#300: The One, Life-Changing Stock to Buy and Hold for the Next 10 Years

28:00Emmet:And I turned to my wife and I said, that's crazy, like an$8 billion online bookstore. And he has repeatedly, year after year, just nailed it. And too many times I've double thought, David, I've like, I don't know. I don't know if that's going to fly. Well, this stock, which our regular listeners know and already have guessed is Rocket Lab. And I pitched it actually a long time ago on Horizon. and long before I spoke to David. But it was his blessing that got me to re-look at it. And the thing about that proverbial investment in Dell in the 1990s that I mentioned at the top of the podcast is that you had to, had you announced to your friends in 1990 that you were taking cash and you were deploying it in the maker of PCs, like a few months after the 1980s ended, they, your friends, for the most part, would have disagreed or misunderstood and not really seen the vastness of the opportunity ahead because the world in which we humankind lived in in the late 80s and the turn of the decade 1990s was computerless you know like um they just weren't there so to invest in dell on the first day of 1990 is all very fine when you've got the benefit of hindsight but you really have to look into the future and see the direction of travel and imagine the direction of travel well rocket lab today looks like dell 2026 edition to me and if you want to hear my thinking deeper on that i guess you can re-listen to the podcast with david or sign up for horizon because now not only have i pitched it in horizon i've bought it in horizon repeatedly and i will never sell that one um it It just, there's too many great investors who've pointed it out to me, but I'm going to stand on my own and say, I pointed it out to Horizon subscribers long before I think anyone pointed it out, but then I abandoned it.

29:59Emmet:I kind of got lost my nerve and certainly that nerve is back in. And this is the only Horizon stock I'm going to talk about in this podcast. In fairness, I'm going to, the next two I'm going to pitch are not in Horizon. If you want my absolute favorite stocks, you gotta sign up for horizon folks i'm investing my real money in it and i think we will have a handful of winners that are analogous to tesla from that 2019 podcast and by the way just before i move on rocket lab today market cap of 37 billion dollars which is in the scheme of today's multi-trillion dollar businesses it's a minnow right mike over to you so we've waste management and Rocket Lab, over to you.

30:42Mike:Okay, next one on my list is Uber. Now, I have some explaining to do here, but this is almost as much out of curiosity as anything. I feel like autonomous vehicles will become a sort of inflection point for Uber. And using this 10-year timeline, I guess I just skip all the consternation of, will it work, will it not? And just fast forward to see if it did. The argument is relatively simple, I believe. So the bull case is that autonomous driving becomes somewhat commoditized. There are a lot of players, Waymo, Tesla, Zoox, Baidu are just four very much real players in it right now. Whoever else comes after that, we don't know.

31:23Mike:If you talk to Jensen Wang and NVIDIA, basically any car company in the world can become an autonomous driving robo-taxi provider if they want to. and essentially what will happen then in this dream bull case scenario is that to maximize their usage and unit economics out of these robotaxis these companies will have to go to where demand is uber's platform is the demand aggregator this in turn obviously vastly increases uber's value position proposition and makes it weirdly one of the big winners of autonomous driving without producing its own vehicles the bear case obviously is that robotaxis become dominated by one or two names.

32:01Mike:Maybe it's just Waymo, maybe just Tesla, Zooks, whoever. They dominate the market. They exclusively offer rides on their own apps, ultimately hoarding demand and Uber. I wouldn't suggest it becomes a thing of the past, but will only own a very small portion of the total robo-taxi market, probably through like smaller players, partnerships, maybe a big acquisition or something. Maybe it does have to go after actually owning the vehicles themselves, which it doesn't want to do. It's always been the asset-life disruptor and it wants to stay in that position. Given the way we've seen the new technology in general proliferate and develop, AI is a great example of this.

