The Smattering Podcast 73: The Smattering Portfolio 2023 Q3 Review, and Nick’s Picks!

The Smattering Podcast 73: The Smattering Portfolio 2023 Q3 Review, and Nick’s Picks!

Jason Hall: [00:00:00] Hey everybody, welcome back to The Smattering where we ask the hard questions about investing. I'm Jason Hall, joined by the voice of the people, Jeff Santoro, Jeffseppi. Hey buddy.

Jeff Santoro: How are you? Hey, I'm good. How are you doing?

Jason Hall: I'm wonderful. I'm doing wonderful. And I'm, I'm starting to get an itch to do something about our 1970s era adult film intro music.

Jeff Santoro: I like it. I think it's uh, classic.

Jason Hall: I mean, that's, that's, it sounds old.

Jeff Santoro: Well, we now have a theme song for our Rough Cut episodes. Thanks to the wonderfully talented Tom McGovern. So maybe we maybe sometime down the road we, we, we get a new intro for the podcast.

We'll have to think about it, find the right, find the right thing.

Jason Hall: Is that code for, you need to ask your wife if you can spend some more money?

Jeff Santoro: No, no, no, no.

Jason Hall: It is for me. It is for me. Maybe I'm projecting. Maybe that's...

Okay. So [00:01:00] it's, it's our, it's time. It's time for our The Smattering 2023 portfolio contest monthly review.

Jeff Santoro: Quarterly review. We are going to talk about, that's right. That's right. Yeah. It's monthly and quarterly, but this is the, this is the more in depth dive. We're going to talk about Q3 results for all of the different portfolios within the Smatterfolio.

Before we do that, thank you again to those who have been giving us reviews and ratings on the podcast apps.

We got another one recently, which I'm gonna find and read in a second here, but just to recap the best way for people to find the show, which is the goal of both Jason and I is for them to be, have it served to them on the podcast apps. And that happens when you give us ratings, when you give us reviews is really helpful.

And I want to thank everyone because as we've been pitching this a little bit more regularly over the last couple episodes, we've had our number of reviews go up by about a dozen. So thank you to those of you who have helped us out. We really appreciate it. Our [00:02:00] most recent review on the podcast apps is from Michelle, who is also a Twitter follower of ours, Jason.

And she wrote, "if you're looking for a fun and interesting financial pod, give The Smattering a shot. Jason and Jeff are relatable guys. It's as if you're casually hanging out as friends as they discuss investing topics."

So thank you, Michelle. Very kind of you to say. If anyone else wants to be mentioned live on the podcast, feel free to leave us a review.

We'll read it. We'll read your name. And we really appreciate the help. All right. Shall we dive in? Let's do it.

Jason Hall: Let's do it. Okay, so. Wait, wait.

Jeff Santoro: What? What?

Jason Hall: Who's, who's ahead? Who's winning, Jeff?

Jeff Santoro: I'm getting there. I'm building up to it. All right. The Q3 winner, meaning the portfolio with the best performance.

Jason Hall: Wait, don't we have sound effects?

Jeff Santoro: Oh, we do. We have sound effects now. All right.

Jason Hall: Come on. You have one job. Okay, you have two, like five jobs.

Jeff Santoro: It's Jason.

Jason Hall: It's me.

Jeff Santoro: Jason won [00:03:00] Q3. So just as a review, we do quarterly winners, and it's not year to date. It's the winner for that quarter.

So this is the best performance from July 1 through September 30th. And this is the best part. And this is going to spur. The conversation-

Jason Hall: I won the race jumping out the window.

Jeff Santoro: Yeah. So Jason's winning return was negative 7. 7% which tells you how the portfolio did overall.

He is also the year to date leader. So from January 1st through the end of Q3, Jason has is actually has taken over the unportfolio for first place. He's at a return of 26%. So still a good year so far, Jason, for your three stocks, despite a rough third quarter. Here are the other results very quickly before we do a deeper dive.

So For the quarter. Jason was the winner. I mentioned to real quick.

Jason Hall: Just a reminder, show notes in the, in your podcast app, you'll see the link to the, so if you want to review [00:04:00] that while we're talking through this, you can pull that up. The Google sheet link is right there in the notes.

Jeff Santoro: Yeah. And it's, and there's different tabs.

There's the overall. Spreadsheet and then there's the quarterly winners, the monthly winners, the Magnificenter Seven portfolios are on there. If you missed that episode, that was three or four episodes back. You can go back and check that out. But yeah, everything's in the show notes on a Google sheet that's available for anyone who clicks on it.

So Jason won the quarter with. A negative 7. 7% return in second place was the team audience with a return of negative 8.3. Third place was The Smattering portfolio, which is the one Jason and I chose together with a return of negative 8.4. So it was close. The on portfolio is in fourth place with a return of negative 16%.

And as I'm sure you will point out many times over the next three months, I am in last place for the quarter with a return of negative 17%.

Now for the full year. It's Jason in first, the unportfolio in second, me in [00:05:00] third, the audience in fourth, and Team Smattering in last place. So that's where we are January 1st through September 30th.

Jason Hall: Alright, other quick, just a reminder, a reminder too for the unportfolio, for those that haven't listened to the episodes where we roll this out and explained it. The goal for that portfolio was actually to do bad. Right. So that's, that's the key.

And if it wins, I made like a pretty big, bold offer of the amount of money that I was going to give. Like if that portfolio actually won, I was going to give like a thousand dollars, it was like a pretty big money I was going to give to the charity of the...

Jeff Santoro: I think it was the audience's charity, audience portfolio, right?

Jason Hall: It was pretty, pretty big. So like I have significant incentive to do better than the unportfolio, which Jeff has totally screwed me on, but that's...

Jeff Santoro: Yes, I thought more about stocks I disliked versus stocks that would do poorly, although I, again, I did think they would do poorly. But you chose rock solid, poor picks. I just picked ones that I didn't like that I [00:06:00] thought wouldn't do great. And I was completely wrong. They've been doing fantastically. So.

Jason Hall: Narrator: Jeff's bad stocks did the best. They're the best two stocks in the portfolio. They should be the worst, but yeah.

Jeff Santoro: So, all right.

So, other real quick little tidbits for the quarter. The best Q3 stock in the entire portfolio was CrowdStrike. That was up 14% over those three months.

Jason Hall: Who's portfolio was that in?

Jeff Santoro: That is in yours, I believe.

Jason Hall: Yeah it is.

Jeff Santoro: The worst performing stock of the quarter. And this is probably why I was in last place, was Outset Medical. Which was down 50% in a quarter. It got cut in half. In three months. So I'll talk more about that later. And the best year to date is still Meta up 149%. And the worst year to date is AMC down 78%.

Jason Hall: Meta, one of your, your, unportfolio picks. AMC, one of mine, I'm so much better than you at this, Jeff.

