Behind The Idea

We revisit GM to further dig into Blue Pacific's bearish view on the company and the industry. We also speak with Phoebe Wall Howard of the Detroit Free Press to see what people inside the industry are saying. It doesn't paint the rosiest picture in the world for investors, but it certainly makes for interesting study. Topics covered: Blue Pacific - 2:00-37:20 2:15 minute mark - What makes GM stand out from pick-up peers 5:45 - Where is the potential bottom and what has changed since 2007-2009? 14:30 - What about the industry as a whole, and the supposed pickup truck oligopoly? 20:30 - Automotive 2.0 - Legitimate hope or hype? And GM's bad luck with bad drivers. 28:30 - Whether anyone will truly win automotive 2.0. 32:30 - Does Tesla skew perceptions? 34:30 - GM's recent management turnover and the questions it raises. Phoebe Wall Howard - 38:00-1:13:00 38:50 - Change is gonna come in the industry, whether cyclical or otherwise 40:00 - Pick-up trucks and the ties to automotive 2.0 45:00 - Fiat Chrysler and GM going head to head 48:30 - Digging into automotive 2.0 and the passion behind it at GM 54:00 - Is tech making itself felt in Detroit? 57:00 - What is the industry most excited about vis a vis new technologies, and what scares it the most? 1:04:30 - What has changed this time around vs. 2007-2009? And how much do people love their cars?

Our first podcast on National Beverage Corp - owner of Lacroix sparkling water, FIZZ - left us unquenched. So we brought on Vince Martin, Seeking Alpha author, to go into the ups and downs of the bull case and this one of a kind story. Then we invited Rachel Arthur of Beverage Daily to give us more perspective on what's going on in the industry at large. It leaves a question of how much luck National Beverage Corp had in riding the sparkling water, and whether or not shareholders should care. Topics covered: Vince Martin - 3:30-45:00 3:30 - How to get comfortable with the CEO and his quirks. 9:00 - Sparkling water the new craft beer? There are some key differences. 14:30 - Snapple as a looming comparison for Lacroix 21:00 - What are they putting in Lacroix and how does that matter? 22:45 - Responding to a short report on one of your stocks, or the Glaucus question 32:00 - A lofty valuation perch or something deserved? Depends on what you compare it to 41:30 - The sweet spot for sparkling water Rachel Arthur - 45:45- 46:00 - How big is sparkling water? 48:00 - The importance of transparency in the beverage industry 51:00 - The big brands and how they handle these new categories and threat 56:00 - The lasting legacy of sparkling water 58:00 - CBD sparkling water? Why not? 1:00 - The big stories in the beverage industry right now, and how sparkling water fits in.

It's easy to take for granted how unconventional Jeff Bezos is, but his approach to Amazon's business is worth a closer look. We do a close read of the 2017 shareholder letter he published this April to see if we can better understand the company as a business and as an investment. This also is a prequel for our miniseries on Amazon to come this November. As might be expected, there's a lot to discuss. Topics covered: 3:00 – Setting the scene – Amazon’s 4-part shareholder letter 5:00 – The intro and the key performance indicators – the unique focus of Amazon’s letter 10:00 – The letter as sign of Bezos’s triumph, and as the changing context of the Amazon story 14:00 – Customer divinity and Amazon’s high standards – investment edge? 20:30 – The meta narrative and the six steps ahead thesis 24:00 – Tackling the quality vs. value narrative again and trying to translate this into the investment case 32:15 – The perfect handstand bit and the value of handstand philosophy 40:30 – Picking apart the 6-page memo process 47:30 - Amazon’s recent milestones, and there are many of ‘em – the all-binding importance of revenue 57:45 – Riding the Treasure Truck 1:01:45 – Singing Internationale about Amazon’s human resources policies, and the Bezosian meta-narrative 1:07:45 – What does all this tell us about Amazon as an investment? 1:11:30 – 2017 vs. 1997 letter

Set aside the recent price action on pot stocks, and a fact still remains - the marijuana industry looks more and more legitimate. But is that the same as it being worth investing in? And what sort of industry is marijuana going to be? We take a couple articles on Canopy Growth Corporation and see if we can part the smoke to find out what might be in the company's future. Topics covered: 3:30 - Canopy Growth Corporation - best in class due to its supply agreements? 6:30 - The Constellation Beverages (STZ) investment and its import, and why beverage companies are entering cannabis faster than tobacco companies. 13:30 - Getting our heads around Constellation's case for buying into Canopy. 20:30 - Are brands going to be the advantage for Canopy (or anyone)? Will Snoop help? 29:00 - Or is it the marketing know-how that comes with the big investment? 37:00 - Reviewing Biotech Beast's article, or throwing some cold water on this fire. 41:30 - The rhyme with 2014, and how things have changed 46:00 - Ok, we can't stay away from Tesla - the similarities between Canopy and Tesla. 51:00 - The last but, and pulling out the popcorn.

