Last updated on May 31, 2023
This episode was recorded on Tuesday, May 16 and made available to premium subscribers that same day. To become a premium subscriber sign up on Supercast or Substack.
Value Stock Geek rejoins the podcast to discuss recent portfolio acquisitions Google (GOOG), Meta (META), and Taiwan Semiconductor (TSM), what’s on his watch list, and where and when he could be looking to buy.
Content Highlights
- The case for Google stock (1:54);
- Artificial intelligence and how that is impacting Google’s business (6:40);
- Meta and the Metaverse: investing in the legacy business plus Instagram (7:38);
- Taiwan Semiconductor: cyclical, yes, but a good bet for the long term (12:39);
- ‘The Weird Portfolio’ and how that works (16:07);
- The watchlist and two notable stocks worth watching right now: NVR (NVR) and Deere (DE) (20:39).
- Home Depot (HD), another watchlist stock, just reported earnings and lowered guidance due in part to consumers pulling back on big-ticket purchases (29:00).
More Information on the Guest
- Substack: SecurityAnalysis.org;
- Twitter: @ValueStockGeek;
- The Weird Portfolio is discussed in some detail on a previous podcast appearance.
Transcript
Nathaniel E. Baker 0:32
Here with Value Stock Geek, joining us under a pseudonym, which is fine. You don’t need to be a real person — well, you need to be a real person, but you don’t need to be have your face and name necessarily attached to your views to join the contrarian investor podcast. So Value Stock Geek here has been on the show before, and we discuss your weird portfolio. But I want to talk about some holdings that you’ve added in the last couple years, or in the last year actually. And there’s three of these. They’re all tech, Google, meta ne Facebook, and Taiwan Semiconductors. So admittedly, maybe not the most contrarian thing here. But I guess what is pretty contrarian is the fact that you are still long these stocks, as the US potentially enters an economic downturn, which would be bad for growth stocks. So tell me your views on maybe starting with Google?
Value Stock Geek 1:34
Sure. So I bought all the stocks last year into the tech decline. So I’ve been waiting for a long time for these great businesses to be available at some compelling prices. So last year, all of these businesses hit pretty attractive valuations. Google got down to about 15 times earnings, Mehta got down to about 10 times earnings, Taiwan Semiconductor also got down to 10 times earnings at the end at the end of last year. So I’ve really just been looking at that’s my generally my approach is I look for businesses, I track them for a long period of time on my sub stack, I build up a big watch list of companies that I think are great. And these are three companies that I’ve always thought were pretty great. And I’ve just been waiting for the opportunity to grab them at an attractive valuation. So starting it off with Google. Last year, Google got down to a pretty attractive valuation I bought at around 15 times earnings. The concerns about Google right now are about the upcoming, potentially an upcoming recession. And then there’s also concerns about AI. That’s another big concern of Google, that they’re basically the search business will get disrupted. That’s, that’s a big concern there. I think when you look at the actual business results, that things are still pretty good that there’s hasn’t been a major disruption in their actual business results. And a lot of what’s going on right now is speculation about what might happen in the future. And to me, that’s the perfect kind of setup, you have a business that’s not actually in serious trouble right now. And it’s mainly being beaten up over speculation about macro worries. And in my view, those macro worries like an upcoming recession are pretty unpredictable. So we might have a recession this year, I don’t really know I don’t really have a view on it. The reason I generally buy stocks is to hold it over a five year period. And I would expect over any five year period or recession is a potential threat. That’s why I generally stick to businesses that have moats, and businesses that have shown in the past some level of recession resistance, one of the first things I always look to when I buy a business is performance from 2007 through 2009. And the thinking is that a 2007? Through 2009 environment could happen at any time.
Nathaniel E. Baker 3:59
Okay, that’s some really interesting stuff. Now, going back to Google, you said that AI is a potential overhang, at least for the search business. But it’s interesting because AI, and what they’ve done with AI has been a big catalyst for the stock to move higher this year. It’s up 30% this year. So how do you do you think that this is necessarily a zero sum game with AI in the search business or? Yeah.
