Jonathan Boyar's Favorite Cheap Stocks with Catalysts

11:14Downtown Josh Brown:Off the bottom, like not by the cheapest price, risk that, but like be able to say, all right, the stock hit 100, bounced, fell back to 100, bounced again. I feel very good buying it now. It's like developed like a little bit of a base. I think for us, the way we do that and we sort of do what you're saying is just buy it slowly. I'm not going to take, like for some accounts, I started buying CRM, you know, 20 points ago. Idiot! I mean, exactly. But it's only, you start off slow. And you see how it is. And momentum is a very powerful thing. So once you start seeing it go up, you might want to add to it.

11:51But the hardest thing I found, or one of them as an investor, is to, you know, buy stocks after they go up. So it's like you can't have your cake and eat it too.

12:00Michael Batnick:No, that's a great answer. You buy slowly over time. Yeah. Let's go to chart one. Michael? All right. So this is the third longest streak since 2017 of times where the NASDAQ 100 has not made an all-time high. The longest streak ended in 2023. Prior to that, it was 2019. And it's been 100 days. and these names, which were all investors - When did the Qs top?

12:30Downtown Josh Brown:November?

12:31Michael Batnick:Sounds about right. This was all anybody wanted to own for the past decade, three years, five years, over any timeframe. It was all about Apple, Amazon, Google, not Nvidia, Tesla. And they're not hot right now. And in fact, they're the opposite of hot. So let's throw up the next chart, please. And what's interesting about this market is that it's really all been multiple compression. Everybody is expecting, rightfully so, that Meta, which just reaffirmed their guidance of$115 billion in CapEx, it's going to hit their margins. It's going to hit their earnings and their cash flow. But these stocks are getting, I don't know, cheap.

13:13Michael Batnick:I don't know what else to call them.

13:14Downtown Josh Brown:For the people listening, NVIDIA 19.8, is that forward?

13:18Michael Batnick:So the average forward PE for NVIDIA for the last five years is 48. it's now under 20. For Amazon, it's 32. It's now 22. Microsoft is trading at a market multiple, growing 20 % a year. I mean, you got to be licking your chops for some of these things. And that is the cheapest one out of all these. Like, again, I am not suggesting that the news is going to all of a sudden get better tomorrow. The sellers are in control. We spoke about this last week. The sellers have the upper hand. There's no doubt about it. But my God, if you can look past the next week, you got to be getting excited. I mean, Microsoft's a perfect example.

13:51as a firm, it's our largest holding by far. Because we bought it right in 2007, 2008, and really never sold or sold very little. So the last 90 days have been extremely painful. 33 % drawdown. It's been horrible.

14:04Downtown Josh Brown:Yeah. But now for accounts that I never bought it for because it was too expensive, this is great. I can buy one of the best companies in the world at a market multiple because people are being short-sighted. I mean, this is like Google last year. What if they're not being short-sighted? Then I'm wrong. But I don't think they are. But what do you think? Let's do this last MAG7 valuations. All right.

14:28Michael Batnick:So just to tie a bow on this story, the average forward PE for the MAG7 names has been coming down. You can now have the basket for 21 and a half times forward earnings. And you know how all of the time investors look backwards and they say, oh, I wish. Even recently, I could have bought Google at whatever the price was. And, you know, the story was wrong. Again, I don't know if and when investors start to change their mind, but my God, this is probably going to look like a gift. So here's my question.

14:58Downtown Josh Brown:What do you think the sellers that are willing to part with the MAG7 names at 21 times earnings, they're selling the stock today? Hard. Meta in particular. What are they thinking? Are they being forced liquidated because they're on margin? It can't be everybody. Is it ETFs that people are redeeming? and that's a forced seller? Or are there people making the judgment call? I don't think this is a good value here. I think it's a few things. One, selling begets selling. I mean, the people are - Totally agree. So that's one thing. Pod shops, they're de-risking. And they all just sell at the same time.

15:35These are the easiest stocks on earth to sell.

15:37Michael Batnick:I don't think, nobody who's selling today, not nobody, the people that are selling today don't care about three years, right? They care about tomorrow and fair because it probably is going lower because the sellers have control.

15:47Downtown Josh Brown:So is that what you mean by short-sighted? Somebody selling the stock for a reason that today will look stupid in three years. Yeah, exactly. They just have different time horizons than we do. They might be able to put the money into something that has better momentum and make money that way. To me, the game I'm playing is if they're giving it away, I'll take it. I'm not going to ask questions. Why are they selling it? Well, I'm asking questions why they're selling it because I want to make sure that I'm not making a mistake. But they just have different perspectives. What if somebody said to you, here's why I'm selling it.

16:16Downtown Josh Brown:These companies have had 40 and 50 % gross margins for 12 years. They were asset light. That was the whole story. They were able to put up double digit growth as far as the eye could see and really had no competition and margins were insane. Nobody ever could have predicted a company this profitable at this growth rate going on for as long as it And now these companies are taking 100 % give or take of their free cash flow and pouring that into heavy asset sort of investing. And they're no longer the same companies. Margins won't survive it. And that's why I don't think 21 times is too cheap to sell some of my stock.

17:03I think they're eventually going to have a Zuckerberg moment like a couple of years ago where he just said, this is the year of efficiency. They look at their stock price.

17:16Downtown Josh Brown:Is that what you think the catalyst is for these stocks to work? Them saying, okay, we hear you. No more reckless CapEx. Or they start showing profits from what they're doing. I mean, something like that. So one of the other has to happen. I think that's worse. I think they're pot committed. If they back off, it's like, wait a minute. Yeah. Hold on. How much money did you guys waste? Are you kidding me? Or just not going to spend as much in the future. They're going to make sure that we get a certain amount returned to shareholders. It's certainly possible. But like something like Microsoft, they could have been a lot more profitable than they were.

17:45They just were supply constraints. They chose. And I think it's a good long-term move. And something as a long-term investor, I applaud. They're putting their chips into CoPilot, which is probably the worst AI thing ever, and investing in growth. So I can't fault them for it. So I think these stocks are going to work. They're so dominant. And they're not all created equal. I'm glad you went there.

18:10Downtown Josh Brown:I think Meta has a serious problem on its hands. Nobody understands beyond more aggressive monetization of reels via a stronger algorithm. Nobody understands anything else that they're doing. they're making huge bets gpu purchases striking up data center financing partnerships um giving away a large language model that nobody seems to be interested in which is llama and people are and then acquiring people's companies just to hire the employees and people are looking at this and they're being like could you maybe just do reels yeah like what what is all this getting us and i I think that that sets meta apart, at least with Microsoft, they own Azure.

18:55Downtown Josh Brown:You could understand where the investments are leading to. Azure literally can't back off because Amazon won't and Alphabet won't. These are three, the three clouds that matter for AI. So Microsoft can't back off. Meta could back off in two seconds. They could basically say, all right, similar to the metaverse, We may have gotten over our skis into areas that aren't profitable enough and we're going to rejigger or whatever we're doing. And I think the street will like it. They'll love it. But does he want to do it? Well, he's already done it with, you know, the metaverse, which was an absolute disaster.

