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Look, it's a it's a it's a it's 
a gut punch and you know running

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a company and I've been doing 
this. 

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It is a gut punch. 
What Salesforce is going through

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right now is a gut punch. 
Now, also the fact that 

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Salesforce is down 47 percent 
year-to-date, that's a gut punch

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but that's not even what Marc 
benioff the CEO of Salesforce is

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even talking about here. 
He's talking about the fact that

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seemingly nobody wants to work 
with him. 

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We have sales force. 
Executives not just employees 

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but Executives across the board 
fleeing, the company, an exodus 

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of Executives. 
We still have the CEO of the 

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company, Marc benioff. 
But even last earnings report, 

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the last Salesforce earnings 
report was a disappointment to 

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investors causing yet another 
sell off. 

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So the stock is down, big this 
year, executives are leaving the

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CEO is still currently here and 
we have to ask the question. 

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What do we do in this situation?
Do we buy more Salesforce? 

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Do we double down on it? 
Do we? 

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Just hold strong and kind of try
to wait through this, or do we 

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sell out and move on to 
something else. 

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Something that has a brighter 
future and less red flags. 

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That's what I'm going to be 
diving into, in this episode. 

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We're going to be looking over 
Salesforce and trying to dig 

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down into what's really going on
and what I plan on doing with my

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holding. 
So, let's first start off by 

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jumping into a portfolio update.
If your new hair, this is going 

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to be something a little bit 
shocking, but I show my 

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portfolios with complete 
transparency on a week-by-week 

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basis. 
No matter what direction they're

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headed. 
So, even though this one's in 

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the red, right? 
Now and this one's performing 

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poorly. 
I'm going to continue to show 

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the progress of it every single 
week for at least the next 

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couple of years until at least 
2025 and I might show it beyond 

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that as well. 
So if you want to follow along 

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and track this portfolio live 
with real updates, just 

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subscribe to the channel and you
can follow along for free. 

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Now, when I look at the 
performance here, and I look at 

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the individual Holdings. 
I notice a common Trend here, 

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basically, every company in this
portfolio, aside from Berkshire,

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Hathaway, all of them are out of
favor in this market. 

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Investors don't Anything to do 
with these type of companies 

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grow center technology 
companies, they're not in favor 

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right now. 
We have the Federal Reserve just

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yesterday going on and on about 
how they're not done. 

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That's the message they said 
we're not done. 

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We're more hawkish, we have 
interest rates going up over the

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next year. 
We're going to hold them very 

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high. 
We're going to have the most 

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restrictive monetary environment
that we've had in decades. 

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It's going to be brutal for any 
company. 

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Like these ones, that's what 
drone Palace said and every 

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single time he holds a meeting 
these Please go down in value 

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more, and more. 
You can look just today one day 

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after the meeting. 
And we're down 5% 4.75%, another

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five thousand dollars. 
So these type of meetings with 

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drone, pal, being incredibly 
hawkish and talking about how 

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much he's going to raise 
interest, rates causes investors

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to run out of these companies 
into the more defensive ones. 

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That's the environment we're in.
Now, I've said this many times I

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would not copy this portfolio, I
don't recommend copying it. 

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In fact, I'd recommend not doing
so because it's highly volatile.

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These companies trade up and 
down 40, 50 percent in a single 

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year and it's in an environment 
right now, we're again, these 

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type of companies are out of 
favor, so, don't copy this 

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portfolio. 
I'm doing this more of a fun 

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thing to watch from the 
sidelines, but I wouldn't jump 

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in unless you're ready for all 
the risks. 

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All the volatility that comes 
along with this volatility is 

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one of those things that's much 
easier said, than done. 

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It's easier to look into the 
future and say, yeah, I can 

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handle volatility. 
I'm okay with that. 

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But once you're actually in it 
like this, it's much more 

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difficult. 
To handle, it's much easier said

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than done. 
Now, when I Benchmark this 

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against the S&P 500, as if I 
deposited money at the same time

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in the same amounts, this is 
what it looks like. 

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The S&P 500 is the redline the 
story fund is the blue line. 

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So we are underperforming, the 
S&P 500 by 23% right now, a huge

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gap of under performance but 
we've been tagging along over 

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the past six months, we're kind 
of hanging in there and we've 

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actually closed the Gap a little
bit for time period. 

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We're underperforming by 30%. 
So I think we're doing. 

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Okay, we're slowly catching up a
little bit but this is still not

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good. 
We're still under performing 

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00:04:08,600 --> 00:04:11,500
right now. 
Luckily I have a lot of time on 

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my side. 
I can let these companies sit 

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and grow over a very long period
of time. 

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I do not need this money anytime
soon. 

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So that's my overall portfolio. 
If we want to look specifically 

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at Salesforce ticker symbol CRM,
it's right here, the very bottom

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row, I can look at my return so 
far since I've bought it 

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throughout the year and not 
right at the beginning. 

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Beginning of the year, I'm down 
35 percent. 

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So the stock overall this year 
is down 47%, but my personal 

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position and it is down, 35% not
optimal. 

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We're in the red by over two 
thousand dollars on this 

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holding. 
And we currently have a holding 

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value of thirty eight hundred 
dollars. 

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And as I've outlined, we've had 
a lot going on with this 

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specific holding the big news 
item. 

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The most recent one, is it, a 
lot of executives are bailing on

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Salesforce. 
They're just leaving the 

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company. 
We have right here that 

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Salesforce just lost another 
CEO. 

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So the way that they ran the 
company is Marc, benioff was the

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CEO and then he hired a co co 
similar to Reed Hastings and Ted

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strandos, the co-ceo is 
something that's uncommon, but 

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it works in some cases. 
I don't necessarily love co-ceo 

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relationships but in some cases,
if you have two individuals that

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have been basically in the 
company so long, they're each 

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taking on about 50% of the work,
they're each running half the 

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company and they're both 
basically co-ceos. 

