Hey, I'm Cramer. Welcome to Mad Money. Welcome to America, other people, my friends. I'm just trying to make you some money. My job is not just to entertain, but to educate, to teach you. So call me at 1-800-743-CNBC or tweet me at @JimCramer.
We had a dramatic turnaround in stocks today when oil, which spiked to $120 overnight, plunged to the mid-80s in the afternoon after President Trump said just before the close, 'The war is very complete.' Pretty much. Okay. Wall Street was getting very antsy about the war with Iran. So buyers lapped it up when the White House signaled that they want to wind this thing down. A day ago, we were talking unconditional surrender. This afternoon, the president was crafting a one-sided, separate peace.
Unfortunately, it might not be a decision the United States can make on its own. You need to get the Iranians on board. It won't be truly safe to buy stocks until the Strait of Hormuz is open to traffic. There could be no missiles coming at the tankers. There could be no more attacks on oil infrastructure, desalination plants. If that happens, we are going to go higher. It would allow us to build on the rally that occurred from the bottom today, with the Dow ultimately gaining 239 points, the S&P advancing 0.83%, and the NASDAQ jumping 1.38%.
But despite the extremely bullish close with oil cascading lower, it's possible we may not be out of the woods. Look, it's a tall order for the war to be over. But if you want stocks to go higher, you better hope it is. That's because every short, sharp run in oil prices takes a wrecking ball to the stock market. I can tick off the declines of stocks when oil goes up more than 100%. But trust me when I say that every time the S&P 500's fallen 20% or more, dating back to the Yom Kippur War in 1973, oil's been involved.
1973 was when OPEC slapped an embargo on the United States, causing a 170% spike in crude and therefore a more than 45% decline in the S&P 500. There are many similar advances in oil and subtractions in stocks through the years. They all have a similar theme: oil goes up, stocks go down. Can the war pretty much be over? The president said this afternoon. Is peace about to break out? Which is right? The spike in oil last night or the plummet in oil this afternoon? You know, it's hard to say. But you know what? I found another way to think about it. I'm going to give you four things that need to happen, no matter what, before this situation can go back to normal. And remember what normal means.
First, both sides actually must stop attacking oil facilities and desalination plants. If Israel attacks an oil depot, which they did, and I don't really understand why, then Iran will attack the oil fields of Saudi Arabia, Kuwait, and the United Arab Emirates. Terrible. That's going to lead to much higher prices because it's literally knocking out production. As for the desalination plants, water is in such short supply in the Middle East that going after those plants practically guarantees that large numbers of civilians will die of thirst. No reason for either side to escalate that far.
Second, there's got to be this acceptance by Iran that the Strait of Hormuz must be free of attacks, of mines, of swift boats, and of drones, or the war just won't end. Think of it like this: the worst-case scenario for commerce has already happened. The place that touches 20% of our oil is shut. Our government can offer insurance, but as long as the Iranians are targeting oil tankers that attempt to cross the strait, nobody's going to take us up on that offer. And from our end, well, you can't really beat it. We always knew that if the Iranians wanted to, they could close the strait. Didn't we have a plan? I mean, I really hope there was a plan, but for the life of me, I can't figure out what the plan was.
Third, not only does the Strait of Hormuz need to be open, it needs to be open soon. Because when you shut an oil well, like many of these countries are, it might never return to the previous level of operation. You can't just flip a switch and make the well work like it did before. The faster we get them up and running again, the less long-term damage there will be to production.
And fourth, the US and the Europeans must start letting oil flow from the reserves, even if the president says the war is winding down. Oil's too high. But then the US has to pledge to fill it back up after the draining occurs and oil's lower. It turned out that all our Permian oil, thought to be the savior of our independence, didn't really mean anything to the global oil markets. It's all committed. There's no swing factor to the Permian, but the Strategic Petroleum Reserve does slow things down, and it lets the market catch its breath, which is what's needed in these situations, or we wouldn't have been squeezed all the way up to 120. It keeps away the sudden short squeeze like we had in London last night because it brings out other unexpected production.
Now, today was an important day. It showed you that when oil's in reverse, you get huge buying in what this semiconductor stocks like Broadcom, Micron, and Nvidia buy.
