In this week’s episode:
☕️🦖 Badger discusses his support for anti-fraud exposer @Coffeezilla
🚫💰 If America was a company, would you invest in it? Or would you look at its balance sheet and say, hmmm, $36 Trillion in debt seems like an awful lot… 🧐
👑🌴 Monkey is in bad shape with only a few weeks left in the first round of the King of the Jungle Portfolio challenge. But it ain’t over ‘til its over, especially if Eos $EOSE 🔋can orchestrate a short squeeze. Monkey explains
‼️🚨 Monkey adds more to his oversized Coherus Biosciences $CHRS position using a limit order and Relay Therapeutic $RLAY, using valuation as his measuring stick
🦁Stock Safari: Listen to Krzysztof pitch Nintendo $NTDOY 👾🎮 based on his experience with Activision $ATVI and Take-Two $TTWO. Is Nintendo a future Apple $AAPL in the making?
🦁Stock Safari: Luke pitches a private military equipment 🪖 and software company $Anduril and explains the extra risks of private investing
Send us your questions and comments on youtube.com/@WallStreetWildlife and patreon.com/wallstreetwildlife
Sources mentioned:
Coffeezilla: https://www.youtube.com/channel/UCFQMnBA3CS502aghlcr0_aw
Is America Broke? https://www.appeconomyinsights.com/p/how-america-spends-money
Segments:
[00:00:00] Introduction
[00:06:05] America’s Broke And It Could Affect You!
[00:16:48] King Of The Jungle – The Final 25 Days
[00:23:06] Biotech Bravery – Betting Big and Bold on Coherus and Relay Therapeutics
[00:29:42] Stock Safari – Level Up with Nintendo, the Princess is in this Castle!
[00:38:36] Will Tesla’s Robotaxi Event Be A 10/10?
[00:42:38] Anduril – Why Luke’s Trying to Buy this Defense Tech Start Up
WSW E48
[00:00:00] Introduction
[00:00:02] Luke: On today’s Wall Street Wildlife, why America is dead and how it could affect you. we go on stock safari with Nintendo, a private company that’s in the military technology space. and we revisit the King of the Jungle portfolio with just three weeks to go left in the competition and ask the question, can Krzysztof catch up?
[00:00:25] Krzysztof: Damn tootin I could catch up, but that’s for later. More, more importantly is we have three more patrons joining our jungle, so shout out to Bruce B, Deborah F, and Sam G, with an especially mighty big, uh, furry scratch to Bruce B, who is our first Team Monkey
[00:00:49] Luke: Woo!
[00:00:51] Krzysztof: Yes, so we have one monkey and zero badgers in the jungle.
Bruce, you are a mensch. Good on you, mate. I will try to make you proud next year.
[00:01:05] Luke: Did have, uh, did Bruce have a particular request for Team Monkey? You got to perform for us, King of the Jungle?
[00:01:12] Krzysztof: Yeah, I think he knows what’s up. I think he knows where the future gains lie, and he’s just, you know, sending the old monkey a little encouragement in what has been a somewhat unfortunate start to the contest, but more, more about that later. The, the
[00:01:26] Luke: you know what we should, we could do? We, we, we talked in the past about, we’ve got our Patreons, we want to do something for our Patreons, but we’re like, it’s too early to do like a whole bunch of bonus content because we’re so focused on building the, like the actual channel. Uh, but I was in Austin.
Okay, I just, just said King of the Jungle. I was in Austin. I sang and you danced at that karaoke joint, uh, The, Jungle Book, uh, King of the
Swingers. So why don’t we repackage that video and we’ll send that to all of our paying patreons.
[00:01:56] Krzysztof: Oh, that’s so great. Right. That’ll be a Patreon only exclusive. That’s genius. Right. So, if y’all, uh, haven’t caught up to our show, we are at patreon.com/wallstreetwildlife, where if you want to belong to our tribe and get some cool perks, that’s where you can cast your vote.
[00:02:18] Luke: And I promise I won’t be posting any poop to you in boxes if you caught last week’s episode.
[00:02:24] Krzysztof: Okay. All right, Badger. So, is America broke?
[00:02:30] Luke: Actually, uh, before we do that, you might notice I’m wearing a different t shirt today, and I do want to riff about that. Does this, does this imagery look at all familiar to you? do you know who CoffeeZilla is?
[00:02:42] Krzysztof: I do not, but that looks like a, almost like a Miyazaki, like a play on Miyazaki, like what’s it called, uh, Totoro, Standing in the Rain.
He is the online investigative journalist, mostly on YouTube, who, went deep with the FTX scandal, managed to get an interview with Bankman Freed.
[00:03:02] Luke: Uh, he exposed what he saw as a load of fraud around the Rabbit R1, like a bunch of other crypto scams. He does good work just digs deep and sometimes feels the pain of it.
Cause he’s on the receiving end of threats and lawsuits and the current litigation is from. I don’t know, internet celebrity, I don’t know how you describe him, Logan Paul. Coffeezilla is defending what looks like a bit of a frivolous lawsuit. It turns out Texas doesn’t have anti slap laws, so, , This isn’t a case that might be heard
in other jurisdictions. and it’s all about a cryptocurrency NFT, offering that Logan Paul offered a couple of years ago and Coffeezilla alleges it’s scammy. so Coffeezilla, unfortunately his legal insurance is not valid and isn’t protecting him against what could be a fairly nasty set of legal fees running well into the six figures. So he was selling t shirts and merch, of which I am now the proud owner of one, but you can also find him on his Patreon. and, give him some love if you like his content and you want him to carry on doing the good work he does.
[00:04:09] Krzysztof: so I’m I’m this is interesting badger because You are a guy who in our context stays pretty far clear away from crypto. I’m the sort of guy that has a very significant position in both Chainlink and Bitcoin. but I always thought this was, yes, a space that you’re not. that interested in. So it’s a little surprising that you have such a genuine, uh, that you’re putting your back into supporting this guy.
Is it like on the premise that he’s a good journalist and you want to support journalists or
[00:04:42] Luke: Yeah, exactly. I think he does, really good work. Not just anti, crypto scams. One of the first sets of YouTube, uh, things he published was around, Madoff’s Ponzi scheme and a whole bunch of other stuff. Basically trying to bring awareness, with a bit of entertainment, to kind of the bad things that can happen online. And how you should be a bit more cautious and kind of protect yourself.
but yeah, he’s managed to get some interviews with some notorious names, so I quite like, his shtick.
