In their latest episode of the VALUE: After Hours Podcast, Tobias Carlisle, Jake Taylor, and Ian Cassel discuss:
- Good vs. Great vs. GOAT Investors: Defining the Differences in Stock Picking Success
- Buy and Hold Forever? The Truth About Long-Term Investing Strategies
- How Michael Melby Achieves 22.4% Returns in Small-Cap Deep Value Investing
- Investing Lessons from Mole Rats: Resilience, Adaptability, and Survival
- Was Peter Lynch – The Barry Sanders of Investors?
- Microcap Stocks Outperform in 2024: Profitable Growth Driving Returns
- Is the Investment Opportunity Set Shrinking? Insights on Value, Growth, and Small Caps
- How Small Businesses Can Achieve 30-Bagger Returns Without Going Big
- The Truth About Going Public: Costs, Benefits, and Misconceptions for Small Businesses
- Trading Around Positions: How Activist Investors Maximize Returns
- Investing Strategies: When to Double Down and When to Hold Back
- Mastering Stock Picking: Core Skills and the Path to Becoming the Greatest
- Position Sizing in Investing: When to Go Big and When to Hold Back
- Planet MicroCap Showcase: VEGAS 2025
You can find out more about the VALUE: After Hours Podcast here – VALUE: After Hours Podcast. You can also listen to the podcast on your favorite podcast platforms here:
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Transcript
Tobias: This meeting is being livestreamed. This is Value: After Hours. I’m Tobias Carlisle. Joined as always by my cohost, Jake Taylor. Our special guest today is the inimitable Microcap Maestro, Ian Cassel. How are you, sir?
Ian: Doing great. Thanks for having me. Always a pleasure.
Jake: Welcome back, Ian.
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Microcap Stocks Outperform in 2024: Profitable Growth Driving Returns
Tobias: Ian, what’s been happening in small and microcap world? It’s been a market of large in growth. And so, just from your perspective, how’s the landscape looked for the last year?
Ian: Well. I think that it’s been a good year for smaller profitable growing microcaps. We’ve seen a lot of outperformance in that flavor factor of growthy profitable small. You want to look at it like that. Even our, I don’t know, our microcap club profitable index that we have, which is nothing more than the 1,200 companies that were profiled one, MicroCapClub since inception screened for trailing 12-month profitability, and then equally weighted rebalanced every quarter. So, just that. That’s about 273 companies. That was up 44%, I think. 44.8% for the year. And so, that profitable band I think did fairly well in 2024.
Jake: Did that come pre-election results or postelection, out of curiosity?
Ian: It was doing fairly well even into the– In fact, I think it was almost up 35 going into November.
Jake: Okay.
Ian: So, a lot of that performance was-
Jake: Already [crosstalk]
Ian: -still front loaded. Yeah, which was interesting. I’m interested to track to see how that– We just started that a year ago, and honestly, I was just curious to see how just this– I don’t think there’s any real tracking mechanism for small profitable global microcaps, and just equally weighting that basket and see how that performs over time.
I think the other interesting takeaway that I noticed during the year, was in the rare moments that the markets were down [laughs] during the year when we had one or two days when made the markets down 2% or 3% or 4%, that index was down a lot less. So, the volatility to the downside was a lot better in that profitable segment of microcaps-
Jake: Which is not-
Ian: -compared to even the S&P.
Jake: -normally what you might expect, right?
Ian: No. Not at all.
Jake: [crosstalk] tail end of the whip.
Ian: Exactly. I don’t want to say there’s too much signal there yet, because until we have a period where the market goes down more than three days in a row, maybe by day 10 or 12 or 15, it’s finally risk off, hit the bid even in that segment. So, I don’t want to come to any conclusions yet. But it’s still interesting to track that segment of the market.
I think you’ve seen a lot of Canadian profitable growing companies doing well in the year. You’re seeing a lot of takeouts in Canadian profitable companies that are microcaps, nano caps up there. It seems like there’s one a day from US private equity taking out a Canadian small business that’s trading at single digit, EV to EBITDA or something like that. It happened quite a bit. So, it’ll be interesting to see how that does.
Jake: So, a lot of the return then was actually crystallized as from taking–
Ian: Yeah. I don’t want to say a lot of it, but there’s definitely a lot of M&A activity. It might be a function of– I don’t know what the function would be. Maybe it’s just that people are just finding more value in that area of the market.
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TSX Venture Exchange: A Dormant Market or Poised for Growth?
Tobias: How have Canadian equities done relative to US equities? Are they like the rest of the world just lagging? Is it a valuation? Are they just cheap?
Ian: Well, I think if you ever want to pull up a funny chart, pull up the TSX Venture Exchange. The historical performance of that, I think it’s basically flatlined for 22 years or whatever it’s been. [laughs] And so, it was like giant risk on during the heyday of junior mining, which was 2005 to 2010, and then it’s just been straight down, and then I think it’s starting to come back a little bit.
Again, I think it depends on what segment of the market you’re looking at. I think just like anything you find a bull market anywhere, you can find one there too. I think in Canada, if you’re a small, non-resource company growing 20%, that’s profitable. I think you saw a nice lift in your equity during 2024.
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Is the Investment Opportunity Set Shrinking? Insights on Value, Growth, and Small Caps
Tobias: So, does that mean that the opportunity set has thinned out materially, or is there enough new blood?
Ian: I don’t know. I tend to think that there always tends to be opportunity. Like, even from the investing that I do in the US markets, it doesn’t matter if your watch list or sandbox is 100 companies, or if it’s 500 or 5,000. It’s like there’s always something to do. There’s always something that is trade out of whack with where it should be priced. That’s what I find too.
We were very active in 2024 as a fund. Added several new positions. You wouldn’t think that would be the case or if you maybe thought that I’d be style drifting up to growth more because of that, the way the market’s performing. But no, there’s always 1% or 2% out of your watchlist that is probably actionable, and that’s just happened to occur for us in 2024 as well. So, I don’t think it really impacted the opportunity set too much to answer your question.
Tobias: It’s a little more difficult to tease out. There’s a question here about value and growth. But in smaller micro, small value, I don’t know what that is, [chuckles] but small growth is– The way that you’re doing it, you’re thinking about where’s this business going to be in 5-years-time or 10-years-time. When you’re paying what you would regard as cheap prices or you’re thinking about some future point rather than a more traditional value analysis, which is it’s cheap on its current metrics. Is that a fair description?
