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Apple just announced the biggest
stock buyback program ever in 

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the history of the world, $110 
billion dedicated to strictly 

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buybacks. 
That money that apples going to 

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spend on buybacks is more than 
the entire market cap of 

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Chipotle. 
They could buy the entire 

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company and have $30 billion to 
spare. 

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They could buy Airbnb, the whole
company and still have 10 

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billion to spare. 
With this amount of money for 

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buybacks, Apple could buy Ulta 
Beauty five times over. 

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That is a big number, a number 
so big that it's hard for us to 

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even wrap our head around. 
Analysts are calling it an 

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astonishing number, but they're 
also saying that Apple may be 

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acknowledging that they are 
becoming a value stock the 

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returns money to shareholders 
rather than a high-powered grow 

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stock that needs its cash for 
research and development or 

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expansion. 
Is Apple no longer the company 

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they used to be? 
Has Apple reached the top of its

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ingenuity, its innovation, and 
its growth? 

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Well, that's what we're going to
be discussing in today's 

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episode. 
We'll be going over this recent 

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report, this massive buyback 
program, the huge stock price 

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boost that Apple's getting from 
this whether it's deserved or 

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not, and answering the important
question of whether or not Apple

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is done growing. 
Now. 

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Of course, it's been a busy 
week, and Apple wasn't the only 

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company that made news this 
week. 

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There's another, much smaller 
company that's a big position of

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mine, Texas Roadhouse. 
The restaurant company just 

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reported earnings yesterday 
along with Apple. 

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Now, unfortunately, Texas 
Roadhouse is not in the position

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to announce a $110 billion 
buyback program, but they did 

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have a great report nonetheless.
This investment has been an 

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insanely good investment. 
Texas Roadhouse is crushing 

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almost everything else in the 
market at this point. 

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It's a company that's a small 
company. 

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It's only $10 billion. 
So relatively speaking to the 

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rest of the S&P 500, to the QQQ.
This is a smaller company. 

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It's not even in the S&P 500, 
it's not in the QQQ. 

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Index holders don't own Texas 
Roadhouse, but their execution 

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and outperformance makes me 
believe that it's only a matter 

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of time until they're introduced
into the indexes. 

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Something is happening here with
this company. 

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The stock is appreciating 
quickly, but it's following 

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along with the fundamentals. 
We're going to be diving into 

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what's driving this stock 
higher, what's powering its 

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incredible share price and what 
I believe happened in this most 

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recent quarter. 
How is Texas Roadhouse doing in 

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2024? 
Now, of course, there's some 

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other companies that recently 
reported earnings. 

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We have MasterCard having a bit 
of a pullback. 

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Another company that recently 
reported earnings this week is 

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Moody's. 
This is another position in my 

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financial category. 
And then finally, I want to play

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this clip from Sam Altman. 
This is going viral because it's

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giving a lot of people some red 
flags. 

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So we'll see what's causing a 
few people to have red flags 

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with Sam Altman. 
So we have a lot of news to get 

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to. 
Let's go ahead and get started. 

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Now, as we jump into these 
earnings, it's important to 

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understand that I have 
significant investments in many 

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of these companies. 
The reason that I follow them so

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intently, the reason that I 
follow them so closely, is 

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because a lot of my net worth, 
in fact most of my invested net 

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worth, is wrapped up into these 
individual stocks. 

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The reason that I choose 
individual stocks is no mystery.

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I do so because I believe I can 
beat the S&P 500 / a long period

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of time. 
Now there's debates on this 

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subject. 
Many people think that's nearly 

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impossible. 
They've been convinced that 

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nobody can beat the collection 
of 500 companies in the S&P 500,

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but I don't believe it's 
impossible. 

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And so far, this portfolio has 
been doing really, really well 

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either way, whether or not you 
invest in the S&P 500 or you buy

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the market or you buy the total 
stock market or the total world 

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market. 
Either way, you can follow my 

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results for free. 
If you subscribe to the channel,

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I'll show you my total portfolio
value. 

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I'll show you my all time gains 
and my returns over time of this

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portfolio transparently on a 
weekly basis. 

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So you're going to see 
everything, whether it comes out

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good or bad, whether I make 
money on certain positions or 

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lose money, I'll show both ways.
Now this weekend earnings turned

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out incredibly well. 
Every position I own and every 

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company had strong earnings 
across the board. 

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I have trouble finding weakness 
in how these companies are 

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performing. 
And Apple and Texas Roadhouse 

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are just the latest 2. 
The stock is up today around 

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6.7% and that's off of news like
this. 

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And it's a beat on the top and 
bottom line for Apple plus the 

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largest buyback in corporate 
history. 

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Let me go over the numbers. 
First, EPS is a beat here at 

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$1.50, Three St. was looking for
$1.50 revenue, a slight beat, 

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90.75 billion versus the 90.01 
billion expected. 

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And As for that buyback, $110 
billion like I. 

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As this reporter is talking, 
Apple stock price is climbing 

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further and further from 1% 
after hours to 2% after hours. 

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When he mentions the gravity of 
this buyback, the size of it 

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Apple stock goes up even 
further. 

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That's the largest ever 
announced, that's according to 

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Birani Associates. 
And then a dividend is 

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increasing to $0.25 a share and 
just a couple of little segment 

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revenues here. 
Let's go over iPhone, a slight 

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miss of expectations at 45.96 
billion, that's down better than

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10% year over year. 
And then services, a slight beat

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here, 23.9 billion, that's up 
nearly 14%. 

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And then As for China, I know 
that's a big question. 

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Going to hear sales in Greater 
China down 8%. 

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It doesn't seem to matter what 
the actual business lines are 

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doing. 
As investors digest the gravity 

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of this buyback, the amount that
Apple spending the stock price 

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continued to gain by the 2nd, 
it's climbed up to an almost 7% 

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gain even though the stock price
is racing up. 

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Not every investor is on board 
with this move, but I think 

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putting the size of this buyback
in context is important here. 

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Apple owns the record for the 
largest buybacks over and over 

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and over again. 
This move of them announcing a 

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$110 billion buyback is actually
not that revolutionary. 

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It's not anything new. 
It's business as usual for 

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Apple. 
While it is true that they just 

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announced the biggest buyback in
history, it's also true that 

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they've announced a $90 billion 
buyback as recent as 2023 and in

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2022. 
And in 2021 and going back to 

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2018, they had a $100 billion 
buyback. 

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Apple holds the record for the 
five largest buyback 

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announcements in the market. 
They hold all five positions. 

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Apple's the king of buybacks. 
They're like the Michael Phelps 

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of buybacks. 
It's what Apple does. 

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Being concerned that Apple likes
doing a lot of buybacks is like 

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being concerned that Michael 
Phelps likes to swim, or that 

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Tiger Woods likes to play golf, 
or that Steph Curry likes taking

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a lot of three-point shots. 
There's no cause of alarm that 

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Apple's doing a large buyback 
program. 

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This has been their strategy for
well over a decade. 

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In fact, if we rewind time 
around 10 years, we can see the 

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start of this. 
In 2013, Apple had 26.49 billion

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shares outstanding. 
This was the absolute peak of 

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their shares outstanding. 
For the prior decade, they had 

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only been issuing shares. 
Like many companies that were 

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getting up to scale, Apple had 
achieved enormous success 

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launching the iPhone in 2005, 
and they'd scaled up to huge 

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size all the way up to 2012. 
In 2012, they reached a breaking

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point where Apple is generating 
enough cash that they could both

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reinvest back into their 
business, creating new products,

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new experiences, new services 
for customers, while returning 

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enormous amounts of cash to 
shareholders. 

