Roaring Kitty has returned, and so have the memes. GameStop stock is also back, currently up 69%. Qualtrum notes this miraculous surge in GameStop is due to a social media post by Roaring Kitty. And Gamestops. Not the only stock up today. Other meme stocks like AMC is up 41% today, again because of a post from Roaring Kitty. Now, in case you missed the last go around and you're somehow new to the market, Roaring Kitty has become a bit of a legend. I also.
Believe the current price of the shares demonstrates that I've been right about the company. A few things I'm not, I'm not a cat. I'm not an institutional investor. And that's right. This is really him being summoned in front of Congress, talking directly to a congressional committee clarifying that he's not a cat. This story was soon made into a movie called Dumb Money where it shows how he was a you tuber that started making videos on GameStop.
His thesis was he believed the company was undervalued. It became legend and started to get spread across social media, primarily Reddit, while a bunch of hedge funds, specifically
Melvin Capital, were short. GameStop Roaring Kitty and his crew of memsters decided to go along the stock and not only go along it, but they pushed the price up through every means possible, through leverage and through options, causing an epic short squeeze where Melvin Capital lost billions of dollars on this one single position and forcing them to shut down. Now, many people saw the movie that depicted all of these
events. It was called Dumb Money, and it even trended on Netflix getting up to the top ten watch movies of the day. But after the movie, it seemed like events started to simmer down a bit. Keith Gill, the person behind Roaring Kitty, was reportedly worth $50 million. He had one of the best trades of all time, turning $50,000 into 50 million, and while it seemed like he was done, $50 million after all, is far past retirement money. He can basically do anything he
wants. And after all of these events, for the next three years, we didn't hear anything. Roaring Kitty, After this epic battle between retail investors, dumb money and the hedge funds, played out to the ultimate victory of the retail investors, it seemed like Roaring Kitty had moved on. He'd accomplished his goal, he's made himself very wealthy in the process, and things went dark for a while. Roaring Kitty didn't post at all on social media. He didn't post until he did.
After three long years, Roaring Kitty made his first tweet and it was this. An image of a gamer going from a relaxed position into focusing mode, leaning forward with intention and concentration. This post alone was viewed 17,000,000 times. So far has 10,000 comments and 83,000 likes. But after this post, it didn't stop there. Roaring Kitty has been putting out every minute a stream of fresh memes for the community to devour. Only an hour later, he posted this. Fine, I'll do it myself.
Oh, Oh yeah. Let's go. He's splicing together Marvel films and X-Men and overlaying music to show that he's back. Now we don't know exactly what's going on or what his specific intentions are, but we know one things for certain, meme stocks are back, and today they're back in a very big way. I think in the spirit of meme stocks, we're going to look over the fundamentals of GameStop and we can look at how this company's been developing over
the past three years. Now of course, we also have some breaking news on the AI front. We have Sam Altman, the leader of Open AI. They're currently having their Open AI Developer day. We're going to take a look at all the new stuff that Open AI has been working on. We also had some breaking news from Bloomberg that Apple is nearing a deal to work directly with Open AI to put ChatGPT on
the iPhone. We'll be going over the specifics of this deal, how this would work in the iPhone and my thoughts on how this would affect Apple stock. And then finally, we also have some news that S&P Global, well, there's rumors that S&P Global is looking to sell off their mobility unit. We'll take a look at S&P Global and see how selling off that one unit of business could impact the company. So obviously this is going to be
a very full episode. If you like this type of content, make sure you subscribe to the channel. Now for those of you that are new here, this is a long term value oriented investing channel where I buy companies that I consider to be the best companies in the world. I have an entire investment philosophy that I've outlined over an 8 page PDF. You can download this for free and part of it I outline that I buy compounding machines.
Compounding machines are the most dominant, powerful companies in the world that have unassailable moats, and they have incredible organic growth. I highlight the attributes that I look for in these specific companies. I buy a concentrated collection of them in this single portfolio and reinvest back into them during any dip. The purchases that I've made recently in the financial category are all going in the right direction.
These companies compound their free cash flow per share and their earnings per share and their stock price eventually follows. In the tech category you find some more traditional tech companies. I like big tech and I've been overweight big tech for years. In this portfolio I've held Apple and Microsoft for around five years and in both of them I have around the same return, $24,300. A new addition to the portfolio is Salesforce. I just recently bought into this
one this year. I'm still confident over time that my Salesforce by will prove to be an attractive one. I bought into world class restaurants, ones that are taking market share from other ones that aren't operated or managed in the same way. In the consumer category. I only have one retail stock, which is Costco. Costco is a very unique retailer.
