Welcome back everyone today on the Joseph Carlson Show. My Portfolio is back to all time highs, reaching a value of 728,000 in total, with 241,000 of that being gains. I own a concentrated portfolio of carefully selected stocks, most of which are doing quite well this year. In the financial category, my largest holding, S&P Global's up 14% year to date. MasterCard is up 11%, Intuit is up 9% and Moody's is up 23%. In my tech category, Microsoft is up 13%. Salesforce is is up 3% and
Apple's up over 20%. In the consumer category has been one of my biggest winners of the year, which is Costco. This company is up currently 33.7% year to date. So Costco has been a massive outperformer and the gains have really come in for this company. Now, we also have a new holding booking holdings, which we'll go into later, but the performance of this one's basically flat so far. In the restaurant category, we have another massive winner.
This is the stock that has gone up the most this year aside from Chipotle, which I sold out of. So Chipotle I sold, I locked in the gains. Texas Roadhouse is my next best performing stock this year and it's currently up 45% year to date. Now in the real estate category, I only have one holding. This one has had a bit of a recovery over the past month. VICI has underperformed so far this year, but there's reason to be bullish on this stock.
And then finally in the railroads, we have another underperformer which is Canadian Pacific. This company is flat year to date. Overall, the performance of this portfolio has been strong with every company either flat or moving up into the green. Every company has been growing their earnings and free cash
flow per share. And with the portfolio moving up again to all time highs, I think it's time to look at the valuation and the investment case of each company and go over three different companies that I'm actively buying. So we'll be reviewing all of that in today's episode. Now we also have some news to get into. This story from Disney is one of the most absurd, ridiculous, unreal things that Disney has done.
They're trying to throw out a lawsuit of a wrongful death in one of their parks because the plaintiff agreed to Disney Plus streaming services terms and conditions. That's right, The Associated Press is saying that the wrongful death suit against Disney serves as a warning to consumers when clicking. I agree. We'll be looking at the details of this case, looking at Disney's defense, and seeing why this is unlikely to hold up in
court. Now we also know that Bill Ackman is a little happy today because his arch nemesis Carl Icahn has reportedly agreed to pay $2,000,000 to settle an SEC investigation for not having proper closures with the amount of money he owed different parties. We'll be looking into what crime Carl Icahn specifically committed and how his business has been faring over the past year. Now finally, we also have news that Bloomberg is reporting MasterCard is planning to cut 3%
of its staff worldwide. So MasterCard is cutting down on staff. A lot of people have been posting on Twitter, posting online that this isn't good for the company. It shows that things must be slowing down for MasterCard. We'll be giving some proper context here with the amount of employees MasterCard has hired, how fast the growth rate has been, and what this actually means for the company. So we have a lot to get to.
Let's go ahead and jump in. Before I go into the three that I'm buying, I want to go into one of the ones I'm currently trimming. And yes, that stock I'm trimming currently is still Apple. Apple historically has been one of the largest holdings in My Portfolio, but now it's currently one of the smallest. In fact, Apple is the second to smallest holding in My Portfolio, the current value of which is 35, $1400.00 with 31,600 in the green.
Apple has been a massive winner for the past five years, but I don't believe Apple will have the same success over the next five years. The valuation is much higher than it was five years ago, so the starting point for the stock requires even greater growth than the past five years to obtain the same results it had previously. But not only is the valuation starting much higher, but the growth is expected to be much slower. The total revenue of Apple has been at a standstill for the
past two years. You can see the enormous spike in growth in Apple. During COVID. There was a big amount of pull forward in demand, and then you see the flattening of demand where Apple is having a tough time growing at all. The exuberance in the stock price of Apple is primarily due to their AI story. Investors are now buying into the idea that Apple's going to be a massive AI win and that will encourage a new massive
upgrade cycle for their phones. The problem is, even if Apple does have a great upgrade cycle, a lot of that upgrade cycle is already being priced into the stock. And this is something that the analyst Craig Moffett pointed out when they introduced their coverage of Apple. What's been interesting to us as we we have have dug into this over the last few months is. Once the.
