Is Berkshire Bending the Rules With Bending Spoons?

In this episode of Motley Fool Hidden Gems Investing, Motley Fool contributors Tyler Crowe, Jon Quast, and Matt Frankel discuss:

• Bank of America's earnings and money laundering fine.
• Fastenal's earnings, a true hidden gem.
• The business behind Bending Spoons.
• Why Berkshire is buying more of this lesser-known stock.
• CoreWeave's debt falls into junk territory. Who's next?

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy.

A full transcript is below.

This podcast was recorded on Oct. 15, 2026.

Tyler Crowe: Did someone tweak the Berkshire Hathaway settings? Motley Fool Hidden Gems Investing starts now. Welcome to Motley Fool Hidden Gems Investing. I'm your host, Tyler Crowe. And today, I'm joined by longtime Fool contributors, Matt Frankel and Jon Quast. We're going to get into Berkshire Hathaway's, some might say, peculiar decision to invest more in Bending Spoons. We're going to talk about 15% interest rates at a certain neocloud company. But we wanted to start because it is earnings week, and we're going to do a little bit of dumping the analyst earnings notebook. And, Matt, I want to start with you because on Tuesday, we were talking about the big banks reporting. JP Morgan, Wells Fargo. We had Bank of America report afterwards. In addition to the earnings report, there was a little bit of oops that wasn't great. So what exactly happened here?

Matt Frankel: Yeah, so before we get to the oops, which was a $1.2 billion anti-money laundering penalty, it's worth mentioning that the earnings miss went beyond that. So the stock had a pretty negative reaction on Wednesday. It was the worst performer of the bank stocks in response to earnings and even without that penalty, Bank of America still would have missed earnings. The big reason is investor banking, investment banking fees were down 11%. On the trading side, which was a strong point elsewhere in the industry, it was really not very strong at all. The reaction makes sense. The bank did not have a great quarter. On the consumer side, it still looks good, but the trading, the investment banking, it was much weaker than peers.

Tyler Crowe: All right, so I hear anti-money laundering, and obviously banks, that's like a real no-go sort of thing. I remember a couple of years ago, I think it was TD Bank, which is Toronto Dominion. It's changed its name. I can't remember specifically what it may have changed it to now, but it had a similar problem with its anti-money laundering practices and know your customer laws. And there was actually an asset cap that was put on top of fines. Based on what you're seeing here with this one, is this a similar situation? Could Bank of America be headed for perhaps something more punitive than just a $1.2 billion fine?

Matt Frankel: Well, it's worth mentioning these are two totally different situations. You don't want to hear this time is different in investing, but I'm going to do that right now. In Bank of America's case, it was the failure to report some suspicious transactions in a timely manner. They just weren't keeping the controls as tight as they should have. They were already under a 2024 order. All of this happened between, I think, 2018 and 2025, and they essentially got penalized because they didn't fix their reporting process when they would see suspicious transactions. That's what Bank of America did. TD's was a criminal case. TD actually had certain employees taking bribes to let money laundering transactions go through. That's a totally different animal. So unless I'm not saying it's impossible, unless the investigation into Bank of America reveals something to that nature where it becomes more of a criminal matter than just, failure to act matter, then I don't think an asset cap is very likely. That's a tool that the government really pulls out only when it has you.

Tyler Crowe: And certainly with TD and Wells Fargo, asset caps have not been a fun thing to manage. Jon, I guess we could say, moving on to something completely different here. I kind of left the floor open. I didn't even ask what company you really wanted to hit in our analyst notebook here. Over the past week, we had a few that have reported so far? What was the one that kind of stood out to you that you want to maybe shed some light on here?

Jon Quast: Well, if I was just picking what I wanted to pick most, I would go with Taiwan Semi, but this is the Hidden Gems show and you got to give the listeners what they're looking for. I think they're looking for a little bit something more under the radar than that. I talked about Fastenal. I looked into Fastenal. This is a cool little company. If you are a industrial player out there, you need some screws, nuts, bolts, that kind of thing. This is a company that can be your one stop shop for that really boring business. But hey, that's what keeps it under the radar and hidden. Really big quarter that it reported this week, 15% growth. Maybe that's not amazing by some AI standards, but hey, for a company such as this, that's actually a really great quarter and it tells us some things. It tells us that U.S. manufacturing is quite strong. In fact, heavy manufacturing for Fastenal that revenue source up more than 20% year over year. We're talking about strength in aerospace, industrial equipment, machine products, that kind of thing. All those are doing very well for the company. Now, it's not completely isolated from the AI trade, so about a third of its growth roughly is from data centers. So data centers need the nuts and bolts kind of stuff that it sells, as well so that was a tailwind as well for Fastenal. But overall, it's really pointing more to manufacturing strength than anything.

