Frank Curzio 00:01

How’s it going out there? It’s Thursday, July 30. I’m Frank Curzio. This is the Wall Street Unplugged podcast where I break down the headlines and—tell you what’s really moving these markets. Mr. Daniel Creech, what’s going on, man?

Daniel Creech 00:16

Happy Thursday, Frank. Markets are moving.

Frank Curzio 00:18

Markets are moving. Up, down, up, down. It’s been down for such a long time, especially within AI, but now— A lot to talk about here. A lot. We’re getting into a lot of details. I feel like there’s stories out there, but they’re not getting behind the bigger picture here, and there’s something very alarming. And you know me. I mean, everybody loves conspiracy stories. This is— this is a very, very big story that can result in another 2008 crisis if it’s not taken care of. And you’re seeing it act out right now. Today, the past week or two, and even before that. And Daniel, I think we want to start with the South Korea market and what’s going on. It’s not talked about often, and now you’re seeing stories pop up here and there, but South Korea is one of the hottest markets in the world entering this month. Entire market was up around 130% for the first 6 months, and this is, you know, through June. Tons of AI exposure. The market’s up so much it became a $5 trillion market cap, okay? Market.

Frank Curzio 01:13

Again, that’s the size of Nvidia market cap, and that’s the size of Apple’s market cap, so you don’t think it’s that big. It’s ranked 6th in the world. So 3 years ago it wasn’t even a top 20. And the market just absolutely collapsed by over 40% in the past 40 days. And when you see a collapse like that, there’s one word that you’re always going to hear, and it leads to every single crisis, every single crash: “This is what happens.” And that word is leverage. And if you’re looking at the leverage— and Kobayashi did a really good job of covering this as well— the leverage in inverse ETFs that were tracking just specifically their biggest company, which is SK Hynix. SK Hynix, we’re familiar with. I think that went public not too long ago, but it’s always been publicly traded in South Korea. One of the biggest AI companies in the world. They had around 100— what is it— 20 billion assets they had, and the inverse and the leverage ETFs around just that stock carried 4 times the stock’s average.

Frank Curzio 02:20

And they had trading volume— the trading volume alone was over $5 billion just from these ETFs. Then, out of nowhere, you see AI stocks start tanking, and a lot of people, including me, are like, “Whoa, what is going on here?” Right? I mean, sure, okay, they say they run up tremendously. You’re going to see a pullback. We saw this— we saw this, Daniel, with— with a lot of the bigger AI names. Nvidia, Nvidia. How Nvidia, you know, had this huge run, always pulled back, people doubt it. Huge run, pullback, people doubt it, but they always put up the numbers. These companies are still putting up the numbers. They’re still reporting record earnings. And yes, they’re spending more, and I get that. Okay, that warrants a 15, 20% pullback. Some of these names are down 50, 60% from their highs, and they’re reporting record numbers. So you’re looking at South Korea itself. They traded the fall, started rising by 300% over the past 2 months. Options, which— option market right now is an absolute joke, right?

Frank Curzio 03:12

It’s being used for 100% gambling. You’re seeing young investors go from crypto into, you know, trading daily options and all-in and telling everyone how much they made on this and that, but you need just one mistake, a couple mistakes, and you’re done. You lose your life savings. And, you know, options a lot of times are the big investors, and you better know what you’re doing because people want to get into options all the time. I don’t even— I don’t even get into options. I rarely own some of my positions, but it’s very dangerous if you don’t know what you’re doing. And a lot of times they’re used for hedging. These are used for gambling. And when you see the notional open interest on the South Korea ETF rose to $5 billion, weekly open call interest before 2025, just to put it in perspective, it never exceeded more than $700 million. So you’re talking about 8 times leverage in a 6-month period. 8 times leverage. And then you have a result. What happens? When you’re leveraged and you have money in your account and you’re borrowing money and, you know, you’re buying stocks off of that, all you need is a small decline.

Frank Curzio 04:08

This is what happened during the credit crisis. It wasn’t subprime lending. People get that wrong. It wasn’t subprime lending. Subprime lending, yes, it hurt. You would have saw the market come down. It was the leveraging of subprime lending by 30x. So you needed basically a 3, 4% move lower in homes— in home prices, which you never see in the U.S. for 20, 30, 40 years or whatever. And then all of a sudden we got that, and you saw the whole entire credit system freeze and almost blow up because nobody knew where anything was. So— all the risk and all the leverage. So when you’re leveraging something, you just need a small decline, and then you’re forced to sell. The brokerage firms are going to say, “Hey, you got a margin call. You’re forced to sell this.” And then times that by millions of people, hedge funds, and everyone is forced to sell at the same exact time, and you have these events. So as a result, what do you have? This massive crash led by forced liquidation, margin calls, where everyone needs to sell at the same exact time.

Frank Curzio 04:59

SK Hynix lost 60% in a month, which, again, that trade on South Korea exchange, but made NASDAQ debut, I think it was July 10th or 11th. You had the government trying to intervene, right? Same with what happened during our credit crisis. This is their credit crisis. The market actually fell by more percentage-wise than ours did during a credit crisis. And a lot of this is retail investors getting annihilated, losing their entire wealth. They can’t pay rent now, they can’t pay for food, they lost everything, and everyone wants to talk about, “Oh, the market’s going higher, now I’m a millionaire.” But when you leverage yourself and be stupid like this, you get annihilated, and a lot of people take advantage of this. And Joe, I think you told me you’re reading stories of, you know, a lot of people are telling their stories of how they can’t pay rent or whatever. It’s even worse. You’re seeing people, you know, committing suicide and stuff because they lost every single thing they have. Daniel, I know you’re up to date on this story.

Frank Curzio 05:45

I want to hear your comments as well, but I’m going to explain how this filters into the U.S. markets because South Korea is— they had their credit crisis. They had that 2008 credit crisis, 2009 credit crisis, and now it filtered over to one sector, which is AI. I’m going to explain how that happened, but, you know, what are your thoughts here? Because, again, this magic word, leverage. Everyone loves it when the market’s going up, but when you go down, it only takes 30, 40 days, and you lose absolutely everything. I think— I just think there should be more regulation around it. People don’t understand, and, man, a lot of people got hurt.

Daniel Creech 06:16

Yeah, definitely a lot of people got hurt, and it’s heartbreaking to hear people, you know, ending everything over this. It’s easy to play Money Morning Quarterback, but, I mean, South Korea has been— their entire stock market has been a meme stock for a good while. I mean, when the memory shortage started happening and components really started taking off, it surged. I mean, South Korea’s stock— Frank, we have the Mag 7, you know, what, made up 20, 30% of the index at one time, and people were, you know, yelling about that, and for good reason. That’s a heck of a data point. South Korea, you have like 2 or 3 stocks that basically make up everything. And, yeah, listen, I don’t have much to comment here because I don’t want to be a smartalec, and there’s no way to say— I don’t know how to say, “Hey, you know, leverage is scary. Excess leverage is ridiculous, and obscene leverage is evidently suicidal, I guess.” I mean, that’s crazy.

Frank Curzio 07:12

Yeah, look, when you go to leverage too, it’s a dirty word, but if used right, it’s smart. And say if you— say if your parents came here 30, 40 years ago and bought a whole bunch of houses, and now they’re paid off, right? You could leverage those houses at 10, 20%, take the money out, you have mortgage on 20%, you still have equity in there, but you’re borrowing money to buy more homes to build up that portfolio, and you have a lot of collateral there, right? That’s what you’re seeing in Microsoft, that’s what you’re seeing in hyperscalers when they’re borrowing money. Yes, it’s scary they borrow money, but they have these guaranteed contracts in place 3, 4, 5 years that are going to constantly generate revenue, which is, you know, that’s the collateral. That’s the money behind a lot of these loans and the debt. But when you’re just borrowing to borrow and there’s nothing, you know, you’re borrowing 10x. You’re not borrowing— I mean, I’m talking about leverage of 20%. These guys are leveraging 5, 600%, 7, 8, 9 times, 10 times.

