This week, we’re hunting for value in a world of stretched valuations and AI disruption:
📈 Luke reveals why he’s shifting focus to small-cap tech stocks (under $20 billion) as the perfect setup for a world after Fed rate cuts. Find out which companies are primed to outperform the giants
🛡️ Why CTOs protecting their own jobs creates a powerful AI-resistant moat for investors in this critical software sector
🎾 Wimbledon Wager Consequences – Sinner defeats Alcaraz, and Krzysztof wins a $1,000 bet! Find out which stock he forces Luke to invest in
🤖 We unveil our latest cybersecurity stock, uniquely positioned to dominate in an age where non-human AI identities already outnumber humans 80-to-1
🤔 The META Dilemma: Patreon Steven asks the ultimate question: is it time to sell his outsized position in META? We break down the portfolio math and the key question you must ask yourself before buying or selling any stock $META
🥩 Steak of the Future: Luke shows off his Mosa Meat shareholder swag and explains his investment at a €200 million valuation. Why lab-grown beef with cultured fat could revolutionize both ethics and economics – from stem cells to Wagyu steaks at scale
Segments:
00:00 Cold Open – LLMs, Stock Markets & Existential Risk
01:04 Welcome & Small Cap Tech Thesis
05:38 AI Disruption vs Cybersecurity Defense
16:48 The Blame Game & CTO Psychology
19:09 Wimbledon Bet Reveal & EOS Options
28:22 Patreon Question: Steven’s Meta Holdings
36:45 Investment Philosophy & Personal Conviction
37:15 Mosa Meat & The Cultured Future
45:05 CyberArk Analysis & Non-Human Identities
57:10 King of the Jungle Preview
WSW – No Ads – E89 – Cybersecurity tennis
[00:00:00] Luke: Essentially like one big flexible tool like a LLM can do a whole bunch of stuff. You don’t need like 20 different solutions.
this is why we have a stock market, because can have different people with different opinions on the same thing.
[00:00:14] Kryz: we, decided to really go for it and put up a cool thousand bananas. with the stipulation that winner of the bet chooses a thousand dollars worth of, holdings for the other guy’s portfolio.
[00:00:31] Luke: I want to own more crowd, more cybersecurity. But I looked at Palo Alto and I looked at Zscaler. And I, they seem to be fairly fully valued as well. So I have found a fourth cybersecurity stock, which I’ve added to my portfolio this week. So I’ll come back to that at the back of the episode.
And why I think that’s a small cap tech winner
[00:00:52] Kryz: my greatest mistake is always selling,
[00:00:54] Luke: there’s probably two key elements of their technology stack that makes them a leader.
[00:01:04] Luke: Welcome to the Waiters Wall Street Wildlife on this week’s episode. Why I am back in buying mode and buying small cap tech stocks and one sector that I think is gonna be extremely AI resistant. Plus, we’ve got a Patreon Stevens question on his outsized meta holding should he sell. Christophe and I were gambling on the Wimbledon men’s final yesterday, and there’s a serious portfolio consequence to be paid.
[00:01:36] Kryz: Mm-hmm.
[00:01:37] Luke: mid episode where we’re gonna say who won and exactly what they have to do. we’re doing a full review of our King of the Jungle portfolio challenge, including five of our picks that have more than a hundred percent return to date.
[00:01:52] Kryz: Exciting times. Badger. Tell us why you are buying small cap tech stocks. What do you mean by that? What’s going on? What’s your research all about?
[00:02:01] Luke: Yeah, so, so, um, what do we mean by small cap tech, like technology companies, not just us listed, but typically us listed with market capitalization? Like the value of the company below about ballpark, let’s say $20 billion. So you’ve got like your NVIDIAs and your Metas and your Googles, these are like trillion dollar plus companies.
Those are like mega cap, large cap is 20 or 30 billion up to about a hundred billion dollars. Small cap is below a, below about $20 billion. And I think this sector is primed to perform for a couple of reasons. Mega cap is objectively, fairly overpriced right now. There’s a lot of momentum built into companies like Nvidia, albeit I think NVIDIA’s actually decent value. small cap has been overlooked to some extent, and it’s very hard to find a bargain in today’s market. Like stocks are expensive. Well, I think on the ex, we, in one of the quickest ever, like remember that graph of like extreme fear to extreme greed. Like we swung from extreme fear recently as like two months ago to extreme greed now, like people are going risk on and everybody’s trying to, you know, get into the market, and I think that’s probably the right thing to do. The Fed have held off cutting interest rates and they’re under pressure from the Trump administration, but they’re, they’re ignoring the noise. They’re focusing on the fundamentals, and they have a long-term rate target of 2%, which hasn’t changed, and we’re above that target right now. So they do want to lower rates, but they’re looking for stability.
And I think we do broadly have that stability even with all the chaos of tariffs on, tariffs off. so I think we’re probably gonna see a rate cup, I would say, before the end of this year. And that’s gonna be really good for small cap tech in particular, because they tend to be a bit more dependent on like debt and convertibles and loan and maybe a like a little more fragile. And so if rates comes down, it makes, it makes a more easy operating environment for those companies. Plus like all tech companies, but in particular, smaller cap tech companies really valued, mostly not on what they’re doing today, but on their future earnings. And as an investor, when you look at the value of a company, you have to discount its future earnings based on. a number of factors, but essentially the risk free rate, which to all intents and purposes, is like the rate set by the Fed. So if rates are high, that means what really, investors can actually get a good return by buying treasury bills or really safe, like risk free, low risk assets. And if rates are low, investors don’t want those assets ’cause they don’t really pay a return.
So investors tend to flock towards riskier IE like stocks, equities, and so the future value of those stocks tends to rise. And so, you know, the stock market forecast what’s coming. So the value today. Of tech or, or of stocks goes up when rates go down. So I think we’re probably gonna move into that environment over the next couple of quarters. That’s why I’m focusing on technology. That’s why I think small cap tech is gonna outperform like big tech. And I have one other thing, but I’ll give you a bit of air time, uh, before I dive into why I think a particular sector is gonna be really AI resistant.
