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Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.

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Speaker 1: I'm Joe Wisn't and I'm Tracy Hallaway. You know, Tracy,

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Speaker 1: we talked recently about the aftermath of the meme stock mania,

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Speaker 1: but even within the meme stock Mania, there were some

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Speaker 1: stories specifically that we're just really extraordinary and worth revisiting.

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Speaker 1: Oh absolutely. I mean each one of those individual sort

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Speaker 1: of stunks was fascinating to watch, but among them all,

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Speaker 1: I feel like GameStop has to like that one has

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Speaker 1: to stand out because that's where it started. So the

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Speaker 1: two big ones were I think Game Stop and am

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Speaker 1: I mean there were others, but those were like the

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Speaker 1: two big ones. And I have to say, like my

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Speaker 1: heart was always a little bit more with the Game

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Speaker 1: Stop one because really, yeah, absolutely, because I always thought like, well,

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Speaker 1: there was at least like a sort of like there

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Speaker 1: was a thesis that had long preceded the boom, there

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Speaker 1: was a catalyst with the stake held by Ryan Cohen,

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Speaker 1: the Truy founder AMC. It was just like a little

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Speaker 1: too nihilistic for my take. Well, Now, first of all,

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Speaker 1: Ryan Cohen came in kind of late, I would say

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Speaker 1: to you know, after a lot of this had already happened,

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Speaker 1: but I was always partial to AMC just because I

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Speaker 1: really like going to the movies. I like that people

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Speaker 1: were throwing money at it at a time when it

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Speaker 1: wasn't really clear if it was going to survive. Whereas

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Speaker 1: games Stopped, game Stop just seemed like another brick and

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Speaker 1: mortar video game retailer. Right, but okay, we're gonna keep

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Speaker 1: arguing about this. But with game Stop, there was like

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Speaker 1: a crew of people who are the AMC thing sort

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Speaker 1: of came out with nowhere, so all through long before

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Speaker 1: the spike, and like January and February, there was a

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Speaker 1: community of people putting together this idea that there was

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Speaker 1: something that the market misunderstood game stuff, that the market

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Speaker 1: viewed this as a brick and mortar retailer in terminal

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Speaker 1: decline eventual zero, and at least there was some contingent

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Speaker 1: of people who thought it wasn't going to be that

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Speaker 1: and be the whole sort of like short Squeeze engineered

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Speaker 1: on Wall Street bets was like a game Stop thesis originally,

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Speaker 1: like that that the fame As post was about, there

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Speaker 1: is an opportunity in game Stop. Specifically, I remember having

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Speaker 1: this argument with you last year, which was was it

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Speaker 1: purely a technical squeeze or was there some sort of

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Speaker 1: fundamental bowl story embedded in Game Stop? And I mean,

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Speaker 1: I gotta say so. Obviously, the share price has come

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Speaker 1: down quite a lot since early However, looking at it now,

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Speaker 1: it's still above a hundred dollars per share. It's almost

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Speaker 1: a hundred thirty dollars per share compared to around like

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Speaker 1: fifteen dollars when we started. So even if it was

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Speaker 1: a technical squeeze, something has changed and someone in the

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Speaker 1: market clearly sees more value there. So in in summer,

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Speaker 1: like a five dollar stock, then it rocketed to like

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Speaker 1: fifty so seventy bagger in a few months. It has

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Speaker 1: come way down, but it's still at so well ahead

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Speaker 1: of where it was pre squeeze. So the question is like,

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Speaker 1: what's going on? Is there something real did actually happen?

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Speaker 1: And what what all happened at games right? And how

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Speaker 1: did the meme stock frenzy actually feed into that? Did

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Speaker 1: it actually have a fundamental impact on the company the

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Speaker 1: health of the company itself? All Right? So today we're

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Speaker 1: going to be revisiting Game Stop, and we are going

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Speaker 1: to have a guest back who he had on Early

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Speaker 1: one last time. But also he was one of the

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Speaker 1: true Game Stop long so he didn't just come in

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Speaker 1: at the peak, like you know, he's not just apen

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Speaker 1: to it. He had a thesis, here's a ball. He

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Speaker 1: argued for many months that it was a misunderstood stock,

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Speaker 1: and he made a lot of money. And we're going

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Speaker 1: to revisit the game Stop story. We're gonna be speaking

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Speaker 1: with Rod Alsman, who is the managing director of Wook

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Speaker 1: Capital and he's the co founder of gm E d

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Speaker 1: D dot com, which sort of has long catalog the

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Speaker 1: long Game Stopped thesis. So Rod, thank you so much

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Speaker 1: for coming back on odd lots. Thanks for having me back.

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Speaker 1: A lot less stressful recording it today than when we

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Speaker 1: recorded it at the peak of the mania. Those were

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Speaker 1: a while times because I think like we recorded an

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Speaker 1: episode and news broken in the middle, or like you know,

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Speaker 1: we were talking to you, right, we were talking to

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Speaker 1: you and something happened in the middle of the conversation

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Speaker 1: and it was like it moved fifty I don't remember

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Speaker 1: what it was because at that time was so crazy,

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Speaker 1: But those were fun times, doesn't right, I mean, it

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Speaker 1: was stressful, but it was fun, right, Both all of

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Speaker 1: the above. Maybe maybe just to begin with, you could

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Speaker 1: give us, uh, just remind us, like, what was it

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Speaker 1: about game Stop that you thought was misunderstood before early

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Speaker 1: before all of this happened. Yeah, Tracy all kind of

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Speaker 1: rehash and summarized my experience with the company. So Joe

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Speaker 1: said months it was years for me. I had begune

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Speaker 1: accumulating a position. In late I received the company is

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Speaker 1: a value play at that point in time, I thought

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Speaker 1: that there was plenty of opportunity for them to generate

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Speaker 1: cash flow both in the near term and through the

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Speaker 1: next video game cycle, which was still a few years out.

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Speaker 1: At that point, I was very early the stock. Uh.

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Speaker 1: A lot happened from an activist perspective in the stock

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Speaker 1: between ten and Tiger management wrote the company a letter

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Speaker 1: encouraging they do a strategic review. They ended up selling

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Speaker 1: off their cell phone retail business that they had bought,

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Speaker 1: as that was their attempted means to diversify away from

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Speaker 1: physical gaming. It was a poor decision earned some capital

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Speaker 1: that way, but regardless, they almost sold the company to

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Speaker 1: Apollo or Sycamore. Bloomberg and Wall Street Journal reported in

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Speaker 1: late early twenty nineteen that fell through they didn't sell

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Speaker 1: the company. It was sixteen bucks to share at the

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Speaker 1: beginning of twenty nineteen. UH new management team comes in

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Speaker 1: and they slashed the dividend to zero. Long story shot.

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Speaker 1: By August of nineteen, the stock has fallen down to

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Speaker 1: about three bucks from sixteen. That's the time that I

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Speaker 1: think a lot more people became aware of this idea

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Speaker 1: that it's not just in terminal decline or at least

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Speaker 1: there's enough opportunity at three dollars per share to get

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Speaker 1: a reasonable rate of return. Michael Burry wrote the board

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Speaker 1: a letter and they had an authorization effectively that they

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Speaker 1: could repurchase eighty percent of the shares outstanding with their

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Speaker 1: existing cash on hand. So like when people actually look

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Speaker 1: at the balance sheet, it just didn't make any sense

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Speaker 1: the way that the market was pricing it. I think

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Speaker 1: it was um some forced selling from when they slashed

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Speaker 1: the dividend of zero blah blah blah. Fast for us

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Speaker 1: into twenty we all know that COVID doesn't happened, and

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Speaker 1: and then we get to August of twenty when Ryan

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Speaker 1: Cohen files his first third ten D and that's when

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Speaker 1: things just go into hyper drive and UH, a lot

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Speaker 1: happened between August and January one. But there, you know,

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Speaker 1: there are points at which the company had a net

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Speaker 1: cash position of five bucks to share on its balance

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Speaker 1: sheet and it was trading at three bucks to share.

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Speaker 1: So it's you know, you had cell side analysts putting

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Speaker 1: a price target of a dollar sixty um like stuff.

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Speaker 1: That just didn't make any sense to me, at least

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Speaker 1: clearly it made sense to some people. Um. And and

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Speaker 1: then of course you can't talk about it without discussing

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Speaker 1: the fact that you know there was a very large

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Speaker 1: short position in the stock that that was correct for

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Speaker 1: many years, right, Melvin Capital is the most well known

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Speaker 1: who initiated the short and teen Obviously I'd love to

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Speaker 1: talk about disclosure through this conversation a little bit, but

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Speaker 1: we know that they were up plus but for whatever reason,

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Speaker 1: they felt that their risk reward was worthwhile to keep

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Speaker 1: the shore on even when the stock traded at a

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Speaker 1: meaningful discount connect cash and the rest is history. So

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Speaker 1: you mentioned the analyst price targets there, and I mean,

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Speaker 1: even now a lot of people are quite bearish on

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Speaker 1: the stock. But what was what was the bear case here?