32:36It's hard not to see autonomous vehicle tech

32:40Mike:become commoditized in some way. I mentioned NVIDIA, their Alpamayo tech stack. We talked about this last week with Derek Riley, actually, if anyone wants to go back on the episode. And I think that's probably why Uber was front of mind for me for this one. but it's just an example of what this industry could look like in 10 years time basically facilitating almost any oam with the resources to employ autonomous driving so with that in mind i think i am bullish on the uber because it's almost like a binary decision you know will it work out or will it not and obviously the reality is going to be a lot grayer from there but in 10 years time you're going to know for a fact whether it did or not and i think if it did uber could be an absolute giant so that's why i'm picking uber in this threesome i think it's a great pitch you know

33:28Emmet:at an intuitive level you almost have to start with with will this brand still be here in 10 years yeah and a bit like back in april 2019 i looked at irobot and went oh yeah definitely um how wrong i was there but i was very right at the other end of the scale lost 100 on irobot and gained 22 2200 whatever it was on tesla um so yeah i believe uber is going to be a bigger better more omnipresent brand in 10 years from now and i think it's a great pitch yeah i just say i think right

34:03Mike:now with the speed of innovation happening like kind of like nothing we've ever seen the question marks do consist and you can see why it's been so love it's just whether you make the decision of do you believe that's unfair or not and then i think there are kind of a fork in the road of what it does end up being so yeah i think it's i think it's an interesting one for this exercise

34:22Emmet:for sure with the 10-year timeline nice work okay my second pitch is a stock i bought something like 100 years ago and then i sold it 99 years ago for a pretty handsome profit i think i made two or threefold my money and it makes me sick today because it has grown at least tenfold probably 20-fold since I sold. And it looks like it's going to endure and grow for the rest of my life and long after it. And at the surface level, people still describe Mercado Libre as the Amazon of Latin America. And that really undersells it. Mercado Libre is the operating system for commerce and finance across an entire continent.

35:08Emmet:It has delivered, now get this, 27 consecutive quarters of 30 % or more revenue growth in a region where about 85 % of people are still offline. So despite this staggering growth, absolute face-melting growth, the runway is still enormous and what really separates mercato libre though is that every new buyer kind of strengthens the marketplace and every new merchant deepens the logistics density and every transaction feeds the mercato pago system which has become one of the most important fintech platforms in latin america now mercato mercato pago uh it does deposit accounts and lending and credit cards and increasingly it's a credible path toward becoming latin america's largest digital bank isn't that amazing yeah like like this kind of amazon of latin america is now on track or at least the direction of travel is to becoming uh the the biggest digital bank in regions that are the most unbanked in the world its loan book grew more than 80 year over year in 2025 and while that naturally raises questions around the quality of the loans given out because when you lend money you're taking a risk into your business the key point is that Mercado Libre has built a really huge data advantage in real world commerce now critics of Mercado Libre Mercado Libre will point to margins which have been deliberately compressed by investing heavily in free shipping and logistics which everybody loves free shipping in fact i would say most listeners would expect it i think maybe for boutique purchases they'll take seven euro or something but no we don't want to pay for delivery it's i bought the thing give it to me i don't pay for delivery if i go to the shop but um that's the trade-off right now in micarta libra in brazil uh lowering free shipping thresholds drove item growth from the mid-20s to over 40 % a year, or I should say year on year, while unit shipping costs actually fell once the scale kicked in.

37:34Emmet:And by the way, another underappreciated signal is the credit ratings. Mercado Libre now holds investment grade ratings from two major agencies. So what that means in plain English is that the business itself can get cheaper capital at exactly the moment it's deploying billions tens of billions into infrastructure um leadership transition is also worth mentioning the founder marcus galerban what is it what is his name again marcus galperin i think it is he stood back as ceo after 26 years which of course has made a lot of people a little bit nervous because you know the parallel jeff bezos is still there laughing loud and giving it sucks but he's not ceo anymore so yeah but he's very yeah you're right they have a new incoming ceo in micarta libre um who's built this whole logistics network i've described that really kind of underpins its strategic advantage today so marcus the guy who was under for the fortune there about a year ago is still at the table but they he's handed the steering wheel as it were to yeah to this guy who's being with it from the very start um and i you i also as much as i pitch this i can't not mention that competition is intensifying i mean amazon doesn't go okay you guys go down there and we'll stay up here that's not the way it works c limited which is a stock we've probably discussed on the podcast and most certainly i've looked at closely for horizon and then local players and whatever else i can see all those competitors are there but macarney libre has doubled its market share in brazil since the dreaded pandemic by just staying obsessive about user experience and today that business has a market cap of 98.5 billion let's call it a hundred billion dollar business again reminding ourselves we're living in a world with not businesses worth a trillion but multi-trillion dollar businesses so 100 billion amazingly really still feels like there's a lot

