so sam tell me this do you like watching sweaty men fight to the death and their underwear me too every weekend i i build my saturdays around it well i think you should invest in in their saturdays my pick for stack twenty twenty four is i feel like i could rule where i know i could be what i want to put at all in in like a days off on a roll alright we're live sean did you just go to the black friday sale at tommy me bah what's going on i went into the old dad's closet today and got a little shirt because a special occasion and i needed to dress up well that's her version version of dressing up yeah this is up dude alright what are we doing today today this is stock the first ever first annual stock palo which you may not know what that means because we made it up basically me and sam said what if we did an episode where we pick a stock so each of us are gonna go through the stock market we're gonna each pick a stock that we have to make a case for if you've ever seen there's a conference called the zone conference and it's kinda like a ted talk but for stock picker and all the biggest names go there bill act goes there and drunken and miller and whoever cha off they owe they get on stage and they make like a twenty minute case for a particular stock why they're long or why they're bullish on something and those guys are good and those talks are fun we wanna try it to and do it our way so the m m style of this it's called stock of palo both me and sam have picked the stock we do not know what each other have picked we're gonna get twenty minutes each to present and so if you're on the like just audio podcast feed i know i've been telling you youtube is where it's at today youtube is for sure where it's at because we got slides your boys came prepared and i have data i got charts i have a whole bunch of stuff here so you wanna go to youtube youtube where you're gonna actually be able to see the screen and see us sharing slides so we got twenty minutes each to do it for the listener who are on not youtube we have to ask them to do something when they finally go to youtube that's right that's right if you go there and you don't hit the subscribe button a curse is placed on your family for seven years and i don't want that for any of you guys so go ahead and hit subscribe when you're there because it's super important for your it's a simple pitch we put all this work in and they don't have to pay us back with anything other than a subscribe on youtube it's free and easy for them and it makes just a ton of difference to us so just go and do that alright now what are you saying okay so you ready to begin do we need should we just go into it no rules okay so we're kinda making up the rules on the fly so we're gonna do how about twenty minutes so you get twenty minutes i'll ask questions but i'll try and set her up too much and then we'll do like well this we'll talk for about it for a few minutes afterwards within an i'll pitch and then the last ten or however many minutes left will will each vote but then in the youtube comments you guys actually have to vote who wins but when we say win what does win mean here because we're not exactly we're gonna be you guys can like we can play a drinking game where it's like count the disclosures you're gonna see this disclosure constantly of saying we have no idea what we're talking about it's just something fun and cool but how do we base win on is it by show ship is it by what the company do you think is gonna have long term best case but what does best mean a ten year well i don't know and that's part of the fun here again can we could say just entertainment because that's different well this is definitely entertainment but the entertainment has to have a foundation you can't just be making shit up right we gotta have actual good insights or good analysis presented in a in a wonderful way right the way that any presentation just sort of scored you have style points and you have substance points and we're gonna take both of those factors into consideration to pick the the ultimate winner i don't know if you have you ever gone and watched any of these by the way like you know in i remember when sham jamal went on stage in twenty sixteen and he was like there's there's a multi trillion dollar company hidden an in plain sight and he made a case for why amazon was gonna get to three trillion by twenty twenty five this is back in twenty fifteen what is it now it's currently like close to two trillion and off left you're left he's not far off he then went up and did a case for box and i bought a shit ton of box stock and bucks then just shit the bed for the next three years and if you go back all the smartest guys bill act when he goes up there and he makes a case for some housing thing terrible stocks right i went back and i actually chart how how these picks did really bad so actually we might be just as good as them because we're also gonna be terrible what's considered good for these guys like is it like a batting average towards it's like if you're three hundred if you're you know which thirty percent right you're the best no i think it's just based on the the returns right so like how much you put in versus often you're right right than multiple the multiple of those two so you know they just gotta get enough right where the overall returns are there but we should say this first slide is the most important slide which is that this is not financial advice this is entirely for entertainment purposes only my lawyer has told me to say that but it's actually true this is only for entertainment purposes i forbid you from actually investing in any of the things that we talk about i am an idiot when it comes to the stock market so if you take my financial advice i consider you an idiot too that's my disclaimer there needs to be a song where it's what did you say throw your hands in the air and lose your money like you just don't care exactly stock a loser that's a stock loser anthem alright let's jump in alright my turn i'm gonna start my clock let's go okay so here's the general idea if you're buying one stocks sam i know you're a index fund guy right you like to go into the s p five hundred and spread out your risk and you're right if you're buying one stock you're taking more risk than the index and if you look back last ten years the index is giving you about a ten and a half percent annual return over a ten year period ten and a half percent over ten so that's we'd have to beat that to justify taking the additional risk of picking one stock because that's gonna basically two point seven extra money in a ten year span so if you wanna do a little better than double almost triple your money in ten years just put in the sb sp five hundred so we're looking for something that if we're gonna take more risk we need to get more reward so here's what i'm i'm thinking i decided to peg for what do i think could get me a five x in ten years okay five x to ten years double what the what the s sp five hundred is gonna do so which stock did i pick sam i'm sure you're wondering well let's ask the oracle of omaha a k buff daddy what would warren buffett do because i'm not a great stock makers so i wanted to go and study the great stock makers of all time and look at what would be their criteria what are they looking for that i can learn from them and i went back and i learned everything i could from warren buffett