[00:05:09] Krzysztof: Okay, right on. Speaking of, there’s a new HBO documentary, scheduled to release I believe this week about allegedly some deep dive journalists undercovering who, Satoshi is the founder of Bitcoin. my guess is they, they don’t find anything, you know, that it’s a, it’s a lot of, uh, , hoopla, but I think the story itself is quite interesting and certainly the Bitcoin world and all of that, you know, there’s so much speculation because it is, uh, quite a mystery.
So HBO Max, the story of Bitcoin’s founder, uh, was a mystery
[00:05:45] Luke: I’ll, uh, I’ll check it out. Very good. Even though I’m not a crypto guy. Well, you wanted to talk about America. Should we hit that segment?
[00:05:56] Krzysztof: Yeah, America seems to have a lot going on, uh, in the coming week. So tell us why America’s broke.
[00:06:04] Luke: Yeah,
[00:06:05] America’s Broke And It Could Affect You!
[00:06:05] Luke: America’s broke and it could affect you, my friend, plus all of our American listeners. I think it’s quite interesting to think about a country like it’s a business. And there’s a really nice Twitter account called App appeconomyinsight. com. Uh, and they, they just do these really nice, like, I don’t, what do you call them?
Like, not waterfall diagrams, but again, you see like money coming in, money going out, and how it all gets spent. And then over there, I just It caught my eye over the weekend. They did a nice article as a freebie on treating the US as a business and looking at inflows understanding whether the US is solvent.
So, like any company, the country and like the CEO of the country is currently Joe Biden. The country has a budget and money comes in. That’s like your revenue. So taxes and money gets spent and that the government publishes a budget and has to get it agreed. And like right now I’ll pop this up on screen. There’s a breakdown of last year’s full year, 2023 net costs, like all the money out. so it’s about 7. 9 trillion dollars net costs last year and 22 percent of that is health and human services. So that’s basically like medicare and all of your Very, very expensive, uh, healthcare schemes.
about 18 percent is the Department of Veterans Affairs, social security is about 18%. Defense, 13%. I thought quite interesting, interest is about 9%. the US government owes so much money, now nearly 10 percent of its spend every year is just servicing the interest load.
How does that make you feel as a taxpaying Texan?
[00:07:54] Krzysztof: Not great, Badger, not great. In fact, this is, this is one of the reasons that I sold out of the majority of my positions last year, because we’re about a year since I made that drastic decision. And I have more to say about this, but I want to let you run if there’s more data you want to throw at us.
[00:08:10] Luke: There’s a ton of data and I can, I’ll pop some stuff off the screen so we can look at it with our YouTube viewers. Do catch us.
on YouTube if you want to see like my funky t shirt. Um, but yeah, like that, I think this, my main reason I brought this topic to the podcast today was just this horribly mounting national debt.
And the government is essentially having to borrow more money just to service the interest. So maybe like we turn a corner a little bit as interest rates are now coming down. And actually something Trump tried to do during his term 2016 to 2020 was like refinance the debt that would have actually worked out pretty well if you could like this huge debt the U.
S. has on. A hundred or a thousand year loan at the rates then, which was super low, but the government didn’t do that. He didn’t get it through. And so, yeah, it’s costing you a ton of money.
[00:09:05] Krzysztof: When I’m looking at this graph of US government national debt, you know what I see? The French Alps. And it’s actually, it’s shocking because the spike, the, the, the spike over the last, I guess it would be 10 years, especially the last five. is really worrying and that’s not going to slow down. This is the connection I make to, uh, I don’t want to say crypto because most of crypto is scammy, but the legitimate crypto use case, I think, ties in with these principles that if you have a hard currency, You can’t go fighting wars you can’t afford and that’s why it’s kind of a philosophical position for many people because these kinds of debts don’t come out of nowhere.
I mean, we’re, you know, if it’s a war and there’s profit to be made but it comes at such staggering cost and today is actually a really sad day. It, uh, you know, the commemoration of October 7th attacks so the world is seemingly precipitating its war activities. And at some point, you know, like, like you and I do all the time, when you look at the balance sheet and the budget and your, your budget is so far gone, so far in debt, it is unsustainable.
So more and more people are, are absolutely, I think, rightly terrified of what happens, not only under this massive burn debt, but the fact that it’s still accelerating.
[00:10:37] Luke: Yeah. Like if this was actually a company that we were analyzing as a potential investment. Like, as you said, the balance sheet, right? The country has about 4 trillion coming in in revenues generated, but it has a debt of 36 trillion as of like last month. There’s no way you would invest in anything that looked remotely like that, right?
It’s so far underwater.
[00:11:03] Krzysztof: Yeah, it’s uninvestable. And it’s, you know, people use the term debt spiral because of one of the aspects you mentioned, the interest rates go higher. So it only increases the rate at which the debt will rise. So I don’t, I really, you know, these are one of those situations, I think no one person can do it.
understands the answer if there is any, but, with the commitment we have in the war in Ukraine, with expanding crisis in the Middle East, I don’t know how we find our way out of this, other than it has something to do with the fact that the U. S.
is the world’s reserve currency, so we’re lucky in the fact that, You know, we control the spigot, so to speak. So other countries would be in bad shape if something happened to the dollar. But that’s also why, for example, China’s buying massive amounts of gold. And right, you know, there’s this, like the world seems to be splitting into two factions you know, the world’s leaders are looking at this and seeing the trouble the U S is in.
So it doesn’t look good from, from the perspective that you brought to our table as a company, the U S looks absolutely dysfunctional.
[00:12:05] Luke: Yeah, Well, it’s definitely like at least top two priorities for the next administration, whoever they might be.
[00:12:12] Krzysztof: Yeah, and that’s why this election is so, I wanted to say cataclysmic, but so There’s so much at stake in all the ways. Like the future of the country seems, seems dependent on, you know, the, the direction we take in accordance with the stuff. And
I, I’m, I’m worried.
[00:12:31] Luke: Yeah. I don’t want to get partisan with it. Um, it’s actually quite hard to say objectively which party would do a better job of sorting out the economy. It’s certainly not ClickUp.
[00:12:44] Krzysztof: No, because everything I read from economists say that Trump’s approach to tariffs is actually economically wrong. And I couldn’t explain to you exactly why that is at this point. But I also know that Democrats, you know, are the party of. higher taxes and greater social spending and that’s certainly not how you reduce a budget.
