Announcer: Wall Street Unplugged looks beyond the regular headlines heard on mainstream financial media to bring you unscripted interviews and breaking commentary direct from Wall Street right to you on Main Street.

Frank Curzio: How’s it going out there? Merry Christmas. Yes, it’s December 25th. I’m Frank Curzio, host of the Wall Street Unplugged Podcast where I break down the headlines and tell you what’s really moving these markets. I hope all of you are enjoying the holidays with your families. Are you enjoying that Eagles win over the Cowboys? Yes. I had to put that up front. Finally showing some heart out there with everybody injured. I still think, like I predicted last week, hopefully they don’t lose any Giants, but if they lose the Giants and the Cowboys beat Washington, then the Cowboys are in any way, but it was a good win. Let’s see if the Eagles could continue.

Frank Curzio: On today’s podcast, and it is Christmas day, I’m going to keep it really simple and just provide you with a great interview, which happens to be with a first-time guest, someone I admire. His name is Jonathan Boyar. I’m a big fan of Jonathan because we have similar backgrounds. His dad, Mark Boyar started Boyar Research in the 1970s. My dad started his firm in 1970s.

Frank Curzio: Jonathan is the face of that brand and his dad didn’t give him that position because he loves his son. Jonathon earned it, graduating from Cornell with a BS in applied economics, business management. He’s got a law degree sort of working alongside Mario Gabelli early in his career, kind of like when I started working with Jim Kramer. He’s been working side by side with his dad for over a decade. He’s now in charge of institutional sales and money management services, right, two huge parts of that company. He’s a really smart guy, really great analyst, and let’s get to my interview with Jonathan Boyar right now. Jonathan Boyar, thanks so much for joining us on Wall Street Unplugged.

Jonathan Boyer: Hey, it’s great to be here.

Frank Curzio: Well, first-time guest, right, so let’s do a little bit of an intro for the rest of the audience. When we spoke, what’s interesting is we have similar backgrounds in terms of our dads being in the money management industry for decades, starting companies in the ’70s. We both follow in their footsteps. Where you work side-by-side with your dad, I did the same with my late dad. Then I chose to work side-by-side with Jim Kramer. You worked side-by-side with Mario Gabelli who’s a legend in the industry. I guess let’s start there, talking about that experience, being young, having some great mentors and amazing analysts around you, but I think that’s an interesting story. I think my audience would love to hear.

Jonathan Boyer: Yeah, I mean it’s been great working with my dad and it also was great learning from Mario. I think I spent my first two years working at GAMCO out in Rye, New York. I mean he’s a legend. He’s one of the smartest people out there and watching how he not only ran his business, but how he analyzed each business and the amount of effort he put into it was truly extraordinary. I mean, at that point in his life, he didn’t need to be doing this. Watching how passionate he was, it was great. It made me want to work harder.

Frank Curzio: Yeah, it’s kind of amazing. Same thing with Kramer. It’s like every single day. I mean everybody has their own opinions about who they like and don’t like, but it was just, yeah, incredible to see the passion and see how much they love it. I don’t think those guys will ever, ever retire because I just love what they do. Let’s get to the markets here because your firm is a value-based firm buying stocks basically in intrinsically undervalued companies, but as we all know, it’s been pretty much a growth market for some time, which is starting to change over the past few months. Has it been difficult for you, your firm to find undervalued companies in a market that continues to hit record highs it seems like every single week?

Jonathan Boyer: Well, it really hasn’t been difficult to find companies because it’s been really a tale of two markets. It’s the high flying growth, technology. The GICS technology sector, I think it’s up 48% year to date. We’re certainly not looking there. I mean there’s a lot in media land, some retail names, some financials that are unbelievably interesting at these levels, but the street only really cares about these growth stories. At some point in time, this will change, and I think we’ll profit when it does. It’s certainly painful to watch everyone making so much money, buying things that we believe are blatantly overvalued, but just like in 1999, 2000, value investors are having an okay year in absolute terms. It’s the relative to performance that’s killing us, but as I said that that will change and I’d rather make double digit returns, taking significantly less risk.

Frank Curzio: Talk about that. That’s a great point, Jonathan, because a lot of people believe that if you have low returns in the market, then you’re not good. You’ll underperform in the market, but money managers have to focus on is, one, is prudent fiduciary responsibility to not buy crazy high flyers. We look at Beyond Meat, right? Beyond Meat went to 215 and now it’s 70, right? People are probably saying, “Why weren’t people buying it at 120, 130 if the IPO?” Talk about risk adjusted basis because it’s better to have a 10% return on a super safe stock then sometimes having a 20% return on a very aggressive stock because if you go long-term, I mean chances are you can lose 40, 50% on that aggressive investment, but this one maybe will only go up 2 or 3%. Talk about risk adjusted and how important that is.

