Affirm Deep Dive

In this episode of Industry Focus: Financials, Jason Moser is joined by Motley Fool contributor John Maxfield to go through the S-1 filing of Affirm. They talk about the company's operations and how it makes money; the competition in the space it operates in and what gives it an edge over the competition; the management credentials; future prospects of the company and what it all means for investors; and much more.

They also look at the latest 13F filing of Berkshire (BRK.A -0.34%) (BRK.B -0.01%) and discuss some notable moves made by the company.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

This video was recorded on November 23, 2020.

Jason Moser: It's Monday, November 23rd. I'm your host Jason Moser. On this week's Financial show, we're digging into the recent S-1 filing for Affirm to get a closer look at what makes this business tick, and when it goes public, if it is a company that investors should have on their radar. We're also going to take a look at Berkshire Hathaway's most recent 13F filing to check out what team Buffett has been buying and selling recently.

Joining me this week, it's bank analyst extraordinaire, John Maxfield. John, how's everything going?

John Maxfield: Good. I think you need to set the expectations lower, Jason Moser.

Moser: Come on! We've spoken before, you've got a track record out there, people know, I can't pull the wool over their eyes. [laughs]

Maxfield: Yeah, you know what I'm going to do, I'm going to put my wife on here, she's going to tell you what the reality is.

Moser: Well, my wife, I'm certain, could do the same thing, you know? But let's stay in our minds here and we'll think the best of us, and we'll let our wives think what they want to think; we don't have to bring that into the show.

John, we were talking over the weekend. And we're seeing a lot of companies that are filing to go public here in the next few months, and it's been a lot of fun, because that's always something for us to dig into. And there is a business that just recently filed its S-1, a company called Affirm, and we wanted to dig into the S-1 for Affirm today and look under the hood here, understand a little bit more about what this business does, how it makes its money, what type of competitive advantage it has, if any, competitors in the space, you know, try to get a feel as if this is a company that investors really should have on their radar here, because it does look like it's going to be something that's going to be going public here very soon. And it's playing in that fintech space which offers a lot of interesting opportunities for sure.

When I opened up this S-1 and started learning more about the business, I have to say, I was really impressed. I think it is pursuing a market that is becoming more and more an attractive space, particularly for your millennial generation, your Gen Z generations, and we'll talk about that focus on buy now, pay later. But let's talk first and foremost about what this business does. And its mission is very simple, and that is to deliver honest financial products that improve lives, but let's dig into that a little bit, talk a little bit about what Affirm does.

Maxfield: Yeah. Sure. So, let me just start with this, because you mentioned their mission statement. Like, one of the things I think is interesting about a company, I think, you know, mission statements are actually really important and I like their mission statement. The reason I like their mission statement is because it's not like, we just want to be the best in whatever industry we are, but they actually kind of talk to an altruistic human desire. And I think that that is such an important thing to work backwards from.

So, I just want to put a pin in that since you mentioned it, Jason, but in terms of what Affirm does as a company and as a business, it's a payments and financing platform for digital and mobile-first commerce. Okay, so what does that mean? Let's say you go to the Walmart website and you want to buy a new TV for Christmas. Well, when you add that to your cart and then you go to the checkout, you can have an option of clicking on a button that'll say "Affirm," and then what that will do is that will allow you to finance that purchase. So, if it's a $1,000 TV, you can set it up so you can set up payments for that. So, it's basically a company that is lending money to consumers to make purchases. And so, you have kind of the lending aspect of it and the payments aspect of it. So, on a global perspective that's kind of how I think about its business model.

Moser: Now, when you say lending money and allowing consumers to finance those purchases. And that really plays right into that "buy now, pay later." We're seeing more and more companies offering those services. I think it's worth noting, and you know it's important to consider here, that Affirm is not a bank, right? I mean, they're not the ones actually lending that money, they're partnering with banks to actually provide that dynamic of the service, right?

Maxfield: That's right. There is a bank that sits behind it, that's actually doing the underwriting. This is kind of like a lead generation business model for that bank, kind of, if you will. And the name of that bank is Cross River Bank, which is a really interesting bank, but for this purpose, yeah, it's just a bank that sits behind Affirm.

Moser: So, when you look at how they make money, it seems like they make money a couple of different ways, from what I could see in the S-1. Clearly, for merchants, you can understand the value proposition with the merchant side, they earn a fee there when they help that merchant convert a sale. I thought it was interesting from the consumer side, that they interest essentially on those loans. I mean, let's just call them what they are. When you finance a product, I mean, that's a loan. And even if you have a banking partner, Affirm is playing a role in that value chain as well.

