1 00:00:02,920 --> 00:00:10,840 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,880 --> 00:00:15,040 Speaker 1: Bloomberg Intelligence podcast. Catch us live weekdays at ten am 3 00:00:15,080 --> 00:00:18,079 Speaker 1: Eastern on affle Card playing Android Auto with the Bloomberg 4 00:00:18,120 --> 00:00:21,440 Speaker 1: Business app. Listen on demand wherever you get your podcasts, 5 00:00:21,640 --> 00:00:24,040 Speaker 1: or watch us live on YouTube. 6 00:00:25,480 --> 00:00:29,120 Speaker 2: I'm looking at that oil deal a diamondback buying endeavor. 7 00:00:29,680 --> 00:00:33,600 Speaker 2: You have bangstock, which is diamondbackstock. It is up by 8 00:00:33,720 --> 00:00:37,280 Speaker 2: ten percent. Wow, that is a really nice move. Vince 9 00:00:37,320 --> 00:00:40,440 Speaker 2: Piasa is Bloomberg Intelligence Senior Energy Research analyst, and he 10 00:00:40,560 --> 00:00:42,000 Speaker 2: joins us now vinced you like the deal. 11 00:00:43,440 --> 00:00:46,960 Speaker 3: I think the deal ticks all the boxes that we're 12 00:00:47,000 --> 00:00:50,519 Speaker 3: going to need to see in this MNA wave. In 13 00:00:50,560 --> 00:00:56,400 Speaker 3: the permium, it grows diamondbacks, acreage, it grows locations, so 14 00:00:56,520 --> 00:00:59,560 Speaker 3: inventory is not going to be an issue in terms 15 00:00:59,600 --> 00:01:04,080 Speaker 3: of the that they paid. Look diamondback in my universe 16 00:01:04,480 --> 00:01:08,480 Speaker 3: of coverage, it was the highest had the highest premium. 17 00:01:08,880 --> 00:01:12,720 Speaker 3: So they're using their multiple to get this deal done 18 00:01:12,920 --> 00:01:17,920 Speaker 3: and so elevated currency along with some. 19 00:01:18,240 --> 00:01:22,640 Speaker 4: Cash and debt they are They do have a fairly 20 00:01:22,760 --> 00:01:25,600 Speaker 4: low leverage on their balance sheet, so I think this 21 00:01:25,720 --> 00:01:28,920 Speaker 4: picks all of the boxes they'll throw off significant free 22 00:01:28,959 --> 00:01:32,280 Speaker 4: cash flow in twenty twenty four and twenty twenty five. 23 00:01:32,360 --> 00:01:35,720 Speaker 3: So in terms of paying off whatever bank loans that 24 00:01:35,720 --> 00:01:37,959 Speaker 3: they're going to take on for this, I think it 25 00:01:38,040 --> 00:01:41,440 Speaker 3: works out extremely well, and you're seeing the response by 26 00:01:41,480 --> 00:01:44,760 Speaker 3: the investors in the marketplace. It also works out for 27 00:01:44,800 --> 00:01:50,080 Speaker 3: the founding family of Endeavor. They get to monetize decades 28 00:01:50,120 --> 00:01:50,760 Speaker 3: of hard work. 29 00:01:50,920 --> 00:01:55,600 Speaker 2: So, hey, I've got a question with that. I mentioned 30 00:01:56,080 --> 00:01:57,680 Speaker 2: that this is a merger of equals, and I got 31 00:01:57,720 --> 00:01:59,560 Speaker 2: kind of laughed at, like, there's no merger of equals 32 00:01:59,560 --> 00:02:02,120 Speaker 2: and it comes to M and A, but in this case, 33 00:02:02,200 --> 00:02:03,520 Speaker 2: like is there though? 34 00:02:05,040 --> 00:02:07,360 Speaker 3: Well, in this case, think about what Endeavor brings to 35 00:02:07,400 --> 00:02:13,920 Speaker 3: the table. It almost doubles of diamondbacks Midlan acreage, and 36 00:02:13,960 --> 00:02:19,680 Speaker 3: it brings sizeable oil production for the broader diamondback franchise. 37 00:02:19,720 --> 00:02:22,640 Speaker 3: So I would tell you that in terms of size, 38 00:02:23,120 --> 00:02:27,359 Speaker 3: it is a merger of equals, but the family will 39 00:02:27,360 --> 00:02:35,000 Speaker 3: get roughly thirty percent of diamondback with selling off almost 40 00:02:35,320 --> 00:02:40,880 Speaker 3: half the resource to diamondbacks, So it basically doubles diamondbacks 41 00:02:41,639 --> 00:02:45,200 Speaker 3: total size, and the founding family gets about thirty percent 42 00:02:45,240 --> 00:02:46,880 Speaker 3: of the new diamondback. 43 00:02:46,960 --> 00:02:50,120 Speaker 5: Let's say Vince are there any regulatory issues here. A 44 00:02:50,200 --> 00:02:52,160 Speaker 5: lot of M and A going on in this space here. 45 00:02:53,240 --> 00:02:54,799 Speaker 3: Yeah, you know it's going to get a looked at. 46 00:02:55,800 --> 00:03:01,239 Speaker 3: So Southwestern and Chesapeake getting together out in Apalachia, that's 47 00:03:01,280 --> 00:03:05,000 Speaker 3: a gas deal, but that will get a very very 48 00:03:05,040 --> 00:03:08,359 Speaker 3: clear look, a very very deep look by the regulators. 49 00:03:08,520 --> 00:03:11,079 Speaker 3: This will as well. I don't see why it wouldn't 50 00:03:11,760 --> 00:03:15,360 Speaker 3: because of the actual size of this entity. It's going 51 00:03:15,400 --> 00:03:18,200 Speaker 3: to be an enterprise value of north with sixty billion. 52 00:03:18,240 --> 00:03:22,760 Speaker 3: It will be the largest Permian pure play, So it'll 53 00:03:22,760 --> 00:03:25,600 Speaker 3: get looked at. All these deals will get looked at, 54 00:03:25,639 --> 00:03:29,840 Speaker 3: and it'll take a deeper look, same as Southwestern and Chesapeake. 55 00:03:29,960 --> 00:03:32,320 Speaker 2: I was talking to Jenrey this morning. She covers Anti 56 00:03:32,360 --> 00:03:36,040 Speaker 2: Trust for Bloowberg Intelligence, and she's like, yes, like all 57 00:03:36,080 --> 00:03:37,280 Speaker 2: of these are going to have to get looked at. 58 00:03:37,280 --> 00:03:40,760 Speaker 2: They're particularly interested in the exon Permian Pioneer deal and 59 00:03:40,840 --> 00:03:42,800 Speaker 2: that all these deals are definitely gonna have the FTC 60 00:03:43,280 --> 00:03:46,640 Speaker 2: sort of wide eyed looking at it. But you have 61 00:03:46,720 --> 00:03:49,680 Speaker 2: to wonder, though, if they want more oil, they're going 62 00:03:49,720 --> 00:03:51,800 Speaker 2: to have to do it, right, Vince, I mean, it's 63 00:03:51,840 --> 00:03:53,520 Speaker 2: gonna I'm just trying to think of, like what the 64 00:03:53,720 --> 00:03:56,360 Speaker 2: rational will be to block and say this deal, but 65 00:03:56,480 --> 00:03:59,440 Speaker 2: like let Excell Pioneer go through, Like you can't. 66 00:04:01,240 --> 00:04:04,839 Speaker 3: This deal is much more North America centric, much more 67 00:04:04,880 --> 00:04:07,920 Speaker 3: North America focused. So when you think about you know, 68 00:04:08,080 --> 00:04:13,760 Speaker 3: Exon and Pioneer Pioneer fits within Exon's Permian portfolio. But 69 00:04:13,840 --> 00:04:19,520 Speaker 3: Exon is a large, integrated multinational franchise. This is more 70 00:04:19,720 --> 00:04:24,720 Speaker 3: US centric and Permian centric as well. But look, they're 71 00:04:24,760 --> 00:04:27,520 Speaker 3: all going to get looked at. It is what it is. 72 00:04:28,160 --> 00:04:31,800 Speaker 3: This is a very large transaction. Like I said, Southwestern 73 00:04:31,960 --> 00:04:34,120 Speaker 3: Chesapeake is getting looked at. This will get looked at 74 00:04:34,160 --> 00:04:37,000 Speaker 3: as well. It's an important resource. What you have here, though, 75 00:04:37,240 --> 00:04:44,880 Speaker 3: is you have resources now in stronger hands. You have Exon, Mobile, Chevron, 76 00:04:45,320 --> 00:04:50,040 Speaker 3: you have Diamondback. You have very large entities with big 77 00:04:50,160 --> 00:04:55,159 Speaker 3: balance sheets and the capability to take down even greater 78 00:04:55,279 --> 00:05:00,400 Speaker 3: levels of capital in order to move production from the 79 00:05:00,480 --> 00:05:03,240 Speaker 3: delineation phase into the production phase. 