Jeff Santoro: Yeah. So as a, as someone who claims to be a long term oriented investor, [00:07:00] Jason does a pretty good job of touting his short term returns, which is fine. Everyone has their flaws. We'll see how this portfolio.

Jason Hall: I am a horn tooter, buddy. Lemme tell ya.

Jeff Santoro: Well, so there's a lot of places we could go with this conversation Jason. We, we were. Laughing at the results this quarter versus the last quarter, because they were so ridiculously different.

So having heard all the headline numbers and looking at the spreadsheet and all that stuff, what were your initial thoughts about the Q3 results here?

Jason Hall: So the first thing, and I know you're going to weigh in on this too, but it's exactly that. It's like, one of the things we talked about a lot, just about every month, since we got to like the third, fourth, fifth month, really once it was, the year started off so well, is things could go bad the rest of the year and still end up being a good year overall. And that's, that's exactly playing out and it's, it's unsurprising.

But I think it's also such a good reminder why you were [00:08:00] poking fun at me about, you know, touting my short term results here and being long term focused, why with a contest like this, there is a, just a tremendous amount of, of luck for lack of a better word that goes into play.

It's just, you know, sure. Sometimes there are just deep value opportunities that you see that the probabilities are very favorable for a quick return in the short term. Just the market's gonna be like, wow, that was a terrible valuation. And even though it's one of the unportfolio stocks, that's kind of what's happened with Meta, right? It was dirt cheap by every objective measure in December when you picked it.

But the thesis was they're going to keep absolutely incinerating money, throwing billions and billions of dollars into Metal labs, whatever their, , their VR business, reality labs, reality labs, right. They're virtual reality business. And they've substantially cut that cost. And the whole year of efficiency has actually been a tangible year of efficiency, right? So, it's, [00:09:00] they got it right.

Jeff Santoro: So I would encourage anyone listening to go back, find, actually go into the show notes and open up the spreadsheet because when you look at the year to date results tab, which has every month, you can, and we'll talk about. I'm not going to give any specific numbers now. We'll talk about it when we get into each individual stock.

But it is, you don't really think about how much some of these stocks can move around within just a year until you look like, Oh, where was it at the end of every month? Or where was it at the end of every quarter? It's, it's pretty astounding.

And the funny thing is, even after a quarter where the best performing portfolio was down almost 8%, we're all still, except for the team smattering portfolio, everything is still up for the year. Your team audience is up 22% for the whole year. You're up 30, I'm up 23. The, on the unportfolio is still up 26. And then the team's mattering one is down six. And those are through the end of September.

So it just goes to show you, like, you can have a [00:10:00] down quarter or an up quarter and not necessarily change the, the overall year too much if it happens later in the year. So yeah, there's a lot of, I've found this to be really eyeopening because as much as I track my portfolio, I don't really ever look at it like this and it's been, it's been really eyeopening.

Jason Hall: I have nothing to add.

Jeff Santoro: All right, Charlie. All right. So let's dive in. We'll start with team audience's portfolio, which to review was Brookfield Infrastructure Partners, MercadoLibre and Taiwan Semiconductor. So Jason, I have a couple of thoughts on MercadoLibre, but do you have anything about Brookfield and or Taiwan Semi to about how they did, anything you remember from the earnings that came out over the course of this quarter?

Jason Hall: Yeah, I, I just, I want to focus on kind of the overall with both of them, the macro environment and everything that's going on. So starting with Taiwan Semiconductor in [00:11:00] stock still up, and this is through today, we're recording this on the 4th. So this is a little bit more than what it's showing through the end of the quarter, but it's up mid teens, which is solid. That's, that's a great return. And that's even with the backdrop of the, the semiconductor kind of the down part of the cycle and they're benefiting from everything with AI at the same time, like a lot of semiconductor stuff is not doing well, the AI demand is really helping give them some uplift.

So it's a reminder of like, how critically important they are, like that whole David Gardner snap test, they're one of a handful of companies in the semiconductor industry that are so massively important to the entire modern world. So I think that's just why it's one of my favorite companies in the semi space, because they're just so important.

Looking at Brookfield Infrastructure, I mean, this is like a cost of capital story. It's things are, money cost something now. And if you look at Brookfield Infrastructure, this whole on the recent Rough Cuts that we did, where I basically said, everybody has to [00:12:00] read 10 K's or they shouldn't buy individual stocks.

We've gone through this amazing period of time where cost of capital was very, very low. And for a company like Brookfield Infrastructure, that's incredibly beneficial. Debt's cheaper, right? Their stock price was relatively elevated for a lot of that. So they could issue secondary offerings, you know, and their cost of capital for equity is basically the dividend yield, right? So their cost of capital has been very, very favorable.

And the market's down. It's down a lot more, the other Brookfield entities it's down a lot more on, I mean, they're down big time. But the market's trying to figure out how much does cost of capital going to affect them as an acquirer? Cause they've been really good at acquiring assets, these long lived assets and using a lot of debt to do it. So the market is still trying to figure that out. So it doesn't surprise me on a year like this, that it's, that it's down. .

And honestly, I wasn't considering interest rates enough in the beginning of the year when I was thinking, when I was thinking about companies like Brookfield Infrastructure, because this is one that was really high on my list to choose. I'm kind of glad those knuckleheads in our [00:13:00] audience picked it before I could have, because I probably would have. I probably would have picked it over maybe Trex or something.

Jeff Santoro: It is, we, it's hard to put yourself back in the mental space that we were both in when we picked these because everything, so much has changed just in the past, nine months.

So the other stock in the audience's portfolio, MercadoLibre. The first thing that jumps out to me before I talk about how it did this past quarter is how, pretty consistent it's been throughout the year. So it's January return was 40%, which is ridiculous for a month, but it has never been above 62% or below 40% in any month since. So it's been pretty consistent in terms of its return whereas some of the other stocks we'll talk about have really fluctuated.

And when you look at the actual results, I mean, you see why everything, every metric for growth that they report for the marketplace business or the FinTech business was up double [00:14:00] digits. Pretty much almost everything was up double digits. All the important things you want to see, unique active users gross merchandise volume, item shipped, item sold, all that stuff, double digit increases.

What I've been really interested to see is again, when one of the things we've been watching with a lot of companies as interest rates have gone higher and money is no longer free is who can become profitable, who can keep building profits and not just rely on revenue growth and revenue growth for MercadoLibre is still really strong, but over the past 5, 6, 7 quarters, their net income and net income margin and earnings per share, any way you want to look at it, has just steadily ticked up. Now, they've been profitable on and off for longer than that, but if you look at it like a chart, it's it's a pretty marked difference in how it's done over the past 5, 6, 7 quarters. So that's really interesting to me.