It kind of feels like in today's environment, maybe there's not a whole heck of a lot of money to be [laughs] made on the lending side, but it is still a dynamic of the business model there. How do you feel about the way this company generates revenue? Do you feel like it opens them up for more avenues, more ways, more services to provide, or is it something that's going to be pretty cut-and-dry just on the merchant's side, on the consumer side?

Maxfield: So, you're right, first of all, this is not a great time for businesses that earn interest, right, because interest rates are so low, but there are some important exceptions. And one of the important exceptions is in the consumer finance space, because these are unsecured loans to consumers, these generate a much higher interest rate than, say, a 30-year fixed rate mortgage. Which I don't know what the rate on a 30-year fixed rate mortgage is right now, but it's probably like, 2.8% -- I mean, for all intents and purposes that's nothing.

Moser: Yeah, for all intents and purposes just use 3% as a round number, but yeah, it's pretty crazy right now, actually.

Maxfield: Exactly. But so, the one area where you can generate more interest income, and this is true in any time period, but still today, is in consumer finance, because the risk of default is just a lot higher. And not only is the risk of default a lot higher, because in a sense you could think about these as credit card loans, in a sense, they're kind of a variation of that, but not only is the potential of loss higher, but what banks called the loss given default is higher. So, if you default on your mortgage, the bank is just going to come and take your house, and because in a conventional mortgage you got to put 20% down, the bank probably isn't going to, actually at the end of the day, isn't going to lose any money on it, because they'll take that collateral. Well, there isn't any collateral in a loan like this, you're not going to send somebody to go pick up a TV, because the cost of sending somebody to go pick up the TV is going to be higher than whatever the worth, the value of the TV is at that point. So, that's why they're able to earn more interest.

Moser: All right, let's dig a little bit more into management here for a second, because we go back to the business, we talk about mission-driven. I mean, oftentimes, mission-driven businesses involve founder-leaders, founders who have a specific idea, specific vision of what they're really trying to accomplish. And it seems like in this case, I mean, you have Max Levchin, who is the Founder and the CEO of the business today, talk a little bit about leadership here, about management. Where do you feel like -- I mean, it is going to be a dual-class share system here. It is going to be another one of those companies where basically, you know, investors who want to consider this business have to understand that they are more or less just kind of jumping in the car here with Max and his team and trusting that they're going to make the right decisions.

Maxfield: Yeah, so I'm probably not pronouncing his last name right, is that Levchin, is that how you say it?

Moser: Well, yeah, I might be mispronouncing it, and I'm sorry, Max, if that's the case. But yeah, I was pronouncing it Levchin.

Maxfield: Yeah, that's what it looks like to me too. So, this is an interesting story, because you know if you look at it. And I think First Republic Bank actually tracks founder led companies and how they perform relative to non-founder-led companies. And they have found that founder-led companies perform better over time. And there's a lot of reasons for that, one is that, they are just all-in on this thing. Not only do they tend to have a lot of financial skin in the game, but they are wrapped up in this thing as human beings, right, because it kind of reflects who they are.

But here's what's interesting about this, Jason. As I was preparing for this and kind of going through their S-1, I was like, I got to ask Jason this, is that, so you have a founder-led company, but in this instance, this follows under that founder-led company, but Max Levchin is kind of like a serial entrepreneur. The cool thing about Max Levchin is that, you know, he was part of the PayPal (PYPL 1.96%) mafia. So, he and Peter Thiel found a company, and then that company, kind of, evolves and it turns into PayPal. And PayPal, then they cash out, when PayPal is bought by eBay, all those guys made a ton of money.

And so, then he goes on and does a few other things afterwards. So, what's awesome about that, from an investor's perspective is that this is not this guy's first rodeo. [laughs] He has been there and he has done that, which is really, really beneficial for an investor, because it means you're going to pay for fewer mistakes on his side.

Moser: Yeah, I mean, that's a really important point there you made in regard to mistakes, I'm glad you said that.

Maxfield: Yeah. But the other side of it is that, is this something that he's passionate about that he's going to be doing 20 years down the road? You know, if you look at his record, probably not. Now, that isn't to say that this is not a good investment for investors, because you know his track record is pretty good. And so, if Affirm eventually gets bought out by another company, maybe gets bought out at huge multiple, there could be a huge return for the investors, or if he hands it off to a CEO who's really capable and that CEO then grows it as an independent entity, it could be super-duper profitable as well from investor perspective.