It's a company that's gone up to an incredibly high valuation, but I still hang on to this one because given the fullness of time, I still believe that Costco will be a prized asset across the world in real estate. I also hold only one company, Vici Properties, which owns the majority of the Vegas Strip. It's a very simple company, but the returns on this one have been diminished by rising interest rates. And then in the smallest category we have the
industrials. I believe Canadian Pacific is the best option out of all the Class 1 railroads. It has the most significant growth and I believe it has the best leadership. The commonality between these holdings is the fundamentals behind them.
Not only do these companies have great stories, you can attach great narratives of long term secular growth, of great leadership of great products and services, but they also have the fundamentals to back it up. When you look over these companies, you come to the conclusion that they're all very strong companies and I believe that's led to the success in this portfolio and the performance so far.
But I realize that not everyone wants to invest like I do, and some people have more of a gambling spirit and right now the gambling spirit is coming back. CNBC has recently highlighted the eagerness of market participants to get back into high risk positions. Meme stocks and options are back. Zero days to expire options have climbed in popularity among everyday investors. These are one day bets on the direction of the market, which can offer outsized returns,
rewards and also outsized risk. Last week, retail activity and zero DTE options, as they're known, saw the biggest weekly sales since the beginning of the year. That's according to JP Morgan. Investors are increasingly betting on one day options, meaning the investors are betting on the price a stock will trade within a single day.
Now you can call this gambling, and I think that's the appropriate term for it because when you're betting on a stock to rise 20 or 30% in a single day, unless you have very solid reason to bet on that, it's a gamble. And in most cases investors that are chasing these high risk plays like the mean stocks are simply gambling. But I don't believe they're the only ones gambling in these positions. If we look at GameStop and see what's happened over the past three years, it paints a picture
of the fundamentals. The revenue since 2020 has gone from 6 billion down to 5 billion. Now. I actually consider that pretty good. It's declined, but not quite as much as I would have anticipated. I would have assumed that Gamestop's revenue would be falling faster. The free cash flow is all over the place, some years slightly positive and then some years a big negative. But overall the free cash flow does look negative. GameStop still has a lot of
cash. They have $1.2 billion with only capital leases to pay. So GameStop has time. Even if they're not making they can operate for years before they run into real issues. This company has no significant Moat and competitors like Amazon are slowly eating away at their market share. But GameStop is still surviving and they're not going to go out of business anytime soon. So it is true that these aren't really investors investing in GameStop. These are gamblers.
The same type of gambling spirit that you would have at a sports game or at the Kentucky Derby is being brought to GameStop. But they're not the only ones gambling on this stock, because surprising enough, as if Wall Street has not learned its lesson, there are still huge funds shorting GameStop. In fact, GameStop is one of the most heavily shorted stocks in the market. GameStop has a percentage of float that's short at 24%, and this is what I really can't
understand. Who in their right mind thinks it's a good idea to short GameStop? What fund manager is making that decision? What individual investor is making that decision? You're shorting a company that's known for its incredibly explosive meme potential and its history of causing the implosion of one of the most well backed hedge funds in the market. They already destroyed Melvin Capital, but it seems like Wall Street hasn't had enough. It seems like they need to get
their hands slapped again. AM CS not a good business and it's a company struggling with long term secular trends of streaming. So it's a stock that attracts short investors, people that want to hedge their portfolio with some type of instrument to go short on. And many of them are inevitably picking AMC as a go to short. AMC currently has around 19% of their float short. Now again, who is it that thinks this is the stock to short? Sure, the fundamentals look terrible.
Sure, the valuation could go down. There's a short thesis for it. But you have to put that in context of this being one of the few stocks that has incredibly explosive meme potential. If you're shorting AMC or GME, you're playing with fire. You're not just playing with fire, you're playing with dynamite. One wrong move and you blow yourself up. I understand what the meme investors are doing. I understand the apes investing in AMC. They don't care about the fundamentals.
They want to stick it to the hedge funds. That makes sense. Their story is clear. Their intentions are clear. What I don't understand is the possible rationale for an institutional investor for a large fund to take yet another short position on a stock where one ominous tweet by one person can send that stock up 100%. In this situation, the dumb money is not the retail investors or the apes or the people investing in these companies with poor fundamentals.
