TIP699: Unlocking High-Growth Investments w/ Jason Donville and Jesse Gamble
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You're listening to TIP. Today's guests, Jason Donville and Jesse Gamble, are a few of the best growth investors that I've encountered. Their firm, Donville Kent Asset Management, has built an incredible track record, beating the S&P 500 since 2008. They've managed to do this through two brutal down cycles in 2008 and 2020. And through changing economic environments, they've consistently identified undervalued growth stocks long before the market catches on.

Now, I had the chance to interview Jason and Jesse back in 2023, and I took so much away from our first conversation. This time, we're going to dive deeper into several investing themes. Over the years, they've refined their process, evolving from using systems such as Peter Lynch's PEG ratio to using systems based on return on equity, and now using the Rule of 40, which is just a very, very powerful tool for spotting fast-growing companies with multibagger potential.

We'll also discuss how they navigate the ever-changing market landscape, including why the market consistently underprices quality growth stocks, and how they analyze a business's moat by tracking key financial metrics. They'll also break down their stock ranking system, their approach to position sizing, and the geographical differences in stock valuation between the US and Canada.

Since Jason is ex-military and Jesse is a current professional athlete on top of what he's already doing with Donville Kent Asset Management, I wanted to learn how their backgrounds have helped them develop the resilience needed to thrive in investing, especially during market drawdowns. We'll also explore how they stay engaged during bear markets, why they believe AI is transforming business fundamentals, and how they find the best opportunities in small and mid-cap stocks, a space that many investors tend to overlook.

I highly respect their ability to just cut through the noise and focus on high conviction investments as well as having high levels of concentration in those investments. Now, as holders of Constellation Software since it IPO'd, we'll also talk about their views on why they prefer it over its spinoffs Topicus and Lumine. And finally, with money market funds at all-time highs, we'll get their take on how and when this massive cash pile might flow back into equities and what that could mean for stock market performance. Now, without further ado, let's get right into this week's episode with Jason Donville and Jesse Gamble.

Since 2014 and through more than 180 million downloads, we've studied the financial markets and read the books that influence self-made billionaires the most. We keep you informed and prepared for the unexpected. Now for your host, Kyle Grieve.

Welcome to the Investors Podcast. I'm your host, Kyle Grieve. And today, we welcome Jason Donville and Jesse Gamble onto the show. Jason, Jesse, welcome to the podcast. Thank you. Great to be here. Yeah, thanks for having us, Kyle. So it was great here going through your letters. Now, it's been a couple of times I've prepped for our first interview back on millennial investing and now for this one. And one of the themes that I've noticed in a lot of your newer letters is both growth and value. Now, I think that

many investors who buy these growth type businesses consider themselves value investors, even though they might own businesses that trade at multiples that would make the most traditional value investors just run for the hills. But you guys have a very clear set of metrics that you track very clearly that stayed according to your own numbers that include things like revenue growth and earnings growth, that many of the businesses that you own are cheap relative to their growth. So can you just review a

how you use these metrics to help determine if something is cheap, reasonably priced, or overvalued. Yeah, so I'll jump in. And I think a starting point would be to look at our process. So what Jason and I each have is what we call our stock trackers. So we have our universe of stocks that we're looking at, and it's changing all the time. But what we're doing is we're trying to compare apples to apples. So if you say this company looks cheap,

this company looks expensive or, but we'll take that numbers and we'll compare it to our universe being like, okay, well on those growth metrics, on those earnings margins, on that PE, actually it doesn't look that good because I can find 20 other stocks that look a lot better, right? So maybe it is really, really cheap. And if it's only growing 10%, maybe it does screen really well. But I think that's where we start is, you know, is it growing? What's its, you know, return on equity? Yeah.

And then once it's multiple and in, you know, if you just take any stock without comparing it to anyone else, yeah, maybe it looks good. But what we're trying to do is we're trying to optimize, right? So we're only trying to own mid 10 or 15. So maybe you probably, maybe you will make money in a name, but we're trying to find the best 10 to 15.

Yeah, well, I would say that our thinking on valuation has evolved quite a bit over the years, or at least in my case, because I've been doing this since the early 90s, so 92, 93, right? And originally, tend to look at growth a little bit more simply. And there was a ratio we used to have called the Lynch ratio, which is you wanted the company to be growing faster than its PE. So if it was trading on 15 times, you wanted better than 15% growth. Then we evolved into return on equity. So we were looking for companies with consistently high returns on equity, typically 20% or better.

Then what happened with so much M&A is the balance sheets got distorted, the calculating ROE accurately became a problem. So then we started in the last five or six years pivoting to the rule of 40, right? Which is the combination of the revenue growth plus the margin of the company, right? All three of those approaches, so the Lynch approach, the ROE approach, and the rule of 40, they're all kind of trying to get at the same thing, which is some kind of a quick and dirty metric when you're screening a universe of 10 or

like a thousand stocks to allow you to get down to 30 that you can take a closer look at. So I would say now that we look at the rule of 40, but when you're doing a factor dive into a database, right? And for people who are listening to this podcast, they'll know what I'm saying here. And you're really looking for four factors. You start by, let's say, factor one would be market cap. I want it to be a billion dollar market cap and greater. So you sort your database, that cuts your database in half. Then you say, I want companies that are only growing at 15% or better. Boom, you put those factors in.

The point is that those three or four factors you pick and the order in which you look at those factors has a big influence on what you're ultimately going to look at.

And with my looking at both where everybody, Buffett included, wants both value and growth. I want growth and I'm prepared to live with some slippage on value. There's other people who are hardcore value investors where they're value first and then they'll rationalize growth kind of later, right? So you kind of have to get a sense of what's your natural tendency. And in the current environment, particularly with so much interesting tech stuff going on in the world,

I'm not really interested in initiating a new position. And I think Jesse probably soar, but I'm not, if they're not growing by consistently at 15% per year, the nine, 10, 11% grower just doesn't interest me because with all this other tapping and tech, there is enough out there that's growing at 15% a year. And then the margins of profitability, we can make that a separate conversation. But as far as that starting point that I'm looking for, I'm looking for 15% growth.

And what we talk about a lot is what we look for, we call them compounders. There's probably more that gets thrown into that than it should. But the idea of compound growth from what we can tell, and we've done historical studies on this, it's just continually undervalued by the market. Humans can't really, we think in a linear manner. So if you're saying, if this company is going to compound at 15, 20% for five years,

You could almost put, you could put a significantly higher multiple on that and still make money, right? Like if you do that with five, 10 years of compounding. So that's why I think that whole value growth, it kind of gets a bit disruptive. There is a lot of value in growth, but when you have a company and if it's growing and so it's improving its underlying value of its business at 20% a year,

you know, the stock would fluctuate around, but five years from now, if it's growing at 20% a year, I guarantee, you know, you've made a lot of money unless you got extremely overpaid. And there is a bit of valuation discipline there.