39:38Mike:of room to grow yeah i think it's a great pick and i think the most important thing there you touch on um an awful lot of the population in south america and latin america is unbanked there's a clear secular demographic trend that is going to be there for the consistency consistently for 10 years oh yeah within this time frame so that that's right that's a source of growth that won't go untapped and i think that's a very important point when you come to a company like that which has experienced explosive growth for some time and investors become dependent on that growth and sometimes you look at say netflix is not a bad example where they've clearly more or less not saturated but they have mature markets whereas with macarro libre even though they have such a dominant position you can see that market refreshing as as it comes on and more people come online and growing middle class in that area and everything else so i think it's a great pick thanks mike so

40:39Emmet:you started waste management then you hit us with uber what have you got as your third pick to buy

40:44Mike:and hold for next 10 years so i feel like i've got a good mix of three here uh one very boring one kind of in between and then one moonshot um stock you know very well you own a good chunk of it's crisper therapeutics oh yeah we've discussed it at length on this podcast i can keep this pitch pretty short because we don't really have to go into detail here a lot of people have heard of

41:06Emmet:and besides going into detail in crisper is hard work yeah you gotta i'll pop out here and get a phd i'll be back in seven years talk to you yeah you might have seen through my ruse there

41:18Mike:i've been out yeah but we we've discussed this business umpteen times on the podcast um but if we're fast fast forward in 10 years why wouldn't you want to own shares in the company that has active trials in place to cure cancer and heart disease. We've seen really promising signs there, even from their last, I wouldn't even call it an earnings report, but their quarterly business update. Seen really promising signs with their genuine commercialization of their first treatment, the sickle cell drug, Caskevi. But that's just the tip of the iceberg for CRISPR. And there's so much more coming down the pipe.

41:52Mike:There's an argument that this could be a$100 billion business, a$500 billion business, even a trillion dollar business in 10 years time from 5 billion today. So that's the moonshot of the group. I think it deserves a place. Obviously, I'm not putting all my eggs in one basket here. If I had 10 grand, I'd probably split it up, you know, kind of six WM, three Uber, one CRISPR. But in the end, if it goes the way you hope it should, CRISPR could end up being the largest portion of that portfolio by distance as well. So yeah, again, maybe I'm just a bit boring and i don't have 10 grand to spare but i think it's a great business for an argument like this and uh it's it's it's this the phrase i always say if it works out i only need

42:37Emmet:to own a little oh for sure and we'll all win if if crisper humanity wins if crisper actually breaks through yeah okay nice one and as you said i'm an investor i i love that business i acknowledge it is as risky as they get but equally as you said if they manage to nail what they're out to do everything changes and you only need a little bit of mustard on your english on your english mustard on your sunday dinner to change everything yeah so it's a little bit of it and it's what we're

43:04Mike:talking about as well the speed of innovation now has to be really super powering these kind of businesses that have have that north star goal and that really ambitious target well now maybe they have the resources and the technology to back it up because i think crisper has a crazy amount of cash on the balance sheet you know that they thankfully they need it they need it exactly And then now they have the, maybe the resources they didn't have before. So it's, if for business, you're kind of go away and find out 10 years from now. I think it's an interesting exercise for sure to see.

