Riding the boom in aesthetic medicine – InMode | Summer Series

Bryce: [00:00:16] Welcome to the Equity Made Summit Series, proudly brought to you by CommSec, the home of investing over 12 episodes where deep diving into some of the most exciting, interesting and well known companies from around the world. Each episode will be unpacking one company with one expert investor. We'll learn from their process and hear why they like the company. My name is Bryce and as always, I'm joined by equity buddy Ren. You alright? 

Alec: [00:00:40] Oh, what is this? 

Bryce: [00:00:43] Oh, I was actually just thinking about, oh. I've just finished a really good cop show. And over in the UK, they always ask each other instead of being like, how are you? They just go, all right. 

Alec: [00:00:54] Okay. This is going to be your thing for 2024 different greetings. 

Bryce: [00:00:58] No it's. 

Alec: [00:00:59] All right. All right, well, look, I am all right. I'm more than all right. I'm excited because, here at equity markets, we love Australian and New Zealand companies that are taking on the world we love Wise Tech. Afterpay had its moment in the sun. Zero is taking on the world. Altium. Some Aussie and New Zealand companies making it in the big time. 

Bryce: [00:01:18] Yeah. 

Alec: [00:01:19] But we also love Aussie investors that are making it in the big time. And today we have one such investor, Tobias Carlisle, hailing from sunny Queensland. But now over in equally sunny Los Angeles, he is taking the American investing world by storm. But he's still making time to jump on this podcast. He's the principal at Acquirers Fund, and today we're diving into a company that he has selected InMode. 

Bryce: [00:01:45] Cannot wait. Yeah, it's always a pleasure to talk to Tobias. Now, the Equity Market Summit series is proudly supported by CommSec, who make it easy to tap into the world's leading share markets. We're covering plenty of global stocks in this series that are likely to get you excited. CommSec has 13 international markets available from the US to Norway, Germany and Japan. Get the access you need as a global investor and invest in shares on the US market from just 5 USD. Brokerage. Download the CommSec app today or visit CommSec.com.au. CommSec T&Cs and other fees and charges apply, and investing in overseas markets exposes you to additional risk. 

Alec: [00:02:23] And before we get started, we need to remind you that while we are licensed, we are not aware of your personal financial circumstances. Any information on this show is for education and entertainment purposes. Any advice is general. Now the price. With that said, before we bring in Tobias, I want to talk to you about the treatment gap. 

Bryce: [00:02:41] There, which. 

Alec: [00:02:42] Yeah well, well to introduce InMode we really need to introduce this concept because this is what they, I guess trying to pioneer and then trying to close, they're trying to open it and then close it. 

Bryce: [00:02:55] They're trying to open the treatment gap and close it. 

Alec: [00:02:57] Yeah. 

Bryce: [00:02:57] Okay. 

Alec: [00:02:59] Well, yeah. Anyway, let's not go too far down the rabbit hole. Basically, if we go to the market for aesthetics, there is laser clinics at the moment that apparently do 40 million procedures annually. They're non-invasive. They're, you know, first, you know, it could be hair removal. It could be, you know, like, veins that are showing, they'll laser them. Typically it's things like laser hair removal and stuff like that, 40 million procedures annually. Then according to InMode, there's a big gap. And then on the other side of this gap, this chasm is plastic surgery. And there's 2.5 million plastic surgery procedures annually worldwide. And that's

Bryce: [00:03:40] Feels like. 

Alec: [00:03:41] A really. 

Bryce: [00:03:42] Yeah. Just think about how many people are in the US alone anyway. It just feels like. 

Alec: [00:03:47] Okay. Yeah. You can take that up with, Will. However, and, you know, the laser procedure is non-invasive, but it's not, I guess, as effective. 

Bryce: [00:04:00] For us as comprehensive. 

Alec: [00:04:02] That's a good one. Long lasting. Yeah. And then on the other side, plastic surgery is a big step. . And so InMode belief, there's this big unmet middle, this big gap of treatments that they're trying to create. 