19:35Tobacco.

19:35Michael Batnick:$90 billion they burned. $90 billion. It's, no, it was terrible. But I, at least he was able to admit his mistake and move on. And the stock's been off to the races since. The stock's down 8 % today. They didn't report earnings yesterday. The market isn't crashing. I would guess that outside of the last time this probably happened, a down 8 % day was Liberation Day. No, it was probably Liberation Day. And then prior to that, I don't know, 2022, like in a single day, it was probably COVID. It's down 8 % today on note news. Now, there's news about a lawsuit,$375 million and more things coming down the pike.

20:10Michael Batnick:But my God, down 8%. Now, all of the risks that we're talking about, nobody's going to be like, whoa, this is so profound. Yeah, no shit. it's trading at 16 times forward earnings. Microsoft is under 20 times forward earnings. I think everybody well understands the risk. And I think last week and the past couple of weeks, we're like, why wouldn't the market just fall in bed already? Like, it seems like there's enough news and enough excuses. You know, let's just get it over with. Yeah. And I think what we were talking about, a lot of people were talking about is the taco thing, right? Like he's going to cave.

20:38Michael Batnick:I think maybe the market is getting, is pivoting to, hey, wait a minute. He could have caved on the tariff stuff because that was a one-sided decision. He might say to Iran, hey, we're done. And they might say, well, we're not done. Like it's not, he can't just snap his fingers and end this thing. Because everybody's like waiting for the tweet. Like nobody wants to get too bearish because God forbid, we remember April 10th, Liberation Day, where he's like, you look up and -

21:02Downtown Josh Brown:But we're saying Meta is down 8 % because we're not sure if Trump is going to - No, no, no. Have a truce with Iran? No, no, no, no, no, no, no. Nothing to do with that. I'm just saying in the market,

21:10Michael Batnick:bringing it back to the market more generally. Yeah, I mean, in terms of what you're saying, yes, it has to be both sides have to potentially make a deal or Trump goes in, says, you know, mission accomplished. I mean, I hate using those words. And they open the they say you better open the strait. Otherwise, every other country is going to say is going to basically revolt. So if he leaves, they're going to be forced to open it up or they're not going to make any Iran's not going to make any money. So he actually has a way out of there. But yeah, we still have a long way to go from like the Trump put.

21:47It's still 15 % or so. And that 15 % happened in like two days. But yeah, it certainly could happen. It might be healthy to have a washout. I mean, it's going to be miserable to deal with.

21:58Michael Batnick:The bond market is freaking out a lot more than the stock market is. The stock market seems to be sort of, you know, it's down today, down another one and a half percent. I think people are anxious right now. Investors are not feeling too good. All the things that they own are getting killed, right? NVIDIA looks like it's hanging on by a thread. I like this setup. And I don't like the, I'm not saying like I like that stocks are going to bounce tomorrow or next week. Like, yeah, sellers are in control. I keep saying that it's true. But for the back half of the year, I think investors are very short-sighted and it's hard to imagine the current environment changing.

22:31Michael Batnick:But let's just say that we do get through this, that we are on the other side of the war. I don't know if it's July or September or whatever. we are in a midterm election year. This seasonally has not been great for stocks. The washout is complete. Like there's nobody's bullish. 40 % of the index is already in a 20 % drawdown. Microsoft is down 34. Netflix, like we get it, right? Nothing's working. Things can get better quickly. I think investors every time, and I'm not saying that there's be a V-shaped rally, but like bulls can come back. We've seen it time and time again. The best indicator of future returns is valuation.

23:06and valuations are now starting to get into the realm of reasonable. So I think investors have, you're right, investors have a fantastic setup, much better than they had four or five months ago or whenever Microsoft was selling at 32, 33 times earnings. Story hasn't changed dramatically. The sentiment has changed. The sentiment has changed. And this is exactly like Google, February of last year. Business was great, but people were like, what's going to happen in the future? And that changed on a dime. And the stock basically, I think it doubled.

23:34Downtown Josh Brown:It's pretty rare to see this much multiple compression, though, in an era where earnings are growing. It's all compression. Yeah, but earnings are growing at the rate that they are. And there really hasn't been an earnings growth scare.

23:47Michael Batnick:So that's the only thing that matters, ultimately. Do we think that earnings are going to be resilient? Do we think they're going to continue to grow the way that they've been growing? Because if they do, stocks are screaming buy. And if we start to see margin compression and we start to see falling earnings growth, then yeah, stocks will continue to get killed. I'm a stock guy. I'm a stock by stock guy. I have no idea what's going to happen with the indexes and the earnings for it. But I just know now we have a whole host of businesses that are really good companies, high quality businesses, selling significantly below what an acquirer would sell for.

24:21And listen, I think probably now, if you're going to buy an index, I would say still buy the S &P 500 equal weight. I still, you know, there's a lot of mean reversion there. I think the Russell 2000 has a long way to go. There's a lot of mean reversion there. But for those who want active management, I think it's, I hate the term stock pickers market is the most self-serving. But wait a minute, chart four,

24:43Downtown Josh Brown:the internal logic of the market this year is to sell the most expensive stocks you own. And here it is illustrated, the deciles of the S &P 500, where you have the most expensive stocks, those are the hardest hit on performance. the 10th best out of negative 25%. Like they are, they're taking the most speculative stocks and beating them the worst. And what is Costco doing here?

25:08Michael Batnick:I know we've mentioned this a million times. And like, John, I'm sure you've scratched your head at Costco. That was, I did a talk on it last week and Costco was, you know, basically the thesis was, you know, there's been three periods where there's a quality bubble, where investors get sucked in to these great stories, These stocks are never going to go down, and they'll pay anything for them. And Costco, Walmart, GE, they're all like that. Investors are either going to get creamed in these stocks, or they're going to go nowhere for a decade. It's very hard to make the case for Costco's quality bubble making sense.

25:46Michael Batnick:We all know it's a great business. Yeah. But 50 times earnings, how do you make money like that? You can't. I mean, you can. Are they going to grow 30 %? I mean, they have to sell a lot of$1.50 hot dogs.

25:56Downtown Josh Brown:The problem is you could have said the same thing. at 30 times earnings, and then it went to 50 times earnings. That's why you can never short these things. You cannot short on valuation, but you can avoid them. Do you agree with me that Costco and Apple are being treated the same? These are companies that are never going to be able to grow to match the multiple. They have the multiple because investors know, at a minimum, they're going to do the number. Yeah, I think that's fair. There's lock-in. Costco has the same consumer lock-in. if you have a Costco membership, you don't wake up and say, I feel like going to Target.

26:30Downtown Josh Brown:That's one. Apple ecosystem functions the same way. Every product you buy is going to work with the Apple ecosystem and all the services are going to be Apple services. And by the way, if you use some other product that Apple has nothing to do with, like Claude or ChatGPT, Apple's getting paid anyway. Okay. So Costco, Apple, there's a small handful of names like that. they're getting these 30, 40, 50 times earnings multiples because people know that at a minimum, they may not grow fast, but the numbers are going to hit. Yeah, that's fair. That's how you get a quality bubble. You get a quality, but they burst.

