Visa's Antitrust Showdown & Lightspeed Looking for Buyers

[00:00:14] [SPEAKER_01]: Welcome back to the Canadian Investor Podcast. I'm here with Dan Kent. We are back for a Thursday

[00:00:19] [SPEAKER_01]: News and Earnings episode. Before we get started, Dan, how's it going? And you know, how's the

[00:00:25] [SPEAKER_01]: search been for finding some news items to talk about?

[00:00:29] [SPEAKER_02]: Yeah, I don't know. It's pretty slow but also, I mean, we got one of the most expensive, I would say

[00:00:35] [SPEAKER_02]: one of the most expensive like MegaCap US stocks reported earnings. So it's pretty interesting

[00:00:42] [SPEAKER_02]: and then we got obviously a Canadian tech company that's getting a bit desperate in my opinion

[00:00:47] [SPEAKER_02]: but should be a pretty good episode. I would say even though it's really slow.

[00:00:51] [SPEAKER_01]: Yeah, exactly. So we still have I think a fun episode ahead. We'll start off here by

[00:00:58] [SPEAKER_01]: the Visa Antitrust issue which you alluded to, I think when we recorded last Tuesday when the news

[00:01:04] [SPEAKER_01]: started coming out that the Department of Justice so the DOJ was going after Visa for Antitrust.

[00:01:11] [SPEAKER_01]: So obviously there's been more details on that. So I'll go and just an overview and my

[00:01:16] [SPEAKER_01]: thoughts. I think you own Visa, I also do. It's pretty for me it's a quite small position. I own

[00:01:22] [SPEAKER_01]: Visa and Mastercard and I think together around like 2.5% of my portfolio. So I think Visa on

[00:01:28] [SPEAKER_01]: its own is slightly more than a percent. So it's not like, you know, I don't think my retirement

[00:01:33] [SPEAKER_01]: will be affected whatever the outcome is of this but I think for you it's probably slightly

[00:01:38] [SPEAKER_01]: larger if I had to guess if I remember correctly. Yeah, it's like 2.5 to 3%. I'd have to go

[00:01:44] [SPEAKER_02]: back and check but it's like a core position for me really. Okay, yeah perfect. So just so people get

[00:01:50] [SPEAKER_01]: context obviously we are shareholders of Visa here. So the Department of Justice filed a civil

[00:01:56] [SPEAKER_01]: antitrust lawsuit against Visa for monopolization and unlawful conduct in its debit network

[00:02:05] [SPEAKER_01]: markets. It alleges that Visa illegally maintains a monopoly over debit network markets.

[00:02:10] [SPEAKER_01]: Some of the things it says that it's alleging that Visa is doing and because I say alleging because

[00:02:16] [SPEAKER_01]: it still has to go to court. Don't want to get into trouble as well. Although I think Visa has

[00:02:22] [SPEAKER_01]: bigger problems here than coming after the Canadian Vessor podcast. So using its dominance to

[00:02:28] [SPEAKER_01]: dwarf the growth of existing competitors preventing the development of new and innovative payment

[00:02:33] [SPEAKER_01]: alternatives. They control over 60% of US debit transaction charging over 7 billion in annual

[00:02:41] [SPEAKER_01]: processing fees. They are also saying their exclusionary agreement and practices. So Visa

[00:02:47] [SPEAKER_01]: imposes a web of exclusionary agreements on merchants and banks. They penalize customers

[00:02:54] [SPEAKER_01]: around transaction through other debit networks or payment systems. They said it has a negative

[00:03:00] [SPEAKER_01]: impact on consumers and the economy because Visa extracts fees that exceed competitive market levels.

[00:03:07] [SPEAKER_01]: It increases costs or pass on consumers through higher prices or reduce quality of goods and

[00:03:15] [SPEAKER_01]: services. It results in billions of dollars in additional fees imposed on American consumers

[00:03:20] [SPEAKER_01]: and businesses. I'm sure a lot of Canadian businesses would also agree with that. Yeah,

[00:03:26] [SPEAKER_01]: from here as well. It slows innovation in the debit payment ecosystem. They also

[00:03:34] [SPEAKER_01]: say that Visa's market dominance is really massive. It maintains enormous scales on both sides of the

[00:03:40] [SPEAKER_01]: debit markets or merchants and consumers. They refer to it as a position of enormous mode

[00:03:47] [SPEAKER_01]: around its business. It engages in conduct to prevent rivals from gaining necessary scales,

[00:03:53] [SPEAKER_01]: share data, and to compete. Especially against smaller debit networks. That's one of the things

[00:03:59] [SPEAKER_01]: if you read the press release of the DOJ, they definitely focus on that. You can also, if you

[00:04:05] [SPEAKER_01]: feel like it, read the 70 pages or so actual lawsuit. Unless you're a lawyer, you probably

[00:04:12] [SPEAKER_01]: won't want to go into that much detail. But again, you can still control F and look for

[00:04:17] [SPEAKER_01]: certain terms that you're more interested about. And that's what I did. So I was kind of curious

[00:04:22] [SPEAKER_01]: because they do cite examples of deals with Square through the cash out, Apple and PayPal to ensure

[00:04:29] [SPEAKER_01]: that they don't create payment system that would compete against Visa. But in the example of Apple,

[00:04:34] [SPEAKER_01]: which I searched the filing because I was interested in return of a binding to the agreement,

[00:04:41] [SPEAKER_01]: Apple gets a share of Visa's profit. So essentially, I don't know what the full agreement is,

[00:04:46] [SPEAKER_01]: but what they're saying is the agreement is essentially for Apple to not build a competing

[00:04:52] [SPEAKER_01]: system against Visa and also not encouraging its users to go away from Visa. And as long as they

[00:05:00] [SPEAKER_01]: abide by that, they'll share part of Visa's profits, although they didn't really specify

[00:05:06] [SPEAKER_01]: what part of the profit. I mean, I'm sure it's related to Apple transactions. So like

[00:05:15] [SPEAKER_01]: you know, it wasn't in the lawsuit per se. This is definitely interesting. I think it'll be worth

[00:05:20] [SPEAKER_01]: following obviously, I own Visa Dan owns it as well. There's definitely some different outcomes here

[00:05:26] [SPEAKER_01]: that could be possible. There could be a ruling in favor or against Visa so they could lose or

[00:05:31] [SPEAKER_01]: win this if it goes to court. I'm not a lawyer obviously. So take this with a grain of salt.

[00:05:36] [SPEAKER_01]: There could also be a settlement made as well. Obviously, if there's a settlement clearly,

[00:05:41] [SPEAKER_01]: Visa would have to give something. And obviously, depending on the ruling, I think it's safe to assume

[00:05:47] [SPEAKER_01]: that it would likely increase competition in a space, erode Visa's dominance to some

[00:05:54] [SPEAKER_01]: dominance to some extent in the debit space. My assumption would be that the DOJ would probably

[00:06:01] [SPEAKER_01]: ask for Visa to void some of the agreements that they have in place like the one I just

[00:06:08] [SPEAKER_01]: talked about with Apple or Square, why I guess Block formally Square with a cash app or PayPal.

