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Speaker 2: One of the big movers in the marketplace today is Roadblocks.
Speaker 2: The game company stock is down eleven percent. It was
Speaker 2: down more than twenty percent early in the trading day.
Speaker 2: Bookings missed outlook a little bit softer than expected. Let's
Speaker 2: get some details on now we can do that. The
Speaker 2: man Deep singing, he's a senior technology channels for Bloomberg Intelligence.
Speaker 2: Man Deep Talk, describe what Roadblocks does, and then what's
Speaker 2: happening with the stock today.
Speaker 3: I mean, this is a platform think fit as a
Speaker 3: Bold garden where you can play any user generated game
Speaker 3: as well as you know, the Triple A titles and
Speaker 3: all sorts of game content hosted inside Roadblocks platform where
Speaker 3: multiple users can play the game. And it's been quite popular,
Speaker 3: you know, with that demographic, the nine to seventeen eighteen
Speaker 3: year old.
Speaker 4: It's a great way to entice somebody to do their homework.
Speaker 4: It really is.
Speaker 5: Yeah, the use cases beyond gaming.
Speaker 4: You spent twenty minutes doing this, you know, after you
Speaker 4: do your homework or whatever.
Speaker 3: Yeah, and so I think again user growth of twenty
Speaker 3: percent plus and anytime you see a company missing on
Speaker 3: user growth, the reaction is pretty strong. Now, if you remember,
Speaker 3: there was a report from Hindenberg talking about how the
Speaker 3: user and engagement metrics are inflated, so pretty much the
Speaker 3: company has been you know, doing the cleanup post that report,
Speaker 3: even though they didn't really acknowledge, you know, there were
Speaker 3: a large number of users.
Speaker 4: Were they faking those numbers. They're just so difficult too.
Speaker 3: With online platforms, is it's so hard to figure out exactly,
Speaker 3: you know, what's bought activity and where are the user
Speaker 3: metrics inflated or engagement And there's always scope to you know,
Speaker 3: clean up and have real users being reflected on the platform.
Speaker 3: In the case of roadblocks, brand safety is a big
Speaker 3: aspect because you know, we were talking about kids using
Speaker 3: the platform. So they've really, I think done a lot
Speaker 3: since that short thesis from Hindenburg, and that's partly the
Speaker 3: reason why they missed in terms of the user and
Speaker 3: engagement metrics. But they called out Eastern Europe being weak
Speaker 3: and Turkey being weak. To me, this is really the
Speaker 3: quarter where the impact was the most obvious, and then
Speaker 3: it will gradually get better because they've cleaned up.
Speaker 2: So it seems like at least the partial vindication for
Speaker 2: the Hindenburg research.
Speaker 3: Well, I could make the case even for you know,
Speaker 3: a platform like snap where you may have they have
Speaker 3: shown hundred million daily active users every quarter. Now do
Speaker 3: they really have one hundred million or is it more
Speaker 3: ninety seven million because three million are just captured in
Speaker 3: their metrics. So no one has a consistent approach to.
Speaker 2: A third party like a Nielsen for TV ratings.
Speaker 5: There's no third party to airfact, there is no third party.
Speaker 5: It's the company that's giving you the metrics.
Speaker 3: And I don't think there is like a consistent approach
Speaker 3: that every company uses in terms of giving out their
Speaker 3: daily active usercount.
Speaker 4: Beyond the daily active users, what are the other important metrics.
Speaker 5: That engagement also was like kind of a slight.
Speaker 4: Message and radio it's time spent listening. Is that this
Speaker 4: sort of the same thing.
Speaker 3: Yeah, So again I look at you know, what they
Speaker 3: are doing on the AI side. They are looking to
Speaker 3: develop their own foundational model. So think of it as
Speaker 3: you know what the LLLM companies are doing. It's a
Speaker 3: walled garden where they will create all of tools to
Speaker 3: enable more content. It's similar to YouTube in some sense.
Speaker 3: YouTube has got a lot of video content, Roadblocks has
Speaker 3: got a lot of gaming content and other things for
Speaker 3: that demographic. So net I mean, this seems to be
Speaker 3: justified reaction because they missed on their numbers, But has
Speaker 3: a thesis really changed because they're losing share?
Speaker 6: I don't think so real quick.
Speaker 4: Have the safety concerns as a parent have they been
Speaker 4: fully addressed?
Speaker 3: That's what they're trying to address, and that's why you
Speaker 3: know they missed on these metrics. So they're using a
Speaker 3: combination of AI tools as well as just focusing more
Speaker 3: on brand safety because they want to ramp up ADS.
Speaker 5: And the way you ramp up ADS is you.
Speaker 3: Want to make guarantee the advertisers that it's a safe
Speaker 3: platform to advertise on.
Speaker 6: Man Deep Seeing, thank you so much. We appreciate that.