[00:05:38] Kryz: that all makes sense. so far the rate prediction stuff, I just put a little bit of an asterisk because it seems like part of your thesis is rates will go down, but I’m seeing a bunch of who knows what it, to me it still feels quite chaotic and I’m not sure anything can be easily predicted at this moment.
Regarding you. So let’s turn to your particular, your particular choice. And I believe this has to do with a question that I had a bunch of episodes back. I have this non-experts, but serious enthusiast view that ai, especially all things having to do with code or software or things that are programmable, might start eating the lunch of all kinds of businesses.
And so anything that has ai, integrated into it, just not confident enough to say, you know, to make a big bet. And one of those companies is a former darling of mine, still a darling of yours. For example, CrowdStrike. Probability wise, I’d say sure. They’re probably fine because they’re massive.
They’re huge, they’re integrated everywhere. If something goes wrong, all airports stop. So it’s hard for me to sort of see ai, sort of eating their lunch because they too are using it. But, the question still lingers. What, you know, if it’s a paradigm shift, then paradigms tend to re rejigger everything.
[00:07:13] Luke: So I made a i, I made like a. Technical argument for why I felt CrowdStrike would be resistant or not even CrowdStrike, like cybersecurity as an industry. I made a technical argument for that when we’d last debated this maybe six months ago, and now actually I think I’ve got a stronger emotional argument.
’cause I’ve been wrestling with this question actually for the last few months and I think I now finally have an answer at least that satisfies me. but let’s reflect on like, AI is this huge, massive force that is now here at an incredible rate. And many, many companies and sectors are gonna have their business models just like wiped out certainly any company is building on top of like an LLM, essentially like a, like an AI wrapper, those companies are doomed, right?
They’re in big trouble ’cause they don’t really have proprietary technology and there are so many startups doing that. And you really have to like weed into exactly how a startup is doing, what it claimed it’s doing. if it’s literally just building like some stuff on top of open AI or Anthropic or one of these models, well they’ve maybe got a couple of versions to survive, but then they’re gonna get eaten alive.
’cause the native model will just do what they do. we saw this, or we’re seeing this right now, you might be familiar with the company Datadog, but the monitoring experts. I sold Datadog citing AI disruption last August. And I think we’re now seeing that, I think Guggenheim have just come out and like slashed their price target on it.
And Datadog’s starting to take a tumble in the markets now people are waking up to the idea that, well, I think evidently open AI use Datadog, for their own monitoring. And now there’s rumors. I think there are only rumors that they’re. They’re using another piece of technology so they can, in-house monitoring. ’cause what is monitoring? It’s just look, looking at like masses and masses, unimaginable quantities of data and trying to draw out some inferences. And, and then it takes some actions on the back of that. And that’s what LLMs are really good at. Looking at monstrous quantities of data and then drawing inferences, like the real time aspect is probably more challenging, but not insoluble. So you’ve got one company on the fringes of cybersecurity that I think is in big trouble and I saw that coming, gone. You’re, I can see you
[00:09:42] Kryz: Yeah. Yeah. Hey, Badger. I, I wanna take a possible slight detour. I don’t know if this is a good analogy. I’ve been hearing on the university level that the computer science major, which was like the hottest thing basically in the nineties, ZS, the tens. I dunno, even into the early 2020s, that that major as a major is now certainly peaked, but is kind of, , having an existential crisis.
Why would you study, computer science when the the AI LLMs are basically going to do most of what you’re doing? And, but I also hear that there’s no company in the world that’s going to get rid of their top senior most experienced computer scientist slash , coder slash LLM engineer. You still need at least call it a pair of eyes or couple pair of eyes to sort of navigate, you know, like program the, the bots.
And so what I think is happening amidst all these companies is that you still need a human or set of humans or a team of humans, but the number of seats. Will go massively down. And so a business model that used to revolve around, called selling seats and charging hundreds of thousands or millions of dollars per seat or whatever the, the number was, you can’t sustain a business model that way, but you still need some humans to do it.
So it’s not like, I don’t know, I don’t know where I’m going with this other than like, it seems to be not an either or, but it’s not like AI is taking over everything, but something about having to do with volume and how are you gonna pick a company that won’t be totally disrupted by losing the majority of its revenues to the LLMs?
Okay. Sidebars. Yeah.
[00:11:42] Luke: I mean, is it It is. You say sidebar. Actually, it is quite relevant though, but I think that’s easily sidestepped. Like yes, a lot of software as a service stuff. Software is sold today based on the number of users, the number of seats. like if you think about, say, non-human users, digital. Digital employees, so companies will still have say a bunch of people doing, I know monitoring, and whereas that whole team was maybe. 20 people in a medium sized company, maybe that team is one person with a whole load of digital agents doing like the other 19 people’s jobs. So, but nothing like the, the work is still being done. The business value, the economic value is still being generated. So all that requires is for the SaaS company in that case to say, okay, charging you based on the number of humans is no longer the, a useful way to charge you, we’ll charge you based on the number of like API calls or some other metric.
So that’s just like a bit of business model tweak that’s customers won’t push back on that ’cause it’s clear, you know, they’re getting benefit. so I think that’s like a more like a, a change to the contract as opposed to like a major technical revolution. but it’s clear like in the, in the open AI case with Datadog, it’s clear that. Some companies will be able to do these things like themselves in house. If you own, say, you know, your own, like your own bare metal in an Amazon data center and you’ve got like a bunch of Nvidia like data center on a chips, and you could probably use those for a bunch of things and you might use those for like your operational processes, but you might also use those to run like huge parts of your development stack and other stuff that you might have outsourced to a whole bunch of other companies.
Essentially like one big flexible tool like a LLM can do a whole bunch of stuff. You don’t need like 20 different solutions. But anyway, coming to my core point, the one industry sort of vertical that I think will be the last, among the last to fall is cybersecurity as a whole. And I made my technical argument for that. Last year. And just to quickly recap that, that was like we talked about CrowdStrike in particular. like one of the big benefits of CrowdStrike is it’s kind of cloud-based and every, the network effect, every new customer adds to the value for every other customer. ’cause if one customer over in Asia gets attacked and breached like in real time, cloud-based solution learns from that, helps that customer fix it and automatically in real time essentially sort of deploys that patch.