27:07They always do. They burst in, you know, Nifty 50 is the prime example. My father started our business in 1975. Was this the chef? Yeah, he took off his shirt. chef hat and then turned into a stock market guy. And what a pivot. It was a, it was a pivot. One of the all time. And he did it at the best time to buy stocks. So 1975. So the nifty 50 has crashed. And I've heard this story since I was like six years old. They took every stock, you know, that was selling in 1972 at an average of 42 times earning and shot them one at a time.

27:47Downtown Josh Brown:Sears, Coca-Cola, Hewlett-Packard, like Blue Chips. Polaroid. But these were companies that they looked bulletproof. They looked bulletproof and they were fantastic businesses. Took 10 years, 10 years for the stocks to - Is the MAG7 reliving the nifty 50 experience now? No way. John, throw chart two up.

28:10Michael Batnick:Look at the forward PEs of these stocks. Meta is at 17 times. But from where they came from - It doesn't matter. What do you mean it doesn't matter? They're not at 40. It's at 17. This is not a bubble. I'm not saying that the stocks have to work. It's not a bubble. I think it got way overheated in the 70s. This is, I mean, listen, not every one of those seven stocks are going to do great. One or two or three probably will. And yeah, are we in a bubble there? I have no idea.

28:39Downtown Josh Brown:We don't have Tesla on here. Tesla's 190 times earnings right now. Yeah. I mean, that's just, it's a jockey bet. I would never touch it.

28:47Michael Batnick:So you mentioned Salesforce. Yeah. What gives you the confidence? Because this is like the question in everybody's mind is, how are these software companies really? And I don't know. And nobody knows. But you - And they don't know. Yeah, nobody knows. But what gives you the confidence? Because what does Salesforce trade you at? 13 times forward earnings, whatever it is? What gives you the confidence that the earnings are going to be there? One, we're still doing our work on it. We just started buying it. But they're ingrained in every single process. They are critically important to so many businesses.

29:17And they're not going to make a clawed chapbot to do everything for your database, your marketing, your payment system. I think there's going to be the haves and the have-nots in that software arena.

29:27Downtown Josh Brown:You see them as one of the survivors. They're the survivors. They have all the data. They're the system of record for so many businesses that literally couldn't do anything without them. Especially in regulated businesses. Try getting in the healthcare business and changing your records to a clawed shop out that has no oversight. Well, the FDA won't allow it. Yeah. Yeah, there are many businesses where you use a certain product because it conforms to the standards that your regulator has decreed are your standards. And then it's not even about efficiency. It's just about like legally we're using this.

30:03And they're also, these are slow-moving industries. I mean, they're not adopting overnight. It's going to take years and years. The customer base of Salesforce. Yeah, exactly. Right. And they're so data locked. I mean, to me, I put that as a head scratcher. I have no idea why it is sold off. And Benioff is, you know, borrowed$25 billion to buy back a ton of stock. And I think that's a good move. He just has to, one, cool the stock-based compensation a little bit. And he has to not stop making dumb acquisitions.

30:34Downtown Josh Brown:He did a wave of layoffs last year as the stock was falling, and that didn't do the trick. It keeps going down. So it almost seems like all he can really do is find a way to demonstrate that their own AI investments are improving earnings faster than they are losing any business. And if he can do that, people will stop selling. But I don't know how long it takes to do that.

31:00Michael Batnick:I was about to make that same point, the stop selling thing. Like at some point, anybody who wants out of Salesforce will have sold. And if you haven't sold today, you know, maybe the next 10 % is like the real watch. Who knows? You have a rotation. You have the growth guys selling and the value guys starting the GARP and then the value guys come in. And that happens every time.

31:21Downtown Josh Brown:Do you look at the 13F to see what other value shops are buying these stocks? Not in CRM in particular, but yeah, I like to see what some of these other - Are there funds where when you see them coming in, you say, all right, I respect these guys. I know how smart they are. And does that give you like added confidence? I mean, I like looking at, you know, Janet does a great job, Starboard. Well, they're back in Salesforce is my point. Yeah, exactly. Oh, they are? Yes. Multiple value-oriented activist funds are back in Salesforce.

31:51Michael Batnick:Yeah.

31:52Downtown Josh Brown:And they've been there before.

31:53Michael Batnick:Yeah. You know what's not great though? Why don't, you don't see insiders rushing to buy. Well, Benioff is so long the stock. Yeah, but he's, forget about him. I understand. But a lot of the other executives,

32:04Downtown Josh Brown:you rarely do attack because of SBC. Yeah, the comp, I get it. That's how they get paid in the first place. So you rarely see a ton of like fresh capital coming into a stock unless it's a very extreme situation. But if Benioff made an open market purchase now, the stock would rent. Well, the guy at ServiceNow did. The stock's down another 30 points. Right, yeah. So it didn't even help. I think the guy at ServiceNow did it at 130 and the stock's 100. Yeah. So I don't even know, I don't even know, I don't know the dollar amount. I just think investors are not convinced that these companies are going to be able to utilize AI as a tailwind.

32:39Downtown Josh Brown:They just see AI as headwind, headwind, headwind.

32:41Michael Batnick:So that story will change. I'm almost sure of it, not knowing anything. I'm a tourist here. But this idea that the incumbents are just going to sit there and do nothing and not adopt, not take the best features of AI and incorporate it into their system, that story, that narrative will shift. Yeah. And you also have to just take a bigger picture. Look, we're talking about the last three, six months. We look at everything in terms of years. Eventually, they will solve this problem and move on. These are the best companies in the world that are well-funded and now selling at reasonable multiples.

33:14All right. So you look at companies.

33:15Michael Batnick:So, okay, you're slow to buy. If you are taking a years-long approach, which I appreciate, you are a true investor, what does it look like when you're wrong? And I assume when you're wrong, it's really ugly. Yeah. You have to be able to omit your mistakes, which is the hardest thing in this business to do. But when you're wrong, you have to constantly look. I write down, and we have our research, so we literally write it down. Why do we want to own this stock? And if the thesis is not playing out, you have to reevaluate it.

33:45Downtown Josh Brown:So let's stop there. I want people to understand this. When you guys get bullish on a stock, or maybe even you research stock and decide not to get bullish either way there's a whole write-up yeah about the risks the possible upside what you like about it what you might be worried about like so that way when the story changes you and stocks down i don't know 20 you could say well let's revisit why we wanted to buy it in the first place are all of these things still true what's or what or has something changed and what is it? And that's got to be helpful. It's unbelievably helpful. About 95 % of our portfolio, we have written an extensive research report sent out to some of the biggest hedge funds, mutual funds in the world.

34:31So, and we do that first. We actually write it up first, send it to the, send it out. Before you'll buy it. Before you buy it. I have strict rules in place on that. Yeah. Getting the feedback from some of these people and when they'll tell you you're crazy or whatever it is, that's helpful. Does that make you excited or does that question I love it. I love when I, the more feedback I get, the better.