Frank Curzio 08:01

During a credit crisis it was 30x. And, you know, you’re looking at it and you say, “Okay, what gives?” Because when I’m looking at the U.S. markets and how it filters through here, we’ve seen a move in AI companies that’s unprecedented of any other time that I’ve been covering stocks in 30 years. I’ve never seen anything like this. Okay, I’ve studied crashes. I study crashes a lot, probably more than the average investor, because my dad got famous because of the ’87 crash. He wrote a newsletter. The only person in writing a month before, and I had that newsletter saying, “This crash is going to be bigger than the prior three.” And he was right, and that’s what got him famous, and, you know, everyone— he was on TV every place because back then it was only like 10 guys that people listened to, and he was on TV and CNBC back then when, you know, they were kind of first starting. And it was huge. So, you know, I was just studying, you know, what made the market crash and the leverage behind it.

Frank Curzio 08:47

I love looking at this stuff. This way, you know, you want to learn. This way you can get ahead of this stuff, right? We got ahead of COVID. We got ahead of COVID because of, you know, just learning in the past of what causes crash, how it happens, and the timing of it. Because you usually have these big bubbles where you can make an absolute fortune for many, many years. People don’t remember this, but the NASDAQ— everyone said the NASDAQ was in this massive bubble. You had Greenspan come out and say irrational exuberance, which was, I think, in 1996, 1997 maybe. And even in 1999, it was incredibly overvalued. People don’t realize this. Before the dot-com crash in 2000, in March, the year before, the NASDAQ doubled. So, you know, timing is just as important to see when this is going to happen. And then we had COVID. We, you know, we pulled a lot of stocks off the market and said, “Hey, you know what? This thing is going to be pretty big. We’re hearing from our contacts. We interviewed people overseas who are locked down 3 months before it even came here and got serious.” And, you know, in Italy and in China, we interviewed people.

Frank Curzio 09:43

So, you know, when I look at this coming, I’m going to tell you something why this is unprecedented. Crashes happen a lot, we all know, but they usually don’t happen when the economy is doing well. And some people could argue and debate whether it’s doing well or not. There’s different metrics they could look at. But I could tell you, one of the metrics I look at is, let’s see, debt defaults, credit card defaults. Are we seeing these types of defaults? And we’re seeing, you know, a little bit on the credit card, but you look at all major banks just reported, Daniel, and every one of them came down and said, “Look, we’re seeing fewer debt defaults.” Right? So people are managing their money better. They usually— when you’re seeing crashes, they usually don’t happen when companies are reporting record earnings. Not record earnings. You see a decline first. Now when they keep reporting record earnings, you don’t see the crash happen during the record earnings, right? You see this in— they’re inflated. And dot-com, they didn’t have any money behind this.

Frank Curzio 10:28

They didn’t have cash flow behind this. They weren’t making profits. They had, you know, a website with 4 web pages, and they had a billion-dollar valuation. Eventually, they were going to get crushed. They weren’t making money at the time. It was based on growth of what was going to happen, right? So you’re not seeing that, which we’re seeing across the whole AI landscape where many of these companies are reporting record earnings right now. And then it almost never happened when the largest companies in the world just reported are saying that they’re increasing spending. They’re increasing spending because they see it. And they have the free cash flow to do it. Yes, their free cash flow is a lot higher, and it’s less, and that’s a problem now, and that’s why they might get debt downgrades if they keep spending. The market’s telling you, “Okay, slow down. Maybe not go $200 billion into spending. Maybe go down to $150 billion for the year,” because every year prior to AI, you were spending $20 billion. You know, you were up tremendously. So they’re saying, “Maybe slow down a little.” But they’re still spending at record amounts because they see business coming in.

Frank Curzio 11:17

Markets don’t crash during these times. They don’t ever crash during these times. You see cracks in the foundation. So what gives? And this is program trading at its best because there’s a fun, you know, right, situational awareness. This is run by a young investor, incredibly smart, valedictorian at Columbia at 19, worked for OpenAI. I didn’t know too much about this fund, I think, over a year ago. Joe, you talked to me about it, right? Hey, you see what this guy’s buying, right? So 13Fs come out. Daniel and I cover 13Fs all the time. When they come out, they tell you, you know, these hedge funds, by law, anyone that manages over $100 million has to report what they’re buying, what they’re selling in their portfolio. And you get a good indication, right? I mean, it’s dated, but you get a good indication of that month, what they’re buying, what they’re selling, new positions, what they got out of. And I like, you know, we cover Warren Buffett, David Tepper, all that stuff. I’ve never seen so much interest in a 13F than this.

Frank Curzio 12:09

Every young person was waiting for the 13F to come out from this kid because this fund built up to $24 billion in assets. It’s a massive fund, right? So they were all looking at 13Fs, and there was more buzz around that than there was for David Tepper or Warren Buffett, which is incredible because this guy had absolute incredible performance. He was ahead of a lot of these names. And then what happened? You look at his biggest holdings. Everyone’s looking at him. So now you have the whole retail investor community buying CoreWeave, Micron, SK Hynix, CoreWeave, Nevius, right, near the top. No surprises. These names got annihilated over the past— started happening probably about 3 months ago, you could say maybe a little before for some of these names. And as they went down, what happened with this fund? It got margin calls since it was highly, our favorite word, leveraged, and now being forced to shut down. So $24 billion hedge fund basically wiped out. Now, okay, we see funds get wiped out in the oil industry a lot, the most in commodities, right?

Frank Curzio 13:04

It’s even from professionals, and after they wipe them out, they start another fund on the side, which is cool, and raise billions of assets. It just goes on and on and on. It’s amazing. What’s different here and something much bigger going on, and it’s starting to get so, you know, winded here into this point. When this fund was blowing up, as prime brokers, JP Morgan, Goldman, Bank of America— pay attention to this because this is very important— they’re trying to reduce positions in an orderly fashion, they say, right? But every hedge fund sees this. Word gets out, they’re like, “Hey, these guys are going to blow up,” and you know Wall Street. Because now every major hedge fund with massive program trading, which is being powered by AI now, which is moving 100 times faster than it was a few years ago, they all see this, and they get ahead of it. Their goal is to make sure this fund gets annihilated and gets put out of business because as it comes out, nobody really knows what’s going on under the hood, which is sort of the past couple of weeks.

Frank Curzio 13:52

You see this massive shorts piling on on every single company. When do they pile on? The best time to pile on a short is when you have the most liquidity. When do you have the most liquidity? Have your company report good earnings. You know, when your company reports good earnings, it goes up 7, 8 percent, all these new buyers come in, and you saw this massive selling by the biggest hedge funds in the world jumping on. It’s why every company that reported great earnings for the past couple of quarters, especially this quarter early on, you saw went up 3, 4 percent and then got annihilated. It was down 10, 15 percent. And you’re like, “What the hell is going on?” This is what they do. That’s the liquidity. They short the shit out of this. Now they keep pushing this fund and saying, “Okay, continue.” The more we pressure these stocks, these guys are getting margin calls, more forced selling. Everyone else sees it. They’re like, “Holy shit, I got to get out of the AI trade. This is like the credit crisis.” And you see the whole market crashing at the same time.

Frank Curzio 14:38

And what happens? We know this is how Wall Street works. Everyone just— I’ve been asked this question numerous times. How does Wall Street work? And I tell them the same thing. I was like, “Wall Street will leave you naked on the street with one sock on in the middle of the street by yourself, and take that sock and shove it down your freaking throat.” That’s Wall Street. They don’t say, “Oh, I feel bad.” No, they don’t feel bad. Billionaires want to see billionaires broke. Not lose 80 percent of their wealth. They want them on the street as a homeless person with a cup. That’s what they do. That’s how they’re programmed. That’s these people. That’s who you are up against. People with massive money, massive leverage, offshore accounts. You don’t know how much is leveraged anywhere. This is what you’re up against as a retail investor. So now you’re saying, “All right, let me see.” Now we know money trumps everything for these guys, family, ethic, morals, but $24 billion fund gets nailed.