Here’s an interesting one little sentence from the article you pulled up. As of September 2024, the national debt stands at a colossal 36 trillion. That’s like every single person in America owing over 100, 000 to someone else.
[00:13:26] Luke: Yeah.
[00:13:26] Krzysztof: Absolutely staggering and dangerous and not good. So America be broke.
[00:13:31] Luke: America Be Broke. And I suppose we titled this segment, Here’s How It Could Affect You. if the next administration does the smart thing, they’re going to have to start raising Taxes, cutting spending. We had a whole round of this in the UK like a decade or two ago, which was branded austerity.
Essentially, you know, tightening the purse strings and trying to be a bit more precise with the limited spend that we have. I don’t know that politically the US can get into that kind of place. As you say, particularly having its arms and legs involved in a couple of wars right now.
[00:14:07] Krzysztof: but you know, the flip side to that is this is precisely just to, I guess, spell this out. This is precisely the reasoning I was using when I sold out of my positions last year around this time, right? Cause that’s when we started our contest. And what did the market do? As soon as I sold, I sold pretty much at the very bottom.
And the market did nothing but go up. And so all investors need to, you know, it’s sort of like, uh, we’re living in Greek tragedies where so many of the gods control the thunderbolts and it’s not up to us. You know, the market can remain irrational for however long, but I’m saying I am. Even more concerned now than I was a year ago.
And well, the market, you know, especially that the market is now that much more expensive. So if I were a new investor at this point, I would be cautious as usual, understand the groundwork and, you know, do not dismiss things like valuation and just expect the best. Some, you know, expect things to break and then take a, be able to take advantage of them when they do.
But this is not a time for complacency. I don’t think,
[00:15:21] Luke: I totally agree. Market’s still ripping though, Krzysztof. Despite everything we said, there seems to be no end in sight.
[00:15:28] Krzysztof: uh, unfortunately, you know, for you and I, well, fortunately and unfortunately, there’s two sides to this kind of thing. We know that the exuberance can continue beyond what’s rational. And we also know what it feels like and looks like when things flip. Which is where season of investors can really make, you know, uh, if they remain, if they position themselves to take advantage of that, you could also succeed on the other way, especially continuing to stay grounded and not flip out and not, you know, sell when everyone’s selling.
because we’ve been through this several times. We know that in the long term, the right thing is to stay invested, right? It’s not about timing. It’s not about the thing, like, it’s not about getting cute.
[00:16:17] Luke: Yeah, but obviously you say that having not done that. You’re absolutely, what you say is absolutely correct. Yeah.
[00:16:24] Krzysztof: Well, actually, asterisk, because I, I see, uh, I see you’ve commented on, uh, on this before. I stayed invested, I just changed what I was invested in. So that was, you know, that’s a subtle point. But I went from high valuations to low valuations. And so far, you know, it, it backfired. But I didn’t just sell out, right?
That’s, uh,
[00:16:48] King Of The Jungle – The Final 25 Days
[00:16:48] Luke: Is this a good tee up to talk about the king of the jungle? Since we’re, uh,
we’re looking at portfolio performance and my stock’s ripping.
[00:17:01] Krzysztof: yeah, I think it is. So, the bad news is, for all those, all our listeners on Team Monkey, that my one big bet, which is Coherus Biosciences, has not had the inflection point that I was expecting. And,
[00:17:22] Luke: earnings or something at the end of the month, right? That’s why we gave you an extra couple of days.
[00:17:27] Krzysztof: uh, it’s not going to be till November,
[00:17:29] Luke: Ah, okay.
[00:17:30] Krzysztof: but because of the manufacturing setback, I’m not expecting the market to re rate the stock. On the other hand, my second main holding is up 150 percent for the year EOS. And there is a tiny, tiny possibility that because of the election cycle, there’s rumor word on the street that the Democrats would like.
to close the DOE loan. In fact, I don’t know if you know this, Badger, but Kamala Harris mentioned EOS in one of her speeches not too long ago because it’s in Pennsylvania. So, you know, all the thing, all the rah rah about increasing jobs and industrial workers and all that. So there’s a possibility. That the DOE loan closes finally after a long, long journey, which means that EOS would then be set up to start producing lines two, three, four, and add infinimum.
And then it’ll be all about the orders. There’s a very high short. Uh, percentage of, to the stock short float. So we are kind of set up for a short squeeze worth the, you know, the dominoes to fall the right way. I don’t think it’s a high probability event, but as of now in the king of the jungle portfolio, I own 230 shares of EOS.
So we’re to go up two bucks, which is pretty good. Short squeezy. That would be, that would put me, uh, neck and neck with you.
[00:19:08] Luke: Is it worth, uh, just going down the rabbit hole a tiny bit and explaining what a short squeeze is and why this is a potential candidate?
[00:19:15] Krzysztof: Yes, so in the market there’s always a buyer and seller and you can take a position as a short where you are expecting the shares to go down. To do that, you borrow those shares at some, usually at some interest rate. If you’re right, and the shares go down, you make the difference from where you, you sold them.
Technically, when you borrow, you’re selling them first, and then you’re buying them back cheaper later. And if it does go down, you just buy them back at that lower price and pocket the difference. The catch is, that imagine as a short seller, some piece of good news hits the wire. In this case, let’s say EOS closes the DOE loan.
So all of a sudden, if you’re a short seller thinking the company is doomed and you get piece of good news, you’re going to buy back those shares, right? That adds buying pressure. So the price is now, there are more buyers. So the price is now going up. So all these other people that have to buy back the shares, they start buying more.
So the price now keeps, you know, There’s just all these basically influx of additional buyers, creating an unnatural pressure, short squeeze, where the more people buy, the higher the price goes, the more important it is for more people to buy. And some of these things historically. Get absolutely nutty.
They’re rare. Uh, it doesn’t happen every day, but the larger that base of short sellers is to begin with, the higher the possible explosion is when you mix that with a low short, you know, float and, a high, yeah, high short float. It’s.
[00:20:55] Luke: And let me just explain that as well, because on a typical day, like there’s only so many shares traded. And so if there’s more demand, say that there could be, like, I think the metric is days to cover, there could be like 10 or more. Days worth of normal volume so that all the shorts can cover their positions and, you know, buy back the stock so they don’t get totally rinsed because they’re stuck on the sidelines trying to buy and failing.
