All the Industry Focus hosts come together to celebrate the 2,000th episode of the podcast. Topics include lessons learned from the podcast, the story that made the biggest impact on the hosts, most recent stock buys, and more!
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This video was recorded on Sept. 9, 2021.
Nick Sciple: Welcome to Industry Focus. I'm Nick Sciple. We've got a special show today for the 2,000th episode of Industry Focus. That's 400 weeks of shows, 1,000 hours of programming, hundreds of different stocks discussed. We've learned a lot along the way and this week we've got a special round table edition of the show with all our Industry Focus hosts to talk about what we've learned. Also we'll share our recent stock we've bought and why we like it. Joining me today are my fellow Industry Focus hosts, Emily Flippen, Jason Moser, and Dylan Lewis. Welcome.
Jason Moser: Howdy.
Emily Flippen: Hey, Nick.
Dylan Lewis: Hey now. To quote Jason Moser, 2K. Unbelievable, guys.
Moser: That's a lot. That's a lot.
Sciple: It adds up and it's a testament to compounding. We talked about that here. You do one show a day overtime. These numbers get big slowly, but surely. I've been here since 2018 for three years . Obviously, there's some host that came before us, Michael Douglas, Kristine Harjes, Shannon Jones, lots of folks. We got the four of us here today. Just off the bat obviously, during the show, week after week looking at all these different stocks, speaking publicly about them having to go on the record, it teaches you a lot. I know it's taught me a lot. How would you say that you've changed or what are some big lessons that you've learned since you started hosting Industry Focus? Maybe let's lead off with Jason. Monday, first day of the week. Let's let Jason go first here on this round table.
Moser: Yes, sure thing. To me, I've been hosting the financial show now for three years of having been with the company for 11 years and being part of MarketFoolery all that time and Motley Fool Money. I was always a guest. I mean, I would prepare for shows as the guest. The questions are being asked and I'm helping to answer them. This was really turning the tables, to quote Michael Scott, how the turntables. I mean, it took a little while for me to get used to actually being a host and asking the questions. But I do need to give a big shout out to my partner in crime, Matt Frankel. I mean, he joins me every Monday with the exception of maybe just a handful of shows over the years that he's not been on. I really do enjoy the conversations that we have and he is a wonderful guest and he has taught me how to be a host. I'm not going to say I'm a good host, but I feel like I'm getting used to it at least. That's been a lot of fun. Then really for me, just being able to expand my circle of competence, so to speak. I mean, I've always known a bit about the financial sector, but he's really helped me dig into it deeper. I've learned a lot about REITs, more recently about SPACs. I mean, Matt, is a wealth of knowledge and he's just been a wonderful partner all these Mondays. That's been a lot of fun.
Sciple: All right, let's go down the line, Emily, Tuesday.
Flippen: Well, I think the biggest lesson I learned is that I'm a little too much of a curmudgeon. Coming on to the Industry Focus podcast, bringing this really high level of skepticism, I'm really living the tale that being a pessimist may sound smart but optimists make more money. As I reflect on so many amazing consumer goods opportunities that I've missed out on, because I was such a skeptic, I was such a pessimist about the business, it definitely pays off more to be an optimist. That's still a lesson I'm learning. Frequent listeners of the consumer goods podcast know anything, I still approach stuff very negatively sometimes. It's my inherent reaction. But taking it a step further, learning to be an optimist, learning to be positive, that's by far the biggest lesson I've learned as part of Industry Focus.
Lewis: Emily, it's so hard though, because pessimism does sound so smart and I think it's trust, but verification is unfortunately the way to go. But yeah, it opens you up and you realize over a certain amount of time, you have to just accept a certain amount of, I don't know, but I want to believe in this thing because more often than not, that winds up being a pretty decent outlook to have.
Flippen: Undoubtedly.
