Investing Unscripted Podcast 101: Averaging Up: When Overvalued Stocks Aren't Really Overvalued

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Jason Hall: Hey everybody. Welcome to the 101st episode of Investing Unscripted. Where we answer and ask the hard questions about investing. Me, 101 times more often than my good friend, the voice of the people, Jeff Santora. Hey buddy. 

Jeff Santoro: How many episodes are you going to give that count on? Is it just the hundredth and hundredth first?

That's it. All right. 

Jason Hall: Yeah. Well, maybe in another century of episodes, I might do it again. 

Jeff Santoro: Fair enough. Fair enough. I'm, I'm doing well. How are you, sir? 

Jason Hall: I'm good. I'm good. I'm looking forward to this conversation. Last week was a fun conversation with Tim Hanson. We've got some other guests lined up in months to come.

I think that people are going to enjoy too, but this episode we're getting back to kind of just talking about some stocks. There's a little bit of like the mindset part of this, but we're going to talk about stocks a lot today. 

Jeff Santoro: Yeah. I love doing the interviews and I love answering mailbag [00:02:00] questions, but I also like when we just kick around.

Stocks and talk about the mindset and, and all that kind of stuff that goes along with being an investor, when to buy, when to wait, is the market doing this, is the market doing that? So I think this will be a fun conversation. 

Jason Hall: Yeah. And I'm going to admit right now, we're still in the working title phase for this one recording, we're recording it.

A good bit earlier than we normally do. I'm going to be taking some time off with spring break coming up where we live. So we're not going to actually say the name of the episode in the episode, but we'll have a name when it, when it goes out, that's right. Let's do the housekeeping. And then we'll talk about kind of the culmination of this, of this show.

Jeff Santoro: Yeah. So thanks again to those who've been giving us ratings and reviews on the podcast apps that I will continue to say that that's the most important thing and biggest way that people can help us grow the show and have more people find it. And those of you that have 

Jason Hall: not yet given a rating, thank you in 

Jeff Santoro: advance for the rating that you're going to give soon.

That's right. Nice. Well done, sir. I want to, yeah, [00:03:00] there's a positive. We could thank the people who've done it. I see that I see that you've given a positive review. We can do it that way. Like the condescending teacher way. 

Jason Hall: I will say this when, when I first cut you off, I was going to shame people, but halfway through it, I'm like, I'll just thank them in advance 

Jeff Santoro: instead 

Jason Hall: of shaming.

Jeff Santoro: I like that. So thank you in advance to those of you who have yet to give us a rating and a review. If you are new to the show, or even if you're not, don't forget that we can be contacted and connected with on social media. You can email us at [email protected]. We have a YouTube channel you should check out with episodes of the podcast, but also shorter videos on specific stocks and InvestingUnscripted.com will also get you a link to sign up for our newsletter, which gets you a transcript of every show and also a Sunday newsletter with Jason or my random thoughts. 

So that is all the housekeeping. Let us, let's dive in here. 

Jason Hall: The transcript, I just want to hit on the transcript too. It's not just, some people like to have the transcript to read along. But [00:04:00] also we put a lot of links. If we mentioned an episode or we have a guest on it, we have all of the ways to get in touch with people. So there's, it's just a good resource for stuff too. So that's useful. 

Jeff Santoro: Yeah. The newsletter is a better resource for more links than the show notes are. We, we will put high level.

Kinds of links in the show description, like if we have a guest on, we'll obviously put their contact information. But if we reference an old episode or talk about a book or another podcast, the trend the newsletter is where you can get really easy to click links to all that kind of stuff. 

Jason Hall: So Jeff, let's, let's talk about stocks.

The kind of the seed for this show was, and it's funny because this is something that happens with us where the market goes through its phases. And like, we've been rewarded as investors since the beginning of 2023 with a really strong bull market. but it feels like a lot of our favorite is to, you know, still relatively young investors who are still net contributing money and still measuring.

A lot of our [00:05:00] goals in decades, we're still looking to contribute new money, but we've also built up a certain amount of wealth and we're starting to be more mindful of, of the realities of things like valuation. And we thought it'd be a good show to just maybe kind of challenge some of our own biases about some stocks that we like a lot.

Maybe some of us like more than others. But for one reason or another, we just think they're. Too expensive. Maybe in a lot of cases too expensive to buy right now. 

Jeff Santoro: And this is something that I know as someone who's been buying individual stocks for a lot less time than you have, it's part of, I feel this is, this conversation is part of just my natural kind of evolution as an investor.

I've spent a lot of my time. Buying stocks. I have high conviction in butter at better valuations than when I initially bought them, but I was able to do that for a long time, primarily because I bought a lot of them in 2020 and 2021. We paid 

Jason Hall: way too much and then the price fell. 

Jeff Santoro: Yeah. And, and I'm not talking, you know, doubling [00:06:00] down on bad businesses.

Like I was able to buy some of these exact companies we're going to talk about today at much better valuations than where they are now, but still lower than when I bought them initially, if that makes sense. So. And they've gone up since then. So I know that that was the right decision. Those tax lots, those individual purchases that I was following that method on have done well.

I'm reminded of something that I think it was Lou Whiteman said to us once. It might have been on a group chat or something where he said he referenced two companies and basically said these are companies You buy it almost any price. I'm paraphrasing. He says something along those lines, like you don't wait for this one because his feeling was it's, it has such a momentum behind it.

And I mean, business momentum, not stock chasing momentum and so many tailwinds that you'd be silly to wait six months or eight months or a year. To wait for that better price because you may never get it so I think that's that's a lot about what we're going to talk. That's a lot of what we're going to talk about today.

Jason Hall: I think so. And I want to [00:07:00] take that statement. I want to invert it too, because I mean, there's a lot of hyperbole when somebody says something like that, but when you invert it to me, inverting that specific phrase, the takeaway is. You're wasting time and missing opportunity trying to wait for the perfect price.

Jeff Santoro: Yeah, and and we've quoted David Gardner on this before he's fond of saying “only dips wait for dips.” Now that's his investing style. It's very much Buy the thing and keep buying it as it goes up. Yeah. But I think that's worth considering, you know, and we've talked about it on this show where there's been a company that we've both agreed as too expensive.

And then six months later, it's up a hundred percent, you know? And it's like, you know, and, and that, that doesn't always happen, but. You know, so it's not, it's not as simple as it's at this price to earnings and therefore I should or should not buy it. Right? 

Jason Hall: Yeah, no that's exactly right. I think part of it too.