Does a relatively overvalued company mean its peers are cheap? Do peak cycle share buybacks create or destroy value? Is General Motors really all that cheap? Seeking Alpha author Blue Pacific raises concerns about the legacy auto giant, and we dissect them to see what's left for shareholders. Topics covered: 5:20 - Breaking out the initial concerns from Blue Pacific - share buyback, accounting changes, etc. 10:45 - The unequal market and the challenges of share buybacks 20:30 - Management departures and accounting changes, and the story of the heroic accounting officer 36:00 - China free cash flow in trouble for GM? 38:45 - The auto industry is changing, where does that leave GM? And how much does the Softbank investment matter? 45:00 - The limits of the 'big boy' argument for investing in a stock 48:00 - Putting it all together - the lessons of short seller articles and our fate as eternal bagholders.

National Beverage is the maker of Lacroix and both one of the most enduring growth stories on the current market and one of the quirkiest. What to make about the short seller accusations, the CEO's bold statements, and the fact that we're investing in flavored water? We discuss a few recent bullish arguments and see how much Lacroix's story fizzes. Topics covered: 2:40 - Breaking down National Beverage's business 8:45 - The bullish beats - a takeover? consistent growth? ignore tariffs-depressed gross margins? 21:00 - What are the possible bearish features? Fad, competition, and moat? 30:15 - The Glaucus research claims - related party dealings, earnings manipulation - do they stick? 42:15 - Getting into the CEO question - what to make of Mr. Caporella?

Questions have been asked about Alibaba long before news broke that Jack Ma might be leaving soon. We got in on the question-asking game, as we quizzed Alibaba bear Anne Stevenson-Yang about what the short case around the company really is, and Alibaba bull Julian Lin about the reasons to stay long. There was more overlap in the two discussions than we expected. Topics covered: Interview with Anne Stevenson-Yang from 2:15-33:15 3:00 minute mark - Why do Alibaba’s different businesses go together? 5:00 – Alibaba as representative of China – how important is that? 8:00 – How is this climate different from the 2009-2011 period in China? 10:15 – What about BABA’s Q1 and continued revenue growth? 14:00 – Where to look closest at BABA to understand the company 16:00 – The Tencent (TCEHY) or BABA blessing 18:00 - Alibaba's presence on the ground 21:00 - Is there a catalyst to a short case? 22:00 - What is causing skepticism in China? 24:30 - Is there a bullish case for China out there? 26:00 - The definition of a Chinese financial crisis and is it going to happen? 27:30 - What are we still not understanding about China? 30:00 - The similarity between the bubbly start-up climate and China Interview with Julian Lin from 34:45-1:28:00 36:00 - How do Alibaba’s different businesses go together? 38:30 – Compare and contrast China vs. US 44:30 – Alibaba’s complexity and the Alipay incident 49:30 – The importance of returning cash to shareholders 51:00 – Thoughts on Jack Ma in general 55:50 – what incentive does BABA have to pay a dividend or start a buyback? 1h00m – Alibaba’s valuation vs. US peers 1:04 – Does Alibaba grow its profit and dominance the way Amazon and Facebook do? 1:09 – What is Julian’s investing style and how does Alibaba fit in? 1:13 – Jack Ma leaving? What do you think? 1:16 – Diving back into the accounting 1:24 – What about Alibaba’s disclosures?

