E90: King of the Jungle Portfolio Review (Part 1)

🏆 Portfolio Deep Dive – Part 1 – After 90 episodes and 18 months of investing, Luke and Krzysztof review EVERY stock in their King of the Jungle Portfolio Challenge. Eight picks are now over 100% returns (doubles!), and there’s one standout 12-bagger hiding in the mix 👀
🔒 CyberArk’s Identity Fortress – Luke explores the cybersecurity leader protecting enterprises from identity-based threats as non-human identities now outnumber humans 80-to-1. Is this the recession-proof cyber play investors have been waiting for?
🥐 Greggs: Britain’s Unlikely Investment – From vegan sausage rolls to dividend yields, Luke makes the case for this 100-year-old British bakery chain. Sometimes the best investments hide in plain sight (even if the food isn’t Luke’s favorite)
⛓️ Chainlink’s Blockchain Revolution – Krzysztof’s highest conviction play gets the deep dive treatment. With the Genius Act now law, is Chainlink positioned to become the “Visa of blockchain” as global finance goes digital?
📱 India’s Trillion-Dollar Opportunity – Luke’s ETF play on the world’s largest population and fastest-growing major economy. From iPhone manufacturing to demographic advantages, why India could be the next global superpower
💊 Biotech Battleground – Harmony Biosciences vs Novo Nordisk vs Relay Therapeutics vs Coherus Oncology – Four very different approaches to pharmaceutical investing, from narcolepsy breakthroughs to weight-loss revolutions
🏛️ The Magnificent Seven Face-Off – Amazon gets Luke’s perfect 10/10 rating while Alphabet trades at bargain valuations. Why AI might be Google’s biggest opportunity, not its biggest threat
🎮 Nintendo’s Entertainment Empire – Krzysztof’s surprise addition channels Disney-like IP expansion potential. Can the Switch 2 transform Nintendo from cyclical hardware to sticky software platform?
💰 Bitcoin & The Future of Money – why Krzysztof thinks we’re still early in the adoption curve

Segments:

00:00 Cold Open – Portfolio Performance Teasers
01:36 Welcome to Episode 90
03:03 King of the Jungle Competition Overview
09:31 CyberArk Software Deep Dive
12:23 Greggs: The British Bakery Controversy
20:54 Chainlink: Blockchain Infrastructure Thesis
31:12 India ETF: Superpower Economics
38:31 Harmony Biosciences: Narcolepsy Play
40:50 Novo Nordisk: GLP-1 Giants
48:02 Relay Therapeutics: Cancer Platform
53:27 Adyen: Payment Processing King
59:05 AMD: The Inference Opportunity
1:15:27 ASML: Lithography Under Pressure
1:20:31 Coherus: Biotech Comeback
1:29:15 Amazon: Luke’s Perfect 10
1:36:07 Nintendo: Gaming Empire Builder
1:45:33 Alphabet: The Ultimate AI Play
1:56:34 Bitcoin: Digital Gold Thesis
1:58:31 Part 2 Preview

🚨 NEXT WEEK: The remaining 15 stocks including EOS Energy, AST SpaceMobile, and the legendary 12-bagger Rocket Lab reveal! Plus final conviction rankings from worst to best.

 WSW – No Ads – E90 – King of the Jungle review part 1

[00:00:00] Luke: Subscription revenue’s up 60% year over year, and that’s driven annual recurring revenue to over a billion dollars, $1.215 billion.

[00:00:10] Krys: the thesis is that Chainlink will be the default protocol helping to tokenize first cash called stable coins, and then all real world assets like real estate, equities, derivatives, and anything else that has value. 

[00:00:24] Luke: if you’re not an Indian national, you can’t buy Indian stocks, and that’s a shame ’cause it’s one of the world’s fastest growing major economies. 

[00:00:32] Krys: it’s not out of the question that India in the coming decade or two might become, legitimate superpower.

[00:00:39] Luke: Novo Nordisk is a global pharma leader and they develop and market innovative treatments for chronic diseases, 

Analysts think it could get to a hundred billion dollars a year annually. 

the skeptic in me thinks, if, the investment thesis is, banking so muchon this relativelynew thing looking like a miracle cure, is it too much of a good thing? Are you worried about that online payments get declined less frequently with Adian than with other payment providers. And what that means is like when you go and try and buy something from a website, your card doesn’t decline.

[00:01:14] Krys: We wanted to show people what we’re doing with a regular little bit of income every month so that we model consistency and over the years, show how quickly that ends up adding up on top of a friendly competition.

[00:01:36] Luke: Hello and welcome to the latest Wall Street Wildlife with Christophe and Luke episode 90, 90 episodes, Christophe, and what are we doing this week?

[00:01:45] Krys: We are going through every single company in our King of the Jungle Portfolio Challenge, which took us a hell of a lot of prep. and it’s so that not only we have a better sense of what we own and why we own it, but so that our listeners and audience can get the very latest of our thinking and what potentially, essentially, are the best buys today.

[00:02:16] Luke: That’s right, exactly right. Between us, we’ve got 30 companies. There’s a little bit of overlap, but like 30 different companies We’re gonna talk about over the next two episodes, we’re gonna take you through like what these companies do. Really high level, like what’s our investing thesis for each of these?

And we’re gonna give you our current conviction level and then we’re gonna wrap up as well with like rank and stack all of these stocks by our conviction. heads up, eight of our stock picks since we started the competition are over a hundred percent return. They doubles. That was 18 months ago. And one of our stocks, I’m not gonna tell you which one, but maybe regular listeners already know is a 12 x return.

So hang around for that one.

[00:03:03] Krys: Right. Your,

[00:03:04] Luke: the story,

[00:03:05] Krys: yeah, your 12 x makes my what? Two Xs seem, seem like they should be ashamed of themselves.

[00:03:14] Luke: you’ve got some good winners in there, like we’ve got four stocks each. You literally just snuck across the line with a hundred percent return, I think like yesterday or a Friday. So we’ve now got four each, which are doubles. That’s like a great, uh, track record. Should we do a quick reminder of what the King of the Jungle portfolio was though before we really get into what the stocks are.

[00:03:37] Krys: Yeah. I mean, I thought that with, uh, today’s. Information overload when you could go and find information about companies and, pretty much anywhere. And then, my sense is like people just don’t know what to do with all that information. So we wanted to start a way to show people what we’re doing with a regular little bit of income every month so that we model consistency and over the years, show how quickly that ends up adding up on top of a friendly competition.

Right? What, where we get to rib each other and buy each other fancy dinners, which, yeah, I won’t get ahead of myself. So, fancy dinners and, you know, spirit of competition goes a long way.

[00:04:27] Luke: We did a check-in, like one year into the contest We did a wrap up a year ago. Uh, I was doing pretty well. I was ahead and now look how close it is. Our current portfolio values are really converging and actually even this isn’t the true truth.

’cause on this picture, you’re about 400 bucks behind. And if we look at today’s values, ’cause this thing only updates once a week, you’re like a hundred dollars behind me.

[00:04:54] Krys: Yeah, that’s crazy. That’s crazy. Especially fun fact for you listeners in Badger’s portfolio, he has a, uh, what you said, a 12 x, meaning it’s up 1100% since you bought it. And that same company, regular listeners will also know is one I bought an option call on, which ended up expiring at zero. So that cost, the thing that made Badger 1100% in gains is what cost me money.

And yet somehow, uh, seemingly miraculously, I’m only down a hundred bananas or so as of this moment. 

[00:05:32] Luke: before we get into our stocks, let’s take a quick look at just the overall picture of both of our portfolios. so here’s what our portfolios look like today. You’ve got the monkey banana on the left hand side.

He’s got 13 stocks plus some US dollars. And you can see like your crazy over allocation, in my humble opinion, to eos 34.5% allocation to eos. But that’s doing well for you ’cause it’s returned a 234% ROI and I guess there’s no more sneak peek ’cause you’ve got the badger on the right hand side and there’s my excessive allocation, 17% to Rocket Lab.

And that’s my, that’s my 12 bagger.

[00:06:17] Krys: know, just as a preview, when we do each company’s summary, we will sort of read, uh, we’ll sort of present it kind of nice and tight and firmly, and then we’ll have a little bit of banter about, you know, what our research showed us, whether we share the same conviction and a kind of what now, because looking at, you know, Rocky Lab now the first question I have is like, should you trim?

Obviously a lot of people are in that same boat, so I’m curious, you know what we’ll discover from talking about each of our positions.

[00:06:51] Luke: And we are broadly doing them from smallest allocation, actually worse performer, worse performer to best performer. So I’m afraid you can have to wait till episode 91 for our best performers. So I’m gonna give you my Rocket Lab real update next week. But yeah, um, if you just like between the lines, like if you don’t own it today, buy a small allocation, but buckle in for volatility.

[00:07:17] Krys: one other thing I wanna point out is, is, uh, when you look at my holdings, if you include cat, well, it’s important I consider cash a position. So the fact that it’s at 0% doesn’t mean that it’s not a position. I think it’s important to, to have a view of that. But, um, but uh, if you strip away cash, I’m holding 13 positions, which is quite concentrated, but to me that feels good.

And you, even though it seems like you have much more, you don’t have that much more, you have, uh, including cash, 19 positions. So we are both running, uh, pretty condensed concentrated portfolios for the King of the jungle.

[00:08:01] Luke: I would argue mine is much more diversified and balanced maybe apart from my big rocket lab allocation. Whereas your portfolio, like a third of your portfolio is one stock?

[00:08:12] Krys: Right. I, I clearly have, uh, five, five positions which are, make up the vast majority of that portfolio, so I’m super concentrated for sure.

shall the games begin? You wanna start with, uh, you said we’re gonna do worse performers, uh, in kind, descending.

[00:08:31] Luke: So, uh, one of my lowest performers, but it’s only because I literally just bought it last week. Let’s chat about CyberArk software. Ticker CYBR. CyberArk is a global leader in identity security, and they’re really focused on the intelligent privilege controls that defend enterprises from identity-based cyber threats, and they secure access from any human or even any non-human trying to get access.

So what does that really mean? Basically, they make sure that the right people log into your systems and they make sure those people have the right permissions they need to do their job. There are Gartner and Forrester recognized leader in the field, which is more important than ever because of the rise of non-human identities, which now outnumber humans by 80 to one.

What does a non-human mean? They’re things like internet of things, devices. API calls from other software, but increasingly AI agents and digital employees. Financials look really good for this one. Subscription revenue’s up 60% year over year, and that’s driven annual recurring revenue to over a billion dollars, $1.215 billion.

Currently it’s got a market cap of about $19 billion, which is 17 times sales. So. An expensive stock, but cheaper than its peers. It’s a new one in my portfolio, so it’s kind of a low conviction holding for me. I’m awarding it three badges, three out of 10 badges, but I wanna increase my allocation to cybersecurity, and I’ve got a bunch of other high conviction cybersecurity stocks that are way more expensive.

[00:10:16] Krys: I like it, uh, but I also don’t know much about it other than what you sh you’ve shared on this podcast. But I love. cybersecurity, big, big thesis. You know what, what this made me do actually over the weekend, this is a little bit of a bracket, but I ended up digging back into Sentinel One. So for possible future episodes, because I just like how you’re thinking about this pro problem badger.

especially when we put this in conjunction with your thoughts about CrowdStrike, uh, it seems like there’s still smart place to be made within cybersecurity, but it’s gonna be more about, you know, that confluence of valuation and size and where they, whether they’re being overlooked and all that stuff.

