New Contructs' Live Podcast: Intelligent Capital Allocation - 10 November 2023

Welcome everyone into Intelligent Capital Allocation. Tam is out this week, so it'll be myself, David Trainer, her consult. We have a special guest, Andrew Miller, on the podcast today. Here is the disclosures, disclaimers. Take a look. They'll be available in the replay of this as well. And then into the agenda for this week. Welcome along. We always encourage people to post to the society any questions, comments, things you want to discuss. We build a lot of our agendas based on that. That's also where you can get replays and slides from this presentation. So definitely check that out. If you're not signed up, you can do so on our website. And also on the next slide, take a look at our new membership real quick, the Stock Tracker 50. We'll briefly touch on that. We've got a lot of research went out this week, cleaned up the zombie list a bit. We updated the focus list long and short, put out a new long idea update, brief summary of WeWork and the WeWork saga that came to a conclusion this week with bankruptcy. And then we had a longtime long idea position close as well. But beyond that, I mentioned we'll have a special guest this week, Andrew Miller. David will introduce him in a second, and then we'll get out to society, some of the interesting headlines. We'll talk about the analyst update on filing season. And round it out with stock picks. But first, we'll jump into the Stock Tracker 50. If you haven't seen it yet, we do have a new membership available on our website. You can get it just from the Get Access link on our homepage, and you can get, like it says there, streamlined access to our ratings. You can get ratings on every company, stock, ETF, mutual fund we cover. You can add up to 50 to a portfolio, track and get alerts on those. And then you can just type in any ticker you want a rating on into the ratings page. You can see old ratings for companies and get quick, easy access to those ratings that are all backed by our fundamental analysis that we do on every company under coverage.

This is a new membership in response to folks wanting something that is a little bit more affordable. It's designed for non-professional users, and you get the same ratings as everyone else gets, and it's based on all of that cutting-edge Proven superior research. This is another thing that we're going to be moving a lot of our legacy clients, legacy Gold, Platinum, and Pro. This is a great place for you to move over as we sunset those subscriptions. We think this fits much more in line with what your traditional individual non-professional investor needs. Lots of ratings, but you don't need all the details behind the rating. You don't need to know the notepad adjustments and the footnotes and these things. Those are nice to have, but. But not necessarily for non-professionals.

I'll turn it over to you, David. Introduce Andrew Miller.

Andrew's a friend of mine for over 30 years. We go back a long way. Lots of great memories. And Andrew has since gone on to be one of the top lawyers in, in the country, probably the world, with respect to representing whistleblowers for state and federal false claims. I think, Andrew, correct me if I'm wrong, but I believe, didn't you, you and your team were Winners of one of the largest ever settlements for a whistleblower here in just the last few months. Is that right?

Last year, we were able to resolve a case under the Federal False Claims Act, which was— still is the largest fraud case alleging small business fraud. So that was a $48.5 million case in which we were able to return to the federal taxpayer.

Not too shabby.

I should probably put in a disclaimer about one of the best lawyers in the world. I don't— I think that people probably recognize that as puffery, but just in case they don't, I'd like to point that out.

Of course, that's right. That's, that's a good lawyer move. I, I appreciate that. But Andrew and I recently connected over an article that came out on CNBC about whistleblowers and the SEC. We're very like-minded in terms of, as part of our profession, as part of our calling, We're helping people better navigate corporate America, better navigate fraud, better navigate cheating and lying and stealing, protecting people from those kinds of things. Because we believe it's important and we believe ultimately at the end of the day, it makes the world a better place. It makes the pie bigger and everybody ends up being more wealthy, more prosperous if we don't have too many folks leeching and stealing. It's just not good for the system. And so Andrew has a lot of experience obviously with whistleblowing. And understanding what it takes to win a case. As he mentioned, one of the largest cases in this space ever. And in particular, Andrew's got some good insights and experience working with the SEC as well. Let me start with a softball though. Andrew, talk to me. I said a lot of things about what you think about your role and your profession and how that fits in society. Why don't you tell us what you think about what it is you do and why it's important?

Sure. And let me also just say thank you for having me, David. Much appreciated. And always enjoy the podcast. So excited to be a part of it for once. I, I see my role as, as holding people accountable. There are always companies and individuals who are willing to lie, cheat, and steal to make a buck. It's a story as, as old as time, whether it's through the Federal False Claims Act, the IRS whistleblower program, or Or the SEC whistleblower program. There are ways that people who know of the lying, cheating, and stealing can share that information. So again, my role and my job is to be an advocate, to be a mouthpiece for those brave whistleblower clients who want to come forward and bring that information to the attention of our government.

