Investing Unscripted Podcast 85: The Investing Unscripted 2024 Portfolio Contest

Reminder that this will be our final newsletter email of 2023 as we are taking some time off to be with family, and you’ve already heard and read enough of our words over the past year.

Note: This transcript is edited for clarity, but not particularly well as we are on vacation and Jason had a flight to catch. Apologies.

Click here for the 2024 Portfolio Contest Google Sheet

Jason Hall: Hey, everybody. Welcome back to Investing Unscripted. I'm Jason Hall joined by my good friend, Jeff Santoro, the voice of the people. How's that tea, Jeff? 

Jeff Santoro: It's delicious. I have I've started a new thing where I drink tea. While we record for two reasons, it's nice on my throat, but also it fills me with caffeine, which helps me get through the shows and carry the dead weight that is you as a broadcaster.

Jason Hall: Yeah. Well, I'm deadening that weight even more. My beverage of choice as we record this show is an oatmeal stout. Going to promote Ipswich ale, Ipswich brewery. Local brewery up here North Shore. Encourage people to check it out. And I'm doing it because I come in so hot. I need something to cool me off, Jeff.

Jeff Santoro: Hey, you know what? It's been working for our show so far. So let's not mess with it. 

Jason Hall: But by some definitions of working, that is true. That is true. All right, Jeff, what do we got lined up for today? 

Jeff Santoro: Well, this is our last show of 2023. This should be coming out [00:01:00] to you. Good people on Saturday December 30th.

And we are taking this week off. You're hearing this on the 30th, but we're recording it 10 days earlier. There will not be a newsletter tomorrow. So, this is our little holiday break with our families. But we are excited to get back at it in the new year. We'll have new shows for you starting first week in January.

We'll do a live, First Friday is again on January 5th, I think is that first Friday, whatever that Friday is, whatever that Friday is, we're going to be live at four o'clock if you're interested in that. If you haven't checked that out yet, it's a lot of fun. It's a live show. We do completely unscripted.

There you go. Plug for the name.

And we send the link out that afternoon on our newsletter. So if you want to get the link and you have not subscribed to the newsletter yet, check that out, get your name in there. And you will receive the link that day. So Jason, we are using the last episode of the year to announce the portfolio contest for 2024.

So we're changing some [00:02:00] things up. We had a very fun year of talking about stocks, and it's not over yet. We will do a December review, and we'll do a Q4 end of the year review coming up in the next couple weeks. 

Jason Hall: Yeah, there's still seven market days left before we can wrap it up. So stay tuned for that.

Jeff Santoro: Yep. And we are also Going to change how the game works a little bit. So we've, we felt that last year was a little too convoluted in terms of all the who's going to pay what charity on what day for what thing. So we're simplifying it and we're using a different method of getting portfolios. So what we decided to do this year, we reached out to every single guest who was on the podcast in the year 2023 and we offered them the opportunity to play along with us.

In the 2024 contest, and let's see, eight people, including not including you and I responded. And the only parameters we gave everyone was send us anywhere between three and 10 stocks. So we gave each player the choice of how large they wanted their [00:03:00] portfolio to be, and give us the name of a charity.

And this will all be on a Google Sheet that will be publicly available the day that this drops, and so everyone can follow along and see all the names. 

Jason Hall: We'll have that link in the show notes. We'll have it in the transcript as well, too. 

Jeff Santoro: Yep. And It'll be very simple. Whoever wins each quarter, everyone's gonna donate to that person's charity.

That's it. Play along, folks. Play along. This is absolutely a silly, fun thing to do. It runs contrary to what we always talk about, which is not making decisions based on quarters or even one year performances. It is a fun way to talk about stocks throughout the year. It's a good way to learn about new companies.

It's a good way to talk about how bizarre the market can be in the short term. I mean, those are lessons I learned doing the 2023 portfolio. And hopefully every three months, it'll be a reason for. , maybe hundreds of listeners to give money to a charity. So that's a really cool, fun thing about it too.

So Jason, here's what I was thinking we would do. I'll, I will go through [00:04:00] each portfolio very quickly, talk about who submitted it, what episode they were on. And I'll list the companies now we're not going to go into deep dives. I don't, we don't have time for that. 

Jason Hall: Yeah, there's going to be 40 or 50 stocks here.

It's a ton. 

Jeff Santoro: Yeah. So don't write them down. You can read them later in the Google sheet. That'll be publicly available. And I think it'd be fun if we just talked really quickly about maybe the stock that we think has the best chance to do well in that person's portfolio. And maybe the one that we're a little more worried about and any other overall thoughts.

Sounds great. So, in order of when they appeared on our show, the first portfolio we have is from the comedian Mitch Fatel, and Mitch was on episode 42. It's Fatel. I'm sorry. It's Fatel. All right, Mitch, I apologize. Mitch Fatel. He was on episode 42. I have to apologize to him because he's a comedian.

He'll just Destroy me for making that mistake. It was a really fun conversation. We talked about his investing journey and a bunch of [00:05:00] other stuff. So go back and check that out. Episode 42. He was also the first person to reply to the email, and he was very excited to play in this year's game.

So Mitch is five stocks for 2024 are Mercado Libre. Shockwave Medical, Taseko Mines, I think that's how you pronounce it. That's not a company I'm familiar with, Transmedics Group, and The Trade Desk. So I thought this was interesting. Some names I'm familiar with and some that I'm sure a lot of our listeners are.

One or two that are a little bit more off the beaten path. And Mitch's charity, by the way, is the Wounded Warrior Project. So if Mitch wins one of the quarters, we can all give money to that wonderful charity. Jason, what sticks out to you With Mitch's portfolio. 

Jason Hall: So the company on this list that like, I think is the most inspirational to me is Transmedics.

Is it's wonderful what they're doing to basically save people's lives and improve an entire industry. So I love that. Very much the one that stands out to me the most is that I think this is the closest thing to a penny stock that anybody is putting and that's [00:06:00] to say, go minds. But I think what he's doing here, that's a, it's a copper miner.

So you think about the electrification of everything, this big trend, this could be copper prices go up. This could be a huge one. Like copper miners is a leveraged bet on copper prices largely. So I think it's a really interesting approach. But man, having Mercado Libre in there at an all time high, basically not an all time high.

But It's 2021 price. I think still the all time high, but it's, I mean, that's kind of ballsy, right? That could hurt. I could hurt, but we get another stock. That's a buck 40 and change, You can go up 2 and that can make the difference in the contest. Yeah, 

Jeff Santoro: I will say this about Mitch, who I only got to know when we recorded that episode with him.

He does seem like a guy who's got a pretty high risk tolerance and just picks what he likes and goes with it. So if the winners keep winning mantra is true some of his more well known. Stocks on his list that had a good year could continue to. So that'll be an interesting one. We'll have a lot of fun things to talk about with that portfolio as we go through the year.

All right, next one. So I'm going [00:07:00] to talk about these together for a couple reasons. So the next two that we got were from Ryan Henderson and Brett Schaefer, the co hosts of the chitchat money podcast. We've had a lot of chitchat money interactions over the last couple of months with the podcast. They were on last week's episode with our Reckless Prediction Show.

We aired one of their episodes on our podcast feed last week. So if anyone has not listened to them yet and had a chance to because it was on our feed, I hope you guys enjoyed it. I hope you check them out. We were on their Power Hour not too long ago, but they were on the show as guests way back in the, near the beginning of the year, they were episode 46, so you can go back and check that out.

And the reason I think we should talk about their portfolios together is, I don't know if they know they did this, But they gave us almost identical portfolios with one stock different. So I'll go through them quickly Brett's Portfolio is Ally Financial Coupang or Coupang. I don't I've heard it pronounced both ways.