So I’m glad you brought a new cybersecurity company into the portfolio, into the universe.

[00:11:10] Luke: Yeah, great stuff. Like I definitely think if you’re a technology investor you should have an allocation to cybersecurity. I made a really strong argument just last week, I think for why I think this sector particularly is gonna be super resilient to ai. Like a lot of other software is gonna get disintermediated, it’s gonna get taken over by large language models and ai.

I think cybersecurity is gonna be one of the last ones to fall. but many of these cybersecurity stocks like CrowdStrike, like Palo Alto networks like Zscaler, like they’re pretty fully valued. So I was, look, when I picked this one a few weeks ago, I was looking for a stock that was a more reasonable valuation.

Cyber rock is still expensive, but a little more reasonable than others. So I’m just building my basket in this space.

[00:11:53] Krys: and a reminder too that I also have rubric on my radar for the same exact reasons, which showed up on a Gartner chart pretty much right next to cyber. So, just thinking out loud, even coming up with a small basket of something like, you know, I’m just sentinel and rubrik and cyber as a kind of antidote to the bigger players, that might be an interesting move for down the road.

[00:12:19] Luke: All right. Should we, we’ve got so many to get through. Should we get to our next stock?

[00:12:23] Krys: do it.

[00:12:23] Luke: I’ve got a few more than you, so I’m gonna do another one, and then we’ll start bouncing ’em backwards and forwards. So my second stock is Greg’s, Greg’s, ticker, GRGL, they’re listed in London. It’s a leading British food on the Go retailer. And they specialize in value for money bakery products like vegan sausage rolls, regular sausage rolls, sandwiches, sweet treats, and their famous steak bake. It’s a hundred year old company with a strong brand that’s embedded in British culture.

The food’s not healthy, but it’s got its raving fans, but it’s also cheap. And this could be an asset if we go into a prolonged economic downturn, which is looking a little bit more likely with the recent unexpected tick up in inflation. The company’s busy scaling from two and a half to three and a half thousand stores over the next couple of years.

So there’s growth potential, but this is still a good income investment, which is why I bought it. And you’ve got a dividend yield of nearly 4% today. This is a new holding for me. I’m giving this a rating of three out of 10 badges, but I wanna increase my allocation to income stocks, and I like Greg’s. I think it’s a good mix of income and growth.

[00:13:41] Krys: So we just, uh, talked income and dividend growth investing, um, with the Dividend Growth Investing Podcast. So stay tuned for that. Uh, so I’m still, you know, it’s not really our bread and butter here. Wall Street Wildlife, right? So, so it’s a little bit, uh, feels a little bit odd to have this in your portfolio to see you invest in this.

And I think without having as deep an understanding of the company as you do, there’s something about it that I don’t like, and I’m gonna say like, uh, it’s not that it’s income because I get why you would wanna switch over to just more, I don’t know if boring is the right word. You know, just income generating companies tend to not be remaking the world all the time. But my question to you is, out of all the companies in the world, including just the income investing one, is this really the best? Is there, this really has that, that special magic alchemy of being so cheap but still growing, that you think out of all the other options, this is where you wanna get your income from.

[00:14:57] Luke: Yeah, I think it is. I’m not experienced as an income investor, but I’ve looked at a bunch of income stocks and I’ve been trying to find some that I feel like I understand, like I don’t. Eat at Greg’s ever. Really? I did. I ate there a little bit to do my due diligence and I look at the stores wherever I drive past now I eyeball them, see how many people are in there because I’m now an owner.

I like being an owner of stuff. but like the stores are busy, like people like this brand. And the reason I’m looking at this sort of sector of, I suppose like recession proof companies is ’cause I don’t know where the world’s going and maybe we’re gonna navigate our way out of, like inflation and financial difficulties, but maybe we are not, and I don’t have much inflation proof stuff in my portfolio.

And I do think companies like, well, Amazon, Costco, Walmart, like uk, like supermarkets that maybe, you know, sell like a lower price point, like Aldi as I think there might be a private company, like companies like this are gonna be more resistant. Like consumer basics companies are gonna be more resistant in a downturn.

So here’s a company that does pay a good dividend, has growth opportunity, like they’re planning this big scale out. Like there’s a strong argument. I know you’re not a Brit and you’ve probably never seen a Greg’s, they’re, they’re all over the place, like two and a half thousand branches across the uk and the UK is not a massive place.

So that’s quite a lot. it’s probably one of the biggest fast casual. Brands there are out there, it’s probably them. And a company called Costa Coffee that are probably like directionally two and a half, sort of two to 3000 branches even. There’s like, that’s more than McDonald’s. There’s something like 1900 McDonald’s in the uk.

there’s an argument that maybe it’s, they’re at saturation point already and this, this brand will never scale internationally. Right. It’s a British brand. You might get as a bit of a joke, like occasional, like a branch in Hong Kong and a branch in like, you know, the places in Spain where Brits go to cause mayhem.

But it’s not gonna scale out at any meaningful way outside of the British Charles. I don’t quite buy into the saturation. I do think they’ve got room to expand and I see like, you know, I’ve, there’s one location in London, there’s like two pre monjas basically opposite each other.

I think this has got room to go and I think you, oh, you triggered me there when you said it. It’s incredibly good value. Like the stock is pretty beaten down right now, so I feel like getting in at a reasonable entry point.

[00:17:28] Krys: The, it’s, uh, let, let me keep pushing back just a little bit more. the fact that you don’t like the food yourself is, is interesting too. Uh, so you’re just using your investor acumen to say, well, there’s lines and it’s busy. It, you’re overruling your own, you know, limited anecdote of one. Right. So that’s, that’s interesting though.

I would say in a negative column. All the other things being equal. I, I don’t know. That’s just a, a, a side comment, but as you were talking, I just thought to ask, to find out what the PE ratio is of Starbucks, Chipotle, and Greg’s, and now PE still isn’t the best metric to use, but it’s, it’s a, a place to start.

And you’re right, I mean, it’s so interesting that Chipotle is close to 47. Starbucks is 33, and Greg’s is about 11. So you’re talking about a difference of three times to four times as expensive, which is pretty, pretty massive, valuation difference. Uh, Starbucks pays 61 cents a share, dividend, Greg’s pays 46, what is it?

Pence?

[00:18:45] Luke: Well, you have to look at the dividend yield 

[00:18:47] Krys: Yeah, 

[00:18:47] Luke: it’s like. But it’s like the cost of the dividend versus the value of a share. So 

[00:18:52] Krys: right. 

[00:18:52] Luke: yeah, Greg’s is, Greg’s is about 4% based on today’s price. Uh, does Starbucks even pay a dividend?

[00:18:59] Krys: Yeah. It’s, uh, 2.6%. So, so basically the dividend yield for Starbucks and Greg’s is, is kind of similar. Just, uh, Chipotle does not have a dividend, 

[00:19:09] Luke: it’s quite a big difference. 2.4% versus 4%. That’s like nearly double, right?

[00:19:14] Krys: my data here shows 2.6% and 2.9%, but I don’t know if that’s currency stuff still, uh, Greg’s is the larger one, so

[00:19:25] Luke: Yep, yep, yep.

[00:19:25] Krys: all other things being considered equal. Anyway, it’s, it’s such an interesting pick. I, I gotta sit more with this, uh, beyond the, I don’t like it attitude because it’s certainly interesting because, you know, in that contrary spirit, there’s so many good investments are like these kinds of, call it ugly ducklings or overlooked and nobody has heard of ’em.

Nobody, not many people talk about it, and yet they could really do, do some good. So, uh, props to you for, for looking into something like this.

[00:19:58] Luke: Yeah, like if, if anything, I think, I think Dominoes is kind of. Recognized by quite a few investors as being like a good investment. I know it as a favorite of our ex-colleague, Matt Cochran. and I, this, in some ways this is a bit like a kind of Domino’s, like it’s, you know, unhealthy food, but it has its fans, financially it’s actually in a pretty robust place, so you might sort of think of it that 

[00:20:24] Krys: Okay, cool. Well, good luck. You use carnivores sausage eater. I do hope they treat their animals well, which I’m almost a hundred percent sure they do not, but, uh.

[00:20:37] Luke: If they treat their employees well, they’ve got like an employee ownership culture. So that’s, I quite like companies like that. Like you, if you work there, like you get like essentially like a share in the company. You start owning stock, you invest stock as you go. Anyway, should we come on to one of yours?

And it’s not even a stock. What are you gonna tell us about

[00:20:54] Krys: Yeah, this is wild that this is my worst performer. Uh, so far. I think after today it’s gonna be pretty much close to break even as far as I could tell, based on the latest, uh, prices. But still, it’s, Chainlink, which is a, a token, so it’s not an equity you could buy, and Chainlink is the backbone of blockchain.

It’s a protocol and suite of security and identity products that is bringing the world’s global finance industry onto blockchain technology. Its mission is to provide pr, tamper proof data, cross chain messaging and compute to smart contracts across any blockchain. Moving money from Fiat, which is slow and dirty to digital, which is instantaneous transparent and available to all with internet access. So this is especially timely now because the Genius Act was just passed a few day ago, a few days ago in the United States, and this makes the US economies move onto blockchain technology, lawful and inevitable.

Basically, the thesis is that Chainlink will be the default protocol helping to tokenize first cash called stable coins, and then all imaginable real world assets like real estate, equities, derivatives, and anything else that has value. Uh, the business model is that will collect revenue for the services it provides.

Is the layer underneath kind of like, uh, more expansive Visa and MasterCard do today? I have, uh, saturated myself with chainlink chainlink lore knowledge, especially this past weekend. And the irony of set of starting with this is because it’s my worst performer, but it is my highest conviction.

Real world investment, uh, at this particular moment, especially in light of the passage of that Genius Act, it almost feels, I watched, uh, for our Patreons I posted a video where the CEO basically gave, I thought a pretty good 20 minute summary. And he was asked, you know, where do you think Crypto slash defi is relative to the start of the internet?

And his answer was, he thinks it’s similar to 97, 98. And I think the, the Genius Act, which basically for those that still don’t really understand this, ’cause it’s, it can be a little bit complicated. It’s basically saying that cash, like, actual, this is what I meant by Dirty Fiat cash, which is still like a physical thing that isn’t instantaneous.

All cash will now be legally backed by the US dollar and it will be made digital, so it will live on chain. And that basically brings cash onto blockchain technology. So it’s the first tokenized, uh, example of what, um, it’s the first thing to be made. Token, token cash itself.

[00:24:10] Luke: And just, just ’cause you didn’t say the word, you just went there about stable coins

[00:24:14] Krys: Yes, correct. And so in this industry, what people have been saying is that stable coins are the things that basically start the domino effect with everything else. Kind of like Amazon, to extend the analogy, Amazon started with books, but really what it was building was not a giant bookstores building a massive in infrastructure that could basically deliver anything to you.

Right. That analogy I think should make sense. So if you buy this thesis that Chainlink is now working with the world’s largest financial institutions, swift being one of them, that underpins the 12,000 global banks. And it’s also working with MasterCard, for example, and it’s also working with the DT DTCC, which is the sort of regulatory kind of company that brings stocks to, to major markets.

Then you could kind of see where this is going. and now that it’s law, I don’t know, it just seems like a matter of time before the volume of transactions that goes online starts to happen. And then Chainlink is gonna take this tiny, tiny little percentage from each transaction. And the way the token ons will develop is a little bit of an unknown.