Ian: Yeah. Well, and it is interesting, because I’m curious, what is the definition of smallcap value? When everybody says how poorly it’s doing, like how is that defined?
Tobias: It’s probably compositional. It’s just filled with all of those TSX Venture mining companies that haven’t worked since 2005.
Ian: Yeah. It is interesting when you think about if your goal is to find small companies that can grow up into larger small companies. It’s always fascinating me to think about, we as investors tend to silo ourselves into a flavor of investing, whether that’s– you can almost put on an X axis. It’s like deep value, value, GARP, growth, hypergrowth. We tend to silo ourselves into one, or maybe we traverse and go into two of the four or five or something like that. What’s interesting is the best companies obviously they going out of all those segments. At any point in their maturation, they would have probably attracted a deep value investor. They would have probably attracted a value, a GARP, even a growth, maybe not hypergrowth, but at least those first four, and it’s hard to– [crosstalk]
Jake: And the company never knows the price that you paid.
Ian: Yeah. Well, and it’s funny. It’s like, a lot of people don’t like to say, “Look, well, who’s going to buy the stock?” As an investor, I actually think about who I’m going to sell my stocks to. It’s not readily admitted by a lot of stock pickers or anything like that. I don’t think about “Hey, I’m going to sell to Jake or Toby.” But I think about what–
Jake: Some other bag holder. [laughs]
Ian: Yeah, what type of trajectory is this business on? The institutions are attracted to a certain type of company and does this-
Jake: Yeah.
Ian: -ultimately fit what they are looking for?
Jake: Yeah, it can be a game of pattern matching coming in and going out, right?
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The Truth About Going Public: Costs, Benefits, and Misconceptions for Small Businesses
Ian: Yeah. It’d be easy for me to then say, well, we as investors need to evolve with the company, so we can capture the full right tail of this big winner. It’d be easy for me to come to that conclusion. But we can honestly find just as many great investors that stuck to their silo and have done really, really well. Whether that’s Buffett in the 1950s and 1960s sticking to a deep value, high turnover approach.
He arguably had the best returns of his career back then. Or, even somebody like a Michael Melby, who I just interviewed on MicroCapClub too, which almost exactly is that Buffett approach from the 1950s and 1960s, sticking to that knitting and having some firm parameters on valuation and all those things. They didn’t evolve up into some growth and they’re still cranking out high returns. So, I think you just have to know what you are and what you want to be and stick to it and do it well and you can outperform, so that you don’t have to just hold on to everything for the long-term per se.
Jake: Ian, do you have any thoughts on– I saw some chart that showed like– It might have been three to one. There’s number of private companies versus public companies. A lot of that is a number of companies is shrinking. I think the Russell 5000 has got 4,000 companies in it or something at this point. It’s easier for a company to stay private longer, because there’s so many sources of funding that they can get access to, less constraints on, having to file. I know the cost of that has come down also as well quite a bit.
Is there any concern about with companies staying private longer that more meat is taken off of the bone before it gets to finally be a public company? If you’re only looking at public companies, especially early, maybe earlier or smaller public companies, maybe someone’s already taken too many bites of the apple by the time it’s getting to you now compared to 25 years ago.
Ian: Yeah, I would love to see more real, small, profitable, growing businesses going public when they’re small. I think there’s a lot of false narratives out there that a lot of people just buy into, because they read an article and it says that it costs $5 million to be public, which is complete BS, by the way, and everybody just, “Okay. Well, I guess I can’t go public then. I don’t even want to think about it.”
Jake: What do you think it is now?
Tobias: What do you think it costs?
Jake: Yeah.
Ian: Yeah, I actually asked my portfolio of companies about this. One of them is on the New York Stock Exchange. If you’re a listed company, if you are going to be frugal– Again, being public, it’s the same thing as buying a car. You can buy a Bugatti for $3 million, $5 million or you can buy a Honda Civic that’s 10 years old for $3,000 and get to the same destination. And so, it’s your choice. You can pay consultants as much as you want, they’ll take your money. You can pay attorneys as much as you want, they’ll take your money. You can pay the highest class, whatever, auditor or whatever– But there’s also frugal ways of doing it.
And so, for the folks that I’m invested, and I would call them on the frugal side, I would say it’s probably between $500,00 to $700,000 a year even to be listed. That is normally if you’re reading an article in this, they’re saying it’s $3 million to $4 million dollars a year of an additional cost to be public on top of your normal business expenses. That’s just BS, because I can tell you right now, if it costs that much, there would be no microcap space that exists today if it was actually that much.
Jake: Yeah.
Ian: If you’re on the OTC, it’s probably $300,000 or $400,000. So, is that insignificant? No. I’m sorry. Yeah, is it insignificant? No, it’s still a decent amount of money. But at least, when you’re $10 million, $20 million revenue, it’s something that should be part of the conversation.
Jake: It’s a big difference between 1% or 2% friction, and not 10% or 15%.
Ian: Yeah. The other thing that people don’t bring up when it comes to being public and small is just the benefits. Nobody talks about the benefits of being public. I don’t mean just raising capital. What I mean is like– You could be selling toothpicks. And if you’re growing 10% a year, growing the bottom line 20% a year and if you can do that over five years, you’re going to get a 20 PE as a public company. I see it all the time. It doesn’t matter.
And so, if you believe in yourself and your small business that you can consistently grow revenues and earnings and don’t have to dilute, you’re going to have a company that’s probably trading at 20 times earnings, and you don’t have to sell it to a private equity shop for five times, and then you have, depending on what you’re selling, it might benefit you to be public, to have a public brand for whatever you’re doing. And so, I like– [crosstalk]
Jake: Yeah, there’s a reputational bump there of like-
Ian: yeah.
Jake: -skin in the game. You have something to lose more so when you’re a public company.
Ian: Yeah. So, I think one of my big missions at least starting last year was just even thinking about even creating a website just about like, the truth about being public at small–
Jake: [chuckles] Yeah.
Ian: You know what I mean?
Jake: [crosstalk] expense.
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How Small Businesses Can Achieve 30-Bagger Returns Without Going Big
Ian: I was out at the Main Street Summit a year ago, and I gave a presentation on this topic. It was really cool, because there was probably 300 people in the audience. After I gave the presentation and I gave examples, I’m like, and “Here’s a Armanino Foods. It trades in the OTC. They’re the market leader in the US in pesto sauce. They have 70% market share. And their stock is a 30 bagger in, whatever it was, call it 15 years. All they did was take a $20 million business and turn it into a $50 million business, and they took earnings from $500,000 into $6 million and they didn’t dilute.”