Yeah coupon Harbor diversified. Yeah, [00:08:00] IAC and Match Group and Ryan's was exactly the same except instead of IAC. He had Discover Financial Services Yeah, so eight stocks, but only two that were different between the two of them. And I should also say Brett's charity is Helin, Helis, sorry, Helinski's Hope Foundation and Ryan's is Meals on Wheels.

So what sticks out to you with either or both of these, Jason? 

Jason Hall: Well, it's hilarious. Number one that there's so much overlap there, but I think that it's interesting too, that there's two things. And this comes a little bit from our prediction show that we did when they were on last week.

Like that there's a bias towards thinking like the financials industry financials is going to do well, you've got Ally and Discover . And then the other part of it too, is just like a little bit of bouncing back like Match Group. I don't think set of stocks had a super great year coupons gotten hammered.

I think I see is interesting. That's the company that owns like a home advisor and Angie and 

Jeff Santoro: stuff like that. 

And they're the [00:09:00] ones that spun, didn't they spin out Match Group? I feel like Match Group was part of, yeah they spin out a lot of companies that become public companies. I want to say Match Group was part of them before it became public, but maybe so.

Okay. Don't quote me on that. Yeah. So I agree with you. I, so Match Group jumped out to me for a few reasons. One is. It's one of the only, it's the only one on here that I've actually owned before. I owned it a long time ago and sold it. And last week on the Reckless Predictions show, the one Ryan made three predictions and we never talked about the third one very much, but his third one was that he thought Match Group could get acquired.

In 2024, if it continues to struggle. So yeah, it's interesting that he predicted that, but also picked it for the contest. 

Jason Hall: It's the special situation the acquisition premium, right? He's counting on that. What's our rule going to be? If somebody 

Jeff Santoro: gets acquired, what 

I was just thinking the same thing.

I think it just goes off the scoreboard at the price it went. It got acquired. I think it just gets frozen there. 

Jason Hall: And We have to wait. It's like whatever the market's returns were through that point is when we have to wait it. [00:10:00] 

Jeff Santoro: Yeah, we'll figure we'll cross that bridge if we come to it. All right.

So anyway, yeah, the only other one I guess that jumped out at me for these two is, is. Coupon, because it's actually a stock I've looked at recently and I'm sort of intrigued by. So it's on my watch list. I'm interested in it. I've not bought shares yet, but I do want to keep watching that one. So that's interesting to me.

All right. So next one, our good friend, Lou Whiteman. Lou was on episode 48, so you can go back and check out our interview. With Lou, and I know that Lou struggled a little bit because he was trying to decide. 

Jason Hall: Pretty bold that his entire portfolio is just the is just the Vanguard total stock market index fund.

That's what he, it's just one ETF. Yeah, it's the, no it's, he was kidding with us and saying that he might actually do that. 

Jeff Santoro: Yeah. I guess we could just throw the, the market up on the spreadsheet and just see how everything compares to that. 

Jason Hall: Yeah, well, the ironies, he said that and then what he proposes is actually the very most stocks of anybody.

So that's totally Lou. 

Jeff Santoro: So that's the, so [00:11:00] that I think is a fun aspect of this portfolio. He went with more stocks than the other ones that we've seen so far. So we've done 10 more if we let him at that. Maybe he would have done another 490 and just gotten to the S& P 500. All right, here are loose and then we can chat about them.

Autodesk, Core Card Corporation, GXO Logistics, L3Harris Technologies, Annalay Capital Management, Nelnet. RTX Corp, Starbucks, TFS Financial, and Walmart. So there are several on here that I've heard of, a few that I have not. What sticks out to you, Jason? 

Jason Hall: So one thing that jumps out at me is Annaly Capital.

So this is a REIT, but it's a mortgage REIT. So they don't own properties, they own the debt. And man, like if you look at that stock over the past 10 or 15 years. Like it's Jim the total returns are okay. I mean there are total returns because of the dividend they pay but the actual stock returns are atrocious because they borrow money short term and the [00:12:00] assets they own or mortgage is long term, right?

So in a declining interest rate environment, it's just been a really tough environment then rates skyrocketing. So quickly is just Ramped up like the hard score for what they're trying to do. So I think it's interesting. I guess he's just predicting that interest rates are either going to stabilize or start to maybe decline a little bit, and if they've made it this far, it's probably going to be good.

Just total returns on the dividend. So I think that was an interesting one. And then like Walmart and Starbucks, I think is interesting because Walmart, I think he's thinking Walmart's going to do well, maybe the consumer is going to get pinched. So they do well in, in these sorts of economic conditions.

In Starbucks, I guess he's just thinking the recovery of China? I don't know, it's interesting. 

Jeff Santoro: He did say when he emailed us that he struggled with this, the whole like one year contest versus companies that you believe in the long term. So you know I think it'll be fun over the course of the year to hear from the people.

Attached to these portfolios to get their thoughts. But I think the one that jumped out to me is Nelnet. I own it and it's a[00:13:00] slightly tricky company to wrap your head around. They have a bunch of different aspects to their business. It's there. It's not. , as intuitive as looking at a very simple, , retailer that you're familiar with, it has not had a super great year, but I always wonder if that's just because the market has a hard time valuing the sum of the parts kind of businesses.

So I'm interested to see how that does over the course of the year from that aspect. And also because I own it Starbucks too, because. I'm very binary in how I think about Starbucks, and I feel like so much of their success is going to be tied to China, and China could be the thing that doubles the stock, and China could be the thing that cuts the stock in half, and so I, I think that'll be interesting to watch over the course of the year.

Lou's charity, by the way, was the Notre Dame Academy, which is the, I believe the school his daughter goes to. Yeah, that's correct. All right. Now the next one is interesting. It requires a little bit of explanation. Nick Rosolillo and Casey Rosolillo, who does the his YouTube channel with him, submitted a portfolio [00:14:00] together and Nick was on episode 55.

That was the time we had him on with us as a guest. He also we aired an episode where he interviewed you, Jason. I went on, 

Jason Hall: I went on his YouTube channel, chip stock investing. We'll have the link for that in the show notes in the transcript to but yeah I went on his channel talking about Texas instruments, I believe.

Jeff Santoro: Yeah. So we aired both. We aired that on our feed as well. Yeah. Yeah. Nick and Casey both do great work in the semiconductor space. So I can't honestly can't think of a better resource for people who are interested in learning about the semiconductor space in a very accessible kind of way.

Agree. Yeah. All right. They'd almost did a thing like we did last year where some picks were Nick's and some were Casey's and some were both. So let me give all the stocks and then we'll differentiate quickly. So their portfolio is Lattice Semiconductor, Microchip Technologies, NVIDIA.

Bold choice on semiconductor, pure storage, Qualcomm, [00:15:00] silicon motion technology, and Taiwan semi. And then they went on to clarify that Nick and Casey together picked lattice semiconductor silicon motion. TSM and Qualcomm, Nick picked microchip technology and on semi and Casey picked NVIDIA and pure storage.

So that's the whole portfolio. Who picked what? So Jason, to me, the one that I think is a little bit risky and it's the same thing we said with Mitch, with Mercado Libre earlier, NVIDIA, not because I don't think it's going to be a great business in 2024, but it's had quite a run in 2023. So from a stock.

Returns perspective. I'm interested to see how that shakes out and. I don't know that the portfolio itself is pretty tied to an industry. So I feel like if the semiconductor industry struggles in 2024, this could be a struggling portfolio and the reverse could be true as well. What I, you know this space better than I do.

So what jumps out to you? What stocks do you like? What do you [00:16:00] worry about? 

Jason Hall: So I think the interesting thing is, it's exactly what you're talking about. But I think directionally, like this is definitely a good time to be building a basket of semiconductor stocks because broadly semiconductor industry is in a downturn.