The, the, the, the strategy around AI and the contextual awareness strategy was built in. It was largely confirmatory for the market that has real value. But certain risks like the one you point out, the, the risk to the Google tag, as it's called, the revenues for search was was largely brushed off by the market. And So what we highlight in this report is that and a number of other risks that I would say, look, don't, don't change the fact that we are relatively
bullish about the AI strategy. But that there are a lot of issues that that, that make it difficult to see how the stock meaningfully outperforms not just the the broader market, but in particular it's, it's core, the rest of the Magnificent 7 that to which it is so often compared. So I likewise, I'm not bearish on Apple. I don't believe the stock is going to go down. But I agree that at this point it's difficult to see how Apple meaningfully outperforms the rest of the Magnificent 7.
There's other companies that I think have a higher chance of outperforming. There's three companies in particular that I believe have a good chance of outperforming and I've put a significant amount of money behind each of these. The first one is in the consumer category. Booking Holdings is a company that I believe could significantly outerform, and I've bought a large osition into this company over just the past two months.
Now it's traded up and down. I've bought it high and low to average out my buys over the past couple of months. Right now, the holding is flat. We are down $70.00 on a $46,000 position, so it's down .22%. This is trading around by the minute, ebbing and flowing from green to red. Booking Holdings is the dominant online travel agency. It has significant demand for restaurants, hotels, and taxis.
So this company's a partner with a lot of other companies and they stand as a digital platform that has a large concentrated leadership, a position in this industry. Now some people are concerned about the potential of going into recession. At some point we will enter into a recession and when we go into recessions, some people will cancel their vacations. That happens every single time. Most of the customers that use Booking Holdings make above
$80,000 per year. Their income is more resilient. They're actually less affected by recessions than people think. So this company still can do well and be profitable during a recession. And overall, recessions are temporary. Recessions are short term in nature and over the fullness of time they make little difference in businesses like Booking. Revenue has been climbing steadily for this company at a rate above 15% per year.
Even in the most recent quarter, the gross bookings by merchant and agency, the amount of revenue this company is making by their bookings has reached an all time high, which means now more people are planning vacations than anytime in history. And this isn't just because of an increase in prices. This isn't just price increasing. We also have volume increasing. The amount of room nights sold has also increased to an all
time high. I'm betting on booking because it's a strong consistent generator of free cash flow. Looking at the chart over time, it shows a very consistent grower. The only time this company's really been materially affected is by the pandemic, but that's because travel was restricted by a one time event unlikely to repeat itself and they did not have to take on debt to fund themselves through the pandemic. Now the free cash flow is
reaching an all time high. When we adjust this by the of free cash flow per share, it shows even steadier growth because the company does significant share buybacks. One share of Booking generates $218 of free cash flow over the course of a year. So I've put some money behind this holding. It's now flat. We get to see what direction it trades over the next couple of years. I don't judge my buys on how
they do in the first year. That's too short of a time period, but I will be judging this holding over the next four to five years. The second holding that I'm still buying into is Salesforce. I haven't forgotten about this company and even though I'm in the red on this company and it traded down after their most recent quarter, I'm still very bullish on Salesforce. It's currently a $56,000
position with $3000 in the red. I believe that Salesforce was unfairly sold off after the most recent quarter. The company's fundamental performance was great. They did exactly what they told investors they were going to do. They told investors that they're going to focus on efficiency, they're going to focus on profits, and they're going to focus strong on free cash flow. That's exactly what they told investors a couple quarters ago. And sales force delivered on
those promises. The stock price after the quarter had an abrupt fall. It went from $278 per share down to 218. So we had this huge fall in stock price and slowly it's recovered over the past quarter, but I don't believe the stock deserved to trade down at all. Salesforce put up strong revenue growth. It grew 11% year over year on a trailing 12 month basis. Every segment of the business is growing the sales cloud, service, cloud platform, marketing integration and
analytics. The most confusing part of this report was why investors were disappointed after they reported the numbers they did in their free cash flow. If we look at their free cash flow on a trailing 12 month basis, this is the picture it paints. You can see a very strong consistent growth and free cash flow over the past 10 years. Now, a lot of people point out that Salesforce does a lot of stock based COM.
So a lot of this free cash flow is eaten up by dilution, but you can even see with the stock based comp that that's trending in the right direction. The stock based comp has actually gone down since 2022 as the free cash flow has exploded to the upside. If we look at the free cash flow per share, it shows this trend, the rapid growth and free cash flow per share in the most recent quarter. This was a massive spike over the previous quarter.
