Latest / The Dutch Investors / #29 | A nerdy UK compounder with software-like margins | w/ Secret Sauce Investing | Free Games Workshop Fundamental Analysis

Transcript

#29 | A nerdy UK compounder with software-like margins | w/ Secret Sauce Investing | Free Games Workshop Fundamental Analysis · The Dutch Investors

0:00
SPEAKER_01: Welcome back everybody.
0:01
SPEAKER_01: In today's episode, we are talking about a very simple British business with unbelievable margins and returns on capital.
0:10
SPEAKER_01: And today I'm not here by myself.
0:12
SPEAKER_01: I'm here with Sonny from Secret Source Investing on Substack.
0:17
SPEAKER_01: And today we're going to talk about Games Workshop.
0:21
SPEAKER_01: Sonny, are you ready?
0:23
SPEAKER_02: I'm ready.
0:24
SPEAKER_01: Alright, let's go.
0:37
SPEAKER_01: I mean, how cool is this?
0:39
SPEAKER_01: Until like a few weeks ago, we hadn't really met or talked, and now we're analyzing Games Workshop together.
0:48
SPEAKER_01: So thank you for taking the time and effort to do this with me, with the Dutch investors.
0:53
SPEAKER_01: That's uh very awesome.
0:54
SPEAKER_02: No problem.
0:55
SPEAKER_02: Thank you for having me.
0:57
SPEAKER_01: Before we dive into Games Workshop, could you briefly introduce yourself for those that don't know you yet?
1:05
SPEAKER_01: Uh, who are you?
1:06
SPEAKER_01: Where are you from?
1:07
SPEAKER_01: And how did you get yourself into the world of investing?
1:11
SPEAKER_02: So, my name's Sonny.
1:12
SPEAKER_02: I obviously write a secret sauce investing on Substack.
1:15
SPEAKER_02: I have been writing about companies since 2021, but I have been investing since 2016.
1:22
SPEAKER_02: Um, I'm based in Edinburgh in Scotland.
1:24
SPEAKER_02: So as a typical Scotsman, by day my work consists of whiskey, um, which is not a joke, that is what I work in.
1:32
SPEAKER_02: Um, so investing for me is something that's more of a passion project um rather than my day-to-day.
1:39
SPEAKER_01: So you don't just drink the whiskey, you do something with the whiskey as well.
1:43
SPEAKER_02: Absolutely.
1:44
SPEAKER_02: Um whiskey, whiskey has a lot of uh generates a lot of income for Scotland as well, and uh we have businesses like Diagio here.
1:51
SPEAKER_01: Yeah, awesome.
1:52
SPEAKER_01: I believe uh our analyst Matthieu's uh and Luke holds shares in Diasio as well.
1:57
SPEAKER_01: We did an analysis before.
1:59
SPEAKER_01: Uh I'll make sure to share it with you after this uh this episode.
2:02
SPEAKER_01: You might like it.
2:04
SPEAKER_02: Thank you.
2:04
SPEAKER_02: Looking forward to it.
2:06
SPEAKER_01: Yeah, awesome.
2:07
SPEAKER_01: Uh before I started doing research on the company, I had never heard of this business before.
2:13
SPEAKER_01: It came to my attention after reading one of your reports on the company, uh, which I highly recommend people listening uh read it after this episode, after this podcast, because it was great.
2:24
SPEAKER_01: How did you come across Games Workshop and why do you own the company?
2:28
SPEAKER_01: Uh, what do you like about it?
2:30
SPEAKER_02: Uh I've known about Games Workshop since I was younger because I used to collect the figurines and paint the models when I was about 10 years old.
2:39
SPEAKER_02: So I've always been aware of the company and it's maybe always held a bit of a special place in my heart.
2:45
SPEAKER_02: But I wasn't aware until about 2017-2018 that it was a listed company.
2:51
SPEAKER_02: So it was only after I started investing I was aware of this.
2:55
SPEAKER_02: Um so I've always kept an eye on it, but unfortunately, I did I did actually see the company when it was traded for about£5 a share, um, but then saw this huge incline um on the share price.
3:07
SPEAKER_02: So I have kept an eye on it and and over time uh have obviously analysed it and and sat on the sidelines until there was a bit of a pullback that gave me a chance to invest.
3:18
SPEAKER_00: Yeah, that's uh talk about uh opportunity costs, huh?
3:22
SPEAKER_02: Yeah, absolutely.
3:23
SPEAKER_02: Um but again, uh probably very new to investing at that point and a bit naive to understand what a great business it was when um you know we're paying several times more for a share.
3:35
SPEAKER_02: But as you say, opportunity costs, we we live and we learn.
3:39
SPEAKER_01: Yeah, absolutely.
3:39
SPEAKER_01: You're right.
3:40
SPEAKER_01: Yeah, it's it's such an interesting company with a pretty cool history as well.
3:45
SPEAKER_01: Uh, we won't go too deep into the history or um in this audio analysis, so I would recommend checking out our written report on that.
3:53
SPEAKER_01: Uh, but I will give a quick overview of uh Games Workshop.
3:58
SPEAKER_01: Uh, they were founded in 1975 in London by Stephen Jax, John Peake, and Ian Livingstone.
4:06
SPEAKER_01: Initially, they started as a small mail order business, I believe, for board games and um tabletop RPGs.
4:14
SPEAKER_01: They ran it from their bedroom and over time they evolved into the world's leading manufacturer of fantasy miniatures, uh known for its iconic Warhammer brand.
4:25
SPEAKER_01: I I actually used to play a little bit of Warhammer on the uh PC.
4:29
SPEAKER_01: Uh well not too much.
4:32
SPEAKER_01: I didn't really like it, but I can see why people like it.
4:36
SPEAKER_01: Could you explain what Games Workshop does in simple terms?
4:40
SPEAKER_02: So, in the absolute simplest terms, I think you've already summarized it quite nicely, is Games Workshop manufactures and produces miniature figurines that are part of a world that includes um Warhammer 40,000 and allows customers to essentially buy these figurines and paint them at home and then play war games with them.
5:02
SPEAKER_02: And alongside that, there's been an entire world developed for Games Workshop that includes a lot of IP that we're starting to see rolled out.
5:11
SPEAKER_01: Yeah, and I believe they have a pretty high customer lock-in with uh because they're so niche, and if you start playing the game and you start really getting good at it and you start liking it, it's I mean, players invest a lot of time and effort into the miniatures, painting and uh and strategy, perhaps even over the years.
5:31
SPEAKER_01: So it's quite an interesting and unique uh business.