But when you think about it, this is a founder-led company, and I want you to tell me what you think, but I think of this as kind of a separate -- kind of its own flavor of founder-led company because of the serial nature of the entrepreneurship behind it.

Moser: Well, yeah, I agree with you. I think you really keyed in on an angle that's important to remember, that when you have someone like Mr. Levchin, who's, let's say, he's a serial entrepreneur, you do pay less for those mistakes. Just they learn so much along the way and they don't repeat a lot of those mistakes. And so, the further down the road you get, a bit more of a compelling offering they bring to the table. And I think with a company like this, you know, I found a really interesting statistic in the S-1, something that just kind of made me think, and you know, it made me wonder about this business being founded. But it was focused on ultimately Gen Z and the millennial generations being the greatest proportion of our U.S. economy today, or over the U.S. consumer economy today. I mean, this is a business founded based on how those younger generations are spending their money. He's had a lot of time to think about this all along the way, given what he's done today.

Maxfield: Yeah. No, absolutely. I mean, he understands this ecosystem. He understands this transformation, this technological transformation. I mean, Affirm has really important tailwinds behind it. 1., to your point, this generational shift, right? 2., the younger generations. And the younger generations tend to spend a larger proportion of their money online as opposed to in a physical store. So, you have that tailwind. And as that generation becomes a larger and larger portion, as these younger generations become larger and larger portion of overarching society, that will go up, and then the other, and you had kind of alluded to this earlier, Jason, it is this "buy now, pay later" tailwind that we're also seeing in the digital space, becoming a larger share of overarching purchases out there.

So, it has these tailwinds that when you look at Levchin's background and being a part of PayPal and understanding how that whole dynamic works, you just can't help but think, like, he probably understands this at a very fundamental level and can kind of project forward better than most of us can.

Moser: Yeah. And I mean, let's talk about that buy now, pay later dynamic a little bit more. You had mentioned, sort of, the riskier nature of transactions like these. You know, there's no real collateral to speak of right there. You're dealing with one-on-one consumer behavior, which in-and-of-itself can be a little bit riskier, but I mean that speaks to something the company is very, very focused on. I mean, it was built upon technology, right, it was built on this idea -- I mean, speaking of datapoints, I found another one here in the S-1 that I thought was really fascinating.

A survey conducted by The Harris Poll in 2020 found that 64% of Americans would consider purchasing or applying for financial products through a technology company's platform instead of a traditional financial services provider. And then if you talk about Americans aged between 18 and 34 years, that sentiment rises to 81%. And so, you can see this shift, sort of, away from that old banking model toward this new partnership model, where even if banks don't want to do it at this point, I don't know that they really have a choice, banks almost have to partner up with some of these tech companies, because these tech companies are being built on different fundamentals, mission-driven fundamentals, tech-driven fundamentals, consumer-centric fundamentals, that perhaps a lot of these older banks have left behind for years and years, and now that's really becoming a little bit more of a consideration for consumers. But with a company that's built on tech like this, on data, on AI, there's a lot of potential for network effect there, right? The more people you get in there using it, the more merchants that want to use it, it feels like to me, while it may still very well be in the early stages, they could be building a meaningful competitive advantage. I mean, that doesn't seem out of the realm of possibility.

Maxfield: Yeah, certainly if you look at their S-1. The network effects is the first competitive advantage that they cite. And the way they think about it is they say, like, look, if you give consumers a better experience, you'll get more consumers. If you get more consumers, you will have a stronger ecosystem. The reason you'll have a stronger ecosystem is because merchants will be a part of that and also because you'll have all that data. So, if you have a stronger ecosystem, you'll get more merchants, you get more merchants, you'll have additional products that they can offer, you have additional products, you can increase the gross merchandise volume that the overarching service provides. If you get that, then that can not only finance, but source better data insights, and then you can use those insights to improve the experience and then you have this flywheel effect.