That’s what a 30 bagger looks like. It’s not finding Google, and making it go to a trillion-market cap. It’s simply a small business that can just grow revenues and earnings, and not dilute me over a long period of time. That’s what a real multi-bagger looks like. My guess is there’s people sitting in this audience that have a business that’s $10 million or $20 million that you believe in yourself, your ability to execute and you have a good quality business. I’m not saying you should be public. You probably shouldn’t, but it should at least be part of the conversation.
Jake: I think for your employees also, that liquidity can be a really meaningful thing for them. When you’re private company, and it’s locked up and somebody wants to buy a house, it gets complicated on how exactly they’re going to– You can borrow against now. There’s all kinds of different tricks around it. But just having a public market for your ownership is a nice benefit for an employee, potentially.
Ian: Yeah. It’s like the law of large numbers. If you’re like, “Well, there’s no more companies going public.” Well, it’s not exactly the case. There’s what 150 IPOs, 80% of them are microcaps. There’s still like a 100 SPACs done a year. Majority of them are microcaps. There’re still a hundred reverse mergers done a year. Those are mostly micro caps. So, there’s still 200 or 300 new companies entering the system every year.
A lot of people that mentioned the decline, which they are of listed companies. There’s still a relatively, the similar amount of small companies that triad in the OTC over the last five or seven, eight years. That’s been pretty constant. You could say maybe there’s a quality difference since versus 20 years ago of those companies going public, which it probably is. That’s what I’d like to get higher. Get higher quality, small public companies public. But it’s not as bad, I don’t think, as what people think.
Tobias: Yeah. I thought Sarbanes Oxley made it a million dollars a year, more expensive. It was a million dollars on top, which is, when it came out, that’s a long time ago now, so folks have probably figured it out. But that was the inflection point, I thought, where there had been more and more public companies coming online, and then the universe started shrinking from that point.
Ian: Yeah. You’re probably right. It’s probably one of the tipping points. But I think a lot of– [crosstalk]
Jake: Thanks, Ken Lay.
Ian: Yeah.
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Tobias: Let me do my quick shoutout.
Jake: Oh, yeah.
Tobias: Valparaiso. What’s up, Mac? Brandon, Mississippi. Filthydelphia. Lima, Perú. London. Tomball, Texas. Bremerton. Toronto. Tampa. Savonlinna, Finland. What’s up? Moncton, Canada. Breckenridge. Lausanne. Oregon City. Bangalore. Sugar Land, Texas. Kópavogur, Iceland. Trying my hardest there. Blanchester, Ohio.
Jake: Greenland, we’re coming for you.
Tobias: Yeah. [unintelligible [00:17:43] [laughter]
Tobias: New South Wales. Cabo. Good for you. Cabo San Lucas. Austin, Texas. It’s Hugh. I don’t know how you pronounce that last name, Jaenis. Jupiter, Florida.
Jake: Oh, you just got tricked into–
Tobias: Did I really? Caught me. Saskatoon. Bellevue. London. Toronto. Very good.
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Good vs. Great vs. GOAT Investors: Defining the Differences in Stock Picking Success
Jake: Ian, I think you prepared a little something for us that was about the differences between good investors, great investors and then greatest of all time investors?
Ian: Yeah. I started journal this about this a night or two ago. This is a very rough thought process.
Jake: That’s all we do here. It’s just very rough stuff.
Ian: Yeah. It’s very rough and very wrong.
[laughter]Tobias: It’s a good place to start. Let’s do it.
Ian: Yeah, exactly. But I think I’m right. But I do find it interesting when you think about sports, or stocks or even stock pickers themselves, the difference between good versus great versus goat, greatest of all time. That’s what got me started journaling a little bit. I think it’s hard to have a conversation like this without defining what good, and great and goat even mean.
And for this, I’m mainly just talking about difference between great and goat. Again, this is completely subjective. But I would say a great stock picker is an active manager that beat the market for 15 years. That’s a decent amount of time. We could argue whether that’s 10 years or 20 years, but it’s hard to fake it until you make it for 15 years and still beat the market. So, I think it’s a tough 15 years, because our starting point is, what, the low in the market.
Jake: Yeah, you only had a half a cycle, really.
Ian: Yeah, exactly. [Jake laughs] So, I think the average CAGR on the S&P for 15 years is, I don’t know, I think it’s like 14%.
Jake: 15%. Yeah.
Ian: 14% or 14.5 or something like that. But let’s just say to be great, you would have to beat that. So, let’s call it 15% net over 15 years. When you actually look at the statistics, and I think Alpha Architect actually did some of this, but I was trying to look at some of the data points. I think it’s roughly 5% of active managers beat the market over 15 years, which might surprise some people, probably not us, just because when we’ve heard about that narrative before too. It’s hard to beat the market, obviously. So, that would be great. Let’s just call it a 15 net return, annualized return for 15 years.
On the goat stock picker side, I define that as somebody that has beaten the market by 500 basis points or more over those 15 years. So, taking that 15% net CAGR up to 20%. That is a big leap and it’s meant to be a big leap and it’s probably 3% or 4% of even the great stock picker band fits into that category. So, great 15% annual returns, goat 20% over 15 years.
I’m thinking about this. What are these great and goat stock pickers doing to beat 95% of professional active managers, both those categories? They’re beating 95% of active managers. What are they doing? Last year in August, I gave a presentation talking about the skills of stock picking. Maybe you can put in the show notes. But what’s interesting about this presentation is I think a lot of people read the title, The Skills of Stock Picking, and their eyes glazed over thinking that it was going to be invest like Ian presentation, bore him to death, that type of thing.
Jake: It’s all accounting.
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Mastering Stock Picking: Core Skills and the Path to Becoming the Greatest
Ian: Yeah, exactly. It wasn’t that at all. Literally, the first 95% of the presentation is me talking about Brazilian Jiu-Jitsu and how Brazilian Jiu-Jitsu got started in Brazil by the Gracie family and how it spread globally. Really, within 100 years, it became the dominant martial art that is all around us. You probably heard of it too.
And so, one of the people that I talk about at the very end of going over the history of Brazilian Jiu-Jitsu is a guy by the name of John Danaher. John Danaher is highly regarded as one of the best, if not the best Brazilian Jiu-Jitsu instructor in the world. He’s been interviewed by Joe Rogan. He’s been interviewed by Lex Fridman. You can pull up those interviews. I’d encourage you to listen to him, because he’s just a cerebral dude. That combined with his New Zealand accent. He’s very easy to listen to. He’s like Toby.
