Straight from Wall Street to you on Main Street
Episode 000
FRANKLY SPEAKING
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Frank Curzio:
What’s going on? Here, it’s Friday, February 3rd. I’m Frank
Curzio, host of the Frankly Speaking podcast where I answer
all of your questions about the market, stocks, economy,
sports, and anything else you want to throw at me. I created
this podcast to answer more of your questions that you send
to me through my Wall Street Unplugged podcast, which I
host every Wednesday. If you have any questions you want
answered, just send me an email at Frank@CurzioResearch.
com, that’s [email protected], be sure to put
Frankly Speaking in the headline. You never know, your
question might be the one I read on this podcast. Keep them
coming, really great questions, great stuff.
Also, get to a couple questions on Garth Braun, that interview,
a lot of positive feedback. You guys loved it. The stock’s been
running higher already, I think it’s going to continue to run
higher. Again, I’m an early investor. I love the company, I’m
not selling it. I think he’s in for the long term. Some really
good feedback and I appreciate it. We’ll get to a couple of
those later on.
Let’s start with a really good question from David. He goes,
“Hey, Mr. Curzio, as a physical therapy student, I appreciate
all the financial advice you help me with because I’m going
to need all the help I can get with these school loans. I have
a question. I’m trying to figure if I should stay in gold mining,
such as MUX, which is McEwen Mining or NAK, which is
Northern Dynasty, during the next recession. Looking at 2008
financial crisis, both NAK and MUX didn’t perform well. Gold
Miners, that ETF, which is GDX, followed a similar pattern.
Why is this the case and what would you recommend would
be a good stock to hold during a recession when the market
falls? Thank you very much for all that you do.”
For one thing, when you look at the last recession, if I had a
crystal ball and knew when the next recession was going to
be, say if I knew it was going to start three months from now,
I would tell you not to own any stocks. I mean, a recession,
you’re looking at a slow growth environment. Some people
Frankly Speaking - Episode 000
say, “Well, you know, when the end of the world is coming
that you should own gold and own physical gold, all different
things.” When you see the past recessions, you might have
sectors like utilities or consumer staples that outperform the
markets but they’re outperforming the markets so instead of
being down 15-20%, they may be down 7-10%. If you actually
had that crystal ball and knew when it was coming, which we
don’t, I don’t know if I would tell you to own any stocks.
There’s certainly some that could outperform but I would
probably own inverse ETFs. I would definitely suggest that
more specific inverse ETFs would be small caps and also
momentum names, those are the ones that get crushed in a
slow growth environment. You have to think of it this way, a
recession is not in the cards right now. We’re seeing earnings
rise, they’re up 8%. I mean, I know we had terrible earnings,
everybody was terrible, but they really reported terrible
earnings that we saw, there was a couple of great earnings on
Thursday and the past few days. Even Amazon has come down
as well. Facebook reported great earnings, we’ll get to that in
a minute but also you saw the stock sell off.
You’re looking at earnings in general, they’re growing around
8% thus far, about 65% of the S&P 500 companies reporting.
That’s a monster number, a monster number. Okay? So, it’s
the fastest rate in almost three years. We’re also seeing a
little bit of wage growth. We have new regulations coming
down the pipeline, right? Those include easing the many
rules on the Dodd-Frank. Also, tax reforms, which could easily
add another 6% to earnings growth of the S&P 500, after
they cut these companies’ earnings. Right now, the way the
current landscape is, a recession’s probably a lot further out
than even I previously predicted, which I think you see a lot,
especially in tightening cycles. It’s like the last 13 tightening
cycles, in 10 of those, a recession followed within three years
when you first started tightening.
We started tightening when, a little bit over a year ago. We’ve
also been in one of the longest bull markets ever. So, you have
to be careful. I think, you prepare, people know a recession’s
coming but right now you’re seeing these strong earnings.
You’re seeing these companies doing very, very well. I don’t
see that in the cards. Now, getting back to NAK and MUX,
these are two stocks you should be up at least 250% each on
average, in the past, I’d say, 15-17 months, if you followed my
advice from the beginning. They’re still doing very well. I still
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Frankly Speaking - Episode 000
see huge upside for them but take some off the table.
When I went to the Vancouver Investment Conference,
everybody was so bullish, “You got to buy more!” I mean, a
250% gain, guys, I’ve been doing this for over 20 years, okay?
We got lucky with the timing. With Northern Dynasty, when
I came back from that trip and it was below 40 cents, I didn’t
think we were going to get a 700% gain in seven months. I just
said, “Look, at 40 cents, the stock should at least be trading
over a dollar if the EPA just chooses to look at their data.”