Value Stock Geek 4:25
So the concern about Google is that obviously, Google search is the key aspect of its moat. And Google search has been fueled by algorithms over many years. And people have that ingrained habit that when they want to look up something, they will Google it, Google it, Google has become a Yeah, yeah, it’s become a verb. I’m gonna Google something. So I think even if better search engines powered by better AI come along. I don’t think that that ingrained behavior that people have will get disrupted. I don’t think that in five years, there will be some better search engine like let’s say Bing provides Better results powered by AI. I don’t think people will change that habit where Google still will control in excess of 95% of all search on the internet. So I’m not too concerned about that. With that said, Google’s AI I think is just as good as chat GBT like I’ve, I’ve tried, I’ve tried both out. And they, they both seem, Bard versus, versus Chachi btw, and I think that they’re pretty. They’re pretty similar, I usually get pretty similar results like they both can deliver results that are factually incorrect sometimes. I think there was a lot of press made when Google first unveiled Bard. And it was it gave some wrong results on I’ve gotten incorrect results from from the other chat bots. So I think that that was a little overblown. And recently, Google has announced a lot of progress that they’ve made in the AI space. And now it doesn’t seem like that’s as much of an existential threat as people were worried about a few months ago. And I think that’s generally how things go with every stock people overreact to things on the downside. And the upside, and I’m trying to capture really good businesses, when, when they’re a little beaten up, and expectations are a little down, which I felt was the case last year.
Nathaniel E. Baker 6:18
Yep. What is the business case for AI? And specifically for Google? Like? I mean, I know they have this Bard thing, and they’re launching an app supposedly soon. But what is it just to integrate with its with its search in a different way and show ads that way? Or what is it?
Value Stock Geek 6:37
I think of it more as a threat to Google. So I think of AI as like, there could be better alternatives that can come along. And it’s more I don’t know, if I don’t know if there is really much of a business case or AI like I don’t really have any view on that. What I’m more concerned about is will people continue to use Google search engine? Will that get disrupted? Is Google taking efforts to counter that disruption? And, you know, I think that that mode is pretty much intact. And I don’t think it’s going to get disrupted over the period of time that I plan on holding the stock, which would be like five years.
Nathaniel E. Baker 7:15
Hmm, fair enough. All right. Interesting. So then meta. That’s been an interesting stock here their big bet on the metaverse, they literally renamed the company to meta, but that hasn’t really gone all that well. But yet the stock has rebounded. It’s doubled this year. Just about. So I imagine you’re sitting on some pretty big gains. Are you trimming your holdings at all or not?
Value Stock Geek 7:38
I’m up just a little bit. I became I got a little too eager to buy it when it was beaten up the first time. So I bought it, you know, a little over a year ago. So I’m not up. Huge on the position. I’ve owned it for through the decline, and then I’ve held it through the upswing. So I’m basically just holding on my thinking on that I was last year when it first started declining, was started declining on concerns about the metaverse. So the concerns are obviously that Mark Zuckerberg has been spending way too much of the company’s cash on the metaverse and it’s not really going to result in any gains for the stock. And there was all there were also concerns that meta was also going to lose some grounds. So there were concerns about tick tock digging into the amount of time that people spend on the meta app applications like Instagram and Facebook. And there were concerns about that my view is they got way overblown. The stock was beaten up way too much overall, this, if you looked for instance, at the daily active users across the meta platforms, there was almost no disruption in use of the actual platform. So that was what I looked at when I saw the stock declining. I said, Well, this all seems like speculation like people are just freaking out about nothing. Even if you just assume that all the cash that was spent on the metaverse if you assume that that resulted in absolutely nothing. It was still a good business like they could spend that cash and it’s not the end of the world. So as far as the metaverse goes i i think it could possibly work. I don’t necessarily think Zuckerberg has lost his mind. I think that the metaverse could turn into something special. What that is I don’t really have any idea what that could eventually turn into. But like I said, even without that I still think it’s a pretty good business and expectations got way to beat up last year. And this is still one of the best advertising platforms in the world.
Nathaniel E. Baker 9:42
Yeah, interesting. So it is very much in your case a bet on the legacy business in which I guess now includes Instagram.