So just from going through your letters and talking to you guys, I know that you guys are long-term business owners, which I really appreciate. And you're looking for businesses that you can tend to hold for, let's say, five to 10 years. Kind of like you just mentioned there, Jason, the business world is changing pretty rapidly. And a company's competitive advantage can kind of erode pretty quickly here if you take your foot off the gas pedal. So I don't necessarily think this is a new convention, but I've noticed it on a couple of the businesses that I've owned that I thought had very secure moats and then ended up being pretty weak. So

My question here for you guys is, you know, how often do you guys think you're missing the mark on some of your picks and given your concentrated nature, how are you mitigating some of that downside risk? Yeah, I would start with, like you said, a deteriorating mo shows up in the numbers.

right? We've owned Constellation for, what is it, like 15 years or something. And the idea was always, I would love large numbers or competition. And now the AI side of it, well, if that moat starts to deteriorate, you'll see it. You'll see it in growth. You'll see it in margins. Or the other argument was that they're buying, they'll have to start buying lower. They'll have to lower their hurdle rate. Well, that'll show up in the numbers.

If you're looking at every single quarter and you're on top of every single metric of that company, there's yellow flags, red flags along the way. Yeah. And you can get these things where a company is growing at a really good clip and then it goes through a growth slowdown and then it re-accelerates. And we've had a case where we've come out of some important names and then gone back into them. So for example, we own Consolation. We started buying Consolation at, believe it or not, 20 bucks. The stock's at, it's almost at $5,000. Right?

So it's beyond 10 baggers. It's beyond 100 baggers. But we lightened up in the middle because they went through a growth slowdown where they couldn't figure out how to grow much fashion 10% or 11%. This was back in like 2014, 15, 16. So we lightened up. Then they figured it out and they reaccelerated. And now they're consistently growing at 20% a year. So we've taken it back to a large position, right? So it does happen. There's a company...

There's a couple of other companies like EngHouse is a company that we've had for five years and then we get rid of it because they go through these kind of sprint and then they drift and then they sprint and then they drift. So it's not a perfect science. There are some companies you can just kind of buy them and they go forever kind of stuff, but you got to continually stay on top of them. And even in the largest cap world, like Apple's been a great company for years, but it's not growing anymore. And at some point, either they're going to have to either have

huge innovation because of the scale of the company to get it growing again. Or it could potentially become the next IBM where it just chugs along sideways. It's a cash cow. There's not a lot of growth there. So they don't all go on forever. And sometimes they run out of growth for a variety of reasons. And you just have to be kind of staying on top of it and then saying, okay, the Apple's slowing down and it's going to go sideways for about one of my altruism. And there's always an alternative. So-

So let's talk about an interesting term that you used in one of your letters, which was yarak. So yarak refers to a super alert state where the bird is hungry, but not weak, and it's ready to hunt. So you wrote about this specifically in the context of staying alert, no matter what the market is doing or how successful you've been in the short term. And I think this is just an excellent concept because it's really easy to get complacent and rest on your laurels in times of peak euphoria. So you guys have had a lot of success throughout the years, not just recently. And so I'm just

Interesting to learn, how are you guys maintaining this concept of YARAC in your investing practice?

Yeah, well, one is for complacency during good times, but it's also during bad times too, right? You almost want to go bury your head in the sand. And Jason says that all the time. It's like, no, we keep showing up every day because you never know when... We had a couple of phenomenal investments last year. And it's just from showing up, turning over rocks, doing our process, then all of a sudden you never know when that's going to happen. Jason and I were actually talking about this yesterday.

We had a couple of great ones and they're like, why are we going to stumble across something? And we might have started yesterday. We might be on top of something. You never know what is going to happen. And I think one is just we love what we're doing. So we're showing up and that's what gets us excited is trying to find what is the next best up and coming investment and trying to get there. So I think it's just...

You have to have that mentality maybe within you. I don't know, Jason, if you know something else about complacency or not. Yeah, I think I've noticed through the bear markets, right? The COVID-driven bear market of 22 was probably the toughest one I've had in my career, right? Because it lasted longer and it was deeper, right? I remember saying to Jesse as kind of a pep talk, don't turn away from the screen. Be completely engaged to this because when it turns...

if you're on top of what's good at that turning point, you will make a fortune off of those companies. And so some of those stocks last year were within a 12 month period, five, six, seven baggers within a 12 month period because they had become so beaten up in terms of mold, right? And so off they went. So you don't get those in the middle of a cycle or at the end of a cycle. Those are usually that first year coming out of the trough, you get some spectacular rebounds because

people just walk away from stuff and they tune out. They don't realize where the value is. And it's just a way to keep your concentration going through a bear market because bear markets are hard on the souls. People out there don't think we take it personally when the fund is down 3% in a day or something like that. Trust me, we go home and that's all we think about for the next 24 hours is the fund was down 3%. My clients all think I'm an idiot. They're going to pull their money. What's the future kind of stuff, right? So-

And so the way to get over it is stay focused on what's happening. Update continuously. I know it's painful, but stay engaged every day. So that would be my advice.

So let's talk a little bit about the performance of the Don Belkin asset management. So you're currently outperforming the S&P 500, which you've actually managed to do for much of the fund's existence as well, but you definitely did have some trouble back in 2021 through 2023. So I'd love to dive into that a little bit. Was there any point at this time where you felt like maybe your strategy wasn't valid anymore and that you'd have to make some sort of strategic shift?

Or were you well aware that, you know, patience was all that was needed for the market to kind of see what you guys were seeing specifically in the businesses that you guys own?

It was the big jump in the interest rates caught us off guard. That's what we didn't see coming, right? We didn't see that the supply constraints coming out of COVID was what's going to whack us because we actually were doing okay up until then. So for us, it's specifically 22 as a year, we just absolutely got our butts kicked, right? And most of it was multiple compression. So stocks, growth stocks that we're trading, this is using mainly Canadian stocks that we're trading on 14 times earnings that we're growing. By the end of the year, we're trading on five times.

And then guess what? Last year, we were up over 100%. So a lot of those stocks that were trading on five times just went back to trading on 12 or 13 times again. Our average company was not growing 115% or 20% last year. The huge amount of it was just multiple expansion as interest rates started to come down. So we didn't see that coming. And it's part of the business that we...

