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This video was recorded on June 21, 2023.
David Gardner: The price per share of a stock tells you almost nothing. It's the price to buy one share of the stock. But how many shares does the company have outstanding? Well, in math, we multiplied two multi-applications together member that word from fifth grade, but the price per share, well, let's just one multiple canned. If you don't know the other one, you can't do any meaningful math or figure out much of the world around you. Fools with a F know that you need to know the shares outstanding and then multiply that by the price per share. Now you know the actual full value of the company, its full price tag, its market capitalization, market cap. Well, to teach this lesson inexorably and unforgettable, we embedded a game. That's what I do. The date was August 9th, 2017. The Market Cap Game Show was born. We've been playing every quarter since. You're playing too. I designed it that way so you can play along against my guest stars, against your spouse or partner, against your kids. Can you outscore my talented contestants this week? Well, it's that time of the quarter again. Ten new stocks, three guest stars. Bill Mann, Jim Mueller, and you. Only on this week's Rule Breaker Investing.
Before we start, I want to say just two things. The first is next week is Mailbag. Our email addresses rbi@fool.com. As you know, it's been AI month on the Rule Breaker Investing podcast, beginning with my first week of June interview with the readout shovel Mohan Tavakoli. Any thoughts about that podcast or reactions to our review-a-palooza episode last week or today's market cap gameshow. Of course, all are welcomed. The Mailbag email address is rbi@fool.com. We'd love to hear from you. You can also tweet us at RBI podcast and we hope you'll subscribe to this podcast, of course, in listening each and every week. That was the first thing. The second is that the week after next week here in the US is of course, independent states, the week of July 4th. For that podcast, I'm asking you this question and I'd love your applies. I'm hoping to get a bunch of replies. Otherwise it'll be, it'll be a short podcast. Here is the prompt in keeping with independence day week, what did you do in the past year to create more financial freedom for yourself or for others? How do you measure that? Again, what did you do in the past year to create more financial freedom for yourself or for others and how do you measure that? That's going to drive the podcast two weeks from today, of course, the week of freedom in this country a week, I'll say also of financial freedom for this podcast, rbi@fool.com.
For those submissions, maybe putting your subject line, financial freedom week or something along those lines. We put it in the right bucket.The Market Cap Game Show, new listeners, we're all guessing here at the market capitalization or market cap, the value of 10 different companies featured this week. As I mentioned at the top, you are playing right along with us. You can easily score yourself. As we go. Each of my celebrity guests will give his best guess at the range of that company's market cap. All you have to do is either agree that the market cap is inside that range or disagree. You'll be giving yourself a plus one if you get it, right. Ten companies, therefore a potential perfect score of ten. Again, if you're new to our gameshow, listen and play along, you'll get it. Jim Mueller is the advisor for options, for energy insider and for future of entertainment, as well as the host on the morning show usually appearing on Friday mornings. Bill Mann as the Director of Small Cap Research here at the Fool and is the lead advisor for Motley Fool, Firecrackers and our Global Partners services. Bill, you didn't include in your one-line bio that you play a lot on the morning show, but you play a lot on the morning show.
Bill Mann: I should've cheated off of gyms paper. I think that's going to be a theme for shot]. I am on the morning show from Tuesday, Wednesday, and Thursday, 9:00 -10:00 eastern.
David Gardner: Wonderful. I've enjoyed you both so many hours on Motley Fool Live. Thank you both. Without further ado, gentlemen, let's get started. [MUSIC] Bill Mann, who are some of the greatest still living old-school entrepreneur founders, not named Buffett.
Bill Mann: I think maybe my favorite founder entrepreneur is a Canadian man named Mark Leonard, who's the CEO of a company called Constellation Software. You can't go out and buy a constellation software package because they go out and buy a bunch of smaller, what are called vertical software companies, and they are just fantastic at it. He's one of those guys who I look forward to every time you get some writing or a speech or MIM, which is really rare, and just a really great entrepreneur.
David Gardner: Wonderful. Bill, because constellation software is not the stock. I'm going to start leading you in the direction of this stock. Did Mark Leonard write up his whole idea for constellation software iconically in a paper turned in at university?
Bill Mann: No, he was not like maybe some of the people who we might expect to either at Princeton University or other. I'm I guessing well?
David Gardner: You're getting really close. Jack Bogle famously did so for index funds, the concept of the index fund for his Princeton senior thesis.
Bill Mann: That right.
David Gardner: Tried Fred Smith.
Bill Mann: Wharton.
David Gardner: I'd forgotten that. Fred Smith, the founder of FedEx. I assume this is true. This is not just the stuff of Legend, which if you look it up, is legendary, one of the definitions is of dubious authenticity, which is my favorite definition of legendary. Anyway, this may or may not be legendary, highly accurate, but that's how I think of it anyway. Bill and FedEx's a company that we've all gotten to know. Pretty much if you've been on this planet for 10 years or more, you probably recognize, especially in the United States, the brand and the company, but it's global. Bill, before I ask you your market cap range for FedEx, one of our themes this month on the podcast is artificial intelligence. For this company, Bill and Jim, or for any others, if you briefly wanted to state what you think artificial intelligence means to that company or not. You are invited but not required to do so.
Bill Mann: I think the most important thing for a company like FedEx for artificial intelligence would come in the form of optimizing its logistics in the back office. For example, it may be the case that a package going from Passaic, New Jersey to Wichita, Kansas, based on the full capacity of the company, may need to go through Omaha or it may need to go through Jacksonville, Florida. That type of making sure that things get there in their totality as quickly as possible is something that I think can be done artificially.
David Gardner: Well said, and I assume it's already happening right under the hood for.
Bill Mann: We'd hope.
David Gardner: Yeah, logistics. But more importantly, Bill Mann, what is your stated market cap range for FedEx company? The ticker symbol, of course, FDX.
Bill Mann: On the low side, I'm going to say it is a $45 billion market cap, and on the high side, I'm going to say it is $105 billion market cap.