That's awesome. I mean, it's exactly aligned with what we're doing. The whole whistleblower thing is a brilliant invention to incentivize protecting and monetizing that and awarding it, which is, which is super cool.

That's a real good point. If I could just jump in right there, David.

Yeah.

Each of those programs does have an incentive provision within it because the government, although we think of our government as being this vast, endless source of personnel and technology, it's not the case. It really isn't the case. There's just too many open spots that folks can under fraudulent representations, get away with conduct that the government, had they known about it, would clamp down on. So these incentive provisions within these programs reward people for coming forward because otherwise the government wouldn't be aware of it.

Right. And, and it's a whole lot cheaper, I guess, than it would be to have an additional police force or whatever, their own special task force for the government to do it itself. So instead, incentivize the public To effectively help self-enforce or self-regulate as opposed to letting the government try to do it.

That's right.

Yeah, which I think is great. But I think, I mean, that's ultimately, I think, the way a country or society is really going to be most successful if you have the people all aligned in the same direction, working to help each other and working to self-regulate and self-enforce. Because, Andrew, you're right. I mean, we see it in the capital markets all the time. People are willing to do a lot of things to make an extra buck in the stock market. And it goes back to the earliest of times when they were called stock jobbers instead of stock analysts back in the 1920s and '30s. And so it's important for people to be mindful that this is a constant force and that it takes real effort to protect yourself. So next question, Andrew, what in general does it take to make a good whistleblower case? What are we looking at there?

Well, I think when you start off, you got to look at the obvious question. Has there been an actual violation of a law or a regulation? Just because something sounds like it's wrong, or just it strikes you as being not the way people should be acting or conducting business, doesn't necessarily mean it's a violation of a securities law. So we have to break it down into what its elements are, what's the conduct, and then match it up with that law or regulation. That's always the first step. Once you have that, then you can start taking the next step of then, okay, well, what kind of information does The client have, the whistleblower have to help piece those elements together. And then that's when you start to get the makings of a true whistleblower story.

So you got to have a for sure violation of a law or something like that. And then you need to have substantial evidence proving that that violation took place.

Sure. I mean, and you know what, in some cases, though, a lot of times what we will see is that clients will come forward and maybe they only have a partial picture. of what's going on, but it's an important piece, albeit incomplete. And that's, I'll be honest with you, you know, I've been doing this for a long time. I don't think I've ever come across a case that didn't have any blind spots. There's always going to be something you don't quite know everything about. And so that's totally natural unless you are the fraudster yourself, you probably wouldn't know everything, right? I have to get into your own mind. And so that's fine. But I mean, being able to identify what those blind spots are and work around them, be transparent with the SEC or Or whatever the other enforcement body is to say, look, here's, here's where we don't necessarily have 100% sure information, but here's what we've collected that gets you most of the way there.

And Andrew, I think in talking with you in the past, you've mentioned that you often work with some of your whistleblower clients to help fill out the case. There's a lot that you guys can do with your experience and resources to support.

Well, one of the, one of the favorite parts of this case is someone will come in the door. with information that they have on, let's call it Conduct A, and they think Conduct A is problematic for whatever reason. And we start talking about it, and as it turns out, Conduct A sounds bad, looks bad, but ultimately isn't a violation of any law or regulation. But we come across information that the client has about Conduct B, and guess what? Conduct B is terrible, and it is an absolute violation of the underlying securities violation Or a healthcare statute or whatever it might be. And so then that's working with the client to kind of figure out ultimately what the story is, if there is a story, is one of the more enjoyable parts of the job.

And you guys also have experience in terms of how to sometimes get some additional data to help fill in some blind spots, right? You've done some investigating on your own as well that will potentially help support and, and, and really empower the, the whistleblowers. Is that right?

Yeah, I mean, we, we definitely rely on third-party investigators and other resources to, to, to work up those cases. That's part of, part of what we do.

Yeah.