80 00:05:04,200 --> 00:05:07,680 Speaker 5: So give me a sense, Vincent, I'm putting my banker 81 00:05:07,720 --> 00:05:10,400 Speaker 5: hat on. Can I keep doing a bunch of deals here? 82 00:05:10,520 --> 00:05:12,640 Speaker 5: I mean, how many players are left? 83 00:05:13,720 --> 00:05:15,839 Speaker 3: Yeah, it's a very interesting question. So we put out 84 00:05:15,920 --> 00:05:22,120 Speaker 3: last year the top twenty private privately held PE sponsored 85 00:05:22,200 --> 00:05:26,480 Speaker 3: names in the permian, in this case Endeavor being the 86 00:05:26,520 --> 00:05:32,920 Speaker 3: second largest Mewborn, which has mentioned that it wishes to sell. 87 00:05:33,400 --> 00:05:37,360 Speaker 3: That's the largest of the top twenty that'll go out, 88 00:05:38,600 --> 00:05:42,440 Speaker 3: we think, because it has been mentioned as a takeover candidate. 89 00:05:42,480 --> 00:05:48,080 Speaker 3: Similar situation Founding family looking to move the assets. If 90 00:05:48,080 --> 00:05:51,039 Speaker 3: you think about the top five, three are now gone, 91 00:05:52,040 --> 00:05:55,080 Speaker 3: so there is a great deal of interest. There's interest 92 00:05:55,520 --> 00:05:59,279 Speaker 3: by the private players as well, especially the PE sponsored players. 93 00:05:59,560 --> 00:06:02,600 Speaker 3: Your gay being close to these vintages that are aged 94 00:06:03,040 --> 00:06:06,600 Speaker 3: and now this capital needs to be recycled, so you 95 00:06:06,680 --> 00:06:10,279 Speaker 3: will see more of that. You will see public buying private. 96 00:06:10,880 --> 00:06:14,680 Speaker 3: Public does have the currency. In the case of Diamondback, 97 00:06:14,760 --> 00:06:18,600 Speaker 3: they had a premium multiple elevated currency that they were 98 00:06:18,640 --> 00:06:23,960 Speaker 3: able to use to monetize the Founding families investment. And 99 00:06:24,000 --> 00:06:27,120 Speaker 3: you'll see that as well, especially in the permium, where 100 00:06:27,160 --> 00:06:31,599 Speaker 3: you do have this difference of large cap premium valuations 101 00:06:31,800 --> 00:06:36,360 Speaker 3: looking for assets and the smaller cap names trading at 102 00:06:36,400 --> 00:06:39,920 Speaker 3: a relative discount to peers, but trading at a discount 103 00:06:39,960 --> 00:06:41,320 Speaker 3: to the larger names as well. 104 00:06:41,400 --> 00:06:41,520 Speaker 4: Well. 105 00:06:41,720 --> 00:06:44,080 Speaker 2: Well, that's really the thing. Private equity being like, oh, 106 00:06:44,080 --> 00:06:47,320 Speaker 2: thank god, we can kind of get these things out there. 107 00:06:47,360 --> 00:06:49,040 Speaker 2: Is a vincement. I also found interesting I was reading 108 00:06:49,040 --> 00:06:50,640 Speaker 2: through some of your research on this just to get 109 00:06:50,640 --> 00:06:52,760 Speaker 2: more background on some of the private players, is just 110 00:06:52,880 --> 00:06:56,000 Speaker 2: how much these private guys have been responsible for bulk 111 00:06:56,040 --> 00:06:57,599 Speaker 2: of the drilling. And in some ways it makes sense, 112 00:06:57,680 --> 00:07:00,760 Speaker 2: right shareholders want the big guys to become capital discipline. 113 00:07:00,800 --> 00:07:03,320 Speaker 2: They're public, they got to report, so therefore they have 114 00:07:03,400 --> 00:07:05,440 Speaker 2: to be capital discipline. But a private guy doesn't have 115 00:07:05,480 --> 00:07:08,280 Speaker 2: to do that. They can do whatever they want. Walk 116 00:07:08,320 --> 00:07:11,520 Speaker 2: me through the importance though, of these guys within the 117 00:07:11,560 --> 00:07:12,320 Speaker 2: shell development. 118 00:07:13,240 --> 00:07:16,680 Speaker 3: Yeah, so we tend to think that the private players 119 00:07:16,720 --> 00:07:19,720 Speaker 3: have been responsible for at least half of the production 120 00:07:19,880 --> 00:07:23,000 Speaker 3: growth in the last few years. What we have seen 121 00:07:23,360 --> 00:07:28,320 Speaker 3: is these privately sponsored players putting out that production growth 122 00:07:28,720 --> 00:07:35,440 Speaker 3: to entice the public players to buy that asset. And 123 00:07:35,480 --> 00:07:38,320 Speaker 3: what the public players tend to do once they integrate 124 00:07:38,360 --> 00:07:42,320 Speaker 3: that asset is to slow that production growth down, remove 125 00:07:42,440 --> 00:07:47,640 Speaker 3: the rigs from that private player, and generate cash flow. 126 00:07:47,760 --> 00:07:51,760 Speaker 3: This enhances free cash flow and allows the public player 127 00:07:51,880 --> 00:07:57,360 Speaker 3: to pay down that debt to push out payouts, give 128 00:07:57,400 --> 00:08:01,400 Speaker 3: it ends or stop buybacks to the investment for rewarding 129 00:08:01,480 --> 00:08:04,600 Speaker 3: them sticking around post a deal. So that's what we've 130 00:08:04,640 --> 00:08:08,080 Speaker 3: seen production growth by the private guys. Public guys come 131 00:08:08,120 --> 00:08:12,960 Speaker 3: on in, buy the asset, turn down the volume, ratchet 132 00:08:13,080 --> 00:08:17,320 Speaker 3: down the speed, generate that free cash flow so that 133 00:08:17,520 --> 00:08:21,360 Speaker 3: the balance sheet, so that the income statement looks stronger 134 00:08:21,760 --> 00:08:23,960 Speaker 3: post a deal. And it's been working for the last 135 00:08:23,960 --> 00:08:26,560 Speaker 3: couple of years. And that's why you see such a 136 00:08:26,560 --> 00:08:30,480 Speaker 3: great reaction in the aftermarket whence these deals are announced, 137 00:08:30,560 --> 00:08:33,400 Speaker 3: especially this deal, and also if you take a look 138 00:08:33,400 --> 00:08:35,080 Speaker 3: at some of the gas deals that have been done 139 00:08:35,080 --> 00:08:35,520 Speaker 3: as well. 140 00:08:35,880 --> 00:08:39,760 Speaker 5: Hey, Vince, as an investor, do ike care about where 141 00:08:39,800 --> 00:08:42,600 Speaker 5: the rock is located? As Pennsylvania shale better than Texas 142 00:08:42,600 --> 00:08:44,560 Speaker 5: Shale's who whoa whoa? 143 00:08:44,640 --> 00:08:45,480 Speaker 2: Yes, yeah you care? 144 00:08:45,679 --> 00:08:46,000 Speaker 6: You care? 145 00:08:46,360 --> 00:08:49,760 Speaker 3: Tell me, yes, you care? You care? Because when you're 146 00:08:49,880 --> 00:08:57,520 Speaker 3: selling a commodity, concentration drives synergies, efficiency and productivity, but 147 00:08:57,760 --> 00:09:01,560 Speaker 3: especially so in places like elegacy play like the Permian, 148 00:09:02,360 --> 00:09:06,800 Speaker 3: or in places like Appalachia or in the Hainesville. Interestingly, 149 00:09:07,120 --> 00:09:10,040 Speaker 3: these last few deals that we've seen, we've seen in 150 00:09:10,120 --> 00:09:16,000 Speaker 3: those plays, those prominent legacy plays, those proven plays where 151 00:09:16,040 --> 00:09:18,600 Speaker 3: you have a lot of runway and you can buy 152 00:09:18,640 --> 00:09:26,480 Speaker 3: these assets, integrate them, grow that concentration and generate those efficiencies, 153 00:09:26,600 --> 00:09:29,280 Speaker 3: generate that productivity going forward. 154 00:09:29,400 --> 00:09:31,120 Speaker 2: Who's next? Who's the next buyer? 155 00:09:32,880 --> 00:09:36,240 Speaker 3: You know what, I will tease the audience. Go on 156 00:09:36,320 --> 00:09:39,880 Speaker 3: to the terminal, look up our research. We put out 157 00:09:39,920 --> 00:09:45,839 Speaker 3: a piece highlighting the twenty private private sponsored E and 158 00:09:45,920 --> 00:09:49,480 Speaker 3: p's in the Permian. We go through that list. Mewborn 159 00:09:49,600 --> 00:09:52,400 Speaker 3: has been mentioned, so we can throw that name out there, 160 00:09:52,440 --> 00:09:55,160 Speaker 3: but there are plenty of names in that top twenty 161 00:09:55,240 --> 00:09:59,840 Speaker 3: list that seem to be putting themselves in a position 162 00:10:00,080 --> 00:10:03,080 Speaker 3: where some type of capital event could be announced. 163 00:10:03,520 --> 00:10:06,480 Speaker 2: Events great stuff. Really appreciate it. Deep teas there, everybody. 164 00:10:06,880 --> 00:10:11,400 Speaker 2: Check out Vincent's research on the Bloomberg Intelligence on the terminal. 165 00:10:11,679 --> 00:10:14,839 Speaker 2: He's Bloomberg Intelligence senior Energy research analyst. You have to 166 00:10:14,840 --> 00:10:17,200 Speaker 2: wonder how many buyers they're going to be right. 