially not for the economy and so this company was not so much reliant on growth there but was enjoying growth there last year not so much this year and so the new ceo mike lyons who i was looking up not irish like irish american but not irish irish uh he said that he assumed that to compensate for the slowdown our non-argentinian businesses would grow significantly faster than their historical mid single digit range that was the original forecast which is just not the case but that quote is telling a lot about the backstory here so mike lyons only came in as ceo in may of this year uh he replaced frank Frank, and I'm going to butcher this name.

27:18So Frank, if you are listening, I'm sorry. Bissignano, who left the role to take up a position in the Trump administration, which we found interesting enough already. So he announced his departure on December 5th last year. And for all intents and purposes at the time, the stock and the business were in great cheap. Under the hood, maybe a slightly different story. And this is what's coming out in Lion's comments from the call, where it's very much like he's been given a raw deal by his predecessor. So So he stated, this is a quote, there were a whole bunch of embedded assumptions away from the major projects that even with strong execution would have been hard to do.

27:54So Bisignano has come out saying, we're going to go 10 % a year. Had him finishing him. Everything is great. And then Mike Lyons is coming halfway through the year being like, what the hell did this fella promise? Now, according to Bisignano, according to insiders who know Bisignano, he believes he gave very reasonable projections for the year, and he's blaming all the poor performance on Lyons. which if you leave the stock at pretty much all-time highs, everything going well, and this new fella comes in and it's down 70 % in the space of six months, fair enough, you do blame the new guy. But a lot of the issues coming out now boil down to a lot more than just what's happening in Argentina.

28:32So it comes down to Clover, which we mentioned already for a long time. This is the company's cash cow. It was acquired in 2019 as part of the acquisition of First Data. And it's kind of been the powerhouse for the business. However, cracks were beginning to show, and the company was relying on additional fees under the guise of value-added services to kind of juice revenue out of the product. So this was noticed by analysts at the start of the year that revenue from Clover was outpacing payments volumes. So, you know, instead of, say, a token of billion in payments volumes and, you know, maybe 200 million came into Clover from revenue.

29:14now it was up to 230 240 whatever else so that was a bit of a concern in the sense of like maybe unearned cash short-term cash uh not only that but then 2023 the company phased out its older payment software system called payeasy and it forcibly migrated 200 000 merchants from payeasy to clover this is kind of seen as juicing revenue and it was maybe artificial the growth that clover is experiencing and it wouldn't continue even though vicignano said for all the world that it would into 2025 so this combination of kind of what seemed like additional fees for very little additional service on top of a big huge migration that maybe new people didn't want saw a big migration away from clover to competitors like toast or square or even shopify the in-person stuff um so that's kind of where the company is now i thought this was a great gem from all of this so bisignano he was forced to divest his stake once he joined the government so he left in may he had to sell it before july essentially in doing that he avoided hundreds of millions of dollars in losses from the stocks decline oh yeah and not only that but he was allowed to defer capital gains tax on the sale of that provided he invested in stuff like treasury bills and and broad-based mutual funds so i mean talk about timing for this fella he kind of a jammy fluke as we say around the world maybe maybe he was more than jammy maybe it was a bit of a sly fluke maybe he kind of didn't set the company up for success for his successor um so meanwhile lions is there where Bisignano was made off with a small fortune, Lions is left to clean up the mess.

31:02And he actually did a review, which found that the value-added services that Bisignano was doing with Clover, they were good for revenue in the short term, but they could actually hurt the company's reputation with customers in the long term. It's a competitive space. We talked about the other companies that are there, big companies, Toast, Square, Shopify. You know, if you're not really innovating, but then charging more for the privilege of doing so it's not going to go too well so this q this q3 call was kind of where lions basically let everything out of the back he was like he bit the bullet he reigned in forecasts he announced he was overhauling his leadership team he's bringing in three new board members as well to help him with the job he announced an action plan that he said would better situate the company to drive sustainable high quality growth and reach its full potential um so it's it's an interesting story it's not just that the stock kind of underperformed and misses earnings or whatever else it was that it was set up to potentially not meet its forecasts and there might be kind of an undertone of this guy said it's a bit of a birthday ahern like you know i'll get out in 2007 and okay bye uh i'll see you now there's your recession um i'm off i'll go and so i just found it very interesting there's more nuggets out of this as well like david tepper and ray dalio two of the biggest hedge fund managers in the world hedge fund managers in the world they both opened new positions in q3 this year right before it fell off a cliff so they're sitting on like right 50 losses on their positions well when it falls 40 in a matter of hours just not a whole lot you can do yeah i think it's an interesting second sorry i don't mean to break your flow but a very interesting secondary consideration that i'm taking from this story is that founding ceos do not set their company up to hand over to another person for it to fail whether there's any truth in in in lions's i don't want to say accusations but in the things that lions is calling out saying it's about his predecessor you didn't say it but i presume your man pisciano or whatever his name is he's not the founder i presume no no no he's ex jp morgan which is a very there you go like a founder will not allow their it's like a parent they don't want to set their child up to fail they want the point at which they let it go to be the lowest point and that is every founder feels that in their blood they want that thing to succeed and the behavior is reprehensible if there are a whole bunch of structural issues that ultimately led to the downfall on your lines as watch and you just wouldn't are rarely rarely rarely i just think would never see it with a founder yeah yeah it's a good point and then the also thing is like a founder would own a lot more of the company than uh one of these mercenary ceos would you So he's very much more financially incentivized to plan for the long term.