Value Stock Geek 9:51
Yeah, and I think you have the legacy business which is still doing fine. Everybody that you talked to, will frequently say in my circles that they’re not using Facebook Look anymore, but you look at the actual data and that doesn’t seem to be happening. So I don’t know if people are lying or, or maybe Facebook is turning into McDonald’s or everybody claims that they never eat at McDonald’s yet. I always see the drive thru packed. People definitely use Instagram. You know, Instagram is definitely a growing platform. And it’s not just in the United States. I mean, Facebook is growing internationally. They also own WhatsApp, which is, which is an excellent application that is used widely throughout the world. So I haven’t been been too, too concerned about any of that. I think that that legacy business is intact. I think it’s performing well. And then with this Metaverse, there’s some optionality there that could turn into something in the future that could turn into something big. And if it doesn’t work out, it’s not like they can’t turn the spending off. Like they can absolutely stop spending so much cash on the metaverse. And recently, Zuckerberg has shown to shareholders that he’s willing to possibly cut back on the spending if it doesn’t result in anything. And he’s also served in capital discipline has been willing to lay off some employees and reduce some of the access and the workforce. So he certainly hasn’t lost his mind, which seemed to be the consensus a year ago that Zuckerberg has just lost his mind. And he’s blowing all this money on the metaverse and he controls the company. So there’s nothing shareholders can do about it. So people really freaked out about that. But I think he’s demonstrated to the street recently that he’s that he hasn’t lost his mind. And he’s still a pretty adept business person.
Nathaniel E. Baker 11:32
What about the prospects of them returning some cash to shareholders via buybacks or anything like that?
Value Stock Geek 11:38
Yeah, I think they they they did buy back stock last year. Yeah, they bought back a little bit. But yeah, I mean, in the future, they could absolutely turn into more of a shareholder yield machine. They’ve focused over the last decade more on growing those core platforms. But I would also be content if this turned into kind of a shareholder yield story where they’re buying back large amounts of stocks, or they they pay some nice dividends in the future.
Nathaniel E. Baker 12:04
And then TSM, Taiwan Semiconductor? That is an interesting one that you um, you say you’re not, you know, you don’t look at economic cycles so much, or you look at them, but you don’t really react to them. But this is a cyclical industry that semiconductors, isn’t it? And didn’t they do very poorly? You know, it’s from Oh, seven to nine?
Value Stock Geek 12:23
Yeah, it’s, it’s definitely a cyclical industry, it will definitely be impacted by a recession. However, I think that the long term prospects for growing semiconductor demand are still intact. And like I mentioned earlier, I’m always holding a stock and thinking a recession can just pop up at any time. The question is, will the company survive? And if I hold it for like a five to 10 year period will demand for that product increase? So I think without question as the leading semiconductor manufacturer in the world, that Taiwan Semiconductor will be a bigger company in five to 10 years than it is today. The question is, are we going to have a recession this year? Are we going to have a recession in a couple of years, the other kind of macro worry weighing over Taiwan Semiconductor would be worries about an invasion of Taiwan. So in my view, what you have there is a good setup, you have a company that’s been beaten up over macro concerns that might not pan out, like I don’t think, I don’t think personally that China is going to invade Taiwan. I’m not too worried about that. I think if China did invade Taiwan, we’d be facing a World War. I’m pretty sure China knows that. And I think that that’s not something that I’m going to lose a lot of sleep over my view of China invades Taiwan, we have bigger problems anyway, then what’s going on with my stock portfolio? Um, as far as a recession goes, Yeah, I mean, the main argument I would have against a recession this year would be that everybody is convinced we’re going to have one. Everybody that you talked to, which is quite contrarian, yes. Yeah. So my view is whenever everybody is on one side of macro view that that macro view usually doesn’t materialize. So yeah, who knows? Maybe we’ll have a recession this year, maybe we won’t. I’m willing to buy a stock that beaten up of recession worries. And there’s a possibility that that repossession might not even happen.
Nathaniel E. Baker 14:18
And TSM does pay a dividend of 2%. The only one of these wait this Google doesn’t do that.
Value Stock Geek 14:26
Yeah, it’s Taiwan, semiconductors paying a dividend. Google does buy back stock, Facebook buys back stock. Taiwan Semiconductor does pay a dividend.
Nathaniel E. Baker 14:35
Obviously, you’re not investing for the income. You’re more about the capital gains over the long term.