. You think about PC sales, think about the auto industry. A lot of the industrial parts of the business that use digital semiconductors same thing. It's in a downturn of this group. And again, some of these, I don't know, but I can tell you that Nvidia, we all know it's had a great year.

Taiwan semis had a pretty good year. The stock certainly had a good year generally, mostly because of Nvidia. . So it's been good for those two companies. But no, I do think the timing is good, but I agree with you. The NVIDIA one is it's definitely a bet that the uptake for AI is going to continue.

And I'm just, I struggle to believe that that's going to continue to be, that's going to remain the case at the end of the year. 

Jeff Santoro: Well, the thing I don't know enough about, and maybe you do, so I'll just ask it here is, the industry is in a cyclical downturn. Nvidia's results notwithstanding, but is 2024 the year that turns [00:17:00] around or is it going to be early 2025?

That's what I don't know. And I, but they know the space better than I do. So I'm guessing they think that's- 

Jason Hall: I think that's the real question. And the thing is most of these companies are pretty specialized in what they do, right? There's not a lot of companies like TSMC that they just make tons of different kinds of semiconductors for everybody. Lots of these companies do very specific things for certain industries. It'll, this is going to be maybe my favorite one to watch in terms of like it's implications broadly. Sure. It's just semiconductors, but it's tied to so many things.

Jeff Santoro: So yeah. I think this one for me with all of these, but this one especially is going to be fun to watch beyond 2024 and, by the way, we'll still end up looking back and talking about the 2023 portfolio throughout this year to just maybe not as formally.

Okay next we have Travis who was on episode 58 and he talked a lot about when he was on as a guest, he talked a lot about the asymmetric stocks that he's Looking for in [00:18:00] his asymmetric investing service newsletter that he does shouldn't say service newsletter. And he picked a bunch of asymmetric stocks that he believes in for his portfolio.

So here is his portfolio, Airbnb, Coinbase, General Motors, MGM Resorts, Portillo's, Peloton, Virgin Galactic, Spotify, and Zillow Group. So What about this portfolio, Jason? What stock do you think has the best chance of doing well in this contest? And what one do you think has the most concern tied to it?

Jason Hall: So I do think it's Peloton's kind of interesting, right? Because they've made their pivot and they're really leaning into the services aspect and less about the hardware, which I think is brilliant. Because that, that positions them better to be like, again, they're competing against Apple. I think Apple is their biggest competitor.

. If you really think about what they're trying to be like to be the fitness app, it's Apple is their biggest competitor. But I think the market is big enough that they can be a really profitable business and a good investment by just [00:19:00] focusing on that part of it. . The technology, the ecosystem, you don't have to deal with being a manufacturer.

If you can do let somebody else do all of that stuff, contract it all out, get it off of your operating statement and your balance sheet I think that one could be really interesting. GM is interesting too, because like his whole original thesis, I encourage people to go read.

His newsletter some of it's behind a paywall, you won't be able to see, but like his initial thesis for GM was like, it was two pronged, right? The big one was Cruise and autonomous transportation. I think GM owns 80 percent of Cruise. It's a substantial investment. And that's gone like nuts, not even sideways.

That's gone sideways backwards and halfway down the toilet. ? I mean, it's been. An awful year for a Cruise. But the other thing he talked about was like, look we also still own GM, which is one of the most profitable of the large automakers. That's got a great balance sheet is dominant in a couple of key areas.

And we're still going to have that big cash cow business and they're buying back at, they're going to buy back. I don't know, it's like 25 percent of the company, like the [00:20:00] share buyback plan that they announced. So I think it's interesting that he's sticking with. GM, even though one of the two prongs that was like a big part of his thesis is come unraveled and if not unraveled, it's certainly delayed by multiple years at this point.

Jeff Santoro: Yeah, I, those two jumped out to me as being interesting. I'll go with two different ones. Coinbase is interesting to me because of the uncertainty around how the government is going to view crypto exchanges. Yeah. , if. Yeah. If it's decided that. Cryptocurrency coins are securities and not commodities.

That's gonna, then basically they're running an un, unregistered exchange. I'm not going to get into the details, but, or it could go the other way and they could be fine. And with the collapse of some of the other exchanges, , we said this a long time ago on the podcast, like their biggest competitive advantage might just be to not be the fraud.

Yeah. Right. Yeah. So I think as long as the legal- 

Jason Hall: To be the publicly traded company that's the only grown up in the room, as Travis has put it. 

Jeff Santoro: Yeah. So I think as long as the legal stuff, and the [00:21:00] regulation stuff doesn't take them down, that they could have a good year. And Virgin Galactic is interesting to me because I feel like that could be an amazing stock, but it also could be an amazing stock in eight years and not in 2024.

Jason Hall: So that'll be, that'll be fun. If there's a time to make that bed, it's like a couple of the other stocks we were talking about from some of the other portfolios. It's when it's really, really beaten down. It's not a bad time to put it on your list. Yeah. 

Jeff Santoro: Yeah, for sure. We got two more here before we take a break and then do yours and mine.

All right, Brian for Aldi, who we had on episode 62, where we talked about. The journey he's been on to set up his whole series of things he's offering to the investing world. He has a book out, he has a lot of classes you can take to learn simple things about investing, like valuation and how to understand financial statements and things like that, he straight up said in his email to us.

That he is bottom feeding. He said, this is a one year contest. So I'm picking stocks that are [00:22:00] beat down that I think can have a strong comeback year. So his portfolio is Chewy. is It pronounced E Pam systems? Jason E Pom E Pom systems, Etsy, Paycom and PayPal. So what jumps out to you with this? 

Jason Hall: So there's what he says, and then there's what he actually put together.

He's bottom fishing from a collection of some of the most well known names in the things that they do that by and large are also very profitable companies, right? This isn't a list of penny stocks that, , could go to zero or- 

Jeff Santoro: yeah, no, I just meant bottom fishing from no, I know, but that's performance, you're the date now, right?

Jason Hall: Yeah. I mean, that's the thing about it's he's he said, well, here's a bucket of junk. Then there might be a, there might be a dollar bill buried in there somewhere. And it's like, These are some really good companies. That's the thing that really jumps out at me the most. 

Jeff Santoro: Yeah. Etsy and PayPal jump out to me because these are two companies I own and have vacillated between putting more money into or selling, which I [00:23:00] know, which sounds bizarre, but I could see both outcomes and.

If I believe it's going to do well now, it'd be a great time to add to these positions because they're both very small in my portfolio and also beaten down because I think I bought both of them in 2021 near the peak. But I'm also sometimes either too hard, too complicated. I don't know. It's such a little amount.

I might as well just cut bait and. Put my energy elsewhere. So those are the two that jumped out to me there. 

Jason Hall: Yeah. The Etsy one in particular, I agree with you on. I just, I've never been able to like, I have some, there's something in my brain that like just rejects PayPal. I don't know what it is. So I don't fight it because there's lots of other good stocks to pick out, to pick on or to pick from.

But Etsy to me, I think you're right. Because I think we did a video about that when it's we went into the video and we were both like, I feel like selling it. And then we went through the whole process. Yeah. We reset our expectations of the potential of the business and then looked at the financials and the balance sheet and like what progress they've made and it's you know what, throwing everything that's happened the past three years out the window, looking at the [00:24:00] business of what it is today and it's you know what, if I'm looking for a bargain for a cash cow business, it's buying back stock and has some potential to grow.

Etsy is really compelling. So it's going to lose 25 percent of its value this year, just because I think it's interesting, right? 

Jeff Santoro: Yeah. Well, then they just laid off 11 percent of their workforce a week or two ago. So I, that's a terrible thing to have to happen, but sometimes that can, what's interesting to me is I wouldn't say they were struggling with, , profitability or cash burn, which is typically a reason that companies do layoffs. They phrased it as just becoming more focused on what they think will drive more growth on the top line and with users and our buyers and sellers. So we'll have to see how that. 