David Gardner: A wide range, Jim Mueller and players at home Bill has just opened up the possibility that FedEx would have a market cap somewhere 45 billion to 105 billion. Especially new players at home. Now is the time that in your mind or out loud you say agree or disagree. His fellow contestant here in the studio, Jim Mueller, you're about to model that good behavior for our listeners, Jim, inside that range, do you agree or outside bills range?
Jim Mueller: I'll agree.
David Gardner: Correct. Therefore, even though Bill made a great call, this is Bill first-time playing the market cap game show. He probably feels like he's winning. Ironically, you gave a really wide range. Jim took advantage that he gets the plus one. Even though I think you've brought most of the savvy Bill.
Bill Mann: How are we playing this again? I was trying to make sure Jim was doing great.
David Gardner: Well, that is one way of playing the game day.
Bill Mann: I'm going to play better from there, no more fun, Jim.
David Gardner: The market cap as of Tuesday afternoon trading on the New York Stock Exchange, Tuesday, June 20th is 59.43. We take it out to two decimals, billion-dollars, so solidly Bill within your range.
Bill Mann: I just wanted to be.
David Gardner: By many measures, you nailed it. Does not buy this one. Jim, one Bill. Nothing, Jim, let me turn to you now for stock Number 2. What is one of the worst made up corporate names in the world today or even indeed, Jim in all of history manufactured by some overpaid branding firm or maybe really bad spelling.
Jim Mueller: What had coached, turn itself into rename itself as.
Bill Mann:Tapestry, but I spelled it right.
Jim Mueller: What does tapestry have to do, which is a fabric have to do with-
David Gardner: It's a little bit of a misdirect degree, although I think Bill is giving them points for spelling it properly, which I do think deserves points.
Jim Mueller: Yeah.
David Gardner: Are you a Truist fan?
Jim Mueller: Oh, the bank. Oh, yeah. That one makes no sense.
David Gardner: So you're not a fan of the name Truist? I was driving past another financial company. Is it Truliant? Truliant. This is in North Carolina, I assume it's regional. I think it's maybe savings or something like that. Truliant.
Bill Mann: I think like first National Bank should just be frank, I will just get on with it.
Jim Mueller: How about Fifth Third? We were on banks, there's Fifth Third.
David Gardner: Yeah, there's some history there, you're right. It's a little strange.
Jim Mueller: It's a little strange, but you're right, there is some history that-
David Gardner: There's also history to Carl's Jr, which I've always thought as a ridiculous name. But Carl's Jr is, there's some history there that explains the name. You can Wikipedia it. I don't know if market access spelled A-X-E-S-S holdings. I don't know if MarketAxess makes the top five worst corporate names or spellings of all time. But for me it would probably be top 20 MarketAxess Holdings. The ticker symbol is a little bit easier to scan than the corporate name, MKTX, but MarketAxess guys, all one word camel case, that means that middle A is capital, but A-X-E-S-S MarketAxess Holdings, the international financial technology company operating in electronic trading platform for the institutional credit markets. Jim, before I ask you your market cap range, have you ever looked at this company?
Jim Mueller: Not in several years, no.
David Gardner: That makes the Market Cap Game Show much more fun, Bill have you ever looked at this company?
Bill Mann: Yes. They are seeking to be a centralized way for people and primarily institutions to trade bonds which are done in a very pencil and paper away with people getting on the phones and selling individual bonds back and forth. And so they're seeking to be a platform to do it in a central way.
David Gardner: I think Bill knows a little bit more about this one than we do, Jim, but-
Bill Mann: I feel like I'm terrible at this game. I keep giving away that I know things. I should just keep going.
Jim Mueller: How do you spell it?
David Gardner: Jim Mueller, your best shot at the market cap range for MarketAxess Holdings, which did have its name written that way from the very start, Richard McVey, the founder, 2000 was the year this company was founded. Ticker symbol MKTX.
Jim Mueller: I'm going to say 25-50 billion.
David Gardner: Twenty-five to 50, Bill. I thought he was talking to you, but he was talking about billion, 25-50, Bill Mann.
Bill Mann: Billion. I'm going to say it is outside of that range.
David Gardner: Correct. Well done, Bill. Because the market cap for MarketAxess Holdings is 10.56 billion. Jim, it feels to me like this stock might be one you want to add to your watchlist anytime somebody has this idea that something is much bigger than it really is, you would have an opportunity right now to buy this company for less than half what you thought it was worth, it's on sale.
Jim Mueller: I was just wrong.
Bill Mann: We're going to call this the Jim intrinsic value.
David Gardner: MarketAxess Holdings, $10.5 billion. Less than a fifth. FedEx, which makes sense because FedEx is a much bigger deal and it's been around a much longer time. Well, Bill one, Jim one keeps things spicy. Let's move on to company number 3. That's our throw down. I think that's the rule we've introduced. I think that's what I've been calling. It's like a daily double, but you guys will remember this. Regular listeners will remember, but for people who are new two of the 10 stocks, randomly have a slightly different mini-game, and here's how it works, Bill and Jim, I'm going to give you the company and you're each going to write down your best guess at the market cap range for the stock. Whoever has a tighter correct range will win if one of you is right, the other isn't. He will win. If neither of you gets it, whoever got closer to the actual market cap will win.
Bill Mann: So there's definitely a winner even if we're both wrong?
David Gardner: That's right.
Bill Mann: That game.
David Gardner: Bill, what was the last time you were in a Walmart?
Bill Mann: Probably three weeks ago, actually. There's a Walmart near our house.
David Gardner: What did you pick up?
Bill Mann: You're going to laugh.
David Gardner: You don't have to reveal it.
Bill Mann: No, Walmart has the best barbecue sauce in this entire area. I'm not making this up.
David Gardner: A certain flavor, or just is a private label?
Bill Mann: It's private-label Walmart barbecue sauce.
David Gardner: Awesome. I didn't know that, thank you. That's why we do the show. Jim, when was the last time you were in a Walmart?
Jim Mueller: I can't remember.
David Gardner: It's been a while.
Jim Mueller: It's been a while.