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So you may as well just give 
them the title. 

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That's how Reed Hastings intense
rounds have been. 

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So they just made something that
was unofficial official. 

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Well, Marc benioff did the same 
thing, he was the CEO of the 

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company and then you made 
someone else, the co-ceo in the 

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last two weeks, Salesforce has 
lost two of its most senior 

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leaders first. 
The company announced that 

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co-ceo Bret Taylor would leave 
in January. 

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Then on Monday, the company 
said, that Stewart Butterfield, 

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the founder and CEO of slack, 
which sales force acquired in 

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2020 for almost 28 billion. 
Would also leave next month. 

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So we have the CEO bailing early
next year and then we have the 

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CEO of slack which they purchase
leaving early next year as well.

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They're both leaving January, 
they say to be fair. 

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None of the people leaving said 
anything negative about CEO Marc

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benioff, in fact, Butterfield 
didn't mention him at all. 

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That's a little odd in my 
opinion, you know, and not 

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saying something - that's good, 
I guess. 

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But the fact that he didn't 
mention him at all, that tells 

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me in my experience in the 
workforce. 

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If someone leaves and are a 
high-ranking position and they 

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leave a very public high-profile
position and they don't even 

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mention the team that they 
worked with. 

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They don't say anything at all. 
That strikes, me is. 

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If you have nothing nice to say,
don't say anything at all. 

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If you had anything positive to 
say about Marc, benioff, he 

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would have said it so that shows
me that they had some 

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disagreements. 
They didn't like how he was 

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running the company. 
Maybe there is problems with the

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acquisition that frequently 
happens but regardless I think 

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it's good. 
He didn't say anything - but I 

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think that Is probably some bad 
blood there. 

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He did mention Taylor only to 
say that the timing was purely 

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coincidental. 
This is another thing. 

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Both of these executives are 
leaving Salesforce at the exact 

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same time, and then they're 
saying, you know what, this 

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wasn't like some planned thing. 
It was just coincidental which a

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lot of people have outlined as 
something positive. 

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Hey they're just leaving 
coincidentally, that's not so 

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bad. 
Again, in my opinion I read this

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is almost worse. 
The fact that you have multiple 

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different Executives bailing on 
the The same company at the same

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time without coordinating at 
all. 

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That shows that something might 
be going on. 

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And that's a big red flag. 
They say it is however, an 

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interesting coincidence. 
Considering Taylor's largely 

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considered responsible for 
shepherding, salesforce's 

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acquisition of slack in the 
first place. 

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So yeah, we have a lot of 
speculation here. 

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So to me this first news item 
that we have multiple 

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high-ranking Executives leaving 
at the same time. 

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I think it's a red flag. 
I have no other way to really 

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describe it than that. 
It is not a good sign. 

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Anytime you want to company and 
there's employees internally 

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bailing on the company and 
higher up positions, leaving the

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company left and right, that's a
red flag. 

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That means that they have an 
inside view of something going 

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on. 
And they're saying, I don't want

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part in this, I'd rather just go
and find my way somewhere else. 

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Even though I'm getting a 
paycheck here, I want out. 

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That is not a good sign for the 
company. 

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So whether this has a long-term 
negative effect on the stock, I 

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00:08:24,200 --> 00:08:27,600
can't say, I don't know, but I 
think this is clearly a red flag

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00:08:27,600 --> 00:08:29,700
in something to pay attention to
was Salesforce. 

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Now, the next part is Salesforce
is what the actual operating 

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00:08:32,200 --> 00:08:34,799
results of the company are 
doing, how is the company doing 

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00:08:34,799 --> 00:08:37,900
operationally with their 
profitability and with their 

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00:08:37,900 --> 00:08:39,900
progress and growth. 
Now, the first thing that I want

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to go into, is the obvious 
elephant in the room here, which

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is the stocks performance this 
year, which has been is just 

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00:08:46,400 --> 00:08:48,800
awful, it's down, 47 percent 
year-to-date. 

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So this company has been a poor 
investment for the past year, 

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00:08:51,900 --> 00:08:55,400
but I like to start off with the
stock performance before even 

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going into the operating 
performance because a stock 

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00:08:58,100 --> 00:09:00,600
performance sets the tone How 
people view. 

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00:09:00,600 --> 00:09:04,400
The company sentiment is driven 
by stock price. 

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00:09:04,700 --> 00:09:08,500
If Salesforce is up 50% this 
year and it had the same 

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00:09:08,500 --> 00:09:11,600
operating performance people, 
just view it more positively, 

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00:09:11,600 --> 00:09:13,700
they'd look at it and they'd say
this companies probably doing 

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00:09:13,700 --> 00:09:17,000
something, right, right? 
Sentiment is dictated by the 

194
00:09:17,000 --> 00:09:20,400
stocks performance. 
So this sets the tone Salesforce

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00:09:20,400 --> 00:09:23,100
is down big and so now people 
are highly critical of the 

196
00:09:23,100 --> 00:09:25,800
company, but I also want to put 
this in context. 

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00:09:26,100 --> 00:09:27,900
Let's just do some quick 
comparables here. 

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00:09:28,500 --> 00:09:31,700
Here we have crowds Strike 
another Cloud company. 

199
00:09:31,700 --> 00:09:33,500
This is one that's in 
cybersecurity. 

200
00:09:33,700 --> 00:09:37,300
It has very strong fundamentals,
high-revenue, net retention 

201
00:09:37,300 --> 00:09:39,800
rates and things like that. 
It's down 41 percent. 