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Speaker 1: What was it that people thought Stop was getting wrong?

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Speaker 1: I think the simple Bear case was that, by virtue

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Speaker 1: of being primarily a purveyor of physical video game software

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Speaker 1: products and specifically used products to drive the bulk of

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Speaker 1: their gross margin, as those profit streams evaporate, and the

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Speaker 1: Bears would argue more quickly than than I think the

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Speaker 1: bulls uh that as that disappears, there's simply no way

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Speaker 1: to replace that lost profit, and it will be structurally

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Speaker 1: incapable of generating meaningful profits into the future. I do

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Speaker 1: think that they missed what happened in twenty nineteen. You know,

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Speaker 1: we talked about it last time that Tyke Kim interviewed

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Speaker 1: Mike Burry and nineteen talking about the fact that the

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Speaker 1: Xbox series X the PlayStation five will have disc drives,

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Speaker 1: and inherently, um, I think his perception, my perception was

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Speaker 1: they have at least one more cycle that they'll have

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Speaker 1: meaningful physical video game sales, and even as that pie

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Speaker 1: continues to shrink for the physical portion, there's still an

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Speaker 1: opportunity for them to generate meaningful free cash into you know,

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Speaker 1: late twenties when the next video game cycle comes around,

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Speaker 1: and who knows, right if the next Xbox or PlayStation

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Speaker 1: will have a disk drive, but in twenty nineteen it

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Speaker 1: was made clear that they would. I think Bears felt

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Speaker 1: like consumer demand for digital would be far larger than physical.

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Speaker 1: Um though, if you look at the production numbers, and

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Speaker 1: I think everything that I've seen reported is that the

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Speaker 1: mix of physical for example, PlayStation, it's I've seen anywhere

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Speaker 1: from seventy of the actual consoles are the physical console

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Speaker 1: as opposed to the digital only console without a drive.

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Speaker 1: So not that everyone buying those physical consoles only buys

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Speaker 1: physical discs, but that optionality and there is real value there.

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Speaker 1: You know, if you buy a game for sixty bucks

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Speaker 1: and you decide I don't love it, well, if you

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Speaker 1: paid it for a digital download, you have no residual value,

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Speaker 1: whereas you could otherwise sell it back treated in have

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Speaker 1: some economic value there. That's interesting. I hadn't thought about that.

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Speaker 1: So in theory, like part of the turnaround plan, and

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Speaker 1: we're gonna get to what Ryan Cohen and management have

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Speaker 1: done over the last year and a half. But you know,

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Speaker 1: in theory, like part of the turnaround plan is okay,

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Speaker 1: they're gonna get into n f T s and digital

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Speaker 1: and be something more than a brick and mortar retailer.

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Speaker 1: But the argument that you're making is that people just

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Speaker 1: mistakenly assumed brick and mortar physical CDs were zero and

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Speaker 1: when you look at the because of you know, that's

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Speaker 1: just what everyone assumes these days. But when you look

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Speaker 1: at actual gamer behavior, what they're actually spending, how they're spending,

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Speaker 1: where they're buying, that was just a mistaken assumption. Is

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Speaker 1: that a mistaken assumption? Still, like, what is the value

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Speaker 1: of just sort of the good old fashioned game stop,

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Speaker 1: walk into a strip mall location and buy a disk?

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Speaker 1: If you think about on its face, why is there

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Speaker 1: any value to buy it from them, us anyone else?

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Speaker 1: And and there isn't. Uh That said, my experience, and

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Speaker 1: from my research, the experience of most consumers who engage

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Speaker 1: with them, is that, look, why is there any specialty

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Speaker 1: retail right? Why doesn't Amazon and Walmart and targets split

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Speaker 1: the entire market? Well? In Game Stops case, the finding,

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Speaker 1: or at least what the company reported, I think it

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Speaker 1: was in twenty nineteen one of the calls, they disclosed

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Speaker 1: that uh, physical game products or gaming products they sold

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Speaker 1: at a two x attached rate to the big box retailers,

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Speaker 1: the generalists and accessories they sold at a three x

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Speaker 1: attach rate. So on this era of direct to consumer, right,

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Speaker 1: if you're a if you're a Sony or Microsoft, sure

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Speaker 1: you'd prefer to own the direct consumer relationship and sell

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Speaker 1: without even giving any cut of the margin to the retailer.

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Speaker 1: But in the case of game Stop, from that uh,

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Speaker 1: you know, from that distribution angle, they're they're the best

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Speaker 1: distributor that the supplier could have to ask for. And

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Speaker 1: I think that part of that was evidenced by the

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Speaker 1: Microsoft strategic agreement that happened in October of wherein basically

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Speaker 1: they they uh indicated that there would be game Stop

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Speaker 1: taking a cut of all incremental sales that occur on

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Speaker 1: hardware sold from game Stop. So if game Stop sells

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Speaker 1: you the Xbox Series X and you go and download

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Speaker 1: games on it, game Stop is gonna get some undisclosed

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Speaker 1: small portion of those incremental sales. So that was a

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Speaker 1: big thing to me is and I think a lot

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Speaker 1: of other investors because it implied, well, these distributors and

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Speaker 1: suppliers see value and game Stop obviously for the customer

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Speaker 1: to see value, it needs to be a differentiated experience,

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Speaker 1: whether that's um the customer service angle, you know, if

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Speaker 1: you walk into most game stops, most of the employees

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Speaker 1: and those stores are pretty pretty hardcore video gamers. They

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Speaker 1: may have a different niche, you know, employee by employee,

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Speaker 1: but you get insight into different games that you might

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Speaker 1: not have otherwise been familiar with. Whereas you go to

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Speaker 1: a Walmart and you know it's behind lock and key,

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Speaker 1: you need to grab some random employee if you want

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Speaker 1: to get the game. They don't know anything about gaming.

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Speaker 1: So so that specialty experience I think is the differentiator,

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Speaker 1: and it was evidenced by their ability to drive incremental attachment.

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Speaker 1: So why don't we fast forward a little bit and

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Speaker 1: talk about what's happened since then? And you know, we

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Speaker 1: talked about Ryan Cohen. He became chairman. I think it

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Speaker 1: was late last year, was that right, something like that,

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Speaker 1: um or maybe it was the summer, Okay, So he

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Speaker 1: becomes chairman and he starts putting in place all these

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Speaker 1: different ways to increase game stops business. And some of

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Speaker 1: the stuff he's been doing, you know, things like starting

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Speaker 1: an n f T marketplace, stuff like that. It seems

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Speaker 1: a little bit different to the original game stop mission

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Speaker 1: or bread and butter business. And I'm curious what you

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Speaker 1: actually think of that, Like, you had a bowl case

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Speaker 1: based on GameStop being a video game retailer and thinking

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Speaker 1: that it could grab a decent slice of the digital market,

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Speaker 1: or at least more of it, and that there would

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Speaker 1: still be demand for physical games and people would want

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Speaker 1: to go into a store where the customer sales people

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Speaker 1: actually know video gaming and stuff like that. What do

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Speaker 1: you think about these diversification efforts and does that change

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Speaker 1: the nature of the business in your view? So we

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Speaker 1: put out in January UM the accumulated sum total of

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Speaker 1: all myself and and a cohort of other investors who

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Speaker 1: were maniacally focused on this company from host of especially

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Speaker 1: after Cohen became involved. You know, we we put out

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Speaker 1: a report with a you know, a hundred sixty nine

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Speaker 1: and forty two cent bull case price target, which obviously

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Speaker 1: was was half meme, but what was underpinned by real analysis.

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Speaker 1: One of the pieces of analysis we got wrong was

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Speaker 1: we perceived there was value for an advertising technology oriented business.

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Speaker 1: They have tens of millions of customers, they have access

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Speaker 1: to reams of consumer data on gaming preferences, and our

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Speaker 1: view at the time was um I had begun seeing

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Speaker 1: them into great targeted advertisements on their web platform. I

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Speaker 1: thought that was the angle they were going, and maybe

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Speaker 1: it was the angle to prior management team was going. UM,

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Speaker 1: they haven't gone that angle, but I think at its core,

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Speaker 1: the value is tapping into the fact that I'm looking

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Speaker 1: at the proxy statement and what they say is that

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Speaker 1: we have a unique opportunity to be a conduit between developers, publishers,

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Speaker 1: and consumers as gaming shifts from consoles to the metaverse

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Speaker 1: and other frontiers. And that was really the core of

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Speaker 1: my view was that Game Stop was that physical nexus

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Speaker 1: of gaming, and that they can play into digital and

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Speaker 1: play into this shift, and that they're not necessarily d

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Speaker 1: o a. UM the direction Cohen went, you know, Tracy,

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Speaker 1: he he had the settlement in early January one where UM,

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Speaker 1: it had looked like it was going to become a

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Speaker 1: proxy fight. There had been previous proxy fights with the

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Speaker 1: company over the preceding year, UM successful proxy campaign, so

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Speaker 1: it looked like Cohen was going that route. There was

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Speaker 1: instead of settlement, I think because you know, look, I

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Speaker 1: collected four percent of shares outstanding and sent him a

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Speaker 1: letter on behalf of those retail shareholders who those four

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Speaker 1: percent shares reflected and said, you have our support if

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Speaker 1: it comes to this year's proxy fight. So I'm sure

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Speaker 1: he had accumulated shares from others. Um. You know in

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Speaker 1: the intro, Joe you mentioned I now am I am

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Speaker 1: at Wook Capital and whoop Capital was specifically formed as

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Speaker 1: a byproduct of really the core work that went into

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Speaker 1: this crowdsourcing of the investment thesis UM and John Kim,

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Speaker 1: John's the c i O at what the founder. John

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Speaker 1: had owned one percent of of game Stop and been

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Speaker 1: the largest contributor to that four percent. John had the

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Speaker 1: opportunity to meet with Ryan in December and here his vision.

