00:00So you bought this in 2023 from the Weiss family who'd owned it for about 40 years.
00:05Why even buy it to begin with? What was the growth thesis for, again, this brand that's
00:10maybe more of the 1980s? So Cloverlay acquires uncorrelated private assets. And they can be
00:18tangible or they can be intangible. But they behave in very unique ways because they are
00:24not operating businesses. So in the case of the Care Bears, on the intellectual property side,
00:29an intangible asset, we own the IP. We don't make backpacks and we don't make t-shirts and we don't
00:35make movies. But we collect and build a global, durable stream of licenses and royalties based
00:42on the intellectual property of the Care Bears. And that behaves very unlike a consumer product.
00:46That behaves more like a music catalog. Right. So you don't need to worry about consumers pulling
00:51back of people not buying as many Care Bear toys or something. That's not as big of a concern to
00:55you.
00:56The way contracts are structured in this particular segment of IP is always with minimum guarantees.
01:02So there will be payments even if no plushie toys are sold in Walmart. However, the contracts are
01:08also structured for the intellectual property owner to participate in the upside of really strong
01:13sales. And that's one of the things we were lucky enough to witness with Care Bears.
01:17On this IP itself, is there something to the nostalgia economy right now? Is that part of the thesis?
01:23The power of the brand is remarkable. And Cloverley looking for sort of undiscovered assets. We're
01:30looking for something that felt like the Care Bears feels before knowing the Care Bears would be
01:35available. And we were looking at iconic, boring, overlooked. Everyone thought the Care Bears was
01:41much, much larger than it was. But there's a lot you can do with a brand that powerful where everyone
01:48smiles when you say, well, the last deal we exited was the Care Bears. And they say, I need to
01:52know more
01:53about that, please.
01:54Well, I mean, to the point of it being smaller than people thought, it was reported when you
01:57bought it that the enterprise value was around $100 million. Like what sort of returns did you get
02:02from this thing on exit?
02:03It's a great exit in less than three years. And I think in the press releases, we talked about the
02:10knowable, findable growth in revenue, both at the storefront as well as inside the company. So it's
02:16just been a great result for us.
02:17So again, your assets, to your point, you know, looking for very uncorrelated things like
02:22everything from Broadway touring rights to wildfire fighting helicopters. Like it's how do you find
02:30experts? Because it's not like you're like the biggest platform out there. How do you find the
02:34right people to take these assets and grow them when they are so different?
02:38Our commercial license is to have lived in each of these pockets for decades and have incredibly
02:44strong and deep networks of potential operators, potential sellers, potential targets. And then
02:51when the constellations come together, as they did in the case of the Care Bears, it becomes very,
02:56very obvious. And whether you're talking about firefighting helicopters or planes, or you're
03:00talking about the Care Bears, or you're talking about obscure corners of litigation finance,
03:05there are common traits across each of our assets because they are assets. And usually you can
03:12grow them. Any other like esoteric, nostalgic IP you're looking at now?
03:15We're looking at a lot. We don't want all of your viewers to know what we're looking at. Just
03:19put it this way. It's like a flavor, a sprinkle.
03:22We have been looking very closely at some of the royalties that are embedded in both film and
03:31television that no one has really thought about how to strip out a piece of the royalty stream.
03:37I know you can't give away too much, but is that like music?
03:40It could be. It could be music. It could be a lot of different things.
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