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Apple has reduced their total 
float, which is a word for the 

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amount of shares outstanding in 
circulation. 

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They've reduced that amount by 
41% over the past decade, 

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meaning that if you bought Apple
here and you owned 1% of the 

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company outstanding, you would 
own roughly 1.8% if you held on 

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to it during this last decade. 
They've increased your equity in

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the company by almost double 
over the past 10 years. 

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To achieve this accomplishment, 
illustrated on this one chart 

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right here, I think is a a big 
understatement by a lot of 

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people. 
I don't think people realize how

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few companies can actually pull 
this off. 

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There's only a few of them in 
the market and some of them are 

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businesses you wouldn't expect. 
AutoZone loves buybacks even 

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more than Apple. 
It's one of the few companies 

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that has really pulled this 
lever. 

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AutoZone has reduced their 
shares outstanding by far more 

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than Apple, going from 150 
million down to 17,000,000. 

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What I think is important to 
highlight is that Apple's 

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accomplished this feat of doing 
massive scale buybacks and 

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reducing their total float by 
41% while reinvesting back into 

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their company aggressively. 
For example, if we also bring up

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the two different indicators of 
reinvestment back into a 

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company, it can simply be 
defined as the CapEx of the 

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company and the research and 
development. 

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Those are the two biggest 
financial metrics to show how 

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much a company is reinvesting or
at least building out new 

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facilities and new products. 
Well, if we look at just these 

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two different indicators that 
are representative of 

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reinvesting back into the 
company, we can go back to 2013.

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This is when Apple started to 
buy back their stock right 

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there. 
The growth since 2013 has been 

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exponential spend on 
reinvestment back into their 

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stock. 
Now Apple best reinvests not by 

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having additional CapEx, but 
instead by having research and 

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development. 
If we look at that alone, it 

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paints the picture more clearly.
Again, Apple started their 

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buyback program right here. 
Do you see any slowing down of 

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reinvestment into research and 
development after starting their

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buyback program? 
Did it change their trajectory 

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at all? 
No, because Apple first reinvest

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back into the company and then 
gives you buybacks on top of 

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that after they made all of the 
reinvestments that they can. 

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So when we see these analysts 
make these claims or make these 

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judgments that Apple may be 
acknowledging that they're 

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becoming a value stock that just
returns money to shareholders 

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00:10:02,360 --> 00:10:06,240
instead of putting the cash 
needed for R&D and expansion. 

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00:10:06,720 --> 00:10:10,120
What is this Based on? 
What number does this claim come

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00:10:10,120 --> 00:10:12,680
from? 
Apple's doing the exact same 

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00:10:12,680 --> 00:10:15,400
thing they've been doing for the
better part of a decade. 

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00:10:15,880 --> 00:10:19,080
They're investing back into 
their company aggressively and 

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00:10:19,080 --> 00:10:21,080
you see that showing up in the 
numbers. 

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00:10:21,240 --> 00:10:24,280
There's very few companies on 
planet Earth that spend more 

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00:10:24,280 --> 00:10:26,320
money on research and 
development than Apple. 

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00:10:26,440 --> 00:10:29,720
Apple is spending a fortune on 
research and development. 

200
00:10:29,800 --> 00:10:31,800
So no, I don't believe that's 
correct. 

201
00:10:31,880 --> 00:10:34,600
I don't believe this is an 
indication that Apple's spending

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00:10:34,600 --> 00:10:37,320
less on growth and expansion and
research and development. 

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00:10:37,360 --> 00:10:39,920
I believe it's a continuing sign
of a company doing the same 

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00:10:39,920 --> 00:10:42,920
thing it always has. 
It's returning its enormous 

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00:10:42,920 --> 00:10:45,600
amount of excess cash back to 
shareholders. 

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00:10:45,680 --> 00:10:48,840
One of the big challenges that 
Apple has, a greater challenge 

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00:10:48,840 --> 00:10:52,960
than any other company on planet
Earth, is they make too much 

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00:10:52,960 --> 00:10:54,800
money. 
Apple's the most consistently 

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00:10:54,800 --> 00:10:58,040
profitable company in the world,
and at the pace they're going, 

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00:10:58,040 --> 00:11:01,600
they're making more than $100 
billion of cash flow per year. 

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00:11:01,680 --> 00:11:06,560
Apple's net income last quarter 
was $23.6 billion, and that's 

212
00:11:06,560 --> 00:11:09,160
roughly the same amount of free 
cash flow they generate. 

213
00:11:09,240 --> 00:11:13,840
A company that has $160 billion 
in cash and is generating an 

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00:11:13,840 --> 00:11:17,960
additional $25 billion in net 
income every quarter has a 

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00:11:18,000 --> 00:11:21,280
problem of too much cash. 
And the way that they've chosen 

216
00:11:21,280 --> 00:11:24,400
to solve this problem is through
the most tax efficient capital 

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00:11:24,400 --> 00:11:27,320
allocation policy possible, 
which is returning the huge 

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00:11:27,320 --> 00:11:29,960
majority of it through buybacks.
The other thing I'd like to 

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highlight, and I think this 
Third Point is also important, 

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00:11:32,960 --> 00:11:36,640
is that Apple's not even doing 
something unique to just Apple. 

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Many companies are copying 
Apple's blueprint, Google being 

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00:11:40,200 --> 00:11:42,360
one of them. 
If we go down further on this 

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00:11:42,360 --> 00:11:45,880
list, we can see the series of 
Google buyback announcements. 

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00:11:46,000 --> 00:11:52,640
Google announced a $70 billion 
buyback in 20/24/2023 and 20/22.

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00:11:53,040 --> 00:11:55,440
They're seemingly doing this 
every single year. 

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00:11:55,560 --> 00:11:58,160
If we look at this buyback in 
proportion to Google's 

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00:11:58,160 --> 00:12:01,880
economics, it's revealing. 
How much money has Google made 

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00:12:01,880 --> 00:12:05,560
for the past three years? 
Well, last year they made around

229
00:12:05,560 --> 00:12:08,920
$70 billion. 
The year before that, they made 

230
00:12:08,920 --> 00:12:11,640
$60 billion. 
And then the year prior to that,

231
00:12:11,640 --> 00:12:15,960
in 2021, Google made around $70 
billion. 

232
00:12:16,280 --> 00:12:21,040
So for the past three years, 
Google made around $70 billion 

233
00:12:21,360 --> 00:12:23,520
each year. 
And then for the past three 

234
00:12:23,520 --> 00:12:26,680
years, they announced the 
buyback program for around $70 

235
00:12:26,680 --> 00:12:30,440
billion each year. 
Now, when Google does this, 

236
00:12:30,680 --> 00:12:33,480
nobody freaks out. 
The market doesn't get super 

237
00:12:33,480 --> 00:12:35,720
excited. 
Investors don't think that this 

238
00:12:35,720 --> 00:12:38,600
is the end of Google and they've
reached the top, and that 

239
00:12:38,600 --> 00:12:40,880
they're no longer investing in 
their future. 