Bryce: [00:04:16] That is better than, than laser and and gives probably results closer to plastic surgery. But it is not as invasive and perhaps expensive as the plastic surgery option. 

Alec: [00:04:29] Yeah.

Bryce: [00:04:29] Yeah. Yeah. And so they're creating a product that sits in between. 

Alec: [00:04:34] Well they've created a number of products that sit in between. And we'll talk about some of them, because I think that if we talk about some of them, you get a sense of what they're trying to do. And a lot of their products used radiofrequency technology. And then before we get to the products, essentially their key customer is the doctor, like potentially a plastic surgeon or a dermatologist or an obstetrician gynaecologist or the laser clinic themselves. So they're trying to sell their products to either side of the gap, I guess.

Bryce: [00:05:08] Allow them to offer alternatives for their clients. 

Alec: [00:05:11] So let's introduce one of the common, I guess, their biggest product. It's called RFAL and it promises body fat removal without plastic surgery. 

Bryce: [00:05:27] They say here the surgical face and body results without the large visible scars in quotations. The holy grail of plastic surgery. 

Alec: [00:05:35] Yeah, yeah. And so essentially, they're trying to deliver this radiofrequency energy into the subcutaneous fat. And they think that can reduce fat. 

Bryce: [00:05:51] Zapping it away. 

Alec: [00:05:52] I just feel.

Bryce: [00:05:52] Melts it

Alec: [00:05:54] I just feel it feels so scammy. I'm not saying it is. Let's not get sued. You know, I just have a series, but it just feels. It feels like an infomercial. Listen, if an infomercial listed on the stock market, it would be this company. 

Bryce: [00:06:14] Good, good.

Alec: [00:06:17] So that's just one of their many products. To take another product they define, shake and define chin, hands free treatments that use bipolar radiofrequency energy to heat the skin with real time temperature control to treat and improve skin, to reveal a radiant appearance. Or let me introduce you to another one of their products. Body tight. It's tight. Is still tight. A minimally invasive, single treatment that coagulates tissue providing dramatic results. That's essentially it. Providing dramatic results. 

Bryce: [00:06:52] Providing dramatic. So that that would be for the plastic surgery. The. You want to tighten up your chin? You know what you're asking? Yeah, yeah. You loose skin.

Alec: [00:07:02] So I think, like, the the range of products that they offer, a sort of fat removal skin 

Bryce: [00:07:09] Tightening. 

Alec: [00:07:10] Yeah But just or just like, and blemishes and stuff like that. Yeah. And then they have some products which are a little bit more like traditional, like laser hair removal and stuff like that. So they're in the aesthetics and beauty space. They're a big company. They sell their products in 93 countries, but they're really trying to establish, I guess, a third category in this space between the surgeons and the laser clinics. 

Bryce: [00:07:35] Look, I, I get the same sense. It's like hard to sort of conceptualise the true effectiveness of these things or. But it's a growing industry. 

Alec: [00:07:46] Put it this way. As a bigger guy, if they can actually melt away 40% of your fat, sign me up. 

Bryce: [00:07:53] Would you do this or ozempic though? 

Alec: [00:07:54] Well, ozempic, you have to inject yourself and stuff like that. 

Bryce: [00:07:58] True. That's not it's. Yeah. 

Alec: [00:08:01] Honestly, I should probably just go for a run. 

Bryce: [00:08:03] But so yeah, I think for me like I can the cosmetic industry has been growing at a rate of not juicing for a while now.

Alec: [00:08:13] Do you think if these guys nail it, it'll actually devalue themselves? Do you think being ripped and skinny will be less, like the more attainable it becomes, the less impressive it will be? 

Bryce: [00:08:28] No. 

Alec: [00:08:29] Fair enough. 

Alec: [00:08:32] Anyway, talking about something that is hard to attain, the revenue growth rate is pretty impressive. 

