GOOGL & UHAL: Two Sides of Value Coin Seen by Molly Pieroni

**SPEAKER_1** (0:00)
So for more on these stocks and the recent performance from both of these names, we are joined by Molly Pieroni, President of Yachmin Asset Management. Molly, great to have you with us. Now, U-Haul's where we'll start, best known for, of course, its truck rental business, but you've argued that the market is missing the value of its self-storage segment. And so why do you believe that investors are perhaps not properly recognizing what those storage assets are now worth?

**Molly Pieroni** (0:24)
Great, it's a really great story. We've found U-Haul for lots of years, and we all know U-Haul with the trucks that you all showed on the trailer before, where we move from place to place when we switch apartments or have a family change of some sort. But they do have also a self-storage business that you've seen as you drive around, and sometimes they're co-located where they're trucking facilities. But because they produce their financials in a way that doesn't break out this line of business element quite so clearly, often they get thrown in together.
The self-storage business is actually, we think, worth the entire market cap of the company based on comping it to a recent acquisition in the self-storage space of the number five player, and you get the trucking business essentially for free. We think that the families, it's the family-controlled and owned business, they're oftentimes making capital investments that are very long-term in nature as business owners themselves. We at Yachtman really like companies that have this type of long-term investment, because you end up being able to make capital allocation decisions that are really good for the business long-term.

**SPEAKER_3** (1:34)
Maybe not as exciting as some of the AI names, some of these high beta infrastructure plays, but certainly a business that has stood the test of time and has a little bit more of a consistent way about it. When you look at its performance over time, is it a little bit more cyclical in nature? Is it going to be exposed to the economic cycle?

**Molly Pieroni** (1:57)
Yeah, great question.
We've done the math on what has hit this company over time in terms of the cyclicality of moving. Oftentimes, people think it's also tied to housing starts. But the fact is, most people who do it yourself moving, are moving from apartment to apartment, or they're going to college, or they're having some other life change type of event. It's actually very counter, it's not even cyclical at all. It's something that even during COVID, the only issue they had was for Texas base, a lot of the trucks wound up leaving California, so there's a little bit of load balancing you had to think about. But it's definitely a company that we think is very defensive against any cyclical risks as well as AI. There's not too much you can think about with AI that would impact the truck rental and storage business.

**SPEAKER_1** (2:52)
When you look at the growth profile, how do the truck rental and self-storage businesses complement one another and which do you see perhaps creating the most value over just the next several years?

**Molly Pieroni** (3:03)
Yeah, I think we're encouraging the company to go ahead and start producing financials that would allow us as investors and other investors, importantly, to be able to see that more clearly. Because if you think about the way we were set up on Wall Street, we have analysts focused on self-storage reits, and this is not a self-storage reit, even though it's in the top five of the self-storage reit market.
It's not a trucking company solely because, of course, they have the other business. I think even just simple things like releasing financials that break out the line of business elements would be a really big step in the right direction. Then you get to look back to the capital allocation side. When you start to build a self-storage facility, there's a lot of capital you have to put in the ground before you ever take rental dollar one into the facility. We have a business that is now on the upswing, now that they've built a bunch of the properties. It's a lot of upside from here that wasn't recognized in the way the financials have been produced by the company.

**SPEAKER_3** (4:02)
Then let's shift gears here, I guess, no pun intended, something completely different. One that really hasn't been questioned a ton over the last few decades until recently, and that's Alphabet. Now, a big part of the discussion is just the extraordinary amount of investment that they're making, and that they've had to tap equity markets, tap debt markets a little bit to finance this. I'm guessing since it's here, it's on your list, that isn't scaring you away.