240
00:12:41,000 --> 00:12:43,560
Nobody's reaching that 
conclusion when Google's doing 

241
00:12:43,560 --> 00:12:47,400
the exact same thing as Apple, 
only on a smaller scale. 

242
00:12:47,400 --> 00:12:52,680
Apple is investing roughly 100% 
of its free cash flow into 

243
00:12:52,680 --> 00:12:56,680
buybacks, and it can do that 
because it has $160 billion in 

244
00:12:56,680 --> 00:12:59,160
cash. 
So they can do that for a number

245
00:12:59,160 --> 00:13:02,240
of years. 
And Google likewise is investing

246
00:13:02,560 --> 00:13:06,760
roughly 100% of their free cash 
flow into buybacks. 

247
00:13:06,800 --> 00:13:10,240
Because Google likewise has 
excess cash, they have around 

248
00:13:10,240 --> 00:13:14,000
$100 billion in excess cash. 
Both of these companies are 

249
00:13:14,000 --> 00:13:17,120
doing the same thing. 
The only reason that Apple's 

250
00:13:17,120 --> 00:13:20,800
buyback is bigger than Google's 
is because Apple makes more 

251
00:13:20,800 --> 00:13:23,520
money than Google. 
If Google is making as much 

252
00:13:23,520 --> 00:13:27,600
money as Apple, they would also 
announce a $110 billion buyback 

253
00:13:27,600 --> 00:13:30,560
program. 
So if Apple's over, if this is 

254
00:13:30,560 --> 00:13:34,000
the end of Apple and their 
innovation and their product 

255
00:13:34,000 --> 00:13:36,760
development and the future 
growth of the company because 

256
00:13:36,760 --> 00:13:39,720
they announced a large buyback 
program, then that should also 

257
00:13:39,720 --> 00:13:43,040
mean that it's the end of Google
that this company's over, that 

258
00:13:43,040 --> 00:13:45,400
they're no longer investing. 
They're no longer creating new 

259
00:13:45,400 --> 00:13:48,320
products because they also 
announced a large buyback 

260
00:13:48,320 --> 00:13:50,680
program. 
In either case, these 

261
00:13:50,680 --> 00:13:53,640
assessments are wrong. 
The analysts going on CNBC 

262
00:13:53,640 --> 00:13:56,960
saying that this is an 
indication of a value stock are 

263
00:13:56,960 --> 00:13:59,160
wrong. 
It's an indication that these 

264
00:13:59,160 --> 00:14:02,960
stocks make a fortune. 
They simply make too much money.

265
00:14:03,040 --> 00:14:05,720
And the biggest take away is 
that Apple makes more money than

266
00:14:05,720 --> 00:14:08,240
any other company. 
Warren Buffett chooses to invest

267
00:14:08,240 --> 00:14:11,360
in stocks that have high amounts
of predictable free cash flow. 

268
00:14:11,680 --> 00:14:15,600
So it's no wonder that he has 
Apple as 50% of his portfolio. 

269
00:14:15,600 --> 00:14:18,600
Now finally, we move on to this 
recent quarter with Apple. 

270
00:14:18,600 --> 00:14:20,520
What actually happened this 
quarter? 

271
00:14:20,760 --> 00:14:22,520
We can dive into some of the 
numbers here. 

272
00:14:22,960 --> 00:14:26,080
First of all, one of the recent 
updates we did on Qualtrim is we

273
00:14:26,080 --> 00:14:28,120
introduced something called 
KPIs. 

274
00:14:28,480 --> 00:14:31,440
We have a nice little pink badge
there to denote that this is a 

275
00:14:31,440 --> 00:14:34,320
KPI chart. 
KPI means Key Performance 

276
00:14:34,320 --> 00:14:36,880
Indicator. 
It's just a nice term to define 

277
00:14:36,880 --> 00:14:39,840
something that is something you 
want to track that's unique to 

278
00:14:39,840 --> 00:14:43,240
this specific stock, to this 
specific company. 

279
00:14:43,560 --> 00:14:45,560
It's different for every 
different company. 

280
00:14:45,880 --> 00:14:49,920
For example, with Apple, we have
the revenue by segment and this 

281
00:14:49,920 --> 00:14:52,600
is something I always like to 
look at well, we can look at the

282
00:14:52,600 --> 00:14:55,360
growth of these different 
segment lines over time if we 

283
00:14:55,360 --> 00:14:59,560
filter just the iPhone. 
I think that the growth here is 

284
00:14:59,560 --> 00:15:01,520
the biggest concern for 
investors. 

285
00:15:02,000 --> 00:15:04,760
There's really no reason to buy 
a new iPhone. 

286
00:15:05,120 --> 00:15:10,480
I have the iPhone 15 Pro and 
this thing has such a nice 

287
00:15:10,480 --> 00:15:13,680
processor, such a nice screen, 
so much battery life. 

288
00:15:14,120 --> 00:15:18,000
It's basically the perfect 
phone, and these phones are now 

289
00:15:18,000 --> 00:15:21,360
lasting longer and longer. 
It's true that the battery 

290
00:15:21,360 --> 00:15:24,360
decays over time, but you can 
swap out the battery for like 

291
00:15:24,360 --> 00:15:28,360
$100. 
So iPhones are lasting longer 

292
00:15:28,360 --> 00:15:32,000
and longer, and that's a little 
bit of a concern for Apple, even

293
00:15:32,000 --> 00:15:35,520
though they price them higher. 
It means that people can hold on

294
00:15:35,520 --> 00:15:37,760
to their phones for multiple 
years. 

295
00:15:38,000 --> 00:15:42,200
You can buy a phone in 2020 and 
you don't need one in 2023. 

296
00:15:42,480 --> 00:15:45,600
You could wait all the way until
2025 to get a new one. 

297
00:15:45,720 --> 00:15:48,600
That's great for consumers and 
it's nice to have devices that 

298
00:15:48,600 --> 00:15:51,840
last for multiple years, but it 
is making it more difficult for 

299
00:15:51,840 --> 00:15:53,680
Apple. 
They're having a harder time 

300
00:15:53,880 --> 00:15:56,480
creating new reasons for you to 
upgrade your new phone. 

301
00:15:56,680 --> 00:15:58,800
When we move down this list, we 
get into the Max. 

302
00:15:58,960 --> 00:16:01,920
Mac revenue was 7.17 billion 
last year. 

303
00:16:02,200 --> 00:16:05,960
This year it was 7.45, so it 
barely grew. 

304
00:16:06,000 --> 00:16:10,240
You have barely any movement in 
Mac revenue. iPads declined year

305
00:16:10,240 --> 00:16:14,640
over year from 6.67 billion down
to 5.56. 

306
00:16:14,720 --> 00:16:17,760
When we look at the wearables 
and home accessories, this again

307
00:16:17,760 --> 00:16:19,640
is another decline year over 
year. 

308
00:16:19,880 --> 00:16:24,520
Last year it was 8.76 billion, 
this year it's 7.91. 

309
00:16:24,520 --> 00:16:27,440
Right now, the only part of 
Apple that is steadily and 

310
00:16:27,440 --> 00:16:30,720
consistently growing is the 
service portion of the business.

