00:00 And of course, we can go into different outlooks here.
00:04 Let's talk about smaller companies.
00:06 And we've been focusing on that also with kind of like the IWM.
00:10 What do you feel about the smaller companies going forward and maybe let them go into the
00:15 tech?
00:16 Sean likes the tech.
00:17 Yeah, yeah.
00:18 Consumer tech, small.
00:20 I think that's honestly where some of the opportunities exist.
00:24 Rates rise, right?
00:26 The whole question quickly, the playbook turns to small companies get hit, they're not going
00:30 to be able to afford to refinance or something.
00:34 And some of that playbook is true.
00:37 There's truth to all that.
00:39 But I also think there's plenty of winners out there that are fundamentally leaders in
00:43 their categories that swing just as large as some of the mega caps in their respective
00:50 niches, have pristine balance sheets and happen to be smaller and are kind of getting forgotten.
00:56 And when you have this kind of magnificent seven concentration that has taken place.
01:02 And what that's led to is, I think a lot of opportunities out there across some of the
01:06 stuff we own, even things that are outside of our portfolio today, where generally speaking,
01:12 it's around the consumer.
01:13 People have been questioning the same questions we've had today around the consumer.
01:18 When is it going to crack and who's going to get hit?
01:19 Let's just stay away from those.
01:21 Who's smaller in scale?
01:22 So therefore, when this refinance wall comes to breath, that they're not necessarily going
01:27 to be able to refi at the same levels.
01:31 And then small, just because in general, small caps tend to perform poorly.
01:37 And then they have some more exposure to more cyclicality.
01:39 So for us, we think there's plenty of companies out there within those categories.
01:43 That's where we're fishing in more so than the mega caps and things like that, that have
01:48 performed well, even though we own one or two of those, the mega caps.
01:52 What are a couple of those names, if you don't mind, Sean?
01:56 Yeah, interesting ones for us.
01:58 Arguably the most, I think, interesting one, heading into 2024 is Fiverr.
02:05 They're that leader in that freelance ecosystem.
02:07 Freelance, payroll.
02:08 If you look at all the payroll providers, they've gotten smoked, right?
02:13 And you look at, one, they're based in Israel, so that didn't bode well here over the last
02:20 month, a month ago, or two months ago, whenever now the time period was.
02:25 And then before that, you had the AI threat when GPT and Chad GPT and some of the other
02:33 players rolled out some of their products.
02:36 That ultimately hit a little bit this category, not only them, but also beyond them with companies
02:43 like Upwork.
02:44 But anyways, you look at a company like that trading at low teens multiples, continuing
02:50 to grow.
02:51 They comped against 80% growth a year ago.
02:54 Their average spend per buyer continues to rise.
02:57 Pristine balance sheet.
02:59 Some of the characteristics that I was just mentioning before.
03:02 So that's one.
03:03 A company like Zoom, I've actually come on here and talked about Zoom and it's kind of
03:06 just treaded water the last six to 12 months.
03:10 But ultimately I think the company is continuing to perform in a way where there was a lot
03:17 of pull forward, obviously during COVID.
03:20 Margins continue to stay really, really strong.
03:22 $6 billion of cash, no debt.
03:25 One of the better product teams out there and trades at 10 multiple in terms of free
03:29 cash flow.
03:30 So that's where it kind of excites us, where it's kind of gotten forgotten.
03:36 And all it needs to do is show some form of growth beyond 3% to 5%.
03:42 And we think that's possible here in the next year and a half, two years.
03:46 Zillow's of the world, that's more cyclical.
03:48 So rates dropping.
03:49 Anyways, that's kind of like the linchpin there though is the rate.
03:53 You look at TLT, you pull up that chart and we're sitting here at a pretty interesting
03:58 level where we think if you back out, you can essentially see that we're at those, what
04:04 is it like?
04:05 Yeah, that's like 2022 around there, I believe.
04:08 Yeah, the October lows.
04:09 We can break above that.
04:11 I think, again, what we've seen in the rates market here in the last month, I think we
04:17 see more of that, but it's all predicated on money flowing into it at this stage.
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