Sciple: Absolutely. I'd say for me maybe along those lines I've gotten a lot more, it's humbling to talk about stocks every week over the course of a year because you will see these stories come and go. I think there's some things that I think would have fizzled out a lot faster than they have. I've been humbled that way, and there's some things that I thought would be the next big thing that didn't materialize in the way that you think. I think being married to a weekly show, to a certain extent, you are talking about what's in the news, the headlines week-to-week. It's funny to look back and see some things that have changed. I remember, we talked about GameStop in early June 2019 around, maybe this thing isn't going bankrupt and then of course it becomes the biggest meme we've ever heard of hearing it went bankrupt earlier this year. It's humbling. Following stocks, week-after-week, year-after-year, it's humbling. That's part of the game. But if you're right, two-thirds of the time you end up making a whole lot of money. That's the good thing about playing this game.
Lewis: Nick, I'll piggyback on that with mine. I mean, I think doing something for years, you start to realize what the day in and day out looks like and how really there are the news items that come into the fold. But what drives the results long-term and what you wind up keep coming back to each quarter is the numbers and overtime, you start to see what stories actually matter. When those stories materialize in a way that really drives the business forward. I know for me I've been someone who's owned individual stocks for seven years and a host of Industry Focus for six. I'm a far better host and analyst now than I was back then, and a big part of it is, I have always, to some extent understood and believed in the long-term buy-and-hold quality businesses become compounding machines. But you start to see that play out much more over a three, five in my case six-year horizon quality separates and it starts to separate in a really dramatic way once you give it a decent runway. That's where you start to see the difference between the new stories that occupy headlines short-term, and the trends that really occupy major gains long term.
Sciple: I love it. Maybe going off what both are doing. I talked about, we've covered lots of stories while we've been on this show, but are there any stories that stand out to you as man this one really illustrates some lessons that really resonate with you as an investor going forward, maybe I should resonate with some of our listeners. Emily, I'll let you go first this time and we'll let Jason hit cleanup for us.
Flippen: This is easy because I think I'm the most green out of all the Industry Focus hosts. I only came onto the Consumer Goods podcast at the beginning of 2020. My first episode with you was actually a round table at the end of 2019, Decade in Review, if memory serves. Right after coming, and if people are familiar with the fact that only a few months and a pandemic hit and the world changed for consumer goods companies. Maybe there's a bit of recency bias in this and calling out the pandemic as the story that stands out to me. But as somebody who was still getting up to speed on the consumer goods industry, it did flip on its head the way that I had analyzed these businesses, because the narrative around what makes a successful consumer goods business dramatically changed and literally a matter of days to weeks. That definitely stands out to me.
Sciple: I think pandemic, lots of lessons learned for me. I think that ties into what I said earlier on, just how quickly things can change. I think as a new investor, you underestimate, I guess maybe how slow some things change and how quickly other things do change. For me, you see you mentioned being new on the show, when I was new on the show back in 2018. I don't know if folks remember the world back then, but that was funding secured time, that was the model ramps. I think that very much shaped my experience coming on to the pockets. That was really the time in the desert for Tesla (TSLA +0.69%), this 2017, 2019 period. Musk himself said, "Hey, we report weeks away from bankruptcy." If I hadn't told me at that time that from January 2020 to today, stock is up 800%. This is like a $600+ billion company. Back at that time, you heard Jim Cramer, when people like me said that this company, I don't know if they're going down the right path. I don't know if this is the stock I'd want to buy. Then, lo and behold, this is one of the best performers on the market. It's one of those things where there's lots of headlines, they get attention. But only some headlines didn't end up mattering due to a stock's performance or to the relevant investor base. I think Tesla is a great example of that. If you'd just paid attention myopically to some of the craziness going on, on the side with that company you never would have predicted what happened. I think I am not alone and being very humbled by the Tesla story.
Lewis: Yeah, Nick, I'll hop in there. You cited 800% gains since then you decided my opportunity cost, I wound up selling out of my Tesla shares shortly after funding secured and the talk of going private. Part of it for me was, I have a hard time understanding what to believe out of management's mouth with this company. It just became harder and harder for me to trust it and own shares. That's proven to be a really bad thesis. [...] was actively really destructive. For my own peace of mind was helpful but I left a lot of money on the table.