With MUX, when I looked at that company, and this was 2015,
I sat down with Rob McEwen, who’s the founder of Goldcorp,
one on one, had a meeting with him and then I learned more
about his company, I couldn’t believe it was trading like a
junior miner. This is a company that had actual real projects
producing, generating cash flow, and also paid a little bit of
a dividend, which is crazy. It was trading at like 85 cents at
the time and it roared to whatever, four bucks. That doesn’t
happen often. I’d like to say, “Hey, if you subscribe to my
newsletters, you’re going to get these ...” You’re not going
to get 250% in seven months, it doesn’t happen often. When
it does happen, be smart. Be happy. Buy yourself a little
something, you know? You did good for yourself.
Also, take some money off the table and let the rest ride.
Those are two stocks that have tremendous upside from here
but you want to take a little bit off the table. Why? Because I
don’t have that crystal ball. I don’t know, maybe gold crashes
from here. I know right now the market is set up for the dollar
to go higher, dollar be a lot stronger, inflation coming into the
market. What do we know about the dollar and gold? They’re
inverse relationship. I mean, if you look past 2014, that’s the
measure you look at, the dollar. Where’s the dollar going?
From what I’m hearing, the people I talk to, who do road
shows in Europe and all over the world, they’re not really
buying gold right now because they believe the dollar is
going to go a lot higher. They see what’s going on in their
countries and their areas and they’re like, “Wow, there’s
going to be a mad rush into the dollar if things don’t change.”
If that happens, since 2014, we’ve seen the dollar go higher,
we’ve seen gold get crushed. Gold’s on a uptrend right now,
everything’s fine. However, I don’t know what’s going to
happen to gold. Maybe it doesn’t have that relationship with
the dollar starting tomorrow. I have no idea. I’m just looking
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Frankly Speaking - Episode 000
at data since 2014 and I know when the dollar goes lower,
gold’s going to go higher and you know, that’s basically the
pattern.
I like these two companies, be very, very smart here. As for
a recession, I mean, you’re saying, basically, David you’re
talking about ... What stock should I buy during the next
recession when the market falls? It’s almost like you’re
preparing for the market to fall but it’s not really set up for
the market to fall right now. It’s set up for stocks to go a lot
higher. Again, I don’t want to be so bullish and super bullish
but right now, there’s just so many factors that are positive
for the market that could push stocks a lot higher going
forward and I don’t see a recession on the horizon, at least for
another 12 months to 18 months. You have nothing to worry
about.
I still like these two stocks and hopefully you’re doing well but
be sure to take some off the table. Not only do you do that
really quick, I don’t want to spend that much more time on
this but it’s more important for your ... just your head, to get
your head ... It’s so important because when own a stock and
you bought at the wrong price and you’re down 30, 40%, it’s
the only thing you’re thinking of, all the time. When you’re up
and you make the right decisions, it’s really good, just for the
psyche of it. Okay, now say, MUX and NAK, say if they fall 30,
40% from here, you’re happy that you sold it and now you’re
different mind frame. You’re like, “Wow, maybe I should buy
some back here. It’s a better buying opportunity.” Or, if it
goes even higher, you’re not even upset because you still own
some.
If you’re buying at the wrong price and you’re down on these
stocks or say if you’re not taking profits and these things go
down like 60% or whatever, you lost a ton of the money, your
head’s all crazy. You’re thinking about these two stocks. Be
smart because now you have money on the sidelines, you
look at other stocks to buy in this area. You’re sitting there
with that powder and saying, “Okay, now I can look at other
stocks,” as the market comes down. You’re just in a different
mindset, it’s much, much better. That’s the way I would
approach it but definitely take profits if you own these stocks.
I know, it sounds like you did very, very well.
Now, let’s get to the next question and that’s from Ruben.
He goes, “Hey, Frank, great interview with Garth Braun
Wednesday. One quote he said stood out for me and I had to
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Frankly Speaking - Episode 000
play it back and write it down. He goes, ‘Don’t think you’re
big and too big to not focus on particulars of execution.’” It is
interesting. He said a lot of pretty cool things. He’s a humble
guy, he’s been through that ... Again, it’s the oil industry,
it’s extremely volatile, in natural gas and liquids and stuff
like that, the energy industry. I thought the interview was
fantastic and he’s a great guy, as you could see, you just listen
to that interview. I got a lot of ... 90% of the feedback was
really good.
That guy’s like, “Oh, you know the stock’s too high, you
shouldn’t have ...” Whatever, I really believe that he’s going
to turn this $300 million company in to a $3 billion company
or more. He’s trying to become the next Pioneer, the next
EOG. This wasn’t his goal to just start producing a couple wells
and make money from a $50 million company, which where
it was not too long ago, less than two years ago. Now it’s a
$300 million company. He’s doing all the right things. He’s
the perfect area. He’s got the technology, he’s got everything
going for him. You could tell just by listening to him that this
isn’t the goal. I mean, he’s made a lot of money on the stock,
this isn’t the goal. He hasn’t sold any shares and he’s in this for
the long term. It’s kind of cool. I want to ride those coattails
and see how far Garth can take it. He’s just one of those guys
that you want to follow, you wan to be in.
