Revealing the Secrets of the #1 Stock Picker

Welcome everybody to our latest training here from New Constructs, and we've got something really special for you today, something we never shared with the world before, and something I think that will truly stretch your imagination and I think change the way you think about picking stocks forever, because I'm going to give you the opportunity to close your eyes and imagine what is the best-case scenario for my stock picking process. I'm going to challenge you to think about that right now because we'll come back to it later, and I'm going to give you an acceptable answer to that question. So with that, let me share my screen and we will jump right into it. We are here to talk about revealing the secrets of the number one stock picker. That's me. That's New Constructs. We've been ranked number one for 59 straight months on SumZero, which is a buy-side professional investor network of over 16,000 professional investors. And I think doing that well for that long is no small feat, to say the least. And I'm going to give you first-ever access to the hidden insights and how we've been able to succeed at such a high level for such a long time. As usual, our typical disclosures and disclaimers. We are not investment advisors. We do not give out professional advice. We are information providers. We are empowerers. We are not your decision maker. We are empowerers. We are truth seekers. We are truth deliverers. And let's talk. Get to me in the chat. Put your tickers in the chat right now. Start voting for the stocks we're going to go over at the end. This is always a fan favorite. People always want me to talk about their picks. And I'm happy to do that. And then also let us know if this is your first time with us. We're always happy to have new folks. The New Constructs family is growing and we want to be sure to welcome you today. Now, today I'm going to give you the first-ever access to the hidden insights that elite investors are seeking right now. We're going to dive into the research process and show you how to navigate what is the most probably complex market in decades. So, it's important to say that what we're doing here is special, but I think it's important to say, why now? Why? Because this is probably one of the most overheated markets and one of the most complex markets that we've seen in a long time. Now, let's look at the reality of the recent stock market rally to be specific about what makes this a complex or dangerous market. And let's talk here about some specifics here. The S&P 500 contribution since March 30th. 2 stocks account for 25% of returns. 10 stocks responsible for 69% of the rally. We were joking recently, people were asking us about some of our indices and we're saying, yes, we're keeping up with the S&P. We're not beating it like we were last year, but we're still keeping up. And they're like, that's fine. That's great. Because by the way, what's beating the S&P these days, the only thing is a super concentrated portfolio. The S&P has become super concentrated. The only way to beat that is to be even more concentrated. And nobody wants that. So the diversification, the protection, the breadth is a real advantage. But folks, if you are looking at the market today, you're looking at one that is probably one of the most concentrated that we've ever seen. And we're seeing echoes of the past when we saw major corrections. We are in— we're in dangerous territory, folks, no matter how you want to skin it. Going back over time, it's a great slide. Thank you, Kyle and Christian, for putting this together. You can see here the railroads, Japan, AI Big Ten, Nifty 50, tech and telecom, tech bubble. This is, to me, this is always, this is one that, whatever, maybe because I lived through it, but there was a time markets were a little more sophisticated, a little more densely populated, right? So we weren't talking about just a fraction of the population. And we're more, that's more comparable to where we are now. And I think that's, anyway, that's what got people a little bit concerned. Here today. If you look at pretty much every metric that you can think about for valuation, stocks are looking expensive. Maybe the best metric, however, though, is what I love to call the Warren Buffett indicator. It compares the total market cap to GDP. And look, Warren Buffett's a pretty smart guy. We hit 227% recently. Which is the most ever. Going back to this slide a couple back, this doesn't show us as the most ever. It shows the most concentration, right? Which is important. But this indicator, the Buffett indicator, total value of all publicly traded stocks to GDP ratio. Yeah, you can see the peaks here in the past and what's happened. 1998, the tech bubble. We're still way above that, man. We're still way above that. We even saw this one as a local peak. And a downdraft there. This one has got to give anybody pause. 227%. And you think in the past we've been down closer on average over longer periods of history, like back to the turn of the 20th century, we were below 100%. That was more the norm. And so where we are today is not only super elevated compared to recent times when everything is expensive, but really abnormally elevated. Compared to long-term history, the market is stretched to its absolute limits. No question. And what we're seeing is the smart money rotating out. Hedge funds are getting out, folks. The big money, the big smart money is out. They are rapidly reducing exposure to Mag Seven stocks. Allocations have fallen to 17%, nearing a three-year low for institutional holders. Okay, the big money is leaving. The sharps are leaving the building. Meanwhile, the retail crowd is going for the bags. They're buying. Retail investors are aggressively buying major tech companies. I saw this, guys. This was just such a playbook from the tech bubble. The institutions pushed these crazy IPOs out there. They were already owning it on the IPO. They were flipping and they were selling straight into rabid retail demand because the retail wants to have access to these big names with all the hype, all the industry, all the media, all the CNBC talking about it all the time. That's exactly when the institutions are leaving folks to hold the bags. They're transferring that exposure to you. And this is why you're seeing big IPOs because, hey, retail people are looking for bags to hold. Let's give them some big fat IPOs because those are the most profitable bags. To leave the retail investors to hold. Most