202
00:09:39,800 --> 00:09:44,700
This year, we have Amazon the 
Juggernaut Cloud hosting online 

203
00:09:44,700 --> 00:09:47,300
retail, you know, the third 
party services. 

204
00:09:47,300 --> 00:09:50,600
This is one of the most powerful
companies in the world down 48 

205
00:09:50,600 --> 00:09:54,000
percent. 
We have atlassian, this company 

206
00:09:54,000 --> 00:09:56,800
again has grown rapidly this 
year. 

207
00:09:56,900 --> 00:09:59,200
The profitability metrics are 
moving in the right direction 

208
00:09:59,400 --> 00:10:01,000
down. 
Fifty-eight percent this year, 

209
00:10:01,700 --> 00:10:05,900
Netflix is down, 51 percent, 
Tesla's down 60%, then we even 

210
00:10:05,900 --> 00:10:09,200
have the software Tech sector 
ETF. 

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00:10:09,600 --> 00:10:13,800
And this is down 34 percent, 
year-to-date the entire software

212
00:10:13,800 --> 00:10:18,700
Industries down 34 percent, we 
have the cloud industry, wisdom 

213
00:10:18,700 --> 00:10:21,700
trees, cloud computing ETF is 
down 49 percent. 

214
00:10:21,700 --> 00:10:23,800
So, of course, it's 
disappointing to see Salesforce 

215
00:10:23,800 --> 00:10:27,300
down 47% this year, but I like 
to put it in context with the 

216
00:10:27,300 --> 00:10:29,700
entire Cloud industry to show 
that. 

217
00:10:29,800 --> 00:10:32,400
It's not much of an outlier. 
It's not like the cloud 

218
00:10:32,400 --> 00:10:35,300
Industries up, twenty percent 
this year and Salesforce is 

219
00:10:35,300 --> 00:10:39,300
down. 50% that would be more 
troubling but the relative 

220
00:10:39,400 --> 00:10:42,900
performance of Salesforce to all
of its peers to the entire 

221
00:10:42,900 --> 00:10:45,900
industry the entire Tech cloud 
computing industry. 

222
00:10:46,400 --> 00:10:50,500
It's basically in line maybe 
slightly worse slightly better. 

223
00:10:50,600 --> 00:10:53,600
It's basically in line with the 
rest of the industry and like I 

224
00:10:53,600 --> 00:10:57,600
said on the onset, like I said 
with my portfolio update, these 

225
00:10:57,600 --> 00:11:00,800
type of companies are out of 
favor with Pastors, if you're 

226
00:11:00,800 --> 00:11:03,300
investing in tech companies, 
cloud computing companies, 

227
00:11:03,700 --> 00:11:06,600
you're going to have a rough 
time until j-pal cools off a 

228
00:11:06,600 --> 00:11:08,100
bit. 
That's just a story. 

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00:11:08,100 --> 00:11:10,700
That's the macroeconomics. 
I think that's something you 

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00:11:10,700 --> 00:11:13,100
have to keep in mind. 
Now let's go ahead and look at 

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00:11:13,100 --> 00:11:15,000
some of the real measurements 
here. 

232
00:11:15,100 --> 00:11:17,600
Last quarter, they reported 
growth of 14 percent 

233
00:11:17,600 --> 00:11:19,700
year-over-year. 
I still see that as strong 

234
00:11:19,700 --> 00:11:22,100
growth in this environment. 
I think that's very strong 

235
00:11:22,100 --> 00:11:24,400
growth. 
And again, this is a major focus

236
00:11:24,400 --> 00:11:27,100
of Marc benioff. 
If we look at his tweets, this 

237
00:11:27,100 --> 00:11:31,400
is his pinned, tweet the thing. 
He wants you to see out of all 

238
00:11:31,400 --> 00:11:34,600
the things he tweets, 
salesforce's Revenue growth year

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00:11:34,600 --> 00:11:37,300
after year, after year. 
He has twenty six point five 

240
00:11:37,300 --> 00:11:40,900
billion dollars in revenue and 
2022, and then Thirty 1 billion 

241
00:11:40,900 --> 00:11:42,900
dollars in guidance for next 
year. 

242
00:11:43,400 --> 00:11:46,900
So again, top line revenue 
growth is obviously the big 

243
00:11:46,900 --> 00:11:50,200
Focus for Marc benioff and I 
think you actually focuses on 

244
00:11:50,200 --> 00:11:53,300
this metric a little too much 
because although this is good 

245
00:11:53,300 --> 00:11:56,700
for bragging rights, you can pin
this on your Twitter, you can 

246
00:11:56,700 --> 00:12:00,000
brag about it on CNBC how you're
bigger than all these Other 

247
00:12:00,000 --> 00:12:02,800
cloud computing, companies 
viewers of the gels of Carlson 

248
00:12:02,800 --> 00:12:05,100
show. 
No, well by now that revenue 

249
00:12:05,100 --> 00:12:07,100
does not pay. 
You dividends Revenue, doesn't 

250
00:12:07,100 --> 00:12:10,200
give you BuyBacks Revenue, 
doesn't pay the shareholders and

251
00:12:10,200 --> 00:12:11,800
revenue doesn't give you free 
cash flow. 

252
00:12:11,800 --> 00:12:14,800
Profitability gives you all of 
those things margins. 

253
00:12:14,800 --> 00:12:17,000
With the revenue is what gives 
you those things? 

254
00:12:17,100 --> 00:12:19,700
And I think that should be a 
primary focus for Salesforce. 

255
00:12:20,100 --> 00:12:21,900
Let's go ahead and look at a 
couple other metrics here, we 

256
00:12:21,900 --> 00:12:25,200
have the ibadah, generally 
speaking going up over time, but

257
00:12:25,200 --> 00:12:27,500
not nearly as smooth as the 
revenue. 

