Hey guys—Frank is traveling today, so I (Daniel) am taking the reins. [0:15]
Pfizer (PFE) announced positive news about its vaccine booster shots. I share my take… and why the current macro picture makes Pfizer a good buy. [2:08]
Mike Novagratz, CEO of Galaxy Digital, spoke with CNBC about what to expect from institutional buyers in the crypto space… and it’s great news for the asset class. He also explained why Ethereum could outperform Bitcoin as inflation moves higher… [7:40]
Finally, I highlight my method for finding quality stocks… and a few catching my attention by rewarding shareholders in a big way… [14:55]
Wall Street Unplugged | 830
These companies are rewarding shareholders in a major way
Announcer: Wall Street Unplugged looks beyond the regular headlines, heard on mainstream financial media to bring you unscripted interviews and breaking commentary direct from Wall Street right to you on main street.
Daniel Creech: Greetings to all you investors, traders, some of you gamblers out there, conversationalists, and overall independent thinkers. It is Thursday, December 9th, and you’re listening to the Wall Street Unplugged podcast, which is normally hosted by the one and only Frank Curzio, where he breaks down the headlines and… I can’t hold the pause that long… Tells you what really move in these markets. Today’s a little different. You are stuck with me and only me because, well, as you all are aware of, life happens every once in a while. Frank had a great interview scheduled, but they had to cancel and then reschedule for a later date. Some things come up, fires need to be put out, fires need to be started.
Daniel Creech: So anyway, we’ll get through it all today. Frank’s turned over the reins of this company a few times now in my amateur-ranked podcast hands, but he’s careful to do it. Don’t get upset. He only does it for 30 minutes or less at a time. I’ll tell you how I’m going to run the show today. This is kind of like my courtroom, or captain of this ship. There were two interviews yesterday on CNBC that caught my eye, one regarding Pfizer and the positive news there around the recent coronavirus variant, and they also interviewed… I believe it was Joe Kernen, had a great interview with Galaxy Digital CEO, Mike Novogratz, who I’m a big fan of, and all our subscribers to our Crypto Newsletter are well aware of that. And then finally, it’s always flattering to get emails from subscribers and listeners, and ask us about our process or how we come up with ideas, or what are we thinking about macro and how does that funnel down to micro?
Daniel Creech: So, I’ll walk you through a fun free website and some bigger macro thinking on what I’m looking forward to, what I’m expecting, or what I want to prepare for when it comes to putting money to work, generating that return for investors. Yesterday, we kicked things off. So yesterday, there was really positive news out of Pfizer, because they said that if you get the doses or boosters, however you want to say this, it doesn’t take one. Maybe not two, but the third shot you get is going to really protect to you from this latest variant Omicron. And of course, you know I’m going to butcher things throughout this short podcast and have some fun. So feel free to email me email@example.com, that’s firstname.lastname@example.org, with all your positive and negative feedback. Now they had, I believe it was the CEO of Pfizer on there. Let me stop real quick.
Daniel Creech: This is good news because as you can see, in just the last two weeks, since our Thanksgiving holiday, the market has basically gained all back of what it had lost through when this variant broke news and really started to shake up markets. You saw huge swings in the market indices the DOW and S&P 500, just crazy times. And people were wondering, hey, this is going to be worse than Delta. We’re going back to lockdowns, supply chains be damned. All the issues we’re dealing with right now are only going to get much, much worse. Fast forward two weeks later, not that big of a deal apparently, which, again, is great news. Not only for economies, but just for us as humans in general and living our lives. I, for one, I mean, any deaths are terrible. This is an awful virus, the coronavirus, COVID, whatever you want to call it, the variants, it’s terrible.
