What Stock Would Warren Buffett Buy If He Started Over In 2024?

Shaan Puri 0:00 So Sam, tell me this. Do you like watching sweaty men fight to the death in their underwear? Me too.

Sam Parr 0:06 Every weekend. I, I build my Saturdays around it.

Shaan Puri 0:09 Well, I think you should invest in, in your Saturdays. Uh, my pick for Stock-a-palooza 2024 is [upbeat music]

Sam Parr 0:25 All right. We're live. Shaan, did you just go to the, uh, Black Friday sale at Tommy Bahama? What's going on?

Shaan Puri 0:30 [laughs] I went into the old dad's closet today-

Sam Parr 0:34 [laughs]

Shaan Puri 0:34 ... and got a little shirt because it's a special occasion, and I needed to dress up.

Sam Parr 0:39 Oh, that's your version of dressing up?

Shaan Puri 0:41 Yeah. This is up, dude. [laughs]

Sam Parr 0:44 [laughs] A- All right. [laughs]

Shaan Puri 0:47 [laughs]

Sam Parr 0:48 What are we doing today?

Shaan Puri 0:49 Today this is Stock-a-palooza, the first ever, first annual Stock-a-palooza, which you may not know what that means because we made it up. Basically me and Sam said, "What if we did an episode where we pick a stock?" So each of us are gonna go through the stock market. We're gonna each pick a stock that we have to make a case for. If you've ever seen, there's a conference called the Sohn Conference, and it's kinda like a TED Talk, but for stock pickers, and all the biggest names go there. Bill Ackman goes there, and Druckenmiller, and whoever, Chamath. And they all... They get on stage, and they make, like, a 20-minute case for a particular stock, why they're long or why they're bullish on something. And, uh, those guys are good, and those talks are fun. We wanted to try it too, and, uh, do it our way. So the MFM style of this, it's called Stock-a-palooza. Both me and Sam have picked a stock. We do not know what each other have picked. We're gonna get 20 minutes each to present, and so if you're on the, like, just the audio podcast feed, I know I've been telling you YouTube is where it's at. Today YouTube is for sure where it's at 'cause we got slides. Your boys came prepared, and I have data. I got charts. I have a whole bunch of stuff here. So you wanna go to You- YouTube where you're gonna actually be able to see the screen and see us, uh, sharing slides. So we got 20 minutes each to do it.

Sam Parr 2:09 For the listener who are on not YouTube, we have to ask them to do something when they finally go to YouTube.

Shaan Puri 2:15 That's right. That's right. If you go there and you don't hit the subscribe button, a curse is placed on your family for seven years, and I don't want that for any of you guys. So go ahead and hit subscribe when you're there because it's super important for your family.

Sam Parr 2:26 It's a simple pitch. We put all this work in, and they don't have to pay us back with anything other than a subscribe on YouTube. It's free and easy for them, and it makes just a ton of difference to us, so just go and do that. All right. Now w- what are you saying?

Shaan Puri 2:39 Okay. So you ready to begin? Do we need to... Should we just go into it?

Sam Parr 2:43 Uh, no. Rules. Okay. So we're kinda making up the rules on the fly. So, uh, we're gonna do how about 20 minutes? So you get 20 minutes. I'll ask questions, but I'll try not to interrupt too much, and then we'll do, like... We'll just, we'll talk for, about it for a few minutes afterwards, and then I'll pitch. And then the last 10 or however many minutes left,

Sam Parr 3:00 we'll, we'll each vote. But then in the YouTube comments, you guys actually have to vote who wins. But when we say win, what does win mean here? Because we're not exactly... We're gonna ba- You guys can, like... We could play a drinking game where it's like count the disclosures. You're gonna see the dis- disclosure constantly of saying, "We have no idea what we're talking about. It's just something fun and cool." But how do we base win on? Is it by showmanship? Is it by what company do you think is gonna have a, a long-term-

Shaan Puri 3:26 It's who makes the best case.

Sam Parr 3:27 But what does best mean? A 10-year?

Shaan Puri 3:30 Y- Well, I don't know, and that's part of the fun here.

Sam Parr 3:33 Okay, fine.

Shaan Puri 3:33 Making it up as we go. [laughs] We can say 10-year.

Sam Parr 3:34 Is it just entertainment? 'Cause that's different.

Shaan Puri 3:36 It's... Well, this is definitely entertainment, but the entertainment has to have a foundation of... You can't just be making shit up, right? We gotta have actual good insights or good analysis presented in a, in a wonderful way, right? The way that any presentation is sort of scored. You have style points, and you have substance points, and we're gonna take both of those factors into consideration to pick the, the ultimate winner. Um, I don't know if you... Have you ever gone and watched any of these, by the way? Like, you know, in, uh, I remember when Chamath went on stage in 2016, and he was like, "There's a tr- there's a multi-trillion dollar company hidden in plain sight," and he made a case for why Amazon was gonna get to 3 trillion by 2025. This is back in 2015.

Sam Parr 4:13 What is it now?

Shaan Puri 4:13 It's currently, like, close to two trillion, and we got a year le-

Sam Parr 4:17 So it's not far off

Shaan Puri 4:17 ... a year left. He's not far off. Um, he then went up and did a case for Box, and I bought a shit ton of Box stock, and Box then just shit the bed for the next three years. And if you go back, all the smartest guys, Bill Ackman, he goes up there, and he makes a case for some housing thing. Terrible stocks, right? I went back, and I actually charted how, how these picks did. Really bad. So actually we might be just as good as them 'cause we're also gonna be terrible.

Sam Parr 4:40 What's considered good for these guys? Like, is it like a batting average where it's like if you're 300... If you're, you know, which 30%, uh, right, you're the best?

Shaan Puri 4:49 No, I think it's just based on the, the returns, right? So, like, how much you put in versus how often you're right, right? The multiple, the multiple of those two. So, you know, uh, they just gotta get enough right where the overall returns are there. But we should say this. First slide is the most important slide, which is that this is not financial advice. This is entirely for entertainment purposes only. Uh, my lawyer has told me to say that, but it's actually true. This is only for entertainment purposes. I forbid you from actually investing in any of the things that we talk about. I am a idiot when it comes to the stock market, so if you take my financial advice, I consider you an idiot too. That's my disclaimer.

Sam Parr 5:25 There needs to be a song where it's, uh, what did you say? Throw your hands in the air and lose your money like you just don't care.

Shaan Puri 5:31 Exactly. Stock-a-palooza.

Sam Parr 5:32 [laughs]

Shaan Puri 5:32 That's the Stock-a-palooza anthem. [laughs]

Sam Parr 5:34 [laughs] All right.

Shaan Puri 5:36 All right. Let's jump in. All right. My turn. Uh, I'm gonna start my clock. Let's go. Okay. So here's the general idea. If you're buying one stock, Sam, I know you're a index fund guy, right? You like to go into the S&P 500 and spread out your risk, uh, and you're right. If you're buying one stock, you're taking more risk than the index. And if you look back the last 10 years, the index has given you about a 10 and a half percent annual return over a 10-year period. 10 and a half percent over 10 years. So that's... We'd have to beat that to justify taking the additional risk of picking one stock. 'Cause that's gonna basically 2.7X your money in a 10-year span. So if you wanna, you'll do a little better than double, almost triple your money in 10 years, just put it in the S&P 500. So we're looking for something that if we're gonna take more risk, we need to get more reward. So here's what I'm t- I'm thinking. I decided to peg for what do I think could get me a 5X in 10 years? Okay? 5X in 10 years. Double what the, um, what the S&P 500 is gonna do. So w- which stock did I pick, Sam? I'm sure you're wondering. Well, let's ask the Oracle of Omaha, AKA Buff Daddy. What would Warren Buffett do? 'Cause I'm not a great stock picker, so I wanted to go and study the great stock pickers of all time and look at what would be their criteria, what are they looking for, so that I can learn from them. And I went back and I learned everything I could from Warren Buffett, and I realized that there's five big things that he looks for, okay? So you ready for the five big ones? The first, understandability, meaning he doesn't invest in shit he doesn't understand. If it's too complicated or if it's outside of his circle of competence, he's simply not investing. And so the, the idea is, is the business simple enough that an idiot like me could understand it, and that ideally an idiot could even run it, right? Such a simple business. So understandability. Number two, an economic moat. So we want few competitors, we want some pricing power, and we want to make sure that this business is so defensible that it's gonna be around in 50 years. Because W- uh, you know, Warren is usually a buy and hold investor. He's, he's not really trying to trade in and out and time the market. He's looking for time in market, and he's looking to be in the, in, in the company for a long time. Um, and so we want a economic moat, something that's super durable. All right, number three, competent management. So management, the, basically just a strong management team is always gonna be a, um, a, you know, big benefit for anything, uh, for any stock. Okay, last, last two. Margin of safety means we gotta be buying this, we can't be buying this at some extreme price. Even if it's a great company, if it's massively overpriced, it's too hot in the market, then we're taking too much risk. So what we wanna do is buy dollar bills for 80 cents, right? That's a mar- that's a great margin of safety. And of course, lastly, strong financials. So high earnings, low CapEx, low debt. That's really what we look for. Okay, so this is why Warren Buffett is buying brands, not stocks. I, I loved this line actually in my research. He goes, "Don't buy a stock, buy a company." Subtle difference, but he's looking to basically like what would, what... Don't try to buy the stock 'cause you think the price is gonna go up. Buy the