David Gardner: On last quarter's show Jim, you revealed your dislike for Airbnb specifically maybe more your wife's dislike for Airbnb. Which have you been to more recently and Airbnb or Walmart?
Jim Mueller: I have never been to an Airbnb, I have been to Walmart.
David Gardner: All right, we'll go with that. Well, guys, you've probably guessed that Walmart is stock number 3. I see you with your pens ready, poised over your pieces of paper. Don't look over Bill's shoulder, Jim. While Jim and Bill are writing down their market caps, you dear listener, can do exactly the same thing. Whether you want to write it down or keep it in your head, you too are playing right along with us by the very same rules. Now, the way to think about this mini-game is you want to be as tight as you can because if you can get it right, you want to be narrower than anybody else in order to win this round. Guys, pens down, looks like you're ready. I'll turn to you first. Bill, what do you show?
Bill Mann: I show a range of 430 billion to 560 billion.
David Gardner: Four thirty to 560. Jim Mueller?
Jim Mueller: Pretty wide range, but it's completely different than mine, 250-300 billion.
David Gardner: All right, 250 to 300 billion. And listener at home, you have now listed your range. The market cap for Walmart as of Tuesday afternoon, June 20th is 424.74 billion and therefore guys, you both blew it. But man Bill, you were close with your lower range of 430. So give yourself a point, Bill two, Jim one and playing at home. If you had Walmart in your range, give yourself a point. It's remarkable to me guys, I was looking at Walmart in the last 10 years. It is an underperformer. Yeah, the market's up 175%. The S&P 500 the last 10 years, Walmart about 100%. I'm not sure there have been many periods that long and history where Walmart has been that an underperformer.
Bill Mann: It gets staggeringly profitable the entire time?
David Gardner: Yeah, and by no means a small company, about a half a tril?
Bill Mann: Yeah.
David Gardner: Although it's remarkable again to think about Amazon being much larger today when it started from nothing in the late 1990s. These are all the big dogs and we were talking about the dinosaurs. This is a dinosaur of the American markets. Thinking about market history where so many of the Dow Jones Industrials, Bill and Jim turnover, the S&P 500, constantly changing Walmart has been a steadfast behemoth's stock in American business. Well, let's move on. There are more interesting companies. What I do is I randomized from the 4, 500 to pick these stocks from one quarter to the next, we cover hundreds of stocks here at The Motley Fool, we have them ranked in an internal system by which ones we think are most likely to beat the market. We share those with members. That's a great reason to join Motley Fool services and I just look at the top 500 and randomized a number each time and pick that stock, so that's why Walmart was included. Bill two, Jim one. Onto stock number 4. Randomly guys, this is another throw down. This is our second and final throw down on this quarter's episode and I'm going to ask you each to think about what is the strangest or whackiest investment that you've ever made. Maybe some really weird derivative, maybe something people couldn't invest in anymore. I'm going to turn to you on this one first Bill because I feel like your portfolio has been full of these things over the years.
Bill Mann: Yeah, in the mid '90s, I was invested in a Siberian engine manufacturer.
David Gardner: That counts [laughs] that certainly much whackier than any stock I've ever had.
Jim Mueller: I might as well just go home. [laughs]
David Gardner: How did it work for you?
Bill Mann: Better than you might expect, but worse than maybe it should have. We bought it at a price-to-asset basis of about 0.05, which means that for every dollar of actual assets, and as we paid a nickel and we sold it for maybe $0.17 on the dollar, so not good.
David Gardner: Who is we?
Bill Mann: Couple of..
David Gardner: You and Putin?
Bill Mann: Me in a couple of other people who were deceived into thinking that we would do well investing in Russia.
David Gardner: Jim, it sounds like you can't out-whack that. Have you ever made? I don't have baseball cards.
Jim Mueller: No, and I never got into trading cards or comics or anything like that. I think certainly my most speculative investment was synthetic long on which is an option strategy that mimics share ownership without actually owning shares on Virgin Galactic, which is still around and might be actually going to start doing business, we will see.
David Gardner: Richard Branson's space vehicle but non-intended SPCE. Well CME Group is the world's largest operator of financial derivatives exchanges and a stock I have picked for Motley Fool Stock Advisor in the past and that is stock Number 4 and we're again listeners and players. We're in a throwdown round here so get out your pen and pencils and think about your best range for CME Group. Ticker symbol as you'd expect CME.
Bill Mann: Doing a lot of exchanges here.
David Gardner: Randomly.
Bill Mann: Randomly I love it
David Gardner: The Motley Fool loves exchange platforms apparently. CME an acronym for the Chicago markentel exchange. This stock is in market up performance just about triple over the last 10 years let me turn to you Jim, what is your market cap range for CME?
Jim Mueller: 10 to 40 billion.
David Gardner: Ten to 40 billion and Bill what did you rate down.
Bill Mann: Thirty-four billion to 66 billion
David Gardner: Thirty-four to 66 billion and players at home scout honor.
Jim Mueller: We have some overlap on this one.
David Gardner: It's true it makes it a little bit more interesting and listeners and home scouts honor you got your range as well. Here's the market cap for CME group 65.55billion Bill the top of your range hood was 66 and so point to you sir. You just swept the throw-down stocks three and four Bill you Cheshire cat grin from me.
Jim Mueller: I'm having flash backs the last time I was playing this game [laughs] scoring tumbling.
David Gardner: Listeners at home if you had an even tighter range then Bills bill your range was 34-66 so therefore it was 32 billion dollars wide. Listeners at home if that market cap was inside yours and you didn't have a gigantic $32 billion range give yourself a point, guys let's move on to stock Number 5. Bill Mann for you can you think of any really successful mega mergers? Thinking back on the mega mergers recent or historic that really worked well and that you're having to think that hard suggests these aren't often great outcomes.
Bill Mann: Mergers of equal? No it has rarely been the case maybe some of the defense contractors ones where you've got a single or very few customers but that might be the extent of it.
David Gardner: Jim can you think of any?