Value Stock Geek 14:41
Yeah, I’m looking for a combination of all of the above, like if I generally what the way I look at it is I tried to figure out what I’m going to what I’m going to earn through shareholder yield and then try to figure out a reasonable growth rate for the business and then if I am buying them a little beaten up I’m so I’m hoping to also get some shareholder some multiple appreciation as another source of gain.
Nathaniel E. Baker 15:06
Okay? And what are there any levels, you’d be looking to add more of these
Value Stock Geek 15:12
I’m generally I’m in or I’m out, I put on a position, and I, I give it some time to work out. And I’m not necessarily going to average into it. I’ve definitely had bad experiences in the past where I’ve averaged into a stock and haven’t really been willing to admit that the thesis is broken. So
Nathaniel E. Baker 15:30
yes, I think we’ve all done the the dreaded value trap there. You’ve talked about your portfolio you call the weird portfolio? How much of that is an individual stocks versus indexes? And how does that all play out?
Value Stock Geek 15:42
Yeah, so I run two separate portfolios. So I have a, I have an account where basically I select stocks, and I’m trying to buy treated as if I’m a business owner, buy them for a good margin of safety, hold them so I can actually get the results from the business. Then I run another portfolio, which is more of an asset allocation approach, where that’s that’s generally all through ETFs. So, and it’s held through US small cap value, international, small REITs gold and long term treasuries, held in kind of a risk parity style asset allocation, where there are some defensive assets. And there, there are some more aggressive, globally diversified assets in there with a tilt towards value. And the hope is like the idea behind that as I’m not trying to predict what’s going to happen with markets, it’s more of buy and hold permanent portfolio style allocation. Now, within my stock picking account, I use that as a proxy for cash. So instead of holding cash, when I can’t find businesses that are selling at attractive prices, I’ll hold the asset allocation instead. So last year, I was able to pick up a lot of stocks that I thought were pretty attractive, I started, I went into 2020, to about 80% in that world, weird portfolio, right. And then I reduced that to 20%, as I was picking up businesses throughout the year, that I thought were pretty attractive.
Nathaniel E. Baker 17:17
So that’s where it is now. It’s like 20% individual in value in the asset allocation portfolio and 80 in individuals.
Value Stock Geek 17:24
That’s right. That’s right. And the goal is to hold about 15. When fully invested, I would hold about 15 stocks and an equally weighted portfolio. How many do you hold them? Right now I hold about 10. So the goal is to eventually, hopefully deploy that remaining 20%. But the markets don’t seem to be cooperating having a good year.
Nathaniel E. Baker 17:48
Surprisingly, right. Yeah. Especially with tech.
Value Stock Geek 17:52
Yeah. So as as things get better. I haven’t found as many opportunities, but I’m always looking, I’m always updating my watch lists. And I’m always adding companies that I think are are good for a long term investor to my watch list.
Nathaniel E. Baker 18:05
How long is your watch list?
Value Stock Geek 18:07
Right now it’s up to about 100 separate names.
Nathaniel E. Baker 18:11
Too much to get into here, but can you give us some highlights of any that you’re really looking at particularly closely right now.
Value Stock Geek 18:20
Sure. So a company that I’ve recently looked at that I that I really like is NVR. So there are homebuilder, that are focused more on the east coast of the United States, they have a pretty nice business model where company went bankrupt in the early 1990s. And out of that situation, they adopted a different kind of approach towards purchasing land. So what they do is, instead of what most homes, what most home builders do is they’ll go out and they will buy land, build homes on it, and then sell the homes. So that makes you very and NVR used to do the same thing. But that makes you very vulnerable. If there’s a big decline in the real estate market, you wind up holding the bag, you’ll end up holding on to all this property that you can’t sell and it’s getting marked down. And NVR ultimately went bankrupt from that situation in the early 1990s recession. So from that what they did was they started instead purchasing lot purchase agreements, which are basically options to buy land instead of actually buying all of their land outright. And then in addition to that, they pre sell all their homes. So basically, they’ll exercise the lot purchase agreement, they’ll buy up like a land that they own a piece of land that they want to develop, they’ll have a model home on it, people tour the model home, and then they pre buy the house and they can often customize it with whatever features they want. So that business model makes them a lot more resilient whenever the real estate market declines that’s allowed them to actually deliver really great returns for shareholders over a period of time. Since since the mid now Nice, it’s still it’s returned to basically a 20% CAGR over that period of time. So it’s turned 1000s and millions over that period of time. That’s why and even if you bought it at the peak of the housing bubble back in like late 2005, and then held through 2015, you still earned a return that was comparable to the s&p 500, which you really wouldn’t imagine if with buying a cyclical homebuilder and holding it through the global financial crisis. But that’s the kind of company that NVR is. So I think it’s a really attractive company to hold for the long term. With that said, right now, the real estate market is doing really well. I would prefer to buy it when things are a little bit beaten up in the real estate market, rather than buy it during a period of strength. So that’s a huge one I’ve added to my watch list. And whenever it gets a little beaten up, I’ll probably buy some.