Frank Curzio 15:25

And maybe you’re saying, “Well, it’s not really a big amount.” You have so many companies that have over $500 billion market cap, some have trillion-dollar market caps. Well, why don’t you leverage that 10 to 1? Now you have $500 billion. Now, times that by all the program trading funds, AI, everyone that’s following this guy, everyone that sees that, and then leverage those positions, and now, you know, add another 10 times to that, and you’re looking at $5 trillion in buying or selling power to influence these markets. That’s where it comes from, which is what AI is actually doing and helping these companies act faster, much, much quicker, being able to short, leverage. Remember, shorting was a dying business. The best shorters in the world have said, “I’m done with this.” It was Citron Research. You have— who’s the other big guy, Daniel, the shorter, who said, “I’m not doing it anymore.”

Daniel Creech 16:11

Well, that was Citron.

Frank Curzio 16:12

Citron, no, the other big guy.

Daniel Creech 16:13

You said that.

Frank Curzio 16:14

Who’s— yeah, what’s his name with the glasses? God, I can’t think of him right now. Anyway.

Daniel Creech 16:19

Glasses cut me off.

Frank Curzio 16:21

Yeah, so they were like, “We can’t do it anymore because it’s so easy to just see the short positions and have, you know, a bunch of retail investors come in,” which would happen with Melvin Capital, would happen with GameStop, right? And they’re like, “All right, it’s so tough to short. Shorting has been back in the last 6 months. Holy cow, shorting has been back.” And a lot of that is because when you’re short and you’re wrong, you need to get out. Now AI allows you to get out much, much quicker before anyone else, and you’re seeing short investing come back because of how fast AI program trading, what these programs are able to do. And you want proof of this happening, look what happened to Nvidia. Nvidia crashed, trading at 15 times forward earnings, growing earnings and sales at 70 percent plus. How does Micron and Sandisk lose 50 percent of their value? Micron’s numbers were insane. And that’s trading— it’s not like you’re trading at 50 times forward earnings. Or you’re trading on this technology that’s going to happen years later, like you’re seeing with Oklo and with some of these other companies, right?

Frank Curzio 17:14

But look at Micron. Look where it is right now, up 14 percent. So trading what, 4, 5 times forward earnings, Micron? Sandisk the same boat. Look at Bloom Energy. Reported one of the best quarters, easily one of the best quarters by far in AI in the entire industry, right? Business absolutely on fire. Companies dire in need of power. This is one of the only companies in the world that can provide scalable power outside of traditional energy, outside of natural gas turbines, outside of oil. This is one of the few companies in the world that’s getting tons and tons of business. And this company went to 350, rightly so. We had a massive, massive win in this name. We recommended it in the 20s, and we sold it for 1,000 percent gains. We sold it like at 2, whatever it was, 260, whatever it was. And we got out of it. And then, you know, I watched it go a little bit higher pretty quickly to 300 right away, and I was like, “Oh, no, did we sell too early?” Then the thing absolutely collapsed, got cut in half.

Frank Curzio 18:04

I’m like, “Whoa.” And if you’re looking at it today, look at this chart. It’s, you know, take 40 points over there. It was 150 from 351, reporting absolutely insane numbers. And now they say what? Well, the selling’s over. We think this fund is gone, right? So everyone’s rushing right now to cover their shorts. And you’re seeing companies— look at Bloom Energy, up 25— what’s the market cap on this company, Joe? What is it? $60 billion. 25 percent. It’s up 25 percent in a day, right? And look how much it lost because it was basically a $120 billion market cap company, a little bit below that, maybe $100 billion market cap company, went all the way down to $40 billion, $50 billion. And now you’re looking at this capital— this company reported earnings just now. This is happening because of a massive short squeeze. And they’re all saying, “Okay, now we need to cover.” If you look up, and this is, again, company reported 21, we sold a lot around 260, you know, 1,000 percent gains around. Look at Nevius.

Frank Curzio 19:04

Do you have Nevius up there, Joe?

Frank Curzio 19:11

Nevius was 300, fell to what? 150? It’s up 28 percent, almost 30 percent today. How does that happen? Okay, it only happens through short. This company didn’t report. Micron up 15 percent. We just saw Iron just signed a monster deal two weeks ago. Stock should have been up tremendously, and it crashed. Pull up Iron. And pull up a month chart. Okay, right there, I think on the 14th, 15th, they signed a major deal. The stock went up. What happens? Hey, we got liquidity. They short the shit out of this. Put the month chart back up again. We have this monster liquidity on the 20th to short the crap out of it. And look where the stock goes from 40 to 30, right? So you see a massive 25 percent decline. And what are you seeing today? Okay, well, we need to cover this because I think maybe situational awareness just covered their shorts. So, you know, you have Sandisk up 20 percent, CoreWeave up 20 percent, all unknown news. Is this stock manipulation? I mean, how is so much leverage allowed to be in these markets that nobody knows what the hell is going on?

Frank Curzio 20:14

The SEC can’t even measure this. They have no idea what is going on in these markets. And if this could happen, and yes, you’re seeing AI come back and maybe you see these things re-rate higher because they’re down. They’re way oversold. I mean, so oversold, I think we’re negative on some of these sentiment readings. The sentiment readings were never negative, right? It’s a contrarian indicator, right? So if you have a lot of buying in it, it says, “Okay, there’s so much buying that, you know, you should be, you know, you should get out of them or sell.” And then when you have, you know, being sold, all these— you get oversold, they’re like, “Okay, it’s oversold. It’s usually a buying indicator.” They got so oversold that that measure went negative. Never ever goes negative, right? Because that’s how much— that’s how this changed the dynamics, all this money floating around. So my question to the regulators out there, didn’t you learn from the credit crisis by not knowing this shit, knowing what’s going on? I mean, it took you to mid-2008 when the markets were absolutely crashing.

Frank Curzio 21:01

You had cracks in the housing market started 18 months ago where hedge funds and Morgan Stanley were going out of business. Countrywide, you saw all this shit coming. But it took over, what, mid-2008, 4, 5 months into that where the markets absolutely crashed to learn that AIG was insuring the entire banking industry and it was about to go bust, which was going to cause the entire financial system, global financial system, to absolutely collapse. To absolutely collapse. They didn’t even know AIG. They didn’t know GE was— they had no— you have no clue how much leverage is going on in these markets with so much stuff going on with offshore accounts and having 10 percent ownership of a stock and how you’re able to hide that through ownership, through other subsidies. They have no idea what is going on. You’re talking about trillions in capital flowing out where— look what happened to the South Korean market. How did you let leverage get so far out of hand where people are jumping off buildings committing suicide?

Frank Curzio 21:48

And granted, you have to have responsibility as an investor, right? You got to take responsibility as an investor and be like, “Okay, I shouldn’t leverage so much.” But allowing this is like allowing a crack addict to have access to crack right in front of you. And you could prevent that by reducing the amount that they could get exposure to or reduce it completely. Not complete leverage, but maybe you should look at your investors to see if they’re capable of taking on that kind of leverage. When every brokerage firm’s like, “Hey,” right off the bat, the first thing you say when you log into a brokerage firm, no matter what it is, is like, “This is how much leverage you have. This is how much buying power you have.” And what happens? Retail investors get annihilated. And look at the shit that’s going on. Like, nobody’s talking about this under the hood. They’re like, “Wow, look at the South Korean market. Look at this shit. Oh, this fund’s out of it.” Look at what’s going on. The hedge funds, when they see a crack, when they see an opening and someone’s getting crushed, they’re going to do everything they can to destroy that fund, get ahead of it, make sure they’re having even more forced selling, make a fortune off of it.