They're the leader in that space. They are still growing the top line pretty strongly, but I'm really encouraged to see the bottom line grow as well.

Jason Hall: Well, there's one more thing about MercadoLibre with interest rates that I think is [00:15:00] important. Now the, we tend to look at international investments through, a U. S. lens and a European lens where, you know, we have similar economic tools in the tool belts of those that manage the economies and manage money and that kind of thing. So the interest, the way that interest rates have changed, have been kind of in lockstep in most of the developed world.

And there's a lot of places in Latin America where MercadoLibre does business that have been dealing with rampant inflation for years on and off at different times and interest rates much higher, much lower in different times while we've just seen what's happened in the U S happened. And we just think it's the same way the rest of the world. That's not the case.

And I think that's really important to remember. These people are really, really good at knowing their business. Having local executives and operators that know the markets they operate in really, really well. And part of their FinTech business is lending. So they're positioned in higher interest rate environments as a lender, to benefit.

They're a capital provider, right? They're [00:16:00] not, they're not reliant on debt markets to operate their business or to fund growth. They're a capital provider, and that is a unique, substantially beneficial position to be in, that a lot of tech companies just frankly, they don't have that, that kind of position to be in. So it's another thing I like about MercadoLibre.

Jeff Santoro: Yeah, not that anyone should do anything based on what you and I think, but I often find myself struggling to find things about MercadoLibre to be overly worried about because they've just been such strong executors So, I mean, I know there's risks, but it's one of the ones I've been most happy to own in my own personal portfolio. All right, let's talk-

Jason Hall: I'm confident enough to say, Jeff, that I can predict that at some point they'll do something wrong and somebody will cover it very well, and then I will tell people all about it.

Jeff Santoro: Well, I will look forward to that moment. All right, let's turn to the, The Smattering portfolio next. So this is the one that you and I chose together. We agreed on all three of these stocks. It is, it [00:17:00] is, if I've learned anything over nine months, is that so far you and I are not good combined stock pickers.

Jason Hall: Let's stick with the podcast and not start a private equity fund.

Jeff Santoro: Yes, we will not be starting a fund anytime soon. So the one I think out of the, so the three stocks in our portfolio for the new folks who are listening Boston Omaha, BOC is the ticker DataDog, DDOG and Simon Property Group, SPG.

Let's start with Boston Omaha, because I think that's the one that you and I really like, and has done the really worst this year. What do you think has gone wrong with the, not with the company, but with the stock price where a DataDog ended September down 38% for the year? I mean, Boston Omaha ended the, the month of September down 38% for the year.

Jason Hall: I don't really know, to be honest with you. I think part of it is that it's, the insiders own a pretty significant part of the company shares. It's not large on a [00:18:00] market cap basis. So you take the market cap, less the stock that's held by insiders. There's just, there's not much float.

There's not much wall street coverage. They don't try to do a lot of promoting of the business. And a lot of the things that they do are just boring, relatively capital intensive on the front side. So like deploying fiber for high speed internet or, acquiring billboards for their, their ad advertising business. Operating costs are lower for those, but there's capital requirements.

And we just talked about cost of capital. So I just think the market's down on it because the market hasn't really figured out how to value it well. Or maybe, here's the other way to think about it. And Jeff, maybe this is more true because I'm thinking about a little bit from a, I bought the stock when it was more expensive so I have a bias that way. [00:19:00] 

Maybe it's the thing that has changed is the market maybe has figured out how to value it more appropriately based on the headwinds and a need to be conservative with a company that's going to focus so much of its growth on acquisitions, which is a hard, hard way to grow. And until they've proven it for a longer period of time where you start generating like substantial free cashflow, then maybe the market's just saying, you know what, we're just going to, we're going to devalue this.

Jeff Santoro: So, yeah. And I think you hear people who like the stock talk about the co CEOs as being great capital allocators, because maybe the person saying that has liked the moves they've made in terms of going into broadband to begin with or starting the asset management part of the business, which is still even newer than the other things.

And what I wonder though, is because the [00:20:00] returns, like the return on capital and the results of the stock would dictate that maybe they have not been the best capital allocators in terms of, like, it hasn't come through the, on the financial statements yet. But then I guess the other side of that argument is, well, maybe it will.

And this is like you said, there's just some expenses upfront that they have to fight through and get passed for the first several years. I know that's the optimistic take because you and I both like and own the stock. But you're right. I think maybe it was overvalued and now it's being price more appropriately.

But I try to think big picture with Boston Omaha, as long as I see them growing those, those pillars, those pillar parts of their business, the broadband, the billboards, the insurance, doing interesting things that generate cash in the asset management side. I'll keep owning not a big position for me, not a big winner in this portfolio, but it's only a one year contest.

All right, let's move on to DataDog. This one has actually gotten better over the year. The first couple of months, little, little dicey, what single digit returns, and then down a little [00:21:00] bit. But got to the end of September up 24% for the year.

Still I, again, it's almost like I just think they keep executing every quarter. Quarter quarterly results come out, I look at all the numbers. It seems like things are heading in the right direction. What's your take on it?

Jason Hall: Yeah, it's security, right? It's internet security data security, great business, important. It definitely took it a little bit longer to bounce back than CrowdStrike, for example. Stock fell a ton mid, late, mid late summer, you know. I think it was up 56% at the end of the first half of the year, maybe the end of July, it was up a ton. It's, it's one that I just I don't have any concerns about Datadog. I really don't. I

think it's very well run. It's an important business, like I said. The growth rates are slowing though. We're seeing growth rates are slowing.

Jeff Santoro: But everyone's growth rates are slowing. I'm very interested to see with Datadog and with a lot of other companies that have seen, like we say growth rates are slowing [00:22:00] with a lot of these companies. But there, the most recent quarter for a lot of them has been 25%, 35% growth, which you would, if someone told you-

Jason Hall: They're growth rates most companies would love to have.

Jeff Santoro: Exactly. So what I'm very curious to see with a lot of these companies, and it could take another several quarters is where does that level off? Like what becomes normal growth? It doesn't ever reaccelerate. Does it hover at 20? It was 25% for DataDog in the last quarter. Does it stay there? If it does, great.

What jumps out to me with DataDog is it had a long path up to profitability, and then a big crash back down and now it's building its way back up towards profitability. So I'm interested to see where that goes.

But they've been a very steady cash generator on the free cash flow and operating cash flow side. And that's gone up a little bit more consistently over time. So, yeah, same with you. Everything's looking on track with that.

All right. Last one in our combined portfolio. Is Simon Property Group, the, the owner of the good malls is how we've been, how we've been talking about it. [00:23:00] But what's your thoughts on their quarter?

Jason Hall: It's another perfectly fine quarter, right? They delivered good results. Their, their occupancy rates are relatively high. Their tenants are generating good revenue per square foot. Balance sheets pretty, they don't have, I mean, they don't have a bunch of debt maturing over the next year, so.