Daniel Creech: So, the sooner we get better news and get past this, the best. And I’m the biggest cheerleader for that. The Pfizer CEO was saying, hey, I loved his analogy he used. He said, “The vaccines are about building and booster shots are about building a wall. So, you want to think about building a wall against the virus for protection.” Now, because of our current political environment, I can’t believe he gets away with this. At least he didn’t say, “We’re building a border around this virus,” because then you’re kicked off TV. He’d probably get a golden parachute package and be sent packing, but that’s okay. That’s neither here nor there. But he said, “Hey, the first booster shot or vaccine builds a wall, but the wall isn’t that high. And then when you get the second shot, it just increases that wall strength and builds the wall little bit higher. And then the third shot, again, does the same thing, builds it a little higher.”
Daniel Creech: That’s all well and good, except for, hey, I’m six-six. I’m a little bit taller than average. I don’t know if three shots will build a wall big enough for me. I feel like that good joke. I need a life-size tattoo of someone my height for this type of protection, but we’ll see how all this plays out. Getting back to markets, markets rallied a little bit yesterday. The DOW bounced around, but this is good news because it thinks, hey, it takes lockdowns out of the picture. It gets people used to the unfortunate reality, which is you’re going to have to learn to live with this, learn to expect this. And I’m talking of course from a investing standpoint. So, when you want to deal with this as being forever, you need to be prepared for headlines about, hey, the new variant coming out.
Daniel Creech: What if it’s worse than the last two? Or, what if this next booster shot doesn’t quite as protect you from this? We’re excited right now. Markets are rallying. We’re looking past this. Dr. Fauci even yesterday came out and basically echoed the same positive news, saying, hey, this new variant looks less severe. As far as deadliness, it is very transparent, or excuse me, it infects people quickly so that’s not good. You’re going to get a lot of cases, number of cases going up. But if the severity of those cases, I don’t want to say nothing to worry about, but if it’s not serious or as serious as one’s feared, that’s positive news. But as investors, what do you take away from this? Well, if we’re going to have to live with this forever, we’re talking about future vaccines, future booster shots.
Daniel Creech: How do you not have exposure to the pharmaceutical industries? And I know Frank has talked about it the last week or so, about how some of the ETFs or biotech trackers have been down significantly this year. I think a couple were double digits, but Pfizer’s not. And they’re always on, the CEO was on CNBC. They have a lot of spokesmen or board members. I can’t think of the guy’s name, but he used to be on the FDA or head it. That stock is performing very well. And it’s not a Moderna, it’s not as volatile as that as far as share price goes, but it gives you exposure to this new normal of, hey, you have to prepare to be ready for this. So the other takeaway is, you want to know what you own and why you own. And I echoed this yesterday on the podcast with Frank. When markets are selling off, everything basically is going to go down.
Daniel Creech: So, I don’t care if it’s Apple, and it’s nothing related to Apple or Microsoft, and nothing related to Microsoft. Typically, a lot of times, those stocks get thrown out. You know, it’s the old expression the baby gets thrown out with the bath water. Okay, that’s going to happen. That’s a reality. When markets sell off, basically everything sells off. But what you want to look at is why, what is the media, or what do you think is behind the sell off? How does that affect your personal positions and use lower prices to either add or at least maintain, and just understand that hey, volatility is just part of it. The new normal there is we have to learn to live with this. So, have exposure to Pfizer and unfortunately be prepared for hey, maybe it wasn’t as safe, these vaccines didn’t work as good, or they don’t last as long.
Daniel Creech: So, we’re going to have to live with this volatility for forever and just deal with that. That’s not great, but it’s better news than where we were two weeks ago, when everybody was scared to death over this thing. Keeping on the CBC network, they had Galaxy Digital CEO, Mike Novogratz, on. And I thought it was a good interview because they asked him about, hey, what about Bitcoin, if inflation gets tamed by rising interest rates. And they also asked him about just the idea of money flowing into the space. And he said a couple of things that really stood out to me. He gave a price prediction, and that’s always tough. People love to see people go out on a limb.
