October 2026 Random Ramblings

0:28This episode is brought to you by Indeed. You're about to listen to the Yet Another Value podcast with your host, me, Andrew Walker. It is Tuesday, October 12th, and today is my monthly random ramblings for the month of October. Before we get into that, a disclaimer to remind you that nothing on this podcast is investing advice. That's true for every podcast, particularly true for today, because it's just me, random guy alone in a very small office, just rambling to you about things. And I can't tell you, I just start talking to the mic and maybe it's just because I like the sound of my own voice, but I just start talking and go.

1:01Today, we're going to talk about, I think, hopefully, it's a really interesting one, just some things on my mind. The first is M &A. If somebody is thinking about a bad M &A deal or announces a bad M &A deal, does it and then pulls back, how do you think about that? Do you give the company credit for pulling back from a bad idea or do you ding them because, hey, they had a bad idea and they almost executed on it and they were forced not to? That's the first thing we're going to talk about. And we talked to that through the light of SOLS and the Starbucks Chipotle rumors. Then I'm going to go and talk a little bit about the indices.

1:32You know, I just kind of a state of the markets thing. Indices are up broadly double digits, you know, domestic indices, double digits here to date. But that's not how I feel when I talk to a lot of my friends. You know, a lot of them are just like despondent. Maybe that's because there's been a big pullback. Maybe it's because there's a lot of churn, a lot of blood underneath those high level. But I'll talk about that a little bit. But then we're going to go to talk about unexpected competition. And I'm going to view that through the lens of IMAX, through the lens of FICO, and through the lens of Netflix.

2:01There's this really interesting piece on microdramas, which are becoming really popular in the US. I think they're quite popular in a lot of overseas foreign markets as well, becoming very popular. And if I said, hey, somebody is going to film 20, 90-second clips that are going to be very formulaic, very quick, very twisty, say, OK, that sounds pretty cool. but like, I don't think that's going to be a big business. A, it is a big business. And B, I think it's going to start cutting into, you know, legacy media. And in particular, Netflix, I think it's a really interesting one to think about. So we're going to go there.

2:33And then we're going to talk about, I ran a high rocks. I'm a whoop member. Here's my little whoop on my wrist for those of you watching. Aura pulled its IPO. I want to talk a little bit about that IPO. And in particular, you know, the Aura business, I think if you had thought about Aura and it's like four years ago, you wouldn't have been thinking about this huge AI data play. Maybe. I don't know. I'm not an investor. Maybe they were. But that really became a thing as they were approaching a$15 billion, which just seems insane to me, valuation. And thinking about other businesses that could have that type of value, that type of, hey, we were one thing, but now we have this big AI tailwind that's increasing our value.

3:08And the one I think about there just in terms of it wouldn't be a continuous tailwind, but it would boost their current asset value as homebuilders. And you know what? While I'm rambling, the one thing I didn't talk about with Aura, the other interesting thing with Aura and Whoop is they're IPOing. I've got my Whoop on one hand. There's an Apple Watch here. And you think about, hey, dedicated fitness trackers have this one overwhelming risk, which is Apple makes the watch. Google's got the Fitbit. They've got these big tech companies that they're competing with. You've got a specialized thing doing one thing versus this big thing that Apple Watch is always getting better at health.

3:42How do you compete with that? That's interesting. You might say, hey, specialization wins out. There are some cases where that's worked. But how do you think Kodak feels about their specialized camera makers when that iPhone comes around and Kodak, I mean, I think they might still be in business, but they're not the Kodak of the 80s anymore, right? So does the specialization win or does the general use cheaper, all that win? Another interesting thing to think about, which I didn't even think about while I was rambling. I just rambled. So we're going to get to the ramblings in one second. But first, a word from our sponsor, and our sponsor is Trata, T-R-A-T-A.com.