43:39Emmet:Nice. Okay. I am going to go. My final pitch is basically, if I had to point to one company that represents one of the greatest compounding machines ever built in public markets it would be constellation software um since it went public in i think it was 2006 constellation has compounded at about 31 per year which turned a modest investment at ipo into something something approaching a 200 fold return and that puts it in the extremely rare category so what does it do we have spoken about it here in the podcast but just to remind our listeners it acquires vertical market software so that's kind of niche or niche if you live in america mission critical software businesses that serve very specific industries like water utilities and libraries and local governments and local healthcare providers, construction firms, you know, that kind of, these are verticals.

44:44Emmet:That's what we're talking about when you say it requires software into those verticals. So these are unglamorous kind of markets, but they're incredibly sticky. Like if you sell a software into a water utility company, they have no interest in it being ripped out. They don't look at it again once it works. Do you know? That's just a fact. So that's what sticky is. Nobody in there cares anymore once the thing does what it has to do. They stop thinking they pay their bills. It's embedded. It doesn't get ripped out. And the genius of the model, Constellation's model, that is, is it's discipline. So Constellation has completed more than 500 acquisitions across 100 verticals, but it only buys businesses that meet very strict criteria, which is high recurring revenue, strong niche market share, mission critical functionality, and also founders looking for long term stewardship.

45:47Emmet:So if my Wall Street was approached by Constellation Software, hello, Mark Leonard, money joking. If it was approached, they would go, oh, two founders are still there. Do they want to stay running the business for the long term? And then they leave them alone. They're like, OK, founders, you're doing a great job. Thanks. There's your check. Keep doing what you're doing. We'll talk to you soon. And so it has a decentralized operations. it has autonomous teams um it has permanent ownership and the stock has been slammed recently for two reasons oh my god why is every stock being slammed recently well that's a that was a rhetorical question i was about to say yeah yeah i could see you take a deep breath that's a podcast but i'm going to tell you why constellation has been slammed recently well the first reason is that mark leonard who is the founder and was the genius behind the business he stepped down mark leonard you know him because he looks like one of the guys from zz top he's got a huge long beard he looks like you know he looks like the uncle you don't know what to do with at christmas but hey i know what to do it i might say sit down there and tell me everything you know about investing but anyway first founder mark leonard stepped down as ceo for health reasons but his successor mark miller is a 30 year old company veteran he's someone i've spoken about oh, I've got to do so much talking these days.

47:13Emmet:Oh, it was on Simon Erikson's podcast on 7investing. But Mark Miller is an absolutely wonderful investor. He has a 30-year history with Constellation. He knows the acquisition playbook inside out. I wouldn't be surprised if he was the absolute secret weapon. And a lot of people my age remember when Steve Jobs died, there was a question, is that it for Apple? is its level of innovation and vision and beauty and all those things we love about Apple over. And then they brought out Tim Cook. And I remember a very funny meme coming out of the onion with Tim Cook going in his first keynote speech going, you know, I'm thinking printers.

47:53Emmet:And of course there, but Tim Cook proved to be, you could say every bit the leader that Steve Jobs was. I'm not saying every bit the visionary, every bit the leader. And I do think that Mark Miller, their strong analogy or parallels there between mark leonard and mark meller i mean this decentralized structure means the machine doesn't depend on any one individual in any way but i think what i was

48:16Mike:going to say about constellation is that mark leonard is such a totemic figure and there's a lot of mystique about him as well because he's yes the business in such a kind of totalitarian way built under his vision you know like he's never issued shares um yes and like all the all the executives there's no um there's no employee share program they all buy the shares with their own money and yes and he's never really done interviews and all the rest and he's very uh very trite and he doesn't speak a lot um no he looks as boring as hell no offense mark i don't know if he's boring as hell he's got a beard down to his belly one boring boring i could do that money killing but uh but you you nailed it there with the a disintertized structure because that's how it's been able to scale its acquisition program is that decisions don't go through him he's trusted his underlings across the board in each division in each industry to go out and find his acquisition targets and kind of go prove it to him do you

49:20Emmet:know what i mean so it's good that it's formulaic it's not um it's not there isn't this kind of uh discretion that varies from person to person it's formulaic they go and find companies that fit into the formula and into the box and then they start to apply their critical thinking. So the first toll gate is if you aren't founder-led, recurring revenue, already profitable between X and Y employees, da-da-da-da. Like then, only then they look and then deep vertical. So that was the first reason. People panicked because Mark Leonard left for no other reason, or I should say stepped back. He did not leave.