[00:06:15] [SPEAKER_01]: So they probably forced them to void some agreements. I wouldn't be surprised if there'd

[00:06:19] [SPEAKER_01]: be some kind of fines as well. I'm not quite sure because if we were talking before the

[00:06:24] [SPEAKER_01]: we started recording, you know, there was the Google anti-trust law suit and for Google it

[00:06:30] [SPEAKER_01]: was a, you know, there were some similarities. I think you know, one of the big sticking

[00:06:35] [SPEAKER_01]: points and you know, what they alleged was that Google was paying Apple to have it as the Google

[00:06:42] [SPEAKER_01]: as the default search engine on Apple iPhones. And that was part of the practice, the anti-trust

[00:06:49] [SPEAKER_01]: practice. And I think there's already been a ruling on that, but I think they're planning

[00:06:54] [SPEAKER_01]: to appeal for the Google lawsuit. And there also could be from what I've read, the final

[00:07:01] [SPEAKER_01]: ruling is not expected to be until 2025. So TBD and there could be different outcomes. It could be,

[00:07:08] [SPEAKER_01]: you know, again, fines. It could be requiring Google to modify certain practices or as far

[00:07:14] [SPEAKER_01]: as breaking out the company. I think search has been, you know, a big point of contention

[00:07:19] [SPEAKER_01]: there. There's also been YouTube, even I think the Android with their store, their app store

[00:07:25] [SPEAKER_01]: for Android. So it'll be interesting, but the Visa one, although there are some similarities,

[00:07:30] [SPEAKER_01]: I don't think you'd be able to really break up the business. So, you know, I think people can make

[00:07:36] [SPEAKER_01]: their own minds on potential outcomes if Visa loses the case or comes to some kind of settlement.

[00:07:43] [SPEAKER_01]: Because if they're coming to a settlement, you can bet that they will be conceding some things.

[00:07:49] [SPEAKER_02]: That's for sure. Yeah. I mean, the main difference here for me between, you know,

[00:07:54] [SPEAKER_02]: a company like Google and Visa is like Google's monopoly dominance, I guess would just be

[00:07:59] [SPEAKER_02]: because, you know, there's really not a lot of competition in that search space. Like I believe,

[00:08:04] [SPEAKER_02]: like even if they didn't pay Apple to make it the default search engine, I believe a lot of people

[00:08:09] [SPEAKER_02]: would just do it anyway. I mean, I know if I had an iPhone and it wasn't set like that, I would

[00:08:14] [SPEAKER_02]: just set it. Yeah. Because there really isn't another engine that's even close to the quality.

[00:08:21] [SPEAKER_02]: I mean, they have 92, 93% of search dominance for a reason. Whereas this is like,

[00:08:27] [SPEAKER_02]: this is Visa pretty much paying off competitors that definitely have the money and infrastructure to

[00:08:32] [SPEAKER_02]: develop the probably a similar, you know, competitive product. But they aren't. So I think

[00:08:39] [SPEAKER_02]: there's going to be two different results here. And like you said, there's pretty much

[00:08:43] [SPEAKER_02]: Google, like if they ended up like going really hardcore and making Google break

[00:08:47] [SPEAKER_02]: up the business, there's like clearly defined segments of that business that they could split

[00:08:51] [SPEAKER_01]: up. Whereas Visa, like I don't know how you'd ever do that. Yeah. And to think about it too,

[00:08:58] [SPEAKER_01]: as you were talking about that, you know, as a consumer, I mean, to me, as long like I don't

[00:09:04] [SPEAKER_01]: care whether it's Visa, Mastercard, AmEx, Discover, whatever card system it is, right? As

[00:09:10] [SPEAKER_01]: long as it's widely accepted and the fees are competitive or I don't pay any fees, right?

[00:09:16] [SPEAKER_01]: It's usually the merchant and that will pay most of the fees. But as long as that's the case,

[00:09:20] [SPEAKER_01]: I don't care whether it's Visa or someone else. Whereas you're right with Google,

[00:09:25] [SPEAKER_01]: I think they tend to have better results. So that's why I would go to them. It's interesting. And I

[00:09:30] [SPEAKER_01]: guess merchants too, right? If they can have other payment systems or payment rails that are,

[00:09:36] [SPEAKER_01]: you know, as good as Visa or close to as good that, you know, their consumers are using

[00:09:42] [SPEAKER_01]: for a better price, they would probably offer that or at least offer multiple options

[00:09:47] [SPEAKER_01]: to consumers, which seems to be what Visa is trying to do. Again, alleged by the DOJ is that

[00:09:53] [SPEAKER_01]: their agreements are built in where I think they had a quote from a former CFO saying that, you know,

[00:10:01] [SPEAKER_01]: I think there are no enemies, they're just friends and partners basically like they make sure

[00:10:08] [SPEAKER_01]: that, you know, you will play ball with them. So the agreements...

[00:10:13] [SPEAKER_01]: Pretty much, yeah.

[00:10:14] [SPEAKER_01]: Yeah, the agreements are made so that, you know, you benefit from it in some form or fashion, but

[00:10:21] [SPEAKER_01]: the downside of not sticking to agreement are so great that, you know, potential competition

[00:10:27] [SPEAKER_01]: or merchants just never go that route.

[00:10:31] [SPEAKER_02]: Yeah, pretty much. I mean, the like, I know a few people who, you know, just operate small

[00:10:37] [SPEAKER_02]: business and the fees on these credit cards are crazy. Like the amount they get charged,

[00:10:40] [SPEAKER_02]: just, you know, to process stuff like this. So I mean, competition would be good. And I mean,

[00:10:46] [SPEAKER_02]: like they say Visa has an enormous mode. I would argue again that Google has a much larger mode

[00:10:52] [SPEAKER_02]: because Visa, like you said, nobody cares what card they use as long as the payment goes through

[00:10:57] [SPEAKER_02]: and as long as they can use the payment, you know, at a wide variety of areas, they don't

[00:11:01] [SPEAKER_02]: care if it's Visa or anything else. Whereas, you know, Google is kind of from like a product

[00:11:07] [SPEAKER_02]: perspective where it's just the clearly superior product. So I mean, in that regard,

[00:11:13] [SPEAKER_02]: more people are using it. But it's going to be interesting. I would imagine they get

[00:11:18] [SPEAKER_02]: absolutely, I mean, I guess I can't guarantee it, but I would say there's going to be fines

[00:11:22] [SPEAKER_02]: to pay at absolute minimum because again, you know, paying Apple off and giving them profits to

[00:11:29] [SPEAKER_02]: just not incentivize any sort of innovation in the space is clearly something that, you know,

[00:11:34] [SPEAKER_02]: they're probably going to hammer down on. But who knows? Yeah, and then there's the last part,

[00:11:39] [SPEAKER_01]: right? With the US election being like pretty much a month away at this point.

[00:11:45] [SPEAKER_01]: Some people may think, oh, depending on who wins, you know, if the Republican wins,

[00:11:49] [SPEAKER_01]: they might drop it. Well, I doubt that they would because, you know, it's an easy,

[00:11:54] [SPEAKER_01]: you know, it's easy to beat on big tech, right? Like that resonates well with the

[00:11:59] [SPEAKER_01]: population. So my perception is that they and I could be very wrong on that. Don't get me wrong,

[00:12:05] [SPEAKER_01]: but my perception is that, you know, it's probably whoever is in power, they will probably just

[00:12:11] [SPEAKER_01]: let the DOJ continue this lawsuit because, you know, you don't want to look like you're on

[00:12:18] [SPEAKER_01]: the side of big tech. I think you probably want to be looked like you're on the other side

[00:12:23] [SPEAKER_01]: and you want to reign in a big tech. Yeah, I mean, from an investor standpoint,

[00:12:28] [SPEAKER_02]: it might not be optimal, but from like a consumer standpoint, I mean, this really only makes it

[00:12:34] [SPEAKER_02]: better. More competition, things like that, which is what they try to target, which is

[00:12:38] [SPEAKER_01]: what they try to eliminate is stuff like this. So yeah, TBD, well, I will keep everyone posted

[00:12:44] [SPEAKER_01]: because obviously we both own it. I'm sure there's a lot of people who own Visa as well.