Again, do your own research, do your own homework but
overall I got really got positive feedback from the interview
and I liked him a lot. He actually sent an email and said he’s
getting more phone calls and a lot of people are interested.
He thanked me and said, whenever you need me to come
back on, or whatever. He’s just a great guy. He’s a good
relationship guy and I know that they’re doing a pretty big
road show coming up and that road show isn’t just ... The
companies always do road shows and they go to conferences,
that’s what it is. Now, it’s a small cap company that he’s going
to institutions. You can get institutions investing. It’s not a 50,
$100 million company anymore, it’s 300 million, with actual
producing.
They got ties to Ancona. They got amazing technology. You
got guys from Schlumberger vouching how amazing this
technology is, guys have been in Schlumberger for 20 years, 30
years. Now, you’re making that road trip to funds and people
are going to get ... This stocks going to get noticed by some
of the biggest small cap funds out there. Let’s see what they
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Frankly Speaking - Episode 000
think and if they believe in Garth, just like I do. Really great
interview. Thanks for writing in again, from all that feedback.
Also, Ruben says, “Your transcripts are going to be full of
nuggets like this,” when he said that quote, “And you’ll be able
to make a book out of them one day.” He goes, “Keep up the
great work.”
Ruben, that’s the plan. I don’t know about a book, I’m just
too busy. People keep asking me if I’m going to write a book.
I don’t know if I want to write a book. Man, I hate reading
so many ... I hate reading most investment books. It’s more
about the person. It doesn’t really teach you that much. It’s
a little sales-y. I don’t know. I never really learned too much
when I read actual investment books, like 90% of them. Some
of them are fantastic, don’t get me wrong. Having those
transcripts are going to be really awesome because I never
realized how many cool things that my guests say that I
kind of ... I remember some of them, of course, I’m doing the
interviews.
When I go back and sometimes listen to this and I hate
listening to my podcast, I really don’t listen to them after I
record them, but when I have a good interview I’m like, “Wow!”
What Doug Casey said or Chris May or Steve ... When I go back
and listen to like the Chris Mays, the Steve Sjuggeruds, it’s
kind of amazing some of the things that they say, that I just,
wow, could be great content that we could publish. It’s all
going to come out with transcripts, really great stuff. That’s
going to be probably like a week or two away from getting
those transcripts of all the podcasts that I’m doing, even the
Frankly Speaking ones, where you go over the questions and
answers and stuff like that that I do. Hopefully, that helps you
out. I know it’s going to help me out just to read those things
over and over again, as well.
Yeah, expect transcripts, they’ll be on my site, CurzioResearch.
com and it should have it probably about two weeks, maybe
three weeks, but we have almost the whole process and we’re
just formatting it the right way. It should be up pretty soon.
New company, right? There’s always new things coming out,
which is awesome, so Curzio Research is doing very, very well,
very happy about it. At the end of this, I’m going to tell you
how else you could help me become even a bigger company
but I’m going to need your help for a couple things, really cool
stuff. I’m going to try this networking thing but I’ll get to that
in a minute. Let me get just a couple more questions first.
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Frankly Speaking - Episode 000
Next one’s from Rusty. He goes, “Frank, great calls on GoPro
and Fitbit. I followed your advice and sold Fitbit after you got
back from the CES,” which is the Consumer Electronics Show.
He says, “Thanks for saving me a lot of money.” Rusty, you’re
welcome. It’s not always about money, all right? It’s just, “Oh,
how much can I make on this stock?” You hear that all the
time. Even my friend, “Frank, you got to give a good stock
pick where I can make a lot of money.” Whatever. Again, like
I have a crystal ball. It’s awesome. But it’s also making the
right choices not to lose money. I mean, it’s just as important.
I stress this all the time in podcasts and my writing, the
importance of having boots on the ground and being in the
room. Right?
What do I mean with being in the room? You’re making
an effort to travel, to be in the room with Ron Thiessen of
Northern Dynasty and their entire management team. I mean,
being in that room in June and July and going golfing with him
even before that and learning more about his business, it’s
just fantastic. Being there and learning that stuff, maybe go
out there and recommend Northern Dynasty. I’ll be honest
with you, on my trip on the way there, I thought it was a
company that I’d probably short, with the EPA and stuff. Being
in the room, going to these ... have your boots on the ground,
Consumer Electronics Show, traveling like crazy, meeting so
many different management teams. Just the Boeing plant,
which I’m writing about now is fantastic, unbelievable record
sales on their planes, even Airbus.
There’s a few suppliers that are just ... I think are going to
take off, that nobody’s really talking about. I’m going to
recommend them in my newsletter. Two stocks, I know that
you never heard of them because I just learned about them
and I cover thousands and thousands of stocks. These are two
names that are amazing that are just ... We’ll get to that for
subscribers, you’ll see that next week, when I write about it.