It's an amazing thing to see because there was no catalyst today. Just a sense that, well, you're being given one more chance to get in before the data center theme takes off again. Under any circumstances, I would wait to see how Oracle acts. If you go on to find out about data centers, Oracle has made itself the king of the data center. It's the fastest grower in the space. We need to hear that there's still tremendous demand for data centers from more than just the hyperscalers, and that new chips from Nvidia are going to be fabulous. Oracle can help us with that.
Hey, by the way, the rally in GE Vernova, builder of the turbines, gave me hope that this fabulous theme continues unabated. Unfortunately, we also saw the continuation of another theme that the banks are struggling to rebound with the averages, no doubt more related to having supported private credit funds where they could be burned by collapsing software companies. The banks won't be presumed guilty until proven innocent. They, of course, aren't all that weak. But we don't know who has lots of private credit exposure to software companies that are going to be eviscerated by Anthropic and ChatGPT.
Right now we're dealing with pretty much of a zero-sum situation. When Anthropic and ChatGPT talk about their growth rates, with OpenAI's annualized revenue rate up 17% just since the end of last year and Anthropic doubling in the same period, it's important to recognize these revenues come from somewhere else. If ChatGPT is $25 billion in annual recurring revenue and Anthropic's at $19 to $20 billion, that means they're taking share from other enterprise software companies that can't compete. And it means they're taking jobs from lots of companies that might be enterprise software clients.
Now, enterprise software used to be the best place in the world to invest. There was little competition. Margins were great. Growth terrific regardless of the economy. Maybe you had another Microsoft. Who knew? A seemingly endless number of these companies were created, and lots of them came public and had big moves, only to fall out of favor with growth-oriented money managers. That was the chance for private equity to borrow money and snap them up on the cheap. The only problem is that these stocks were cheap for a reason. They could be disrupted one day, at least by artificial intelligence.
Now these firms like Blue Owl have a bunch of clunkers on their hands, and it'll be very hard to bring these clunkers public again when their prospects are so dim. And of course, higher oil acts as a tax on the entire system. The tax on the lower and middle incomes is severe and might mean fewer cars sold, fewer homes sold, along with fewer home renovations. Those are a big part of the economy. They're the ones that get hurt the worst.
So the bottom line: we know the winners in this scenario, but are wary of the losers. It's just in this environment, there could be many more in the loser column if the Trump administration can't extricate itself from Iran and the price of oil doesn't continue to move lower. Now, you know what needs to happen for us to get this situation under control. Let's see in the coming days if the war really is won. Because if it isn't won, then I am not sure it's over. Let's go to Norma in New Jersey. Norma,
Hi Jim. I'm Norma from White House, New Jersey, and I'm 81 years old, and I've been watching your wonderful show and enjoying it for many years. I would appreciate your opinion. I have owned e.l.f. Beauty for over two years, and it's had some nice runs, but now I think it is walking maybe backwards. Should I keep it or sell it and buy CoreWeave, please?
You know, oh boy. All right, that's frying pan fire. Okay. So, e.l.f. Beauty is erratic right now, but I have faith that it can go higher. I think you hold off on CoreWeave. CoreWeave is a stock that has tremendous potential, but also has a lot of downside. And I don't want you, Norma, to be in something that has a lot of downside. As much as I like the company, it can be eviscerated by changes. Let's go to Johnny in Louisiana. Johnny,
Jim, thank you for taking my call. I'm a long-time club member, and we appreciate all you do for us home gamers out there.
Thank you, Johnny. Been working like a dog. Glad that you appreciate it. It makes me feel better. What's up?
All right. The stock I want to talk about today is Bunge, BG. It's a long-term core holding of mine and has a unique presence in both the US, South America, and beyond. So, should I buy more?