[laughter]Ian: Easy on the ears, but-
Jake: Yeah.
Ian: -you find out really quick that just like Toby. He has a lot of horsepower between the ears. Even though he’s a mixed martial arts instructor, the best in the world, he actually was a philosophy major in undergrad, and then he was a philosophy major in graduate school and then he went to Columbia University in New York City to study philosophy for his PhD. So, this is a person that enjoys thinking about thinking.
Jake: And he can cave your head in.
Ian: Yeah, exactly. [Jake laughs] Exactly. And so, it’s in one of these interviews that he did– I think it was with Lex Fridman, where he’s literally asked, “How do you become the best in the world at what you do?” He gives this great answer. It was something like, “In any sport or profession, there are five or six core skills that you need to be able to do to participate in that sport or profession.” He basically said that, “To be the best in the world, you need to be good at all five or six of those skills, and then be really dominant best in the world in at least one or two of those skills.”
And so, it got me thinking. The premise of this presentation I did a year ago or six months ago was, all right. So, what are the five or six core skills of stock picking? I just thought about it and wrote on it. It’s basically the last part of that presentation. Basically, the six skills I had for stock picking are, number one, identifying ideas, so finding actionable ideas before others. Number two, valuation, determining intrinsic value.
Number three, buying or sizing your conviction. Number four, holding, maintenance, due diligence, knowing what you own at all times. Number five, selling, the skill of letting go and moving on. And then six, survival, your ability to adapt and evolve as a stock picker with the market environment or over time.
Jake: I didn’t hear pumping your meme coin in there. What’s– [crosstalk]
Ian: Yeah, we’re doing that too. [laughs] That helps.
Jake: Okay.
Ian: So, I think to become a– getting back to what Danaher said, “You need to be good at all those skills.” I think to be a great stock picker, you need to be good at all those skills. The cool thing about those skills, is it doesn’t matter whether you’re deep value or hyper growth or short-term, long-term, whatever it is. I think those skills apply to anybody that is a stock picker. I think the ones that are great, the ones that can outperform the market, just do a really good job focusing on those skills. They’re really good at it and they do it consistently over time. So, that’s where I think it becomes great.
And then, for the goat ones, Danaher goes into this. I didn’t share this in the presentation. This would be like a part two. But he actually goes into detail on, what does it mean to be a goat? Like, what are the goat stock pickers doing differently than the great stock pickers? And so, for that, he gave some examples even using Brazilian jiu-jitsu as an example. He talks about when he trained Saint Pierre, who is highly regarded as probably a top to, if not the top, mixed martial artist of all time.
He trained him and he talked about, when he– That St-Pierre was really good, and he was really good at all those core skills, but where he became great and where he became dominant was he focused in on an underappreciated skill at the time in Brazilian jiu-jitsu, which was leg locks. He focused it on this area, innovated on that underappreciated skill, reintroduced it back into the sport, surprised opponents, surprised the fighting style, and that created his edge, probably that would have lasted five, six, seven years. And he keeps on innovating on that underappreciated skill.
And so, I think applying that back to stock picking, when I think about some the greats of stock picking, they did that exact same thing where they almost– Regardless of your flavor investing, there’s probably an underappreciated skill there that other people in that flavor investing don’t appreciate, and you go in and attack that in a new way and that becomes an advantage that creates the alpha in the portfolio.
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How Michael Melby Achieves 22.4% Returns in Small-Cap Deep Value Investing
Ian: I apologize for this being such a monologue, but you have a guy like Michael Melby as an example. We were talking a little bit about him earlier at Gate City Capital. He’s in a horrible factor like deep value and [laughs] small cap deep value. And yet, he’s put up a 22.4% net CAGR over 13 years in an awful factor like that. And of course, as an investor, you sit up a little straight in your chair and you’re thinking, well, small cap value has averaged 8.5% percent over 14 years, and he’s doing 22.4% net. What’s he doing differently?
When you dive into what he does, it gets really interesting. A lot of it doesn’t sound like anything really novel or unique. He’s basically deep value concentrated in 15 ideas to 18 ideas, two year hold on average, so 40% turnover a year. Looks at old economy businesses that have hard assets, land, real estate, so they can go up with inflation.
He is very, very disciplined on his DCF modeling. Always a 12.5% percent discount rate, never budgets it up or down depending on how he feels about the market. He’s very consistent. They’ve just done a lot of work over 350 names that fit their sweet spot in the US and Canada. I think the one area that I would say he does something really, really unique in is the fact that he focuses on quality management teams in a deep value type of style investing. I think that is probably the focus of his fine-
Jake: That’s his leg lock?
Ian: underappreciated thing. He literally goes out and visits every single company. With the management team, sits down with them, interviews them, tours their facilities. When you talk to him, he’s like, “Yeah, we probably pass on 30% of the companies that we visit just because there’s something we don’t like when we see it in person, or whether it’s the interaction with the management team or the assets themselves.” I think he’s done an interesting job of finding that skill of really valuing management, because as we all know, deep value, it’s mainly, “All right, let’s find some assets we can buy cheap enough where we don’t have to even value or even do any management analysis,” you know?
Jake: Yeah.
Ian: And so, I think he’s innovated on that, and that’s created this alpha and he’s done it consistently. But anyway, that’s my rambling answer to– I think the difference between a goat and a great investor are really those investors that really dive deep. They do all the basics really, really well, and they form that pattern recognition. And then, obviously, over time, the watchlist of 300 companies to 400 companies becomes your sustainable edge that you did work on 5 years or 10 years ago. All that work you did 5 years or 10 years ago in that same subset of companies allows you to see around corners the next time around with that same company. That’s helps amplify that edge over time too. But anyway, that’s my rambling thought that I was journaling about over the last couple days I thought I’d share.
Jake: Yeah, I love it.
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Tobias: I want to throw a name at you, but I don’t want to do it until we do the Jake’s veggies and then we’ll come back to the–
Ian: Okay.
Tobias: -come back to that name.
Jake: Yeah, let’s do some veggies.
Tobias: We’ve got a special treat for everybody today. JT–
Jake: Oh, boy. This is– Yeah, go ahead. [laughs]
Ian: Oh, yeah, that’s right. Oh, hold on.
Tobias: JT, better introduce it.