Jason Hall: Yeah. I'm going to call it. I'm going to call that out.

Basically, you read between the lines and what they were saying is we can't grow. So we're just going to shrink our payroll. That's what they did. That's what they did. 

Jeff Santoro: No, I get it. I agree with you, but that's not going to increase revenue growth, and that's not going to increase buyers, and that's not going to increase sellers.

So that's why I don't get it. 

Jason Hall: It pisses me [00:25:00] off. They did something in the short term to appease large investors. That pisses me off. 

Jeff Santoro: All right. The last portfolio we have before we Do the break is our good friend, Jim Gillies. Now, Jim was on very recently on our last first Friday's episode, the one that was for December 2023.

Jason Hall: He was our week of the week that Charlie Munger passed away. 

Jeff Santoro: Right, that, the very first week of December. sO that's when his 2023 appearance was. But you should also go back way into the way back machine and listen to episodes 24 and 25. Jim was actually I think our first guest or one of our very first guests. 

Jason Hall: And it was such a great conversation and by great, I mean long, we had to make two episodes out.

Jeff Santoro: Yes, it's a two episode Jim Gillies special episodes 24 and 25. So go back and check that out. So. Jim really struggled with our contest, Jason, because he wanted to make clear that he thinks that the one year contest idea is silly and wanted to caveat his picks [00:26:00] with that. So for everyone listening, we agree with Jim.

This is purely for fun and for charity, and we. Do not believe that people should making be making investing decisions based on short term timeframes. He also wanted to make very clear that it was okay for him to pick Canadian stocks. And I said, yes. And he wanted to make clear that we were going to use dividends in the returns.

Jason Hall: The total returns. 

Jeff Santoro: Total returns. So the spreadsheet you can all see will not include dividends on the page that shows the daily price because that's not a feature available in Google Sheets. But when we do the monthly and quarterly reviews and results, we will do it dividend included. So everyone knows that.

I waited to be able to explain it because I know Jim wanted to make sure that was made clear. Okay. This is absolutely the portfolio with the least amount of stocks I've ever heard of. In fact, there's only two on here that I'm aware of. So here they are. Aircap Holding Holdings, Avlo Petro Energy, Chegg, Excelsius Incorporated, Hamilton, [00:27:00] Say that?

Exalexis. Exalexis. Okay. Hamilton Enhanced Canadian Bank, which sounds awesome. What's this one, Jason? Nu, Nuvi? Nuve? Sure. Okay. Nuve or Nuvi Corp. And Prague Holdings. P R O G Holdings. I knew this would be A portfolio of strange stocks, but I wasn't sure it'd be this strange. So what's your take on Mr. Gillies' portfolio? 

Jason Hall: So the first thing friend of the show, Colin Roy, you probably recognize some of these because you're Canadian, because a lot of these are Canadian, right? So that's Jim's in Canada. So that's, , I'm glad that we've got that variance, but then I think the other thing is there's definitely his value bent is here because, I'm sure these are mostly fine businesses.

Some of them like AerCap is the very best at what it does, but by and large, I would guess that a handful of these are probably just fine businesses that he thinks that the valuation is enormously attractive and management's ability to execute and generate per share [00:28:00] cash flow and then do smart things with the cash flow is more important than the quality of the business itself.

That's my guess. That's my guess. 

Jeff Santoro: And I should point out, Hamilton Enhanced Canadian Bank is an ETF. I didn't say that when I read the name. 

Jason Hall: Oh, Hamilton Enhanced Canadian Bank ETF. So he's, this is, that is a bet, that is a bet on the Canadian banking system is my guess. Yes. Which is like nine banks if we're being honest.

Jeff Santoro: Jim is very bullish on Canadian banks in 2024. I've heard him say that publicly on other podcasts. Anyway I love Jim. I think his way of looking at the stock market is fascinating. So I am very interested in watching this portfolio throughout the year. 

Jason Hall: I will also posit about Jim that like, not only has he proven to be a good investor over the longterm, like the services that he picked stocks and all that kind of stuff. They've, he's consistently generated alpha now and outperformed the market right over the longterm, but like every year, like his track record of beating the market on a yearly basis is incredibly high. So this portfolio, I'm not going to say will. But I'm going to predict that this [00:29:00] portfolio will outperform whatever, whether you benchmark it against the S& P 500 or the Canadian TSX, whatever their benchmark is.

I believe that this is going to outperform the index. Is it going to be the best portfolio? That's another question. 

Jeff Santoro: Yeah he gave us some notes here since these are lesser known stocks That I'm not going to read now, but we can refer back to the notes. Yeah, you got the email. We can refer back to these.

The only two I know of our air cap holdings. That's a aircraft leasing company. Finance. Yeah, he's talked about that on a few podcasts I've heard over the years. And I know of the company too. Yeah, I know of Chegg because it's an education. It's a company that helps kids cheat on their college assignments.

And I it got 

Jason Hall: a lot of money in that, you know.

Jeff Santoro: I know. It got smashed earlier in the year and that's when I, yeah, that's when Jim thought it became a compelling investment, if I remember correctly. So he thought the, this, the beating it took was overdone. 

Jason Hall: The thesis was that artificial intelligence was going to completely undermine their business.

Jeff Santoro: So there you [00:30:00] have it. Those are the eight. The eight portfolios are our eight guests who we will chat with and refer back to over the course of the year. As of right now, we're planning to do the same cadence of last year where we'll do a show around these portfolios each quarter. And we will recap on a monthly basis in some way, either very briefly on the second half of the show, or maybe just in our newsletter that we're still trying to figure out.

But again, we will declare a quarterly winner. And then a year end winner and we will all donate to that winner's charity and have a lot of fun this year. All right. We're going to take a- 

Jason Hall: Before we take a break real quick. I don't think we did it for every single stock. Just want to mention the charities again for everybody.

So again Mitch Fatel, Wounded Warrior Project, Brett Schaefer Helensky's Hope Foundation, Ryan Meals on Wheels, Brian Feroldi, The Ocean Cleanup. I'm a huge supporter of that. Lou Whiteman again with Notre Dame Academy. I've given some money and the byline for that one, if his wins one, just put "Lou Whiteman is a giant nerd."

Yeah. Admin loves [00:31:00] that when she sees it, it makes her so happy. 

Jeff Santoro: You have to, if you, if he wins and you give money, or even if he doesn't win and you give money, you have to say that Lou is a big, big fat nerd. 

Jason Hall: Nick and Casey Rosolillo Hospice Foundation of America. I believe Casey was a hospice nurse at one point in her professional life. Huge supporter of nurses in general. 

I don't think Travis has given us I think he wants us to give to The Travis Has Two Kids Foundation, now Join Asymmetric investing- no, we'll we'll get we'll get one. 

Jeff Santoro: Yeah, I wrote him back and said hey, don't forget to give us charity He just hasn't gotten back to me yet So we'll have it on there before way before we get to the first quarter. 

Jason Hall: And then Jim Gillies Our friend north the border the Alzheimer Society of Canada. Alzheimer's is an emergent and expanding problem as the boomers age and become a larger and larger portion of the population.

So another charity I support. Okay. I'm going to go get another oatmeal stout. Jeff, you gonna get a tea? 

Jeff Santoro: No, I'm all right. Stick around. We will reveal our portfolios after this short break. 

Jason Hall: Hey everybody. Welcome back. I did not get another oatmeal stout. I have [00:32:00] moved on to the Polar sparkling pineapple lemonade, seltzer, fine folks at Polar. 

Jeff Santoro: Probably a good call, probably a good call.

Jason Hall: How's that tepid tea? 

Jeff Santoro: I'm done. I finished my tea. I the caffeine's coursing through my veins. I feel great.