I don't want you to buy more. I don't want you to buy more. I want you to hold on to it. Bunge is a great company, and you caught it at the right time. It's moving up quickly also because of problems in the Middle East. They've got, believe it or not, a lot of the agribusiness side, not the food side. The agribusiness side is going to do much better. And you've got just a great winner. And thank you for the kind words. Let's go to Jonathan in Oregon. Jonathan,
Hey Jim, longtime listener, first-time caller. My aunt Nancy introduced me to you when I first started my investment journey. My question today is about Costco. They had solid earnings last week, and I'm wondering where you think the company direction is headed, how the macro geopolitical environment will affect them moving forward. Would you buy, sell, or hold?
At this point, I want you to hold Costco. We own it for the club. I think it can head to new highs. I know that some people feel that the renewal rates weren't up to snuff, but I would come back and say when gasoline has a sudden jolt up, that's always been the time to buy the stock of Costco. I want you to, with those in mind, I just want you to hold it. The spike up big in Costco stock means that we've actually got to wait for a little bit of pullback before we buy more.
Now, we know the winners if oil goes lower, but we have to be wary of the losers, and there could be many more if oil doesn't come down. Let's hope the war is over. If you want to see the stock market higher on Mad Money tonight, as we near the end of the first quarter, the S&P is set to go through its reshuffling. I'm taking a look at who's getting added to the index, who's getting kicked out, and Robinhood Ventures Fund just went public. I'm telling you what it's all about and what it says about the state of the private market sentiment right now, and how are the defensive plays holding up in this turbulent market. I'm sitting down with the real estate investment company called Realty Income, letter O, which pays a monthly dividend, to find out. So stay with Cramer.
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On Friday night, we got some big stock market news. Although you might not have noticed with all the craziness in the Middle East, S&P Dow Jones Indices, that's the keeper of the S&P 500, announced a series of changes for its key benchmark index. This happens near the end of every quarter, but I always find it interesting to watch what they're adding and what they're subtracting. This time around, there are four changes being made. In the communication sector, they're dumping Match Group. Sell, sell, sell, and replacing it with EchoStar. Buy.
In the industrials, they're ousting Paycom. Sell, to make room for Vertiv. And finally, they're swapping Molina Healthcare and Lamb Weston out for a pair of tech stocks, Lumentum and Coherent.
With these changes, the S&P 500 will become even more levered to tech than it already is. Right now, the information technology sector alone accounts for 32.4% of the index. But there's a ton of tech that's classified under communications or consumer discretionary companies like Alphabet, Amazon, Meta, and Tesla. If you include just those four, the S&P is about 47% tech now. It's losing a healthcare stock and a consumer staple to make room for a couple more tech stocks.
Beyond that, let's take a look at these substitutions one by one. First, there's Cramer fave Vertiv, which makes power and cooling equipment, especially for the data center. Since Vertiv came public through a SPAC merger just over six years ago, the stock has rallied over 1,950%. And it's been profitable for five full years with a market capitalization now in excess of $101 billion. Wow. Purely on the basis of size, it would have been very hard for S&P Global to keep Vertiv out of the index. What a stock. What a company.
Next, a week ago, we learned that Nvidia was investing $2 billion apiece in a pair of fiber optic plays, Coherent and Lumentum. They both have a lot of exposure to AI infrastructure. Apparently, S&P and Nvidia have the same style because both those stocks are getting added to the S&P 500. Coherent rallied more than 450% from its post-liberation day lows last April. It's now a $47 billion company. I'm very excited about this because we're going to have on this one tomorrow CEO Jim Anderson for an interview. That'll be something. This company, I think this company is just terrific.
Lumentum is similar, except its stock has been even hotter. It's up more than 1,300% from its post-liberation day lows. The stock's a lot more expensive than Coherent on a price-earnings basis. Higher risk, higher reward, but they're both plays on optical networking equipment for the data center.
Finally, there's EchoStar, which is a satellite play. After doing nothing for basically 17 years, this company burst onto the scene last year with some huge deals to sell spectrum. In late August, EchoStar announced it would sell certain wireless spectrum licenses to AT&T for $23 billion. Just a couple weeks later, in early September, they rolled out a separate deal to sell spectrum licenses to SpaceX for $17 billion. In November, they increased the size of that SpaceX transaction. Basically, the market dramatically underappreciated the value of EchoStar's spectrum assets, which is why the stock has been skyrocketing up nearly 300% over the past year.