4:15If you've been listening to this podcast for the past year, 18 months, you know that Trata has been a great sponsor, and it's a product that I love, that I use frequently. Trata is two buy-setters who hop onto an anonymized call, and they talk about stocks that they're long. They talk about the risk or long, thinking about getting long, short, whatever it is. They talk about it, and they talk about why, right? They talk about, hey, here's the opportunity I see. Here's the risk. Here's what I worry about. Here's what keeps me up at night. Here's where I think the street is right. Here's where I think the street is wrong.

4:43They talk about all that. And then Trotta takes the transcript of it, anonymizes it, and lets you read it. And I'll give you a little hint. Whenever I'm looking at a company, I have my little Claude agent. I say, hey, Claude, today I'm looking at this company. First thing it does, go to Trotta, pull up any transcripts that mention it, and tell me what people are saying about the stock. So I think it's just an awesome product. It's really unique. I think if you like this podcast, you're going to like Trotta too. So go to trata.com to check them out. All right, let's jump into it. So today, oh, well, I'll say everything in the intro about what I'm going to talk about today.

5:16Let's dive into everything. So I want to start off talking a little bit about mergers. And first, I'll start with a hypothetical, a little brain teaser. I don't know if brain teaser is the right word. Brain teaser is what I'm going to call it, if you will. So there is a company, SOLS is the ticker. I believe it was a spinoff about a year ago. Solstice Advanced Material is the company. People really liked them when they spun off because every eventy value investor is going to look at spinoffs. They had some exposure to semiconductors, all this sort of stuff. I haven't done tons of work on them, so I'm not going to claim to be an expert.

5:51I'm just giving you a broad overview, doing this off the cuff from memory. A couple of months ago, they announced a merger. It was a merger of equals, if I recall correctly. And the stock just gets hammered, right? The stock is down 20 % in a day or two. On the announcement, investors hate the merger for 1 ,000 different reasons, right? This is a spinoff. They want a different capital allocation. So a few months later, the stock's down 20%. It's a merger of equals. A few months later, they call off the merger. And look, mergers have a contract. Both sides have to agree. But both sides say, hey, this isn't working.

6:22The stocks are down, all this sort stuff. So they call it the merger. And sole stock goes up about 15 % on that news. Now, percents can be funny, all this sort of stuff. But if you just kind of do the math, down 20, up 15, you kind of know, oh, look, the stock is down a little bit in total since the merger announcement, right? It hasn't fully recovered. And again, that could be index related to everything. But I think it's probably right to say after they announced the merger and the stock went down, people were kind of looking at this company with a little bit more funny eyes. It's just something I've been thinking about a little bit, right?

6:56Is Soles announces a merger and investors hated it. If you are coming and looking at the company with fresh eyes and the company announced the merger, investors hated it and they call the merger off. And in this case, they were able to call the merger off. If I remember correctly, there's no break fees. You know, it was a merger of equal and both sides said, let's merge. And both sides said, let's not merge. So if you're looking at Soles, what do you think about the management team after they do a merger investors hate and call it off? Is that a bullish sign for you? You know, hey, they took a shot, but they were willing to listen to feedback.

7:28And investors said, we hate this. And they said, we hear you and we're going to do our best to get out of it. Is that a bearish sign for them? Because, look, I don't think there's any management team out there who's going to announce a merger and saying my shareholder is going to hate this. Right. Like every the main my share is going to hate this and they don't get out of it. They think their shareholders are going to love it. And it's a great deal. So is the merger announcement, even though they got out of it, is that a bearish sign? Because you can't trust the management anymore. Their capital allocation decisions are going to be suspect.

7:54And they clearly want to merge. You got out of this one. But the next one you might not be able to get out of. There's going to be a signed contract. You're going to be forced to go through. Just been thinking about that, you know, because in general, if you said, hey, somebody did something and they had the mental flexibility to do something. You know, they spent months of work, diligence, all this sort of stuff to get a signed contract. They think it's great. They had the mental flexibility when people were telling them this is a bad idea to get out of it. You know, generally, I'd say that's great.