Daniel Creech: With the current sell off, Bitcoin hit damn near 70,000 or right around there. And then it sold off to 41, 42. It’s back around 50… Well, give or take, who knows where it is. It was 50 yesterday, again, when this interview was happening, and Novogratz said he doesn’t expect it to go under 40,000. Now, of course he doesn’t have a crystal ball, but I liked what he explained. And he said he had just gotten back from the Middle East. So, he’s talking to the biggest institutions, big money managers all over the world. He’s a very connected guy, super smart guy, obviously, super successful guy. And he talked about what he referred to as an institutional bid under the crypto market. And that really stood out to me. And then I started seeing it on headlines and different things. I mean, that’s a great soundbite, an institutional bid. And what he’s saying there is that there’s a lot of people and a lot of money that still want to get into this space.
Daniel Creech: And they’re very smart people. So, they’re going to do it in the best way they can. Well, when prices, we talked about this yesterday as well, when prices come down, so does your risk. So, if you’re worried about Bitcoin going to zero, there’s obviously less risk at 40,000 going to zero than it is at 70,000 going to zero. And as an investor, if you’re already in Bitcoin or cryptocurrencies, or you’re thinking about doing that, you need to, first of all make peace with the fact that you have to buy in or your certain beliefs are that it’s not going away if you’re thinking about going along. You’re probably not worried about it going back to zero, even though it’s difficult emotionally to buy into when prices are going down, that’s what you have to train your thing, your idea and your thinking to do.
Daniel Creech: So, he’s just telling you on CNBC that the biggest, smartest, and largest asset or money managers in the world are kind of using this volatility to look to add or gain exposure to this. That is a huge takeaway. And you need to write that down and you need to continue to remind yourself of that during volatile times. It doesn’t mean you can buy blindly, doesn’t mean you can put all your eggs in one basket. Let’s not get out of hand here, but what he said really stood out to me, that there’s an institutional bid under the market. Maybe he believes it’s right around that 40 mark, maybe it’s a little higher, maybe it’s a little lower. The point is that this guy is telling you, you haven’t missed it. So, don’t be the guy sitting on the fence saying, oh yeah, well, it’s just waiting for me to buy it, and then it’s going to go down.
Daniel Creech: That’s a good bar joke, but don’t live there and don’t invest that way. Another thing he said, turning to the regulatory front, was… And it just so happened yesterday there was a big House hearing. I don’t even know what the group was, but some House committee had a bunch of crypto related companies’ CEOs in front of them, and Maxine Waters came right out and basically said, “Hey, if Meta, formally known as Facebook, allows individuals to use this wallet and use this cryptocurrency, it’s basically going to undermine,” I believe that’s exactly what she said. She’s worried about it undermining the US dollar. Because you have billions of people that use the platform, you could have a lot of volume flow into that space. So, I don’t think it was a coincidence that he talked about regulatory clarity as this house hearing was about to take hold. When it comes to regulation, most of you listeners are going to know I’m a less is more type guy there.
Daniel Creech: All you need is a few simple rules and enforce those rules so that people aren’t scammed and or stolen from. There’s bad actors in everything, so blaming crypto, blaming bad actors’ behavior on cryptocurrencies, or using that is in my mind just a silly argument, but it’s one that attracts emotion and headlines. But we do need just clarification, just set a few simple rules. And Frank has talked about this over months and months about which cryptocurrencies are they going to deem as securities and or coins or utility coins. And that will have a major effect on different exchanges. It wouldn’t shock me. And like Frank has talked about, you see a lot of the cryptocurrencies that are trading on certain platforms maybe have to be delisted off those platforms if tighter and more regulatory regulation crackdowns happen. We’ll see how all that plays out.