Like the same fix is applied to every customer without them having to go and install like the next version. It’s just there. ’cause it’s the nature of the solution with the agent and then a lot of intelligence on the backend. And I think that would be incredibly hard to replicate with everyone had their own LLM of separately. But there’s another reason in my emotional argument now see if you buy this for why, The pragmatic reality of this sector means that this will be one of the last things to in-house. So say you are the chief technology officer in a company and you look out there and you go, oh, actually, like there are these AI cyber security solutions that, you know, like that.
Or rather like, I can take my AI that we have and I can do our cybersecurity with it. ’cause it’s like, it’s really solid and it looks like it’s gonna give a great solution. So you start decide to do it yourself, which is essentially what you, the risk for these companies, like companies, DIY, these solutions with LLMs as these like hugely flexible tools. If you do that, you’d probably be okay. Maybe if the, you know, when this technology is super advanced, but if there is a breach or a problem, you’ve not only in-house like the solution, you’ve in-house the blame, And you’re gonna go down as, as an executive in that company, like the benefit of buying, it’s a bit like the old term. No one ever got fired for buying IBM. That was like a saying in the eighties or in the nineties. I think like if you, if as a CTO or the head of security, like cybersecurity at some company, if you buy in CrowdStrike and maybe Palo Alto and a couple of other solutions, maybe a stock I’m gonna share at the back end of today’s podcast, if there’s a screw up, like the big CrowdStrike failure wasn’t a breach, but a big failure last year, you’re not gonna get blamed.
’cause like you bought the best solution, you made the right decision for the company. So your career is safe. You’ve outsourced the blame essentially to this vendor. I think if for no other reason than that, is gonna be pretty resistant because the pragmatic reality of enterprise it is, a bit of a blame game and it’s someone else’s fault if something really went wrong. , So I think that’s why companies will be very slow. To their cybersecurity.
[00:16:48] Kryz: So I’m hearing you say cybersecurity is too much of an existential risk.
You cannot, right or wrong,
[00:16:58] Luke: like in poker, you, you have a hand and you have to play it.
[00:17:03] Kryz: You can’t fold your ACEs, basically, right? Even if they lose, you’d be called a fool for folding them. So you have to play. So it’s about the result.
Might, you know, if this paradigm shift ends up being, way crazier than we could predict, you still didn’t make the wrong decision given what you knew, and you’re not gonna take the chance. So that’s why the sector you feel is sort of more immune than, than, than not, against whatever changes are coming.
[00:17:34] Luke: that, that’s it. A bunch of other arguments. But there’s like my final closing argument, which is why, like I want to increase my exposure to cybersecurity. And so I have been like, despite everything I said about CrowdStrike, I’ve been trimming my CrowdStrike holdings. ’cause it’s really, it’s a really highly valued company.
It’s rich, like, it’s expensive. so I’ve trimmed it a couple of times and it’s continued to go up. Like so be it, right? I’m trimming, I’m managing my risk exposure. But what that’s meant is my exposure to cybersecurity and my own personal real money portfolio was like nearly 10%. And I noticed about two months ago, with a recent, I think I did two trims of CrowdStrike, like back to back months. I’m like, wow, this is down for like five and a bit percent. just, I want to own more crowd, more cybersecurity. But I looked at Palo Alto and I looked at Zscaler. And I, they seem to be fairly fully valued as well. So I have found a fourth cybersecurity stock, which I’ve added to my portfolio this week. So I’ll come back to that at the back of the episode.
And why I think that’s a small cap tech winner in this segment.
[00:18:40] Kryz: Okay, fantastic. I look forward to, to hearing about it. Shall we? Uh, and, and by the way, yeah, and, and I buy what you’re saying. I mean, I, I too, once upon a time was a major cybersecurity, owner of companies until my, the great, the great shift in, in my own thinking. but I think you’re, you’re absolutely right.
Or rather your reasoning is, is seems solid. We’ll, we’ll find out if you’re right.
[00:19:09] Luke: Well, there was, there was one thing at the weekend I was not absolutely right about, and that was your and my bet on the Wimbledon men’s final.
[00:19:17] Kryz: Correct. Uh, this was painful. This was, this was a painful, , match because originally I had wanted to cheer for, for the Spaniard, but I ended up taking the Italian Mr. Sinner in our bet, and this was no small bet. We, decided to really go for it and put up a cool thousand bananas. with the stipulation that winner of the bet chooses a thousand dollars worth of, holdings for the other guy’s portfolio.
So that means since Mr. Sinner won, I get to decide how you’ll invest a thousand dollars. In, in your portfolio, and we stipulate it has to be with options, correct.
[00:20:07] Luke: yeah. Only because, like you wanted to force me to buy a whole, like a stock, a thousand dollars worth of stock, it just makes all my reporting and tracking really complicated. So I’m, I’m hoping you’ve chosen wisely rather than some complete meme stock junk. But I’m gonna stick it in my options portfolio and I can at least classify it as entertainment money.
And then it doesn’t pollute like my mid month portfolio updates that I do every month on
[00:20:33] Kryz: this was, I said this was complicated because I was, I was trying to pull a badger. ’cause you have a way of winning even when you lose, just like, even though, even though you lost the spread, I’m still gonna make you all kinds of, all kinds of money. So it’s like, you can’t, you can’t go wrong.
But I hedged my bet.
[00:20:54] Luke: Okay,
[00:20:55] Kryz: so while I put, you know, I, I had sinner in our bet. I actually used Robin Hood’s new predictive markets, and they had the men’s final and I chose Alcaraz and I bet, it was like, uh, I bought 270. Shares on Alcaraz for about 44 cents on average. So it cost me basically 120 bucks and he lost.
So I was ac while watching, while watching the game. I was actually pulling for Alcaraz, by the way, by the way.
[00:21:26] Luke: interesting. I didn’t know that there’s like sports betting or like markets on hood. I had no idea.
[00:21:31] Kryz: Yeah. It’s a new thing. Here’s why it was fascinating. way more fascinating than than I anticipated. This was my first go around. It’s live. And so as major points were happening, let’s say, uh, one of the break points, the odds of one of the guys winning or losing really changed. And so you could kind of, I don’t know how to say this, uh, judge the quantify, maybe quantify probabilistically, you know, the match to like a.