So investors were selling out of this stock as they were growing their free cash flow per share by 62 percent year over year. Now to me, on a simple observation, when a company's growing it's free cash flow per share by 62% year over year, typically that means the stock should move up, unless of course the company is dramatically overpriced and Salesforce is not
dramatically overpriced. In fact, right now the company trades at a 26 Ford PE ratio, which is very low to moderate for company growing this quickly. And it trades at a free cash flow yield of 3.3%, which is much higher than most companies growing this quickly. So by the metrics, Salesforce is not an overvalued company. The only argument to make that this company isn't a good buy is if it's going to go into decline.
So if you believe that Salesforce is a company of the past, it's antiquated technology and it's going to be disrupted by competitors, then of course this company is not a buy. But I don't believe that's the case for this company. Even though this is now the only company that I'm in the red on, it's still one that I'm bullish on. And I think given enough time, it's only a matter of time until Salesforce goes back into the green. Now, the third company that I'm buying is Intuit.
Intuit had a fantastic 2023. The stock price raised up dramatically. If we look at the past five years, we can see the stock price racing up all of 2023. I bought into it at a decent point. I got a good deal on it and the stock price raised up immediately. Intuit was the fastest company I've ever had $10,000 in gains in. But as you can see, after 2023, the stock price has settled down a little bit. I realize that Intuit's a more
volatile stock. It trades around more aggressively than most companies, so a lot of investors are wary about buying this one. But based on my research, I think Intuit will still outperform the market by a large extent over the next 5 to 10 years. Intuit's about as solid as it gets all around. For a tech company, the company has incredibly strong revenue growth, quality of the revenues getting stronger as the majority of it moves from one time purchases to ongoing
subscriptions. They're continually moving more and more customers from their desktop applications to their web applications where they can apply more continual updates and have more of the product strategy that Adobe has shown over the past decade. The free cash flow growth of Intuit is one of the most impressive lines that I've seen growing continually every single year. When you put this on a free cash flow per share basis, it looks even stronger as they've done significant buybacks.
The company has grown its free cash flow per share by 19% year over year and over the past five years it's averaged 15% and into. It's another one that's extremely volatile around earnings. So I wouldn't be surprised if they give some metric or some number that investors don't like causing the stock to sell off. We've seen that before, even as recent as just last quarter into it dropped a full $100 per share after giving their last
quarterly report. So this type of volatility is something you need to expect going into this holding, but I don't concern myself with that. I pay attention to the free cash flow growth of the company. So I'm trimming a little Apple. I'm buying into booking Salesforce and into it three companies that I believe have a strong predictability of beating
the market. I'll never know fully what's going to happen with any company, but sticking to an investing strategy with the diversified portfolio, all with very strong companies eliminates most of the risks and sets it up for a high probability of success. So I'll continue to follow this and give you updates as we see
what happens. Now moving on, we get to a story that's more and more frustrating and aggravating the more that you read and learn about it. And the story reveals the dark and ugly side of Disney. The story is about a lawsuit by the family of the New York woman who died after eating at a restaurant in Disney Springs and outdoor dining, shopping and entertainment complex in Florida owned by Disney.
The Tang Swan family says in a lawsuit that the 42 year old New York Dr. had a fatal allergic reaction after eating at an Irish pub in Disney Springs. The lawsuit claims that Tang Swan and her husband Jeffrey Piccolo and his mother decided to eat at the Raglan Rd. in October 23rd because it was billed on Disney's website as having allergen free food. The suit alleges that Tank Swan informed the server numerous times that she had severe allergies to nuts and dairy
products. Nuts and dairy products are the most common allergies for foods. They say that they didn't just mention this once or even twice to the server. They mentioned it numerous times. They even told them to go check with the chefs to make sure and absolutely verify that it didn't have these foods and what they were serving, and the waiter guaranteed that it didn't have
those foods. About 45 minutes after finishing their dinner, Tung Swan had difficulty breathing while out shopping, collapsed, and died at the hospital. According to the lawsuit, the medical examiner determined that she died as a result of having anaphylaxis due to elevated levels of nut and dairy in her system. Now, of course, after this happened, Disney released a statement saying that this is an unfortunate event and should have been avoided and that they will compensate the victims for
any liability that they had. Just kidding, Disney didn't release such a statement. In fact, Disney released the opposite statement. Disney said that they didn't want to take any responsibility whatsoever. Disney said in a statement this week that they were deeply saddened by the families lost, but stressed that the Irish pub, which also is being sued, is neither owned nor operated by
the company. Now this Irish pub is in the Disney park, so it's literally in their park when you go in and experience Disney World. But now Disney's saying that we have nothing to do with him, we don't run it, we don't operate it, we're not liable at all. So that's their excuse, and that's one excuse being used for Disney to avoid liability here. Obviously they should vet who's in their park and they should share some liability, but that's a whole different argument in
and of itself. The really infuriating part of this lawsuit is Disney's arguing that Piccolo, the husband in this case, had agreed to settle any lawsuit against Disney out of court and through arbitration when he signed up for a one month free trial of Disney Plus back in 2019.