Shaan Puri 8:30 company 'cause you think that company's gonna endure and be successful and, and just grow steadily for a long period of time.

Sam Parr 8:35 That's a new thing that he did. So it's not new for... I mean, uh, he, he didn't start doing that until his 60s. So before, he was buying stocks purely on the financials. He's like, "I don't care what they sell." And then he, like, met Coke, and then he, like, invested in Washington Post and he's like, "Oh, no, the brand is actually where it's at."

Shaan Puri 8:49 Exactly. He used to do the cigarette butt investing where, you know, if there's two puffs left on the cigarette, um, okay, let's do it. There's value there. W- uh, but he, he credits Charlie Munger for showing him that actually it's better to pay, uh, you know, a fair price for a great business than a great price for just a fair business. And so this, that's why he's now invested in Apple, Bank of America, American Express, Coca-Cola, Geico. These are brands that have been around for 50 years, and that's what he's looking for.

Sam Parr 9:15 All right, everyone. A quick break to tell you about HubSpot, and this one's really easy for me to talk about because I'm gonna show you a real-life example. So I've got this company called Hampton, joinhampton.com. It's a community for founders doing between $2 million all the way up to, like, $250 million a year in revenue. And one of the ways that we've grown is we've created these cool surveys. And so we have a lot of founders who have high net worths, and we'll ask them all types of questions that people typically are embarrassed to ask but provide a lot of value. So things like how much the founders pay themselves each month, how much money they're spending each month, what their payroll looks like, if they're optimistic about the next year in their business. All these questions that people are afraid to ask, but, well, we ask them anyway, and they tell us in this anonymous survey. And so what we do is we've created a landing page using HubSpot's landing page tool, and it basically has a landing page that says, "Here's all the questions we asked. Give us your email if you wanna access it." And then I shared this page on Twitter, and we were able to get thousands of people who gave us their email and told us they want this survey. And I could see did they come from social media. I can see did they come from Twitter, from LinkedIn, basically everywhere else [laughs] that they could possibly come from. I'm able to track all of that. And then I'm able to see over the next handful of weeks how many of those people actually signed up and became a member of Hampton. In other words, I can see how much revenue came from this survey, how much revenue came from each traffic source, things like that. But the best part is I can see how much revenue came from it. And a lot of times it, it

Sam Parr 10:30 takes a ton of work to make that happen. HubSpot made that super, super easy. If you're interested in doing this, you can check it out, hubspot.com. The link's in the description. And I'll also put the link to the survey that I did so you can actually see the landing page and how it worked and everything like that. [beep] I'm just gonna do that call to action then. And it's free. [beep] Check it out in the description. All right, now back to MFM.

Shaan Puri 10:50 Okay, so simple Buffett formula, just to summarize, buy brands that you understand, that'll be here 50 years from now, that spit off cash at a fair price. If you do all that, you can hold forever. You've done well. So I looked, and I looked, and truth be told, I actually started with one in mind and then reverse engineered this whole presentation.

Sam Parr 11:09 [laughs]

Shaan Puri 11:09 But, um, I have one. So Sam, tell me this. Do you like watching sweaty men fight to the death in their underwear? Me too.

Sam Parr 11:18 Every weekend. I, I build my Saturdays around it.

Shaan Puri 11:22 Well, I think you should invest in, in your Saturdays. Uh, my pick for Stock-a-palooza 2024 is TKO. TKO is the stock that owns, um, WWE and the UFC. And I think that TKO is a Buffett stock. And here's Buffett, you know, looking ready for WrestleMania. Why is it, why does it fit the criteria? So understandability. Very easy to understand. It's a holding company that owns these sports franchises. It owns these leagues underneath them, okay? That's the, the, that's all the business is. It's, it does nothing else besides that. Um, fighting is the easiest thing to understand in the world. Uh, I don't know if you've heard this great thing that, uh, that, that Dana White says. He goes, "Let's say you walk out into a, a, a sports field on a Sunday, and there's a soccer game over here and a basketball game over there, and these guys are playing flag football" And you could go look in any one of those directions. You might have a favorite sport, but if somebody yells, "Fight!" and there's a fight going on, everybody's head's gonna turn. It is a, a human nature thing that we like to watch people compete and fight. Um, and it is global. Everywhere in the world. People don't... You know, if you go to China, people don't know the rules of football. You come to America, people don't know the rules of cricket. But everybody understands the concept of these two guys are gonna fight each other, uh, everybody around the world. And so it is the easiest to understand product and business. The business is very simple. Fans pay to watch fights. People pay pay-per-view. Sam, how much do you think you've paid in pay-per-view, uh, per year? What are you, what are you spending on your UFC fandom?

Sam Parr 12:53 So, uh, I would probably say I, um, buy the five a year, so that's $500 I think, and then I only have a ESPN subscription. Like, dude, I don't know anything about sports. I just found out that s- the Super Bowl is this Sunday. I thought it was in November.

Shaan Puri 13:09 [laughs]

Sam Parr 13:10 I on- I pay for ESPN just for that, so that's another 60, and then I attend one to three a year, which is, uh, quite expensive. That's $1,000 a show at least.

Shaan Puri 13:20 Exactly. High LTV fans. Okay. So let's, let's go through these now. Economic moat. Um, n- name the competitor to the UFC. Name a competitor to the d- to WWE. They've all come and gone. Bellator was the, the most well-funded competitor to, to UFC. It was funded by Viacom. They put hundreds of millions of dollars into this thing. It failed, and they just sold it for, you know, uh, less than what they put, what they invested into it. Like, they sold it for 100 million bucks. The number two competitor sold for 100 million. The UFC sold for 4.2 billion, so that's the gap between one and two. Uh, growing up, I loved WCW. That was the big competitor to WWE. Guess what? It folded, and they took all the wrestlers. Uh, AEW, all those things. Basically, these two brands have over 95% market share in their market. This is total monopoly, more than Google has in the search market.

Sam Parr 14:10 Do you know how popular WWE is on YouTube? Have you, have you... Did you look into that?

Shaan Puri 14:14 I, I have. I have a couple slides later. They dominate social media.

Sam Parr 14:18 It's the 10th. The 10th most popular channel on all of YouTube is WWE.

Shaan Puri 14:23 [laughs]

Sam Parr 14:24 That's insane.