Frank Curzio 22:41

And now they’re rushing to cover. The ones that were a little bit late, who have their program systems not as good as everybody else, are now getting annihilated because they were short these companies that are up 25, 30 percent today. Unknown news on any one of these companies. And what is the SEC doing right now? What are the regulators doing? Oh, this is normal. This is perfectly normal what’s going on. Anyway, sorry for the rant. I’m going to take a couple of your questions. But Daniel, what are your thoughts on this?

Daniel Creech 23:04

Well.

Frank Curzio 23:05

I mean, so I couldn’t stop.

Daniel Creech 23:06

About the park bench stuff. Joe and I were talking about the park bench the other day. The— yeah, the only thing that really stood out to me, you know, you learn something once you kind of figure out what was behind this. The returns on this hedge fund— what was the name? I’m sorry. Just situational awareness, which you can make fun of.

Frank Curzio 23:26

I never heard of this. Joe told me about it. Joe’s like, “Did you see this guy? This guy’s on fire. This guy’s great.”

Daniel Creech 23:29

He’s brought it up for the past several months about BE and all that. He’s had a remarkable return. He’s the OpenAI— and I’m not even going to try to butcher his name because I would indeed do that. It’s like every letter of the alphabet minus one vowel. But it’s pretty wild. But he had $200 million, I’m rounding, turned that into $20 billion. That’s absolutely insane. Evidently, he was using total return swaps. And essentially, it’s just leverage on leverage. And the— you were thinking of Jim Chainos, I think.

Frank Curzio 24:04

Yep.

Daniel Creech 24:05

Right? In the movie— now you need to help me out— Wolf of Wall Street, where they use beautiful women to describe synthetic leverage and stuff. That was smart on their part. But total return swaps, essentially, Frank, get this. They let you buy an underlying security, like stock in Micron or whoever, and you only have to put up the either libel or secure overnight funding rate plus a spread. So essentially, it’s just—

Frank Curzio 24:31

You don’t have to own it.

Daniel Creech 24:32

Exactly. You don’t have to own it. So the bank owns it, and you just pay the financing cost. And all that’s well and good when the sun’s out and everybody’s making hay and, you know, prices are going higher. Well, then several of his holdings evidently went down 50 percent. Don’t believe everything you see on the internet. But Frank, what do you think about this? Situational awareness was up 200 percent year-to-date, down evidently 50 percent month-to-date. We’re talking July. And then maybe down 30 percent overall.

Frank Curzio 25:10

That’s almost down 30 percent overall.

Daniel Creech 25:12

I find that a little hard to believe. Again, take that with a grain of salt because unless you really piled in at the top with leverage, he’s been in Bloom Energy, which is a stock, like you just said, went from the 20s to 200 and change, 300 and change. You know, what they said was they, to your point, favor on CNBC, to his credit, talked about this a little bit. And evidently, they sold essentially all their public holdings through JP Morgan, Bank of America, and Goldman Sachs to a hedge fund. And then they’re also unwinding those. But they still have their private investments in companies like Anthropic. And in a Financial Times article that says they saw an investor letter dated this month, July 24th, he’s asking to raise more capital.

Frank Curzio 26:00

And he’ll probably get it. The best thing, if you’re a fund and you are this popular, the best thing, when you blow up a fund, it’s never a problem. You’re going to go and you’re going to raise more money in another fund. And you get it right another time. They’ll be like, “Oh, you know, I learned my lesson after you annihilated people.” But there’s a lot of young investors that are following what this guy is doing. Obviously, $24 billion. You have a lot of institutional investors. But that’s the thing the kid doesn’t learn when you’re a genius, is you’re not learning the way Wall Street actually works, where you could be incredibly book smart, you’re sharp, you know your math, you know everything, right? And you’re able to figure out stuff and unbelievably use new technologies. What you don’t understand is the real world, how someone’s going to shake your hand and actually go like, you know, shoot your mother behind your back and take you out to dinner and have fun with you while he just murdered your mother. That’s Wall Street, okay?

Frank Curzio 26:47

And you don’t realize, and you know who did a great job of this, I think it’s Andrew Ross Sarkin in Billions, when I forgot the main character where he took out that kid and the kid didn’t like him and his father. Yeah, and he took him out on the boat and everything. And, you know, it was all like this big thing. He’s like pretending to be okay. I understand. He’s like, “I want to do it.” In the meantime, he took him out of the boat. There’s no cell phone use. And he basically shorted all the stocks. He destroyed his fund. He was on a boat. That’s exactly how this is. This is how it is. And we saw this firsthand, which was amazing when we saw who was it? Bill Ackman and ICON. Did you see those guys? I mean, that was the greatest entertainment ever, right? Both these billionaires go, “Oh, it was only $25 million. That’s nothing. What are you going to try to do?” Like these, you know, going back, they’re trying to destroy each other. That’s real life. What happens behind the scenes, that’s how they make money, right? It is, “Hey, let’s easiest way, let’s destroy one of our competitors,” right?

Frank Curzio 27:33

That’s the easiest way to do it. When I look at what’s going on in this market, it changes the dynamics of everything you’ve ever learned. Because this isn’t about what do you do? You buy a company. I think they have great technologies like Bloom Energy. And I think this stock’s going to go up tremendously. No one’s factoring this in. They got a good CEO. Their technology fuel cells actually, holy cow, they just signed on a big partner at the hedge fund that’s helping them fund this. And, you know, they’re seeing revenue through the door, through the roof, right? Crazy. You’re buying this company, report great earnings, growing tremendously, right? Growing into its valuation because the stock’s up so much because their revenue is up tremendously. Could you pull up Bloom Energy really quick? I want to see what their revenue is now. This is important. Growing tremendously. What is their revenue at? Okay, so they have a revenue. I mean, they weren’t generating anything. Like $2 billion in revenue.

Frank Curzio 28:24

This is over the trailing 12 months. This is going to be like $5 billion, $7 billion, $10 billion. They’re selling part. Now they sell it. This works, right? They have energy that’s capable of taking that power, which is what every hyperscaler needs. And they’re signing up like crazy. This is a lot different from, say, Oklo? Is it Oklo? I say Oklo, I think it is. Is that it? Okay, push that in there. And even this one’s going up to shorting. This is the stock was at $193. It’s $40, right? This is the SMR technology. Go down and see how much revenue they generate. Zero. They don’t generate revenue. This is a company I could see going down 70 percent, saying, “I doubt this technology. Maybe it doesn’t happen.” This is a PDTL company. And it is good. They have technology again, but they haven’t figured out a way to scale it yet. This is totally different than Bloom Energy. So you’re buying Bloom Energy on everything you’ve ever learned in investing. “Hey, I have a growth company, growth spin-out, performing value.

Frank Curzio 29:13

This makes a lot of sense. I love it. I’m going to buy it.” Okay, earnings going great. Earnings, they reported massive earnings, and the stock gets annihilated. And you’re looking at a company down 60 percent. How do you go and teach people how to invest when you see something like that happen? Because all this is about is massive leverage that’s floating around. And yes, you could say, “Well, maybe the company re-rates, but what about the person that bought this at $230 and then just watched this company a couple quarters in a row report unbelievable numbers, signing more deals? Everything’s on fire. Company’s in a great position it’s ever been.” And then you’re seeing this company fall because there’s so much leverage in it. And now you’re looking at it went down to $150. A lot of people probably sold and said, “Holy shit.” It rewrites the rules of investing. And yet you’re going to see, what are they looking at? Like, this is a classic example. Do you know how crazy this is going to get with AI and leverage and how quick money’s moving?