258
00:12:27,800 --> 00:12:31,600
We have the free cash flow hair.
It shows a strong trend of going

259
00:12:31,600 --> 00:12:34,800
up over time, in fact, the free 
cash flow looks fantastic. 

260
00:12:34,800 --> 00:12:36,600
Just amazing. 
Look at this free cash flow 

261
00:12:36,600 --> 00:12:38,900
Co-op year after year, it's 
absolutely incredible. 

262
00:12:39,000 --> 00:12:42,100
It reminds me of companies like 
Nike and Estee Lauder, the best 

263
00:12:42,100 --> 00:12:43,600
of breed companies in the 
market. 

264
00:12:43,900 --> 00:12:47,000
But then we do something here, 
we toggle over the stock based 

265
00:12:47,000 --> 00:12:49,400
compensation and it makes the 
picture. 

266
00:12:49,400 --> 00:12:52,600
Look a little less glamorous, a 
little less good. 

267
00:12:52,800 --> 00:12:56,700
In fact, the amount of free cash
flow that Salesforce earns is 

268
00:12:56,700 --> 00:12:59,600
basically chopped in half by the
amount of dilution that they do.

269
00:13:00,000 --> 00:13:02,100
And this is one of the points 
that I think investors are the 

270
00:13:02,100 --> 00:13:05,200
most troubled with this stock. 
We can see this most clearly if 

271
00:13:05,200 --> 00:13:08,600
we switch over to annual hair, 
we have the free cash flow in 

272
00:13:08,600 --> 00:13:10,200
Orange. 
We have the stock based 

273
00:13:10,200 --> 00:13:13,600
compensation and purple and 
notice how the free cash flow is

274
00:13:13,600 --> 00:13:16,800
basically chopped in half year 
over year by the amount of 

275
00:13:16,800 --> 00:13:19,200
stock-based compensation. 
So we could cut all these 

276
00:13:19,200 --> 00:13:23,800
numbers in half and say and 2018
since its 2.2 billion dollars in

277
00:13:23,800 --> 00:13:26,200
free cash flow. 
We chop that in half because the

278
00:13:26,200 --> 00:13:29,400
stock based compensation and we 
have one point 1 billion dollars

279
00:13:29,400 --> 00:13:32,200
left. 
Dover after dilution 2019, we 

280
00:13:32,200 --> 00:13:39,300
have one point for in 2020. 
We have 1.8 in 2021, we have two

281
00:13:39,400 --> 00:13:42,000
and then a 2022. 
We have two point five so far. 

282
00:13:42,100 --> 00:13:45,800
So even if you did net out, the 
stock based compensation, this 

283
00:13:45,800 --> 00:13:48,600
company looks pretty strong. 
Another metric we can look at is

284
00:13:48,600 --> 00:13:51,400
the free cash flow per share. 
This is where we take the amount

285
00:13:51,400 --> 00:13:54,200
of free cash flow, the company 
generates and then we divide 

286
00:13:54,200 --> 00:13:56,200
that number by the shares 
outstanding. 

287
00:13:56,400 --> 00:13:59,300
So if they are diluting the 
shareholder, that's factored 

288
00:13:59,300 --> 00:14:01,100
into this. 
Calculation and we can see that 

289
00:14:01,108 --> 00:14:03,900
they're growing, the free cash 
flow per share over the past 10 

290
00:14:03,900 --> 00:14:08,400
years by 21.7%. 
Kegger, that's a very fast 

291
00:14:08,400 --> 00:14:10,600
growth rate of the free cash 
flow per share. 

292
00:14:10,600 --> 00:14:14,500
So again, this looks terrible 
because half the money is eaten 

293
00:14:14,500 --> 00:14:17,800
up by stock-based compensation. 
That's a big negative for the 

294
00:14:17,800 --> 00:14:21,000
investor, but even when you 
factor that in their still 

295
00:14:21,000 --> 00:14:24,000
growing, the free cash flow 
above that at a very attractive 

296
00:14:24,000 --> 00:14:26,100
rate. 
Now if we move on from the cash 

297
00:14:26,100 --> 00:14:28,300
flows and we look at the actual 
balance sheet of this company. 

298
00:14:28,400 --> 00:14:30,800
What we have here is a chart 
that That shows the cash the 

299
00:14:30,800 --> 00:14:34,600
debt in the capital leases, the 
debt is long-term debt in the 

300
00:14:34,608 --> 00:14:37,700
capital. 
Leases are basically like rental

301
00:14:37,700 --> 00:14:40,600
agreements but they, they 
organize them in a different way

302
00:14:40,600 --> 00:14:42,700
where they call them Capital 
leases because they might have 

303
00:14:42,700 --> 00:14:45,300
some ownership rights so we can 
simply filter and look at the 

304
00:14:45,300 --> 00:14:46,700
cash for. 
It's the long-term debt. 

305
00:14:47,000 --> 00:14:49,800
They currently have eleven point
nine billion dollars in cash, 

306
00:14:50,300 --> 00:14:53,200
and then eight point eight five 
billion dollars in long-term 

307
00:14:53,200 --> 00:14:54,900
debt. 
And the long-term debt is 

308
00:14:54,900 --> 00:14:58,000
steadily going down quarter 
after quarter, then we have the 

309
00:14:58,000 --> 00:15:01,400
capital leases here, if you 
Actor in the capital leases it's

310
00:15:01,400 --> 00:15:04,600
barely above the amount of cash 
they have, but I don't consider 

311
00:15:04,600 --> 00:15:07,500
this problematic. 
This company does have a very 

312
00:15:07,500 --> 00:15:10,500
strong balance sheet that needs 
to be said about Salesforce. 