Now, on a side note, he also signed up for Disney Plus on a PlayStation. So the husband of the victim back in 2019 signed up for Disney Plus on a PlayStation and they're using those terms of service as an agreement that they can't sue because of the wrongful death of their wife in the park. That's correct.
You're hearing this correctly. The first page of the subscriber agreement states in all capital letters that any dispute between you and us, except for small claims, is subject to class action waiver and must be resolved by an individual
binding arbitration. That's what you're signing up for when you sign Disney Plus. Now, if you think it's outrageous that signing an agreement for a streaming service means that you can't sue for wrongful death in a park four years later, then of course you're correct. And that's the exact same thing that the lawyers are saying for Piccolo. They've slammed Disney, calling it preposterous, saying it's on the borderline of being surreal. They say that it's quote, fatally flawed for numerous
independent reasons. The lawyers are aghast that Disney would even propose this as a defense. I realize there's a lot of hardcore Disney fans, and in some cases they'll even try to spin this in defense of Disney, but there's really no defense here. This is just despicable behavior by the company. The fact that they're using a terms of service agreement from a streaming service in 2019 on a PlayStation to try to say that you can't sue when they fed you food that killed you in your
park? That is beyond absurd and frankly, Disney should be ashamed and embarrassed by this attempted defense. And one more thing, just on a side note of the story, it wasn't even Tung Swan that signed up for Disney Plus. So the person that was actually victimized wasn't the one that actually agreed to the terms of service. We get to see what happens with this case over the upcoming years, but if the judge has any sense, they'll throw out this defence.
Now we get to the story of Carl Icahn running into more trouble. We know that a couple years ago, Hindenburg Research released a report showing that Carl Icahn may be doing some dubious things with his financials. Carl Icahn's company agreed to to pay $2,000,000 to settle civil charges from the Securities and Exchange Commission that he failed to disclose extensive borrowing against the company's shares.
The settlement is modest in the damage done to his company compared to the short seller report. Since that report, shares of the company are down 68%. It slashed its dividend by half and was forced to renegotiate terms of his loan. Now, he hasn't omitted any wrong. This is something that they do when they settle. They settle and say, we'll pay this much if we can get this case behind us, but we're not
going to admit any fault. And Carl Icahn has said, quote, we are glad to put this matter behind us and we'll continue to focus on operating the business for the benefit of the unitholders. Overall, this individual fine. It's not a big deal for Carl Icahn. The bigger deal is the damage done to his company over the past year and a half. And if there's one person that's been happy to read this article, it's been Bill Ackman.
Now, moving on, we finally get to the news that MasterCard is cutting back on 3% of its workforce. In a lot of cases, this can mean trouble for the company. It's symbolic of a slowdown, but that's not the case here with MasterCard. We can first look at their reasons for doing these cuts. They say, quote, as these changes are made, we plan on redeploying resources into
growth areas. These changes will reinforce our strategy and competitive advantage to drive a long term growth diversifier revenue streams and differentiate our product and solutions. The employee count of MasterCard has been growing steadily over time. In fact, firing 1000 employees wouldn't even put the company back a single year. From 2022 to 2023, they hired an additional 3000 employees. So this is not an indication that Mastercard's slowing down. They're still hiring people like
crazy. If anything, this is a slight moderate. In their hiring. Now that's going to be it for this episode. If you want to see more exclusive content and get access to quantrum.com, you can check out the Patreon. Other than that, I'll see you in the next one.