Following the SpaceX deal, which included some stock consideration, I think some people might have bought EchoStar purely as a backdoor way to get some exposure to Elon Musk's SpaceX ahead of its IPO. That'll probably be smart. It'd probably be redot.
So, what about the companies that got expelled from the S&P? First, Match Group. Now, this is a dating app company that you might recognize as Tinder or Hinge, Match, or several other platforms. I know nothing about online dating, thank heavens. But I do know that Match's stock is down nearly 80% over the past five years. The market cap has shrunk to $7 billion, which is now too small for the S&P 500.
Next, Molina Healthcare is a managed care play with lots of exposure to Medicare and Medicaid, the weakest part of a weak business. That includes the kind of Medicare Advantage plans that have been wrecking the entire industry. The stock is down 63% over the past two years. This is another one where the market cap got too small. Plus, S&P Global is not exactly reluctant to get rid of long-term losers.
Third, Lamb Weston sells frozen potatoes. They dominate that entire business. The company was spun off by Conagra in 2016, and for a big chunk of the following decade, Lamb Weston was a consistent winner. But in the last few years, the stock's been eviscerated. Now look, maybe it's a victim of the GLP-1 weight loss drugs, or maybe it just reflects the broader struggles of the restaurant industry. Either way, the stock's down 55% over the past years to the point where Lamb Weston's become a $6.4 billion company. It's now the subject, by the way, of an activist push from Starboard Value, a very smart firm that wants Lamb Weston to aggressively cut costs.
Finally, Paycom software does online payroll and human resource software at a time when there's just so many of these companies doing the same thing. In addition to the big payroll processors like ADP and Paychex, there are smaller players like Paycom. The whole group was being weighed down by worries about AI disruption. On the one hand, Paycom's HR software becomes less enticing when Claude can whip up something similar. On the other hand, if you believe in AI, then you believe it will destroy jobs. That's how it saves money, which is of course bad news for the payroll processors. The big dogs, ADP and Paychex, they've been gutted. And Paycom's down 35% over the past 12 months. It's also off 75% from its highs in late 2021, just a $7.5 billion market cap now at these levels. Wow.
I bring these up because the S&P 500 is much more of an actively managed fund than most people realize. The index tends to perform well over time because it's curated. In how to make money in any market, I hammer home the idea that you should put half of your money in an index fund and the other half in individual stocks. I'm comfortable doing that largely because the best indices are constantly being adjusted. And this latest batch of changes really reinforces the importance of the AI data center buildout.
Especially since the war with Iran got going, it often feels like the data center buildout is the only theme that's really working in this market. When you look at the new entrants into the S&P 500, three out of four are data center plays, and one of the stocks that got the boot is an AI exile. So here's the bottom line. In two weeks' time, the S&P 500 will expel four underperformers and welcome their outperforming replacements. Three companies that supply the data center and a satellite play that's been selling spectrum at a huge premium to what people thought it could get. I'm just glad there it's a theme that we can hold on to even in this time of what I now have to say is extreme turmoil. Mad Money's back after the break.
Coming up, Robinhood is looking to open up private markets to retail investors. Cramer's investigating how it looks and where it could be headed next.
On Friday, a new publicly traded venture capital fund backed by Robinhood started trading right here on the New York Stock Exchange. It's called Robinhood Ventures Fund 1, and it trades under the symbol RVI. As of the end of January, this thing had investments in seven privately held companies. There's Databricks, that's a data management and analytics play. We've had them on the show several times, along with a British financial technology company called Revolut, and an AI-infused hiring startup called Mercor. Those are the three largest positions.
They've also got stakes in Oura, which makes smart rings that you've probably heard of, you know, to measure your sleep quality. And Ramp, that's a buzzy fintech company focused on modern corporate expense solutions that does a very good job. I'm less familiar with Airwallex, another fintech company serving corporate customers, which seems more popular in Asia right now. And Boom Supersonic, which is working on a supersonic aircraft that it says will be able to cut commercial travel times in half.