I dunno, it was quite precise. Like the, the, the contract values were jumping up and down quite precisely. So it started at 50 50 thereabouts. And then in the first break it went down or whatever. And after Alcaraz won the first set, he was up around 70%. And then, um, I added more shares when it was back to 50 50 after one of the breaks.
And anyway, I ended up losing, uh, something like 120 bananas even though I won our bet, which is kind of the more, will end up being the much more, uh, meaningful bet. Because Are you ready? Are you ready for the big reveal?
[00:22:50] Luke: I am. Let’s hear it.
[00:22:52] Kryz: Okay. I just posted to our WhatsApp,
[00:22:55] Luke: God. I knew it was gonna be gone.
[00:23:01] Kryz: I think I, in fact, we, we really need to, uh, we need to remember this segment because your reaction was, but I think I’m gonna make you a lot of money with this. And so you are now joining Monkey as a co-owner of EOS stock, ticker EOSE, January 15th, 2027, $5 calls. And as of market close, on Friday, they were going for about $2, a piece.
So I estimate you’ll be able to buy about five of them for approximately a thousand dollars depending on how the market opens. So for us, non-option, people, what this means is in essence that Badger will be buying the right. To buy shares of EOS at $5, and he’ll have that right until about Jan, not about January of 27.
So this is a long dated option, so it’s over, call it a year and a half from now. And to have that right, he’s paying $2 per share. Each contract is worth a hundred shares, so that ends up being $200 per contract. So his break even a year and a half from now will be when EOS reaches $7 per share. and there’s the time value in between.
So the, if the shares go up soon, then the contract will be worth a lot more than that. What I wanted to accomplish above all, besides making you filthy rich, which this thank me later, is I finally wanted you to get on the eels bandwagon baby,
[00:24:49] Luke: You’re basically just mitigating me moaning about EOS all the time. Now, whenever you talk about eos in future episodes, I actually have to listen and not just take the piss. Okay?
[00:24:59] Kryz: by the way.
[00:25:00] Luke: were gonna pick eos. Alicia didn’t pick Robin Hood. That’s my other fear.
[00:25:04] Kryz: No, no. I took this seriously. I, I really, really, went through all the options and not, not all the options, but I was like, this is serious. This is a a thousand dollars when you compound, that is serious money. And, you know, at, at worst I thought, okay, so when Badger, when this, you know, 10 x is in two years and Badger’s sitting on a pretty 10 K or 15 K, I’m sure he’ll use some of those proceeds to funnel them back into the show and like, get us all kinds of new fancy editing tools or whatever he’ll, he’ll do right by us.
So this was the most, I mean, it’s just the, one pick I have the highest confidence in, especially at these prices. So,
[00:25:47] Luke: like it.
[00:25:48] Kryz: um,
[00:25:49] Luke: Hey, I’ll take it. Yep. Okay. Very good. I’m now, do I have to, am I is is it like a name for people in the EOS club? Like the A STS people? They put like an A, like a big emoji A on their Twitter X handle. What do the EOS people
[00:26:03] Kryz: EOS people are called battery heads, so
[00:26:05] Luke: Okay. No.
[00:26:06] Kryz: they put little, they put a little battery emojis though I’ve refrained, uh, from doing that ’cause monkeys. Monkeys could only hold bananas. but, uh, in all sincerity, it’s, it’s interesting. I’ll say this tomorrow, so I’ll, I’ll go into a little bit of the lore. Back when the story started for me, there was a big hoopla, big to-do about an Earth Day presentation. That was maybe when we were gonna find out about the Old Department of Energy loan, which was like this major narrative and catalyst for the stocks, so on and so forth.
And it never happened. And then there was all kinds of disappointment. So it’s like kind of Mimi stuff. But what’s fascinating about the timing of this is that tomorrow, badger. There’s this major energy summit in right outside of Pittsburgh. So the Senator for Pennsylvania, the governor for Pennsylvania, and I believe Trump are all gonna be talking about investing in energy in Pennsylvania.
EOS is gonna be there. Now the battery community is kind of, you know, we have a lot of, trauma from the disappointments of Earth Day. So some people are making a joke that this is Earth Day 3.0, but there’s a non-zero chance that, you know, during all the marketing and hoopla about creating jobs and energy, yada yada.
One of the major hyperscalers, by the way, Amazon, I don’t know if you knew this, Amazon, one of your companies is also opening up a data data center in Pennsylvania. So all of these things, all of these tailwinds are kind of coming to a head and it’s, there’s a non-zero chance that there might be some kind of announcement for a major partnership that EOS might get its name out there.
And if that were to happen, the stock I, I think would react very, very positively. So you’ll have your options just in time.
[00:28:01] Luke: All right. Like it? Yeah. Okay. Keep me, keep me appraised. I’m not gonna track this one super hard myself ’cause you do tracking for the both of us, but let me know when I should be exercising my option.
[00:28:13] Kryz: You got it? You got it. Welcome to the club buddy. Woo.
[00:28:20] Luke: what we’ve got next in our docket. Christophe, should
[00:28:22] Kryz: We have a question.
[00:28:24] Luke: Patreon? Stevens Meta Holding.
[00:28:27] Kryz: Yeah, I thought this was a really good question because it’s like one of these impossible questions, so I’ll, I’ll read it. Steven is considering selling his meta position and it’s because the, he thinks it’s quite expensive now, and he’s not a big fan of the company personally, and he’s identified several stocks, mely, Google, GLBE, and Adyen.
What’s GLB? Egl? Uh, global,
[00:28:59] Luke: globally,
[00:28:59] Kryz: yeah,
[00:29:00] Luke: Yeah.
[00:29:01] Kryz: e uh, FinTech company. So he’s identified a bunch of places that he thinks aren’t as expensive, and he wants more non-US exposure. And so it’s the forever question. Do you sell, uh, a company that has done really well for you? But here’s the catch, he still thinks that meta according to him, quote, is for sure a great investment long term.