So, I mean, it's, it's important to you that you're not going to be taking a bad case. So if you are going to engage with a whistleblower client, you'll not only help them evaluate where their strengths and weaknesses are, but you can also help them strengthen the strengths and make the weaknesses less weak. And you know what to do in order to make that— you can give them an honest assessment on how successful their case might be.

Right. Whether, again, those programs that I mentioned, the IRS Whistleblower Program, the SEC Whistleblower Office, and the Federal False Claims Act, which involves numerous parts of our Department of Justice, those programs are overwhelmed with cases that people are filing. The last thing we need to do is add to those cases claims that don't have merit. And so part of any type of evaluation is identifying those and doing your best not to clog the system.

What percentage of all of the ideas or whistleblowers that come across your desk do you end up usually engaging with?

I don't know that I have an exact percentage, but I would say I think people mean well in the long run, but I think ultimately, as it turns out, a lot of that information doesn't end up in a case that ends up getting filed with the appropriate enforcement agency.

Yeah, that's good. That means that there's, that the whistleblower program is working. There are plenty of people. who are willing to come forward and voice concern about things.

Right. And I think that better that it's that way rather than the opposite. If you're in a situation where people are afraid to come forward for fear that it's not a case, and so you don't get as many opportunities to evaluate what could be fraudulent conduct versus what I just described, much rather have it that way. That way you're at least getting a fair look at what's happening out there in the public sphere.

Yeah, absolutely. Since we work in the stock market, we're clearly concerned mostly with the SEC whistleblower program. And I think your point about protecting the public, we care about protecting investors. We're doing that diligence in the footnotes for the same reason. We're constantly warning people to avoid this or that. We were early in warning people about WeWork, and we all know how that ended up. Can you shed some light on your experience with the SEC's whistleblower program? Because it feels like Oftentimes we get questions around fraud in the stock market, and help us understand how maybe do you think the SEC thinks about fraud, and maybe how investors can understand the SEC's, how it sees its role, and where the responsibilities lie between what to expect the regulator to do and what investors need to do on their own. Sure.

And I think it probably makes sense to give a little bit of background on the program itself. So folks, when they hear, you know, SEC whistleblower program. I know I've referenced it a couple times and I haven't really given an explanation for what it is. Maybe I should probably do folks here a service by explaining what it is I'm actually talking about. So the whistleblower program was created by Congress back in 2010 as part of the Dodd-Frank Act. And then the SEC implemented the program by issuing some final rules in May of 2011. And then those final rules went into effect in August of 2011. So the program has been up and running for a little over a decade. And what it's designed to do is to encourage folks with information about securities violations to come forward. One of the most important things about it is that it allows whistleblowers to submit tips anonymously if they are represented by counsel, and the SEC then treats those tips as confidential and nonpublic as more of an incentive for folks to come forward. There are cases where the insider provides a tip through counsel, counsel gives it to the SEC, SEC investigates, there's a positive result in terms of a fine collected against that particular company and that whistleblower gets paid out, no one knows who that individual was. And so the confidentiality provisions are critical because otherwise people with important information would, I think, be too afraid to come forward. The ability to maintain your anonymity throughout the process, I think, is critical. But in order to get an award, your information has to lead to a successful SEC enforcement action with total monetary sanctions exceeding $1 million. So it's a low-level amount of fraud. There's not going to be— the whistleblower program doesn't provide for any kind of recovery. But as we've seen, and for folks who pay attention to some of the headlines that appear from time to time, some of these awards are quite substantial. In a little over a decade that the program's been in place, the SEC's paid out to whistleblowers collectively about $1.3 billion. That's billion with a B. And just this past May, they announced the largest whistleblower award, a single whistleblower award of $279 million. And another thing that a lot of folks don't understand is where, where that money comes from. And that actually comes out of an investor protection fund that was established by Congress And it's financed entirely through monetary sanctions paid to the SEC by securities law violators. And critical for your customers to understand too is no money has been taken or withheld from any harmed investors to pay whistleblower awards. So it all comes from, as we call them, the bad guys. So that's a little bit of background on the whistleblower program itself. And that sets the stage for, well, if you've got that kind of inside information, There is a vehicle available to you to, to share that, that info.

The anonymity thing is probably really important in this space. I mean, that people would probably be afraid or if they're wrong. That's a really important protection. That's great. I didn't know most of what you were talking, what you said in terms of how it works and the amounts actually paid out to, to date and where the money comes from.