Eventually higher interest rates are going to affect them. And there's there's just concerns, right? There's, let's face it. If you're, if you own a mall, if you're a mall owner, like Simon Property Group, the, the Damocles sort of the internet is always going to be swinging back and forth over your head. The idea that e commerce is going to take away your business.

But we just, I don't think that's ever going to prove, I don't want to say ever, because society changes and things change over time. But the idea that we're going to be 100% buying everything online forever at some point just doesn't ring true because we're social beings. People go out.

And Simon has done a good job with two things. Number one, they've grown their[00:24:00] their premium outlets business. They have the largest premium outlets portfolio of properties in the, in the U S. So they've done a really good job with that.

And that's important for like omni channel these brand owned and operated stores, right? They, they want to control their future. They want their store with their name on it, and, as well as having their products in macy's too. They want to be online and they want to sell on their online platform. So Simon's done really well there.

The other thing, Jeff, is they've done a really good job with experiential, making that restaurants, bowling, things that people want to do to go out and have an experience together. That, I think is going to be a big part of the future for Simon and other mall type property owners that succeed.

And I think Simon's done a wonderful job of beginning that transition.

Jeff Santoro: What I wonder about the outlet piece of their business is, does that give them a little bit of recession resilience if we really do hit a slowdown with consumer [00:25:00] spending?

I know when, when I was younger and shopped at those kinds of stores a little more than I do now, but I didn't have a ton of money to spend I always went to the outlet stores rather than the mall stores. So I totally get it.

All right. So, moving on, let's do your portfolio next.

Disclaimer to the audience. There's gonna be a lot of gloating ahead. So if you want to just mentally prepare yourself for just some unbearable boasting, we will start with CrowdStrike, the, the best performing stock of Q3 and also Jason's best performing stock in his portfolio. So I will turn it over to you, friend. What was your thought about CrowdStrike's quarter?

Jason Hall: So we, we're starting to see the answer to the question about, can they keep growing these important metrics at high rates?

And one of my concerns with CrowdStrike has been, this isn't a concern, but it's more like this is a thing I'm really watching closely, is we tout the importance of cybersecurity. And is expecting that cybersecurity is going to continue to grow, which [00:26:00] it will, but that it also should be more resilient to economic downturns. But the reality is that, I mean, especially for something like CrowdStrike, which is, based on device endpoints licenses, for company reduces 10, 000 headcount what is that? 12,000, 15,000, 20,000 fewer endpoints, maybe potentially?

So those sorts of things could have meaningful impacts for CrowdStrike in a recession. So I keep watching that closely, but like the thing we keep seeing is like their comps number for these businesses, the cash based, what's the Jeff, you got to help me out here, revenue retention rate.

Jeff Santoro: Dollar based net retention.

Jason Hall: Dollar based net. That's basically comps for these SaaS companies. They're consistently above 120, 120%, isn't that their benchmark?

Jeff Santoro: Yeah, their benchmark is 120%. I think they've only been below it once in the past several years. And [00:27:00] it was like 119 or something. It wasn't much below it.

Jason Hall: Yeah. So that, I mean, what that means is that the customers are not just staying with them. They're spending more. And that's, to me, that's deep evidence of the value of these. Cause it's one thing you have a company that, cause CrowdStrike relies on like software resellers a lot to, to sell their products and get them in. And I can get them in.

But it's when a company doubles their outlay, adds more of the what do they call them? The modules. That's the product delivering, right? That's not a good salesperson. That's your product paying

Jeff Santoro: Yeah. And you always want, you always want to increase revenue from your existing customers versus try to acquire new ones. Although you have to do both. It's it's a lot more efficient and like costs a lot less. There's a lot less sales and marketing spend to get your existing customers to pick up another module than there than it is to go out and get new customers.

But even the customer growth metric is still growing pretty strongly.

So the one thing I mean, I don't mean to keep harping on the exact same metrics, but I'm [00:28:00] very interested in watching this with so many different companies. They, CrowdStrike was also slowly making its way towards profitability over the past several years, but it jumped pretty quickly in Q1. It had a, I'm sorry, Q4 of last year, which is January, it ends in January for them, they had a loss of $47 million. Q1, $500,000 net income. So they just ticked over into profitability, and then last quarter, $8.5 million.

So they didn't like slowly work their way up. They were middling around the $50 million loss range and then boom, profitable. So I'm very curious to see if that trend continues, or if they pulled some levers to make that big jump that maybe they could only pull once. So that's something I'm going to keep an eye on.

Jason Hall: My prediction is that it's going to continue. And the reason why is one of the things, when you look at these SaaS companies, these platform companies, they get enormous operating leverage because they generally have very high gross margins and very low fixed costs.

So every [00:29:00] incremental dollar, like you talked about the value of adding a module or adding some seats to an existing customer, like that first hundred thousand dollars that customer spends, maybe you get 15 points of operating margin out of that from that customer. But the next $100,000 that you get from them, you might get 85% operating margins, right?

And that's, so that's the nature of their business. So I don't think we've seen the end of that.

Jeff Santoro: Yeah, no, I agree. All right. Your second stock was Lemonade, which you said at the beginning of the year was your sort of swing for the, yeah, your, your moonshot swing for the fences stock.

And it has been that it has been as high as 65% in the end of July, and as low as down 21% back in April. And it had a rough last month, right? So we ended Q3 with it down 15%. So what have you seen with Lemonade?

Jason Hall: So 10 months through the year. Five months of the year, it's been up double digits two months. It's been down double digits [00:30:00] in two months. It's been either flattish or up low single digits, right? This is a very volatile stock.

And what it gets back to, is there became over the summer, right, we saw a lot of stocks go up over the summer and then, S&P's down since, was it, late July, early August. Since the peak, a lot of stocks like the Lemonades are down a lot more because there was a lot of optimistic, remember we were talking no landing for the economy, right? Hard landing, soft landing, no landing. We're talking no landing over the summer.

And now we're seeing the market come back to the realization that things are still concerning. The Feds not messing around with interest rates. They're not just going to start dropping interest rates and saying, Hey, good job, everybody, you did it! Go buy a bunch of stuff. No, they're not. They're going to, rates are going to stay high and the economy is still a real concern. Inflation is still a real concern. And along the way investors looked at their portfolios that, where they bought Lemonade on a song, that, hey, maybe this is going to , pay off. And they're like, holy shit, this is up 65%. Maybe I should [00:31:00] take some off the table.

And then they reported another quarter where their gross loss ratio was still well above-

Jeff Santoro: it got worse.

Jason Hall: It got worse. So two things, it was still well outside of their, their goal, their longterm goals, and it was worse than it was. So they continue to not execute on the most important thing that an insurer needs, insurance company needs to do. Doesn't surprise me it's down 15%. There's still a chance. There's still a chance.