Insurance companies can be hard to understand. Brighthouse Financial, a newly spun off company, has attracted both bulls and bears in its short public career. Ranjit Thomas recently wrote a Seeking Alpha article expressing skepticism about famed value investor David Einhorn's position in the company wouldn't work, leading Einhorn to respond with a few comments. What is the story here and is there a way to grasp BHF's business model? We take a shot at it. Topics covered: 2:30 - Starting off - what does BHF do? 6:45 – The spin-off angle and the bull case for BHF 15:00 – Spelling out the bear case on BHF's and whether its model works 20:00 – Getting into the books for BHF 27:00 - The value of hedging your book at a insurance company 31:00 - Reviewing Einhorn's source idea and the underlying incentives in this story. 38:00 - Reaching conclusions and whether it's better to get into the weeds or avoid them.

This week's Behind the Idea goes back to the football pitch to discuss Manchester United. The Ringer's Katie Baker joins us to talk about the changing nature of fandom, the growth and cycle of soccer in the US, and the distortions that might exist in pricing a sports company. Then Seeking Alpha's Alex Kivali explains his case in the company, the growth MANU can see abroad, and the difference between US and UK fandom. Topics covered: W/Katie Baker 4:00 – Women’s world cup as high water mark in US interest 6:00 – What is the upside for soccer in the US and for MANU given the lesser place of men’s soccer in the US? 10:30 - The cyclical nature of fandom – is Soccer going to break out in the US? 14:30 – The China growth imperative 18:30 – How much has fandom changed and what does that mean for investors? 24:00 – What is the friendliest Wall St. sport? 27:00 – The novelty of sports stocks and sports as media plays W/Alex Kivali 38:00 – Breaking down MANU’s international growth 41:00 – How much is MANU levered to its league? 44:00 – The difference between US and international soccer 46:45 – US Vs. China as an opportunity 49:00 – US growth in soccer interest from an outsider perspective 52:00 – The ‘stability’ of leadership when management and players turn over a lot? 55:30 – What is MANU’s competitive and pricing power? 1:01 – The tension between fandom and investment analysis 1:07 – How to value a soccer team and the breakdown on the numbers 1:11 – We’re at the price target – where do you go from here? 1:15 – Why MANU as a fan?

Ralph Lauren has been getting a lot of credit for its turnaround from the market, but what if that's premature? We dive into the topic with Berna Barshay of Viola Capital Management, to hear why she's short RL, what her research process and edge is like, and what she thinks about sharing her first public idea experience. Topics covered: 1:45 - How does Ralph Lauren's Q1 fit into the short thesis, and the focus on US wholesale and comparable numbers? 7:15 - What is the way out of Ralph Lauren's chicken/egg problem in their turnaround? 15:00 - How does Berna's narrative differ from the company's narrative and how much does that matter for the thesis? 20:00 - The disruption social media poses to fashion companies 29:00 - How much M&A is there in fashion currently? 31:45 - A woman's perspective in contrast to a male industry 41:00 - Wall Street's bias for widgets and the key of qualitative analysis, and who is less vulnerable to the current fashion climate? 46:30 - The TJ Maxx shortcut 48:00 - How to avoid confirmation bias when doing scuttlebutt research, and the power of focus 54:45 - Thoughts on sharing an idea publicly for the first time.

Disney's story is one of the more interesting long-running sagas on today's market. We discuss the company's fate and pending transformation with Seeking Alpha author Brian Langis (the 2-minute mark) and with The Atlantic's Derek Thompson (the 50-minute mark) to figure out whether Disney might be able to cross into streaming. Topics Covered: 2:00 - Reviewing Brian's thesis and the new hope for Disney 7:45 - What are you watching for in the transition to streaming? When does the tipping point come? 16:00 - How big a deal is Fox, how much to worry about $20B extra? (The running cost of content and the offense/defense game). 20:00 - Looking at Netflix across the aisle from Disney 24:45 - Getting to the numbers for Disney. What is the story there? 28:30 - How do we avoid getting attached to Disney shares when we enjoy Disney products? 35:30 - Talking value investing in an expensive market, and a cheesy answer. Getting to Alimentation Couche Tard (ANCUF) and Dollarama (DLMAF) as examples. 41:00 - What has changed in the past five years for your investing? 45:30 - The Iger risk 50:00 - Setting the scene with Derek Thompson on Disney, one of the most interesting companies in the world 54:30 - Why does Disney have a good chance of pulling off the transition to streaming? 56:30 - Why relinquish ESPN to decline? What barriers are there? 1:01:30 - What do the economics look like once Disney makes it to streaming land? 1:08 - Are we at the tipping point where video is too easy to make, thus drowning out Disney's advantage? 1:16 - How important is Fox? 1:19 - Vertical integration - is this business different? Why not work together with Netflix? 1:27 - Let's get into the fintwit discussion.