Yeah. And then I think the anonymity thing, just to further your point, our clients have ranged anywhere from the lowest level. on the corporate roster all the way up to folks in the C-suite. And a lot of times the information that our clients have, folks think would be identifying. Only such and such would know this information. Well, if the identity is kept confidential, you never have— you don't have those worries certainly as much.

Yeah, that's great. That's great. Is there anything else that's— you mentioned a lot of unique things about the SEC's whistleblower program. What else is unique about Bringing a case to the SEC's whistleblower program that people might not be aware of, or that's different from the False Claims Act or the IRS?

Well, different than the Federal False Claims Act, the SEC whistleblower program is a little less transparent, is probably the best way to put it. With the Federal False Claims Act, we file a case under seal, and then it's more of a collaborative— it can be more of a collaborative process with the federal prosecutors. And the whistleblower counsel as the case gets investigated. So we tend to get feedback on how the investigation's going. If there's a question that arises, we can provide on-the-spot answers to it. If the government gets, gets under the misimpression about a certain aspect of the case, we can correct it if it's correctable. That way you avoid that situation where you get something in your head that something's a certain way, and then you're— you close your mind to how it could be anything else. Well, we have that opportunity in the Federal False Claims Act to remedy that situation. The SEC whistleblower program by design is meant to be more confidential. So it's a little more of a black box. And there's nothing wrong with that. It's just different. But there's less of an opportunity to engage in that way. That, that probably is the most unique thing about it as compared to the typical Federal False Claims Act cases that we pursue.

And you think that that's in service of protecting anonymity? Because I would imagine, I mean, some of these cases are really complex, and so there would need to be a little bit of Q&A there.

Well, I mean, that's not to say that they— that the SEC enforcement, uh, folks at the whistleblower office don't engage and have subsequent, uh, interviews. It's, it's, it's not like it, it never happens. That certainly does. And, and there are interviews with the whistleblower and whistleblower's counsel, uh, but it's not guaranteed in every case, is I guess maybe the point I was trying to say.

I got it.

I mean, at some point, they're probably drinking from a fire hose in this stuff, and they've got to be somewhat selective. And it's just probably maybe too much to have to go through and score everyone and report to everyone every single thing that they can do. They got limited resources. I got a good question from the audience here, Andrew, from Steven. It says, is it possible to discern and pursue fraud cases using only public information? If so, what incentives are there? Yes.

Yes, great question, Stephen. So the SEC whistleblower program actually makes it that you don't have to be an insider. As long as your information leads to an enforcement action based on a securities violation, you're eligible, and you're eligible to the same percentage as anyone else who was sitting in that C-suite who concocted the fraudulent scheme. The SEC makes no distinction between the two.

Another great question from Fazana. He says, thank you for a fascinating insight into the world of fraud and whistleblowing subject matter. If someone were interested, inspired by your talk today, what books would you recommend to get started in this subject matter? What qualities would one need?

Was the first part of that what, books?

Yes.

Yes.

Okay.

I, I may have to take a pass. I get one pass per— I'm gonna pass on books. Yes.

Uh, until you write one at least, then there are no books really. I mean, this is—

How about this? I will commit, I will commit to exploring writing a book on this. All right, cool, cool. What was the second, the second part? I can answer that. What was the second part?

Yeah. What qualities would one need to be a successful whistleblower advocate?

Credibility. 100% credibility. That's all that matters. Don't try to fit a narrative that you think the government wants to hear. Just share truthful, honest information and let the chips fall where they may. That's the best advice I can give on that.

Whistleblower program, you said these, at least for the SEC, has been around for about 10 years. What would you guesstimate in terms of all the fraud out there that this whistleblower program is able to catch or punish?

I think that's probably an unanswerable question, even by the folks tasked with enforcing compliance with With our securities laws. Yeah, that's right.

It's kind of a trick question. We don't know what we don't know. That's part of the problem. There could be some huge amount of fraud and the problem is we don't know about it. So how do you know what percentage?

And $1.3 billion in awards means that there's exponentially more in terms of actual fines that were levied against those companies. That's just the award. That's not penny for penny. That's usually just a percentage of a total fine or sanction against a company. So without the program, we wouldn't have even those numbers to point at. So to that degree, it's a success. Yeah.

Yeah.

Big time. Big time. What do you think in terms of, for investors, this is maybe a little bit outta your wheelhouse, what can they do to help themselves avoid fraud or unsavory management?