49:53Emmet:He stood back for health reasons, which is only reasonable the second reason as everybody knows is ai fears investors are worried that ai will make niche software obsolete and this misunderstands both ai and constellation like these businesses win because they encode decades of industry specific processes you know you go into utility water utility company or whatever fire engine control room or something And the software is very, very particular for a very distinct set of needs. And a team of people develop software to sculpt around that need. And I think it's overly reductive. I think vastly reductive to think that AI is just going to go in and some intern is going to throw together custom software in every single industry.

50:46Emmet:So Constellation is already integrating AI where it genuinely helps customers. So it's not like you're now excluded from AI. by being a Constellation investor. You are now invested in 500 companies that are comprehensively considering how to make their tools better with AI. So it really is a feature and I don't think it's a threat. And the numbers back that up. Even through this so-called SaaSpocalypse and AI panic, revenues are still growing double digits. Earning before interest and tax, aka EBIT, is growing even faster. Free cash flow is accelerating. And for the first time in years, constellation is trading well well below its historic multiples because sentiment has just completely smashed and everybody's panicked mark then there's left a building ai is on the way

51:32Mike:and also the thing about a lot of these software stocks and a lot of this sas apocalypse now not all of it is that the valuation needs to come down as well do you know what i mean and mark leonard has always said that's right you know he i think he's actively telling people not to buy his stock when it was traded at 30, 40 times earnings. So now that it's come down to something more reasonable, it really does become attractive. And for all the reasons you've said there, I think it's a great pick. And I love the 10-year time horizon as well because it reminds me a bit of Uber where we're going to find out, yes or no, whether this is a true threat or whether, as you said, it could be an opportunity or whether it's completely overgrown.

52:13Mike:And that is one of the babies out with the bathwater.

52:16Emmet:For sure. I mean, high-quality companies, so rarely go on true sale and this is an example of when they do and by the way i am doing a buy alert for horizon um next week which is the beginning of march and i have a company like constellation but i prefer to constellation so email frank and my wall street.com if you want a deal um so that is there there we go we've done a review of the baker's dozen from april 2019 to find that it was a very fine collection of stocks once you invested in them all and you didn't go i don't like in on musk um but if you bought those 13 stocks you would be you would have comprehensively thumped the market we've now both done three stock pitches at a theoretical three minutes each and um so there's six stocks which we will revisit all going well in a matter of years so what about us taking before we sign off mike just talking about previous podcasts and um we could possibly decide you know we've done a lot of podcasts and i think um maybe how's about i pitch to you my favorite and then you pitch some of your favorites

53:32Mike:well we just i thought this would be a good one to finish off and kind of give credit to all the people we've spoken to over 300 episodes on this podcast um and just kind of go back over the interviews particularly just because they're kind of easier to search for me um but we have interviewed some great people and i just think it'd be a nice way to finish we have and kind of give ourselves a pat on the back for 300 so i have highlighted some of my favorite interviews you're going to speak on your personal favorite you've had yes yeah i think it's a good way to finish the show so um let me let me go first and then you can finish off with your number one so i've got four all right podcasts um dating back the first one is episode it's actually before we numbered episodes but it was right before we started numbering them so i figured it was episode 96 if that makes sense uh it was published on march 11 2022 and it was the first interview with chris mayer the author of hundred baggers oh yeah so this is an episode about stock picking really is an episode about stock picking.

54:32Mike:And I think this book is a must read if you see yourself as a stock picker. Chris Mayer has a great interview. He's built kind of a rough system for analyzing stocks and finding quality businesses. Loads to learn from this one. The next episode I have is episode 130. This was published on the 4th of November, 2022. If you want to go back and let's do it. And it was an interview with ARK Invest Chief Futurist, Brett Winton. Just for the job title alone. I think it's worth a listen, but...