Daniel Creech: But I wanted you to take away from that institutional bid. One other important thing he said to me, and there was a good question on hey, if Bitcoin is viewed as this inflation hedge or more of a sound money hedge, kind of like gold does, because you have this endless and massive money printing not only going on by our federal government and Federal Reserve, but also, this is happening worldwide against these central banks. So, if you are devaluing your paper currency, your fiat currency, that is a bull case for Bitcoin because there’s a limited amount of Bitcoin ever. And that’s a good question. Hey, if interest rates rise and you can stop debasing the currency, isn’t that a negative for Bitcoin? And maybe it is, maybe it isn’t. I think there’s still a lot of value there because of the limitness and the usage that can come from it, the trust that can come from it, the innovation that can come from it.
Daniel Creech: And if there’s that much money sitting on the sidelines waiting to get in, I still think that over time, going forward, prices are going to be much higher than the, where they currently are. In addition to that, he said Bitcoin is looked at as the hedge and Ethereum is looked at more of a technology. So, it’ll be interesting to watch, and it’s not rocket science to probably guess that you can have exposure to both. So, if you’re in crypto, you should be, in my opinion, have exposure to the biggest and best names because that’s where a lot of the capital and innovation is flowing into and innovation coming from. And I expect them… I’m not saying they’re going to dominate forever, but Bitcoin and Ethereum are clearly leaders in their space.
Daniel Creech: So, if investors are looking at Ethereum from a technology perspective, that just gives you many options to win. And that’s a good thing. That’s a very strong bull case for years to come. And it’ll be exciting as just a interested participant and investor to watch that unfold. Don’t worry too much about rising interest rates crashing Bitcoin, in my opinion, but just expect further volatility. And I know that is a broken record because you don’t need me to tell you that Bitcoin and cryptocurrencies are crazy volatile. I mean, hell the market went down a few percent, Bitcoin and other cryptocurrency season went down more than 20% right around the Thanksgiving holiday here in the US. But just a few things to think about, and if you can go Google those, check out those interviews and do a lot of your homework on what cryptos do you like, why, and use those pullbacks as buying opportunity.
Daniel Creech: Switching to one more thing here, let you guys go a little early from this class session, it’s always very flattering to get emails, even if it’s telling me how terrible I am, it’s still funny and, and great that you guys take the time to sit down, email, send us a note. Whether you love us or hate us, don’t ignore us. That’s what we like to joke about. But I’ve gotten a handful of hey, how do you come up with certain ideas, or what tools do you use, or how do I become a better analyst, or how can I do this on my own? And I hate to tell you, there’s no secret sauce here. Two ingredients for success are time and effort. And you got to be willing to put in the time, and you obviously have to be willing to put in the effort.
Daniel Creech: And the good news is, it’s very easy to do that right now. Not so much time, but the effort and the ability to grab information, because you can basically get transcripts for free from conference calls. Go to the company’s websites, look through their presentations, look through their earnings release, their news releases, look through their SEC filings, their quarterly reports, their annual reports, all that, they legally have to publish that. And it’s all free. You can go to, I believe it’s SEC.gov, sec.gov, or Seeking Alpha, I don’t know if they still allow you to access all that on their free membership, but there are other sites that you can… The point is you can get that information out there.
Daniel Creech: And so, you want to take advantage of that, granted. Now, a lot of you don’t have time. That’s why you subscribe to our newsletters, which you should, even if you have the time, you got to keep us going here at Curzio Research. Frank will like that plug. But I wanted to point out one great free website and it’s Finviz. And what I like about Finviz is across the top, you can click on a screener tab and as you use the dropdown menus to go through industries, you can go from anywhere, energy technology. It’ll bring up these lists for you, and then the nice thing is, you can just hit the chart feature, and it charts every stock there, and it’s pages and pages. So if you do oil and gas, you’re going to have pages and pages. Why do I say that?