Jason Hall: Nice. Nice.

Jeff Santoro: All right. How do you want to do this Jason? Should we reveal our portfolios in full one at a time? You want to go back and forth and just name stocks? How do you want to do this?

Jason Hall: I mean, if you wanted to go ahead and just take the stand and congratulate your opponent on a great, you could do that now. Save you an entire years of abuse like you got last year. I'm kid. I'm totally kidding. I'm totally kidding. Let's just go back and forth. 

Jeff Santoro: Okay, mine are in no particular order.

So I'll just-

Jason Hall: Let me ask you this. How many stocks first of all? 

Jeff Santoro: I went larger. I think I have nine. I have nine. Yeah, I have nine stocks. So let's do this before we go back before you go first. Okay, but before we do let's quickly what was your overall strategy? Or a thought process or [00:33:00] whatever in picking your portfolio.

Jason Hall: So last year I did a combination of picking a couple of beaten down stocks that I thought would probably have good years. And I was huge fans of their business. That's CrowdStrike gone parabolic. Trex has had a terrible year, but the stock's gone up because housing, I guess. And then Lemonade was like my moonshot turnaround.

And it's done fine, right? It's done. It's done fine. So I thought I would do something completely different this year and because my portfolio is going to win like it's like the third quarter of the fourth quarter. It's nuts. What's happened? 

Jeff Santoro: Oh, you mean this year? Yes. No, it is. It is almost guaranteed. Yeah you crushed it. 

Jason Hall: I'm going to save my gloating. I'm going to save my gloating for that episode. But I want to acknowledge like the complete randomness Aspect of this. And I'm taking a little bit of the Brian Ferolid approach. And I'm bottom feeding and I'm bottom feeding specifically stocks that I own.

And some of them are far lower quality than the high quality businesses that Feroldi said was bottom feeding for him. [00:34:00] What about you? 

Jeff Santoro: So I chose only stocks. In my portfolio, and I chose mostly stocks that I thought either are beaten down this year, or even if they've had a good year, I think should still do well.

And I picked at least one just to troll you. 

Jason Hall: Oh, that makes me so happy. Let me say, let's do them alphabetically, because I'm sure we're going to have some overlap. I'm almost certain we're going to have some overlap. 

Jeff Santoro: Oh, mine are not listed alphabetically, I have to think. Okay, alright, I'll go first.

I think I can do the first one alphabetically successfully. Alright. And my first one is CrowdStrike. Okay. All right. Now not beaten down. Has had a fantastic year. 

Jason Hall: That's up like 150 percent this year, but still way down from the peak. 

Jeff Santoro: And I, I don't think it's stupid expensive. Like just looking at, valuation metrics.

It's not like it's 150 times sale, earnings or something crazy like that. So I've said for as long as I've been talking into a microphone that I believe in the cyber security space. I believe [00:35:00] CrowdStrike is a leader there every single quarter the results come out and I'm like, yep, not much to pick apart here.

So I don't think it's going to go up another 150 percent this year, but I think it'll have a good year. I think it'll be a good stock in my portfolio. So my first one is CrowdStrike. 

Jason Hall: All right. So we're going alphabetically. We're going to have to go backwards here because we're gonna have to go to the B's.

I wish those of you that are watching the podcast, I wish you were watching the YouTube. So you could have seen Jeff's face just now. 

Jeff Santoro: I didn't know what you were talking about. You'd made no sense for a second there. Anyway, go ahead. What's your first one? Stock that begins with a B. 

Jason Hall: Stocks way down. Had a bad year. Jeff, I own it. Boston

Omaha. Yes, sir. Yes, sir. 

Jeff Santoro: Oh, crap. That was, that actually was my first one. I just, I told you my list was in alphabetical order. 

Jason Hall: Oh, Jeff. Ladies and gentlemen, Jeff Santoro, educating New Jersey's kids. 

Jeff Santoro: Oh, I'm not educating them anymore. Thank God they got me out of the classroom.

Jason Hall: Supervising the people educating. 

Jeff Santoro: That's right. All right. Well, anyway, we both picked a stock that I had a feeling you'd pick it too. So I think that's interesting. So why don't you talk about it? I [00:36:00] won't. So this is a bet. 

Jason Hall: So we talked about the, in the prediction show and a little bit on earlier in this show about how much the, like it's been multiple expansion with the magnificent seven, a lot of stocks really this year, it's multiple expansions, what we've seen driven the market up over the past few months.

Not earnings growth. I'm expecting multiple expansion from Boston, Omaha, right? I think they're probably, maybe they're going to grow a little bit too. I think maybe some of the things that they've been planting the seeds in are going to start to produce fruit and they're going to be able to grow earnings and cashflow.

But at this point, I haven't looked in a week or so, but for most of the past. Most of the year, the stocks traded at a discount to book value. And this is a business that generates positive cashflow, right? It's not like they got a bunch of debt and that book value is getting eroded because they're running out of money, right?

And then they're burning cash or something like that. It's a, they can live within their own balance sheet. And it's a discount to book value. And that just seems excessive to me. It seems like there's just an excess of negativity around the business. And the [00:37:00] business hasn't performed well but I do think it's just, there's going to be some multiple expansion just to normalize to a more reasonable valuation for a perfectly fine business.

Whether the potential turns out to be what we hope for is another story, but I think the stock should move up just because the business is fine and it's too heavily discounted. 

Jeff Santoro: What about you? I agree with everything you just said. There are two. So we have a coworker at the Motley Fool who follows this company very closely, Matt Frankel.

And he was just on the Motley Fool money podcast a few weeks ago, talking about Boston Omaha. And there were two things he said that made me want to keep this on my portfolio for this year. 

Jason Hall: You should have told me about this beforehand. I would have picked a different stock. No, I'm kidding. I'm. 

Jeff Santoro: So the first thing he said was about the, that it trades at a discount to book value.

His point was book value he thinks is actually undervalues the business generally. So then a discount to book value would be even more of an undervaluing of the business. So I thought that was, and I trust Matt's, analysis of that. So I thought that was an interesting. thing to [00:38:00] hear. And he actually had a conversation with one of the co CEOs.

I believe it was Alex and expressed, I guess he expressed his concern that they don't give out a lot of information because they don't do conference calls. They don't do press releases. They just drop the SEC filing and that and to do an annual letter and that's it. And Alex Roszak agreed that they probably do need to communicate better but didn't know how to do that.

And but at least he's. Acknowledging that's a thing. Cause that's been my frustration. Like I'm asked, I'm interested in the asset management business, but you read the 10 Q and It's like a paragraph and it's not very descriptive, so I, I want to know more about that. And if they're going to at some point figure out how to be more communicative, that's good.

So I picked it. I think it's undervalued. I think it could have a bad year, could have a good year, but that's why I went with it. All right. So this brings it back to me. All right. I'm double checking my alphabetical list here. Okay. I think I got this correct alphabetical order this time Jason. starts with a D and I used it to troll you. [00:39:00] What is my next stock? 

Jason Hall: Oh, dream finders homes, ladies and gentlemen . 

Jeff Santoro: It is. So Jason and I have been going back and forth about this stock for a while. 

Jason Hall: The asset light home builder that has, that's got a level of debt to equity than any of the top 10 home builders in the United States.

Jeff Santoro: I understand that side of it. I'm not saying it is a risk free investment. It has had a very good year. So I be picking it at the exact wrong time. It is the only home builder I own. I know it fairly well, and I think homebuilders should have a good year. That's the very basic reason I chose it.

And I'm 100 percent honest, since this is just a fun one year game, I did pick it to troll you. Because on the off chance it has another great year, I will be able to bust your chops about it the entire year. Absolutely. 

Jason Hall: I just, I think it's interesting because, I do think most homebuilders are going to have a very good 2024.