Jim Mueller: Not a mega there's several companies that do pretty good at nibbling or vacuuming up smaller competitors. I'm thinking like Sysco the food services giant.
David Gardner: I really should have I guess specified more like merger of equals Bill I'm glad you made that comment because there are successful acquisitions all the time when when you have something really big, buying something really small. It might even not be clear whether it's succeeded or not is just so small it may not really matter but this particular announcement within the last year has mattered and is getting some scrutiny from the government in terms of whether Seagen will be allowed to be bought by Pfizer. Seagen the former Seattle Genetics.
Jim Mueller: That one.
David Gardner: This deal is it all coming back to you Jim. This deal announced earlier this year the stock as you might have imagined jumped up at the time but how much it jumped well I won't say but I will turn you to Bill and ask what is the market cap for Seagen and Seattle Genetics decide to simplify it's name and just make it Seagen tickers symbol S-G-E-N.
Bill Mann: I need to know who was confused by Seattle Genetics that doesn't seem hard
Jim Mueller: See when you first said Seagen I was thinking S-G.
David Gardner: Well I think it as C company container.
Bill Mann: That's right.
David Gardner: Seagen it's all one word and small g it's S-E-A-G-E-N.
Bill Mann: It's a shipping company come on.
Jim Mueller: If you keep Seattle then it should Segen.
David Gardner: You're right, it's true Pfizer likes it I guess.
Jim Mueller: Now there's name for a silly company name.
Bill Mann: They're not paying for a name Jim so I need to come up with a range, I'm going to say between 16 billion to 24 billion.
David Gardner: Sixteen billion to $24 billion this stock is a pass Motley Fool rule breakers selection but a good company. Jim 16-24 is what i believe Bill just said do you want to agree or disagree with that range?
Jim Mueller: I'm going to disagree I think it's just a little bigger than that.
David Gardner: Well played sir not a bad guess but the market cap for Seattle Genetics now Seagen which now by the way isn't moving much this days since it has this prospect of a buyout coming $37.04 billion now I believe that Pfizer has been $43 billion so I think the stock as they often do is trading under the expected price pending agreement, probably not just by the US these days but by the European Union, etc I'm not deeply following this one right now but has that of you Jim I know there's a little bit of chemistry, engineering past and you do you care about.
Jim Mueller: I have chemistry yes but I don't do well in the biotech space so I just avoid it.
David Gardner: Have you ever bought a biotech stock.
Jim Mueller: A couple?
David Gardner: They didn't work well, that didn't go well.
Jim Mueller: Not so far. [laughs].
David Gardner: Well it is.
Jim Mueller: I do have hope.
David Gardner: That's important.
Jim Mueller: It is a fantastic reason to keep investing.
David Gardner: The company specializes in monoclonal antibody-based therapies for the treatment of we all look for this cancer and Seattle Genetics again founded in 1997. These all not just within our lifetimes gentlemen but within the years that we founded The Motley Fool. It makes me think how small we are because $37 billion market cap and they came well after we did.
Bill Mann: What are we doing.
David Gardner: What are we doing? Well I'll tell you what Jim's doing he's scoring, appoint Jim plus one for you. Were at halftime. This is the moment where Rick plays the halftime music. I feel we're talking a lot about language this particular episode we're about to do that again, Jim acronyms. They don't just dominate military labeling. Happens quite a bit and business I'm sure you've noticed investing CEO, ROI, IPO, CRM, EBITDA.
Bill Mann: I don't reach you pronounce all of them? CRO.
David Gardner: ROI
Bill Mann: IPO.
David Gardner: It does create an in-crowd dynamic, doesn't it? Because I think a lot of people new to investing are I'm not quite sure what EBITDA is. Even people who are not new to investing, not quite sure what EBITDA is. IPO I think initial public offering, I think maybe your first sign that you're becoming an investor is when you know what IPO stands for. That's probably one of those early CEOs a given these days Bill?
Bill Mann: The second sign is that you square off IPOs.
Jim Mueller: But the acronymization if that's a word is a way to keep the priesthood in empower.
David Gardner: That has often been how things have worked over the course of history. I have to admit the particular acronym I'm about to throw down which is relevant to this company. I did not recognize this one so I am in the out crowd but now that I've looked it up I guess I'm in the in crowd and for everybody hearing me right now you're about to be in the in crowd. Jim try this acronym on precise, B-P-O. That do anything for you? Not IPO, BPO.
Bill Mann: It's pronounced as BBOE.
David Gardner: Do you know Bill?
Bill Mann: I think it's a business process optimizer outsource.
David Gardner: That's it, that was really good. I didn't know, Jim didn't know. Bill knows everything. Business.
Jim Mueller: Viewer, I'm bowing down to..
David Gardner: Business process outsourcing. This is what TasksUs. Ticker symbol TASK one of those companies that has a cute readable ticker symbol. This is what TaskUs does and you can certainly just go to taskus.com and read more about it. But BPO business process outsourcing, I guess I can puzzle it out. I get it once i hear it but it's not one of those acronyms I would have recognized otherwise.
Jim Mueller: It's one of those SaaS companies.
David Gardner: Yeah.
Jim Mueller: See what I did there an acronym?
David Gardner: I did absolutely do you know what GASS is.
Jim Mueller: Golf as a service?
David Gardner: Games as a service. That's what Grand Theft Auto V has become. It was initially a boxed copy you might have bought I did 10 years ago probably for $59.99. But then it just becomes a subscription service and they keep adding content to it over time. Yes anything as a service I won't give the acronym for that. But [laughs] software-as-a-service, games-as-a-service there's a lot of that these days, Business Process Outsourcing is what TaskUs is doing and more importantly for our game. Jim I'm turning to you now and ask you what is the market cap for accompany about which I know very little but I did learn its acronym, TaskUs, ticker symbol TASK.
Jim Mueller: Five to 10 billion.
David Gardner: Five billion to 10 billion. Bill players at home agree or disagree?
Bill Mann: I disagree. David.