5:35
SPEAKER_01: I would love to talk about how the company makes its money and dive a bit deeper into the business model.
5:42
SPEAKER_01: From doing my research, Games Workshop mostly generates money from third-party sellers, so selling their intellectual property through bulk and wholesale with uh, like I said, third-party retailers and uh distributors.
5:58
SPEAKER_01: Uh, I believe it's roughly 55% of revenue.
6:01
SPEAKER_01: They also generate roughly 20% of revenue through uh retail, uh, so company-operated stores, and the other 25% comes from online sales and licensing.
6:13
SPEAKER_01: So think of selling Warhammer art on, I don't know, displayed or Warhammer uh plushies.
6:19
SPEAKER_01: They have close to 550 stores and expect to open 28 stores in 2025.
6:26
SPEAKER_01: And what I found pretty interesting is that 75% of all their um stores are single staff stores, uh meaning just a single employee or manager, and 85% of all retail stores are located in the UK, North America, and Europe.
6:42
SPEAKER_01: So I believe those are the most important markets at this moment.
6:46
SPEAKER_01: Do you have uh a games workshop in uh in Scotland?
6:50
SPEAKER_02: We do, um, which is it's surprising to see.
6:53
SPEAKER_02: Um, the trade side of the business is so high because in Scotland and in the UK, it's quite common to see Games Workshop stores.
7:02
SPEAKER_02: Um, so I actually, before this podcast, before you asked me to come on, I was in the Games Workshop store about two months ago, and I hadn't I hadn't been in a store for maybe over a decade.
7:12
SPEAKER_02: And it was interesting to just get uh you know a bit of a feel for the store.
7:17
SPEAKER_02: Previously, uh the store that was in Edinburgh, it was a bit dingy and needed maybe a refit, but there's they've got a new store in a new location, and it was it was busy, it was quite positive to see there was older parents possibly there with their with their children, so it was a real mix of ages.
7:35
SPEAKER_01: You were just doing some um real world uh like um research for uh for your company or was it for fun?
7:43
SPEAKER_02: It was for fun.
7:44
SPEAKER_02: I I think uh for me uh game I think you've already touched on it about customer lock-in, but there's almost uh a cathartic or uh an addictive side of Games Workshop that customers always want to uh purchase the next release.
7:59
SPEAKER_02: Um and I think you know you summed up quite nicely with with your breakdown of where product is sold, um, and I think the fact that obviously I am such a large percentage, about 75%, are single staff.
8:11
SPEAKER_02: I think I worked backwards and uh worked out about it was about 216,000 generated um revenue-wise per store, uh, which which actually isn't isn't a lot per store, but it just shows you how high the margins are for this product.
8:27
SPEAKER_01: Yeah, I did some uh math on that as well.
8:29
SPEAKER_01: I believe it was around uh 216,000 uh per store on average, you're right.
8:35
SPEAKER_01: Um, which only makes it more impressive.
8:38
SPEAKER_01: Uh I believe they said in their most recent earnings call that I listened to that all stores were profitable, and if they're not, they're going to relocate it or uh or close it.
8:48
SPEAKER_01: So they're pretty strict on that as well.
8:51
SPEAKER_01: Is there anything you would like to add on the uh on the business model?
8:54
SPEAKER_02: Uh no, I think we'll jump into it.
8:56
SPEAKER_02: Um there's been a lot of uh talk obviously about the breakdown, but I think we can almost cover parts of those segments by themselves a little bit as well.
9:03
SPEAKER_01: Yeah, I agree, I agree.
9:04
SPEAKER_01: What do you think is their biggest strength and weakness if you look at their business model?
9:10
SPEAKER_01: What do you think uh are their strengths and weaknesses?
9:14
SPEAKER_02: I think the the strengths are the fact that they ultimately control the game's workshop world, they control Warhammer 40k, they control Age of Sigmar, yes, they license um Lord of the Rings, but they ultimately dictate how this how this world is going to evolve.
9:33
SPEAKER_02: Um so for me that they can't be really compared to another seller or retailer because they are, yes, they're the retailer, but they're also the producer of the product, which again you have this customer buy and you have this customer lock into the game's workshop world and the franchises.
9:52
SPEAKER_02: Um, and then beyond that, the fact that they are vertically integrated, so they are the manufacturer of all the products, which again they have full control over any of their manufacturing.
10:03
SPEAKER_02: And as we can see, and I'm sure we'll come on to the margins, you can see with products how profitable they are.
10:09
SPEAKER_01: Yeah, uh, I agree here.
10:11
SPEAKER_01: They I mean they have exceptional pricing power, right?
10:14
SPEAKER_01: I mean, uh, we'll talk about the the margins later, and the vertical integration is I mean gives them control over production, distribution, and retail, which is very important for this uh for this business.
10:26
SPEAKER_01: I do see some weaknesses, uh, and you can either um agree or disagree uh on them.
10:32
SPEAKER_01: I I think they're I mean the business is almost entirely reliant on the success of a single brand, uh Warhammer.
10:41
SPEAKER_01: Uh so customer backlash is a huge risk, which we'll probably talk about later as well.
10:48
SPEAKER_01: Um, they're also, I mean, they they they do a lot of price hikes, and eventually this could cause problems.
10:57
SPEAKER_01: Uh, eventually, I think even the the diehard fans will give them some backlash, I I guess.
11:03
SPEAKER_01: Would you agree or or not?
11:05
SPEAKER_02: Yeah, I would agree on on both those points.
11:07
SPEAKER_02: I mean, again, the fact that they they don't have essentially a direct competitor means that they can hike prices or continue to hike pricey uh prices, but this will eventually frustrate customers.
11:19
SPEAKER_02: Um I would also advise as a weakness, there is there's a level of operational gearing with the business.
11:25
SPEAKER_02: So the because of the setup, all of the all of the increase in revenue has almost gone directly to the profit because of the fact that uh it's such a profitable uh product.
11:38
SPEAKER_02: But if Games Workshop revenue was to stall or decrease, they'd still have the same fixed costs.
11:45
SPEAKER_02: So that's that's uh potentially a risk.
11:47
SPEAKER_02: Um in in regards to my notes as well that I'd taken, there is an element of it being a hit-driven business.
11:54
SPEAKER_02: They still have to uh entertain customers with with new releases.
11:59
SPEAKER_02: Um and then I think lastly, there's the risk that there's an aging population as well.
12:04
SPEAKER_02: This is this is a lot of people who have been collecting this for even since before I was collecting it um 25 years ago.
12:12
SPEAKER_02: So so for a lot of these um customers at some point they will just come to a natural end of collecting.