8:20So it's just been a little brain teaser. I don't think there's a right or wrong answer, but hey, we're rambling. And I just thought I'd start you off with that brain seizure. Something I've been thinking about. And I think it is interesting. That's a big example, right? That's a merger of equals. But you could apply it to if you're building a relationship with a management team or something and you talk to them in quarter one. And you say, hey, look, guys, you talked in quarter one about taking pricing, not taking pricing, whatever it is. I've done a lot of industry research. I've talked to experts.

8:50I've talked to customers. I don't think this is a good idea. in quarter two, if they do something, they come back to you and they say, hey, we took your idea under advisement. We talked to customers. We implemented it. We stopped taking pricing as much in this situation. You'd love to hear that. So just something I've been thinking about, and you can apply it to all sorts of scenarios, big and small. Again, in the Sol's case, I don't think there's a correct answer on bullish or bearish, but I think it is interesting to play around with. Speaking of mergers, the other merger I've been thinking a lot of is there was a rumor a week or two ago.

9:24I'm recording this October 12th. There was a rumor a week or two ago that Starbucks had looked at an acquisition of Chipotle. And I believe yesterday, October 11th, Starbucks went on CBS and said, we're not going to buy Chipotle. So take that off the table. But it's still really interesting to think about because that is a merger. Starbucks and Chipotle, yes, they are both food companies, quote unquote, right? That is a merger with probably the least amount of synergies two companies in the same industry could possibly have. Like when you think about Starbucks and Chipotle, two completely different supply chains, like the only thing they do is, yes, they both like to get high foot traffic locations, right?

10:02But they're kind of competitors in that sense. And not competitors in you merge them into Duopoly because there are plenty of people who want, there are plenty of restaurant brands or retail brands or whatever it is, coffee shops, whatever, that want high foot traffic locations. So you take another competitor off, like it doesn't change the competitive dynamics for the high traffic locations at all, Right. So there's like literally zero synergies between merging Starbucks and Chipotle. But you know what there is? Starbucks and Chipotle. I believe Brian Nichols is the CEO of Starbucks. He was hired in 2024.

10:30August August 2024 is when he was announced. He was the CEO of Chipotle. Right. So he's the CEO of Starbucks. Now he was the CEO of Chipotle. So you have a merger where there are no synergies. It is a silly idea. Yeah, no one would think, you know, if you gave somebody a fantasy football draft and said, think of the top thousand mergers that could happen in the public company space, public restaurant space, whatever. No one would think that Starbucks and Chipotle belong together. You know, I know people are going to come at me at Yum! Brands and say, hey, you've got Taco Bell and KFC. And for a while, I believe Pizza Hut's not in there anymore, but you had them all on their same roof.

11:04And I'd say, yes, that's true. But at least for them, you know, Taco Bell and KFC are buying meats. They're buying cheeses. Like there's a little bit of synergies in terms of supply chain synergies. Star Wars and Chappellate don't even have that, right? And look, a Taco Bell and a KFC, you can put them under the roof. There are dual Taco Bell KFCs. You can't even put a Star Wars and Chappellate under the same roof. They have completely different kitchens. They have completely different supply lines. Like everything about the business is completely different. So no one would dream for any of these two together unless you were thinking of – unless you like knew the CEO.

11:37And the CEO clearly wants to do this. At least in my opinion. Again, I'm not in the boardroom. I don't know. But it seems pretty logical that if he was the CEO two years ago, they're exploring this merger that makes no sense. It's driven by him. Right. And that's interesting because this merger doesn't make sense unless you think Brian Nichols, the CEO of Starbucks, is so uniquely qualified that Chipotle and Starbucks, I suppose, under him is worth more than anyone else. Right. In that case, there actually are synergies, right? Because if he is so talented, he's so unique, he's such a visionary in whether it's the restaurant space or the fast, casual Mexican space, which probably that it works under him, then there are synergies.

12:14And that is just really interesting to think about. You know, if you think about Steve Jobs, when he came back to Apple, like a lot of the mergers that happen around Apple or around Steve Jobs are Steve Jobs centered, right? So I don't think anyone would have thought, oh, what are some things Apple buys? I'm blanking. But Pixar, when I read the Steve Jobs books, a lot of them merges stuff around Pixar. Now, there's great creative talent in Pixar, and there's their own dynamics there. But a lot of that is keeping Steve Jobs happy, keeping Steve Jobs involved. When Disney buys Pixar, there is Steve Jobs on the board.