And so that’s where you get this kind of magnifying effect.
[00:21:26] Krzysztof: Right. And days to cover, by the way, means, you know, uh, on average volume of trading based on how many shares are borrowed. This is how many days it would take on average volume to buy back all those shares. So the longer, the higher, the number, the larger, The base of shares that need to be bought back. So
[00:21:48] Luke: were, if you were in the queue to try and buy Oasis tickets, like I was for like six hours last month, right, that was, you know, a massive imbalance between supply and demand and a ton of people. Like, not cover their positions, but like, get a damn seat for the thing. And I do see this now in the papers ’cause I, I sadly failed on every occasion where I thought I got to the top of the queue.
There’s a whole bunch of buyer remorse from people who did succeed in buying. ’cause they end up paying way more than they expected to for their <INAUDIBLE> tickets. And I suppose we’ve got a bunch of buyer’s remorse as well for anyone who’s holding their EOS shorts. If the, uh, position’s skyrocketing
[00:22:30] Krzysztof: yeah, so I mean to return to uh, where, how monkey is feeling about the uh, last few weeks of the king of the jungle portfolio challenge round one. The answer is not very good badger. I’m not feeling good because you know, you don’t want to, uh, I don’t like hanging my hat on, you know, a miracle of a short squeeze, even though it’s possible.
I’m sure we’ll dissect the first year in a future episode, more specifically, but it will take a little bit of a miraculous finale for me to win, even though it’s looking unlikely. However, that said,
[00:23:06] Biotech Bravery – Betting Big and Bold on Coherus and Relay Therapeutics
[00:23:06] Krzysztof: in a segment I’d like to call biotech bravery, betting big and bold on Coherus and Relay, we, as our listeners know, add a hundred bucks to the portfolio.
at the beginning of the month, and I’ve tried so hard to restrain myself from adding more, uh, to the positions I already own, and I failed. I failed. I failed miserably, and here’s how I’d like to justify myself. tell me if I’m wrong, but you’re holding a significant chunk of cash in part because the companies you are buying are highly valued companies.
So those, right? So the phenomenon we talked about early in the show exists very much for you. If there’s a market correction, your companies will get whacked more significantly than mine. But, my biggest company Coherus is so undervalued right now, based on my due diligence, that I put in a limit order for 99 cents.
Saying basically, 99 cents is meaningless ’cause prices, uh, all relative, but at 99 cents, the market cap of coherence is something like $110 million. I know that the one of its FDA approved drugs will probably have, uh, annual revenue revenue of about 150 to $200 million in 25, 26, so not too long. Like as it commercially ramps.
So I put in a limit order for 99 cents and it hit. So I added a bunch more Coherus shares to my already large hold in and in part This is the be greedy when others are fearful mantra now you You are Rinsing and in giving me the stink eye
[00:25:00] Luke: And let’s just, we know what we’re looking at, right? I’ll stick up the two pie charts of the diversification of our tool portfolios while we’re chatting about this segment. Like you are now nearly 54 percent of your entire King of the Jungle portfolio is Coherus and like nearly 40 percent is EOSE. And then you have a bunch of other stuff.
Whereas. Look at my beautiful, like, looks like it’s just come like dancing off of the trivial pursuit board with all of its beautifully equally spaced bits of pie. You know, I got a bunch of good quality stuff in there, all broadly equal weighted.
[00:25:35] Krzysztof: Well, to your comment, maybe I just like anchovies and mushrooms on my pizza, you know, and I’m not gonna go off buying every last thing, but
[00:25:44] Luke: But don’t, you can’t position this as investment advice, right? Would you, is there anyone listening to this podcast, you would say this is the way to run a portfolio?
[00:25:52] Krzysztof: yeah, this is, this is, uh, over, way overweight in Coherus.
[00:25:58] Luke: Okay, good.
[00:25:59] Krzysztof: then is, uh, then is decent in a, you know, in a, like a real world portfolio because anything could happen. but I did to balance it out also add to Relay Therapeutics, same, uh, that’s a position I really want to make much larger. And the principle continues to be the numbers are getting better and better from the data readouts, the assets that they’re working on in breast cancer and their breast cancer portfolio are just potential, absolute potential blockbusters, and the price, meanwhile, continues to stay at Based on the future revenues of a blockbuster cancer drug, absolutely hugely undervalued, so I took all the remaining of my cash dollars and made Relay a bigger position.
unless a miracle happens in Coherus, which it probably won’t, Badger, you’re looking to win the first round.
[00:26:57] Luke: We do have another bet in play though, uh, the Axon versus EOSE bet, and you do seem to be soundly kicking my ass on that one.
[00:27:06] Krzysztof: Yeah. How’s that make you feel?
[00:27:07] Luke: I’m cool. I’ve got like 18 months left to run on that one. I’m still confident. Don’t you want to double the stakes? You can keep your, keep your starting prices if you like.
[00:27:17] Krzysztof: Oh yeah. We should double, triple the stakes.
[00:27:20] Luke: We haven’t, we didn’t define any stakes.
We should work out what the actual stakes are,
[00:27:23] Krzysztof: We should work out what the stakes are, but whatever they are, we should triple them.
[00:27:30] Luke: For real.
[00:27:34] Krzysztof: I think I want to say one more thing, uh, about adding Coherus using a limit order. This, this is, I would say the more professional way to do things. where I made a deliberate calculation and I said Coherus at this market cap is severely undervalued. That’s it. That puts me at an exact number. Not that it’s an exact science, right?
But I said I want to buy more shares at 99 cents because that’s a low market cap. And if the market happens to sway that way, then my order fills automatically. And so there’s no, none of this feeling like that. I’m just, you know, say willy nilly gambling at something because I’m feeling hot or impulsive that day.
So to me, this is a calculation on current value versus future value. I like the price I put in the order. And now I have something like, I believe, 850 Coherus shares. So, yeah, if it goes up, for every 10 cents it goes up, I’m making, uh, 87. So,
[00:28:46] Luke: We need we need, we need to do like an episode on risk at some point. So you can, I can basically force you to acknowledge, uh, the risk that you’re carrying when you’re offering your portfolio in this way.
[00:28:58] Krzysztof: Oh, I acknowledge it, uh, 100%. And that is a future segment that, that I’m working on. Lots of stuff about risk in year two of, of my life.