Bryce: [00:08:37] It is phenomenal. And I think we should say that Tobias, who will be joining us shortly, he comes at his investments purely quantitatively and from a screener. So this company has obviously from the for the metrics that he looks at. And we'll ask him about that. This has come up in his screener. I don't think he's looking at it from the point of view of this is amazing technology or revolutionary.

Alec: [00:09:03] I don't know. He is based in L.A. now. Maybe, maybe he's got, friends and family. 

Bryce: [00:09:08] Know something that we don't. 

Alec: [00:09:10] Invest in what you know. And Lee certainly knows these clinics, but, you know, this is a company that's growing profit in double digits, growing revenue in double digits as well, and is trading in a price to earnings ratio of ten. 

Bryce: [00:09:24] It's amazing. 

Alec: [00:09:25] Yeah. Yeah. So like that it ticks a lot of Tobias' boxes. It also has I think no debt and about $600 million on its balance sheet. 

Bryce: [00:09:37] Cash to spend. 

Alec: [00:09:38] Yeah. Yeah. And it's a $1.8 billion market cap. So take the cash off the market cap and get the enterprise value. And then, you know it's even less than a ten multiple.

Bryce: [00:09:50] Yeah. If you take it away without knowing the product and someone said to you double digit revenue and profit growth 600 billion on the balance sheet, price to earnings of ten. Like you're going like this sounds pretty crazy. Yeah. It's just that it's operating in an industry. Interesting industry. 

Alec: [00:10:10] Yeah. And there's no doubt that this industry has heaps of tailwinds. Like there's no doubt that this is a good industry to play in. It's just well, yeah, I, I actually wonder. So obviously here in Australia we have seen a lot of our healthcare stocks get whacked by the Ozempic effect. Yeah ResMed with sleep apnoea company CSL because of their kidney treatments. InMode is down about 50% from July. I wonder if that is ozempic related as well. We can ask Tobias, but yeah, like as you said, take the company away and just look at the financials. It's a pretty compelling story. 

Bryce: [00:10:51] Now I'm excited to chat to Tobias. But before we do, CommSec is the home of investing. And if you want to start small, you can through the Commbank app, you can invest with as little as $50. Consistent small amounts can add up to meaningful returns. Visit Commbank.com.au for more CommSec T&Cs and other fees and charges apply. 

Alec: [00:11:10] We'll be right back with Tobias after this short break. 

Bryce: [00:11:23] So we're here with Tobias Carlisle. Tobias, welcome to Equity Mates. 

Tobias: [00:11:26] Hey, thanks for having me, fellas. Good to see you again. I think the last time I saw you was Omaha. 

Alec: [00:11:30] Yes, yes it was. Yeah. Yeah, yeah.

Bryce: [00:11:32] After we just finished the5K fun run. 

Alec: [00:11:35] Yes. 

Tobias: [00:11:36] What is it? What was it? Fun? 

Bryce: [00:11:39] For me, it wasn't so much. Yeah. It's the first time I've run five K in, like, ten years or something, so. But the whole weekend was awesome. 

Alec: [00:11:47] Yeah, yeah, yeah, yeah, it was great, I loved it. You're. You're a celebrity over there, Tobias. We were, struggling to get a word in with you. That's true. 

Tobias: [00:11:56] Yeah. That's funny. At the front of one of those. One of the, meetings. 

Bryce: [00:12:01] Everyone coming up shaking hands. Yeah. Anyway, we're here to chat InMode to kick off. Tobias, can you just broadly help us understand what InMode do. 

Tobias: [00:12:11] They make these machines that minimally invasive or non-invasive for aesthetic, cosmetic, sort of almost surgery in the States. And so that's that's their business. They sell these machines and they're based in Israel. So I give you. I think that there's a lot of points in there for why this thing is a little bit undervalued at the moment. 

