We spend a lot of time covering the big banks, so here's a closer look at four small-cap bank stocks that probably aren't on your radar -- yet. Plus, host Jason Moser and Fool.com contributor Matt Frankel, CFP, discuss Amazon.com's (NASDAQ:AMZN) Amazon Pay and what it could mean to some of our War on Cash favorites. Plus, the team answers listener emails on REITs, bank interest margins, dividends and buybacks, and more. It's all on this week's episode of Industry Focus: Financials.
A full transcript follows the video.
This video was recorded on Nov. 26, 2018.
Jason Moser: Welcome to Industry Focus, the podcast that dives into a different sector of the stock market each day. It's Monday, Nov. 26. I'm your host, Jason Moser. On today's show, we're going to talk small-cap financial stocks. We'll tackle some listener emails. We'll tap into Twitter, of course, and give you One to Watch for the coming week.
But we begin this week talking about the king of e-commerce as Amazon continues to pursue the massive market opportunity not only in e-commerce but out there in payments. We talk a lot about payments here, as you know. Joining me in the studio this week, as usual, is Certified Financial Planner Matt Frankel. Matt, how's everything going?
Matt Frankel: Pretty good. We took the kids up to my family in Maryland and just got back from that. I actually had a chance to use Amazon Pay for some Black Friday shopping last. I'm really looking forward to talking about that.
Moser: I have a feeling we're going to be digging into that a little bit. You guys had a nice Thanksgiving weekend, it sounds like.
Frankel: We did. The trip was surprisingly smooth for a 10-hour car ride with two small children.
Moser: Holy cow, 10 hours! How many times did you have to stop for that trip?
Frankel: We've got little kids, one of whom is potty training, so...
Moser: Well, we're glad to have you back here and joining us. You mentioned Amazon Pay, so let's kick right off here talking about Amazon. There are a few different points to this discussion we want to get to. We're talking primarily about Amazon's effort to gain more share in the payments space. That's through Amazon Pay. We can couple this discussion also with the fact that according to Adobe Analytics, Black Friday pulled in a record $6.22 billion in online sales, which was up almost 24% from a year ago. It was the first day in history to see more than $2 billion in sales stemming from smartphones. That's where I really want to pick this conversation up here. Not only are we living in an e-commerce world; we're certainly living in a mobile world as well.
For a lot of us, Amazon Pay probably isn't top of mind, yet we're reading now that they're really making efforts to gain share, it seems like initially with companies that are not necessarily direct competitors, like gas stations or restaurants or what have you. It does seem like they're trying to take a little bit more of that role in the transaction, much like we've seen Apple (NASDAQ:AAPL) do to date with Apple Pay. But it's also not just Apple. There are all these payments companies out there, trying to get a little piece of that transaction.
Talk a little bit about your experience with Amazon Pay. Give us a little bit of your perspective here as to what the endgame is with Amazon.
Frankel: I was on a certain retailer's website. I can't tell you what I bought, or who I bought it from, because it was an anniversary gift for my wife, who listens to the show.
Moser: Oh, so you really can't. I was going to say, "You can't, or you won't?" But it's both.
Frankel: I really can't. It was a small business, something you would see featured on Shark Tank. It struck me as somewhere that gets most of their sales from Amazon to begin with. This was directly on their website. I went to check out; they were having a great Black Friday sale. I went to their website, selected my products, and went to the checkout. And there were two buttons. There was a PayPal (NASDAQ:PYPL) button and an Amazon Pay button. I was curious, because I had never seen that on a merchant's website. Amazon really hasn't pushed it until recently. So I clicked Amazon Pay, and it took me right to my Amazon checkout, where I have my Amazon credit card already set up. It was just like checking out for a normal Amazon purchase. It took me about two clicks. It was very easy. I was actually going to use PayPal, and I like this alternative because it lets me keep all my purchases in one place. I'd say about 50% of what my wife and I order is already through Amazon. It lets me organize my purchases into one payment portal. I actually think PayPal might have something to worry about here.
Moser: That's a good perspective there. I want to ask you, the initial thing that comes to mind here where I think they may have a little bit of a challenge, we know that to date, the U.S. consumer isn't necessarily all that digital-wallet-focused yet. That's still something that we're in the very nascent stages of, and I think it's going to take a while for that behavior to really change. You look at something like Apple Pay, for example, as clever as that is, consumers still aren't embracing that wholeheartedly. Whether it's Apple Pay or Google Pay or Amazon Pay, the digital wallet, there's a big opportunity there. That explains why Amazon is pursuing this.