Put it all together, and it's an intriguing grab bag of privately held businesses. Friday morning, I got to speak with Robinhood CEO Vlad Tenev in Squawk on the Street, where he pitched us on this new venture fund. He says it's a way to further democratize investing, giving home gamers access to fast-growing startups that ordinarily you'd only be able to get a piece of as an accredited venture capital firm. Personally, I wouldn't recommend this kind of thing. Too risky for most people, but I thought it was a compelling pitch. And that's why I was so surprised when the launch of RVI didn't go particularly well.
When Robinhood announced this thing, they said they were seeking to raise $1 billion from investors, with the fund selling 35 million shares at $25 apiece and Robinhood selling another 5 million shares itself. But RVI ended up raising far less than that. They only sold a little over 12.6 million shares at 25 bucks, though. Now things got worse once trading began. Just before 10:30 a.m. on Friday, RVI opened at $22. After some ups and downs, it closed at $21, down 16% from the offer price. Terrible.
To be fair, today RVI did better, rebounded to 22. But this thing clearly isn't as popular as Robinhood thought it would be. It wasn't as popular as I thought it would be. Why is that? First, I think the structure of the Robinhood Ventures Fund was really confusing to pretty much everybody. See, it's basically a closed-end fund that trades publicly via an exchange. Many of the publicly traded closed-end funds that you see these days are business development companies, or BDCs, and investors are pretty wary of these things right now. When you hear about struggling private credit funds, lots of them are BDCs. And that's not what RVI is, but it certainly looks like it.
You can think of these closed-end funds as being similar to ETFs, but unlike an ETF, there's no redemption and creation feature where you can basically cash in on your shares for a piece of what the ETF owns. Something like RVI doesn't let you do that. That can allow it to become wildly unmoored from the underlying net asset value. Then again, with this kind of venture capital fund, it's very hard to put a valuation on the companies that it's invested in. I think that really hurt it.
Take Robinhood Ventures Fund's larger position, Databricks. RVI invested in Databricks twice. First in Databricks' Series K fundraising round last September that valued the company at north of $100 billion, and then again in a Series L round that valued the company at $134 billion. So wow, that's a big increase. So the good news is Robinhood Ventures Fund is already up on its initial investment in Databricks. But the broader point is that for many of these holdings, investors might be worried that Robinhood came in at a later private fundraising round that already values these companies quite richly, quite full. And if you're doing that for a company that might come public soon, there is a possibility that later private fundraising rounds value the business more highly than the eventual IPO.
Of course, it looks like the Robinhood Ventures Fund invested in its seven current holdings at various points. As Vlad Tenev told me on Friday, some of these investments were in earlier-stage funding rounds, but there are also plenty in later-stage investments. Plus, RVI stated in its IPO prospectus that it entered an agreement to put $15 million into a funding round for fintech startup Stripe, that's a darling, back in February. We know from recent reporting that Stripe's latest fundraise valued the company at $159 billion, which strikes me as kind of high.
Let me put it bluntly. When Robinhood was offering shares of RVI at $25 in the IPO, investors were buying into the fund at face value. In other words, they were buying this pool of investments in private companies at the price that Robinhood was saying they were worth. And to start, there was far less demand for these assets at that price than Robinhood expected there to be. Only one-third of the demand that they were expecting materialized.
But then with these closed-end funds, once they're released into the wild, we can easily see the difference between what the manager of the fund thinks some group of assets are worth and what the market thinks they're worth. When we see publicly traded business development companies trading at 70% of their stated net asset value, that means the investors are saying, 'Whoa, we don't think the assets you own are worth as much as you think they're worth.' And in the case of the new Robinhood venture fund, the fact that the stock sub traded substantially lower right out of the gate meant that the public market investors just aren't buying the valuations here. You know what? That's telling.
As I've been explaining all year, there are some huge IPOs coming toward the end of 2026 with some companies that have achieved astronomical valuations in the comforts of private markets. SpaceX was recently valued at $1.25 trillion after its merger with xAI and apparently could be seeking a $1.5 trillion valuation when it comes public later this year. OpenAI was just valued at $730 billion in a private fundraising effort that ended last month, and Anthropic, the destroyer, was valued at $380 billion in a fundraise around the same time. These are just huge numbers, and it's an open question whether public investors will sign off on these types of numbers.