Speaker 6: Man Deep Seeing.
Speaker 2: Senior technology channels for Bloomberg Intelligence. Join us here on
Speaker 2: a bloomerg interactive broker studio.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
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Speaker 2: Right next, guest, nice exposure to technology. And one of
Speaker 2: my questions is is technology going to continue to lead
Speaker 2: this market?
Speaker 6: Hire have a little bit of a hiccup so far
Speaker 6: in it.
Speaker 4: Was the only sector to decline in the month of
Speaker 4: January exactly, and it's.
Speaker 6: Just kind of underperforming here.
Speaker 2: So Nancy Tangler John's She's the CEO and CIO of
Speaker 2: Laffer Tangler Investments based in Get this right now. She's
Speaker 2: calling from Scottsdale, Arizona. One of my all time favorite.
Speaker 4: Play there is snow, snow and ice on the.
Speaker 6: Ground, snow as Royal Palms Hotel is my go to place.
Speaker 2: They love me there lots of good stuff to do
Speaker 2: out there, exactly. Nancy, thanks so much for joining us here.
Speaker 2: Deep Seek was a story a couple of weeks ago.
Speaker 2: We've now kind of forgotten about it, but I think
Speaker 2: that costs a lot of tech investors to kind of
Speaker 2: maybe rethink a little bit their AI trade. Here, how
Speaker 2: did you kind of view that news and did it
Speaker 2: kind of change in anyway your view of big tech.
Speaker 7: Well, Paul and John, I'm dressed in sympathy for you
Speaker 7: this morning in a down vest because it is actually cold.
Speaker 6: Here to find cold, Nancy, Well, not really cold yet.
Speaker 4: I was going to whip out my violins.
Speaker 6: Plan well, listen.
Speaker 7: I think there was a couple of things with the
Speaker 7: Deep Seak announcement. Remember on the Friday before we had
Speaker 7: Projects Stargate where the President had Larry Ellison, Sam Maltman,
Speaker 7: and Masassan in the White House announcing a five hundred
Speaker 7: billion dollar investment in AI and whether or not it's
Speaker 7: going to be five billion dollars. We could talk about
Speaker 7: that all for quite some time, but it generated enthusiasm.
Speaker 7: And then the next Monday we had the story break
Speaker 7: that Deep Seak had developed a more efficient AI model
Speaker 7: for a five point six million I don't think that's correct,
Speaker 7: and I think there was timing involved, And then we
Speaker 7: had Ali Baba come out. What we know is that
Speaker 7: the system is not as reliable, it's censored, it crashed.
Speaker 7: And we also know that at Dagos, where this was
Speaker 7: being talked about and for months before Deep Seek that
Speaker 7: is that they allegedly have fifty thousand h one in
Speaker 7: Vidio chips, which costs forty thousand dollars each. So I
Speaker 7: think the whole thing is a bit suspect, but good
Speaker 7: for the overall AI market because what we know from
Speaker 7: Jevon's rule is that what you will see is the
Speaker 7: cheaper technology gets, the more the usage and the use
Speaker 7: case demand goes up. And we're seeing that across all
Speaker 7: sectors in earnings reports for the last nine months and
Speaker 7: also this most recent.
Speaker 4: Quarter, Nancy, what do we learn from the earnings reports
Speaker 4: so far? I mean they're kind of backward looking, I
Speaker 4: guess more specifically the earnings calls that we've had.
Speaker 7: Yeah, John, No, you're absolutely right. So it is backward
Speaker 7: looking when you look at earnings beats. But what we
Speaker 7: listen to is the guidance, and what we're hearing is
Speaker 7: pretty optimistic. So if I'm going to look at my
Speaker 7: notes just a little bit, because we cover a lot
Speaker 7: of companies, but we're hearing things from companies as diverse
Speaker 7: as next Era Energy, raytheon Xylum water treatment company, and
Speaker 7: pro Logis, for example. So old economy companies that are
Speaker 7: benefiting from the usage of AIRE in their well in
Speaker 7: their businesses and then the margin improvement is showing up
Speaker 7: in margins and we're getting guidance that's pretty optimistic. And
Speaker 7: so you see that in the markets. What we also
Speaker 7: see is volatility because we have Trump two point zero
Speaker 7: and we know from Trump one point oh that volatility
Speaker 7: will be with us. He's going to make bold statements,
Speaker 7: some of which will come through, many of which won't,
Speaker 7: but it'll rile the markets, and it'll rile the algos
Speaker 7: and the short term traders. As an investor, it's great
Speaker 7: news for me because we're Volatility is the friend of
Speaker 7: the long term investor.
Speaker 6: Names.
Speaker 2: I'm looking at your twelve Best Ideas portfolio, very very
Speaker 2: heavily weighted with the big tech names everybody knows Spotify, Amazon, Broadcom,
Speaker 2: Microsoft and the like. Talk to us about your thesis
Speaker 2: there behind that portfolio.