[00:12:49] [SPEAKER_01]: And even if you don't own it directly, if you have index funds, chances are that you

[00:12:53] [SPEAKER_01]: own at least part of it. If you have US index funds, so something to keep in mind.

[00:12:59] [SPEAKER_01]: Now we'll move on to I guess some rumors of rumor mill in Canada with light speeds. So

[00:13:05] [SPEAKER_01]: do you want to go over what's going on there? Well, it was rumored, but now it was rumored

[00:13:11] [SPEAKER_02]: last week, but now confirmed. So the rumors started like probably mid last week that

[00:13:18] [SPEAKER_02]: light speed commerce, which is like it's a point of sale platform, but they've kind of

[00:13:23] [SPEAKER_02]: they've emerged into a lot more stuff other than outright point of sale. But if you follow the

[00:13:28] [SPEAKER_02]: company at all, you'll know that after Nouveas sold, which would have been earlier this year,

[00:13:33] [SPEAKER_02]: light speed had been rumored to be seeking out potential suitors to either be bought by another

[00:13:39] [SPEAKER_02]: company or private equity or anything like that. And that was I can't remember when

[00:13:43] [SPEAKER_02]: Nouveas sold it was probably early this year, I think. Yeah, I think it was like in this early

[00:13:48] [SPEAKER_01]: spring, if I remember correctly, something like that. And I think it was private equity,

[00:13:52] [SPEAKER_02]: if I remember correctly. Yeah, right? Yeah. So they got bought up by private equity and then

[00:13:57] [SPEAKER_02]: a week later there was rumors that light speed was kind of seeking to do the same thing.

[00:14:02] [SPEAKER_02]: And even DAX, the CEO had mentioned something like that, but it was never confirmed.

[00:14:07] [SPEAKER_02]: But now these rumors kind of resurfaced again last week and they were confirmed by the

[00:14:12] [SPEAKER_02]: company that they have hired JP Morgan to kind of help it seek out potential buyers for the business.

[00:14:18] [SPEAKER_02]: So the news caused the company's share price to shoot up around 21%

[00:14:22] [SPEAKER_02]: over the last week or so that it was announced. And when we look back to what Nouveas sold for,

[00:14:29] [SPEAKER_02]: so they sold for around 4.5x enterprise value to sales and prior to the news,

[00:14:34] [SPEAKER_02]: light speed was trading only at around a third of this. And after the news came out,

[00:14:38] [SPEAKER_02]: it jumped up to around 1.7x EV sales. So I'm an owner of light speed. I mean,

[00:14:44] [SPEAKER_02]: I've traded in and out of this one quite a bit during the pandemic. So I'm pretty interesting to see

[00:14:51] [SPEAKER_02]: where a deal comes in here. If it does, I'm actually betting there's more chance that

[00:14:57] [SPEAKER_02]: nothing happens out of this rather than the company gets bought. I don't think it's

[00:15:02] [SPEAKER_02]: worth the same as Nouveas. They were a profitable company. I think they had nearly $300 million

[00:15:07] [SPEAKER_02]: in free cash flow. Light speed is really struggling to get towards any reasonable level of profitability.

[00:15:15] [SPEAKER_02]: But I do think it's safe to say that it's probably worth a little bit more than what it's trading

[00:15:19] [SPEAKER_02]: at now. If it were to end up being taken private, even if we think of half the cost of Nouveas,

[00:15:26] [SPEAKER_02]: that would still be around a 30% premium to what they're trading at right now.

[00:15:30] [SPEAKER_02]: Obviously pure speculation by me. There's been no confirmation of any sort of value or

[00:15:34] [SPEAKER_02]: nothing, but I think that might be appropriate. But just overall it seems sloppy to me.

[00:15:41] [SPEAKER_02]: It seems like management can't really take the business to the next level. So now they're

[00:15:44] [SPEAKER_02]: just looking to sell it off and move on. I mean, it's weird for them to come out publicly.

[00:15:52] [SPEAKER_02]: This doesn't really happen too much, but it's happened. It's been rumored to happen

[00:15:55] [SPEAKER_02]: earlier in the year and now it's been confirmed to happen now. I mean, it's a bit odd.

[00:16:00] [SPEAKER_02]: And I know a lot of people had mentioned there's a bit of arbitrage opportunity here

[00:16:05] [SPEAKER_02]: if they were to get bought out at a higher premium, but I think it's a really high risk one. Yes,

[00:16:09] [SPEAKER_02]: if the company were to be acquired its price would probably be higher than it is today. However,

[00:16:14] [SPEAKER_02]: if nothing materializes, it's more than likely going to give back that 21% and probably more.

[00:16:21] [SPEAKER_02]: Because obviously now it's gone public that the company is looking to seek out buyers. And if no

[00:16:26] [SPEAKER_02]: buyers show up, it might spook investors even more. So I mean, I still hold my shares.

[00:16:33] [SPEAKER_02]: I'm willing to hold on to see if a deal materializes. But if no news comes out relatively soon and

[00:16:38] [SPEAKER_02]: the stock just starts to bleed off the gains from the bump in news, I'll probably just move on.

[00:16:43] [SPEAKER_01]: I know what they need to do. They just need to get a deal done with Ryan Reynolds. That's it.

[00:16:48] [SPEAKER_01]: Yeah, exactly. Just pull the new vein now. But what I'm sharing here for a joint TCI,

[00:16:54] [SPEAKER_01]: so just basically what you were saying, right? So, you know, cells have grown quite nicely,

[00:16:58] [SPEAKER_01]: especially spurred during the pandemic. But one of the issues for them as like you said,

[00:17:03] [SPEAKER_01]: it's been profitability. So, you know, free cash flow has been negative around 100 million for

[00:17:09] [SPEAKER_01]: several years now earnings on a gap or, you know, IFRS basis is getting a little better.

[00:17:17] [SPEAKER_01]: But still, you know, looking at on a trailing 12 months base at 150 million in the holes. So,

[00:17:23] [SPEAKER_01]: yeah, definitely some issues on the profitability and there's also a lot of competition in this

[00:17:28] [SPEAKER_01]: space too. So I think that's one of the other issues that they're dealing with. But

[00:17:33] [SPEAKER_01]: I mean, it's interesting to keep an eye on. It's they were one of the darlings of 2020-2021

[00:17:40] [SPEAKER_01]: and then I think they're struggling a little bit to find their footing. I do hope they have

[00:17:46] [SPEAKER_01]: a backup plan because it's not good to only relying on, you know, being bought out because then you

[00:17:53] [SPEAKER_01]: probably, you know, potential buyers are not stupid, right? So they will probably say, well,

[00:17:58] [SPEAKER_01]: you know, if that's your only option, we won't give you an awesome deal.

[00:18:02] [SPEAKER_01]: Exactly. Yeah. So it's I think that's where I'm a bit kind of, I find it a bit of a head

[00:18:08] [SPEAKER_01]: scratcher because the fact that they're coming out like this, it they might not be. And I haven't

[00:18:14] [SPEAKER_01]: looked you can maybe tell me I haven't looked in terms of how much cash they asked on their

[00:18:19] [SPEAKER_01]: balance sheet. I think last time I looked it was pretty decent. So quite a bit. I think they have

[00:18:24] [SPEAKER_01]: probably around 900 million Canadian. No, actually six. Yeah, maybe looking at the US.