12:19
SPEAKER_02: So they have to um generate new customers from from you know the the children of these collectors or or reach an entirely new generation.
12:27
SPEAKER_01: Yeah, yeah, yeah, yeah.
12:28
SPEAKER_01: Uh I mean uh great points.
12:30
SPEAKER_01: What one more thing before we can head over to the industry.
12:34
SPEAKER_01: Um, usually, and I I found this pretty unique.
12:38
SPEAKER_01: Whenever we think about retail businesses, uh, usually the goal is to sell as much as we can in the retail stores.
12:45
SPEAKER_01: And I mean, the goal for games workshop is not necessarily to sell anything in the store itself, it's more to like introduce people to the game, let them make their own character for free.
12:59
SPEAKER_01: I went to the games workshop uh up north, I believe there's two here.
13:03
SPEAKER_01: Uh so I went to one of them and uh they let me make their own character for free.
13:08
SPEAKER_01: Uh they told me they guided me around the the store, uh, they offered me all the support I wanted.
13:14
SPEAKER_01: There was only a single guy there.
13:15
SPEAKER_01: He was very friendly, he was very passionate about the game as well.
13:19
SPEAKER_01: And I felt like the goal wasn't really to sell anything.
13:24
SPEAKER_01: I didn't say I was looking for uh at it as like an investor, I just was really act acting as like a customer.
13:31
SPEAKER_01: Um, and I felt like the goal was more of to build like an intimate relationship with me um between the game, the brand, uh, the community.
13:40
SPEAKER_01: And I mean he did a great job.
13:42
SPEAKER_01: I I wanted to try the game and buy something afterwards.
13:45
SPEAKER_01: So would you say that's true, or uh or or did that did he just not sell me enough?
13:51
SPEAKER_02: No, I th well, first of all, I'm I'm uh as as a shareholder, I'm delighted you've had a good experience or a positive experience because I do think there is a risk of if we if we consider these um single staff uh stores, there is a risk if you have somebody who is a toxic gatekeeper or puts off new entrants or new customers, there's a risk they're they're missing out a customer for life there.
14:13
SPEAKER_02: Um I think Games Workshop for me almost has the feel of a luxury business where somebody is buying into the brand rather than necessarily the product.
14:23
SPEAKER_02: It has almost uh it's not it's not this on the same level, but a Hermes type feel to the business um where customers just want to be part of the brand, they want to be in the store.
14:36
SPEAKER_01: That's pretty crazy that you said this because uh I was uh writing my article for the Games Workshop release, and I believe I said something very, very similar where where luxury brands charge like premium prices because customers feel such a strong emotional connection to the product, uh, which is pretty nuts that you said that as well.
14:57
SPEAKER_01: I thought I was being creative, but uh you you were uh you beat me to it.
15:01
SPEAKER_01: One more thing that I found very unique, and this comes back to your point.
15:06
SPEAKER_01: Uh, when I read the 2024 10K, the annual report, I read this uh from the CEO, Kevin Roundtree, and he said, ensuring we continue to recruit well, behavioral fit is more important than skills, which we can ultimately train, which is basically what you said.
15:26
SPEAKER_01: I mean, the managers, the single store staff has to be extremely passionate about the game and the skills we can train later, right?
15:35
SPEAKER_02: Absolutely.
15:36
SPEAKER_02: Um, and I think if we just reflect on a on a previous point that you've made as well, um the the aim of Games Workshop is not to sell as much product as possible, they want to be very operationally lean, and with that comes they want to effectively sell out of all the products they produce, they're not producing an excess of products.
15:56
SPEAKER_02: Um, and again, we'll we'll get onto the figures as to why they're such an efficient business, but that that in part lends itself to why they have things like such a high uh ROCE.
16:06
SPEAKER_02: So, yes, I think as a as a business, it's it's great to see they're doing so well in recruiting new customers because I think that's that will lend itself well to the future.
16:16
SPEAKER_01: Great points.
16:17
SPEAKER_01: Um, I think this is clear for now.
16:20
SPEAKER_01: Uh, could you expand a bit more on the industry uh Games Workshop operates in?
16:25
SPEAKER_01: Uh, perhaps you could start explaining what the tabletop gaming market looks like.
16:31
SPEAKER_01: Uh, is it big?
16:32
SPEAKER_01: Is it growing?
16:34
SPEAKER_02: This is this is a hard question because I I feel that Games Workshop is almost completely on its own level.
16:41
SPEAKER_02: That that competitor-wise, um, and this is just from doing my research.
16:45
SPEAKER_02: We've got um people like Mantec, so specifically Kings of War, Hawk War Games, uh, and I think it's Mallefox.
16:53
SPEAKER_02: I've never I hadn't even heard of before, but with these companies, um, none of them are publicly traded, they're just they're not mainstream, they're probably for specialists who are aware of these companies.
17:04
SPEAKER_02: Um, and then beyond that, we have listed manufacturers such as Mattel, Tommy, Hasbro.
17:10
SPEAKER_02: But these manufacturers are predominantly focused on board games and and mainstream toys rather than tabletop board games.
17:18
SPEAKER_01: Yeah, when you think of like tabletop board games, you think of like Scrabble, Monopoly, uh perhaps even Risk.
17:26
SPEAKER_01: But when you go a little bit deeper, you realize that they are in their own little you could even say like they're operating in a niche within a niche.
17:35
SPEAKER_01: I mean, it's so there's so few people that they don't need to attract everybody, right?
17:42
SPEAKER_01: Uh they just need the most passionate players that are completely, you know, passionate about the ecosystem of Warhammer.
17:50
SPEAKER_01: And once you have like uh one of these customers, they are worth much more than just a regular board game player, right?
18:24
SPEAKER_01: Yeah, exactly.
18:26
SPEAKER_01: Yeah, I found a few interesting statistics that I found worth uh mentioning.
18:30
SPEAKER_01: The the the the industry does seem to appear very like fragmented.
18:35
SPEAKER_01: Over 20,000 board game publishers are known to exist around the world as of 2020, so it might be more or less now.
18:43
SPEAKER_01: I mean that's crazy if you think about it.
18:46
SPEAKER_01: And I also found it interesting that insiders expect the strategy and war game segment um to hold close to 70% market share of global board games revenue, uh, which is obviously uh a tailwind for games workshop, if that uh if that is true.
19:04
SPEAKER_02: Yeah, I would agree.
19:05
SPEAKER_02: Um but again, it's so hard to for me to um decide or or have input on the the board game sector or or the the um overall market because I uh as we've already touched on um games workshop was almost standalone.
19:20
SPEAKER_01: Yeah, yeah, I agree.