167 00:10:17,840 --> 00:10:20,400 Speaker 5: So rock is not rock, Rock is not rock? 168 00:10:20,440 --> 00:10:22,320 Speaker 2: Well, rock is rock, but some rock is better than 169 00:10:22,360 --> 00:10:22,719 Speaker 2: other rocks. 170 00:10:22,720 --> 00:10:23,800 Speaker 5: Some rock is better than other rock. 171 00:10:23,880 --> 00:10:24,280 Speaker 2: Definitely. 172 00:10:25,760 --> 00:10:29,640 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 173 00:10:29,720 --> 00:10:33,240 Speaker 1: weekdays at ten am Eastern on applecar Play and Android 174 00:10:33,280 --> 00:10:36,439 Speaker 1: Otto with the Bloomberg Business. You can also listen live 175 00:10:36,520 --> 00:10:39,720 Speaker 1: on Amazon Alexa from our flagship New York station just 176 00:10:39,760 --> 00:10:44,199 Speaker 1: say Alexa playing Bloomberg eleven thirty A. 177 00:10:44,160 --> 00:10:47,880 Speaker 5: Great, great game, big, big platform for advertisers, arguably the 178 00:10:47,880 --> 00:10:49,439 Speaker 5: biggest day of the year for the advertisers. 179 00:10:49,520 --> 00:10:51,520 Speaker 6: The question is these seems even work? 180 00:10:51,640 --> 00:10:53,520 Speaker 5: I mean as it worth. It is a worth seven 181 00:10:53,600 --> 00:10:54,960 Speaker 5: mili plus whatever your production. 182 00:10:55,120 --> 00:10:56,120 Speaker 2: I was not impressed. 183 00:10:56,600 --> 00:10:59,319 Speaker 6: I thought some good ones, some some ads were good. 184 00:10:59,320 --> 00:11:01,199 Speaker 5: I like to don't donuts. But there's some people who 185 00:11:01,240 --> 00:11:04,120 Speaker 5: actually measure this as a business. They don't just watch it. 186 00:11:04,120 --> 00:11:06,280 Speaker 5: They measured as a business. Our next guest Kevin Krim. 187 00:11:06,480 --> 00:11:10,319 Speaker 5: He's the CEO of Entertainment Data Oracle. Kids call it EDEO. 188 00:11:10,800 --> 00:11:13,240 Speaker 5: He joined his live here in our Bloomberg Interactive Broker studio. 189 00:11:13,280 --> 00:11:16,560 Speaker 5: He knows his way here. He's been in Bloomberg before. Kevin, 190 00:11:17,160 --> 00:11:19,280 Speaker 5: thanks so much for joining us here. We really appreciate 191 00:11:19,320 --> 00:11:22,160 Speaker 5: coming in. I thought there was some pretty cool ads. 192 00:11:23,120 --> 00:11:26,880 Speaker 5: From your perspective, What are brands trying to do here 193 00:11:26,920 --> 00:11:29,839 Speaker 5: at the Super Bowl and how do they measure if 194 00:11:29,840 --> 00:11:31,600 Speaker 5: it even worked or it was successful? 195 00:11:31,600 --> 00:11:33,720 Speaker 6: How do you think about it when marketers are thinking 196 00:11:33,720 --> 00:11:36,120 Speaker 6: about what they're trying to achieve in any marketing, but 197 00:11:36,240 --> 00:11:39,800 Speaker 6: especially on television, which is at the top of the 198 00:11:39,840 --> 00:11:43,800 Speaker 6: pyramid of value in advertising. At the very pinnacle of 199 00:11:43,840 --> 00:11:46,679 Speaker 6: that peak is the NFL and the Super Bowl is 200 00:11:47,440 --> 00:11:51,680 Speaker 6: at the absolute top when we've measured, we've measured nine 201 00:11:51,720 --> 00:11:54,920 Speaker 6: super bowls now, and what we're measuring is the consumer 202 00:11:55,040 --> 00:11:59,000 Speaker 6: engagement with the brands or products being advertised and any 203 00:11:59,040 --> 00:12:03,320 Speaker 6: marketers trying to achieve awareness and then engagement with their brands. 204 00:12:03,440 --> 00:12:07,560 Speaker 6: And we're measuring engagement as searches and branded website visits, 205 00:12:07,840 --> 00:12:10,800 Speaker 6: app usage, the kind of digital behaviors that are predictive 206 00:12:10,840 --> 00:12:14,120 Speaker 6: of sales lift, but they're immediate and they're easy to 207 00:12:14,160 --> 00:12:15,600 Speaker 6: collect large amounts. 208 00:12:15,240 --> 00:12:17,160 Speaker 2: Of what's the time frame for that? Is it like 209 00:12:17,559 --> 00:12:19,400 Speaker 2: right after the ad airs? Is it in the next 210 00:12:19,440 --> 00:12:20,440 Speaker 2: twenty four hours? 211 00:12:20,960 --> 00:12:24,360 Speaker 6: Most of that engagement happens within minutes of the ad airing, 212 00:12:24,480 --> 00:12:27,720 Speaker 6: But because of streaming, because of the ability to DVR 213 00:12:28,000 --> 00:12:30,600 Speaker 6: or tvo it, you do have a tail to that. 214 00:12:30,720 --> 00:12:33,760 Speaker 6: And we'll see activity for a week or more after 215 00:12:34,400 --> 00:12:36,840 Speaker 6: a big ad airing like like the Super Bowl, And 216 00:12:36,920 --> 00:12:40,320 Speaker 6: when we see what kind of engagement is driven relative 217 00:12:40,360 --> 00:12:43,160 Speaker 6: to what else you can get on TV, like let's 218 00:12:43,160 --> 00:12:47,000 Speaker 6: say an average thirty second spot on primetime broadcaster cable, 219 00:12:47,760 --> 00:12:51,040 Speaker 6: the Super Bowl does many, many, many multiples of that. 220 00:12:51,120 --> 00:12:54,200 Speaker 6: We're talking the average advertiser would have to buy hundreds 221 00:12:54,240 --> 00:12:57,439 Speaker 6: of those thirty second spots on regular primetime to get 222 00:12:57,440 --> 00:13:00,520 Speaker 6: the same impact as a single area on this So 223 00:13:00,559 --> 00:13:03,000 Speaker 6: on a dollars basis, we find that the Super Bowl 224 00:13:03,080 --> 00:13:06,640 Speaker 6: is a very good rational decision for most marketers. But 225 00:13:06,679 --> 00:13:09,480 Speaker 6: then the pressures on the creative, and the creative has 226 00:13:09,520 --> 00:13:12,120 Speaker 6: to be strong or you're not getting your money's worth. 227 00:13:12,200 --> 00:13:14,679 Speaker 6: And that's where you know. We saw ads yesterday. Some 228 00:13:14,720 --> 00:13:17,920 Speaker 6: of them were fantastic, others I think played it too safe, 229 00:13:18,200 --> 00:13:20,840 Speaker 6: and you're going to see quite a range in how 230 00:13:20,920 --> 00:13:23,040 Speaker 6: much engagement is driven from those ads. 231 00:13:23,080 --> 00:13:25,360 Speaker 5: So from your perspective, maybe from the data's perspective. 232 00:13:25,480 --> 00:13:26,839 Speaker 6: Yeah, a winner or two? 233 00:13:26,880 --> 00:13:28,680 Speaker 5: Which one did you? 234 00:13:28,760 --> 00:13:31,240 Speaker 6: Let's talk about real quick. The top five Number one 235 00:13:31,280 --> 00:13:33,000 Speaker 6: was Deadpool three number two. 236 00:13:33,360 --> 00:13:35,800 Speaker 2: I have thoughts on that because I'm a huge deput person. 237 00:13:36,520 --> 00:13:38,800 Speaker 2: Love it, but then again, he could come on, Ryan 238 00:13:38,800 --> 00:13:40,440 Speaker 2: Renns could come on and say hello, and I'd be like, 239 00:13:40,480 --> 00:13:42,240 Speaker 2: that was brilliant, that was amazing. 240 00:13:42,280 --> 00:13:44,280 Speaker 6: It was a fun spot and the tease of having 241 00:13:44,320 --> 00:13:48,360 Speaker 6: Wolverine joining him is very satisfying for any Marvel fan. 242 00:13:49,040 --> 00:13:52,720 Speaker 6: Number two is the film that adaptation of Wicked. Another 243 00:13:52,760 --> 00:13:57,280 Speaker 6: interesting teaser Ariana Grande in one of the starring roles there, 244 00:13:57,320 --> 00:13:58,840 Speaker 6: So that's going to pick up a lot of attention. 245 00:13:59,320 --> 00:14:03,000 Speaker 6: And then number three three was the Volkswagen ad that 246 00:14:03,280 --> 00:14:05,560 Speaker 6: you know of harkened back to their heritage of bringing 247 00:14:05,559 --> 00:14:09,240 Speaker 6: the Beatle to UH to America and then it teased 248 00:14:09,320 --> 00:14:14,160 Speaker 6: their new all electric UH bus, so the VW Bus 249 00:14:14,200 --> 00:14:17,480 Speaker 6: returning to America after a long long gap. Number four 250 00:14:19,240 --> 00:14:21,680 Speaker 6: was Team or Temu as we all learned was how 251 00:14:21,680 --> 00:14:25,600 Speaker 6: to pronounce it? Last yesterday they ran six spots between pregame, 252 00:14:25,760 --> 00:14:29,400 Speaker 6: in game, and postgame. Six spots. That's a huge investment. 