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Speaker 1: So I think that the people who really did the

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Speaker 1: legwork understood there wasn't This wasn't just some scheme that

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Speaker 1: the guy cooked up out of the blue. He had

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Speaker 1: a vision. You know clearly that I knew nothing about

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Speaker 1: blockchain and crypto other than just what I read UM.

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Speaker 1: I was not an active participant in the blockchain or

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Speaker 1: crypto ecosystems. I had never bought any crypto until very recently,

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Speaker 1: I've begun dabbling in n f T. But that does

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Speaker 1: seem logical, right if if it's creators gamers are consuming this.

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Speaker 1: It's a forty one billion dollar addressable market, and we

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Speaker 1: can argue how sustainable that is. It's very logical to

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Speaker 1: me that they've gone that route. Is their digital growth strategy,

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Speaker 1: and that's underpinned by them really doubling down on making

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Speaker 1: their existing business better. They hadn't done any investment really

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Speaker 1: into like digital systems, their website, their mobile app, e fulfillment. UM.

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Speaker 1: They've made multiple fulfillment network investments over the last year. UM,

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Speaker 1: they've improved their service. If you think about Chewy, people

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Speaker 1: know them for you know Chew, we will send pet

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Speaker 1: owners a happy birthday when it's the pet owners birthday. UM.

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Speaker 1: I'm seeing now Game Stop doing a lot more of

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Speaker 1: that customer engagement during interactions UM. In the g M

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Speaker 1: E d D discord server, I see a lot of

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Speaker 1: people sharing different examples of their own experience. So there's

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Speaker 1: definitely been a change in the customer experience with that

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Speaker 1: top down view from Cohen. UM. He became chairman in March.

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Speaker 1: I believe it was so they The first porting of

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Speaker 1: anything n f T related was from g M E

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Speaker 1: D D and it was in April of one. So

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Speaker 1: this is not stuff that they've just pulled out of

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Speaker 1: the blue. They've been working on it for quite some

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Speaker 1: time now. Um they've committed to bring in the marketplace

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Speaker 1: to bear by the end of the fiscal second quarters,

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Speaker 1: so the end of July. So you know, a lot's

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Speaker 1: happening behind the scenes, and I think that people are

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Speaker 1: so focused on just staring at the current financial statements,

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Speaker 1: which you know, the companies shifted its strategy. They're forsaking

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Speaker 1: margin at the expense of regaining customers back into their

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Speaker 1: ecosystem for long term growth. And uh, I think COVID happened,

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Speaker 1: so our initial estimates were certainly impacted there. Um digital

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Speaker 1: is being adopted more quickly, it seems it'll it'll remain

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Speaker 1: to be seen if what that what happens is two

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Speaker 1: keeps rolling along and normalization keeps occurring. But there's a

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Speaker 1: lot to unpack there, and uh, you know, we've done

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Speaker 1: our best to try and be objective with it. Um.

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Speaker 1: Most of the people in g M, E. D D

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Speaker 1: don't have a meaningful ownership stake in game stuff. We

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Speaker 1: it's just a passion project and we just feel like

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Speaker 1: it's been so misrerepresented in media. It was so misrepresented

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Speaker 1: in from the analyst angle for so long that we

351
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Speaker 1: were just doing our best to present what we thought

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Speaker 1: was mostly unbiased you. So, I just want to like

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Speaker 1: pivot just a little bit because you mentioned that some

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Speaker 1: of the money that was in the original game Stop

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Speaker 1: trade has become part of what capital your current project

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Speaker 1: you talked about. You know, they're still the g M, E.

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Speaker 1: D D dot com discord and of course these are

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Speaker 1: some of the topics recently talked about them without Lily

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Speaker 1: Frankis and Kyla Scanlon. But it's like this cohort of

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Speaker 1: game Stop traders, Like where are they now? I mean, uh,

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Speaker 1: you know what's wearing kiddy? Where is everyone? And not

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Speaker 1: just the big names like yourself and Keith Gil, but

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Speaker 1: so many of the people who got excited about the trade,

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Speaker 1: Like what's the distribution? How many of them are still trading?

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Speaker 1: How many of them lost interests in the market, how

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Speaker 1: many of them? What? What? Where's that crew now? I

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Speaker 1: know you'd love to get a really clean answer, but

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Speaker 1: it really is all over the spectrum. Um. In terms

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Speaker 1: of you know, Keith Gil, I haven't had an opportunity

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Speaker 1: to speak with him since January. Um. You know, regrettably,

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Speaker 1: I'm certain he's been facing his own share of of

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Speaker 1: legal reasons for for which he hasn't and look, I'll

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Speaker 1: say it allowed, and I'm I'm I know I would

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Speaker 1: be advised not to. But it was just about a

375
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Speaker 1: year ago I was subpoena from SEC pertaining to my involvement. Um.

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Speaker 1: It was this massively broad based subpoena asking for everything

377
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Speaker 1: I've ever said to anyone about Game Stop for you know,

378
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Speaker 1: more than twelve months of history. And when you think

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Speaker 1: about I literally my life my second job was research

380
00:20:51,000 --> 00:20:53,919
Speaker 1: and Game Stop. Yeah, it was a massive cost just

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Speaker 1: to try and accumulate all of the documents. UH ended

382
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Speaker 1: up having to say, look, I it would it would

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Speaker 1: cost me hundreds of thousands of dollars to do what

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00:21:03,400 --> 00:21:06,359
Speaker 1: you're asking. You can go to the sources themselves if

385
00:21:06,359 --> 00:21:09,399
Speaker 1: you would like it. I did incur meaningful expense that

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Speaker 1: that breached six figures, which was more than my net

387
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Speaker 1: worth before I entered the trade. Thank goodness, I made money.

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Speaker 1: And I think that is a good example of where

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Speaker 1: you see these politically motivated investigations that have, you know,

390
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Speaker 1: I think, and misdirected towards small passionate investors who, in

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Speaker 1: my opinion didn't do anything wrong. I know that there

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Speaker 1: are some people who had malintent, right. You can obviously

393
00:21:34,440 --> 00:21:37,800
Speaker 1: point to the Wall Street bets folks saying things like, yeah,

394
00:21:37,840 --> 00:21:40,840
Speaker 1: squeeze the shorts. Well, obviously that's not an investment thesis.

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Speaker 1: Um So, So with regard to Keith, I haven't spoken

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Speaker 1: to him to Roaring Kitty to d f V, and

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Speaker 1: I'm sure he's incurred expense comparable slash in excess of mine.

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Speaker 1: But I know, you know, Michael Burry disclosed he was

399
00:21:52,280 --> 00:21:55,280
Speaker 1: subpoened as well, um, which is like why the guy

400
00:21:55,320 --> 00:21:57,000
Speaker 1: got out of the trade in the fourth quarter. He

401
00:21:57,040 --> 00:22:00,400
Speaker 1: wasn't involved. So that's where what is sec for focusing

402
00:22:00,440 --> 00:22:03,600
Speaker 1: on there? But let me let me sorry, I mean

403
00:22:03,640 --> 00:22:06,200
Speaker 1: just interrupt you. So, first of all, I hate paperwork,

404
00:22:06,400 --> 00:22:09,360
Speaker 1: and you know, something like that is my biggest nightmare,

405
00:22:09,440 --> 00:22:12,320
Speaker 1: and so you have my utmost sympathy because I can

406
00:22:12,400 --> 00:22:16,680
Speaker 1: only imagine what that's like. But secondly, you know this

407
00:22:16,720 --> 00:22:19,440
Speaker 1: is sort of tangentially related. But this week we saw

408
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Speaker 1: Bill Wong, the the Archagos founder, charged with market manipulation,

409
00:22:26,800 --> 00:22:30,840
Speaker 1: and there's a lot of talking there about purposefully squeezing

410
00:22:31,040 --> 00:22:34,720
Speaker 1: the stock higher, and some people saw parallels between that

411
00:22:35,320 --> 00:22:38,240
Speaker 1: and Game Stops. So I guess my I'm just curious

412
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Speaker 1: what you thought about that. It doesn't seem like the

413
00:22:40,560 --> 00:22:46,119
Speaker 1: SEC is cracking down on basically gamma squeezes. I'm not

414
00:22:46,200 --> 00:22:49,040
Speaker 1: sure about that. Like, here's how I would characterize the