and i realized that there's five big things that he looks for okay so you're ready for the five big ones the first understand ability meaning he doesn't invest in shit he doesn't understand if it's too complicated or if it's outside of his circle of competence he's simply not investing and so the idea is is the business simple enough that an idiot like me could understand it and that ideally an idiot can even run it right such a simple business so understand number two an economic moat so we want few competitors we want some pricing power and we want to make sure that this business is so def defensive that it's gonna be around in fifty years because you know warren is usually a buy and hold investor he's he's not really trying to trade in and out in time of the market he's looking for time in market and he's still looking to be in the in the company for a long time and so we want a economic mode something that's super durable alright number three competent management so management basically just a strong management team is always gonna be a you know big benefit for anything for any stock okay last last two margin of safety means we gotta be buying this we can't be buying this at some extreme price even if it's a great company if it's massively overpriced it's too hot in the market then we're taking too much risk so what we wanna do is buy dollar bills for eighty cents right that's a that's a great margin of safety and of course lastly strong financials so higher earnings low capex low debt that's really what we look for okay so this is why warren buffett is buying brands not stocks i i love this line actually in my research he goes don't buy a stock buy a company subtle difference but he's looking to basically like what would don't try to buy the stock because you think the pricing to go buy company because you think that company is gonna endure and be successful in and just grossed steadily for a long period of time that's a new thing that he did so it's not new for i mean he he didn't start doing that until his sixties so before he was buying stocks purely in the financial he's like i don't care what they sell and then he like met coke then he like invested in washington to post and he's like oh no the brand is actually where it's out exactly he used to do the cigarette but investing where you know if there's two puffs left on the cigarette okay let's do it there's value there but he he credits charlie mu for showing him that actually it's better to pay you know a fair price for a great business than a great price for just a fair business and so this that's why he's now invested in apple bank of america american express coca cola like geico these are brands that have been around for fifty years and that's what he's looking for okay so simple buffett formula just to summarize buy brands that you understand that'll be here fifty years from now that's spit off cash at a fair price if you do all that you can hold forever you've done well so i looked and i looked and truth be told i actually started with one in mind and then reverse engineer this whole presentation but i have one so sam tell me this do you like watching sweaty men fight to the death and their underwear me too every weekend i i build my saturdays around it well i think you should invest in in their saturdays my pick for stack twenty twenty four is tee k tee is the stock that owns wwe and the u seen and i think that tee is a buffett stock and here's is buffett you know looking ready for wrestle pennsylvania why is it and why does it fit the criteria so understand ability very easy to understand it's a holding company that owns these sports franchises it owns these leaks underneath them okay that's the the that's all the business is it's it does nothing else besides that fighting is the easiest thing to understand in the world i don't know if you've heard this great thing that that that dana white says he goes let's say you walk out into a a a sports field on a sunday and there's a soccer game over here and a basketball game over there and these guys are playing flag football and you can go look at any one of those directions you might have a favorite sport but if somebody else fight and there's a fight going on everybody's heads gonna turn it is a human nature thing that we like to watch people compete and fight and it is global everywhere in the world people don't you know you go to china people don't know the rules of football you come to america people don't know the rules of cricket but everybody understands the concept of these two guys are gonna fight each other everybody around the world and so it is the easiest to understand product and business the business is very simple fans pay to watch fights people pay pay view sam how much do you think you've paid in pay per view per year what do you what are you spending on your u fandom so i would probably say i by the five a year so that's five hundred dollars i think and then i only have a espn subscription like i dude i know anything about sports i just find out that the super bowl is this sunday i thought it was in november i own i pay espn just for that so that's our sixty and then i had attend one to three a year which is quite expensive that's a thousand dollars a show at least exactly high lt tv fans okay so let's let's go through these down economic mode name the competitor to the u name a competitor to to w they've all come and gone bella was the the most well funded competitor to to u usc it was funded by via put hundreds of millions of dollars into this thing it failed and they just sold it for you know less than than what they put what they invested into it look it's sold it for a hundred million bucks the number two competitors sold for a hundred million the u sold for four point two billion so that's the gap between one and two growing up i love w c w that was the big competitor to w w e guess what it folded and they took all the wrestlers ae w all those things basically these two brands have over ninety five percent market share in their market this is total monopoly more than google has in the search market do you know how popular wwe is on youtube have you have you did you look into that i i have i have a couple slides later they dominate social media it's the tenth the tenth most popular channel on all of youtube is wwe that's insane right like the fact that these two have more market share in their market that google has in the search market shows you they just cut complete utter dominance and the fact that competitors have come gone people have taken their best shot and they haven't been able to touch them so you if you have two brands that have been around for while and will be around for a while okay comm management we have aria emmanuel if you're ever seen entourage is the character ari gold is based on on aria emmanuel he is an absolute power player power broker in in the entertainment business you have dana white the guy who's has basically been a founder ceo of this essentially since they bought it for two million bucks bought it for two million sold it for four point two billion and he's he's still going and he's still going strong this guy is an absolute animal and they have a e du who's with a silver like partners that's their kind of institutional capital behind this and that guy's also you know got a pretty crazy track record with multiple billion dollar our multi billion dollar