David Gardner: You disagree correctly. Sir, now, I'm turning to The Motley Fool's small-cap expert Bill, is this a company that you've looked at?
Bill Mann: No. I know a fair amount of some of its competitors though.
David Gardner: You knew the acronym more importantly, maybe not as importantly, but anyway, task us is market cap 1.10 billion. This is a near-micro-cap company.
Jim Mueller: Almost went low.
David Gardner: Those might.
Jim Mueller: I thought it went low enough.
David Gardner: That was pretty low, but we go lower. Companies that are really small, that have pronounceable ticker symbols are interesting to me and sometimes maybe things you want to stay away from. I'm not saying so in this case, I really haven't looked at task us, but people who find whatever the new trend is, they've got the ticker symbol that is that trend. It becomes suspect for me as an investor.
Bill Mann: I feel like we're being marketed to as investors whenever you have a cute ticker symbol like that. On some levels, companies that are public should want their stocks to go up. But how about we just do that through good operations and not worry about the cute ticker so much?
David Gardner: Fair. I don't want to be unfair in this case to task us because
Bill Mann: It's also their name.
David Gardner: I was going to say.
Jim Mueller: That's all.
David Gardner: I was good, this is actually their name. If I'm an investor relations right now to ask because I'm like guys, that's our name. What are you saying, Bill Mann?
Bill Mann: Don't be so mean.
David Gardner: But what you are saying Bill Mann was disagreed which was the correct answer. Therefore, Bill, you've taken a 4-2 lead after six of our 10 stocks on this week's Market Cap Game Show. Now turning back to you, Bill, you mentioned your love of Walmart barbecue sauce, which I think was one of the Hidden Gems of this particular episode. Thank you for that. Any fast casual food experiences that you've had, maybe newer ones over the last year or two that you've really appreciated.
Bill Mann: I do love Cava.
David Gardner: Cava is now a public company.
Bill Mann: Public as of this last week.
David Gardner: Just a few days ago. Ticker or symbol?
Bill Mann: You're not going to believe this David.
David Gardner: Cava.
Bill Mann: Cava.
David Gardner: My god.
Bill Mann: They would have had to have worked with getting sued to ever done something else, I think.
David Gardner: But I also love me some Cava and Cava did start here in the Washington DC area. It's a local kid made good now national at least because I know they're in California among other US states. I was checking out Bill a $4 billion, so market cap right now for Cava.
Bill Mann: A lot of people call it a clone of Chipotle. I think that there's something to that. Obviously Chipotle is much farther down the road, but at a four billion dollars market cap, they are a highly profitable company and they have come across one of those other concepts that does work very well like Chipotle does in terms of how they serve and how they interact with customers.
David Gardner: That's the clone part of it, because there's different food, it's Mediterranean food is not tacos in this case, but both conscious capitalism companies I've seen and come across both in conscious capitalism contexts. But this company is not Cava, however, staying, this is somewhat ironic guys staying within the space of newer fast casual. This particular company, stock number 7, is also a Washington D.C.-based start-up. Bill, you think you know what it is?
Bill Mann: Is it Sweetgreen?
David Gardner: It is ticker symbol SG. I have to admit. I'm a pretty big, Sweetgreen fan myself. I don't think I knew Sweek Green was public, but what I for sure didn't realize is it was started by two students graduating from the McDonald School of Business at Georgetown University here in Washington D.C.
Bill Mann: That tried. A couple of Voyas thought they would get a little roughage into their diets and started a good fast-casual salad-making business.
David Gardner: It's now based in Los Angeles, which probably makes sense given the sorts of food that seems to be preferred these days. More plant-based by the west coast, more so than the east coast perhaps although I think it's good for people on every cost, and especially Los Angeles, but that's where Sweetgreen ticker symbol SG has its corporate headquarters move there at turns out in 2016, about 10 years after its founding. Let me then turn to you, Bill Mann, since you right away thought you knew what the company was and you did in fact know what it is and ask you, what is the market cap range you'd like to accord Sweetgreen ticker symbol SG, and do you have a favorite order by the way? A lot of people may not know Sweetgreen, they're not exactly where, but it's one of those things where you can throw a whole bunch of things into a bowl and a lot of them are healthier.
Bill Mann: Yeah, I'm anti-health David ultimately.
David Gardner: You loved that about you Bill?
Bill Mann: No. I can't remember. Actually, they have a Southwestern salad situation. I can't remember that I thought was pretty great.
David Gardner: It is a lot like Chipotle and Cava in that you can order it how you want. There's even more choices. Cava has a lot more choices than you get in Chipotle. Chipotle, it's like beans, no beans do want Caiso or not. There aren't a lot of choices. Cava, many more choices. Sweetgreen like that as well. Bill, what's your market cap range that you have in mind for this one?
Bill Mann: I'm going to say 700 million to 2.5 billion.
David Gardner: Certainly the lowest range, instead of having start with a B, this one starts with an M for the first time. Bill that was 700 million to 2.5 billion Jim players at home.
Bill Mann: That's a huge range. Jim.
David Gardner: Agree or disagree?
Jim Mueller: I'll agree.
David Gardner: You're right to do so. Bill, seem to know his stuff. Jim, though gets the point, keeps it interesting. Bill for Jim, three, the market cap for a Sweetgreen is almost exactly the same market cap as task us has task us was 1.10 billion, Sweetgreen 1.16 billion. If you had to buy one of those stocks over the other, would you go with task us or Sweetgreen, guys? This horse race is starting right at the same point.
Jim Mueller: I would go with the Sweetgreen. I think software companies like task us, don't have as nearly a bigger moat as you might hope. Because software is easy to develop and there's a lot of smart coders out there. Once somebody knows that something can be done, competitions coming.
Bill Mann: I would say Sweetgreen also, although I would say that task us has a much higher probability of being bought.
David Gardner: Don't say we don't make predictions on the Market Cap Game Show. Thank you for those insights, guys. It is Bill 4, it is Jim 3. Let's move on now to stock number 8. Jim, do you own a car?
Jim Mueller: Yes.
David Gardner: Do you like your car?