[00:18:31] [SPEAKER_01]: Yeah. Yeah. So in terms, but I have 673 74 million latest quarter was as high as

[00:18:39] [SPEAKER_01]: yeah, 953 million that peaked in March of 2022. Yeah. Yeah. It's, I mean, lights be beside the one

[00:18:48] [SPEAKER_02]: I and I actually dug this up as you were as you were talking there. So nine of the 20 technology

[00:18:53] [SPEAKER_02]: companies to launch initial public offerings on the Toronto Stock Exchange during the COVID-19

[00:18:58] [SPEAKER_02]: linked boom have already gone private. So almost half of them have already gone private.

[00:19:06] [SPEAKER_02]: So I mean, I think Nouveau would probably be included in that because it IPO'd in like

[00:19:11] [SPEAKER_02]: 2021, I think or 2020 somewhere around there. Yeah. Absolute software, true context. It only

[00:19:19] [SPEAKER_02]: lists a few of these. This is just an article from the Globe and Mail. But yeah, I mean,

[00:19:25] [SPEAKER_02]: they all IPO during a time that was very, very, very good to IPO in. I mean, lightspeed,

[00:19:32] [SPEAKER_02]: I don't think would be included in that because they IPO'd before COVID. Yeah.

[00:19:37] [SPEAKER_02]: Pretty sure they IPO'd in 2018 or 2019. Yeah. I think you're they wouldn't be included in that.

[00:19:42] [SPEAKER_01]: Definitely pre-COVID. That's for sure. I'm not sure when but pre-COVID for sure.

[00:19:46] [SPEAKER_02]: It's just pretty interesting to see like how, so these companies all IPO'd at probably much,

[00:19:51] [SPEAKER_02]: much higher prices than they got taken private and they're just getting scooped up now. So

[00:19:56] [SPEAKER_02]: I mean, it's interesting to see. I don't know. I didn't even know there was 20 tech companies

[00:20:00] [SPEAKER_02]: that IPO'd on the TSX during the COVID boom but I didn't know there was even 20 tech companies on

[00:20:06] [SPEAKER_02]: the TSX. I know. Yeah. I don't either. Yeah. No, I think no, I think it's a good overview.

[00:20:14] [SPEAKER_01]: It's worth watching. I know there's a lot of people that still own that company. So

[00:20:19] [SPEAKER_01]: it'll be interesting what they do. I don't own it. I always found it a bit fascinating. Again,

[00:20:24] [SPEAKER_01]: I think it's another case and they're not alone in terms of that. There has been tons of companies that

[00:20:31] [SPEAKER_01]: had a big pandemic boom, made some questionable acquisition, one that I own myself and I sold

[00:20:39] [SPEAKER_01]: a year and a half ago. I think at this point almost two years ago, Teladoc,

[00:20:43] [SPEAKER_01]: same kind of thing. So they made a really big one, ill-advised acquisition that they're still

[00:20:49] [SPEAKER_01]: paying for right now and I was actually looking at their sales. It's flat or declining. So you can

[00:20:56] [SPEAKER_01]: tell they're really struggling. I mean, at least they're so profitable on a free cash flow basis,

[00:21:00] [SPEAKER_01]: but still that's another example where management definitely made some questionable decisions at

[00:21:06] [SPEAKER_01]: the hype in 2021 and now they're paying for it. Yeah. Yeah, like Lightspeed made some big acquisitions

[00:21:16] [SPEAKER_02]: in 2021. New order was one of them. And I mean, it's pretty clear now. Very hard to tell that

[00:21:23] [SPEAKER_02]: they overpaid back then, but clearly they did now. I mean, another Canadian tech company would be

[00:21:28] [SPEAKER_02]: Open Text. Paid, I think it was like six or six and a half billion dollars for Micro Focus.

[00:21:33] [SPEAKER_02]: That has not worked out very well. I mean, Open Text is a lot more established profitable

[00:21:38] [SPEAKER_02]: cash flowing. So it hasn't taken as big of a dip as Lightspeed has, but it just kind of shows that

[00:21:45] [SPEAKER_02]: growth through acquisitions. It's a very risky business model and when it doesn't work out,

[00:21:53] [SPEAKER_01]: it gets rough. Yeah. And there are some that have been impressive doing that. I think

[00:21:58] [SPEAKER_01]: Constellation Software probably comes to mind as one of the ones. Alimentation,

[00:22:02] [SPEAKER_01]: Cush talk has a really good track record. We'll have to see going forward. It's Seven and I,

[00:22:08] [SPEAKER_01]: but yeah, you're right. I mean, a lot of the time I think people get excited with acquisitions,

[00:22:13] [SPEAKER_01]: but I would say more often than not it doesn't end up being as productive as management expected

[00:22:21] [SPEAKER_01]: to. I think I'm trying to be nice there. Either they overpay for it or just they

[00:22:27] [SPEAKER_01]: aren't able to, I think I love this word efficiencies. So established these efficiencies

[00:22:33] [SPEAKER_01]: as much as they thought. So I think always take that with a grain of salt when they make

[00:22:39] [SPEAKER_01]: acquisitions unless they have a really strong track record of doing so. I think it's something

[00:22:44] [SPEAKER_01]: that investors, personally it's something I'm always kind of very cautious about,

[00:22:49] [SPEAKER_01]: at least in the last couple of years since I've been burned with Teladoc. Yeah,

[00:22:53] [SPEAKER_02]: there's definitely very few companies that can do it successfully over the long term.

[00:22:58] [SPEAKER_01]: Okay. So I guess enough about light speed. We'll talk here about the next dock workers across the

[00:23:04] [SPEAKER_01]: US go on strike and there's also a limited strike on in Montreal in the Palais de Montréal.

[00:23:10] [SPEAKER_01]: So I'll start off with that because clearly there's the Canadian components that two are not

[00:23:15] [SPEAKER_01]: related per se. So the Montreal poor there's a limited three day strike that began on Monday

[00:23:21] [SPEAKER_01]: this week. So we're recording this on Tuesday, roughly 350 workers on limited strike for context

[00:23:27] [SPEAKER_01]: Montreal is the second largest port in Canada. The issue seems to be really more about job

[00:23:34] [SPEAKER_01]: security than salary which is different than the US strikes that are happening here. And I'll go

[00:23:44] [SPEAKER_01]: really interesting to see what's happening. That's the really the contention between the two keep in

[00:23:48] [SPEAKER_01]: mind these are different unions so not the same in Canada and the US and different employer

[00:23:53] [SPEAKER_01]: association. You know obviously we saw I think it was the Vancouver port that had a strike in

[00:23:59] [SPEAKER_01]: 2023 and that had a pretty big impact on the Canadian economy cost billions of dollars in

[00:24:05] [SPEAKER_01]: terms of for the Canadian economy. So you can really tell how important these ports are

[00:24:10] [SPEAKER_01]: especially when you're talking about Montreal and Vancouver. I think I would assume I didn't look

[00:24:16] [SPEAKER_01]: it up that Vancouver is the largest if Montreal is the second largest that would be my assumption.