plays like skype and whatnot so super good management team okay margin of safety so i don't know if you know how much money these make but they basically the combined entities generate over a million dollar oh sorry a billion dollars a year of eb and it trades at about fourteen so it's about a fourteen billion dollar market cap company right now with four with with a billion dollars of eb just to put this in into comparison if do u c plus w two full like leagues are fourteen billion the phoenix suns one nba franchise just sold for five billion right so this is basically three phoenix suns and you get the entire universe of combat more of of of of you know fighting entertainment which is wrestling and you have seen everything except for boxing f one which is you know to me seems super niche like f one is is so so niche do you know how much f one just sold for no idea eight and a half billion dollars and one has a big problem which is no matter how popular one is they have to pay out to all the teams the franchises so you know half the revenue goes to the aston martin team and then the mercedes team and the whoever else so you doesn't have any of that all the fighters are independent contractors they don't even pay salaries there's no guaranteed salaries independent contractors who make about fifty fifteen to seventeen percent of the overall revenue goes to the fighters way less than every of the sport no teams no no no rev sharing with anybody they get you bring that up later in your presentation we do i do have a wrist slide which is around that yes and the best part this all ai resistant like we don't know what the hell is gonna happen with ai ai is pretty clearly the next big thing and it's gonna wreck a bunch of industry it's gonna redo the way that insurance works and the way that cars work and the way that you know software is built and and all this stuff how are you gonna use ai to generate like you can't use ai to make two guys fight in a in a in a ring it's not gonna happen and so there's a ai proof industry which is nice because it warren buffett buff daddy he's looking for things that are not gonna change and i think this is not gonna change alright last one it's growing nicely so it's grown twenty percent a year right now but there's also the big the big prize with any sports league is media rights deals and the media rights for both of these are coming up this year and next and so they have a chance to renegotiate and basically double what they're getting paid for by all the streaming companies by netflix and by amazon and espn and all the companies that want they need live sports because live sports are one of the only things that people watch concurrently and have to look at the ads because they're watching during the thing there's no dvr there's no there's no binge mode there's no streaming and so live sports is this one of the few live sports assets that exist and the media deals are coming up and they might be a lot bigger than people think alright last few slides consistent cash flows so these are profitable companies are spit off cash you know they're spitting off you know couple hundred million bucks a year free cash flow and they don't need to invest they don't own a ton of a real estate or they don't have to buy more machines in order to grow they just put on and they just keep putting it on shows it's all variable a couple of the risks that are worth mentioning got a bunch of debt they use debt to buy the the franchises these leagues and so they still have a few billion dollars of debt the last thing stock performance has not been great i think this is one where we're gonna have to buck the trend gonna have to know what the market doesn't know right now and we're gonna have to to go ahead and outperform what date did that drop so the they merged in like mid twenty twenty three but there's that drop because vince mc man not just vince mc man i think basically what happened was they merged people didn't understand the term they didn't understand what was gonna happen what was the plan all that stuff and the vince mc man stuff happened at the same time got and so they dropped out fifteen percent on the merger which is kinda crazy before they were both public and they were both trading at about eight to ten billion in valuation and so when they merged they were supposed to be like a twenty billion dollar entity and they're currently trading at fourteen right after they merged so that was that's what happened last year lastly a couple other risks like you talked about fighters not getting be paid enough so their cost could go up if the fighters ever union and we're able to collectively bargain which they haven't done but the nba and nfl all has and lastly i don't know what's gonna happen if dana ever leaves he is the powerhouse and the ceo who's driving this thing he's cashed out so he does not own the same stake that he owned before he's not even on if you go look at the stock filings he's not on the cap table so he said he has skin in the game still but it's not listed anywhere so i'm not sure what he has and he might you know might might retire one day and i i i think that would be a a big shock to the business like zach retiring or or bezos retiring you know it it can affect the business can i add a few a few risks let me add a few risks yeah go for it alright first dana white is insane so he's mostly insane in a good way but there's a lot of liability there's a lot of lot liability in this industry because we're talking about grown men fighting in their underwear for the millions of people the the person who likes that and runs that as well as the person who actually does that in order to be great at that you have to be insane and so what that means is there's been risk with dana dana has said a lot of crazy stuff i don't even think that i'm not even gonna say if i think it's right or wrong that it's irrelevant what's irrelevant is that a lot of people think it's wrong he also got trouble for smacking and his wife and that was on video vin man now in trouble for not even sexual harassment i think it's beyond that and then also like the third famous guy in the usc right now sean strickland again i don't care if you like what he says or dislike what he says there's a lot of people who dislikes what he as it regards to like the whole trans gay thing and so inherently there's gonna be all types of nutty people like that i think it won't impact the business at all i think the it's actually gonna make the business better because the people who are behind them are gonna be harder behind them and i think but but i do think it will scare institutional money and that's basically my downside well and that lawsuit that that lawsuit is actually a pretty big lawsuit so i think that the only counter to that is usually the risks are what ifs all the things you mentioned have already happened they've already happened they've already happened and the business is doing fine right so like dana has been saying crazy stuff for twenty years what okay it yeah i guess he'll just continue continue as is that's business that's a risk that's a risk that's a what if i think there's some some risk there but but not that much in fact i would actually say they the has has shown tremendous anti agility so for example if this is a business that depends on live events it's all based on live events and it survived covid it can survive anything