Is it you know, capitulating to pay a higher price is not the same thing. And we're not saying [00:08:00] throw discipline out the window. And just YOLO your way to millions. That's not at all. What we're saying is what we're going to do is we're going to take these stocks these companies we've identified.

And I mean, we could have come up with a list of a hundred and we're just trying to pare it down a little bit so we can have more kind of depth of conversation about just a handful of companies that we think are representative of. Valuation. And a couple of them, I think we're, we might come to different conclusions.

Okay. Then one another, which I mean, again, that's what makes a market. But also it's, we're not going to come through all of these and say, yeah, it's definitely a buy. And we'll get in the nuance too, because that's important. What stocks 

Jeff Santoro: do we want to start with? So let's start with Kinsale capital, because I feel like that's the stock that.

Started this whole idea us talking about whether or not we thought it was too expensive because we're big. We're both big fans of the business. And full disclosure. And I can say this because we are recording well in advance of when this will be aired. I actually [00:09:00] just added to my Kinsale position this week.

So I made my decision about how I feel about its valuation, but I still want to talk through it because I much 

Jason Hall: for having an objective conversation about valuation here, pal. 

Jeff Santoro: Well, I want to have it because I could be very wrong. And I didn't double down or anything. It wasn't an enormous ad, but it was a little bit.

And I have to admit I struggle more with a company like Kinsale because it, it's not the smartest, as I understand it, to value it on some of the same metrics you might value Amazon or something like that. Because insurance companies tend to be more expensive. are just a little bit different in how their financials are, are set up.

So I know you know more about that than I do. So that'll be part of what we talk about before we dive in. I will give my simpleton understanding of what can sale does. And then you can, and then I'll correct it. And then you can, I was going to say, you can talk for 35 minutes and repeat what I just said with a lot more words.

But basically they're An insurance company that does a special type of insurance for oddball things. That's my one sentence explainer of them. So they insure things [00:10:00] like axe throwing businesses and what, you know, like random, random weird things that don't, that are a little bit harder to insure that, you know, they're not going to insure a target.

Jason Hall: Horse stables, for example. 

Jeff Santoro: Yeah. Things 

Jason Hall: that go cart places. Yeah. It's basically skydiving, you know, that kind of stuff. They call it excess and surplus. E and S is the, is the bucket that the insurance industry puts it in. And basically it's the thing that there's not. Like, vast quantities of that make it really easy to figure out the costs to insure, the risks.

Like, there's 

Jeff Santoro: millions of drivers on the road, so figuring out how to price auto insurance is a lot easier than how to price axe throwing. Companies, 

Jason Hall: right? Exactly. So as a result of that, Jeff it's kind of the island of misfit insurance. And it's not tiny. It's about 100 billion market, right?

But because there's so many unique cases again, you're not applying like a cookie cutter method to [00:11:00] the way you're underwriting every single piece of it. Policy it's a little more challenging, right? To underwrite well, right? So the big insurers, they tend to, maybe they dabble in it a little bit, but none really do a massive amount.

So for example, Kinsale, this is an interesting thing about Kinsale, Jeff, I think you know this is that they're a pure play in ENS. This is what they do. So, Michael Keough, the founder, he left James River. Another insurer to, to found Kinsel Capital and James River, I think maybe 60 or 70 percent of their insurance book.

They do other things to reinsurance. But there's 

Jeff Santoro: nobody else. It's a pure play, right? So they're competing against some pretty big companies. Big, formidable insurance companies, but for those big, formidable competitors, this particular type of insurance is just a small part of their overall insurance 

Jason Hall: book.

Jeff Santoro: Right. 

Jason Hall: And it's a tiny part, right? It's a thing that they do just because they're big insurance companies and they do casualty insurance and they're going to get calls, right? So they're going [00:12:00] to answer those calls and they're going to quote policies. Right. And I will tell you, this has been a massive, massive winner.

I was actually looking at my portfolio today. I think I've owned this stock since 2018 is when I bought it and it's up 600, 700 percent for me in that very short period of time. So you think it's an insurance company and it's up that much. Either you bought it, you know, for fire sale prices or the multiple has gone bonkers.

And when I bought it, I was kind of looking at the valuations. I paid a reasonable price for it. It wasn't super cheap. And yeah, we'll talk through the valuation now, Jeff, because I think that's kind of point of doing this. But the big, the biggest thing that's a big, massive thing that's driven the results is how much they've grown and how.

Cool. Damn good they are at writing profitable insurance policies.

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 So if you look at just a chart of their revenue growth. Or their net income growth or their earnings per share growth or their operating and free cash flow growth. I mean, [00:14:00] it's all up until the right pretty steadily over the past several years. So they've they've really, really kind of been crushing it for a while now.

Jason Hall: Yeah. So you think about, you think about the growth rates and the fact that multiples have expanded. And it's easy to price anchor on a stock like this and say, man, it's got gotten, you know, Crazy, crazy pricey. 

So let me talk, I'm going to use price to book value. Jeff, we'll start there for valuation. 

To demonstrate Kinsale as being a stock that is, Incredibly expensive. First I'll explain what price book value is. Why? Why? It's useful for something like an insurance company. Insurance companies write an insurance policy. Ideally, they make money on the policy. They make it make an underwriting profit, right?

So if they write 100 worth of insurance, ideally, they pay out less than 100 in claims, right? And what's left over is, is their underwriting profit. Kinsella has been very, very good at that. So, we'll start, we'll start there. Now the other [00:15:00] way that insurance companies make money, and this is the way most insurance companies make most of their money is that policy gets They collect the premiums right for all of their policies and they hold a bunch of money.

As claims come in and then they pay out the claims But in the meantime, and you know, they have policies that renew every day, right? So it's constantly churning that cash and that's called float all the money that they keep from premiums that they haven't paid out to cover claims it's basically perpetual interest free capital if you're a good insurer You And you underwrite really, really well.

It's incredibly safe capital too, right? Because you're not having to pay it out, all of it out in claims. So you're able to maintain a ton of it on your balance sheet. Now, the way you make money with it is you invest it. Of course you have to be smart and not take on risk. Because if you. Invest that float and then you lose 20 or 30 percent and then all of a sudden you have big underwriting losses.

Well, guess what? You just went out of business. So you have to be mindful of [00:16:00] taking safe bets when you invest the float. And for most insurance companies, that means things like really, really high quality bonds. So treasuries as a starting point a lot of stuff shorter term, because again, you don't want to be tied up.

For too long and things like when interest rates went up, older bond values got plummeted yet get slashed because the yields, right? So they have to do smart things like that to make sure you're not creating short term risk, trying to capture returns. And they've been generally pretty good at that.