313
00:15:10,700 --> 00:15:12,600
They're in a very good 
situation, they're going to have

314
00:15:12,600 --> 00:15:14,800
no problems with the liquidity 
crunch. 

315
00:15:14,800 --> 00:15:18,200
Now, finally, the last thing in 
this one is a killer for 

316
00:15:18,200 --> 00:15:21,400
Salesforce, is the shares 
outstanding over time. 

317
00:15:21,900 --> 00:15:25,700
We've seen these charts before 
investors hate this and I think,

318
00:15:25,700 --> 00:15:28,800
for good reason, when we see a 
long history of the amount of 

319
00:15:28,800 --> 00:15:32,000
shares outstanding, Going up, 
that means that your ownership 

320
00:15:32,000 --> 00:15:33,900
in the company is being diluted 
over time. 

321
00:15:34,200 --> 00:15:37,100
So you own less and less of the 
company as their printing out 

322
00:15:37,100 --> 00:15:40,100
and giving away more shares to 
employees over and over again 

323
00:15:40,200 --> 00:15:43,300
they're diluting your stake and 
giving that Equity to employees 

324
00:15:43,500 --> 00:15:45,000
and that's how they run the 
business. 

325
00:15:45,300 --> 00:15:48,300
And a lot of times companies do 
this because it looks better on 

326
00:15:48,300 --> 00:15:51,500
paper to pay employees through 
Equity than it does through 

327
00:15:51,500 --> 00:15:53,400
cash. 
So they have incentives to do 

328
00:15:53,400 --> 00:15:55,800
this. 
And Salesforce has been a highly

329
00:15:55,800 --> 00:15:58,000
diluted company over the past 
two decades. 

330
00:15:58,000 --> 00:16:01,900
So this aspect of The dilute of 
nature of it is one part of it 

331
00:16:01,900 --> 00:16:04,200
that I think it's been a big 
downside for a long period of 

332
00:16:04,208 --> 00:16:06,400
time. 
And this brings me to my next 

333
00:16:06,400 --> 00:16:09,200
point about Salesforce, 
something that I don't like 

334
00:16:09,200 --> 00:16:13,200
about this company is I think 
it's very difficult to do real 

335
00:16:13,200 --> 00:16:15,500
analysis on. 
I think a lot of the numbers and

336
00:16:15,500 --> 00:16:18,800
a lot of the things they say you
have to do a lot of detective 

337
00:16:18,800 --> 00:16:21,300
work to decipher them. 
Let me give you one example. 

338
00:16:21,300 --> 00:16:25,100
Here I'll bring up the latest 
earnings report from Salesforce 

339
00:16:25,100 --> 00:16:28,000
is just the most recent quarter 
a couple weeks ago. 

340
00:16:28,000 --> 00:16:31,600
We have November 30th. 20 right 
or 2022. 

341
00:16:31,600 --> 00:16:35,600
Sorry, we look at this and we 
have all the numbers here, they 

342
00:16:35,600 --> 00:16:37,500
do the highlights. 
They try to brag about what the 

343
00:16:37,500 --> 00:16:40,700
company is doing. 
We have the revenue growing 14% 

344
00:16:40,700 --> 00:16:43,600
19% in constant currency. 
I think that's fine. 

345
00:16:43,700 --> 00:16:45,200
Top line revenue, growth is 
great. 

346
00:16:45,400 --> 00:16:48,400
Again, that's the big Focus for 
Marc benioff, but it's when you 

347
00:16:48,400 --> 00:16:52,100
get into the profitability 
metrics where I have issue with 

348
00:16:52,100 --> 00:16:53,900
how they relay what they're 
doing. 

349
00:16:54,700 --> 00:16:57,800
Let's go ahead and look at one 
example, we have right here, 

350
00:16:58,300 --> 00:17:01,700
they say they return. 
One point seven billion dollars 

351
00:17:01,700 --> 00:17:05,200
to shareholders in the third 
quarter in the form of share 

352
00:17:05,200 --> 00:17:09,099
repurchases, that is share 
BuyBacks so they said that 

353
00:17:09,099 --> 00:17:12,599
they're returning one point 
seven billion dollars back to 

354
00:17:12,599 --> 00:17:15,599
the shareholder that's money. 
Going to you they pointed out 

355
00:17:15,599 --> 00:17:17,500
there. 
Claire's day returned, 1.7 

356
00:17:17,500 --> 00:17:20,500
billion to shareholders in the 
form of share repurchases. 

357
00:17:20,800 --> 00:17:22,800
Now we should know what share 
repurchases are. 

358
00:17:22,900 --> 00:17:25,200
I'm going to have a full video 
on this in the future but a 

359
00:17:25,200 --> 00:17:27,500
share repurchase is called a 
share buyback. 

360
00:17:27,700 --> 00:17:30,700
It's when they buy back shares 
outstanding During which is the 

361
00:17:30,700 --> 00:17:33,500
opposite of dilution. 
So the thing that investors have

362
00:17:33,500 --> 00:17:36,400
been complaining about the 
shares outstanding going up, 

363
00:17:36,600 --> 00:17:39,600
Sherry purchasing is doing the 
opposite and we should see this 

364
00:17:39,600 --> 00:17:42,800
number come down. 
But the interesting thing is 

365
00:17:43,000 --> 00:17:47,600
look at last quarter's numbers, 
we ended the quarter with 997 

366
00:17:47,700 --> 00:17:51,000
million shares outstanding, the 
quarter before. 

367
00:17:51,400 --> 00:17:54,900
We had a 997 million shares 
outstanding. 

368
00:17:54,900 --> 00:17:57,000
So the share count is the exact 
same. 