311
00:16:31,000 --> 00:16:33,280
And if we look at this in 
comparison to their total 

312
00:16:33,280 --> 00:16:35,880
revenue, it's a minority of 
their total revenue, but it's 

313
00:16:35,880 --> 00:16:39,040
still a significant portion. 
So looking at this overall, it 

314
00:16:39,040 --> 00:16:43,000
shows the continued trend of 
most things being mostly flat 

315
00:16:43,000 --> 00:16:45,840
for Apple and the services 
continuing to grow. 

316
00:16:46,040 --> 00:16:48,560
When I look overall at this 
quarter, I was pleasantly 

317
00:16:48,560 --> 00:16:51,000
surprised because I had very low
expectations. 

318
00:16:51,160 --> 00:16:53,600
I wasn't going into this one 
expecting Apple to have some 

319
00:16:53,600 --> 00:16:55,920
massive beat. 
I thought that most lines of 

320
00:16:55,920 --> 00:16:58,800
business would be down. 
So the fact that they are able 

321
00:16:58,800 --> 00:17:02,200
to pull this off, they have such
an enormous buyback program to 

322
00:17:02,200 --> 00:17:04,560
actually grow services was a 
positive thing. 

323
00:17:04,880 --> 00:17:08,800
Another thing that Apple tried 
to mention on the earnings call 

324
00:17:09,079 --> 00:17:11,800
is of course their pivot 
degenerative AI. 

325
00:17:12,200 --> 00:17:15,880
Apple's taking the approach of 
not doing large language models.

326
00:17:16,119 --> 00:17:19,359
What they're doing instead is 
making their devices support 

327
00:17:19,400 --> 00:17:22,599
artificial intelligence and 
generative AI with their newer 

328
00:17:22,599 --> 00:17:24,280
chips. 
So that's going to be a huge 

329
00:17:24,280 --> 00:17:26,680
improvement for Apple. 
That's another potential growth 

330
00:17:26,680 --> 00:17:28,840
path. 
Another thing they mentioned on 

331
00:17:28,840 --> 00:17:31,960
the earnings call was the Vision
Pro headset. 

332
00:17:32,640 --> 00:17:35,360
And this is where you can try to
decipher what they said. 

333
00:17:35,440 --> 00:17:38,400
They didn't give out hard 
numbers, but they basically said

334
00:17:38,400 --> 00:17:42,120
that half of the Fortune 100 
companies have purchased Vision 

335
00:17:42,120 --> 00:17:45,360
Pro headsets. 
To me that doesn't say much. 

336
00:17:45,520 --> 00:17:49,240
So did they purchase one or two 
or did they purchase 1000? 

337
00:17:49,560 --> 00:17:51,680
We still really have no insight 
on that. 

338
00:17:52,080 --> 00:17:55,600
And as far as I can tell right 
now, anecdotally from what I 

339
00:17:55,600 --> 00:17:59,760
see, I don't see the Vision Pro 
being this grand success right 

340
00:17:59,760 --> 00:18:01,520
now. 
It seems like it's very limited 

341
00:18:01,520 --> 00:18:03,040
with the amount of customers 
that have it. 

342
00:18:03,040 --> 00:18:05,720
But overall right now, even with
these doubts, the buyback 

343
00:18:05,720 --> 00:18:07,760
program alone was enough to lift
Apple share. 

344
00:18:07,920 --> 00:18:10,880
Now moving on, we get to Texas 
Roadhouse, which is a company 

345
00:18:10,880 --> 00:18:13,000
that has just been astonishing 
to me. 

346
00:18:13,200 --> 00:18:16,320
There's not many companies that 
I've ever owned that I've been 

347
00:18:16,320 --> 00:18:19,520
this pleased with the investment
and the performance and the 

348
00:18:19,520 --> 00:18:21,280
continuing operations of the 
company. 

349
00:18:21,400 --> 00:18:27,560
Texas Roadhouse is now a $71,000
position in My Portfolio with 

350
00:18:27,560 --> 00:18:32,040
35,600 of that bean gains. 
So this company's over a double 

351
00:18:32,040 --> 00:18:34,560
since purchasing it in my 
current portfolio. 

352
00:18:34,560 --> 00:18:36,960
Texas Roadhouse has gained so 
much value. 

353
00:18:37,160 --> 00:18:41,040
It is now my third largest 
position, just behind S&P Global

354
00:18:41,040 --> 00:18:43,320
and MasterCard. 
It is a bigger position than 

355
00:18:43,320 --> 00:18:46,800
Microsoft, Costco and Intuit. 
And again, I didn't size it to 

356
00:18:46,800 --> 00:18:49,720
be this big of a position. 
I bought into it and just let it

357
00:18:49,720 --> 00:18:51,440
grow. 
It's the same reason that 

358
00:18:51,440 --> 00:18:55,480
Costco's such a large position. 
I have not been buying Costco 

359
00:18:55,480 --> 00:18:58,640
anytime recently. 
Costco's just grown into a large

360
00:18:58,640 --> 00:19:02,640
company, so My Portfolio in many
cases, and the portfolio 

361
00:19:02,640 --> 00:19:06,240
allocation is a result of just 
letting these companies grow 

362
00:19:06,240 --> 00:19:09,040
organically. 
After making my initial buys, 

363
00:19:09,280 --> 00:19:13,160
even after going up 33% year to 
date, Texas Roadhouse has gone 

364
00:19:13,160 --> 00:19:16,200
up an additional 3% after 
earnings because of how good 

365
00:19:16,200 --> 00:19:18,840
these earnings were. 
Now I got to be honest here, 

366
00:19:18,840 --> 00:19:23,080
when we were going into this 
earnings report, I was slightly 

367
00:19:23,080 --> 00:19:25,360
concerned. 
I was a little concerned because

368
00:19:25,360 --> 00:19:27,960
I saw the massacre that happened
to Starbucks. 

369
00:19:28,400 --> 00:19:32,440
Starbucks was just destroyed. 
The earnings report was so bad 

370
00:19:32,440 --> 00:19:35,240
across the board. 
I I I went through that earnings

371
00:19:35,240 --> 00:19:38,200
report and that's one where I 
had a really tough time finding 

372
00:19:38,200 --> 00:19:41,560
a silver lining. 
Starbucks is down 21% year to 

373
00:19:41,560 --> 00:19:45,400
date and they got blindsided by 
this bad report. 

374
00:19:45,760 --> 00:19:48,120
So when I was looking at 
Starbucks, I realized that Texas

375
00:19:48,120 --> 00:19:50,480
Roadhouse is a very different 
business with a very different 

376
00:19:50,480 --> 00:19:53,280
value proposition. 
So I was crossing my fingers 

377
00:19:53,280 --> 00:19:56,000
that there wasn't going to be 
any overlap, that Starbucks 

378
00:19:56,000 --> 00:20:00,520
wasn't any great indicator of 
the overall economy or consumer,

379
00:20:00,680 --> 00:20:03,280
but Starbucks just had Starbucks
problems. 

380
00:20:03,560 --> 00:20:05,000
And that turned out to be the 
case. 

381
00:20:05,240 --> 00:20:08,280
Texas Roadhouse is not 
Starbucks, and it's a company 

382
00:20:08,280 --> 00:20:11,560
that I believe offers a better 
value proposition to customers 

383
00:20:11,800 --> 00:20:13,840
than Starbucks. 
It's also a company that I 

384
00:20:13,840 --> 00:20:15,960
believe has less competition 
than Starbucks. 