54:57Emmet:That was a great one. I really enjoyed that. I enjoyed those both immensely. I mean, an outpouring of intelligence from those two. Absolutely.

55:05Mike:And just to get an insight into how people predict technological innovation, we talked about it at length today about how fast it's moving right now. So a very insightful episode if you want to go back to it. Next one I have is episode 192 with Betty Lou. She was a financial journalist for years and an executive chair of the NYSC. She's interviewed the greats like Warren Buffett, Elon Musk. this is a great episode to kind of get an insight into the inner workings and going on's of wall street now you're not going to get a lot of stock picks or anything from that but what you are going to get is kind of if you are a bit of a nerd if you are reading finance books and stuff i think this is a great listen because it kind of you know lifts the veil somewhat into wall street and then our last one this is going back to a number numbered episodes were not a thing so it's first published on October 30th 2020 and it was an interview titled the world according to Morgan Housel if anyone hasn't I would strongly suggest you read psychology of money it's a great read and Housel is just he's a really incredibly thoughtful and contemplative speaker on finance yes but like things beyond finance as well history psychology human nature well worth a listen so if you are a big Stock Club fan and you want to go back for some of the the old highlights those are four great episodes to go find they are four great episodes and I

56:24Emmet:think I I conducted all those four interviews and they were just I I have to say when I interviewed Morgan Housel I was I could have done better I was total greenhorn I was a bit of an incoherent mess I always found economics a bit scary and I knew I was talking to one of the greatest in the world but there you have it you live and you learn and you review and you improve and hope well you hopefully improve um loved that betty great interview i mean you know the way this thing there's is it they say six degrees of separation yeah yeah six degrees kevin bacon whatever well like yeah something like that well i mean i am two degrees away she has in her phone book bill gates warren buffett elon musk like all the biggest names in business she sat opposite them and actually ended up friends with very many of them and i guess as the executive chair of the New York Stock Exchange, just through doing that alone, she would have forged relationships at the higher echelons of business.

57:22Emmet:And she's so intelligent. And I'm a big fan. So what I'm going to do then is pick my favorite. And what I'll do is I won't pick from the four you just mentioned, though I could. One springs to mind, but I'm not going to point at it. And I'm going to, well, I'm going to be a little bit tilted by recency bias. And I've already mentioned the person and it's my interview a few months ago with david gardner because as i said apart from the fact that he alongside my dad was the biggest influence in my investing life which is my passion he is to investing what i guess you could say brian may of queen was to my guitar life which is like almost a supernaturally um great and intuitive and authentic uh person that they're in their field so that was my favorite and also because i do count david as a friend and for me it was an easy podcast to record because it was just a chat with an old friend someone who i've been chatting with i don't know for decades someone who we've swapped christmas cards with so i kind of i really like david i didn't find that i wasn't a bit nervous like i was nervous when i was talking to morgan housel like if i was interviewing brian may guitarist of Queen.

58:36Emmet:I'd be quaking in my boots, but when I was talking to David, I felt I got the best out of it for myself and my listeners. And that was my favorite. And hey, guess what, Evan? Listen carefully. You should buy tickets to this year's Investicon because someone I just mentioned is going to be our VIP guest. Anyway, I didn't even say that, but yeah, you might just find that a gardener is at an investicon this year anyway yeah that was my favorite um recency bias declared and and friendship bias declared but yeah that was a good one he really did as he always

59:18Mike:does illuminate the subject of stock and press yes okay we're rounded up on an hour which is rare for this podcast i've seen enough yet yes thank you very much for joining me and thank you everyone for listening in and if you have been there since the start please do write into us at pod at mywallstreet.com because 300 episode is no joke. I'm very proud of what this podcast has done. And Emmett, you should be more proud. You've been there from the start. You've been the one interviewing all these people. You've been the main man on the mic. So yeah, fair play to you. It is some achievement. And honestly, if you've listened to 300, it's probably even bigger achievements.

59:52Mike:Okay. We will talk to you.

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