12:51That type of thing. You've got this unique creative genius in kind of keeping him aligned. So with Starbucks buying Chipotle, that would be the only explanation. And I think if you look at the stock prices and the performance since Nichols left, you could see evidence one way or the other. It's kind of in the eye of the prolder. So, again, Nichols joined – Nichol, I think it's Nichol actually, joined Starbucks in late 2024. The stock, it's$78 per share the day before they announced he's going to be the CEO. It jumps to$95 per share when it's announced that he's going to be the CEO. It's trading$93 per share today.

13:25So you've got two years and with dividends included, Starbucks stock is basically flat over that time frame, right? Chipotle, it is$55 per share before he leaves. It drops from 55 to 50 the day that it's announced he's going to be leaving. And as we're talking, it's$30 per share today. So I think you could look and say, hey, Chipotle, they were performing incredibly under his stewardship. Starbucks buys them. He brings the juice back. And, you know, there's a lot of upside if this merger goes through and Starbucks can kind of get that juice back, right? The counter to that would be, hey, maybe he was writing trends.

13:57Starbucks is much more competitive now. The restaurant environment is more competitive. Starbucks hasn't exactly done great under his stewardship. So, you know, was this one-time thing a guy writing trends? I don't know. But it's just, again, it's really interesting to think about because that is the silliest merger I can possibly imagine. but it is you know there's there's one man probably driving it and you could kind of a visionary scenario where you'd say hey souls everyone hated it and there was no reason for that merger to happen starbucks chipotle there's no reason except for one man one man's vision for it to make sense so i think that's really interesting let's move on other thing i think this is the thing most people tune into the random ramblings for and that's kind of my you know i don't do the posts anymore on state of the markets it's kind of my state of the markets thoughts i I don't know.

14:40Maybe you tune in because I'm so handsome. Maybe you tune in for any number of reasons. But let's talk about the indexes real quick. Again, I'm talking October 12th. And it's funny. Most of the people I talk to tend to fit into – I don't love the label value investor because maybe you're getting old and crotchety, fighting over definitions. But value investor, when somebody says I'm a value investor, what they mean is I buy stocks at under 10 times price earnings. That's a lot of what they mean. I consider myself a value investor, but 10 years ago, I would have said, yes, I buy stocks under 10 times price earnings.

15:16Now, I don't say that about myself. I say I'm a value investor in that I want to invest rationally. I want to think logically. I want to buy things for less than they're worth or buy things that are going to be under a firm. And I think everybody would say, hey, I want to buy things for less than they're worth. I want to invest rationally. But when I hear people say value investors, a lot of times what they mean is I buy things really quantitatively cheaply. And that is not what I mean. But I will say, you know, most of my friends I invest to, I think they're rational, logical, the right friends.

15:41I talk to them a lot and fall more into the value investor camp, right? Why do I say that? Oh, anyway, so they fall into that and they tend to be on the smaller side. It's interesting because indexes are up double digits here today. The Russell's up 10 or 11 percent. The S &P's up 13 percent or so as I record this. When I talk to friends, that is not what I'm hearing from them, right? A lot of my friends are like borderline despondent, I would say. Not despondent in the kind of depths of COVID way, but really frustrated with the market. And maybe part of that is because a lot of the Russell 2000 in particular, again, if you're a smaller investor, you're probably not investing in the super large stuff.

16:19The Russell 2000 is down about 8 % since June 30th. So we're approaching correction territory. I think underneath the hood of indices, and I'm going to talk about that in a little bit, there's just a bloodbath underneath the hood. And the indexes in general have been really supported by tech, surprise, surprise, and energy so far this year. I pulled a little thing where I pulled up like there's 10 different sector-based, big sector-based ETFs. There's consumer discretionary, consumer staples, industries, all that sort of stuff. When you look at them, all of them are like plus or minus 5 % on the year except for two.