Jim Mueller: Yes.
David Gardner: Do you love your car?
Jim Mueller: Define love.
David Gardner: I'm not going to. What I've learned is Bill Mann knows everything. Bill, could you give us a definition of love, please?
Bill Mann: I'm glad to hear that you don't love your car. Let me put it that way [laughs]
David Gardner: That doesn't fall within your range of the word love cars.
Jim Mueller: I'm not a car guy.
David Gardner: I knew I'm not either. But part of the beauty of owning a Tesla is that it doesn't even really make sense to be a car guy because it's not a car. It's basically a skateboard except instead of the board, that's the battery and four wheels underneath it and then just a box built on top of it driven by software. Bill, do you have a Tesla today?
Bill Mann: Yeah.
David Gardner: As do I. Jim, you haven't gone Tesla, have you gone electric?
Jim Mueller: No. The condo I live in doesn't have any outside the charging ports. It would require a really long extension coordinate.
David Gardner: Sure
David Gardner: That is a real impediment, but I'll say this. I love my Tesla and I've loved Tesla stock and therefore I loved it when Tesla popped up as one of our Fool 500. I will mention, occasionally we like to let people look behind the curtain here at the Fool. This is number 5 out of the Fool 500 in terms of the confidence levels the Motley Fool analysts have across all stocks for beating the market from here. That's just an interesting factoid on its own. But now turning back to Jim, who admittedly is not a car guy, and asking you, Jim, have you heard of Tesla?
Jim Mueller: Tell me more about that.
David Gardner: Well, I first picked the stock three weeks after Elon Musk came to Fool HQ and gave a talk and Bill interviewed him. And I so enjoyed that interview Bill that I was like, that's my next stock pick. Not so bad.
Jim Mueller: Your brother hosted a smackdown on Tesla with the, I think it was going to 10X from where it was at the time and a debate on it. We looked into the company all hands and I was on the anti-side and I have to say we won the debate.
David Gardner: Was there a time frame specified there?
Jim Mueller: I think it was 10 years or five years. I can't remember the time frame.
David Gardner: Whatever it was, it hasn't gone up as much as some people thought it might.
Jim Mueller: It hasn't performed as expected back then.
David Gardner: Well, I am going to ask Jim very shortly, Bill, for his market cap range for Tesla ticker symbol TSLA. But I'm talking to the guy who interviewed Elon Musk here at Fool HQ and also a person who's owned Tesla for a long time. Is this a stock that you own today or have ever? What are your thoughts about Tesla broadly, Bill?
Bill Mann: I have owned it in the past. I don't own it now, and I've been profoundly wrong about the stock for a long period of time so let's not listen too closely to me about this. But I've long thought that the assumptions that are being placed upon the company from a stock basis have been extreme, and that's just not the type of situation where I like to guess.
David Gardner: I totally can appreciate that. It has been just an absolutely fantastic investment. Though most of the appreciation has just been over the last four years. The stock went sideways, basically from 2014-2019 and all of a sudden it's shot from around $20 a share in the summer of 2019. This is all adjusting for splits to today's $273 a share. I don't think that's helping Jim, calculating it's market cap range.
Jim Mueller: I do know how many share there is.
David Gardner: In that case I may have helped.
Jim Mueller: Which I will prove I don't actually.
David Gardner: It is certainly one of the most fascinating companies of our time, whether we're talking about the stock and what's it's done and not done at different points or the product or the founder can't miss this one whether you've owned it in the past, due to today or not. It's worth observing. It's worth thinking about, and I would say it's worth knowing the market cap. Casually at cocktail parties, which is what we set you up to do when we play this game every quarter. You're all set up to go. Do you realize what the market cap of Sweetgreen is? You are the only one at the cocktail party who knows that. You may not be Jim, the only one at the cocktail party who knows Tesla because a lot of people follow Jim.
Jim Mueller: You don't listen to me.
David Gardner: What is your stated market cap range for Tesla, ticker symbol, TSLA?
Jim Mueller: Five hundred and two. I'm going to pull a page from Bill's book of not-round numbers, 502-623 billion.
David Gardner: 502-623 billion players at home. Bill Mann, agree or disagree?
Bill Mann: It's an $815 billion company so I disagree.
David Gardner: Depending on where it fluctuate the last [laughs] hours so you may haven't exactly spot on. I'll say this, Bill may have prepped.
Bill Mann: I said don't listen to me.
David Gardner: That gives Bill a 5-3 lead, it's not over yet, Jim, but you would have loved to have that one. You didn't have a bad range but Bill knew his Tesla [laughs] and I heard at 811.08 billion when I checked just minutes a go. 815 billion pretty darn good guess.
Bill Mann: I was off by several billion dollars.
David Gardner: It doesn't usually work in this game, but with some stocks it does.
Jim Mueller: One percent, man, what's wrong with that? [laughs]
Bill Mann: Look, several billion dollars is a lot of money. I don't know about you, Mueller.
David Gardner: Bill, were you talking about Tesla on the morning show it all this week or do you follow actively it's market cap?
Bill Mann: I follow actively. That was slightly unfair, but thank you. I will take an unfair granted. [laughs]
Jim Mueller: I've made money on the company. I've lost money on the company and I just lost a point. So I really don't like to [laughs].
David Gardner: Understood. Well, it is Bill 5, Jim 3, which means you still have that opportunity for a tie, Jim, as we move to stock number 9. Bill, Warren Buffett gets imitated a lot, wouldn't you say?
Bill Mann: A little too. Well, he gets name-checked a lot for sure. I'm not sure how many people have successfully followed him, what he's done.
David Gardner: He's got a lot of people who I think rightly so love him, adore what he's done. If they've owned Berkshire Hathaway stock for long periods of time, they love him as investors. A lot of people admire his character.
Bill Mann: Absolutely.
David Gardner: They also mimic in some ways the business that he's created. Can you think of any companies that you think of as mimicking Warren Buffett's Berkshire Hathaway business.
Bill Mann: We talked about Constellation Software earlier. That's absolutely one.