Shaan Puri 14:25 Right. Like, the fact that these two have more market share in their market than Google has in the search market shows you the just cut a complete and utter dominance. And the fact that competitors have come and gone, people have taken their best shot, and, uh, they haven't been able to touch them. So you have, you have two brands that have been around for a while and will be around for a while. [lips smack] Okay, competent management. We have Ari Emanuel. If you've ever seen Entourage, the character Ari Gold is based on, on Ari Emanuel. He is an absolute power player, power broker in, in the entertainment business. You have Dana White, the guy who's basically been the founder, CEO of this essentially since they bought it for two million bucks. Bought it for two million, sold it for 4.2 billion, and he's, uh, he's still going, and he's still going strong. This guy is an absolute animal. And we have, uh, Egon Derman who's with, uh, Silver Lake Partners. That's their kind of institutional capital behind this, and that guy's also, you know, got a cr- pretty crazy track record with multiple billion dollar, um, or multi-billion dollar plays like Skype a- and whatnot. So super good management team. Okay, margin of safety. So, uh, I don't know if you know how much money these make, but they basically... The combined entities generate over a million dollar... Oh, sorry, a billion dollars a year of EBITDA, uh, and it trades at about 14X. So it's about a $14 billion market cap company right now with four, with, with a billion dollars of EBITDA. Um, just to put this into comparison, uh, if UFC plus WWE, two full, like, leagues, are 14 billion, the Phoenix Suns, one NBA franchise, just sold for five billion, right? So this is basically three Phoenix Suns, and you get the entire universe of combat sport [laughs] of, of, uh, of, of, you know, fighting entertainment, which is wrestling and UFC, everything except for boxing. Um, [lips smack] F1, which is, uh, you know, to me seems super niche. Like, F1 is, is so, so niche. Do you know how much F1 just sold for?

Sam Parr 16:18 No idea.

Shaan Puri 16:19 Eight and a half billion dollars. And F1 has a big problem, which is no matter how popular F1 is, they have to pay out to all the teams, the franchises. So m- you know, half the revenue goes to the Aston Martin team and then the Mercedes team and whoever else. So UFC doesn't have any of that. All the fighters are independent contractors. They don't even pay them salaries. There's no guaranteed salaries. Independent contractors who make about 15, uh, 15 to 17% of the overall revenue goes to the fighters. Way less than every other sport, no teams, no, no, no rev sharing with anybody basically. They get to keep all the money.

Sam Parr 16:51 Do you bring that up later in your presentation?

Shaan Puri 16:53 We do, I do have a risk slide which is-

Sam Parr 16:55 All right

Shaan Puri 16:55 ... uh, around that. Yes. Uh, and the best part, this is all AI resistant. Like, we don't know what the hell's gonna happen with AI. AI's pretty clearly the next big thing, and it's gonna wreck a bunch of industry. It's gonna redo the way that insurance works and the way that cars work and the way that, um, you know, uh, software is built and, and all this stuff. How are you gonna use AI to generate... Like, you can't use AI to make two guys fight in a, in a, in a ring. It's not gonna happen. And so this is a AI-proof, uh, industry, which is nice because Warren Buffett, Buff Daddy, he's looking for things that are not gonna change, and I think this is not gonna change. All right. Last one, it's growing nicely, so it's growing 20% a year right now, but there's also the big, the big prize with any sports league is media rights deals. And the media rights for both of these are coming up this year and next, and so they have a chance to renegotiate and basically double, uh, what they're getting paid for by all the streaming companies, by Netflix and by Amazon and ESPN and all the companies that want... They need live sports because live sports are one of the only things that people watch concurrently and have to look at the ads because they're watching during the thing. There's no DVR. There's no, there's no binge mode. There's no streaming. Um, and so live sports is w- this is one of the few live sports assets that exists, and the media deals are coming up, and they might be a lot bigger than people think. All right, last few slides. Consistent cash flow, so these are profitable companies. They spit off cash. Uh, you know, they're spitting off, you know, a couple hundred million bucks a year fr- free cash flow, and they don't need to invest it. They don't o- own a ton of, uh, real estate or they don't have to buy more machines in order to grow. They just put on... They just keep putting on shows. It's all variable A couple of the risks that are worth mentioning. It's got a bunch of debt. They used debt to buy the, the franchises of these leagues. And so, um, they still have a few billion dollars of debt. And last thing, uh, stock performance has not been great. I think, uh, this is one where we're gonna have to buck the trend. We're gonna have to know what the market doesn't know right now, and we're gonna have to, to go ahead and, um, outperform.

Sam Parr 18:50 What date did that drop?

Shaan Puri 18:51 So the, they merged in, like, tw- uh, mid-2023.

Sam Parr 18:55 D- but is that drop because Vince McMahon?

Shaan Puri 18:58 Um, not just Vince McMahon. I think basically what happened was they merged, people didn't understand the terms, they didn't understand what was gonna happen, what was the plan, all that stuff, and the Vince McMahon stuff happened at the same time.

Sam Parr 19:10 Got it.

Shaan Puri 19:10 And so they dropped about 15% on the merger, which is kinda crazy. Before, they were both public, and they were both trading at about 8 to 10 billion in valuation. And so when they merged, they were supposed to be, like, a $20 billion entity, and they're currently trading at 14, um, right after they merged. So that was, that's what happened last year. Lastly, a couple other risks,

Shaan Puri 19:30 like you talked about, fighters not getting paid enough. So their costs could go up if the fighters ever unionized and were able to collectively bargain, which they haven't done, but the NBA and NFL all has. Um, and lastly, I don't know what's gonna happen if Dana ever leaves. He is the powerhouse and the CEO who's driving this thing. He's cashed out, so he, um, does not own the same stake that he owned before. Um, he's not even on... If you go look at the stock filings, he's not on the cap table, so he said he has skin in the game still, but it's not listed anywhere, so I'm not sure what he has. And, uh, he might, you know, might one, might retire one day, and I, I, I think that would be a, a big shock to the business. Like Zuck retiring or, or Bezos retiring, you know, it, it can affect the business.

Sam Parr 20:09 Can I add a few, a few risks? Let me add a few risks.

Shaan Puri 20:12 Yeah, go for it.

Sam Parr 20:13 All right. First, Dana White is insane. So he's mostly insane in a good way, but there's a lot of liability. There's a lot of liability in this industry because we're talking about grown men fighting in their underwear in front of millions of people. The t- the person who likes that and runs that, as well as the person who actually does that, in order to be great at that, you have to be insane. And so what that means is there's been risks with Dana. Dana has said a lot of crazy stuff. I don't even think that, uh, l- I'm not even gonna say if I think it's right or wrong. That's irrelevant. What's relevant is that a lot of people think it's wrong. Um, he also got in trouble for smacking his wife, uh, and that was on video. Vince McMahon's now in trouble for, uh, not even sexual harassment. I think it's beyond that. And then also, like, the third-famous guy in the UFC right now, Sean Strickland, again, I don't care if you like what he says or dislike what he says, there's a lot of people who dislikes what he says r- as it regards to, like, the whole trans thing and gay thing. And so inherently, there's gonna be all types of nutty people like that. I think it won't impact the business at all. I think the, it's actually gonna make the business better, 'cause the people who are behind him are gonna be harder behind him. And I think, but, but I do think it will scare institutional money. Um, and that's basically my downside. [laughs]

Shaan Puri 21:16 Well, the-

Sam Parr 21:17 And that lawsuit. That, that lawsuit's actually a pretty big lawsuit

Shaan Puri 21:20 So I think that the only, uh, counter to that is usually the risks are "what ifs." All the things you mentioned have already happened. [laughs] All-

Sam Parr 21:28 They've already happened

Shaan Puri 21:29 ... they've already happened. Uh, and the business is doing fine, right? So, like, Dana has been saying crazy stuff for 20 years. Uh, it's, it's, well, okay. It, he, I guess he'll just continue, continue as is. That's business as usual for him.

Sam Parr 21:41 But that's a risk. That's a risk. That's a "what if."

Shaan Puri 21:43 I think there's some, some risk there, but, but not that much. In fact, I would actually say, um, they, the UFC has j- has shown tremendous anti-fragility. So for example, if this is a business that depends on live events, it's all based on live events, and it survived COVID,

Shaan Puri 22:01 it can survive anything, right? Live events had to all shut down, and the UFC figured out a way. Why? 'Cause founder CEO, he's got the willpower. The guy went to, like, Abu Dhabi, created a bubble, and start... Created something called Fight Island and hosted the fights in a bubble on Fight Island himself. Um, y- you know, they found a way around the pandemic. I think they could find a way, a way around pretty much anything.