34:54Michael Batnick:No, but I'm saying if it's overwhelmingly, you're an idiot, does that make you more confident? Yes. Okay. Because it means it's so hated. It tells you where the positioning is. So when you're buying these stocks and maybe it's overgeneralizing, are you, let's just assume that there's a lot of multiple compression, right? Everybody hates a stock. Are you anticipating that the narrative will change the multiple and, or do you think that there's like an earnings acceleration story? You never really want to count on multiple expansion. It shouldn't be the primary drive. All right, so you're betting on the business.

35:24Exactly. We're looking, what is this business worth? You know, we have to slap a multiple on it, but you don't want to say, okay, this has to go to the historical multiple. But so, I mean, we do that. We look, what does it look like at a historical multiple? But also what does it look like? You know, one of the companies maybe we'll talk about later is Cooper. You know, if you use the historical multiple, It goes from 70 to, I think, 120. What is Cooper?

35:48Downtown Josh Brown:Cooper. Cooper the eye? Yeah. Yeah. I used to sell that stock in 1999. It's contact lenses. Yeah, contact lens and women's health. So how do you get involved in a contact lens company? It used to be called the Cooper Companies. Exactly. Still called that? Exactly. Okay. How does that get on your radar? One of our analysts, they get paid to read, found it, started looking at it. Then activists started, you know, Jan is in it and this Browning company. That is, but the thing with a stock, like that is one of the biggest long-term winners I've ever seen. Oh yeah. Myopia is huge. I think I was selling the stock to people at$2 and I think like non-split adjusted, it went to like$500.

36:25Downtown Josh Brown:Yeah. I didn't last that long, but I'm saying, but like, that's an example of a stock where it's a small cap still. Yeah. It was a small cap 30 years ago. It's just off the radar of regular investors. We love that. Yeah. I mean, that's where you get the intuition. I was going to say, this is your kind of market right now. I love it. Those stocks are shining. Well, not Cooper, and that's where the opportunity is. The stock sucks. Yeah. Well, yeah, no. Pull up like 30 years. I'm just teasing. Keep going. That's a compound there. It's a great business. And there's things. It's not enough just to find a great business that's cheap.

36:59That's like two out of three. You need to then have a catalyst because then you get, otherwise you get sucked into a value trap. So we're looking, is there a reason for the stock to go up in value over a reasonable period of time. And to us, reasonable is two to three years. Is that the hardest part? Because how do you find, how do you predict a catalyst? Well, you have to kind of tell a story.

37:17Downtown Josh Brown:You have to use your imagination. You have to tell a story. Well, so let me throw one at you then. You guys have probably done work on Adobe. We passed. Okay. So did most people, obviously. Yes. OpenAI shut down Sora. Yeah. Out of nowhere. Yeah. Just decided, no, nobody had any notice. The team working on it, they were in meetings with disney the night before disney's pulling back its billion dollar investment sora if you created stuff on the app they'll let you access it for a certain period that's it gone adobe popped today i mean not much of a pop but it was green and a red tape specifically you have like sort of a catalyst there i don't know if that's enough so i guess the question is, let's say you have an idea what's going to turn Salesforce around.

38:08Downtown Josh Brown:Let's say you think Dreamforce is next month-ish. Okay. Dreamforce, they're going to unveil Agent Force 2.0, and they're going to have, I don't know, Jensen Wang is going to come back on stage or whatever it is. And that's going to be the catalyst. That day comes and goes, and the stock doesn't give you the reaction you want. Is your job then as a value investor to start thinking of the next catalyst or do you have to revisit your bullishness or how do you handle like a failed, not a failed, but like a missed opportunity for a rally? Yeah, I think that wouldn't necessarily be the type of catalyst we would look for.

38:46Let me just give you a quick example. Yeah. Madison Square Garden Sports. And that's one where we were somewhat involved in. So MSG Sports, it owns the Knicks and the Rangers. Enterprise value of MSG Sports is$8 billion. So you can buy the Knicks and the Rangers for$8 billion when the Forbes value of both is$14.75 billion. All right, but everybody knows that.

39:13Michael Batnick:So there's no free lunch. Like, why is the market valuing it? James Dolan. Because of ownership. But if you actually do the work and you look, the predecessor company of Madison Square Garden Sports is MSG, which owned the MSG networks.

39:32Downtown Josh Brown:Radio City. Yeah, it owned Radio City. It owned the gardens. The Christmas thing. Everything. If you invested that, when we initially profiled it, which was right after the spinoff, you would have been up like 800, 900%. The S &P was up 600, 650. I could be off by a little bit. but significant outperformance. So people take a very short-term view, I think, or maybe they see this guy can't get a winning basketball team and, you know, won't buy the stock, but he does what's right for shareholders in the long-term. He sold Cablevision for a price that we never thought we could get. Which his father built.

40:07Yeah, so he's a seller. He could sell this thing and we got frustrated. So we wrote a letter in June of this year telling them they should do three things. Did he get banned from the garden? i i that's i'm very afraid of it well they use they use facial recognition software in the cameras i'm not taking you no game i was going to sue them on one of their transactions and then i realized you cannot get into the building if you have an active lawsuit on them so yeah not suing them but basically we outlined three things one they should uh uh do a spin out put two publicly turn it into two publicly traded teams this is msgs yes so so you make the knicks as a as a company and you make a Rangers as a separate publicly traded company.

40:51Without the broadcast rights, just the team itself. The broadcast rights is with Sphere right now, which makes no sense. Oh, what? Makes no sense at all. Yeah. That was why I sued. It makes no sense. And it was a lot of self-dealing. So I said, we should do that. The second thing is they should get a minority shareholder involved to demonstrate the value. Let somebody buy in, which will set a price. Exactly. Okay. And if you look at the roster of shareholders, Silver Lake owns 9%. KKR, which just bought Arcos, owns like 2 % or 3%. Bill Gates Foundation, although, you know, who knows, owns 3%. There are tons of people who would do this.

41:30PE is getting involved in a big way. They should do that. And then three, they should use the proceeds to buy back shares. The NBA allows this.

41:38Downtown Josh Brown:Absolutely. The NBA now allows multiple owners. Like, it's not the NFL. Yeah. So an outside person could come in, buy a chunk of stock directly from the company at a price, and then that resets the narrative about what everything in there is worth. Yes. And they already – Are the Knicks a$10 billion franchise standalone? If the Lakers are, I believe they are. If Las Vegas is going to get a team that they think is going to go for between$7 and$10 billion with no history, the Knicks are worth a lot more. What is this guy going to get for the Cowboys? He could get$15 billion, I think. Easy. Right.

42:12Downtown Josh Brown:Right. So the Knicks could be worth 10. Easy. This market cap you're saying is 14 and it includes the Rangers. No, no. Mark cap is 8 billion. 8 billion, excuse me. And it includes the Rangers. Exactly. How much does Dolan own of this? He controls it. He has like, I think 60, 70 % voting. But he announced, I think it was February 7th, I could be wrong on the date, that he is now exploring and him now exploring means they're going to do it. They're splitting it off into two teams. Whether we had anything to do with it or not, I have no idea. So it'll be an MSGR, which will be the Rangers? Yes. Okay.