Jeff Santoro: Well, it seems it, I don't want to oversimplify any investment, but it, it really does feel like all it would take is one quarter where that, that loss ratio drops six or seven percentage points. I don't know if that's possible in one quarter. I'm just saying, like, if they were to, if they were able to overperform on that one metric alone, you could see, I mean, it was already up 65% at one point this year when it wasn't showing great improvement with its loss ratio.

So I think if it were able to do that, I understand why it was your moon shot pick, because it really could take off after that. The, we've been saying it all [00:32:00] year. They seem to please their customers. They seem to have a product people like. They seem to have a legitimate use for AI. They've been talking about AI longer than long before ChatGPT put it on all our radars.

That's the whole, it's actually, it's the basis of the basis of the operation, right? You get that quote in five minutes or 10 seconds, whatever they say, quickly, because it's using artificial intelligence to, crunch all the numbers and give you the quote. The question is, is AI good enough to give you a good quote?

One thing I do wonder is-

Jason Hall: It's the, it's giving people too good of quotes is the problem.

Jeff Santoro: Well, that, and so what I'm curious to see is if we are now going to be in this age of ever, ever improving artificial intelligence, does this, does the rate at which it does this job well increase exponentially in a shorter amount of time?

And that's something we'll just have to-

Jason Hall: Kind of like CrowdStrike's economic profile. Maybe so.

We're going to find out almost exactly a month after this episode comes out, they, it's the first- end [00:33:00] of the beginning of the first, second week of November is usually when they report earnings. So it's the last earnings we're going to get for the year.

So I think we're going to find out the fate of this particular stock in my portfolio much sooner than we will a lot of the others.

Jeff Santoro: Agreed. All right. Last one for you is Trex. Any, any thoughts on how, how they've been doing?

Jason Hall: How the hell is the stock up 46%?

Jeff Santoro: So I'm a little bit mad because I remember wanting to buy this stock. Like maybe it was the beginning of the year and you were like, you, you gave me a little bit of caution. You were like, I don't know. It could be, they could have a rough year and, and I was only-

Jason Hall: It has had a rough year. That's the thing. The stock's had a great year you should have bought. Stop listening to me.

Jeff Santoro: Obviously in hindsight, right?

Jason Hall: So, you know, that, that, this disclosure we read at the end of every episode of our podcast? Jeff, I'm gonna have to start texting it to you.

Jeff Santoro: Yeah, you should just have it saved in your your phone and send it to me.

Jason Hall: So, yeah, but no, Trex's business has been, it's been, hasn't been great. It's down a lot from, from last [00:34:00] year, but it was expected. It's, it's been down within the expected range.

And they've done a pretty good job with their, their financial profile. They spun off, they sold off their like industrial railing business, commercial railing business, which didn't really fit well with their core. They only owned it five or six years and it never really did what they thought it would do. I mean, they're just, they're running it well in this part of the cycle. And we'll see with interest rates because HELOC costs.

You think mortgages cost a lot more. Look at a HELOC ,and you want to spend $10,000 on a deck. A lot of people can't write that check. You gotta borrow the money to do it. So it's going to be interesting to see how like those capital headwinds on consumers affect the company's growth profile, starting next spring, really, when people really start building decks again, we'll see.

I got lucky with that one. I guess that's, that's a 100% I got lucky.

Jeff Santoro: Well, sometimes, especially over short terms, sometimes luck is, is what gets you through. So I mean, look, you and I both, I don't [00:35:00] own it, but I admire the company and I, there's parts about it. I really like, and I have a feeling over the long run, it's going to do just fine.

It's just interesting that there's been such stock appreciation that has lined up with a time when it's results have not been maybe as good as they could have been.

All right, let's do my portfolio next.

Jason Hall: One more, one more, one more real quick. Is Trex near it's all time high? Do you know?

Jeff Santoro: I don't know.

Jason Hall: Don't look it up. I'm asking you. Don't look it up.

Jeff Santoro: I know. I'm going to say it is not.

Jason Hall: It's 58% below its all time high.

Jeff Santoro: Just goes to show you how that compounding math works. You could be up up 65% for the year and still down 85% from your high. Interesting.

Okay, Amazon, the first one in my portfolio.

Jason Hall: I was a 100% wrong and you nailed this one, Jeff. I'm gonna say that.

Jeff Santoro: Well, I'm gonna slow down it's only been nine months. But I mean, look, the the basic reason I chose it was [00:36:00] I really thought they were going to be able to figure out the operating losses on the e commerce side. It's too successful of a business that's been too good for too long to let that be the thing that kills the business.

And they have AWS, which I think will always be a good business. And it was so stupid cheap. It got so beaten down. It just felt like if they're just okay this year, it had a chance of having a positive return for the stock. And that's what has happened.

I mean, none of the results have, I don't think, knocked any socks off, but they have gotten some of their e commerce operating losses under control. They've been building back towards consistent profitability after being unprofitable for a few quarters, which was rare for them over the past couple years.

I think the interesting thing now is, we did a video on what the FTC suing them really means, and I think we came to the conclusion that in the short term, it probably doesn't mean anything because it will take years of court for this to shake out.

But yeah, I can't [00:37:00] complain about it. I don't have much else to say other than I'm still watching the same stuff. Like I still want to see if they can continue to get the e-commerce business right sized. I hate that word, but it's a good, a good one to use here. And I do want to see if AWS, like I want to know what their normal growth kind of rate is, that's been trailing off the last couple quarters. The growth rate.

I mean, it was 33% growth year over year back a year ago. And in this most recent quarter, it was 12%. So. I, I'm curious where that ends up and when it starts heading in the other direction, but yeah, I can't really complain about how it's done stock performance wise this year.

Jason Hall: There's a little bit of when Tim Cook was named the permanent CEO of Apple, kind of is a little bit similar to what's going on with Amazon with Andy Jassy. Obviously, Steve Jobs dying was very different situation.

But the market was really down on the business. Wasn't great. They kind of hit one of those lulls in [00:38:00] their, in their growth cycle where everybody thought, well, iPhone business is super mature. Now it's turning low growth. None of their other stuff looks like it's going to be a very big hits. The stock fell to, 12 times earnings at something like it was just , pretty beaten down.

And maybe a little bit of the same thing happened here with Andy Jassy too. Now it's again, different situation too, with the market being at, it's those bubbly peaks and Amazon got caught up in that in 2021 just as much as, as any other, maybe more than a lot of stocks because of their e commerce focus, during the pandemic. That was, this is the company that's going to rule the world, everybody thought.

But I think there's just been this realization that this is a really great leader who is really, really focused on this business and knows how to navigate it through this next phase of its growth. So I think part of it is just the market coming back to Jassy and say, okay, you know what, this is the right leader for this business in this moment. We believe in him. And the execution is has validated that too.