[00:24:20] [SPEAKER_01]: I would imagine yeah I can't see anything else. Yeah just because the way Montreal is located

[00:24:25] [SPEAKER_01]: right with the Le Fleuve Saint Laurent or like the Saint Lawrence River. Sorry when I talk

[00:24:31] [SPEAKER_01]: about Quebec it's my French kind of kicks in there. So the Saint Lawrence River so the

[00:24:36] [SPEAKER_01]: way kind of you know it goes right Montreal's basically the last port the closest one to Toronto

[00:24:42] [SPEAKER_01]: and all the major cities. So it would make sense that it's the second largest and you know out east

[00:24:49] [SPEAKER_01]: you know with the west being the largest with Vancouver but if it's not that let us know it's

[00:24:54] [SPEAKER_01]: just my assumption here. And in the US what's happening here is the International Longshore

[00:24:59] [SPEAKER_01]: Men Association so the ILA represents about 45,000 port workers. They announced that they were going

[00:25:06] [SPEAKER_01]: on strike as of this morning so Tuesday morning it affects 36 ports from Maine to Texas so it's

[00:25:13] [SPEAKER_01]: all along the east central east coast. The strike started earlier today like I mentioned the

[00:25:19] [SPEAKER_01]: negotiations are done with the US Maritime Alliance so that's the USMX so it's an association

[00:25:25] [SPEAKER_01]: representing multiple employers in that industry. I guess it's similar right when they go on strike for

[00:25:31] [SPEAKER_01]: auto workers although auto workers I think they'll negotiate with each automaker is still kind of that

[00:25:37] [SPEAKER_01]: same union that's centralized. Yeah centralized I think so that's just my perception here one

[00:25:44] [SPEAKER_01]: of the big sticking points with is that the union is asking for a 61.5% pay increase while

[00:25:52] [SPEAKER_01]: the employers are offering 50% so pretty big gap here and it's pretty noteworthy because it is the

[00:25:59] [SPEAKER_01]: first strike since 1977. And some retailers some of the larger retailers have actually made some

[00:26:06] [SPEAKER_01]: pre-emptive orders so ordered goods earlier than usual to make sure that they could meet demand

[00:26:11] [SPEAKER_01]: for the fall and winter obviously that came at a higher price but they were concerned of

[00:26:17] [SPEAKER_01]: a potential strike. Of course here the blaming game is in full effects the ILA is blaming the

[00:26:25] [SPEAKER_01]: employer association so the USMX and vice versa you know one is blaming the other for the result of

[00:26:32] [SPEAKER_01]: their strike the White House has said that they don't want to intervene but they are

[00:26:37] [SPEAKER_01]: monitoring the situation apparently there's over 100,000 containers waiting to be offloaded in the

[00:26:44] [SPEAKER_01]: New York area which is obviously quite a bit and it's hard to say how much this will cause a US

[00:26:50] [SPEAKER_01]: economy I tried researching it the numbers that I've seen were kind of all over the place but

[00:26:58] [SPEAKER_01]: they were all falling between two billion and five billion every day that the strike is ongoing.

[00:27:03] [SPEAKER_01]: So that's kind of the numbers that I saw in terms of the economic impact so obviously the

[00:27:08] [SPEAKER_01]: longer it lasts the bigger the impact it will have in the US. It could have you know an impact on

[00:27:14] [SPEAKER_01]: the economy obviously but also potentially could have an inflationary effect as well right if

[00:27:20] [SPEAKER_01]: there is limited goods you know we've seen what happens when there's supply chain issues I think

[00:27:25] [SPEAKER_01]: there's a lot of people that still have PTSD with that during the pandemic so who knows what

[00:27:31] [SPEAKER_01]: will happen there but these are all potential issues that could come up if this strike goes

[00:27:36] [SPEAKER_01]: on for a while and if you're thinking about the White House too right the Biden administration

[00:27:42] [SPEAKER_01]: with Carmela Harris are trying to get reelected I know they have kind of adopted an attitude pro

[00:27:49] [SPEAKER_01]: blue collar workers and pro workers but I think they're probably between a rock and a hard place

[00:27:54] [SPEAKER_01]: because you know they want to get those votes but they also you know want to make sure the

[00:28:00] [SPEAKER_01]: economy it doesn't get too bad so it's exactly it's really interesting and it'll be fascinating

[00:28:06] [SPEAKER_01]: to see if this goes on what the White House will actually decide to do because it's obviously not

[00:28:13] [SPEAKER_01]: good for them either way and intervening is probably not a great look either and obviously the Republicans

[00:28:20] [SPEAKER_01]: and Trump would probably try that to use to their advantage. Oh absolutely yep I mean you

[00:28:25] [SPEAKER_02]: want to be like pro worker but then you know you also don't want this to be held out very

[00:28:30] [SPEAKER_02]: long to the point where it does start to impact the economy. The one thing I read is I can't remember

[00:28:37] [SPEAKER_02]: who it was that that said it but they said like because demand is not very high right now this

[00:28:42] [SPEAKER_02]: shutdown like won't fuel inflation too much whereas if you know the economy was strong and

[00:28:47] [SPEAKER_02]: and you know demand was high then this would cause a lot of issues over the short term which

[00:28:52] [SPEAKER_02]: they still did mention it will cause issues but not as much yeah just because you know the

[00:28:58] [SPEAKER_02]: sluggish like not during COVID you know when when demand was just with stimulus checks and stuff

[00:29:05] [SPEAKER_02]: yeah the stimmies yeah but yeah it's uh it's gonna be I don't see it lasting very long before

[00:29:12] [SPEAKER_02]: somebody would would step in I think it's that that critical and in terms of the ports in Canada so

[00:29:19] [SPEAKER_02]: Port of Vancouver is the largest okay and it's the third largest in North America

[00:29:24] [SPEAKER_02]: so it is yeah it's big yeah yeah all the second largest yeah exactly getting all the stuff from Asia

[00:29:30] [SPEAKER_01]: so that makes sense that it would be quite large and then obviously that impacts a lot if some of

[00:29:37] [SPEAKER_01]: the listeners are listening and they own like railways in the US for example those would be

[00:29:43] [SPEAKER_01]: definitely impacted by that the port of Vancouver when they had their stride going there was

[00:29:47] [SPEAKER_01]: definitely someish impacts that were created for the Canadian railways so something to keep in mind

[00:29:53] [SPEAKER_01]: pretty obviously I do hope they come to some kind of agreements not good when this is going on

[00:30:00] [SPEAKER_01]: some kind of a fair you know agreement for both sides I think that's always

[00:30:05] [SPEAKER_01]: what you want to achieve but we'll have to see

[00:30:09] [SPEAKER_01]: I guess we'll move on now to yeah Costco warnings you know that company that keeps doing

[00:30:15] [SPEAKER_02]: pretty well I would assume yeah yeah yeah so they they reported sales of 78 billion which

[00:30:21] [SPEAKER_02]: missed estimates by a couple billion they were expected to report 80 but five they beat earnings

[00:30:27] [SPEAKER_02]: expectations by about 5% so I think that cushioned it a bit it is trading off its highs but not

[00:30:34] [SPEAKER_02]: very much so when you look at headline sales you'll see 1% year-over-year revenue growth however

[00:30:39] [SPEAKER_02]: last year had an additional week of reporting so when you kind of compare apples to apples

[00:30:43] [SPEAKER_02]: they grew by 7% same-store sales increased by 5.3% in the US 5.5% in Canada 5.7% internationally

[00:30:53] [SPEAKER_02]: and average ticket prices which is pretty much like how much people are spending in the store

[00:30:57] [SPEAKER_02]: like total they they're falling by 0.3% the US and around 2% in Canada and internationally

[00:31:04] [SPEAKER_02]: however the company is just seeing so much more foot traffic into the stores that it's just

[00:31:08] [SPEAKER_02]: it's more than offsetting this so foot traffic increased by 6.4% year-over-year so I mean what

[00:31:15] [SPEAKER_02]: this would tell me is like for the most part the company's probably seeing a decline in

[00:31:19] [SPEAKER_02]: discretionary trend or sorry in discretionary spend but traffic volumes for you know those

[00:31:25] [SPEAKER_02]: who are looking to buy staple items are offsetting this which should kind of you know provide

[00:31:31] [SPEAKER_02]: the company with some additional tailwinds when discretionary spending returns because I

[00:31:36] [SPEAKER_02]: really doubt and I've had this quite a few times here I don't think that you know people purchasing

[00:31:42] [SPEAKER_02]: staple goods from Costco will ever go away I think it like the shopping shift for consumers to

[00:31:49] [SPEAKER_02]: places like Costco, La Blanc, Dollarama I do think it's going to be permanent regardless of

[00:31:54] [SPEAKER_02]: where interest rates go I mean the cost of groceries is never going down or at least

[00:31:58] [SPEAKER_02]: you know if it does there's probably if you see long-term deflation in food prices

[00:32:03] [SPEAKER_02]: there's probably other major issues but I think it's definitely going to be permanent

[00:32:07] [SPEAKER_02]: and I mean Costco is just realizing the benefits of this massively.