profitable for those selling, that is. And I would say, folks, the easy trade is coming to an end, unfortunately. I call it the bag holder trade. Look, the buy any tech stock is no longer a viable strategy. Valuations are eventually going to align with core earnings. Can't tell you exactly when, but if you're going to say that we were close, I think it'd be hard to argue at this point in time. The bottom line is I think you really do need a way to filter out noise. Don't get left holding the bag. The real question is, how do you know which stocks to own? How do you figure it out? How do you know which stocks to avoid? How do you know when you're guessing? How do you know who to trust? There is a better way. These questions are normal. Everyone has them. But what we're here to do today is provide and show you a better way. And prove to you why you can trust it. And by the way, people knocking on it are some of the biggest, most sophisticated names in the business. Ray Dalio's firm wanted a meeting to talk about forensic accounting, long ideas, and danger zone ideas. They, along with some of the biggest and smartest institutions in the world, pay us for and call on us for our research. Why? Consistent alpha, folks. We consistently outperform 59 straight months on sum zero. You don't think people pay attention to that? Our indices outperforming the S&P dramatically. You don't think people pay attention to that? Our continuous write-ups in the news, the media, Harvard Business School, Ernst Young, Google choosing us for an AI. You don't think people pay attention to that? Everyone pays attention to that because no one else can match it. And now we're looking to share it with you. So if you're new, let me just take a second to introduce myself and what we do here at New Constructs. I'm David Trainer. I'm the founder. I've been at this work for 30 years. I just had a meeting this week and one of my buddies from Wall Street said, hey, David, man, it's been 30 years when we first met. We were together back at Credit Suisse. I'm author of Modern Tools for Valuation and The Valuation Handbook. And a great deal of other many research reports and items over the years. And the real takeaway for my story and the New Construct story is that, look, I was on Wall Street, I saw how the sausage was made during the tech bubble, and I decided to build something better. I decided to do my part to support the integrity of the capital markets and really ultimately provide investors with unbiased, superior fundamental research. And over the last 2 decades, we've perfected AI-powered stock research that digs deeper, picks stocks better, and beats the market. Our alpha comes specifically from proprietary data. We have better data from the footnotes in the filings. And why do we focus there? Because footnotes is where the secrets are, right? This is where you got to go to get the data. They're extremely hard to find. And so when I decided I wanted to start a business, I'm like, I want to go do something that no one else can do. To me, that is why you have the right to enjoy profit margins. When you can do things that no one else can do, you deserve to have profit because you're creating value. And that's what New Constructs is all about. And the performance of our superior fundamental data and research speaks for itself. As I mentioned before, Ranked number 1 in multiple categories for 59 straight months. I can't wait till we can say 60 months because that's going to be 5 years in a row of being ranked number 1 on a platform with professional buy-side investors. There you are. See the picture straight from their site. Not to mention, our work's been vetted and validated by some of the most prestigious firms in the world. MIT Sloan School of Management. Harvard Business School, Ernst Young, the Journal of Financial Economics. And I've asked this 100 times. Does anybody know any other research firm that can share these same credentials? Please let us know. I don't think there's a single one. Here's another one that no one else can say. Google chose us to build their investing AI agent, FinSights. Recently, they showcased it at Google Next, a big conference in Vegas. But they chose us. They paid us. They brought us in to help them design this, and they used our data and a lot of our subject matter expertise to build the only AI agent for investing. Why? Because we got superior research folks. And for them, it's a way to demonstrate the value of their technology. And my buddy Brad, who I worked with on this deal from the beginning, said, when I told him what we were doing, he said, David, that's exactly what we need. We're looking for that special sauce to show why our technology works so well. The key being that when you can endow AI technologies with 100% accurate and predictive data, you've got a really magical capability. Even better, the outperformance of our actively traded indices proves our value added and our alpha. Core Earnings Leaders Index beat the S&P 500 by 900 basis points in 2025. It beats the S&P 500 by 27% over the last 5 years. The Very Attractive Stocks Index has beat the S&P 500 by 5% over the last 5 years. The Core Earnings Weighted S&P 500 Index, my favorite, right? This one, we don't even have to pick the stocks. We let somebody else pick the stocks. But we weight those stocks based on core earnings instead of market cap. And guess what? Beats the S&P 500 by 23% over the last 5 years. Now, importantly, these indices are managed by Bloomberg, so they're not available to you. But the research behind them is. The bottom line, we have the only AI that reads the footnotes and calculates true core earnings. Earnings. Now, I said I wanted you guys to imagine something special. Imagine this. Imagine what would be the best way to pick stocks. Seriously, if you had an unlimited amount of money, design any process you can imagine. What would you do? What would be the best possible scenario for you to have a research system to pick stocks? I want you to close your eyes and think about that for just a few seconds. Hmm. How about this? I got an idea. What if you had expert investors with 40+ years of experience running a hedge fund, seeing the tech bubble, seeing how the sausage was made, building AI technology, writing research and putting out ratings for over 20 years, using the best data in the world, 40+ years of experience? Would that be a good system for you? Does that sound good? That's what we have here at New Constructs. And today, as we are analyzing the latest