Jake: Yeah, let me tee this up just a little bit. So, I know how much Ian loves all the sperm whale related content. And so-
[laughter]===
Investing Lessons from Mole Rats: Resilience, Adaptability, and Survival
Jake: -I wanted to stick with something animal themed for this week with Ian coming on. I actually received inspiration for this segment on a daily walk while I was listening to Warren and Charlie, as I’m want to do. At the 1996 Berkshire Annual Meeting, Buffett tells this funny little story. I’ll quote right here. He says, “I made the mistake of taking Charlie up to Microsoft in December. He became friends with Nathan Myhrvold. They were corresponding back and forth with increasing fervor and enthusiasm about mole rats. They copy me on all these communications, so I’m getting to see this flow back and forth on the habits of mole rats. I haven’t really found a way to apply it at Berkshire, but I’m sure Charlie has got something he’s working on.”
So, just to keep it fresh with everybody, because we’re on Season 7 at this point. [Tobias laughs] For today’s veggie segment, we’re going to learn about mole rats together. The way we’re going to do it is a little bit novel. But first, I’m going to tell you a little bit about Nathan Myhrvold. I think that’s how you say his name. He’s quite the polymath, actually. Showed a lot of expertise in different disciplines. At the time, in 1996 of this recording, he was the chief technology officer at Microsoft. And so, he’s, obviously, fairly instrumental in shaping the world of information technologies that we live in today.
He left Microsoft in 1999, and he founded Intellectual Ventures, which was a company focused on developing and licensing IP. He’s made contributions in paleontology, actively participating in dinosaur research, like coauthoring papers on topics like the biomechanics of dinosaur’s tails, even going on field expeditions to excavate fossils. He had an artistic side. He’s an accomplished wildlife photographer, which is probably where these mole rats come in.
Tobias: Has he also written a cookbook?
Jake: Yes. So, he wrote a cookbook called Modernist Cuisine. That’s a deep dive into the science of foods, and including the role that animals play in agriculture and sustainability.
Tobias: One of the things that he was doing in that was trying to find the perfect French fry, and he decided that you had to cavitate the inside of each French fry using sound waves, I think. So, it gives you a mash inside the French fry.
Jake: Liquify it, huh?
Tobias: -and then you fry the outside. Sorry. So, the man’s doing incredible work out there, just to [crosstalk] where he is.
Jake: That’s doing the Lord’s work is making the perfect French fry.
[laughter]Jake: He even led efforts to combat mosquito borne diseases like malaria by building this laser system that would target and shoot mosquitoes midflight basically.
Tobias: Practical.
Jake: Yeah, quite practical. So, you could see why Nathan and Charlie might hit it off and have quite the correspondence. So, to keep things fresh, I wrote a little play as if Nathan, Warren and Charlie were discussing mole rats, and investing and how they combine together. And so, we’re going to do a little live table read for you. This could be an absolute, unmitigated total disaster. We haven’t even practiced this at all. So, it’s a blind read. So, buckle your seatbelts, put on your crash helmets, but we’re trying to keep things fresh.
So, I will start off things as the narrator saying. The year is 1996. It’s mid-May, shortly after the Berkshire meeting. Warren Buffett, Charlie Munger and Nathan Myhrvold are seated in a cozy study surrounded by bookshelves filled with biographies, biology texts and a few war worn copies of The Intelligent Investor.
A coffee table holds a large box of peanut brittle encircled by a rainbow of aluminum cans of Coke, Diet and cherry Coke. And in the air is a sugar high mixed with intellectual curiosity. There’s a taxidermored naked mole rat. It’s just sitting on the coffee table, ugly as sin. And you guys should look up a picture of what the mole rats look like to really bring this home.
All right. So, with that, we’re going to kick off this conversation.
Ian: Well, I’m Buffett.
Jake: Yes. Sorry. So, Ian is playing the role of Warren Buffett, I’m Nathan and Toby’s going to be–
Tobias: This is more [unintelligible [00:34:53] Munger’s has ever had in his entire life, but [Jake laughs] I’ll do my best.
Ian: All right. I don’t know if you can see this, but here’s the Coke. So, I’m Buffett. “You know, fellas, I’ve been enjoying the fascinating correspondence between you, although it’s been cutting in my bridge playing time. When you were talking about mole rats, I didn’t realize how hideous these little creatures are. These things are soggy cigar butts of the animal kingdom.”
Tobias: “Ah, yes, mole rats. Nature’s little contrarians. Most animals are fighting it out on the surface, but they go underground where no one else wants to be. Nathan thinks that it the ideal metaphor for resilience, adaptability and teamwork. Warren, you must agree, as you’re smart and he’s right.”
Jake: “Thanks, Charlie. Mole rats might not be conventionally beautiful, but they’re a highly successful species. Just start with longevity. These little creatures live over 30 years, which is particularly unheard of for a rodent.”
Ian: “30 years? That’s a lot for compounding from a rat.”
Tobias: “We’ve come across a few rats in our days, haven’t we, Warren?”
Ian: “We’d better cut you off here, Charlie. We criticize by category, not by name.”
Tobias: “Longevity in nature, just like investing, comes down to survival. Mole rats are built to last and that’s what every great investor should aim for, durability. It’s why we focus on businesses with strong motes and avoid chasing fads.”
Jake: “Yeah. You know, Charlie, their longevity is tied to their cellular resilience. They’ve developed unique DNA repair mechanisms which prevents and protects them from cancer and age-related diseases.”
Ian: “That sounds like Coca Cola. Durable, steady and beloved, no matter the environment. Cases sold goes up, share count goes down.”
Jake: “Mole rats thrive underground in some of the harshest conditions imaginable. Low oxygen, scarce food, high acidity. They’ve evolved to conserve energy and share resources efficiently, ensuring the colony survives. Mole rats store food in underground caches for the lean times.”
Ian: “We do the same thing, but with gobs of cash.”
Tobias: “I celebrate frugality in all its forms. As Ben Franklin said, ‘A penny saved is a penny earned. The name of the game is conserving capital, avoiding stupid risks and focusing on quality.’ Mole rats don’t waste resources going for minutes without oxygen.”
Ian: “Cash is the oxygen in a business. When it’s around, you don’t notice it. But as soon as it’s gone, it’s the only thing you notice.”
Jake: “You know, living underground, mole rats can tolerate extreme heat.”
Ian: “Ah, like a value investor in an overheated market like 1999. They don’t let the outside temperature get them overly excited. I regularly have to check Charlie for a pause. He’s such a hyperkinetic fellow.”