I mean, I would, as with anything, do your research, be as well informed as possible. I, I'm in a, not in a position necessarily to give that type of advice. Like I said, what we we do is we try to bring to light— that makes it available for public consumption— situations where companies are defrauding either healthcare beneficiaries or taxpayers, or through securities cases, investors. And so just staying abreast of enforcement actions, I think, is probably a good place to start because you can see who the government is focused on and who, who they've pursued as it relates to fraudulent conduct.

Yeah, I mean, that, I think that's a consistent theme with what we would say in general. At the end of the day, there's no substitute for diligence. These whistleblower programs are helpful, but they do not absolve anybody as a fiduciary or individually of you doing your homework. I think one of the things that's really challenging in the public markets is fraud is a very specific legal term. There are many things that companies can do that are very unethical, Inappropriate, wrong, but aren't necessarily illegal. Because in our business, there's this law of disclosure. As long as you tell people that you're stealing from them, it's legal. And anyone who's ever read a Wall Street report and the disclaimer section, check it out. Get something from Goldman or Morgan Stanley or any of these firms. Read the disclaimer section and see what they say they might be doing. These new disclaimers were enhanced. post the tech bubble and probably also the great financial crisis, a lot of regulation. And really what it became is something that is a lot like the financial filings and it's just a deluge of information, a deluge of things they might do. So every disclaimer lists every single thing that the investment bank might be doing in order to protect themselves from everything in everything they write. So you never know for what company they might actually be shorting against the long idea because they say they might be doing it for all of them. That's what makes going through and, and doing the kind of work that we need to do in the securities business that much more difficult because 10-Ks and 10-Qs or financial filings are the same way. There's a lot of information that doesn't matter in there, which makes it harder to find the information that does matter.

I think something else that connects kind of the work that each of us do is certainly looking at the overt statements, the representations that folks make, but it's also figuring out the omissions and the material omissions that a lot of these corporate individual wrongdoers are engaged in. And that's where the insiders we work with can facilitate bringing that to light because they know the truth about what's really going on behind closed doors and those omissions, how they have a material effect on whatever it is that's being reported. So it stresses the importance of having a true insider. Again, not to say, to Steve's question, you can be an outsider and still be able to make it work under the program. But a lot of times, particularly as it relates to omissions, having that insider is critical. Yeah.

It's not just about what they say, it's what they don't say. And I think one of the things that can be really frustrating for us in the public markets is that With Twitter, I think it's pretty clear that that's not necessarily considered a formal distribution or communication platform. But regardless of the platform, someone could say a very misleading statement and wrong statement, a manager, an investor, a fund manager, a company manager, but then they could contradict it in another tweet or another statement somewhere else. And so they're saying all kinds of crazy stuff. Again, We're, we're, we struggle with the signal-to-noise ratio. I think in our society there's just so much contradictory information that it just means you gotta do your diligence more than ever. All right, Andrew, one last question and then we'll let you go, man. Have you used the Financial Crimes Enforcement Network of the Treasury Department?

Yes, I have. Hmm. Is that Steven again?

No, that was, this is Robert. He's another very savvy client of ours.

So yeah, I was almost—

Yes, Vincent.

Say again?

Yes.

FinCEN. We, we refer to it as FinCEN. And, and that's a, that's definitely another vehicle that's available. I apologize that I didn't mention it in, in my list of agencies that are, or programs that are available to folks with inside information or information generally about fraud as it relates to the financial markets. But absolutely. And that's a little newer in terms of these other programs, but we're finding it just as effective.

Awesome. And one other question from Nancy, who is one of our most active clients. Is there a list of companies that have been involved in fraud that we should know of so we can protect ourselves? Is there some naughty list out there that we can just use to be aware of?

I'm not aware of the naughty list. I mean, I know that the SEC publishes on its website the orders announcing whistleblower awards. But I think in those, a lot of the information is redacted, including company names. So just off the top of my head, I can't think of a source that she can refer to. Sorry, Nancy.

No worries. Well, Andrew, thank you so much for your time. I really appreciate it. This is super, super interesting. And we've got some great feedback here in the chat on the information and insights you gave us. And we appreciate what you're doing.

Thank you.

Likewise. Thanks for having me. It was a lot of fun.

Thank you.

See you.

Okay.

All right, Kyle, what do we got next here?