Getting back to being in the room, it’s very important if you’re
going to buy a newsletter, you’re going to follow somebody,
that they’re doing this kind of work for you. The difference is,
with a Northern Dynasty, where being in the room allowed
everyone that I talk to or everyone that listens to me to buy
that stock, below 40 cents, maybe you bought a little bit
later. When we have the top newsletter writers out there, I
know two of them, they just recommend the stock at 2.50,
you know? That’s where they recommend it, 2.50 when we’re
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Frankly Speaking - Episode 000
buying at 40. They just learned about that story now.
Going to the Consumer Electronics Show, you could say a
lot. You could say, “Oh, well, GoPro, we knew about this stuff
and Fitbit, whatever, the wearables market.” You know what,
when you see it, it’s a lot different because when I’m at the
CES and I’m looking at GoPro, it’s just a dead company. There’s
no innovation. I’m passing by like a hundred manufacturers of
similar cameras, just like GoPro, 360 cameras. They’re being
sold at much cheaper prices. When you actually see this stuff,
how many companies and Asian companies ... There must’ve
been, seriously, if there wasn’t a hundred there, that had
similar products. I know GoPro has the brand, they have the
name.
You look at Fitbit when it comes to wearables, it’s not a
growth market anymore. This was supposed to be one of the
biggest growth markets and it’s not a growth market. What
did you have single digit maybe, single digit sales growth?
Maybe? I mean, this was supposed to be a monster growth
market we talked about just two years ago. The whole world
was all over this, right? Apple’s coming out with their watch,
it’s supposed to be huge. Yet, if you’re looking at this, Apple’s
obviously crushing Fitbit, but there’s so many wearables that
do exactly the same thing, walking past these companies and
seeing them and asking them. I remember mentioning this
on the podcast, after I came back and gave you that review
of the Consumer Electronics Show, and I asked a lot of people,
“What’s different from your watch?” They really couldn’t come
up with anything, which makes this almost a commoditized
product now.
Now, what does that mean? It means prices for these
products are going much lower, which means margins are
going to go much lower as well. That’s what you’re seeing
with Fitbit. It works a little bit for Apple here because they
have a huge ecosystem in place where it’s compatible with
that wearable or watches, with everything that you own
that’s manufactured by Apple, including your iPhone. But it’s
a dead market in terms of investing. That’s all I care about,
when it comes to this stuff. How can we make money off of
wearables? You can’t. It’s very hard. I mean, do you really
want to buy a company in this? Fitbit, not a terrible company,
it’s just in a terrible market, unfortunately.
I think, you might not see Fitbit or GoPro around too much
longer, to be honest with you. It’s just the competitors in the
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Frankly Speaking - Episode 000
marketplace and it’s not like they have special proprietary
technology that makes them different from everybody else.
They’re not, they make the same products of everybody
else, they commoditize and prices are going to come down.
Margins are getting crushed. I know GoPro is going to shove
a new hero down your throat every single year but do you
really need the hero six and the five and the four? Maybe for
those die-hards but those are two companies, by going to CES,
by going out to NAK, by going on these trips and being in the
room, that’s how I come up with a lot of my ideas.
If you’re subscribing to a newsletter or you’re following advice
from a hedge fund manager that’s not doing this, you’re
at a significant disadvantage, man. I’m telling you. I’m not
saying this to get more business or to get more subscribers
or anything. You can see from the results, just by listening to
the podcast, where the stories that we’re coming up with and
the things that we’re buying are being mentioned months and
sometimes years later on CNBC, when we’re up a lot on these
things, or trends that we’re talking about. I pride myself on
that. I really like that.
It’s one of the highs in the business that I get, trying to find
out those stories before everybody else. You know, and just
seeing them come to fruition and these stocks go higher. Then
the momentum investors, we’re buying these things at $10
and they’re $30 and the momentum guys are getting in at 30
and guys are recommending at 40. That’s what I love, getting
to these stories earlier than everybody else, which is really,
really cool. I really appreciate that and I’m glad you saved
money on those stocks. Again, it’s not always about making
money but it’s nice when you can avoid disasters as well.
Next question’s from Joe from Chicago. He goes, “Hey, Frank,
whatever happened to the silver bet between Marin Katusa
and Doug Casey on the U.S. election? Did Marin pay up since
Hillary lost or is Doug cutting him some slack, since he turned
out to be right on Northern Dynasty? Thanks. I love the show.”
A few things here. If you don’t know about this bet, this bet
was made on my podcast. It’s widely talked about in the
mining circles. Plus, I kind of made fun of Marin at one of the
conferences, which he made a keynote speaker at one of his
conferences and yeah, I took the opportunity to make fun of
him because he was sending me ... Actually, he was sending
Doug emails and CCing me on ... on election day, telling Doug
that, “I like my silver coins shiny. Make sure you polish them
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Frankly Speaking - Episode 000
for me.”