Sam Parr 22:22 But I'm an idiot. Keep in mind, I'm an idiot. I don't think that's gonna impact any of the business. I think all those things are gonna make their business, their revenue, their profit greater. I just wonder how will that impact, like, if Fidelity or one of, if one of these big companies wants to buy a huge chunk of their comp- of the stock.

Shaan Puri 22:37 Yeah, yeah. I, I think that's, that's fair. Um, all right. L- last couple things. I think the global nature of this is, is underrated. And so when you think about where does growth come from for these types of leagues, it comes from two things. One is streaming, streaming deals, which are getting bigger and bigger and bigger, and the other is, uh, globalization. Uh, I don't know if you know, but the NBA does, like, crazy amount of work to globalize. They, you know, have, like, camps all throughout Africa and India. They go every summer. They broadcast games. They cut deals to broadcast games. They will play a game in, in Europe to try to get fans. The NFL does the same thing. They play a game in London to try to get fans there. But the UFC actually, uh, uh, uh, like, inherently has that. They get champions from all over the world.

Sam Parr 23:16 But they've never gone to Africa. They've, I don't, I, I think maybe one time they've done one event in China.

Shaan Puri 23:21 Basically, China, India, and Africa are still untapped, but they're proven that they have product-market fit. Um, they have, they have, they have fans, they just haven't done the events there yet. And the biggest case for this is really that these leagues dev- uh, they develop lifelong fans. Um, you know, you've been a fan, and I, I would guess that 20 years from now you're probably still gonna be a fan.

Sam Parr 23:42 Yeah.

Shaan Puri 23:42 Your kids might become fans. Uh, this is how sports works. It's basically generational. People watch them till they're, you know, my grandparents will watch sports, but then they'll take their kids to the events, and they'll get their kids involved, and they, they become fans as well. The UFC is only 30 years old. That's incredibly young when it comes to a l- a league like this. And so-

Sam Parr 24:01 And you know what they're better at than everyone else? Telling stories and creating characters. They are without a doubt the best at this. They kick ass compared to any of the other leagues.

Shaan Puri 24:09 So check this out. This is on Instagram. The NFL, which is the biggest, most profitable sports league in the United States, biggest, most profitable league, has 29 million followers. The UFC has 39 million followers because they are better at social media and they are better at storytelling, which is essentially saying they're better at the way the world works now, and the NFL was better at the way the world worked 20 years ago Uh, same thing, you know, here's YouTube. Here's, uh, the YouTube channel has 17 and a half million subscribers, uh, for the UFC on YouTube. Baseball, which has been around for whatever, 100 years, 4.9 million subscribers. It's, it's insane how they get dominated by this. And so they, uh, you know, you get to, you get to ride on the back of that. And the other thing is that, um, [smacks lips] Ari Emanuel's company which bought, uh, bought these, they're just better at negotiating media rights. That's what they've been doing for th- their entire career for, for, you know, actors and, and television shows and whatnot. Better, uh, negotiating sponsorships. If you look at where the UFC was when they bought it versus where it is now, you know, it was unprofitable there and growing, you know, growing at a okay clip. Now it's growing faster and more profitable, and it is profitable because of the work that they've done. WWE just cut a, a 10-year, $5 billion deal with Netflix just for one of their shows, which is kind of insane.

Sam Parr 25:19 Insane. Insane.

Shaan Puri 25:20 It's gonna go from USA Network to Netflix. These are now, like, $300 million a year streaming deals that they're picking up. And that is all, Sam. Thank you very much. [clapping] Ladies and gentlemen, Stock-a-palooza. [clapping]

Sam Parr 25:33 That was very good. That was very good. My, um, bias is heavy here. I, I tell people, they, they ask, like, what my hobbies are, if I pay attention to sports. I say I pay attention to only two sports: fighting, and the other one's way nerdier, track and field. I like track and field and UFC. I'm a super fan, and I think there's so many super fans like me. Uh, I don't know how that, those super fans compare to the other sports. I, I don't know if it's as strong, but I'm a s- huge fan. Uh, the stock, it's a, it's a good brand, I agree. I think the risks are too high, though. I think there, I think there, Dana's a, is... Do you think if someone left he could... You said that on your second point it was like anyone can run it. Do you think someone can run it as good as him?

Shaan Puri 26:17 Uh, I do think you get the benefit of the kinda founder-led company when you have Dana there. Um, and you would lose that if he, if he left. So I do think it'll, it'll continue to run, but I don't think you'd get that X factor back of what Dana brings to the table. And what Vince McMahon brought to the table till he was... How old is Vince McMahon? He's like 80 or something like that. The guy ran the league for, like, 50 years or something.

Sam Parr 26:39 And he was a character. He was a character on the show.

Shaan Puri 26:41 He was a character in the show, and I think Dana is a character in the show.

Sam Parr 26:44 I think Dana's the most popular UFC fighter.

Shaan Puri 26:46 [laughs] Right?

Sam Parr 26:48 Well, I think he-

Shaan Puri 26:49 Well, Connor, but like, I think he could run this thing for, like, 30 more years.

Sam Parr 26:52 Maybe. I think maybe. I think that, I think that running this type of league is the harder than any other league. Maybe F1 actually would be really challenging because you're, they're like, they kinda seem like divas. But the UFC, I think dealing with these types of fighters... Have you ever hung out with a professional fighter or, like, up-and-coming professional fighters? I, I've been around a, a handful of them. They're insane. They're insane.

Shaan Puri 27:14 [laughs]

Sam Parr 27:14 They're, they're hard to work with. They're, they're nuts, and it would be very challenging. And also, the lawsuit that they have. So to put that in perspective, you said that they pay their fighters 14%. How much does the NFL pay their, uh, or the, uh-

Shaan Puri 27:26 NFL and NBA are about 50%. Um, that's the, the collective bargaining, that's what they negotiated.

Sam Parr 27:31 And right now you made a case that they're a monopoly. That's the exact case that the lawsuit is trying to make, which is that the UFC's a monopoly and that you guys, you, you have to allow us to do collective bargaining. And I, I have looked into it a little bit, but it seems like they've got a great case, and that could meaningfully change the economics.

Shaan Puri 27:49 It could. It could. That is, I, I, I would put that as the number one risk w- to, to shift the economics of the business.

Sam Parr 27:54 Dude, there's some guys, like, they'll say in the post-fight, uh, interviews, [laughs] they're like, "I'm the champion now. Eight months ago I was driving Uber." And like Fr-

Shaan Puri 28:02 And they're like, "And I'm still driving an Uber because I don't get paid." [laughs]

Sam Parr 28:07 Well, like, to put this in perspective, there's this guy named Francis Ngannou. I think he's from Cameroon. He's like the, uh, the American dream. He came over here with nothing. I think he worked in, like, a mine, you know, like a blood diamond type of mine, like crazy stuff. He's now champion. Do you know how much money he w- He was the world champion in the heavyweight division of the UFC. He looked like an animal. When you think of a heavyweight champion, this is what you want this guy to look at, look like. Beautiful story. Great guy. Do you know how much he

Sam Parr 28:30 was getting paid per fight?

Shaan Puri 28:32 I feel like it was, like, 500K or something.

Sam Parr 28:33 It was about $600,000. That's how much this guy was getting paid to fight the scariest people on Earth. It's insane.

Shaan Puri 28:40 I know a mid-level engineer at Google that makes more than that. [laughs]

Sam Parr 28:43 It's insane, right?

Shaan Puri 28:44 He's the baddest man on the planet. [laughs]

Sam Parr 28:46 Yeah. It's insane. Uh, it's, it's, it's insane. And so that needs to change, I think, for there to be true longevity for this sport. And if that changes, there's actually gonna be bad stuff for the business, or at least it'll be less good. But great presentation. I, uh, I'm a fan of UFC. I think that was a great pres- presentation.

Shaan Puri 29:04 All right, your turn.