34:08And that seems like, especially with Clover, especially with the lack of innovation and added fees, is not really the strategy that was coming to the fore. Now, there's not much finger pointing. There's a lot of insinuating in this situation where, like, you know, lines are saying stuff without saying it. but if you're reading between the lines, you can see a lot there of, wait a minute, I kind of inherited a poison chalice here. Right. And there was stuff there, the signs were there maybe from the start of the year. Like a lot of analysts were noticing what I said earlier of that Clover revenue increasing faster than payments volume increasing, whereas they've always been in tandem for a long time.

34:53And is this meeting forecasts artificially? And I think that's the accusation that Lyons has made. So there's an action plan in place. There's a new rejig leadership team in place. And he very much looks like, okay, I'm ready to do this the hard way now. Which is an interesting point, like an inflection point for the business here. Down 70%, very established. I think it's trading at 10 times earnings now or something like that. so yeah it makes for an interesting an interesting kind of view on the business and how we're looking at it going forward but I just want to finish with one little nugget here I did find while I was doing my research so Fiserv was added to Times Magazine's 100 most influential companies on the 1st of July would you like to know its performance since that edition?

35:46yeah tell me down 64 % oh ouch so uh yeah i hope you aren't i hope you weren't looking at time for investment advice in this case i'll never throw a stone in a glass house i live in a world and occupy my time and career with identifying great businesses that i believe are great and too often i find in not too distant future after me opening my big fat trap that it isn't great but more often than not we get it right so my sympathies to the time analysts slash journal who figured Fiserv was the panacea for everyone's retirement plan um so do you want to do a very quick uh where would you put your money we've got 10 grand oh 10 grand oh and before we do can I ask you just does it all say to you that Fiserv will be whipped out of the S &P 500 um I don't think so right um it wouldn't be so much for performance it would be if they're missing some of the criteria like you know if they turned on profitable in the year or stuff like that five servers still profitable um it's still way above market cap uh regulation stuff like that so i would be very surprised but like find out um soon enough i think it's rebalancing it's re it's rebalancing before christmas so okay we will find out but i don't think it just goes down to the bottom company and is like uh okay you're gone and we're replacing you with three more.

37:11I think it sees companies that are falling out of its kind of regulation criteria. But I could be wrong. If you're investing in the S &P 500 and you have a business that is down 70%, that is affecting the millions and millions of people who invest in that as an index. So maybe that is enough reason for it to be scalped. I'm not sure. It's interesting. Our little new fun game where we both decide how we'd allocate 10 grand And if there were only two listed stocks in the world, the two we pitched on the show, we did it a few weeks ago. And there are two good companies, Shelley and, oh, the serial acquirer from Sweden.

37:49What was it called? Medcap. Medcap. And I think you and I both went in heavy on Medcap, but both acknowledged that Shelley is a fine company. I think in this one, it's a lot trickier because Western has had its run. it's up 5x uh since january and fiserv has now brought out its dead and very feasibly could be sitting at all you know at bargain basement levels so who's gonna go who goes first do you want me to go first uh you can go first yeah you went first the last time yeah we'll give you more time so i'm gonna put in a new rule we can't go 50 50 it's too vanilla um the up go upper said david gardner and ai is not a flash in the pan i do acknowledge appreciate and can see just some crazy valuations out there but not with uh western digital not with western exactly so not with western digital so i'm gonna go 75 into western digital and 25 into fiserv I am going to go the inverse.