415
00:22:49,080 --> 00:22:51,520
Speaker 1: things that are wrong with with what happened with Archaicos

416
00:22:51,640 --> 00:22:56,000
Speaker 1: and with say Melvin Capital. You have a lack of

417
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Speaker 1: transparency in the market. It is unacceptable to me that

418
00:23:00,600 --> 00:23:04,840
Speaker 1: Arcagos was able to accumulate ownership or at least economic

419
00:23:04,880 --> 00:23:08,800
Speaker 1: ownership stakes of more than fifty percent of discovery of

420
00:23:09,040 --> 00:23:15,040
Speaker 1: I qually of GSX, whatever their rename now. But the

421
00:23:15,080 --> 00:23:18,880
Speaker 1: fact that he was able to accumulate those with with swaps, now,

422
00:23:18,920 --> 00:23:22,040
Speaker 1: that is clearly a failing on the side of the

423
00:23:22,080 --> 00:23:24,960
Speaker 1: disclosure rules for longs. But I would counter that the

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Speaker 1: fact that Melvin Capital had more than a third of

425
00:23:28,920 --> 00:23:33,520
Speaker 1: Game Stops shares short and had no disclosure obligation. Obviously

426
00:23:33,560 --> 00:23:37,720
Speaker 1: people passed together with their puts that they disclosed um

427
00:23:37,800 --> 00:23:39,800
Speaker 1: would show up in their thirteen f you know, the

428
00:23:39,840 --> 00:23:42,800
Speaker 1: short shares were not showing up, which I've I don't

429
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Speaker 1: know for certain, I've come to the conclusion it was

430
00:23:45,040 --> 00:23:49,200
Speaker 1: somewhere around twenty to million shares plus the puts, which

431
00:23:49,200 --> 00:23:51,320
Speaker 1: would be if you add those together, it's you know,

432
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Speaker 1: you're getting close to half the shares outstanding that Melvin

433
00:23:54,720 --> 00:23:58,120
Speaker 1: Capital themselves were short. So on both ends of the spectrum,

434
00:23:58,119 --> 00:24:01,160
Speaker 1: it's unacceptable that disclosure would be so limited that people

435
00:24:01,160 --> 00:24:04,200
Speaker 1: in the market don't understand that these massive, multibillion dollar

436
00:24:04,280 --> 00:24:08,959
Speaker 1: forces are pushing prices and impacting stocks. So I I

437
00:24:09,000 --> 00:24:12,040
Speaker 1: think that there's issues with that. And then there is

438
00:24:12,080 --> 00:24:15,120
Speaker 1: an issue, it's it's unacceptable if there's a discord chat,

439
00:24:15,200 --> 00:24:19,040
Speaker 1: a well Street bets chat somewhere, that's that's your your

440
00:24:19,200 --> 00:24:22,440
Speaker 1: thesis is that I can push a price as opposed

441
00:24:22,440 --> 00:24:26,119
Speaker 1: to I see a fundamental reason for this business. And

442
00:24:26,160 --> 00:24:29,160
Speaker 1: obviously the world of crypto is completely wild West, where

443
00:24:29,400 --> 00:24:31,959
Speaker 1: it's mostly just pump and dumps and rub pulls and

444
00:24:31,960 --> 00:24:34,359
Speaker 1: and scams like that. And I think that the conversation

445
00:24:34,440 --> 00:24:36,920
Speaker 1: you all had with Mad and SPF the other day

446
00:24:36,920 --> 00:24:42,040
Speaker 1: talking about the box, um, you know, highlights that. But

447
00:24:42,920 --> 00:24:48,040
Speaker 1: there's a lot that's wrong. Um. Obviously I feel aggrieved

448
00:24:48,040 --> 00:24:51,240
Speaker 1: about how I was um part of you know what

449
00:24:51,480 --> 00:24:54,159
Speaker 1: SEC opted to investigate, and as far as I know,

450
00:24:54,200 --> 00:24:56,800
Speaker 1: they've still not put any sort of report out or

451
00:24:56,840 --> 00:24:59,159
Speaker 1: gone after anyone. I'm sure there could be something to

452
00:24:59,200 --> 00:25:01,640
Speaker 1: come on that. Um, hopefully they don't come back after

453
00:25:01,680 --> 00:25:05,920
Speaker 1: me for saying this, But yes, it's unacceptable that people

454
00:25:05,960 --> 00:25:09,800
Speaker 1: would try and manufacture price distortions on both the long

455
00:25:09,880 --> 00:25:12,360
Speaker 1: and the short side, and I think that is market manipulation.

456
00:25:12,680 --> 00:25:16,480
Speaker 1: It feels though, like, um, you know, it's one thing, okay,

457
00:25:16,560 --> 00:25:19,320
Speaker 1: if you're a hedge fund, you have certain rules in

458
00:25:19,400 --> 00:25:23,600
Speaker 1: place in theory about things, you know, requirements, and maybe

459
00:25:23,640 --> 00:25:26,639
Speaker 1: there should be more requirements about what you have to

460
00:25:26,680 --> 00:25:30,240
Speaker 1: disclose if you're short. But here's a regulated entity, a

461
00:25:30,320 --> 00:25:32,800
Speaker 1: group of people just to play I don't know, Devil's

462
00:25:32,840 --> 00:25:34,960
Speaker 1: advocate or something like. I don't even know how you

463
00:25:34,960 --> 00:25:38,919
Speaker 1: would conceptualize an equivalent for people meeting on a message

464
00:25:38,920 --> 00:25:42,080
Speaker 1: board or people meeting on a discord or in the

465
00:25:42,119 --> 00:25:45,080
Speaker 1: comments of a Wall Street beds post. Just sort of

466
00:25:45,080 --> 00:25:49,159
Speaker 1: like organically becoming part of like a stock market flash

467
00:25:49,200 --> 00:25:52,399
Speaker 1: mob that aims to implicitly push the stock in a

468
00:25:52,480 --> 00:25:55,440
Speaker 1: dramatic direction just because everyone's sort of doing it all

469
00:25:55,520 --> 00:25:58,400
Speaker 1: the same time. And I don't know, you know, maybe

470
00:25:58,400 --> 00:26:01,040
Speaker 1: we'll never get back to quite the fever pitch of

471
00:26:01,119 --> 00:26:05,080
Speaker 1: early But my assumption would be that these sort of

472
00:26:05,200 --> 00:26:08,439
Speaker 1: like organic squeezes that just emerge because that's how the

473
00:26:08,480 --> 00:26:10,200
Speaker 1: Internet is are going to be with us for here

474
00:26:10,240 --> 00:26:13,000
Speaker 1: to stay and a very difficult time to ever like

475
00:26:13,280 --> 00:26:17,800
Speaker 1: come up with rules around it. Yeah. Look, the reality

476
00:26:17,880 --> 00:26:19,919
Speaker 1: is that the flows of of money or what's going

477
00:26:19,960 --> 00:26:21,479
Speaker 1: to drive the price in the short term. And if

478
00:26:21,480 --> 00:26:27,400
Speaker 1: there's massive flows of highly leveraged capital through short dated calls, um,

479
00:26:27,440 --> 00:26:30,639
Speaker 1: that's gonna have them outsize effect. And you're right, you know,

480
00:26:30,720 --> 00:26:33,000
Speaker 1: one person on their own isn't going to move the price,

481
00:26:33,000 --> 00:26:37,040
Speaker 1: but when it's dozens, hundreds, thousands, tens of thousands UM,

482
00:26:37,119 --> 00:26:41,960
Speaker 1: that cumulative effect is clearly impactful. It. I saw a

483
00:26:42,000 --> 00:26:46,320
Speaker 1: report discussing the January events and the timing of stimulus

484
00:26:46,800 --> 00:26:49,800
Speaker 1: checks and the timing of all the new accounts being opened,

485
00:26:49,800 --> 00:26:52,760
Speaker 1: and it does seem that what happened in January one

486
00:26:52,840 --> 00:26:56,160
Speaker 1: is is kind of the most extreme example of what

487
00:26:56,200 --> 00:27:00,280
Speaker 1: you're getting at. It's likely, in fact, one would expected,

488
00:27:00,359 --> 00:27:03,320
Speaker 1: and we keep observing it in various UM tickers. You

489
00:27:03,320 --> 00:27:05,439
Speaker 1: know since then that this type of stuff is going

490
00:27:05,480 --> 00:27:08,240
Speaker 1: to happen. But I think it's worth repeating that people

491
00:27:08,280 --> 00:27:10,240
Speaker 1: should understand that, you know, if you're going on a

492
00:27:10,240 --> 00:27:13,440
Speaker 1: message board and you're saying, you know, let's squeeze these guys,

493
00:27:13,480 --> 00:27:15,800
Speaker 1: let's pump this price. Like if you're if you're intend

494
00:27:15,880 --> 00:27:19,439
Speaker 1: is to manipulate the market, just because you're a small fry,

495
00:27:19,520 --> 00:27:22,600
Speaker 1: you you shouldn't get a pass. And I don't think

496
00:27:22,640 --> 00:27:26,320
Speaker 1: that's acceptable. But I do understand thinking back to what

497
00:27:26,640 --> 00:27:29,280
Speaker 1: Lily and Kyle we're talking about, like there's this perception

498
00:27:29,320 --> 00:27:31,400
Speaker 1: of a lot of those small fries that the game

499
00:27:31,480 --> 00:27:34,000
Speaker 1: is so rigged against them that they almost have to,

500
00:27:34,080 --> 00:27:36,760
Speaker 1: you know, break the rules themselves or go down that path.