We get it right a lot of the time. We get it right more often than not. But in the 17 or 18 years I've been doing this, we've gotten our butts kicked twice in 18 years. 22 was one of them. And then that 08, 09 also was pretty tough. But the thing is that the back half of 09 was so strong that on the annual numbers, it doesn't seem like it. But if you took the worst six months of the 08, 09 period, same thing. We're down really, really hard, right? And then you get that resurgence and it kind of makes

makes the year-end numbers look fine and therefore people like oh they did all right say okay but if you looked at this at the end of april if you look at the april 09 at the at the bottom of the worst month right like oh my god these guys are idiots and you would have concluded the same thing in 22 and of course when you've been riding high for a long time there's a lot of people that quite enjoy watching a guy who's had a pretty good long run or a couple guys have a good long run get their heads handed to him and it's you know it's part of the business

Yeah. And to your point, Kyle, like strategy and did we make poor investments? If we were looking through our names, so this includes 21, 22, 23, 24, it was 90, I'm going to round the numbers, but it was 95% of all of our top investments had record revenue and record earnings. Following year, record revenue and record earnings. Following year, record revenue and record earnings. So the company, if we're doing what we said, they're compounding, they're doing well over that timeframe. And

And the stocks are declining, like mostly from that multiple compression as interest rates went up the fastest pace in history, right? So, you know, you sit back and you say, well, and we get, you get that question, what would you have done differently? And you're like, companies performed extremely well. Some of, most of them better than we had modeled or even expected, right? So, and then now we own mostly a lot of the same, you know, we kept those investments going. And again, they massive rebound last year and they're off to,

They look like they're going to have phenomenal 2025. So, you know, did we change strategy? No. Was there some, you know, bad investments that went bankrupt? No. It's that timing the market side that, you know, we don't think many people or anyone can do. I'll give you an example. There's a company called Vertical Scope, which we own, and it's just been ripping. We still own it. It's been ripping, you know, year to date. I think it's up 17% year to date. And we still think it's one of the cheapest things that we own.

So this thing put like pre 22 was trading for 30 bucks. It went to three.

So a year and a half ago, when you noticed the first time, it was around $3,350. It's at $12 right now. So it's gone from $30 to $3, back up to $12. It's been growing that whole time. I was on TV a week and a half ago, and I said, this is a $25, $30 stock. That only presumes it's back to where it was in $21 or $22, but it's been growing that whole time, right? And it's the Reddit of Canada, for lack of a better word, and it trades on seven times earnings.

I said, "This thing should be 14 or 15 times." Reddit could acquire these guys at a 50% premium and it would be massively accretive to Reddit. It's not as big as Reddit and it's a little bit different, but it's one eighth the size of Reddit as an acquisition. It would increase Reddit's earnings and its revenues by 15%. It's not that small, but it wouldn't be something attractive. Well, this thing went to three from 30.

Now it's back to 12 and a half. And I think within three or four months, it'll be at 25 or 30. That's the world we live in. So with your guys' strategy, obviously, you probably didn't take into account those interest rates and you knew that maybe some of your names would get beaten up. So I'm just interested in learning a little bit more about your perspective of that, being an institution here who's managing other people's money. How did your partners feel about that? Do

Do you guys have just these really good relationships with them so that they understand what you guys are doing and they're okay with taking some of the bumps along the way? Or yeah, please just expand on that as much as you can. First of all, we weren't ignoring interest rates. We were just wrong. We just didn't think they would go where they were. Because remember, coming into COVID, we're living in a deflationary world, right? It wasn't that long ago we're talking about negative interest rates. European institutions offering you a negative interest rate to hold their currency effectively. And we're like, what the hell? You mean I'm going to put my money in a European currency?

And then I'm going to pay them another half a percent just to hold that currency. Like, that's how crazy it was. So we just figured that we'd be back into a deflationary world pretty quickly, right? So our read on it wasn't that we ignore interest rates. We just got it wrong. I'll let Jesse kind of finish the answer. But when you screw up full disclosure, when you got it wrong, just like cold spay, because then people just think, oh, my God, the guy...

smooth over all of his mistakes. We just didn't think that interest rates were going to go as high as they did. We got that wrong. Yeah. And Kyle, I know you follow what we write and we put out and that's what we write and put out and speak to our investors. So to your point, obviously, we're large shareholders in our fund. So we felt the pain. So obviously other investors felt the pain. What we did is we try and just keep our investors on top of what we're doing. We were very open and honest. We write

very detailed quarterly reports, monthly commentary saying, this is what we own. This is what you own. This is why this is what's happening. And I think, you know,

at least educating to a certain degree, I think helps people understand that we're not a black box and know these companies aren't going to zero. So it's that type of... And a lot of the investors have been with us a long time. They understand volatility to a certain degree and they understand what we own. So I think that educating investors and just being open and honest, I think helps, especially in the long term. Stig Brodersen : Let's take a quick break and hear from today's sponsors.

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My audience gets a special offer of $1,000 off Vanta at vanta.com slash billionaires. That's V-A-N-T-A.com slash billionaires for $1,000 off. All right, back to the show. So speaking here towards what happened while you guys dropped here, I think it speaks a lot to the next subject here, which is I want to talk about, which is resilience, which I think is just an incredible characteristic, almost a necessity to have in investing, especially over a long time period.

I think that any manager who's been involved in investing for a long time period and is still around and is still successful, like you guys have to have some form of resilience in some way, just because, you know, you're going to have to be dealing with being a punching bag for the market. At least some of the time that you guys mentioned, you know, twice kind of as is what you guys have had to deal with. So how have you guys kind of managed to continue performing at these high levels during some of these lengthy drawdowns that you guys have had to go through?

Well, let me, let me, let me try to go a little longer. We, we, we've only had a couple of, we've only got really whack twice, right?

And like I say, in one of them, it was a short enough that we got back into the good so fast that a lot of clients almost didn't notice it. Right. Or some did. So really, the only tough one is 22. I think now I'll kind of shift to resilience in general. It comes from a lot of different places. It comes from how you were raised, the lessons your parents passed on to you, the life experiences that you have through things other than your work. Jesse is a professional athlete. I've been involved around athletics a lot of my life.

You know, I'm ex-military. So you learn a little bit of how to be cold and wet and miserable and still manage to, you know, get through your day kind of stuff. So there's different life experiences that build you up to that. But I think at the end of the day, you know, you believe in each other and you're decent people and you just go, yeah, just it's like that scene in the first Gladiator movie where he just gets everybody in the middle of the ring and just sort of says, everybody form that circle, right? And we're going to just fight this thing together. And that's what we did. And the team bought into that and we got through.