right live events had to all shut down and do you have figured out a way why because founder ceo he's got the willpower the guy went to like abu dhabi created a bubble and start created something called fight island and host of the fights in a bubble on fight island himself you know they found a way around the pandemic i think they could find a way way around but i'm an idiot keep in mind i'm an idiot i don't think that's gonna impact any of the business i think all those things are gonna make their business the revenue the profit greater i just wonder how will that impact like if fidelity or one of if one of these big companies what's to buy a huge chunk of their comp of the stock yeah yeah i i think that's that's fair alright well last couple of things i think the global nature of this is is underrated and so when you think about where does growth come from for these types of leagues it comes from two things one is streaming streaming deals which are getting bigger and bigger and bigger and the other is globalization i don't know if you know but the nba does like crazy amount of work to global they you know have like camps all throughout africa in india they go every summer they broadcast games they cut deals to broadcast games they will play a game in in europe to try to get fans nfl does the same thing they play a game in london to try to get fans there but do uc actually like inherently has that they get champions from all over the world but they've never gone to africa they've i don't i i think maybe one time they've done one of event in china basically china india and africa are still untapped but they're proven that they have product record fit they have they have they have fans i just haven't done the events there yet and the biggest case for this is really that these leagues they develop lifelong fans you know you've been a fan and i i would guess that twenty years from now you're probably still gonna be a fan your kids might become fans this is how sports works so it's basically generational people watch them till their you know my grandparents will watch sports but then they'll take their kids to the events and they'll get their kids involved and they they become fans as well do fcc is only thirty years old that's incredibly young when it comes to a a league like this and you know what they're better at than everyone else telling stories and creating characters they are without a doubt the best at this they kick ass compared to any of the other leagues so check this out this is on instagram the nfl which is the biggest most profitable sports league in the united states biggest about profitable league twenty nine million followers d has thirty nine million followers because they are better at social media and they're better at storytelling which is essentially saying they're better at the way the world works now and then nfl was better at the way the world worked twenty years ago same thing you know here's youtube here's the youtube channel has seventeen and a half million subscribers for the e on youtube baseball which has been around for whatever hundred years four point nine million subscribers is it's insane how they get dominated by this and so they you know you get to you get to ride on the back of and the other thing is that our emanuel company which bought bought these they're just better at negotiating media rights that's what they've been doing for their her entire career for for you know actors and and television shows and whatnot better negotiating sponsorships if you look at where the was when they bought it versus where it is now you know it was unprofitable there and growing you know growing at a okay clip now it's growing faster and more profitable and it is profitable because of the work that they've done wwe just kind of a ten year five billion dollar deal with netflix just for one of their shows which is kind of insane it's gonna go from usa network to netflix these are now like three hundred million dollar a year streaming deals that they're picking up and that is all sam thank you very much ladies and gentlemen of stock palo that was very good that was very good my bias is heavy here i i tell people that they they ask like what my hobbies are if pay digital sports i say i pay attention to only two sports fighting and the other one's way nerdy or track fields i like track and field and u i'm a super fan and i think there's so many super fans like me i don't know how that those super fans compared to the other sports i i don't know if it's as strong but i'm a huge fan the stock it's a it's a good brand i agree i think the risks are too high though i think they're i think their dana is is do you think if someone left he could you said that on their second point it was like anyone can run it do you think someone can run it as good as him i do think you get the benefit of the kind of founder led company when you have dana there and you would lose that if he if he left so i do think it'll it'll will continue to run but i don't think you'd get that x factor back of what dana brings to the table and what vince mc brought to the table till he was how old is vince me he's like eighty or something like that the guy ran the league for like fifty years or something and he was a character he was a character who on the show in the show and i think dana is a character in the show i think dana is the most popular u c fighter right he well connor but like think you could run the steak for like thirty more years maybe i think maybe i think that i think that running this type of league is the harder than any other league maybe f one actually would be really challenging because they're like they kinda seem like diva but the u c i think dealing with these types of fighters have you ever hung out with the professional fighter or like up and coming professional fighters i i've been around a a handful of them they're insane they're insane they're they're hard to work with they're they're nuts and it would be very challenging and also the lawsuit that they have so to put that in perspective you said that they pay their fighters fourteen percent how much does nfl pay their or b nba are about fifty percent that's the the collective bargaining that's what they negotiated and right now you made a case that they're a monopoly that's the exact case that the lawsuit is trying to bake which is that monopoly and that you guys you you have to allow us to do collective bargaining and i i have looked into it a little bit but it seems like they've got a great case and that could meaningfully change the economics it could it could that is i i i would put that as the number one risk to to shift the economics of the dude there's some guys like they'll say in the post fight interviews they're like i'm the champion now eight months ago i was driving uber and and they're like france and i'm still driving at uber yeah i don't get paid well like to put this in perspective there's a guy named francis na gon i think he's from came he's like the the american dream he came over here with nothing i think he worked in like a mine you know like a blood diamond type of mind like crazy stuff he's now champion do you know how much money he he was a world champion in the heavyweight division of the u he looks like an animal it would you think of a heavyweight champion this is what you want this guy to look at look like beautiful story great guy do