Jonathan Boyer: Oh, it’s the most important thing. I mean, the first thing we always look at in any investment is how much can you lose? What’s your downside? You have to really look at everything through that lens. To go and jump on the momentum train and buy these technology shares, even though they’ve been a great bet, I don’t think they’ll continue to be. You really have to look at that. You just want to look at companies that have either good balance sheets, great franchises that are selling at reasonable discounts, to intrinsic value that are selling significantly below intrinsic value, that are selling it at reasonable multiples, that have a catalyst, something that’s going to make the stock ascend in value over a reasonable period of time. That’s the thing that really helps is you have to find a catalyst. That’s the one way we’ve changed since we started is we’re much more catalyst driven than ever before.

Frank Curzio: No, that’s great to hear. I heard you talk about some sector, Jonathan, where you said financial, media, texts over va– financial media. Are there any of the sectors you like because when I hear value, I want to say, “Okay, maybe consumer staples or utilities,” but here’s two industries that even people who are trying to play it safe and with that yield, since we have basically almost a zero yield inflation adjusted in the world today, that you look at utility stocks and some of them trading 20 times plus earnings, consumer staple companies. Some of them are trading very, very expensive. Those are usually places that you go for safety, for value, but are you finding anything maybe in those two sectors because they seem very overvalued as everyone’s trying to be safe and them? Yet at these valuations they might not be so safe.

Jonathan Boyer: I completely agree. I mean I would stay as far away from utilities as possible. Year to date. I think utilities are up about 25% on average. They’re selling, you said 20 times earnings historically. They sell at about 15 times earnings, so they’re really expensive. This is exactly what you alluded to. In a zero interest rate world where people can’t buy bonds, they’re jumping to these names because, “Oh, utilities. Those are widows and orphan stocks.” They’re not. Not these, not at these levels. I mean everything has a price and these are blatantly overvalued. At some point in time, especially if interest rates start to rise, these stocks are going to get hit pretty hard.

Frank Curzio: Now I do this what a lot of my guests. I want to learn their methodologies, me personally. Hopefully it transfers well over to my listeners. For me, this is always a learning game. I feel like it’s golf, right? You could always get better, and better, and better. There is no perfection in this. The second you think you’re perfect, the market just punches you right down. That’s why I love this so much because it’s so competitive, but talk about your research process, maybe from the beginning. Is it screens? What are you looking at? Is it low PEs with little growth. You did say they must have a catalyst maybe over the next six, 12 months or so. Talk us through that research process to the point where, “Okay, here’s why I started and here’s where I finished. Here’s the actual stock.”

Jonathan Boyer: Yeah, it’s very bottoms up. We’re not macro focused really at all. We try, to the best of our knowledge, to divorce ourselves on what’s going on in the world in terms of the economy. Is it a good economy? Is a bad economy, et cetera? There’s always a reason not to buy a stock. You have to kind of, to the best you can, ignore the headlines and look at each business. Our analysts here, we have a team of four analysts plus myself and my father, we’re all free to come up with ideas regardless of industry sector size. It’s just basically US based companies and we just take it from there. Everyone’s curious. We spend our days reading and reading and reading it. That’s basically what our analyst get paid to do and there’s no screen that’s going to replicate what we do.

Jonathan Boyer: It’s just looking at recent spinoffs, potentially. Looking at companies that have great consumer franchises, companies that have assets on their balance sheet that are not properly reflected due to gap accounting, or looking at entire industries that are out of favor and trying to pick the ones that we think have the best chances of thriving in the future. Our competitive advantage is not taking a six or 12 month view. It’s looking two, three, four years out. What is the business going to look like then? Looking at everything through the lens of an acquirer. What would a knowledgeable buyer pay for a business?

Frank Curzio: Yeah, no. That’s great stuff. Thanks for taking us through that process because, yeah, it’s different for everybody. There’s so many different factors. I love what you said earlier where I asked about it’s a growth market, a value market, but you said, “Hey, we adapted and we focused on companies that have catalyst now,” because I think the best money managers always learn how to adapt because there’s different market conditions, right? I mean, when you talk to your dad, I mean 0% interest rates, no one thought that would ever happen, right? I mean it’s just all the money that’s flooded into this market. I mean, it really is a different market isn’t it?