But the thing is, Jeff, is that that float now is a lot more valuable today. Because, well, interest rates have, have gone up so much so they can make more money, but even when factoring that in, and for those of you who are watching the podcast if you go over to our YouTube channel, you can watch, you can listen to this and watch Jeff's pulling up some.

Charts from FinChat. We have a, we have a deal with FinChat too. Don't we, Jeff, people can save a little bit of money. 

Jeff Santoro: Yeah. The details are in our [00:17:00] show notes. If you use our code, you can, you can save some, I think it's 15 percent on a subscription. So check that out, but yeah, they have nice little visuals of all the stuff we're going to talk about.

So. 

Jason Hall: So the, again, the book is that book of insurance and the value of the float that it owns. So the idea is, you know, you the bigger your float is, the bigger your book of insurance is your book values, a big kind of underpinning for your business. I'm going to give you some numbers here. So here's a company.

That is a pretty good insurer that people know about Markel. Markel trades for, and they're interesting because they have kind of a little bit more oddball insurance that they do too. So kind of some interesting comps trades for 1.3 times books or trades for a little bit of a premium to book value.

Now AIG, the massive insurance company, giant trades for just over one times book, 1.1 times book value. You wanna hear what Kinsell trades for? 9.7 times book 

Jeff Santoro: value. Now I'm gonna put it back on the screen for [00:18:00] people who are watching and we can talk through it. Not only is it around, like you said, 9.

right now. Over the past, oh, I don't know, four or five years, it has not been below five or six, hardly at all. You, you have, and in fact, this chart goes back to August of 2016, and it still is not as low as some of the ones you just quoted. So this is a company that for Eight years has not been anywhere close to the valuation that you just quoted for these other companies.

And I think this is the crux of the conversation because 

Jason Hall: if 

Jeff Santoro: you had looked at the valuation of this company in August of 2017 and said 3.5 price to book a 3.5, I can go by insurance company X for half that you missed out on Hundreds and hundreds and hundreds of percents of gains and that's, that's the entire reason for this episode.

Jason Hall: Yeah. Well, let me throw another insurance company out there. I think is, is compelling [00:19:00] as kind of a comp in terms of the premium that's progressive. So progressive, of course, that is a massive auto insurer very great growth rates. Really good underwriter. They write really profitable insurance trades for about six times book value.

Right. So, and also unlike Markel, which is not just an insurer, that's their biggest business. They are also, I think it's called a baby Berkshire sometimes because they invest a lot of their float in actually buying whole businesses. And also they have a pretty big stock portfolio. Progressive is more of a pure play insurance company, right?

In its case, mainly an auto insurance is its biggest business. But again, you see the multiple start to come up. And so that multiple premium, this is going to bring it down to earth a little bit, Jeff on an earnings basis price earnings about 34 times, 34 times earnings.

Jeff Santoro: For Kinsale?. 

Jason Hall: For Kinsale Capital. Yeah. So now that starts to sound more reasonable when you think about the 

Jeff Santoro: growth rates, right?

Yeah. I [00:20:00] mean, just with, with no other context, 35 times earnings is still usually an expensive stock for, they have the growth and the profitability and the cashflow to back it up. It's not like it's 35 times earnings on a unprofitable SAS company. Like we would see back in 2021. It's 35 times sales, which is a premium for a premium insurance or insurance company.

So I think that's the balance. And I think that's the hard part about picking just a metric and talking about valuation. It's not, it's not that simple. There's more art to it than that. 

Jason Hall: There is, there is. And I think I want to put a little more context on it too. Just a couple more things before we both share a little bit of our kind of conclusions.

And you. You certainly did not bury the lead. The fact that you recently bought shares of Kinsale kind of says where you've landed on it, but there's some other things I want to talk about. And we've, we've talked about it before with other stocks. Kinsales, very much a growth story still.

Right. Growth rates have [00:21:00] been incredible. The CEO is cautioned as to those growth rates are going to slow. Yeah, I've seen that, right. We've seen that. However, this is the only pure play in the space. Of any scale, right, of any of any size. And it has less than one point half percent of the market.

So there is still an enormous, enormous amount of room to to, to continue to, to grow the business and take share. And, and they've clearly proven that they can, right? We've seen that based on the growth rates. So that's, to me is another kind of bullish thing. This is, you know, you've got a high executor to kind again, to kind of crib a little bit of loose comments.

Not a buy at any price business, but you're not buying, you're paying a premium price for a premium business and you're buying it based on their ability to execute, not your ability to buy it cheap. 

Jeff Santoro: Yeah. And if you know, just going back to this chart one more time, one of the things that you'll notice if you look at it is while there are times that it [00:22:00] is peaked.

Into the 12 price to book range. There are also times in the last couple of years, like let's just say since the pandemic where it's dipped down closer to five or six. So, and actually just not that long ago, it was down around 7.6. And the, 

Jason Hall: I believe in the fall after they reported, Results and their guidance.

They said, look, we're expecting growth to slow. And they did that quarter that it was slower than expected. The stock plummeted. It's it's up for like 60 percent from that low though, in less than three, less than three quarters. So, 

Jeff Santoro: yeah. And like, so I, I guess we can kind of jump. I'm going to jump anyway, whether you want to or not into my thinking for why I bought 

Jason Hall: there.

Jeff Santoro: Yeah, well, I, I kind of look at it like this. I have a plan in my head about how much I want to put into anyone's stock, at least right now, in terms of my investment and then kind of let the company do the rest for me. And. I'm not [00:23:00] anywhere near that limit that I have set for any individual stock with Kinsale.

So I might be overpaying right now. And to some level, I'm okay with that because I didn't. It's not like I put my full allocation into the stock this week. I bought some more. And to me, that's a way to hedge against the fact that like it could go up a lot from here and I will not have missed out, but it also could go down from here and it won't kill me or probably even put my position in the red.

Because I have a decent amount of gains built up from earlier purchases. And then if, if in three or six or nine or 12 months, I see a better opportunity to add more to it, I will. So I don't know if that's the right method. I could turn out to be completely wrong, but that's the way I'm approaching. I think all of the stocks we're going to talk about, but particularly can sell since I did just buy a little more over, 

Jason Hall: but I want to say this first in response, which said over overpaying.

Somebody might hear you say that and take over [00:24:00] pay and replace it with the word mistake. And I don't think that's necessarily the case for this sort of a business because again, this is about an, this is an execution story. More than a valuation story. You don't want to pay a terribly bad price, but prices that some of us were paying for some stocks back in 2021, for example, that were clearly, clearly way too much in terms of the multiple for what you're buying.