Moser: Maybe so, I will say though. I mean you make a good point because I've had people ask me about Tesla before and investigate Tesla. To me, I mean, I never invested in Tesla, I've never owned it. I pull-forward 100% because I feel like that's the direction the world is headed. But for me, I have a level of comfort with Elon Musk as its CEO. I mean, I don't trust him as far as I can throw in. Now that's not to say he's a bad person. But the guy, perhaps if he didn't have Twitter, it would be different because his voice will be somewhat muted. But he says a lot of stuff. Some of it's spot on, some of it, it sounds like he's already in outer space. But maybe you left some money on the table there, but maybe that also, I mean you're a better investor for one way or the other. You talked about opportunity cost. I mean I'm sure that you were able to invest that money in other businesses and those have done well as well. It is easy to see, men I left some money on the table. But you stuck to your process too, and as Foolish investors, as longer-term investors, I mean we really do feel like the process is what matters most. The outcome isn't always going to be the way you hope it turns out, but that doesn't mean the process is bad. It's just the way investing works. It's not always, you are not going to be at a thousand. I think we've all come to that realization.
Lewis: That's charitable, Jason, and I appreciate it.
Moser: I left money on the table too. But a lot of it was because of what you just said. You said trust. That's the word that comes to my mind. I just don't trust him. It's not to say I don't believe in what he is doing. I believe that what he is doing is the right thing. If he would just tone it down a little bit, maybe that would make it easier for people to trust him. But I mean it's understandable that people have a hard time making that leap.
Lewis: I think for me this, this dovetails into my story of the time that I've been doing the show, and it is WeWork.
Moser: That's a great example.
Lewis: That is one of the craziest things I've ever seen. I can't imagine that I will see anything like it in terms of the reduction of valuation. There are so many interesting lessons for investors. One of them, I think transitioning from talking about Musk to now WeWork and Adam Neumann is the call of personality and the founder-led-business story-line. The brilliance and eccentric line is very thin. As an investor on the outside it can be very hard to tell the difference.
Moser: That's why it's OK sometimes to just say, you know what, I'm going to take a pass.
Lewis: Yeah. You just have to work that into your outlook and know, you're not going to catch them all. Can't play Pokémon with stocks.
Sciple: Jason, I think you're up.
Moser: Yeah, I think for me it's just been really fun watching this changing of the guard from the stereotypical stodgy bank that we're also familiar with, that most of us grew up with compared to what we're seeing in the fintech space. FinTech is [...] and some of these companies make a lot of sense in what they are doing. Some of them, maybe they're going to prove to not contribute as much value as they believe. But I remember going through Jamie Dimon's shareholder letter. I believe it was with JPMorgan this year. He had two lists side-by-side, essentially comparing banks to fintechs and the advantages of one over the other. It's been fascinating just to watch this push and pull of banks and fintechs working together. You're seeing fintechs taking shares from traditional banks. You're seeing companies like Square and PayPal and so forth with their lending. It's going to be very interesting to see here in the future how the banking landscape actually shakes out because certainly Jamie Dimon, to my mind, is the best CEO in the financial space. He's the smartest guy, the most experienced, he knows a lot. He certainly sees the threats that come from the FinTech space. I feel like deep inside, he's wishing that maybe they have the wherewithal to try to acquire Square or PayPal back in the day when it was a bit more feasible. Clearly, those are pipe dreams now. But this is going to be a story I think that we watch continuing to play out here over the next decade and perhaps beyond is just how this banking landscape is going to change? Because certainly it's changing.
Lewis: Jason, I'm curious, you are like Mr. Basket at The Fool and your war on cash basket is, I think, the stuff of legends at this point. Did you have any sense when you started with that branding for that and that idea that it would create as many winners as it has? Because it's really been incredible.