The one hang-up here I have with Amazon and the process that you just described, it sounds like there's a little bit more friction in there, versus if I go somewhere, whatever website it may be, and I have the option to pay with Apple Pay. When it says, "Do you want to use Apple Pay?" And you can just use your thumbprint to verify the transaction, as opposed to having to go to another website and verify that purchase. What I'm getting at here is ultimately, it feels like Apple, and to a degree Google, have a hardware advantage that Amazon doesn't have to date. Does that make sense?
Frankel: Yes, but here's my perspective on that. I don't necessarily think this will steal any market share from people who are already on Apple Pay or PayPal. Both of those are, like you said, very easy portals. They both have hardware advantages over Amazon. But there are a lot of people who are not using digital wallets yet who are already comfortable with Amazon's checkout process. I don't necessarily think they're going to steal market share or steal existing customers from any of the other ones, but I do think it gives them an advantage recruiting new adopters to digital wallets.
Moser: Probably, you're right. We talk about this all the time, this is not a zero-sum game. It's not as if one wins and everybody else loses. This is a massive opportunity out there. At the end of the day, money is going everywhere. That's what dictates everything, basically, is money getting from Point A to Point B. Pursuing even just a small piece of that pie makes a lot of sense, particularly in Amazon's case, because really, you have to figure for them, this is a very easy bet to make. The business certainly isn't hinging on it. At the most, they get a tiny scrape of that transaction. When Apple Pay is used, Apple gets a very, very tiny scrape of that transaction. It's not terribly meaningful. It becomes meaningful if you have a billion people using it on a consistent basis. And obviously, we're not to that point yet. But even beyond the financial implications, I would imagine that a company like Amazon, as smart as they are about using data and doing things with that data, just gleaning the data from transactions like these would be seen as a reasonable pay-off.
Frankel: Right, and that seems to really be what they're after here. I've actually read that Amazon is subsidizing the swipe fees for merchants -- not swipe fees, but whatever the swipe-fee-equivalent of digital wallet fees are. They're actually subsidizing the fees to get retailers to put the Amazon Pay button on their website at a lower cost to them. It's fair to say Amazon's not making money on this, but it's expanding their reach. Anything that expands Amazon's reach, data-wise, customer-wise, merchant-wise, is good for the long-term business.
Moser: Makes sense to me. I don't think Amazon's going to ever going to have a hardware advantage, at least on the smartphone side. They tried with the Fire Phone. They were late to the game, tried to do something a little bit different, but there was nothing terribly compelling to get someone to switch, particularly if you're already used to a certain operating system. I'm also skeptical when it comes to incorporating things like voice assistant technology into actually paying for things.
With all that said, things change very quickly. Technology is evolving seemingly on a daily basis. I'm going to be interested to see where Amazon takes this. Amazon Pay has been around for a while, they just haven't done much with it. Perhaps we're entering this stage now where consumers are going to be a bit more open to adopting digital payments and digital wallets and whatnot. If that's the case, clearly we can see there's a lot of market share there to pick up. For Amazon to try to be a part of that makes perfect sense.
Frankel: To be perfectly clear, PayPal, Amazon Pay, and Apple Pay all have tremendous growth runways. PayPal's growth rate could go from 20% to 19%. I'm not saying they're going to really suffer. To be clear, I still love PayPal on a long-term basis.
Moser: Gotcha! We want to make sure we respond to the inevitable email we're going to get. We're not saying, "Short PayPal, long Amazon." You're probably saying go long on both, right? It's reasonable to just diversify your portfolio, own shares in both companies.
Frankel: Right. Both companies are going to be winners. I could just see the tweetstorm going off in my head when I was saying that.
Moser: Well, we'll get out in front of it if that does happen. Let's take a look here, new topic for discussion. We got a tweet a few days back from @ChrisM_Jones. Chris said, "Would love for the two of you to cover some small-cap financials. For example, AX, UVE. Full disclosure: UVE was my first stock, and now is my largest position." The bottom line is, Chris was hoping we could take a look into some more small-cap financial stocks.
Matt, you and I love talking stocks. When you get to find compelling small-cap financials, we could probably talk about that for the next four hours. Unfortunately, we're not going to be given that much time. We thought we would take an opportunity here to target two companies each in the small-cap space that we like and see if we could give Chris a couple of ideas, companies that we like, some things to keep an eye on with them.