Sam Parr 29:05 All right. Now it's my turn. So look, we said the disclosure already that this really, we don't know anything. So I'm actually gonna not even focus too much on the numbers. I'm gonna focus on the story, and I just wanna put this disclosure up front. Now, before I get into this, I wanna tell you a few other companies that I looked at. I looked at Rivian, I looked at 23andMe, that's a total shit show. I looked at Container Store 'cause maybe that's the next meme stock. And of course I looked at HubSpot because I own HubSpot and I'm trying to do a little pump and dump scheme. I'm kidding. I'm kidding. I'm not gonna talk about that. Now, I was trying to think about this and I was like, should we do, like, a Wolf of Wall Street pitch? You know how he's pitching penny stocks where he's like, "Hi, John. The reason I'm calling is I've got this new patent technology that has huge upside potential and little downside potential."

Shaan Puri 29:48 Is this something where I could maybe get in on the ground floor? [laughs]

Sam Parr 29:51 [laughs] Yeah. And then I realized I'm not gonna do that. I'm just gonna tell you, I'm just gonna base all of everything that I'm doing here on what do I think is cool and interesting. And so what

Sam Parr 30:00 do I think is cool and interesting? Look, if you wanna make great money, you invest in Amazon. It's a slow, predictable... It's gonna be, I think it's a great company, but that's not interesting to me. We all know that. Same with E- everything Elon's doing. At this point, he's the man. I can't invest in Tesla. I can't invest in anything he's ever done. That's dorky. Plus, look at him. I don't wanna invest in that.

Shaan Puri 30:17 Yeah, I like how you used the, uh, pre-plastic surgery, uh, Elon one there. Nice.

Sam Parr 30:21 There's a point. I've got a point here. And then I looked at Bill Gates and I looked at those guys, like, you know, Microsoft also a great company. I like the CEO. They're doing great things. But we've been there, done that. I think it all makes money, but it's a little bit boring. It's not for this podcast. So what is interesting? Look at this guy. Do you know who that is?

Shaan Puri 30:37 Uh, that is, uh, the LVMH guy, right?

Sam Parr 30:40 The LVMH guy. I, we're gonna call him escargot 'cause I don't know how to pronounce his name.

Shaan Puri 30:44 [laughs]

Sam Parr 30:44 What's his name? Bernard, [laughs] Bernard L- [laughs] How do you say his last name? Bernard, uh-

Shaan Puri 30:49 I don't know

Sam Parr 30:49 ... Arnold. Yeah. We're gonna call him escargot guy.

Shaan Puri 30:52 Bernard Arnold, as we call him here on MFM.

Sam Parr 30:54 [laughs] Yeah. The slug-eatin', suit-wearin', beautiful Frenchman. That's what we're gonna call this guy. Uh, so he's great. So LVMH, what... Here's what they do. This isn't my company, but th- this is the person I got inspired by. So they own, uh, a, a hundred plus luxury brands, Dior, um, Fendi, Sephora, Tiffany's, Hublot. They own luxury brands. And the reason why this guy, this guy got into the luxury business, and I found three quotes by him. You use Warren Buffett as your kinda like rule setter for how you're gonna pitch a stock. I'm gonna use this guy. He used to own a construction company, and then he got super into luxury businesses, and I'm gonna explain three quotes as to why he said that. So he said, "In luxury business, you have to build on heritage." And so have you ever heard that phrase Lindy? So Lindy's a popular phrase that's floatin' around on the Twitter circles. It basically just means the time of which something has existed is directly correlated to the time that it will continue to exist. So something that's been around for a long time will likely be around for a long time. Something that's brand new and hasn't been around for a long time can go away easier. And so for in order to build a luxury brand, what attracted this guy, he's like, "I need something that can last, that's been around for a long time, and that means it's gonna last a long time." He also said, "Luxury goods are the only area in which it's possible to make luxury margins." Okay, high margins. So I've gotta find a company that has, that can last a long time because it's been around for a long time, it has high margins, and then the final thing he says is, "Affordable luxury, those two words, they don't even go together." Meaning, w- I've gotta find some, a product, a company that sells a product that is expensive and exclusive. Now, what fits that bill, Shaan? Originally, I thought of James Bond. James Bond, like, that's like the definition of cool guy and exclusive, and like you dream wanting to be him, but it's gonna be impossible to attain. And so the c- the product that I, and the brand that I almost chose was, what's something that James Bond is s- is synonymous for? Do you know what that car is?

Shaan Puri 32:41 Uh, the Aston Martin, I believe.

Sam Parr 32:44 That is an Aston Martin. And so Aston Martin, that kinda, that kinda, that kinda got me interested.

Shaan Puri 32:49 Huh.

Sam Parr 32:49 As- Aston Martin has a strong brand, but they have a shit multiple. They've got a decent product, but it's actually one of the least p- uh, valuable car companies in the world. I believe right now it's only trading at like $2 billion, so it's not that, uh, big of a business. Now, Aston Martin, it's been around for a long time. I think it's gonna continue being around for a long time. I think a lot of young men dream of having an Aston Martin. Their margin is shit, so it's been losing money, so that kinda gets it out of the way. I can't do that. And in terms of like being exclusive and expensive, it is expensive, but because not that many people want an Aston Martin compared to all the other cars, I wouldn't exactly say that it's that exclusive. So Aston Martin, not good enough. So what is good enough? So I found a company that has been around for a very long time.

Shaan Puri 33:34 Hmm.

Sam Parr 33:34 It's got huge margins.

Shaan Puri 33:36 Okay.

Sam Parr 33:36 In fact, it's got the best margins in its industry.

Shaan Puri 33:39 Hmm.

Sam Parr 33:39 It's very expensive, and it's so exclusive that even if you wanted to buy it, in many cases you cannot. Do I have your interest?

Shaan Puri 33:47 I, you have me interested. [laughs] You had my attention, and now you have my interest.

Sam Parr 33:51 Okay. So you probably don't know who this person is, do you?

Shaan Puri 33:54 I do not.

Sam Parr 33:55 All right. This man, he's, he's no longer around, but he was born in the early 1900s.

Sam Parr 34:00 His name is Enzo. Enzo started out as a race car driver, and he drove... I actually believe he might have drove for, uh, uh, Aston Martin at one point, but, uh, he also drove for Fiat, an Italian car company. And he was so into race car driving that he goes, "This, these Fiats, they ain't cutting it for me. I have to make my own car, and I'm gonna make the best car." He goes, "I'm basically just gonna make an engine, and I'm gonna put wheels on it, and aerodynamics be damned." That's what you say if you have a shit engine. "I'm only gonna focus on the engine." And he was obsessed with making an engine, and eventually other people got obsessed with m- his engines. And so in the first year he made a car for himself, in the second year he sold two cars, in the third year he sold only about eight cars, and he kept slowly growing, and eventually that company became Ferrari. So Ferrari is my company, and you're gonna like Enzo Ferrari. Enzo Ferrari, he's a crazy person. He's sorta like Conor McGregor, that quote that we have from Conor McGregor. He goes, "I'm like Vincent van Gogh. I've lost my mind at this game." Enzo Ferrari is like that. He's got this great quote where he goes, "A great mania to which one must sacrifice everything, without reticence, without hesitation." So he's one of these guys who has totally bought into his brand, sorta like Dana White, where he lives and breathes this shit. He was known as being kind of a shit dad, kind of a shit husband, and all he cared about was Ferrari and making it great. So let me give you a little bit of high level facts about Ferrari. In 2023, the revenue grew 17% to about $6.5 billion. They're very profitable. Their net profit last year was $1.3 billion. Now, here's an interesting stats, an interesting stat. So Honda last year sold something like 1.2 million cars. Ferrari only sold 13,000 cars.

Shaan Puri 35:39 [laughs]

Sam Parr 35:40 Their market cap... Now, when I started working on this, their market cap was a lot lower. They released some really big news on Friday, and their market cap skyrocketed, and they are now worth $72 billion. That makes them roughly the s- eighth or seventh largest car company in the world, and they're still growing at around 23% a year. Unfortunately, their PE ratio is crazy high. It's like 54, so 54 times earning, which is like one of the highest. But check out this. Look at the highest, uh, or the most valuable car companies in the world. Number one, Tesla, number two, Toyota, and then Porsche, Mercedes, and then you go down to Ferrari, $68 billion. I think, um, on Friday it was like 75 billion. So they're more va- valuable than BMW, more valuable than Volkswagen, more valuable than Honda, and they only make something like 13,000 cars a year. Isn't that insane?