But this is the most asymmetric holding I could possibly think of. And, and I don’t mind going on the record, to say that if I’m right about even any of this, this is one of those potentially generational investments that you kind of think to yourself like, oh yeah, if I understood Google way back when it was starting to do search, or if I understood Amazon, you know, well enough early, then, it’s that kind of crossroads I think we’re looking at with Chainlink.

[00:26:02] Luke: All right. And I, I own some chain link on your recommendation and you understand the company and the mission and the token far better than I do. But like, remind me, is there really no competition for this kind of capability? Like, it’s sort of, I mean, the, the high level pitch as I understood it was like they’re bridging physical, like stuff in the real world and stuff.

That’s nothing to do with blockchain. They’re bridging that into the world of blockchain and cryptocurrency.

[00:26:32] Krys: Yeah, well see, that’s the thing that’s mind blowing. my understanding of Chainlink is that it’s more of a protocol than it is say, a company. So, you know, when we think of cybersecurity, there’s individual companies are doing similar things, right. But yeah, there’s competition. But like the internet, there’s only one. There are, you can’t have multiple internets because I mean, it sort of by definition doesn’t make sense. And so Chainlink started their mission now. They started collaborating with these major financial institutions years ago. And right now, yes, the answer is that Chainlink has the lead by far. And it’s one of those network flywheel effects, kind of sort of like Facebook.

Like why would you, even if technically somebody else created a protocol, why would you not use Facebook when everybody is already using Facebook? So no, not everybody is still using, uh, chain Link, but the players that are most important, these are the guys they selected. It’s just that it’s kind of, I don’t know if this is, it’s not that it’s in the shadows, it’s just that most of the world doesn’t understand, um, the scope of this.

And that’s why I’m saying that yes, if it’s true, it’s almost too good to be true in a way. And I, I get why you would ask that the way you did, but from where I’m sitting, it’s like, yes, this is the, the, the horse that is, has a massive lead on everybody else. And I don’t know what would need to happen for some other protocol to take the lead at this point.

[00:28:08] Luke: All right. Very good. Well, you’ve awarded it eight bananas outta 10, so you’re definitely, uh, it’s up there as one of your highest conviction things.

[00:28:15] Krys: And I, I’ll tell you why I didn’t give it a perfect score, despite everything I just said. It’s still, part of like the crypto world. But when you listen to what the leaders in this industry are saying is that crypto is like a bad label. It’s not really what this is about. This is about bringing global finance into its next paradigm. but because it’s such a massive thing that still hasn’t happened yet, I just can’t say with, you know, other conviction or like a 10 for 10 that this is gonna work because it’s such a huge undertaking. It’s just that if it does, the, the rewards are gonna be absolutely astronomical. But I thought eight out of 10 is like, to me is like, this is as, as exciting, uh, investment as that could have.

And there’s still, you know, there’s still doubt, there’s still uncertainty until it’s done.

[00:29:12] Luke: All right, very good. Which we talk about. Another one of mine, and this is also not a stock. Uh, next up for me is the Globalx India Nifty 50 ETF. Uh, ticker is NDIA. So yeah, it’s an ETF. It’s the only ETF I’ve pretty much ever owned since I started owning growth stocks. And it gives investors exposure to the 50 largest and most liquid blue chip companies on the National Stock Exchange of India.

Now, if you’re not an Indian national, you can’t buy Indian stocks, and that’s a shame ’cause it’s one of the world’s most exciting and fastest growing major economies. And the Indian government has some really incredible policies around economic reform, infrastructure development, attracting foreign investment.

This is just great for its companies. Initiatives are boosting manufacturing and digital infrastructure. And a really good example I think is iPhones like Apple are currently manufacturing around 10% of all their iPhones globally in India. And they’re planning to grow that to 25%. And that’s because of like tariffs.

If they manufacture their iPhones in China, which is where they do the majority manufacturing today, like US tariffs are gonna hit that hard. They manufacture in India, different set of tariffs. Currently, who knows, tariffs on tariffs off currently much lower. So it’s cheaper for Apple. It means they can sell, like the unit cost of an iPhone is lower.

I’m giving this six badges out of 10. I’ve owned the index since 2023 and I’m continuing to gradually add to it myself.

[00:30:56] Krys: Hey Badger, this is showing on the scorecard as what, uh, a loss so far of, uh, 4%. Is that right? 

[00:31:04] Luke: yeah, I think it is. I think it is. I had to tweak the numbers and I’m not, I’m not a hundred percent, but it’s essentially, it’s like close to zero. It might be a small loss and like if you dig into the reasons for that, like just global geopolitical kind of chaos, there’s also an element of interest rates in here ’cause it’s like in a different currency.

but yeah, it’s not performing well. Uh, it was up, it’s now down again. yeah. But long term and like still it’s gonna be a long time before we see the impact of some of these like geopolitical shufflings around like tariffs and things like that. Plus a lot of the bull case around India is generational stuff.

I think they have like one of the highest percentages of people of working age, like of, you know, your a billion plus Indians, the large majority are actually in the workplace. So like generating economic value as opposed to being either kids or retired. uh, yeah, I just think it’s a fantastic place to be invested.

I haven’t got huge allocation to this in my King of the Jungle portfolio. I’ve got, a three and a half percent allocation that’s probably similar to my real money portfolio, but. Yeah. Like, I do want some exposure to this particular market and it’s kind of the only way to get it.

[00:32:24] Krys: So this, this is, based on, some small part of our conversation some time ago, right when we were talking, digging deep into India and just excited about the demographics there and that the, you know, it’s not out of the question that India in the ne coming decade or two might become, legitimate superpower.

[00:32:45] Luke: I mean, they are

right. They’re, they, they’ve got nukes, they’ve got like a space program that like 

[00:32:51] Krys: Uh, when is it, I see that your conviction also went up when you did this deep dive. Is there something particular that, that you ended up impressing you more than you expected?

[00:33:04] Luke: No, not especially, I just, I feel like, like the chaos and probably like the US driving things like manufacturing out of China are going to benefit companies that can kind of step in and maybe in the future be like the world’s manufacturing powerhouse. So like Vietnam, there’s a lot of manufacturing moving there.

A lot of other countries in Southeast Asia, well, like India is now the world’s largest population, like past China a couple of years ago. and so I think they’re gonna get like the lion’s share and. You know, currently there are very good, good strong relations between the Indian government and the US government.

[00:33:45] Krys: Okay. Uh, I need to put that on my radar again too, because it’s something I’m definitely interested in knowing that, that it could be an even better value than what you brought it as is especially enticing. Okay. So my next company is, A low performer, my portfolio because I just bought it a couple days ago, so it’s brand spanking new. This is Harmony Biosciences, which is a US biopharmaceutical company focused on developing and commercializing therapies for people with rare neurological disorders. Its flagship product.

Is Wix, a first of its kind drug approved to treat excessive daytime sleepiness and cataplexy, which is sudden muscle weakness in adults and narcolepsy as well as daytime sleepiness in children with narcolepsy. Sorry, narcolepsy. this is a, a blockbuster drug, and it now generates about 715 million as of last year and has become a profitable mid-size player in the sleep disorder treatment market. Why do I really like this company? One, it’s the, uh, only FDA approved non-scheduled narcolepsy therapy drug, 45% share in the us. Its 2025 revenue guide was 820 to 860 million, up 23% year over the year with a pretty sweet 34% operating margin. And this is the, important bit. It has a key readout. Do this quarter.

So basically do by September 30th, that is the company’s second go at providing satisfactory data for fragile X syndrome, which is basically like people with social irritability issues that is actually genetic. and they learned a lot from the first attempts at this study. So this is kind of, it seems like the probability for them having success with this latest readout is more than 50%.

Last but not least, should that study not go well and shares drop because of the massive cash flows that the company has for its, Wix drug. It has a 10% share buyback in place that’s basically like insurance, built into biotech, which is quite rare, a quite rare combination. to pull back the curtain a little bit, uh, as I was preparing the, this deep dive, there’s one company on my scorecard that just made me want to stab myself, in terms of like doing deep research and that was. I hadn’t talked it much because it was such a complicated situation that had to do with aviation fuels and that is mixed in with policies and, and administration changes and tax credits. And it was like one of these special situations plus a Department of Energy loan that went well, but then the stock didn’t react well ’cause there was all this game theory around it.

I mean, it was just kind of a headache. And I still think that in that investment will go well for people that’s CalEd, CLMT. But then when I thought to myself, you know, part of investing is, you know, thinking like an owner and, and to me it’s important to sort of have pride in what you own or at least interest and, and knowing that Harmony Biosciences is a stellar company because it’s already profitable and it has this catalyst looming within, call it the next 60, 70 days, um, I just felt why not swap the two, you know, exchange a kind of difficulty and complexity that’s unpleasant for financially sound, small cap, big catalyst coming up, insurance built in, and massive upside if certain things go well.

And the, the conclusion I took was, no, there’s no reason to, to do it. I, I’m gonna like, force myself to, override the, what’s called ownership bias, where you treat the things you already own better than the thing that you don’t own. And I pulled the plugin, CALT sold it at, I think I lost $3 in total for the King of the Jungle portfolio.

So it was pretty small loss. and now I have, a new biotech that I’m really rooting for.

[00:38:31] Luke: All right. Alright. I can’t say I know much about narcolepsy. I think my wife might have it or maybe I just watch really boring movies ’cause she can’t get through like a movie on a Friday night. I have to get her doing like star jumps and drinking cups of coffee. But, uh, but it’s a, you know, clearly I’m trivializing it, it’s a serious condition that affects a lot of people.

[00:38:50] Krys: Yeah. Uh, and it’s genetic and there’s more research undergoing. Um, one tidbit I wanna mention. So, um, the reason this company is, I would say, quite undervalued is, is because there’s doubt on whether, their cash cow, this Wix drug can continue pulling in all the revenues once it’s, it’s sort of right patent expires.

But they have, in their own pipeline. Sort of upgraded versions of the current drug on the market. So if those pass the test, then they’ll be in the clear through I think something like 2034, like another or, 10 years. So right now the market is a little hesitant because they’re like, yeah, your thing is gonna expire and it’s your only cash cow because these other, the FXS drug is still unproven.

So it’s the, the market is, depressing, shares out of uncertainty. But I think though the likelihood of that not working out for harmony is low. So making it a pretty good risk reward investment in this moment.

[00:39:59] Luke: And, uh, and, and that’s a new stock for you, but tell us a little bit about your conviction level.

[00:40:03] Krys: Yeah, I gave it five bananas because it’s, new. So, you know, I like it takes time to get to know stock and develop a relationship with it, but it’s so found, uh, financially sound. the fact that it has a 10% buyback program for a, a biotech, you know, company is quite rare. And so it’s, it’s, you know, the one option I had when I sold Kalima is I could have left it as cash, but I think this is a much better place for cash in this moment. And so I thought that’s kind of a five bananas is, you know, I’m not overly excited for it, but it certainly has many things going for it. So like, it’s kind of like right in the middle. It’s a great investment to make in this moment.

[00:40:45] Luke: All right. Very good. Shall I say about one of my five badger stocks?

[00:40:50] Krys: Uh, I’m sorry, say that again. Badge.

[00:40:52] Luke: Go, I let, let me tell you about one of my five badger stocks, which is also in the biotech arena. Let’s chat. Novo nor dis. I’ve added this to my portfolio quite recently. Novo Nordisk is a global pharma leader and they develop and market innovative treatments for chronic diseases, but mostly they’re focused on diabetes and obesity care through their Blockbuster G GLP one drugs, Ozempic and Wegovy.