253 00:14:29,800 --> 00:14:31,720 Speaker 6: But this is an interesting one. A lot of people's 254 00:14:31,760 --> 00:14:33,880 Speaker 6: opinion of that kind of spot would say that it 255 00:14:33,920 --> 00:14:34,760 Speaker 6: was one of the worst. 256 00:14:35,760 --> 00:14:38,400 Speaker 5: And you know, actually, it doesn't even resonate with me. 257 00:14:38,440 --> 00:14:39,400 Speaker 5: What what what is it? 258 00:14:39,400 --> 00:14:41,760 Speaker 6: Coppening? It was, it's a it's a mobile shopping app 259 00:14:42,760 --> 00:14:46,600 Speaker 6: and uh. They they started their first real kind of 260 00:14:46,600 --> 00:14:49,800 Speaker 6: advertising in the US was last year's Super Bowl. That 261 00:14:49,960 --> 00:14:52,760 Speaker 6: kicked it off. They were one of the most downloaded 262 00:14:52,760 --> 00:14:55,120 Speaker 6: apps in the Google App Store and the Apple App 263 00:14:55,160 --> 00:14:57,400 Speaker 6: Store all of last year. They followed up with a 264 00:14:57,440 --> 00:14:59,480 Speaker 6: bigger bet this year, and it. 265 00:14:59,360 --> 00:15:02,360 Speaker 2: Is discounts are insanity like it like if you go 266 00:15:02,440 --> 00:15:04,640 Speaker 2: on there, I mean you have to measure, like what 267 00:15:04,680 --> 00:15:07,400 Speaker 2: am I actually buying? Like there's that conversation we had, 268 00:15:07,480 --> 00:15:10,960 Speaker 2: but the number price, it's it's unreal. And there's like 269 00:15:11,000 --> 00:15:12,800 Speaker 2: extra deals like it's it's huge. 270 00:15:13,640 --> 00:15:16,200 Speaker 6: Temu and Shine or Sheen, I'm not sure how to 271 00:15:16,200 --> 00:15:20,600 Speaker 6: do it properly. Are both China based apps that are 272 00:15:20,640 --> 00:15:25,760 Speaker 6: about these giant discounts and are very popular apparently with 273 00:15:25,760 --> 00:15:27,480 Speaker 6: with Barbain discount shoppers. 274 00:15:27,640 --> 00:15:28,520 Speaker 5: How about Booze. 275 00:15:29,120 --> 00:15:32,360 Speaker 6: You know, we saw really interesting. We saw no liquor 276 00:15:32,360 --> 00:15:34,480 Speaker 6: ads this year. We saw a smaller number of beer 277 00:15:34,520 --> 00:15:36,840 Speaker 6: ads than last year. What we did see was some 278 00:15:36,920 --> 00:15:41,560 Speaker 6: top performers were soda ads, and we had Poppy in 279 00:15:41,600 --> 00:15:46,360 Speaker 6: our top five. Hoppy is this new? Yes, premium priced? 280 00:15:47,160 --> 00:15:49,360 Speaker 6: Would you call it? Like kind of like more popularized 281 00:15:49,480 --> 00:15:51,160 Speaker 6: kombucha maybe. 282 00:15:50,920 --> 00:15:53,640 Speaker 2: The way without the fermentation, Like I'll get poppy to 283 00:15:53,680 --> 00:15:56,040 Speaker 2: my daughter, but you can't have ka. 284 00:15:55,640 --> 00:15:59,760 Speaker 6: Right because it's trace mounts of Alcoholah, so it's got 285 00:16:00,200 --> 00:16:02,840 Speaker 6: slow sugar supposed to be good for you and two 286 00:16:02,840 --> 00:16:05,640 Speaker 6: dollars a can. Oh so the margins are incredible. It's 287 00:16:05,680 --> 00:16:10,440 Speaker 6: an independent soda company from Austin, Texas, husband and wife founders, 288 00:16:10,480 --> 00:16:13,640 Speaker 6: and you know, they made a big statement in popping 289 00:16:13,680 --> 00:16:15,800 Speaker 6: into the top five. That's gonna lead to a big 290 00:16:15,840 --> 00:16:17,520 Speaker 6: lift in their sales. I mean we can say that 291 00:16:17,560 --> 00:16:21,720 Speaker 6: with total confidence whether that stix or not is alex 292 00:16:21,800 --> 00:16:24,320 Speaker 6: Is saying it's it's it's it's good. So you know 293 00:16:24,520 --> 00:16:25,440 Speaker 6: they may have a shot at. 294 00:16:25,400 --> 00:16:29,640 Speaker 5: Being a to Okay, how about nostalgia In the nostalgia 295 00:16:29,720 --> 00:16:33,720 Speaker 5: driven TV reunions, a lot of reunions, I would say 296 00:16:33,720 --> 00:16:35,400 Speaker 5: they were a mixed bag and sort of in terms 297 00:16:35,400 --> 00:16:36,000 Speaker 5: of performance. 298 00:16:36,040 --> 00:16:38,280 Speaker 6: I loved most of those spots. I mean, the Duncan 299 00:16:38,360 --> 00:16:40,320 Speaker 6: spot was in our top twenty. That was probably the 300 00:16:40,320 --> 00:16:45,600 Speaker 6: best performing of the nostalgia based ads. We saw Jennifer 301 00:16:45,640 --> 00:16:48,160 Speaker 6: Anison and David Shwimmer reunite and. 302 00:16:48,120 --> 00:16:50,120 Speaker 2: The Uber eats like that one. 303 00:16:50,360 --> 00:16:52,600 Speaker 6: I thought that was a fun moment. Yeah, it was 304 00:16:52,640 --> 00:16:55,440 Speaker 6: a fun moment, you know. But again, Oh, and I'd 305 00:16:55,440 --> 00:16:58,120 Speaker 6: say the other top performing spot we had the parks 306 00:16:58,120 --> 00:17:00,480 Speaker 6: and Rec several of the leads in Park and Rec, 307 00:17:00,920 --> 00:17:03,880 Speaker 6: in the in the in the app for in the 308 00:17:03,920 --> 00:17:09,480 Speaker 6: ad for Mountain Dews, Baja Blast Soda, and that was 309 00:17:09,520 --> 00:17:10,320 Speaker 6: a lot of fun. 310 00:17:10,800 --> 00:17:13,440 Speaker 5: Interesting and we had to you know, I like you 311 00:17:13,480 --> 00:17:17,280 Speaker 5: putting in your notes here that streaming is the new syndication. Yeah, 312 00:17:17,359 --> 00:17:21,040 Speaker 5: that's where shows go to live forever. And one of 313 00:17:21,080 --> 00:17:24,159 Speaker 5: the examples and then maybe become popular again. One of 314 00:17:24,200 --> 00:17:27,119 Speaker 5: which is Suits, Suits, which is all over my social 315 00:17:27,160 --> 00:17:29,399 Speaker 5: media feed and I never even paid attention to it 316 00:17:29,440 --> 00:17:31,560 Speaker 5: when it was on whatever network it was years ago, 317 00:17:32,000 --> 00:17:34,600 Speaker 5: but they're making a huge comeback, right, So. 318 00:17:34,560 --> 00:17:37,640 Speaker 6: That was NBCUniversal originally, I think it was USA Network 319 00:17:37,920 --> 00:17:42,200 Speaker 6: when in its first run the top streaming series on 320 00:17:42,240 --> 00:17:48,040 Speaker 6: Netflix for last year, and you saw the Suits stars 321 00:17:48,080 --> 00:17:50,600 Speaker 6: and a bunch of other stars from a bunch of 322 00:17:50,640 --> 00:17:54,440 Speaker 6: the series that were hot maybe fifteen twenty some years 323 00:17:54,480 --> 00:17:58,280 Speaker 6: ago and are now top streaming series in their sort 324 00:17:58,280 --> 00:18:01,160 Speaker 6: of rerun stage on what it's Pea Cock or Netflix 325 00:18:01,280 --> 00:18:02,320 Speaker 6: or or others. 326 00:18:02,400 --> 00:18:04,520 Speaker 2: What else did out to you? What was like a 327 00:18:04,520 --> 00:18:05,159 Speaker 2: wild factor? 328 00:18:05,400 --> 00:18:05,600 Speaker 3: Yeah? 329 00:18:05,640 --> 00:18:08,639 Speaker 6: I mean, I would say besides those those things that 330 00:18:08,680 --> 00:18:11,800 Speaker 6: we talked about, I would say the automotive category was 331 00:18:11,840 --> 00:18:16,080 Speaker 6: really interesting. All the ads outperformed the average. They were 332 00:18:16,080 --> 00:18:19,480 Speaker 6: all import or foreign automakers. They were not any of 333 00:18:19,520 --> 00:18:21,880 Speaker 6: the Big three and from Detroit, which is very unusual. 