Nathaniel E. Baker 20:54
It is trading at right near an all time high here. Interesting chart. If you look at it, they peaked in like late 2021 And then dropped precipitously until it looks like they had a bit of a double bottom. Okay, so maybe that was that was in line with the rest of it. In October of last year. And since then, it’s been on an upswing recapturing its post COVID. High. So maybe yeah, interesting return. But
Value Stock Geek 21:24
yeah, well, well, I think last year, you did have a situation where people were anticipating that the real estate market was going to decline. And that didn’t happen. So yeah, last year was probably a good time to buy it. Like I said, I would really like to buy it when real estate is weak. And then, you know, hold hold from there. But even if I think it’s the kind of company where it does have some strong resiliency in the face of a recession, like even in 2008, the company didn’t lose money. Which is amazing for builder.
Nathaniel E. Baker 21:59
Yeah, it’s weird. This is one of these kind of like Berkshire Hathaway and that they don’t seem to have split the stock at any point. So trays for almost $6,000 a share.
Value Stock Geek 22:09
Yeah, they don’t split the stock. And then in addition to that, they buyback massive quantities of stock. And so they’re they’re constantly retiring shares and aggressively buying back stock. And that combined with the growth in the business is really fueled great gains for shareholders. Yeah.
Nathaniel E. Baker 22:26
But not paying a yield. Interestingly, which is the more tax efficient way of doing it anyway. Yeah. Yeah.
Value Stock Geek 22:32
They focus on the solely on buybacks.
Nathaniel E. Baker 22:34
Interesting. Wow. Okay. That is that is a interesting one. NVR. Okay. Anything else that you’re that you’re particularly closely watching?
Value Stock Geek 22:43
Another company I’ve written up pretty recently is that I’ve written up is, dear. So I did that there’s a John Deere tractors. So that’s another really great company. I think it’s a little expensive at the moment, not not terribly expensive. I’m hoping to pick that up at some point with a decent margin of safety. So Deere is obviously synonymous with tractors, but it’s also well known for the quality of its products. So among people in the agricultural industry, they’re known as the most reliable pieces of equipment that you can buy. So when someone buys one of one of their pieces of equipment there, they know that that’s going to last. And when you’re talking about agricultural equipment, it’s not something that you can really take a gamble with it like if you if it goes down for a day, you’re going to lose significant amounts of money. So you need to be very reliable. They’re known for being reliable. You also need good service. So they’re known for having a really high level of good customer service where they can go out and they can repair your women, whenever that happens. They’re also investing pretty extensively in technology. So they’re developing autonomous, autonomous tractors where they can go out and they can actually, you know, drive themselves and then that’s, that’s all also synchronized with GPS. So sure, so they’re they’re investing extensively in technology. And they have, they almost have the market cornered were in the US agricultural market. John Deere is going to be the premier brand. I think it’ll probably be the premier brand 20 years from now. So whenever Deere is available at a decent margin of safety, it’s definitely something I want to pick up.
Nathaniel E. Baker 24:30
Interesting. The stock has kind of gone nowhere. It’s down on 13% year to date. Over the last year it’s basically flat down 1% and the forward P e is 12x. What do you what at what level would you would you be buying here?