Kyle, I don't know if your investors know that Jesse is a hedge fund manager Monday through Friday, but he's a professional athlete on the weekends, right? And he's also like a CrossFit freak kind of stuff. So he's super fit and all that kind of stuff, right? So he's still playing professional lacrosse and doing this day job kind of stuff. And that's pretty impressive because Jesse's not a 25-year-old professional athlete, right? He's part of the reason he's still playing is he's super fit. And I think it speaks a lot to his kind of mental strength and

things like that, but he can manage both the portfolio and also be a professional athlete and be that fit at the age that he's at to be able to do that. So I think that alone tells you a lot about the guy's character and his kind of happiness priorities together. Yeah, I know. I knew, Jesse, that you were a professional lacrosse player, but I didn't know that you were still a professional lacrosse player. Can you maybe talk about some of your own experiences that have helped build your own resilience?

Well, I would just say, you know, it's sports in general. You don't always win. And how do you react to losses? And to be successful, you obviously have to react in the right way. I think anyone that's played sports kind of understands that. But to Jason's point, I think he himself and us did, you know, we circled the wagon as well.

And it's that mentality, you know, you could quit, sure. Or you could kind of do what's right for your firm, your employees and your investors and, and you battle through. So yeah, it was a hard year. But again, I think we're, we're one year into kind of this next cycle. So I think we're actually pretty excited, especially what we're seeing out there.

So speaking of cycles here, let's get into a little bit on maybe some of the macro. I know you guys aren't macro investors, which I very much resonate with, but there's definitely some overarching themes that I noticed that you guys like to talk about, especially in 2024. So at the beginning of 2024, you guys had this thesis that the businesses that you owned were going to continue increasing profit margins, continuing increasing earnings growth, and then hopefully also see some multiple expansion. Robert Leonard :

So can you maybe just provide an update on how this played out in 2024?

Yeah, so you definitely saw multiple expansion, right? We had many, many companies trading on single digit PE multiples. Today, we probably have a handful that are still trading on single digit PE. So you definitely saw multiple expansion. You saw earning growth. You saw margin expansion for a lot of our names. We think growth even accelerates this year. Margins accelerate again. You won't get the same type of margin expansion because, well, one is that inverse of the interest rates too, right? So interest rates got cut, but we don't think they got...

you know, at the same pace as maybe they, you know, those previous cuts the last few months. So yeah, so it did play out kind of as expected in the sense of those three factors. But again, we're not macro. So it's just going through name by name. And if you're looking at name by name right now, like, or we're excited, you know, they excite you for 2025, 2026 when, you know, revenue grows their margin expansions, expansions there. And then, yeah, you don't, you don't rely on multiple expansion as much.

I think, Kyle, though, that there was a macro set up at the start of 24 that's worth just briefly relooking at. And there was really three factors at the start of 24 that were really positive. The valuations were low in the small to mid caps. The weight of money, people were underweight, the small to mid caps. And interest rates had peaked and were coming down, those three things. You go to 25 and you sort of say, okay, so let's revisit those three things, right?

interest rates now look like they're going to go sideways. I don't see a Canada. They might come down a little bit, but in the States economy's rocking. I just, it's hard to imagine the interest rates are going to go much lower. So I, you know, people are discussing how many more, one more, two more cuts. I don't see it unless somehow Trump puts pressure on, you know, on the federal reserve, whatever, even though it's supposed to be a non-political organization, let's call it a spade. And so, yeah,

I just reach are going to be neutral as opposed to a positive valuations are still pretty reasonable in part because the mag seven and the mega caps are pretty expensive. Right. And yes, the weight of money is improved a little bit, but people are still relatively underweight because it's been too easy to just hide out in the, in the mag seven or in the ETFs that are dominated by the mag seven. Right. So at some point you're going to get a valuation differential. Right.

And I think it'll be good for people like us who are stock pickers in the small to mid cap area. That said, I wouldn't buy the Russell 2000 and it's not a way of diverting people away from me. That basket's full of a lot of garbage. So it's not really an asset class. If you took the Mag 7 and just created a bundle together and said, it's a single company, it's a rocket ship. It's just expensive. That's all. But the earnings and the profits and all the margins are phenomenal. You take the 2000 companies in the Russell, it's garbage.

right? There's, there are good companies. It's gotta be somebody who can look into that Russell and identify the 10 or 15 that is the way to play small caps and mid caps in America and the same thing in Canada. Yeah. We, we, we actually wrote about that kind of in detail it, because we were saying, look like this is one of the, this is the largest divergence between large cap and small cap. So if you believe in, you know, reversion to the mean small cap look phenomenal still does extremely phenomenal today, but

We broke down the Russell 2000. And if you want revenue growth, you want earnings growth, you want a profitable business with a decent balance sheet of that name, we wrote about it, we broke it down, but it was like 2% or 3% of that whole index kind of fits metrics that you would ideally want in a business. So that's not, if small caps look good and look cheap, there's probably better ways to get there.

So let's go over the Rule of 40 that you guys kind of already mentioned here, which I really like how you guys use it because when I first came upon it, it was kind of only used on tech businesses, kind of those sassy type businesses. But you guys have kind of broadened it out and used it kind of everywhere, no matter what kind of company it is in, what business it's in, or what industry it's in. So just for listeners of this who don't know what the Rule of 40 is, it's essentially a

kind of a tool used on generally, like I said, software businesses to help determine if a business's growth is healthy. So to calculate it in the traditional way, you add revenue growth and cash margins. And if those two numbers equal or exceed 40%, then you're looking at, let's say, a pretty decent business. So just an example of that, let's say a company is growing its revenue at 25%, has 50% cash margins, then you meet the parameters of the rule of 40. Robert Leonard :

So I'd actually, since you guys now have made it kind of a bigger part of your own investing, I'd love to know how you guys look at both the two parameters inside of this and which of them you guys think is maybe the most effective and predictable for future value creation. Well, there's a couple of things to think about. So the rule of 40 is a business. If you're looking at compound that you can hold for a while, it's at that 40 and the valuation isn't ridiculous.

And I would say ridiculous in nowadays market is probably over 35 times earnings, right? That's 25 times is not ridiculous anymore for a consistent compounding because a certain number of people have figured that. So 40 or better, you kind of know where this is a great, this is now a long-term buy and hold. So that's what we look for. However, we also want to look at the companies that are not at 40, but they're rapidly going to 40. So you actually get more upside from finding a company that's at 20, but you

But you can see, oh my God, last year was a 17. This year it's a 20. Next year it'll be a 25. That's actually the most powerful. So it's on its way to becoming one of those, right?

And typically where you get bad is where a company has got consistently high sales growth. So they're growing at 50% sales and then they're crossing break even. But you can look at the nature of their business and say, okay, this company should have margins that will go to a certain point. Right. But I'll give you an example in our portfolio in contrast with a large American company. So the large American company called Doximity, which does software for doctors. Right.