16:53Energy is up like 45 % and tech is up like 35%. So if you were not long tech or energy or and within tech, I think a lot of it is focused in the semis. Right. If you were not long tech slash semis or energy, if you were focused on any other sector, you are massively underperforming indices. So I think there's two things driving this despondency. One, if you weren't long those sectors, you're underperforming. And two, the indexes are in correction territories over the past four to five months. But it's just really interesting. Like the despondency I see, if I just didn't even know, you know, if I didn't even know what the indexes were yesterday and I was just relaying my thoughts to the friends I'm talking to, I would have guessed indexes were down 15 % on the year or something.

17:38And they're not. They're up pretty solidly. I think that's interesting. Speaking of interesting on the indexes, a popular thing I heard probably in late 2021, but I've heard it off and on for the past 10 years and it peaks and wanes a little bit. But a popular thing I've heard is people will say the Russell is a broken index. And why would they say that? They say, hey, over the past 25 years, the world has become a world where scale matters, right? The returns to scale improve. You think about software companies. You think about internet companies, all this sort of stuff. So as you get bigger, you kind of gain scale, you gain operating leverage, and your business gets better, and you kind of get a little bit of moat.

18:18You know, who's going to go start the next Google? You can't. You don't have the data science and all this sort of stuff. So you get a little bit of moat. What they were saying was the Russell, it's a broken index because it does the reverse of what you want to do. It cuts its winners and flowers its losers, right? So if a stock goes up enough, it gets booted from the Russell. So it's selling its winners, and it's kind of over-indexing and its losers. If the average company in the Russell has a billion-dollar market cap, let's say, if you stay at a billion, you will have a really good rating in the Russell.

18:49But you just kind of floated a billion and you're just 0, 0, 0, 0 % returns year after year. So the Russell kind of waters its losers because it's over-indexing to them and they stay at this thing. It's kicking the winners out. It's watering its loser. I think that's really interesting because, you know, we saw this happen in 2021 and we might see it happen again now where, yes, it's true, it kicks its winners out, but sometimes it dodges a bullet on those winners kicks. Right. So SMCI, I believe. What is that? Supermicro. We saw this happen, I think, in 2024, where the stock went up like 10x to start the year.

19:25Right. It was the biggest winner on the Russell and the Russell kicked it. And then it got hit with all sorts of accounting allegations. You know, it had this wild resignation letter where the accountant was basically like the only thing they would confirm was that they used to be the accountant for SMC. It would not like write off anything on their financial anything. So all this happens. The stock goes up 10x and then it's down like 80 percent. And the Russell rise that 10x up and then boots it. And then it misses the 80 percent drop. And we could be seeing a little bit of that with the Russell today.

19:54You know, earlier this year, a lot of the AI winners, Bloom Energy, a few, the Russell kicks them kind of in June-ish, right when all of them are peaking. You're right before the situational awareness blow happens and all this sort of stuff. So the Russell rides them up and all of these things are, I mean, you know, Bloom Energy alone, I believe, adds 1.5 % of return to the overall Russell this year. So it rides these up to huge returns. They all go parabolic. It kicks them. And all of them are down quite a bit since then. And so it is funny, like the same reason people used to say that the Russell is broken kind of has helped it so far this year.

20:34I don't know what to take away from that, but I think that's very interesting. Let me go to something close to my heart. Oh, no, actually, you know, speaking of indexes, I want to talk about one other thing. Unexpected competition in Bearcats, speaking of people being despondent. Yep. And this kind of came to me because FICO, I don't know if anyone, I'm sure a lot of people listening to this are investors, you know, FICO, the FICO score, credit score, whatever. FICO has come under a lot of heat from really the government recently. And the government's really trying to break them and the stock's down quite a bit this year.

21:07And it was starting from a high PE. And, you know, the combination of high PE plus competition and maybe government-induced competition coming in is not a great combo. So the stock's down quite a bit, though I think it's bounced off the lows. But I've seen what I call unexpected competition popping up a lot. You know, FICO, they kind of get a regulatory crackdown because they push pricing too hard and they get a regulatory crackdown. But I've seen it in other places, too. You know, Disney is releasing the new Avengers film, I believe, the same weekend as Dune 3 is coming out. And all the theaters, Dune 3 had reserved all the IMAX theaters.