know how much he was getting paid per fight feel like it was like five hundred k or something it was about six hundred thousand dollars that's how much this guy was getting paid to fight the scariest people on earth it's insane a mid level engineer at google that makes more than that it's a silly bad on the planet yeah it's insane yeah it's it's it's insane and so that needs to change i think the further to be true longevity for the sport and if that changes there's actually gonna be bad stuff for the business or at least it'll be less good but great presentation i i'm a fan of of i think that was a great presentation alright your turn alright now it's my turn so look we said the disclosure already that this really we don't know anything so i'm actually gonna not even focus too much on the numbers i'm gonna focus on the story and i just wanna put this disclosure up front now before i get into this i wanna tell you a few other companies that i looked at i looked at r and i looked at twenty three me that's a total shit show i looked at container store because there that's the next meme stop and of course i looked at hubspot because i own hubspot and i'm trying to do a little pump and dump scheme i'm kidding i'm kidding i'm not gonna talk about that now i was trying to think about this and i was like should we do like a wolf wall street pitch you know how he's pitching penny stocks where he's like hi john the reason i'm calling is i've got this new patent technology that has huge upside potential and little downside potential is this something where i could maybe get in on the ground floor yeah and then i realized i'm not gonna do that i'm just gonna tell you i'm just gonna base all of everything that i'm doing here on what do i think is cool and interesting and so what do i think it's cool and interesting look if you wanna make great money you invest in amazon it's a slow predictable it's gonna be i think it's a great company but that's sounds interesting to me we all know that same with e everything elon doing at this point he's the man i can't invest in tesla i can't invest in anything he's ever done that's do plus look at them i don't wanna invest in that yeah i like how you use the pre plastic surgery elon one they're nice there's a point i've got a point here and i looked at bill gates and i looked at this guys is like you know microsoft also great company i like the ceo they're doing great things but we've been there done that i think it all makes money but it's a little bit boring it's not for this podcast so what is interesting look at this guy do you know who that is that is the l h guy right the l guy i we're gonna call them cargo because i don't know how it pronounce his name but his name bernard bernard all how do you say his last name bernard arnold yeah we're gonna call es sk bernard arnold as we call karen yeah the slug eating suit wear beautiful frenchman that's what we're gonna call this guy so he's great so l what here's what they do this isn't my company but the this is the person i got inspired by so they own a hundred plus luxury brands dior fe sephora tiffany hub blow they own luxury brands and the reason why this guy this guy got into the luxury business and i found three quotes buy them you use warren buffett as you're kinda like rule set for how you're gonna pitch a stock i'm gonna use this guy he used to own a construction company and then he got super into luxury businesses and i'm gonna explain three quotes as to why he said that so he said in luxury business you have to build on heritage and so have you ever heard that phrase lin so lin is a popular phrase that's floating around on the twitter circles it basically just means the time of which something has existed is directly correlated to the time that it will continue to exist so something that's been around for a long time will likely be around for a long time something that's brand new and hasn't been around for a long time can go away easier and so in order to build a luxury brand would attracted to this guy he's like i need something that can last that's been around for a long time and that means it's gonna last a long time he also said luxury goods are the only area in which it's possible to make luxury margins okay high margin so i've gotta find a company that has that can last a long time because it's been around for a long time it has high margins and the final thing he says is affordable luxury those two words they don't even go together meaning what i've got find some a product a company that sells a product that is expensive and exclusive now what fits that bill sean originally i thought of james bond james bond like that's like the definition of cool guy and exclusive and like you dream wanting to be him but it's gonna be impossible to attain and so the cut the product that in and the brand that i almost chose was what something that james bond is a synonymous is for do you know what that car is the aston martin i believe that is an aston martin and so aston martin that kinda that kinda that kinda got me interested at aston martin has a strong brand but they have a shit multiple they've got a decent product but it's actually one of the least valuable car companies in the world i believe right now it's only trading at like two billion dollars so it's not that big of a business now asset martin it's been around for a long time i think it's gonna continue being around for a long time a lot of young men dream of having an nest martin their margin is shit so it's been losing money so that kinda gets it out of the way i can't do that and in terms of like being exclusive and expensive it is expensive but because not that many people want an asset martin compared to all the other cars i wouldn't exactly say that it's that exclusive so ask martin not good enough so what is good enough so i found a company that has been around for a very long time it's got huge margins in fact it's got the best margins in its industry mh it's very expensive and it's so exclusive that even if you wanted to buy it in many cases you cannot do i have your interest i you have be interest you had my attention and now you have my interest okay so you probably don't know who this person is do you you're not alright this man he's he's no longer around but he was born in the early nineteen hundreds his name is enzo enzo started out as a race car driver and he drove i actually believe he might have drove for aston martin at one point but he also drove four fiat an italian car company and he was so into race car driving that he goes does these fiat they ain't cut it for me i have to make my own car and i'm gonna make the best car he goes i'm basically just gonna make an engine and i'm gonna put wheels on it and aerodynamic aerodynamics be damned that's what you say if you have a shit engine i'm only gonna focus on the engine and he was obsessed with making an engine and eventually other people got obsessed with his engines and so in the first year he made a car for himself in the second year he sold two cars in the third year he sold the only about eight cars and he's kept slowly growing and eventually that company became ferrari so ferrari is my company and you're gonna like enzo ferrari enzo ferrari he's a crazy person he's sort of like conor mcgregor that quote that we have from conor mcgregor he goes i'm like vincent van go i've lost my mind of this game enzo ferrari is