Jeff Santoro: [00:39:00] Yeah, I, the Jassy thing is interesting to me, but the other, you know, we did an episode or part of an episode recently where we talked about like, is, is being a, a lazy investor better. And stocks like Amazon, especially when they trade his at historic lows, like they did back, valuation wise, like that they did when I picked it back in December, I, there's times where I'm just like, Amazon is everywhere. I buy everything from Amazon. Like, how is this not going to work out for me owning it now for the next 10 years?

Like sometimes it's just, and I feel that way about Netflix and Disney and Apple and, like Disney and Netflix, remember Netflix a year or two ago when it, when all the subscriber numbers were crashing and everyone was like, it's dead in the water.

I mean, how has it done since then?

Jason Hall: I was, another one I was terribly wrong about.

Jeff Santoro: Yeah. Oh, I know. I know you were. I remember that.

All right, moving on to my absolute worst, crushing, performance stock, which is Outset Medical.

I'm going to be 100% honest with the listeners here. [00:40:00] I am starting to like, it has been so beat down that I've been wondering more often than I normally do, if I'm just totally wrong about this stock. I don't think I am because what I'm looking for is still happening. And I'm just, I really do think it's just that this company is still very early days. It's only been on the public market since the, since Q2 of 2020. But man, it is just getting taken to the woodshed stock wise.

Part of that recently is that when they released their Q2 results, they also announced that they were not, they were stopping the sale of a specific configuration of the machine or a part for the machine to do an additional FDA approval, which they didn't have to do, but they wanted to do.

It didn't really have a huge impact on, they can still sell the machine. It was just this filtration aspect of it. That was the issue, but I know the stock dropped after that. I mean. The thing that I can't, the reason I [00:41:00] have hope, gross margin expansion is just bonkers. So a year ago, Q2 of 2022, the gross margin was 15%, and in this most recent quarter, Q2 of this year, it was 21%.

I mean, that is... That's a big increase for gross margin in a year and they're targeting 50% in the future. So it really does just my, my positive side tells me this is just still early days and they're, they're growing into and getting economies of scale.

Now again, I could be totally wrong. Maybe this just never takes off. They can't get enough adoption. There's still cash, they're burning cash. They're still unprofitable. Maybe now is the correct valuation for this company and not where I bought it and not back in where it was in December, but I don't have much else to say about it other than I hope I'm still right because I love what it's doing. And I'll just have to keep keep watching it.

Jason Hall: I have two thoughts. The first one is you remember DermTech? I haven't looked at DermTech stock in a while. But DermTech had, had, has, I [00:42:00] don't follow the biotech industry, I don't, so I don't spend a lot of time looking at them. But the, the whole patch, a sticker that you could put over a, a potential skin cancery looking thing, remove that after a couple days and send it for a, the biopsy would be done from cells that were taken from that instead of actually an actual biopsy where they had to... they could do the testing from that sticker instead of having to do a biopsy and remove tissue from your body. And scarring and you, cut open. Like you've got something like that on your face, you don't want to deal with that.

But the, the, the thing that they ran into Jeff is economic incentives, right? I talk about this all the time. And the bottom line is that dermatologists make a ton of money doing biopsies, right? So you can talk about how this product is safer and more accurate and better for patients all you want. But if you go to a dermatologist and their office does. I don't know, 50 biopsies a month, a hundred.

I don't know what a good number is, but like you're talking thousands and thousands of [00:43:00] dollars of revenue comes out of their business. Okay. How, how they pay their nurses, their, their staff? How does that doctor buy his next boat? Like whatever, I'm being a little crass there. But the point is, is that the economic incentives become disaligned.

And as much as Outset has talked about how their system will drive costs out of the, what's the word, the acute hospital setting with the, but the, no, the machine does dialysis, like driving it out of these dialysis centers, driving out costs and definitely for acute care and inside hospitals that do it.

There's an entire industry that's built around that existing system, right? And economic disalignment has me concerned that its potential maybe is just a niche and maybe it's a great product that can't be a standalone business that maybe, I don't know, maybe Davita buys it or or some other large healthcare device manufacturer that's a supplier [00:44:00] for, for that industry, where it becomes an also instead, of a replacement for. And it's just not going to be as disruptive because the existing regime that's there is just going to be so resistant to it. It's never going to make it to the patients.

Jeff Santoro: I absolutely agree that that is a risk. And what my biggest concern with the company is exactly that, like that. The, the incentive structure to keep lining the pockets of who's profiting off of dialysis treatment now. I think the thing that's different with just using DermTech as an example, and by the way, they're both down 80, almost 90%, although DermTech is much, down a lot more from its all time high because it had a really huge spike back in '21, whereas Outset never really did.

But, the difference to me, I guess, my hopeful side to that counter argument that you just gave is, I think there's a big difference between the inconvenience of having a cancerous or, or potentially cancerous thing [00:45:00] removed from your skin using a scalpel versus putting this bandaid on you. I think that's a, one is obviously better than the other for the patient, but that's a lot different than, three times a week, four hours each time, having to drive to a place to sit in a chair to get dialysis. I mean, that is a massive

Jason Hall: life. Yeah, no, I've I've known I've had family. Yeah.

Jeff Santoro: So, and it is a life changing life disrupting thing. So I feel like if enough people can use this machine and be, and it can be known by enough people, maybe just the, the simple pressure of, hey, my cousin's on dialysis and is using this machine called Tableau. Tell me about it.

Maybe that's enough to get the ball rolling, but time will tell. This is why, this is why I position size things certain ways. This is not an enormous position. I hope I'm right. But if it's not, it won't, it won't kill me.

All right, we're running a little long here. So let's, let's pick up the pace. The Trade Desk was my last one. [00:46:00] I don't know what else to say other than they're, they're doing great now. They have not seen their growth rate crash like some of these other companies have. They're still in the mid twenties range. So they're not seeing that like decline that a lot of other growthy companies are seeing. Digital advertising and streaming advertising is gonna continue to be a thing and they're gonna continue to be the biggest player in making it happen.

So yeah, it's that. I don't have much more to say about it. I think they're doing great and I'm glad they're in my portfolio in real life and in this contest.

Jason Hall: One of the great things about their business is that they've proven that they can make money charging for their platform, not upselling ad inventory, right? They don't make money on ad inventory. So in a way, that means that this ad down cycle that we've gone through hasn't affected them as much, right? Because they've continued to grow through it. And they focus their focus on like the, where the, where the focus on the biggest advertising buyers, their focus on the biggest [00:47:00] spenders and being aligned with the agencies.