42:44And MSGK, which will be the Knicks. And - You can invest directly in the Knicks. You can buy, yeah, exactly.

42:51Downtown Josh Brown:For anyone - You get to go to the annual shareholder meeting. Yeah. That's exciting. I feel like you're going to do it.

42:56Michael Batnick:Is this the only publicly listed NBA team?

42:59Downtown Josh Brown:No. Oh, NBA, yes. Yes. You have the Atlanta Braves for baseball. Wasn't Cleveland publicly traded at one point? Yeah, and it went private because it makes no sense to be a publicly traded team. The Celtics were public when I got into the business. Yeah, yeah. It was a great bar mitzvah gift. Yeah, people were, right, right, right. Okay. Wait, you're Jewish? I couldn't tell. Hold on, hold on. So if they split it, what does that mean for the shareholders? They would get, if they have 100 shares, they get 60 shares and 140 of the other? Yeah, let's figure out a way of doing it. And there's another catalyst there, which we identified.

43:33Starting at the end of, I think it's 2027, if you are a publicly traded company, and for most companies, this doesn't matter, your top five executives, they don't have to be named executives, top five employees. So players. Players can't be deducted for income tax purposes. There's your catalyst. They're screwed. They cannot be a public company. So, okay. So, okay. So if they're a public, so what does that mean? They have to sell it to someone? They have to go private. I mean, how can they, they had, I think,$175 million last year. In payroll. No, in earnings. and 150 and like their top five people were like 150.

44:12So like you can't deduct it. I mean, that's your catalyst.

44:16Downtown Josh Brown:They're deducting the salaries that they're paying and they might not be able to for the top five players, which is probably most - Yeah. It's not really going to help you. So a week's pay, a day's pay for - Right, and Brunson's up for another contract soon. And that's not going to be a fun -

44:32Michael Batnick:No, Jalen's locked.

44:33Downtown Josh Brown:All right. Hey, can we talk about Uber?

44:34Michael Batnick:Yeah, absolutely. So Josh talks about it all the time. Josh is a shareholder. I think this might be simple. We talk a lot about like Waymo and Autonomous being on their lawn. What if Uber is just selling off because of the delivery aspect of it, which I didn't realize. You have a slide up here, chart it, please. I didn't realize that delivery was 33 % of their, what is this, of their revenue? What is this chart showing us? Top right. Top right. I think that's, yeah, those are. Oh, 50. Oh, okay. No, ride hailing. Delivery, there it is. Yeah, 30. I had no idea it's a third of their revenue. All right, so guess what?

45:06Michael Batnick:If DoorDash is getting killed, I get it. DoorDash stock is getting killed. Yeah. And so Uber is a third of their business.

45:14Downtown Josh Brown:Michael's talking about like with higher gas prices, are people pulling back from delivery food? Yeah, but normalize it. In two years, who cares? They are the absolute winner. They have the best network, the narrative. Thank you so much. Let him cook. Let him cook. Hold on. I know you wrote up Uber. Yeah. Okay. just lay out for my to answer michael's question lay out why the uber approach to autonomous is not only not just defensive but actually has the ability to win the same way they won in ride hailing they are i think in the best they're in pole position for this nobody thinks that you and i wrong you and i and dara nobody else yeah and i i think you know the only way for in in my opinion, for this thesis not to work, is if there's only one autonomous vehicle company.

46:07And that's not going to happen. Why would that be the case? I don't think it will be. That's how I lose. Yeah. That's how both of us lose.

46:15Downtown Josh Brown:If Waymo gets 80 % market share - Then they can have their own app. And they have their own app. Yeah. Then there's no point in Uber existing. Exactly. But that's not going to happen. Why would anyone think that that's how this is going to play out? Because they're used to these winner-take-all ecosystems in tech, and they think this is tech. But it's not. It's logistics. This is a logistics company that is well run and they have scale. The network is, you know, as a value investor, it's still, you know, it's now it's cheap. But it's they have by far the biggest network. The biggest network is going to win.

46:47If you have an autonomous vehicle company and Waymo is paying one hundred and twenty thousand dollars or whatever it is for a car. How many cars are they going to get for four o 'clock in Manhattan?

46:57Downtown Josh Brown:Yeah, they can't. They need to satisfy demand. All right. So a couple of things I want to ask you about this. they have in the last two months, three months, put out a barrage of partnership announcements. I love it. Yeah. I love it. Street hates it. The street hates it. Yeah. They are using their own balance sheet now to invest in there being more players in the ecosystem. So they gave Lucid money. Yeah. And they're going to buy 10 ,000 cars from Lucid. Then they do a deal with Rivian. We're going to buy up to 50 ,000 cars from Rivian. Now, they don't want to own these cars at all, but they have to put their balance sheet into the pot and commit billions of dollars so that an ecosystem will arise.

47:41Downtown Josh Brown:If you don't have Lucid out there and Rivian and all these other OEMs making cars, then there is a potential that Tesla and Waymo just take the whole thing away. It's the same thing that Travis did when he was investing in a network. He subsidized the drivers. They're doing the same thing. They lost money on the drivers just to make sure that there were enough drivers. The biggest network wins, and Uber by far. And now they're getting into, I think there was an announcement today. It was some Eastern European country. They're going to have AV there. Every day there's a new announcement. Yes. Pony AI.

48:19Downtown Josh Brown:Pony AI. The city is called, what the f***, with a K? Yeah. It's like Yugoslavia. Yeah. I don't know. Kluxenberg. It's in Kluxenberg. No, but the point is they're doing this all over the world. They're doing this in the UK. So they're now, but that's a narrative violation. And people have said Uber is asset light. It's the app. It's the network. It's the services. Who owns the car is somebody else's problem. Those are just things that depreciate. But now, for better or for worse, they're going to own some of this stuff. Yeah, but that's a temporary thing. And this is not going to be like the hyperscalers doing 100 % of their cash flow.

48:56You said their CapEx is light, no?

48:58Downtown Josh Brown:Very light. They're a cash flow machine, Uber. How much in cash flow are they expected to do this year? Like$10 billion, I think. Right. And they were burning cash like four or five—at the time of the IPO. And they're buying back stock.

49:11Michael Batnick:$10 billion in cash flow, buying back stock, growing 20 % in that. 30. And 15 times, right? 30 % growth. It's$150 billion market cap? I think it's 18 times EBITDA, I think.

49:21Downtown Josh Brown:I just think the Waymo rolling out in cities without them has scared off growth investors because they think they're walking into a trap where, oh my God, we're competing with Google. Yeah. I think what they don't see is that it's very unlikely one company is going to own every autonomous vehicle in the world. Yeah. It's extremely unlikely. They don't, even a Google funded company does not have the capital. I don't even think Waymo has that as their ambition to be the only autonomous car on the road. I think they just want to be the best. and also just in terms of autonomy, it's still not ready for prime time.