385
00:20:16,240 --> 00:20:18,800
There's many food companies, but
there's not many food companies 

386
00:20:18,800 --> 00:20:22,040
that have the same recipe and 
operations and formula and 

387
00:20:22,040 --> 00:20:25,240
branding as Texas Roadhouse. 
Now if we look at the earnings 

388
00:20:25,240 --> 00:20:27,240
report, there's a couple 
important things to highlight 

389
00:20:27,240 --> 00:20:30,080
for this company. 
First of all, of course, we have

390
00:20:30,080 --> 00:20:33,040
the revenue growth and the 
earnings per share growth that 

391
00:20:33,040 --> 00:20:36,080
we look at for every company and
these numbers are impressive. 

392
00:20:36,120 --> 00:20:40,000
In the last quarter, Texas 
Roadhouse grew its revenue by 

393
00:20:40,000 --> 00:20:44,360
12.5%. 
So double digit revenue growth. 

394
00:20:44,480 --> 00:20:48,520
They grew their diluted earnings
per share by 31.4%. 

395
00:20:48,640 --> 00:20:51,680
What these numbers should prove 
is that you don't need to have a

396
00:20:51,800 --> 00:20:54,240
large language model to have 
good returns. 

397
00:20:54,520 --> 00:20:56,960
You don't need to be a leading 
technology company and have a 

398
00:20:56,960 --> 00:21:00,120
huge research and development 
budget to have good returns. 

399
00:21:00,440 --> 00:21:03,440
The way companies get good 
returns is by having earnings 

400
00:21:03,440 --> 00:21:05,360
growth and free cash flow per 
share growth. 

401
00:21:05,680 --> 00:21:09,160
And Texas Roadhouse has both of 
those at a faster clip than the 

402
00:21:09,160 --> 00:21:11,480
majority of companies in the S&P
500. 

403
00:21:11,560 --> 00:21:13,560
Now if we look at Texas 
Roadhouse and we want to put 

404
00:21:13,560 --> 00:21:16,600
these numbers in context with 
recent quarters and see the 

405
00:21:16,600 --> 00:21:19,720
overall growth of this company, 
we have some other cool KPI 

406
00:21:19,720 --> 00:21:21,640
charts specific to Texas 
Roadhouse. 

407
00:21:22,040 --> 00:21:24,400
We have, for example, the number
of restaurants. 

408
00:21:24,400 --> 00:21:27,200
And this is where people, I 
think, have the wrong idea of 

409
00:21:27,200 --> 00:21:29,840
what this company is. 
Texas Roadhouse is a company 

410
00:21:29,840 --> 00:21:32,480
that owns multiple brands. 
They own a company called 

411
00:21:32,760 --> 00:21:36,760
Bubba's 33, They own a company 
called Jaggers, and they even do

412
00:21:36,760 --> 00:21:40,080
some franchising. 
So there's wholly owned Texas 

413
00:21:40,080 --> 00:21:43,240
Roadhouses and then there's a 
number of franchised ones and 

414
00:21:43,280 --> 00:21:46,720
franchised Jaggers. 
So this is a company that has a 

415
00:21:46,720 --> 00:21:50,120
few different parts to it, but 
the majority of it started with 

416
00:21:50,120 --> 00:21:53,040
company wholly owned Texas 
Roadhouses. 

417
00:21:53,200 --> 00:21:56,040
These are the ones that the 
company opens every single 

418
00:21:56,040 --> 00:21:59,040
quarter and the ones that they 
operate themselves. 

419
00:21:59,240 --> 00:22:02,040
You can see this number growing 
steadily over time. 

420
00:22:02,280 --> 00:22:06,640
Back in 2011, at the end of the 
first quarter in 2011, they had 

421
00:22:06,640 --> 00:22:12,080
276 Texas Roadhouse locations 
and that's grown over time. 

422
00:22:12,200 --> 00:22:15,160
Every single quarter you see the
slow and steady growth. 

423
00:22:15,160 --> 00:22:17,200
They're always opening up more 
locations. 

424
00:22:17,600 --> 00:22:21,640
In the most recent quarter, they
ended the quarter with 591 

425
00:22:21,640 --> 00:22:24,240
locations. 
Then in 2014, they started a 

426
00:22:24,240 --> 00:22:27,400
brand called Bubba's 33. 
This is more of like a Bar and 

427
00:22:27,400 --> 00:22:30,520
Grill concept. 
It's performed really well. 

428
00:22:30,520 --> 00:22:33,560
All of these get really high 
expected returns each time they 

429
00:22:33,560 --> 00:22:36,520
open one, but because the 
company hasn't been around as 

430
00:22:36,520 --> 00:22:39,000
long, it doesn't have quite as 
much brand value. 

431
00:22:39,480 --> 00:22:42,680
It doesn't have as high of 
returns as a Texas Roadhouse 

432
00:22:42,680 --> 00:22:44,800
location. 
So if we look at both of these 

433
00:22:44,800 --> 00:22:47,680
compared to each other, you can 
see that they focus more on 

434
00:22:47,680 --> 00:22:50,160
their company owned Texas 
Roadhouses than they do their 

435
00:22:50,160 --> 00:22:52,720
Bubba's 33. 
Again, along the way they're 

436
00:22:52,720 --> 00:22:56,040
always experimenting, opening up
new concepts and one thing 

437
00:22:56,040 --> 00:23:01,200
they've wanted to go into is QSR
quick service restaurant, things

438
00:23:01,200 --> 00:23:05,000
like Chipotle, McDonald's, those
type of restaurants, they open 

439
00:23:05,000 --> 00:23:07,080
up their own brand called 
Jagger's. 

440
00:23:07,400 --> 00:23:10,400
This is something where they've 
worked on this concept all the 

441
00:23:10,400 --> 00:23:13,360
way. 
Back in 2013 they had one 

442
00:23:13,440 --> 00:23:16,720
Jaggers open, they kept it the 
one and then they opened up a 

443
00:23:16,720 --> 00:23:21,120
second one in 2015 and they've 
worked on revising the concept. 

444
00:23:21,400 --> 00:23:25,200
They don't want to expand unless
they get the concept perfect to 

445
00:23:25,200 --> 00:23:27,760
where they're getting the high 
expected returns they want. 

446
00:23:28,000 --> 00:23:29,760
So they kept this at 2 
restaurants. 

447
00:23:29,760 --> 00:23:33,520
From 2015 to 20/20/2020, they 
opened up three. 

448
00:23:33,880 --> 00:23:36,080
In 2021 they opened up another 
one. 

449
00:23:36,440 --> 00:23:39,600
And then in 2024, they now 
operate 8 of them. 

450
00:23:40,000 --> 00:23:42,120
They're learning from these 
restaurants, they're learning 

451
00:23:42,120 --> 00:23:45,200
the QSR business. 
But Texas Roadhouse has a great 

452
00:23:45,200 --> 00:23:47,360
team. 
They know how to revise 

453
00:23:47,360 --> 00:23:50,240
restaurant concepts. 
They know about processes and 

454
00:23:50,240 --> 00:23:53,560
processes at scale. 
They know about incentives and 

455
00:23:53,560 --> 00:23:55,840
ownership structures. 
They know about creating long 

456
00:23:55,840 --> 00:23:57,920
term value. 
So they're trying to take the 

457
00:23:57,920 --> 00:24:01,520
learnings that they have from 
operating their company owned 

458
00:24:01,520 --> 00:24:04,920
Texas Roadhouse restaurants and 
take those learnings and 

459
00:24:04,920 --> 00:24:08,360
implement them into a QSR 
concept, which is Jaggers. 

