By coinnews 
00:00 Speaker A
It’s now time for some of today’s trending tickers. This morning we are watching Berkshire Hathaway, previewing earnings for both Palantir and Hims & Hers. First up, Berkshire trending after a big weekend of news out of the company’s annual shareholder meeting here, including Warren Buffett tapping a new successor. We did know energy executive Greg Abel was going to be taking over. That is set to occur at the end of this year. Shares are lower today, on track for their worst day since April 4th. They’re down just about 5%. Adam Johnson is still here with me to provide some commentary. And Adam, I know this isn’t a name that you own, but how do you think about it?
00:41 Adam Johnson
Right. It’s a stock. It’s a value name. I’m a growth investor.
00:44 Speaker A
Growth guy, yep, yep.
00:47 Adam Johnson
Yeah, anyone who’s surprised that Warren Buffett, God bless him, is retiring, um, needs to just pick up a newspaper and I mean, come on. How old is Mr. Buffett?
00:57 Speaker A
He’s in his 90s, yeah.
00:58 Adam Johnson
He’s in his 90s. And we’re going to be surprised that he’s retiring. Maybe a little sad. I’m only surprised he didn’t retire a decade ago. I mean, God bless him, a legend, a gentleman, a thinker, a leader and inspiration for so many.
01:11 Speaker A
Does he frame your thinking on investing at all? Has he influenced how you think?
01:16 Adam Johnson
No. You’re very different thinkers, yeah.
01:18 Speaker A
You’re very different.
01:19 Adam Johnson
He is a value investor. He, for example, Bank of America, one of his big positions. You buy Bank of America when it trades at a discount to book value and you sell it when it gets to about 1.5 or 1.6 times book value, right? A value investor says, here, it’s a buy, here, it’s a sell, and you’re playing that differential. And value investors sort of go in and out of the same name, perhaps, you know, multiple times as the stock moves around with the business cycle. I don’t do that. I’m trying to find a wonderful young company or in some cases, a bigger mature company that is growing at double digits. And by double digits, I want to find earnings growth of 20 to 30%, maybe more in the case of, say, an Nvidia or AI stocks. And then I try to figure out what the, uh, what the cash flow will be three to five years from now, discount all that future cash flow back to the present, and then put a multiple, a PE multiple on that. And that’s, if I say, if I do that analysis, and I find that the stock is trading at, um, a price that I think is a fraction of where it ought to trade, I buy it. And then when it gets to my target, I always sell a third. Right. And then I rerun the analysis. And if I can get to a higher target, I hold on to it. So that’s the way I invest, very different from what Mr. Buffett does.
03:00 Speaker A
Well, we’re going to talk about a potential name that fits somewhat into that framework here. We’re going to talk about Palantir shares wavering just a bit this morning. Earnings out after the close. Analysts are expecting a massive 36% year-over-year revenue jump. The stock down about 1% right now. Investors gearing up to get insight into AI demand and defense spending. I know this is the type of name that you could have added to. It’s a growth stock, but it is not in your positions.
03:27 Adam Johnson
Yes. Yeah.
03:29 Speaker A
Why?
03:29 Adam Johnson
I stared at that stock every day when it was at eight bucks and thought, can I buy this thing? And the reason I didn’t, and I was wrong not to buy it, but the reason I didn’t is that at that point, um, their business model was lopsided, by which I mean, they would go into a company, and they would get a huge upfront payment, which was typically 90% of the revenue they would get from that client. And then over time, eight months after they installed the AI platform into that company, they would get a small subscription, which was just 10%. It should be the other way around. Get 10% up front, and then get the 90% on the back end spread out quarter after quarter after quarter. That’s sustainable cash flow. They didn’t do that. They have since switched, um, but the stock had already run. And at this point, it’s trading at, I don’t know, 200 times earnings. That’s just, I know I’m a growth guy, but 200 times earnings is an awful lot. So, no, I don’t own Palantir, and that’s specifically why. It was about the cash flow of the business.
04:47 Speaker A
All right. Well, let’s also talk about another name here, Hims & Hers announcing a C-suite shakeup ahead of its earnings out after the close. The health company tapping an Amazon executive as its new chief of operations as it does plan to expand into areas like blood testing. Obviously, Hims & Hers has been on a bit of a run over the course of the past couple of months. They are providing a compounded GLP-1 drug to consumers recently, teaming up with Big Pharma as well in an attempt to reach consumers more broadly with these drugs. How are you thinking about a company like this?
05:20 Adam Johnson
Yeah.
05:21 Adam Johnson
So I don’t own this one because it’s feast or famine. And it’s very hard to try to figure out whether this company’s going to make money a year from now, two years from now. And here’s why. As a compounding pharmacy, they are allowed to compound or fabricate or make drugs that are on allocation because we can’t make enough. Great example, Wegovy, Ozempic, right? Uh, drugs made by Novo Nordisk that help diabetes and weight loss. Well, there was so much demand for these drugs that Novo couldn’t make enough of them. So compounding pharmacies were allowed to basically just look at the recipe and say, oh, here’s how we make it. And then they make it and sell it. Um, but when the drug comes off allocation and those drugs are no longer on allocation, Novo can make enough of them. They’re not allowed to make them anymore. Right. Right? So it’s feast or famine. That’s a hard business to own. I mean, more recently, they’ve gotten into the sex drugs market, right? You know, Cialis, etc. So if you’re on your Instagram feed and you keep seeing, you know, all these ads, you know, better, better sex life, go to Hims & Hers. Yeah. Hair loss supplements. All kinds of things. Yes. Yeah, I’m not a buyer of this company.
07:04 Speaker A
Yeah, and to your point, we definitely see a lot of volatility around any announcement from the FDA on GLP-1s. So it’s a great framework there for those investors.
07:13 Adam Johnson
Yes.