So, certainly they view network effects as a really important aspect of the competitive advantage. Now, the one thing I would say, and here's what's interesting, is that in this digital world that we live in, if you think about huge, big, big trends, big societal trends that we've seen over time, one of them is the power to make better decisions, and better decisions are based on better data, not only more data, but more timely data. And then the systems behind those things that allow you to analyze that data. Now, this is one of those business models that benefits a lot from data. And one of the reasons it benefits so much from data is because this is where you're lending money, when you lend money, risk management is so incredibly important, right? Because you go through a recession, loans like these are the ones that go bad fastest, because you're not going to lose your house, and not only that, nobody is going to come take the TV you bought. So, like, yeah, it'll ding your credit score, but it isn't going to hurt your life in the immediate future, which is what happens in the -- you know, that's how people start thinking in those time periods.

But what I found was, what was really interesting is that in the banking industry, in the fintech industry vis-a-vis banking, one of the pitches that all of these companies are making is that, look, because we have all this data, we can make better credit decisions. And so, what you found in their S-1, as I say, one of the selling points to Affirm is that, we approve 20% more customers than our competitive products, and that's a benefit and a detriment, it is a benefit to the merchants, because then the merchants are selling more things.

But now on the other side of it, you have to say, well, what are these other companies, are the other companies missing something or the other companies just being more prudent? And you don't know this until you go through a cycle with one of these companies, that's where the rubber meets the road, but that was one of the things that I was thinking like, uh, I've heard this thing over and over again in the fintech community about using data to improve credit analysis. And while I understand that theoretically, the proof is in the pudding on that one, and nobody is -- since we're in Thanksgiving week talking about food -- that pudding hasn't been made yet by anybody.

Moser: Yeah, I mean that is just it. You can talk the talk, but then you need to walk the walk, and I mean, I've certainly seen businesses -- there was a business, years ago, that PayPal acquired international remittance company Xoom, and you know part of their secret sauce, as David Gardner likes to say, is their risk assessment. They had proprietary risk models that really helped them minimize losses on those remittances. And you see, Square, with a big focus that way as well. I guess, we start talking about risks with a business like this and it leads me to, you know, the first obvious question, I feel like, with something like Affirm, and we're seeing this right now with Square applying for a bank charter, what's the possibility that Affirm at some point or another decides they want to try to become a bank, is that something that just, because that's taking on a whole new level of not only risk but regulatory compliance and commitments and, you know, capital maintenance requirements that that will never go away. So, you become a bank, you take a little bit of that slick sort of high margin tech model away, don't you?

Maxfield: Yes. You become a bank; there's a lot to your point. The expense that you incur because of the stringent regulatory environment is not insignificant by any stretch of the imagination. That being said, there is an expense of not being a bank, and that is, to cut out the middleman, right? Right now, Cross River Bank is the "middleman," and so, if you look at their business model, so you go in, you buy a TV, Affirm makes a loan to you, Affirm takes that loan, and that loan just goes straight to Cross River Bank, but what Affirm will do is, it'll buy those loans back from Cross River, and there's a cost associated with that. So, you take out that cost -- the question is, by taking out that cost, would that cost outweigh the cost of being a bank? I don't know that, I'm sure that is something that they would dig into.

But the other thing that needs to be appreciated is that these are the types of loans that banks have historically stayed away from. These are, you know, I don't want to call them hard money loans, but these are those types of loans. And banks already kind of get a bad name for making money off of other people's money. Well, if you're going into those niches in the market where the interest rate is super high, well, that's where, kind of, banks have historically gotten a bad name from, which is another interesting thing to think about. You think like, well, would Affirm want to go down that regulatory path and be a regulated bank given the fact that they operate within this niche. And the other thing you need to think about is, like, well, would Affirm be a potential acquisition target of a bank? Like, would a bank want that portfolio on its balance sheet? And I don't know the answer to that, but it's certainly something to consider.

Moser: Yeah, we've certainly batted that question around more than once, as to why, you know, someone like a JPMorgan wouldn't have thought about acquiring something like a Square back in the day [laughs] when it was far more affordable. But that's water under the bridge at this point, I guess. One thing I noticed, and I would call this out, as probably the risk that really, the concern, I think, that really stood out to me the most, they have one really big customer, don't they, John?

Maxfield: One really big customer, yeah, I mean, Walmart, is that ...