Next up, we'll head out to society.

That was awesome. Andrew's a great guy. That's some super cool stuff he's doing. Great for society. And I like it because it's aligned with a lot of what we do too. I mean, look, we're out here to try to make the world a better place. And I think part of the way we do that is doing this work we do to help people make more informed decisions and That's one of the comments in the chat was like, hey, discerning fraud from public information sounds like what New Constructs does. I'm like, yeah, yeah. I mean, and I would tell you that WeWork is a great example of that. I mean, this was a, this was in many ways fraud. Now, is it an illegal version of fraud? Hard to say. I don't know if these guys are going to jail, but they probably ought to considering how much money was taken from well-meaning public investors and put into Adam Neumann's pockets and other employees' pockets. Anyway, we did the diligence on this, this company and stock over 4 years ago. We told people to avoid it. We predicted that this was going to happen. I went back and looked, and it really unfortunately played out in the worst-case scenario that we predicted was really highly likely. So highlights for this week, interesting headlines. We work— we did our best to help you Avoid that. We hope that you read what we wrote many times on that and that you didn't fall prey to another Wall Street ploy.

IMMR.

We had some good questions about this in Society this week, and notably from George Clements. This is something he really likes. It looks really attractive on the new constructs front. And I think here we're wondering what we don't know. In terms of fundamentals and cash flows and return on capital and valuation, this thing's looking really cheap. We've seen a big run-up in operating profit here recently, and so maybe that's due to reverse, but we'd love it if anybody has any subject matter expertise in this space. If you could chime in here in the society, that would be really cool. And then the investment thesis, I want to point this out. We had one of our members, Cole, here propose an investment thesis on PubMatic. And this was very detailed work that Cole put together here that I recommended people take a look at. I think it was a, a nice report here on Substack. And I think anytime somebody in society puts this kind of effort into something, we want to share it. We love diligence. We love folks who do lots of work. And I love the subject matter expertise or the non-financial stuff that Cole's got in here in terms of these additional industry stats. I think that's super helpful. Leadership alignment, similar to what we talk about with respect to aligning executive compensation with return on invested capital. Here it's more about share ownership, but look, it's good if the owners own shares too. A little bit more than a one-pager, certainly super detailed. Take a look at this. Show Cole some love and give him some feedback on, on this great work he did. And then, all right, Panaki, if you're, if you're here with us today, we want to definitely discuss a little bit more on what you pointed out about this reduction in interchange fee. So interchange fees are a really pretty fascinating part of the financial system that most people don't know. And that is basically anytime you're using a credit card or paying someone electronically, the card issuer, like a Visa or MasterCard or Amex, they make money on every transaction. It's just a toll. And so do the banks for supporting this financial transaction highway. They make tons of money on these interchange fees. It's just free money coming in at very high margin. And so that's a big part of what's made these companies successful. That's why Visa, Mastercard, they've got these great super high margins, super high returns on capital. And I think, what is the ticker for Visa? It's V. You can see here really high profitability, really high valuation because I mean, they just get all this money and all these transactions. It's a great business. What is Mastercard? Is that MC?

Yeah.

I think it's MA.

MA.

Thank you.

Whoops. I mean, it looks exactly the same as Visa. Great business, great company, not necessarily a great stock because the valuation's already baking in expectations for a lot of really high profitability in the future. So what Panaki's pointing out here is that the Fed is considering Lowering these interchange fees by a third. And he's right, this is huge. I mean, this is a huge amount of money for all these firms. And as he points out, I mean, this is, it allows Visa to make more profit per employee than Google or Meta or Amazon, even though Amazon doesn't have real profits, which we pointed out, pointed out recently on CNBC, negative $150 billion in free cash flow over the last 5 years. But that's really pretty interesting. And I think this is moving the US more in line with where the rest of the world is. Panaki points out in Europe, he just pays through the bank. Nobody really uses these credit cards as much. They just go straight through the bank because it's more secure and they got no need to. So a very interesting point. And I think Panaki's bringing something up that's really important. It makes these valuations for Mastercard and Visa look very much at risk if they are looking at a potential 33% cut. In one of what is probably their largest source of revenues. So let's go to— yeah, so Panaki, we got a question here from Steven asking, will small banks do well because they'll take over payment processing from payment processors like Visa and PayPal? And I think the answer from Panaki's writings is yes, small banks will do very well. He just added here in the chat, yes, small banks will do very well. I think that's the idea. So these credit card companies and payment processors have had a monopoly on this trans— this, this just free transaction fees. And they've made a ton of money on it. And, and now it's coming back to the banks where I think they probably set a lot of this stuff up themselves and it probably makes sense for those profits to return to them. The software portion of the transaction is a commodity now. That makes sense. And that was a big part of our original thesis on Square/Block, Kyle, right?