Daniel Creech: Well, because it’s easy to see them right next to each other. You can see hey, this chart went up and it’s pulled back 20% or 50%. Why? Something to make a note and look in. You can get a lot of the competitors in the industries. You can look at a lot of what they have exposure to. And it’s all in just one neat screen. It’s got a feature where you can look at groups and it’ll show you daily, weekly, monthly, year to date, year over year, what sectors are doing best. You can simply click on those sectors. And again, it’ll chart all these different stocks for you. And it’s a great point to start your research. Charlie Munger had a great quote talking about his partner and brilliant investor, Charlie is, as well Warren Buffet. And I’m paraphrasing here, of course, but basically somebody was asking him, “Hey, how’s Warren so great,” or “What makes you guys such a great team,” and this and that and the other.
Daniel Creech: And Charlie said, “One of Warren’s best qualities is he sits on his and reads a lot,” and I’m sure he implied it. But I would also add to that. Think, you just want to think through certain situations and how that’s going to affect everybody. Turning to volatility in current markets, how do I think through things right now, going into the next year? Obviously, we’re going to have a lot more volatility, so you want to be prepared for that. So, Frank has talked about a lot of this in the past where you can scale into positions over time. Certain positions for me, I want to get certain amount of dollars in those positions, so I’m going to buy over time until I get X amount in one stock, X amount in the other, et cetera, et cetera.
Daniel Creech: That’s a personal preference. You can do that as well. But I want to think about, okay, if we do get a major pullback, say 10, 20%, and that hits most stocks, I want to have a shopping list of what to buy when those prices come back. Now, two things for that, A, you have to put in the time and make a shopping list or listen to us. And B, you have to have cash ready on the sidelines. So, you don’t want to be in the position of selling other positions to buy something else if you’re experiencing a big pullback. So, you want to think about that process over time. If we are going to have a lot more volatility, like both Frank and I expect, you want to focus on quality. And it’s okay to be boring, you want to hide out. You don’t always have to be doing something in the markets.
Daniel Creech: That’s what’s so great about investing. You don’t ever have to do anything. Obviously, you can’t sit on the fence all day, but you can research and choose not to invest, take on that risk, wait for the risk-reward to be in your favor before you swing at that fat pitch. So, when I think about quality, I want to look at strong balance sheets. Some you can do simple screens again, back to Finviz on insider buying. If insiders, CEOs, CFOs, managers, board of directors are buying their stock, that’s a starting point to look into it further. That’s how I found for Curzio Venture Opportunities. That’s how we came across Red Rock Resorts, casino play, we did that as a reopen. It’s up over 150, 160%. I don’t have it right off the top of my head, but the first time I came across that stock was simply because insiders were buying.
Daniel Creech: So I wrote it down, we started looking at it, Frank and I bs-ed about it. Boom, it gets in the portfolio, and that really worked out for us. Another quality in addition to insider buying is, especially during these times right now, if interest rates are going up, you think of return on your money, higher yields. I just did a quick thing through one of our other products we use, Briefing, about special dividends. And I’ll just read you a handful of these. I jotted them down, but some of these shocked me here for special dividends. So AmeriGo, U-Haul, UHAL is the symbol, moving. That shouldn’t surprise anybody that that was gangbusters and perfect environment for them. Everybody was moving all over, especially you had this exodus out of large cities during the coronavirus. So, they paid out a special dividend. American Financial, several insurance companies have done very well over COVID and through COVID. American Financial declared a special dividend.
Daniel Creech: So did WR Berkley, two very well, just amazingly run companies, and look to gain exposure, add to on pullbacks, because those are just well run companies. Turning to a different sector from insurance and traveling, EOG Resources, symbol is EOG. They’re in the oil and gas business, volatile as hell all the time. They’re known for volatility. They declared a special dividend. We’ve talked in the past about Devon Energy. DVN is the symbol. They are doing basically this scaling structure on their dividend, so they have a set fixed dividend, and then based on quarterly resorts, they can raise or kind of lower that quarter to quarter, which is really good. I already mentioned Red Rock Resorts. They declared a special dividend. In Steel Industries is like counting in Roman numerals. The symbol is IIIN. Metal fabrication, industrial, think infrastructure bill.