334 00:18:22,520 --> 00:18:24,159 Speaker 5: Was was that a did you hear anyth coming out 335 00:18:24,160 --> 00:18:25,320 Speaker 5: of Detroit saying hey, we're just. 336 00:18:27,000 --> 00:18:28,919 Speaker 6: You know, I didn't talk directly to all of them. 337 00:18:28,960 --> 00:18:31,359 Speaker 6: Some of them are my clients. I'll be discreet, but 338 00:18:32,359 --> 00:18:34,520 Speaker 6: I would say what I heard loud and clear. From 339 00:18:34,520 --> 00:18:36,919 Speaker 6: the industry overall, you've got to have the right product 340 00:18:36,960 --> 00:18:39,800 Speaker 6: to launch. You don't want to have a disruptive supply 341 00:18:39,920 --> 00:18:42,720 Speaker 6: chain when you're when you're doing a big Super Bowl ad, 342 00:18:42,760 --> 00:18:44,760 Speaker 6: it usually is best to use a Super Bowl as 343 00:18:44,800 --> 00:18:47,560 Speaker 6: the start of a big campaign, So to launch a 344 00:18:47,560 --> 00:18:50,040 Speaker 6: new model is key. And then, yes, if you're coming 345 00:18:50,040 --> 00:18:53,800 Speaker 6: off of bruising, you know, negotiations with your unions, probably 346 00:18:53,800 --> 00:18:55,320 Speaker 6: one of the better things to do is maybe just 347 00:18:55,320 --> 00:18:57,359 Speaker 6: sit it out, wait till next year. 348 00:18:57,680 --> 00:18:59,840 Speaker 2: Well, what's their messaging. It's like, hey, guys, you know 349 00:18:59,880 --> 00:19:01,760 Speaker 2: the we're still making them. You should buy one, but 350 00:19:01,800 --> 00:19:04,120 Speaker 2: we're also gonna do these ices and these are really cool. 351 00:19:04,200 --> 00:19:06,040 Speaker 2: Go buy those like It's like they're enough, We're gonna 352 00:19:06,080 --> 00:19:07,600 Speaker 2: do all that money over there. I mean, it's a 353 00:19:07,600 --> 00:19:08,560 Speaker 2: pretty tricky line. 354 00:19:08,680 --> 00:19:11,480 Speaker 6: It's a tough balancing so to sit on the sidelines 355 00:19:11,480 --> 00:19:12,800 Speaker 6: for this year smart move. 356 00:19:12,840 --> 00:19:15,359 Speaker 5: Were you surprised that we didn't see any price inflation 357 00:19:15,400 --> 00:19:17,200 Speaker 5: this year from last year. Seven million dollars for a 358 00:19:17,240 --> 00:19:20,160 Speaker 5: thirty second spot. Usually we've seen you know, mid single 359 00:19:20,200 --> 00:19:21,840 Speaker 5: high single digit inflation year to year. 360 00:19:21,920 --> 00:19:24,560 Speaker 6: You know, I think it's it's it's a challenging market 361 00:19:24,720 --> 00:19:28,560 Speaker 6: as we shift from traditional to streaming. But I would 362 00:19:28,560 --> 00:19:31,200 Speaker 6: say anyone who bought an ad from CBS this year 363 00:19:31,480 --> 00:19:34,800 Speaker 6: got a fantastic deal, right, I mean, you know, it's 364 00:19:34,840 --> 00:19:38,119 Speaker 6: the super Bowl always performs consistently. But on top of that, 365 00:19:38,200 --> 00:19:42,119 Speaker 6: you had the Taylor Swift effect and you can't plan 366 00:19:42,200 --> 00:19:44,800 Speaker 6: on her team being in the super Bowl. That's that's 367 00:19:44,840 --> 00:19:47,280 Speaker 6: a bit much. But just if you were sitting there 368 00:19:48,240 --> 00:19:50,880 Speaker 6: last September as the season got started and you made 369 00:19:50,880 --> 00:19:53,479 Speaker 6: a commitment to seven million dollars, you you had a 370 00:19:53,520 --> 00:19:57,040 Speaker 6: good hunch that this would be a sustainable positive effect, 371 00:19:57,119 --> 00:20:01,119 Speaker 6: a tailwind, if you will, for the whole sport with 372 00:20:01,240 --> 00:20:01,919 Speaker 6: Taylor involved. 373 00:20:01,920 --> 00:20:03,560 Speaker 5: All right, good stuff, Kevin Krim, thank you so much 374 00:20:03,560 --> 00:20:06,240 Speaker 5: for joining us. Kevin Crime to CEO of Entertainment Data 375 00:20:06,440 --> 00:20:10,800 Speaker 5: oracle Edo, joining slave here on our Bloomberg Interactive Brooker Studio. 376 00:20:11,680 --> 00:20:15,560 Speaker 1: You're listening to the Bloomberg Intelligence podcast Catch US Live 377 00:20:15,640 --> 00:20:18,240 Speaker 1: weekdays at ten am Eastern on Apple car Play and 378 00:20:18,320 --> 00:20:20,919 Speaker 1: then broud Otto with the Bloomberg Business app. Listen on 379 00:20:21,000 --> 00:20:24,280 Speaker 1: demand wherever you get your podcasts, or watch US live 380 00:20:24,359 --> 00:20:25,720 Speaker 1: on YouTube. 381 00:20:26,400 --> 00:20:28,680 Speaker 2: So SMP five hundred, like you were saying, right, fifty 382 00:20:28,720 --> 00:20:31,160 Speaker 2: twenty eight, and I take a look at the strategists 383 00:20:31,240 --> 00:20:34,920 Speaker 2: call for this year. The average is forty eight sixty seven, 384 00:20:35,440 --> 00:20:39,159 Speaker 2: the median forty nine fifty, the high fifty two hundred, 385 00:20:39,560 --> 00:20:42,119 Speaker 2: the low forty two hundred. So it's like either a 386 00:20:42,119 --> 00:20:43,639 Speaker 2: lot of people are wrong, We're gonna see a lot 387 00:20:43,680 --> 00:20:45,400 Speaker 2: of upgrades, or we're just gonna have a crash out 388 00:20:45,440 --> 00:20:47,080 Speaker 2: at some point, which is quite of interesting. 389 00:20:47,359 --> 00:20:49,240 Speaker 7: At the end of the day, it's all about making money. 390 00:20:49,359 --> 00:20:51,359 Speaker 7: So you do the earnings analysis on the S and 391 00:20:51,359 --> 00:20:54,199 Speaker 7: P five hundred, and the earning surprises so far this 392 00:20:54,320 --> 00:20:56,960 Speaker 7: quarter of those companies that have reported is something like 393 00:20:57,040 --> 00:21:01,080 Speaker 7: eighty percent at this point, so it's impressive. 394 00:21:01,240 --> 00:21:03,480 Speaker 2: Yeah, you can make the argument that it's legit, and 395 00:21:03,520 --> 00:21:07,000 Speaker 2: then it's actually broadening out to a certain extent. Let's 396 00:21:07,040 --> 00:21:09,640 Speaker 2: ask Kim Forrest. She is founder in CIO, a book 397 00:21:09,640 --> 00:21:12,479 Speaker 2: of capital partners. Hey, Kim, I take a look at 398 00:21:12,480 --> 00:21:15,600 Speaker 2: the strategist notespend for this year where we're trading at 399 00:21:15,720 --> 00:21:18,760 Speaker 2: right now? Is this a crash up, a melt up? 400 00:21:18,800 --> 00:21:21,439 Speaker 2: Does it continue or is it fundamental here at this point? 401 00:21:22,400 --> 00:21:25,040 Speaker 8: Well, I have to say, I think people by and 402 00:21:25,160 --> 00:21:29,160 Speaker 8: large are kind of terrible at forecasting, as we saw 403 00:21:29,240 --> 00:21:32,240 Speaker 8: last year, and maybe this is more of the same, 404 00:21:32,480 --> 00:21:36,240 Speaker 8: right And I think I think it's going to be 405 00:21:36,280 --> 00:21:40,280 Speaker 8: a crash up, I have to say, because the markers 406 00:21:40,320 --> 00:21:43,840 Speaker 8: have slow down, or more than slow down, are just 407 00:21:43,920 --> 00:21:47,960 Speaker 8: not there right So, and we'll see tomorrow and this 408 00:21:48,040 --> 00:21:51,440 Speaker 8: is a data rich week where we have more earnings, 409 00:21:51,480 --> 00:21:57,080 Speaker 8: but probably most importantly CPI and then retail sales to 410 00:21:57,080 --> 00:22:00,040 Speaker 8: see if the consumer continues to spend, but we believe. 411 00:21:59,800 --> 00:22:00,440 Speaker 6: It they do. 412 00:22:00,760 --> 00:22:04,800 Speaker 8: They do, so why not and the year above five thousand? 413 00:22:05,000 --> 00:22:07,200 Speaker 8: I think that's a good call at this point. 414 00:22:07,520 --> 00:22:10,359 Speaker 5: Why not own the magnificent seven? Why not keep buying 415 00:22:10,400 --> 00:22:11,160 Speaker 5: them today? 416 00:22:11,600 --> 00:22:13,440 Speaker 6: Is this AI thing real? 417 00:22:13,600 --> 00:22:15,040 Speaker 5: You've got a perspective here, don't you. 418 00:22:16,040 --> 00:22:20,159 Speaker 8: I think the AI thing is real. I have to 419 00:22:20,200 --> 00:22:22,920 Speaker 8: disclose this. I was a software engineer working in AI 420 00:22:23,080 --> 00:22:26,360 Speaker 8: before I moved on over to the world of finance 421 00:22:26,400 --> 00:22:31,600 Speaker 8: as a cell side equity analyst, and so have I 422 00:22:31,640 --> 00:22:35,280 Speaker 8: know of which I speak, so Kimba, it is for real, 423 00:22:35,640 --> 00:22:38,000 Speaker 8: but it's never going to play out the way investors 424 00:22:38,040 --> 00:22:40,960 Speaker 8: think at the beginning of a rush, right, they think 425 00:22:41,040 --> 00:22:44,480 Speaker 8: in Nvidia and Google and Amazon and all the rest 426 00:22:44,520 --> 00:22:47,800 Speaker 8: of the Magnificent seven are probably going to be winners. 