But I'm going to, I'm going to quote our friend, Brian Feroldi. If you're going to pay up, if you're going to overpay, if you're going to pay a high premium for a stock, do it when it's. It's still a small business with a massive opportunity. And I think that's the case, Jeff for Kinsale. Now you said this is a small holding for you and one that you're looking to kind of nibble and build your position out.

Ask, ask me, I want you to ask me where, how does it sit in my portfolio? And when was the last time I bought? 

Jeff Santoro: Hey, Jason, how does Kinsale sit in your portfolio? And when is the last time you bought some? 

Jason Hall: It's [00:25:00] my second largest holding. It's almost 4 percent of my portfolio. And I added 

Jeff Santoro: shares yesterday.

Alright, but let me ask this, because I think this is an important part of the conversation and it's something that I feel strongly about in terms of how people buy. How many times have you bought it? Like, how many different purchases have you made to get it to where it is today?

Jason Hall: I bought Kinsale 18 times. I bought my first shares in April of 18. I bought just about every other month in 2018 for about a year from early 2018 through early 2019. I bought just about every other month as I was learning more about it and I was steadily building out a position. And then I bought about once a year.

I've bought a little bit about once a year.

Ever since then, right? So 

Jeff Santoro: and that's I mean, unless unless you are someone who wants to spend the time is very good at the math side of it and feels very confident in your ability to determine the intrinsic [00:26:00] value of a stock, which some people like to do and feel confident with. I think. That that's the right way for most people to build out a position in a stock.

And as you can see, if it's a good company, who's on a good run, you can buy it 18 times and still have it be up whatever you said at the beginning, several hundred percent. I think where you have to be really careful evaluation, if you're like, I'm going to make every stock whatever, a 1 percent position in my portfolio.

And I'm going to buy all of that position. Now, then you have to be right. Cause if you did that at, you know, the all time high at the end, during the COVID peak, you know, for some companies, not Kinsale, but for some companies, they may never get back to that. Yeah. So you have to be really confident and really right.

Or I think you can take your time building out a position. And honestly, I, the other piece of that strategy that, I'm drawn to is you're learning more about the company as you do that, right? And hopefully building higher level of conviction and hopefully increasing your [00:27:00] ability to maybe see red flags or recognize something that might make you think.

Okay, maybe I'll wait a little bit before I add more. Maybe I'm in a wait and see mode because of this thing or that thing. So there's a lot of benefits to it. All right. What's next? So let's turn to something completely different. But another one that I know you are a big fan of, and I don't own yet.

We both own Kinsale, but. I don't own this one yet, and you do, and that is Trex. 

Jason Hall: Yeah, so Trex their core business is making composite decking 95 percent recycled polyethylene film and scrap waste wood. So they use trash bags as like, or shopping bags is like, this is, The representation of what they use, but the vast majority of them their input is like if you go on a Costco or a BJ's and you look up on the racks above and the pallets that are all wrapped, the shrink wrap, the pallet wrap, that's the main feedstock.

That stuff's really hard to recycle because the value is so low. And then lumber [00:28:00] producers generate massive amounts of scrap wood. So they have these really cheap feedstocks and they make a really high quality product that lasts decades. So consumers love it. The challenge Jeff is interest rates have skyrocketed.

So if you're going to build a deck or resurface a deck, it's a, you're going to spend a dollar, a dollar amount that has a comma in it. It could be a five digit purchase. A lot of homeowners don't just have that money laying around, right? So they're going to finance it or put it on a credit card or something.

And that's become cost prohibitive. We've also seen the residential existing inventory for, for housing market has just collapsed. There's no inventory. Right. And those are two things that put a lot of pressure on on Trex's business. Of course with the exception of kind of that, that pandemic pop, the stock at around $95 a share, how much has it gone up over the past, Year and a half? Doubled? 

[00:29:00] I think it's doubled from the time that I probably told you. Yeah, I wouldn't buy right now. And it's doubled.

Jeff Santoro: Yeah. I, I have not gone back and looked, but yes, there was a time when I was interested and you said you cautioned me that some, some rough times could still be ahead and I pulled my finger off the trigger. 

Jason Hall: Well, and you know, of course, I look like a terrible advisor from that period of time. Yeah. But, I was right about the business. Revenues fell sharply over the next couple of quarters and they told us they were going to fall. Right? So the business delivered exactly as management said that it would.

So Jeff, we have a business that it's, it's revenues went backwards and the stock price went up. This is a manufacturer too. So operating leverage is really important. So when revenues fall, their, their, their operating leverage falls and their profits usually fall a lot more than revenues. So now you have now the stock is 49 times earnings and about 38 times [00:30:00] cash flows.

Jeff Santoro: Yeah. So again, I'm, for those watching and we'll talk through it, I'm just displaying the price to earnings for Trex over the past almost decade. And. Again, another company that is rarely cheap, you know, I think this goes back to January of 2015, and I think the lowest it's ever been is 21 times sales are 21 times earnings, which, and that was in during 2022, when we had that big market correction.

So this is another one of those companies that. If you waited for what someone would consider to be a, you know, cheap valuation on a price to earnings basis, you may never, you may never get it. 

Jason Hall: Yeah. It's on average, it's traded for somewhere around 37 times earnings over the longterm. This one to me, Jeff is the one that's been most perplexing of the ones that we see.

Yeah. We follow because the price has gotten done so well while the business has 

Jeff Santoro: struggled. 

Jason Hall: Yeah, and I wouldn't say the business is struggled. It's again, because it's [00:31:00] cyclical, right? So there, there is, this is an interesting one, Jeff, because you have it is very cyclical based on consumer spending and, and the, the puts and takes of housing that, that affect its business.

But the secular trends are still very favorable over the longterm demand. Demand for home ownership is on, is on the rise. We know there's a lot of pinup demand. We also know that the housing stock in, in North America, which is its primary market, it's has some international expansion, but it's slower. Is old.

The average house home in the U S is 38 years old. We also know that younger buyers, like the core demographic that's buying homes are more conscious of things like the environmental impact of, of Purchases lumber. Well, you have to cut trees down for lumber. If you put a deck and you have to stain it, you have to water treated every year.

If you don't do that maintenance, it's not going to last as long. The chemicals are not great for the environment. Right? So there's that. Negative impact plus the fact that it's lower [00:32:00] maintenance. So you put all those things together and like the trends are very, very favorable for Trex to continue to take market share and grow.

But we're in a cyclical period where there's a lot of weakness right now. So anybody that's followed the semiconductor industry, there's some, it's the same thing, right? The secular story is wonderful. But there's cycles and industrial cycles, economic cycles that affect it. But the stock just seems like it's ignored the realities of the environment that it's in.