Shaan Puri 36:29 That's crazy

Sam Parr 36:29 So here's my case as to why this is an interesting company. I'm gonna try and talk a little bit about the numbers, but again, that's not our specialty, so I'm gonna try and stay a l- a little bit away from it. But they are a cash cow. They are the cash cow of the industry. In fact, Ferrari makes more profit per unit, uh... For e- every unit they sell, they make more profit than any other car in, uh, maker in the business. Some car makers, in fact, like a GM, they actually lose money, and they hope to make monies through their other models or through selling parts or fixing the cars. Ferrari makes a profit on everything, everything they make.

Sam Parr 37:00 Last year, or sorry, in 2021, they made over 100 grand per unit sold. The second place company that sold the, profited the second most was Tesla at $6,700. Isn't that insane?

Shaan Puri 37:11 Wow. So, you know, whatever, 15x more profit per car than, than the second place person.

Sam Parr 37:17 But it gets even crazier. So in order to make the same amount of profit, pr- profit that Ferrari makes per car, Ford has to sell 900 cars, okay? And you think Ford, that's just a middle-of-the-line car. Okay, what about Mercedes? Mercedes has to sell 67. BMW also has to sell 67. It, they make the most profit of any other car, uh, luxury car maker in the business, and they make more profit per unit sold than any other car in the, in the industry. Now, here's the, where it get, where it gets even crazy, crazier. You don't choose Ferrari. Ferrari chooses you. So if, so did you, do you know about this with Ferrari about their wait list?

Shaan Puri 37:51 I did not know this.

Sam Parr 37:53 All right. So here's how it works. And there's a lot of mystery around this. Like, they don't even openly say, like, exactly how it works. But let's say you wanna buy a base Ferrari, like the cheaper models. A lot of times you can just go in and buy it. But if you wanna buy the more expensive one, what they do is they have got a wait list, and they look at the wait list and the, and, and in order to buy the fancier ones, oftentimes you have to buy three to four of the base models. And so Jay Leno, you know how Jay Leno's a big car nerd?

Shaan Puri 38:22 Yep.

Sam Parr 38:23 He's, he openly says, he goes, "I res- I refuse to buy a Ferrari because of how elitist they are." You have to... They're not... Well, he's like, "Obviously, they're not the every guy, every man car," but you can't even buy one if you want one. And you have to s- and once you buy one, if you, if you're able to acquire one, you have to sign paperwork that says that you're not gonna put any stupid parts on it. You can't repaint it certain colors. So there, there's this lawsuit that just ended recently where this famous celebrity painted his Ferrari pink and they sued him, and he had to pay them-

Shaan Puri 38:52 [laughs]

Sam Parr 38:52 ... $350,000 because he posted it on Instagram, and they said that that hurt their repu- reputation. Justin Bieber did the same thing. Justin Bieber bought a car, and he did three or four things that were crazy. The first thing is he just left the car at the h- at a hotel parking lot for, like, a few weeks or something while he traveled. Another thing that he did was I think he took, like, the Ferrari badge off of it. You know, some people de-badge their car to be cool. And so they banned him. Justin Bieber can no longer buy a Ferrari if, if he wants to.

Shaan Puri 39:20 Wow.

Sam Parr 39:20 Another thing is-

Shaan Puri 39:21 Bummer for the Biebs

Sam Parr 39:22 ... bummer for the Biebs. If you b- and if you... And, and just, this is, uh, very similar to the Rolex in the luxury watch industry. So do you know that if you buy, like, a Rolex and they find out that you buy it at retail and you flip it for above retail, oftentimes the dealer will never sell you a Rolex again? Ferrari does the exact same thing. So if you flip a Ferrari and you don't tell them and ask for their permission, you get in trouble. And so it's a big deal, and they ban you. And so they have so much demand that they literally ban people from buying a $500,000 item. Is that insane or what? I mean, that's, like, truly pinnacle of exclusive and elite, like, people are dying to have this product.

Shaan Puri 40:01 Nothing makes me wanna get in more than a wall preventing me from getting in. [laughs]

Sam Parr 40:04 And they do a great job of creating that wall. And their brand is incredibly hard to kill. So if you, if you Google what are the most expensive cars ever sold at auction, a recent one is a, I forget, it's a GTO 250. I forget which year it is. But it was an $80 million car. 11 of the top 15 most expensive cars ever sold are Ferrari. In fact, people love Ferrari so much that there's a theme park obviously in Dubai just for Ferrari.

Shaan Puri 40:32 [laughs]

Sam Parr 40:34 Bas- they make something... So this company, what did I say, $700, uh, $7 billion a year in revenue? Is, is it something like that?

Shaan Puri 40:41 6 billion a y- 6 billion a year.

Sam Parr 40:42 6, 6 billion? 500 million of that comes from merch. So a pretty substantial amount just comes from people buying Ferrari hats. And this is even crazier. So for every Ferrari sold, something like 65% is being sold to someone who already buy or who already owns a Ferrari and has bought one from a dealer, meaning their LTV is massive. They've done a bunch of really crazy, crazy things to prevent, like, or to, to keep their brand strong. So they have this bounty program. So they basically have just created a bunch of snitches. So if you're in the streets-

Shaan Puri 41:14 [laughs]

Sam Parr 41:14 ... and you see someone has painted their Ferrari a certain color, has put a modification on it, like a part that, that Ferrari doesn't approve of, if you report that to Ferrari, you get an allowance. You get a little bit of money. They pay you to report that people are breaking the rules. It's, they have a new bounty system. It's insane. Now, uh, I talked about the Lindy effect, so here's the exact definition. The future life expectancy of some non-perishable things like technology or an idea is proportional to their current age, thus the Lindy effect proposes the longer a period of something has survived to exist or, uh, the, the longer something has existed, the longer its remaining life expect- expectancy. So Ferrari has been around, it's, it's gonna be, uh, I believe they were launched in the '50s or so. They're gonna be around, I think, for an extended period of time. I think Ferrari's a very hard brand to kill. If you put Ferrari on a Rolex, someone's gonna pay extra to buy that Rolex. If you put Ferrari on anything, someone's gonna wanna pay more money to have that, that item. Now, and that's not the same case with a Honda. It's often n- I don't, I mean, there's like a handful of car companies that are able to pull that off, or there's a handful of any type of companies.

Shaan Puri 42:19 I, I just went to the website and put a $600 baseball cap into my cart. But I need to, like, have a cool-down period before I click buy b- just because I think, I don't know if you're selling me the stock, but you're definitely selling me some Ferrari merch today

Sam Parr 42:32 W- I- was the hat really $600?

Shaan Puri 42:34 There's... Yeah, it's a $600 hat. [laughs]

Sam Parr 42:36 It's a what?

Shaan Puri 42:36 The cheapest hat is, like, $180.

Sam Parr 42:39 That's insane. That's absolutely insane. Like, I went to a kid's, or I went to a friend's house the other day, and their kid had, like, a Ferrari coat that he was wearing.

Shaan Puri 42:46 [laughs]

Sam Parr 42:46 'Cause he, like, lo- he, like, you know, and he has, like, Ferrari toys. And they, they sell so much of this stuff, it's insane. Is it, was it really a $600 hat? What makes it so good? Does it, does it, does the hat drive?

Shaan Puri 42:57 Uh, just the entire story you just told me made it so good.

Sam Parr 43:01 The, it, it's an insane brand. And have you, have you ever been in a Ferrari?

Shaan Puri 43:06 Uh, I have been in a Ferrari, yes. It's a, it's a wonderful car.

Sam Parr 43:09 I've been in a, I've been in a Ferrari. They're definitely cool. My takeaway is that they're a fucking pain in the ass to own.