So the efficacy of these GLP one agonist drugs has been revolutionary, and the market is still vast and mostly untapped. Analysts think it could get to a hundred billion dollars a year annually. So there’s like a ton of growth left for these drugs, but they’re in fierce competition with Eli Lilly and essentially like they’re blockbuster drugs in this space.

They’re going toe to toe. Novo have got Ozempic and Wegovy. Eli Lilly have got Zep Bound and Manjaro. But Novo Nordisk has got a whole bunch of weight loss drugs in the pipeline, including cag, sema and other oral versions of Semaglutide. So instead of having to inject yourself with these, you can take a pill and.

Indications of these, these could be superior to the drugs that Eli Lilly have on the market right now. But we’re gonna have to wait and see in the latest quarter 18% growth in sales. And that’s really driven, or it’s been driven by a 65% surge in its obesity segments. That’s really like the piece that’s driving this company.

And I, as I said, this is like a five bagger conviction for me. Five badgers outta 10. I like the combination of income and the potential of growth, but with a current valuation of just under 250 billion euros. This is just six times sales and competitor. Eli Lilly is 15 times sales. So right now you might be picking up a generational company at a bargain price.

[00:42:57] Krys: That’s a good combination. This is also a little bit out of your wheelhouse. It’s the only, biotech, this all, all these, tell me this, all these weight loss drugs, right? I mean it’s, this is a relatively new thing. Correct?

[00:43:10] Luke: Yeah. Last couple of years. Yep.

[00:43:12] Krys: is it not possible that things go wrong with this? Like that We still, it’s too early to see because it, I, sorry.

it’s, these drugs, when I hear about them from the news, they almost seem like too good to be true. And I have done some deep dives into it. And it does have that element where people are like, my God, this could cure Alzheimer’s, you know, Alzheimer’s. And it seems to tap into some like. root system that’s, is almost like miraculous, right?

But, you know, the skeptic in me thinks, okay, if, the investment thesis is, banking so much of its future on this relatively new thing that’s looking like a miracle cure, is it too much of a good thing? Are you worried about that at all?

[00:43:53] Luke: Not really, like I said, a couple of years, but actually like the first drug in this space was pic and I think that’s like getting on for like eight or nine years since it’s been like out commercially being sold. And these trucks are well understood now. Yeah, we, I mean there might be ’cause because there are different versions of the same thing still coming to market.

Like maybe we’re gonna find some problem over the decades, but it’s like obesity and diabetes, like these are chronic conditions that affect so many people. Probably the people eating too much. Greg’s Right. And Domino’s, affect so many people. And then. You know, on its own, obesity isn’t great, but it leads to so many other conditions like heart disease and strokes and everything else.

So like, the impact on people is horrible. It’s bad. But actually, if you are running a country, like the impact on the country is really tough. ’cause your healthcare costs are through the roof. And whether that’s played by the individual in the US or that’s paid by like the state in the uk, like it’s still costing some, something, a lot of money to support all these chronic conditions which don’t go away.

So it’s not like, you know, like a broken leg or something, you can just fix it and then someone gets over it. Like typically you’ve got one of these chronic conditions and you live with it for the rest of your life. So it’s costing like the state a ton in the long run. And yeah, you could say to people, oh, well, you know, just eat less and exercise more, but it don’t work.

And so as you’ve kind of hinted, these drugs seem to have a whole bunch of revolutionary benefits, not even on weight, like on your ability to, control your state of mind. Like evidently I think this is quite new findings, like these drugs are helping with other addictive behaviors like gambling and drinking and things like that.

So like maybe they are revolutionary and maybe they’re allowing us to eventually lead the lives that we want to lead. So, you know, maybe something else will come along, but these two companies, Eli Lilly, and Novo Nordisk are at the forefront of this space. And, and these aren’t like, you know, you just told us about, harmony and I know you have like a bunch of other biotechs in your own portfolio.

Like these two companies are giants. Like these are not like one string ponies with, which are like sub billion dollar market cap and they live or die by the next drug. Like, these companies are selling absolute like tens and hundreds of millions of dollars of these products and like growth is just continuing to climb.

So if there was, if they, if this space was gonna be dis intermediated by an even better drug, like I imagine these companies will be straight on it. ’cause they have so much money to spend on r and d and acquisitions.

[00:46:49] Krys: Yeah. No, that, that’s good. In the context of going back to back with our biotechs, it makes sense to me. You just invested in the $250 billion mammoth, right? That has a dividend. Which, which makes sense because you are looking to increase your income, right? Whereas I invested in a $2 billion company that is also financially sound, but it has one product and much depends on the readout of this next product, which is why I call it a catalyst.

And so I think in one sense we’re, both of these are sound, but it’s just, you know, it’s the difference between hoping for 10 x versus having an anchor. Something like an anchor in your portfolio.

[00:47:38] Luke: Yeah, that’s a good way to look at it. Like the risk based return. Like the risk is far lower with something like a Novo Nordisk, but the return is also gonna be far lower and more gradual. and you know, maybe you want, if you are a biotech guy, I’m not a biotech guy, maybe you want like a mix of the giants and also a whole bunch of like small allocations to the wild stuff, and then that might be a good way to build a basket.

[00:48:02] Krys: Shall we talk about my next company with the lowest returns, which is uh, relay Therapeutics? So Relay Therapeutics is a clinical stage biotech that applies its proprietary dynamo platform. Combining molecular motion simulations, AI and experimental assays to design drugs for cancer and genetic diseases that traditional approaches struggle to hit its lead asset relay 2 6 0 8 is a first in class PI three K alpha selective inhibitor.

Now moving into phase three trials for breast cancer with additional studies underway in vascular malformations. Although the company’s current revenue comes only from collaboration, milestones relay is backed by about 710 million in cash and aims to fund operations through major data readouts expected in 2027 through 2029. financially its cash, far exceed exceeds its market cap, giving it a negative enterprise value conviction wise, this was, uh, this dropped through my research and I wanna be very clear why, I have actually never believed in the company more. This. So let me tie the, let me tie the, the, the strings together, uh, the loose ends to together because their platform lets the scientists see how proteins move in time, which is a very, very difficult thing to do.

The way Relay sets up their cl, their, the way they select the molecules, first of all, is head and shoulders above other companies because they’re looking, uh, call it more precisely than others are. And then the way they design their trials is superior to other companies. That means their rate of success is going to be higher than most other companies. This matters because, you know, running clinical trials costs a lot of money. So if you could do the kind of work on the backend better, you’re gonna have a better reward. The data that this particular drug relay to 6 0 8 currently has in hand is just so far superior to what’s on the market now, and we’re talking about breast cancer here. So, my conviction that this drug will be commercialized and that’s going to be a blockbuster in a few years, is, has never been higher. Its current market cap badge is only 600 million. So that’s why you know when it has 710 in cash, it’s selling below, right? It’s cash. Why did my conviction drop? It’s because it became very clear to me that the next time you can have something like a positive catalyst is gonna be at least a year away. And then even then, you’re still years away from commercialization. So even though I’m saying at the same time, it’s sort of inevitable that this will be, a major blockbuster drug worth billions and billions, like to the order of 10 x the market, you know, it’s the Wall Street stuff. Like why would a company right now buy additional shares when nothing’s gonna move the stock price? And that’s why I think that’s actually, I think it’s just a matter of timing, really, why the shares are so theoretically undervalued. There’s an easy, let me re-say all that in a different way. Relay at 600 million has an easy shot, straight shot to a 10 x of being worth at least 6 billion. There’s no question about that. That is in hand, right? But that’s not gonna happen for a bunch of years. So even if you invest in it today, you’re gonna overperform the market, say five years from now. But then as I’m, I’m sitting here and I’m thinking, my man, there’s a lot of other companies that. Are already, you know, producing and already, uh, performing in the field as it were. the thought of adding more shares today did not feel right. So this is one of my major holdings, one of my major top five, and I picked up shares when it fell, when it was like something, a dollar 80 per share. So 50% lower. I think if we get that kind of scenario again, where, you know, the market cap is around 300 million, that’s such a no brainer that I will pick up more shares additionally, but right now I’m gonna put my hands under my butt and just, uh, let the months, you know, calendar pages fall off and take care tend to my other positions.

the only only caveat I would say is that there is always a risk that they’ll announce some sort of licensing deal or some company will buy them out for a huge premium. and that’s why I’m not even tempted to selling, you know, and reallocating all that money. This is one of those, creme de la creme of biotech and it’s just a matter of timing.

[00:53:27] Luke: I mean, I, I’ll take your word for it. But the market doesn’t agree with you, right? Because it’s priced below the cash it has. So I suppose the implication there is like if you were literally, if you were able to say, turn off the company tomorrow and shut it down, and that, that would generate shareholder value, closing the company down.

’cause the valuation, the market cap is below the cash on the books, plus they’ve probably got some assets and some other stuff, right? So yeah, the market essentially is saying, well we think they’re just gonna set fire to that cash. They’re gonna burn it over the next couple of years and it’s gonna be worth like way less.

[00:54:02] Krys: I think it’s more nuanced than that. maybe if you are like a robot and you’re not like a human person and you just look at spreadsheets, I think that is a reasonable, conclusion, right? That we, just don’t believe this company is gonna make it. That’s why the value’s so low. But as a human investor, I think it’s a different story. I don’t think many people think this company is gonna run out of cash. I mean, it’s, they have a runway through commercialization, basically.

I think it’s really more the situation where it, it’s more about impatience and, you know, if you’re a hedge fund and you wanna justify owning this in 2025, knowing it’s gonna be another two years, say before some, you know, the next meaningful milestone has hit, then your boss might look at you and say, that’s two years is a lot of opportunity cost, especially, you know, sure.

Nothing is a given. Anything could happen. Right. But at this point, uh, I’m going to leave it as one of my top holdings because it is so, undervalued for the blockbuster that will become, that. I kind of don’t wanna get cute and, you know, screw myself over with the timing. I’m just gonna leave the shares I have and add more, only if it becomes even more severely, undervalued relative to its future blockbuster status.

[00:55:28] Luke: But you, you are using words like. Top conviction and like highest like favorite ideas, but you’ve only given it three bananas. Like can you tidy that up for us?

[00:55:39] Krys: this is, uh, probably the most complex holding I have because it’s contradictory.

it’s contradictory in that I, I have, as high conviction as I have in the, call it the biotechnology and in the inevitability of success. But it only gets three bananas, which is lower than coherence say. And coherence is the much inferior, called biotech company. Because coherence could actually surprise to the upside in the next month or in the next two months, or in the next three months, and realize it’s just not gonna do that unless there’s a surprise, you know, licensing thing.

And so, because the Banana Badger scale is time sensitive, and we’re talking about, you know, we’re given the ratings to right now, the shares of Relay, even though they’re massively undervalued relative to their future, it’s still gonna be a weight. So I couldn’t justify that as a neutral. I can’t kind of feels to me like this is, I just won’t be adding to this at these, at the relative valuation.

So that to me feels like a three.

[00:56:48] Luke: All right, well let me bring us out of the murky world of biotechs and let’s talk about like a real company with real stuff that’s here today. I’m gonna tell you about Adyen, uh, which is a Dutch company under the ticker, A-D-Y-E-N. And they’re a FinTech. I like FinTech and they provide a single integrated platform for businesses to run their e-commerce mobile payments, point of sale payments.

And you can do that globally. And the single unified platform is really advantageous and really compelling if you’re a global merchant ’cause you’re trying to sell in lots of international different markets. And there are literally like hundreds of different ways of paying payment methods and channels in each of these countries.