And I just keep thinking, convincing myself that being patient is going to reward investors with a better opportunity to buy. 

Jeff Santoro: Yeah. I mean, I'm assuming the reason that the valuation has not fallen more is that the market trade, you know, wall street writ large is seeing all the tailwinds that you just talked about.

And kind of seeing through the cyclical nature of the business and thinking to themselves, this is still a good long term business. But even, even that said, I, I am kind of surprised that we are [00:33:00] not at like all time high valuations for Trex, but not far, far, far off. You know, I, if this were trading more in the 30 range as it's like low quote unquote, because it's always kind of expensive, that would make more sense.

But you know, close to 50 times earnings is wild for a company that is a growth company and has all those tailwinds. But I don't know this one, I guess between Kinsale and Trex still feels. Kind of expensive to me and you know, you were right when you said, or I, I would have been right to buy back when I wanted to, and you were cautioning me because, but that's also when the valuation was near, not it's all time low, but kind of, you know, the lowest it's going to get.

Jason Hall: The stock was, was cheaper, but again, my concerns were about the business and I was not expecting. The market to look ahead as much as it has which has been a really interesting story and maybe part of it for me is a, is a lot of price anchoring here. This is my third largest [00:34:00] investment. It's just behind Kinsale.

Because I bought it a long time ago and it was, it's just been a really, really big winner for me, but I do think this is one investor should be patient with. 

Jeff Santoro: Yeah. And I want to look more this was on my watch list for a while and then it kind of slid off, which is why I've been struggling with, you know, Whether I should just buy the things on my watch list, so I track them better cause I love the story of this company and I believe in all the tailwinds, you know, I think in a world, especially when housing is constrained and more people are going to decide to stay where they are rather than move and deal with higher mortgage rates and all that, you know, you might be more inclined to redo your deck.

If you're going to stay in the house, then if you were thinking of moving, and I like the environmental aspect of the business, the fact that they're building a great product people like out of what would have just filled landfills is very appealing to me. 

Jason Hall: Definitely checks off that box for investors that want companies that they feel like they can root for.

Yeah. No doubt about that. 

Jeff Santoro: If you want companies that do well and do good, this would certainly go to the top of the list. And I've actually, I've heard their CEO [00:35:00] interviewed a few times and he's always really impressed me. Just a very no nonsense down to earth kind of, kind of guy. Not this not your stereotypical, you know, slimy CEO that you might have in your head. Well, he's part 

Jason Hall: of an interesting legacy too. Ron Kaplan came in and basically saved the business during the financial crisis. He was hired to come in as CEO and turn the business around. He didn't realize the company was like 30 days from being insolvent when they handed him the keys to the building.

But luckily was able to make some changes and then he retired, moved up to the chairman. His replacement. was the chief operating officer that he brought in from outside. And he eventually retired and moved up to executive chairman. And the person that he brought in is the current CEO. Who's actually one of the few people in the C in the, in the executive suite of the company that had been there prior to this massive change in management.

So somebody that understands the [00:36:00] legacy of the business, the struggles they had before and the culture that they've built. That's been so, so wonderful. Definitely just a wonderful business, but. Yeah, I think investors should be patient on this one. 

Jeff Santoro: Hey everybody, we'll be right back, but first, a word from our sponsors. Earlier in the show, you heard us talk about investing platform Public.com. That's where you can trade options with no commissions or per contract fees, and you get a rebate of up to 18 cents per contract traded. NerdWallet recently gave public five out of five stars for options trading.

If you want to see why, go to Public.com and start getting a rebate of up to 18 cents per contract traded. Paid for by Public Investing, options not suitable for all investors and carry significant risk. Full disclosures and podcast description, US members only.

All right, let's go to something completely different again.

And I think this will be fun because this is one. That we've disagreed on a lot in the past, but I've come to see your side of the story a little bit, but the story has changed also in the last couple months. So let's talk about [00:37:00] Apple. So you've long been a not a fan of owning this stock. 

Jason Hall: I've been wrong for a long time.

Jeff Santoro:Yes. And to be honest, I probably shouldn't own it because I am still 85 to 87% index funds in my combined retirement savings with my wife. So I probably own a lot of Apple passively. So the owning a couple hundred dollars worth that I do in my individual stock portfolio probably doesn't make a lot of sense, but I like the company.

I use all of its products and I just like owning it. So I do now I've not added to it for a while because even before you were pounding the table that it was overpriced, I was it, It did not rise to the top of my list because unlike some other companies that I had bought at very, very high valuations that I was able to buy at better ones, I timed most of my Apple purchases very luckily [00:38:00] through not knowing what I was doing because I was brand new during the pandemic and I, it was one of the first stocks I bought.

So I bought a lot of Apple in like April of 2020. You know, right as the market was, you know, not, it's not an excellent time to be buying Apple stock. Yep. Yep. Yep. But I will say this. So this is interesting in the March 2021 quarter, which is not their Q1, they're on a different cycle. They had revenue growth of 54%.

It has fallen almost continuously since then to. Year over year loss of 5.5 percent at the end of 2022. And then it is ticked back up to a whopping year over year revenue growth of 2 percent in the most recent quarter. So. Now what's remarkable is, I mean, this, that's just revenue growth. This company gushes cash and is insanely profitable, but in a, in a two year span, three year [00:39:00] span where revenue growth has really kind of fallen off a cliff, the stock has continued to go up and.

Was very, very expensive until recently when some bad news and regulatory stuff started to chip away at it expensive. It is, but not not where it was because I check on this one kind of frequently because I just think it's interesting to see when and if it returns to evaluation close to where I had purchased it previously.

Yeah, and. You know, at one point it was trading for 30 times earnings or something, and I don't think it's near there anymore. I'm going to look it up while we talk. 

Jason Hall: Well, yeah, I can, I'll tell you it's, it's interesting, right? Because really the period of time that I started to become a little more bearish on, on Apple was.

Late 2020 the stock, like every stock 2020 

Jeff Santoro: was trading for almost 

Jason Hall: 40 times 

Jeff Santoro: earning. 

Jason Hall: So, well, that's, yeah, that's exactly right. And, and what happened was the stock, like every other stock collapsed and it was a great opportunity. And then we saw massive bull run with so many stocks. And you know, late 2020 [00:40:00] and through a lot of 2021.

And my expectation was that Apple's revenue growth was going to slow very quickly because revenue growth has already slowed in the year. So before that, again, it was still growing, but it had slowed, but then revenue growth took off services. Revenue continued to grow at a very high rate that a couple of really successful.