So I started, you know, thinking about this with, well, my greatest mistake is always selling, has been selling world-class companies too soon because they do continue to compound year over year, over year. Meanwhile, all the other stuff that I just mentioned is in play. So, uh, I answered by replying with what I thought was the best question.
If he was not a shareholder, meta shareholder today, would he buy it at today’s prices? And I think the answer he came back with was no. Now that’s not the end all and be all, because there’s all kinds of other complexities like paying taxes if it’s not a tax, preferred account and all that. But to me that lends a lot of clarity.
If I already, if I know I would not be buying it today and I have all these other places that I want to put my money and it’s done super well and that we could, we both agree that it’s quite richly valued in the market itself, that is quite richly valued. Then why wouldn’t you reallocate? What’s your thinking?
[00:30:44] Luke: no, that’s a, that’s a strong argument. And, and one thing that also kind of concerns me maybe in Steven’s question is he, I guess he’s saying he’s a fan of the stock, but he’s not a fan of the company. And he says like, aggressive on getting your personal data. Like that also is a. Like I, I, I general in general, I’m a fan of and I like and I believe in the mission and the approach of all the companies in my investment portfolio.
And that makes it easier to be a shareholder. And if you really don’t, like, if you have the opportunity to be a customer, but you don’t want to be a customer, I know that’s like a personal red flag may be completely meaningless, but it makes it harder to hold on when the going gets tough. And then you might end up doing kind of dumb things in your own portfolio.
Maybe if the company underperforms for a bit, might be a great investment, but if you don’t really believe in it, then you might find yourself selling at the wrong times, things like that. So yeah, I mean, I don’t like that aspect either.
[00:31:46] Kryz: Yeah, I mean this is not a question that has an the obvious, like, for sure this is what you should do. Answer. But I think it’d be, a little trickier if he did not so clearly identify alternatives for the money. And if it was not so richly valued, then I would say, no. You just sit on your hands. But you’re right when you add the third piece, he doesn’t actually particularly like this company.
and I know for some investors, ethical considerations are no small thing. Investing is a personal journey. I believe Steven cares about the world and, and consequences of certain companies actions. So all those things together with that extra piece of, of insight that he would not be buying it if he didn’t already own it to me, says at minimum trimming it or selling something like half would be the least he should do in his personal situation.
[00:32:44] Luke: so here’s a, here’s an extra quirk because like the Patreon’s becoming quite rich and we’re having good conversations about topics like this. And so another one of our Patreons Barry dived in and said what you just said, like, could you not just meet yourself in the middle and trim meta? Steven’s reply was, I’ve got 40 positions and I’m looking to like clean that up, essentially eliminate some. Like 40 stocks is a lot of stocks. Maybe in my own portfolio, like I own 30 things today. Maybe it’s 31 as a consequence of the thing I just bought the other day. and that’s too many. But re in the reality is if you drill into my portfolio, like 75% of my money is in like my top, dunno, maybe 12 or 13, say top 15. So that’s really, I’ve got a portfolio of 15 things and there’s like a long tail of a bunch of other stuff. think that’s kind of okay to have that sort of approach. But I don’t know. Steven’s portfolio construction, if he has like 40 stocks and they’re all relatively material positions, that is too many.
You can’t track 40 things. so you should, else aside, you should be looking Steven, for opportunities to focus on your highest conviction investments.
[00:33:58] Kryz: Yes, and I’m also, uh, I really wanna talk about the number of positions when we go over our king of the jungle of portfolios. In fact, I have a very specific thing to say about that, but something else to consider. We’re teaching good investing hygiene here. I maintain that if you own a company, you kind of, as an owner, you kind of owe it to yourself to listen to earnings calls of that company.
[00:34:22] Luke: Yeah.
[00:34:22] Kryz: If nothing else, then use now AI to get the summary. But you have to do some amount of work. So if there’s a company like Meta that you actually don’t like, there’s a little bit of a reprieve from saying, oh, cool, I don’t have to listen to those calls anymore. I don’t have to put up with Zucks, whatever.
Although Zucks kind of weirdly turning into a little bit of a, he’s turned from villain to a little bit of a non villain these days anyway. But still, you don’t have to listen to Zuck anymore, Steven, if you don’t want to by selling meta. Yay. You know, that’s not a monkey. Yeah. Woo. So, no small thing.
[00:35:04] Luke: I, I went on the same, just with meta specifically. I went on kind of that same journey. I was a shareholder. I became dis enamored their behavior. I know in the late 20 teens, maybe 20, 20, 20, I exited my position. And I’m thinking in the last year or so, actually, like Zuck is a bit of a boss. I do like where the company’s going. like the leadership they’re taking around. Augmented reality. So put like metaverse aside, I think that’s probably a bit of a distraction, but like the steps they’re making with AR glasses I think is quite interesting. Um, and potentially I wanna get back in. So everything we said, you know, it is like your personal conviction as an investor. In Steven’s opinion, he doesn’t like this company and its strategy and its approach. So that’s his personal view and that should definitely influence how he manages his position. I felt like that maybe I’m changing my mind personally. That’s my own personal view. And this is why we have a stock market, frankly, because can have different people with different opinions on the same thing. They can actually weirdly both be correct and it’s not like black and white, ’cause maybe you’re trying to do different things in your portfolio. Like Steven’s got too many stocks. He wants to reduce, he should, it’s correct for him to cut his low conviction holdings. I believe that. Augmented reality is gonna be big, and I don’t have any or limited exposure to that today other than Alphabet.
So it’s correct for me to add meta to my portfolio. No, these are both correct things to do. It’s just based on the context of an investor. It’s why you can’t copy what someone else does.
[00:36:45] Kryz: Exactly, and one other point. Investing is in the art, not the science, although the, the two are dance partners. And think of how pretty your portfolio will be when you’re not using, you know, a color to extend a metaphor that, you know, like a nasty color that just ruins the painting because you don’t have to.
I mean, it’s, your portfolio’s gonna be that much more enjoyable to look at. And so it’s not a small consideration getting rid of the companies you don’t like.