Alec: [00:12:38] Yeah. It's a it's a funny one. We were we were speaking about it earlier in the episode and talking about the treatment gap as they, they talk about it, you know, there's laser clinics and then there's plastic surgery and they're really trying to play in the middle of, of that, space. It's certainly not an industry that it's not in our, circle of competence, like, well, it's not in there. It's no, no, no, lived experience. So, it's an interesting industry to look at. You're based in LA, so I reckon you, you might have heard about some of their treatments a little bit more, but I guess, you know, we're not here to talk about the health care story. We're here to talk about the investment story. So when you come across this company and you think about it as an investment, what is it that is interesting to you and how do you start to analyse this company? 

Tobias: [00:13:31] So you guys know I'm mostly quantitative. I have two funds, I have a large cap mid-cap fund, and I have a small and micro fund in the states. I won't tell you the tickers so we won't or go bananas with compliance. But this company went into my big fund and was in my big fund screen and my little fund. The smaller companies use the same strategy just in a slightly lower market capitalisation level. And so this one has now also fallen into my small and micro. So it's a small company market cap. I think today it closed just a little bit over $1.6 billion, which is pretty small by US standards. And the price value is a billion. So they've got a lot of cash sitting on their balance sheet. What they do is selling these machines. And so many of these machines, bought by businesses that then sell the services on the other side, I use them to deliver the services. And so for the client purchasing this machine, it's mostly a commercial decision. And the increase in rates over here has made it more difficult to finance these machines, which is one of the reasons why they've had a little bit of a slowdown in the sales, although sales have been growing very rapidly and probably continue to do so. I think that that theme of people doing a lot of these sort of minimally invasive things to their bodies will only increase as people get wealthier and older, which just as a general theme, I think that that's not a bad one to bet on. That's not really the basis for my bet here. Mine is more purely on how undervalued I think this thing is. If you just look at the stats on this thing you're getting, the PE is under ten. Free cash flow yield is around 10%, which is absolutely mammoth for a company of this quality. Their return on what they the machines sell for giant margins, gross margins more than 80%. It's a very, very good business. The question is how competitive does it get and how much of that gets squeezed, you know, over time. And probably there is some room for that to come out. But at the moment it's sort of a the I think that the valuation is so good that you can afford to have a lot of, you know, the business can be competed away with a little bit and it'll still be a pretty good performer for a period of time. So mostly I think it's a deep value stock that's much, much better than a deep Valley stock.

Alec: [00:15:57] Yeah. Just so to put some numbers to that, profit last year, net income last year was 160 million. And as you said the market cap is 1.6 billion, but it's got about $600 million in cash. So take that out. The enterprise value is about $1 billion. And it did 160 million in profit last year. It's pretty rare. And then you overlay that with the revenue growth story. It's that the financials are compelling. I guess that is the core of the bull case? Just the value opportunity. Is there anything else when you think about why this is an interesting investment opportunity? 

Tobias: [00:16:34] So for me, you know, because I am mostly quantitative. Like for me, quantitative just means I mostly make my decisions based on what's in the financial statements. And the financial statements tell a pretty good story that if this sort of continues into the future, I think this is probably a very good investment. The other stuff around it, I think the theme and the place for it also make it kind of a compelling investment, but that's usually stuff that I don't really get too involved in because it's harder to be right on that stuff. For me, I think that's sort of it's almost quasi macro, but I don't think that the valuation is so compelling that a lot can go wrong for this company, and it's still pretty good value where it is. I do think there are some reasons why it's cheap, and I'm happy to go through those with you guys if you'd like to do well. 

Bryce: [00:17:21] That was going to be my next question, because there's probably a fair few people listening, thinking, if it's such a great company, why is it such a value play at the moment? So yeah, take us through it. 