19:21
SPEAKER_01: I came to the same conclusion.
19:23
SPEAKER_01: There is no real direct competitor at the same scale as Games Workshop.
19:27
SPEAKER_01: Perhaps there's like a very small publisher we don't even know of, uh perhaps.
19:32
SPEAKER_01: Uh I think the closest alternatives would be War Machine, uh Bolt Action, Infinity, I'm uh perhaps Star Wars Legion for those that are fans.
19:43
SPEAKER_01: Uh and I guess the biggest indirect threat could be Dungeons and Dragons, which comes pretty close, I guess, to uh like popularity um wise, but they don't have nearly the same pricing power.
19:56
SPEAKER_01: And I believe it's owned by Hasbro, and they've done pretty well so far.
20:02
SPEAKER_01: And I believe if you go back in history, Warhammer is sort of like based on the story of how Dungeons and Dragons started, but I might be wrong on that.
20:13
SPEAKER_02: Yeah, I think as well, the probably the competition for the future comes from the acquisition of new customers, and actually a lot of these customers could be lost to the likes of World of Warcraft or or League of Legends, and it'll be interesting to see going forward how much Games Workshop intersects with the digital world rather than just purely remaining as a tabletop game.
20:36
SPEAKER_01: Yes, yeah, I think that's I mean, the industry um isn't stuck in the past, right?
20:42
SPEAKER_01: I mean, many of the biggest franchises, Dungeons and Dragons, Warhammer, um, Magic the Gathering, they they are expanding into video games, mobile apps, and pulling in new audiences, right?
20:54
SPEAKER_01: So uh we'll see uh in the opportunities chapter, uh, whether that's one of the opportunities we see as well.
21:01
SPEAKER_01: Uh let's head on over to my favorite chapter of this specific analysis, the uh competitive advantage, because I think this company, before I'll give it away instantly, but this company has an exceptional competitive advantage.
21:16
SPEAKER_01: I mean, anyone could draw that conclusion just by looking at the return on capital employed or the margins they have.
21:22
SPEAKER_01: What do you think are Games Workshop's biggest modes or advantages?
21:29
SPEAKER_02: I think first of all, the the own the world and the IP that comes with it.
21:33
SPEAKER_02: That's not even just the characters or the board games, that's as I mentioned earlier, the Black Library as well, and the narratives around that and even the um the IP that will come into the licensing and that we've that we've already seen a small part of released with the secret level episode with Amazon.
21:53
SPEAKER_02: So in regards to the IP, I think there's a huge competitive advantage there that the company um Is really yet to fully unlock.
22:02
SPEAKER_01: Yeah, the intangibles are a are a huge part of their mode.
22:06
SPEAKER_01: Um, perhaps I would add that switching costs are pretty high for this company.
22:12
SPEAKER_01: I mean, once you're involved in this ecosystem and this storytelling, uh, the amount of time and money you've spent on a game, perhaps you could uh expand on that a little bit because you play or have played Warhammer quite a bit, you said.
22:26
SPEAKER_01: Do you think switching costs are a real thing for this uh company?
22:30
SPEAKER_02: I I don't know if I totally agree, because just purely based on the fact that um I I'm not in regards to the game, um I think there is absolute switching costs when it comes to people who start collecting, but I think with the with the game itself, there there is an element of not just game players, but you might also have collectors, and the collectors can collect right across the field.
22:55
SPEAKER_02: So if we're looking at it purely based on a on an individual who's building their army, switching costs are absolutely there.
23:02
SPEAKER_02: But from a collector perspective, I suppose you you could have individuals who collect right across across the field.
23:08
SPEAKER_02: However, that's not to say that there is, as we've already talked about, there's too many competitors that that these collectors can be buying from.
23:15
SPEAKER_01: Alright.
23:16
SPEAKER_01: I mean, uh we can agree to disagree here, right?
23:18
SPEAKER_01: I mean, you're the expert since you've played the game quite a lot and uh perhaps have a different perspective on it as well.
23:25
SPEAKER_01: Do you think any other company could replicate what they do or and how they do it?
23:31
SPEAKER_02: If we consider the the fact that Games Workshops are a fully integrated manufacturer, they control all of the costs.
23:38
SPEAKER_02: That is part of the reason they have such high margins, is because everything is done in-house.
23:43
SPEAKER_02: Um, there's very little overheads, and with that, they also now control the scale that comes with all of that.
23:51
SPEAKER_02: So even if you consider their molds, um you know whether it be the resin molds or or the plastic molds, these molds can produce hundreds of thousands of models and don't have to be replaced that often.
24:04
SPEAKER_02: Um, in part of my research as well, I found that the molds can be adapted so they can produce multiple variations um of characters or miniatures with very similar types of mold.
24:18
SPEAKER_01: In my um written report I said that Warhammer kind of has a Lego feel, where uh I don't mean that like the the the items are the same, but I feel like if you're very into Lego, you're you're you're going to afford, you're going to be able to to to to pay the extra um you're going to pay the premium, right?
24:42
SPEAKER_01: What what we said about luxury brands.
24:44
SPEAKER_01: And this company kind of has that like that same feeling that if you love Lego, if you love Warhammer, it doesn't really matter if if it's 10 bucks, 20 bucks, or 30 bucks, you're going to pay it because you want it and want to use it.
24:58
SPEAKER_02: Yeah, I would absolutely agree.
25:00
SPEAKER_02: Um the final point I would just add uh as a competitive advantage as well is operational efficiency.
25:08
SPEAKER_02: And I think that ties back into the fact that they're very lean when it comes to the amount of releases they put out and how often they sell out when it comes to products.
25:18
SPEAKER_02: They've not just got a backlog of stock.
25:21
SPEAKER_02: Um, and this is this sort of shift has has happened over Kevin uh Roundtree's lifetime as CEO, and we're starting to see Games Workshop operate as a very efficient business.
25:33
SPEAKER_01: Alright.
25:34
SPEAKER_01: So just to draw a quick conclusion, Games Workshop seems very difficult to disrupt by any other company, uh, through a combination of very strong branding, uh, deep customer investment, whether that's uh like time-consuming or uh or or money-wise, vertical integration, uh their intellectual property, and they have a very dedicated community.
26:01
SPEAKER_01: I mean, that creates a formidable competitive advantage that is very hard to disrupt, it sounds like.
26:07
SPEAKER_02: Yeah, I would agree with all those points.
26:09
SPEAKER_02: And and as an investor in a company, I'm I'm quite happy for those to maintain, you know, long into the future.
26:15
SPEAKER_01: I mean, so many green flags.