Basically, they made a bet. Marin Katusa said Hillary’s going
to win the election. This was about four months before the
election. Doug Casey said, “No way.” Straight up bet. You
know Doug could’ve got amazing odds on that and sure
enough, Trump won. Marin did settle that bet and you asked
if Doug cut him some slack. No way, Doug would never cut
anyone slack when it comes to money, just to let you know,
little side thing. Yeah, they paid off the bet at the conference.
Yeah, it was all fun. It was a bet that ... Well, Marin, actually
said, he’d love to lose because we all thought the mining
industry would take off and he’s a mining guy and 95% of his
holdings, maybe 90% are in mining stocks.
It turned out that even mining came down. Gold got crushed
originally and a lot of these stocks came down but now that
gold’s come back, I’m sure Marin didn’t mind paying that bet.
A lot of those stocks in the mining industry have come back,
especially the past couple months but they did settle that bet.
It was pretty cool and it was all good fun. Yeah, I just love the
fact that Marin was talking so much trash on election day. I
have the email of him talking trash to Doug around like 10, 11
o’clock in the morning and then sure enough, at the end of
the day, yeah, I kind of gave it to Marin and made fun of him
by the end of the day so it was pretty cool. Thanks for bringing
it up but yes, they did settle their bet.
Next question is from Jack. He says, “Hey, Frank, is Facebook
a buy here after earnings?” I got to tell you Jack, you should
have owned Facebook for a very long time if you’re listening
to this podcast. Is it a buy now, after earnings? I would say,
yes, but you could probably wait for more of a pullback. You
saw the stock run up about 15% into the quarter. What
happens when that takes place? If it runs up 15% into the
quarter and you see a company beat earnings, usually, you’ll
see the stock sell of a little bit. If they miss earnings, you’ll
see the stock get destroyed because it ran up, it’s going to
lose all those gains. That’s what happened with Facebook. It’s
normal. It’s more like a sell and then react, no matter what
the numbers were. The numbers were absolutely amazing.
I think the company’s just taking a breather after reporting
very, very strong earnings, on almost every single metric.
Although, there’s some analysts worried about spending,
they’re increasing spending but I like companies that spend
a lot of money to grow. Spending’s a good thing. They’re
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Frankly Speaking - Episode 000
spending to grow their company. Depends how they spend
but when it comes to Zuckerberg, he’s pretty good when it
comes to M&A, right? You got to give it to him. Spending on
the right things to make Facebook grow, which is evident by
the company’s amazing numbers. I mean, mobile, these are
daily active users, 1.15 billion daily active users. That’s an
increase of 23%, year over year. The monthly active users,
1.86 billion, up 17%. Imagine that.
I call Facebook the greatest company in the world because
I never thought in a million years, 25%, nearly 25% of the
world’s population, little bit lower than that, would be on
one platform. Not only would they be on that platform, they
would tell you everything about themselves, everything they
like, pictures of their kids they share to everybody. Yeah, you
got to friend them and stuff like that but Facebook has all
this information. They know exactly where these people are.
Why? Because they check in. They want to show their friends,
“Hey, I’m at a sporting event or I’m at a nice restaurant, I got
to check in.” All this data’s available. Think about that, what
is that going to lead to? Well, advertising revenue, which
is amazing because they don’t even raise their prices for
advertising.
There’s an analyst on Oppenheimer that broke it down on
CNBC yesterday, fantastic. I forgot his name, a fantastic
analysis, but it was more like an auction, and it’s going up
... They’re seeing massive demand but they only raise prices
by 3%. Think about it if you want to advertise and you’re a
company and you’re like, well, you go to cable, TV, and they
give you all these demographics, which they really don’t know
for a fact or if you’re a company like Macy’s, you could say
here, here’s six million people that have been whatever ... it’s
a couple hundred thousand, whatever it is. Here’s the million
people that are in your stores right now. Right now, these
people are in your stores, what do you want to send them? It’s
like no competition.
Not only that, when you look at Facebook ... By the way, 8.8
billion in revenue they report, up 50% year over year, we’re
talking about a very big company, all amazing numbers. Even
like Amazon, got smart, selling the Kindle. Okay, well, we sell
books, let’s sell Kindles. That’s fine. Let’s sell the Echos now.
We have hundreds of millions, all these people that shop,
let’s give them some of the products that ... it’s almost like a
razor, razor-blade model type of thing. Think about Facebook.
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Frankly Speaking - Episode 000
I mean, Oculus Rift, I know Zuckerberg said, “Oh, it’s like a 10
year project.” They’re still doing well, they’re making money
on it because they sell that technology to Samsung, which is
going to be everywhere next year.