We're going to start the discussion here with a company that Matt, you know, Synovus (NYSE:SNV), ticker SNV. Give us your elevator pitch for Synovus.
Frankel: This is a bank that I drive by a lot, because it's a Southern regional bank. The reason I like Synovus is, one, they're profitable; two, they're growing very fast. On the side of profitability, return on assets of a little over 1.3, return on equity of 40%. Both are great numbers. The loan portfolio is growing at a pretty impressive rate, about 4.5% a year. They're making acquisitions on a pretty aggressive basis, and they're actually getting really good deals.
I reported over the summer that Synovus decided to acquire a bank called FCB Financial, Florida Community Bank. They actually wound up getting a discount to the share price. Generally, when you acquire a company, you're paying a premium. That's why the shares jump up right after the acquisition's announced. This will make them one of the biggest regional banks around. They got a great price. They expect it to be immediately accretive to earnings. I really like Synovus. Very profitable, well-run bank with big ambitions.
Moser: Ameris Bancorp (NASDAQ:ABCB) is the first one I'm going to talk about here. Listeners have probably heard me talk about it before. The ticker is ABCB. This is a not-so-little regional bank in the Southeast. Home base is Moultrie, Georgia. Full disclosure: My mom and dad actually live in Moultrie, Georgia. I've played golf with a couple of these guys at Ameris Bancorp before. That wasn't through design; it's just small-town living there. Everybody knows everybody. And I do own shares of Ameris Bancorp as well. This is a company I found back in 2011, at the depths of the financial crisis, when a lot of these small-cap banks, these tiny banks, particularly in Georgia, for whatever reason, were going belly-up. They had bad loan books and really overextended themselves. Ameris Bancorp has always been a very well-run, fairly conservative operation, not trying to write checks that the bank can't cash.
What that resulted in, over the course of the few years in that recovery from the financial crisis, the FDIC recognized Ameris Bancorp's excellence in operating and started using Ameris as a partner in rolling up some of these failed financial institutions to give them at least a little bit of an exit strategy so that everything didn't go completely to hell in a handbasket. What this ultimately did for Ameris, it gave them a very risk-free way to build up their asset base and their deposit base. The FDIC basically said, "Any losses are going to be on us. We just want you to help us get these things rolled up, and there's going to be nothing ultimately but upside there for you."
Fast-forward to today, that really has worked out for the company. They now have total assets near close to $11.5 billion. Tangible book value per share is close to $18. All in all, what you have here in Ameris is a still small-cap bank, around $2 billion market cap, that has grown its presence beyond that Georgia footprint. They have plenty of opportunities to continue to make some smart acquisitions going forward. And they certainly have done that. They recently purchased Atlantic Coast Financial, as well as Hamilton State Bank. It's all helping them grow this business out. Longtime CEO Edwin Hortman stepped down recently. The new CEO, Dennis Zember, who has been with the company for a number of years, held positions of COO and CFO.
That's all to say, I expect that conservative, smart, long-term-focused mentality to continue here with Ameris Bancorp. Certainly had developed a long track record of success. I suspect we will see that going forward as well. That's one of those little small-cap financials I really like.
Speaking of banks, Matt, you wanted to take a trip out west and talk a little bit about Bank of Hawaii (NYSE:BOH), right?
Frankel: Yeah! Since we're talking about some of your disclosures, disclosure: I've never been to Hawaii, so I've never been to a Bank of Hawaii branch.
Moser: I've been to Hawaii! I was looking to see if we could get a Fool branch in Hawaii. That'd be pretty sweet, actually.
Frankel: If there was an office there, I might sign up for it.
Moser: I was pitching that and/or the Bahamas. I would gladly take either post.
Frankel: [laughs] So I've never actually been to a Bank of Hawaii, but I know a lot about them as a bank. They're one of my favorite small-cap banks. I've been watching them for a little while. Not only are they an extremely profitable bank, but along with one other bank, they have a pretty dominant market share in Hawaii. If you're in Hawaii, you generally don't go to a Bank of America or Wells Fargo. You're either at Bank of Hawaii or First Hawaiian Bank, the other major bank out there. They have a very big market share. Great reputation on the island. Don't expect too much growth as in geographic growth. You're not going to have a Bank of Hawaii branch in Kansas or anything like that.
Hawaii's economy is doing great. It's growing at a faster rate than the rest of the U.S. It's one of the fastest-growing economies. Great reputation. The loan portfolio, for example, grew about 7% over the past year, most banks were in the 3%-4% range, if you look back at our episode where we covered the big banks. That's a testament to how strong the Hawaiian economy is right now. Consistently profitable throughout any economy.