Speaker 7: Yeah, So we run a growth strategy pall, and then
Speaker 7: we also run a dividend growth strategy, which is more
Speaker 7: value and we always pull from there our twelve best
Speaker 7: ideas because there was a study done decades ago that
Speaker 7: said optimal diversification is twelve names, and we have found
Speaker 7: that to be true over the years. That portfolio has
Speaker 7: done better than everything else. So we look for the
Speaker 7: companies that are generating earning's growth at a reasonable not
Speaker 7: a cheap, but a reasonable valuation. In determining that, we
Speaker 7: look at relative price to sales ratio, So what am
Speaker 7: I paying for a future unit of sales and then
Speaker 7: the price earnings to growth ratio, And these are the
Speaker 7: names that we have confidence in.
Speaker 6: In fact, it has shown up in the performance.
Speaker 7: So I think it's also got a heavy exposure to
Speaker 7: consumer discretionary, modest exposure to industrials via Uber, and then
Speaker 7: some one healthcare name, and I think one financial Goldman Sachs.
Speaker 4: I learned from Paul this morning that there's high dispersion
Speaker 4: in the market. I want to answer for a detailed
Speaker 4: explanation of that. But does are we all writing the
Speaker 4: same our investors all writing the same wave.
Speaker 7: Well to some extent, you know, and that's driven by
Speaker 7: the ETFs. John, So you know, when you see a
Speaker 7: big sell off in a stock like Apple, a lot
Speaker 7: of times that's because retail investors or financial advisors are
Speaker 7: exiting ETFs, many of which own Apple, So you have
Speaker 7: to keep that in mind. But what we're looking at
Speaker 7: is an analogy to the nineteen nineties, and I think
Speaker 7: we're in the early years of this anal Internet as
Speaker 7: a technology was super cool, but we were measuring eyeballs.
Speaker 7: I wasn't but analysts for eyeballs on a website. This
Speaker 7: technology is much more robust. And you've heard John Chambers,
Speaker 7: who was the CEO of the poster child of overvalued
Speaker 7: stocks in the nineties, say that generative AI and AI
Speaker 7: computing is more powerful than cloud computing and the Internet combined.
Speaker 7: So in some periods of time it makes sense to
Speaker 7: be part of the consensus as long as you're not
Speaker 7: buying companies with multiples of one hundred times peak earnings,
Speaker 7: which is what people were paying for Cisco in the day.
Speaker 7: And the buyers of the infrastructure are the hyperscalers who
Speaker 7: have robust balance sheets.
Speaker 6: Many of them were.
Speaker 7: Spending fifty sixty seventy five billion dollars this year in capex,
Speaker 7: but they're still generating fifty sixty seventy five billion dollars
Speaker 7: in pre cash flow, so these are really sustainable, strong company.
Speaker 6: Nancy, thank you so much for joining us. Really appreciate it.
Speaker 2: Nancy Tangler's CEO and chief investment office Laffer Tangler Investments,
Speaker 2: and oh, by the way, forecast at high for Scotts Sale,
Speaker 2: Arizona today seventy eight degrees.
Speaker 6: So there you go.
Speaker 4: That's tough.
Speaker 6: Is they have a nice golf tournament there.
Speaker 2: The PGA is there in Scotts Sale this week in
Speaker 2: Phoenix area, so they're gonna have been good weather.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto
Speaker 1: with the Bloomberg Business App. Listen on demand wherever you
Speaker 1: get your podcasts, or watch us live on YouTube.
Speaker 2: All right, let's talk to these markets here. Let's talk
Speaker 2: tech technology in these markets. This technology is still a
Speaker 2: leader for these equity markets as it has been forever.
Speaker 6: Shana Cisel joint says. She's the president and CEO.
Speaker 2: Of Bondrin Capital Management, joining us here. Shana, you know,
Speaker 2: a couple of weeks ago, it seems like a lifetime ago.
Speaker 2: There's this thing we all learned about deep seek, and
Speaker 2: I know you guys spend a lot of time thinking
Speaker 2: about investing in technology broadly defined. How did you guys
Speaker 2: think about this deep seek and what may mean for
Speaker 2: technology investing?
Speaker 8: So my general rule of thumb with any kind of
Speaker 8: news is if it makes me have a very visceral
Speaker 8: response that I should step back and read, and so
Speaker 8: that was my initial response. The market, however, does not
Speaker 8: have the focus and the ability to necessarily do that,
Speaker 8: so it freaks out. As I learned more, I became
Speaker 8: less concerned about the deep seek threat and what that
Speaker 8: means for China as a competitor in the AI space.