They all operate in different ways and if like legacy payment processes and a adjuncts competitors, most of them have got a patchwork of different systems for online payments, install regional payments. Adjunct built it all from the ground up in-house. So it’s fast and efficient, but most importantly it’s accurate.

So online payments get declined less frequently with Adian than with other payment providers. And what that means is like when you go and try and buy something from a website, your card doesn’t decline. If it’s a legit transaction, it goes through and the merchant sells more product. So a tiny change in the percentage of approved, like non false positives on your canceled transactions is actually really meaningful to the merchant.

’cause they sell more stuff. They’ve got now 30 customers doing over a billion dollars annually, and that’s up from just 19 a year ago. So really incredible growth of their highest cohort of customers. And they are focusing on these large global merchants. I’m giving this six badgers out of 10. This is a behind the scenes company that most of us actually interact with daily without even noticing it.

It’s proven its ability to win and expand wallet share with the world’s leading companies. And it’s in a great position for sustained profitable growth for many years to come.

[00:59:05] Krys: Oh man, Badger, where do I start with this? Uh, this stuff gives me a headache,

[00:59:12] Luke: Not as big as the headache as your damn biotechs, I promise you.

[00:59:15] Krys: uh, because I don’t understand, for example, like the difference between Aian and call it PayPal or, I don’t know, block, maybe like square block. You know, like I’m at a store and I give somebody a credit card. Is it, you know, to me I don’t care. I like, I just want to give some of my money. Is it like just the extent to which some of these companies are more integrated and larger than the others and it’s a matter of size or 

[00:59:48] Luke: Like you would as the end consumer, like the guy with the credit card or on your website buying the thing, like, you’re right, you don’t care. You just wanna buy the thing you’re trying to buy. Like when can you remember like the last time you tried to buy something and like the transaction got declined and you had to like phone your bank and then you had to like get it sorted out.

Like it’s, it’s not that frequent, but it does happen. And if it happens online, like the, the retailers probably lost your business there. cause you, you know, you just wanna get something done and move on and add, you just better at minimizing those like incorrect failed transactions. They do a bunch of other stuff as well.

They’re faster, they’re cheaper. and like Square is mostly in North America. Block is mostly used by retailers in North America. Like if you are a retailer and you’re selling in India or you’re selling in Vietnam, I don’t know, I don’t think blockers can be super helpful for you. And it’s only certain types of transactions.

Like if you wanna plug into like some, maybe even like crypto or something, you know, you wanna start taking payment in Bitcoins. Like Agen have all the interfaces for this stuff and they do everything well consistently. And it’s really easy as a merchant, you know, you just kind of turn on the payment channels you want to use with some other providers.

You’ve got like this actual mishmash and you’ve got like 20 different products for each different market you wanna operate in. It’s not how you want to run your payments and collections as a global brand. You want it clean and simple.

[01:01:23] Krys: can you speak at all to PayPal? Is PayPal in the, in the, is it a competitor or is it somehow doing something vastly different?

[01:01:32] Luke: It does. So I, I think there’s an overlap, I think, is it Braintree, I think is like PayPal’s the bit of PayPal that’s mostly, mostly competitive with Adian, but PayPal does like a bunch of other stuff, in my opinion. Not that well. Like if you wanna do, ’cause it’s like say if I wanna send money to you in the States, you’ve got things like Venmo and.

Like Square have an option. Like there’s different ways of doing that. Agenda’s not in that space at all. It’s not trying to do that. It’s doing like business to B2C transactions if you wanna buy something from a company. So I think PayPal do have some products that sit across that space, but I’d need to do some research to pull out the numbers.

I think like the cost of using PayPal is higher. I certainly know as a end consumer, if you wanted to send me money and it, there’s like FX involved, PayPal is ludicrous. The amount of FX it charges, it’s terrible. It’s a really bad solution. But there you’re getting more into like Wise, which is a different company I own.

And we’ll cover next week,

[01:02:38] Krys: it just occurred to me that, uh, with the advent of whatever Chainlink is gonna be up to, uh, especially their partnership with MasterCard, I wonder if a company like Adyen will also use a company like Chainlink in order to bring their business onto blockchain. So to remains to be seen, especially if it’s one of these more like, uh, not corporate, but inst insti, their partners are like institutional level players, right?

[01:03:09] Luke: right? 

[01:03:09] Krys: that might be an interesting thing to watch out for.

and you said, uh, your conviction was at Six Badgers with not much that changed for you in this round of research.

[01:03:22] Luke: Yeah, slow and steady. Like growth is good as like naturally as the company grows, like the rate of revenue growth comes down. But it’s been pretty stable at 23%, essentially like mid twenties, growth in revenue quarter after quarter after quarter. So nice and steady, and now doing about half a billion euros in revenues every quarter.

So like it’s turning into big numbers and they, like, they transact trillions of dollars to make that like half a trillion, half a billion dollars euros every quarter in revenue. So like the, the amount of money flowing through their systems is boggling.

[01:04:04] Krys: what’s its market cap,

[01:04:06] Luke: Uh oh. Gimme a sec. I shall tell you.

[01:04:10] Krys: you know, as you’re looking that up, it, it’s weird, you know, when talking about this, uh, a size of a company like this, you know, I, I wanna guess like, it feels like something like a $40 billion company.

[01:04:24] Luke: Yeah, spot on. It’s uh, just on 49 billion Euro euros. So kind of euros and dollars are bouncing. If you compare that to say PayPal. I know PayPal do different stuff. PayPal’s a $72 billion company.

I’m not a huge fan of Block ’cause I just really don’t think that, Jack Dorsey is shareholder friendly. But Jack, but Block is in the same area of market cap as agen.

$44 billion.

[01:04:49] Krys: Okay. So this is another pretty well established, sizable company. It’s not gonna surprise the world, but it’s going to act as, uh, another one of those anchors in your portfolio.

[01:05:01] Luke: Yeah. And I think, actually, I didn’t say it there, but critically like it’s a Dutch company and it, it’s doing sales globally. Like obviously there’s a ton of revenue it generates in North America, but if you want some international diversification, this is a good place to get it.

[01:05:16] Krys: So the, my Fourth Worst Performer in the King of the Jungle Portfolio Competition is also a relatively new edition, but it’s already up 14% from when I bought it. I’m talking about Advanced Micro Devices, A MD, which is a global, fabulous semiconductor company that designs and develops high performance computing graphics and visualization technologies for the gaming data center and computer markets.

But because compute is now embedded in everything, AMD’s products will start to become more widespread than ever across most industries. Think of the AI landscape as the Wall Street wildlife Savannah older monolithic chips, lumber cross. Its solitary, like solitary, rhinos big, expensive and hard to maneuver.

AMD’s chips by contrast, behave like quick footed, murky mirror cats Mars. That’s the second time I got that wrong Small modular and able to scurry into any computational nook that needs filling. Because each chip is its own agile creature, a MD can mix, match, or multiply them at will growing whole colonies for hyperscale inference or dispatching a lean patrol to an edge device.

That modular swarm craft turns a MD from a mere chip vendor into the ecosystems. Clever keystone species. It isn’t just selling silicon. It’s weaving the neural sinus that let computation flow everywhere up. The data center canopy out to the edge squirrel band, and even into pocket sized purchase as inference costs drop and edge deployment stampede.

The total watering hole of AI compute will do more than expand. It’ll erupt badger in that chaotic habitat. The nimble predators win. Agile outruns, brute size, flexibility, outwits entrenched mastodons, AMD’s triplet troop is built for exactly that kind of fast evolving terrain, quietly staking out the infrastructure layer of a smarter automated world.

One nimble me Rat Mound at a time.

[01:07:42] Luke: Are you calling? Are you calling Nvidia an entrenched Mastodon?

[01:07:46] Krys: Yes, that’s exactly what I’m doing. This is, uh, I gotta say, this is the research deep dive that I had the biggest, uh, what I would call light bulb moment. out of all the companies that I took another, uh, much closer. Look, here’s the insight and, and I don’t know, it makes sense to me. This is the difference between, we talked about this some time ago.

In the world of ai, you have the massive compute needed to train the model, which I think of as a seasonal thing. It’s like you gotta stuff a bunch of data in there, make the model, and then once you’ve done that, it’s kind of done until the next milo comes out. But it’s like, it’s like you’re doing things in, in chunks and blocks, right? For that, you need the biggest and best and most powerful, and that’s NVIDIA’s chips. And there is no second. Right? But that’s kind of, I don’t know what stage of, of, of the AI’s evolution we’re at, but that’s, you know, we’re no longer in the first inning with that. But any time you make a query using ai, you need, you need an answer.

And that needs to happen there. And then almost like continuously, infinitely from now forevermore into the future, that is what we call, uh, inference, the act of running a trained model in real world applications. So the aha moment that I had when researching this is that Nvidia by design makes mammoth chips.

And I mean, to some extent, literally, like their chips are like huge and they’re sort of incredibly complex and yeah, they’re like rhinoceros, monoliths, elephants, right? Whereas a MD by design, and this took a lot of forethought on the company’s part. They sort of seeded, in some sense, seeded the, training market to Nvidia.

And all this time they’ve been develop, developing. I’m calling them triplets instead of chips. To differentiate them smaller and much more flexible and agile. Different versions and kinds of chips that could, like Lego blocks be sort of stacked in different configurations for different use cases. All about the edge cases.

That is how you and I will actually use AI. Now. It’s not just ai, it’s also, you know, anything that could be calculated is, can be computated and needs chips. So more and more your refrigerator will have a chip, your thermo, you know, your car, your thermometer, your, you know, I’m not just talking about learning language models.

And for that, AMD’s chips are actually fundamentally better designed because it’s a whole different application. And so the proof in the putting, so to speak, is when I see meta, you know, a company that right now has more cash than knows what to do with, right? And it’s trying to lead the world in AI and creating a metaverse and you know, it’s building its own data center.

It’s going with a MD and you have open ai, you know, on stage saying we’re going with a MD, these are massive players in the space. So the light bulb for me, Badger was not that Nvidia is a bad company, it’s just that. When I look at, uh, AMD’s market cap of about 250 billion, and the inference part is the part that is now gonna take off.

I feel like this is almost the, the moment we had three years ago when we were, you and I were both talking in Nvidia and we were kind of like, this is inevitable and you gotta, you know, like a once in a generation thing. And we were right about that. And I think this is the second coming of that exact scenario.

The difficulty to understand, or the thing I have to convince myself of is that you’re not investing in a, like the second best you’re investing in, call it as good as, because it’s just a different thing that’s needed. And from today’s valuations, I’m kind of like, I’m still sort of, I, I don’t know. I’m kind of, uh, what, what I’m kind of excited, I don’t know how else to say this.

I’m excited that I found what I think is a second shot at, in this vesting, in the Nvidia moment, and that the market hasn’t quite caught up to yet because it’s not yet exactly, you know, NVIDIA’s journey took. A couple years to kind of, you know, they, you know, to unfold. Like I think a MD is like right at that spot right now.

So I gave a MD uh, six bananas because it’s fresh to the portfolio. I didn’t catch the bottom. It was recently a 80 share. Now it’s kind of double that. But to where the opportunity is, I think this is gonna ride like a decade long wave in massive, massive, uh, potential from here.

[01:13:17] Luke: Do you happen to know? The extent to which like they’re gonna get smashed by say Google like, like on my Pixel phone, Google developed their own chips now and then they have like their hardware in my phone and that’s where they do inference like on the device. So do you reckon a MD are then pitching themselves against companies who are like mass market producing their own chips to go in the end user devices?