427 00:22:48,119 --> 00:22:50,479 Speaker 8: I think they are going to win, but there's going 428 00:22:50,560 --> 00:22:54,520 Speaker 8: to be other more nuanced AI applications that come in 429 00:22:54,560 --> 00:22:57,560 Speaker 8: and it might be the killer app I. 430 00:22:57,480 --> 00:22:59,640 Speaker 5: Mean, I'm looking at in Vidia here, up forty eight 431 00:22:59,640 --> 00:23:02,800 Speaker 5: percent year to date, two hundred and fifty trailing twelve 432 00:23:02,880 --> 00:23:06,760 Speaker 5: month basis in Nvidia overtakes Amazon and market value Bloomberg 433 00:23:06,760 --> 00:23:09,760 Speaker 5: News just across the tape here, do I just keep 434 00:23:09,800 --> 00:23:10,600 Speaker 5: buying these chips? 435 00:23:10,720 --> 00:23:12,960 Speaker 6: Is the chip? Are chips the way to play this? 436 00:23:14,359 --> 00:23:16,960 Speaker 8: I think chips are, But I don't know that in 437 00:23:17,160 --> 00:23:20,399 Speaker 8: Vidia is our final winner. If you notice, there's a 438 00:23:20,480 --> 00:23:23,439 Speaker 8: theme in chip land, and that is to make chips 439 00:23:23,480 --> 00:23:25,760 Speaker 8: that are as good as in Nvidia, but maybe not 440 00:23:25,920 --> 00:23:30,720 Speaker 8: cost as much. Even Sam Altman, although he's kind of 441 00:23:30,760 --> 00:23:34,920 Speaker 8: a dreamer, that's the chat GPT guy, you know, he's 442 00:23:35,040 --> 00:23:37,880 Speaker 8: really going all in on trying to design his own 443 00:23:37,960 --> 00:23:41,480 Speaker 8: chips and getting people, you know, interested in funding this 444 00:23:41,680 --> 00:23:46,520 Speaker 8: new company. But I think that chips are a way 445 00:23:46,560 --> 00:23:50,240 Speaker 8: to go and it's going to allow for a more 446 00:23:50,480 --> 00:23:53,720 Speaker 8: as I say, nuanced approach. You know that we're going 447 00:23:53,800 --> 00:23:57,000 Speaker 8: to have to collect data and chips are the way 448 00:23:57,040 --> 00:24:00,560 Speaker 8: they do that to put into these models. So I 449 00:24:00,600 --> 00:24:03,800 Speaker 8: think chips by and large or a winner here as 450 00:24:03,840 --> 00:24:04,320 Speaker 8: a sector. 451 00:24:04,560 --> 00:24:07,280 Speaker 2: So Kim for individual names, then how do you play 452 00:24:07,320 --> 00:24:08,560 Speaker 2: it if it's not going to be in video? 453 00:24:09,800 --> 00:24:10,159 Speaker 3: Sure? 454 00:24:10,280 --> 00:24:12,960 Speaker 8: Well, I mean I remember I think in Vidia wins. 455 00:24:13,000 --> 00:24:16,879 Speaker 8: But does it continue to like double quadruple. I don't know. 456 00:24:17,440 --> 00:24:21,639 Speaker 8: I'm thinking no. So the next two closest competitors that 457 00:24:21,840 --> 00:24:25,960 Speaker 8: may have a product that can help, you know, people 458 00:24:26,520 --> 00:24:30,640 Speaker 8: build these large AI models at a lower price are 459 00:24:30,720 --> 00:24:35,520 Speaker 8: both AMD and Intel. Now they've been known for PC 460 00:24:35,720 --> 00:24:38,600 Speaker 8: chips and that's been dragging them down, but let's give 461 00:24:38,600 --> 00:24:41,800 Speaker 8: them credit for coming up the curve and serving this market. 462 00:24:42,040 --> 00:24:44,320 Speaker 8: I think that they have a good shot to do that. 463 00:24:45,680 --> 00:24:45,920 Speaker 3: Kim. 464 00:24:46,000 --> 00:24:48,240 Speaker 5: We're about to a little more than sixty percent of 465 00:24:48,280 --> 00:24:51,240 Speaker 5: the way through the S and P five hundred reporting earnings. 466 00:24:51,600 --> 00:24:54,320 Speaker 5: Any themes for you either plus or minus coming out 467 00:24:54,320 --> 00:24:54,640 Speaker 5: so far? 468 00:24:56,040 --> 00:25:00,560 Speaker 8: Sure, I think the smaller companies are looking more interesting 469 00:25:00,640 --> 00:25:05,720 Speaker 8: to me because of mergers and acquisition. Potential mergers and 470 00:25:05,760 --> 00:25:11,600 Speaker 8: acquisition completely dried up in twenty two going into leaving 471 00:25:11,640 --> 00:25:14,800 Speaker 8: twenty two into twenty three, and it's largely because we 472 00:25:14,840 --> 00:25:18,720 Speaker 8: were in a rate hike cycle by the Fed. And 473 00:25:18,960 --> 00:25:23,040 Speaker 8: now that we seem to have reached peak interest rate, 474 00:25:23,320 --> 00:25:26,240 Speaker 8: maybe that is what is bringing people back into M 475 00:25:26,280 --> 00:25:29,280 Speaker 8: and A. And I think looking for high quality companies 476 00:25:29,320 --> 00:25:32,120 Speaker 8: in niche markets is another way to go. 477 00:25:32,600 --> 00:25:34,480 Speaker 2: So this doesn't be like a by the Russell here 478 00:25:34,800 --> 00:25:35,639 Speaker 2: at this point, wouldn't. 479 00:25:36,520 --> 00:25:39,880 Speaker 8: No, No, not at all. You're there's a whole lot 480 00:25:39,880 --> 00:25:43,280 Speaker 8: in the Russell. Look for those companies that have product 481 00:25:43,359 --> 00:25:47,080 Speaker 8: management that are creating and delighting their customers, and that 482 00:25:47,280 --> 00:25:50,439 Speaker 8: might go well with a larger company that needs that 483 00:25:50,560 --> 00:25:51,320 Speaker 8: niche product. 484 00:25:51,680 --> 00:25:54,560 Speaker 2: But by takeout targets, that's that's tough, isn't that. I mean, 485 00:25:54,560 --> 00:25:55,760 Speaker 2: that's that's a tough one. 486 00:25:55,840 --> 00:25:57,919 Speaker 8: It is, but it's exciting. 487 00:25:58,320 --> 00:25:59,320 Speaker 3: It's what were you here? 488 00:26:00,119 --> 00:26:01,600 Speaker 2: Fair enough? Okay? 489 00:26:02,400 --> 00:26:04,520 Speaker 5: So Kim, are there any other sectors out there in 490 00:26:04,560 --> 00:26:07,080 Speaker 5: the market you're looking for or are there factors that 491 00:26:07,119 --> 00:26:09,920 Speaker 5: are kind of driving your process these days? 492 00:26:11,200 --> 00:26:13,800 Speaker 8: Well, we take a kind of weird approach where we 493 00:26:13,880 --> 00:26:17,240 Speaker 8: say we are stock pickers and mirror the S and 494 00:26:17,280 --> 00:26:21,040 Speaker 8: P five hundred with our picks with respect to sector waitings, 495 00:26:21,600 --> 00:26:25,840 Speaker 8: So putting that aside that we're kind of sector neutral, 496 00:26:26,359 --> 00:26:30,199 Speaker 8: I think it's really interesting. Tech is big, and I 497 00:26:30,240 --> 00:26:33,160 Speaker 8: think you should stay concentrated in that, but I'd also 498 00:26:33,200 --> 00:26:38,240 Speaker 8: look for some unloved areas, kind of like consumer discretionary. 499 00:26:38,720 --> 00:26:42,280 Speaker 8: You know, at the top of this segment you pointed 500 00:26:42,320 --> 00:26:45,520 Speaker 8: out most of the strategists think we're going to, you know, 501 00:26:45,600 --> 00:26:49,480 Speaker 8: go backwards from here. But if the consumer keep spending, 502 00:26:49,800 --> 00:26:52,560 Speaker 8: why not look at names where the consumer is spending 503 00:26:52,680 --> 00:26:54,640 Speaker 8: and that they are gaining market share. 504 00:26:54,520 --> 00:26:58,840 Speaker 2: Like where Kim, well, retailers. 505 00:26:58,240 --> 00:27:01,280 Speaker 8: Are a big fascination of mine, and we're gonna at 506 00:27:01,320 --> 00:27:04,080 Speaker 8: the end of this earning season hear a lot more 507 00:27:04,160 --> 00:27:06,880 Speaker 8: from them. I don't really want to trot out any 508 00:27:06,880 --> 00:27:09,800 Speaker 8: of the names because I have smaller names in that section, 509 00:27:10,760 --> 00:27:13,520 Speaker 8: but yeah, I do like retailers, and I think they're 510 00:27:13,640 --> 00:27:17,400 Speaker 8: very much unloved at this point, given you know, we're 511 00:27:17,400 --> 00:27:20,640 Speaker 8: all looking for that poolbacker softness to occur this year. 512 00:27:21,160 --> 00:27:23,400 Speaker 5: All right, Kim, thanks so much for joining us. Really appreciated. 