369
00:17:57,400 --> 00:17:59,400
The exact same quarter over 
quarter. 

370
00:17:59,700 --> 00:18:02,000
Belgium is correct here. 
My website is showing these 

371
00:18:02,000 --> 00:18:04,500
numbers correctly. 
The share count didn't go down 

372
00:18:04,500 --> 00:18:07,300
at all. 
So they spent one point seven 

373
00:18:07,300 --> 00:18:10,600
billion dollars on BuyBacks 
saying that they return that to 

374
00:18:10,600 --> 00:18:13,000
the shareholder. 
When in reality, they don't 

375
00:18:13,000 --> 00:18:14,300
return anything to the 
shareholder. 

376
00:18:14,600 --> 00:18:16,000
The share count didn't go down 
at all. 

377
00:18:16,200 --> 00:18:18,600
All they did was offset the 
amount of dilution that they're 

378
00:18:18,600 --> 00:18:21,900
already doing. 
So, this is such a tricky way. 

379
00:18:22,100 --> 00:18:23,600
I absolutely hate that 
companies. 

380
00:18:23,600 --> 00:18:25,100
Do this. 
I think it's incredibly 

381
00:18:25,100 --> 00:18:26,700
misleading. 
I think it. 

382
00:18:26,700 --> 00:18:29,500
Honestly, in my opinion, I think
this type of thing should be a 

383
00:18:29,700 --> 00:18:32,500
Illegal to say, I think a gaap 
accounting should update their 

384
00:18:32,500 --> 00:18:35,400
rules and come out and be much 
more clearer with the effect. 

385
00:18:35,400 --> 00:18:37,600
This is having to shareholders 
because basically, what 

386
00:18:37,600 --> 00:18:40,200
Salesforce is doing here is 
saying that we're diluting you 

387
00:18:40,500 --> 00:18:43,200
to pay for our employees, but 
then we're buying back the 

388
00:18:43,200 --> 00:18:45,500
dilution and off setting it to 
0. 

389
00:18:45,800 --> 00:18:48,500
And what they're saying is we're
returning that money back to the

390
00:18:48,500 --> 00:18:51,300
shareholder, in my opinion, 
that's not accurate. 

391
00:18:51,400 --> 00:18:53,800
That's like me saying. 
I'm going to take a dollar from 

392
00:18:53,800 --> 00:18:55,600
you and then I'm going to give 
it back to you. 

393
00:18:55,600 --> 00:18:58,200
And then at the end of this, I'm
going to say I just gave you a 

394
00:18:58,200 --> 00:19:00,400
dollar. 
Well, that's Really the case I 

395
00:19:00,400 --> 00:19:01,700
took one and then I gave it 
back. 

396
00:19:01,700 --> 00:19:04,900
We're basically netting out zero
in this case we're literally 

397
00:19:04,900 --> 00:19:09,000
netting out. 0 investors did not
gain any equity in the company 

398
00:19:09,000 --> 00:19:12,400
at all, share counts the exact 
same and this is the true tell 

399
00:19:12,400 --> 00:19:15,200
of if you're gaining Equity. 
We own common shares 

400
00:19:15,200 --> 00:19:18,000
outstanding, if you're gaining 
equity in the company, the 

401
00:19:18,000 --> 00:19:19,700
common shares outstanding will 
come down. 

402
00:19:19,800 --> 00:19:22,300
So again, when I look at these 
reports and I see them claiming 

403
00:19:22,300 --> 00:19:24,500
right at the headline there, 
that they're returning one point

404
00:19:24,500 --> 00:19:26,800
seven billion dollars to 
shareholders in the form of 

405
00:19:26,800 --> 00:19:29,000
BuyBacks. 
And really, all they're doing is

406
00:19:29,000 --> 00:19:31,600
offsetting the Current dilution,
I just think that's so 

407
00:19:31,600 --> 00:19:33,600
misleading. 
I think that Gap accounting will

408
00:19:33,600 --> 00:19:36,100
eventually be updated, and they 
won't be able to make these 

409
00:19:36,100 --> 00:19:38,500
claims anymore. 
In the meantime, we have to do a

410
00:19:38,500 --> 00:19:40,700
little bit of detective work to 
figure out what's really going 

411
00:19:40,700 --> 00:19:43,400
on with our companies. 
So I use different ways of 

412
00:19:43,400 --> 00:19:46,600
looking at it than just just the
headline sentences here. 

413
00:19:46,700 --> 00:19:49,700
So, so far, the bad news that we
have about Salesforce is one. 

414
00:19:49,700 --> 00:19:53,300
We have Executives leaving the 
company to, we have the fact 

415
00:19:53,300 --> 00:19:55,900
that even when they do BuyBacks,
we're not seeing a reduction in 

416
00:19:55,908 --> 00:19:58,600
shares outstanding. 
So we have some problems there 

417
00:19:58,600 --> 00:20:01,000
with them, actually returning. 
Capital back to the shareholder.

418
00:20:01,400 --> 00:20:04,000
And I want to highlight what I 
consider to be the third, big 

419
00:20:04,000 --> 00:20:07,600
problem for this company and 
that is Tech employee layoffs. 

420
00:20:07,900 --> 00:20:10,100
We see in this chart and I'll 
zoom in for you so you can see 

421
00:20:10,100 --> 00:20:12,000
it as well. 
Let's take a look here. 

422
00:20:12,000 --> 00:20:14,700
I'll see if we can zoom in more.
This is the amount of tech 

423
00:20:14,700 --> 00:20:17,700
employees. 
Let Go by different companies 

424
00:20:17,900 --> 00:20:20,600
every single month. 
So we can see all the different 

425
00:20:20,600 --> 00:20:22,300
companies stacked on top of each
other. 