26:17
SPEAKER_01: Uh, I'm I'm I'm looking for the the the orange and the red flags, but uh it it's very difficult.
26:23
SPEAKER_01: Um, but I do have a few things to say about the management, so I think um perhaps we can do a quick little jump.
26:31
SPEAKER_01: You already mentioned uh the CEO, I believe.
26:35
SPEAKER_01: What can you tell us about the management team?
26:37
SPEAKER_02: Yeah, so the two standout individuals that for me are Kevin Roundtree, who's the CEO, um, and he has been the CEO since 2015.
26:47
SPEAKER_02: He's influenced a lot of the strategic decisions, and all you need to do is is go back to 2015 and look at the revenue growth and the stagnation of the company.
26:59
SPEAKER_02: And you can now obviously he had the the boost with COVID, which certainly helped with people being at home, but that growth has maintained and that efficiency has certainly maintained as well.
27:11
SPEAKER_02: So I think he's an absolutely excellent CEO.
27:14
SPEAKER_01: Yeah, and just uh to add to your uh story of the CEO, I think he he looks like a great CEO.
27:19
SPEAKER_01: Um he's been there for uh over 25 years already, so uh he he knows the ins and out.
27:25
SPEAKER_01: When looking, I always look back into other annual reports.
27:29
SPEAKER_01: I al I love reading like from uh from 2024 to uh say 2014 just to see what they're saying and what uh whether the the tone changes.
27:40
SPEAKER_01: And I found this piece in the fiscal year 1415 annual report.
27:45
SPEAKER_01: This was the year that Roundtree actually took over the day-to-day running of the company, and I found this quote uh from the previous CEO, and I I just it it's one of the best things I I found.
27:57
SPEAKER_01: I highly recommend uh the people listening reading this on page 14 and 15 of our report.
28:03
SPEAKER_01: I'll make sure to share it with uh Sonny as well, so um your readers um can uh can read this as well.
28:08
SPEAKER_01: And I quote The Great Master Plan continues cutting costs, becoming more efficient, providing excellent returns on capital.
28:16
SPEAKER_01: We do not set out to pay dividends, we set out to run an efficient company that uses money wisely.
28:22
SPEAKER_01: We are doing that well that when we have more money than we need, this becomes your dividend eventually.
28:28
SPEAKER_01: One bit of the Great Master Plan remains stubbornly unrealized sales growth.
28:34
SPEAKER_01: I mean, they they said this in 2014-2015, and they admit that revenue growth is uh is lacking.
28:43
SPEAKER_01: And if you just go back to today and look over uh at the past 10 years, I mean revenue growth has been going at like 18% kegger.
28:51
SPEAKER_01: Uh so I mean it was just funny that I read this where they said revenue was stagnating, and uh 10 years later it grew at an 18% kegger.
29:01
SPEAKER_01: I mean, who would have thought, right?
29:03
SPEAKER_02: And they certainly had the boost from um from COVID as well, which was a massive help because if you if you compare sort of pre-COVID and post-COVID, but what's been fascinating to watch is that growth has largely maintained as we've came out of lockdowns.
29:19
SPEAKER_01: Yeah, COVID was a tailwind for them.
29:22
SPEAKER_01: Uh I said that I found like a it's not a really a red flag, but it is an a yellow flag.
29:27
SPEAKER_01: The low insider ownership of the company, um, it's not worrisome, but it does raise some question marks.
29:36
SPEAKER_01: There is no long-term incentive plan, for example.
29:39
SPEAKER_01: They don't uh there is no long-term share awards program, which is pretty unusual for a uh uh such a large company, and bonuses are entirely discretionary, so rather based on predefined performance targets, it's uh it's discretionary.
30:00
SPEAKER_01: It's it's not a red flag, it's a European country, so they're they're a bit more conservative compared to like uh US companies.
30:07
SPEAKER_01: But I mean I had to try and find something that I didn't like about uh about the business.
30:12
SPEAKER_01: So if if this was the only thing I could really find that uh that I perhaps didn't like, and the low it's uh they have a pretty low insider ownership, around 2 million and uh 500,000 pounds.
30:26
SPEAKER_01: So it's I mean it's something, it's but it's just like 1.3 times base salary or three times base salary, which is um not per se a red flag, but it's not a lot, if you ask me.
30:38
SPEAKER_02: Yeah, I would agree.
30:39
SPEAKER_02: Um, I think with uh Kevin Roundtree in particular, I think his share ownership is about um 0.046% when I was doing my research um of outstanding shares.
30:52
SPEAKER_02: And it it was interesting because it wasn't until I I was doing research for this podcast that I was fully aware that the um share option scheme was so whacking for me.
31:05
SPEAKER_02: Uh the I had I always always thought Kevin Roundtree was actually selling his shares every year, but uh but it turns out he's actually just not been rewarded with with many shares, um, and his his bonus is only based on um as a cash bonus rather than share options.
31:21
SPEAKER_01: Yeah, one could argue, I mean, uh, that that that's the right thing to do for a company like this that is so like uh put all their effort into like intellectual property.
31:31
SPEAKER_01: So I I don't really know what incentive you would choose if you had to pick an incentive for this company.
31:37
SPEAKER_01: Uh we'll get to the KPIs later, but I don't think this is a red flag.
31:42
SPEAKER_01: It's just uh uh I'm just nitpicking, I guess.
31:45
SPEAKER_01: I just I'm just looking for something that uh I don't really like.
31:48
SPEAKER_01: Uh let's see if the competitive advantage and the management translates into good financials.
31:55
SPEAKER_01: Before jumping in into the financials, I would like to remind you that listening to the financials is pretty difficult.
32:01
SPEAKER_01: So we will keep this to the point.
32:04
SPEAKER_01: If you want to truly understand the ins and outs of this um financial analysis, I would recommend you checking out the written report or check out Sonny's uh Substack, uh Secret Source Investing, about the financials of Games Workshop.
32:18
SPEAKER_01: And this together contains all the necessary information, graphs, um images to fully comprehend the numbers behind Games Workshop.
32:27
SPEAKER_01: I already gave a little sneak peek on their exceptional returns on capital and margins.
32:33
SPEAKER_01: Could you tell us what investors really need to know about Games Workshop's financials?
32:40
SPEAKER_02: So just over the top line, revenue recently is growing about 10% per year.
32:46
SPEAKER_02: Uh gross profit for me is I I've referred to it in my substack three years ago, and I still think it's the same, is like a software margin.
32:54
SPEAKER_02: It's about 70%, and operating profit sits around 35%.
32:59
SPEAKER_02: Games Workshop typically pays out about 75% of their income annually as dividends.
33:06
SPEAKER_01: Yeah, that's a great overview.