Jonathan Boyer: It’s completely different. You’re right, you have to adapt, but you also have to stay true to a philosophy. You can’t chase things. I mean, I think that’s critically important. I mean, we’re staying true to buying things out, buying the proverbial 50 cent dollar. We’re always going to do that, but what we’ve changed in the 70s when my dad started the business, there were a lot more cigar butt type of investments, low quality businesses that just were unbelievably cheap. We’ve learned through the years that you can get caught in these value traps by doing that. One way to avoid that is we’re looking at companies that have a catalyst, whether it’s six months, a year, or two years, something that’s going to make the stock ascend in value. We look, “Are they able to buy back a lot of stock? Could the company be sold? Could they sell a division? Could they make an attractive acquisition?” These are the things that we look for and ask ourselves before making any investment.

Frank Curzio: Now, whenever I interview money managers or hedge fund managers, you have to open up an account with them, you have to have them manage your money. What I like, what we’re going to talk about right now, is you created a product, and it basically was institutions, money managers, pension funds, but now individual investors can get access to it as well, it’s called the Forgotten Forty. Talk about that and tell everybody what it is.

Jonathan Boyer: Yeah. As I mentioned before, we’re really long-term investors, but we realize not everyone is as patient as we are. Well over 20 years ago, my dad started the Forgotten Forty. What the Forgotten Forty is, it’s our 40 best ideas for the following year. It comes out around Christmas time. It’s our Christmas gift to our subscribers. What we do is we have as our investible universe, every company that we’ve ever profiled. That’s the criteria for getting in.

Jonathan Boyer: These are names we know well. These are names that we follow and we say out of these what we think we’ll do over the year ahead. What will do the best in the year ahead and what’s the catalyst for that? We do these one page snapshots that are backed by really, really in depth research. A typical Boyar Research report is 10, 20 pages. We condense it into one, one page for each company and pick and discuss, “What’s the catalyst? Why is the stock going to go up over the next 12 months?” and detail it. It’s been something our subscribers really enjoy. They like that you’re getting this really deep research in kind of Cliff Note form, especially around the end of the year when people are starting to think about portfolio rebalancing.

Frank Curzio: What are some of the stocks that make it in there? Is it just large cap, mid cap, small caps? Is it any place, anywhere, any sector?

Jonathan Boyer: It’s anything. It’s basically just US names. The only criteria is we had to have profiled it before in a full length report. We have a separate service for microcap, so generally the sub $500 million names are out of it. Yeah. In this year, it’s a $500 million name up to Microsoft, so the smallest to the biggest.

Frank Curzio: What I love about this, because you actually sent this to me. You sent this to me because it comes out every year very late, like 20, 29th I think you start sending out, if I’m not mistaken. You sent me last year’s version because I was curious about it. You mailed it to me, right? I got it in a box and it was a lot of information, right? It’s a snapshot. It’s a snapshot, guys. Don’t think Snapshot, like it’s just the company. There’s a ton of research, like the value line if you’re looking at that. What I love about this is you don’t have it online, do you?

Jonathan Boyer: Yeah, I mean we’ve heard of the internet. We’re not tech investors, but we realize that’s a much cheaper way of distributing content, but we want to make it more exclusive. We also found it helps with retention. Everyone’s email box is flooded with emails. This way you get it sitting on your desk. It’s kind of a call to action to try and read it. We found that people like sifting through it. It’s a giant legal sized document. People just like touching it and feeling it. Some things are meant to be read online. This is not one of them. You can have the best copy protection in the world, someone could go in and reproduce it online. It’s a lot harder to figure out or to copy of this. It’s more for our clients. It’s more that I think they enjoy sifting through this and reading it.

Frank Curzio: Yeah, it’s pretty cool because, like you say, it feels more special when you’re getting it that way, where it can’t be shared and which people can find ways to share it. We’ve caught people sharing our research and kicked them out of our company, which is in our policy because people pay for it and you have to protect that, right? That’s your brand. If people are able to get that stuff for free, but there’s no way you can because you’re mailing it directly to them. I just thought that was amazing. Coming from my background where I used to have to lick the stamps, put them on the envelopes, fold my dad’s newsletters, stuff it in an envelope, and then take bins to the post office. It’s a little bit different now, isn’t it?

Jonathan Boyer: Yeah, no, it’s definitely a whole different world. People appreciate this and I mean when you start in the business, your mailbox was full. Now it’s empty. We’re contrarians in every way, even to the point of how we distribute it.

Frank Curzio: No, that’s awesome. I usually end with this where I ask a guest if he could share a couple of ideas. I know sometimes that’s a tough on the money management side, but I was wondering if you have any specific ideas you could share. If not, I guess you shared a couple of sectors, but I was just wondering if there’s any investment ideas you’d like to share with my audience.