426
00:20:22,600 --> 00:20:25,600
And then the total amount of 
employees in November, we had 

427
00:20:25,600 --> 00:20:29,700
60,000 layoffs announced by all 
these different companies He's 

428
00:20:29,700 --> 00:20:33,300
in December so far. 
It's 13,000, but you're seeing 

429
00:20:33,300 --> 00:20:36,600
this progress over time. 
If we go back to January of this

430
00:20:36,600 --> 00:20:39,500
year it was 600. 
There's like no layoffs. 

431
00:20:39,500 --> 00:20:42,200
Everybody was hiring but now the
layoffs are starting to mount 

432
00:20:42,200 --> 00:20:44,500
their starting to get higher. 
And then the number of 

433
00:20:44,500 --> 00:20:46,600
companies, this is another 
troubling thing. 

434
00:20:46,600 --> 00:20:49,500
We have here, a chart that shows
the number of companies that 

435
00:20:49,500 --> 00:20:53,000
have actually announced layoffs 
every single month and you can 

436
00:20:53,000 --> 00:20:56,300
see since May it basically 
exploded and it's getting more 

437
00:20:56,308 --> 00:20:59,600
populated over time so we see 
more employees being laid off. 

438
00:21:00,000 --> 00:21:02,000
More companies deciding to lay 
off employees. 

439
00:21:02,100 --> 00:21:04,100
Now, the concern here really 
isn't that there's going to be a

440
00:21:04,100 --> 00:21:07,400
recession per se, but it's a 
fact that Salesforce is a 

441
00:21:07,400 --> 00:21:11,100
business to business company and
they sell licenses, they sell 

442
00:21:11,100 --> 00:21:12,700
seats. 
So if I have a company that 

443
00:21:12,700 --> 00:21:16,600
employs, 50 people and eye 
contact sales force to say, I 

444
00:21:16,600 --> 00:21:19,200
need, I need to get set up. 
I need your software. 

445
00:21:19,500 --> 00:21:21,500
They will charge me based on the
amount of seats. 

446
00:21:21,500 --> 00:21:25,800
I have the amount of licenses if
my company grows rapidly to 100 

447
00:21:25,800 --> 00:21:27,700
people. 
Then I have to pay sales, force 

448
00:21:27,700 --> 00:21:31,100
more, maybe $20. 
As per month, per new employee, 

449
00:21:31,100 --> 00:21:32,900
right? 
That adds more Revenue to 

450
00:21:32,900 --> 00:21:35,000
Salesforce. 
Well, if I start firing 

451
00:21:35,000 --> 00:21:37,500
employees, I have less of them 
to pay for. 

452
00:21:37,700 --> 00:21:40,000
I tell Salesforce, I only have 
30 employees. 

453
00:21:40,000 --> 00:21:42,300
I no longer have 50. 
So, the amount of Revenue, I'm 

454
00:21:42,300 --> 00:21:45,400
giving Salesforce goes down 
because I have less seats to 

455
00:21:45,400 --> 00:21:47,300
fill. 
This is a concern. 

456
00:21:47,500 --> 00:21:51,200
If the economy contracts, even 
though sales force doesn't do 

457
00:21:51,200 --> 00:21:54,800
business with the end user, they
do do business with other 

458
00:21:54,800 --> 00:21:58,000
businesses and if those 
businesses are, firing off Tech 

459
00:21:58,000 --> 00:22:00,600
developers and Tech workers. 
And Summer support agents, 

460
00:22:00,900 --> 00:22:03,600
they're going to need less 
licenses and I could see that 

461
00:22:03,600 --> 00:22:07,300
have a short-term impact on 
sales force for the next year, 

462
00:22:07,600 --> 00:22:09,300
especially if the economy 
contracts. 

463
00:22:09,700 --> 00:22:12,200
So, I do think it's somewhat 
susceptible to the economy, 

464
00:22:12,500 --> 00:22:16,200
especially the tech economy. 
If we keep seeing these trends 

465
00:22:16,200 --> 00:22:19,100
of growing Tech layoffs. 
So, overall to put this in 

466
00:22:19,100 --> 00:22:22,100
context, we have three different
areas that I'm concerned about 

467
00:22:22,100 --> 00:22:24,300
Salesforce. 
The first is Executives, leaving

468
00:22:24,300 --> 00:22:26,300
the company. 
I think that's a red flag. 

469
00:22:26,600 --> 00:22:29,500
The second is a fact that they 
do things that just bug me like 

470
00:22:29,600 --> 00:22:32,600
they say the returning 1.7 
billion back to shareholders 

471
00:22:32,600 --> 00:22:35,700
when in reality the share count 
hasn't gone down at all. 

472
00:22:35,900 --> 00:22:38,200
That's something that I just 
don't like to see a company do. 

473
00:22:38,300 --> 00:22:40,200
And then, the third one is, 
there's lots of tech companies 

474
00:22:40,200 --> 00:22:41,600
that are tightening their 
budget. 

475
00:22:41,800 --> 00:22:44,700
And part of that is reducing 
amount of spend, on companies 

476
00:22:44,700 --> 00:22:47,200
like Salesforce. 
So, we have some things that I'm

477
00:22:47,208 --> 00:22:50,600
concerned about some red flags 
but then there's also parts of 

478
00:22:50,600 --> 00:22:53,600
Salesforce that I really like I 
like the fact that the revenue 

479
00:22:53,600 --> 00:22:55,300
is growing. 
I think that's a good thing, 

480
00:22:55,300 --> 00:22:56,800
especially in an economy like 
this. 