filings, the question we hear the most, how am I going to protect my portfolio? What am I going to do in this crazy market? Don't get me wrong, it's been great for a lot of people, but how do I protect this hard-earned capital? And then how do I find good stocks? What's left? Everything seems so expensive. And that's exactly why we're here today. We're going to hand over the research to answer those questions and show you how to gain a true sustainable edge. Now, if you're familiar with New Constructs, you know that we provide proven superior stock ratings based on proven superior fundamental research. We cover over 3,300 US stocks and provide the most accurate unbiased research data available in the world. Now, rating system includes 5 key metrics, and they're based in 2 sort of categories: quality of earnings and valuation. The 2 quality of earnings metrics are economic earnings versus reported earnings. Economic earnings are the overall comprehensive measure of the profitability of a company. Then you've got return on invested capital. We have our 2-year average free cash flow yield, price to economic book value, and the market implied growth appreciation period. All these 5 metrics are what drive our overall ratings. It's the only stock rating system with an official U.S. patent. So far, I just want you to know, for the record, no one has provided any answers or suggestions for another firm that has as many credentials as New Constructs. That was before I mentioned the patent. I don't know of any research firms that have a single patent, but they certainly don't have the credentials from Harvard Business School, Google, Bloomberg, MIT Sloan, Ernst Young, etc. I hope that means something to you. Now let me tell you why we earn these credentials. We have over 250,000 expertly marked up filings. These are 250,000 that experts Have gone in and marked up. Now we have millions of filings that the machines have marked up and practiced on and tried on and been tested on. 250,000. That means 43 billion data points in our database. 43 billion data points to inform our AI how to understand and analyze filings and build models. That's our advantage, folks. 43 billion data points. Doing it exactly right for 20 years to produce alpha. That's our secret sauce. It's an auto-parsing technology that allows us to go through the filings faster and faster. When we started this thing over 20 years ago, it was much slower. It's way faster now. We had way more people doing a whole lot more manual work. Now the machines do that really well. We have a proprietary ontology. The way that we organize the data. To give it meaning, give it purpose, is different and better, as evidenced by our alpha. Alpha means outperformance. Our outperformance scoreboard— can't say much more than that. And then we got footnotes and MD&A analysis. Look, no one does that better than we do. Now, a great Wall Street Journal article I'd love to point out estimates that Warren Buffett Read maybe more than 100,000 financial statements. Now they didn't say footnotes too, but I'm giving him credit because I believe this guy, he wasn't reading just the front part of the filing, right? How many of you guys know a typical filing is about this big, right? And the financial statements are maybe this much of it, and then the rest is footnotes. That's the tough part. Uh, so I'm assuming that Mr. Buffett, because he is the master, he's the man, I'm assuming he read The whole filing, 100,000 of them. At New Constructs, we've done 2.5 times that and counting. Think of us as the AI version of Mr. Buffett. Now, we use a proprietary technology to standardize complex financial disclosures. So that's our difference, right? I learned from Mr. Buffett and many other people, read the books. My boss, my first boss on Wall Street said, read these 3 books. I read them. He came back to me and said, read them again. And he said, build a model. And I built a model and I had some friends at the Wall Street firm, younger folks like me, this great friend, Bob Heiler. He helped me build a model in the beginning. And we built this great model, Credit Suisse, and everybody was using it. 80% of the analysts around the world were using it. I'd been all over the world teaching people how to use it, fueling their objections about how to build a better model. And then the tech bubble came. Frank Quattrone and his team, Mike Quantitz, Elliot Rogers, many other people came over to Credit Suisse, and the model I had was no longer very popular. And so when I came back to do it again, after having done all that work manually, I realized, look, there needs to be technology. And that's what we built, is a technology that over time has gotten faster and smarter as it has learned from experts. That was the idea. Always build the technology to learn from the experts. Every time a human tells the machine how to interpret a particular line item or footnote disclosure, that goes into a memory bank, which becomes another instruction on how to handle that disclosure scenario. And so that's what we built. And the key here is that these metrics are proven vital for assessing a company's health. To put it simply, our robo-analyst AI technology gets the data the market is missing, That's how we have alpha and does the diligence for you that no one else will do. That's how you get an edge, folks. Better data and better analysis. It's one thing to have data, but if you don't put it into the right form, you don't get signal. We're giving you both. Look, most investors these days, even the professionals, why do you think folks like Bridgewater, Citadel, and others keep coming back to us? They don't have time to read the 200+ 10-Ks and 10-Qs. They don't have time to do proper diligence. The process, and they've got millions to spend, they still can't do it. If you wanted to do it on your own, it would probably take you millions of dollars to figure out that you couldn't do it. If you could do it, great. But I'm telling you, it would be millions of dollars per quarter to replicate. How do I know that? Because our clients have told us that. Now, I've explained to you how our data and our ratings are some of the best, if not the best in the world. But those ratings, as powerful as they are, are just the starting point for what I want to share with you today. Here's what really makes us number one. It's superior screening. It's being able to go through the entire market and identify the very best and the very worst. And add to that our qualitative analysis. This is where 