[00:37:15] Luke: But
[00:37:15] Kryz: speaking of things, uh, speaking of conviction Badger, I see you wearing a Mosa meat T-shirt. Usually you’re rocking, you’re rocking our Wall Street Wildlife p paraphernalia, which I, I really gotta get me one of those shirts.
I wonder if I deliver it to my Austin address Anyway, I don’t have one. You’re not wearing it today. You’ve replaced it with Moosa meat. What’s that about?
[00:37:41] Luke: forget what they called it, like, it might have been their series B, but anyway, they did a funding round, Moza Meat, did a funding round earlier this year at a 200 million Euro valuation. And I bought myself a little piece of that just actually through like a crowdfunding platform in the uk. so I’m a minority shareholder of Moza Meat. They are, uh, one of the many companies that are trying to bring cultured meat products to market. I know you’re a big, like animal ethics guy. You even teach classes on this topic, so. You know, clearly gonna be close to your heart. What do we mean by cultured meat?
Like you’ll have, I used to be a Beyond Meat shareholder in the public markets Beyond Meat and their ilk, they were doing like plant-based meat, you know, like plant-based burgers. and those products were really good. And I was a shareholder, but clearly like a massively commoditized market. There are so many products on the shelves. I was like, I need to get out. And luckily I got out of Beyond before the stock collapsed. Well, the other reason I got out is like, plant-based is not really the future of this space. Cultured meat is the future of this space, and there’s a big difference. Cultured meat is, let’s talk about Moza Meat’s product.
They’re working on beef, so they have, like, they’ve created a beef product today. So they had like a burger a couple of years ago, like five or six years ago. They had like their prototype burger. and so they’ve taken like stem cells or cells from an actual cow. And then they’ve grown them in a vat. So there’s no like nervous system and brain.
There’s no ethical thing here. It’s just like pure flesh that’s growing. Sounds kind of gruesome and Frankenstein like, but you’re getting, you’re creating actual real meat. then, you know, if you’re a vegetarian, maybe you’re struggling with nutrition and you might, you know, maybe you don’t like eggs or something.
You know, you might find it hard to get like a healthy, balanced diet. I know you can have a very healthy, balanced diet as a vegan. Of course you can, but it’s complex. But if you, if you wanna stay away from meat, just the ethical reasons, but you like the taste of meat, cultured meat are gonna bring these products to market and they’ll be the same as in fact, arguably could eventually be better than like cow
[00:39:55] Kryz: Uh,
[00:39:56] Luke: No risk of disease. You know, could have like you’ve cultured like the greatest Wagyu steak in the world and you know, created like these, like kobee beef at like cubic meters of it. You know, that’s just kind of the trajectory of this technology.
[00:40:10] Kryz: yeah. So Badger, I’ve been hearing about this for years, like you were saying. weirdly, I have not kept up on the latest in the last year or two. What, is there something special going on now? or has have there been some, some new, developments that are noteworthy?
[00:40:27] Luke: so the whole industry is coming along. Um, so let’s what moza meat in specifically then? ’cause like you’ll have seen like big, I dunno, they call
[00:40:37] Kryz: Mm-hmm.
[00:40:37] Luke: or whatever, like you’ve got a couple of states in the US that are trying to outlaw meat because it’s clearly gonna be such a disruption. To like big cattle farmers, but this is like, you know, legacy taxi people, like trying to hold back the tide of technology and protest against Uber. Like, you can make a swing at this, but you’re not gonna last eventually, like the economics will weigh you down. And the ethical considerations, like I, core, I don’t like our ethics around animals, but I do like the taste of animals, right? So at my core, is the way that I, this is the way I think the world is gonna go. I think in general, from, you know, some people like to drive like an old, you know, manual car on a racetrack, and that’s great. They should be allowed to do that. But, you know, it’s, it’s a tiny, tiny fraction of people who actually do that.
Most people will be sat in there like, know, roboto taxii, and that will be like 99.99. 9% of every, every mile driven will be like high tech. And I think it’ll be the same. I hope it’ll be the same very much eventually with cultured meat and. I’m not calling for like outlawing of animal slaughter, but I expect it to become this very niche thing.
Maybe only in certain like old, old timey restaurants or something. And most people will go, actually, that’s pretty barbaric eating animals for sustenance and would much rather have this culture product, which by the way is cheaper, safer, easier, better quality. Like eventually that will be the case. It’s just, it’s about iterating the technology and then got all these battles happening in the us that in the UK and in Europe. most of me I think have just had approval or they’re trying to seek approval from, I think our food standards agency to launch some of their products in the uk. So I’m just kind of looking forward to be able to like buy these products and try them out myself. And it is we’re a long way from having like the equivalent of say, a steak.
Most of are working on beef. Other companies are working on chicken, some are working on eggs, some are working on fish. Like these are all kind of different culturing technologies, but albeit in this big vertical, the hard thing about beef is like if I gave you like a plate of just the actual beef flesh, like, that’d be like a bit like a, a fillet steak, right?
Like a fillet steak is very tender and delicious. But a lot of the flavor in a steak comes from like, people like rib eyes and other cuts because you have like the fat interconnected and the, you know, the tendons and the musculature, and you get like a different mouth feel. And it’s like a very, it’s a very unique experience. So moosa are now working on their cultured fat. Product and essentially you then have to like scaffold these things together and create like a beautifully marbled steak once you’ve got both these products like operational. And I think they’ve made progress on fat in the last year or so.
[00:43:35] Kryz: Okay, so Badger one, one quick thing, regarding the ethics of all this, I’m not gonna get on a soapbox, but in summary, I think my position is that life requires the taking of life. So there is no, so you can’t live without taking life. and now as we better and better understand moral morality and consciousness and how they’re intertwined.
it’s not, you know, even plants or forests have a kind of consciousness say. So, you know, I like to say there’s no holy place to stand. Right. But, so it’s not so much, I think that, uh, killing an animal, let’s say, is immoral or unethical. The problem is that I would say 99% of the killings are done in such a barbaric, brutal way that is out of sight, out of mind, and that directly contributes to global warming, that it’s not the end product that’s so much the problem.
It’s, it’s the journey. So if this company solves that, then it’s a tremendous, uh, gain to, the planet in, in all of the life forms that get to share it with us. I’m so curious when, you know, this will become a viable. Real, real world thing that, you know, you could buy in the supermarket. So I’m really rooting for it.