Moser: No, I'm sorry, Affirm. Yeah, I don't know if you saw, but Peloton actually represents a lot of their total revenue. I was impressed to see this. You know it could be the sword that cuts both ways, I guess, because Peloton is, obviously, doing really well. And I think they've got a lot of runway there, Peloton. But Peloton represented approximately 28% of Affirm's total revenue for the fiscal year ended June 30th, 2020, and 30% of total revenue for the three months ended September 30th, 2020. So, just something worth keeping in mind, anytime you see these businesses and they're new and they're young and they're just getting their feet underneath them. And, you know, having a big client is something you want, you want that belief, right, you want a client that's willing to commit and say, listen, this is our partner, this is the company that's making us work here, but it's also something to keep in mind. They do make a lot of money from Peloton, and any loss of that revenue, partial or otherwise, that would be something that would be a significant hit, at least in the near-term, I'm not saying that's a long-term concern there.

But we saw recently with another very popular name in the Foolish universe, not a financial holding, but the company Fastly, the edge computing content delivery network. You know, Fastly lost that TikTok revenue stream, which had become something like 13% or 14% overall. I mean, I'm not saying that's fatal to the business, right, I'm not saying that, but certainly the market reacted negatively to it, and it's something that's going to play out in the near-term. And as Fastly tries to, you know, shore that up and find ways to replace that revenue.

Maxfield: Yeah. You know, I missed that in the S-1, and that's a really significant fact... it's not a fatal factor for an investor by any stretch of imagination, but that is something that should be kept in mind. And for this reason, in particular, given where we are at right now, and that's because this home exercise stuff is just killing it right now. That's not going to be the case at all times. So, not only do you have, like, the potential that it could lose that relationship, but maybe that relationship becomes less profitable. Again, not fatal, but a really important variable to consider.

Moser: Yeah. And when these IPOs go public, there's usually a lot of enthusiasm, the valuations become a little bit detached from the fundamentals of the business, so just something to keep in mind at least. But knowing everything that we know, knowing what we've discussed today, I'd be interested to hear your take on this. I mean, is this the kind of business that you would be interested in as an investor or is it maybe a little bit outside of your comfort zone?

Maxfield: Well, it's not outside of my comfort zone, because it's very much, kind of, what I look at, what I think about in terms of businesses. Would it be something that I would invest in? That's a really good question, let me answer it in -- let me go off on a tangent and answer that in part, OK. IPOs are killing it right now. IPOs, so if you look at the Renaissance U.S. IPO Index performance that year-to-date the companies gone public are up 88%, the S&P 500 is up 12%. So, this is an amazing time to go public for the companies that are going public. Now, is it as good on the other side for the investors that are buying in? That remains to be seen. And the reason the IPOs are doing so well, especially tech IPOs, is that when interest rates come down as far as they've come, you just can't make as much money in the bond market.

And the bond market is this huge monster relative to the equities market. And so, when you have these bond investors, you have these asset managers, these wealth management folks, who need to earn a certain yield on their investment, so what they'll do is they'll take a small chunk of their bond portfolios and then allocate it over to their equity portfolios. Well, [laughs] because the bond market is so much bigger, it's just a small sliver of that that's got to come over to equities to really drive this stuff up. And then we think within the world of equities, there are certain ones that are doing particularly well, and those are, and you mentioned this, fintech companies is one of that, you know, one of that, kind of, subsectors of companies that are doing really well. And you're thinking, like, why are fintech companies doing well? Well, technology companies are doing well, because in this environment everything is remote, so everybody is buying stuff online, everybody is doing stuff digitally, as opposed to in-person, but fintech companies in particular, they have benefit from this kind of trend in the financial space toward -- like, kind of, this transformation toward digital financial transactions. And so, these are huge tailwinds that are just shooting up equity valuations in that space.

So, I would be reluctant, just as a general rule, to buy into that, because the valuations are so high, as a general rule. But that doesn't mean [laughs] that I have missed more [...] investments than I've made, Jason, OK, so I'm not saying that people should avoid it. But just the way I invest, that's probably not the direction I would go in for that simple reason.

Moser: Yeah. No, I'm with you, I think this is one that I'm fascinated by the business, I'm not 100% sold on just the "buy now, pay later" opportunity, I think I'd be more encouraged if I saw them branching out in other direction, it's certainly one that I'd follow it, and I'd want to know more about it more and learn more about it. But I've learned through the years that, for the most part, IPOs, you want to let them go for a little while, let them prove themselves. And I think in this case, I would view this no differently. And for investors, we do not have at least a date set; there has been no date set for this IPO. It sounds like it's going to be something that comes out here soon in December. It'll be trading under the ticker AFRM, for Affirm. So, keep an eye out for that. And yeah, we'll certainly be following it along here on the show as this story unfolds, because it sounds like a really neat business and one that we're going to learn more about.