Samsung is probably a great buy, guys. I listened to that
presentation at CES for the President. Addressed like, “Hey,
this is the most challenging year we’ve ever had in our lives
but here’s what we’re doing.” After he said, “Here’s what we’re
doing,” and the rest of the presentation, I was blown away,
because those guys are not messing up their next phone.
There’s no way. That’s going to be the greatest phone ever.
I could tell you after the biggest, I won’t curse here, blank
up of in the history of the phone business, even worse than
Blackberry, you can’t even get on a plane today still without
them mentioning that the Galaxy 7 catches fire, you got to
shut them off. They’re prepared. They’re going to be spending
a fortune. They’re going to be all over the Verizons and AT&Ts
and stuff. I mean, huge ramp. I think they’re just going to be
on fire, Samsung.
They’re selling their Oculus stuff. Think about Facebook with
1.8 billion people that they connect to, immediately. I mean,
they could sell almost any product they want, try to create
anything that they want and have an audience of probably
a hundred million plus buyers of whatever product they’re
going to sell, that many people on a platform. The sky’s the
limit for this company. You’ll probably see it pullback, I mean
it pulled back to 113 probably about three weeks ago, I think,
or maybe a month and a half ago and then went all the way to
130 and now pulled back a little bit after earnings. If you get
this thing at 120, I would buy it, hold it.
Amazon’s another one you’re going to be able to get at a
pretty big discount. The earnings weren’t that good but I know
people are going to ... Long term, that story’s definitely intact.
I think Amazon’s a strong buy in that pullback as well. Those
are two companies that I love that I think are going higher.
They’re going to go much higher.
Next question is from Rex. He goes, “Hey, Frank, do you still
hate Chipotle here, following their earnings?” I said about
a month ago that I like Chipotle now and you should follow
Ackman into this name because Ackman took a position in
it and I kind of picked on Ackman a lot with Herbalife and
a lot of the ... I don’t know. I won’t even go into it because
some of the stuff that he’s done and the politicians, they’re
trying to make people sue the company. It got so personal it
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Frankly Speaking - Episode 000
was horrible. It was disappointing to me because I really like
Ackman, I think he’s a brilliant, brilliant investor. I just think
he lost his way with Herbalife pretty bad but when he came in
and it was kind of a shock, right? I mean, he came in and said
he owns a position in Chipotle and I said, “I think he’s going to
be right on this one.”
Why? Because everything that’s bad about Chipotle, name it, E.
coli, less traffic, negative same store sales, higher food costs,
all these risks, right? Guys, we’ve been talking about these
risks for like a year, year and a half now, which means they’re
already priced into the stock, with shares down what over
40% from their old highs. After they report, they had a whole
bunch of analysts on Fast Money people or whatever, it was
crazy. No way, nobody’s touching this stock. Stephanie Link
got on there, who I love. Who I actually love, she’s amazing.
She used to come to this podcast all the time and she can’t
anymore because she’s one of the biggest fund managers in
the world, TIAA-Cref, amazing, so proud of her.
She’s like, “No.” She brought up a good point because their tax
rate is one of the highest, it’s like 39% and after tax reforms
go through, they’re going to see a huge jump in earnings, a
huge jump in earnings. The average tax rate on the S&P 500
companies is about 26% and they want to try to get down
to 20% with new tax reforms. Anyone that’s above 32, 33,
you’re seeing those stocks rally because they know those tax
reforms are coming. Obviously, the higher tax you’re paying,
the more benefit you’re going to get once this gets enacted
and those tax reforms come into play.
That’s like a hidden catalyst behind it. If you’re looking
at Chipotle, this is a company that fell initially and then
magically started rising in the after hours. Nobody liked it ...
Nobody at CNBC liked it. It kind of reminded me of IBM when
I recommended at 135. I mean, everyone hated it, right? 10
straight quarters of year over year sales declines. Everyone
eating their lunch, they’re terrible, they’re horrible, the
servers, everything’s terrible. But the company identified
these problems like three years ago. I was one of the ones
that said that IBM could be one of Buffett’s worst investments
ever when he invested. I think his average price was like 190
or something, or 180, I want to say. The stock fell to 110.
At 135, when I saw the change that they were doing, they
were getting more into big data, cloud, social media, huge
growth markets that now account for a significant portion
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Frankly Speaking - Episode 000
of their revenue now. When it was 5, 10%, now it’s more
like 30%. They’re going the right direction. I really liked
IBM. They identified those problems. Again, they went all in
on those three major growth markets. Plus, the company
was generating a massive amount of cash flow, had a huge
dividend that was perfectly safe, and now you’re looking at
IBM at 175 and people are actually talking positive about it
now. They hated it at 135 but they like it at 175, right? It’s just
sentiment.