Is so, so powerful and I think underappreciated, versus running around picking up the scraps of the 99% of companies that spend, I don't know, 25, 50% of the money instead of focusing on the one to 5% of companies that spend an outsized portion of it. It's just a much smarter approach. To building an ad platform. So that's important.

Dave Pickles resigned or retired, stepped down there. He's a co- founder. I think that's worth mentioning. He was the tech guy behind the scenes with, with Jeff Green. Jeff Green's a wonderful CEO and I think the business is still in good hands, but I've said for a long time that I think Pickles is maybe one of the most underappreciated kind of unknown co founders of the big tech winners of the past decade.

So we'll see, we'll see. We're going to find out a lot over the next few years, how important he really, really has been for the business.

Jeff Santoro: Plus Dave Pickles is just a fantastic name.

Jason Hall: Yeah. Yeah.

Jeff Santoro: It might be the best name in finance.

Jason Hall: Hopefully [00:48:00] investors don't go sour on the business.

Jeff Santoro: I hear he's a big dill. All right. Let's turn to the, on to the, on that's the worst dad joke I think I've ever told.

Jason Hall: That is fantastic.

Jeff Santoro: All right. Let's move. Let's move to theunportfolio, where again, I am ruining everything.

I think for you, I'm going to speak for your two stocks, and then you tell me how you feel about it. AMC and Blink Charging, which you chose because you anticipated them doing poorly, it didn't happen immediately. But over the course of this year, both have absolutely tanked for you.

Jason Hall: Yeah.

Jeff Santoro: So, AMC ended September down 78%. Blink Charging ended September down 72%. It's worth remembering that they started the year up 31 and up 24. So they had-

Jason Hall: Oh AMC was up 75% at the end of February.

Jeff Santoro: Yeah. Ridiculous. So talk us through those two garbage stocks and if you have any thoughts briefly on them, and then we'll move on to my two and be done.

Jason Hall: AMC has been kind of one of the two or three ultimate of the meme stock diamond hands kind of companies. But it's a mediocre business, right? Movie theaters. We know [00:49:00] that movie theater chains are just, it's, it's. Consistently in decline and-

Jeff Santoro: And even if they weren't, but even if, even with those challenges, they, they, the company seems to worry less about making movie theaters good as it is-

Jason Hall: Such a distracted, like they bought a gold mine or some shit like that. Right?

Jeff Santoro: I mean, it's just that. So they, they care too much about what the Reddit board is doing and they're making new, new shares and

Jason Hall: distraction, and like the APEs, the whole thing that really, this is the thing that killed the stocks and like a little bit, I'm going to give myself a little bit of credit for a tiny bit of financial sophistication behind picking this one.

The company had been consistently issuing secondary stock to raise money, to fund the business, like raises, that was like the big thing, but they ran out of stock to sell. Like the charter, they couldn't sell any more stock. They couldn't issue anymore. They ran out of shares that they, they were approved to issue.

So they did this whole APEs thing. This was the preferreds that they did. And they were trying to like financial shenanigans, engineer a way to convert, like issue those apes, and then convert them into [00:50:00] shares and like change all the rules. And the court said, no, you can't do that. And when that happened, that was really what unraveled the stock over the past few months.

And it's, again, it's just a mediocre business that the stock got insanely overvalued. Like if you looked at it based on any kind of reasonable valuation, it never made sense. And eventually their shenanigans to try to fund the business with equity caught up to him and the massive amount of dilution and now just running out of money here we are down 80%.

Blink Charging. It's, I'm sorry, but but these charging stations, EV charging stations, this is like gas stations without being able to sell candy bars and soda and the stuff that makes the stuff that makes money. So it's just, it's a mediocre business.

You might be able to make some profits. There's growth, but it's not going to be great growth. And it's another story stock that people fall in love and their management's do a good job of telling this great story every few years. And people say, oh, this is the next great thing. Blink Charging has been around for like 20 years. It's not a new company.

People lose money. They sell [00:51:00] off. Wash, rinse, repeat. Here we are.

It could be up, it could, stock could be up 25% by the end of the year though. There's a, there's a chance here. There's a chance management's going to tell the story again and people are going to rush back into it.

Jeff Santoro: Well, that's what's funny about your two picks. Like, yes, there was a very good chance that they were both going to be exactly where they are right now. But there's also a chance if the meme stock people grab a hold of AMC and, in, on December 1st, it could end the year up. You just don't, that's why they were interesting picks if, if not good picks.

Jason Hall: I think at this point they're down so much, you're talking like 400, 500%, but you know, so, but yeah, it could happen.

Jeff Santoro: It could be up a lot more than it is now, just based on silliness is, is what I'm, the point I'm trying to make.

Jason Hall: You're telling me there's a chance.

Jeff Santoro: Meta is up 149% and Tesla is up 103% which makes this portfolio do exactly the opposite of what we designed it to do.

Again, I've said a bazillion times, I really thought Meta was going to continue to burn cash. I thought Zuckerberg had [00:52:00] lost his focus. I thought the year of efficiency was just a thing you say to make your stock go up momentarily, but he's been more efficient than I was expecting. And the stock has responded.

Tesla. I still, I, I don't like the company. I don't want to own it. Although there's more on that soon. And, but I have to say, I, I'm impressed that it, the company, I mean, the stock is what it is. He has the ability to tweet and have it go up or down.

But I've not been completely like disgusted by the results. I mean, unless something fraudulent is happening, which there's no evidence of, they keep making cars people want to buy they, they're holding onto their margins, even as they slip a little bit, they're still ahead-

Jason Hall: What they've lost in gross margin they've picked up in, in net cashflow because of the growth of units sold, right? It's absolutely, absolutely paid off.

Jeff Santoro: And I've said it before, just anecdotally living in New Jersey. I mean, I will go anywhere around my house and [00:53:00] see dozens of Teslas. There's times I go...

Jason Hall: You and nick both, buddy. You and Nick both.

Jeff Santoro: Yeah. There's times I go pick up my kid at school and I'm in the parking lot with six other Teslas and two other electric vehicles. So I'm obviously in an electric vehicle area, but... Teslas are very popular here. So it's, it's easy for me to, to have at least a little bit of a bullish streak in me when it comes to Tesla.

Okay. We are done with the portfolio review, but I know this episode is running long, but stick around because after the break, we have a new portfolio / fun game story involving my father.

So we're going to tell this story. We're going to reveal a new portfolio that I'm a little bit sad I had to be part of, but if you stick around after the break, I'll explain everything. So we'll be right back.

Jason Hall: Hey everybody. Welcome back and it is time for a fun game. A fun game. It's we call it a game?

Jeff Santoro: We, we got to call it something because this is [00:54:00] I don't know, stock picking by gunpoint.

So let me tell the story. So my old man, my father, he helps run a monthly raffle for a community orchestra that he plays in. And he bought me for Christmas this past year, a raffle ticket because I refuse to buy one on my own because I'm cheap and he pointed out to me that I was cheap and made fun of me and harassed me, but he bought me, and also my sisters I think also got one a raffle ticket.