That's why the suboptimal debut of Robinhood Ventures Fund really matters. The bottom line is that this was our first chance to get a glimpse of how public investors will feel about some of these more elevated private market valuations. And though this is just one example, clearly people aren't that enthused about these venture capital-backed startups. And as long as the disruptions caused by the war with Iran drag on, it's not going to get any easier marketing this merchandise to the public. Let's talk to Sammy in California. Sammy,
Hey Jim, I'm playing tennis out here. It's a balmy 73. Sorry, I don't know what it's doing out there. I am calling about things. So today JP Morgan Chase suggested that we could do a 10% correction in the market if the war drags on. And some of the financials, which I'm calling about, have been really hit hard. And the price of oil, as you know, seems to be in chaos. So, and they're also suggesting possible stagnation according to an article on the well-known financial website. As an example, Citi fell in the last four weeks to a low of 8%. When do you see the market recovering, or will it? And I'm on a large cap called Capital One.
Okay. Now, Capital One is supercharged right now because it's got a lot of credit card debt, obviously, and people are very concerned about credit card debt at a time when oil has moved up so much. At one point, the stock was down six today. I would tell you that it's an incredible, fantastic opportunity. We own the stock for the club. It did go as high as 250. We sold some, we bought it back a little too quickly, but it's down a huge amount in the last month, and I think it's just a solid buy. Let's go to Isaac in New York. Isaac,
Hi, Mr. Cramer. This is Isaac from Long Island, New York. Long-time listener, first-time caller. My question is about Coinbase. It came to the market in April 2021 at 381. I remember listening to you. You said the stock can go to 600, but don't buy it now. And you're right. The stock went all the way down to 60, and then it went all the way up to 444, and now it's around 200. I appreciate your opinion and prediction.
Sure. Thank you very much. Well, I'll tell you, I think that a lot of people just think it's a play on Bitcoin. And what I would suggest you do is just buy Bitcoin. It's cleaner. It has less to do with whether there's competition, say, from BlackRock or from Fidelity. So, just go with Bitcoin. That's the way to go.
The Robinhood Ventures Fund was a chance to see how public investors feel about private market valuations. Looks like right now people, they aren't too enthused. Now, much more Mad Money, including my exclusive with Realty Income, letter O. But the stock up double digits here. Realty, I got to tell you, these guys are outperforming the rest of the market, and it's a very exciting story. It's one I've endorsed for many years. So let's talk to the CEO. There's something in this market that doesn't make sense to me. I'm telling you what it is and how you can invest accordingly. And of course, all your calls rapid fire in tonight's edition of the lightning round. So stay with Cramer.
Even at this crazy moment, it's been a good year for Realty Income, letter O, the real estate investment trust that mostly owns retail properties. Even it's been diversifying itself lately. The stock is up 15% year-to-date with a nearly 5% dividend yield. Now, some of that's because Realty Income has made a push into industrial, gaming, and data center properties while also moving into Mexico. When they reported their most recent quarter a couple weeks ago, the results were in line with expectations. But the four-year forecast with average funds came in just a tad light. Still, the market seemed to like what Realty Income is building here. I don't blame them. Even if it might take time for some of these investments to pay off, I like what I see.
So, let's take a closer look with Sumit Roy, the president and CEO of Realty Income Corp. You get a better read of the situation. Mr. Roy, welcome back to Mad Money.
Thank you very much for having me, Jim.
Okay, so I'll tell you, Sumit, it's very funny. I was going through everything that you've done, and I've always felt that you were the best of the real estate investment trusts, but you were unhappy with your performance. How is that possible, and why did you make the change?
Well, look, I'm not going to go so far as to say I'm unhappy with the performance of what we've done year to date. But if you think about where we are trading at today versus just historical multiples, we are still three or four turns off of that. But I'm looking towards the future, and I'm so excited about where we are on our journey, having created these different avenues both on the financing side as well as on the growth side that you alluded to in your opening remarks, Jim. So the future looks bright, and especially at times like this where uncertainty is elevated, you know, that's when we really perform well, and so I'm really looking forward to that.