Shaan Puri 43:15 [laughs]

Sam Parr 43:15 Everyone stares at you. So they've, um... The, that Ferrari red was actually formerly the, um, it was the national racing color of Italy, and Ferrari, Enzo Ferrari was like, "Oh, we'll just use that." And then eventually they got so popular they patented, uh, or they trademarked that red. So that red is only for Ferrari. But if you're in one of those cars, you get stared at like crazy, which is one of the reasons why people love driving it. I hated driving it for that reason, and they're loud, and they are kinda rough. They're fucking race cars. It's a race car. And so if you like driving Ferrari, you're gonna love it. I, my opinion was this is a pain in the ass to drive. But I get it, I get the appeal. Ferrari is badass. But their P/E ratio is insane, so I don't know how much value is left to be had here.

Shaan Puri 43:57 [laughs]

Sam Parr 43:57 But they are, but they are growing. They are growing consistently. So if you look at, if you look at their last, um, if you look at their last, uh... I think they went public in 2018. It's grown on average roughly 30% a year, their stock, their stock price. So it's, like, been a pretty consistent growth. They... Ferrari, Enzo Ferrari, when he died, he sold a lot of the business to Fiat, and then Fiat spun it off, and they built, uh, they, they took it public on, on its own. And so it's been very consistent since it's gone public. You had a great return. Recently they signed a

Sam Parr 44:30 deal with Lewis Hamilton, who's like the LeBron James of, like, F1 racing, and their, their, their price skyrocketed because also their earnings, they're like, "Dude, we're killing it." So they make something like, I believe their EBITDA margin is 35%. So no car company has that much, that big of a margin for... I mean, that's, like, ridiculous. What does-

Shaan Puri 44:50 See, you, you gotta do the smart rich guy thing, which is you say Ferrari's not a car company, it is a luxury brand. And it's priced incorrectly. They're pricing it like a car company, but it's actually a luxury brand, right? That's what all the stock pickers do. They're like, "Tesla is not a car company"

Sam Parr 45:04 That was my argument, and then I looked at what the P/E ratios of some of the other [laughs] luxury brands were.

Shaan Puri 45:09 It's still... [laughs] You need to be like-

Sam Parr 45:10 And it's [laughs]

Shaan Puri 45:10 ... it's actually a, it's, [laughs] it's actually a AI chip company, I guess, based on this P/E multiple. [laughs]

Sam Parr 45:18 Well, my original point, I was like, this is a luxury company. And then I looked at what the, what some of the numbers were for some of the other luxury companies. I was like, well, this is bad timing. If you-

Shaan Puri 45:26 [laughs]

Sam Parr 45:26 ... if we would've done this t- if we would've done this, like, two or three weeks ago, it w- it would've l- it would've made a little bit more sense. But they just had, they just released earnings on Friday, and so they crushed it. But there is a bunch of downsides. So, uh, P/E ratio is insane. It's at an all-time high right now. I think it's, what did I say, 55 times earning? That's insane. That's a lot. Another question. When you were a kid, did you have, like, car posters on your wall? Like, or, like, a folder, like a binder that had a car, car on it?

Shaan Puri 45:53 I did not. I had a life-size poster of The Rock.

Sam Parr 45:56 Okay. Well, you're, didn't do the bro move and prove my point.

Shaan Puri 46:01 [laughs]

Sam Parr 46:01 But many young kids when we were young did. You go to that book fair, and you buy, like, a Ferrari eraser, or you'd buy, like, a Porsche, a Lamborghini folder, whatever. We cared about that when we were kids, and so it was very aspirational. Do you know that young people nowadays are barely even getting driver's licenses?

Shaan Puri 46:16 Yeah. That's, like, a loser move, right?

Sam Parr 46:18 It's, like, a loser move to have a driver's license. And so oftentimes I wonder, are young kids even gonna care about this? And then finally, EU regulations. So Ferrari's, uh, uh, based in Europe. The EU is cracking down, so for a lot of cars they have to be hybrid. I, I think the ruling is by, like, 2030, I think all cars have to be, have some type of hybrid component. I don't think it's gonna kill Ferrari, because they're already making hybrids, and a large percentage of their cars, something like 25%, are already hybrids. So I think they're gonna be fine. But that is a risk. Now, beyond the stock, I just wanna talk about a couple lessons here. Ferrari's an amazing company to aspire to build, at l- uh, at least if you wanted to build, like, a luxury product. A great company. The first thing, they're fucking missionaries. They're not mercenaries. A lot of times we talk about, we use that word arbitrage. If Enzo Ferrari heard that word arbitrage, he would take off his leather glove and smack you in the face.

Shaan Puri 47:14 [laughs]

Sam Parr 47:15 He would ask you about passion. That's what he cares about. And it's paid off. He's built a brand that, you know, is one of the most valuable brands known by billions of people in the world that they aspire to attain, and it's all about him being a missionary. He's truly bought in. The, the people who work there are bought in. They built a brand that's aspirational. Now, in order to do that, in order to build one of those brands, you have to do something really hard, something you and I struggle with, something that I think every entrepreneur struggles with, which is you have to say no to so many great opportunities. And that's really hard. So someone could've said, "Hey, Enzo, what about, like, a $50,000 car that, like, everyone likes? Like, we, we would just, we'd crush it. Like, the average man would buy this, and they all want it. We'd kill it." He said, "Uh-uh." How do they say no in Italy? [laughs]

Shaan Puri 48:01 [laughs]

Sam Parr 48:01 He would say, "No." Uh, [laughs] I don't know how they say it, but I bet it, I bet it's just no. That's what he would say. And they didn't, and they've refused to do that. But that's been very hard for them to do, I'd imagine, um, because there's so much opportunity. But that's just a real lesson for a builder. However, the last lesson is if you can say no for that long and you do build a really good luxury brand, it can pay off so much. I had no idea getting into this. I would've thought that Ferrari was worth, like, 10 billion. I didn't realize it was the seventh-largest car company in the world, only selling 10, 13,000 units. That's insane compared to another company like Honda or Toyota that's selling a million plus units. So anyway, that's my pitch for Ferrari

Shaan Puri 48:40 Good job. Give it, let me, let's give it up. Let's give it up. Um, that's kind of insane. And by the way, I feel like your point about Italians, not just Enzo not doing arbitrage, have you ever met an Italian running an arbitrage? Like is there-

Sam Parr 48:52 No, man

Shaan Puri 48:52 ... is there an Italian affiliate marketer on Earth? I don't, I don't think I've ever seen one. It just seems so beneath them, as it should be. They're the, they are the luxury brand of ethnicities also. [laughs] They are the

Sam Parr 49:03 Yeah, dude

Shaan Puri 49:04 ... ultimate ethnicity

Sam Parr 49:04 You want like an old lady in the back. It, like I... So I grew up in an all Italian neighborhood, by the way. I grew up in St. Louis. For some reason, St. Louis has a large amount of Italians. I was the only non-Italian at my grade school. We used to learn Italian in grade school. They used to teach it to us. We had to go to mass three days a week, and one of those days was in Italian.

Shaan Puri 49:20 But you didn't know the Italian word for no? [laughs]

Sam Parr 49:23 I wasn't a good student.

Shaan Puri 49:24 Dude. [laughs]

Sam Parr 49:24 But I could tell you the, I could tell you the Our Father in Italian. And, and the best part was like everyone would have their old grandma like in the back of the house like rolling up these raviolis and just like-

Shaan Puri 49:34 All right. I wanna hear you speak some Italian. Let's go

Sam Parr 49:35 ... don't put me on the spot, bro. I, I, I [laughs]

Shaan Puri 49:38 [laughs] You just said, "I could tell you the Our Father in Italian." Okay. Tell me.

Sam Parr 49:43 No, I don't even wanna say it. I'm so bad. Dude, I got a thick, I got a thick tongue.

Shaan Puri 49:47 Well-

Sam Parr 49:47 Just like our boy Bernard, I got a tongue like a slug.

Shaan Puri 49:50 [laughs]

Sam Parr 49:50 It's a thick tongue. I, I can't roll my Rs. It's disgusting.

Shaan Puri 49:53 [laughs] The, the back of your teeth just battered.