Frank Curzio 30:01

We just saw it right here in the biggest sector in the world, trillions of dollars being able to push in and out, shorting, coming back in, stocks going up 30 percent in a day on no news. We’re seeing it right now and nobody’s coming out and talking about this. What do you think is going to fucking happen years from now? We’re going to see a monumental crash of all these stocks, everyone running out at the same freaking time. You’re going to see. And it’s, you know, we have measures in place and we have a Fed that’s going to print money forever or whatever. And that’s why we didn’t absolutely collapse and they funded the banks in a credit crisis. But when you’re looking at South Korea, what are they going to do? They toast. What are they going to do? What are you going to do with that? I mean, where’s the money? It’s going to filter back into that market now. I mean, it’s insane that nobody’s talking about this. Where does leverage coming from? Who’s monitoring the trading systems that are going back and forth, that are going in and out of this stuff, regardless of what a company does or doesn’t do, simply because you know the guy across the street’s about to blow up and you’re going to get a position in it.

Frank Curzio 30:54

Now you’re putting out outlets to people on CNBC, Fox Business, all everything. “Hey, look at this. This fund’s about to blow up. This fund’s going to blow up.” You’re putting it out after you’re short, right? It’s perfectly legal, right? It’s not illegal, but they’re able to do it. And then you have people reporting, reporting. And now finally you see it blow up completely. And what happens? These guys probably fed the story to CNBC today and said, “Hey, you know what? They covered already. They’re good.” And now what they’re going to do is play it on the long side here as they cover the story, just like you saw in the credit crisis. Once the bailout happened, all the shorts had to run to cover. The whole market was going to come back tremendously. So like David Tepper, said, “You know what you should buy? Buy everything. Everything. Because the government’s backstopping everything and everything’s going to go higher.” And he was right. The whole market from 2010 through the credit crisis, biggest bull market we’ve seen in a 10-year stretch almost ever. Crazy.

Frank Curzio 31:41

Anyway, we say this podcast, the free podcast for Thursday. We just have people paying for this. It’s going to be a Q&A. So anyone who has questions, go to askkersio.com. Put your question in there. You have to put your name in. This way, we don’t have, you know, a guy asking the same millions of questions or whatever. Just, you know, throw your name in. Make sure you’re a real person. And, you know, we’re starting to get some questions in. Not enough to fill up the whole podcast. So we’re going to talk about current events, what’s going on at the beginning. But we did get some good questions that I want to get to. And, Daniel, get to this first one. Which hyperscaler looks the most attractive after the sell-off? And the sell-off, I think this was before today. But he said Microsoft, Meta, Apple, Amazon, Oracle. Which one would you be buying? And that was from James. You want to give them your favorite one?

Speaker 3 32:28

Yeah. I, well, no, go ahead.

Frank Curzio 32:32

I mean, look, we had, what do we have? We have Microsoft report. Where’s Microsoft? Microsoft is up. Is Microsoft really up 15 percent today? It’s up 7, 8 percent. MSFT. 15 percent. What’s the market cap? 3, 4 billion? 3.3 trillion, I mean. Yeah, holy cow. That’s a massive, massive move. This company is up 15 percent today. This move is probably bigger than 80 percent of the market caps in the S&P 500. That’s how much it’s up today. And pushing. Like, look, it’s not, you know, again, 550 was its high. 555, it’s 450. It was a lot lower than that. It’s up 50, 60 points today. Microsoft numbers are great. Stock’s up huge today. Biggest one-day gain since COVID. Cloud on fire, $100 billion annual revenue for the first time. $100 billion in annual revenue. Not a $100 billion market cap. $100 billion annual revenue first time. That’s for cloud. Broad strength throughout its business. Even the segments that aren’t that good. Microsoft 365 did good. Personal computing, you know, one of their weaker segments, but it was better than expected.

Frank Curzio 33:33

Spending surging. At full year is going to go up to $175 billion, right? We have Google at $200 billion. We’re going to see Amazon at $200 billion, right? I mean, massive spending going on, but they raised spending. So the biggest takeaways for me with Microsoft is the OpenAI breakup doesn’t seem to be impacting this company. Cloud on fire, making nice ROI on that, you know, through cloud and also through the AI investments. And what stood out to me is this is one company right now that did not get punished for increasing CapEx. So Microsoft probably back. Meta, on the other hand, Daniel, I thought wasn’t good. Numbers were solid, but what do we say? What is the best? Not about the current quarter. It’s about guidance. And the guidance was not that good. And they raised CapEx to, I think it’s $167 billion at midpoint. And that’s for just this year, 2026. But if you’re raising CapEx like Microsoft did and like all these companies, if you’re raising CapEx, you want to show your ROI. The best way to show your ROI is by increasing or raising your guidance.

Frank Curzio 34:31

And this company didn’t do that. And that’s why the stock’s getting nailed today. If you look at Meta, down 10 percent. And what’s the market cap on that? This is a major, major move. Wow. Holy cow. You can fall $1.3 trillion on Meta now. That’s what was the high on Meta? Go up really quick. What was it? That was almost $800. It’s $530. Wow. That’s incredible. So biggest takeaways, $80 billion losses on their, what is it? Their division, what is it called? Reality Lab division. $80 billion in total. This is another $4 billion. $80 billion in total. Just to put that in perspective, I saw someone talk about, you know, the glasses and how they’re going to control this market. For now, Apple’s getting in it. And you’re going to see everyone else getting in it now that they’ve done all the research on it. If you look at this market being a $10 billion market, say if they have 50 percent of the market, they have most of the market now, but a lot of people are going to come in as it gets bigger, say 50 percent market share.

Frank Curzio 35:26

So say if it’s $10 billion market, $5 billion, and they’re going to have profits of a billion, which is pretty cool for hardware. Those are very high margins for hardware. Not software, but that’s hardware, right? The glasses. I mean, think about it recouping $80 billion in losses. I mean, is that going to be what, like 80 years to recover those losses? And that’s just since 2020. So, you know, when I look at this company, not so good, but getting to your question, and the biggest thing I learned from this is if I look at Google and I look at Meta, the whole world was dominated by this massive growth trend called digital advertising. And these guys had access and they stole everyone’s information, everything that you ever done. And again, they never got in trouble for it ever. That’s fine. Paying the right politicians and whatever you have to do, that’s fine with lobbying. But digital advertising, they control the whole digital advertising model. Like, are you going to market on a commercial?

Frank Curzio 36:19

Are you going to go to Meta or Google? You’re going to Meta and Meta’s, you know, if you’re at Starbucks, you go to Meta, Meta’s going to be like, “Okay, wait, before you do anything, there is, you know, 40 million people in Starbucks right now.” What do you want to tell them? I mean, compared to putting a commercial on TV, you don’t know if someone’s watching it. So, you know, they control this and massive spending. People got it right. It’s an art to actually, you know, when it comes to ad spend on these social media platforms, it’s very, very expensive. Some people have incredible results. AI changed the landscape. Okay, there’s people that know how to generate traffic through social media, do different things without paying the massive amount of money. And you’re seeing that filter in where Google, as well as Meta, I think those companies are going to be in trouble. That’s their business model, right? It’s digital advertising using AI. They have access to all these people. How are they going to do it? And they’re still saying Meta just forcing, I don’t know if you saw it, Daniel, Meta and Zuckerberg just saying, “You know, we have these AI tools and we’re going to use it for even more advertising.” Like they’re finding ways.

Frank Curzio 37:14

I don’t feel like they have enough ways to generate or monetize, generate return on the massive CapEx spend outside of this advertising. And he was saying, “Oh, we could use this for other things as well.” But what are the things? You really didn’t tell me. So I would take my foot off the gas. We sold Google for 100 percent plus gains. We nailed that over a year ago. Meta, I really don’t like here. I hate saying I don’t like something that was down 8 percent. Microsoft clearly turned the corner. I like Microsoft. Amazon, Apple reporting today. I want to see what Amazon says today. I’m hoping that the stock reports good numbers and comes down. I love Amazon. I love what they’re doing. They’re growing tremendously. And that’s a name that, again, look at the 52-week range. It’s not that far off. But this is a name I want to see. You know, hopefully it pulls back and I think this might make their way into the portfolio. I do like Amazon. I want to stay away from the Google and SpaceX’s just because they’re going to have to raise more money.