[00:29:07] Luke: Weird stuff. All right.
So, Krzysztof, shall we turn to our stock safari, and if you haven’t caught the last couple of episodes, our listener Tom helped us name this segment, and so every week we’re going on safari, looking for two off the radar stocks. They’re not necessarily investable, they’re not necessarily Great companies , but they are companies we’ve got an eye on and we’re considering adding to our portfolios at some point.
We’ve got two really interesting names for you this week. Krzysztof, you want to hit us up first? Who are you going on safari with?
[00:29:40] Krzysztof: Yes, I am calling this segment
[00:29:42] Stock Safari – Level Up with Nintendo, the Princess is in this Castle!
[00:29:42] Krzysztof: Level Up with Nintendo. The princess is in this castle. I am, quite enthused about what I’m finding about Nintendo. this is one of those instances where depending on how the deep, rest of the deep dive goes, this might end up being One of my next positions both in the King of the Jungle portfolio and in my real world portfolio.
Let me maybe start at, um, start at the back, what I consider the back, why I’m so enthused. I have a long history as an investor with what I call video games slash entertainment companies. And the first one, uh, I remember, my goodness, this was at the very start of my journey on The Motley Fool, was with Marvel,
and if you bought shares at that point, you made absolutely stunning amounts of money.
[00:30:35] Luke: Yeah. I was in that bandwagon too. My Marvel shares turned into Disney shares at some point. Yep.
[00:30:40] Krzysztof: Yeah. So the entertainment business can be incredibly lucrative, but I was also a long time shareholder of Activision and the same sort of kind of thing happened that there was a, You know, Activision made video games and then they joined Blizzard and then it became a behemoth of a, of a company, even though there was a long period where the stock, what I remember thinking of it was a spring coil, uh, coiled spring.
[00:31:09] Luke: Similarly, also an Activision shareholder. I guess I must’ve been reading the same newsletter. and the stock went nowhere. I love the games, like massive fan of StarCraft, but, uh, yeah, stock didn’t do much to my portfolio.
[00:31:20] Krzysztof: Right for a long time until it did so historically I have this Background in in video game in the video game industry And by the way, I was also ticked at the molly fool I was the ticker advisor for take two, which is the company that grand theft auto anyway
[00:31:39] Luke: uh, one of my buddies is Next Door Neighbours with the CEO of Tank 2, as it turns out.
[00:31:44] Krzysztof: Okay. That’s right. I forget you hang around castles, uh, over the weekend in your spare time. So here’s the thing. Nintendo is a very, very interesting company. There’s so much to say about it. It was, it was, uh, actually founded in, uh, the ninth, 19th century. Believe it or not. I don’t know if you knew that it’s.
Yeah, it’s historically one of the oldest companies there is. Um, but that’s neither here nor there for this investment thesis. It was like a card. It was like a gaming company, card company kind of thing. here’s the thing, the pitch, really, It can’t be, it’s not that Nintendo makes games that people like, because that would make it kind of the same as Activision and Take Two.
What I’m seeing here is that Nintendo is starting to become the sort of Apple of video games. Let me explain. Apple sells the iPhone. They sell a lot of it, right? But it’s now starting to get commodified. So, especially at these levels of performance. Apple’s genius really is the way it locks people into its ecosystem, right?
And that’s kind of why you’re not an Apple, right? Correct me if I’m wrong. That’s why you don’t particularly like the Apple phone. Cause you like to think you’re free. I love Apple because I love its ecosystem, but once you’re in, you’re in. So here’s an interesting thing. Gamers love the Nintendo switch console, which is the little portable thing.
That you could take with you, or you could put it into the handset and play it on your big TV.
[00:33:23] Luke: Yep.
[00:33:24] Krzysztof: Pop quiz for you. how old is the Nintendo Switch console?
[00:33:28] Luke: Oh, crikey. Uh, I’ve never owned one. I’m gonna guess, like, five, six years?
[00:33:33] Krzysztof: Close. It’s seven years old. Actually, I’m sorry. It’s eight years old now. And here’s the thing, people are still buying it like, like crazy. So it’s eight years old, which is still good, is the point. So it hasn’t become outdated, because it’s not really about the tech per se. The tech is already good enough.
It’s that people love Nintendo’s Call it platform and world that they continue buying the switch So the thesis is that Nintendo is now turning call it raison d’etre is people want in to the software system and rather than needing a fancy new platform. That’s half of it. But there is a new switch that’s going to be released in, I believe, March or April.
So there will be a new influx of people upgrading. However, the word on the street is that this upgrade will be somewhat incremental in that most of it will stay the same. It’ll just be slightly better frame rates and maybe a little glossier this that or the other thing but really everything that Nintendo offers will remain the same and be playable so it’s not like going from zero to your users then all of a sudden everybody needs to upgrade to the whole new system and start from zero again so the whole point that I’m rambling on and on about Is that most video games are cyclical and you go, you, you work up your user base, then it falls.
Then you have to work it up again. Nintendo is already has a proof in point that they have what it takes. to create a self sustaining, repeatable ecosystem that will just keep driving profits. There’s a lot more to say about the economics of that. Not only that, last bit here is that Nintendo also has a massive intellectual property portfolio that they monetize.
How? In 2023, Badger Worldwide box office, do you know what the top movie was in the world?
[00:35:53] Luke: Uh, 2023. A Barbie, movie?
[00:35:57] Krzysztof: Barbie, point, good guess, 1. 4, uh, 1. 4 billion dollars.
[00:36:06] Luke: I only know that because we went, I had to go on a Barbie themed 40th birthday to, uh, Barcelona. So I have my KT shirt,
[00:36:15] Krzysztof: you know things. Second largest movie in the world? The Super Mario Brothers movie.
[00:36:22] Luke: Okay. All right, cool. Okay.
[00:36:25] Krzysztof: Oh, so that’s the thing, right? Second largest movie in the entire world is Super Mario Brothers. That is a intellectual property character from 1986. It’s kind of staggering when you think about it.
They’re also opening up, uh, theme parks. So they’re basically taking the Disney, you know, playbook. So here’s the thesis investment. I take my history with something like Disney and Pixar, right? We’re seeing that in intellectual property. I take the playbook that Apple is using to develop an ecosystem that’s not necessarily dependent on the hardware, locks users in.