I think their businesses are going to have a good 2024. They're probably going to build more houses than they built last year, mainly because the two years before they blasted through their inventory because the demand went incredibly high and they just, they couldn't [00:40:00] build the houses fast enough.

And that's slowed down. The rate data looks good. Interest rate data for mortgages, right? So that's positive. There's no inventory of existing homes for sale. And those are all positive things. And there's tons of pent up demand. So I think you're right. You're going to have good years. The problem is the stock market also thinks that, and it has bid up these stocks across the board at home builders, and I think a tremendous amount of 2024 expectations is already priced in, right?

I really do. But I do think also that if you're going to bet on a home builder, that's not a terrible one to bet on because they're smaller. And like their cadence for because of the way they acquired land and all that stuff, like they didn't have the land inventories that some of the bigger ones did, they just bought land and they could move quicker, right?

Versus these guys with their options where they can't move as quickly depending on the seller of the land and that kind of thing. I think it's an interesting pick. It's far from my favorite home builder, but it's probably one of two home builders that I would have picked if I was picking a home builder for this year, but I'm not going because I think that's a stupid, stupid pick for this year. 

Jeff Santoro: I love it. I don't care if it's wrong. [00:41:00] It'll just be fun to talk about for the year. All right, go ahead. 

Jason Hall: You know, just because I own some and also because I want you to be able to pick on me for something. 

Jeff Santoro: All right, go for it. What's your next one? 

Jason Hall: Okay. I have to jump all the way to the E's and I'm going to go with Enphase.

So this is definitely a bottom feeder. This is one that's been smashed. They're good news. They're good. Recent news was that they were cutting 10 percent of their staff and they were shuttering to manufacturing facilities. And when that's good news that sends your stock up 8 percent things are really crappy.

Yeah. So the short version is the solar industry, particularly rooftop solar, largely residential. They do some commercial, but residential is like the big base of their, they make the inverters, microinverters and batteries. anD between them and SolarEdge, they do like 90 percent of North America's like the electronics for the distributed solar and they're growing their market share in Europe, but this is really the first time in like the current iteration of their business. You go back to like [00:42:00] 2016, 2017, like they had, like they got their stuff together and like really built, this is what we're going to be. And they've executed incredibly well.

This is the first real downturn they've gone through. Solar is very cyclical. It's part of the energy business. It's very cyclical broadly. . So this is like the first time that they've gone through a period where they're actually seeing revenue declines. And man, is it declining, like their revenue from like the second quarter.

I think the second quarter of 2023 was like 700 million and change roughly. I think it fell to 500 million last quarter, the third quarter. They're expecting it to be 325 million at the midpoint of the fourth quarter. That's fallen by half. In less than six months, right? That's just a gutting of it.

And the fact that they're saying, yeah, we're going to cut 10 percent of our head count and we're going to shutter two of our manufacturing facilities makes it pretty clear that they don't think the worst is over.

Now here's why I'm picking them. Those are terrible things for any manufacturer to be in. They use contract manufacturing. They own the equipment that's a big part of their IP. So they're canceling, they're terminating their contracts with these [00:43:00] contract manufacturers and they're relocating the equipment from those factories to two of their us based factories. And ramping up the capacity in those factories.

So I've talked about one of the things I love about the business is the fact that they are pretty asset light for me. Like they use the Apple model, right? Where you just have other contract manufacturers do it. So this is where they're flexing that, right? They're bringing their operating costs down a ton and they got a really strong balance sheet, so they're going to be fine through the downturn.

And this is one of those periods of the vibe is super negative. On residential solar and I think by the end of the year, the vibe is going to be really good and this business is going to be fine and there's going to be really good expectations and the stock's going to go up a ton.

Jeff Santoro: This has been on my watch list for a while and it was originally on my watch list and not in my portfolio because it was very expensive. I think it's still expensive even after this. I haven't looked recently, but I guess my biggest concern to come for the business. I really do. My biggest concern is considering most people don't lay out the cash for solar panels and they[00:44:00] finance them, I feel like we're gonna have to see some moderation and interest rates for them to really pick up back steam, pick steam back up.

And I don't know if that's going to happen in 2024, but it certainly is, has been beat down. 

Jason Hall: Things have got to get cheaper. That means either interest rates have got to go down or you've got to cut your prices. 

Jeff Santoro: All right. So my next one. Also, in the E's, is EPR, which is a REIT. So I wanted to pick, I have another REIT coming up later, I wanted to pick some REITs that I own because they had a crappy year and I feel like they shouldn't have and are probably being overly punished because of interest rates.

 EPR is interesting to me because they, I believe the E in EPR is experiential, right? So they EPR properties. Experiential properties. Yeah. So they have things like movie theaters and top golfs and amusement parks and stuff like that. Like those are the properties that they own and it's been beat down largely because of the Exposure to movie theaters over the last several years.

In fact, [00:45:00] their regal, which went through bankruptcy, just came out of bankruptcy. And that was on their portfolio book, a book of portfolio of properties. And that got resolved. They have about 40 percent exposure to movie theaters. I believe something like that. 

Jason Hall: I think it was 41 or 42 percent at the end of the 2nd or 3rd.

Jeff Santoro: Yeah. So and they're trying to diversify away from it. They're trying to, as they, if they add another Property they're trying to have it not be a movie theater to diversify away from that. So I think owning experiential properties is not a bad business to be in. And I would like to see them improve and I own it and I figured let's see how reads do this year.

So I went with EPR properties. 

Jason Hall: Yeah, it's, I think it's a smart play. I really do. Some things got resolved for them last quarter, the regal bankruptcy that was resolved in August. I don't think they really affected their rents hardly at all. They had one tenant that was, had a bunch of deferred rent, but they were acquired by another theater operator that paid all the deferred rent.

? So it's I think the [00:46:00] worst case scenario for the theater industry is probably, I Small really small chance that it happens. And then I have a bunch of debt maturities coming on all their debts, fixed rate. They don't have any maturities this year. Like I think they're going to roll into 2024 in really good shape.

So I'm, I like this book. I really do. That's terrible. . For you. I'm pretty sure you think that's bad. 

Jeff Santoro: You just jinxed it. It's done. All right. What do you got next? 

Jason Hall: Let's see. I'm really good at this ABCs things too. I'm terrible at it. Okay. This is another one. That's also a little bit of a troll. Outset medical.

Jeff Santoro: Guess what my next one is? 

Jason Hall: Is it you're going back to the well, we both pick outset. 

Jeff Santoro: Yeah. So let's both talk about it. Go ahead. You can go first. It was your turn. 

Jason Hall: Yeah. So this was in Jeff's 2023 portfolio. It's the worst performing stock in the entire portfolio. 

And the reason I'm going to say it's the worst performing stock in the portfolio is because my two unportfolio picks, I think one of the two has done worse than it has.

But it was supposed to do worse. So worse is better, right? 

So it's just been a terrible, because their business has struggled. So these are the guys doing the [00:47:00] dialysis machine, like the home dialysis, the small dialysis machine. Wonderful thing for humanity, but they're running headlong into the challenges of changing behavior and incentives and making change in the healthcare industry is really tough. They had a little bit of regulatory stuff, but I think they've worked through all of that. But I think a lot of the worst case stuff is stocks come up a little from like the low points. But I do think they're going to get some traction next year. 

I do think they're going to get some traction next year or they're going to get acquired. One of those two things is almost certain to happen. 

Jeff Santoro: They had a month or two span where just. Every news was bad. Yeah, they had the FDA the issue with one of their the one version of their device where they paused sales of it and it's a popular version.

So people, rather than buy a different version, people just waited. So they saw a big decline in revenue, but they also saw a positive, which was these people weren't dropping out of the pipeline. They were just waiting. So theoretically, once they get this resolved and start selling that device again, all those orders should [00:48:00] come through.