40 years of experience in investing and writing research and running hedge funds and doing competitive analysis. Adds value on top of what is already the best data and analytics in the world. So our ratings, they screen the market. The qualitative research finds the biggest winners. So we filter down 300— 3,300 stocks to a small handful, and then we do this in-depth qualitative research. And let me be specific, we look at the macro environment, macro trends, competitive positions, catalysts, forensic accounting, and deep discounted cash flow analysis, reverse DCF analysis that typically looks at least 2 to 3 different scenarios for the future. Right? We look at what the market implies. We have a best case. We have a worst case. We do deep, deep analysis that's rivaled by nobody, certainly in terms of its performance. And this qualitative research helps us find picks like this consumer staples company. was up 421% while it was a long idea. Our consumer discretionary company up 505% while it was one of our long ideas. Means we opened it and closed it. This information technology company was up 262% while it was a long idea. Now, the analytical framework behind our long ideas reads like the work you'd see in a Harvard Business School case study or in an MBA class. Except we're doing it with real data in real time. All these case studies in MBA classes, they spend entire semesters teaching people how to analyze a stock and it's all backward looking. It's easy. We're doing all that work in real time. And that means unrivaled insights into the inner workings of a company, a masterclass in building a thesis. We do the work that business schools try to teach students over semesters. And it's something that, look, that I, in order to help my team, And to grow this and to scale this and to be consistent, I created a 40-point checklist. Now, I would say this checklist is more like 150 points, right? But we gotta boil it down. There's a lot of specifics. And so we boil it down like 4 key things. And this is a very long and arduous journey after going through the screening. Keep in mind, millions of dollars to build this database that many of you have access to. Many of you guys are subscribers. You have access to Discovery, Stock Tracker, or professional members, right? You have access to one of the greatest systems in the world. So do I. Why don't I use it? It's my pleasure. It's my distinct joy to be able to use this amazing system to pick stocks and to be able to put what I love most is my understanding about how to analyze a company, how to understand a business, how to think about competitive position, to put that to work to identify the best stocks in the market. Take that screening and whittle it down to that small group of companies that really deserves that deep intellectual investment to understand the business model, its thesis, and competitive position, and really think about whether or not it is a really major winner. That to me, it's euphoria. It's the goal. It's the end. When I told you before, imagine the best possible stock picking process, that's what I'm talking about. So after the great screening, We have 20 top-level criteria, 40 total checkpoints of rigorous validation, all this stuff before it even gets pitched. And when I say before it gets pitched, before it gets to me, right? I don't want to talk about it unless it can pass all these things. And here's some of what we're talking about. Porter's 5 Forces. I remember when I was on Wall Street, Porter's 5 Forces was all the rage. People loved it, talking about how great it was for analyzing. And it is great. It's great. It doesn't give you any insights. But it does provide great vocabulary for talking about how to analyze competitive position. But things that we're talking about in our checklist, industry competitive position, not just the company, but the industry. Oh, is this company swimming with the current in terms of where the overall world is going or against the current? Right. And then of course there's competitive position versus peers. It may be swimming in the current, but if it's behind 30 other big companies, it doesn't help. Right. Threats to the company's business model. What are substitutes out there? What are things that are going to change it? If it's super profitable, hasn't it invited a lot of competition? What are the key merits or strengths and weaknesses of their products and services? Global market trends, macro tailwinds and headwinds, impact of regulatory changes, relationships with suppliers, relationships with vendors, corporate governance. Some of our best danger zone calls Short ideas have been because of related party transactions. Remember the WeWork guy? He was paying people in his family for catering and stuff, and he was getting all kinds of kickbacks from the brand, right? Remember what happened after we wrote that report? They canned the IPO. So there's a lot of things that you got to go into to understand exactly what's going to be the really big winners. Of course, profitability analysis is super important. And then really, to me, most important at the end of the day, when you've done all this work and you understand your thesis, now let me understand the implications of our target price, of the current price, and understand what kind of future cash flows, future margins, future revenue growth, future returns on capital are required to justify this target price. Sometimes the target price for a long idea is higher than the current price. Danger zone ideas often much lower. And what's so revealing about this reverse DCF analysis is that we can go in and say, oh, by the way, this stock— recent example, company we just published on— oh yeah, it's a startup. It's barely off the ground, and its stock price implies that it's going to be bigger revenue and more profitable than one of the industry behemoths. That happens more than you think, folks. These valuations are unhinged. You'll see what happened to some of the stocks we pointed out that had these kinds of unhinged valuations. So keep in mind, only the best survive. This is the idea of everything, right? You see this on TV shows. They have reality shows about it all the time, right? They have a bunch of people that are really good at what they do. They've signed up for a reason. And you systematically eliminate, and you only have the best. And those people typically are really very skilled, right? Same is true for stock picking, guys. 96% of stocks are not buy and hold, despite what Wall Street tells