Sam Parr 49:55 I'll, here. Dude, my first girlfriend in grade school, her name was Philomena.

Shaan Puri 49:59 [laughs]

Sam Parr 49:59 Like, I was all

Sam Parr 50:00 in.

Shaan Puri 50:00 So-

Sam Parr 50:00 I was all in on the Italians

Shaan Puri 50:02 ... I feel like, uh, uh, American Italian people, like Italia- Italian people who live in America are just... They give it the, the, the wrong rep really. It's sort of like, it's just like Tex-Mex or whatever. It's like too Americanized. Italian Italians, oh man, it's just uh-

Sam Parr 50:16 Yeah. I want like a really s- I want a skinny Italian with like, wearing ski- skinny, tight jeans, smoking a cig constantly, drinking a espresso with a buzz cut.

Shaan Puri 50:25 Yeah.

Sam Parr 50:25 I don't want like these Gabagool, like you know what I mean?

Shaan Puri 50:27 [laughs]

Sam Parr 50:27 We... [laughs] Well, that's not the type of Italian.

Shaan Puri 50:29 Yeah, I don't want The Sopranos. I don't want Tony Soprano, right? Like [laughs]

Sam Parr 50:32 Yeah.

Shaan Puri 50:32 I like the Italian grandmother who still like, you know, smokes the cigarettes.

Sam Parr 50:35 And a lot of great, uh, car companies are Italian. You know, Lamborghini's also Italian. Uh, Fe- and Lam- I believe the story, by the way, do you know the story of Lamborghini? He, uh, invented the Lamborghini because Ferrari wouldn't sell him a l- uh, a car.

Shaan Puri 50:48 Oh, revenge?

Sam Parr 50:49 And he was, and he was making tractors. Lamborghini was a tractor maker, and Ferrari wouldn't sell him a car, so he made his own. And so they've been assholes from day one, and that's why it's such a great brand.

Shaan Puri 50:59 [laughs] You definitely sold me on how cool Ferrari is as a business. Um, I don't think you sold me on the stock just 'cause it's like at an all-time high and 70 billion.

Sam Parr 51:10 It's at an all-time high.

Shaan Puri 51:12 It, it also sounds like they're not trying to grow fast, right? That's like part of the shtick is like sell-

Sam Parr 51:17 That's part of the shtick

Shaan Puri 51:18 ... only a limited number of these at insane margins, and so I think that's, uh, you know, maybe, maybe one of the downsides. But very cool story and also more like MFM, more, more of, uh, inspiring for how to build a business than, uh-

Sam Parr 51:30 But hold on

Shaan Puri 51:31 ... a great stock

Sam Parr 51:31 ... don't discount, don't discount me. Listen, I actually don't know how stock, stocks works. You know, I'm a dummy. [laughs] How does a stock work? I don't know. [laughs]

Shaan Puri 51:41 Let's start. Let's go back to basics.

Sam Parr 51:44 But if it's growing 20% a year, and if we think that it could continue doing that-

Shaan Puri 51:49 But you're saying the stock price is growing 20% a year, not the business

Sam Parr 51:52 No

Shaan Puri 51:52 ... revenue.

Sam Parr 51:53 Revenue. Revenue is growing 20% a year.

Shaan Puri 51:55 Okay.

Sam Parr 51:55 If revenue is consistent, doesn't like that, that other shit follow?

Shaan Puri 52:00 It does. It does. It does. But you didn't talk about that, so, um, you know.

Sam Parr 52:04 It was on the slide, bro.

Shaan Puri 52:04 I can only go based on what you told us, right?

Sam Parr 52:07 The business is growing. It's good. Just... [laughs]

Shaan Puri 52:10 You started the pitch with, [laughs] "As for my stock analysis, we're not gonna be talking about numbers," [laughs] which was just a masterful, uh-

Sam Parr 52:18 Isn't that what you said Warren Buffett said? Brands or some bullshit?

Shaan Puri 52:22 Yes. Yeah, something like that. Something like that. Um, I do think that, uh, you know, that's the best way, right? Like, if you didn't prepare for your speech, uh, in school, you're just like, "You know what?" You rip up th- "I'm not gonna read off those prepared notes."

Sam Parr 52:37 [laughs]

Shaan Puri 52:37 "I'm just gonna speak from the heart." It's like you're just ripping a blank piece of paper up and throwing it away.

Sam Parr 52:42 Dude, I did prepare. I pr- I prepared a long time for this.

Shaan Puri 52:45 [laughs]

Sam Parr 52:45 I just, I just really took, uh, uh, Buff Daddy's words to heart and I looked at the brand.

Shaan Puri 52:53 Fair enough.

Sam Parr 52:53 Okay?

Shaan Puri 52:53 All right. [laughs]

Sam Parr 52:54 It is kind of an interesting dichotomy here. We did just pitch the two exact opposite things, right?

Shaan Puri 53:01 Yeah, exactly. Y- yeah, the, the highest of high fashion and luxury and, uh, sort of the, uh, the lowest form of human behavior, getting in your underwear and fighting in front of other people for their entertainment. We give you the full spectrum here on MFM, right? We, we, we give you everything.

Sam Parr 53:15 [laughs]

Shaan Puri 53:15 [laughs]

Sam Parr 53:15 So let me, let me think about it. Okay. So if I had to put my own money, if I had to put $100,000 let's say into either Ferrari or TKO, I think I would go Ferrari. I think I would go Ferrari, but I think TKO has significantly higher upside. Significantly.

Shaan Puri 53:33 Right. Right, right. Okay.

Sam Parr 53:34 So-

Shaan Puri 53:35 That's fair

Sam Parr 53:35 ... so I don't know how you wanna gauge the winner on that one.

Shaan Puri 53:37 If I had to put my money in either, I would put it in neither [laughs] is my takeaway from Stock-a-palooza.

Sam Parr 53:43 Oh, I, emphasis on the if I had to, which I don't have to.

Shaan Puri 53:46 Right. [laughs] Which I will not. [laughs]

Sam Parr 53:49 Yeah. [laughs]

Shaan Puri 53:50 I-

Sam Parr 53:50 Which I'm not in that position

Shaan Puri 53:51 ... and, and by the way, I don't know if it showed, but I definitely worked backwards from, I looked at the stock and I was like... I, actually what happened was I saw that they merged and I was like, "Dude, these companies have no competitors. This is a true monopoly." And in tech, people, you know, from the Peter Thiel school of thought really value a monopoly, and it's so hard to build a monopoly. Like, there are so few businesses that are truly a monopoly. We talked about even DuckDuckGo eating into Google's market share last time, but you know, Google, Facebook, this is one of the few monopolies that exist. And I was like, "Huh. It's funny that, like, this TKO thing i- is actually a monopoly," but I, I don't know how good of a business it is. I don't know how, I don't know if that's gonna grow. But if you're Warren Buffett and you're looking for something with a sustainable competitive advantage, that would be it. And so that's where I started. And, and to be, to be show- truthful, I didn't even consider any other stocks. I started with that and then I texted Sam, "Hey, we should do a stock picking episode 'cause I already have one picked."

Sam Parr 54:46 All right. I'll give you my vote. There, we have it. Unanimous, unanimous decision. You win.

Shaan Puri 54:52 Oh, I got the vote too? Oh, amazing. Well, guys, uh, I don't know if I'm supposed to do an acceptance speech now or if I should just say, um, I'm not surprised, but, uh, that's, that's where I stand as far as Stock-a-palooza. I hope you guys liked it. Go to the YouTube comments-

Sam Parr 55:07 And-

Shaan Puri 55:07 ... and vote in the comments who won, Sam or Shaan. Put it in the comments. We will tally them up and name the official winner after we do that.

Sam Parr 55:16 And if you got any joy from this or if there was a time that you were pulling your hair out and being like, "These fucking idiots don't know anything about this stuff," if it-

Shaan Puri 55:24 Right

Sam Parr 55:24 ... whatever the spectrum is, if you got a little emotion, click, click subscribe. Uh, and, uh, we'll owe you one. Um, all right. That's the pod. [upbeat music]