There's a small version of that company in Canada called Vital Hub, which does healthcare software. So Vital Hub, when we voted, their margins were about 8%, but they were growing at the level of Doximity and maybe even faster, but their margins were at 8% and Doximity was at 40%. So we said, if over the next five to seven years, they can move that from eight to 40, the re-rating of the stock will be phenomenal. Yeah.

So now, Jesse, what would you say that'll have that now? About 25. So they've gone from 25, but there's still another 15 points. They still think they can get to 40. They think they can get to 40 as well. So that's really where you get it. And so when you're looking for that playoff between the margin and the rule of 40, start by looking for the revenue growth. And if you find a company that's just crossing break-even, don't freak out that they're on 65 times earnings because that margin...

if it goes from even from 2% to 4%, that's 65% times earnings can become 15 times earnings like that. The better way to measure is if it's priced in as what's the price to sales ratio. Because you can look and say, okay, a mature role of 40 company that is trading on a stable valuation, what is a normal price to sales? And it's often 20, 25 times the price to sales multiple for a company like a Doximity. And if

And if you say, oh, this guy's crossing the break-even, it's on 65 times earnings, but it's only on three times sales. But the margins are coming up quick. Ignore that PE or cash earnings ratio because it's just temporary because the following year, right? And you're seeing a lot of companies like, you know, Shopify is going through that rating right now. So we have to get larger names. People like Shopify, even Amazon is starting to become like margins are coming up, right? So, and then we'd take that same logic and apply it to small and mid-cap companies in our area where you go, wow, look what's happening to the

Look what's happening to the margins that's coming over the next three years. Stocks on 45 times this year, which seems expensive, but they're growing at 22% a year and the margins are coming really fast. This thing might be only on seven or eight times three years forward earnings, right? Now, just want to describe all sounds easy. You only get a couple of those, like you get two or three of those a year. It's not bad. They're like a million of those lying around, but that's certainly what we're looking for.

So I think that's a really good segue here into my next question that I want to ask. So in one of your net letters, you had this really good graph that kind of showed the optimal zone that you guys like to purchase in according to its maturity levels. So you listed three levels that I'd like to go over here really quickly. So stage A was kind of a concept stock, which I guess you guys would probably consider a business that maybe only has rule of 20. It's not quite there yet. So these are pre-revenue, maybe unprofitable businesses, higher failure rates, higher risk, and need for financing. Robert Leonard

Then you move into the zone that you guys like to look at, which is business that are high growth, but also profitable.

businesses that tend to be overlooked, businesses that have minimal or preferably no analyst coverage. They hopefully are undervalued and now they're at a point of maturity where they can self-finance themselves. And then stage B that you guys wrote here was mature stocks, which are slower growth, but profitable, tons of analyst coverage, stocks that are fully priced and very well-known brands. And I think you mentioned a couple of them. Amazon, of course, is one that everyone's going to be familiar with. So you mentioned here that you use that rule of 40

kind of as a benchmark to kind of prepare yourself for businesses that maybe are getting to that zone. Will you buy ones where you have high conviction that it will go from 20 to 40, or are you generally going to wait for it and get a little more conviction and want to see the business perform and execute at a high level before you eventually make a starter position?

Yeah, well, I think the best way to answer it is with an example. So Jason already was just speaking to Vital Hub. We met with them in our office when they were literally just weeks public and they said, this is what we're doing.

This is the idea. They were just one little piece of software, not profitable, but they had recently just ran, sold a similar business. Now they're coming off for non-competing. Yeah, we're doing it again. This is the plan. Yeah, you're too early for us.

right? You're unprofitable. It's not that proven, but no, we like you guys. We like what you're doing. It was a few quarters later, they put in a couple other extra pieces of software. They break profitability and they say, yeah, now they're doing what they said they were going to do. And so I think we first initially invested with them at around $1.70 and that stocks at 12 bucks today over the last five or six years. Robert Leonard

And so that's one where we're meeting with companies all the time. And that concept, a, like you say, that we try and stay away from, because like Jason said, you'll get one or two of those that actually come through and you might have to take 50 meetings, a hundred meetings, but you know, you're on, at least you're on top of them. So when, you know, you first see those things, those, those, those companies breaking the margins you're looking for in the grocery market, you're not starting from scratch. Like you're on top of it. You either like the guys, you don't like the guys, you already have an opinion. Yeah.

And then you can react a lot faster. Yeah. I think that slide that you're talking about, Kyle, it's a nice graphing. It shows you the stage in the company's development. But I also think you can quantify that a little bit. I was reading a report this morning that was looking at 10 baggers in the US market. And a couple of academics have done this study on 10 baggers essentially over a decade. If you want to get a stock that's going to go up 1,000% in one decade, what are you looking for?

And the guy said, he did a couple of academic, did a big study. And the average company that became a 10 bagger, the market cap at the start of that decade or that 10 year period was $3.3 billion. So for most Americans, that would not even quite be a mid cap. It would be a small to mid cap, right? In Canada, we kind of, because we're one 10th the size of the States, we typically take everything in the States and divide it by 10. So in Canada, that would be about a $350 million market cap.

And that's completely consistent with what Jesse and I see as the sweet spot for finding these great companies in Canada is 350 million to about 2.5 billion. And they're just coming on the radar screen, but they're fairly elect. Would you get time to get to know the management?

the stage in the company's history is important, but also the market cap, right? Because it's just the likelihood that Microsoft or Apple, when they get that validated, I think Microsoft's a good buy and hold stock for somebody. So I would recommend that as a, I would say,

companies are probably going to grow at 12% to 13%. But if you're looking for that big score, you've got to be down in this, if you're a US investor in that short $3 billion to $4 billion market cap, of which there's tons of great companies,

And in Canada, same thing, between 250 million and the 3 billion. And when you look at all of our big winners, most of them are actually even below 350 when we started out, right? Vital Hub, way below 350. Zedcore, way below 350. Enterprise, way below 350. In fact, some of them are just starting to punch above 350 right now. But they're not so small you can't buy them. These are

for somebody who's listening in the States, these aren't like stocks that are so illiquid and so tiny that they don't care because in other markets, a $3 billion company in the States is the equivalent in Canada as a $500 million company as far as activity and that kind of stuff. So if you're searching in the mega caps, you'll find some great companies, but even in this study where they look at all the great companies, the Netflix and all that stuff, they still, the typical 10 bagger is starting at, your starting point is going to be in a market cap of around $3.3 billion. Right.