Tobias: Munger makes a face for those people listening at home.”
[laughter]Ian: Do we still have an audience?
Jake: “Yeah. No, everyone hung up by now. “Mole rats use social behavior as another standout trait. Each colony is highly organized with the queen, workers and soldiers. Every individual has a specific role, and they collaborate to keep the colony functioning.”
Tobias: “Well, as Adam Smith taught us with his Pin Factory, ‘Specialization is also how humans have created so much material wealth.’”
Ian: “There are more synergies in a mole rat colony than there are in corporate America’s M&A.”
Jake: “Here’s another fascinating fact. Mole rats are nearly insensitive to pain. They don’t feel the effect of the acidic environment.”
Tobias: “That’s an enviable trait for an investor. If you can’t stomach a 50% drawdown with some equanimity, you don’t deserve equity like returns. I remember Warren in 1973. He wasn’t feeling the pain. In fact, he was like a kid in a candy store.”
Ian: “I think the analogy I used was an oversexed man in a whorehouse, but Charlie is usually the one using colorful language. So, Nathan, should all investors be taking mole rats as their new spirit animals?”
Jake: “Well, maybe. But at the very least, they remind us that survival, resilience and adaptability are universal principles, whether you’re a rodent or an investor.”
Tobias: I have nothing to add and seen.
Jake: All right. I appreciate you guys for humoring me on this. This was probably a terrible idea. Honestly, the show, if I’m not keeping myself a little entertained, then what’s the point? So, I appreciate– [crosstalk]
Tobias: It was like playing Glengarry Glen Ross. This is incredible.
[laughter]Tobias: Sign on the line. Sign on the line that is dotted.
Jake: Yeah. Always be closing.
Tobias: Good job, JT.
Jake: That was the fanfiction.
Ian: Sorry, guys. I realized I could barely read.
[laughter]Jake: That was the Berkshire fanfiction that no one was asking for.
Ian: Right.
[laughter]===
Was Peter Lynch – The Barry Sanders of Investors?
Tobias: So, I have a question for you. This is inspired by Ian’s goat or great investor. There are a lot of investors out there who sit at– Well, Peter Lynch has a 13-year track record. I’m not misremembering that, if anybody can correct me from–
Ian: Yeah. 13 years, 29.2.
Tobias: It’s like 1983 to 1996?
Ian: No, 1977 to 1990, I think.
Tobias: Okay. Oh, even better. Who went to 1996? Was that Bill Miller? Oh, no, that’s not right either. Forget that. What do you think about an investor who has that 12-year period, which is you can have the– and then hangs it up? He’s still alive today, so he could have kept on going for 30 years more.
Ian: Yeah.
Tobias: What was the reason for him giving it up and what can you sort of– Is he just a good timer? He said at the end, “That’s the end of my market. I can’t find any more opportunities. I’m off.”
Jake: At some point, you get rich enough where the stress of it might not be worth it anymore.
Ian: I think I tweeted something about this a week or two ago about him in particular. I wrote an article about this, because I am fascinated by– Peter Lynch basically pulled off the Barry Sanders in the investing world. He went out on top and even says as much in the statements he made back then about how he wanted to go out while champagne was still being popped, something like that. He was only 46 years old when he retired too. You could say that, “Yeah, he was wealthy.” But I think if you pull up his net worth, obviously, it’s a lot. But it’s not billions. It’s a $100 million, $200 million, which is obvious–
Tobias: That’s enough.
Jake: Poor guy.
Ian: Yeah. But you know what I mean? But it’s not like, nowadays where it’s like, “Well, if you’re not making $10 billion as a hedge fund manager– [crosstalk]
Jake: Why bother?
Ian: I think just managing the portfolio probably in a public mutual fund like that was stressful combined with just the amount of work he had to do to oversee literally owning 1,200 companies in the portfolio.
Jake: Yeah, that’s harsh.
Ian: That’s one thing that a lot of people forget.
Jake: Quite a bit of turnover too.
Ian: Yeah. [chuckles] It’s like, he was not a concentrated investor. He’s literally in 1,200 companies.
Tobias: Are you doing a lot of oversight with 1,200 companies?
Ian: [Jake laughs] I don’t know. It’s a good question. It’s a good question. It wasn’t always–
Tobias: I’ve got 30 in one portfolio and 100 in the other. I don’t know that I’d be doing– I’m obviously not doing not well. [Jake laughs] I’m not visiting each location.
Ian: Yeah. So, I don’t know what the right answer is, but I imagine he was in an incredible amount of stress and just turnover of equities. He could probably have a sense for timing just like Barry Sanders did, just like Jerry Seinfeld did-
Jake: Yeah.
Ian: -at the top.
Jake: Plus, his kids were getting too old to get those investment insights from. Wasn’t it?
Ian: Yeah.
Jake: What his teenagers were into?
Ian: Actually, one of my favorite quotes of his was when he was managing Magellan, and you could tell it was an inner ego pushing him, because it was just like, “The fund’s getting too big.” He has some quote about when the fund reached a billion, people told me to shut down. It’s too big. You’re not going to be able to outperform. They said the same thing at $3 billion, same thing at $8 billion. And he said the most gratifying part was he managed the largest equity fund in the country, and he was outperforming and it was like a giant, I think, middle finger to all the naysayers. Maybe they panelized him.
Jake: It’s pretty legit.
Tobias: Coming off 1,200 positions, you’re only $800,000 in each one of the billion. Is that right? I think that’s right.
Ian: I think it was 1,200 towards the end.
Tobias: Okay.
Ian: But I think it was–
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Buy and Hold Forever? The Truth About Long-Term Investing Strategies
Tobias: It just didn’t sell.
Ian: It was always several hundred, you know?
Tobias: It was never sell.
Jake: [crosstalk] math pretty good though, Toby?
Tobias: Just keep buying.
Ian: Yeah.
Tobias: I have some sympathy for that approach. I think if I could get away with it, I’d do that. Never sell, just buy, because I think you get this behavior in some stocks where– I’ve talked about this a little bit before, but I’ve done these studies-
Jake: Done the math on it?
Tobias: -where I look at basically, if you buy and never sell. You can do it with any index. You can do it with the S&P 500. Just take an S&P 500, rebalance and don’t rebalance it when the committee does it next and it outperforms the S&P 500. It’s true in just about any index that I look at, the rebalancing seems to hurt. So, I think there’s a reasonable argument for just buying and holding forever.