[01:13:44] Krys: Yeah. That’s a good question because, uh, another sort of thesis that I didn’t talk about in the pitch was nobody really likes the fact that Nvidia has a monopoly. I mean, because, you know, the pricing, uh, I’m not sure if it’s price gouging, but basically Nvidia said we could charge as much as we want and you’re gonna pay it.

Right. So I think it’s inevitable to some extent that if a company, like one of the hyperscalers, if they have enough. Resources to do something in-house, then they will to some extent, so call it Microsoft, Google Tesla. Right? They’ll, they’ll make some chips. But I always go back to the fact that when you have a company that has only one thing to do, they’re gonna do it better than anybody else can.

And this space changes faster. You know, I mean, the, the evolution and the amount of brain power engineering, brain power and actual resources needed to get these things to iterate and make it the, you know, best of breed is a, a job for one, I would say. So, I don’t know. I’m basically not worried about the kind of edge cases of siphoning off some bits of the market to the, the in-house stuff.

But what remains is still gonna be such a gargantuan market that even if a MD captures, I don’t know, 25% of it, it’s like mul hundreds of billions of dollars of, of recurring revenue, basically for the foreseeable future.

[01:15:20] Luke: alright. Good one. I like it. A MD I’ve got Nvidia. I own another company in this space. I’ll tell you about in a sec. I don’t own a MD and it could well be worth a look. Let me tell you about the company I do own in this space. A SML ticket. A SM. A SML is a Dutch multinational that’s got a monopoly on designing and manufacturing the extreme ultraviolet lithium free machines that help produce the world’s most advanced semiconductor chips. So what does that really mean? In English, they make the machines that are used by companies like TSMC and Samsung and those guys use ASML’s machines to make the most advanced chips that are powering everything from ai, dentist data centers to smartphones.

Now, there were Dutch company, but US policy has a lot of influence over them and in the last year or two, they’ve been forced to really cut back what they can sell into China, and also more recently to stop servicing the machines they’ve already got working in China. And that’s hit the financials in the recent couple of quarters.

And at the moment, net bookings, which is essentially like booked revenue plus current revenue, it’s down quite substantially from a peak of $31 billion current, or euros rather down to 19 billion euros, over the last 12 months. So the valuation has taken a hit. Um, hang on a sec. I’ll edit here. I wanna wrap this up back.

So the valuation is taking a hit. I’m giving this a three badger out of 10 rating, like it hasn’t performed brilliantly. And semiconductors is a cyclical business. And if we are in an AI bubble and if that bubble pops, the company’s gonna have quite an uphill battle to come back. But right now, this does feel like a bargain basement valuation, and I’m happy to keep a small allocation as it even pays a 1% dividend yield.

[01:17:19] Krys: All right, Badger. Uh, I’m so glad you’re talking about this because I, I, I was looking into a SML myself and, um, I think my research on a MD, uh, now that I think about it, is gonna make, make me pass on this. And here’s why. Tell me, tell me if this adds up, if anything I said about a MD is true, then, then what the world’s going to need in a sense, much more of is the kind of more agile, smaller chips.

And if my understanding of a SMLs right, this, these, the machines these guys make, I think I’ve heard them be called the most complex machines ever made by humans. I mean, they’re just beasts of, of engineering. And if the world is in the sense, in some sense, moving away from needing, call it as many of the Nvidia type chips towards the more agile ones than, than.

The need for the, the, these beasts is gonna somehow over time diminish or not grow as fast, or is that 

[01:18:32] Luke: No, that’s not the case. It’s not the case. ’cause you are thinking about like size as in, you know, like a bigger thing that goes in a rack versus a tiny thing that goes in a phone. But that’s not what we’re talking about. We’re talking about like at the, like the ability to build chips at say a three nanometer scale.

So that might still be a tiny little chip that’s like, there’s like hundreds of them in my phone. Or it might be like millions of those highly precise lithography chips on a much bigger thing. So like a MD, they’re fabulous. Same as Nvidia. So they don’t actually make their own chips. They do the designs.

They get those designs to be manufactured by TSMC and Samsung and companies like that. Well, those companies are using A SML,

[01:19:18] Krys: okay? So, so if I, if I could jump in here. So I think I see my, the error. The error, like, just because NVIDIA’s chips call it is more powerful. All kinds of chips you’re saying will need the kind of precision that only A SML, which pushes the boundaries of what physics allows for, right? With the tininess of the lasers.

So it’s not, so everybody’s is still going to need what A SML does.

[01:19:47] Luke: Yep. Correct. And that really are, there are no competitors. Like there’s nobody else making the machines that can make chips at this scale, as in the precision, not the size.

[01:19:59] Krys: right. So

[01:20:00] Luke: And so that’s it. The market locked up.

[01:20:02] Krys: then it doesn’t make sense to me, therefore why, when we’re still so early in the, in the AI world, like why there is the revenue drop off and why I think the estimates have spooked some investors. if full tide, if we’re full steam ahead, right, and NVIDIA’s, you know, still knocking, you know, like exceeding expectations, then why would there be this kind of like 

[01:20:28] Luke: because they, China, they used to sell and their machines were used in Chinese manufacturing and they can no longer do that. Um. So they’ve lost like a big chunk of their market and they do, they don’t just manufacture the machines, they have to maintain them. So they’ve got like the services revenue and they’ve lost that as well.

More recently, I’m sure there were like a myriad other reasons, but that was a big reason for the drop.

[01:20:52] Krys: Okay, so I see you’ve got a three badger rating and your conviction dropped.

[01:20:57] Luke: be because of that and because like, I don’t know, I’ve got a personal opinion, but we might be in a bit of an AI bubble. And also like the, the thesis for A SML depends on companies needing to manufacture more and more and more increasing volumes of chips. And maybe we’ll find like breakthroughs. ’cause there are some AI models that are doing like deep seek are doing more with less, you know, less processing power, less inference, but they’re delivering the same quality of results.

So maybe there’s a ton of model innovation. Now that’s so it’s a, it’s a risk, right? It’s not necessarily, and if you look at what meta are doing and what these, the other max seven are doing, like that risk isn’t manifesting itself. These companies are spending more and more and more on chips on like compute.

And so that supports the a s ML thesis, but this stuff could blow up.

[01:21:56] Krys: Okay.

[01:21:57] Luke: So that’s why it’s lower conviction for me. Plus I use, I just like to see my companies performing and, you know, some of the actual metrics are going in the wrong direction for this company. So, you know, I like to buy and add into strength as opposed to doubling down on my losers.

[01:22:13] Krys: So is it fair to say that your three badger rating as well as a drop in relative conviction, is that you would not. Uh, buy more shares at these prices now, but it’s not bad enough that you’re gonna sell it off your scorecard.

[01:22:29] Luke: That’s exactly it. That’s exactly it. Yep.

[01:22:31] Krys: All right. I’m gonna, yeah, I’m gonna pass on the A SML and, uh, probably add to a MD. All right. So the next company on my scorecard is in the old standby Coherence Oncology, which is a commercial stage innovative oncology company focused on developing and commercializing immuno-oncology therapies, including its approved PD one inhibitor code, name, or drug name, lector. The investment thesis for Coherus is centered on its strategic transformation into a fully integrated, innovative oncology company leveraging its commercial infrastructure, which was originally built for its biosimilar business.

The company has recently sharpened its focus exclusively on oncology, a move designed to unlock value and streamline operations. The cornerstone of this new strategy is look towards the A next generation PD one inhibitor approved for nasopharyngeal carcinoma, which serves as the commercial and clinical foundation for the company’s growth.

But that’s not all. The core of the growth strategy is to maximize the value of look towards by expanding its use into new indications through proprietary combination combinations. With COHEs own pipeline assets, the company is advancing two mid-stage clinical candidates, CHS one 14, an anti CCA antibody, and Casto zoug, an IL 27 antibody.

These candidates are designed to enhance the immune response against tumors and are being evaluated in combination with, with luck towards the and high prevalence cancers like liver, lung, and head and neck cancer. Success in these combination trials could create proprietary high value cancer therapies and drive significant sales growth. So, back to the well ongoing badger. this is fascinating because my conviction in coherence went back up again. I’m bumping it up. It’s uh, at five bananas just because it is so darn small. it’s at a hundred million dollars right now. Uh, so it’s kind of hard, you know, to really, I think in good faith give a company this small, much more than something like five bananas.

But in this moment, again, it is so potentially undervalued and it’s set up for so much success that this is a legitimate, it has a legitimate shot at getting to 10 x ’cause that would only mean getting to 1 billion and it’s already, it already has a revenue making drug in hand. So this is how I’m really thinking of it.

The Look, Zi basically has, um, market of, of potential like a hundred to $150 million in annual revenue, and it’s the only game in town for that particular cancer. So now that, that’s just scaling, that’s just ramping as, uh, So that’s already going, right?

So they have revenues coming in. They have $250 million in cash now after getting rid of the biosimilars. So the debt, the balance sheet is actually quite clean. And they have these two assets that, because they work with the one they already have take, you know, the, they’re doing combination studies that in the first half of 26 are primed to give some pretty, uh, good readouts.

Those, those combinations. We’re talking about markets in the billions of dollars. All coheres has to do is basically show better data and any one of the drug companies in the world might look at coherence and buy them out for, you know, for peanuts to them and have in hand drugs that really do well against multiple kinds of cancers.

So this is like, especially timely. the, all the biosimilar stuff is in the rare view mirror and in my, uh, king of the jungle portfolio, I’ll be looking to add shares pretty consistently, probably from these price points for the next few months because the upside is so high and the risk. Is actually lower than it’s ever been given look towards the revenue generating capacity.

So, um, I’m actually, again, I know you hate to hear it. Quite excited about this as a investment opportunity.

[01:27:22] Luke: Fair enough. Am I right to think like you used to have, this is one of your massive allocations, like a 20, 30% allocation, but right now it’s down to 2% and you’re back in adding mode. Is that right?

[01:27:33] Krys: Yeah, because, uh, if you remember at one point the, this was, um, dropped to just a, uh, it dropped, it was a bit of a rollercoaster for any fans of the show. it dropped to, uh, measly 67 cents per share and then, uh, it had a good result, sold the, the biosimilar and it popped to something like $3. So that was a massive win.

So I took a bunch of those shares off the table at, at a big, big win. And then the shares started declining again, and it was only around the 75% the call it sub $100 market cap that I began reinvesting in it. So this has been me kind of doing a little bit of the slalom and racking the gains relative to, to market cap because I know it so well.

It’s kind of not that hard to do once you know what you’re looking at.

[01:28:29] Luke: Right. Fair enough. It’s good. I, as I, as you know, ’cause I’ve moaned at you a few times, I’ve got some, uh, core options on this one, which are now deep out of the money and have cost me a ton of cash. Well, some, some of my entertainment money. So I’m glad I didn’t sell my calls. Let’s see if you, five bananas comes good for

[01:28:47] Krys: well, I’ll say one more thing, Badger. I did buy a call on this for the king of the Jungle. It’s the February 26th, uh, 50 cent call for, and I bought for 50 cents. That means the break even is a dollar due February, and I get two earnings call, minimum of two earnings calls, maybe a third earnings call in there, and the big drug conference that happens in January for a bunch of upside potential.

Basically like a free call option, essentially.

