Five interesting things that Hodges Capital research analysts discovered this week...

#1 ALL THE NORMAL NAMES WERE TAKEN: Generally, company names are either truly descriptive, a Surname of the founder, or, at the very least, something that sounds familiar. For example, US Steel, International Business Machines, General Motors, Gucci, McDonald’s, Ford, Amazon, Starbucks, and Apple. On the other hand, what is a Zillow and MapleBear? Zillow combines "zillions" with "pillows" to reflect the millions of listings on their database of homes that presumably all have pillows. MapleBear reflects the flags where the founder has lived, Canada and California, thus “Maple” Leaf and “Bear.” At least MapleBear operates under the more familiar name, InstaCart.

#2 REALTOR REMODEL: The National Association of Realtors (NAR) was sued over their policies regarding setting a commission rate for their agents and the requirement that agents must list homes on a NAR-affiliated database to sell them. The accusation was that these policies inflated commissions, lacked transparency, and constituted anticompetitive behavior. The NAR has recently agreed to a landmark settlement, to pay $418 million to settle more than a dozen lawsuits. For home buyers, this eliminates the traditional 6% commission that real estate agents typically receive and now buyers and sellers will have the ability to negotiate fees directly with their agents upfront.

#3 BETTING ON: All the online betting commercials during televised sporting events suggest the activity is extremely popular, and it is showing up in the numbers. The U.S. regulated Online Sports Betting (OSB) market has grown rapidly, up 29%, exceeding $121B in handle. New states coming online include Vermont and North Carolina, bringing OSB to more than half of the U.S. population. Industry observers are placing their bets on the possibility of legislative progress in Georgia, Alabama, Mississippi, Missouri, and Minnesota.

#4 A HIGH INTEREST STORY: Bloomberg reports that U.S. delinquency rates on credit cards and auto loans are the highest in more than a decade. High interest rates and inflation have stressed consumers, and for the first time on record, the combined interest payments on credit cards and car loans are now as large as interest payments on home mortgages. A recent paper from the IMF and Harvard University suggests that these expenses are not captured in inflation figures, which explains the disconnect between consumer sentiment and what economists are advocating.

#5 SPLITTING A BURRITO: There is some debate that stock splits drive a stock price higher, but the math shows a split does not provide any economic value. A burrito that splits 2 for 1 is still the same sized meal. Stock splits simply make it more bite-sized for small investors to own. Typically, splits are sized as “2 for 1” or “3 for 1”, and both Amazon and Google have done outlier splits of 20 for 1. Chipotle recently announced its board approval of its first-ever stock split. What was notable is the size: a 50-for-1 stock split that is one of the biggest in NYSE history. That is a lot of burritos.

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This discussion is not intended to be a forecast of future events and should not be considered a recommendation to buy or sell any security. Past performance is not indicative of future results. Investing involves risk. Principal loss is possible. Investing in smaller companies involves additional risks such as limited liquidity and greater volatility. No current or prospective client should assume that information referenced in this communication is a recommendation to buy or sell any security or is a substitute for personalized investment advice from your individual advisor. HCM does not provide tax or legal advice. Consult your tax or legal advisor for any related questions.

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