The only thing is that after about five years, there’s nothing that is predictive, so there’s a lot of randomness in it. Its value is predictive out to about five years. But it’s not like you would think that quality would be a pretty predictive factor, but it’s not at all.
Ian: I think it works in larger public companies. I think you do it in larger companies which are more mature and robust. The shelf lives of smaller microcap companies. They’re shorter than what investors want to admit. They’re almost all cyclical. Even the winners have four to eight quarters of success, and then they stub their toe or the management teams can’t innovate another product or two to sustain the trajectory. And so, I find in microcap, nano cap, the average success is a one-to-three-year success story or window.
I think that you can do a coffee can, especially if you’re valuation centered. The key to everything is buying it, right, that your initial purchase price. And so, I think you can do that in larger ones. Like, you don’t want to be that– What’s the overused one buying Microsoft in 1999 at $58 per share with that environment where it literally took 21 years.
Jake: 14 years.
Ian: No, it took 21 years– Actually, it took 21 years to get to catch up to the S&P.
Tobias: Yeah, that makes sense.
Jake: 14 to get to break even, I think.
Ian: Yeah. It’s just stuff you and I all know, most people know, like valuation matters, your entry price matters. It’s just everything. It’s like, you can buy Costco at 60 times earnings, but if the thing just re-rates to 40 times earnings, it’s going to take six years to get back to the current price. Like, nobody wants to sit on dead money for five years. I don’t, my investors don’t, my wife doesn’t want that.
[laughter]Tobias: I think the argument is that you pick up a very small handful of giant outperformers, and so you end up at the end. I’ve always said this. The funniest thing is that even though you’re buying incremental amounts of these tiny little companies along the way– Sorry, not tiny little– tiny little amounts of these companies incrementally over a very long period of time, the ones that outperform get so big in the portfolio. They’re all the things that are working right now. They’re the things that are successful and popular now. So, your portfolio looks like this.
Jake: And you look like prescient, just genius.
Tobias: Yeah, you got this Kelly weighted portfolio. It’s not Kelly weighted, but it has that look like you got all these biggest positions are a few 8% positions, a few 5% or 6% and so on. It’s that kind of shape. From my perspective, it’s quite an attractive looking portfolio because right now, it would be Google and Apple. Because all these things have been cheap at some point over a period of time where you could have bought a little fraction of them.
Ian: Mm-hmm. Yeah.
Tobias: I can’t fit a good story to it. If I could find a good reason for why it worked, I’d probably do something with it, but I just don’t think it’s there– I can’t find the story. I don’t know why they do it other than just blind luck.
Jake: I think it’s an expected outcome of how power law driven the world is.
Ian: Yeah, you can’t escape it.
Jake: It’s just power well out turtles all the way down.
Tobias: Power well out all the way down.
===
Position Sizing in Investing: When to Go Big and When to Hold Back
Ian: I like the idea you said there, Toby with– and it’s a part of investing stock picking where I’ve evolved is really on the position sizing, the buying part. I even talked about in our annual letter I just sent out last week. Even five years ago, it was just like, “If It’s not a 10% or 15% position at cost, it’s not worth my time.” I’m not convicted or whatever the case may be.
Jake: Have you think about it now?
Ian: In reality, I found that works better, is actually for us at our strategy now is like “No, it’s okay to take a 3% to 6% at cost, cap it there and let it earn its right to be in a 10% or 15% or 20% position.” I love having big positions, but I love them even more when they earn the right to be there. Not me just trying to prove to the market that I’m right and the market’s wrong. So, I like the idea what you said there, Toby, about taking smaller positions and then doubling down when you see more success when you have build more trust in it too allowing yourself that optionality and not going all in at once and then just trading water.
Tobias: Well, there’s some argument for that– OSAM I know has done this that they have a two-year rebalancing schedule for a portfolio. So, you rebalance half every year. And so, they’re buying whatever is– They have a model portfolio. Whatever the actual portfolio is buying during that period of its buying, it’s buying that model portfolio. So, you have this time weighted– They get more exposure to companies that stay cheaper for longer, because it’ll just be a bigger part of the portfolio if something sits in there while it’s during that buying period.
I think that’s an interesting approach even for investors who aren’t as systematic or more discretionary. If you’re not buying a huge position at cost, you’re just buying a smaller position. And then, it sits there and it’s cheap for a while, so you do get to know it a little bit better, get more comfortable with it, buy a little bit more. And if it keeps on sitting cheaply, then– There’s always two thoughts, because I’m missing something, obvious that everybody else can see or is it opportunity still exists, so keep on buying. There’s no research behind that, folks. That’s just me guessing off the top of my head.
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Investing Strategies: When to Double Down and When to Hold Back
Jake: Well, I would say that an extended bull market would make you feel like you should. As soon as you have a good idea, put most of your chips in, so that you can get exposure because everything’s moving away from you. So, what do you need to do? Like, “Well, I’ve got a great idea. I need to load up on it, right back the truck up.” But that’s not always the case in the world. Sometimes the price comes to you even more than it did before, and what was cheap gets cheaper.
Boy, it sure is nice to have some extra capital put aside to be able to double down when the price is halved on you, even though you thought it was cheap when you were buying it the first time. And continually lowering that cost basis through a down cycle, I think you can build real wealth there.
Tobias: There’s only two things that happen. If you load up immediately, that’s not the bottom. The price is going to go down a little bit more. But if you nibble, then it runs away from you. That’s all that ever happens.
Jake: Those are only two scenarios.
Tobias: The market does exactly what you don’t want it to do.
Jake: Yeah.
Ian: The key is to buy and then let all your family and friends know about it. [Tobias laughs]
Tobias: That’s it.
[laughter]Ian: That’s a good way to get a 70% drawdown.
Jake: Immediate drawdown.
Ian: Yeah.
[laughter]Tobias: I mean, what’s a drawdown? How long since you’ve had a drawdown?
Ian: I know. Yeah, it’s crazy.
Tobias: I look at the valuations in the portfolios that I run, and I think that it was cheap in August 2020– It’s cheap in whatever the low was for that year, was it October somewhere in that–
Jake: What? This last year?
Tobias: No in 2022. 2022,
Jake: Oh, 2022.
Tobias: 2022 was the last time we got cheap, I think. It was just whatever late in 2022. 2022 was down and it bottom somewhere and then it started rallying a little bit towards the end of the year. Forward returns then were looking pretty good. I think forward returns now looking pretty anemic, still better than the index, but nowhere near where they were a few years ago.