Value Stock Geek 24:47
Yeah, I think at the moment that the low p is a little bit deceptive because businesses are going so good over the last year I see. So whenever I see something like that when I see a company where it has a low p but it’s on like incredible. will strengthen the business, I usually assume that will mean revert a little bit. Right. So if you look at, for instance, trending in price to book or price to sales, you know, right now it’s, it’s above, you know, 5x price to book, right? If you’re talking about a recession, it would probably get down to about two times price to book. So I’d like to buy that on some weakness, I’d like to buy it when business isn’t as good and anticipating that will eventually mean revert rather than buy it when business is hot. And mean reversion hurts in the other direction. But again, it’s kind of company for a long term investor. It should do fine over a long period of time.
Nathaniel E. Baker 25:40
Yeah, the forward price of sales is 2x. And the the forward price of book is 5x. Yeah, the forward price, the current cash flow isn’t bad. That’s 11x.
Value Stock Geek 25:51
Yeah, exactly. And it is also a strong source of shareholder yield. So total share count is down by about 30% In the last decade, and they are a dividend aristocrat. So they, they’ve been able to grow dividends at a pretty steady rate. So they’ve grown it from like, if you were to adjusted for splits and everything else and went from like below 50 cents to almost $4.50 Over the last 20 years.
Nathaniel E. Baker 26:18
On Friday, if I’m not mistaken, this coming Friday, I believe. Yeah, this is interesting. Did you see Home Depot just reported earnings, and they said that cool. Consumers are scaling back big ticket purchases, and that Sox game being beaten up a little bit as a result? They lowered guidance. So any thoughts on that? You think that I mean, that’s this is an economic question, obviously. Yeah. But if they’re seeing it, then maybe somebody like Dr. could sue.
Value Stock Geek 26:48
Yeah, it’s possible. It’s possible we can have the recession that everybody’s worried about, like, I don’t really know, I’m more so I would just wait for one of these industries and one of these businesses to show some weakness, and then I’ll buy it. So that’s actually music to my ears at Home Depot is my piano, because that’s another company I’d love to own. So yeah, I’d love to I’d love to see Home Depot get beaten up over a recession or recession worries and then be able to buy it.
Nathaniel E. Baker 27:16
Interesting. Okay, well, that’s all what do you have a certain price that you’re looking at for the year where you would consider adding? It’s now at 370? A share?
Value Stock Geek 27:24
Um, I yeah, I’d like to own it around, I’d say for three times price to book at least somewhere in that ballpark. So that would probably be about 25 30% less than it is today. Okay.
Nathaniel E. Baker 27:36
So that’s about Wow. So you’re talking like sub nine sub 300? Basically,
Value Stock Geek 27:41
yeah. And then then I’d start to get interested in like, Yeah, I like to basically my approach is to find is to look for these compounds, where, even if you’re a little bit wrong on the price, you should still do okay, unless you dramatically overpay. And then on top of that, try to buy them when they’re when they’re in a substantial drawdown.
Nathaniel E. Baker 28:00
Okay, so yeah, they’re probably not going to dump that much on earnings. Even if it’s a major Miss.
Value Stock Geek 28:06
That’s what I said. That’s what I thought about Google and Facebook to your okay. Yeah.
Nathaniel E. Baker 28:11
Typically more volatile than company. Yeah. Your Home Depot are so mature yet. They haven’t been at 300 levels. Since last summer. It looks like actually, yeah, summer. Yeah. But doesn’t again, yeah, doesn’t mean that you’re right. Can and especially if there’s concerns about consumers, you could see some stocks get beaten up unfairly.
Value Stock Geek 28:31
Yeah, like, I’m not sure if we’re gonna have a recession. But I would love to see one. I mean, sure. Yeah. That’s a great time to buy some of these. Some of these nice businesses. No question. Yeah, you’ll have a lot of people sell for reasons other than the actual quality of the business. That’s always a good, good story. And then on top of that, people always extrapolate whatever is going on right now. I assume it’ll last forever.
Nathaniel E. Baker 28:55
Of course. Of course. Of course. Yes. Both upside and downside. They do that. Yeah. times and bad. Very interesting. value stock geek. You mentioned that you have a sub stack. How’s that going for you? Because I have I’ve had a subset going back about two or three years now. Almost. Yeah.