And then there was a word that Ozempic was good for kidney stuff. So that sent the stock down and then they pre released the bad earnings that I just talked about and that sent the stock down. I think all those bad news events In a row, probably compounded on each other and had the socks on, that's for sure.

Had the stock sell off more than I think was correct. So I guess we'll find out. So yeah, I have it on my list too. I'm doing it two years in a row. Maybe I'll be an idiot for picking it two years in a row, but I, it's just so beaten down now, I feel like it's gotta head back up. 

Jason Hall: I'm eating a little bit of my own cooking here too, because this is one that I had a very small position in from a couple of years back.

And I've added to it in the past couple of months, a little bit, I bought some shares. So a little bit of conviction there too. Okay. Your 

Jeff Santoro: turn. 

TEchnically it's yours because I had odds at two, so go ahead. Okay, 

Jason Hall: Let's see here. S, L, Q, R, S, T, V, S, okay. 

Jeff Santoro: All the rest of mine start with P, so I really have to think. I gotta go to the second letter. 

Jason Hall: Are you serious? That's nuts. [00:49:00] Stem. Ticker STEM. Stem. So my, from the 2023 Reckless Prediction Show, this is my stock for 2023. And they've gotten wrecked because they're exposed to solar through an acquisition they made.

Jeff Santoro: No, they got wrecked because you picked them. 

Jason Hall: Fair. Fair. But management also made some questionable decisions. The timing for buying Also Energy, that's just, that happens. Like it's, that business hasn't really been, it's been fine though. Cause it's they're Helping like manage utility scale and commercial solar assets.

But the core business is batteries and Athena, which is their AI software. That's super high margin. And it's 20 year contracts. It's this great thing. But they spent all their money buying Also Energy. And then interest rates have gone up. 

And the reason I'm picking it is because management has really tightened the belt.

They've really focused on generating good unit economics and not just throwing money out there to buy stuff. Like you got to grow the business and you got to grow cash flows.[00:50:00] And they're from the end of the second quarter through the end of the year, they're actually going to increase their. Their cash on the balance sheet.

So they're generating positive cashflow. That's part of it is timing because they've already paid some money to buy inventory and stuff on batteries and that kind of stuff. They're monetizing it and they're selling the batteries, generating cash without necessarily ordering new ones. So it's a little bit of like a working capital kind of shell game, but it's a really positive sign that they're going to end the year with more cash because that means they have more time to let things stabilize.

And expectations are so low right now, Jeff, that I think I think it's going to be a good year.

Jeff Santoro: All right. So my next one, this is my, this is me kind of stepping out a little bit. So it's one of the newer socks that I own. It's one that is newer to the public markets. And I have a little bit of a bias towards it because of it's tangentially related to some stuff I've been dealing with at my job for the last couple of years.

And it is pro core technologies, which is a construction management software company. So essentially [00:51:00] we've done a lot of building in my, the district where I work over the last several years. I've been in a lot of construction meetings with Contractors and architects and subcontractors, and I noticed that I was surprised at how much of the industry runs on email me this.

I'll send you that. Here's a paper copy of that. And Procore is a company that's trying to get all of those different aspects of construction onto. A platform so that everyone is in the same, , dashboard and all the time, all the files are there, all the deadlines are there, all that kind of stuff.

So they've only been on the public markets for since like Q2 of 2021. So fairly new since its IPO. Is growing revenue really nicely. It did slow down the last couple quarters, but then it stabilized. It's been 33 34 percent for three quarters in a row now, so I think that's a good sign where you've seen so many other companies see the revenue growth decline, not profitable yet, not consistently cash generative yet, but making slow steady progress towards those things.

[00:52:00] So I don't know, this is a little bit of a, I don't have a high level of conviction in this company. I like what they're trying to do. I'm tracking results and seeing them trending in the right direction. So not a big position for me in my personal portfolio. I'm happy with the direction it's going.

So pro core. 

Jason Hall: Is it sounds like Basecamp for construction, right? So basically project management software. So that's an interesting one. 

So this, my next one in the S is here. This is like my one stock that is not bottom feeding at all. And that's SoFi. It's doubled this year, but the vibe is still bottom feeding because the market's still relatively down on banks.

It's a lot of bank stocks are up since May March or May, when the bottom started to happen with the banking crisis this year. buT there's still a lot of concern about banks out there. And I think SoFi has a tremendous amount of room to run. The customer acquisition costs are coming down.

They're starting to get really close to generating because they're getting that cost under control and they're getting scale everywhere else and. Proven really sticky. Like customers sign up [00:53:00] for one thing and then they add another financial service product. Yeah I'm SoFi. That's my one bottom feeding vibe, but actually a stock that's done really well.

Jeff Santoro: I like that. 

So I have three more. I dunno how many more you have, but we can get through these kind of quickly. Three more. Yeah. So the next one for me is Health Peak Properties. So it's a reit. It is one that I'm admittedly we're going back to the h's. No, the ticker is Peak. I was going by ticker name. 

Okay. Okay. Not by company. PEAK is the ticker in the company's HealthPeak properties. So I will admit, I don't know much about this. I've owned it for a long time. It's a very tiny like starter position. I've been intrigued by. It, in the sense that it's one I've wanted to add to, because I like what it, I like the area of the REIT world that it works, that it lives in, which is the properties they own are things like buildings that pharmaceutical companies, use and, labs and things like that.

So it's like a specialized kind of real estate that seems durable to me. 

So I want to learn more about this. I don't have much to say [00:54:00] about it. I want to learn more so that in my own portfolio, I can decide if I want to add to it. I did want to throw some REITs in here, as I said. So that's the other one in addition to EPR. 

Jason Hall: And that's so interesting because, I'm between the two of us I've owned a lot more real estate than you do. I don't have a single REIT in my portfolio this year. Zero. Zero. 

Okay. Let's see here. Next TPI composites. TPIC. Yeah. 

Jeff Santoro: Wow. 

Jason Hall: Yeah, no, tell me about it. Old. And here's the thing. This stock, this, it stocks up 63% since December 12th. Eight days, it's up 63% now Jeff, you should ask me a question.

Ask me. Ask me how it's done this year, 

Jeff Santoro: I'm gonna answer your question. I think it's down significantly. Even after that 61% jump. 

Jason Hall: It's down 68% since the first trading day of the year. It's down 78 percent since like a week after the market started trading in 2023. It's down a ton.

Management, man. They got this business so upside down and almost defaulted on [00:55:00] some debt to the point of like bankruptcy.

Jeff Santoro: Sounds great.

Jason Hall: Yeah. Right. But so they've, here's the thing. Like they got oak tree capital basically bailed them out. . With some like this is the oak trees. Like it's a great company to own. They're part of Brookfield now. But they're like, they're the payday lender of the corporate world.

They took on debt at 11 or 12%. I think it was 11 percent interest. That sounds like not terrible now, but when they took it on interest rates were still like three. So like they were in a ton of trouble, but they just, when the stock's gone up so much recently, it's because they renegotiated some terms.

And got a little more debt access to a little more capital and better terms. So there's pot, there's progress that's been made on the finance, on like the balance sheet side. And then if you look at like the core business, they made some progress operationally. All of their customers, which are like the biggest wind turbine manufacturers in the world.

They make, these guys make the blades, they contract manufacture the blades. Basically, all of their large customers continue to do better and longer [00:56:00] term deals like the cycle has been tough because like they've had to pull back on things here and there, but like the trend is still definitively that their customers want to continue to do business with them.

And I do think that the wind industry is going to get a little better this year. And. The market's going to come back to this one, maybe in a very big way. 

Jeff Santoro: I think that'll be your worst. That'll be your worst performer. 

Jason Hall: Ah, it'll go bankrupt, right? Yeah. 