501
00:27:37,240 --> 00:27:39,240
Speaker 1: So there's definitely a lot of that distrust to me

502
00:27:39,280 --> 00:27:42,240
Speaker 1: that it was a lot of taking all the occupy

503
00:27:42,280 --> 00:27:45,400
Speaker 1: Wall Street, but now Occupy Wall Street has a smartphone

504
00:27:45,400 --> 00:27:48,600
Speaker 1: app and they can try and occupy Wall Street effectively.

505
00:27:49,040 --> 00:27:51,359
Speaker 1: Well also, I mean to me, it's a disconnect between

506
00:27:51,400 --> 00:27:55,000
Speaker 1: the existing rules and technology as it stands. Right, so

507
00:27:55,119 --> 00:27:57,760
Speaker 1: you are not allowed, say you're a hedge fund, you

508
00:27:57,800 --> 00:27:59,960
Speaker 1: cannot send out a bunch of emails to your closest

509
00:28:00,000 --> 00:28:03,120
Speaker 1: hedge fund client uh contacts and say like, hey, let's

510
00:28:03,160 --> 00:28:06,560
Speaker 1: all conspire to push up the stock of Game Stop,

511
00:28:06,640 --> 00:28:10,040
Speaker 1: and yet because these message boards exist, everyone seems to

512
00:28:10,119 --> 00:28:12,560
Speaker 1: think that that somehow makes it different if you do

513
00:28:12,600 --> 00:28:15,919
Speaker 1: it at scale and you do it publicly. But I

514
00:28:15,920 --> 00:28:18,159
Speaker 1: guess we'll find out, you know, from the sec or whoever,

515
00:28:18,200 --> 00:28:21,000
Speaker 1: whether or not that's the case. But I wanted to

516
00:28:21,040 --> 00:28:27,080
Speaker 1: ask you another sort of I guess, depressing question or

517
00:28:27,119 --> 00:28:30,399
Speaker 1: like a darker question. But you're right there. There was

518
00:28:30,520 --> 00:28:33,159
Speaker 1: this sort of sense about the game being rigged, and

519
00:28:33,359 --> 00:28:36,000
Speaker 1: part of the Game Stop appeal to some people seem

520
00:28:36,080 --> 00:28:40,160
Speaker 1: to be this idea of getting back at the big institutions,

521
00:28:40,240 --> 00:28:43,480
Speaker 1: whether it's Wall Street banks and hedge funds or something else.

522
00:28:44,120 --> 00:28:47,120
Speaker 1: And it almost felt like people went, you know, really

523
00:28:47,120 --> 00:28:48,960
Speaker 1: went over to the dark side. There are some people

524
00:28:48,960 --> 00:28:52,000
Speaker 1: who seem to think that all of Wall Street revolved

525
00:28:52,000 --> 00:28:55,080
Speaker 1: around the shares of you know, a video game retailer,

526
00:28:55,400 --> 00:28:57,200
Speaker 1: and then if they could just like if they could

527
00:28:57,200 --> 00:28:59,840
Speaker 1: just squeeze it higher than the whole edifice would come

528
00:29:00,040 --> 00:29:03,000
Speaker 1: crashing down. But why do you think it was such

529
00:29:03,000 --> 00:29:05,520
Speaker 1: a lightning rod for those types of people? And has

530
00:29:05,600 --> 00:29:09,240
Speaker 1: that that sense persisted? So so it gets back to

531
00:29:09,320 --> 00:29:11,640
Speaker 1: Joe's question about where is everybody? And then it is

532
00:29:11,680 --> 00:29:16,280
Speaker 1: a wide spectrum answer. I I it's irrefutable. UM I heard.

533
00:29:16,440 --> 00:29:18,320
Speaker 1: I think it was literally referred to kind of some

534
00:29:18,360 --> 00:29:21,760
Speaker 1: of these cult like mentality like social platform and some

535
00:29:21,800 --> 00:29:24,000
Speaker 1: of them are quite like that. UM. I'm not going

536
00:29:24,040 --> 00:29:25,400
Speaker 1: to use the name of the one that comes to

537
00:29:25,480 --> 00:29:28,720
Speaker 1: my mind most clearly, but there's tens of thousands of

538
00:29:28,720 --> 00:29:31,040
Speaker 1: people that on a daily basis or in this platform,

539
00:29:31,120 --> 00:29:33,760
Speaker 1: and and it's very much a view that these people

540
00:29:34,160 --> 00:29:42,400
Speaker 1: are deeply convicted. They believe that the short sellers never

541
00:29:42,440 --> 00:29:46,600
Speaker 1: closed in January one, there was some nefarious scheme between

542
00:29:50,000 --> 00:29:53,880
Speaker 1: no no, because I mean I thought you were because

543
00:29:54,360 --> 00:29:59,360
Speaker 1: I'm not talking about with other of the I feel

544
00:29:59,400 --> 00:30:02,680
Speaker 1: like the people who are really into the other stock

545
00:30:02,920 --> 00:30:05,320
Speaker 1: or like like you guys, except turn to a level no.

546
00:30:05,400 --> 00:30:07,920
Speaker 1: But but there are people into game Stop who are

547
00:30:08,120 --> 00:30:11,840
Speaker 1: just as bad and in so far that they are

548
00:30:11,960 --> 00:30:16,040
Speaker 1: purely believing that by throwing their their hard earned dollars

549
00:30:16,160 --> 00:30:19,600
Speaker 1: into this equity, which you know, for for them it's

550
00:30:19,600 --> 00:30:21,720
Speaker 1: more like a trading token. They don't know they look

551
00:30:21,720 --> 00:30:25,360
Speaker 1: at price. Most many of these investors, speculators, traders, or

552
00:30:25,360 --> 00:30:28,360
Speaker 1: whatever you wanna call them. Apes. These these people buy

553
00:30:28,400 --> 00:30:31,000
Speaker 1: and large are very new to the market. They don't

554
00:30:31,720 --> 00:30:34,760
Speaker 1: have a deep understanding of how things work. They often

555
00:30:34,760 --> 00:30:37,240
Speaker 1: just look at price, they look at a stock chart.

556
00:30:37,640 --> 00:30:42,560
Speaker 1: It's very much um limited amount of analysis. It's hearing

557
00:30:42,560 --> 00:30:44,720
Speaker 1: and seeing what the people with the largest social media

558
00:30:44,760 --> 00:30:47,960
Speaker 1: followings are talking about UM and then saying, well, they

559
00:30:48,040 --> 00:30:49,840
Speaker 1: must be right, and let me get on this. And

560
00:30:50,000 --> 00:30:52,000
Speaker 1: I see so many people talking about this and saying

561
00:30:52,040 --> 00:30:55,160
Speaker 1: there's this this evil scheme by these these people on

562
00:30:55,200 --> 00:30:56,920
Speaker 1: the short side of the trade, that it must be true.

563
00:30:57,320 --> 00:30:59,040
Speaker 1: So so you've got like that end of the spectrum.

564
00:30:59,200 --> 00:31:01,000
Speaker 1: But then the spectrum you have a lot of people

565
00:31:01,000 --> 00:31:05,200
Speaker 1: who experienced this game stop investment. UM. I think about

566
00:31:05,560 --> 00:31:07,520
Speaker 1: my my partner with G M. E. D. D Joe.

567
00:31:07,640 --> 00:31:09,920
Speaker 1: He he was a young guy in his early twenties

568
00:31:10,000 --> 00:31:12,800
Speaker 1: who who made me, you know, low six figures some

569
00:31:13,080 --> 00:31:15,920
Speaker 1: he but he he sold out of the position. As

570
00:31:15,960 --> 00:31:19,800
Speaker 1: I mentioned, he's continued to maintain the analysis of game stuff.