513 00:27:23,440 --> 00:27:28,800 Speaker 5: Kim Farest, founder and CIO of Boca Capital Partners, located 514 00:27:28,840 --> 00:27:31,880 Speaker 5: in Pittsburgh, Pennsylvania. So good stuff there. 515 00:27:33,560 --> 00:27:37,440 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 516 00:27:37,520 --> 00:27:41,040 Speaker 1: weekdays at ten am Eastern on applecar Play and Android 517 00:27:41,040 --> 00:27:43,840 Speaker 1: Auto with the Bloomberg Business app. You can also listen 518 00:27:43,960 --> 00:27:47,040 Speaker 1: live on Amazon Alexa from our flagship New York station. 519 00:27:47,400 --> 00:27:52,360 Speaker 1: Just say Alexa playing Bloomberg eleven thirty. 520 00:27:51,480 --> 00:27:53,480 Speaker 5: And you got the dow of two hundred points. I'm 521 00:27:53,520 --> 00:27:56,399 Speaker 5: on forty thousand. Watch there were thirty eight eight hundred. 522 00:27:56,640 --> 00:27:59,200 Speaker 5: So I like those nice round numbers. We eclipse five 523 00:27:59,240 --> 00:28:02,399 Speaker 5: thousand a couple days ago in the SMP sixteen thousand 524 00:28:02,440 --> 00:28:04,480 Speaker 5: on Nasdaq, So I like some round habers there. Yeah, 525 00:28:04,480 --> 00:28:07,040 Speaker 5: and why not? But I know the pros do it, 526 00:28:07,080 --> 00:28:09,159 Speaker 5: and you know, do a little bit more analysis than 527 00:28:09,200 --> 00:28:10,320 Speaker 5: that than just no. 528 00:28:10,359 --> 00:28:13,680 Speaker 2: But honestly, if you just bought like an ETF for NDS, 529 00:28:13,920 --> 00:28:15,160 Speaker 2: you'd be fine. 530 00:28:15,520 --> 00:28:18,639 Speaker 5: All right, Let's check in with Jennifer Apple. She is 531 00:28:18,640 --> 00:28:22,199 Speaker 5: the founder and portfolio manager of Alpine Peaks Capital. She 532 00:28:22,359 --> 00:28:25,159 Speaker 5: joins us via zoom from New York. Jennifer, what do 533 00:28:25,200 --> 00:28:27,640 Speaker 5: you make of some of these heights we're hitting here 534 00:28:27,720 --> 00:28:30,880 Speaker 5: on these markets? I guess it really you know, started 535 00:28:31,200 --> 00:28:34,560 Speaker 5: this latest leg back there in November December last year, 536 00:28:34,640 --> 00:28:36,359 Speaker 5: kind of continuing into this year. What do you make 537 00:28:36,400 --> 00:28:37,920 Speaker 5: of these markets and these levels. 538 00:28:38,560 --> 00:28:40,640 Speaker 9: Yeah, Hi, good morning, Paul and Alex, and thank you 539 00:28:40,640 --> 00:28:42,880 Speaker 9: so much for having me. It is really interesting we 540 00:28:42,920 --> 00:28:45,760 Speaker 9: saw this strength. I think it was really signaled by 541 00:28:45,760 --> 00:28:49,560 Speaker 9: the Fed signaling, you know, especially in early December, that 542 00:28:49,600 --> 00:28:53,160 Speaker 9: they were going to start cutting rates. They baked in 543 00:28:53,640 --> 00:28:56,520 Speaker 9: about three rate cuts as you guys know for twenty 544 00:28:56,600 --> 00:28:59,040 Speaker 9: twenty four, and a lot of commentators are expecting more 545 00:28:59,600 --> 00:29:02,040 Speaker 9: and see a lot of that optimism, I think get 546 00:29:02,360 --> 00:29:04,400 Speaker 9: priced into the market in December, and so it was 547 00:29:04,760 --> 00:29:08,000 Speaker 9: interesting in early January to see some names pull back 548 00:29:08,040 --> 00:29:11,160 Speaker 9: a little. We definitely saw some market volatility, which I 549 00:29:11,200 --> 00:29:13,240 Speaker 9: think is healthy by the way. It offers us all 550 00:29:13,280 --> 00:29:16,680 Speaker 9: opportunity today though as we're starting to I mean, it 551 00:29:16,720 --> 00:29:19,240 Speaker 9: will be interesting tomorrow we get the fresh inflation numbers, 552 00:29:19,280 --> 00:29:22,920 Speaker 9: so that's probably the best indicator of what the Fed 553 00:29:23,040 --> 00:29:26,760 Speaker 9: is thinking to do. But you know, so far, as 554 00:29:27,000 --> 00:29:29,440 Speaker 9: you were just pointing out, companies have been putting up 555 00:29:29,440 --> 00:29:32,760 Speaker 9: pretty good earnings as they posted for most of them 556 00:29:32,800 --> 00:29:36,400 Speaker 9: their fourth quarter results, and so that's definitely positive. It's 557 00:29:36,840 --> 00:29:40,320 Speaker 9: always interesting for people like myself to hear companies actually 558 00:29:40,320 --> 00:29:43,120 Speaker 9: report their outlooks for twenty twenty four and to get 559 00:29:43,120 --> 00:29:46,160 Speaker 9: that guidance. I think there's a lot of speculation as 560 00:29:46,200 --> 00:29:49,040 Speaker 9: to what companies will do, but it's always it's great 561 00:29:49,080 --> 00:29:52,240 Speaker 9: to hear it from the horse's mouth and actually get 562 00:29:52,280 --> 00:29:53,600 Speaker 9: the outlook from these companies. 563 00:29:53,960 --> 00:29:57,560 Speaker 2: So, Jennifer, we've seen the rally sort of broaden. I 564 00:29:57,600 --> 00:30:00,160 Speaker 2: appreciate that the equal weighted indext for the SMP and 565 00:30:00,200 --> 00:30:01,960 Speaker 2: had the breakout that the S and P has, but 566 00:30:02,160 --> 00:30:06,480 Speaker 2: the russels up there industrials, healthcare for the SMP, we're 567 00:30:06,480 --> 00:30:10,040 Speaker 2: doing really well as well. Do you buy the rally 568 00:30:10,080 --> 00:30:12,120 Speaker 2: breadth is good or the rally breath is bad? 569 00:30:13,800 --> 00:30:16,480 Speaker 9: Yeah, it's an interesting question where you have some some 570 00:30:16,520 --> 00:30:21,200 Speaker 9: real breakout strength continue and a handful of names. But 571 00:30:21,280 --> 00:30:23,320 Speaker 9: I think the economy and certainly lower rates will be 572 00:30:23,360 --> 00:30:26,360 Speaker 9: good broadly for the economy. So it makes sense to 573 00:30:26,400 --> 00:30:29,240 Speaker 9: me that we are seeing us more broadly, and that 574 00:30:29,760 --> 00:30:33,240 Speaker 9: is something that I would expect to continue. Obviously not universally. 575 00:30:33,360 --> 00:30:35,840 Speaker 9: It does matter what's happening on a company specific level, 576 00:30:35,840 --> 00:30:38,680 Speaker 9: and you do have winners and losers within that. But 577 00:30:38,720 --> 00:30:42,520 Speaker 9: I think the environment should be supportive for the breadth 578 00:30:42,600 --> 00:30:46,320 Speaker 9: of the valley, if you will, So, how. 579 00:30:46,320 --> 00:30:48,680 Speaker 5: Much or how important is this feeder reserve for you 580 00:30:48,760 --> 00:30:50,720 Speaker 5: and your investment outlook here, I kind of feel like, 581 00:30:51,520 --> 00:30:53,680 Speaker 5: you know, the market's really just trading on where the 582 00:30:53,720 --> 00:30:56,520 Speaker 5: FED is going. I'm not sure there's paying as much attention, 583 00:30:56,560 --> 00:31:00,360 Speaker 5: perhaps to the earnings as we typically do. You view 584 00:31:00,360 --> 00:31:02,680 Speaker 5: the FED and it's impact on the market. 585 00:31:03,440 --> 00:31:05,760 Speaker 9: Yeah, that's such a good point, and I agree with you. 586 00:31:05,800 --> 00:31:08,080 Speaker 9: It's interesting. So we have a five year average building pread, 587 00:31:08,160 --> 00:31:10,440 Speaker 9: and so we are taking that longer term view and 588 00:31:10,480 --> 00:31:13,800 Speaker 9: thinking about our companies across business cycles rather than just 589 00:31:14,760 --> 00:31:17,760 Speaker 9: what next quarter will look like. But I do think 590 00:31:17,960 --> 00:31:21,800 Speaker 9: that a lot of people are focused more on the 591 00:31:21,800 --> 00:31:25,280 Speaker 9: FED right now, and particularly getting excited about the prospects 592 00:31:25,440 --> 00:31:29,479 Speaker 9: of perhaps accelerated rate cuts. We don't think that will 593 00:31:29,520 --> 00:31:32,280 Speaker 9: happen as quickly as some people do. But nonetheless, even 594 00:31:32,320 --> 00:31:35,400 Speaker 9: if you take the two to three cuts that are 595 00:31:35,440 --> 00:31:38,320 Speaker 9: kind of at the bottom end of the outlooks, that's 596 00:31:38,520 --> 00:31:42,240 Speaker 9: still helpful for this coming year. And so it's interesting 597 00:31:42,280 --> 00:31:44,520 Speaker 9: that we do see as companies report earnings, we do 598 00:31:44,560 --> 00:31:46,480 Speaker 9: see them revert more. I feel like there can be 599 00:31:46,560 --> 00:31:50,240 Speaker 9: a lot of momentum and excitement priced into names intra quarterer, 600 00:31:50,760 --> 00:31:54,120 Speaker 9: but we do see them return to typically return to 601 00:31:54,200 --> 00:31:57,880 Speaker 9: trading on their own individual outlooks as they were poort earning. 