Frank Curzio 38:08

And when I look at Meta right now, Daniel, what I saw at Meta is they’re going to, they’re going to have to raise money, Meta. They’re going to have to raise money. And right now, companies are getting punished. I mean, their free cash flow is below $1 billion. And they’re looking to spend $160 billion. So, you know, again, a lot of that cash flow is coming out already, whatever, $40, $50, $60 billion. I don’t even know how much they’re generating free cash flow, but a lot of it’s coming out of it, going into the CapEx quarter after quarter after quarter. But they’re going to have to raise money. And in this market, you’re getting punished for raising money because you’re looking at interest rates higher. It’s much more expensive. And that’s why when you look at the CDS and credit for swaps, which is insurance against these companies, you’re seeing them widen. Especially with Oracle and SpaceX have widened the most. Those companies got hit the most. Meta might be in that category because they’re going to have to raise a lot of money. Maybe they use their stock.

Frank Curzio 38:53

I don’t know. But it’s more costly. It’s more noticeable. Everyone’s paying attention. What’s the interest rate? What’s the spread between that and the U.S. Treasury that, you know, because it was the widest level when you just had, what was it? BlackRock, right? Raised money from Meta. They’re going to have to raise even more money, right, to go forward. I think that was with Microsoft and BlackRock. But not a good time to be raising a lot of money where there’s such a high focus on it. And the market really doesn’t want to see that. So I think I see Meta falling. I also like Micron here. I think, you know, trading at a four-year runway of revenue, which is incredible, incredible growth. Pricing power throughout that. And you’re looking at a company that’s absolutely dirt cheap. They just sold off mostly because a lot of program trading. And this is a name that should go considerably higher from here. I also like Bloom Energy here. I love Vivo and DGXX. Also part of this selling off where these guys own their own power.

Frank Curzio 39:43

Vivo came out with amazing news yesterday. Stock fell 18 percent towards the end of the day. Vivo. And now it’s up 12 percent. It’s getting some of those gains back. I couldn’t believe it fell. On news that they did a pipe investment, pipe investments you want to look at. A lot of times it’s shitty deals. It’s exercisable with the amount of money they raised. I forgot what it was. It was $40 million something. With the amount of revenue they raised, it’s exercisable at $750. Meaning you’re not going to do that deal unless you think that Vivo stock’s going to go over $750. That’s incredible that they’ve done a deal like that. That’s how much energy that they have locked in. Same with DGXX. Very, very huge upside. They’ve been part of this on no news kind of these stocks getting hit. We’re in early. We’re still up a lot in these. We were up a super lot in them. But these are names that have pulled back that own their own power like Bloom Energy that people are in dire need of. And I think you’re going to see a lot more contracts being signed by Vivo and DGXX.

Frank Curzio 40:31

So again, a lot of news on that just to highlight what I like. But Daniel, you might think differently.

Speaker 3 40:38

Yeah, quickly for me on Microsoft and Meta. My coin flip yesterday was 100 percent off, right? I can’t hit water if I fall out of a boat right now.

Frank Curzio 40:46

What was it again?

Speaker 3 40:48

Microsoft down. That’s a little different. I’ll dumb this down to my level. I thought I’m a little surprised on the Meta dropping because they raised the lower end of their CapEx spend, not the higher amount. And yes, the free cash flow went under a billion dollars. It was $700 and change. And I understand that, you know, that’s going against what Wall Street wanted. And on Microsoft’s level, I think the key thing there from the conference call was they ended, Microsoft just reported Q4. So now they’re starting their new fiscal year. And they said that in 2026, you know, they even raised CapEx to your point. They said, “Hey, you know, we spent, they guided this quarter for over $40 billion. I think it came in at $41. They guided next quarter Q1 for them over $50 billion.” But the key there is they said in fiscal year 2027, they’re going to be free cash flow positive. And I think that that is, you know, we give Musk a lot of credit for understanding what analysts want to hear and kind of controlling that conference call situation.

Speaker 3 41:46

I thought that was brilliant. When I saw that come across the headline, I thought, “Man, what a, you know, I’m not trying to say they’re manipulating it short term. I’m just, you ought to communicate and be transparent and you ought to have your pulse on what investors and what the street wants.” And I thought that was absolutely incredible. Obviously, both of them, I thought, put up numbers. I mean, they’re growing like crazy and, you know, you’ve touched on a lot of that. But yeah, I’ll be interested to see Amazon. But I just think it’s about cash flow and kind of managing that. And listen, none of these companies, there’s going to be some volatility, but I’m not worried about any of them. So, but I like your thesis there.

Frank Curzio 42:24

Yeah. And BlackRock, that $12.5 billion deal was on, I think it was Monday. And that was for Meta, not Microsoft for Meta. So they raised some money. They’re going to have to raise more money though, you know? And that yield, you know, we covered yesterday in the podcast, it was that spread was 2.8 percent higher than the U.S. government debt.

Speaker 3 42:40

You mean debt? Are you thinking they’re going to do an equity offer?

Frank Curzio 42:42

No, I’m talking about the debt part. So, you know, wide is for, you know, a bond rate AR higher in the past three years, right? So it’s very wide. And you’re seeing that debt get, you know, to raise, it’s more expensive. And that’s what Meta did. But maybe they use their stock, which Google did as well. And there’s other ways. Again, that’s going to result in dilution. But, you know, they have to raise money. When you have to raise money to fund your stuff, it’s, you know, you need, when you’re raising money in dilution really quick, guys, dilution is not the worst thing in the world. Every company is going to raise money to grow themselves, right? Even if you look at in the past what Apple’s and the Microsoft’s and stuff like that, they had to do that, right? To grow into the valuations that they are today. You want to raise money. It’s a reason why you go public. You do it with your stock. It’s very easy. You trade at a much higher multiple, you know, whatever we’re trading now, 19, 18 times forward earnings compared to private companies that may trade three times earnings, right?

Frank Curzio 43:27

So you have high valuations allows you to raise money, a lot more money from a bigger institutional base. And that’s, you want to make sure when you’re raising money, you’re growing the company. And that’s what we’re going here with everything right now. Because you’re looking at it where all these companies returning that are, are they getting ROI in that investment? And now if you’re spending all your free cash flow, that’s fine. If you’re spending on something that’s going to grow and AI is growing tremendously, but, you know, you’re spending, I don’t think people understand the numbers. If you spend $50 billion, that’s a ton. Now what’s $100 billion? Like, holy cow, now it’s $200 billion, right? You’re going from $260 billion spent a year ago to, you know, $500, $600 this year. It’s going to be $750 billion plus over the next three years. That’s what they’re looking to spend. Unprecedented that you have to see the ROI. So you have to be able to raise your guidance and you need to see that.

Frank Curzio 44:14

So if you’re raising money, the thing with Meta, you have to show, you can’t go in and say, “Oh, we’re going to find uses for how we could use these advertising tools in different revenues.” Like, so these companies are so big, where do they find the revenue streams when you generate $100 billion like Microsoft and Cloud? How do you generate these massive revenue streams where you justify that kind of spend? And you need to see it. And Meta needs to show that a little bit more. And I don’t know if you’re going to see it where competition is massive now where, you know, you had this ownership with Google, you had this ownership with digital advertising. They just have access to everybody, everything, every one of their thoughts, everything that you looked up on Google for the past 15 years. They have every single thing that they keep track of that they know exactly where you’re going to go. You go on social media, you’re posting your whole life, people, bitch. But you post every single thing. Look, you go on vacation the same week, you go to the bathroom the same time, you drink coffee at the same time with creatures of habit.