you. If you've been with me before, you know that we like to talk about that stat. Wall Street's got 96% of stocks as buy and hold. No, for us, it's a much, much smaller number. I'm going to show you how small in a second, but I want you to understand. We go through all that screening. We go through a 40-point checklist, and then the analysts pitch it to the team. Only 2 out of 10 of those actually get qualified and get the full workup and write-up. So it's screening after screening. Look, not every cheap stock is a good long idea. Selectivity is the key to success in everything. So what am I talking about here with a long idea or a danger zone idea? It's not just a screen ticker with an attractive rating. This is a fully researched, conviction-driven thesis built for the long term. A lot of these stocks we hold for as many as 3.2 years. So when we say we're selective with these long ideas, danger zone ideas, we're not just saying stuff, right? We're not just kidding. We've got the data and the proof and the track record behind it. Now let me walk you through some examples of past long ideas. Let's go with Sprouts Farmers Art Market. I think it's up big today in a down market. It was up 421% from the time we opened the pick to the time we closed it. Now, I admit I've said this before in some of our trainings, sometimes we close some of our stock picks too early. We don't chase it when it looks dangerous to us, gets unattractive. We let it go. Why? Because we have the ability to go find another stock that's better. Maybe you say, oh, it's not better because it goes on some crazy run. I don't like taking that risk. I don't want to be chasing the performance we're seeing in the current market. As good as this is in the S&P 500, some of the smartest investors I know, one of my good friends told me he's all out of equities, has been for a long time. Doesn't want the risk. Happy with his 7 or 8, 9% that he can get, or 6% for a bulk of his portfolio. Our ability to go back and consistently find good quality companies, cheap stocks, is what drives our outperformance, folks. It's that ability. We're not trying to hit grand slams every time. We're looking for singles and doubles consistently. Bam. And that's what we do. So Sprouts Farmers Market is a great example. Here's a report. You can see it written in November of 2020. And look, the reasons behind why we like this stock was well beyond the attractive rating. It was taking market share Growing faster, and they had a long runway of growth from new store openings. They were successful at this. We point out a lot of these retail companies, retail restaurants—they're terribly improbable for a long time while growing. Sprouts was able to do both. They had a very strong niche brand in healthy natural foods. That's a very great—that's a great macro environment. It's growing higher margin model with a lot of. Private label, and the stock price at the time implied very pessimistic profit growth expectations. I think it had negative profit growth baked into it. It was priced as if its profits were going to decline. That's what the reverse DCF showed us. So like, oh my gosh, this thing's super profitable, high margins, growing like crazy. People are missing something. That's what our ideas do is uncover things that people are missing. That's how you get 505 Performance, Williams-Sonoma. Great one. While everyone's over here talking about that fancy online retail company that does furniture, I'm blanking on the name right now, just whatever, right? We're in here with Williams-Sonoma. Why? Because it's got a multi-channel strategy. It does online and offline. We wrote this report back in 2016. Stock went up 500%. Its e-commerce growth was a competitive advantage, not a threat. It had great bricks-and-mortar strategy. The disciplined management focused on profitable growth and value creation over time, which is why we saw such high returns on capital and high margins. And again, I believe at the time we wrote this report, the stock was priced as if it was never— the business was never going to grow hardly at all. So a combination of great growth drivers, Great profitability and a valuation that implies no growth. Folks, that's a win. That's a big win. How about Jabil? Technology company, 262% gain. Very similar kind of thesis. And look, they had great executive incentives tied to ROIC, real profits growing, strict cost controls, and a fast-to-market strategy that drove greater efficiency and higher profitability. Diversified end markets. This is the funny thing, and I always love to say this to the team. By the time we get done with the reports, we're like, we almost can't believe it. We read it and we're like, this is too good to be true. How do we find a business with this many good things going for it? And by the way, we spent a lot of time going through the bear case. You'll read in these reports, we spent a lot of time addressing the bear cases. That's where our arguments get the best. We go through and we look through, hey, what is all the non-confirming? Evidence out there. What are the people who disagree with us saying? What is their thesis, and what do we think? To me, that's actually the most fun part. When we have a meeting like this and they don't know the counterarguments, I'm like, "All right, guys, we can't. I can't use this. If you can't tell me what the bear case is, you don't even know how to address the bear case. It's a no. It's a non starter." We spent a lot of time trying to think about what can dismantle these ideas, and typically when we get done with these long ideas, it's like what? It's amazing. It's like Christmas. Oh my gosh, I found a recent company, one of our recent long ideas we wrote about just a few weeks ago, some one day last week, up 20%. Up 20%. And that's the neat thing. It's like Christmas can happen on any given day. It's Christmas when we write the report and we put it out there. Man, this is some really good stuff here. This is a growing business. It's competitive positions. All these markers, they have no competition. They're doing all these things that no one else can do. And the stock price is acting like they're going to go out of business. Wait a second, something's— this is too good to be true. And then we're just sitting around one day and I get a Slack from Lee or somebody say, by the way, that long idea up 20% today. Boom. It's awesome. And when I told you guys to imagine the best stock picking process in the world, this is what I'm showing you right now. Now, and it