Moser: Well, I didn't. That entire idea was born from every quarter or Chris Hill and I would be doing MarketFoolery and talking about the earnings results of these four companies, MasterCard, Visa, PayPal, and Square. Every quarter, these companies just knock it out of the park and at the end of the taping, we would look at each other and be like hey, do you own that stock and be like no, and be like I don't either. Eventually it was like, why the hell don't we own these stocks men, what's the deal? Part of the problem was, what's the best company to buy it? I thought, man, I don't know that there is a better one. It strikes me as a massive market opportunity and typically with massive market opportunities there are going to be multiple winners. It just became apparent that the most forward thinking of a bunch so to speak. It's worked out well. I feel it's a fun way to build your own little fund and personalize your own investing style. I certainly still own all four stocks myself today. I think I'll own them indefinitely hopefully, but yeah, it's worked out well.
Lewis: Yeah. It's something that I've borrowed from you. You're talking about lessons like the idea that you don't necessarily have to have the individual winner for any space, and saying it's OK to decide that this is probably something that's going to lift a lot of companies up and it's nice to have three bets in that space.
Moser: I think it makes great content for us to pick the winner. It's a great headline to name the winner of this opportunity. The reality is, and I think most out there would agree. Investing is rarely a zero-sum game. Typically, when you're talking about companies disrupting markets, pursuing these big market opportunities, you're going to have a handful of companies that do really well. I have come to find that's one of the bigger lessons I've learned throughout my investing life, is you really don't have to try to pick one winner. Find some good companies and just invest with them because of big market opportunities, there's a lot to go around.
Sciple: Talking about market opportunities for the show, talk about a recent stock that we've bought and why. Let's do that. Dylan, we'll let you go first on this and what's the recent stock you've bought and why?
Lewis: You can get the full feed here in our recent episode. We're talking about Spotify (SPOT 2.41%), we pitched this recently. I'm trying to get over the hump sometimes, I love something as a consumer and I don't own it as an investor. I have missed out on a lot of really great businesses that way, and sold businesses too early that I still had really strong consumer interest in. I think for me the Spotify is, you have this incredibly sticky digital offering that absolutely delights consumers. Is that a critical mass, even though there's competitive pressure not going anywhere. The core economics of their music streaming business and the paid premium model is honestly not great. It's hard for them and there's some pricing power issues. They don't have a lot of control over their costs because of the agreements that they're in. But that's the floor, if you have this really sticky business. On top of that, I think they're going to become a major player in audio advertising. We're starting to see that segment for them really ramp up. I think it's going to offer much more attractive margins for them as they're able to scale it and really enjoy some leverage. It could really dramatically change the way that businesses' finances look. I think you've got a really nice sticky product at core with the upside of possibly the YouTube of audio advertising. We know that advertising is a very compelling, very high-margin business to be in.
Sciple: Love it. Spotify's on the list of companies that I don't own are probably too obvious, I guess, companies that it seems too obvious that you don't feel smart buying it and so you stay away from it. That is a big lesson learned for me as I've matured as an investor is, you don't have to look under every single rock sometimes, you don't have those right in front of you. It's very obvious and Spotify is one of those that has been right in front of me and I've never bought it. Maybe someday soon I will.
Lewis: I'm trying to take that same lesson, Nick. It comes from not having ever bought Netflix despite it's delighted consumers of their content for a really long time, you don't get style points in investing. It's a good idea. You're good to go.
Sciple: Jason, what's your stock?
Moser: The one I most recently bought. I just thought about it last week, so I'm actually able to now talk about it. But a company called C3ai (AI 0.12%), ticker is AI. As most of you all know, the services I run here at The Fool focus on immersive technology in 5G and connectivity in the digital economy that's developing from all that, and some machine learning, artificial intelligence, Internet of Things, immersive technology, all of those are opportunities that I study in C3ai. It's relatively new to the public markets, but a fascinating business focused on artificial intelligence. They take a little bit of a different approach, they have a model-based offering for their customers. Their customers are enterprises. They're selling their AI technology to businesses to help businesses incorporate artificial intelligence into their work, and to help them ultimately achieve better outcomes.