IPhones over that early, over that, you know, during that period. I think a lot of people and a lot of companies were spending a little more money on technology because of the pandemic, right? So their business really was just executing incredibly, incredibly well. And I wasn't expecting the growth rates, revenue growth rates to be that they were.

And again, this is a hugely cash efficient business, right? Because those, those revenue growth rates meant that you operating leverage cashflow grew even more. But I was looking at the valuation saying this just doesn't make sense. So I'm going to rephrase my, my I wasn't [00:41:00] wrong. I was just early.

Jeff, I was predicting revenue growth to start to slow a couple of years before it really did. Right? 

Jeff Santoro: Yeah. And, you know, so I'm, I'm displaying now the price to earnings chart for Apple. And yeah, at the end of 2020, around the end of 2020, like the last quarter of 2020, it was trading up near. The high 30s price to earnings and it's now around 27, which is still not cheap, but you know, and it has recovered a little bit.

I think it's in the, in early 2023, it was, it was down closer to 20. But yeah, I, so I think with Apple. You know, I, we've talked about Apple a lot. I've written articles about Apple pretty frequently. And one of the bullish things for it is it's continuing growth in its services revenue, because that's all the high margin subscription stuff.

Apple music, iCloud storage, Apple arcade, Apple news. 

Jason Hall: Yeah. 

Jeff Santoro: And that's just, you know, You know, the more people are spending money on that, [00:42:00] the more cash and profits for Apple, because that's all super high margin stuff. They're not building a, you know, spending money on development and hardware to, to to get that revenue, but still even with that, you know, nice growth.

I mean, that's still only, well, it's a decent amount of their revenue. It's their second biggest piece of revenue after the iPhone 

Jason Hall: it's become their second biggest price. It has. Right. 

Jeff Santoro: Yeah. 

Jason Hall: Yeah. 

Jeff Santoro: So, but it's still not to the point where, like, you could say this is a software company. I mean, it's heading in that direction, but it's not quite there yet.

This is still first and foremost, the company that sells the iPhone. Well, and that's where, that's my biggest concern in terms of the valuation, which is, you know, how much better. Is the iPhone going to get, you know, like, I, I don't know when, remember when they lost that lawsuit several years ago about the battery life, like, basically, it was proved in court that they were basically like that every two years, right?

When your contract was up, your battery would start to [00:43:00] die. And they lost a lawsuit for that. And ever since then. I mean, I used to trade in my iPhone every two years, like clockwork, because by the time you got to that 20th month, the battery was terrible. And I've had mine phone for four years and it, it's great.

I'm in no rush to upgrade it. Like I watched the new models come out every year and they're a little better camera, a little better battery, a little better storage, you know, but I get all the software updates. 

Jason Hall: Well, those early, those early, the differences in performance and quality from the early devices.

So to every generation was like a real step change, right? And performance and quality, and there is definitely far more incremental now. And so I, I think when, when I think about Apples, a couple, a couple of things, so number one exceptional business. Absolutely exceptional business in essentially every way.

They still spend a lot of money on R and D. They still innovate. But they don't have to innovate as much now to be a disrupter because Apple's customers have two really, really important [00:44:00] things. They have money and they have loyalty. When you're in the ecosystem it's rare for people to move on.

The churn rates are very, very low because the experience is great. It's seamless. It works really well. From your iPhone to your. to your Mac, to your iPad. That's a big differentiator that they have versus other platforms. And again, the customers have money, right? So you get that loyalty that I think is so incredibly valuable to make this such a wonderful business, but this isn't a bit at any price sort of business.

I think to the contrary, most people. Probably shouldn't be buying Apple stock. Unless it gets exceptionally cheap. The reason Jeff, I say most people shouldn't is the reason that you've already said that probably the reason you shouldn't and the vast majority, unless you're like me, where you're essentially a hundred percent stocks, individual stocks, you're not, you know, your index fund through your 401k.

Right [00:45:00] now we TX no 

Jeff Santoro: index funds. Yeah. 

Jason Hall: Yeah. Yeah. So if you, if you, if most of your wealth is already in index funds, especially the large cap index funds. You've already got plenty of exposure to Apple, right? And unless the stock just gets crazy cheap and you see a great opportunity It doesn't, I don't think it makes sense for most people.

You're not, you're not creating value. You're not doing anything smart to create better value for your long term returns by just buying more 

Jeff Santoro: Apple. Right. I mean, to your point, I was lucky with my purchases and I have not bought it very frequently. And my entire position is only up 34%. I don't even know if that.

If those individual purchases are beating the market necessarily, because you know, the market could be up more than 34 percent since I bought some of those. Yeah, I agree. I think

it's hard to say, like, I don't know that they have to, I don't know that they have to be this like incredible growth machine anymore, but they, but then they also can't trade for, 30 times earnings. Yeah, 

Jason Hall: we haven't even mentioned 

Jeff Santoro: the fact that there could be some cracks in the thesis, right? If well, [00:46:00] so everything that we said in terms of like, maybe things to watch out for, I think are less important than the possible outcome of this regulatory stuff.

I mean, I, I tend to think that they're smart enough and have enough influence. To probably work out a deal with the federal government that they don't have to get broken up or something like that. But that deal, if that deal ends up taking away some of their alleged monopolistic power in the app store and stuff, that may be good for the business versus the alternative.

But it also is going to be a reason. Again, that you probably should wait for a better valuation, because that's part of the reason that the company does so well is because of their 30 percent fees and closed garden app store stuff, right? So, you know, this will take years to to play out. This is not something we're going to get a resolution on anytime soon, but when it does, I guess the best case scenario would be if if the administration changes and the suits just dropped, but assuming that [00:47:00] doesn't happen and it's pursued for the next several years.

They're going to either have to lose or go to court and try to win or lose, or they're going to make a deal. And if they make a deal, it's probably going to impact their business in some way, you know?

So anyway, I, I think I agree with you that this is not a business you pay for at any price individually, especially if you have index fund exposure. I am tracking its progress here because if it dips down to a reasonable valuation, I will buy more. I can tell you right now. 

Jason Hall: Yeah. And I can get that. Like I said, this is, it's an 

Jeff Santoro: exceptional business.

It's exceptionally profitable. I mean, look in, in early 2019 it traded for 12 times earnings and isn't Buffett famous for having paid around 15 for his 15 times earnings for his stake. It's at 27 now and we're in a bull market with a little bit of frothiness. I don't know. I could see a scenario where at some point in the next, let's [00:48:00] just say three years, we see Apple in the low twenties, high teens, maybe.