49:58Look what happened in San Francisco in the beginning of the, or LA in the beginning of the year. They still only mostly rolled it out in warm weather climates and most of Uber's growing their rider base. I mean, it's kind of a New York view that it's only in the big cities, but it's not. It's factually incorrect. They're growing significantly in kind of second, third, fourth tier cities.

50:22Downtown Josh Brown:Waymo does not have delivery. Yes. And that's a competitive advantage. It's a competitive advantage because what Uber has said is that their best customers who spend the most on the platform are back and forth between eats and rides. Yeah. And the best of that segment are the X million, like myself, who are Uber One users. Yes. Who are getting money back for some of these transactions. And advertising is growing. I mean, there's so many ways for them to win. Yeah. That it's, I scratched my head. I don't understand why the stock's not 125. It makes no sense to me. I, it'll get there. I think so.

51:01Michael Batnick:It's not a good market right now. It's not a good market. Not a lot of things are working. And I think people stop believing Elon and his like crazy dreams. Tesla's in a 24 % drawdown. That stock's getting whacked off pretty good. But every time he opened his mouth about - That's over now. Yeah. But now it's Waymo.

51:17Downtown Josh Brown:Now it's Waymo and not, right. There was a moment where anything Elon said about autonomous cabs, Uber would lose 8%. Yeah. And now the stock is more afraid of Waymo. Yeah. Which is ironic because they're operating in partnership with Waymo in two cities. Yeah. In Atlanta and somewhere else. I think people wanted more Waymo partnerships in more cities. And now that doesn't look like that's going to happen. I mean, Waymo, I think, is doing a giant negotiation. They're trying to figure out and showing, you know, Uber, we need each other. uh and last thing last thing on this uh jensen wang has been going out of his way to do autonomy and robot stuff at every uh public speaking event yeah he really is trying to transcend llms okay and what they announced for oems it's like this combination of software and chips that will enable Mercedes, Cadillac, Volvo, Volkswagen, Porsche, you name it, to make any car an autonomous car.

52:18Yeah. It's not just going to be Elon licensing his technology.

52:20Downtown Josh Brown:That's right. So now NVIDIA competes with Tesla on, they don't call it full self-driving, but on autonomous technology for cars. Yes. Do you think that plays into Uber's favor because it will lead to more autonomous cars that aren't Waymos on the road? The more players, the better.

52:40Michael Batnick:Right. How do people not understand this? All right. They don't get it. You guys get it. Why are we the smartest people in the world? We're either the smartest or dumbest. Or we're going to lose half our money. Let's talk about another narrative violation. Vegas is dead. Dead. Okay. Then how come the ratio of MGM to the S &P 500 is hitting a seven-month high? If Vegas is dead, why is the premier brand in Vegas doing pretty darn okay relative to the overall market?

53:08Downtown Josh Brown:MGM is a Macau. I'm talking to John. Okay. Well, can you tell him that? Okay. Okay.

53:13Michael Batnick:Is MGM not the biggest premier provider of rooms in Las Vegas? They absolutely are. But MGM also had kind of a bad year last year. So it could be a little catch up. But MGM is a super interesting story. Wait, hang on. You're telling me that China is so hot right now. That's why MGM is doing well?

53:32Downtown Josh Brown:No. I just think the driver of the publicly traded casino stocks over the last 10 years has been Macau more than Vegas. All right, John, what's going on with MGM? And it's been held back a little bit because of polymarket and all that kind of stuff. But I think those fears are a little bit overblown. One of the most exciting things for us about MGM, and it has great management. Shameless plug, I had Bill Hornbuckle on my podcast. He's great. He's done a great job. They're returning about 45 % of their, they've retired 45 % of shares since. This does look very good technically. Yeah, it does. Wait, 45 %?

54:09Since 2021.

54:10Downtown Josh Brown:What? The problem though is how they're doing it. They're selling the land to private equity out from under themselves, which then leads to rents being jacked up, which then leads them to start charging$8 for an iced coffee. And it's turning the players off. And social media, gambler social media has grown very negative, not on MGM specifically, but on just the Vegas experience. Yeah, it sucks. So buying back stock is great. Yeah. Borrowing money to do it, not as great. And then turning over the property ownership to private equity is probably not like a free ride. I think the escalators are about 2 % a year.

54:49So they just have to grow more than 2 % a year to kind of make up for it. So now they're kind of more of a cap light business. But you've heard that whole thing that I've laid out.

54:58Downtown Josh Brown:Absolutely. Do you follow Vegas Poli C on Instagram? No, no, no. He is going in on, because they sold the land out from under themselves. And then they used that as an excuse to like, all right, we shrunk the flow. We bought back stock. Yeah. But it's degrading the experience. Yeah, that could be the case. But there's a lot of growth in there. What do they own? MGM. They own MGM. Park. Yeah, all those. Chart 14. Yeah, there you go. Elagio, Maria. They have, and then they have the regionals. Aria? Oh, I didn't realize they own this. I didn't know they own the Cosmopolitan. Yeah, they are. That's what— All right, say they own everything, basically.

55:40Except for the win. The best part of the story and what the street really— It's not even in anyone's estimates. 2030, they're going to be opening the only casino, legalized casino in Japan. Only one. They think it's going to be a— They're going to own 43 % of it. they are projecting, I think, something like$6 billion of revenue. How did they get that? That's their projection based on— No, no, no.

56:10Downtown Josh Brown:How did they get to be the only casino in Japan? A lot of lobbying. Hornbuckle is really good at it. Okay. He's also— He made the right connections. Exactly. Had the right plan. Local partners. They like it. And they only own 43 % of it because that was the way— You need a Japanese partnership. 100%. Same as operating in China.

56:27Michael Batnick:Hornbuckle sounds like a name from a Taylor Shutterton show.

56:30Downtown Josh Brown:hornbuckle that's great yeah uh that's definitely a concealed carry guy so just guessing just to give you an idea all of those las vegas casinos had about eight and a half billion dollars of revenue they think they're going to get six billion or so from uh japan alone when is it open 2030 so that's the catalyst is in four years they're going to have a japanese casino i mean there's there's other there's other things bet mgm is starting to like inflack they were losing 200 million now they're making$200 million a year. And they're smart allocators. I'll give you an example. New York, in its wisdom, you know, they were going to build all these casinos there, and MGM was in pole position to do it.

57:11They pulled the wrong. These the Nassau County ones? Yeah, this was going to be in Westchester. Oh, okay. I didn't even hear about that. And MGM was going to do it. But because the New York state legislator is incompetent, at the end of the day, they said, we're going to have to tax you more, this, that. They kept changing the terms. He pulled out. He said, I'm not dealing with this. I want, you know, as much as I want to be in New York, I want a profitable operation. And I like that. I like the discipline. And the other thing about that story is Barry Diller, who I have a lot of respect for, IAC owns about 25 % of it.