Another example of this is Post Holdings. Guys, I’m not saying
this like I’m some kind of genius. I’m saying this because
I’ve learned these lessons myself. One of these lessons was
Post Holdings. This is a stock, I’m probably going to destroy
her name, Nehal Chopra, is her name. She’s a billion dollar
hedge fund manager. She’s a Tiger Cub, which she was trained
by legendary hedge fund manager Julian Robertson, who
is the founder of Tiger Management, I was at the Ira Sohn
Conference in 2013, I believe, it might’ve been 14 but I’m
pretty sure it was 2013, and she recommended Post ... Post
cereal, stuff like that.
I remember looking at the stock and saying, “This woman’s off
her rocker.” I had no idea what she saw, I mean, no earnings
growth. Stock was really, really expensive. The share price
did nothing in two years. I didn’t see it. I didn’t see it, I didn’t
get it. I was like, “Wow, this is going to be ...” Not that I would
short it, I just saw so many better opportunities than Post.
Today the stock’s up over 150% in three and a half years, not
too bad. I mean, that’s an amazing, amazing return. She was
looking forward when I was looking backwards, which is kind
of normal.
Take IBM. Buying IBM 12 months ago was really, really crazy.
There’s so many negatives. The stock was getting trashed.
It’s one of the reasons why I loved it, it’s so hard to be a
contrarian, guys. It’s so hard. Everybody says they are, 98%
of people, making that number up but it’s very, very high,
are not contrarians. They don’t know how to be contrarians.
Everybody thinks they’re contrarian, which tells you they’re
not contrarians because they’re all saying they’re contrarians,
that makes sense.
The same thing with Chipotle. Remember, all the negatives,
right now, think about it. Everyone’s talking about, “Oh, they
still didn’t get over the E. coli. They still didn’t get over ... Same
store sales are down so much.” We did a great job. You guys
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Frankly Speaking - Episode 000
did a great job emailing me, right, at FrankCurzioResearch.
com, telling me the stores are empty and you got to be careful.
We knew those same store sales are going to come in a lot
worse than what the analysts are projecting. Right now the
analysts estimates have been lowered tremendously. All right,
this company’s finally turning the corner. A lot of the bad
stuff’s already factored in.
Buying this stock now, it’s difficult if you owned it, it’s difficult
if you know the stories because that’s fresh and everybody
knows it but try to look ahead a year from now, okay. This is
going to be behind them. Unless, again, another scare comes
in or one of their restaurants ... that’s a different story but
this is going to be behind them. They’re growing their storebase now. They’re doing well. They’re expecting really good
numbers in 2017 and I think they’re going to hit them. I think
right now, a lot of that risk is factored. Again, it’s normal to
say, “I don’t even want to touch this stock, it’s horrible.” Then
when it goes up 20%, it’s also normal to be like, “Wow. This is
over, maybe we should buy it.” That’s just your normal course
of thinking when it comes to stocks with everybody.
For me, I’ve learned that lesson. Just looking at things and
thinking ... Looking at a stock and looking at the past and
looking at the current valuation and not looking at the future,
what the catalysts are, what these guys are doing. That’s
what you need to look at when you buy stocks. Don’t look at
the past. All the past, if people are talking about it and you’re
reading about it, it’s factored into the stock and you might be
able to get it at a dirt cheap price, which I think you can get
Chipotle at if you bought it under 400. I think it is going to go a
lot higher if you have an 18 month or longer horizon.
Wow, got to a lot of questions here, just zipped right through
them but that’s it. That’s it for this podcast. If you have any
questions you want answered, send me an email, Frank@
CurzioResearch.com. Be sure to put Frankly Speaking the
podcast, this way, it’s a lot easier for me to find because I’m
getting tons of emails these days, which is really, really cool,
as the subscriber base, the listener base grows and stuff like
that. Thanks to you, really great stuff. If you send me those
questions, you never know, maybe the one I read on the
podcast. Again, the ones that I love, the boots on the ground,
which is really, really cool emails, I love those, read them a lot.
I appreciate all that feedback.
Also, if you want you can visit my site at www.FrankCurzio.
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Frankly Speaking - Episode 000
com. You can find all my podcasts, the current, past ones,
read more about my guests. We’re going to have transcripts
up there. You’re going to get a chance to get free reports, if
you put your name in the little box and stuff, some really cool
things coming down the pipeline, including, guys, including a
lower price newsletter, which I plan to launch pretty soon. I
don’t want to tell you the exact date because last time I did,
it got pushed like a month or two. Then finally we launched
and everybody was happy. Again, we have to make sure
everything’s okay in our platform and the backend, all the
links are working, everything’s 100% fine, that’s the most
important part of the business.
We’re planning to launch this. I’m going to tell you within 30
days, it’s going to be a really fantastic newsletter, similar to
the Destructors and Dominators newsletter that I recommend.