Speaker 8: There's a number of things that stood out to me
Speaker 8: that made me think, like, Okay, this is no different
Speaker 8: than any time a Chinese company knocks off a American
Speaker 8: shoe brand or anything else. It's very similar, But there's
Speaker 8: more of a concern here. If we thought TikTok was
Speaker 8: a concern from national security perspective, this is an even
Speaker 8: greater concern with its connection to the CCP through their app.
Speaker 8: So while there's definitely some interesting aspects of the open
Speaker 8: source code that can be used by Amazon or anybody
Speaker 8: to leverage the actual app itself and the things that
Speaker 8: related to that, I'm less concerned about in terms of
Speaker 8: what it means for the US companies in the tech space.
Speaker 5: This shouldn't be a surprise. It was always the.
Speaker 8: Greatest risk to technology companies in the US was having
Speaker 8: somebody disrupt the market. But I think it's a bit
Speaker 8: overblown and quite frankly, I think we've been complaining about
Speaker 8: valuations forever and this solved our problem pretty quickly.
Speaker 4: All right, let's move to treasury yields. I heard the
Speaker 4: new treasure secretary say yesterday that he's kind of focused
Speaker 4: on the tenure and bringing that down. Now, I'm kind
Speaker 4: of a student of history, and I have to go
Speaker 4: back to the early sixties and beyond right up to
Speaker 4: present day. The ten here seems to follow economic activity.
Speaker 4: And if you want to bring the ten year lower,
Speaker 4: a sure way to do it is to lessen economic growth.
Speaker 4: I'm sure it doesn't want to do that.
Speaker 8: Yeah, that's the conundrum here, right, You want to bring
Speaker 8: rates down, but you know, at the end of the day,
Speaker 8: there is correlation there between the strength of the economy
Speaker 8: and the interst rate environment and the yield curve and
Speaker 8: how the yeld curve behaves. You know, the FED doesn't
Speaker 8: have the power things it has to control that. I mean,
Speaker 8: we've seen that in recent months with the FED cutting
Speaker 8: and yet the yield curve not behaving like rates have
Speaker 8: been cut. In fact, it's to be expected, right, because
Speaker 8: you want to get out of an inverted yield curve,
Speaker 8: which requires the longer end to go up even in
Speaker 8: a cutting cycle. But I think that the problem here
Speaker 8: and what they're trying to kind of fix, is related
Speaker 8: to mortgage rates in the housing market, and I don't
Speaker 8: know that there's an easy fix to that. But I
Speaker 8: am concerned that there's this belief that if they just
Speaker 8: cut rates enough, they can fix this problem, because I
Speaker 8: think it's not that black and white, and there's a
Speaker 8: high probability of a potential mistake being made if they
Speaker 8: go in with policy decisions thinking that it is that easy.
Speaker 7: Chan.
Speaker 2: I know you work with your clients talking about alternative investments. Here,
Speaker 2: where do you see the greatest opportunity in alternatives here?
Speaker 2: Private equity, private credit, hedge funds.
Speaker 6: Where are you spending most of your time these days?
Speaker 8: So more hedge fund like strategies, private equity, private credit
Speaker 8: are kind of sensitive to the interest rate environment and
Speaker 8: also sensitive to public market betas in the hedge fund world,
Speaker 8: especially if you believe that there's going to be increased volatility.
Speaker 8: Hedge funds and hedge fund like strategies are great diversifiers. So,
Speaker 8: for example, last week, there's a ETF PTL, the ADF
Speaker 8: us Anti Beta fund long low beta short high beta
Speaker 8: that that product did remarkably well when we had the
Speaker 8: big deep seek threat threat sell off, And that's exactly
Speaker 8: what you want and those types of products, and that's
Speaker 8: what hedge fund like strategies can do is provide you
Speaker 8: that downside protection when the market is under significant stress.
Speaker 8: Managed futures is another example, like a CTA et F.
Speaker 8: And then when you move into the hedge fund space
Speaker 8: where they can use leverage more as a tool, you
Speaker 8: can get even greater benefit as a diversifier and as
Speaker 8: a downside protector. But it's not sexy and people get
Speaker 8: forget that, like these aren't meant to outperform the market.
Speaker 8: There they serve a purpose in your portfolio.
Speaker 5: I like to think of it as.
Speaker 8: Like home insurance, like you hope you never have to
Speaker 8: use it, but it's you would never not have it
Speaker 8: because you need to be able to manage the risk.
Speaker 8: And that's exactly how I see those types of strategies.
Speaker 8: This year, I think is the year where these types
Speaker 8: of strategies are really going to show their worth because
Speaker 8: I think the markets are going to be quite polatile.
Speaker 2: Shana, thank you so much for joining us. Always appreciate
Speaker 2: getting a few minutes of your time. Shana Sissel, president
Speaker 2: and CEO of a Bondrion Capital Management, joining us, you're
Speaker 2: talking about the broader market.
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