39:06I can be very guilty of falling. And the worst thing about falling into the kind of emotional fallacies and stuff you have with investing is I can recognize what they are and still fall into them. I find it hard to invest in a company that is in a cyclical industry and has had such a hot year i think that is the case with western digital whereas with fyserve it's only up 200 fold like it's only up 200 i should have just been born in 1986 invested then um with fyserve i feel like yes there is a risk of catching a falling knife but still a very established business clearly needs work and like the ceo was there to clearly bring in a turnaround of sorts and then you're getting it at like nine ten times earnings um so yeah maybe i'll go eight eight grand five serve two grand western digital holy schmoly why not i i've been guilty of trying to catch falling knives before i famously put flipping novo nordisk thinking the drop was done recently on the stock of the month but um i'm willing to get hurt again emmert i think nova nordisk will be around when you and i are pushing up the daisies so i wouldn't be too worried about that what's interesting about our last time we split 10 grand conversation we were both pretty aligned i think i said 80 20 and you said 75 20 and they're both in the same direction we've gone in opposite directions here leaving our our valued and loved listener confused confiscated frustrated discombobulated or we just gave them two uh very varied opinions that they can decide themselves what theirs looks like you know we don't people can't just be don't think for yourself following everything we say think for yourself as weak hey listen finding profit finding profit oh no following profit following profit we need a jingle but anyway in its absence I'm going to remind our listeners about profit because we have a little segment, which we skipped for the last two weeks because we're too busy talking about Nexus, called Following Profit, where Mike or I spotlight one of profit's current 10 stocks.

41:22so profit is our just tell me what to do service you subscribe you take a your your starting capital you break it into 10 equal amounts and buy uh same dollar amount of the 10 shares that are live and profit and then on the next rebalancing you sell the ones that tells you to sell take the cash and split it evenly amongst the ones that tells you to buy so um it might tell you to sell these three and buy these three you sell them divided by three and buy the three and from that point forward it happens every four weeks it's results are mind-blowing and um yes of course i will always promote what we do but we are now thinking bigger than anything we've ever done before with profit and that is way way bigger so um but for now anyway i'm drifting here profit is rebalancing on friday the day after this podcast goes live so there are currently 10 live stocks mike nor i or anyone in my wall street has a visibility of what's going to happen at the rebalance because this thing was built with the most bleeding edge uh technology and ai and algorithms and we don't watch what's coming in the pipeline because in a we can't see it in the pipeline that's the truth of it so one of the 10 stocks that's live at the moment in profit is called carpenter technology corporation and it was purchased by profit on august 15th which when this podcast goes live will be 111 days ago and in that time it's up 31 for profit so as i said i might sell it tomorrow And the reason I'm not going to go on a deep dive on Carpenter is because it is terribly boring.

43:15It's like the other one. It's like the other way. We just talked about Western Digital and Fiserv. We're not famous for doing too exciting. I imagine there's probably a few people out there still like, go, go, tell me more, tell me more. But I'm afraid, like, if you've got a propensity to listen to a podcast about Western Digital and Fiserv, we're really pushing our luck with Carpenter Technology. It's a US-based manufacturer. It does special performance alloys and engineered materials. It sends bits and bobs and metal stuff and big yokes, shiny things, to aerospace, defense, medical, energy. oh so exciting but um it it's basically just titanium alloys and nickel based super alloys which are particularly known for their strength and corrosion resistance so who doesn't love an investment in a business that makes yolks that don't rust i mean you'll never we'll never recommend something that rusts that's not the my wall street way we look for companies companies like Carpenter Technology up 31 % in profit.

44:23Will it be kicked out tomorrow, locking in a 30-something percent gain? Only those who subscribe to profit will know. And if you want to deal in profit because it is being repriced to a grand a year, maybe this week, it's$499 at the moment, and it's going to be repriced to a grand either by the time this podcast goes live. You can even access it if you email frank at mywaltz.com. So you can either get horizon or mywallstreet.com at yesterday's price, day before yesterday's price, if you email Frank. But this is not an idle marketing message. When it's gone, it's gone because we got to get this business into a whole new segment of Bowman's strategy clock.

45:08The nerds are now looking it up because I am a nerd. So there you have it, folks. who wouldn't love to own a carbon tungai, whatever it's called, nickel super alloy maker and carpenter technology. Great stuff. Brilliant. Finding profit, following profit. I suppose the beauty of profit is you don't need to know what carpenter does. You just do what it tells you to do. Just do it. Yeah. It's for people who like the sport of listening to stocks, but not thinking about stocks and they can enjoy managing their own portfolio. there are no management fees to manage your own portfolio folks you don't have to hand over a percentage every year to some guy who's getting it wrong profit gets it right and it's only a grand a year or 499 or something if you email frank okay we'll finish it we'll finish it on that very ambiguous software we're not sure we're not sure how much it costs email us yeah yeah but no no no what i am should resents it to it's a it's a great week because everything is going is going up and by the way you know mike where we're going at the end of the at the end of 2027 so there are going to be people who listen to old versions of the podcast in the future and they're going to listen to this podcast and go hold on a minute that was 499 that's not fair and we'll be like yeah sorry we also sell small violins