[00:44:56] Luke: Great. Good stuff. I’ll keep you appraised. I’ll, I’ll certainly, I’ll do like a live burger on air or something once they actually have products that I can buy.
[00:45:05] Kryz: Yeah. Um, uh, okay. You wanna talk about, you wanna get back to the cybersecurity company
[00:45:14] Luke: oh
[00:45:14] Kryz: you.
[00:45:14] Luke: Yeah. Let’s, let’s, let’s close it out ’cause we talked at the top of the episode about why I think cybersecurity is, I think I persuaded you, is gonna be pretty resistant. I added a small cap cybersecurity company to my own portfolio, so who I buy and why. I bought a company called Cyber Arc, ticker, CYBR, I don’t wanna go into like the deep, dark details, but I do talk about this a little bit more on our Patreon. If you want to like swing over to Wall Street Wildlife, dot com, where we’ve got our Patreon and I chat about it in the community there. But essentially, CyberArk are the leader in privilege session management. So without getting too technological, like essentially like I identification and authorization, like who is this person and what do they have permissions to do? And they’ve, dunno if you’ve heard of like Gartner and Forrester, their two, I used to have access to all their material as a tech guy in my previous job.
It’s quite expensive, but they’re kind of analyst agencies. They kind of rate technologies and,
Marker
[00:46:22] Luke: and they site, Gartner and Forrester both have CyberArk as a leader in, permissioning. So they have like the best technology.
And there’s a couple of good reasons I try to get under the covers for about two days last week and understand why. And there’s probably two key elements of their technology stack that makes them a leader. one is their digital vault. So essentially they have like, rather than having like your passwords on like a server that could be breached, they’ve got like a, an isolated, highly locked down when you deploy their software, which it has like a super like controlled firewall with only one port open, like it’s very hard to breach this very, very restricted environment. And that’s where. Like the, the repository, the vault for all the authentication credentials lives. So that’s actually quite a robust solution. And then the other thing they have is they do, have something called a privileged session manager. Again, in into detail like, like a secure proxy. Like if, say you want, you are like a system admin and you wanna log in and do something where normally you’d like type in your password or use your two FA like your key or something, or get a code on your phone, then you log in and you can do the thing you’re gonna do. But if you’ve implemented cyber rock solution, you can have certain kind of interactions like say your CIS admin people, they don’t log into the target system that they wanna go and do something on. They log into the CyberArk session manager and then that logs into the final thing for them. So that, it’s like that way it protects the actual login.
So the yet, like the user doesn’t actually see the password that’s being logged in. ’cause the user might be like. attacker, everything’s gone through this like tunnel, I guess CyberArk can see exactly what’s being done. You’ve got like a very robust monitoring audit chain. You can shut down, uh, access very easily. And so again, that’s like an element of a good solution that is seemingly not usually this stuff, but seemingly is better than the competitors. But the reason I’m looking overall at this particular part of cybersecurity is back to something we talked about earlier, non-human identities. So like ev evidently like, like human logins, right?
So evidently now non-human users of systems now outnumber humans by 80 to one, and that’s rising. So that’s like a huge volume. Of it’s not just AI agents, although increasingly it is AI agents, like digital employees doing this stuff. It’s also like API calls and internet of things, devices. It’s just like technology using other technology, which is, you know, it’s like an age old, thing.
This is nothing particularly new, but it’s becoming more prevalent and as we move into a world of AI agents or these technologies will be doing more unpredictable things. So you want to have really, really strong, easily auditable controls over your non-human employees essentially. you can make sure that, you know, if you think this agent is gonna do these, maybe like cut, try and break it to life a bit.
Say customer service agent, phone, whoever, some company to say, oh, you know, my bill’s wrong, or refund me or something. And you might be talking to like an AI. phone and then it tries to understand what you wanna do and then it, it actually goes and pulls in some data. It can answer your queries, you know, what’s my account balance? And it goes maybe, you know, I dunno, refute, ref refute, like a transaction or something. Well, you want to give that agent like a lot of permissions to see a lot of stuff and do like some tightly controlled things so that it can serve you a bit like a human employee would be able to serve you. so it’s a bit less clear exactly what each agent will want to do and why. So we’re increasingly going to want more like human style permissions over what agents can do. I dunno if that made sense. But essentially, you know, I think that’s the world, the direction the world is going. And I think solutions like CyberArk are gonna make that a slightly less risky transition for Chief Technology Officer.
[00:50:49] Kryz: just looking at the Gartner and the Forrester charts, they do seem to be the far and away leaders by far.
[00:50:56] Luke: Yeah.
[00:50:56] Kryz: I don’t understand the intricacies of the tech enough to understand why they themselves might not be disrupted or commodified. Do you get that?
[00:51:08] Luke: I think they could be, but it’s gonna come down to that argument I made at the top that, this will be among the last things that get outsourced because if you out, sorry, in-house. ’cause if you in-house it, you’ve in-house the blame. So that was my kind of argument. I think it applies just as well to as it does to CrowdStrike.
[00:51:24] Kryz: Okay. Second question is, on the regression analysis chart, it’s interesting to see that the two,
Marker
[00:51:31] Kryz: You see two dots that are basically all on their own. that means they are growing the fastest, they’re furthest to the right, but they are also below the red line, meaning they’re relatively speaking the cheapest.
So that’s kind of the sweet spot. And right next to CyberArk is Rubrik, which is a cybersecurity company. I did a security, uh, I’m sorry, a Safari stock feature on some months ago. I’m curious, uh, what, if anything, what made you go with CyberArk over Rubrik?
[00:52:04] Luke: I started this analysis. It’s quite, this is quite interesting sidebar, right? Like, how do you, how do we find stocks? So, I started this analysis a couple of months ago saying, I want more cybersecurity and conscious that I was trimming CrowdStrike. And I want, and I, I kind of was off the idea.