[00:32:12] [SPEAKER_02]: Memberships came in at 76.2 million which is up 7.3% this is pretty much the company's bread

[00:32:18] [SPEAKER_02]: and butter when it comes to profits they're you know razor thin margins on the actual goods

[00:32:22] [SPEAKER_02]: they offer and they just try to get you know people renewing their memberships and they

[00:32:27] [SPEAKER_02]: generate a huge chunk of their profits from this and renewal rates 93% in North America

[00:32:33] [SPEAKER_02]: while worldwide it's at 90.5% and I know people view this company as ridiculously expensive

[00:32:41] [SPEAKER_02]: and it is like it is on a forward earnings basis it's worth like 50% more than Nvidia

[00:32:48] [SPEAKER_02]: is trading at on a forward basis I think it's trading at 45x expected earnings

[00:32:52] [SPEAKER_02]: it's just crazy expensive right now but you know I don't really ever make decisions

[00:32:59] [SPEAKER_02]: based on anecdotal information but I have never witnessed a retail store as absolute chaos in

[00:33:07] [SPEAKER_02]: my life as a Costco like they are we went we went we usually go always almost exclusively like

[00:33:16] [SPEAKER_02]: weekdays like right when it opens because there's nobody in there but we yeah we were

[00:33:20] [SPEAKER_02]: driving by one the one day on a Sunday at like 3pm we're like oh we need to grab some stuff so we

[00:33:24] [SPEAKER_02]: went in there and I got like stuck I parked and I was parked close to where the gasoline line was

[00:33:31] [SPEAKER_02]: and I could not get out because the lineup was so long that they blocked me into the parking

[00:33:35] [SPEAKER_02]: stall and I had to like I had to get out and tell the guy like I need to exit this stall can you

[00:33:42] [SPEAKER_02]: just wait for me to get out and we didn't even we just left the parking lot was open or like

[00:33:47] [SPEAKER_02]: full the inside of the store was just I couldn't even believe how many people were in there it was

[00:33:53] [SPEAKER_01]: absolutely nuts I do have a good story for you but first I'm just showing their revenue a membership

[00:33:59] [SPEAKER_01]: fee revenue which has been steadily on an increasing slope and what's really interesting here is

[00:34:06] [SPEAKER_01]: people should remember they only recently increased their membership fee as of September 1st

[00:34:11] [SPEAKER_01]: so I'm not even sure if this is capturing the increase while not the full fledged right a

[00:34:17] [SPEAKER_01]: lot of people will be renewing you know throughout the year right it's not that everyone's renewing

[00:34:21] [SPEAKER_01]: at the same time and you're still seeing essentially membership revenue which almost all goes to the

[00:34:29] [SPEAKER_01]: bottom line it's increasing at a 7.29 compounded annual growth rate and for and now it's above

[00:34:39] [SPEAKER_01]: I think this yeah for the past year it's uh it now it's creeped above 4.8 billion

[00:34:44] [SPEAKER_01]: and that's just the membership revenue and it's been increasing steadily but the fact that it was

[00:34:49] [SPEAKER_01]: increasing despite increasing the membership fee just goes to show how many new members are actually

[00:34:55] [SPEAKER_02]: getting yeah I mean like I I cannot imagine any reason to ever cancel my membership like I can't

[00:35:03] [SPEAKER_02]: think because often like I know a lot of people say like oh I refuse to like pay to shop

[00:35:08] [SPEAKER_02]: but I mean I typically when we go there I mean we save that almost in a single visit just on the

[00:35:14] [SPEAKER_02]: you know lower cost for goods and I mean you do have to buy in bulk but I mean we just you

[00:35:19] [SPEAKER_02]: know freezer pack most of the stuff and last forever and but I mean and then we have an

[00:35:24] [SPEAKER_02]: executive membership so not only does it pay for the membership but we shop there often

[00:35:27] [SPEAKER_02]: off we actually end up making money so I mean yeah yeah it's just it's such a

[00:35:34] [SPEAKER_02]: genius business model like you get more members which you know you buy more goods in bulk

[00:35:41] [SPEAKER_02]: which lowers the prices which ultimately gets more members which means you could buy more goods

[00:35:45] [SPEAKER_02]: at bulk prices and it's just a continuous cycle and like just 93% renewal rates like 19 out of

[00:35:52] [SPEAKER_02]: 20 people every single year are just you know pretty much renewing their their membership

[00:35:57] [SPEAKER_01]: and it's been very consistent too yeah so if you've been following Costco for a while like

[00:36:03] [SPEAKER_01]: it's always in the kind of low 90s it never pretty ever like I can't remember the last time

[00:36:09] [SPEAKER_02]: if I ever dipped below 90% as well and I mean the one reason why its global rate is lower

[00:36:18] [SPEAKER_02]: is typically in the companies mention this so they get they open up a new store

[00:36:21] [SPEAKER_02]: internationally and you know a ton of people flood in and buy memberships and then it

[00:36:25] [SPEAKER_02]: kind of weeds out the people who you know it might not be for so their renewal rates are

[00:36:30] [SPEAKER_02]: lower you know that first or second year and then they gradually trend up towards that you know 90%

[00:36:35] [SPEAKER_02]: plus rate but yeah my family shop at Costco I remember going to Costco in like the 90s

[00:36:41] [SPEAKER_02]: yeah yeah I remember too yeah but and it was nowhere near as huge as it was then but now it's just

[00:36:48] [SPEAKER_01]: they're massive yeah and we um so before I get to the last segment here

[00:36:53] [SPEAKER_01]: parents that are listening to this show so obviously I have a toddler she's uh

[00:36:57] [SPEAKER_01]: she's two now turned to like a month ago and I had the smart idea and I'm being slightly sarcastic

[00:37:04] [SPEAKER_01]: my wife had plans a Saturday morning so I was looking after my daughter and I'm like you know what

[00:37:10] [SPEAKER_01]: I'm gonna go to Costco with my two-year-old daughter at 10 30 am on a Saturday morning so it

[00:37:18] [SPEAKER_01]: was not and it was raining so I ended up being okay but it was crazy and she again for parents

[00:37:28] [SPEAKER_01]: obviously um I know you don't have kids but at that age obviously they can there's terrible twos right

[00:37:34] [SPEAKER_01]: and it is a thing so she was uh not having a great time at the beginning but I was able to power

[00:37:40] [SPEAKER_01]: through and with the sample samples all over the place that got her in the bit better mood

[00:37:46] [SPEAKER_01]: I brought some snacks I was able to do it but it is definitely a challenge if you go there like just

[00:37:51] [SPEAKER_01]: one even two parents with like a young child it's something else because you already have to deal

[00:37:57] [SPEAKER_01]: with everyone else being it's so packed and then you have to deal with the child so that's my uh

[00:38:02] [SPEAKER_01]: recent anecdotal or funny story from Costco I would have a complete meltdown yeah I think they