57:45Downtown Josh Brown:They own 25 % of MGM? Yeah. Oh, how? They bought it. Joey bought it. Levin bought it during COVID. He couldn't put money fast, work fast enough in the private markets. So, or to buy a whole company. So he bought stock and their whole - Oh, wow. Their whole, IAC's whole thesis is going from offline to online. And they saw with gaming, it's going from offline to online. So - That's where Dara comes from. Exactly. From that family tree.

58:14Michael Batnick:Exactly. And Diller and John Malone. Yes. Go way back. They go way, way back.

58:18Downtown Josh Brown:Can we talk Sphere? Yeah. All right. I'm going to see No Doubt in May. Super excited. My wife, all her friends, we're all going. I'll probably go back in October to see Metallica because I just, I can't stay away. I am in love with the sphere. Why is there still only one? And what do you tell people that are in the stock? Because it's worked out huge. There are people that would say, if Jim Dolan is involved in it, it can't work. Yes. Okay, those people in this world exist. 100%. This has worked. He looks like a genius to me. And full disclosure, I was so against doing this because I thought it was just the risk-reward wasn't there.

59:01Which part? Because they incubated this inside of MSG. Yeah, to do$2 billion to put a sphere in the middle of the desert just seemed like— This was part of MSG when they built it. It got spun out. You know what's weird? The inflection point happened with The Wizard of Oz. Yeah. They saw you take one show that costs like$100 million or whatever it does. They were charging$200 a ticket and it was working. Yeah. And now there's going to be, unless it gets blown up, God forbid, one in Abu Dhabi.

59:28Downtown Josh Brown:So, John, this was$25 stock in the middle of last year. It's$108. Yeah. Could you buy it here? That's what we talked about earlier. It's very hard to buy a stock after it's gone up so much. That's more of a behavioral finance thing. But I think you probably will make money. How many spheres can the world profitably support? What they're doing is the one in Vegas, I think, is 18 ,000 seat. They're doing smaller ones. They announced one in Maryland that's like 20 miles outside of Washington, D.C. They're doing one in Abu Dhabi, but they're doing a cap light. They are— They bring in outside investors for each project?

1:00:04Downtown Josh Brown:Exactly. Okay. Or for a significant portion of it. So who puts money, like a shopping mall developer that wants to attract more bodies to the mall? Or an Abu Dhabi government. There could be a lot of them. Will it lose the magic when there are a lot of them? I think that's the fine line. We were talking earlier about IMAX. It's sort of a special kind of thing, like an IMAX. This is kind of like an IMAX on steroids. It's a premier type of destination event. Absolutely. But yes, you have to be really careful about losing the list. What are your favorite stocks that are about to do what the sphere just did?

1:00:41Downtown Josh Brown:Give us your best winners. All right. Everybody grab your pen and pencil. No pressure. Take some notes here. No. What do you like? What's on your buy list right now? What do you like of your – I know the coverage universe is large. Yeah. But like what do you think in these days?

1:00:55Michael Batnick:John is what is spaghetti and meatballs right now? Talking about a stock that's done well but still to buy it, MSGS is up there. Still? Still. I would also, if you don't have a position in Uber, I don't understand why. You should certainly do it. Scott's Miracle-Gro is interesting. All right.

1:01:12Downtown Josh Brown:Tell me about Esquil. Scott's is a family-controlled business. We love these family-controlled businesses. They basically took lit about$1 billion or$2 billion on fire going into cannabis. Right. That one didn't work. It was a horrible, horrible idea. SMG. SMG. Okay. New York Stock Exchange. Yeah. Controlled by the Hagendorn family. James is crazy. He lived right down the street from me. He would fly his own plane to Ohio two or three times a week to work there. The guy's nuts. Wait, he lived on Long Island? Yes. And flew to Ohio? Two or three times a week. Okay. He flew himself. Oh, he's done.

1:01:58And he would, and he would, no, literally, and he said he would read the Wall Street Journal on the way there, which seemed -

1:02:04Downtown Josh Brown:As he flew. Yeah. All right. This is a$3.6 billion market cap. Yeah. Looks like the stock at 62. Yes. Looks like it topped at 70 twice in the last year. You think at some point it's going to break through? It's one of the best consumer staple companies trading at nine and a half times EBITDA should trade at 12, 13 times. This is a company, you have a 70-year-old guy or 69-year-old guy who has to be exhausted. The last couple of years have been an absolute disaster. He's going to, my guess, he's probably going to sell this thing. Why? COVID was tough for this? COVID and pot. Oh, yeah. Look at this.

1:02:41Yeah, there's no more sellers.

1:02:42Michael Batnick:Let me ask you another question. Do you follow Florin Decor? I've heard people talk about it, but I don't know what. Okay. It's like a premium Florin company that is getting annihilated. They took a lot of business from Lowe's and Home Depot. Nobody wants to own the stock for reasons that are very obvious. And he can the housing set. Well, I guess this, is this a housing plan? It's a housing plan. And what's interesting about a huge percentage of their sales are come from Depot and Lowe's, but they bring people into the store. There's also very little private label competition.

1:03:09Downtown Josh Brown:So you think at 69 years old, he's going to say, you know what? The right thing to do here is find a buyer. And he doesn't own all of it. It's as a family. It's a trust or however it's set up. And I think that they might be tired of the stock languishing. They wouldn't cut the dividend, even though they should have. So they own it. They control it. An activist can't really do anything. An activist can get annoying. Like we were, we talked about Unifirst. Yeah. You know, that was a family, the Croati family owned, controlled 70 % of it. Engine capital and to some extent ourselves got annoying and, you know, got them to sell.

1:03:47Downtown Josh Brown:A lot of the way that you explain these catalysts and these ideas reminds me so much of Mario. My first boss. Okay, so you work for Mario Gabelli from what year to what year? I think I was there right out of college. So 2002 for a couple of years. Your dad say that that was a good idea? Like go learn from Mario? Go learn from Mario. He's the best. I love Mario. He is fantastic. He's still doing it. He's still doing it at 83, 84 years old. Yeah. I met him a bunch of times on the set at CNBC. Yeah. He's so entertaining. Yeah. I remember the host just like basically turning the mic over. Yeah. Like stop.

1:04:24Downtown Josh Brown:Like they weren't even trying to ask questions anymore. he would just go. Yeah. And he just had like so much to say about so many companies. I was at a conference last year. So you learned a lot about presenting your ideas from the Gabelli school, sort of. I think, I mean, he's the master at it. So I can't say I'm anywhere close to him. I was at a conference where he presented last week. He went through 83 slides in about six minutes. Yeah. And he had the audience like, and I had to present after him, which was awful. is he in his 80s now 82 83 he's the same generation as like cooperman yes and their best friends all those guys went to columbia together exactly who else is in that posse cooperman him and was jeremy siegel in that group or he went to warden yeah i i think it was rosen uh i mean all those old school all those old school value guys like the names are escaping but the two of them are super good friends.

1:05:21I mean, they all... What a f***ing legend.

1:05:24Downtown Josh Brown:Yeah. And he was at the exact right time, 70s, 80s, when finding these intrinsically valued companies. That's right.