And as both of these work together synergistically, The users will go up, the margins expand because it’s not really about selling more mechanical things. It’s about making people pay more once they’re sort of at the theme park, whether in person or digitally. And all of a sudden you have a massive cash cow that is about to enter a new phase because of the upgrade to the Switch, which hasn’t happened for seven years.
I’m incredibly excited about this, not least because it also has a strong balance sheet, massive amounts of cash, making the enterprise value ratio to earnings pretty low, pretty appealing.
[00:37:44] Luke: That’s great. It’s definitely very different to really any of the other stocks that you own or you’ve talked about, um, on the podcast. So good to see you jumping into potentially jumping into something that might be almost considered like a solid investment.
[00:38:00] Krzysztof: Oh yeah, this is, this is, well, uh, let me push back a little bit. I do have Tesla in my poor king of the jungle, even though it’s a small position. However, that’s also, you know, this company, Nintendo, I mean, this is like you’re saying, this is a more of a badger kind of stock than it is. The first year monkey stock, but, uh, I’m absolutely loving what I’m seeing.
And, uh, if the market does in fact, correct, then this would be one of, I would think a safer places to put your money.
[00:38:30] Luke: Great stuff. Great stuff. Hey, I want to tell you about my Safari stock, but you just because you mentioned Tesla.
[00:38:36] Will Tesla’s Robotaxi Event Be A 10/10?
[00:38:36] Luke: So today is the 7th of the 10th or 7th, the way you US guys say it. Uh, but on 1010 in three days time, there is the Tesla robo taxi event. Got any thoughts about that? You apprehensive as a shareholder?
I freaking am.
[00:38:52] Krzysztof: I’m not, I’m excited. I was side note. I’m, I’m apprehensive about dark, dark MAGA Elon. I can’t wait to see what they show.
[00:39:04] Luke: It’s a 3am my time, but I might set my alarm and get up and watch it live.
[00:39:09] Krzysztof: It’s a big thing. I will say, I will add a little commentary here. It is one of these crossroad events for humanity, I think. as a leader in AI, actually, you know, buying, think of it this way. Tesla has bought more NVIDIA GPU chips than pretty much anyone, right? And now this is what they’re saying they’re going to do with all those chips.
So there’s people who that look at Tesla and say, this is an AI company on wheels. If you want to think of their cars that way. And the whole promise of autonomous driving has been what Musk himself has been saying is the reason for Tesla to, for you to consider Tesla an investment, you have to believe that they will solve this problem.
And this is their first update. And if it’s successful in any way, And we’re talking about a massive paradigm shift in the world, right? How driving happens.
[00:39:59] Luke: I, I, I sort of fear that we’re not going to see enough from the event that’s substantial. Like, they’ve rented, um, We haven’t thought about or prepped this segment at all, I’ve just lured Krzysztof into it. But I think they’ve rented like Warner Brothers studio, and they’re, so I’m guessing that they’ve like mocked up like a town or something.
Um, because I guess that’s like film sets. And they’ll be doing like autonomous drives for journalists and stuff. But like Like Waymo are doing that for real right now in a bunch of cities, right. So, and they’ll, they’ll have like a funky version of the car, maybe with all the seats face it forwards, there’s no steering wheel, stuff like that.
Sure, I think everyone expects that. Are they actually gonna, at the end of the event, open the doors and the cars go rolling out and start, like, servicing, uh, like, neighboring districts? I don’t think so. And, uh, yeah, I agree with everything you said. I just think there’s still going to be a long hard road from here to get to true like level four autonomy.
[00:41:01] Krzysztof: Elon has, as we know, a long history of over promising, under delivering, who knows, right? But a lot is riding on this and they have been putting out, like you said, a lot of publicity. So it’s kind of odd if, you know, if you’re not sure or if you have lots of doubt about this major inflection point, I don’t think they’d be advertising it.
Though, as aggressively as they seem to be. So,
[00:41:26] Luke: they they had a date and then they shifted it. But then like some senior like board level tech guy quit the firm, left the firm like a few days ago. Just seems like odd timing. You know, if you’ve done great work and Elon’s really happy with, like, your, the progress of the technology stack, you’d think you’d want to hang around and at least get some of the glory and be on stage.
[00:41:49] Krzysztof: I think what I’m sensing from this is I’m more optimistic than you. You’re, you’re reserving the right to be, you know, uh, you want to see the proof before you believe.
And I’m kind of as usual, like more willing to believe that we’ll see something good, but
[00:42:07] Luke: Well, like, I’m optimistic with my portfolio. It’s like a 5 percent position in my, like, net worth pretty much. So yeah, like, I’m certainly hoping Elon delivers, or at least we see, like, Climbers of when the actual release date might be, not like Elon dates, but
real dates. Anyway, let’s see. It’s only three days to wait.
Yeah.
[00:42:29] Krzysztof: okay. Well, so tangent,
[00:42:32] Luke: Yeah. Good tangent though. Uh, maybe we can, we can talk about what we actually saw on next week’s episode. But anyway,
[00:42:38] Anduril – Why Luke’s Trying to Buy this Defense Tech Start Up
[00:42:38] Luke: let me tell you about my Safari stock and why Anduril is a company that I’m trying to buy. A defense tech startup, and this is particularly difficult because it’s a private company. You can’t just go out and buy the shares.
and I don’t know if I’m going to be able to, if I’m honest, I’m all over a whole bunch of like private listing platforms. They’re all US companies. I’ve got a couple of private investments in the UK.
[00:43:03] Krzysztof: can you tell our listeners how one goes about gaining entry to a, to a platform like that?
[00:43:12] Luke: Yeah, so like, okay, so let me tell you about , Andrew L and like its valuation and then maybe we can come into that because the valuation actually tells us something about how you’d get access to the shares. they are a defense technology, military technology company. It’s founded by a guy called Palmer Luckey, and if you’re familiar with that name, it might be because he also invented the Oculus, and then, sold that to Facebook, as it was, before it became meta, but he’s now in military technology, and he’s a super smart Guy. you think about the prime contractors. I own one of them in my portfolio, Lockheed Martin, but you’ve also got like Boeing and Raytheon and a bunch of others. Like, well, we talked at the top of the episode about America is broke.
It’s because like a ton of America’s money is spent on military technology. And It’s a bit of a legacy procurement process today, where these prime contractors essentially, um, they’re selling stuff on cost plus, which means, you know, if it’s going to cost Lockheed like 10 billion dollars to develop like the next fighter aircraft.