To me, when it went public, you look at the stock chart, you could see there was a lot of speculation immediately when it went public. The stock just took off, now it's come back down to earth and the valuation was one thing. That's what really got me to pull the trigger, but I feel like with their model-based approach, and then the importance I think that artificial intelligence is going to continue to play in our lives in the role of businesses as time goes on. Again, a very big market opportunity, I think that C3ai is going to be one of those companies that really helps bring strong artificial intelligence capability to more and more businesses around the world. To me, they've got that nice subscription model as one of those SaaS businesses. It seems like it's one that has a lot of opportunities for them.
Sciple: I love it. Emily?
Flippen: Well, Nick, you're probably going to think that I'm the host of the energy show after I tell you what stock I most recently bought, but this is actually me taking a lesson here from Jason's motto of basket approach industry. This is a business that I bought and my approach to a basket of cannabis exposure businesses, and it's actually Chart Industries (GTLS +0.09%), the ticker is GTLS, I bought I think a month and a half ago. I think a lot of people will know it because it's a legacy play in the natural gas industry, but in reality their CEO, Jillian Evanko, has been turning the business around since he took the [...] in 2018 and made a lot of really interesting investments across numerous different initiatives in the green energy space. A lot of those do play into the cannabis industry, and without getting into a long tailwind about how exactly that plays out, it also gets into things like lasers and cryogenic equipment. It is actually a really cool, really interesting business. It was brought to my attention by John Connell, who was actually the Ticker Guy, a member of The Motley Fool community who keeps an eye on the business. He pinged me and he's like, "Hey, when was the last time you looked at Chart Industries?" It has been an absolute monster of a business. I will say, if people pull it up, they might see the stock price chart and think to themselves, wow, that's way too expensive to purchase, but if you look on a relative basis, like at an EV to EBITDA, the ratios actually come down a bit because of how profitable these new ventures have been. So, a great business and interesting plan in the energy industry.
Sciple: I love it. I think I did an episode with Jason Hall on Chart in the past, folks can look up that episode if they wanted to, I'll check it out. My most recent stock purchase is Nelnet (NNI 0.99%), another stock we've done an episode on, I believe it was back in May, with myself and Jim Gillies. Nelnet, its primary business is student loan servicing. They are my student loan servicer. The basic thesis of this company is that you've got this pool of student loans that the company is fully advertising, that creates cash so they can then redeploy in other businesses. Most recently, they started Nelnet Bank. They also have fiber to the home business. The company trades at about book value, and I think that that's undervalued some of those new investments. The really interesting part of the business for me though, where I think there's lots of hidden values, is that they own 20% of a company called Huddle. Huddle helps provide film services and helps you to share clips for high schools and things like that. If you have a high school and you want to go watch your trial, play sports when they're playing the road game, Huddle sells packages to schools as well as additional software services as well. Why is that interesting? Well, anybody who has paid interest to any episodes I've done, knows that I like college football and I follow it very closely. We've just had a big regulatory change in college football starting in July of this year, allowing for name, image, and likeness monetization by players. In a world where players can monetize their name, image, and likeness, doesn't it become more valuable than ever to market yourself as a high school athlete and to get every possible clip and piece of content that you can post on your social media platforms, to both gain a follow and get recruited to the biggest brands in the countries that you can monetize, name, image, and likeness? I think this company is going to be worth multi-billions of dollars and Nelnet's 20% stake is going to be worth a large amount of money. Therefore, if you look at the book value today, I think it's too cheap and that's why I bought it. That's Nelnet for you, and I would recommend folks go in to look at that episode to get more of the story.
Lewis: Is that a Berkshire-like thesis with Nelnet, where they operate financial services and they're able then to take the money from those financial services and find really compelling investment opportunities?