So maybe, but again, I, it's also just not one, you know, I just don't feel like it's when you have to go rush out and buy at any price for all the reasons we said. All right, let's move on. Let's do one or two more here. All right. What about ASML? So ASML is a company that makes the machines you have to have to make semiconductors.

And if you're talking about the most advanced semiconductors, they are the only company that makes that machine. So while all of the AI chip headlines go to companies like NVIDIA and more recently Intel, who's trying to compete with NVIDIA on these chips. 

Jason Hall: Yeah. None of them get 

Jeff Santoro: made. None of them get made without ASML. 

These machines are the size of like shipping containers and they are hundreds of millions of dollars each. So you have to have a full 

Jason Hall: time ASML employee on [00:49:00] hand when you're running these machines, right? It's it's yes, it's factory is full of people that work for ASML. 

Jeff Santoro: And if I remember correctly, this just, you know, I don't mean to keep calling out Lou here.

I hope I didn't misquote him, but I believe ASML was the company that prompted him to say, basically, like, this is a company that you don't wait for, because, and I tend to agree, this is probably, The business, I have the highest level of conviction in, because I, I just can't see a world in which they're not super important for the next decade or more.

I'm not obviously the only one who sees that, and therefore the evaluation of this company has also increased significantly. So I'm gonna, I'm gonna bring up this one too and we'll talk through it for those of, those of you that are listening. 

Jason Hall: So while you're pulling up the chart, Jeff it trades, it trades for about 46 times earnings right now. That's definitely not the most it's ever traded for. The thing to me that's so interesting, you talk about how necessary It's product, it's lithography machines are and I've mentioned it before, but [00:50:00] I really think people should should read Chip War. That's such a good book. I'm really, really enjoying it. 

At this point, it's not even somebody else trying to reverse engineer what they've done. It would be almost impossible. There's, I don't know, a hundred thousand individual parts in these machines. Most of them were specially designed by different companies.

Some of which they ended up acquiring because they weren't meeting their quality expectations consistently. And like the way that it makes light. So this, the latest, the new machine, the EUV machine, extreme ultraviolet. There's not a light bulb that makes these extreme ultraviolet frequencies, right?

There's not a device. So they worked with a company that actually uses a laser. And they had, first of all, they had to develop the laser to do it that shoots little pieces of tin and makes the pieces of it, tin, tin explode. And that's what generates these UV frequencies that cause the masks to, [00:51:00] and the chemicals, the photosensitive chemicals to actually paint the lines for the, on, on the semiconductors and they have to do it like, I don't know, 300 times a second or some insane thing like that.

That's just like, that's just one thing. Then it took like 15 years and billions of dollars to develop like the, the order of magnitude of difficulty to, to do what they've done to re recreate what they've done is impossible to measure. And as we move forward, like, cause we're still really like in phase one of rolling out these EUV machines, right?

We're like, you know, a year or so into it every year that goes by a higher and higher percentage of semiconductors are going to be manufactured with these machines. So that to me is the most compelling, like of the bull thesis things. That's it right there. There's more and more of these machines are going to be necessary.

Jeff Santoro: Yeah. And what I can't figure out is I've yet to hear a compelling bull case. I mean, I'm sorry, a compelling bear case for [00:52:00] ASML. And that worries me a little bit. You know, I want to hear the the other side. So if you're listening and you, and you have one, please let us know. And every time I do read about it and think about it and just kind of take a step back and consider like, okay, well, where will this industry be in five or 10 or 15 years, unless there's some brand new technology that comes around, I mean, maybe that's the biggest bare thesis is that someone else figures out a way to get the same job done through a different process.

And if I remember correctly, from way back when we had Nick Ross, a little on it. I want to say he referenced that there are companies trying to approach this from a different way. So maybe that works out. It's true. I don't know. Considering where it is right now, when I think about the fact that it's trading for 46 times earnings, my first thought is that's it, right?

Right. You know, like I but you know, I'm looking at the chart and it's, it's been as just over the past, you know, You know, whatever nine years or so, it's been as low as 20, 21, 22 at certain times, and it's been as high as 60 something, but I'm just, I don't know, I guess I'm just [00:53:00] shocked it's ever been as low as in the 20s.

Jason Hall: Well, the thing to me is that this is thinking about where we are, right? So you go back into the late teens, and EUV was the next thing coming, right? It was moving closer to commercialization, closer and closer and closer. And then the pandemic happened. And well, everybody needs a webcam. Everybody needs a computer at home.

Everybody needs more technology. Cause we're moving into this virtual world. That means everybody that's making chips needs more ASML machines. They need more parts from ASML. They need more service on the machines that they have in place. Right? So that was the big runoff that we saw in the stock in 2020, 2021.

And then of course, everything tech went bad for a while. And now we've seen the AI craze. So we've talked about this a little bit before, Jeff, but the semiconductor industry broadly is still in a bit of a downturn. 

Jeff Santoro: Right. AI is masking what would have been just a vast [00:54:00] secular a vast industry wide downturn.

Jason Hall: Right. Automotive industry is down. Industrial demand is down. All of that's down. Computer sales are pretty flat. Smartphone sales are very slow growth right now. AI is the only thing that's really, you know, that's really blowing the doors 

Jeff Santoro: off. But then, so then, but then here's another, here's another bull case, right?

So if the U. S. especially is very, is serious about near shoring and friend shoring It's semiconductor supply chain and reducing its reliance on Taiwan, which is. At any point at risk of being invaded by China, right? That means, you know, and they're already doing it as 

Jason Hall: well You know Korean Peninsula connects right mainland China So there's 

Jeff Santoro: yeah and there but there's companies that are building Fabrication facilities in the US right now because they've gotten big subsidies from the government to do so 

Jason Hall: Every 

Jeff Santoro: one of those fabs that gets built needs an ASML lithography machine or more than one.

I don't know how many does [00:55:00] her fat 

Jason Hall: dozens 

Jeff Santoro: Right. So, you know, I if nearshoring the semiconductor industry is a tailwind for the next 20 years, because you don't just build a fab in six months that, you know, it just makes me think that again, unless they're disrupted by some new technology, which is always a possibility, neither you or I are smart enough to know the likelihood of that.

It just seems like the tailwinds are continuous. I don't know. I, it's hard for me to find a reason to be. bearish on this company. And much like when I walk into Costco, I think to myself, why don't I own more of this stock? 

Jason Hall: Yeah, I'm, I'm, I'm absolutely not even in the realm of being, being an expert on this, but I just, I do think potentially one area where disruption could happen is if quantum computing becomes more of a thing.

But I don't even know enough about. That 

Jeff Santoro: well, that's never stopped you before. 