Frank Curzio 45:03

And they know exactly what you’re going to do. And that’s how they market you and advertise you, right? It’s that return on ad spend. Now that you have AI and a lot of companies could do this, again, maybe not as good, not yet, but there is competition with people. You want traffic, you want to get your brand in front of people. It’s a lot of people using AI in-house to use other AI services that’s cutting into their business. It’s going to be interesting going forward. So I got one question here before we go. And this is from Adriana. Hey, Frank. I’ve been following Curzio Research for a long time, comingly Alpha member. Thank you very much. I’ve become increasingly interested in learning more about the Curzio on membership. I appreciate the opportunity to learn more about the membership and discuss whether joining Curzio would be a good fit for me. Thank you for your time. Thank you, Adriana. So she said this email because we have, we said this on yesterday’s podcast, we just launched our new private placement that, you know, it’s not a private placement, but a private company that we’re investing in.

Frank Curzio 45:55

And I get a lot of these sent to me. And I would say I’d say no to about 85 percent of them. This is one we invest in already called Sugarphena. And for me, with Sugarphena, the biggest thing with Sugarphena is I love learning something new. Because 30 years ago, 20 years ago, I think when you’re really good at your job, you want to tell everyone you’re good at your job. You have this ego, right? A lot of people have ego when they’re doing stuff for a long time and everything. And then, you know, you realize after a while, just you learn to keep your mouth shut and listen a lot more because there’s so many brilliant people out there. And I love when a thesis challenges my beliefs to the point where I almost like being wrong because if I’m going to be wrong, it’s going to be a teaching moment. And it puts my ego in check. And it says, “Hey, you know what? Don’t be stupid. Like, be open, be curious.” And with Sugarphena, I met Paul Kessler at a conference. And this is, you know, several years ago.

Frank Curzio 46:43

Paul’s a rock star. Finance structured over 400 companies, most of them gone public. Great reputation, well-liked, wealthy-looking guy. Just really, really cool. Insanely smart, contrarian. Like one of those people you hate because it just seems like everything’s perfect. But he’s a great, great guy and a very good friend. And when I first met with him, he told me one of his biggest investments is in a candy company. And this is three, four years ago. And I’m thinking, man, this guy’s wasting his time. You know, not even looking or being curious about his background and saying, “Okay, you know, this guy knows what the hell he’s talking about. Obviously, he’s been doing this for 40 years.” And I was like, “Wow, you know, why invest in a confectionery business, you know, food’s a terrible industry, you know, so much competition.” I thought chocolates at first, that’s what Sugarphena was. So GLP-1 risk, although most of their brand is gummies and candies and now they own a coffee brand. Then he went on to tell me, he goes, “Look, I’m going to tell you something.

Frank Curzio 47:29

The private equity,” he said, “this is totally fucked.” This is over three years ago. Is they’re really seeing, you know, redemptions, which nobody’s really talking about. It’s going to get even worse with his private equities. Bought a lot of these companies and at high valuations, promised they were going to go public seven years or whatever. And it’s not going to happen. They have to unload a lot of these. They have to re-rate them. And if they do that, they have to, you know, mark to market. The valuations are a lot lower. And he said, “You’re going to see a lot more redemptions. This is the industry I operated in my whole career and they are done.” He said, “They’re in a lot of trouble and people don’t know.” So he said, “We identified dozens of companies in confections and small food and beverage companies that we could scoop up for pennies and a dollar.” And he still didn’t really sell me. But he loved this so much, he doubled down by raising $200 million. Again, he’s a large owner in Sugarphena. $200 million he raised in a day for a SPAC, which he and Scott Laporte, Scott Laporte’s CEO, Sugarphena, one of the best roll-up guys in the world with Hilton.

Frank Curzio 48:21

He was in charge of Hilton. And Hilton was a, I don’t want to say a crappy brand, but it wasn’t doing well early 2000, 2001, 2002. And he decided to buy other hotels, buy casinos, and then spin off those casinos and turn Hilton from $500 million into a $5 billion operation. And he’s done it over and over again throughout his career. So they have this SPAC that they’re going to run. And a SPAC has to be in the market. This SPAC is on the market for a year. You can look, it’s called Vendome Acquisition Corp. They’re also searching for the perfect company to buy in the consumer food and confectionery space. That’s worth over $1 billion. You have to go about 2.5X over whatever you raise for your SPAC, right? So if you raise, you know, $100 billion, say like, you know, $350, $400, you’re looking for that kind of acquisition. They’re looking for something that’s worth a billion that they can get at a 25 to 40 percent value discount because private equity giants need to unload this. That’s the way they create dry powder and they’re getting, you know, they’re getting massive redemptions.

Frank Curzio 49:14

They’re like, “Okay, let’s see if we could sell some of this stuff without, you know, disclosing it so much.” And that’s the thesis behind Sugarphena. But now they raise that SPAC as well. So, you know, now think about someone coming to you with this story three years ago. Markets are all-time high. You have AI just starting to take off. You have momentum names absolutely on fire. You have growth. Growth is out on fire, right? Outpacing value ever since the credit crisis. And I’m like, this guy’s nuts, right? Food company right now. We talk about 13 straight years, you know, growth companies, momentum names doing great. And this crazy guy’s pitching me, you know, this value company, right? And fast forward to today. Coca-Cola is at an all-time high. Starbucks is on fire right now. Great turnaround there. Beer companies finally starting to bottom. Cheesecake factory high. Texas Roadhouse high. BJ’s Restaurant high. Who the hell wanted to own these stocks back then, right? Awesome. And I love that.

Frank Curzio 50:07

So we invested in Sugarphena a little over a year ago at $80 million valuation. Today it’s being valued close to $150. And they were going to go public and they said, “Look, there’s a lot of names we want to buy.” That we’re in the process and that we’re going to get and they’re going to be a creative right away. So they said, “Let’s wait another year to go public and we want to raise a little bit more money, get more brands under this so we come out of much higher valuation.” So valuation where, who knows, the SPAC that they have, when you launch a SPAC, you can’t have a company in mind. You can have an industry in mind that you’re focusing on, but not the company. You’re not allowed to. Sugarphena was not on the radar because it was so small, but it’s growing so fast that who knows if that SPAC could come in and say, “Hey, you know what? We’re going to buy Sugarphena. You need Sugarphena’s valuation to go higher.” But they’re raising money, and I’m speculating on this, but they’re raising money to build this company up because they see a lot more deals they want to get done before they actually go public. So now they’re raising money again and they put it all together.

Frank Curzio 50:54

That’s absolutely great for a credit investor. You got to be a credit investor to invest in these and be on our Curzio One membership. And it’s all for five-year warrants. Anyone who’s got warrants, what happens? You’ll get warrants of $2 and exerciseable $250, $275, $300, whatever. These warrants are exercisable at the price you’re coming in at, which is really cool. You don’t see that. All right? So it’s not a 30, 40 percent premium. They’re paying you a 6% dividend to own shares and they’re planning to go public in 2027, a year from now. So much so that this isn’t a line, this isn’t like, “Oh, here’s the pitch.” They already have a symbol in place. Paul owns over $20 million of this stock. Scott Laporte, the biggest investors, they benefit the most by this going public. They want to go public, right? They just want to buy a few more companies before that because they know the valuation is going to go higher. And who knows the valuation goes that high? That’s their private independent valuation where it’s worth.

Frank Curzio 51:41

This company could be worth a lot more. It’s not often where you can invest in a private company where your liquidity period is going to be a year from now. It’s usually seven years on average, sometimes 10 years. If you’re in this private equity funds, it might be even longer. Who knows? And that’s where we are with this company. These are the companies that I’ve vet, that I go into. We’ve got great companies that we invested in. I invest my own money. These companies don’t pay me. You pay for the membership. Once you get into the membership, I’ll probably have like four or five deals a year on average. You don’t have to get into any of them. There’s no pressure. If you do, you do. But your answer to your question, Adriana, if you want to become a member, give me a shout. FrankCurzioResearch.com. Sugarphena is open right now. We have another one, an AI company that’s incredible around dairy and cows and stuff like that. I just talked to CEO, blew me away. We’re able to invest in this one at a pretty low valuation, lower than this one.