Then they’ll sell that to the US government for 10 billion plus whatever the agreed profit margin is. Like that doesn’t motivate companies like those guys to be efficient and optimize and cut costs where you’ve got like a really properly competitive market. So Palmer Luckey’s company and Durell are trying to bring that startup competitive thinking, reusable components to the market.
And you might have seen some YouTubes of their technology. They’ve got a whole range of drones and UAVs and other cool bits of technology. but actually they’re primarily a software company. Their main product is something called Lattice, which is, I don’t know, I couldn’t tell you how it differs from Palantir, which is another company I own, but Lattice is like a software stack that integrates a whole bunch of different sensors and systems to give.
Like the operators, a comprehensive understanding of like a military, a battlefield situation. . Now, uh, I got called out actually. I do like my monthly tweet thread now where I post my whole portfolio on X.
And LinkedIn and some other places. And I break down like recent transactions I’ve done. I do position, I think about my portfolio as being like, I’m invested in companies that are making the world a better place. And some dudes called me out, like I saw this morning when I woke up, he’s like, Oh, you’re a clown.
You say you’re trying to make the world a better place, but you own Lockheed Martin. and like, I’ve got to own that. Right. Um, I, I, I, In that same bucket is Palantir and is my hoped for acquisition of a tiny, tiny piece of Andruil, because if there ain’t a world, right, there ain’t a world to make a better place.
And I’ve 180’d on this in the last five or six years, I think, where I’ve come to realize that, I don’t know if it’s because I’m like an older guy or something, I’ve just come to realize that It’s not pragmatic to have your head up your ass a little bit perhaps and say, oh, you know, military technology is bad.
like you got to protect your way of life. Um, and sometimes you got to, if you’re a big behemoth like the US, you got to get out there and protect your way of life. And, uh, other like minded cultures and their ways of life, a bit like what’s happening in Ukraine right now and in the Middle East. So, anyway, long story short, like military technology, I think is a essential, and if I just take all the emotions out of it and everything else, Like this is a growth in industry, right?
Hard to argue that, like military tech companies are not going to be doing very well. So, you know, underpinning all of this is also my thought that, hey, this is going to be like a growth sector. I want to be invested in it. So getting invested in it. How do you buy shares of, let’s say, Anduril specifically?
So they’re not public. Which means you can’t go and download like a quarterly or an annual report. You’ve got really no insight into the company at all other than what you can glean from like catching interviews with members of the leadership team and maybe looking at press releases and other articles from that space.
So it’s actually quite hard to get a clear sense of really anything about the company. When you go public, suddenly you have all of these requirements to be super transparent and publish like all of your books and everything, at least on an annual basis and a quarterly basis, you give like updates.
but right now you’ve got none of that information if you want to invest in a company like Anduril or SpaceX or Stripe or any of the other big famous. And Tony Lukman’s too. Um, Anduril did their last round. They did a series F. So I don’t know if you know how this stuff works. Like when you start off, you’re like, uh, maybe have like a friends and family round when you’re like, literally like a, you know, million dollar company.
And then you might do like a seed round where you raise like a bit more money, typically up to. Maybe 5 million, something like that, 10 million bucks. And then Series A, Series B, C, D, E, F. So Anduril are up to Series F and in their Series F, which was quite recent, June, 2024, they raised just over a billion US dollars at a post money valuation of 14 billion.
So you can buy shares on the private market, the secondary market, and like if you’re a massive. Venture capital firm, then you can, you can buy directly in that round. Like there were funds like Founders Fund getting involved, and they took a piece of the Series F because they’re negotiating directly with the company, and now they own like a chunk of that billion dollars of, New stock that was issued.
But if you have some tiny level dude like me, who’s got nothing like a billion dollars to invest, they’re not going to give you the time of day. They’re not interested in talking to you, but there are shares available because you’ve got, say, employees who vested their stock options and they want to sell them.
and also sometimes some of these funds maybe break it down and they’ll sell their piece and they’ll create what’s called purpose vehicles, SPVs. See, it’s almost like Companies within companies within companies. And if some of these big, bigger shareholders want to sell their, sell pieces of their allocation, they can do that?
through an SPV.
So that’s what I’m trying to do. I’m trying to get a piece of an SPV that’s invested in Anduril and There’s no liquidity, like I’ve put bids in on a couple of them, like right now, you just got to pay through the nose. Those guys got in a 14 billion valuation a couple of months ago. If I just look at where it’s trading right now, it’s probably closer to 30 billion.
And,
[00:50:04] Krzysztof: Wait, how do you know where it’s trading at if it’s private?
[00:50:08] Luke: uh, cause some of these secondary markets publish like the last transaction that was successful where a buyer and a seller, like it’s not like a stock market where you buy at the bid price and sell at the offer price and you don’t know who your counterparty is. If you’re buying in the secondary market, like there’s a contract, you have to get lawyers involved potentially depending on how mature this, the company you’re buying from is.
Essentially you’re buying like shares of a company and that company exists to own shares of the target company, Android in this case. And so when some of these secondary market sellers, a buyer, well, they’ve like, there’s been like a buyer and a seller have found each other.
So most recently, the most recent private?
market trade was at 35, which was a couple of days ago. so That puts the market cap about 30 billion. So like, you can’t use any of your investing skillsets really for this sort of stuff, because. Who knows if 30 billion is a fair price to pay for Angirol. All I know with certainty is some very smart people thought that 14 billion was a fair price like back in June.
[00:51:18] Krzysztof: That has a bunch of warning bells coming up for me, but there’s got, I feel incredulous to think that if you’re a serious investor with a lot of money, that there is no equivalent of something like a, you know, annual report or latest earnings or anything like that. You’re making it sound like it’s just, yeah, like hearsay or trust based.
That can’t, that can’t be right.
[00:51:43] Luke: No, but it’s not publicly available. So if you are an investor, like you will get investor materials. Typically, like I’m, like a bunch of the companies I have a small private stake in, I’ll get an email every quarter with like a business update. It won’t be formalized, you know, it comes from the company itself.
It’s not like been through anything like The Securities and Exchange Commission. It could be arbitrary format. One of the companies literally just sends like an email with a couple of pretty pictures. Another one sends like a few bullet points. Um, you are, there is a lot of trust involved. You know, you are taking the company at its word because that that information isn’t always audited.
so Yeah, so there is trust involved. Yeah.