Tyler Crowe: When I hear a company like Fastenal, it's been one of those behind the scenes businesses for a long time. As you said, 15% growth is, guess you'd say out of trend here for what it normally has done. How has this company that I was just looking at its stock chart has done spectacularly, how is it created value for investors if it is this slow growth, I don't know gives parts to company's business?

Jon Quast: First and foremost, I mean, it does run a tight ship. I mean, inventory levels are pretty much matching what it is generating in revenue, and that's a good thing. You don't want to be buying too much inventory. You want to keep that in balance. This is a good management team, and to that note, it really does prioritize its shareholders, and so definitely making moves that are shareholder friendly. One of the interesting things here is that it's debt. It's total debt down to only 100 million. This is a $57 billion company, so that's really peanuts here, this debt level that it has, and it's down pretty significantly year over year. Then you look at net income, 82% of the net income going back to shareholders in the form of share repurchases and its dividend. Dividends around 2%, but that is growing nicely. So overall, this is a management team that does prioritize its shareholder base.

Tyler Crowe: Before we get out of here, we got two stocks here. We got Fastenal, we got Bank of America. I’ll put it to each of you guys who talked about this: Matt, buy, sell, or hold Bank of America, even after this kind of flub or stubbing in the toe in this most recent quarter?

Matt Frankel: I'm holding. The fact that they are being under observation for anti money laundering is a yellow flag for me, even though this issue is in the past, it kind of opens up to some more scrutiny in this area in the future. So I'm holding. I still own the stock.

Tyler Crowe: And what about you, Jon? Buy, sell, or hold Fastenal?

Jon Quast: The one thing that does give me pause here, you are looking at a company that 15% growth that is unusually good normally in more of the single digit range and right now trading at around 40 times forward earnings. That may be a little bit too hot to handle, even though the business is strong right now.

Tyler Crowe: All right, so two holds. We'll see what's going on. I mean, 15% growth on a company like Fastenal is pretty spectacular. We'll have to check up on these in the fourth quarter and see what these predictions had for the following quarter. Coming up after the break, we're going to talk about Berkshire Hathaway upping its stake in Bending Spoons.

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Tyler Crowe: Guys, Berkshire Hathaway recently announced that it was upping its stake in Bending Spoons, which I guess the best way to put it is like a media company, I think. The company soared like 40% yesterday after the announcement. And I'm guessing a lot of people, this is the first time they've ever heard of Bending Spoons. So, guys, let's just come right out at the beginning here. What the heck is Bending Spoons? What do they do?

Matt Frankel: Bending Spoons, I don't know if I'd call them a media company or a tech company or a Mini Berkshire Hathaway. Bending Spoons, they're a Milan based tech company. They buy struggling or neglected digital businesses, and they try to make them more efficient and profitable. You probably haven’t heard of the Bending Spoons name, as Tyler mentioned, but you might have heard of companies like AOL, Brightcove, Event Bright, Vimeo, Airtable. These are companies that are in Bending Spoons portfolio. It's completed more than 50 of these acquisitions so far, and their playbook is really too aggressively cost cut after they buy a business in order to, like, kind of squeeze every last bit of juice out of these companies.

Jon Quast: Yeah, as Neo was told in The Matrix, try to realize the truth, there is no spoon here. This is a growth by acquisition company. We've talked about Baby Berkshires many times in the past. I think this might be the closest one that I've seen to that. Normally, when we're talking about Baby Berkshires, it's companies that are investing kind of the float that they have in perhaps some publicly traded companies, but this is a company that is acquiring businesses outright and holding them for the long term and that is very Berkshire risk.

Tyler Crowe: You mentioned AOL. You mentioned Airtable, Vimeo, Vimeo, however, anyone wants to pronounce that. These are a lot of, we'll call them like the Island of misfit Internet properties, maybe, is a way of putting it. I mean, I'm sure a lot of people lost money on AOL during the.com crash. So what is the investing appeal here? I mean, it doesn't sound like the most audacious business model here, Jon.