That's a good study. And that's kind of similar to some of the things that I've come across as well. So let's move on and talk a little bit about portfolio management, especially through the lens of position sizing. So you guys are pretty concentrated. So if you have an idea that you guys really like, obviously you're going to put pretty significant capital behind those ideas. So I just want to ask, how do you guys think about position sizing? And specifically, how are you thinking about position sizing entering a very high conviction position?

Yeah. Well, you don't just enter a high conviction position, right? Like it's not,

You might have a good meeting with management. It screens well. So what we do is we take a toehold position because it takes a long time for it to be a high conviction name usually, right? So you take that toehold position, half percent, a 1% weighting, and you've met with management and you've modeled it and everything looks good. And then another quarter comes out and they're doing what they said they were going to do. The numbers look good. So maybe you add to that position and then multitask.

Multiple quarters, multiple years have gone by before it gets to a significant size in the portfolio. And over those years, you've met management thousands of times and talked to clients and customers and competitors. And now you're on top of it, right? It can happen faster than that. It definitely has happened faster than that. But I think that also goes to the risk side. You don't just go out and buy 10% of your fund in a name because you think it's a high conviction name, but...

If you've done that much due diligence on it, you should have been, you know, starting to accumulate it fairly early on when you saw, when you saw like the green lights that, you know, it's potentially there. Right. So the bottom part of our portfolio, so we're very high concentrated. So top 10, 12 names are 80, 85% of the fund, but we do have what we kind of refer to as like a farm team below that, right. These starter positions and maybe we hold it for a couple quarters and we boot it out because it isn't what we thought it was or we do grow it over time and hopefully we do, but that's

but that's where the more of the turnover comes from. But that also is from a risk mitigation standpoint. You know it well enough by the time it gets to a size that could really hurt you, right? So let's go into

some of the reasons for selling. So Jason, you mentioned earlier something, sometimes valuation gets ridiculous. But before that, I just want to mention your kind of four main reasons for selling that I kind of took away from my research into you guys. So the first one is return on invested capital starts fading. The business is no longer a compounder. The second one, like I just said, is valuations get ridiculous. Third one being management becomes untrustworthy. And the fourth one is that the company ends up taking too much debt for whatever reason, maybe it's to fund a deal or whatever. Jason Williams

So I want to touch on the second point here, which is valuation is starting to get ridiculous. So what exactly is your framework for an absurd valuation? Is it a matter of you just know it when you see it, or do you guys have a more granular system to help you determine when something becomes overpriced? I'll jump on the day-to-day portfolio management. Jason can touch on it after. So I'll go back to our stock trackers. So we're trying to compare apples to apples.

So stock A, we own it, it looks good. And the stock price, and we had one that we literally just sold and it was up 300% over the last 12 months. So when you rank them and valuation is part of it, it starts to slide down the list, right? The growth metrics and the profitability are the same, but all of a sudden that one piece that you're using to rank drives it down the list. And if you're trying to own the best...

you know, dozen, 15 companies that you can own, then why are you owning this thing? Not, it starts to leak down to 20, 30, whatever, right? So that's kind of like a relative valuation call. And we've had a few of those where, you know, it looks good, but, you know, at 3X the valuation, maybe, you know, other things look better. So that's the relative side. Jason, do you have kind of other valuation? No, I just, because in Canada,

We don't get much over 25 times in terms of what we own. As far as 25 times earnings would be something that's fairly expensive, right? Whereas in the States, which is a high quality company, it's hard to find anything below 25 times. So it really, it's only just with the US stocks where we have to start to say, okay, relative to the US market, this is actually attractive. We're going to have to live with it. I think I can live with a little bit more multiple value, a higher valuation than Jesse. I think Jesse's got a little bit more of a value bent than I do.

So once you get over 25 times, it is a judgment call. The key thing is if you're taking money out of a stock that's growing quickly, but it's on 30 times, as long as you're not putting in cash, but you're putting in something else that's growing, you're probably going to be okay.

So oftentimes when we sell something, the people, oh my God, you sold it and then subsequently went up another 20 or 30%. Don't assume that we didn't put it into something else. It didn't do well as well. And it's been Kyle, like you say, like, you know, when you see it, so, you know, a company growing at 30% with 30% margins and trading, you know, it can trade a much higher multiple than something growing at 20% with 20% margins. Like you're, you're, you're willing to pay a different multiple. And that's kind of where that ranking kind of facts at all in like how much growth

are you getting per unit of PE? Obviously there's more qualitative stuff there too, right? Are you comfortable with how recurring and safe the growth is going forward or could a lumpy quarter come out of nowhere? And if a lumpy quarter can come out of nowhere and something's trading out 50 times, it can go trade on 20 times pretty quick, which was hurt, right? So versus if you're more secure and they're more diversified or more locked in recurring,

Then maybe you're willing to pay a little bit more because you know that, you know, that, that bad quarter is not coming around the corner.

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All right, back to the show. So tell me a little bit more about that ranking system. I mean, I think I've probably seen it on your, at least on, you know, sometimes you do have a list of 10 to 15 stocks and you'll have, you know, revenue growth, earnings growth, and then the price to earnings for the future growth. Is that kind of how you're constantly evaluating these businesses over, you know, the next quarters or years or whatever?

Yeah. Yeah. Jason, there usually says like, you know, he goes mirror, mirror on the wall. What looks, you know, what's prettiest of them all today type of thing. But it does, it kind of breaks down into a single number, right? So you can, it's a bit more complicated than that, but you know, how much, how much revenue growth or new growth are you getting per unit of PE that you're paying for? It's kind of like a reverse peg, right? Yeah.

And again, we're not making investment decisions strictly based off this number, but it gives you a starting position. There's companies that rank high on that that we don't own for one reason or another, right? Debt.

or, you know, not liking management or et cetera. Right. So it's, it, the, the rankings, a starting position is something, is something ramping up the list. Then we better be on top of it. If something's dropping down a list, we better be on top of it. It's, it's, that's, that's, that's where it starts. But again, there's, there's modeling meeting with management, talking to, to whoever we need to, to kind of get comfortable. It's so it's more of a starting point.