Jason Hall: No, of course it hasn't. But, but I, I do think, I think it's one of the things that like, there's the potential for something like quantum computing to, to displace it because you don't need semiconductors cause you're not doing [00:56:00] ones and zeros anymore.

So you don't need semiconductors in the way that we use them today. I should say you still need analog semiconductors to manage power and, you know, the semiconductor industry would still play a role. But eventually I think the point I wanted to make is that eventually it's going to be disrupted, but the question is.

Is it going to be disrupted by external forces or is it going to innovate, right? Is it going to be, is it going to disrupt the EUV by developing the thing that comes after that? So, you know, that's, that's the thing we're going to learn. And it's in the, I think it's interesting because in the culture of this company, from its founding.

To always be looking over your shoulder. 

Jeff Santoro: Yeah. I mean, you've remarked that before that even when, even when demand is down, they, I think I looked it up once, their R and D spend as a percentage of revenue is almost static. Like it's always the same. So like they don't ever really seem to take the foot off the gas pedal on R and D when the business cycle slows down, which is probably why they're in the position that they are.

[00:57:00] So yeah, you would hope that management, cause I, you know, they've already built the thing. Yeah. They've already built. The, the EUV machine that everyone needs and they have a backlog. So it's not like, you know, they, they have plenty of demand out there to just keep building the thing. So they have nothing else to do with their R and D money other than try to think about the next thing.

And I think that's a great place to be, you know, they have the thing everyone wants. They just have to, and I can't build it quick enough to keep up with demand. So they have all this, Other R and D time to think about what's next. So 

Jason Hall: my inclination is that they also see opportunities where they can make incremental improvements to honestly, they can do that and continue to work on the next thing.

So I think both of those things are going to be true. 

Jeff Santoro: So let me ask you, we talked about Kinsale Capital. We talked about Trex. We talked about Apple. We talked about ASML. If you, if you had to bucket them in the probably okay to wait for a better time versus probably okay to buy at almost any price, how would you, how would you stack them up?[00:58:00] 

Jason Hall: Yeah. So I've been very wrong about it so far with Trex, but more recently I've been wrong, but over, I followed the company for over a decade. And I can tell you that because it is a cyclical business and sentiment can shift I feel strongly that there'll be better opportunities to buy Trex.

I really do. As a shareholder, part of me hopes I'm wrong. But as somebody always looking to deploy more capital if I'm right, this is one that I would add to ASML is really interesting because it's a cyclical industry. It's a very cyclical industry. And we look at the volatility of its stock And it's riding the high of AI right now, because if you look at its business results, they're not spectacular.

They're fine. Right there. And they're held up by the orders that were placed last year and the year before that they're just now being able to build their way into fulfilling. So there's part of me that says, ASML is one that you can be patient with as well, but I don't think it's one that. Yeah. You wait for it to fall to 15 times earnings because that's, I don't think that's going to happen.

But I do think it's one [00:59:00] also that you pay 46 times earnings at this price and five or 10 years from now, it's probably still going to have worked out pretty well. 

Jeff Santoro: Yeah. I think what I would say about. ASML is, there's probably very few price points where you would not make money, if that makes sense.

Like maybe like the very high extremes and everywhere else is just varying degrees of money made. And again, if you're, if your timeframe is decades, then you obviously have more opportunity to recover from maybe a higher purchase price. Right. I, I guess the next one I would put. In order if I was ranking them like by now versus wait for a better price, I guess I, I might put Kinsale next just because it, the growth has not slowed down at all.

It's still putting up 30, 40 percent revenue growth every, every quarter and the other ones. I, I think I agree with you. You can just wait or, or buy little bits, maybe dollar cost average into Trex. I guess I would, I would agree with you on Apple. I think you, you wait for, I think Apple is one you can wait for, especially if you have index fund.[01:00:00] 

Exposure. 

Jason Hall: I'm just so remarkably uninterested in owning Apple. I know. This is, well, 

Jeff Santoro: this is the big thing that you and I argue with, like, I like the fact that I own Apple. Like it just makes me happy. 

Jason Hall: Yeah. I don't give a damn. So I don't. For me, Kinsale is the one, all of these, I think is the one that's the most, you can buy it just about any, not completely unreasonable valuation.

And after five years, you're going to be super happy. Yeah. To me, it's the most buy at any price stock of this group. So you'd put that above ASML. Yeah, I think so. 

Jeff Santoro: Interesting 

Jason Hall: because of the cyclical nature, but insurance can be cyclical too. It can, but the difference ASML has the market. Kinsale has 1 percent of the market.

So the margin of safety there is enormous. Do you're not going to see disruption? Like there's that little tiny sliver of a risk of disruption for ASML that just doesn't exist for Kinsale in the same way. 

Jeff Santoro: I guess, but then I think what I would [01:01:00] push back is. There's no competition for ASML, and there's a lot of competition for Kinsale, right?

Think of it this way. They've been crushing it for years now, and they have a small percentage of the market. Yeah, so they started from nothing. I get it, but I guess I'm just saying like, is there a scenario in which Kinsale puts up 20 to 40 percent revenue growth quarter after quarter for the next five years and gains 3 percent market share?

Jason Hall: Probably they- 

Jeff Santoro: or some small amount. You know what I'm saying? Yeah, because it's a competitive

environment.

Jason Hall: They go from 1 percent of the market share to 2 percent of the market share. But that's kind of my point. That's how big the opportunity is. 

Jeff Santoro: . Yeah. They're doubling their market share if you want to look at it that way. 

Jason Hall: Yeah. Right. Right. And they still only have 2 percent of the market. Yeah. Yeah. Yeah. 

Jeff Santoro: Well, listen, no one should do anything based on what we're talking about here, but this is, I think talking through it is, it's part of the fun, fun part about having the podcast and talking about these stocks. So

Jason Hall: Investing Unscripted, where we have a podcast [01:02:00] because we like to talk. 

Jeff Santoro: I mean, let's be honest. That's why we do this. Both of us like to hear ourselves talk.

Jason Hall: Entirely. Entirely. But, Jeff, I think we've talked enough for one episode. 

Jeff Santoro: Yeah. This has been a longer one than usual, so let's wrap this thing up.

Jason Hall: Since we're done, I'll say the thing and we can do the thing. We did a lot of sharing our answers to the hard questions about investing in stocks that can look expensive.

We have good answers. They're useful answers. For us. Your answers need to come from you, but you know what? You can do it. Even 101 episodes in Jeff, I still believe in our listeners. They can do it. All right, pal. We'll see you next time. 

Jeff Santoro: See you next time. 

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