[00:38:09] [SPEAKER_02]: like the the older Costco is in Calgary so the one I went to I don't know anybody listening

[00:38:14] [SPEAKER_02]: this is from from Calgary it's on like Sarsie Trail and it's a very it's an older Costco and like the

[00:38:21] [SPEAKER_02]: infrastructure there can't even handle how busy it is so like not even the Costco parking lot

[00:38:27] [SPEAKER_02]: it backs up like almost onto the main road because people are trying to get into the

[00:38:33] [SPEAKER_02]: Costco but the roadways just don't have the capacity to even support the people that want

[00:38:38] [SPEAKER_02]: I can't like I understand why people think it's expensive but I mean I don't think this company

[00:38:45] [SPEAKER_02]: is going to slow down anytime soon I just can't see it yeah and one thing they're I don't I don't

[00:38:51] [SPEAKER_01]: think they have it yet in Calgary but in Ottawa it's in it's one of the first cities where now you

[00:38:55] [SPEAKER_01]: have to scan your they got that now they got that now okay I think Ottawa was one of the first

[00:39:00] [SPEAKER_01]: cities to try it out in Canada so now you have to scan your membership pass as you get in

[00:39:06] [SPEAKER_01]: but we have that same issue the older ones are just insane so I actually go I do a detour

[00:39:11] [SPEAKER_01]: I go to for Ottawa listeners they'll know there's a bar even one that's relatively new

[00:39:16] [SPEAKER_01]: so I drive an extra five ten minutes I would say from where I live to go to the new one

[00:39:21] [SPEAKER_01]: because the parking is much larger and for my sanity I'm just like you know what

[00:39:27] [SPEAKER_01]: and the aisles are bigger and stuff like that it's worth the detour

[00:39:33] [SPEAKER_02]: yes it's bonkers in there if you if you can go brave Costco on a weekend you're a lot stronger than

[00:39:40] [SPEAKER_01]: you can do anything yeah you can do anything so I guess we'll move on from Costco the last thing

[00:39:46] [SPEAKER_01]: I wanted to talk about just because I haven't talked about Bitcoin in some time and people will know

[00:39:52] [SPEAKER_01]: if you've been listening to the podcast for a while I'm obviously a Bitcoin bull I believe

[00:39:57] [SPEAKER_01]: in the technology but it's interesting just to look at the Bitcoin ETF how it's doing I mean

[00:40:02] [SPEAKER_01]: it's three quarters of the year in since the approval on January 10th the US pot Bitcoin ETFs

[00:40:09] [SPEAKER_01]: and I always find it fascinating because the block dot co has some really good data when it comes

[00:40:17] [SPEAKER_01]: to that so I'll share that with our joint TCI list watchers subscribers that are watching the

[00:40:23] [SPEAKER_01]: video well first of all I mean the asset under management since the launch essentially as close

[00:40:30] [SPEAKER_01]: to doubled here so it went from 20 billion at the launch which was almost all because of GBTC

[00:40:37] [SPEAKER_01]: which was the grayscale Bitcoin trust and they converted it to an ETF when this public coins

[00:40:43] [SPEAKER_01]: were approved now you know that one is still seeing a little bit of I would say

[00:40:51] [SPEAKER_01]: you know it's still the second most in terms of asset under management but the one that has the most

[00:40:57] [SPEAKER_01]: asset under management is the black rock so I bit so that one has the most you have second

[00:41:03] [SPEAKER_01]: GBTC and then the fidelity one so the top three are definitely in advance and what

[00:41:08] [SPEAKER_01]: you can see with what I'm showing here is just that the asset under management I kind of been

[00:41:15] [SPEAKER_01]: in between roughly like 50 billion and a bit above 60 billion since March obviously the price

[00:41:23] [SPEAKER_01]: appreciation has something to do with that where when it launched it was 56,000 USD per

[00:41:29] [SPEAKER_01]: one Bitcoin and it actually peaked around 73 in March and ever since it's been between like

[00:41:36] [SPEAKER_01]: 50 and 72 ish so clearly the price going up will bring the asset under management

[00:41:43] [SPEAKER_01]: definitely higher but what you can see here as well is that you there's definitely been some inflows

[00:41:50] [SPEAKER_01]: so you can see with this chart here so these are the spot Bitcoin flows and you can see that the

[00:41:55] [SPEAKER_01]: lines above are every essentially they're inflows and outflows are the lines below even though

[00:42:01] [SPEAKER_01]: there's been some outflows mainly because of the grayscale so the GBTC ETF mainly because

[00:42:08] [SPEAKER_01]: of that one because of the higher fees a lot of people have been selling and going to IBid the

[00:42:13] [SPEAKER_01]: black rock one or some of the other options that are lower fees but I don't know exactly how much

[00:42:19] [SPEAKER_01]: flows there's been since the launch but there's clearly been quite a bit of inflows and it's

[00:42:26] [SPEAKER_01]: really fascinating to look at that because you're seeing you know some I would say some pretty

[00:42:32] [SPEAKER_01]: clear winners so far like I said black rock GBTC is probably a clear loser because it's lost close

[00:42:38] [SPEAKER_01]: to half of his asset under management since the launch a lot of outflows but then fidelity the

[00:42:45] [SPEAKER_01]: third one and then arc is a and bid bow are far distant number threes but it's just interesting

[00:42:52] [SPEAKER_01]: to see what's happened since the launch here and what'll be also interesting to watch in the

[00:42:59] [SPEAKER_01]: next few months is I don't know if you knew that then but on September 20th the SEC actually

[00:43:05] [SPEAKER_01]: approved options trading for the IBid ETF I didn't know that no yeah so they approve that I mean I

[00:43:12] [SPEAKER_01]: don't I looked this morning they still I still couldn't buy options for IBid so I'm assuming

[00:43:17] [SPEAKER_01]: it the actual it'll come into effect well I think they can launch them whenever I think

[00:43:22] [SPEAKER_01]: it's just now the you know the back end getting everything ready to launch the options

[00:43:26] [SPEAKER_01]: but it should start trading soon so it'll be interesting whether that brings the price up

[00:43:32] [SPEAKER_01]: or low because obviously if you're talking option you can start buying like put options call options

[00:43:38] [SPEAKER_01]: like there are different kind of options some options where you can bet against the price and

[00:43:43] [SPEAKER_01]: somewhere you can bet you know if you're bullish on the price obviously people will be also able

[00:43:48] [SPEAKER_01]: to lever up on these options so there's a lot of different implications but I think it's cementing

[00:43:54] [SPEAKER_01]: the fact that bitcoin is becoming a more and more kind of financial asset but on the other end

[00:44:00] [SPEAKER_01]: it's funny that black rock was the only ETF that was approved for that and I know there's a lot

[00:44:05] [SPEAKER_01]: of people in the bitcoin space that are lamenting that because I mean I think it may be you know if

[00:44:12] [SPEAKER_01]: I put my thin foil add on it's like okay the US government through the SEC are seeing like I

[00:44:19] [SPEAKER_01]: don't think we can get rid of bitcoin so if not then we'll make sure that the incumbent in terms of

[00:44:26] [SPEAKER_01]: massive asset manager yeah you know is the only one to be able to launch options I'm sure they'll

[00:44:33] [SPEAKER_01]: approve it eventually for the other ones but you know there's always that potential first mover

[00:44:38] [SPEAKER_02]: effect yeah I mean the option the options is I mean you have a highly speculative asset in the

[00:44:44] [SPEAKER_02]: grand scheme of things and now you're adding more amplified speculation on it in terms of you know

[00:44:50] [SPEAKER_02]: options which is I don't know it's pretty crazy the one thing I was saying in terms of outflows is