So the other thing that I really enjoyed was your breakdown of future compounders needing three things. So they were one, profitability, two, the ability to reinvest at high rates of return, and then three, obviously this long runway for compounding for multiple years. So I'm interested most in identifying the ability for a business to sustain the compounding, which I'm sure you guys spend a lot of time on that as well. So

How are you factoring things like competitive pressures or technological disruption into your analysis process? Well, one, I'd say every company is different, right? Like you can't just say, we look for this. It doesn't matter. But I'll go back to that point of,

you know, if competitive pressure starts to happen, you see it, you see it in growth numbers, you see it in, in margins, like it shows up, right. Or you see it because you're, you're, you should be out there talking with competitors and customers. And so like, I wouldn't say there's something that smacks you in the face, but like, you're definitely looking for it. But, and then on the other point I'll go to when you're talking about, you know, long-term compounders and ability to reinvest at high rates is we, we,

And I think it might have been day one. I started working with Jason. He's like, every company is a P-type Q. In some form or another, it's price and quantity.

which I kind of refer to as just like the unit economics of the business. So break the business down. How much does it cost for them to make that? How much are they getting for it? Is that good? We have some companies that have phenomenal IRRs right now. Something costs them $30,000 to make and they make $15,000 a year off of it and it can last 10, 15 years. That's a phenomenal IRR. And if they can keep throwing money back into that, reinvesting back into that,

And then, like you said, there's a long enough runway for growth. That's a, that's a compounder, right? So unit economics is very important. You know, how much did it cost? How much, how much does it make? Like, can you replicate that over time? That's definitely our starting position, at least.

So I want to talk a little bit about Constellation Software here because it's definitely a favorite of a lot of the people who listen to this. And I obviously am a massive fan of the business. So like you guys mentioned, you've owned it for whatever, 15 years and you started buying it around $20. So it's obviously a massive multi-bagger for you since your initial purchase. So one observation I had though, was that you don't hold either the spinoffs, Lumine or Topkis. And full disclosure, I own both of those.

So I'm just interested in knowing why, you know, can you comment on your reasoning behind this? Is it because you don't like the fundamentals of the businesses? Is it just like you think Constellation is just better because you got Mark Leonard? Is it a matter of valuation or yeah, just please go ahead.

Jason, you probably have your stock tracker in front of you or if you want to refer to the... Yeah, why don't you talk and I can bring up the numbers as far as how the valuations look. Yeah, so obviously we got the spin out, so we did own them. We owned a little bit of mine for a while and for a bit they were kind of traded to a higher valuation than Constellation. So again, we run a concentrated fund, so it's not like we need to own all three. We could own all three. But again, when we go to that ranking process, one, Constellation still ranks well, but two...

By one constellation, you get the upside of further spin outs, right? Which you don't with the other two. So that's definitely part of it. And then for me personally, it is the, it is the just, you know, we've been sitting down and speaking with that specific management team for a long time. So there's, there's a type of being comfortable and then not knowing the other management as well. Like that, that factors in as well, but go ahead, Jason.

So just on backing up on valuation, Lumine and Topic has both traded roughly speaking on about 30 times this year's earnings, which is, you know, they're highly high growth companies and competitive companies, but Constellation trades on 18. So there's a big valuation differential there. I'm not sure why that differential is. I think for Jesse, remember I said to you that I can live with a little bit more valuations, but we tend to get, our big positions are ones that we both like at that price.

I would suspect that if either Lumine or Topicus was to come back closer to 25 times, I think that Jesse would be more open to it. My feeling, and I don't think we're going to disagree with this, it's just where our comfort level is evaluation, is that if you can find a compounder that's growing at 20% a year for the next 10 years, whether you pay 20, 25, 30 times, the compounding effect will make you a winner. So I think if anybody's listening in on this, I would be very comfortable holding any of those three stocks in

In the present moment, though, consolation is cheaper. So I want to touch back on something that we talked about earlier here, which was some of the tailwinds that you saw back in 2024. So I'll just reiterate there are declining interest rates, evaluations, and also cash on the sidelines. And you had this terrific graph in one of your presentations that showed the performance of the S&P 500 when interest rate yields were falling versus when they were rising. And the differences were just this massive contrast in performance.

Yeah. So in a declining interest rate environment, the S&P 500 averaged 14.5% in returns since the mid-1960s. And in a rising interest rate environment, the return dropped to an abysmal level of just 0.8%, which as soon as I saw that, made me think of that Buffett quote, which was, interest rates are to asset prices sort of like gravity is to the apple. And when there are very low interest rates, there is a very small gravitational pull on asset prices. So I would just like to get your views on

What you're kind of seeing today, I mean, you kind of mentioned interest rates and where you think they're headed. You think maybe they're in kind of this neutral zone, but how do you see that playing out maybe next year and into the future? And you're obviously still very, very bullish. So yeah, please go ahead and riff on that.

Yeah. So again, we're not macro investors, but I have a pretty strong opinion. But what I would say is, I think pre-COVID, so before COVID happened, interest rates had been declining for a long time. And like Jason said earlier, we were facing deflation. Okay, what's changed? COVID happened, supply issues, and they pump money into the economy. And there was that spike and we're coming back down. But has anything else changed structurally?

from interest rates coming down and going more towards deflation. Because guess what? Demographics are massively deflationary right now. I had some stats because we're doing some writing right now, right? The population growth on average the last five years has been 0.7. But then people prefer, I think a lot of people get stuck thinking of the 60s and 70s and 70s of those interest rates. But the population growth was 2X, almost 3X

the population growth it is now, right? So, and now, and we're heading towards literally declining demographics. I think China is declining year over year and based on current birth rates, our population, it will end up start declining. That's deflationary. So there's that side to it.

The one is the money printing. Well, the government was fighting money for the decade heading into COVID too. And again, we were facing deflation. And then another one is productivity. We haven't really talked about AI, but AI is, we're not even out of the dugout yet. And you're starting to see massive productivity gains. And if people get forced to return to the office, like Jason and I were speaking about today, the amount of government workers that

You need two extra government workers to do the same amount of work now because they're not getting anything done. And so increased productivity is deflationary. So you start going through these things and you're like, well, that just kind of looked like what it was. And again, I think you can find studies about this. What is the long-term interest rate over the last 300 years? It's like between one and 2%.

All right. So I think a lot of people get stuck in the 70s and the 80s, but that was an aberration. You were going through a massive demographic explosion, a massive inflationary explosion. That's behind us. But I think a lot of people's minds, especially if they grew up in that timeframe and they had to have a mortgage at 18%, that's stuck in their mind. So all that to say is I don't see a massive spike back in inflation, which is what we faced in 2022. And a lot of that was the supply side. So

I have a strong opinion on no massive spike back in inflation and no massive, which means no massive increase in interest rates. Interest rates are still higher than the nominal growth rate, which means they're still slowing the economy. So that's my opinion. That's more in the US. Again, Canada is weaker than the US. So the Canadian rates probably do drop, continue to drop.

But that's probably a long winded answer to macro, which we're spending a lot more of our time on companies. So I don't know how helpful that is.

So you mentioned AI there and yeah, I know we haven't gotten a chance to speak to that much, but I know obviously from reading your letters in 2024 and 2023, that's an area that you guys have definitely been spending some time on. So talk to me a little bit about AI. Is the reason that it interests you, is it because you think that it's going to help certain businesses that are maybe not utilizing AI get better into the future or is it going to help

Tech businesses get even better, whether that's making revenue grow faster or improving margins. As an overarching theme, obviously it's going to differ between business to business, but how are you guys viewing AI's impact on business fundamentals into the future?