I I wanted to get a sense of like the landscape. So there’s actually a really nice website called Metech Capital, and I think like a research firm, but essentially they track about a thousand different technology companies, mostly like software as a service companies. And they have a whole load of like UpToDate metrics around different like SAS valuation metrics and all sorts of other like financial data. and we be fans of, fiscal ai. But Metech, if you’re looking at software companies exclusively, they’ve got some quite nice like pictures, like graphics you can get to very quickly. So this was, you can, you can plot like anything against any other thing. And so, yeah, this, you explained it really well.
This was, these are the. I filtered it down on Metech to just security cybersecurity companies. And there’s about, what, 20 or 30 on there. And then I plotted, growth annual a RR growth in particular annual recurring revenue. ’cause you want recurring revenue ’cause you’re gonna get it again next year, it’s gonna recur. and I plotted that against, essentially like a different version of the price to sales ratio, like ev to next 12 months revenue. and then it, it draws like a nice line of the whatever you call that as a statistician. But anyway, I like the sort of midline, but stuff below the line is sort of good stuff.
Above the line is bad just because of two axes I chose I was trimming CrowdStrike, like this picture justifies that like CrowdStrike is expensive at approximately what? 24 times next 12 months revenue. expensive. And you can see it’s an outlier, but the only thing above it in terms of valuation is CloudFlare net. which I previously owned and no longer do, but even like Zscaler is expensive and Palo Alto Networks PW expensive. ’cause those companies are growing less quickly. I saw this chart, I’m like, oh wow. Like si who the hell is cyber and Rubrik? ’cause they’re the clear winners on this particular way of looking at the com at this sector, who’s growing the fastest relative to valuation. And a just sort of bit me when I read like a very high level understanding of what they did. And then that took me down the rabbit hole. So that’s kind of, and then it ended up with a, a first buy. So I bought about. allocation in my real money portfolio, plus allocation in King of the Jungle, which we’ll look at in a second. So that’s kind of the journey of about how, of how I do investing. I think of an idea then I try and get like a big wide view and then I try and narrow down on something I might have found. Often you’ll do this and you know, I’ll do this 10 times and I won’t find anything of interest. But in this particular case, I found two companies that looked theoretically quite investible, and I just went into one of the stories and it made sense.
So that’s how I got to cyber rock.
[00:55:20] Kryz: Excellent. One note of caution, back in the seven investing days, I pitched Sentinel One,
[00:55:27] Luke: Hmm.
[00:55:27] Kryz: on, map is you’ll, it’s the stock to S
[00:55:31] Luke: Yep.
[00:55:32] Kryz: and then, uh, I issued a sell on it. And I think I was right. I know I was right because, uh, the valuation of Sentinel One has remained close to where it was around the cell.
Whereas the stock market has gone up massively. So s on this chart looks pretty, pretty compelling, meaning it’s, one of the cheaper and one of the fastest growing.
[00:55:58] Luke: yeah,
[00:55:58] Kryz: it’s not enough to just look at a chart like this.
[00:56:01] Luke: yeah, totally.
[00:56:02] Kryz: I think.
[00:56:02] Luke: you wanna be at the bottom, the right of this chart. actually, you know, Sentinel One arguably is better just looking at this chart than CyberArk and rubric. Yeah. It might be growing a little less quickly, still growing nicely at what, about 30 30% year over year growth, but objectively much cheaper at something like a five times. revenue multiple. So, yeah, like, you’re right. If you looked at this cyber, uh, sorry, Sentinel One would look like a really good investment, but you gotta do the next bit, which is actually understand the company and the context and what they do and why. then, you know, in this case, maybe ask yourself the skeptical question. Why is it so cheap?
[00:56:44] Kryz: Right, exactly. And one of my thesis, reasons was that I was competing with a company like CrowdStrike and when network effects come into play,
it might be one of those things that are. Too big to overcome, given the rich valuation to begin with and so forth. So anyway, the moral of the story here is that a pretty picture, you know, if it was that easy, you know, everyone would be getting rich.
So there’s a lot more, that goes into it.
[00:57:10] Luke: yeah.
so Christophe, we were going to review our King of the Jungle portfolio results, but we’ve been jabbering away for like an hour. Looks like we went super deep on a couple of those topics. Shall we push that to next week’s episode?
[00:57:23] Kryz: Yeah, because I think we have so much to say, we’re gonna cover all of our holdings and our portfolio construction and our latest and greatest thoughts about all of this. And I think it’s, ought to be a standalone episode and, uh, probably gonna be over an hour just talking about all of that. So we don’t wanna, you know, uh, we’re not Lex Friedman here running, uh, three hour long shows for the sake of our listeners.
So I think an hour is a good place to stop for now. I mean, as though this show was in, was in momentous already, you are now an eos or will be in a matter of, of a few hours an EOS shareholder. Uh, so, you know, uh, queue up the, the headlines, get that, get that in the largest print possible. yeah, we’ve talked about a lot already.
[00:58:10] Luke: We have, we have, if you wanna check out our King of the Jungle portfolio in prep for next week’s episode, though, you can find it at patreon.com/wall. Streete Wildlife, I think I said the other url, but they go to the same place. Wall Street wildlife.com takes you to the same place and you don’t need to like pay money as a Patreon.
Just get on there, I think, sign up, and then it’s available for free to check it out and you’ll see what our standings like us. We do have five. More than a hundred percent return stocks in what, 80 something episodes. And I got a couple of really pretty big winners. So I think go check it out. And then yeah, we’ll do a bit of a deep dive, well not deep dive, but we’ll do a broader view of the whole portfolio. We’ll look at, uh, our standings and why maybe some of our big winners have been big winners. And we’ll give some thoughts next week on, uh, any changes we’re may be planning for the King of the Jungle portfolio. we’ve got our EOS versus Axon bet, which is kind of snuck down there on the bottom right of that spreadsheet if you check it out. So we’ll look it on that.
[00:59:14] Kryz: That’s right. That puts you in a similar Syniverse Raz bind I put myself in now you’re, you’re gonna be rooting for and against yourself now.
[00:59:23] Luke: Yeah. Yeah.
[00:59:26] Kryz: Awesome.
[00:59:26] Luke: Awesome. Very
[00:59:27] Kryz: Uh, are you ready to be a beast of an investor?
[00:59:31] Luke: Your journey starts here.