460
00:24:08,920 --> 00:24:12,960
So right now, if you look at 
this chart, Jaggers barely shows

461
00:24:12,960 --> 00:24:14,240
up. 
You can barely see it because 

462
00:24:14,240 --> 00:24:17,200
it's so small, but represents 
great potential. 

463
00:24:17,600 --> 00:24:21,240
If Texas Roadhouse becomes 
convinced that they can scale 

464
00:24:21,240 --> 00:24:24,640
this quickly and earn high 
returns, you could see these 

465
00:24:24,640 --> 00:24:27,560
numbers shoot up exponentially 
quarter by quarter. 

466
00:24:27,560 --> 00:24:30,480
The strategy that they've taken 
with Jaggers is 1 where they 

467
00:24:30,480 --> 00:24:33,160
don't want to just own Jaggers 
in and of itself. 

468
00:24:33,440 --> 00:24:36,560
This is where they want to get 
into a franchise model and we 

469
00:24:36,560 --> 00:24:39,720
have right here them starting to
work with different franchise 

470
00:24:39,720 --> 00:24:43,240
operators just in 2023 and in 
2024. 

471
00:24:43,480 --> 00:24:47,360
You can see right here a few 
franchise Jaggers opening up. 

472
00:24:47,680 --> 00:24:51,200
So they have one in 2023. 
The franchise owners opened up 

473
00:24:51,200 --> 00:24:54,680
another one in 2022 and then 
they just recently opened up 

474
00:24:54,680 --> 00:24:57,120
their third one. 
Again, these are small in 

475
00:24:57,120 --> 00:24:58,800
comparison to the rest of the 
business. 

476
00:24:59,080 --> 00:25:02,320
This isn't a huge revenue line. 
In fact, it's not meaningful. 

477
00:25:02,680 --> 00:25:06,000
But Texas Roadhouse views this 
as an additional growth path for

478
00:25:06,000 --> 00:25:08,320
the company. 
As their restaurants meet more 

479
00:25:08,320 --> 00:25:11,880
scale and saturate the market 
further, they want to have 

480
00:25:11,880 --> 00:25:14,000
different ways to offer value to
customers. 

481
00:25:14,280 --> 00:25:17,960
And if they can get this concept
right, which I believe they can,

482
00:25:18,160 --> 00:25:20,280
you can see this become a 
meaningful portion of the 

483
00:25:20,280 --> 00:25:23,000
business over time. 
During this time period of Texas

484
00:25:23,000 --> 00:25:26,560
Roadhouse having their own 
restaurants, they also have 

485
00:25:26,560 --> 00:25:30,160
franchise owned operations and 
they do this strategically. 

486
00:25:30,440 --> 00:25:33,200
If we break out just the 
franchise Texas Roadhouse 

487
00:25:33,200 --> 00:25:36,520
locations, you'll see that it's 
not growing as fast. 

488
00:25:36,760 --> 00:25:39,280
In some cases, the numbers even 
go down. 

489
00:25:39,720 --> 00:25:44,240
They went down in 2016 and in 
2021 and a little bit in 2020. 

490
00:25:44,840 --> 00:25:47,800
The reason that they go down is 
not because the franchise owners

491
00:25:47,800 --> 00:25:50,760
struggle, it's not because these
locations are shutting down. 

492
00:25:51,080 --> 00:25:54,880
It's because Texas Roadhouse 
likes to buy some of their 

493
00:25:54,880 --> 00:25:58,480
franchise operators out and own 
those companies outright. 

494
00:25:58,760 --> 00:26:01,520
O what the company does 
strategically here is they use 

495
00:26:01,520 --> 00:26:05,240
their franchise locations as a 
OOL to pick different companies 

496
00:26:05,240 --> 00:26:08,520
to acquire fully and that's a 
strategy that I think has very 

497
00:26:08,520 --> 00:26:10,680
high returns. 
They can look over all the 

498
00:26:10,680 --> 00:26:14,360
franchise oerators, see the ones
that have the best operations 

499
00:26:14,600 --> 00:26:17,800
and purchase and pluck those 
companies specifically out of 

500
00:26:17,800 --> 00:26:19,680
the pool. 
But overall, when we look at the

501
00:26:19,680 --> 00:26:23,160
restaurant locations over time, 
we see the same trend going. 

502
00:26:23,320 --> 00:26:26,520
The company is growing over and 
over again every single quarter 

503
00:26:26,760 --> 00:26:29,000
and I don't believe it's going 
to slow down anytime soon. 

504
00:26:29,200 --> 00:26:31,680
On top of the growth of their 
total locations now getting 

505
00:26:31,680 --> 00:26:35,600
close to 800 locations, they're 
also growing the size of their 

506
00:26:35,600 --> 00:26:38,120
location. 
New locations are bigger than 

507
00:26:38,120 --> 00:26:40,800
older ones. 
They're doing bump outs on older

508
00:26:40,800 --> 00:26:44,160
ones, They're redoing the 
kitchen and making to go orders 

509
00:26:44,200 --> 00:26:47,320
on the older ones as well. 
So they're constantly enhancing 

510
00:26:47,320 --> 00:26:50,160
the older locations as they're 
growing the total number. 

511
00:26:50,280 --> 00:26:52,960
The other most important KPI 
that we look at specific to 

512
00:26:52,960 --> 00:26:55,920
restaurants is their comparable 
restaurant sales. 

513
00:26:56,080 --> 00:26:59,040
They highlight this as the first
bullet point on their report 

514
00:26:59,280 --> 00:27:03,360
because sales increasing per 
location is a key indicator for 

515
00:27:03,360 --> 00:27:05,720
how this company's doing and we 
can look at this and give it 

516
00:27:05,720 --> 00:27:09,960
context on a greater scale here.
Now this isn't the total average

517
00:27:09,960 --> 00:27:11,800
volume per year of the 
restaurant. 

518
00:27:12,040 --> 00:27:13,960
This is their total weekly 
sales. 

519
00:27:13,960 --> 00:27:16,920
That's the way that they define 
it, total weekly sales. 

520
00:27:16,920 --> 00:27:20,560
So if we look at this on a 
quarterly basis back in 2011, 

521
00:27:20,760 --> 00:27:23,320
their weekly sales was around 
73,000. 

522
00:27:23,800 --> 00:27:27,000
It goes up and down based on the
quarter, whether it's a longer 

523
00:27:27,000 --> 00:27:29,960
quarter or a shorter one, 
whether it's the holiday season 

524
00:27:29,960 --> 00:27:31,760
or not. 
But you can see it growing 

525
00:27:31,760 --> 00:27:37,000
steadily overtime from 70,000 to
80 to 90 to 100,000. 

526
00:27:37,400 --> 00:27:39,040
And then we had the COVID 
quarters. 

527
00:27:39,400 --> 00:27:44,040
The COVID quarters, it dropped 
from around 102,000 to 41,000. 

528
00:27:44,400 --> 00:27:48,320
At the same time, during that 
first COVID quarter, the To Go 

529
00:27:48,320 --> 00:27:51,320
sales went up dramatically. 
They doubled their normal 

530
00:27:51,320 --> 00:27:54,640
average up to 54,000. 
We'll revisit those to go orders

531
00:27:54,640 --> 00:27:56,200
in a second. 
But we look at the rapid 

532
00:27:56,200 --> 00:27:59,840
recovery in weekly sales, It 
went all the way back up to 

533
00:27:59,840 --> 00:28:03,000
where it was prior to COVID in 
early 2021. 