33:08
SPEAKER_01: I believe operating margins have increased to around 41% by now, so that would make you excited as a shareholder, I suppose.
33:16
SPEAKER_01: I mean, this is software-like profitability, which is incredible for a physical goods company.
33:23
SPEAKER_01: It's uh it's unbelievable.
33:25
SPEAKER_01: They have uh basically zero debt, a very strong balance sheet.
33:30
SPEAKER_01: I mean, what is there not to like about their uh about the financials, right?
33:35
SPEAKER_02: Yeah, the um, and I'm sure we'll come on to it, but the ROCE is is unbelievable for for what is effectively a manufacturing company, um, where that sits at in their in their most recent report, I read it at about 176%.
33:51
SPEAKER_01: Yeah, why why why is there ROC why is there ROCE so high, do you think?
33:57
SPEAKER_02: Effectively, this is a a capital-like business with incredible gross margins.
34:03
SPEAKER_02: So because the because there's so little debt as well, and the operating profit is so high, it just lends itself to this huge return um on ROCE.
34:13
SPEAKER_01: Yeah, and they own the entire value chain, right?
34:16
SPEAKER_01: So there's no real reliance on third parties, they have a minimal reinvestment rate, uh, they focus on profitability over aggressive expansion, so all of this combined gives them like this unbelievable 75% plus ROCE, which is unbelievable.
34:33
SPEAKER_01: I I I it's it's very rare you see these returns on capital.
34:38
SPEAKER_01: Regarding capital allocation, they don't do any merges or acquisitions uh that I'm aware of, they don't do any buybacks, uh, which makes sense, but we'll get to the valuation later.
34:51
SPEAKER_01: But I I don't disagree there, they're not doing any buybacks uh at this current valuation.
34:56
SPEAKER_01: They focus on organic growth, yeah.
34:58
SPEAKER_01: They have a pretty high dividend payout, so most of their capital allocation goes to a dividends, yeah, and reinvest selectively into retail expansion and licensing deals.
35:08
SPEAKER_01: So since you're a shareholder, uh I'm very curious to know what KPIs do you track um for Games Workshop.
35:17
SPEAKER_02: So typically I have tracked revenue growth.
35:21
SPEAKER_02: Um for me, gross margin as well is quite an important one, important one.
35:26
SPEAKER_02: Um and then largely operated margin if we if we consider those.
35:31
SPEAKER_02: Um I would potentially like to see I I think the strategy has a has a finite life cycle for continually paying out dividends, and I'm curious at some point if if that's going to come back to bite them for not retaining more capital or reinvesting in the business more, or alternatively even buying back shares.
35:58
SPEAKER_01: Yeah, well, I mean, time will tell, right?
36:00
SPEAKER_01: Uh who knows?
36:01
SPEAKER_01: Uh so far they've been pretty successful, but uh it's it's a fine line they're walking on, right?
36:06
SPEAKER_01: So uh I would I would add perhaps licensing revenue would be pretty uh well not exceptional, important, but fun to track because I think that's where a lot of growth can come from.
36:18
SPEAKER_02: It's a point um that reflects really positively on the management as well, is that I really enjoy reading games workshops updates and annual uh releases because they are pretty straightforward and easy to understand.
36:32
SPEAKER_02: They're not trying to hide complexities, um, and I really enjoy the fact that they always separate out the license and revenue, um, so they don't include this as core revenue, and I have no doubt that that that will increase going forward, but it's really a it's a green flag for me, the fact that management don't consider that as repeat revenue or recurring revenue.
36:53
SPEAKER_01: I agree, absolutely agree.
36:55
SPEAKER_01: Uh, and perhaps, but it's it's a bit difficult to measure, I suppose.
36:59
SPEAKER_01: But I would say customer engagement is a very important uh KPI.
37:05
SPEAKER_01: I don't really know how you would track that, uh, other than perhaps looking at the Warhammer plus subscribers, the community activity, perhaps hearing from what players have to say on the company.
37:18
SPEAKER_01: But I mean, if if customers become um less engaged, that's going to be a huge problem for them, I suppose.
37:27
SPEAKER_01: And I I believe they are also tracking, uh, and with they, I mean Games Workshop, uh, they they have their own KPIs, they also track the numbers of uh company-owned stores and the the uh third-party retailers how many they have um like deals with, but I think that's uh that's the gist of it.
37:45
SPEAKER_02: Yeah, and just uh a point on that as well is another KPI as well that's interesting is the number of stores they're opening, but they have stated in their annual reports that if stores stagnate or profitability declines, they will slow their store openings.
38:00
SPEAKER_01: Alright, great points.
38:02
SPEAKER_01: Uh, I think we we touched on this a little bit so we can keep this pretty short and brief.
38:06
SPEAKER_01: I would love to know uh your biggest threats for Games Workshop.
38:13
SPEAKER_01: Um, I'll see whether I can add anything or uh agree or disagree anywhere.
38:17
SPEAKER_02: So with Games Workshop, we're almost in uncharted territory when it comes to revenue growth because pre-COVID um we didn't have this ongoing revenue games workshop had largely stagnated before Kevin Roundtree took over.
38:32
SPEAKER_02: With that as well, I think there's still an element of being a hit-driven business, despite it not being as obvious anymore.
38:41
SPEAKER_02: With the margins, as we've already touched on and keep referring to, they are so strong.
38:46
SPEAKER_02: But at some point, is Games Workshop going to be guilty of price gouging customers, and then what's the backlash going to be with that?
38:54
SPEAKER_02: Um, with the customers as well, the engagement is so important, and they need to ensure that as we saw previously to Kevin Roundry joining the business, the rules were overcomplicated, it was putting people off.
39:07
SPEAKER_02: Again, culture is very important, as we've touched on.
39:10
SPEAKER_02: If if there's a toxic gatekeeper in this one in or one person store, it could put off new customers from joining as well.
39:18
SPEAKER_02: Um, in regards to other risks for me, um, I think there is there's the fact as well, we're seeing so much growth in trade, and games workshop has been such a strong business because they control so much of the stack.
39:33
SPEAKER_02: Whereas if the if the products are released more into the trade and there's more growth there, then suddenly you may have managers of stores or or retailers who don't know as much about the product or or aren't as knowledgeable.
39:47
SPEAKER_02: Um and I think even if we if we make a comparison with with Nike recently, we've seen Nike trying to bring um bring sales back in-house with with a lot of their direct sales.
39:58
SPEAKER_02: Um so I think that is a potential risk that in pursuit of sales to um push more into trade, they'll lose control of the brand, the customer, and the and the engagement.