Jeff Santoro: Let's get the last two last couple here done quickly.

We're running kind of long. All right. My next one is Progeny. So this is a small company that I also need to learn more about. It's another one that's a tiny position in my portfolio, but they help. Companies who want to offer fertility services through the health benefits that they offer to their employees, Progeny does that for the companies.

And it's another one of those companies where I've been tracking results for, Oh, a couple of years now and every quarter they come out with results and every quarter I'm impressed, things heading in the right direction, growing nicely. So I'm playing off of [00:57:00] some of the smaller stocks in my portfolio that I want to learn more about and possibly add more to and that one fits the bill in that sense.

So Progeny is my second to last pick. 

Jason Hall: All I can say is that I know nothing about this business, but if there's a business that I want to become far more valuable than it is today. It's the, I know a lot of families that have struggled with fertility and business that helps facilitate that, count me in.

Yeah. I mean, I'm happy with one kid, but count me in as an investor. 

Jeff Santoro: But you know, and so just a couple of things really quick. Revenue growth consistently above 25, 30% profitable cash generative. And expenses as a percentage of revenue coming down consistently each quarter. The utilization of their products is growing.

Their average number of members is growing pretty steadily, flattened a little bit the last couple quarters. Again, I don't have a ton of conviction in it because I still need to learn more about it. We'll see how it does this year. Is this your last one now or second to last one? 

Jason Hall: I have two more.

Jeff Santoro: All right. Go for it. 

Jason Hall: Quantum scape ticker QS. [00:58:00] These are the solid state battery startup. 

Jeff Santoro: So why now? Cause I feel like quantum scape is one of those, might be great in five years, 10 years kind of a stocks. What do you see in 2024 that- 

Jason Hall: They've been so good about like hitting timelines on their development and the feedback.

And of course, what we're getting is very filtered, but like the third party feedback on samples that they're producing. Generally look really positive. They've got six OEMs signed up as customers and there's probably some pretty big cart. We know Toyota's or excuse me. We know Volkswagen's one of those partners.

They were an early investor in the company. J. B. Strabel is on the board. This is. One of Tesla's co founders, I think it was the chief technology officer at Tesla and Redwood materials. His startup is they're working on recycling and materials for lithium ion lithium for largely for like EVs.

So they got some really smart people in the room. You look at the results so far, it's really positive. They've just started hiring in the past. A couple of quarters, they've started hiring [00:59:00] executives from companies that manufacture precision electronics, like semiconductor industry people. So they're starting to bring in the people with the expertise in manufacturing.

And it all lines up to like late 2024 being the year where we start seeing like actual commercial production come online. And taking orders from partners and things like leveraging JVs to help fund CapEx for building these facilities. I think this is going to be the first year where we're going to actually see meaningful, real, like actual economic value of the business.

And I think the market's going to start to price that in. I'm willing to, and I'm not actually having to buy shares. I'm just putting the tickers on a spreadsheet because it's a contest. 

Jeff Santoro: So yeah I, this is, I've had the same vibe with my portfolio for the contest is definitely not the ones I'd be adding to right now, just cause I.

Like I said, there's a couple that I have middling conviction on or need to learn more about, but trying to have a little fun this year. And I also wanted to pick ones that we don't talk about [01:00:00] much on the show, since we're going to be talking about these a lot over the next year. All right, here's the last one for me.

We talked about it a little bit in the first part of the show, cause it was on someone else's portfolio. But my last one is PayPal. I own it. It's one of those I've decided I've tried to decide between selling it or adding more to it. The reason I want to sell it sometimes is I find it.

Complicated and difficult to follow because there's so many little weird parts about the business So my thesis for picking it is big picture stuff So one everyone uses Venmo and everyone and a lot of people use PayPal I think that is something that should not be ignored. They have a large user base and The last several years have been bizarre for several reasons.

So they spent a few years trying to get out of their Relationship with PayPal or whatever they did. They spun PayPal out that was affecting results for a while as they were having year over year comparisons to that. They had a management team that lost focus and tried to make PayPal into an everything app.

And [01:01:00] now they have a new CEO. What seems like renewed focus a. Emphasis on, power users versus growth at all costs, and it's cheap. It's like the cheapest multiples is traded at since it's been a publicly traded company. So I just think there's too many big picture positive things with this company to ignore the stupid low valuation.

So this management team can be. , even just modestly competent and get a little more focused. I feel like they can turn things around. So my last one is PayPal. 

Jason Hall: All right. My last one's Wolfspeed ticker. W O L F.

Jeff Santoro: You are going wild.

Jason Hall: Yeah. Yeah. So analog semiconductor producer. So silicon carbide is their product. It's a materials. 

Jeff Santoro: You mentioned this stock in the episode with Nick. And I think he called you a wild man. 

Jason Hall: He might have, yeah, he might have. The stocks down about 50 percent since that conversation round figures. Just because it's been slow, like the stock was, it was like really high interest at the time [01:02:00] in the stock.

And they've had to spend a bunch of money cause they're bringing more capacity online and they're going with a larger form factor. To make these silicon carbide chips and they're going against a pretty big competition like Texas Instruments in the analog semiconductor space, the differentiator is that the silicon carbide chips.

Can handle higher currents and work better in more extreme environments. So there's a lot of like potential advantages, but it costs more. So the market's wondering if the cost differential is going to make sense. And I think there are a lot of applications that it will. They're experts in what they do.

They're leaders there. And the stock's so beaten down I'm. Taking the bet that the things they're bringing online in 2024, combined with the downturn in the semiconductor industry, because a lot of their end markets were down. I think it's going to be a big bounce back here.

Jeff Santoro: All right. Well, this has been a long episode with a lot of stocks mentioned. I'll count them up at some point, but it's a lot. 

Jason Hall: What's your portfolio this year? Have you decided? 

Jeff Santoro: My charity? You mean? 

Jason Hall: Yeah. Sorry. You're what's your charity this year? Have you decided? 

Jeff Santoro: Yeah. Mine's going to be the Children's [01:03:00] Hospital of Philadelphia.

Jason Hall: Yeah. Cool. Same as last year. Same as last year. I'm actually going to do the same as last year. One of the, one of the portfolios we had No Kid Hungry as part of it. I'm going to go with that. Gary Sinise Foundation is the one that I want people to give to when I win in 2023 because that's given at this point.

So we'll give some money to a different charity when I win it next year. We'll do No Kid Hungry. 

Jeff Santoro: I love it.

So this I'm very much looking forward to this year. I think this will be fascinating because there's so many different things to look at and think about and talk through and it'll be fun conversations throughout the year.

So I want to resume wrap up here. I want to thank all of the guests from 2023 who contributed portfolios and I honestly I want to thank all the guests from 2023. regardless if they're gave one or not, and also all the listeners. This is our last show of the year. We have seen a really gratifying amount of support and growth over the course of 2023, and I'm really excited to see how our show can grow and how we can grow the audience in [01:04:00] 2024.

So if you have been a listener this year, thank you very much. We truly, truly believe that you are the reason that we do this. And if you could do us a solid and share the show with a friend, tell someone about it, give us a review, give us a rating. Let's let more people find the show in 2024. And hopefully we keep bringing you guys content that you enjoy.

Jason Hall: In memory of our lost Charlie Munger. I have nothing to add. All right, Jeff, we're done, buddy. We did it. 

Jeff Santoro: We did it. 

Jason Hall: Not just this time, but we did it for the full year. This was fantastic. Okay. As usual, just a reminder. We love to share our favorite stocks, build our portfolios for 2024 and beyond, but it is up to you to do it yourself.

You need to find your own answers out there, pick your own stocks, make your own decisions, own it. You can do it. I believe in you. All right. We will see you next year. 

Jeff Santoro: See you next year. 

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