Frank Curzio 52:27

And that’s probably going to come out next, maybe in like three, four weeks. But if you’re interested in Curzio One, I’d like to talk to everybody first. You have Alpha. So if you paid for Alpha membership, which is all our newsletters consolidated, now you get Alpha for free when you’re a One member. So if you paid for Alpha and you want to upgrade to One, you take off everything you paid for Alpha automatically. And then you come into this membership and then you have access to all these ideas. You also have access to our conference where almost every one of these private companies, their CEOs, I interview on stage. You get to meet them at my conference. It’s a lot of fun. They bring, Sugarphena’s going to bring chocolate. Caffrey’s another one that’s disrupting, you know, the way caffeine is taking out of soft drinks and they’re using like packets and stuff like that. They’re going to have taste tests there. I mean, they make the conference a lot of fun. They highlight their technology. I got shot by Raps Device last year again in front of everybody. So, you know, the bowl wrap. So, yeah, it’s really cool.

Frank Curzio 53:13

You have access to that conference, which is awesome. But if you’re interested in becoming a member, I’d like to talk to you first and make sure the membership’s right for you. I turn people away sometimes because, you know, if they only want to buy one of these, it’s risky. I want you to buy at least three a year. You have to be an accredited investor. But, you know, everyone checked their ego at the door. Everyone was so great. They participated. They’re all from different industries, these members. And it was, I learned a lot. Everyone learned a lot. It was such a great network. But if you want to become a Curzio One member, email me, frankcurzioResearch.com. I’ll set up a call with you and talk to you. Give you all the details. Let you decide. It’s not a sales call. And if you want to come in, you come in. If not, you’re not. But that’s how you come into a Curzio One membership, which we’re seeing a lot of members come in now, a lot of new members because the membership’s cool and a lot of people went to the conference. And man, we had like 100% of rate of everyone saying so many good things about the conference, which is really awesome.

Frank Curzio 54:00

So, really good question. I appreciate it. Sugarphena is open to investors right now, probably open for another couple of weeks. And then we’re going to go into another one that I’m looking at right now that I really like. Just have to do a little more due diligence. It’s fascinating because there’s no AI around dairy, cows, and production and breeding and all that stuff, which is going on right now. And these guys, their revenue went from $400,000 to $10 million in nine months. I mean, pretty crazy. So these are the ideas that we’re going to get access to, which is really cool. These are good teams that I’ve vet. People have been there that have done that, who brought companies public before, who are very wealthy, very smart, good ideas. Again, just learning from my mistakes in the past 30 years, I’m very careful what companies I invest in. I’m investing my own money in there. Again, I don’t get paid by these companies. So, and usually all these CEOs, every single one of them have massive stakes in their company.

Frank Curzio 54:46

So we all have stake in the game. We all want these things to go public. And it’s a really good membership with a lot of good private ideas out there. So if you’re interested in becoming a member, frankcurzioResearch.com. I still think we got like five minutes left here. I don’t know if there’s any more questions out there. Somebody asked about SpaceX, right? Should they get in now, right? Didn’t somebody ask about that?

Daniel Creech 55:06

Yep. Yeah, they just talking about an entry point since the stock price has.

Frank Curzio 55:11

Where is SpaceX right now? 113 and holy cow. I mean, look, they’re going to come out with their first earnings call. You also have, I think, in a couple of weeks, you’re going to have 11% of this float like being unlocked. Meaning that it’s going to be a first time 11% of people in the stock, 11% of float is going to be able to be sold. Which, you know, again, you could see the stock down a lot because of that, but you’re going to have a lot of sellers coming in. If I was going to go into entry, I would probably wait to mid-August. I think you might see a bump when they report earnings because Elon Musk is fantastic when he has conference calls. He knows what everyone’s looking for. The analysts are looking for everyone. They say, “This is what I want to see.” It’s kind of like what you’re seeing going into these calls with, you know, we want to see maybe you cut down on AI spend. We want to see more of your ROI. And that’s what Microsoft did. Microsoft did a good job of giving the market what they want to hear.

Frank Curzio 56:07

And if you do and you put up good numbers, your stock’s going to take off. You have 25 of the top firms in the world covering this that put up analyst reports. I’m sure if they were smart, a lot of them have conservative estimates on it. This way they’re going to set up as a nice beat. I think that’s what companies do. Again, it’s just a game. That’s just a number they put out there. It doesn’t matter how much it’s growing. It’s like if the number says it’s a dollar, expectations, which is the average of all these analysts covering it. And if you say, “Okay, it’s a dollar, it’s a medium, more like the medium.” And if, you know, you come in at a dollar five, the stock’s going to go higher and you have good guidance, stock’s going to go higher. But, you know, sometimes that could be a dollar 20, depending on how optimistic the analysts are. I don’t know if they’re optimistic too much, but I want to see the expectations. But they’re going to report pretty soon. I think next week, I think.

Daniel Creech 56:50

Yeah, they report the fourth. That’s Tuesday.

Frank Curzio 56:53

I wouldn’t be surprised if you see a nice pop in it as a trade. I mean, it’s down so much and you’re seeing like this unwind of the short trade in AI right now, which I think will continue for the next couple of weeks. But overall, I would probably wait because you’re going to see more selling pressure. So you could trade this, but you’re probably going to see more selling pressure because if I’m in this thing at 30 or 40, I think the average person inside is in at 40 outside of Elon Musk who’s got founder shares, but has come into every single, you know, capital raise. I think there’s, I think there was 32 capital raises in over 10 years for SpaceX, you know, in the private markets. But the average is 40. If you’re 40 and you’re 113, you’re going to sell, you’re going to sell it, right? I mean, that’s a good gain. And you’ve been in it, you’ve been locked up for so many years. I would wait to mid-August. Maybe you get, maybe you get lucky and get this thing under 100. I don’t know if it’ll go under 100, but, you know, we’ll see.

Frank Curzio 57:40

But I want to wait till after because you’re going to see a lot of selling come out. That’s a big amount of the float. That’s, you know, 11% of the float is going to be, it’s going to have access to sell the stock. So I’d be careful. So I’d wait for a couple more weeks. And I do think on a quick trade, I think the quarter’s going to be good and maybe you see this thing pop right away because it’s down so much. But I think you’re going to see a lot of selling pressure into that in a couple of weeks as some of the float gets locked up, if that makes sense.

Daniel Creech 58:01

Yeah, quick AI from Google says they report the fourth and then 20% of their shares get unlocked the sixth. So you’re looking at Tuesday and Thursday next week for big dates.

Frank Curzio 58:11

All right, cool. All right, guys. So look, that’s it for us. Be sure to askcurzioright.com. Put your questions in there. We’re here for you. Ask anything you want. We might actually do it. I want to do something like, Joe, like the fan where you actually, you call in, right? Which is pretty cool. I don’t know how they do that. It’s got to be the lake because some people could say whatever they want. But, you know, people are calling in and we talk and we answer your questions and stuff because you guys have great questions. I think Daniel and I really like doing it when I’m on a time to fly and stuff. It makes a lot more fun. And, yeah, but ask your questions. We’re here for you. You can do it for free. You got a great source. We cover all the stocks, cover everything. We’ve been doing this for 30 years. Mouse’ll use that. I mean, I don’t know too many places that you can call in. Yes, you have Kramer Show sometimes, but you probably got 20 million people calling in every day and he answers like six calls on that, you know, on the segment. But, you know, we can answer a lot of questions here. So askcurzio.com.

Frank Curzio 58:57

Any questions on our Curzio One membership? Email me personally, frank@curzioresearch.com. Daniel, what’s your email?

Daniel Creech 59:03

Daniel@curzioresearch.com.

Frank Curzio 59:05

All right, guys. Listen, we got one more trading day tomorrow than the weekend and we’ll see you guys next week. Take care.

Announcer 59:10

Wall Street Unplugged is produced by Curzio Research, one of the most respected financial media companies in the industry. The information presented on Wall Street Unplugged is the opinion of its host and guests. You should not base your investment decisions solely on this broadcast. Remember, it’s your money, and your responsibility.