534
00:28:03,240 --> 00:28:06,840
So we had a very rapid recovery 
and investors that bought the 

535
00:28:06,840 --> 00:28:10,480
dip here did really well in Q1 
of 2023. 

536
00:28:10,480 --> 00:28:14,240
Their average weekly sales was 
$148,000. 

537
00:28:14,480 --> 00:28:18,400
That is incredible, but they 
still beat it this first quarter

538
00:28:18,560 --> 00:28:24,320
159,000 setting an all time 
record weekly sales for the 

539
00:28:24,320 --> 00:28:26,440
company. 
It's hard to look at this and 

540
00:28:26,440 --> 00:28:29,480
see that there is any trouble at
all with Texas Roadhouse. 

541
00:28:29,720 --> 00:28:32,800
They're not only opening up 
additional locations every 

542
00:28:32,800 --> 00:28:35,520
single quarter, but they're also
increasing the amount of weekly 

543
00:28:35,520 --> 00:28:37,360
sales every single quarter as 
well. 

544
00:28:37,440 --> 00:28:39,760
Now one thing that Texas 
Roadhouse is getting much better

545
00:28:39,760 --> 00:28:43,360
at is their to go orders and 
this is where the numbers look a

546
00:28:43,360 --> 00:28:46,120
little off. 
We have this first one here and 

547
00:28:46,120 --> 00:28:48,760
this is unusually high because 
they are basically only 

548
00:28:48,760 --> 00:28:51,880
accepting to go orders in early 
2021. 

549
00:28:52,160 --> 00:28:54,240
During that quarter they had 
54,000. 

550
00:28:54,320 --> 00:28:58,000
It started to normalize in 2022.
That's where it hit the low, but

551
00:28:58,000 --> 00:29:01,320
over the last two years, it 
started to increase again at an 

552
00:29:01,320 --> 00:29:04,560
accelerated pace, more and more 
percentage of their customers 

553
00:29:04,560 --> 00:29:08,040
are ordering to go. 
This year there was 20,800 

554
00:29:08,040 --> 00:29:10,040
weekly. 
So it's improving year over 

555
00:29:10,040 --> 00:29:11,280
year. 
We're back to a growth 

556
00:29:11,280 --> 00:29:14,560
trajectory where previously it 
was going down from all the pull

557
00:29:14,560 --> 00:29:17,080
forward from the pandemic. 
And they mentioned on their 

558
00:29:17,080 --> 00:29:19,480
call, they're getting better and
better at the technology. 

559
00:29:19,720 --> 00:29:23,640
They have the app making it very
easy to order for to go and they

560
00:29:23,640 --> 00:29:26,880
have a special pickup station 
and a digital kitchen that's 

561
00:29:26,880 --> 00:29:30,000
specific to to go orders and 
they're seeing more repeat 

562
00:29:30,000 --> 00:29:32,760
orders from the same customers. 
So we see these number of 

563
00:29:32,760 --> 00:29:35,240
restaurants grow. 
We see the average weekly sales 

564
00:29:35,240 --> 00:29:37,520
rise and that translates into 
the overall revenue of the 

565
00:29:37,520 --> 00:29:41,320
company, 12.5% revenue growth 
reaching a record high. 

566
00:29:41,440 --> 00:29:44,200
The free cash flow also reached 
a record high this quarter, 

567
00:29:44,200 --> 00:29:48,600
$165,000,000. 
That's an increase of 35% year 

568
00:29:48,600 --> 00:29:51,360
over year. 
The net income was up 31% and 

569
00:29:51,360 --> 00:29:53,640
the earnings per share was up 
32%. 

570
00:29:53,720 --> 00:29:56,800
They've maintained 0 long term 
debt on their balance sheet and 

571
00:29:56,800 --> 00:30:00,680
they've grown their cash balance
from around 100 million to 213 

572
00:30:00,680 --> 00:30:02,360
million. 
And finally, on the earnings 

573
00:30:02,360 --> 00:30:04,920
call, when they're asked about 
the value proposition to 

574
00:30:04,920 --> 00:30:08,560
customers and whether prices are
getting to them, Texas Roadhouse

575
00:30:08,560 --> 00:30:12,120
said that after their last price
increase of 3%, they actually 

576
00:30:12,120 --> 00:30:14,520
saw an increase in traffic 
trends. 

577
00:30:14,880 --> 00:30:17,720
More and more people coming to 
the restaurant because even 

578
00:30:17,720 --> 00:30:21,280
though they're increasing prices
slowly, other places are 

579
00:30:21,280 --> 00:30:24,520
increasing prices much faster, 
making their relative value 

580
00:30:24,520 --> 00:30:27,840
proposition better and better. 
So overall, when I look at the 

581
00:30:27,840 --> 00:30:32,040
stock, I think this is about as 
solid of an earnings report as 

582
00:30:32,040 --> 00:30:34,880
you can get and that's why the 
stock continues to sail higher 

583
00:30:35,040 --> 00:30:36,640
after already being up this 
much. 

584
00:30:36,720 --> 00:30:38,280
Now finally, we get to 
MasterCard. 

585
00:30:38,280 --> 00:30:40,920
This is another large position 
in My Portfolio. 

586
00:30:40,920 --> 00:30:43,520
This quarter, MasterCard came in
a little bit weaker than 

587
00:30:43,520 --> 00:30:45,840
expected. 
I mean they they did fine. 

588
00:30:45,840 --> 00:30:48,960
It was mostly business as usual,
but they did predict that things

589
00:30:48,960 --> 00:30:52,000
were going to slow down a little
bit for them and that did 'cause

590
00:30:52,000 --> 00:30:55,800
investors some alarm that the 
CFO says shouldn't really 'cause

591
00:30:55,800 --> 00:30:57,800
alarm. 
The reason for the slowdown is 

592
00:30:57,800 --> 00:31:01,120
simply because outside of the US
is growing really quickly. 

593
00:31:01,160 --> 00:31:04,160
It's a large portion of 
Mastercard's revenue and the US 

594
00:31:04,160 --> 00:31:06,880
dollar is becoming stronger. 
So when you have that foreign 

595
00:31:06,880 --> 00:31:10,240
exchange, when you have that 
currency conversion, it simply 

596
00:31:10,240 --> 00:31:13,040
makes it so that they lose one 
to two percentage points in 

597
00:31:13,040 --> 00:31:14,960
earnings. 
The most important takeaways 

598
00:31:14,960 --> 00:31:17,320
that I see are the similar 
things they're saying at 

599
00:31:17,320 --> 00:31:20,600
MasterCard that they said with 
Visa, we continue to see good 

600
00:31:20,760 --> 00:31:23,280
solid consumer health and 
consumer spending trends. 

601
00:31:23,520 --> 00:31:25,560
And this is true globally around
the globe. 

602
00:31:25,560 --> 00:31:29,360
People are spending money, the 
MasterCard doesn't really care 

603
00:31:29,640 --> 00:31:32,920
what they spend money on. 
It makes no difference for them.