A little fun fact: After Citigroup almost collapsed during the financial crisis, they brought in Bank of Hawaii's former CEO to be the new chairman of the board. The big guys on Wall Street know how profitable Bank of Hawaii is and how well run it is.
It's not a cheap bank stock. I put it in the valuation category of a US Bancorp. But just like Synovus, about a 1.3% return on assets, and 18% return on equity, which is unheard of for a brick-and-mortar bank. Highly profitable. Very, very low default rate. It was like a 0.2% non-performing assets rate, which is extremely low. Great economy, great quality bank, great history of being a well-run institution. That's why it's one of my favorites. Hopefully I get to visit one someday.
Moser: I feel like this is the opportunity to bring this thing under official coverage here at the Fool. The annual meeting is out there in Hawaii, right? That has to be where they have the annual meetings. Then you have to go out there, right? It's the biggest no-brainer. We'll look into that later this week, Matt.
Let's wrap it up here. Chris had made specific mention here of a company, Universal Insurance Holdings. This is the company he said has grown into his biggest position. Let me tell you, Chris, I think that's not actually such a bad move here. From what I have seen with Universal Insurance Holdings, this is a pretty compelling company. This is the largest private personal residential homeowner's insurance company in Florida. When I say Florida, let's be very clear, most of their business is in Florida. Only 26% of their total insured business is outside of Florida. This is a Florida play. They are in 16 states, but right now, this is a Florida play. They are seeking to expand that footprint and diversify, geographically speaking.
But generally speaking, we love the insurance business from the investor's perspective, because insurance is one of those things that's always going to be needed, particularly if you're a homeowner. Chances are, you've got a mortgage, you have to pay that mortgage, your mortgage company is going to require it. Even if you've got your mortgage paid off, nobody owns a home and isn't going to have some type of insurance on it.
Universal Insurance Holdings has been focusing on its primary market of Florida for a number of years. It's a small company, $1.5 billion market cap. But I tell you, if you bought this thing five years ago, you're feeling really good about it. The stock's up close to 300% since then. A big measure for us when we look at insurance companies is book value. We can see through Universal's book value they are growing. In 2013, that book value was at $5.20 per share, vs. today, which is $15.20 per share. Obviously, that indicates the company is growing, and growing at a healthy rate. Another metric that we look to with insurance companies to understand if they're writing good books of business is the combined ratio. We like to see that combined ratio under 100%, that tells us that they are writing good business, profitable business. The combined ratio for Universal in 2017 chalked up at 84.4%. That actually was a little bit up historically from what we've seen in years past.
This is a well-run business. CEO Sean Downes has been there for a while, has plenty of experience in the industry. The risks with a business like this, particularly in a state like this, is the natural disasters. Florida is known for its storms. But the flip side of that is, every insurance company in Florida is planning for that stuff. It's not a matter of if; it's a matter of when. So I like to believe that management is certainly keeping that on their radar. And the way that insurance companies tend to hedge that risk is by reinsurance.
So all in all, it does look like Universal Insurance Holdings is doing a lot of good things with the business. Based on the metrics, the business looks very healthy. Strong balance sheet, appears to be very capable management there. Chris, I think you can feel pretty good about owning that one. Congratulations on your gains, and here's to many, many more dollars in the future!
Chris, thank you for the question! We always love taking a look at new stocks, and this gave us a chance to dig into a few new names, and hopefully give our listeners a few additional ideas for their watchlist.
OK, Matt, let's take a look at some email questions we've pulled in over the past couple of weeks. We had a question from Jay Otto in Oshkosh, Wisconsin. He says, "I love your podcast. I enjoy listening to you on the other podcasts as well." Thanks, Jay! I like being on those podcasts. I think he's talking about me, Matt, but I'm not sure. He had a question on REITs. I'm going to give you this question, Matt, because you're our REIT guy. "Is there any difference in investing in REIT stocks versus other equities? I think I've heard in the past that there are different tax implications with these stocks. Is that true?"
Frankel: Yes, that is absolutely true. Provided that you hold them in a taxable account, most dividend stocks have what are called qualified dividend status, which gets favorable tax treatment. Think long-term capital gains rates, the same rates that apply to qualified dividends. Generally, most people pay a 15% dividend tax rate if you're in any of the middle tax brackets. If you have a REIT, though, it's considered pass-through business income for the most part, so you're generally taxed at your ordinary income tax rate for a REIT.