Tobias: [00:17:31] They had a little stumble with the revenues, which is if you look at the chart, they've come off a lot over the last few months and they've come off a lot over the last sort of 12 to 24 months. The last few months have been a few things. One of them was just that geopolitical instability, Israel, Palestine, that kicking off was part of it. It's also the forward guidance state. I can't remember exactly what the range was, but it might have been up to 550. And they've got it down a little bit below that. It's still over 500 million. And there's still if you look at the analyst estimates, that's still growing for the next 3 or 4 years, as far out as they can see. So I think that the business itself is pretty healthy. So I think that a lot of the reasons why it's sold off are sort of not necessarily related to the stock. There tend to be more, more sort of macro term risks. One of the ones we were discussing before we came on. But, you know, the GOP one seems to be like the dog ate my homework kind of argument for why all of this, from everything from Pepsi to Walmart to why all of these companies have sort of struggled a little bit. 

Alec: [00:18:30] And for people, the GOP one is Ozempic. 

Tobias: [00:18:33] Yes, that's the semaglutide. It's the drug that stops you from eating. Just get rid of it for an extended period of time. And it seems to work very, very effectively. But there's this concern. And the funny thing is that it's sort of hit all of these, you know, Pepsi because it makes Doritos and, you know, sodas and stuff like that. Walmart because it sells, I guess, a lot of junk food there. And then it sort of hit a few of these healthcare companies, too. And I guess that these guys, because they are in the business of making people look better. But I would argue that GOP one, semaglutide, whatever, whatever you want to call it, the weak stuff, maybe that's a benefit to these guys. Maybe people trim them down, they decide they want to do like just as a stepping stone to the full cosmetic make of it halfway through it it this non-invasive, minimally invasive stuff. 

Alec: [00:19:23] Yeah, well, we were looking at an investor presentation for InMode, preparing for this. And because I have a whole bunch of different machines that do a whole bunch of different cosmetic procedures, I guess, but the first one in their deck is the RFAL machine, which, to quote them, is the holy grail of plastic surgery. And it's it's all about, it's all about fat loss without, you know, doing, actually invasive surgery. And so, yeah, the obvious thought there is, well, their customers and now have ozempic as an option as well. 

Tobias: [00:20:00] I would say it's also, you know, cutting down on the loose skin.

Alec: [00:20:04] Yeah. Yeah.

Tobias: [00:20:05] It's a side effect of the ozempic.

Alec: [00:20:07] Yes. True. Yeah. 

Tobias: [00:20:08] Yeah yeah I typically don't make investment decisions on this. But I think we can all come up with like good arguments for one way or the other. And I think it makes the story more colourful. But I would never make decisions on its basis because I don't know one way or the other. But I think the financials are so compelling. The one thing that really gives me pause with this thing, and it annoys me a little bit that they don't do this. They are obviously very cheap. They've got $600 billion in cash on their balance sheet. Why are they doing a buyback? They asked the CEO and he said, and this is only a recent thing. I only saw this in the last week or so, he said. Our competitors did a big buyback and their stock price didn't go up. And I think that that's just not what you want to hear from a manager. You want to hear them. You know, the managers should understand that the nature of the buyback is to buy back stock that is undervalued, because that increases the value for everybody else who is hanging around. And at some point in the future, over time, if you do it and you demonstrate that you're a good allocator of capital, you're rewarded with a higher stock price in the future. It's not like we've announced the buyback. Why has no stock gone up? That's the wrong approach. 

Alec: [00:21:18] Yeah yeah I'm looking at the balance sheet now. The last few years and, you know, 2020 end of 2020, 260 mil the year off to 415 mil end of 2022, almost 550 mil and now, over 600 mil. So they have just been accumulating like they've been profitable and they've just been accumulating cash on that balance sheet. I mean, good news for them is that rates are higher. So hopefully they're getting like 4 or 5%. But yeah, like surely there's a lot of pressure both from shareholders as you just mentioned, but also internally to do something. 