Jon Quast: Tyler, there is a difference between a company that is founded by a good founder and that same guy being a good operator. I think Mark Zuckerberg as somebody who has really evolved a lot over the years to become the man that he is today, to be able to run this very big business. But sometimes those guys don't make the leap. They found the business. It was a good idea. They were good for the start-up stage, but they're not good at the operating stage and really, that's Bending Spoons' bread and butter. It's a good business idea and has a lot of attractive qualities, but it just needs better operations. It steps in here and tries to improve that. Now, we've heard that many times before and many other places, but that is what Bending Spoons is all about.

Matt Frankel: They take unprofitable businesses, as we mentioned, and turn them profitable. Just the numbers show why it might be considered a good investment. We'll get into why it might be a Berkshire investment in a minute. But I mean, a 53% adjusted EBITA margin from businesses that have long been forgotten, 84% of their revenue comes from recurring subscriptions. That's another thing that a lot of investors love. It's debt is reasonable compared to what it's getting out of it. There's a lot to like about the numbers. They're turning all these businesses in the right direction. And like I've said before with other stocks, the proof is in the performance, and that's what we're seeing here.

Tyler Crowe: I'm kind of hearing this and it's starting to bubble to the surface a little bit when I think about, Berkshire Hathaway because at first, I was like, AOL, Event Bright in the Berkshire Hathaway portfolio. I feel like just the name alone would have had Warren Buffett say, no, thank you. But part of this it almost feels a little bit like the very, very early Berkshire Hathaway. Like, not you know- there was, like, the Charlie Munger: Buy decent businesses at a good price. Then there was, like, the early Warren Buffett, where it was like, buy really, really cheap, kind of cigar butt let's just milk these things for the last sort of cash. Would you say that to make the comparison to a Berkshire stock, is this more of like that cigar butt style type of business, we're going to get the few puffs of smoke out of AOL or something like that?

Matt Frankel: I mean, sort of, I mentioned the subscription revenue. I mentioned the high margins. It's a very disciplined acquirer. I mean, they only acquire about one out of every 400 companies they evaluate, and they require a pretty high internal rate of return to even consider an acquisition. It's a very disciplined strategy. A lot of it they're acquiring brand names. They're acquiring these brands that they're essentially getting for less than the value of the name and so they don't have to be that great performers. There is still demand for a lot of the products that these businesses have. I mean, I've used Airtable twice today so far. I mean, there's still demand for a lot of these products. It is a lot of the Berkshire model. It's a capital allocator. It's got 50% plus margins that uses those margins to continue to fund more acquisitions. It's not hard to see the connection here. It is a cigar butt business in a lot of ways, but in a very early Berkshire way.

Tyler Crowe: All right, guys, last question. Here's the thing. CEO Bending Spoons is going to fly you out to Milan right now as an acquisition consultant, and they want you to pitch some orphaned Internet company in the vein of all these other ones. All the companies that we've analyzed before, maybe some of the ones you've been following in the past as an analyst, who would you pitch to the CEO Bending Spoons right now?

Jon Quast: Considered Yelp and Expensify, but I'm going to let Matt talk about one of those. But the one I landed on was TripAdvisor. This is a company with a $1 billion enterprise value, and it is selling one of its properties called the Fork for 700 million. So that values the rest of the business, what? Down at 300 million. You look at its second-quarter free cash flow: 130 million from continuing operations. It is still growing in the experiences part of the business, albeit by single digits, but that's more of the Viator category that brand that it owns and so there's a lot here for the Bending Spoons team to work with. I've long said, TripAdvisor is undervalued asset, but can the management team actually extract the value? I think that Bending Spoons could go in, overhaul what needs to be overhauled and actually turn this into a company that creates a lot of value for shareholders.

Tyler Crowe: Matt, that's a pretty good pitch. How are you going to top it?

Matt Frankel: Well, I mean, my dream pitch for Bending Spoons would be Dropbox, but I think that's a little bit outside of its realm right now. It's an $8 billion company. It would be by far the biggest deal ever. It's already highly profitable and has stalled revenue, so it's a great valuation. But I'll go with Yelp, like Jon mentioned. I mean, Yelp, it's a brand everybody knows. Local businesses depend on it. There's a huge library of data in those reviews to license to AI companies and other things. Data licensing is a really untapped part of the business. It has an adjusted EBITA margin of about 22%, so a lot of room to expand that, which Bending Spoons loves. [MUSIC] Loves opportunities to grow profitability, and it's an iconic brand that isn't priced like one.