21:42So there's no Avengers IMAX coming out. And Disney is trying to roll out this thing they're calling Infinity Vision. And they're going to the other studios except for Warner Brothers because Warner Brothers is releasing Dune. They're saying, hey, why don't you guys start releasing movies in Infinity Vision? We're going to kind of spin up this competitor to IMAX. And we've actually seen that happen in the movie industry before. You know, if I remember correctly, I don't have my notes here, but all of the movie chains a few years ago rolled out. You know, you could go see something in IMAX or they rolled out their premium theater offerings with bigger screens, better sees all this sort of stuff.

22:17So we've seen it before, but I just think it's interesting. You know, both Infinity Vision slash IMAX and FICO, what do they have? You have a kind of monopoly. You know, IMAX has a great brand. When you think, hey, I want to go see a premium movie, you think IMAX. They have a great offering near monopoly, FICO, you know, the FICO score near monopoly. And they push pricing power. In IMAX cases, they've pushed pricing power both in terms of what they charge the consumers. But, you know, IMAX, their actual customer is the movie studios and they push pricing. They've pushed pricing there in a variety of ways, including saying Disney go take a hike on Avengers.

22:53So I just think it's interesting, you know, investors are always looking for the next monopoly, the next business with a huge moat. And it is interesting to think about, hey, you know, whenever you talk to an investor and they're investing in a company, they're a lot of times, especially if it's a really good company. the thing they're going to tell you, I wish this silly management team would just pull that pricing a little harder. I wish they would push pricing more. And it's an example of, hey, yes, that pricing lever is great, but you push pricing too much and there is always going to be a competitive response.

23:21Like you push enough and somebody is going to figure out a way to bring supply or competition online in one way or another, or, you know, with FICO or we saw it with Valiant 10 years ago, push pricing too hard. And yes, maybe you have a monopoly, but the government will come and crack down on you. So it is interesting. There's always a bear case. There's always competition. There's always risk. And I was thinking about that a little bit where there was a New York Times article on micro dramas. And I believe micro dramas are very popular in some emerging and foreign markets, and they're getting more popular here.

23:52But basically, the micro drama, you know, the New York Times was portrayed as you watch and they, you know, it's pretty low quality, but they're filming kind of soap opera type things. And they've got stars and they're getting very popular. And, you know, you're watching like a clip. It's two minutes at a time. The clips are very short. They're very targeted. You know, the microdrama, they say it's getting filmed in English, but all the producers are Chinese and they're sending the cast notes as it's happening. And they're saying, hey, you know, you need to hit this storyline. We've seen that a lot of the, you know, this increases in traffic.

24:23So they're very quantitative in, hey, we need to see blood on the screen or we need you to see this line. We need this twist to happen. I thought that was interesting. The reason I bring up micro dramas is twofold. Number one, and this is mentioned at the start of the article, you know, a lot of people, myself included, when Quibi launched six, seven years ago, made fun of Quibi. And Quibi, Quick Bytes was what it stood for. It launched in like 2020. So very unfortunate timing for them because they wanted people to be consuming the Quick Bytes on their phones while they were in line for coffee.

24:54and COVID happened. So like nobody's standing in line for coffee, but it was, but it was Jeff Katzenberg and Meg Whitman, if I remember correctly, but you know, Quibi, it was, it launched hundreds of million investments, got mocked, shuts down within like a month or two of launching. That's basically what these little micro dramas are. So one, I thought it was interesting, you know, you had this thing that was widely mocked seven years ago, but it just been a little bit ahead of its time, you know? And the other reason I thought about it was, you know, Netflix, the stock has done pretty poorly over the past year.