Tobias: [00:21:57] Well, I think it's, I really like it when management teams do buybacks because one thing it tells you is that the stock is genuinely undervalued. But you know sorry that's only where they do it in material size. You find buybacks being done all the time to mop up share based compensation. And I hate that kind of buyback. But the buybacks where they do it in meaningful size and they do it with cash that they've already got on the balance sheet or from earnings that shows you that the company really can support it. And they expect more pretty good earnings in the future. And it shows you the management team know what they're doing. So when they have $600 million in cash on the balance sheet, a very undervalued stock price. And they're not doing anything that makes me nervous because it says either the cash is locked up for some reason or they're concerned about the future. They want that liquidity there because they're worried about what's going to happen in a downturn or something like that, which is probably reasonable. It's good to be prudent, but $600 million prudent. So like that's a year's worth of revenue. Seems like too much to me. And the attitude of the CEO is just wrong, a little bit frustrating when they do that where they, you know, they view the stock price as something that you should be goosing up rather than sort of growing the value of the whole company for the, the shareholders always think of, you know, Warren Buffett is the gold standard of how to treat shareholders. And I discount everybody else for the to the extent that they don't live up to that standard. And there's a lot of things that I like about this company, but that little part is something I definitely don't like. So I'm just just in full transparency talking about that. But I do like otherwise. I think it's very cheap and I think it's an interesting kind of business. 

Alec: [00:23:41] Yeah. The other thing that it makes me think is like, you know, they make these big proclamations in the shareholder deck, the holy grail of plastic surgery. And they talk about this treatment gap that they're chasing. But it's like if if you really do have such a great solution for this gap in the market, put fuel on that fire, like take, you know, all this cash that you just sitting on the balance sheet and win the market and like do the customer education and the sales and all of that stuff that you need to do. 

Tobias: [00:24:12] I think to be fair, they have been growing pretty rapidly. They're saying 500 plus million dollars for 2023 in revs. And then this thing 600 plus, you know, I think 666 for 20, 25, like that's. 

Alec: [00:24:27] Okay. Yeah. 

Tobias: [00:24:27] Material growth over the next few years. And it's not just a matter of, you know, it's not like a tech company that can just roll out infinite screens. Like they've actually got to make the machines, get them at their service. There's some education, there's other bits and pieces that go with it. So I actually kind of really like their rate of growth. It's they're forecasting like 10 to 13% for the next few years, which I think it's like that's a good number. That's a solid service. That number makes sure all the new customers stay around. I think it's all sensibly run. I think the figures are really good. The only thing that frustrates me a little bit is that comment that he made about the buyback. 

Bryce: [00:25:06] So when you take a quantitative approach to all of this, what are some of the red flags that you look out for, for it to no longer become an attractive investment? Like, how do you start thinking about forming your bear case? 

Tobias: [00:25:18] I have a model that's constantly running, and it's looking at how good this business is, how sustainable are these earnings and what are we paying for these earnings. And ideally, I want the biggest discount I possibly can get from that valuation. And that's Deep Valley. That's how I define Deep Valley. And so the questions that the system is asking, it's looking at, you know, how financially strong is this business. As the first question, what's the balance sheet look like? Is that liquid, is there a lot of debt. What does the business itself look like? Is the business generating lots of revenues? Are those revenues translating into gross profit to those gross profits falling through into earnings, so that turning into cash flows, is this a real business that's generating real cash flow? And then what are they doing with that? Are they reinvesting that at pretty good rates of marginal return on invested capital? Are they buying back stock with the cheap. And that offers a better alternative? It's sort of a question that's how I measure management. I'm looking at what they're actually doing with with the cash flows. It's a bias of mine that I don't think you get a lot of information from management themselves. I think that there's lots of good management teams around there, lots of management teams, they know what to say and they don't follow through on what they should say. So I just look at the, you know, the minimal buybacks or announced they're not completed. And so I always look at are these guys in fact buying back stock. What has the stock, what a shares outstanding look like over the last 5 or 10 years. And with a shrinking materially that's a very good sign, particularly when it's combined with an undervalued stock and a good balance sheet and a good free cash flowing business. And so that has all of these things except for the buyback. Buyback is not essential to my process. It's just a nice to have. I don't need a buyback. Lots of companies grow and need capital in addition to what they're generating because the opportunities there, the opportunity is huge. They want to grow really quickly. They'll take outside capital. I got no problem with that at all. It's just that when these factors exist like this, and I should be doing a buyback and then not, then that's just something that's worth noting, I think, but it's not necessarily factoring in. I should say that it doesn't necessarily make it's not a decision to go ahead or not go ahead. It's just one of those things that I would watch. 