[00:52:24] Krzysztof: Yeah, okay. Uh, this, so I would put this in the obviously beyond, uh, expert graduate level of investing. You don’t want to come anywhere near this stuff, uh, unless you happen to have some inside information of the legal kind or you’re properly connected to someone or, you know, like this, yeah, uh, but may I comment, offer one comment about the sort of big holistic picture in this?
As you were describing you know, work investing into the military industrial complex, it is another one of those things where, you said yourself there’s our idealism and then there’s the reality on the ground. And then in the end, everybody still has to make their own ethical choices.
[00:53:09] Luke: Yep.
[00:53:11] Krzysztof: For me, I don’t think I could ever invest in a company like this, even if I upgrade my mind software to we need companies like this.
You know, yeah, so it’s an open question everyone needs to wrestle with. Not every company is, no matter how promising, you could sleep at night owning. I don’t think I could. Yeah. So.
[00:53:35] Luke: Yeah, no, I totally get that. It’s not for everybody. Just like, like a bunch of people make good money investing in tobacco companies. Like, that’s not for me.
[00:53:43] Krzysztof: the world is getting yeah, I mean, it’s I mean, yeah, let’s not spend no use in me speculating and spinning off on on moral theory right now. But as a potential investor, I would be damn sure that or as sure as I could be that this is not exacerbating the world into a much darker place faster than it would otherwise get to on its own.
[00:54:05] Luke: Yeah, I think it’s, I think, like, bad things happen whether you want them to or not. And I’d rather be part of a coalition of countries that had the best technology. Like, I’m just playing, uh, you know, Age of Wonders 4, because I’m always playing some, like, game in the background PC, like, here and there, and I just started playing it a few days ago, so I spent, like, way too much time staring at the damn thing.
I don’t know if you’re familiar with it, it’s a bit like, like, Civilization, Civ VI, like that. There’s, like, lots of ways of being victorious, like, a military victory, where you just kind of, like, beat everyone into submission, there’s, like, a, culture victory, where you win them over with your, like, your art, or a religious victory, where you kind of convert everybody.
I always find myself going for, like, the science victory, right, because you can out science people. And in Civ VI, that’s, like, you, you win by, like,
[00:54:54] Krzysztof: Oh,
[00:54:55] Luke: launching, like, shit and, like, you know, putting satellites up and doing stuff like that. And in,
[00:55:00] Krzysztof: I got a, oh,
[00:55:02] Luke: so I’m, like, uh, I’m, like, Even if you look like you’re losing, if you’re winning at the science and innovation, like, you’ll suddenly come out of nowhere and your, your, uh, your competitors will be like, holy F, like, where did you pull that victory from, Luke?
So yeah, I feel like companies like Palantir and Angeril, they’re arguably, you know, they’re chasing the military victory, um, but they’re really like science companies and, uh, I’m glad it’s the West. That, that has these companies in its portfolio.
[00:55:36] Krzysztof: I’d be remiss not to point out that as a professor of literature, there is a book called Frankenstein by Mary Shelley, which the romantics thought, you know, uh, they thought some, some deep thoughts about the dangers of thinking that man could control nature and via his highfalutin reason, mess with the natural order.
And if you’ve read that book, which I, you know, you’re a Brit, it’s by your people.
[00:56:09] Luke: I’ve read book. I’m familiar with the story. Yeah,
[00:56:12] Krzysztof: Yeah, well, read the book. It’s, it’s good. You know, it’s a tale as old as time, but uh, that distinction between the military complex as one form of victory and science, you know, there’s science has its own, uh, troubles.
[00:56:27] Luke: Well, as we will see, as soon as Elon’s got actually got his robo taxis on the streets, right. There will be deaths, uh, but in the name of progress. yeah.
[00:56:36] Krzysztof: yeah. Whoa, well that, that was a lot of yapping for a Monday morning. We,
[00:56:43] Luke: was.
[00:56:43] Krzysztof: we hope our, our current patrons are enjoying the yapping, maybe our future patrons We’ll say, yeah, we give us even more.
[00:56:54] Luke: Did we, uh, like we, we prioritized a question from Deb last week or two weeks ago, and we spent a whole half an episode on it, and I’ve seen she is now a Patreon, so I assume that’s the same Debra. So thank you Debra for jumping on board. did we get any questions that we should field next week from our current Patreons?
[00:57:12] Krzysztof: Yeah, I want to address, uh, Bruce, uh, wanted us to talk about a little bit, uh, trading, some trading mentality and stops. Stop and stop losses, which I could, I’d be very happy to handle. So that might be next week.
[00:57:28] Luke: Awesome, great stuff. If you are a patreon or if you’re not like you can still find us on twitter on x And like hit us up with any questions, queries, challenge our opinions, tell me why I’m an idiot for trying to buy this private company when I’ve got no idea what it’s really doing. Tell Krzysztof that he’s doomed with Nintendo.
You should stick to EOSE and Coherus.
[00:57:55] Krzysztof: And maybe, uh, uh, let us know as the king of the jungle portfolio, round one is, uh, on the final straight away who you’re pulling for and what you thought about What turned out to be very unique individual strategies, whether Badger just got lucky with his tried and true invested world class companies, whether monkey just, you know, uh, happened to eat a rotten banana or whether this was, you know, scripted from day one to, to be the outcome that, that it is.
We’d love to hear you, uh, check us out on, uh, all the platforms, YouTube and all of that.
[00:58:33] Luke: Just to plug them specifically, we’re on patreon.com/wallstreetwildlife
You can find Krzysztof and I on x, that’s where we most like to chat. I’m at 7LukeHallard.
[00:58:46] Krzysztof: And I am at 7 flying platypus and actually, side note to that, I’m the one mostly running the Patreon account, little peek behind the curtain, so comments work extremely well there, so that, that or YouTube are a great way for us to engage.
[00:59:02] Luke: Do find us on YouTube if you’re only listening on the, uh, the pod. There are occasionally visuals. I’ll jump a bunch of these charts and graphs into today’s video edit. And, uh, even if you don’t watch on YouTube, just, like, click over there and subscribe because it’s good for the algorithm and it helps us.
[00:59:17] Krzysztof: Alright, are you ready to be a beast of an investor?
[00:59:22] Luke: Your journey starts here.