25:25As I write this, the stock is trading for$70. I think before they started bidding on Warner Brothers about a year ago, the stock was in the $110-ish, so it's down quite a bit. I think they are still by far the dominant player in streaming all this sort of stuff. But if you look, I mean, everywhere I see competition, Netflix used to say, hey, our competition isn't HBO or our competition isn't Disney. It's YouTube. It's Sleep. It's what they said. And everywhere I look for Netflix, I see competition looming, whether it's YouTube hours continue to grow or these quick bites on the small end. And I think a lot of bulls, when you talk to them about Netflix, would say, hey, they have such a moat just from their distribution, their size, their scale when it comes to TV viewership, no one can catch them.

26:10And they're probably right on that. But it is interesting, again, the competition comes from unexpected places. Maybe the competition they should be thinking about isn't the competition from Disney or HBO or whoever, maybe the competition they should be thinking about is, hey, 10 years from now, are people gonna be watching as much TV, as much scripted dramas as they currently do? Or in 10 years, are these quick bites that satisfy quickly, that can be spun up really cheaply that you can get for, that are specifically targeting you? Is that what, are people gonna be spending more time there? Because if they're spending more time there, they're spending less time on Netflix.

26:45And I'm not saying Netflix is a terminal zero or anything, But that type of competition coming is how something can break. And I just think it's very easy that, you know, the competition can come in any form, whether it's with FICO, a regulatory crackdown with IMAX. Hey, you piss off somebody big and they're going to spin off their own technology and try to get it going. Or from Netflix, from, you know, these cheap Chinese backed Chinese backed micro dramas. And again, the article, it's so good. It's really interesting. And one of the articles, things it says is, you know, the actor says, hey, yeah, we have to stick to the scripts that these guys are given because often we'll think something silly.

27:23But then we'll see the data and like it really causes a spike in viewership or a spike in signup. So it's very data driven. But the actor's also like, yeah, but sometimes, you know, we are dealing with Chinese people. So they'll send us a script and they'll say, hey, you should yell at this person like, how dare you, you lowborn peasant. And we'll be like, well, you know, peasant isn't really what you would call someone in America here when you were saying that. So we'll change that. But I thought it was really interesting. You know, just that peasant line stuck in my head. A lot, a lot of other interesting things there.

27:48And I'll I'll try to include a link to that in the show notes. All right. Last thing I want to talk about is Aura delayed its IPO this week. And there were so many great jokes about Aura's IPO. You know, my favorite was, and I'm a whoop person, so maybe I'm speaking from, you know, the customer of a competitor. But one, my favorite was, oh, Aura didn't delay its IPO. It just had a low readiness score right now. For those who don't know, you're writing a score, you wake up, and whether you have a whoop or Aura or whatever it is, it tells you, hey, you got a good night of sleep last night. Your readiness score to go work out is really high today, or you got a bad night's sleep.

28:21It's really up. They delayed their IPO. And I think Aura is interesting in a few ways. Number one, you know, Aura, again, that's the ring that keeps track of your health. And I would have guessed, I bet you if they had tried, so they tried to IPO at like I think a$15 billion valuation, which is just absolutely insane. And let me see if, yeah,$15 billion valuation, tried to raise$2.2 billion. If they had tried that 10 years ago, let's say the whole Aura business is the same 10 years ago, you know, subscription rings, they would have been raising nowhere close to$15 billion. I think one of the reasons they were so highly valued is people looked and said, hey, this is a company that has a wearable with unique data.

29:00You could imagine a lot of ways that could come into play in an AI world, right? So I think they were at least trying to raise on an AI play. And I just think that's really interesting to think of, hey, you have a business that's, you know, customers love it. It's got unique data. It's on your body, but whatever the business is. And all of a sudden, there's a tangential thing that happens, and it massively increases the value of that data, that customer, everything that you've got. I think that's just a really interesting thing to think about. And especially, you know, we're very early in the AI revolution.