The dumb money is the institutional investors, the ones that think it's a good calculation to take a short position on stocks with this type of explosive online social media attention. So out of all the dumbest investors in the world, at the very top of that list right now are the ones shorting GameStop. Now moving on, we finally have the demo from Open AI. This is something that was
long-awaited. A lot of people want to see the next iteration of Open AI and they time this demo right before Google's IO developer conference. So they're trying to take some Thunder from Google, which is of course one of their primary AI competitors. Now, I did watch the whole demo beginning to end. I watched all of the different things that they showed and overall I think it was a pretty good iteration. I thought it was a pretty good demo of the different
capabilities. The one thing that they're really leaning into more than anything is basically trying to copy the movie her. Have you ever seen that movie? It has Joaquin Phoenix as a main character and he's kind of like a lonely guy, you know, he he's by himself. And then he gets an OS, an operating system that has an artificial intelligence companion. It's like his new girlfriend. He actually starts to fall in
love with her. And she's voiced by Scarlett Johansson. So you can imagine Joaquin Phoenix forming a relationship with an artificial intelligence operating system that is in the voice of Scarlett Johansson in this movie, which was complete fiction and something you thought, oh, maybe that will happen one day. Well, it seems like that's starting to happen and maybe sooner than we think. Here's a live demo of the new Open AI technology and notice the similarities.
Hey, how's it going? Hey there, It's going great. How about you? I see you're rocking an open AI hoodie. Nice choice. What's up with that ceiling about? Are you in a cool industry style office or something? Now, right off the bat, you may question that he's talking to a real human and he's not. That is AI. And you'll notice that different donations, the conversational style. She sounds a little bit almost sultry, like she's a little bit flirting with him to some
degree. The whole conversation seems way more organic than anything we've heard. It's like they took Siri, which sounds very robotic, very rudimentary, and they took that to a whole new level. Well, can you take a guess at what I might be doing based on what I'm showing you here? Hmm. From what I can see, it looks like you're in some kind of recording or production set up with those lights, tripods, and
possibly a mic. It seems like you might be gearing up to shoot a video or maybe even a live stream. Yeah. In fact, we've got a new announcement to make. That's exciting. Announcements are always a big deal. Judging by the set up, it looks like it's going to be quite the professional production. Is this announcement related to Open AI? Perhaps it is. And in fact, what if I were to say that you're related to the announcement or that you are the announcement?
Me. The announcement is about me. Well, color me intrigued. Are you about to reveal something about AI, or more specifically, about me? As a part of Open AI, you've got me on the edge of my well, I don't really have a seat, but you get the idea. What's the big news? What this reminds me of was Google's Gemini demo that they originally did, where they tried to show off how conversational it was.
We found out a day later that a lot of that was prerecorded and prerehearsed, so it was immediately not as impressive as we thought. Now, Open AI may be doing the same thing, but we have no evidence to believe that so far from what they tell us. This is a live demo. Mike. Mike She wonders. If whales could talk, what would they tell us? They might ask how do we solve linear equations?
There it is, taking the 2 languages and seamlessly translating it back and forth, which granted, that is something we've seen before with different tools. Google can do that, for example, But this sounds far more organic and it seems to work more seamlessly than what we've seen so far. They also illustrated how now they can actually use the camera and it has video mode. Here he is writing down a math equation and he has the Chachi BT4 camera pointed at the equation.
Ah, I see it now. You wrote down three X + 1 = 4. Again, this is another illustration of the similar type of thing we saw Google try to do a couple months ago, but they completely botched their demo. It was illustrated right after Google did their demo that a lot of it was prerecorded. So it seems like Open AI is doing a lot of the same things, but it's also improved a little bit on top of that.