602 00:31:57,920 --> 00:32:01,239 Speaker 9: So that's always a particularly esteem moment of truth for us. 603 00:32:01,280 --> 00:32:03,520 Speaker 2: If you will, you have some cool companies that you 604 00:32:03,560 --> 00:32:06,680 Speaker 2: look at Rolins If I said that, right, Roland Rollins, 605 00:32:06,760 --> 00:32:09,480 Speaker 2: Yeah he did. Yeah, Pest Control Services, which is take 606 00:32:09,800 --> 00:32:13,040 Speaker 2: r L walkers through while you like this one? 607 00:32:13,280 --> 00:32:17,320 Speaker 9: Yeah, absolutely so. They are the leading pest control independent 608 00:32:17,360 --> 00:32:21,200 Speaker 9: pest control company in the United States. Their largest competitor, 609 00:32:21,280 --> 00:32:24,360 Speaker 9: termin X, was just bought out by a UK company 610 00:32:24,400 --> 00:32:32,280 Speaker 9: called rental Kill last year and leading love yes, okay, yeah, 611 00:32:32,320 --> 00:32:34,160 Speaker 9: And it's just a it's a compelling time in the 612 00:32:34,160 --> 00:32:37,520 Speaker 9: industry for there's a few broader macro reasons, if you will. 613 00:32:37,840 --> 00:32:43,480 Speaker 9: Global warming is supportive of past populations. Demographic demographically too, 614 00:32:43,680 --> 00:32:47,320 Speaker 9: our generation and younger generations are more likely to hire 615 00:32:47,360 --> 00:32:50,800 Speaker 9: somebody else to deal with pests rather than do it yourself, 616 00:32:50,920 --> 00:32:54,080 Speaker 9: as the baby baby boomers tended to do. And so 617 00:32:54,160 --> 00:32:56,160 Speaker 9: we're seeing oh go ahead. 618 00:32:55,960 --> 00:32:58,840 Speaker 5: No, no, go ahead, continue, okay. 619 00:32:58,720 --> 00:33:01,800 Speaker 9: Excellent, So it's a you know, it's a good environment 620 00:33:01,840 --> 00:33:04,720 Speaker 9: for the pests, if you will. And it's a time 621 00:33:04,840 --> 00:33:06,880 Speaker 9: where Round two Kill has always been a really strong 622 00:33:06,920 --> 00:33:09,800 Speaker 9: competitor in the area. They have really powerful door to 623 00:33:09,800 --> 00:33:13,000 Speaker 9: door sales, have been investing heavily in technology, also a 624 00:33:13,280 --> 00:33:16,960 Speaker 9: very clean balance sheet, and that's enabled them to typically 625 00:33:16,960 --> 00:33:19,640 Speaker 9: add between a third and half of their growth from acquisitions, 626 00:33:19,680 --> 00:33:23,280 Speaker 9: and so they continue to roll up smaller pest control companies, 627 00:33:23,800 --> 00:33:26,320 Speaker 9: share best practices with them over time, be able to 628 00:33:26,320 --> 00:33:30,880 Speaker 9: really improve margins there. It's created a very positive dynamic. 629 00:33:30,920 --> 00:33:34,000 Speaker 9: It's also making an interesting transition now from being a 630 00:33:34,040 --> 00:33:37,120 Speaker 9: family dominated company that Rollins family. Actually they just sold 631 00:33:37,120 --> 00:33:38,880 Speaker 9: off a portion of their stake, but they still own 632 00:33:38,960 --> 00:33:42,560 Speaker 9: over a third of the company to bringing them. Last 633 00:33:42,640 --> 00:33:45,880 Speaker 9: year was the first year that professional, a non family 634 00:33:45,880 --> 00:33:49,240 Speaker 9: member was appointed CEO. And so while if Rawlins family 635 00:33:49,280 --> 00:33:51,120 Speaker 9: has done a great job building the business, I think 636 00:33:51,160 --> 00:33:54,840 Speaker 9: there is a really interesting switch to a little bit 637 00:33:54,880 --> 00:33:58,120 Speaker 9: more of a bottom line line focused perspective right now. There. 638 00:33:58,840 --> 00:34:01,480 Speaker 5: We've had a aviation when we talk about Boeing, and 639 00:34:01,480 --> 00:34:03,040 Speaker 5: it has been in the news not for the good reasons. 640 00:34:03,040 --> 00:34:07,880 Speaker 5: You have a manufacturer of aviation parts, Hiko HgI is 641 00:34:07,920 --> 00:34:10,000 Speaker 5: a ticker what's tell us about that company and why 642 00:34:10,040 --> 00:34:10,839 Speaker 5: you guys like it? 643 00:34:11,800 --> 00:34:14,399 Speaker 9: Yeah, absolute, So they're a really interesting company. They make 644 00:34:14,440 --> 00:34:18,120 Speaker 9: what are essentially generic aftermarket aviation parts. So it's almost 645 00:34:18,160 --> 00:34:22,719 Speaker 9: akin to generic drugs if you think about pharmaceuticals, but 646 00:34:22,800 --> 00:34:25,360 Speaker 9: in this case. So they take what's called an om 647 00:34:25,440 --> 00:34:29,880 Speaker 9: part or original equipment manufacturer, and they reverse engineer it 648 00:34:29,920 --> 00:34:32,279 Speaker 9: to be made out of the same materials, to be 649 00:34:32,320 --> 00:34:35,360 Speaker 9: able to meet the same stress tolerances, to last just 650 00:34:35,400 --> 00:34:38,760 Speaker 9: as long and has similar quality, and then that's approved 651 00:34:38,800 --> 00:34:42,560 Speaker 9: by the FAA. It's called Parts Manufacturing Authority or PMA 652 00:34:42,920 --> 00:34:45,719 Speaker 9: is the acronum used in the industry, and then by 653 00:34:45,760 --> 00:34:49,399 Speaker 9: each individual airlines. And airlines like these parts because they 654 00:34:49,440 --> 00:34:53,200 Speaker 9: typically sell or starts at about thirty percent less than 655 00:34:53,200 --> 00:34:55,400 Speaker 9: the OEM price, and that can widen out to as 656 00:34:55,440 --> 00:34:58,160 Speaker 9: much as seventy percent over the year with volume discounts, 657 00:34:58,840 --> 00:35:01,320 Speaker 9: and so it's a great way for airlines to save money. 658 00:35:01,360 --> 00:35:05,000 Speaker 9: And Iiko's really the dominant player in this area. They 659 00:35:05,320 --> 00:35:09,000 Speaker 9: just bought actually their largest competitor, called a Wendcore, and 660 00:35:10,239 --> 00:35:12,720 Speaker 9: it's a space they know really well. It's adding about 661 00:35:13,040 --> 00:35:16,799 Speaker 9: thirty percent on revenue to the company this year and 662 00:35:17,320 --> 00:35:20,840 Speaker 9: It's a very exciting time for them, you know, taking 663 00:35:20,960 --> 00:35:24,120 Speaker 9: the recovery and air travel that's happened post pandemic over 664 00:35:24,160 --> 00:35:26,719 Speaker 9: the last couple of years, and then market gains they've 665 00:35:26,760 --> 00:35:29,719 Speaker 9: made as they can help airlines improve their own economics. 666 00:35:29,920 --> 00:35:32,520 Speaker 2: Jennifer, great stuff. We really appreciate you joining us. Jennifer 667 00:35:32,560 --> 00:35:36,280 Speaker 2: Oppold a founder and portfolio manager of at Alpine Peaks Capital. 668 00:35:36,360 --> 00:35:36,960 Speaker 2: Quite interesting. 669 00:35:37,320 --> 00:35:41,839 Speaker 1: This is the Bloomberg Intelligence podcast, available on Apple, Spotify, 670 00:35:42,040 --> 00:35:44,960 Speaker 1: and anywhere else you will get your podcasts. Listen live 671 00:35:45,040 --> 00:35:48,640 Speaker 1: each weekday, ten am to noon Eastern on Bloomberg dot com, 672 00:35:48,719 --> 00:35:52,160 Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app. 673 00:35:52,280 --> 00:35:55,360 Speaker 1: You can also watch us live every weekday on YouTube 674 00:35:55,480 --> 00:35:57,320 Speaker 1: and always on the Bloomberg terminal.