There are a couple of caveats to mention. One: Your REIT dividend is actually a combination of a qualified dividend and a non-qualified dividend. Depending on the quarter and the particular REIT, most of it is usually ordinary income with a little bit that you'll get a favorable tax treatment on. The second thing is that thanks to the tax reform bill, REITs qualify for that pass-through deduction as small business income. Whatever income you do get from REITs, you can take a 20% deduction for that before your ordinary income tax rates are applied.
There's a lot of moving parts here. The situation is definitely a little more complicated with REITs than it is for other stocks. But I love them. I always recommend REITs in retirement accounts so you don't have to worry about this. But yes, if you hold them in a regular brokerage account, there's a big tax differences. Long story short, REITs are a little more complicated.
Moser: Good information to know. Jay has a follow-up as well. "Another topic you hit on last week was Buffett's large investments in the big banks in the last quarter. You guys talked about how it should be a good environment for the big banks with rising interest rates. Can I assume the same opportunity is there for smaller banks such as Axos or," a bank we just talked about a minute ago, "Ameris Bancorp?"
Frankel: The opportunity is definitely there. You have to remember that certain banking products are tied to short-term interest rates and some are tied to long-term interest rates. For example, if a bank is a big credit card business, credit card rates go up immediately when the Fed raises rates. Those businesses are already seeing a big benefit, as the Fed has hiked rates about eight times so far in this cycle. On the other hand, if you don't have a big credit card operation and you rely on long-term rates, such as mortgages and auto loans, those really haven't kept pace with the shorter end of the spectrum. It depends which end of the yield curve is moving as to which banks benefit the most. It's not really small cap versus large cap; it's how is their loan portfolio made up? Short-term loans like credit cards or long-term loans like mortgages and auto loans that are not at variable rates that move with longer-term Treasury yields, not the federal funds rate.
The short answer to your question is yes, but look into how the bank makes its money. That'll tell you what rates need to rise.
Moser: That's a great point! We have one more question, from Landon Boring. Landon, come on, man, you're not boring. [laughs] Just kidding! Landon says, "I really enjoy the Industry Focus podcasts." Thanks, Landon. We enjoy doing them! "I have a question about the War on Cash podcast from Nov. 19, 2018. Jason and Matt mentioned that they like the buybacks of Visa but are OK with small dividends to fund future growth. I'm confused. Don't both buybacks and dividends decrease the amount of cash to fund future growth?" He goes on to say he would personally prefer dividends over buybacks. That's cash in the pocket. But on the other hand, increasing dividends generally represents a much stronger commitment by management in the faith of the business, because companies generally do not like to cut the dividend, and dividends provide a more direct reward to shareholders.
Landon, you make a very good point here. Regardless of whether it's a dividend or a buyback, the company has to fund that one way or another. When you have a business like Visa, or Mastercard for that matter, that is as big as they are, and have very high-margin business models, as they both do, the nice thing about that type of investment opportunity for investors is that while the growth is going to be there, the growth will generally be organic, and it'll be tied to general consumer spending. These are business models that generate a lot of surplus cash. They have to do something with it. There's only so much they can reinvest in the business before they start getting a little bit outside of their circle of competence, and you start seeing some deteriorating returns on those investments. So you reward your shareholders either through a dividend or share repurchases.
I tend to prefer dividends, just because, like you said, Landon, they are cash in the pocket. But by the same token, these companies do know that material buybacks over the course of time can play out on the share price. The fact of the matter is, when you reduce that number of shares outstanding, that's going to give you a little bit of a different look on the value of those shares. It should, in theory, make them a little bit more expensive over time.
All in all, we like to see a healthy mix there, and feel like, with Visa and Mastercard, perhaps the opportunity there is to grow that dividend a little bit more substantially over time. That's what we'll be hoping that they do. Landon, thank you very much for the question! Jay, you as well!
We'll tap into Twitter here really quick for a couple of comments. One from @Cricket99238. Neeraj says he was delighted to learn about the XLF Holdings SPDR ETF for financials. "Thanks for introducing it. And with Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B) and [JPMorgan Chase] as its largest holding, it seems a no-brainer investment. The market is certainly giving a wonderful opportunity to buy this stock basket." Matt, that fund is what you were talking about a couple of weeks ago, right?
