This video covers several key topics related to investing and market analysis. The speaker introduces a new research tool under development at Stock Unlock, designed to provide historical fundamental and valuation scores for stocks, enhancing objective investment decisions. He then details his decision to sell HIMS stock, explaining how new insights into FDA regulations regarding "mass compounding" of personalized drugs revealed a significant regulatory risk to HIMS's business model. The video also dives into the heated debate surrounding Tesla's Full Self-Driving and Waymo's autonomous vehicles, arguing that while both technologies are improving, neither currently possesses a clear competitive moat, leading to concerns about future profitability and a potential price war. Finally, the speaker presents a clip from Charlie Munger on stock-based compensation, advocating for its recognition as a true expense and highlighting what he perceives as more shareholder-friendly practices in international markets compared to the U.S.
Summary:
0:01 New Research Tool at Stock Unlock: The speaker is developing a new feature for his Stock Unlock platform: historical fundamental and valuation scores for stocks. This tool aims to show how a stock's fundamentals and valuation have changed over time, helping investors identify opportunities when prices fall and fundamentals remain strong, aligning with Benjamin Graham's "intelligent investor" philosophy.
0:48 Valuation Score and Alerts: The new feature includes a historical valuation score, demonstrated with Google and Palo Alto Networks (PANW), which would show when a stock becomes "very good" or "good" from a valuation perspective. A future enhancement will include notifications to alert users when a stock on their watchlist reaches a favorable valuation.
4:11 HIMS Stock Sale Justification: The speaker sold his HIMS stock, realizing a 70% gain, due to new research prompted by Novo Nordisk's recent accusations. He previously believed HIMS's compounding practices were legal but discovered a significant "loophole" in FDA regulations.
5:45 FDA Compounding Regulations: The FDA explicitly states that compounded drugs are not intended for mass production or direct-to-consumer sales, but for rare, individualized patient needs (e.g., allergies, specialized dosing).
6:04 HIMS Operating in a Loophole: The speaker believes HIMS is mass-compounding drugs (e.g., GLP-1s, oral weight loss, hair loss treatments) under the guise of personalization through generic questionnaires, which he views as fundamentally conflicting with FDA intent.
7:05 Regulatory Risk: This loophole is unlikely to remain open indefinitely, as drug manufacturers like Novo Nordisk and Eli Lilly are lobbying the FDA due to the significant R&D costs they incur for FDA-approved drugs. Lawsuits or regulatory changes could severely impact HIMS's entire business model.
17:04 Personal Investment Comfort: The decision to sell was based on increased risk and uncertainty, pushing HIMS further out of his "circle of competence," despite acknowledging the stock's future movement is unknowable.
21:44 Tesla vs. Waymo Autonomous Driving Debate: The speaker discusses the heated online debate between supporters of Tesla's Full Self-Driving (FSD) and Waymo, showcasing videos of failures from both (Waymo driving errors, Tesla FSD failing a turn and driving on the wrong side of the road).
24:23 Technology Improving, But Moat Concerns: He acknowledges that both technologies are not 100% ready but are clearly improving and will likely achieve very low error rates. However, his main concern is the lack of a sustainable competitive "moat."
25:48 Price Competition and Lack of Differentiation: Since both services fundamentally provide transport from point A to point B, they will likely compete primarily on price, leading to low profit margins, similar to the airline industry. Tesla's $4.20 robo-taxi rides in Austin are cited as an early sign of this price war.
28:51 Investment Risk Comparison (Waymo vs. Tesla):
Waymo (Google): Represents an insignificant portion of Google's business and is not factored into Google's current attractive stock valuation, offering potential upside without significant current risk from Waymo's performance.
Tesla: Its current stock valuation heavily relies on autonomous vehicles generating "tens of billions of dollars" in future profits, making it exponentially riskier due to the highly speculative nature of this profitability and the perceived lack of a competitive moat.
31:18 Charlie Munger on Stock-Based Compensation: A clip of Charlie Munger emphasizes that stock-based compensation (SBC) should always be treated as a real expense and dilution for shareholders, rejecting arguments that it's "double counting."
32:40 SBC as a Real Expense: The speaker agrees, explaining that companies must use real cash flows to buy back shares to offset SBC and prevent shareholder dilution; otherwise, shareholders own less of the company.
34:04 International Markets and Shareholder Friendliness: He notes that high SBC is predominantly a U.S. phenomenon, with international markets (Canada, Europe, Japan) showing significantly less SBC and generally more shareholder-friendly practices, including healthy balance sheets and higher margins.
35:08 Value in International Markets: While U.S. companies are top-tier, their obvious quality has led to massively expanded price multiples that, in the speaker's opinion, no longer justify their quality. He argues that significant value and better shareholder returns can be found in high-quality, fast-growing international companies trading at much lower valuations.