40:10
SPEAKER_02: Um I think in regards to my last point as well for for risks is if IP is poorly managed, all you need to do is you need to go through Metacritic and look at the look at the games that have been released with with Games Workshop titles or Warhammer, and they're largely poorly reviewed.
40:28
SPEAKER_02: The the fact that I think it's about 70% of their licensing revenue comes from um from um games or from um like PC and computer games shows that that's a really important part.
40:42
SPEAKER_02: Um and I think fortunately Space Marine 2 came out not too long ago and has been largely positively received, but that's not always a guarantee if they're again they're not in control of the IP and it could leave a bitter taste in customers' mouths.
40:56
SPEAKER_01: Purely out of curiosity, do you think uh Games Workshop could ever diversify into other intellectual property?
41:03
SPEAKER_02: That is that's a very difficult one.
41:05
SPEAKER_02: Um, and I think it's it's interesting because they control so much of the stack, but at the same time, they obviously recognise there's certain areas they're not the experts in when it comes to how they how they license their IP.
41:20
SPEAKER_02: However, as we have seen, uh they have Warhammer Plus, the model that generates about£5.99 or£5.99 here in the UK for a customer.
41:29
SPEAKER_02: And I think uh correct me if I'm wrong, there was about 176,000 annual subscribers or subscribers.
41:37
SPEAKER_02: Um, so they're they are expanding into different segments of of digital.
41:42
SPEAKER_02: So I don't know if they'll they'll necessarily move in completely different areas, but they are obviously testing that and it seems to be working.
41:50
SPEAKER_01: I I mean there's not much I can add here.
41:53
SPEAKER_01: I I would absolutely agree.
41:54
SPEAKER_01: I think the absolute biggest risk is the fact that they have no uh, I mean, it's the over-reliance on Warhammer, it's it's the biggest opportunity, it's this biggest risk at the same time.
42:05
SPEAKER_01: What do you think of 3D printing?
42:09
SPEAKER_01: Would you say perhaps that that is a like a risk?
42:12
SPEAKER_02: It's funny because in preparation for this podcast, I looked into that and it's not something I ever considered.
42:18
SPEAKER_02: For me, I think in the UK, especially where we have maybe so many Warhammer stores, it's almost like comparing uh, again, if we move back to the luxury handbag sector, if you have a luxury handbag versus a counterfeit luxury handbag, even if to the person on the street who you know maybe it looks similar, you will still know the difference.
42:39
SPEAKER_02: And for me, I I don't feel that we'll ever reach that point where, well, first of all, 3D printers are necessarily mainstream, and then off the back of that, there's a massive risk.
42:50
SPEAKER_02: I think where the risk with 3D printing actually comes in is probably through counterfeiting, um, and especially that comes back to the point we made about a lot more reliant on trade.
43:00
SPEAKER_02: So if trade customers are buying counterfeits and then selling them and trying to pass them off as Games Workshop products, that's certainly a risk.
43:08
SPEAKER_01: Yeah, it was a bit of a rhetorical question.
43:11
SPEAKER_01: I I I knew you were going to say this.
43:13
SPEAKER_01: I I would I will make the comparison to Lego again, right?
43:16
SPEAKER_01: I mean, if you're a Lego fan, you're not going to 3D print Legos just to make a cheap version of, I don't know, the Ival Tower, right?
43:24
SPEAKER_01: I mean, you're a fan of Lego, you're a fan of Warhammer, you're just going to buy the the real brand.
43:29
SPEAKER_02: So I think my my last point as well that is a risk is we have seen how strong a manager Kevin Roundtree has been and how strong a CEO he's been for the company.
43:40
SPEAKER_02: Um I think because the company generates such a high level of income and has stuck to that same strategy of paying out income as dividends.
43:50
SPEAKER_02: I'd be curious if there was a new CEO brought in and they decided to change that strategy, would it be for better or for worse?
43:59
unknown: Yeah.
44:00
SPEAKER_01: I don't know.
44:00
SPEAKER_01: Um great question.
44:02
SPEAKER_01: It's something to keep track of if you're a shareholder or uh if he ever decides to leave, right?
44:07
SPEAKER_01: Uh I don't I haven't really read anywhere he's uh he's going to leave anytime soon, but that's definitely a long-term uh risk.
44:14
SPEAKER_01: Would you uh kindly expand on some of the opportunities for Games Workshop?
44:20
SPEAKER_02: I think the opportunities are again based around the IP.
44:25
SPEAKER_02: Uh have you have you watched Secret Level on Amazon Prime?
44:28
SPEAKER_02: Uh I have not uh yet, no.
44:31
SPEAKER_02: Uh so these are just like short stories, but anyone who's watched Love, Death and Robots on Netflix, it's by the same creators.
44:38
SPEAKER_02: Yes.
44:38
SPEAKER_02: And and I I just I watched it without even knowing that there was any reference to Games Workshop or Warhammer 40,000 in the uh in the in the series, so I was quite positively surprised.
44:49
SPEAKER_02: Um but it was nice to see that.
44:50
SPEAKER_02: I suppose that's the first piece of the unlock with with Amazon and the partnership that has came about uh previously.
44:57
SPEAKER_02: So for me, I think the sh the opportunities lie around the unlock of the IP, the fact that obviously Henry Cavill, um Superman, he has obviously he's a big fan of Games Workshop and he seems to have some involvement in this reported cinematic universe, which is going to have a TV series around Warhammer 40k as well.
45:18
SPEAKER_02: So I think one of the risks we talked about was potentially struggling to replace our uh older customers and struggling to replace them with new customers.
45:27
SPEAKER_02: But actually, if we can access them through media through Amazon Prime, then that's a huge opportunity.
45:34
SPEAKER_01: You know what I found difficult about this company was estimating or calculating where the limits are for this business?
45:42
SPEAKER_01: Can they still grow in Europe?
45:44
SPEAKER_01: Uh the answer is probably yes.
45:46
SPEAKER_01: Um, I they can still grow a lot in Latin America and Asia, since that's like a tiny part of their revenue.
45:54
SPEAKER_01: But at what point does opening more stores not really contribute to getting new um fans, customers?
46:07
SPEAKER_01: I found that very difficult.
46:09
SPEAKER_01: Uh so I do think the digital expansion, like you said, into games, into movies, uh, perhaps some subscriptions, uh is a huge um like tailwind or some uh opportunity uh rather.
46:24
SPEAKER_01: But I found the the like the estimating where the the the limits are for this company to be very difficult.
46:31
SPEAKER_01: I mean, is there anything you you can you can tell about us about that or have you ever thought about it?