Ian: To your point, Jake, when stocks are going up, everybody just sees upside. When stocks are going down, you rarely do the right thing, because all you see is more problems or issues and all you see is more downside that it can always go cheaper. [crosstalk]
Tobias: That’s why you need a valuation view of the world where your whole screen is getting greener and happier and happier as the market’s going down, so you’re feeling better and better. And the other way around. When the market’s going up, screens filling up with red as everything’s getting to full value. Just train yourself to feel inverse to the market.
Ian: It’s also what intrigues me a little bit about getting back to the goat investors that have a 20% CAGR. A firm like Turtle Creek out of Canada, they have a deep value bent, but they’re actively trading. Every day as something gets closer to intrinsic value. They’re shaving it off as it gets further away. They’re adding to it on a daily basis, and they actually break down our activity in the portfolio added this much alpha during the year, where if we were just pure buy and hold in these 30 securities, it would have been–
Tobias: What do they estimate that it adds?
Ian: What’s that?
Tobias: What do they estimate that it adds in terms of performance– [crosstalk]
Ian: Well, they give it by company by company. So, I have to look at their latest presentation. I think they’ve done 19% net for 25 years. I forget what the difference is, but they’re another one those– Again, they do things differently where at least most investors are bought into this buy and hold forever, don’t touch it, quote a philosopher or something,-
[laughter]Ian: -where like they take it different. Like, “No, we’re going to turn the subject people don’t like to talk about, which is selling. We’re going to innovate on that and reintroduce that back and make that our advantage.” That’s why back to the Melby example and then them is another example that I think are doing a skill differently than most. It doesn’t mean everybody should be doing that, but I think it’s interesting, that ability to really be, well, first, accurate in your assessment of intrinsic value first, and then you acting on anonymous on a daily basis once it gets too expensive or gets less expensive.
Jake: Imagine how frustrating it would be though to realize like, “God, if I would have not even come into the office this year, we’d all better off.”
Ian: Yeah, the inertia analysis. That’s it.
Jake: Yeah, the inertia analysis.
Ian: Yeah. I did that in our letter this year. And of course, I’m only going to do it when my activity adds to the–
[laughter]Jake: Yeah. Drop that out on the–
Ian: Yeah. Next year, it will not be included in any of my letter.
[laughter]Jake: Or, the other one that equal weight one is another one that can make you equal weight your own portfolio.
Ian: Yeah.
Jake: What am I doing here?
[laughter]===
Trading Around Positions: How Activist Investors Maximize Returns
Tobias: There’s an investor whose name just escapes me a little bit, but he’s a large cap activist, comes from a background in European private equity. He’s been running this thing out of New York for 20 years. Could have a 20-year track record. He estimates that he gets 20% of his returns from trading around positions, because they only hold five to eight positions and they hold them for a long time, because they’re activist or engaged behind the scenes. So, they can’t trade in and out, but I guess you can trade around a position if you’re an activist.
I like that as an approach man. I think that makes sense. If something’s going up, the opportunity’s going away. And so, it should be a smaller part of your portfolio. It’s the risk reward is changing all the time. I don’t know if it’s changing daily. I’m not saying necessarily that you can do it to that level of precision. But probably across a whole book, you got to change a few positions around.
Ian: Well, I think when you’re concentrating like that too, Toby, in eight positions, I know there’s a few of them that I own that you’ve owned for years and you know the management teams really well. You have a really good pulse on that company, its value and how it’s not accurately reflected in the share price, or maybe it is, and being able to take advantage of that. There are three or four names where I feel like I’m fairly accurate in probably being able to trade them like, “All right, this is a little bit [crosstalk] Oh, it’s definitely a buy here, because you have that knowledge of it.” It’s almost like the pulse of the company.
Tobias: Yeah, I try to get that effect trading in the stuff that I run. We’ll just buy a position when it goes down, back to equal weight, sell a position if it’s gone up back to equal weight. I think you get a little bit of that. I like that Shannon’s Demon idea in a portfolio. It helps to have a few things that are working against each other in the portfolio, so that when something’s working, something else isn’t you can rebalance across.
Jake: Yeah, it’s the Farmer’s Fable thing too.
Tobias: What’s the Farmer’s Fable?
Jake: Oh, that’s where– We did a segment on this, but it’s basically like, if you trade– Let’s say, one farmer has a bad year and the other one has-
Tobias: Oh, yeah.
Jake: -a good year and then you give some of the seeds to the other one, it’s limiting volatility drag at the end of the day.
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Planet MicroCap Showcase: VEGAS 2025
Tobias: Ian, coming up on time. Got anything you want to promote, or let anybody know how to get in contact with you or follow along with what you’re doing?
Ian: Let me see if I can think of something different.
Jake: [laughs]
Ian: Maybe one thing that’s worthwhile mentioning. I’m at the MicroCapClub’s teamed up with Bobby Kraft of Planet MicroCap and we’re doing an event in Las Vegas April 22nd to 24th. It’s free to attend. You don’t have to be a MicroCapClub member or part of the community to attend. As long as you’re a Microcap investor, you can come. We’re excited about that. I think it’s going to be–
Jake: Yeah. Is that companies coming in or what’s the–?
Ian: Yeah. So, we’re up to 315 investors registered. I think we have 60 companies. It’s a really good lineup of companies, profitable, growing, there’s not too many story stocks in that list. So, it’s good. I think it’s going to be the best large format microcap event in the United States will be this one coming up. Maybe a lot of listeners don’t realize this, but most MicroCap events in the United States, it’s basically just a sea of service providers trying to sell each other something.
There are very few real investors that attend. And so, to be at 315 real investors, that’s probably 300 more than normal MicroCap events. [Jake laughs] We have people flying in from around the world. So, it’s going to be an awesome experience for people if they want to come out and see the best of what MicroCap has to offer.
Tobias: Good stuff.
Jake: Yeah. It should be fun.
Tobias: JT, anything to add?
Jake: No. Just, again, I appreciate you guys humoring me on our little skit-
Tobias: Oh, that’s good stuff.
Jake: -that we did. I wish I would have had more time to polish the writing, but it occurred to me last night, I was like, “Oh, let’s just go for it.”
Ian: Yeah, I would have still fumbled the words, Jake. So, it doesn’t really matter.
Jake: I’m sure if we did a second take, it would have been golden.
[laughter]Tobias: Best takes your best take.
Jake: Okay.
Tobias: I don’t-
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