Snowflake Sparks a Software Rally and What I Learned from Dan Loeb This Week

**Colin Santucci** (0:00)
Welcome to the Rigatoni Capital Podcast. I'm your host, Colin. It is pre-market Friday, May 29th. Sunny, beautiful day on Wall Street. Tech stocks, Dell, Dell Technologies up like 30 percent. Snowflake was up like 30 percent. MongoDB was up something like 30 percent. What is going on in the market today that we have tech or software beading, and then we have a huge type of squeeze or huge run up in the stock price? I don't understand that. But I tried to do a little research for you guys, so we can discuss it a little bit. It's great for me who owns Palantir. Palantir was up 10 percent yesterday.
So, AppLovin is up well over $600 a share. I mean, what the heck is going on? So, before we talk about software, let's talk about this tweet I see from Divindology. Divindology. I don't know how to pronounce that. Caterpillar. Their annual return since 2019, guys. Pretty much between the year he shows 2019 through the year 2024, you're getting like high teens. You're getting about what? 18% returns annually, 15%, 20%. That's the type of annual return you're getting in Caterpillar. Really strong performer, but it's not like crazy performance, right? And then, bang, 2025, you get 60% return annual. 2026, you get a 59% annual return. So right there, you have this huge liftoff hockey stick type of move. And, you know, he's saying or she's saying, this isn't normal. This isn't normal. But, you know, I would argue that this makes sense, of course, because we're kind of in like a super cycle Caterpillar. I'll be the first to admit I've owned it since 2016 I understand the business very well.
The business has always been strong.
Few reasons why is because, you know, there's boom and bust in terms of infrastructure programs around the world. And usually that's infrastructure from the government. It's government funded. And it's an infrastructure bill that can happen in any country around the world. And Caterpillar would be Caterpillar equipment would be shipped there. So it's a big export stock. OK, so Caterpillar, if the dollar drops, we export even more because, you know, customers across the country, across the world think they're getting a better price based on just currency. And, of course, you had the last 10 years, us hoping for some kind of infrastructure bill. We kind of got one there, here and there. You know, these big infrastructure bills, Democrats and Republicans both wanted to do this. And that was really the reason to own it was to hope for some of these cyclical infrastructure bills that would be passed through Congress. So that was the story on Caterpillar. Now, back in 2016, I don't remember the year, maybe it was 2017 They had some problems there, some drama, some ethical issues, if you recall, some accounting issues, stock dropped really hard. I bought more.
Caterpillar has been a stock I've owned for 10 years and the dividends just reinvest. I'm up about six times my original investment. So I'm continuing to hold it during this timeframe, knowing that it's a super cycle. We didn't expect this as investors, that we would have a refined rare earth shortage due to China, maybe with export controls. And we didn't realize central banks around the globe would be hoarding gold and that is good for the miners and that therefore, caterpillars need it to mine gold, silver, diamonds, refined rare earths, whatever it is, caterpillars, a player and across the globe that way. And then you have also a cyclical business in the data center infrastructure as well. That's kind of tied in because we have a raw earth shortage as well. We need raw earths to build out the electrical equipment for the data center. So it's all everything's tied in. And if you understand caterpillar, you understand that that was always a growing segment for them. They call it like the rare earth segment or something. I can't remember it. And they discussed that back in 2024 And I wrote to my Substack newsletter subscribers. At that time, I didn't have any because I was just starting to write the Substack thing.
The reason I started Substack was for that reason. Because I thought that Caterpillar was a buy. So I wanted to like, instead of having people randomly ask me like, hey, what stocks do you like? Because friends do that with me sometimes. And I give them a quick opinion. Now I could just write to all of them at once. That's how I started. My family, my friends, they want to talk stocks. But I have to answer them all individually throughout the week. And this way, I can just send out a newsletter to all of them at once. That was perfect. But Caterpillar was kind of like me pounding on the table saying, you know, I recommend this stock due to AI and a potential data center infrastructure build out. At that time, we didn't know that we were going to see this type of data center build out with the Mag7 fueling it. I didn't know that at that time. This was 2024 So, like, ChatGBT, it was not even, it was just starting to, let's just say Enterprise wasn't really getting involved with AI and the Mag7. We didn't know that the data center build out was going to be this big. But we knew that the Rare Earth segment seemed to be growing. So, like, we could be, you know, we all agreed that because of data centers, we would have some kind of cyclical theme here for Caterpillar. And boy, did we get it, right? We got an unbelievable, this unbelievable super cycle thing happen. And so is it this isn't normal, they say. You know, I would say this is normal. This is what I would expect. I would expect Caterpillar to... Oh, we didn't even talk about the gas turbines that can keep the data center powered.