604
00:31:33,200 --> 00:31:36,680
They even say quote, so for 
$1.00 spending taking place at a

605
00:31:36,680 --> 00:31:40,760
restaurant or $1.00 spending 
taking place at a value store 

606
00:31:40,960 --> 00:31:43,360
generates the same revenue for 
us. 

607
00:31:43,760 --> 00:31:46,600
That's the incredible thing 
about Mastercard's business 

608
00:31:46,600 --> 00:31:48,200
model. 
You don't have to predict which 

609
00:31:48,200 --> 00:31:51,640
company will do well, You just 
have to predict that people will

610
00:31:51,640 --> 00:31:54,760
spend more money digitally with 
cards in the future. 

611
00:31:55,080 --> 00:31:57,000
And I think that's a very safe 
prediction. 

612
00:31:57,320 --> 00:32:00,400
So far nothing has changed with 
my thesis in MasterCard. 

613
00:32:00,560 --> 00:32:03,560
Another stock in My Portfolio 
worth noting is Moody's. 

614
00:32:03,560 --> 00:32:05,360
This is a brand new investment 
of mine. 

615
00:32:05,360 --> 00:32:09,080
It's roughly flat, down slightly
since purchasing in, but they 

616
00:32:09,080 --> 00:32:11,800
just had their earnings report 
and overall it was really 

617
00:32:11,800 --> 00:32:13,960
strong. 
The company beat their estimates

618
00:32:13,960 --> 00:32:17,400
both on the top and bottom line.
The revenue grew to $1.79 

619
00:32:17,400 --> 00:32:20,000
billion, which is a 21% 
increase. 

620
00:32:20,280 --> 00:32:24,920
The free cash flow came in at 
around $775 million. 

621
00:32:24,920 --> 00:32:27,320
Now there's different ways you 
can adjust this free cash flow. 

622
00:32:27,640 --> 00:32:31,320
Moody's adjusted themselves down
to around 695,000,000. 

623
00:32:31,440 --> 00:32:35,120
Net income was up 15%. 
Earnings per share were up 15% 

624
00:32:35,120 --> 00:32:37,320
as well. 
Moody's adjust this down to 

625
00:32:37,320 --> 00:32:40,600
around 13% earnings per share 
growth and they are paying down 

626
00:32:40,600 --> 00:32:42,520
debt quickly, which I like to 
see. 

627
00:32:42,520 --> 00:32:45,920
Last quarter, just quarter over 
quarter, they paid down around 

628
00:32:45,920 --> 00:32:49,600
$700 million worth of debt. 
So I like seeing that go down. 

629
00:32:49,600 --> 00:32:52,440
I think it's good capital 
allocation strategy and while 

630
00:32:52,440 --> 00:32:54,880
they paid down debt, they had 
additional cash. 

631
00:32:55,040 --> 00:32:56,920
There's not too much to say 
about this report. 

632
00:32:56,920 --> 00:33:00,280
It was strong all around, every 
financial metrics looking strong

633
00:33:00,480 --> 00:33:03,600
and their core businesses, both 
Moody's Analytics and the credit

634
00:33:03,600 --> 00:33:05,440
rating business are both on 
track. 

635
00:33:05,480 --> 00:33:08,240
That about wraps up the earnings
reports this week and overall it

636
00:33:08,240 --> 00:33:09,960
was a great week for My 
Portfolio. 

637
00:33:10,040 --> 00:33:11,600
Now one last thing I must 
mention. 

638
00:33:11,680 --> 00:33:14,560
Sam Altman of Open AI recently 
went on an interview and like 

639
00:33:14,560 --> 00:33:18,160
many of these tech billionaire 
big people that have blown up in

640
00:33:18,160 --> 00:33:20,400
this category, he says a lot of 
things. 

641
00:33:20,400 --> 00:33:22,840
He says a lot of things and some
of them are very grandiose. 

642
00:33:23,240 --> 00:33:26,680
But some of these strike me as 
not just grandiose or dreaming, 

643
00:33:27,000 --> 00:33:30,400
but they strike me as as almost 
a red flag, something I feel 

644
00:33:30,400 --> 00:33:33,560
like I have to be cautious of 
when looking at people like 

645
00:33:33,560 --> 00:33:35,440
this. 
For example, here's one of the 

646
00:33:35,440 --> 00:33:37,040
things he said during this 
interview. 

647
00:33:37,280 --> 00:33:42,440
Whether we burn 500 million a 
year or 5 billion or 50 billion 

648
00:33:42,440 --> 00:33:45,000
a year, I don't care. 
I genuinely don't. 

649
00:33:45,000 --> 00:33:48,480
As long as we can, I think, stay
on a trajectory where eventually

650
00:33:48,480 --> 00:33:51,520
we create way more value for 
society than that. 

651
00:33:51,800 --> 00:33:54,160
And as long as we can figure out
a way to pay the bills like 

652
00:33:54,160 --> 00:33:55,920
we're making AGI, it's going to 
be expensive. 

653
00:33:55,920 --> 00:33:58,080
It's totally worth it. 
Now I get it. 

654
00:33:58,120 --> 00:34:01,440
He wants to create AGI. 
He's very focused on his goal. 

655
00:34:01,440 --> 00:34:04,280
That's a good thing. 
But the indifference he has 

656
00:34:04,280 --> 00:34:09,080
towards the magnitude of money 
between $100 million or 5 

657
00:34:09,080 --> 00:34:12,239
billion or 50 billion is a 
little bit alarming. 

658
00:34:12,520 --> 00:34:16,360
It's almost like he treats 
capital as this endless thing 

659
00:34:16,719 --> 00:34:20,239
that money just sprouts on 
trees, grows indefinitely, and 

660
00:34:20,239 --> 00:34:24,320
you'll never have trouble ever 
receiving funding for his goals 

661
00:34:24,320 --> 00:34:27,840
and his dreams of creating AGI. 
And not only is he not concerned

662
00:34:27,840 --> 00:34:30,840
about receiving funding, but he 
also doesn't seem to care. 

663
00:34:30,840 --> 00:34:34,600
He seems entirely indifferent, 
even clarifying that he 

664
00:34:34,600 --> 00:34:38,600
genuinely, genuinely doesn't 
care. 5 billion or 50 billion a 

665
00:34:38,600 --> 00:34:41,159
year, I don't care. 
I genuinely don't. 

666
00:34:41,520 --> 00:34:43,360
Five billion? 
50 billion? 

667
00:34:43,360 --> 00:34:45,120
Who cares? 
I don't know. 

668
00:34:45,120 --> 00:34:47,400
At least for me, when I watch 
this type of thing and I see 

669
00:34:47,400 --> 00:34:50,880
people talking about this type 
of money in real context, saying

670
00:34:50,880 --> 00:34:53,480
they don't care, that raises a 
red flag. 

671
00:34:53,480 --> 00:34:56,920
So I hope that Sacha or anybody 
working with them is careful 

672
00:34:56,920 --> 00:35:00,120
about that, that he does not 
seem to respect or care about 

673
00:35:00,120 --> 00:35:02,680
burning investors capital. 
Now that'll be all for this 

674
00:35:02,680 --> 00:35:04,520
episode. 
If you want to see more content 

675
00:35:04,520 --> 00:35:07,880
or you want full access to 
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676
00:35:07,880 --> 00:35:10,200
with a free trial. 
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677
00:35:10,200 --> 00:35:11,760
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