doesn't just work on the long ideas. Danger zone stuff is just important. Look, as Ben Hogan said, golf is a game of not just good shots, but also bad shots. Right? Any of you guys play golf out there? What affects your score the most? That one great shot you hit or that one bad shot you hit? So listen, the danger zone work is just as important, and we do those on a regular basis. Understanding what to avoid is just as important as knowing what to own. So here's some examples of our danger zone picks. Beyond Meat. We were bearish on this thing From before the IPO. This is like another Christmas comes when you write these reports. This is such a joke. How can anybody want to invest in a company that's selling ground vegetables as a means to compete with ground meat, right? Ground vegetables is really that much better. It's not. I'm not talking about taste. I'm talking about the quality of food. It's not that much better for you. All right. I think even what Beyond Meat did had a lot of chemicals in it. Defeats the whole purpose, right? And they're just riding some popular fashionable wave of whatever eating. And by the way, they couldn't get shelf space. They're trying to get shelf space from Kroger. Kroger's got their own alternative meat. Who's going to get the shelf space? Come on. Joke of a business. Probably going to go to zero. It was a zombie stock as well. Yeah. Not a good business. Lyft. Another example. I think we were out of this. We were onto this at the IPO, before the IPO. Down 85%, outperformed the S&P by 247%. Folks, listen, how many people can name a municipality where they make money on their public bus system giving people rides? Self-driving cars gonna all of a sudden make margins better? By the way, who's gonna get all the margin in self-driving cars? Probably the company that provides the self-driving technology, Waymo. This is also a conflicting thesis. You can't believe that self-driving cars are the future and that rideshare is also the future, right? It's a commodity, folks. It's giving someone a ride. There's not a margin at— it's a commodity service. That's why you don't see taxi drivers that are billionaires. Eventbrite down 88%. This is another one. By the way, we love getting on these before the IPO, and you should be on the lookout. We're going to be doing a pre-IPO report on SpaceX as well, and we're going to give you the truth behind that one. That's going to be a juicy one. We already know of many related party transactions that remind us of WeWork. And we also have suspicions that the valuation is going to imply profits that probably are going to make SpaceX bigger than China. No joke, right? They're going to have revenue that's equal to the GDP of China. That's what the valuation I'm guessing for SpaceX is going to imply. Something outrageous. Something outrageous, folks. We're going to be on top of that too. But Eventbrite in the danger zone. This was a great business. They were— I think it's maybe gone out of business. What are they doing? Invitations? So many free services. How am I going to make money doing something that everyone else can offer for free? Online invitations. This is a great example of like where the internet just made it free. It's so simple. You're not charging for that stuff. And they try to have a business model based on that. And typically these danger zone ideas are not just really bad business models. They got valuations implied they're going to be one of the greatest business models of all time. So it's greater. Extremely high valuation, super bad business model. Danger zone protects your portfolio. Right? Once one side long ideas helps you find winners, the other side protects against blowups. Together you get a complete picture. This is how the best of the best do the work, my friends. And again, this is long-term conviction. These aren't day trading ideas. Keep in mind everything's done for you. And this is not just about, hey, I just got something great. Here's a stock pick. No, these aren't like your Wall Street reports. These are way more comprehensive, way more high integrity, way more detailed. We don't fake our valuation stuff. We lay it all out there for you to see. Because by the way, if we're wrong, remember I told you how we search for the bear case? We search for those and we put all our stuff out there for clients to see. And I will tell you, over the last 20 years, I've not always been right. And there have been times we've something wrong early on is because we hadn't fully researched the bear case. Guys, we can't put something out there like someone, hey, by the way, do you think about this? No, come on. So that's when I had to institute a checklist and make sure, hey, we've checked through the bear cases so that we're not missing anything. That was 20 years ago. And that's why we've gotten so good at what we do and why we continue to do it so well. Now, to give perspective on just how rare these picks are, folks, We cover 3,300 stocks. Only 12 ideas over the span of a year get picked on the long idea side, on the danger zone idea side. That's 0.4% of our coverage. Not 4%, not 14%, not 40%. That's 0.4%. When you want to talk about the best of the best, we're not talking about even the top 1%. We're not even talking about the top Top half percent, 0.4%. That's what makes it into a long idea. That's what makes it into a danger zone idea. That's what you get access to, the best of the best. So again, when I came to you earlier today and I said, imagine what's the best process, can you imagine a more discerning, more rigorous process than what we have here today? Remember, producing and maintaining this level of detailed research would set you back millions of dollars a quarter, assuming you could come up with as good an ontology as we have. And these reports give access to deep financial research that's considered a goldmine by financial advisors and hedge fund managers around the world. There's a reason why these great firms are accessing us. It's because these ideas work. They're excellent. And we've got the track record. So quick story. I've told a lot of stories today, but I want to come back to one of my favorite stories. And that's one of the great fun I have every year is in talking to our clients on a regular basis. Our pro members, they get a one-on-one every 6 months. And our institutional clients, some of them talk to us more often. Some of them don't need to talk at all. They're like, hey, the data is good, David. I got the big client in New York. They're