29:33What are other businesses that are going to see their value massively increase as AI takes hold? You know, we've already seen a lot of them, right? The classic example would be crypto data centers, right? Because crypto data centers, they had all this power, all this cooling and everything. It was built for Bitcoin to the moon. Bitcoin didn't quite go to the moon, but it turned out those data centers were 10x more running as AI centers. You know, we see, I mean, to stick with AI, there have been a lot of articles recently about companies. I think there's one that it's an EV charging company that bought tons of power and they had enough power to power, you know, like 10 ,000 trucks per day or something.

30:15Well, they don't charge 10 ,000 trucks, but they have that allocated to them. So they say, hey, what if we go and charge 10 ,000 trucks worth of AI data centers instead? You know, so I think we've seen a lot of that. And I was trying to rack my brain for, look, a lot of the first order things have already happened. But what are the second order things that happen that get more valuable as AI comes along and as the world transforms? I don't have great answers, but one that was really interesting to me, you know, that appeals to the value investor in me a little bit. Homebuilders, right? You could imagine now, and I say homebuilders because homebuilders, you know, indices, to go back to what I said earlier, indices are, there's a bloodbath underneath indices.

30:51A lot of homebuilders have sold off pretty heavily so far this year. you know, on rates, concerns, every type of concerns you can imagine. Berkshire, not Warren Buffett anymore, but Berkshire has been buying a lot of Lennar. You know, Lennar starts the year off at 100. It's at 75 right now. So we can do the math real fast. It's down 25 % of the year. It's trading around book value. Berkshire has been buying a bunch of it. And I think home builders could be interesting. Why? You know, you could imagine a world where AI firms start paying home builders saying, hey, install our AI equipment all over the new homes that you're building, all over the new communities that you're building, and we'll pay you for that.

31:32And that way, the communities become more valuable. Now, in that case, that would not be with Aura, the data becomes a permanent increase. With homebuilders, because they're competitive, those returns would get competed away over time, right? Because homebuilders in the future, when they're buying communities or building lots or whatever, they'd be bidding up knowing that there's an AI return on the back end. But what would happen is all their current lots would be undervalued, right? Because their current lots were bought thinking, hey, normal home building returns. And then they run into, oh, AI firms will pay us 5 % of the house's value to install AI data trackers or whatever it is.

32:05So all their lots would be worth 5 % more. So that would be a one-time boost. But I think that type of windfall is interesting to think about. And again, you can do the math there. Is the windfall one time? Like in my argument that the home builders windfall would be one time because it gets competed away or with or because they've already got all of those customers. You know, is that kind of an ongoing benefit to your business? I think that's really interesting. Last thing I'm going to talk about. Speaking of aura, you know, did a high rocks race over the weekend, had a great time. My buddy Logan, who I think is also the number one fan of the yet another value podcast, came and did it with me.

32:41We did in Boston, had an awesome time. Have I thought to myself, hey, maybe I should become a fitness influencer instead of investor? Every now and then when markets are rough or when I'm talking to despondent friends, maybe every now and then. But I love investing, so I'm not going to. But maybe I am. I don't know. Anyway, I say that because I had so much fun. And if you're into high rocks, you should just message me and we can talk about high rocks and stuff. But I don't even know why I said it. I just said it because I wanted people to message me if they're into high rocks and we can talk about high rocks.

33:11But it's something I'm going to keep doing and really enjoy the training, really enjoyed all of that. Probably going to do Miami High Rocks late March. So if you're in the Miami area, you want to train, you want to talk, let me know. But anyway, oh, man, I have so much to talk about. But I've had fun rambling. I think it's been about 30 minutes. Oh, my gosh. I've got one, two, three, four, five, six other different topics I did not hit to. Who knows when I'll be able to get to those. But I've had a great time rambling. Hope you enjoyed it. We'll talk to you soon. And we will go from there. A quick disclaimer, nothing on this podcast should be considered investment advice.

33:45Guests or the hosts may have positions in any of the stocks mentioned during this podcast. Please do your own work and consult a financial advisor. Brussels clean up nicely at Sweetgreen. Maple glazed, roasted, and edges perfectly caramelized. Sweetgreen's fall harvest is back on the menu. And the season's most overlooked little green vegetable is dressed to be devoured. You know what to do. order on the Sweet Green app. Thanks.