You know, I was thinking of you in terms of these private credit companies. They were so eager to get away from institutional money. They wanted individuals. You understood that individuals could be very fickle, and you decided to go institutional. I think your path has proven to be much more correct, isn't it?
It is. It's a more difficult path, but you know, we are building this company for the long haul. And when you think about our history, we've been around for over 31 years in the public domain, over 55 years as a company. We wanted to make sure that the capital that we raised on the private side mimicked what we had on the public side. And so institutional capital, long duration, open-ended structure, that was going to be very key to executing our long-duration, you know, dependable investments that we make. And so it was by design that we chose this route.
All right. So let's start with the new investors. I like, for instance, you mentioned GIC as a partnership. You say, here's an investor in our company. They liked us. So you decided to take it one step further. Correct.
That's correct. In fact, we have multiple partnerships with GIC. They came in and supported us on the open-ended fund. We've built a proprietary relationship with them on build-to-suit facilities both here in the US as well as in Mexico. They had tremendous experience in Mexico working with Hines, and you know, they wanted us to come in and basically be a partner in helping them take out some of these build-to-suit high-credit clients, long-duration, dollar-denominated leases. All of the things that you would associate with a company like ours in terms of managing the volatility, the predictability, etc.
All right. So tell me about what you think about the data center situation. There are some, it's become very controversial, not in my head because I think that they're going to make a lot of money, but a lot of people feel like there's overbuilding in data centers. And what will happen is that there'll be some true value destruction. Do you think, like me, that you know what, it turns out this is just the new way of business?
It is. Look at our business for instance, Jim. We are a real estate business, but I've been investing in technology now for over seven years, creating predictive analytic tools that is so heavily reliant on data. Obviously proprietary data that we've cultivated over 30 years of history, but also external sources of data. And every company that you turn to has an AI strategy in mind. You know, how are we going to enhance scalability? How are you going to take advantage of information that is available real time, help you make decisions, etc. And that's not going to be possible without data centers.
And so, yes, we hear about the big seven and their need for data centers, but this is a trend that will continue. Having said that, you know, some of these developers are not going to get through. And so I believe that's going to create opportunities for us. But our thinking about this is pretty precise. We've created a narrow box within which we want to play. And I'm very long data centers, but it needs to fit that box that we've created for ourselves.
All right. Now, how about this move into the casinos, the Encore Boston Harbor Resort, which we've liked very much, by the way. We've been outspoken about how good that property is.
It has been, and it continues to perform really well. If you think about when we first underwrote versus today, the performance has just continued to improve, and it's similar investments we've made in the CityCenter building in Vegas as well as the Bellagio. I mean, if you look at the performance of those two assets in the Strip and you compare it to a lot of the other assets that are not doing quite as well, you understand why we choose to be very selective when it comes to gaming, and why we choose the right operator, but more importantly, the right location that the operator is functioning out of.
And you know, the proof is in the pudding. If you look at the results of these two assets, and MGM just came out and talked about that, they are continuing to do very well despite a softening in the Vegas markets for the more, you know, middle-tier assets.
Last question. The whole conversation between you and me would have been involved Family Dollar and Walgreens because that's what got letter O, if there was a compression, was because there's always going to be some chain that doesn't do well. Your whole model is set up so if that happens, you won't even notice, but that's all people used to pick on. Isn't it interesting our conversation did not revolve around how many Walgreens are going to close and how many Family Dollar are going to close because you've grown out of that. To me, that is a mature, correct way to go in an environment where it's unforgiving if you own one retail chain that's not doing well.
That's exactly right. Diversification, diversification, diversification. That's what we've built this entire portfolio on. It's essential-based retail. You know, grocery is our largest industry, convenience stores, discount stores, but even those two names are going to be just fine. And we have such a diversified portfolio, which is precisely why at times like this, you know, we tend to outperform. So we are very excited. The building blocks of growth that we have shared with the market, that's been well received. I think it's been starting to get reflected in our stock price performance. But we are very excited about the future, and despite this volatility that we see in the background, we feel like we are very well positioned to perform.