like that he's got this great quote where a great man to which one must sacrifice everything without re without hesitation so he's one of these guys who has totally bought into his brand sort of like dana white where he lives and breathes the shit he was known as being kind of a shit dad kind of a shit husband and all he cared about was ferrari making it great so let me give you a little bit high level facts about ferrari in two thousand twenty three the revenue grew seventeen percent to about six and a half billion dollars they're very profitable their net profit last year was one point three billion dollars now here's an interesting stats an interesting stat so honda last year sold something like one point two million cars ferrari only sold thirteen thousand cars their market cap now when i started working on this their market cap was a lot lower they released some really big news on friday and their market cap skyrocketed and they are now worth seventy two billion dollars that makes them roughly this eighth or seventh largest car company in the world and they're still growing at around twenty three percent a year unfortunately their pe ratio is crazy high it's like fifty four so fifty four times earning which is like one of the highest but check out this look at the highest or the most valuable car companies in the world number one tesla number two toyota and then porsche mercedes and then you go down to ferrari sixty eight billion dollars i think on friday it was like seventy five billion so they're more valuable than being w more valuable than volkswagen more valuable than honda and they only make something like thirteen thousand cars a year isn't that insane that's crazy so here's my case as to why this is an interesting company i'm gonna try and talk a little bit about the numbers but again that's not our specialty so i'm gonna try say a little bit away from it but they are at cash cow they are the cash cow of the industry in fact ferrari makes more profit per unit for every unit they sell they make more profit than any other car in maker in the business some car makers in fact like a gm they actually lose money and they hope to make money their their other models or through selling parts or fixing the cars ferrari makes a profit on everything everything they make last year or sorry in twelve thousand twenty one they made over a hundred grand per unit sold the second place company that sold the profit the second most was tesla at sixty seven hundred dollars and then it's saying wow so you know whatever fifteen x more profit per car than in than the second place person when it gets even crazier so in order to make the same amount of profit part profit that ferrari makes per car ford has sell nine hundred cars okay and you think ford that's just a middle line car okay what about mercedes mercedes has to sell sixty seven bmw also has ssl sixty seven it they make the most profit of any other car or luxury car maker in the business and then make more profit per unit sold than any other car in the in the industry now here's the what could where it gets even crazier crazier you don't choose ferrari ferrari chooses you so if you so did you do you know about this with ferrari about their waitlist list i did not know this alright so here's how it works and there's a lot of mystery around this like they don't even openly say like exactly how it works but let's say you wanna buy a base ferrari like the cheaper models a lot of times you can just go in and buy it but if you wanna buy the more expensive one what they do is they have got a wait list and they look the wait list and in in order to buy the fancier ones oftentimes you have to buy three to four of the base models and so jay len you know how jay lo is a bit partnered yep he's he openly says he goes i i refused sub supplier ferrari because of how elitist they are you have to they're not well he's like obviously they're not the every guy every man car but you can't even buy one if you want one and you have to and once you buy one if you if you're able to acquire one you have to sign paperwork that says that you're not gonna put any stupid parts on it you can't rep paint it certain color so there there's this lawsuit that just ended recently where this famous celebrity painted his ferrari pink and they sued him and he had to pay them three hundred and fifty thousand dollars because he posted it on instagram and they said that that hurt their reputation justin bieber did the same thing justin bieber bought a car and he did three or four things that were crazy the first thing is he just left the car at the at a hotel parking lot for like a few weeks or something while he traveled another thing that he did as i think he took like the ferrari badge off it you know some people deb badger the card to be cool and so they banned them justin bieber could no longer buy a ferrari if he wants to another thing is bummer for the beeps bummer for the beads if you and if you and and just this is very similar to the rolex in luxury watch industry so do you know that if you buy like a rolex and they find out that you buy it at retail and you flip it for above retail oftentimes the dealer will never sell you a rolex again ferrari does the exact same thing so if you flip a ferrari and you don't tell them and ask for their permission you get in trouble and so it's a big deal and they ban you and so they have so much demand that they literally ban people from buying a five hundred thousand dollar item is that insane or what i mean that's like truly pinnacle of exclusive and elite like people are dying to have this product nothing makes me wanna get in more than a wall preventing me from getting in and they do a great job of creating that wall and their brand is incredibly hard to kill so if you if you google what are the most expensive cars ever sold that auction a recent one is a i forget it's a gt two fifty i forget which year it is it was an eighty million dollar car eleven of the top fifteen most expensive cars ever sold are ferrari in fact people love ferrari so much that there's a theme park obviously in dubai just for ferrari they make something so this company what did i say seven hundred seven billion dollars year in revenue is it something like that six billion six billion five hundred million of that comes from merch so a pretty substantial amount just comes from people buying ferrari hats and this is even crazier so for every ferrari sold something like sixty five percent is being sold to someone who already buy or who already owns a ferrari and has bought one from a dealer meaning their lt tv is massive they've done a bunch of really crazy crazy things to prevent like or to keep their brand strong so they have this bounty program so they basically have just created a bunch of switches so if you're in the streets and you see someone has painted their ferrari a certain color has put a modification on it like a part that that ferrari doesn't approve of if you report that to ferrari you get an allowance you get a little bit of money they pay you to report that people are breaking the rules as they have a new bounty system it's insane now i talked about the lin effect so here's the exact definition the future life expectancy of some non perishable things like technology an idea is proportional to their current age thus the linear effect proposes the longer a period of something has survived to