Brad’s Note: Last week, I announced a major evolution of Wide Moat Research. Put simply, we’re doing something we’ve never done before, and I wanted to make sure readers heard about it.
For the first time ever, we’ll be publishing recommendations for small-capitalization stocks, the type of companies with the potential for rapid growth. Our new model portfolio is now live. And I wanted to make sure all interested readers had a chance to join.
In my recent presentation, I’ll share my thesis for small-cap stocks and why I’ve decided to take this step today. If you’re at all curious to learn about our first recommendations, you can learn more right here.
The Value of Security Just Went Up
I was at a hockey game in Las Vegas a few weeks ago…
It’s not a sport I follow religiously, but I can definitely understand the appeal. Though I have to admit that my mind wasn’t on the puck the entire time.
At one point during the game, my friend, who had invited me, tapped me on the shoulder.
“Do you know who that is?” he asked as he pointed to a serious-looking man a few seats away.
“No, should I?”
“That’s Elon Musk’s head of security.”
I looked again. I had rubbed shoulders with the man when we both entered the box before the game. Musk himself wasn’t there, but it was a surreal experience meeting the man responsible for his safety.
As you might expect, Musk takes his security seriously. Watch any video of him in a public setting, he’s almost always flanked by stern-looking men scanning the crowds.
He also pays them well. Tesla spent $2.4 million on personal security for its CEO in 2023. Considering Musk’s involvement with Donald Trump – who himself was the target of an assassin – I have no doubt that figure will be much, much larger for 2024.
And as recent events have proven, it’s money well spent…
You probably know the news by now. Last week, Brian Thompson, the CEO of UnitedHealthcare’s insurance arm, was gunned down in Manhattan.
The murder is – of course – a tragedy for his family. It’s also a blow for the publicly traded company he represented. And my heart goes out to his surviving relatives, especially his wife and two sons.
And the incident is a sad reminder of the need for physical protection for many executives. And I wouldn’t be surprised if companies that provide protection start seeing a lot more business from here.
A Very Vitriolic Response
Klein Investigations CEO Philip Klein, who has worked security for Thompson before, told Fox & Friends on Friday that he was especially shocked at one aspect of the murder:
What stands out most to me is the inability to provide him security in New York City while he’s going to give a speech to many mad stockholders and possibly mad clients of the healthcare company. Did he deny security and say, “Look, I don’t want security around me?” Because he does run one of, if not the, biggest healthcare company in the world. Or secondarily, does the healthcare company not provide him security?
These are legitimate questions, but It’s not my place to speculate on the context around this event. I’ll let the authorities get to the bottom of things. And, as of yesterday, it appears they have a suspect.
But what’s shocking (and a little unnerving) is the outpouring of support for the shooter from some people.
The Wall Street Journal covered the situation yesterday:
From online forums and social media to the streets of Manhattan, people have been celebrating the suspect as a quasi-folk hero who struck a blow against a detested institution – the nation’s for-profit healthcare system.
In most instances, they were rooting for the killer to evade capture and defending his actions – or remarking on his good looks. But in some cases, expressions of support have crossed over into calls to stymie a police manhunt that, on Sunday, entered its fifth day with the suspect yet to be named.
Look, I understand many people hate the insurance providers. But this is way over the line. I couldn’t make it up if I tried. And I wouldn’t really want to.
But I promise you, every C-suite in America is watching this… and they’re wondering how they can increase their security budget.
Security Is Their Middle Name
It’s a sad day when people genuinely fear for their life simply because of who they work for. But it’s the reality we’re operating in, nonetheless. There’s no way around it.
And I have absolutely no doubt that companies – particularly in insurance and healthcare – will be revamping their security procedures. In fact, they’ve already started.
It’s no surprise that CNN noted on Thursday how:
Multiple major healthcare providers began increasing personal protection around top executives Wednesday following the shooting, security industry sources told CNN’s chief law enforcement and intelligent analyst John Miller.
And it’s not just healthcare.
In 2023, Apple spent $820,308 for security services to their CEO, Tim Cook. Amazon spent over $900,000 to protect Andy Jassy. And Google spent upwards of $6 million last year to protect CEO Sundar Pichai. I wouldn’t at all be surprised to see these numbers move higher from here.
As far as I know, none of these security companies are publicly traded though. There are plenty of cyber security businesses big enough to list on the NYSE and Nasdaq. But physical security tends to be more of a localized industry.
Big-name hotels and resorts that cater to high-profile executives will also no doubt be stepping up their security details – and passing those additional costs on to their powerful customers. And I imagine that life insurance companies will see an increase of interest going forward as well.
It’s a dangerous world. Perhaps now more than ever. I have no doubt security services are lining up to offer their services to America’s largest corporations. And given what just happened, I have no doubt those companies will be willing to pay.
Regards,
Brad Thomas
Editor, Wide Moat Daily
MAILBAG
Do you agree with Brad that companies will be more willing to pay for protection with the recent events? Write us at feedback@widemoatresearch.com.