Tom Hayes – Yahoo! Finance Appearance – 11/29/2024 #Finance

big deal all right let’s turn now to some interesting investment plays to consider as the market rally potentially broadens beh Beyond big Tech into 2025 Thomas Hayes is with us he’s the chairman and managing member of great Hill Capital Tom it’s great to

see you so um we were just talking about that broadening Trend if you were had to pick now between large cap Tech and everything else what are you picking I think you follow the earnings Julie and thank you for having me on what we’ve seen since the first quarter of this year is the mag 7

earn earnings growth has decelerated from 50% earnings growth in the first quarter of this year to Mid teens and what we’re also seeing is the unmagnify have accelerated from negative aggregate earnings growth to positive and by early next year they will be low double digits to Mid teen so

you want to follow the earnings and uh and the UNM magnificent 493 I think that’s where you’re going to see things happen Tom it’s well good to see you uh it’s been a little while um look it’s a holiday shopping season give people some uh presents in terms of some

stock picks what do you like what don’t you like well I think the biggest surprise of 2025 is going to be that Bonds get bid okay we’ve seen since bessent Scott bessent was appointed as Treasury secretary uh and he put in his 333 plan the 3% real GDP

Budget Deficits below 3% and add 3 million barrels per day uh Bonds have come Yields have come in so that’s an opportunity to buy a little longer out on the curve as for stocks as for Christmas presents I got a perfect one for you actually

maybe two if we have time I’ve got Etsy Etsy has been left for dead Etsy was a covid darling the stock is down 85% but what most people don’t realize it’s the third most trafficed retail website 92 million users and what’s really interesting about that Brian is that they

don’t compete it’s it’s not a race to the bottom on prices because the things you can get on Etsy you can get nowhere else and this is a company that while the stock is down 85% they’ve been able to maintain all the users they picked up during covid and maintain the free

Cash Flow generation is re accelerating 600 million plus trailing 12 months a billion doll buyback authorization growth in international growth in men’s growth in gifting growth in loyalty programs we like this one um and of course now I’m seeing Brian sazy next to me

commencing his holiday shopping on I’m looking at digital prints I maybe you’re right here Tom I I can get a digital print of my non-existent puppy and put it right there on my desk this what El she showing here is Bailey Bailey the puppy it’s great so Tom let me ask you though

because one of the reasons that the stock has taken such a hit has been sort of concerns about um that it hasn’t maintained that level of specialness right that there are counterfeit Goods on there that it’s not not as curated Etc what do you think about that do you think etsy’s

been doing a good job of sort of addressing some of those concerns no and yes no they haven’t been doing a good job that’s why the stock’s down 85% yes they recognize the mistakes they made and they’re fixing it and that’s why we’re seeing a re acceleration of

growth Revenues proper initiatives curation and uh and an abandonment of what they were doing which was trying to compete with people that they don’t compete with you know Brian when you go out to get that picture of your puppy you want to uh engrave the recipient’s

name on that picture and and it will make them feel special I mean when you receive a customized gift from a friend or family member it’s special because they took extra time they were thoughtful about you versus just scatter shotting 20 chocolate baskets from Amazon is is not the most ideal

situation anymore and now I’m gonna have to get a puppy I don’t have one but I just want to pop in I want to take a photo of and I want to share with all of you Tom before you came in here Julie and I were having a chat on on Tech STS and uh seeing semiconduct any read any caution signs

from of these that were of the favorit investors now getting tossed in the trash well as it relates to Nvidia we we saw a lot of retail uh investors Chase into that after the split uh they got some benefits but you know at the end of the day you have a stock that’s priced for Perfection

trading at some 40 times sales 40 times forward to earnings a lot has to go right and the problem is there was a period in time when when Nvidia the stock price went up and it actually got cheaper because the multiple went down that is no longer the case because Profit margins have

capped out uh Revenue growth has capped out at a measly $4 billion dollar a quarter which is still absolutely incredible but uh the key is price is what you pay value is what you get and at 40 time sales as we move from training the models which is where gpus are the most critical

and the spend for gpus is the most important thing to the more efficient part of the AI process which we’re slowly shifting into which is inference inference can be done on more basic chips with lower energy use lower demand uh more chips but lower quality chips that’s where the amds of

the world and the intels of the world are going to start to arise from the dead and the and the pi is going to be split up a little bit better so uh on that basis maybe they can eek out a couple more quarters of stock growth but uh where it’s priced I I think uh it’s it’s

certainly makes sense that it’s consolidating and stalling a little bit and maybe even pulling back um I want to come back to your bond call because I find that kind of interesting Tom because there are of of course all this talk about tariffs maybe keeping rates meaning that

Inflation’s going to stay higher meaning that rates are going to stay higher for longer we’re not going to see as many Cuts how does that factor into what you’re expecting well this was the exact same thing that happened in Trump . 1.0 he was elected in November

of 2016 the first thing you saw was oh it’s going to be Inflationary he’s going to spend he’s the Debt king or the you know the bond King uh and and immediately uh long end of the curve sold off aggressively after the election and into his

inauguration and it was kind of sell the rumor by the news when he actually got in Bonds had a meaningful rally in 2017 same thing with the dollar as soon as he was elected it had this J strength all the way into January into the inauguration and then weakness and I think those are

going to be two big surprises in 2025 Bonds get bid Yields compressed dollar actually re weakens maybe not the next few weeks but as you look out six to nine months that that will be the case and if you look at the Inflation during the Trump 1.0

Administration it was subdued there were a lot of different conditions I’ll give you that history does not repeat it does rhyme but the other thing that was odd about uh uh 2017 to 2020 is uh Emerging text-decoration: none;">Markets did exceptionally well when he was a pro tariff the Tariff King he ran on the Tariff King and Emerging Markets had really tremendous rallies as the dollar

weakened so I would be open-minded and the other thing that people think energy is going to do great energy did very poorly under the Trump Administration and so did retail stocks after initial rally into the inauguration retail stocks were very weak in that first year probably on the fear of

tariffs as well so uh I would just be burdened by the facts and the data versus the hearsay of what might happen or perceptions about what would happen look at what actually happened and see where the conditions are similar and where they might be different and I think there’s a tremendous

opportunities in the next 12 months in doing that Thomas Hayes great Hill Capital chairman and managing member always good to see you appreciate the piics appreciate the puppy suggestion we’ll talk to you soon thanks so much Brian thanks Julie all right now time for