Alec: [00:27:28] Yeah, yeah, yeah. So Tobias, we'd like to finish these Summer Series episodes with asking about like the long term for a company. And, you know, if a company is successful in its ambitions, you know, what will it look like in ten years? But I guess when we're talking about InMode and your interest in it, it's really around the value opportunity and the financials. So we'll give this question a little bit of a twist, I guess, when you're thinking about how long you want to hold it for, do you have a particular time period in mind. Is it just until it falls out of your screen or what are the reasons you would sell the company and what time frame are you thinking around that. 

Tobias: [00:28:11] I estimate that the ideal holding period for most of these companies tends to be around 3 to 5 years, because that is about the time that it takes whatever issue is impacting the company and people are aware of it. That's about how long it takes for that to sort of disappear or be resolved. And then the price, because we're finding things that are trading at a big discount to where everything else is, and so it should drift back towards that price. Having said that, you know, I, I had a position in Meta last year and I think that not that this is a message type stuff, but it occupies the same place in my mind because it's one of the it's an unusually good business. You know, I deal with a lot of unusually bad businesses that are even further discounted. And so I just, you know, that's just the world that I live in. I don't mind, but I don't mind buying a horse that runs second or third providing I'm getting some value, you know, for the show, the place I'm not necessarily trying to pick the winner. Every now and again, I get these things in there that I think are better than average, and these are the ones I want to talk about a little bit. Meta was a good example. If you had asked me, then how long do I plan on holding Meta? Like I'll hold meta for as long as it's the best opportunity in the opportunity set. And now I don't hold Meta anymore. We sold it out in Q2, Q3, and the same could happen with this. If it bounces very quickly, it could get so that it could also have a deterioration in the financial statements and get sold out for something that is a better opportunity. So I always want to hold the best opportunities. I rebalance on a quarterly basis. So it's possible that there's a deterioration in this. It gets sold out in the next rebalance and it's not in the portfolio. Having said that, I purposefully chose that because it's still in my screen and it's still in my portfolio, and I think that it will be there for the next rebalance, I'm pretty sure it'll be there for the next rebalance. So I plan on holding these things forever, and I really prefer it when they stay undervalued, but they kind of perform along the way, which happens with Hewlett Packard, HPQ because they were doing a great buyback the whole way through. It's a terrible business, but throws off a lot of cash and they buy back stock and perform really well and held it for a long time. I don't hold it now, unfortunately, but the ideal holding period is forever. But if it doesn't make it through the next quarterly rebalance and it's gone. 

Bryce: [00:30:26] Nice. Well, Tobias, we have run out of time. So thank you so much for coming on. It's always such a pleasure chatting with you because you bring a new stock and, and a different perspective. So we really enjoy it. And, and I know our community loves listening to you as well. So thank you so much.

Tobias: [00:30:41] That's very kind. Always love doing these things. Any time you fellas want me back, I'll be happy to do that.

Bryce: [00:30:45] Thank you. 

Alec: [00:30:46] No. It's fine, thanks to us.

Tobias: [00:30:47] Thanks, gents.

Alec: [00:30:47] Now, before we go, a huge thanks to our Summer Series partner, CommSec, the home of investing. If you're looking for more support and resources to build confidence in the market, head to that content hub. Otherwise, you can get $0 brokerage on your first ten trades for Aussie markets. When you join brokerage on US stocks from just 5 USD, and you can invest from as little as $50 through the Commbank app. Download the Commbank app today or visit commbank.com.au CommSec T&Cs and other fees and charges apply. Investing in overseas markets exposes you to additional risk. 

Bryce: [00:31:22] Now, stick with us. This next episode we have Jun Bei Liu unpacking Altium.