like, hey, Getting the data. We got it. But those clients that do talk to me, they keep saying the same thing and they love to say it. They say, David, I'm just so glad I found you. I didn't know that you existed. I didn't know that New Constructs existed. I was hoping for something like this and I was actually searching for you guys. And by the way, I'm ticked off that not more people know about you. What's wrong with you, David? How come you're not out there more? Like, I think I'm out there a lot. What you do is amazing. I tried to do it myself. I couldn't do it. I was so happy to find that what you have here has existed. And that's what they say. And then they go on to say, yeah, and look, I'm glad you saved me the millions of dollars trying to do it. Because I think even if I did spend millions of dollars to do this, I probably couldn't replicate what you do. So when they're paying us 6 figures, 6 figures a year, that's their way of saying we're getting really great value. Here are a few other notes from our clients. These are our advisor and individual clients. Nancy, I love this quote from her. She says, look, along with your integrity, we appreciate your commitment to maintaining high standards and your courage for saying so. If you ever saw the core values at New Constructs, you'd see that it's preceded with a sentence that says, we have an uncompromising commitment to these core values. Uncompromising. We are uncompromising about our desire to do things right. That's how you have consistent success. Commitment to a high integrity. In my opinion, there's no other way. Simply and instantly you can see how your stocks or funds are rated. I highly endorse the New Construct system as one must-have tool in any stock or fund selection process. This one, I try to keep these short, but this is a good one. She said, see, I valued New Construct for several years now and have relied on it for managing a single portfolio that supports my husband and me in retirement. Having worked with big data throughout my first career, I sincerely appreciate all the work that has gone into creating New Constructs and the database. Going from marked-up footnotes and filings to reliable, easy-to-understand indicators of a company's performance is a huge undertaking, and you deserve my utmost respect. I find New Constructs information to be reliable, relevant, and trustworthy. I sincerely appreciate the transparency, the education, and the personal personalization through the portfolio portfolios and alerts, and I expect to continue using New Constructs through my life to avoid ever running out of money. New Constructs is the only company that has allowed me to feel secure in both my buy and sell decisions, and that has been truly valuable. And I have tried quite a few over the years. It's a long one, but there's a lot of good stuff in there, folks. It's not just the big firms— Bloomberg, Google, Harvard Business School, MIT Sloan. It's the folks, it's the individuals out there. And these are the folks that matter most to me. You're the folks that matter most to me because you are the ones at the end of the day that make the market. The big firms will always be around, but it's you that makes the market. That's why so much of that advertising and propaganda is geared towards you. They want to take advantage of you. I'm here to give you An antidote. Kurt says, I have found your analysis superior. As a business owner, I know how financials can be manipulated to put forward best-case scenarios, thus hiding critical information. Your research digs that out for me and provides a high level of confidence in my selection process. I use other metrics to compare, but I rarely buy something that does not have solid ratings from New Constructs. Provides me with concise insights into investment opportunities derived from meaningful metrics that I could not duplicate on my own. No one else can do what we can do. It's part of why it works so well. And look, folks, let's be honest about something. Trust is not exactly growing on trees these days. You can see almost every survey, trust is going down. I don't know if you feel it, but I quit watching the news a long time ago because I just felt like I was getting attempted to be manipulated. I don't know how many of you on social media. It is outrageous the attempts to manipulate and brainwash us on social media. You just put yourself out there. It's like laying on the tracks for a train to come. Maybe you're good at rolling off the last second. Don't ever buy anything. I don't know. But I want you to know it's very important to me. To provide an alternative out there, something that is going to be focused on truth, straight facts, short and to the point. I'm not trying to massage you and lather you up or propagandize you with a bunch of stuff. I'm just giving you good information because you're not getting that anywhere else. And I hope that you guys can appreciate that, because in this market, it really comes down to 2 choices: keep going down a path you've been on Trusting this noise, this propaganda, this desire to monetize you, or leverage an unbiased, superior fundamental research platform to protect and grow your portfolio? Option 1, option 2. The bottom line is our clients enjoy a reliable port in the storm. Reliable, like unlike anything else out there, because really we started from the right place. We started with a mission to improve the integrity of the capital markets. Title of my business plan. Written in 2002 in the summer in Central Park. And the goal was to give people the truth about profitability and valuation so that our markets allocate capital more effectively. And in so doing, we can provide transparency, And truth in a way that the world has never seen. I think the benefits of that have spoken for themselves over the 20-plus years of our great stock picking track records. Keep in mind, we are not conflicted. We're not compensated to promote. Now it's time for our live demo. We've got a few minutes left here. Kyle, what do we got here for Some of the top stock requests. Uh, the first one we'll go with is ticker DRS. DRS. Leonardo DRS. I don't know what this company is, but I would put this in the bucket of okay company, expensive stock. This is our institutional membership, and so you've got a lot of capabilities here. You can see a credit rating, you can see a stock rating, you can go through and see how all the adjustments we make. to net income in order to get to our net operating profit after tax. Same is true for GAAP