[01:29:15] Luke: Good luck. I’m in this boat with you. Alright. I’ve saved the best till last, my final two stocks in this part one episode. These are both 10 badger allocations from me. It does not get any higher in terms of conviction at today’s valuation. So prick up your is, here’s my first one. Amazon Ticket, A MZN.

You guys, you know who Amazon are? They are the world’s globally dominant e-commerce company, but they’re also a cloud computing company with Amazon Web Services. And more recently, they were a digital advertising company. So this company’s got it all. They have an unbeatable logistics in Vantage in most of the markets they operate in.

Like no one will overtake them. Now they’re so far ahead in terms of the ability to go from an order to having something in your hand like hours later, depending on where you live. But Amazon Web services, the cloud computing side, that’s the real engine of profitability. And in the last quarter, a Ws AWS revenue growth was up 17% year over year to a hundred billion dollars annualized run rate on its own.

And now AWS makes up 62% of Amazon’s total operating income. That’s super high margin and it’s key to the investment case, but advertising is also becoming incredibly profitable. Like when you go to amazon.com and you’re seeing adverts on the page, they’re making a ton of cash out of that, basically doing ad placements for sellers.

And in the most recent quarter, ad revenue is up 19% to nearly $14 billion. Again, super high margin. This is a 10 out of 10 badger investment for me right now. I’ve owned it since 2009 and it’s still among my highest convictions dogs.

[01:31:15] Krys: So that trip to the warehouse really did you in good, huh?

[01:31:20] Luke: You got it. Yeah, yeah, yeah. Seeing the robots and they’ve got, like they, they, it may have just installed their Nith robot, I think from memory. I saw that headline. Yeah. These guys have got this stuff sewn up.

[01:31:32] Krys: Okay. So attend, you know, a perfect rating begs for, for some pushback because that’s saying, you know, this is as perfect in investment of vehicle as, as there is in a sense. I wanna throw the law of large numbers at you here. It’s, it’s, uh, what the fourth largest company in the world? I, 

[01:31:56] Luke: Yeah, it’s a $2.4 trillion company today. So yeah, that definitely, that ballpark.

[01:32:01] Krys: So for me, and this is obviously subjective and relative, but for me, for an investment to get a 10, I would need to feel like the reward, you know, is somehow. asymmetrical somehow, or like that I’m getting more alpha than, you know, the, the, than the market recognizes. But Amazon, in one sense is like so well known, and so it’s not cheap.

Exactly. Right. And it’s huge. Are you looking, are you giving it a 10 out of 10 just because you’re not, you are happy? I don’t know. What, what are your expectations from this investment? Might be a different way of asking the question.

[01:32:44] Luke: If you look, I, I hear what you’re here saying, and I’m gonna attack it head on. This is a multibagger investment from the current valuation, right. They, they have so much of commerce, they have so much of cloud computing, but growth, they’re still. Like they, I I have no doubt that they will be the world’s leading e-commerce brand in 10 years time, maybe even 20 years time.

Right? I mean, do you wanna argue with that?

[01:33:12] Krys: Are you saying they already are Not now or they will become,

[01:33:16] Luke: They’ll still, or they are today, that the 

world’s leading e-commerce brand

[01:33:18] Krys: saying. Okay. Yeah. Uh, I, I would, I would agree that the likelihood of that is quite strong.

[01:33:26] Luke: Yeah. Right. So, right. And like still, there is still commerce going online in many markets. Like e-commerce is massive in the western world, but it’s still under penetrated in some countries. And like, I’m gonna say something that’s gonna sound a bit stupid, but this will probably still be the world’s leading e Eagle gas company in 50 years time, right?

What else is Bezos doing now? I’m going, I’m going off way off piece here, right? But what else is Bezos Bezos doing? He’s building into space with like blue origin, right? I don’t doubt that. Like when we have humans on the moon, on like, you know, star base, alpha, whatever the hell we call this thing, right?

At some point Amazon will be servicing them. And when we have humans on other planets and in other galaxies, Amazon will probably still be surfacing them, like as they’re gonna grow as the species grows. As our relentless demand for consumerism grows. You, you yanks, right? You spend a ton of cash on just crap and stuff you don’t need.

And in, in the rest. In Europe we’re a little bit, we spend a bit less and we’re a bit more fiscally conservative, but we all like you guys lead the way in this stuff ’cause you’re, you know, you’re pushing your TV into our eyeballs. You are making all the rest of us, like, like much more consumer centric and Amazon are just gonna profit from that.

[01:34:57] Krys: I’m thinking of in Austin, when I order something, sometimes it gets there in four hours. So I’m almost in the sense spoiled by, oh, I’m, I’m thinking, well, where do you go from there? But I forget that the vast majority of the world is still, Amazon hasn’t quite tapped, you know, gotten their tendrils into everything here in Sicily, there’s a little delivery locker that allows me to, you know, ’cause the mailman can’t go up the hills and into, you know, so there’s a little delivery locker and it worked, you know, like four days, five days, and I got my thing.

But yes, you’re reminding me that it’s almost like the app tell me if this rings true for you at all, when Apple already had their major iPhone success and like iPhones were already in everybody’s pocket. And then that’s the moment where buffet like double down and like bought in and then. The company only, you know, went much higher after already was already huge.

You are kind of saying the same thing here, right? That despite its massiveness, it’s far from even being the middle of the, of the journey.

[01:36:10] Luke: And it’s a reasonable valuation if, um, there’s only one company in the mag seven that’s subjectively cheaper, and that’s my other 10 badge of stock I’ll talk about in a minute. It,

[01:36:20] Krys: Now, you, you present a, a, a pretty good case, uh, you’re saying, you’re saying when, when do you think, uh, it might, how soon might it double? What’s the earliest you think it could double 

[01:36:38] Luke: well, I mean, my investment case, my investment case isn’t that. I’m gonna double my money over some period of time. It’s just that these guys are rock solid and untouchable. But if they continue, like they’re already very dominant with AWS, like that’s really where the growth’s coming from. And if advertising continues to grow, like they have other revenue streams, it’s not like Alphabet, like that’s my other 10 badge of stock.

It’s not like Alphabet where they have these other really quirky like Waymo’s and other bets. Like Amazon is like, they’re like, they’re one company with one kind of big bet, but they’ve got so much optionality within that bet. Like they’re making so much money from advertising. But does it seem intrusive?

Have you ever really noticed like ads in your face when you’re on Amazon? Like I, I dunno, maybe it’s me. I haven’t, like it all just feels seamless and it’s part of the experience and I just get stuff that I want, but clearly they’re monetizing that and it doesn’t feel like horrible adverts like popping up in my eyeballs.

So they’re doing stuff really smartly.

[01:37:41] Krys: yeah. No, this is good. I’m, I’m glad. I mean, a 10, a 10 badger rating, you know, is something to, even, even for a monkey like me, I gotta take that seriously. it’d be, it’d

[01:37:52] Luke: You do not get more badges. That’s the most badgers. It is. I mean, well, I don’t wanna sidebar too much. Like it is interesting you have no 10 bananas. Like we’re obviously thinking about this in slightly different ways.

[01:38:07] Krys: yeah. I’ve restrained myself. I tried to, I tried to be reasonable, unlike some wild eye that furry bush tailed, uh, optimists. I, I I reign myself in. All right. speaking of, of fair, of, uh, fluffy bushy tails, my next company is Nintendo, which just came out with a, with a fantastic new game, donkey Kong or Don Donkey Kong.

Something. this Nintendo is a company that has a deep library of intellectual property that creates a powerful and enduring competitive, competitive moat driving both software sales and hardware adoption. The investment case the market is missing. With the sold out switch to launch exceeding expectations, Nintendo transitioned from selling a new console that required its user base to start from scratch.

Two, the switch two, which allows for previous generations to play its games and to continue, uh, to grow its active user base. So instead of being a hardware platform, it is now much closer to something like Apple’s ecosystem that locks its users in for life and can offer additional services and games in perpetuity beyond its core console gaming business.

Nintendo is also strategically expanding the reach of its IP into other entertainment verticals. A strategy akin to Disney’s, the company’s leveraging its characters through theme park attractions in partnership with Universal Studios and feature films such as the super successful Super Mario Brothers movie and a new Zelda franchise that is in the works.

This strategy serves a dual purpose. It creates new high margin revenue streams, and it acts as a powerful marketing tool introducing its characters to new generations and driving engagement back to its core gaming products. It is also exceptionally financially well positioned. It’s a cash gusher. what they’re going to do with the cash is, is either grow their, uh, 1% dividend or potentially buy back shares.

So I could not be more excited for Nintendo, and I’ve ranked it with a pretty high, uh, seven Bananas, which, uh, increased during this deep dive that I did.

[01:40:43] Luke: All right, nice. Are you a gamer? Have you got a switch or have you ever played for these things?

[01:40:48] Krys: I have a very weird relationship with gaming badge. I love the idea of gaming. So I buy the consoles and I buy the games, and then I feel too guilty to play them because I should be learning Italian or working on my investing. And then I don’t play them. But I read about, I think about buying them. So the company still gets my money.

[01:41:17] Luke: Yeah, you switch, like you could turn the game. You could turn the game into like Italian mode. So you’re listening to Italian like you. You can learn passively 

that way. 

[01:41:24] Krys: No, but, uh, we talked about, I talked

[01:41:26] Luke: These characters are Italian, like Mario and Luigi. They’re Italian characters.

[01:41:30] Krys: is the joke I made on, uh, the European dividend growth investment that while you’re off buying sausages, uh, I’m here buying something much more fun. I really love this company in this particular moment. It’s a odd company for my portfolio because it’s already at a hundred billion dollars, but it’s actually conservatively run, and I get strong Whiffs badge of that moment when, Disney acquired Marvel and Pixar and basically became much greater than the su uh, than the sum of its parts.

And I think this is what we’re looking at here, especially when I could point to the switch from being a cyclical hardware business where you start from zero all over again to the Switch two, which basically says no, we’re basically keeping things the same. All you old guys still have your accounts.

We’re just upgrading, you know, the specs a little bit, but everybody’s now welcome. So we’re more of a software platform now, locking everybody in and then building the entertainment, you know, franchises. And it’s just stunning that Super Mario Brothers movie was the second highest grossing movie in the world.

You know, it’s like no small, you know, thing. And with all these, properties, super Mario Brothers and Zelda and like Donkey Kong and I mean all of these things, the a hundred billion dollar valuation, you know, I always look, could this 10 x? And at first I’m like, hell, you know, hell, hell no. And no, this isn’t one of my obvious 10 Xs, but could it like five x from here and become like the world’s premium entertainment company in the age of everything being digital and you know, the younger generations growing up with, you know, gaming and online gaming, plus the advent of blockchain and being able to like own your things.

This company is perfectly positioned to reap all kinds of rewards even through, you know, recessionary times. ’cause people always need their entertainment. So, very high conviction. For me, that’s seven bananas.

[01:43:32] Luke: I’m not gonna hit it too hard ’cause it’s been a long conversation. But it is, it is an interesting to compare it with Disney. So it’s kind of directionally about half the market cap if I just did my Y for dollars calculation. Right. But Disney is like, you know, the, is a genuinely like a behemoth with so many different things, but at the same time, like, I think Disney have kind of blown it, where they’ve just o they’ve overdone most of their intellectual property, like their characters, they’ve burnt out like Star Wars and the Marvel Universe, like these, these movies, most of them are flopping in the box office.

so yeah, like if, if Nintendo, like, if it can, if it can be smart with its IP and conservative with its ip, but con in the Disney way, like continually like reinvent it for the next generation of kids, then yeah, like the.