Quoth the Raven joins Mike Taylor of Behind the Idea to talk about his thesis on gold, a topic that can often leave cash flow focused investors scratching their heads. While Mike and Quoth don't agree on everything, they do discuss two key points - the importance of an independent and skeptical perspective in investing, and the risk of becoming too proud of your thinking. The podcast also covers QTR's background as an investor and how he developed his unique perspective, as well as how he maintains to this day.

Seeking Alpha author Julian Lin made the bull case for Alibaba, arguing it's growing and unbeatable in its markets (https://seekingalpha.com/article/4185148-china-fallen-alibaba-conviction-buy). Alibaba is China's champion, and it like many China companies has drawn questions about the true numbers of its business. So we dive in to see whether there's more to Alibaba than meets the eye, or whether the growth story has legs. Topics covered 2:30 – Reviewing the article thesis – easy on the hot takes, but this is a basic tech industry leader growth story 7:00 – Tackling the other side and the limits of what he knows 9:30 – How do you start to value this? 16:20 – The meaning of valuation approaches 23:00 – The need for technical analysis at a certain point 29:30 – Can we trust Alibaba’s numbers? 37:30 – the risk of a story CEO 40:30 – the limits to the hunt for new information 43:30 – What about the fact that Alibaba doesn’t trade in China?

We revisit Shopify from all angles to see what the investment case is both for longs and shorts. We had From Growth To Value (Long) and Ramy Taraboulsi, CFA and Jan Barta (each Short) talk up their views on the stock and their case. While the narratives don't always intersect, we hope the different perspectives helps investors better consider Shopify and other battleground stocks. Topics covered: Introduction – 1:25 3:45-46:00 – From Growth To Value 4:00 – How does the Growth investing mindset fit here? 7:00 - Which value stocks fit the author's style? 8:45 – What trends does Shopify have in its favor? 14:15 – Why shopify as the play and not other companies? 18:00 – Getting into Shopify’s competitive position 21:00 – Can Shopify’s customers survive? What about churn? 25:15 – Show me the numbers 32:00 – What if revenue growth slows? 36:00 – How could this go wrong? 42:30 – The growth mindset in general 47:00-1:36 – Ramy Taraboulsi, CFA 48:20 – What brings you to Shopify? 50:30 – Shopify’s competition 56:15 – Can Shopify build a moat? 1:01 – Can Shopify be enough to compete with the big boys? Do the economics work? 1:06 – Can Shopify benefit from regulatory crackdown? 1:11– If Shopify’s winners grow fast enough, does churn matter? 1:13 – About Shopify’s valuation 1:18 – What is the catalyst here? 1:23 – Clients vs. revenue growth 1:25 – How does this compare to short RIMM (BBRY) back in the day? 1:29 – Again, how could this go wrong? (Hint – cannabis is coming) 1:37-2:05 – Jan Barta 1:38 – Hearing about the contrarian or value style 1:39:30 – Why cover Shopify? 1:41:30 – What about growth over churn? 1:44 – What is supporting Shopify’s growth? 1:47 – How do you view Shopify’s strategy then? 1:49 – Is Facebook actually going to change their relationship with Shopify? 1:52 – What are your catalysts? 1:56 – How could this go wrong?

The World Cup is over, but the Premier League is around the corner. And Manchester United trades on the market every day. Just because the club often wins doesn't mean it's a winning investment. We review a recent article by Alex Kivali - https://seekingalpha.com/article/4185750-runway-quite-manchester-united - to see what upside there is in the club and whether good times loom for investors. Topics covered: 4:00 minute mark – A recap of Manchester United's story so far 8:00 – MANU’s international opportunity part one - China and the construction of an audience 16:00 – MANU in the US - has soccer already played out here? 20:50 – Executive Leadership and whether MANU has stabilized in the post Sir Alex Ferguson era. 28:45 – How stable are the cash flows for a sports business? How different are sports businesses? 37:00 - How do you value this? And what's going on with MANU's margins? Is it a Coke or a Costco? 44:15 - The different models in the soccer world 47:00 - Added time to look at the valuation