1:05:29Michael Batnick:Him and the coupon, they love stocks. Yeah. He lives

1:05:34Downtown Josh Brown:and breathes. Give us one more for the road. One more. One more that you guys like. Atlanta Braves. Okay. Tell us the story. And I just don't do sports companies. This just happens to be same thesis as before with the... Don't buy Atlassian Atlassian, by accident, don't buy team. B-A-T-R-K. Or you - B-A-T-R-K. Yes. So what's the story here? Is this one of those Liberty Media freak shows? Well, it was spun out. So now it's an asset-backed stock. Unlike the Dolans, you kind of have a rational owner of Atlanta Braves. Stock's selling about 42. We think it's worth about 60 or so in a sale based on a small premium to Forbes value.

1:06:13Malone is still the owner? He's the controlling shareholder. He's 82, 83. He's simplifying his empire.

1:06:19Downtown Josh Brown:I was going to say, I can't understand. I call them freak shows. Not the companies, the structure. Yeah. I don't know. I'm an investor in Live Nation. Yeah. Stock has done unbelievably well. It's doubled. Yeah. But like some of these other things with the five letters on them, I've given up over the years. So what's the story? You own Atlanta Braves and you own real estate and something called the Battery in Atlanta, which is office towers, et cetera. and he's going to sell in the next year or two. Or, you know, that's - You think he can get 60 for this? Yes. Is it like a go private? Yeah. Because like the Knicks, they can't afford to be a public company.

1:06:58Downtown Josh Brown:Do you like when public companies own a lot of land like St. Joe or Howard Hughes, you mentioned? Yeah. Do you like those types of investments in general? I've never had success with them because I think they require more patience than I have. I think it depends. Depends on the story. What I hate is when companies give their own NAV based on the land at the end of the presentation. That's like the kiss of death. Why? Because I don't want that. You know, they're talking their own book, and I don't like promotional management. Okay. That's a turnoff to you. Yeah. I want someone to tell me the story, not tell me to buy the stock and let me make my own decision.

1:07:31Gotcha. What's the last stock you looked at that you passed on? Adobe was probably up there. Why? Why did you pass? Because I just don't know if they're going to be a survivor. They don't have the data the way that CRM does.

1:07:48Downtown Josh Brown:What they said, they see themselves as the layer that sits on top of whatever LLM people want to use. Maybe. I said, well, what happens when people decide they don't need the layer? Because they're like professionals, very comfortable interacting with our tools. They have workflows built in Adobe. All we have to do is take these engines that are powerful and put them underneath. And people will never give up their subscription because we are the company that makes it easy to use AI to do design. That sounds plausible on the surface. And actually, they haven't really lost anything. When you look at their earnings reports, that stock never stops going down.

1:08:32Downtown Josh Brown:So the street is just telling them whatever you think your strategy is, you're dead. So I put it in this order. Uber, I'm uber confident that I'm right. CRM, probably. Adobe, I just don't know. And I don't want to invest in something. It's too hard to tell. Yeah. What about Apollo, companies like that, the all-time investment managers? Any read there? I'm starting to, we're starting to look at it. You know, we've spent more in the financials on like insurance companies. A company like Markel, which is run by Tom Gaynor, is something that's more interesting to us. who knows what's going to happen in the private credit space.

1:09:09Is this going to be a disaster or not? Some of those have to be buys though. Yeah, probably.

1:09:13Downtown Josh Brown:You can't have this much damage without some value being created.

1:09:16Michael Batnick:Also, with so much of this capital locked up, you can create some sort of a model that tells you what the cash flows are going to be. You could even assume the worst case, all right, they bleed 5 % a quarter. Let's just assume it goes on three years. What's the worst case? And what's it worth? But the problem is, are they not going to have any carry going forward? is the value of their...

1:09:35Downtown Josh Brown:So part of me feels like the software spook won't end until somebody gets bought out. Do you think that that's a plausible scenario where one of these big SaaS software companies gets a real bid either from a strategic or from like Silver Lake and a big consortium of private buyers? Or are they just too big? I think they may be too big, But what I think a big buyout or a multiple buyouts are going to help is making small and mid-cap stocks do well. They've underperformed for like 15 years and terrible over the last five years. I think that M &A boom is going to happen there. Interest rates just need to settle.

1:10:19The world has to have some sort of semblance of order. Can I put a floor under these stocks?

1:10:23Downtown Josh Brown:Yes. If we get like buyouts for some notable mid-cap, non-mega-cap software companies just get taken, people all of a sudden will say, all right, maybe I'm not going to sell this so fast. Yeah. But they're not happening yet. Yep. No, I mean, it's going to take a while. I mean, it also just started. I don't even know what the reaction would be in the share price of the buyer these days. I can picture a collapse. Yeah. Like, think about it. But like if a big CRM, like a Salesforce, said, okay, that's too cheap. We're buying this competitor ABC. Yeah. But they can't buy it with their own stock now because their own stock is - Nobody wants their own stock.

1:11:00Yeah. So it's hard.

1:11:01Downtown Josh Brown:Okay. But maybe on the smaller ones. But I think for a regular non-software company, that's going to be the renaissance on small and mid-cap investment. Last thing, how are you feeling about the Knicks in the playoffs? How far do you think we go? every year they go one step further, right? That's right. So, you know, we'll lose in the finals. Well, you don't have to worry about some teams that you've had to worry about over the last couple of years as much as you used to. Yeah. Right? It's a crapshoot. Pacers are off the board. Yeah. I don't know. Do you think... Although Boston's strong and Detroit is...

1:11:39Downtown Josh Brown:He came back. Yeah. I thought we had this year. All right. Dude, did you have fun on the show today? This was great. Yes? This was a lot of fun. We had a blast talking to you, learning from you. I want to tell people where they can go to get more information about Boyer and how they can get smarter by following your ongoing research. What would you tell people? Just visit boyervaluegroup.com. We also have a sub stack for like the regular retail type investors and go there and just listen to me on The World According to Boyer. All right. How often are you putting the shows up? Not enough. All right.

1:12:11I do it when I can get a great guest who's interesting.

1:12:14Downtown Josh Brown:Okay, so you're not doing like a regular pace thing. It's just like, hey, I got somebody new. Yeah, exactly. Okay, you know, you could get Michael Batnick, I think. I would love to. I would love to have both of you. All right, we'll do it sometime. Sounds good. Ladies and gentlemen, this has been The Compound and Friends with our friend Jonathan Boyar. Please follow him everywhere he's putting on information. Very, very bright, very intense research, and an all-around great guy. And I think you'll learn a lot from him. Thank you so much for listening. Thank you for watching. Special round of applause for John, Duncan, Nicole, Rob, Graham, Sean, Shark Kid, Matt, the whole team, Daniel.

1:12:54Downtown Josh Brown:Who am I missing? Travis. Katie. All right. Are we kicking ass this year? We are, right? We are. All right. Guys, thank you for all that you do. We appreciate it. I know the audience appreciates you as well. All right. That's it from us. Thanks for listening. Talk to you soon.

1:13:11Michael Batnick:You don't have to ask me to check for our day. Okay, good. Campbell Smith, does that thing go to zero?