571
00:31:19,840 --> 00:31:22,360
Speaker 1: He and many others like him are continuing to learn

572
00:31:22,400 --> 00:31:27,000
Speaker 1: about markets, learn about how you actually analyze investments. So

573
00:31:27,040 --> 00:31:29,520
Speaker 1: like you have the bad of the cultists and you

574
00:31:29,560 --> 00:31:32,440
Speaker 1: have the good of new market participants who are learning,

575
00:31:32,720 --> 00:31:34,560
Speaker 1: and like that's one of the things we're really looking

576
00:31:34,600 --> 00:31:38,600
Speaker 1: to foster with what capital is. We believe that social research,

577
00:31:38,680 --> 00:31:41,960
Speaker 1: crowdsourcing of research, like the fact that you can have

578
00:31:42,160 --> 00:31:45,320
Speaker 1: millions of eyeballs looking at different pieces of information and

579
00:31:45,360 --> 00:31:49,960
Speaker 1: bringing unique expertise to bear, you can uncover nuanced and

580
00:31:50,640 --> 00:31:54,800
Speaker 1: differentiated perspectives and theses in that manner as opposed to

581
00:31:54,920 --> 00:31:57,160
Speaker 1: just we're gonna we're gonna mess with the shorts. So

582
00:31:57,200 --> 00:31:59,520
Speaker 1: there's there's this wide spectrum. There's clearly a ton of

583
00:31:59,520 --> 00:32:02,200
Speaker 1: new partici suppense. I think, like Lily and Kyla were saying,

584
00:32:02,280 --> 00:32:06,240
Speaker 1: it's it's it's come down of course from January, but

585
00:32:06,280 --> 00:32:07,880
Speaker 1: I do think it is durable, and I think it

586
00:32:08,000 --> 00:32:11,200
Speaker 1: is different from like the you know, the two thousand

587
00:32:11,240 --> 00:32:14,480
Speaker 1: year message boards. It's it's even more so than than

588
00:32:14,560 --> 00:32:16,600
Speaker 1: that was, and I think it will remain durable. Can

589
00:32:16,640 --> 00:32:19,040
Speaker 1: you just describe what is it? Look? Capital? Is it?

590
00:32:19,080 --> 00:32:22,760
Speaker 1: A hedge fund? Is it? And what is you have

591
00:32:22,800 --> 00:32:24,960
Speaker 1: several stocks? Just describe a little bit more of what

592
00:32:25,080 --> 00:32:28,000
Speaker 1: this vehicle is and yeah, we we we just started up.

593
00:32:28,000 --> 00:32:30,959
Speaker 1: So so John had mentioned John and I had worked

594
00:32:31,160 --> 00:32:33,280
Speaker 1: um John have been one of the investors where we

595
00:32:33,640 --> 00:32:39,000
Speaker 1: had this this cohort of game Stop investors, you know, lawyers,

596
00:32:39,760 --> 00:32:44,040
Speaker 1: oil and gas people, just other random retail investors, like

597
00:32:44,040 --> 00:32:47,520
Speaker 1: across the entire spectrum of people who people who were

598
00:32:47,520 --> 00:32:50,000
Speaker 1: tuning into the Roaring Kitty chats, you know, from August

599
00:32:50,000 --> 00:32:54,120
Speaker 1: of twenty onward. Um, we we we kind of formed

600
00:32:54,120 --> 00:32:55,960
Speaker 1: a group and read it where we were just talking

601
00:32:55,960 --> 00:32:58,040
Speaker 1: about trying to analyze all the things coming out. We

602
00:32:58,080 --> 00:33:01,880
Speaker 1: eventually made a discord. We called ourselves the Hedgehog Fund,

603
00:33:02,480 --> 00:33:06,120
Speaker 1: you know, jokingly. But all of these like the fact

604
00:33:06,200 --> 00:33:09,600
Speaker 1: that we experienced and lived this where we were able

605
00:33:09,640 --> 00:33:13,440
Speaker 1: to develop a much more robust and informed and detailed

606
00:33:13,520 --> 00:33:18,480
Speaker 1: thesis through all of these various differentiated perspectives like that's

607
00:33:18,480 --> 00:33:21,560
Speaker 1: informed the view that John had, which is that you

608
00:33:21,600 --> 00:33:25,400
Speaker 1: can repeat this at scale over time. And by this

609
00:33:25,520 --> 00:33:30,560
Speaker 1: I mean identifying miss christ misunderstood market opportunities and equity markets.

610
00:33:30,600 --> 00:33:33,120
Speaker 1: So our view with what what is a private investment fund,

611
00:33:33,480 --> 00:33:37,760
Speaker 1: we have you know, nine figures of investable assets that

612
00:33:37,840 --> 00:33:40,240
Speaker 1: we are not looking for anybody's money. We're not selling

613
00:33:40,240 --> 00:33:44,000
Speaker 1: anybody a product or service. The the what we're selling

614
00:33:44,280 --> 00:33:47,080
Speaker 1: is we are going to build a community to really

615
00:33:47,120 --> 00:33:50,600
Speaker 1: look to scale what we experienced with the whole second

616
00:33:50,600 --> 00:33:54,400
Speaker 1: half of game Stop where you can bring in investors,

617
00:33:54,920 --> 00:33:58,600
Speaker 1: retail investors from across the spectrum, people who have passion,

618
00:33:58,680 --> 00:34:03,760
Speaker 1: who have creativity, who have this enthusiastic transparency and willingness

619
00:34:03,840 --> 00:34:06,720
Speaker 1: to share their information with others, like much like what

620
00:34:06,760 --> 00:34:09,640
Speaker 1: we did right we we had I had nothing to

621
00:34:09,880 --> 00:34:12,799
Speaker 1: gain from talking and sharing that. You know, I had

622
00:34:12,840 --> 00:34:14,759
Speaker 1: to cru crud all these order numbers, and I was

623
00:34:14,800 --> 00:34:17,600
Speaker 1: crowdsourcing these order numbers and had located you know that

624
00:34:17,680 --> 00:34:20,040
Speaker 1: you can understand what the company's e commerce results were

625
00:34:20,040 --> 00:34:23,200
Speaker 1: going to look like, etcetera, etcetera. So it's it's taking

626
00:34:23,280 --> 00:34:26,400
Speaker 1: that and taking that novel idea that you can crowdsource

627
00:34:26,440 --> 00:34:32,160
Speaker 1: research and realize alpha as as kind of a community aspect.

628
00:34:32,239 --> 00:34:34,520
Speaker 1: Now it's not like we're saying that you know, you

629
00:34:34,560 --> 00:34:35,960
Speaker 1: need to pay us to be part of this, but

630
00:34:36,280 --> 00:34:39,680
Speaker 1: we're still nascent and thinking it out more. But but

631
00:34:39,760 --> 00:34:42,200
Speaker 1: that in essence is what we're looking to build and replicate.

632
00:34:57,920 --> 00:35:01,080
Speaker 1: So can I just ask, so you went long game

633
00:35:01,160 --> 00:35:03,759
Speaker 1: Stop because you had a very specific interest in the

634
00:35:03,760 --> 00:35:07,440
Speaker 1: company from what I remember um and now based on

635
00:35:07,520 --> 00:35:11,960
Speaker 1: that experience, you're doing due diligence on other stocks and

636
00:35:12,040 --> 00:35:15,359
Speaker 1: sort of I guess exercising what you've learned from the

637
00:35:15,400 --> 00:35:19,040
Speaker 1: Game Stop experience in a broader way. What sort of

638
00:35:19,040 --> 00:35:21,680
Speaker 1: stocks are you looking at? And what's the difference between

639
00:35:22,320 --> 00:35:26,239
Speaker 1: you know, coming up with a investment thesis for game

640
00:35:26,280 --> 00:35:28,920
Speaker 1: Stop a business that you know intimately you're a video

641
00:35:28,960 --> 00:35:32,040
Speaker 1: game or you understand that whole thing, versus looking at

642
00:35:32,120 --> 00:35:35,320
Speaker 1: something else. Well, I think that's that's it. You should

643
00:35:35,400 --> 00:35:40,960
Speaker 1: have a more informed view than the market. I'll and

644
00:35:41,040 --> 00:35:43,120
Speaker 1: this is not a position that what has but I'll

645
00:35:43,160 --> 00:35:46,480
Speaker 1: talk about it aus and I have personally Allison Transmission, right,

646
00:35:46,960 --> 00:35:50,600
Speaker 1: I worked in the industry at Writer Transportation Logistics company

647
00:35:50,640 --> 00:35:54,800
Speaker 1: for five years and this you know, we've obviously observed

648
00:35:54,800 --> 00:35:57,080
Speaker 1: this e V bubble that I think we're still living

649
00:35:57,080 --> 00:36:01,000
Speaker 1: in where everyone expects that EV from both personal vehicles,

650
00:36:01,000 --> 00:36:06,560
Speaker 1: commercial vehicles, all sorts of transportation equipment will rapidly electrify

651
00:36:06,640 --> 00:36:10,080
Speaker 1: and the legacy O e ms or suppliers are all

652
00:36:10,080 --> 00:36:15,160
Speaker 1: out to pasture. But in the case of say, Alison Transmission,

653
00:36:15,200 --> 00:36:19,120
Speaker 1: they make automatic transmissions for commercial vehicles. And I've done

654
00:36:19,280 --> 00:36:24,439
Speaker 1: extensive research and lived extensively in my prior role at

655
00:36:24,520 --> 00:36:27,480
Speaker 1: the company of talking to O e M s understanding

656
00:36:27,520 --> 00:36:31,680
Speaker 1: their build plans, understanding what the opportunity is for them

657
00:36:31,719 --> 00:36:35,560
Speaker 1: to shift to e v UM, understanding that fleets aren't

658
00:36:35,600 --> 00:36:38,319
Speaker 1: likely going to be buying from no name startups. They're

659
00:36:38,400 --> 00:36:42,040
Speaker 1: much more likely to go with the trusted freight liners Internationals,

660
00:36:42,400 --> 00:36:46,040
Speaker 1: Mac Peter, Bilt, Kenworth, et ceteras of the world. To me,

661
00:36:46,080 --> 00:36:48,000
Speaker 1: I think Allison is a good example where when you

662
00:36:48,000 --> 00:36:50,080
Speaker 1: look at it, it's it's trading at its lowest multiple

663
00:36:50,120 --> 00:36:52,440
Speaker 1: in its history. The company was part of General Motors

664
00:36:52,440 --> 00:36:55,640
Speaker 1: in two thousand seven, it was sold to private equity.