And unless their demo turns out to be fake, unless we have some breaking news that Open AI completely fabricated this demo, it seems like they're doing this for real now. There was rumors that Open AI was going to announce a direct competitor to Google. Those rumors quickly dissipated when Sam announced that he's not announcing A competitor to Google. So no competitor to Google in
this Open AI conference. But even though they're not competing with Google, they may become allies with Apple. We had some breaking news over the weekend that Apple's narrowing a deal with Open AI to put ChatGPT on the iPhone. Now in this developer conference, they said nothing about this deal. So this is completely a rumor, and they're not commenting on it. But we know from different sources that this deal, this
potential deal is getting close. They say that Apple would be doing this deal in a broader push to bring artificial intelligence features to its devices. And we know this has been a stated goal from Tim Cook. He says that he's leaning in to artificial intelligence. The two sides have been finalizing terms for a pact to use ChatGPT features in Apple's iOS 18, the next iPhone
operating system. Apple also held talks with Google about licensing that company's Gemini chat bot, but those discussions haven't led to an agreement. Now, there's a lot of speculation of why didn't Apple move in with this agreement with Google, and I have a couple different ideas, a couple different things that I think
could impact the decision. The first reason that I believe Apple would choose to partner with ChatGPT over Google is because Apple already has a significant and lucrative agreement with Google over defaulting their search engine. And think about this for a minute. If Google also not only had their defaulted search engine, but was also licensing all of their AI to Apple, that's another huge agreement with these two companies, and the first agreement's already under government scrutiny.
Google's such a big company and Apple's such a big company that any big agreements they do together is going to raise the attention of regulators. So I believe one of the potential reasons that Apple may avoid doing further deals with Google is simply to avoid greater regulation. The other thing that I think could be a reason is because Apple is, after all, competitors with Google. They don't want Google to singularly become too powerful and become too dependent on them.
By doing a deal with a different company, they diversified the different companies that have power in this territory. If this deal goes through, it would feed a tremendous amount of data to Open AI. All these billions of devices that Apple has now feeding new information to Open AI to better train their models. Now of course, the ultimate reason that they're leaning in on Open AI over Google is unclear, and this is all speculation.
Both the companies, Open AI and Apple, declined to comment on these rumors. Apple stock is rising after this potential agreement and I think for good reason. So far we've heard more and more negative news for Apple, greater and greater regulatory oversight. We've also had Warren Buffett trimming his position and the stock at more of a full valuation. And this news with a potential, a ideal seems like a real game
changer. This is something that could uniquely strengthen the Moat and the ecosystem of Apple. The ecosystem of Apple is the mode of Apple. As long as they have their seamless integration and their ecosystem where their devices work Better Together than apart, the company will continue to flourish. If the ecosystem gets torn down, ripped apart, the devices no longer work seamlessly with each other, then Apple no longer can
protect its growth path. And I view this potential deal with Open AI as a positive iteration with their ecosystem. I think this actually has a bigger potential impact on Apple and the future of the stock then their new Apple Vision Pro headset. So overall I think Apple's a winner in this and if this deal goes through I think Google unfortunately is a small loser in this situation. Now finally we get to one of my largest positions and a move
that they may be making. S&P Global is currently my very biggest position, an $89,000 holding. Apparently the rumor is that there's three different people with knowledge of the matter, so they have three different insiders that have leaked that they're weighing the option of selling the mobility business. Including a full sale. So the entire segment, they're weighing, selling that off. They say that they might sell it to private equity firms that have expressed interest in the unit.
And S&P Global themselves do not feel that the mobility segment is a core part of their business. So again, there's nothing set in stone here, but we know from three different insiders that this is a possibility. Now again, if we look at these segments of business, the mobility business is the one they're considering selling.
If we look at this business in isolation, it is the smallest of all their different businesses and they recently acquired it in a transaction in 2021. So this is a part of the business where again it's focused around cars and they own a website like Carfax. And I agree that I don't think it's the most significant or important part of their strategy. There's a lot of different things S&P Global could do with the $12 billion they get from
the proceeds. For example, they could pay down a lot of their long term debt, but I don't think they're going to do that. I believe the reason the S&P Global isn't paying down their debt is because a huge majority of it is financed at around 3%. They have an incredibly low interest rate on their debt. They could make more money just investing in treasuries, so I don't think they're going to use the money to pay down debt, but they can certainly put it to use
other places. Now again, I don't know exactly if they're going to do this deal, but if they are, it's something I'm OK with. I don't see any problems with them selling off mobility. It's not a core part of the business. It's not what I consider the most attractive parts of the business. Now I would be concerned if they were selling off the indices business or the market intelligence or the ratings. Those are three segments of business that I consider to be
very important to their future. I believe commodity insights and mobility aren't quite as important, but we'll keep an eye out of how this develops and see what they ultimately decide to do. Now that's all for this episode. If you want to see more content like this with real investing, Real news, make sure you subscribe to the channel. Other than that, I'll see you in the next one.