exist or the the longer something has existed the longer it's remaining life expectancy so ferrari has been around it's it's gonna be i believe they were launching in the fifties or so they're gonna be around i think for an extended period of time i think ferrari is a very hard brand to kill if you put ferrari on a rolex someone's gonna pay extra to buy that rolex you put ferrari on anything someone's gonna wanna pay more money to have that that item not then that's not the same case with a honda it's often i don't i mean there's like a handful of car companies that are able to pull that off or there's a handful of any type of company i just went to the website and put a six hundred dollar baseball cap into my cart but i need to like have a cool down period before i click buy just because i think i don't know if you're selling me the stock but you're definitely selling me some ferrari merch today it was a hat really six hundred dollars there's yeah six hundred dollar hat the the cheapest hack is like a hundred and eighty dollars that's insane that absolutely insane like i went to a kid's i i went to a friend's house saturday and their kid had like a ferrari coat that he was wearing because he like love he like you know and he is like ferrari toys and they they sell so much of this stuff it's insane is it was it really a six hundred dollar hat what makes it so good does it does it does the hat drive just entire story you just told me made it it's so good it it's an insane brand and have you have you ever been in a ferrari i have been in a ferrari yes i been wondering i've been in i've been in a ferrari they're definitely cool my takeaway is that they're a bucket of pain in the ass to own everyone stares at you so they've the that ferrari read was actually formerly the it was the national racing color of italy and our enzo for ferrari was like we'll just use that and then eventually they get so popular they patent it or they trademarked that red so that red is only for ferrari but if you're in one of those cars you get stared at like crazy which is one of the reasons why people up driving it i hated hate driving it for that reason and they're loud and they are kinda rough their fucking race cars it's a race car and so if you like driving ferrari you're gonna love it my opinion was this is a pain in the ass to drive but i get it i get the appeal ferrari is badass but their pe ratio is insane so i don't know how much value is left to be had here but they are but they are growing they are growing consistently so if you look at if you look at their last if you look at their last i think they went public in two thousand and eighteen it's grown on average roughly thirty percent a year their stock their stock price so it's like been a pretty consistent growth they ferrari enzo ferrari when he died he sold a lot of the business to fiat and then fiat spun off and they built a they they took a public on on its own and so it's been very consistent since it's gone public you had a great return recently they signed a deal with lewis hamilton who's like the lebron james of like f one racing and their their their price skyrocketed because also their earnings they're like dude for killing so they make something like i believe their eb margin is thirty five percent so no car company has that much that big of a margin i mean that's like a ridiculous what you gotta do the smart rich kind thing which is you say for ferrari is not a car company it is a luxury brand and it's priced incorrectly they're pricing it like a car company but it's actually a luxury brand right that's what all the stock picker do they're like tesla it's not a car company that was my argument and then i looked at what the pe ratios of some of the other luxury brands were you like it's actually a it's it's actually a ai chip company i guess based on this b multiple well my original point i was like this is a luxury company and then i looked at what the what some of the numbers were for some of the other luxury companies i was like this is bad time if you if we would've done this if we would've have done this like two or three weeks ago it it would've have like it would have made a little bit more sense but they just had they just released earnings on friday and so they crushed it but there is a bunch of downside so pe ratio is insane it's at an all time high right now i think it's what did i say fifty five times earning that's insane that's a lot another question when you were a kid did you have like car posters on your wall like or like a folder like a binder that had a car car on it i did not i had a life sized poster of the rock okay well your didn't do the pro move and improve my point but many young kids when me were young did you go to that book fair and you buy like a ferrari eraser or you'd buy like a porsche lamborghini folder or whatever we cared about that when we your kids and so it was very aspirational do you know that young people nowadays are barely even getting driver's licenses yeah it's like a loser move right it's like a loser move to have a driver's license and so oftentimes i wonder our young kids even gonna care about this and then finally eu regulations so ferrari is a base in europe the eu is cracking down so for a lot of cars they have to be hybrid i i think the ruling is by like two thousand thirty i think all cars have to be have some type of hybrid component i don't think it's gonna kill ferrari because they're already making hybrids and a large percentage of their cars something like twenty five percent are already hybrids so i think they're be fine but that is a risk now beyond the stock i just wanna talk about a couple lessons here ferrari is an amazing company to aspire to build at at least if you wanted to build like a luxury product a great company the first thing they're fucking missionaries they're not mercenaries a lot of times we talk about we use that word arbitrage if enzo ferrari heard that word arbitrage he would tick off his leather glove it's smack you in the face he would ask you about passion that's what he cares about and it's paid off he's built a brand that you know is one of the most valuable brands known by billions of people in the world that they aspire to attain and it's all about him being a missionary he's truly bought in the the people who work there are bought in they built a brand that's aspirational now in order to do that in order to build one of those brands you have to do something really hard something you and i struggle with something that i think every entrepreneur struggles with which is you have to say no just so many great opportunities and that's really hard so someone could have said hey and so what about like a fifty thousand dollar car that like everyone likes like we we would just we'd crush it like the average man would buy this and they all want it we'd would kill it he said u how do they say no in italy they would say no i don't know how they say it but i bet i bet it's just no that's what he would say and they didn't and they've refused to do that but that's been very hard for them to do i'd imagine because there's so much opportunity but that's just a real lesson for a builder however the last lesson is if you can say no for that long and you do build a really good luxury brand it can pay off so much i had no idea getting into this i would've have thought that ferrari was worth like ten billion i