David Gardner: For those who don't know Constellation Software, this is a stock that you've mentioned a lot over the years. Bill Mann fans already know, but I think most people don't recognize the name Constellation Software give us the skinny 30-60 seconds on how Mark Leonard software company looks a little bit like Berkshire.
Bill Mann: Well, it's a Canadian company which actually doesn't help.
David Gardner: That's really the wrongs start said forth.
Bill Mann: I was committed to starting with it being a Canadian company regardless of what you asked.
David Gardner: Oh, Canada.
Bill Mann: They are very disciplined in how they go about buying other companies. He pays himself very little money, which is very much in the Warren Buffett mold, pays himself just a couple of hundred thousand dollars a year because he knows full well that his stock ownership is what is going to be the greatest accrual of his own wealth and that keeps him very aligned with shareholders. They just have a very much a discipline about what it is that they want to buy, how much they want to pay, and they really want to keep the existing management teams in place. They don't want to comment and mix things up.
David Gardner: Nice.
Bill Mann: They want the companies that they're buying to do exactly what they're doing now, but then send them money to Toronto to be reinvested.
David Gardner: Does Leonard call out Buffett? Does he say we're doing what he's doing?
Bill Mann: He has mentioned Buffett before. They tend to invest in much smaller companies as compared to the size of Constellation software. He's his own man, which I think is great.
David Gardner: Sure.
Bill Mann: But in a lot of ways. He has mentioned Buffett before as someone who he has learned from.
David Gardner: Any other companies come to mind as so-called baby Buffets.
Bill Mann: There's one in particular, and I suspect I'm being led to mention Boston Omaha. [laughs]
David Gardner: Ticker symbol BOC. I'm laughing a little bit of this because Jim, we played along last quarter with these various stocks. I think it may have even been the same slot in the show and randomly, Boston Omaha Corp has just shown up again on the Market Cap Game Show, but do continue, Bill.
Bill Mann: Boston Omaha group and the Omaha, I believe it's based there. But they buy up small properties. They were also in the insurance business. They have outdoor advertising. They own stakes in a number of different small, really interesting companies. A company that provides hangars for private planes in Phoenix and other places. They are looking for companies that have excellent returns on total capital, and they very much named Jack Warren Buffett.
David Gardner: They do very much named Jack Warren Buffett. Looking at their website right now, greetings from Boston Omaha. At the top you see that the company operates four businesses, Broadband Telecom, outdoor advertising with billboards, bond surety insurance, and Boston Omaha asset management, and so it does sound somewhat similar. And at different points over the years this stock has been picked up. We might have recommended it here or there. I haven't followed it very carefully, but I'll say this. We're all about to hear what the market cap is according to Bill Mann's best estimate. The market cap for ticker symbol, BOC, Boston Omaha Corporation.
Bill Mann: I'm going to say 700 million to 900 million.
David Gardner: That is a very low, very tight range. Earlier you were off by billions on your Tesla call. [laughs]
Bill Mann: I might be off by billions again and it would be way more interesting.
David Gardner: So 700 million to 900 million, Jim, a little bit intimidating because it seems like Bill knows this company over the years. Bill might know what he's talking about listeners at home. Jim, do you want to agree or disagree with 700-900 million?
Jim Mueller: This was one of the ones last time?
David Gardner: It was, check it.
Jim Mueller: I have no idea what it was last time.
David Gardner: That makes it even better. Go back and listen, it was March.
Jim Mueller: Bill's ahead 5-3. With all his knowledge about the company, is he's sitting a tight range?
David Gardner: Yeah. There is gamesmanship in the Market Cap Game Show.
Bill Mann: This is [inaudible] I can clearly not drink the one.
David Gardner: Well, are you sure? Great scene.
Bill Mann: Australians are not used to being trusted.
Jim Mueller: I'm moving with the first one. That's awfully tight, I'm going to disagree.
David Gardner: He's right 600 million. Bill was gaming the game and Jim figured it out, plus one to you Jim and to everybody who said disagree. Bill did throw down another great market cap range, 700-900 million but as of this morning anyway, it was 624.1 million and so that was indeed outside the range making it a dramatic conclusion as we now move toward stock number 10. Jim Mueller, how much stuff that you acquire on a monthly basis comes from e-commerce?
Jim Mueller: Counting groceries and stuff, maybe 10%.
David Gardner: You use Amazon, I'm assuming Jim?
Jim Mueller: Yeah.
David Gardner: Do you use any other common go-to shipper, deliverer, producer? All Amazon all the time?
Jim Mueller: It's Amazon, yeah.
David Gardner: Bill, what about you and e-commerce?
Bill Mann: Probably about 10%.
David Gardner: I can see, I'm clicking buttons and buttons, stop more than that guys are. I thought I was normal. Now I'm thinking I'm the weird one.
Bill Mann: I don't know, gave also.
David Gardner: I would say like 70% of the things that I buy.
Jim Mueller: There's two things, one, we don't buy a lot of stuff, and two, we have a small condo apartment. There's not a lot of room to store stuff. I mean, you're famous for having one closet, two closet full of board games.
David Gardner: I have a lot of board games in my house. [laughs] I don't know if I'm famous for it or whether I'd want to do.
Bill Mann: You are now.
David Gardner: Well you know what? I'm happy to be famous for that. I do have hundreds and hundreds of board games. It's true Jim. I bought almost all of them online [laughs] not at my friendly local games store, but apparently, I'm the only one who is doing this.
Bill Mann: See as a family, I think we probably buy a lot more. My wife is a seamstress and so fabrics and things show up at our house all the time. [laughs].
David Gardner: Did that sound angry? [laughs].
Bill Mann: No I'm so delighted.
David Gardner: Sticking with some generalizations, would you say that the far east would typically index higher in terms of its use of e-commerce than the United States?
Bill Mann: Unquestionably.
Jim Mueller: Yeah.
David Gardner: Now, more toward the stock that I'll be asking Jim about the market cap very shortly. What about very large e-commerce companies from the east with founders who are, it's unclear where they are right now.