Daniel Creech: Again, that’s a great shopping list item there, because we have a lot of tailwinds come through with the infrastructure bill and future stimulus. One more sector here, retail. Dillards, DDS, declared a special dividend, and all these are recent. I’m not talking they did this last year, I’m talking about just over the last few months. Build-A-Bear Workshop, that shocked the hell out of me. Regular listeners know I don’t have children or anything else. So ,this is totally out of my league. But Build-A-Bear Workshop is obviously killing it. And they declared a special dividend. National Beverage Corp, FIZZ is the symbol F-I-Z-Z. And retailer Buckle, BKE. All have done special dividends in the past few months. You’re either crazy as a management team and overleveraging and running your business terribly by doing special dividends, or you are seeing not only strength that you’ve recently come out of, but you feel good enough about the future to where you’re declaring this, you’re taking this money off your balance sheet and your rewarding shareholders.
Daniel Creech: That’s a great quality that you want to invest in, in a management team. You want management teams with skin in the game. You want them to be incentivized to make money as their own company and stock prices make money. And you want them to have the idea of rewarding shareholders. That is amazing. And during these times, and I know everybody wants quick returns, me included, okay. If I buy a stock today, I would love for it to go up 300 or a 1000%, be a meme stock or a crypto stock over the next month and you make thousands and thousands of percent returns. I’m not arguing that. Hell, I want that. I could argue I’d want that worse than anybody else. That’s just not the reality. And so you don’t want to have that as your needed result to fulfill your game plan.
Daniel Creech: But you want to focus on these management teams, and during this volatile time, expect more craziness around the Red, the bond tapering, buying less bonds per month, which means other buyers have to come in, which is going to put a pressure on rising interest rates. They may hike. They say they’re going to, they should. Hike the overall interest rate at their level, the federal benchmark. And you have to worry about the constant variance of coronavirus and or threats of lockdown, travel restrictions and everything else that are going to play on the economy from quarter to quarter. Having said all that though, that’s what you know. So, build your shopping list of quality, look for the best management teams around, and then look to add to those on opportunity pullbacks. So, that’s just a couple of, like I said, the briefing we pay for, I don’t think that they have a free service, but I could be wrong on that.
Daniel Creech: But Finviz, Seeking Alpha, Well Wisdom, I’ve mentioned in the past about looking at 13F, the filings that hedge funds and over a $100 million offices have to file. So, that’s one way that you can start your idea. And this sounds really cliche, but have confidence. Read through stuff, make notes, build a thesis, and then just try to poke holes in it. But that’s one thing I love about my job is there’s a lot of people with a lot bigger and smarter degrees than me that are in the investing world, but that doesn’t mean you have to have all that to pick good winners. AutoZone, I’ve talked about over a few different podcasts. They just reported blowout earnings. Look into their company filings, read through their transcripts. That’s an amazing company. It’s amazingly well-run company, and that’s what you want to focus on when you’re talking about investing.
Daniel Creech: This isn’t trading, this is investing. So, I hope that helps again. Give me your feedback, good or bad. I appreciate this and this opportunity to have my first Wall Street Unplugged podcast to go out to the masses. I filled in on Frankly Speaking a few times, which only goes out to our paid subscribers at Curzio Research, but it’s been a lot of fun. I hope that you’ve been somewhat entertained, and you have a little extra tools in your toolkit to go find the next great idea. And remember to subscribe to our products here at Curzio Research. So, have a wonderful weekend. Frank will be back in the saddle again, as Aerosmith sings about, next week. And we’ll get back to our regular schedule. Guys, take care.
Announcer: Wall Street Unplugged is produced by Curzio Research, one of the most respected financial media companies in the industry. The information presented on Wall Street Unplugged is the opinion of its host and guests. You should not base your investment decisions solely on this broadcast. Remember, it’s your money and your responsibility.