665
00:36:55,680 --> 00:36:59,240
Speaker 1: It became public in twenty twelve. And since the company

666
00:36:59,320 --> 00:37:01,800
Speaker 1: on a forward or rings basis, you know, Eavy to Ebit,

667
00:37:01,880 --> 00:37:04,799
Speaker 1: Eavy to EBITDA has never been cheaper because you have

668
00:37:04,920 --> 00:37:08,080
Speaker 1: this massive storm cloud of oh no, e v is coming.

669
00:37:08,120 --> 00:37:10,520
Speaker 1: But then when you actually look at and you talk

670
00:37:10,600 --> 00:37:13,359
Speaker 1: to the experts in the in the space, you know, yes,

671
00:37:13,400 --> 00:37:19,640
Speaker 1: there's some government regulation in like not to go too detailed,

672
00:37:19,640 --> 00:37:23,240
Speaker 1: but I guess it's unique. Like Howard Marks has said

673
00:37:23,360 --> 00:37:25,880
Speaker 1: in the past, you need to have a different view.

674
00:37:25,880 --> 00:37:27,960
Speaker 1: If you want to outperform the index or the market,

675
00:37:27,960 --> 00:37:29,759
Speaker 1: you need to have a different view and you need

676
00:37:29,800 --> 00:37:32,040
Speaker 1: to be more right and I think Allison is an

677
00:37:32,040 --> 00:37:35,239
Speaker 1: example where I have a different view toward electrification adoption,

678
00:37:35,600 --> 00:37:39,120
Speaker 1: and hopefully I'll be right. Just on Allison, I'm curious

679
00:37:39,120 --> 00:37:42,120
Speaker 1: that you have personal expertise in a company like that,

680
00:37:42,320 --> 00:37:46,799
Speaker 1: But then the platform itself is like a crowdsourced research platform.

681
00:37:47,000 --> 00:37:51,279
Speaker 1: So do you would you go out and solicit other

682
00:37:51,440 --> 00:37:54,279
Speaker 1: information from people on that company or is it more

683
00:37:54,320 --> 00:37:57,759
Speaker 1: that you share your own insights with others. It's absolutely

684
00:37:58,360 --> 00:38:01,399
Speaker 1: more so the former, because I may know a few

685
00:38:01,440 --> 00:38:03,760
Speaker 1: things about a few things, but I might no means

686
00:38:03,840 --> 00:38:08,040
Speaker 1: an expert and everything. I'm very very little of an

687
00:38:08,040 --> 00:38:11,080
Speaker 1: expert in anything. But it's it's it's trying to make

688
00:38:11,120 --> 00:38:14,560
Speaker 1: it such that people see value and participating in this community,

689
00:38:14,600 --> 00:38:18,480
Speaker 1: bringing their own expertise to bear. Um. We have kicked

690
00:38:18,520 --> 00:38:20,680
Speaker 1: off earlier this month, we kicked off a series. You know,

691
00:38:20,680 --> 00:38:23,279
Speaker 1: it was ironic. We've recorded it the friday before the

692
00:38:23,320 --> 00:38:26,640
Speaker 1: news came out of Elon Musk getting involved with Twitter.

693
00:38:26,920 --> 00:38:29,279
Speaker 1: We had I had a friend of mine who's an

694
00:38:29,320 --> 00:38:31,319
Speaker 1: a g C at a public company who had spent

695
00:38:31,440 --> 00:38:34,200
Speaker 1: time on both the activist side and also on the

696
00:38:34,200 --> 00:38:36,800
Speaker 1: corporate side defending activists, and we had a robust discussion

697
00:38:36,800 --> 00:38:39,880
Speaker 1: on shareholder activism, and our hope is to have you know,

698
00:38:39,920 --> 00:38:42,520
Speaker 1: different programming where Look again, we're not trying to sell

699
00:38:42,560 --> 00:38:45,360
Speaker 1: you anything. Our view is if you see value and

700
00:38:45,400 --> 00:38:48,640
Speaker 1: participating in this community, you will be willing to share

701
00:38:48,680 --> 00:38:51,520
Speaker 1: your own insights knowledge base. No one is going to

702
00:38:51,520 --> 00:38:54,319
Speaker 1: be an expert on everything. Some people who have differentiated

703
00:38:54,400 --> 00:38:58,640
Speaker 1: views from their lived experiences, UM such that. Yeah, hopefully

704
00:38:58,640 --> 00:39:01,680
Speaker 1: we can cover a wide ectream of industries, of sectors

705
00:39:01,680 --> 00:39:05,160
Speaker 1: of companies and uncover some of these misunderstood and mispriced investments,

706
00:39:05,239 --> 00:39:09,759
Speaker 1: and it would mostly be driven by the expertise of

707
00:39:09,840 --> 00:39:13,360
Speaker 1: the of the crowd and the insights of the many. Um.

708
00:39:13,400 --> 00:39:15,320
Speaker 1: Some of some people are going to have more insights

709
00:39:15,360 --> 00:39:18,439
Speaker 1: than others, of course, but it's not going to be like, uh,

710
00:39:18,520 --> 00:39:21,279
Speaker 1: you know, Rod knows all this stuff about everything, because

711
00:39:21,280 --> 00:39:23,480
Speaker 1: that's not the case. I think it sounds really cool

712
00:39:23,520 --> 00:39:26,960
Speaker 1: and your description obviously of Ellis and specifically again taking

713
00:39:26,960 --> 00:39:30,400
Speaker 1: an assumption that everyone has these businesses or zeros and

714
00:39:30,640 --> 00:39:33,959
Speaker 1: questioning that obviously the parallels to game stop are clear.

715
00:39:34,160 --> 00:39:35,680
Speaker 1: We us have a couple more minutes. I just want

716
00:39:35,680 --> 00:39:38,359
Speaker 1: to ask you real quickly game Stop, like, what's the

717
00:39:38,400 --> 00:39:40,799
Speaker 1: next thing to watch like when do we see what

718
00:39:40,840 --> 00:39:44,400
Speaker 1: should people look for to say, Okay, the strategic efforts

719
00:39:44,440 --> 00:39:47,600
Speaker 1: that are being made are turning this into a better business.

720
00:39:47,640 --> 00:39:50,920
Speaker 1: So the company has told us, and i'll i'll rely

721
00:39:51,080 --> 00:39:54,200
Speaker 1: on the company's direction that we should be looking more

722
00:39:54,239 --> 00:39:55,880
Speaker 1: at the top line, which when you look at their

723
00:39:55,960 --> 00:39:59,760
Speaker 1: last quarterly result, they really force you know, they forsook

724
00:39:59,840 --> 00:40:03,239
Speaker 1: more RGIN gross margin meaningfully it was it was in

725
00:40:03,239 --> 00:40:06,200
Speaker 1: the high teams. So what I believe they are doing,

726
00:40:07,200 --> 00:40:10,239
Speaker 1: and they've said this since Cohen became chairman, is that

727
00:40:10,280 --> 00:40:12,279
Speaker 1: they are long term focused and what that means is

728
00:40:12,320 --> 00:40:14,919
Speaker 1: in the short term, they need to bring customers back

729
00:40:15,040 --> 00:40:18,600
Speaker 1: into the ecosystem. They need to regain customer trust, and

730
00:40:18,680 --> 00:40:22,120
Speaker 1: I believe their goal, like with Chewy, will be that

731
00:40:22,239 --> 00:40:25,200
Speaker 1: whereas the desire with Chewy is that that's the ultimate

732
00:40:25,239 --> 00:40:28,680
Speaker 1: destination for pets, game Stop will be the ultimate destination

733
00:40:28,760 --> 00:40:34,800
Speaker 1: for gamers. They've expanded product categories across accessories, PC, hardware,

734
00:40:34,880 --> 00:40:38,279
Speaker 1: and component try um, these these are you know, any

735
00:40:38,320 --> 00:40:40,960
Speaker 1: of themselves not going to be a game changer. I

736
00:40:41,000 --> 00:40:45,440
Speaker 1: do think the big question mark and the big perspective

737
00:40:45,600 --> 00:40:50,120
Speaker 1: upside scenario is what happens with this UH and a

738
00:40:50,239 --> 00:40:54,480
Speaker 1: tea marketplace their forays into blockchain as I. As I noted,

739
00:40:54,480 --> 00:40:56,719
Speaker 1: we've fund been following them from for a long time

740
00:40:56,760 --> 00:40:58,480
Speaker 1: and they've been working on this for more than a year.