earnings versus our core earnings. Also see our balance sheet adjustments, also see all of our valuation adjustments, and then a lot of detail behind all the elements of the rating. How's economic earnings? Are positive and rising, even though they are below accounting earnings. So that's not so great. We are happy to see them as positive and rising, though. That's good. Number of shares going up, not so good. Return on invested capital looks okay. That's why we're getting a middle-of-the-road score here. Yeah. Margins and capital turns. Margins not looking so good. Here's your free cash flow. Getting better. Price to economic book value. See the divergence there? This economic book value is one of our favorite metrics. Of all of our clients, I love it. It's one of their favorite metrics as well because it shows you the value of the business. If there's no future profit growth. So the profit level stays the same. So the difference between where the economic book value is and the stock price, that's all future growth. So when the future stock price and the growth in the stock price is multiples of the existing profits, that's expensive. And then here's a summary from our reverse discounted cash flow model. And this rating, by the way, The market implied growth appreciation period rating is the strongest and biggest, most important of the 5 ratings. It's based on a reverse DCF model that I was talking about before. That's some background around the rating system. And then the, you'll see if you ever pick a stock that is a long idea, it will show up here in the analyst notes as having been a long idea. All right, Kyle, what's our next stock? Next one is Microsoft. So we do have a related article. I'll go ahead and save you the suspense. It is not a long idea. Microsoft is one of the greatest business models of all time. And we love this business, but it's not been cheap enough for a while for us to see it as a long idea. I would love it to be. We know it's had some hard times this year, been up and down, but this is a classic example of great business, expensive stock. So we're not into it. We've also been talking about Microsoft as one of the big AI companies. We've done a great series of reports on this. You guys, anyone who's interested in understanding our strategic analysis on AI and what we've been saying, which has been very correct, we've identified some blowups long before everyone else and believe we've identified who the winners are going to be very well. Also, those thesis just keep looking better and better. All right. Yeah, question on file integrity issues in Office OneDrive. Look folks, this is why we've got a neutral rating. It's, if it were priced as if its profits were gonna permanently decline, I'd say Microsoft was a good buy even if it had some issues. But when the valuation is this expensive and there's this much growth priced into it, we're gonna say let's stay away. As an example, you can see here's the no growth value of the business. It's around $150 a share. It's now up to $176 a share, but look how much growth is there in it, right? This is $500, $423 a share. A lot has to be done to justify the current price, not for it to be higher, but just to make the current price an accurate reflection of the present value of future cash flows. The company's gonna have to do a lot. All right, Kyle, let's do one more. Last one, ticker NEM. Any, um, Newmont Mining? People are always into the miners. Yeah, this is greens. This is where— this is a great example. A price-to-economic book value of 0.8, that means the stock price is implying the company's profits will permanently decline by 20%. That's good risk-reward. Here's how that looks in the price-to-economic book value chart. Economic book value going up, stock price not as much. Stock price below economic book value. That's saying the market's implying profits will go down. That's good risk reward in our opinion. And we did have one question about Amazon. I'm going to go ahead and answer it as I think it's really interesting. I'm not going to show the rating, but Amazon is in part of our— we are talking about it as one of the big AI hyperscaler companies. And yeah, the debt's huge, huge and going up. Debt's going up, shares outstanding going up. Why? Because it's been free cash flow negative for a long time. You don't keep selling shares and taking on debt because you're profitable. Free cash flow negative. All right, let's, let's finish up here with a few common questions. What is the difference between the long ideas and the stocks found in model portfolios? Huge difference. Qualitative analysis, 40 years of expert research on top of The screening. So model portfolios, they come from quantitative screens that we run across the entire market. That's true. These screens produce excellent picks and results. The added research and qualitative analysis is what makes our long ideas and danger zone ideas special. It's a whole new level. 0.4% of the best. Common question number 2, are the long ideas or danger zone stocks guaranteed to outperform? Have double or triple digit gains in the next year? No, nothing is guaranteed. We don't make guarantees. People out there making guarantees, be careful. I don't know if that's legal. I don't know if the SEC is doing it about or the Fed is doing anything about it. It's not legal. It's not fair. I can't predict the future. People always joke, "Hey David, how come you don't run like? How come your stock ratings aren't always perfect all the time?" If my stock ratings were perfect all the time, that would mean I could see the future. If I could see the future. We'd be doing this meeting on the new construct yacht, not on Zoom. Okay. All right. I think that gets everything else. I got a couple nice comments in here from a former stock analyst. Thank you, Dean. Yes, we are intense. We are intense. I believe you have to be intense to be good. I don't think you get good at stuff doing it half speed. I believe in doing things that I believe in, and I believe in doing them with my full heart. And with that, accomplishing great things, which I believe we've done here at New Constructs. So I'm going to leave you with the same question I asked earlier today. What would be the optimal stock picking system? And then think about what we talked about here at New Constructs and let me know if you think there's anything possibly better, especially when you consider our track record. I don't think there is, and I hope you'll join us today. Thank you and have a great day.