[00:44:58] [SPEAKER_02]: and I'm actually surprised it's not that this much but I'm surprised it's not more than it is

[00:45:03] [SPEAKER_02]: but BTCC like the purpose bitcoin ETF yeah it's lost $540 million this year so year-to-date

[00:45:11] [SPEAKER_02]: outflows of $540 million it's got assets under management of $2.15 billion I expected this to

[00:45:17] [SPEAKER_02]: be more because the expense ratio on that fund is like 1.4 1.5% but I would imagine maybe this is

[00:45:24] [SPEAKER_02]: people who like want to keep the currency this is an unhedged fund that's what I would think yeah

[00:45:29] [SPEAKER_02]: keep it in Canadian or maybe they bought this fund when did it start trading I mean it only

[00:45:36] [SPEAKER_02]: started trading in 2021 so I don't think like unless you bought it at the bottom in you know 2022

[00:45:41] [SPEAKER_02]: you you probably don't have gigantic capital gains because I could see that being a reason why people

[00:45:47] [SPEAKER_02]: you know hold off on selling but yeah I'm not sure why more money isn't flowing out of this and

[00:45:51] [SPEAKER_02]: into the cheaper cheaper funds I mean I sold pretty much the day that I bit I mean IVIT came

[00:45:59] [SPEAKER_02]: out I sold this converted it and just bought it yeah I remember you doing that I own the

[00:46:04] [SPEAKER_01]: Bitbow one not Bitbow sorry the Bitwise so um so I own that one but again it's Bitwise a bit smaller

[00:46:13] [SPEAKER_01]: but I mean the fees are very similar to the BlackRock one so I don't think you most of the US ones

[00:46:19] [SPEAKER_01]: I don't think you can really go wrong aside from the grayscale which still has high fees

[00:46:23] [SPEAKER_01]: and I mean despite the price of Bitcoin going up the latest data that block the blog.co has

[00:46:29] [SPEAKER_01]: is that it has 14 billion in asset under management I think it started around 28 billion

[00:46:34] [SPEAKER_01]: when it launched right so there's been a lot of outflows lost about half of its asset despite

[00:46:40] [SPEAKER_02]: the price of Bitcoin being higher yeah yeah people are it's it's very easy to just go to

[00:46:48] [SPEAKER_02]: stuff that has lower fees these days like it takes you a few clicks of a button I mean obviously

[00:46:52] [SPEAKER_02]: in the states you don't have to deal with currency exchange like we do because you as

[00:46:57] [SPEAKER_02]: Canadians we pretty much have to go south of the border to find lower fees I don't think there's a

[00:47:02] [SPEAKER_02]: Bitcoin ETF that's even close to what they offer south of the border here no I think the Galaxy one

[00:47:10] [SPEAKER_01]: I think they reduced their fees but it's still like I think 75 basis point or 60 or something

[00:47:15] [SPEAKER_01]: like that I'm not sure but I know there is one I had looked I was surprised that they had actually

[00:47:20] [SPEAKER_01]: dropped the fees a decent amount I think it was the Galaxy one Galaxy is 0.76% that's what

[00:47:27] [SPEAKER_01]: why charts are saying I don't know if it's no I think that's the one accurate but yeah I think

[00:47:32] [SPEAKER_01]: that's the one I think that sounds about right but it's still you know three and a half four times

[00:47:38] [SPEAKER_01]: what you'd be paying with the US one so yeah if you're looking to hold this for a while it's

[00:47:43] [SPEAKER_01]: probably best to even pay the currency exchange fees because you'll long term you'll save a whole

[00:47:49] [SPEAKER_02]: lot of money just on those fees yeah yeah like outside of the fluctuation in the Canadian and

[00:47:54] [SPEAKER_02]: US dollar I pretty much because I know IBIT they had really low fees for a while but I think they

[00:48:00] [SPEAKER_02]: that was like an introductory fee or whatever but it was I'll get my money back like I just

[00:48:05] [SPEAKER_02]: straight up converted it on well simple paid the 1.5% I'll get that back in like a year just

[00:48:10] [SPEAKER_01]: didn't just saving the fees no I think exactly so I know but I think that's it I think it

[00:48:16] [SPEAKER_01]: was just good to see how it was doing especially with the price of Bitcoin kind of going pretty

[00:48:21] [SPEAKER_01]: sideways for the better part of since March like I said again I'll be interesting what happens

[00:48:27] [SPEAKER_01]: obviously the US election will probably have a big impact here where you have you know Trump has

[00:48:32] [SPEAKER_01]: been more kind of embracing crypto whereas you have Carmela Harris that's you know been a bit

[00:48:38] [SPEAKER_01]: wishy washy from what I've read but less you know against it than the current administration

[00:48:43] [SPEAKER_01]: as much as it's weird I mean she's trying I think to differentiate herself a little bit

[00:48:49] [SPEAKER_01]: so be interesting whether the markets react to that I mean I think the markets are really

[00:48:54] [SPEAKER_01]: let's be honest like I know we don't talk really about politics too much but you know with the

[00:49:00] [SPEAKER_01]: the port strike for example but also this obviously politics will have a big part and

[00:49:05] [SPEAKER_01]: I think in the markets right now I think it's safe to say that the markets now are just

[00:49:10] [SPEAKER_01]: waiting to see what happens with the US election I think there's going to be a whole lot of

[00:49:14] [SPEAKER_01]: volatility I think we're seeing that ups and downs until then but I think the markets are just

[00:49:20] [SPEAKER_01]: trying to weigh you know who could potentially get in and what kind of industry and what will it

[00:49:26] [SPEAKER_01]: mean for you know businesses going forward I think that's what the markets are trying to weigh

[00:49:31] [SPEAKER_01]: and I haven't looked at the polls but it looks like it's all still kind of a coin flip from

[00:49:36] [SPEAKER_02]: what I've seen very close yeah yeah so I'm uh I'm gonna be down in Arizona for the election

[00:49:42] [SPEAKER_01]: oh okay it's like a like a soap opera on yeah wasn't it like a battle state the last one wasn't

[00:49:48] [SPEAKER_02]: there a lot of drama I think they're mostly Republican I think but I'm not 100% sure yeah

[00:49:54] [SPEAKER_02]: but I think it is one of the tighter states but I think generally yeah I might be completely

[00:49:58] [SPEAKER_02]: out to lunch there I don't really pay too much attention to US politics so I know I pay a little

[00:50:04] [SPEAKER_01]: bit of attention but mostly because I'm curious of what they're saying about the economy and what

[00:50:09] [SPEAKER_01]: you know none of them are saying about tackling the US deficit but that's a discussion for another

[00:50:16] [SPEAKER_01]: day it's like it just doesn't exist right two trillion a year three trillion like yeah no one really

[00:50:21] [SPEAKER_01]: cares except for like a handful of people but um you know we'll have to see so I digress I think

[00:50:28] [SPEAKER_01]: we've gone long enough despite being a slower news week thank you everyone for listening we

[00:50:33] [SPEAKER_01]: really appreciate the support like always you can follow us on Twitter I'm at fiat underscore and

[00:50:38] [SPEAKER_01]: iceberg and then Dan at stock trades underscore ca we're pretty you know responsive on twitter as

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[00:50:57] [SPEAKER_01]: the support and we'll see you next week the Canadian investor podcast should not be construed as

[00:51:03] [SPEAKER_01]: investment or financial advice the host and guest featured may own securities or assets discussed

[00:51:10] [SPEAKER_01]: on this podcast always do your own due diligence or consult with a financial professional before

[00:51:17] [SPEAKER_01]: making any financial or investment decisions