481
00:22:57,200 --> 00:23:00,800
I like the fact that the company
is growing Free cash flow per 

482
00:23:00,800 --> 00:23:04,500
share at a steady clip. 
This factor is in dilution and 

483
00:23:04,500 --> 00:23:08,000
Salesforce is still growing 
their free cash flow, even with 

484
00:23:08,000 --> 00:23:10,700
dilution factored in, and I like
the fact that the company's 

485
00:23:10,700 --> 00:23:13,300
unlevered, they have no debt. 
So they're in a very good 

486
00:23:13,300 --> 00:23:16,200
situation to be able to weather 
any storm in the future. 

487
00:23:16,200 --> 00:23:18,600
And I also like the fact that 
right now Salesforce is trading 

488
00:23:18,600 --> 00:23:21,100
at a much more. 
Conservative valuation trading 

489
00:23:21,100 --> 00:23:24,400
at a 2340 PE. 
That's not bad for a company. 

490
00:23:24,400 --> 00:23:26,800
Like Salesforce, a low 20s. 
Multiple. 

491
00:23:27,200 --> 00:23:29,500
The free cash flow yield is 
4.3%. 

492
00:23:29,600 --> 00:23:34,100
Percent if we factor in 
dilution, that's maybe 2.2%, so 

493
00:23:34,100 --> 00:23:37,100
even the free cash flow yield 
right now, is not that bad, 

494
00:23:37,200 --> 00:23:39,700
especially for a company that 
continues to grow their free 

495
00:23:39,700 --> 00:23:42,000
cash flow per share. 
So to put this in context 

496
00:23:42,000 --> 00:23:44,000
there's some good and there's 
some bad with a company. 

497
00:23:44,300 --> 00:23:46,800
When I try to look at this 
overall, I'm focusing on three 

498
00:23:46,800 --> 00:23:49,400
main points. 
I'm focusing on buying companies

499
00:23:49,600 --> 00:23:52,800
that have very good economics 
companies like Salesforce that 

500
00:23:52,800 --> 00:23:55,900
have reoccurring Revenue, they 
have powerful Market positions, 

501
00:23:55,900 --> 00:23:58,800
they have wide modes overall, 
it's just an economically. 

502
00:23:58,800 --> 00:24:01,000
Good company. 
The second thing I'm looking for

503
00:24:01,000 --> 00:24:03,700
is companies that have a long 
runways of growth, they'll be 

504
00:24:03,700 --> 00:24:06,400
able to Simply grow for a long 
period of time with minimal 

505
00:24:06,400 --> 00:24:09,700
Interruption the growth gets 
slowed down a year hair year. 

506
00:24:09,700 --> 00:24:12,200
There that doesn't matter. 
But I want the company to be 

507
00:24:12,200 --> 00:24:14,200
around for another 20 or 30 
years. 

508
00:24:14,500 --> 00:24:18,000
Companies, like Salesforce, 
these companies that operate in 

509
00:24:18,000 --> 00:24:20,600
cloud computing are incredibly 
sticky. 

510
00:24:20,700 --> 00:24:24,400
Look at Oracle for example, look
at IBM, it's difficult to 

511
00:24:24,400 --> 00:24:27,000
destroy these companies. 
They've been around forever and 

512
00:24:27,008 --> 00:24:29,200
they're probably going to be 
around for the next 30 Years. 

513
00:24:29,500 --> 00:24:32,600
And Salesforce is one of these 
cloud computing companies that's

514
00:24:32,600 --> 00:24:35,400
heavily ingrained in society and
in our corporate world. 

515
00:24:35,700 --> 00:24:39,100
So it has a long continuous 
runway for growth, I think with 

516
00:24:39,100 --> 00:24:41,800
minimal disruption. 
And then the third thing I look 

517
00:24:41,800 --> 00:24:44,300
for is buying these type of 
companies at a reasonable 

518
00:24:44,300 --> 00:24:49,600
valuation and again at a 23, 
Ford PE at a 2.2 free cash flow 

519
00:24:49,600 --> 00:24:51,300
yield. 
I think the companies at a 

520
00:24:51,308 --> 00:24:54,600
reasonable valuation. 
So even with all the red flags, 

521
00:24:54,600 --> 00:24:57,300
even with all the things that I 
don't like there's enough stuff 

522
00:24:57,300 --> 00:24:59,900
that I continue to like with 
this stock that I'm Continue to 

523
00:24:59,908 --> 00:25:02,800
hold it and I know that over the
next year it's probably not 

524
00:25:02,800 --> 00:25:06,100
going to perform well there's so
much bad news for tech companies

525
00:25:06,600 --> 00:25:09,000
drone pal, still talking about 
hiking up, interest rates 

526
00:25:09,000 --> 00:25:12,100
another full percentage points 
and we're going into a potential

527
00:25:12,100 --> 00:25:14,000
recession. 
So I don't expect. 

528
00:25:14,000 --> 00:25:16,000
It will have good returns over 
the next year. 

529
00:25:16,300 --> 00:25:18,500
But again, I'm holding these for
the next five to ten years. 

530
00:25:18,500 --> 00:25:20,700
I'm looking at this at a very 
long-term perspective. 

531
00:25:20,700 --> 00:25:23,700
So, in my opinion, as far as I'm
concerned, I'm still planning on

532
00:25:23,700 --> 00:25:25,700
holding Salesforce. 
I have no intention of selling 

533
00:25:25,700 --> 00:25:27,100
it. 
We'll see what happens over the 

534
00:25:27,100 --> 00:25:29,300
next three to five years, I'll 
show you the outcome. 

535
00:25:29,600 --> 00:25:32,200
Either way, but that's my take 
on the latest sales, force, 

536
00:25:32,200 --> 00:25:34,400
trauma and the operating results
of the company. 

537
00:25:34,800 --> 00:25:35,500
See you in the next.