didn't realize it was the seventh largest car company of the world's only selling ten thirteen thousand units that's insane compared to another company like honda or toyota that's selling a million plus units so anyway that's my pitch for ferrari good job jimmy let me can just give it up let's give it up that's kind of insane and by the way i feel like you're point about italians not just enzo not doing arbitrage have you ever met an italian run our arbitrage like is the is there an italian affiliate marketer owners earth i don't i don't think i've ever seen one it just seems so beneath them as it should be they're the they're are the luxury brand of ethnicities also they are yeah you want like an old lady in the back like so i grew up and it at all italian neighborhood by the way i grew up saint louis for some reason saint louis has a large amount of italians i was the only non italian at my grade school we used still learn italian in great school they used to teach it we have to go to mass three days a week and one of those days was in italian but you didn't know the italian were for now i wasn't a good student but i could tell you the i could tell you they our father to tell you and and the best part was like everyone would have their old grandma like in the back of the house like rolling up these ravioli alright i wanna hear you speak so italian let's go don't put me on the spot bro i i you just said i could tell you the our father in italian okay tell me no i don't even want to say it i'm so bad dude i got thick i got think tongue just like our boy bernard i got a tongue like a slug it's i think hung at i can't roll my rs as it's disgusting the back here is better my first girlfriend in grade school her name was phil like i was all in i was all in on the italians i feel like american italian people like italian people who live in america are just they give it the the the wrong rep really it's learned like it's just like text me or whatever it's like two american eyes italian italians man it's just yeah i want like a release i want a skinny italian with like wearing in skin skinny tight jeans smoking a sick constantly drinking the espresso with a buzz cut i don't want like these ga gh like you know what i mean well that's something i don't like i don't want tony sop right like the italian grandmother who's still like get smokes the cigarettes but a lot of great car companies are italian you know lamborghini is also italian for and i believe the story by the way you know the story of lamborghini he invented the lamborghini because ferrari wouldn't sell him a a car he lynch and he was making tractors slam lamborghini was a tractor maker and ferrari wouldn't sell a car so he made his own and so they've been assholes from day one and that's why it's such a great brand you definitely sold me on how cool for ferrari is as a business i don't think you sold me on the stock just because it's like at an all time high and seventy billion it's at an all time high it it also sounds like they're not trying to grow fast right that's like part of the stick it's like sell part of the limited number of these at insane margins and so i think that's you know maybe maybe one of the downsides but very cool story and also more like more more of a inspiring for how to build a business than but hold on great stock don't discount don't discount me listen i actually don't know how stock stocks works you know i'm a dummy how does the stock work i don't know let's start let's go back but if it's growing twenty percent a year and if we think that it could continue doing that but you're saying the stock price is growing twenty percent a not revenue revenue revenue is growing twenty percent a year if revenue is consistent doesn't like that that other shit follow i it does it does it does but you didn't talk about that so you know it was on like an told us right the business is growing it's good just you start in the pitch with as for my stock analysis we're not gonna be talking about numbers was just a mashed isn't that what you said warren buffett said brands or some bullshit something like that something like that i do think that you know that's the best way right like if you didn't prepare you for your speech in school you're just like you know what you rip up i'm not gonna read off those prepared notes i'm just gonna speak from the heart it's like you're just ripping a blank piece of paper but throwing it away dude i did prepared i prepared a long time for this i just i just really took buff daddy's words to heart and i looked at the brand fair enough okay right it is kind of an interesting dichotomy here we did just pitch the two exact opposite things right yeah exactly yeah the the highest of high fashion and luxury and sort of the the lowest form of human behavior getting in your underwear and fighting in front of other people for their entertainment we give you the full spectrum here on m right we we we have so let me let me think about it okay so if i had to put my own money if i had to put a hundred thousand dollars let's say into either ferrari or t k i think i would go ferrari i think i would go ferrari but i think tee k has significantly higher upside significantly right right so that's true i don't know how you would gauge the way i had my money and either i would put it in either is my takeaway away from stock at oh i i emphasis this on the if i had to which i don't have for you which i will not yeah which i in that position and and by the way i don't know if it showed but i definitely worked backwards from i looked at the stock and i was like i actually what happened was i saw that they merged and i was like so these companies have no competitors this is a true monopoly and in tech people you know from the peter t school of thought really value a monopoly and it's so hard to build a monopoly like there are so few businesses that are truly a monopoly we talked about even duck go eating into google's market share last time but you know google facebook this is one of the few monopoly that exist and i was like it's funny that like this tee thing is actually a monopoly but i don't know how good of a business is i don't how don't if that's seen to grow but if you're warren buffett and you're looking for something with a sustainable competitive advantage that would be it and so that's where i started and and to to be truthful i didn't even consider any other stocks i started with that then i text to sam hey we should do a stock picking up episode because i already have one picked alright i'll give you my vote there we have it unanimous unanimous decision you want i got the vote too oh amazing well guys i know i'm supposed to do an acceptance speech style or if i should just say i'm not surprised but that's that's where i stand as far as stock blues i hope you guys like it go to the youtube comments and vote in the comments who won sam or sean put it in the comments we will tally them up and name the official winner after we do that and if you got any joy from this or if there was a time that you're pulling your hair up and being like these fucking idiots don't know anything about this stuff if it whatever the spectrum is if you got a little emotion click click subscribe and we'll owe you one alright that's a pod i feel like i could rule where i know i could be what i want to put at all in it like a days off on a road less travel never looking back