Yep.

Look, like online payments and carts and all this stuff is, that's a commodity. Where's the value add? What are they gonna do? And, and by the way, serving customers that historically banks and other larger firms have found to be unprofitable is probably not a good long-term business model because they've been left alone for a reason. And anyway, yeah, with the internet and these devices, even your iPhone, I mean, I think you just put a little plug into the iPhone and you can swipe stuff on that. little piece of equipment, an add-on there. And, and so yes, I think Panaki's making a good point is that the software and the hardware portion of payments and processing has become commoditized. And there's really, really no reason not to let that value return to the banks, the people who hold the money. There's no reason to take the risk of an intermediary being in there. Thanks for this insight. This is awesome stuff. Panaki's put some other cool stuff on there, had a great post. think last week about fraud, which is part of why I wanted to bring Andrew Miller on and talk about the whistleblower world and what it's doing for society, which I think is great. But also to point out, at the end of the day, you still got to do your diligence. And especially the way companies and Wall Street have danced around the fraud issues by— they say they're doing everything, including the bad stuff. Well, then you can't really sue them for fraud because they've admitted it. You don't know that they've admitted it if you don't read the filings. So that's what we're here to do to really help people out with that. Kyle, I think that's all I got for here. You want to, you want to wrap it up here with our big moves?

Yeah, I'll take it back over and we will head towards the finish line. Let me start here. We'll turn over to Hakan for a minute. Let him talk about filing season, some of the value creation so far through the 3rd quarter filing season, which is I think almost wrapping up.

So, oh yeah, almost there. This is actually one of the busier filing seasons we've had. Last week I mentioned that the 405 filings we parsed was our record, and just today we have another 400 filings to parse and update the models for. So this is again a quick analysis of how much value we create during filing season, specifically this 3Q23. Assuming that it takes 9 hours per filing to go through the filing and update the model. And assuming it takes a $100 an hour type of person who's educated and knowledgeable enough to do this work, in this third column we can see how much value we create per day in— on that specific day. And on the last column, it shows the cumulative savings that we bring to you from the start of filing season To the end of today, we'll have created $816,000 worth of value. And every single customer is benefiting from this value, from the pro to institutional members, the new Stock Tracker 50 members who can see all the ratings. And how they benefit from it is we give comparability and accuracy with all these filings that we parse. And since investing is a relative field, Without that comparability, you can't really put a number on just going through random filings. So a lot of value added. And in this number, we don't even include that somebody's building the models, somebody's updating the models according to the new accounting rules, and the technology it takes to distribute all this data to you, our clients. So pretty conservative analysis here, but that's a quick recap of how the filing season's going.

Thanks, Akaan. I always love to make sure we make our clients aware of the work we're doing here. Whether you're a Stock Tracker 50 client or an institutional client, you're getting access to the same level of diligence and the ratings and analysis to help protect you from at least the public fraud. We can't help with the private fraud. When people are lying about the financial statements, that's tough for us to fix. Even though I, I like to tell our institutional clients, and I've been saying for years, people tend to bend the truth before they break the truth. See, people tend to bend the rules before they break the rules. So to the extent we're identifying situations where economic earnings and core earnings are diverting from reported earnings, that's usually a pretty good red flag that things aren't so great. Definitely.

Thank you guys. Real quick before we wrap it up, we did get the latest SumZero rankings. Wanted to point these out because they are nice. Proud point of ours. We've been ranked now in SumZero number 1 in multiple categories since May of 2021. For the month of November, we rank in 18 different categories, 10 of them number 1 ranking as well. And so we're very proud of these. We put some of our best ideas on SumZero after clients have had them. Goes up against, I think, 19,000 other buy-side companies and employees and analysts. So we like to See that our research is also being recognized across the market here. And with that, thank you guys, and we'll see you next week. Hope you guys have a great weekend and week. Thank you.

Have a great weekend.