Value Stock Geek 29:12
Pretty good. I’ve had a substack since 2011.
Nathaniel E. Baker 29:16
Oh, wow. They were around then?
Value Stock Geek 29:19
Not 2011. I’m sorry. 2021, 2021 I started it. And I started writing. And I basically started this project where I’ve been analyzing businesses and trying to find wonderful businesses that my watch list with the idea that I want to capture these things when they’re selling with a margin of safety. So basically building up a big watch list, because what I found is whenever you have a good opportunity in the market, it kind of comes and goes. So I don’t want to have to wait for a crash run a screen, go dig through the screen during the crash. I want to own what I want to know what I want to own prior to any crash or prior to any any disruption in the markets wait for it to happen. And then I already know I have my shopping list. And I know things I want to own. And I know the prices, I want to own the mat. And that’s the idea there behind the substack is every week I’m evaluating a company, the generally my, what I’m concluding is, hey, this is a really good business. But it’s not attractive at the moment. So I’m adding it to my watch list. Sometimes I’ll evaluate businesses that I think are like superficially quality, and then I’ll dig into them a little bit. And I have some doubts about it. And I won’t add that to the list. And then occasionally, I’ll also go into businesses where, you know, I’m not really sure about the quality, but it looks cheap. There’s some quantitative metrics that look attractive, and then I’ll, I’ll dig into those as well. And then the goal is eventually to go through the whole s&p 500. And find and develop this this watch list of, and potentially beyond that, I’d like to go into the mid cap space and places like that and try to find a list of really high quality businesses. And that’s what I do on the sub stack every week, I publish new right up. On top of that, I’m also publishing updates on my watch list. And then I publish updates on my real time personal portfolio where I’m actually going out and buying these portfolios, buying these stocks. Additionally, on the sub stack, I also publish podcast episodes. So I’m interviewing a lot of pretty interesting investors. I’m also answering questions from the audience. And then usually what I do with that, as I’ll release podcast episodes, first behind a paywall, and then remove the paywall after a few weeks.
Nathaniel E. Baker 31:41
That’s an interesting strategy. Yeah. And that podcast is available at security. analysis.org. Yep, that’s the website. I’m just looking at it. Now. I noticed here you have Clorox also on your watch list. It looks like.
Value Stock Geek 31:53
Yeah, Clorox is an excellent company. That’s a wonderful consumer staple. I think something something like 90% of all homes, have Clorox products that went through a wild ride due to COVID. So obviously, they’re probably they have business COVID was great for their business. And then they’ve had a little deterioration in that, I guess, because everybody’s houses are fully stocked with cleaning products at the moment. But yeah, that’s pretty expensive at the moment, but at some point, I’d like to own that. It’s probably the kind of thing I could pick up in a recession.
Nathaniel E. Baker 32:29
For sure. Yeah, I got I got some a little cheaper, again, at the end towards the end of last year. And still since then, it’s been on a bit of rallies when I watch them pretty closely as well. Okay, cool. That’s real. Wow, that’s really are sick. And then of course, on Twitter value stock geek, is that your handle there? You have a lot of followers a lot more than me. Are you have you used this substack notes yet? I think that what are your thoughts on that versus Twitter post? Elon?
Value Stock Geek 32:58
Well, it was pretty disappointing when Ilan banned the links to substack. That happened briefly. So that was kind of annoying, and it made me question. You know, like, I actually did go out and buy the blue check, specifically to promote my substack. That was the whole point of it. And then when they tried to ban sub stack, that was pretty, I was pretty irritating. And then they also necessarily, that ban has been lifted. But they’ve also, it seems like they are still suppressing sub stack links a little bit. So I’ll definitely get more engagement when I don’t post a sub stack link. So that’s a little irritating. So anyway, I’ve tried notes as an alternative to it. Unfortunately, there aren’t as many people on there. So it’s not as as great a platform to promote substack. And they definitely need to get more of an audience on there. And Twitter still kind of has the game cornered with social media. So but substack notes is nice. I like what they’re doing. I like the effort that they’re making. And hopefully it gets bigger in the future. I’m definitely posting on there. And I would encourage anyone listening to join it and try it out.