741
00:40:58,520 --> 00:41:01,839
Speaker 1: The marketplace will be launching within the next UH it's

742
00:41:01,840 --> 00:41:04,560
Speaker 1: gonna be May soon, so before the end of July.

743
00:41:04,840 --> 00:41:08,440
Speaker 1: So I would look closely at what the receptivity is

744
00:41:08,480 --> 00:41:12,400
Speaker 1: to this marketplace. We've all seen I'm sure negative commentary

745
00:41:12,960 --> 00:41:16,040
Speaker 1: from you know, Ubisoft launched U n f T S

746
00:41:16,040 --> 00:41:18,560
Speaker 1: and gamers hated it. Blizzard has been talking about it

747
00:41:18,600 --> 00:41:20,640
Speaker 1: and gamers hate it. But I think it's because gamers

748
00:41:20,680 --> 00:41:23,680
Speaker 1: perceive n f T as as loot box two point oh,

749
00:41:23,719 --> 00:41:26,239
Speaker 1: where you're gonna pay for something and it's just the

750
00:41:26,239 --> 00:41:29,120
Speaker 1: company milking you out of things. I do think that

751
00:41:29,200 --> 00:41:32,359
Speaker 1: it's more oriented on there are creators, like we've seen

752
00:41:32,400 --> 00:41:34,200
Speaker 1: some of the stills where it's some of the artists

753
00:41:34,360 --> 00:41:36,600
Speaker 1: who worked on some of the most well known games

754
00:41:36,640 --> 00:41:39,880
Speaker 1: of our time putting out different um digital artwork that

755
00:41:39,960 --> 00:41:43,920
Speaker 1: could be digital collectibles. Company does have a thriving collectibles business,

756
00:41:43,960 --> 00:41:47,440
Speaker 1: so it does make sense that digital collectibles will dovetail

757
00:41:47,480 --> 00:41:50,440
Speaker 1: with physical collectibles and physical gaming. I think there's an

758
00:41:50,440 --> 00:41:52,839
Speaker 1: obviously a lot of question marks around the durability of

759
00:41:53,040 --> 00:41:56,560
Speaker 1: crypto gaming and blockchain gaming right actual infinity. It's like,

760
00:41:56,680 --> 00:41:59,279
Speaker 1: is it just a big ponzi? So I I think

761
00:41:59,320 --> 00:42:02,080
Speaker 1: it's fair to be uncertain about what that looks like,

762
00:42:02,160 --> 00:42:05,160
Speaker 1: but it's irrefutable that it's a rapidly growing market, there's

763
00:42:05,200 --> 00:42:07,400
Speaker 1: a ton of capital going into the space, and that

764
00:42:07,480 --> 00:42:10,520
Speaker 1: it is a real opportunity that though to me, is

765
00:42:10,520 --> 00:42:13,360
Speaker 1: the bowl case from here. Right, we're a ten billion

766
00:42:13,360 --> 00:42:17,680
Speaker 1: dollars market cap, so your your core business isn't going

767
00:42:17,719 --> 00:42:20,560
Speaker 1: to be enough to justify that. In my view, you

768
00:42:20,680 --> 00:42:23,120
Speaker 1: need there to be you know, free cash flow dollars

769
00:42:23,120 --> 00:42:26,200
Speaker 1: flowing in from this high margin digital business that they're building.

770
00:42:26,239 --> 00:42:28,640
Speaker 1: And it remains to be seen, but going to be

771
00:42:28,640 --> 00:42:30,400
Speaker 1: watching that closely over the next few months as they

772
00:42:30,480 --> 00:42:33,279
Speaker 1: launched the n f T platform. All right, well, Rod,

773
00:42:33,400 --> 00:42:35,240
Speaker 1: we gotta leave it there. But it was so great,

774
00:42:35,480 --> 00:42:38,320
Speaker 1: uh to catch up with you. Always really interesting and

775
00:42:38,400 --> 00:42:42,040
Speaker 1: appreciate you coming back on oddlock. Thank you for having me. Absolutely,

776
00:42:54,239 --> 00:42:56,960
Speaker 1: Rod is so great. I really I really enjoy me.

777
00:42:57,000 --> 00:42:59,560
Speaker 1: It seems like a genuinely I think it's a good

778
00:42:59,560 --> 00:43:02,520
Speaker 1: person messed up that he had to spend six figures

779
00:43:02,520 --> 00:43:06,440
Speaker 1: to click paperwork when I don't know, unless we're missing something,

780
00:43:06,640 --> 00:43:09,959
Speaker 1: it's like, yeah, it doesn't seem like the guy who

781
00:43:10,000 --> 00:43:13,239
Speaker 1: came up with like a fundamentals based bike he was

782
00:43:13,400 --> 00:43:16,239
Speaker 1: on Game Stop was like the one. He's the one

783
00:43:16,280 --> 00:43:20,880
Speaker 1: who has to anyway. Setting that aside, and it absolutely

784
00:43:20,880 --> 00:43:23,160
Speaker 1: sounds like a nightmare. It does feel like and this

785
00:43:23,200 --> 00:43:25,359
Speaker 1: is something that came up with Kyla and Lily as well.

786
00:43:25,400 --> 00:43:28,879
Speaker 1: It does feel like something's changing here, like some sort

787
00:43:28,920 --> 00:43:34,080
Speaker 1: of disruption in the way research and I guess investment

788
00:43:34,160 --> 00:43:37,640
Speaker 1: communication actually works, if that makes sense. Oh yeah, for sure,

789
00:43:37,760 --> 00:43:41,719
Speaker 1: Like this is in the idea of like crowdsourcing or

790
00:43:41,760 --> 00:43:46,160
Speaker 1: distributed research to find like genuine, genuinely novel ideas like

791
00:43:46,400 --> 00:43:48,680
Speaker 1: I love Twitter, I love finance Twitter, but you know,

792
00:43:49,400 --> 00:43:51,719
Speaker 1: it can get trapped at times into these sort of

793
00:43:51,719 --> 00:43:53,880
Speaker 1: like group think where it's like everyone's all into like

794
00:43:53,960 --> 00:43:56,200
Speaker 1: cloud and text docs and then they had turns and

795
00:43:56,239 --> 00:43:58,680
Speaker 1: everyone hates cloud and text docs and all that stuff,

796
00:43:58,800 --> 00:44:02,160
Speaker 1: and so actually likes amining individual companies and saying, you know,

797
00:44:02,320 --> 00:44:03,920
Speaker 1: here's the thing that a lot of people believe in.

798
00:44:03,920 --> 00:44:07,000
Speaker 1: It may be wrong. Is like it seems like a

799
00:44:07,080 --> 00:44:09,400
Speaker 1: high potential for the Internet to come together on or

800
00:44:09,520 --> 00:44:12,440
Speaker 1: just being able to stress test a thesis, which is

801
00:44:12,480 --> 00:44:15,759
Speaker 1: something that sell side analysts at large banks. I don't

802
00:44:15,800 --> 00:44:17,880
Speaker 1: think they really get a chance to do it. They

803
00:44:17,920 --> 00:44:20,440
Speaker 1: can do it internally, but it's not like they can

804
00:44:20,719 --> 00:44:23,440
Speaker 1: publish a no externally and then ask everyone like, well

805
00:44:23,440 --> 00:44:25,239
Speaker 1: what do you think about it? Well, you know they

806
00:44:25,280 --> 00:44:28,279
Speaker 1: have those ideas dinners, right, and so it's like people

807
00:44:28,320 --> 00:44:34,560
Speaker 1: throw out stuff. They probably argue, but why can't public right? Anyway,

808
00:44:34,640 --> 00:44:36,879
Speaker 1: it was great, Yeah, it's fun shot, all right, should

809
00:44:36,880 --> 00:44:38,520
Speaker 1: we leave it there? Let's leave it there. This has

810
00:44:38,560 --> 00:44:41,960
Speaker 1: been another episode of the All Thoughts podcast. I'm Tracy Alloway.

811
00:44:42,000 --> 00:44:44,520
Speaker 1: You can follow me on Twitter at Tracy Alloway and

812
00:44:44,560 --> 00:44:46,759
Speaker 1: I'm Joe wi Isn't Though. You can follow me on

813
00:44:46,800 --> 00:44:50,520
Speaker 1: Twitter at The Stalwart. Follow our guest Rod Alsman, He's

814
00:44:50,600 --> 00:44:55,120
Speaker 1: at rod Alsman. Follow our producer Kermen Rodriguez at Carmen Arman.

815
00:44:55,239 --> 00:44:59,439
Speaker 1: Follow the Bloomberg head of podcast, Francesca Levi at Francesca Today,

816
00:44:59,560 --> 00:45:02,400
Speaker 1: and check out all of our podcasts at Bloomberg Onto

817
00:45:02,440 --> 00:45:05,040
Speaker 1: the handle at podcasts. Thanks for listening.