Jonathan Boyer: Sure. Absolutely. Well, there are really two names that I would talk about and it’s Madison Square Garden and Madison Square Garden Networks. These are run by the Dolan family. Everyone loves to hate the Dolans, but we kind of have a different view of them. They’ve been unbelievable stewards of capital. We originally owned Cable Vision and they spun out Madison Square Garden from there. And then they spun out Madison Square Garden Networks from MSG, so they’ve done a great job to unlock value for shareholders. MSG has been a three or four bagger since it was spun out. Just to take you through MSG, it’s selling for roughly $290 a share. We think it’s worth close to $400 a share using very conservative assumptions.

Jonathan Boyer: MSG is more than just the world’s most famous arena. It owns the Knicks. It owns the Rangers. It has long-term leases on the Beacon Theater. It owns valuable real estate above Madison Square Garden. They’re doing something interesting this year. They’re going to spin out the entertainment business from the sports business. They’re doing yet another corporate action to help unlock value. Now you’re going to have a publicly traded sports empire, the Knicks and the Rangers, and then you’re going to have the entertainment business on the other side. There’s a shorter term catalyst there.

Jonathan Boyer: The other name, Madison Square Garden Networks, is the television home of both the Knicks and the Rangers. They have, I think, a contractual right to broadcast them through 2035. The stock has been destroyed this year. I think it’s down 25, 30% so far, but they’re doing the right things. They just completed a buyback of about 20% of their shares. The stock is unbelievably cheap, utilizing what precedent transactions for cable networks are out there. One thing that’s going to be really helpful for them going forward is sports gambling. Sports gambling is going to be huge for them because if people are going to gamble on a game, they’re going to watch it. The ratings go up and there’s going to be more advertisers, et cetera. It’s a great trend there. They’ve legalized it in New Jersey and in certain areas of New York, but if it continues to be legalized, the valuation and the stock should go up considerably.

Frank Curzio: Now, I know you had talked about Dolan and how he released value. I’m a huge basketball fan, so I have to go here with this. I mean, is that a factor of Dolan or is that a factor of the demographic they operate in in New York where people are going to go there, they’re going to fill out Madison Square Garden no matter what? Imagine if the Knicks were not terrible for the past 15 years.

Frank Curzio: I mean, as a major market, I don’t think there’s any team in any sport that’s been this bad for this long. Imagine they got LeBron James or Kawhi Leonard this off season. I mean maybe that’s more a factor of MSG networks because I know Dolan, I believe, is in talks to sell either a portion or some of it, at least that’s what we’re hearing. Who knows? I don’t know if that’s gonna happen, but I mean wouldn’t more people watch these guys on the networks, not just because of gambling, but if the Knicks and the Rangers were actually really, really good every year?

Jonathan Boyer: Oh, absolutely. I mean the stock has done unbelievably well when the team has done awful. Can you imagine if the team had done well? Our estimate of intrinsic value would be significantly higher than a little less than $400 a share. I mean, it’s a great business. I’m not saying he’s a terrific operator, but he’s done a good job at least unlocking value for shareholders. He’s done a terrible job running the teams, I mean, absolutely awful. I think if he put these teams up for sale, there’d be a line around the block for them or a few billionaires at least who would love this. I mean, how often do these trophy assets ever go up for sale?

Frank Curzio: Yeah. Recent sales, oh, man. I mean two three 3 billion dollars for bad teams they’re getting these days. The value of these teams and the amount of billionaires that keeps increasing year after year at the markets. It is amazing how valuable these particular assets have come in sports teams and sports franchises. No, I love that because even with Dolan, like you said, I mean, he spun off. He did good things to the value of that, but the Knicks aren’t going to be terrible all the time. If he does sell a portion of the team, that could be a huge catalyst for the stock going forward, I guess.

Jonathan Boyer: Yeah, no, absolutely. I mean, if you look at Forbes, Forbes values the Knicks at roughly $4 billion. The whole entire enterprise value of MSG is, I think, 5.8 billion roughly. With the Knicks and the Rangers combined, you’re basically getting everything else for free. Yes, if the team improves, that’s certainly going to increase the valuation, but sports gambling, the value of live sports, just in general in this kind of DVR world, they have a lot of positive trends there.

Frank Curzio: Yeah, that’s cool. All right, so let’s end with this, Jonathan, because you also have a podcast. I love talking to people who have podcasts. I never see it as competition. I always see it as you can listen to a podcast whenever you want. That’s why this is coming out the 25th and I know some people may be dying to watch it on 25th because not everybody loves when all their family members are over at the same time and need a break, but they’ll listen to it either a couple of days later. You have a podcast called The Boyar Value Group where you interview some pretty amazing guests. I mean, Ken Langone, Mario Gabelli, Steven Einhorn, who’s the vice chairman of Omega Advisors, and even our friend who introduced us, Chris Mayer. Talk about the podcast, what made you start a podcast, the value in it. I love talking to people who have podcasts.