Nathaniel E. Baker 34:11
Yeah, same same. And I’ve had a good dialogue with Linda over there at who does the financial piece at substack. And she’s awesome. Yeah, she’s really cool. And they seem to be doing a lot. And they take a lot of suggestions. Although one that I’ve given her a couple of times that she hasn’t followed up on yet. I’m going assuming there’s a reason for this is that you know how they they have the like the stock tickers get linked if you write it in an article, but if you look, if you do it like Twitter, they can put $1 sign in front of the ticker, but not on the notes. So which is kind of which is unfortunate that you can’t do that. No, it’s yeah.
Value Stock Geek 34:53
So but at least like you said they’re open to suggestion so I’m sure they’re probably they’ll probably add that I would imagine, boy in the future. Yeah, you would think Yeah. And they definitely seem a lot less crazy and volatile than Elon. Yeah. Like, it’s like, what the hell is he going to do today? You never know.
Nathaniel E. Baker 35:14
And throttling substack like, this just hurts him you would think, right? I mean, yeah, it’s just petty and
Value Stock Geek 35:21
well, never short term. It makes sense. I mean, keep people engaged on Twitter. But then, if you take that too far, eventually, I would imagine people would migrate away from from Twitter as the premier social media platform,
Nathaniel E. Baker 35:35
except there weren’t really any alternatives. I mean, people have talked about this blue sky thing, which I’ve been trying to get an invite for forever. Me too. And I haven’t been successful. But you know, the other one that was awful. But I forget where even when it’s called now. It was right when Elon took over people were screaming about it. And it just didn’t work. So it’s, I mean, there’s a reason that nobody’s displaced Twitter yet. And, you know, maybe the barrier to entry is a little higher than we think.
Value Stock Geek 36:01
Could be. And then I imagine in the future, we won’t be dealing with Elon, like, at some point
Nathaniel E. Baker 36:05
Yeah. I mean, already. Now he’s stepping back and having this woman take over as CEO.
Value Stock Geek 36:10
But yeah, I don’t know if they’re, the debt load that they took on is sustainable. So well, I imagine it’ll probably at some point, get owned by the banks, and then they’ll sell it to someone. So yeah, I will say,
Nathaniel E. Baker 36:23
that was a great arbitrage opportunity. By the way, when Peter he bought them. Yeah, I don’t know if he probably didn’t do any risk arm. But that was like a rare instance of like, basically a lab because there was no way he was getting people who looked at the agreement. They were like, There’s no way he’s getting out of this. And, you know, there were times when when it sold off, right, well below the takeout price, and you know, could have locked into nice gains there.
Value Stock Geek 36:50
Yeah, those those who did that. It worked out pretty well for them.
Nathaniel E. Baker 36:55
But I didn’t buy enough, because but anyway, and that was just more luck. But anyway, yeah.
Value Stock Geek 37:00
But there was some uncertainty like he could have. I don’t know, I’ve seen him do all kinds of crazy things before why didn’t able to weasel out of things? And yeah, I don’t know. I don’t know.
Nathaniel E. Baker 37:09
What’s the concern? Yeah, that was the concern that he was going to somehow find a way to weasel out of it. But if he looked like you’d be looked at arms, like you’d be looking at, like, the legal precedents, like, basically, for him to do that would have to, it would have been like, illegal, like, like a mess. Yeah, and create a new precedent that like nobody would want to deal with. And so from that perspective, it was laugh but yeah, but a layup. But anyway. So much prefer that. All right, cool. So yeah, so check out Valley stock Geek on substack. The website security analysis.org. And of course, value stock geek, the Twitter account anywhere else on on social media or anywhere else I’m imagining or have a YouTube.
Value Stock Geek 37:53
Yeah, that’s it. I’m security analysis.org. And then my Twitter or my handles add value, stocky.
Nathaniel E. Baker 37:58
Cool, very nice. Awesome, very lucky, thank you so much for coming back on the podcast, again, look forward to having you on at a future point. Maybe in a year or so. Maybe we’ll have a completely different economy, then maybe it will be shopping season for you. But for now, this is what we got. And with that, we thank you all for listening. Thank you, value stocks for coming on. And with that, I look forward to seeing you all again here next week. See you then. Bye.