It’s going to be large cap, mid-caps, growth and income, a lot
of really cool ideas that I know you guys loved, those past
newsletters that I wrote. It’s going to be more affordable than
the backend, which is a high priced newsletter and very small
cap, market cap, aggressive and stuff like that.
Real quick here, for Twitter, I was going to ask you guys to do
me a favor, because we have a blog up there right now, it’s
fantastic. Basically, we’re taking the best stories out of that
blog and we’ll add the whole entire market and putting it on
our blog, called Curzio Digest, for now. I’m thinking about
changing that name but I want to see if this works. I’ve got
to say this, my Twitter handle’s @FrankCurzio, I’m trying
to find the best stories to put on this blog every single day,
really, really good hardcore stories. So many of you email me
amazing stories. A lot of stuff doesn’t make the podcast and
so many of you email me, it’s fantastic. I try to answer them
all but a lot of you send me amazing stories because you have
jobs in certain fields and you know so much more than me, in
certain sectors.
What I want you to do is start sending me those stories on
Twitter and if they’re good, I’d like to include them in my
blog. I don’t want it to be stories on, like you have an agenda,
here’s a stock that you bought at 30 cents and stuff and
you’re sending me a link to like Seeking Alpha from a guy
that doesn’t exist. I don’t want those. Like, really good, if it’s
Scientific America or Wired magazine, just stuff that you read
that blew your mind that people aren’t really talking about.
That’s what I want this blog to be about.
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Frankly Speaking - Episode 000
If I see those types of stories, for me, even from Cramer,
what I’ve learned so much from him, is you could take those
stories and I could have ... Instead of having a story like me
visiting the Boeing plant, people might walk away and say,
“Wow, Boeing record sales, record backlog. Boeing’s a great
company.” For me, I’m not looking at Boeing. I’m looking at
the hundred thousand suppliers, literally a hundred thousand
suppliers, I went to probably 3000 publicly traded companies
and now I’m done to 10 and I’m going to write about two of
them in Curzio Venture Opportunities, that are going to go
up probably four, five times the amount of Boeing because
they’re in an amazing, amazing cycle where they’re seeing
unbelievable growth in planes, their orders, their backlogs,
and everything.
These are some of the guys. This is the best way. I’ve done this
before where I recommended suppliers to Walmart and made
a lot of money for subscribers. I recommended suppliers
for Apple and easily outperformed the market and more
importantly outperformed Apple because when you see these
big stocks, what’s the chances of Boeing doubling or tripling
over the next three years? Where you could see a lot of these
suppliers, small caps, could easily double, triple, quadruple.
I’ve done studies on this showing that those nuts and bolts
plays, they also call them hitch a ride stocks, have easily
outperformed their bigger ... whether it’s Apple, whether it’s
Walmart, whether it’s Boeing, they’ve outperformed those
like two to three to one, over those growth patterns, over
those trends. When you see those cyclical trends where we’re
seeing the airlines and aerospace industry right now.
If you can, @FrankCurzio, that’s my Twitter handle. If you see
amazing stories you want to send me, I’d love to hear about
them, probably put them on the blog. Again, we’re doing this
everyday to find stories that are unique, that are different,
that people don’t know about because there’s so much
garbage. There’s so much news out there, there’s just so much
noise. I really want to try to send you guys something that you
could just look at, learn from it, and generate new stock ideas
from. If you can, send me those stories, @FrankCurzio, if you
can. It’d be pretty cool and I’d really appreciate it.
On a final note, I promise this is the last note here, have fun
watching the Super Bowl. It’s the last week. Broke down the
game, love the Falcons getting three points, which means
take everything you own and put it on the Pats, they’re
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Frankly Speaking - Episode 000
probably going to win by at least a touchdown, since my last
six Super Bowl picks were dead wrong, but I do like Atlanta.
Also, enjoy the game. Have some beers. Eat a lot of terrible
food, right? Things that are bad for you, awesome, eat hot
dogs, hamburgers, potato chips, whatever, dip, but make
sure you have a lot of fun and don’t talk Donald Trump.
Which, by the way, I love the Trump prop bet. I don’t know
if you saw it, the under over on how many times Trump gets
mentioned during the Super Bowl is three, it’s only three. I
love the over on that bet, considering you will likely see some
kind of protest during the Lady Gaga halftime show. I think
if you see a Trump sign or whatever, that’s kind of a mention,
right? Kind of.
I like the over three for Trump, which is pretty cool. Who
knows, maybe he’ll make a surprise appearance and that’ll
definitely shoot it to six, seven, or eight and you definitely
win that over, which is pretty cool. I actually like that prop
bet, which is interesting. Enjoy the Super Bowl, it should be
a great game and try not to talk about politics because it’s
getting pretty crazy out there. It’s getting ridiculous and the
Super Bowl’s meant to have fun, so have a great time. Enjoy
the game. I’ll see you in seven days. Take care.
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