And every month they draw a ticket and the winner gets 500. So I won the September raffle. So my father who felt that he should get some credit or have some sort of say over how I spend this money, because after all, it was his gift ticket. That was the winner.

Jason Hall: Technically, it's his money. If we're being honest, Jeff.

Jeff Santoro: Yeah. Okay. Well, that's how you and he see it.

He suggested that I use the money to buy a stock I would never buy. And I laughed and thought that that was kind of a [00:55:00] funny idea. But I came up with what I thought was a more fun game, which we're calling Nick's Picks.

So what I told my dad to do, so he is a, a listener of the podcast. He has listened to every episode, although he listens in bunches. I get a text-

Jason Hall: Hey Nick, like you better than your son.

Jeff Santoro: I get, I get the text every couple of months that he's finally caught up on the podcast.

So I said to him, all right, dad, you've been listening to 70 something episodes of this podcast. Hopefully you've learned something. So I said, you pick five stocks you would buy based on what you've learned from listening to The Smattering and I will buy them in my account with this money. And I, I have no sway over this. He's just, he got his, he got to pick his 5.

So he sent them to me over the weekend. I bought them in my portfolio yesterday. So if you also go to our spreadsheet, you will see a "Nick's Picks" tab where you can follow this portfolio [00:56:00] along with the regular portfolio and the Magnificenter Seven. This will be where all of our fun portfolios live.

We, he picked five stocks. I bought them. So the prices are as of midday on October 3rd, which is when I purchased them. So we'll go through each one. We'll share our thoughts and then we will either praise or ridicule my father for as long as this podcast exists as we review how his picks did.

Okay. The first one he chose was Old Dominion Freight Lines. And this was his one line reasoning. "Since The Smattering has never even mentioned this stock, it was one of my first stock picks in October of 2020 and has returned 102% since then. It goes into the Nick's Picks portfolio."

So I, I helped my dad pick some stocks back in 2020, which was a combination of things that I had learned about, and things that he knew I knew of. Pretty sure he picked this because they have an ad at Citi Field and he's a Mets fan, but it's just speculation.

But it has done well [00:57:00] for him. It is, it is a wonderful business. It has doubled since he bought it. Now, I think it's very expensive right now, so it hurt me a little bit to click the buy button. It is currently down 0. 8% after a day. So, so there's that.

But anyway, the first Nick's Pick is Old Dominion Freight Line, which is a great company. I own it. I really do like it. My only concern talking to my dad here is the valuation, but we'll see how it turns out.

All right. Any other thoughts on Old Dominion before we move on?

Jason Hall: I have nothing to add.

Jeff Santoro: His next pick was there is Nvidia, speaking of expensive stocks. So his, his comment on this was "one of Jeff's recommendations in 2020 that actually paid off, up 233% since October of 2020."

Yes, dad. It has done well, but we, I told you to buy it or advised you to buy it at a much lower price. So again, great company. I own it. You own it. We both really like it. [00:58:00] We'll see how it does. With a starting point of $449.73.

Stock number three, Applied Materials. This one threw me for a loop. I was not expecting this.

Here's his comment. "Some of my favorite shows were episodes 41 and 55 with Nick Rosolillo on semiconductors. Since finding out that I could play a CD on my computer while creating a Word document, I have been fascinated with this area."

So that's an inside joke, but I will tell the story briefly. In the late 90s, at a time when this should not have been a revelation, my father earnestly said to me and my sister, dead serious, "Hey, did you know that you can listen to a CD and use Microsoft Word at the same time?"

And we almost... died that day from making fun of him and laughing at him. Cause at that time, even [00:59:00] that this was not new technology. So, so I appreciate the joke. And we will see how Applied Materials does. Jason, I don't know this stock very well. Are you familiar with it?

Jason Hall: A little, a little, they do some of the materials for the semiconductor industry. That's, that's about as much as I know, but they, they're really important. I know that much. I know they're really important.

I have, I have a theory. He really picked it because he heard about it on an episode from a really smart guy whose name was nick. I think it's the Nick thing.

Jeff Santoro: I agree.

All right, last two. The fourth one is ASML, which is probably my biggest, my most, one of my highest conviction stocks in my personal portfolio. If anyone doesn't know, they make the lithography machines that you need to make semiconductor. So they are a crucial part of the semiconductor chain.

Jason Hall: They make a ton of money supporting them and servicing them and providing the materials for them.

Jeff Santoro: Yeah. So the comment was, "I couldn't decide between Applied Materials and ASML, see above."

So this is [01:00:00] another one where he's fascinated by the space and picked two semiconductor related stocks. This one I actually, I, I agree with. I like this pick. I think, I don't think it's overpriced right now, so we'll see how it does.

And the last one, the one that it probably, other than valuation, it killed me to click the button on more than any other, he chose Tesla.

Jason Hall: Your dad's trolling you.

Jeff Santoro: So I now, because of this stupid game that I invented, have to say that I am a Tesla shareholder. But he has the same bull argument that I just made, which is, "in the last five days, I saw 23 Teslas driving on the roads of New Jersey. The owners drive worse than BMW drivers. And the Tesla is almost as fast" as his car, which is just him bragging that he has a fast car. So here you go, everyone.

And Jason, I am back as a Tesla shareholder. It is up 5% in a day. So my dad is a genius, apparently.

Jason Hall: I love his ability to troll [01:01:00] you and his ability to make you buy a stock 100% higher than it was, the price that you said you would never buy the stock.

Jeff Santoro: Yep. Yep. Yep. So thanks for that old man. I will, as we close out here, I will say one last thing. He did give us an honorable mention stock, which I did not buy. And it's not going on the portfolio, but as a baseball fan, Jason, I thought you'd want to hear this.

His honorable mention stock is Truist. And he said that, he said it's the least objectionable bank in the National League East, because the Mets who suck are in Citi Field and the Phillies who are good, but we can't like them because we're Mets fans are in Citizens Bank Park. So I guess-

Jason Hall: My Atlanta braves are in Truist Park.

Jeff Santoro: So the baseball fans will get a kick out of that and everyone else has tuned out by now. Wonderful. So there we are. We have the Nick's Picks. It's on this portfolio sheet. Everyone can track it along with us. And we will occasionally review and praise and or taunt the returns of the portfolio.

Jason Hall: Love it. All right, Jeff, we did it, buddy. [01:02:00] 

Jeff Santoro: We did it.

Jason Hall: All right, everybody, just a reminder. We love to tell, we love to give our answers to these hard investing questions, but it's up to you to find your own answers. I believe in you. You can do it. All right, Jeff. See you next time, buddy.

Jeff Santoro: See you next time.