Jonathan Boyer: Yeah. I don’t view it as competition and if it was competition, you’d be killing me. You have a lot more viewers than I do. I have a podcast, The World According to Boyar. It’s the most fun part of my job. I love it. I love just talking to interesting people like, like a Ken Langone, or a Howard Lobber who runs Vector Group, which owns Douglas Elliman, just trying to see how they do this? How did you turn a very small business into a huge business? To hear their stories, to gather their insights, it’s just so much fun. I love teeing up the questions and learning from them. It’s the best part of my job. Why I did it, I’m not really sure. I guess I always had an interest in journalism and news. This was just a kind of a way to help market my business while fulfilling a passion.

Frank Curzio: Yeah, and you’re right, especially when I’m interviewing people with different investment styles or if people have a different opinion than me, it’s always a respect there where I know in a network sometimes they’ll attack people. It’s not attacking. It’s just learning different investment styles. It’s all about education. It’s all about getting smarter. I can imagine with those guests how much you learn, but yeah. It’s really cool to see that you’re doing your own podcast and let’s finish up here. If anybody wants to listen to your podcast or if they want to learn more about your Forgotten Forty, again, it is available to individual investors, where should they go? How could they do that?

Jonathan Boyer: They can follow us on Twitter @boyarvalue. That’s BOYAR or you can go to our website, boyarvaluegroup.com, yeah, or just give us a call.

Frank Curzio: All right, Jonathan. Thanks so much for coming on. We planned this a couple of weeks ago and we’re doing this on the 23rd by the way guys, because I’m not doing it on Christmas. Don’t worry. We’re spending time with our families for the holidays, but it is a week where most people have off. I really appreciate you doing this and being a first time guest. Yeah. Listen, I’m probably not going to talk to you, but have a great holiday. Have a great New Year and looking forward to even your Forgotten Forty, which is coming out in just a couple of days.

Jonathan Boyer: Have a happy holiday and thanks for having me on.

Frank Curzio: All right, great stuff from Jonathan. I love having a first-time guest. You could say we have a lot in common. We had lots of great stories. We were basically introduced through Chris Mayer. I’ve got to get back on the podcast, but we just email each other from time to time. I love Chris. Chris is one of the best guys. I get the best feedback from Chris. He used to be in a newsletter industry and now I think he’s managing actually Bill Bonner’s money who owns Agora. He’s just a great analyst and I really appreciate that introduction. Johnson’s great guy, great analyst. Hopefully you learned a lot from the interview.

Frank Curzio: Guys, I hope you’re relaxing, enjoying the holidays, which usually doesn’t happen until the 25th right? Since all your shopping’s done, you’re already traveled through tons of traffic and likely terrible weather to get where you are. Most of the stress and pressure is over, which is a good thing. Anyway, my staff is off this entire week. If you put your email address or we have your email address, you’re on a mailing list, you know that. We sent out a really nice note about the year that we’re having and a lot of first and great things that happen to Curzio Research and thanking you. My staff is off the entire week.

Frank Curzio: With that, I still wanted to provide a podcast for you because I’d never want to miss a week. You guys know I love you. You take time to listen. The least I could do is deliver, give you a cool podcast even if it’s on Christmas. Don’t send me any emails, frank@curzioresearch.com because this is not live. It was taped on Monday. I’m enjoying the holidays with my family, but I definitely want to get a podcast out to you guys.

Frank Curzio: Enjoy the rest of the week. I’ll have a podcast for you on the first, which is a Wednesday. It’s New Year’s, so it will be something kind of short and sweet. I don’t know if I’m going to have an interview yet. We’ll see, but you will get something on the first, which is Wednesday, which is a part of our schedule, which is New Year’s. I hope all of you have a wonderful Christmas, Hanukkah, Kwanzaa, Winter Solstice, Las Posadas, but that is Happy New Years, Happy Chinese New Year. I don’t know. There’s so many holidays, right? It used to just be Hanukkah and Christmas, but man, anybody that celebrates anything during this holiday season, listen, I hope you guys have a great holidays with your family. I’ll see you next year, which is still seven days from now. Take care.

Announcer: The information presented on Wall Street Unplugged is the opinion of its hosts and guests. You should not base your investment decisions solely on this broadcast. Remember, it’s your money and your responsibility. Wall Street Unplugged, produced by The Choose Yourself Podcast Network, the leader in podcasts produced to help you choose yourself.