46:37
SPEAKER_02: I would just say I probably agree that because Asia in particular looks to be a huge opportunity, but just purely because the company does not sell there, but actually the culture can be quite different in Asia, and it's not to just guarantee that there's an opportunity to open more stores and or to sell more product.
46:57
SPEAKER_02: Um, however, I would I I do think there is still the opportunity to scale up when it comes to production, but at what point again do they lose control of either production facilities or does it then have to there is there a new facility created out in Asia, and again that's a bit of loss of control because things have been done for so long in the UK.
47:20
SPEAKER_02: Um, and then you know, is there a risk of counterfeiting as we've already talked about?
47:25
SPEAKER_01: Alright, yes, I think that uh tops up uh risks and opportunities.
47:29
SPEAKER_01: Uh I don't really have anything to add here.
47:31
SPEAKER_01: I think you uh mentioned the most important ones on uh risks and opportunities.
47:37
SPEAKER_01: Let's head on over to uh like the valuation.
47:40
SPEAKER_01: The PE seems to be historically high, uh, but it has come down a little bit from uh post-COVID.
47:48
SPEAKER_01: I mean, the market recognizes the quality, right?
47:51
SPEAKER_01: I mean, the pricing power and profitability.
47:53
SPEAKER_01: Uh I found it very difficult to value this company since I mean how much more can they squeeze out margin-wise?
48:01
SPEAKER_01: Uh at what point do they decide that they have perhaps they have to perhaps lower prices to get more new customers or um not to lose any current fans or customers?
48:15
SPEAKER_01: So I I kind of left things at what they are right now, where they don't really squeeze out any more profits, but they don't really lower prices either.
48:24
SPEAKER_01: Uh, I do think they still can grow revenue since there is a like a few tailwinds they operate, they still have quite the growth path.
48:32
SPEAKER_01: Yeah, I I started at like 10% revenue growth and then dropped it down to uh eight and then to six over time.
48:39
SPEAKER_01: Uh I used the 10-year scenario analysis we we use for the Dutch investors just to get a rough idea of uh of the value.
48:47
SPEAKER_01: I I kept the margins the same and I arrived at a IRR between uh seven and ten percent, which is I guess reasonable, but I don't know.
48:58
SPEAKER_01: Uh what do you think of the valuation?
49:01
SPEAKER_02: So I for my valuation I also uh went for a 10% IRR, but I I was maybe more generous and left it at 10%.
49:10
SPEAKER_02: Um, and with that for me, um in my DCF calculation as well, I had the valuations sitting at around about£120 a share, um, which were slightly above that just now.
49:24
SPEAKER_02: But that it seems reasonable.
49:26
SPEAKER_02: It I don't think it's necessarily aggressively overvalued, but for me, if I was to buy more shares in Games Workshop, I'd certainly be waiting for a pullback down to you know possibly about£70 a share.
49:39
SPEAKER_01: Absolutely agree.
49:40
SPEAKER_01: That's basically uh basically the same I uh I said as well in my uh in my report.
49:46
SPEAKER_01: It it seems very simple, very easy to understand.
49:51
SPEAKER_01: I feel like it's within my circle of competence.
49:54
SPEAKER_01: I feel like I can keep track of this company.
49:57
SPEAKER_01: Uh there's there's a lot of things to like about this business.
50:01
SPEAKER_01: I mean, there's still a lot of growth.
50:03
SPEAKER_01: Yeah, it's it's difficult to say.
50:05
SPEAKER_01: Uh what would you what would make you sell Games Workshop aside from valuation?
50:11
SPEAKER_02: Um I think for me um with Games Workshop, it's tricky.
50:16
SPEAKER_02: I think if there was a stagnation in revenues um or a real loss in gross margin, I'd be quite concerned.
50:25
SPEAKER_02: Beyond that, it would be things like fan engagement if there was a real pushback or backlash um from fans, and obviously if there was a deterioration in the culture around the company as well.
50:37
SPEAKER_02: Um, and then lastly, because he's he's sort of such a linchpin, if if Kevin Roundtree did leave, I would keep quite a close eye on who his replacement was and what style they they plan to implement for the company.
50:49
SPEAKER_01: Awesome.
50:50
SPEAKER_01: Thank you for uh for sharing that.
50:51
SPEAKER_01: I I I think I agree uh on all your points there.
50:55
SPEAKER_01: Is there anything uh any closing thoughts on Games Workshop before because I think this was a great analysis, but perhaps you have any closing thoughts?
51:03
SPEAKER_02: Um I just think it's it's probably points we've already touched on is that they're a fascinating business because they own the IP of a world that they've created.
51:12
SPEAKER_02: Um they they vertically uh manufacture of the goods, they have software style margins, and again, touching uh reflecting back on the annual reports, there's a bit of a no-nonsense style about how they present to present to investors and shareholders.
51:31
SPEAKER_02: As a company, I know they they hold their IP in quite hard high regard, but I I also as a shareholder have I'm an owner of of Disney and Nintendo, and I think Games Workshop falls into a similar bucket.
51:46
SPEAKER_02: Uh it'll be very um interesting in regards to how the how the Amazon partnership plays out because it's such a unique business, and I'll be keeping a close eye on that.
51:55
SPEAKER_02: Um I'd certainly recommend that that anyone who's listening to this podcast um or yourself watches Secret Level and it's only it's only 15 minutes and it's quite an entertaining uh 15 minutes for uh a nice uh point of Warhammer 40k.
52:11
SPEAKER_01: I would like to thank you so much for uh sharing your thoughts and information on Games Workshop.
52:18
SPEAKER_01: Uh, I would highly recommend our listeners to subscribe to Secret Sauce Investing over on Substack.
52:24
SPEAKER_01: Um is there anything any anywhere else they can find you or is it mostly Substack?
52:30
SPEAKER_02: Mostly Substack.
52:31
SPEAKER_02: Uh, I think my intention, based on all the research and notes I've pulled together, would also be to put out a bit of an update on Games Workshop in the sort of coming weeks or or month.
52:40
SPEAKER_01: I'm looking forward to that.
52:42
SPEAKER_01: I I would love to get you uh on the podcast again sometime.
52:46
SPEAKER_01: Perhaps we can analyze a uh a new business together or we can choose one of the businesses from your portfolio.
52:53
SPEAKER_01: Uh again, we'll see.
52:54
SPEAKER_01: Uh we'll see.
52:56
SPEAKER_01: Uh thank you again for being here, sharing your thoughts, and uh we'll talk later again.
53:01
SPEAKER_01: Great, thank you very much for having me.
53:02
SPEAKER_01: Absolutely, thank you so much.