Frankel: That's correct. It's basically if you don't want to put all your money in one bank stock -- it's not practical for most people listening to own 10 bank stocks like Warren Buffett does. If you're not comfortable owning an individual bank, you're not really sure which ones are healthy, which ones are not healthy, which ones are growing in the right way, which ones are growing in the wrong way, things like that, an index fund like the XLF, especially one like that that has very low fees, can be a great way to get exposure to the whole sector, if it does as well as Warren Buffett thinks it's going to.
Moser: Good deal. We also have a tweet from @BuckyCat. BuckyCat wonders if buying Eventbrite (NYSE:EB) stock gives you a discount on buying tickets from them, because they buy a lot of event tickets from them between Eventbrite and Ticketfly. Listeners may remember that Eventbrite was my One to Watch last week. A little bit of a direction away from direct payments companies, but the relationship with payments companies in the space. Generally speaking, the company itself, I think, has a lot of opportunities for investors. BuckyCat, I don't know if you get discounts there. That would be pretty sweet. But it's good to know that you're buying a lot of tickets from them. I own Eventbrite shares, and that, in all honesty, should mean their share price should be going up in the future, if you keep on buying all those tickets.
Frankel: A lot of people would own a lot more stocks if they would offer discounts. A lot more people would buy things like Fitbit stock. Berkshire Hathaway is the only one I know of that gives discounts to shareholders through all of its subsidiaries.
Moser: That would be pretty sweet, if that was a more consistent behavior. Offer the shareholders a discount. I would utilize that all the time.
Frankel: If you're a Berkshire shareholder, you can get a discount on Geico auto insurance. I don't know if you knew that.
Moser: That's a good point there. If you go to the Berkshire meeting, there's all sorts of opportunities to buy the stuff that from the companies that they own, particularly See's Candies. That line always seems to be stretching out the door.
Well, as always, we love it when you reach out to us via email. Please email us here at firstname.lastname@example.org. Of course, you can get us on Twitter @MFIndustryFocus. Keep doing it! Clearly, if you do it, we're going to answer your questions here on the show. We just did.
Matt, it's about that time this week. We're going to wrap things up with our one to watch. What is the stock that you'll be watching this week?
Frankel: It's not really a financial-sector stock. I'm looking at Amazon. We talked about them quite a bit. They're down roughly 25% from the highs. I think their new payments system is going to have some traction. Like I said, I personally think that PayPal and the others are going to lose a little bit of their growth trajectory because Amazon has a big existing customer base for this to really play well with. And not just because of that. I think Amazon is a good value. I thought Amazon was a pretty decent value at about $2,000 a share. I really think it's a good value now. There's talk of them offering some kind of co-branded checking account product. Maybe they'll be a financial sector stock after all. I love Amazon this week!
Moser: Time will tell. I put nothing past them. That's a good one! I'm going to go with Tiffany (NYSE:TIF), ticker TIF, this week. I know this may seem a little bit of an odd pick, because it's not directly a financial. But I've covered Tiffany for a number of years now. What I have found is that Tiffany is a very good indicator of how the economy is doing and how the market thinks the economy is going to be doing in the coming quarters. You know what we're in right now? It's what I like to call the Larry David economy. Everything is pretty, pretty, pretty good. And I hope that will continue. But I think on Wednesday, when Tiffany's earnings come out, we'll get a better idea.
Management recently had raised guidance last quarter, which was impressive. They're going to be investing a lot in their New York flagship store in the coming year. That really does matter for a company like Tiffany that depends on that physical presence. What they do that I think is so phenomenal, they really protect that brand so well. It's a luxury brand. They don't resort to fire sales. You're not going to find big Cyber Monday, half off deals with Tiffany. They protect that brand and do a very good job. When times are good, like they are right now, the stock feels it, and it looks like it's feeling it right now. When times get a little tough, certainly, the stock feels it again. Honestly, that's where investors need to consider potentially investing in a business like this, when times get a little bit tougher.
I'm sure on Wednesday, we'll get a better idea of what management sees coming around for the next full year, certainly the holiday quarter guidance. A lot of things you can glean from this luxury retailer in Tiffany's. We'll keep an eye on it.
Matt, thanks for joining us this week! I always appreciate your Skyping in. Glad you guys had a good Thanksgiving!
Frankel: Hope you had the same!
Moser: Yep, it was nice and quiet, and I'm still full. [laughs] As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. This show is produced by Austin Morgan. For Matt Frankel, I'm Jason Moser. Thanks for listening. And we'll see you next week!