Sciple: Yes, they're actually based in Nebraska as well, also family controlled. The Executive Chairman owns over 20% of the stock. There's another Buffett connection; Adam Peterson of Boston Omaha, through his Magnolia Group, owns about 5% of the stock. You've got Buffett's, I think it's his grand-nephew, as one of the largest investors and the companies with a few different Berkshire connections, same basic type of premise.
Lewis: That's pretty cool. I got to put that on my radar, I haven't heard of it yet.
Sciple: There's our picks. I got Nelnet, Spotify from Dylan, C3ai from Jason, and Chart Industries from Emily. Just going to wrap up the main part of our show. Before we go, I want to give some shouts out to all the folks who have helped us out through the history of the show. I mentioned off the top, lots of hosts that have come before, such as Christine Hodges, Michael Douglas, Shannon Jones, [...] a bunch of folks who came before us, who y'all want to call out before we hit the road?
Lewis: I'll give a shout out to some frequent listeners and folks who regularly write in, Max Conrad on Twitter gives us something great. I'd regularly talk about companies he throws our way. I'll give a shout out to Mike McMann aka ProShopGuy in Fool Live, providing really awesome breakdowns with so much of the content we do at The Fool. Also, I think we can't talk about podcasts without giving some love to Chris Hill, Mac Greer, Steve Broido, all the Fools behind the scenes for the past decade plus that The Fool has been doing podcasting. We would not be here doing the show today if they hadn't started making those little investments early on to see what we might be able to do in this space.
Flippen: I had to throw Tim Sparks in there as well because I'll tell you what, Tim makes me sound way smarter than I actually am. Thanks for all of his work behind the scenes here on Industry Focus. But I also have to thank each of you, especially you, Dylan, because you'll let me across the balance of what a consumer goods business is way more often than probably is appropriate. Thank you in advance for letting me expand that definition.
Sciple: I don't know that we adhere to the strict definitions of industry standards in the show. If you want to get technical, the S&P classification for basically every solar company we've talked about on the energy show was technically techs. There you go, we're breaking rules left, right, and center. Jason, anybody you want to shout out?
Moser: Just another tip of the cap to Matt Frankel, my partner in crime on Mondays, he's just been a terrific partner for these shows. I've had a lot of fun working with him, and I absolutely second, all of those names that you mentioned; Chris, and Mac, and Broido, and Dan, and Tim, and Austin, I mean, none of this happens without them. I've learned so much from working with Tim or working with Chris, and Mac, and Broido just so early on with MarketFoolery and Motley Fool Money. That's where I learned everything, MarketFoolery and Motley Fool Money. I'm with you, Dylan, it was so great to see that they had about it to plant that seed so early on and give this a run to see what we could do in the podcast landscape, and you fast-forward to today, those investments have just paid off in an amount that's just very difficult to quantify. They thought podcasts were cool before podcasts were even a thing, and now look where we are.
Lewis: The greatest multi-bagger was waiting in your podcast queue the whole time.
Moser: Got it.
Sciple: One last group we didn't mention that I think is the most important group, the listeners. If folks didn't listen, we wouldn't be doing the podcast, and hopefully folks will stick around for 2,000 more with us. One thing I thought about, we talked about all the lessons that we learned. I'm sure folks who have listened along with us have learned a ton too. If you've got anything you want to share with us or topics we should discuss next time on the show, you can email us at [email protected]. Guys, 2,000 more episodes to go. Hopefully we can all be there for that. Thanks for joining me.
Moser: Thank you.
Lewis: Thanks, guys.
Sciple: As always, people on program may own companies discussed on the show and The Motley Fool may have formal recommendations for or against the stocks discussed, so don't buy or sell anything based solely on what you hear. Thanks to Tim Sparks for mixing the show, for Emily Flippen, Jason Moser, and Dylan Lewis, I'm Nick Sciple. Thanks for listening and Fool on.