Jim Mueller: I'm just going to give up now because Bill knows China inside out
David Gardner: Sometimes when Bill knows it best that's when you've scored the +1 Jim. Chin up, although you will be specifying a market cap range for the ticker symbol BABA. It is the Alibaba Group. Now, I think this was picked at random. I think all of us around the table know that Bill knows this company best. In fact, I would say Bill, we could combine Jim, my knowledge and yours about Alibaba and Bill would maybe 10X that.
Bill Mann: Does it mean I know the market cap though?
David Gardner: Do you know the whereabouts of Jack Ma?
Bill Mann: Yeah. I was hanging out with him the other day.
David Gardner: That's why I love having you in the studio.
Bill Mann: He's back.
David Gardner: He is back?
Bill Mann: Yeah.
David Gardner: Jack is back?
Bill Mann: Yes. No longer officially really involved with the company and I think recently the new Chief Executive said that he was stepping down.
Jim Mueller: Has Ma been forgiven or is he on probation? Or do they even say that?
Bill Mann: Since I would like to go to again to China I'm not sure I'll answer that question [laughs] I don't want to be at the embassy there like..
David Gardner: Daniel Jong is today the CEO of the company and the Executive Chairman. Jack Ma of course, the storied founder and by all accounts, hitting pretty good guys. I would say, treated fairly poorly in recent years, but I'm really not deeply steeped in this one. More importantly, Jim, I'm starting to think about the market cap of Alibaba and I will toss you a bone here. This may or may not help. As of 2022, Alibaba had the ninth highest global brand valuation, not market cap, but the estimate of the value of its brand top 10 worldwide.
Jim Mueller: It's amazing.
David Gardner: Let me now formally ask stock number 10. Jim, you are behind by one. There are listeners at home who have nine points, who are beating both of you guys. There are also people still scratching for there first point. Help them out here Jim Mueller. Give them a good fairly accurate mark a cup range, tighten up that Bill wont get it, for ticker symbol BABA, which is the ticker for Alibaba group.
Jim Mueller: Seven hundred and fifty to 820 billion.
David Gardner: Seven hundred and fifty billion dollars to $820 billion. Bill Mann, plays it at home, inside or outside that range.
Bill Mann: It is below that range, but that was a really solid range to put out there. I might be wrong and this be terribly embarrassing if I was.
David Gardner: Let me just say that was so gracious of you, first of all, Bill, win or lose, to give Jim a compliment at the end. You know a little bit of how to fool to Jim who is presented with a very large company, but not nearly as large as [laughs] Jim estimated This company's market cap $238.57 billion. I think you were either not clear yourself Bill or far too gracious to Jim with your concluding compliment.
Bill Mann: No, I would say this, Alibaba was on track to be a trillion-dollar company, and so it is perfectly reasonable. In a world in which $500 billion and a market cap company is a really thing, Alibaba is a reasonable company to guess that it is at that range. For someone who doesn't know, I thought it was a good point to start.
David Gardner: I'm not meaning to make live with it, in fact, I think Jim did a standard job once again on this market cap. I wouldn't know that Alibaba went from $60 a share, so to start at 2016 to touch over 300 in late 2020. This is a stock that was basically a five-bagger.
Jim Mueller: How is it now?
David Gardner: If you played it right from 2016-2020, pretty much straight down since that moment, that peak in the fall of 2020, the stock has declined from about 320 down to its present state, just below 90. This is a company that is now less than a quarter of a trillion that, Bill, as you said, was getting near being one of those trillion-dollar babies.
Bill Mann: Yeah.
Jim Mueller: We should've been playing this game like.
Bill Mann: I'm going to be right.
David Gardner: We actually were playing this game in 2021.
Bill Mann: We're playing a new game called retrospective market.
David Gardner: Well, the final accounting is then this. Bill Mann six, Jim Mueller four, but both Bill and Jim and I know that we're not playing this game for each other, we're playing it for you. How did you score? Dear Fool, dear listener at home, we hope that you outscore all of us. The purpose of the Market Cap Game Show is to make more popular. I've never going to say Bill, it'll be as cool to the kids in social media. But market cap, a close second. If that's the mountain that were climbing, and it happens one quarter at a time and you both distinguished yourselves again as celebrity guests, Bill Mann, congratulations. Jim Mueller, congratulations. Again, Bill, Jim and I congratulate you for sticking with us, stem to stun from FedEx to Alibaba Group to close and close out this episode of the Market Cap Game Show. Jim, great to be with you.
Jim Mueller: Thanks David.
David Gardner: Bill, great to be with you and congratulations.
Bill Mann: Thank you, David. I will wear my crown proudly. I scored more points than I did last time.
David Gardner: You did.
Bill Mann: Is there a crown?
Jim Mueller: We'll make one for you.
David Gardner: It definitely is jester cap-shaped. Well, again, thank you to my guests, Bill and Jim. A quick reminder next week is the Rule Breaker Investing mailbag, RBI at fool.com our address. If you have thoughts about AI, we really didn't speak to AI too much this episode guys, but it was AI month for this podcast and I would love to field some mailbag items around artificial intelligence next week. Then of course, the week after it is financial freedom week. Well, it is independence day here in the United States of America. But on this show, I'm asking you, what did you do in the past year to create more financial freedom for yourself or for others? How do you measure that? That's the question we'll be discussing during freedom weak in two weeks. In the meantime, Fool on.
Bill Mann has positions in Berkshire Hathaway and Constellation Software. David Gardner has positions in FedEx and Tesla. Jim Mueller, CFA has positions in Chipotle Mexican Grill and MarketAxess and has the following options: short July 2023 $115 puts on Tesla. The Motley Fool has positions in and recommends Airbnb, Berkshire Hathaway, Boston Omaha, Chipotle Mexican Grill, Constellation Software, FedEx, MarketAxess, Pfizer, Seagen, TaskUs, Tesla, and Walmart. The Motley Fool recommends CME Group and Sweetgreen. The Motley Fool has a disclosure policy.