John, before we wrap things up this week -- team Buffett. Team Buffett out there in Omaha, they've been doing a little buying and little selling. They filed their recent 13F. And that 13F, as many folks know, that's the form that institutional money managers are required to file 45 days after the end of each quarter, and that tells us what these money managers have been doing, buying and selling-wise, with the stocks that they own. And you know, not a lot of surprises out there with what's been going on. It seems like there maybe was a little bit of profit-taking on some of that Apple position.

But I'm wondering if any of those transactions on the buy side or the sell side for Berkshire Hathaway this quarter stood out to you?

Maxfield: Well, just in broad strokes, I mean, this was -- your point about Team Buffett as opposed to Buffett, I think is spot on. I think when you look at what it's doing, this is not Warren Buffett sitting there making all these decisions, right?

Moser: I think you're right.

Maxfield: I mean, he's got his two money managers that are, kind of, behind him -- you have Todd and Ted -- these guys are, I think, making a lot of these decisions. You know, let me just kind of walk through the things that stuck out to me. They sold their Costco position.

Moser: That was the one that stood out to me more than anything. And it wasn't that they trimmed it, they sold the entire thing.

Maxfield: Sold the whole thing. And when you think about --

Moser: Why? Why do you think they did that?

Maxfield: I don't know! But you think about, like, Costco is a Buffett company, you know what I mean. I mean, it's just simple, so profitable, just doing so well. I don't know the answer to why they sold; obviously, they don't tell me. [laughs] I don't know. But I thought that was really interesting. Do you have a hypothesis on that?

Moser: The only thing I could fathom was that, just a massive return on an investment that's done very well. Perhaps they felt like, you know, it had done what it could do in this newfangled, sort of, e-commerce Amazon world. I mean, Costco is not known for its e-commerce prowess, so... I mean, going back to team Buffett, I feel like this decision certainly went beyond him. I could see Charlie and Warren just saying, hey, we're very happy with it. So, maybe it went beyond them.

Maxfield: Yeah, I'm just bewildered by that one. But another big trend I saw in the 13F, and I'm sure you did too, is that they went in big on pharma stocks and pharmaceutical companies. And not only just one. So, you think like, OK, well, were they betting on the company that is going to come up with the vaccine or was this more of a general investment thesis that pharmaceutical stocks is going to be a good place to be over the years to come? Looks to me like it's more of the latter. They went in on Pfizer, they went in on a Bristol Myers, they went in on Merck. So, they went in on, I think, four different companies, bought a relatively substantial stake, although for Berkshire, what's a few billion bucks each, right? But they are betting heavily on the pharmaceutical companies.

And whether that's because of this COVID situation right now or whether that's maybe because, you know, they see the change in demographics in the United States, as this baby boomer generation continues to age, maybe they see that as a fertile field for investment thesis. I don't know, but it's certainly one of the larger things that they did.

Moser: Yeah. Yeah, I think there are probably a few things playing into that. And perhaps a little bit of a consolidation in the space, maybe looking years down the road, recognizing the role that those pharmas play in our lives, the roles they're going to continue to play, how important they are and ensuring that they're [laughs] well-capitalized. And frankly, I'd much rather see him, you know, allocating capital to those types of businesses as opposed to oil and gas. Nothing against oil and gas, it just feels like the world is headed in a little bit of a different direction that's going to be, kind of, a long slow bleed there. But yeah, it's always interesting to see what they're doing with their money there.

And of course, we talked earlier in the year about is, position in Snowflake, which was clearly strictly tech, obviously data, probably not something that Mr. Buffett or Mr. Munger was behind. And a modest investment in the context of their portfolio. But just, yeah, always good to look at that 13F and see what they're doing. You know, we're not copying it by any means, but it's always worth knowing, it's always worth thinking about, because it can help you see things from a few different angles, and that's really what investing is all about.

Well, John, listen, I think that's going to do it for us this week. Man! I really appreciate you sitting in and taking the time to join us.

Maxfield: Yeah, my pleasure. Anytime, Jason.

Moser: All right, folks. Remember you can always reach out to us on Twitter @MFIndustryFocus or you can drop us an email at [email protected].

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.

Thanks, as always, to Tim Sparks for putting the show together. For John Maxfield, I'm Jason Moser, thanks for listening and we'll see you next week.