Well, we're already seeing it improve efficiencies. So we own some investments where without being able to have AI on their back end, they wouldn't have been able to scale like they're scaling. Like it just wouldn't have been possible. There's a few investments like that, right? Where they're not AI companies, but they're utilizing it as a tool. I think that's what we're seeing most likely. And we wrote about it and listeners can kind of go on our website and pull it up. But like anything, there's a lot of hype.

There's a lot of trash. There's a lot of speculation. And we're trying not to get pulled into any of that. We're saying, what are you using it for? Are you actually seeing results? And we're not investing in AI companies per se, right? Smart management teams find the best tools to improve their business. And if they're seeing it as a tool and they're improving their business, that's what we're already seeing happen to a decent scale. Jason, do you want to jump in on AI there? Jason Williams

Yep. Not much more to add other than that AI is already pretty much everywhere. If you're using a software as a corporation to deal with clients, manage efficiency, whatever, there's AI components and all that stuff now. So yes, there are some companies in our portfolio like Propel that's more pure AI where they have 12 guys from Stanford with PhDs working in the company kind of thing. So we've got some stuff that's really AI, but it's in everything right now.

Yeah. And then the other side of where we do spend time is, you know, what, what's, you know, if AI does go the way, like does have the growth that it looks like it will, you know, obviously there's going to be massive energy needs. Where does that energy come from? Is that sustainable? So then you're talking about, you know, building data centers or most of them will be powered by not, not for gas. And you start, so then you, you do kind of, we don't, we don't invest in sectors like, oh, you like this sector.

But when things are booming in a sector, you can usually go in and find a really great company that's operating there, right? But even going back to that study that I read about 10 baggers in the US, right? The vast majority of them come from the tech sector. They don't come exclusively from there, but that's probably 75%. Canada's a mirror of that. I would say when you look at our big wins, 75% of them are coming from tech, right? Because the growth comes from the new, new things. And we live in a knowledge-based economy, and that's where the opportunity is, right? So-

And if you're in the knowledge based, if you're focusing on the knowledge based end of the economy, then you're running into AI everywhere. And it's not just in the obvious stuff. We've got companies that do healthcare stuff. Right. AI is a big player in healthcare on a whole bunch of different levels. Right. So it's in security tech people trying to keep buildings and facilities safe. It's in commercial lending, but it's also in sourcing clients, right. Finding people adjudicating risk.

It's everywhere and it's expanding margins. It's accelerating growth. It's dividing, you know, we see it, you know, we know, we, we know a couple, or we have investments in a couple of online lenders or, you know, um,

what do you call it? Like, um, they want to call them subprime, but they're, they're, they're, they're not doing that. They're not banks that are lending kind of stuff that I've got AI tools and we see what their growth rate is. And then we know, you know, in Toronto, people that are doing lending that are not doing it that way. And the ones that are not doing it that way are not growing at all. Maybe they're even contracting slightly. And the two that we own that are public are growing at 30 to 50% a year. And you kind of go, Hmm,

I think there might be a bit of a market share thing happening here. And it's the guys that are technologically sophisticated that seem to be growing really fast. And the old school guys, they have a million different reasons to say why, oh, yeah, AI can't do this or whatever, right? You know, it's crazy. I mean, before you know it, they're going to be thinking that they're going to be able to sell books through the internet or something like that, right? Sure. It is what it is.

So one other thing I want to mention here was that you guys looked at money market funds and kind of how those were at kind of these all-time highs. So you guys mentioned it was at 7 trillion in November of 2024. Since then, the S&P 500 has moved about 5% as of January 17th, 2024, probably even more today. So I'm just interested, from your research, looking into this graph, as well as your prior experience, how are you...

viewing that those money market funds in terms of, you know, what are the lag times going to be like for that cash to eventually be deployed into the market?

Yeah. So in, so in after the 2000 crash and then after the 08 crash, a similar, similar dynamic happened, right? Where people, people get scared, they go to cash and they, and a lot of these cases it's locked in for a year, but it all, all to say that maybe rates go up and it also looked more attractive as rates climb. But then also as people just get more comfortable that we're past some type of, we're past COVID or we're, we're, we're, we're past some, some big block in the road.

then they become more comfortable to go back to the market, which over time should give them a higher rate of return, right? So it's a slow bleed. So after 2000, after 08 or 09, like it was a slow bleed, but that money came back into the market, right? So if rates have, obviously the rates that they're getting on these have declined, but then we can also tell you that we have investors that call up and say, my GIC is coming due and the new price that they're giving me, I'm not happy with like,

let's roll it over. Let's roll it into the fund. Let's do something where they're not happy with that new one, but then they're also probably just more willing to take risk now versus a more uncertain world, middle of COVID per se. But speaking about cash, we refer to the money market funds, but then also listen to the American bank CEOs.

their clients across the board on the low end and the high end have never had so much cash as sitting in their bank accounts. They had COVID payouts and they saved most of it. And then you're sitting, you're hearing with Bank of America, he's going through all the cohorts and he said, this cohort used to have two to $300 in their bank account. They have 1200 to 2000 now. That's fairly significant in the sense of being fairly defensible market, but-

We don't spend too much time on that. It's just an interesting pattern that we've seen. So Jason and Jesse, thank you so much for coming onto the show and sharing your insights with me and my audience. So I'd love to give you a handoff and let you tell the audience where they can learn more about you. Well, I'll jump in and then let Jason finish. But we write a quarterly newsletter and monthly commentaries that goes to our clients, but anyone can receive it. So if you go to our website, donvokent.com, you can sign up.

And we just, we write about similar conversations like we have today. But Jason, I'll hand it over to you. I know a lot of people are skeptical. We just let people read our newsletter.

Just realize that when we talk about companies, we already own them. Like we're not going to tell you about the company that we're just about to invest in tomorrow. But once we're in, someone says, what's in there for us? We'd like to share our ideas and engage. Part of the discovery process is we've found this really great company. There's still a lot of upside. We already got our piece, but there's still lots of upside for you guys. So have a look. And Jesse does most of the writing of the newsletter now. And I think it's very well received. People like it. It's got a lot of ideas and it's kind of a fresh look at the market. And a lot of companies that are not

People have already got a lot of exposure to Microsoft and Apple. So it's a lot of companies that go, wow, these are kind of interesting companies. But I haven't heard of them before. So yeah, so I think if you really want to learn about us,

The newsletter is the best place to go.