[01:44:24] Krys: And it’s funny you say that. It’s not just kids though. That’s the weird thing about Nintendo. I don’t know how well versed you are with their, you know, but they’re, they sell themselves as, you know, the kid friendly family. But the way they make a game like Mario Car where adults could get together, you know, and have a lot of fun together drinking and boozing and playing these goofy character looking characters, and it’s just so much fun.

The fact that they pay a dividend, I mean, this company should be so high up your, your, uh, watch list. I’d be disappointed in you. I’d be outright disappointed in you if you don’t look, uh, more deeply into this one.

[01:45:02] Luke: I’m gonna say it’s not for me, but only because like I’m a bit of a gamer. I like confession time. So my, but my friends, close friends are in, uh, Japan at the moment. They just went traveling. and so I popped over to their house and I stole their PlayStation five and PSVR ’cause I wanted to play like a couple of different games that like, I can’t play on pc, but I’ve real, so I’ve, sorry.

Wow. That’s thunder in my background. I dunno if you’re hearing that Huge thunderstorm. Hopefully the wife walking home. so I was always a PlayStation, not a Nintendo or an Xbox kid, I guess. And now I’m like a PC gamer, like I borrowed the PlayStation, but Hey Taj, I barely used it buddy. I think I’ve gone off this like genre of stuff.

So. I’m sticking to my PC games. I never really got into Nintendo, but I can see it’s massively popular. I can see like kids love it and I can, you’re right, like drunk adults love it too.

[01:45:55] Krys: Yeah. But also like your, your investment in Greg’s, right? You don’t have to like sausages for it to be a 

great investment, right? So.

[01:46:03] Luke: yeah, yeah. Totally. Yeah, I get 4% dividend on Greg’s. I get like 1% on Nintendo, right? Anyway. Anyway. Alright, let me close out my side of this with my other 10 Badger, uh, investment. And I’ve revealed what it is already. But let me tell you about Alphabet ticker, GOOG or G-O-O-G-L. Super high conviction, 10 out of 10 badges from me.

Tech Giant that generates the vast majority of its revenue from online advertising, but they’ve also got a whole bunch of other bets, plus masses of money they’re generating in cloud computing and in ai. Alphabet has got seven products each with over 2 billion users. Its mobile os Android is on 70% of handsets.

It is dominant. Um, and that gives it unrivaled distribution. And then beyond advertising, Google Cloud, GCP, has become a key part of the investing thesis over the recent years. Last year, cloud revenue surged 31% year over year to $43 billion. The company ended last year with $95 billion in cash, and it’s generating over a hundred billion dollars in net income for the year.

So it’s actually the world’s most profitable company, and yet, despite all of that, it still trades at just 20 times earnings or six times sales. So it is by far and away the cheapest of all of the Magnificent seven. The market has really misunderstood the impact that AI is gonna have on Alphabet. It thinks AI is gonna disintermediate it and kill search.

This is a misunderstanding. AI is a massive opportunity, not a threat for Alphabet. I’ve been an owner of this company since 2010, and I added to this position as recently as two months ago. This is my highest conviction investment at today’s evaluation.

[01:48:11] Krys: Oh boy. Where do we, where, where do we start? Um, I think you need to explain, uh, a little bit more clearly that the, what is giving this, uh, us this opportunity to get a 10 badge rating. Right. You are saying the market’s missing it and it’s the AI thing. And I am, uh, and for full disclosure, I’m leaning, if not not heavily in on your side, but but significantly on your side.

I think you’re right about this, but. for, to go, to use our scale for rating to be 10, 10 badgers or 10 bananas. It seems like you have to have like all the faith in the world that this is the case. And on my end I kind of think, well, I agree, but what if, you know, like since AI is such a new thing, what if they, you know, something goes wrong where they, they sabotage themselves somehow or they are too, you know, whatever.

so I don’t know if it’s me niggling that maybe this should only be a nine badge or a eight badge or rather than a full 10. You’re out here saying, no, you have no doubt whatsoever that AI ain’t going to touch it. Not only is it not gonna touch it, it’s gonna make it a better company. Can you explain that a little bit, like why you’re so confident in that?

[01:49:33] Luke: Yeah, and I try and keep it brief, like I unpacked it in a post on social media a bunch of months ago, and I also recapped it briefly on the, uh, conversation with the European dividend growth guys the other day. Everybody thinks AI is gonna come in and it’s gonna stop you, like. When you Google something, you see like the 10 blue links and you know, you go into it and Google get paid a little bit of money.

’cause the whole way advertising tech works is this crazy auction that happens in real time whenever you search for anything and Google serves up stuff that it thinks you want, but it also gets paid by the people whose stuff appears like in those, that first page of results. And everybody thinks AI is gonna kill that because the thinking here is that you won’t go and Google search for something, you’ll ask AI for this thing.

Well, how do most people access ai? It’s gonna be on their phone and sure, OpenAI are deploying chat GBT to a whole ton of handsets and they’re growing gangbusters rate, but most handsets, nearly three quarters of all handsets in the world today, all phones in the world are Android and Google. Like for 2 billion people, like they’re using at least seven of Google’s products.

Things like maps and search and other stuff like photos and various other products. Every time you touch any one of those Google products, it learns a little bit more about you and your preferences. So you take this vast repository of data, which I think. Dwarfs the information that a company like Meta has on you and a company like Apple has on you.

’cause you know, most iPhones, they’ve, most iPhone users have got a couple of Apple, sorry. Yeah. Most iPhone users, a couple of Android apps on their phone anyway. ’cause Google Maps is pretty damn good. And Google Photos is pretty damn good. Like there are no iPhone apps on an Android handset. Apple are getting none of that data.

And I haven’t even talked about YouTube, right? Like arguably now the world’s dominant media channel, like so much content and so much educational content as well as entertainment content plus like incredible podcasts like ours, right? It’s all on YouTube and all that data is there for Alphabet to mine, for insight.

And then no, you know, you’re spending, oh, Christophe like watched 30 seconds of this video and he clicked away. He’s not interested in that thing, or he jumped to this point of this video and watched this bit. He’s interested in that thing. So this vast repository of data, I’m bringing it together now into the conclusion.

When you ask AI using Gemini or using any of your Android tools, ’cause AI is, Gemini is built into all of them. Behind the scenes, you ask a question. Alphabet can lean on that unrivaled data to give you an, the one answer that serves your needs in a much more sophisticated way than anybody else can.

’cause they know so much about you. But at the same time, the, the AI result is the advert, right? I gave this example on my social media, but I think it’s a good one. I just kind of made it up. It’s like I’m a health conscious guy. I don’t like Greg’s. I do like healthy food. If I’m like walking the streets and I wanna get pizza and I search for pizza, well Apple, Android, natively knows Alphabet natively know that I want a healthy version of pizza maybe unless I’m really drunk.

and so they’re gonna serve that. To me, that’s a high intent advertising opportunity. ’cause I’m probably gonna go to that pizza place. ’cause it’s like when they told me about it, the AI told me in maps, Hey Luke, here is your recommended pizza joint. It’s these guys that do this, you know, gluten-free thing or whatever it might be.

I’m probably gonna go there ’cause it plays to the stuff I really, really want. And so they can charge that pizza restaurant even more for that advert that was built into the AI response. There’s a whole bunch of other stuff I didn’t even talk about. Waymo didn’t even talk about all these other bets that could turn into like massive Tesla rivaling companies one day.

But you know, that’s, that’s why I think AI is benefiting Google’s ad tech, not disintermediating it.

[01:53:47] Krys: I buy all that and I think all the people running Google are some of the, you know, sharpest minds and they’re, they’re on this, they know, you know, they’re not, they’re not sleeping at the wheel. So it would be for, for them to bungle this would, would take some sort of, you know, cataclysmic miscalculation, which I just don’t see happening given what the company’s DNA is.

Uh, so I think you’re right that this is, uh, an opportunity in this moment of doubt. Um, and I’m probably going to, uh, be a, uh, alphabet shareholder, shareholder owner. Soon. Again. Soon.

[01:54:30] Luke: All right. Very good. Nice to hear

[01:54:32] Krys: Yep.

[01:54:33] Luke: 10 badges.

[01:54:34] Krys: Wow. Yep. 10 Badgers for, for Google. So let’s close this out, and I’m gonna make this, uh, brief, my next king of the jungle portfolio position is Bitcoin. I’m given Bitcoin six bananas. I’m not gonna say much really about this other than I think it’s the world’s best money. Gold is still the world’s top asset class.

I think Bitcoin is going to flip that because of all the regulatory wins in its favor. And if you just, if editors could put up the chart on Bitcoin, that’s an, uh, logarithmic chart and it’s, it’s just nothing but up into the right and the next sort of, if you look at that and you add one more graph and the, you know, one more bar or a couple more bars in the same scale, you’re getting to a million dollars per Bitcoin.

So it’s just one of those things that’s, you know, humans have decided that money is this, is, this is the next version of money. And with so mu many a huge, huge funds buying into it, it’s a sort of self-fulfilling prophecy as far as I could tell. Uh, and. So far, I, I just bought a tiny little bit for the king of the jungle.

I kind of thought of it as a place marker. I think it was 0.001 of a Bitcoin. It’s up something like 25%, uh, to date and it serves, I think, the way gold should, you know, just a little bit of, uh, yeah, value storage and uh, but with Bitcoin, obviously, it’s not just storing value, it’s creating immense amounts of it.

So it fits in pretty well with my investing thesis. Um, the only other thing I’ll add, I suppose, is now that the right, the US regulations are so procr that there’s still so many people in the world that do not have anything to do with Bitcoin or wallets. Relatively speaking, it’s kind of the Amazon problem.

Like we, because it’s in the news, you think people have it, but most really don’t. So I think there’s still a long, long ways to go.

[01:56:51] Luke: Good stuff. And it is more than half of the total like capitalization of all cryptocurrency. It’s like 58% and I think it’s now a Bitcoin market cap. If you, if there was such a thing is now $2.3 trillion, that’s like a whole chunk of change.

[01:57:11] Krys: Yeah, it’s huge. It’s huge. It’s this amazing new asset class. That as the world, you know, in some ways it ties in a bunch of threats. You know, like the whole world is going digital. Like that’s why I’m investing in a MD. It’s gonna be everywhere now that blockchains are not, you know, gonna be regulated and they’re gonna be what the global financial industry runs on.

It just makes all the sense in the world to me that I said it before, that this thing is gonna flip physical gold because it just makes more sense.

[01:57:42] Luke: Awesome. Well that got us through our first 15 of our 30. King of the jungle holdings between us, editors, if you could pop up the, combined conviction rating picture. So you’ve seen my two biggest conviction holdings, my Alphabet and my Amazon, but I’ve got a couple of Biggins in there for the second half of the episode for part two of the episode next week.

We haven’t talked about EOS yet, that you’ve got that coming up plus A STS, which we both own. So a lot to listen up for when we come back next week’s episode and we do the other half of the portfolio. And these are the stocks that have delivered the most and then hang around for the end. ’cause the big winner, my 12 bagger rocket lab.

Will it be a 13 bagger, 14 bagger by the time we record next week? Who knows?

[01:58:31] Krys: Yeah. So we still have a lot to talk about the real, uh, high flyers in our portfolio. Really exciting companies. Stay tuned.

[01:58:42] Luke: Are you ready to become a beast of an investor?

[01:58:45] Krys: I dunno, Badger, I dunno what we’re doing here. I’m.

[01:58:53] Luke: Christophe’s journey ended there. 

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