Tyler Crowe: I got to say, of the orphaned Internet properties, I think those are pretty good options here. It'll be interesting to see what happens with Bending Spoons and these acquisitions for even going on. Who knows? Maybe TripAdvisor and y'all bend up on it. Coming after the break, we're going to talk about bond yields and neoclouds.

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Tyler Crowe: Shares of CoreWeave are down about 15% yesterday and as we're taping this right now, they're down about another 6%. A lot of this is coming down to secondary market trading of its bonds, which have moved into distressed territory, which I think is now the new euphemism for junk bonds that we used to have back in, I don't know, the ‘80s and ‘90s for anything that was below investment grade. So, guys, what's going on here? Why is the market seeming to price the bonds at CoreWeave so poorly right now?

Jon Quast: It's kind of a perfect storm for fear in this category of the market. I mean, fear, generally, the fear and greed index is down to 26 today, which is close to extreme fear. But you look at some of the things that have happened, you have Elon Musk and Chamath Palihapitiya on X talking about how this whole space is a little bit under pressure right now, but also Gartner coming out and saying, 80% of the neoclouds are not going to be independent companies by I think it was 2030 in the report. Basically questioning this whole space, that fuels fears, and man, that really does not help CoreWeave's bond trading.

Tyler Crowe: Yeah. Matt, do you see this as a CoreWeave-specific problem, or is this perhaps a little bit more, as Jon was hinting, the Neocloud business in general, or maybe you might even see it spreading even further than just the Neoclouds? Where do you land on how far this goes?

Matt Frankel: Yeah, I mean, the Neoclouds and CoreWeave in particular are a business that I really want to like. The reason I say that is because at some point, all these hyperscalers, all these companies building out data center infrastructure, they’re going to need more capital-light ways to do it, and Neoclouds could provide that solution. But CoreWeave is the most leveraged, which means that if any cracks in the AI build-out spending slow down, we get a recession, whatever the case may be, it makes it really susceptible to that, but the stress is spreading throughout the industry. Nebius, the other neocloud has a much healthier balance sheet than CoreWeave to be fair. But you're seeing companies like Oracle and Dell. Their bonds are also trading much lower. Oracle's credit default swaps hit a record high yesterday. The stress is definitely spreading throughout the industry. It's not a CoreWeave-specific problem. It's a AI debt problem.

Jon Quast: To that point, I mean, you look at CoreWeave, and it's nice that you mentioned Nebius because one of the things that comes into play here is the different depreciation schedule. CoreWeave at six years, Nebius at five years. Basically, what this means is that CoreWeave is expecting a longer useful life out of its GPUs. If you don't know what a neocloud is, this is basically selling AI compute. Over the cloud. But basically, the problem here is if it does need to replace its GPUs at a faster schedule, then it's going to need even more funding to be able to do that. Nebius its debt already factors that in its depreciation already factors in a shorter lifespan. So that's another reason why Nebius might look more attractive here to investors than CoreWeave.

Tyler Crowe: Getting into some real in-the-weeds territory here, talking about depreciation schedules on chips. But it is something that has been really at the forefront of what's been moving these stocks and these bonds recently. I think I remember Nebius said something about chips lasting longer, and the stock absolutely soared as a result. How long these go could be a big factor here. As we wrap up here, I want to think about we mentioned a couple companies. Is there anywhere else you have an eye on in particular? Where you think we could see this run into the capital problem where it's like, we got to raise a lot of capital, we got to go to the debt. We got to go to equity, and maybe they'll start to get tapped out. We've already mentioned Oracle, Nebius, CoreWeave; anyone else really on your radar here?

Matt Frankel: I mean, I would mention Applied Digital, their interest on their debts approaching their entire annual revenue run rate, which, it's fine if it keeps growing and growing and growing, but if it doesn't, then that becomes a problem very fast. That's what I would call out.

Jon Quast: I mean I'll take the other side of that. One of the businesses that I think may be in a position of strength would be Digital Ocean. It's not a neocloud per se, but this is a small cloud computing company, and it is getting a lot of benefit from the AI trade. You look at its debt levels down nearly 400 million in the first half of the year, it's actually going the opposite way with debt. Then you look at its revenue growth. We are growing very fast, accelerating even in 29% growth in the most recent quarter. This is a company that, man is in a position of potential financial strength, and that is particularly important if some of these neoclouds start to crumble.

Tyler Crowe: I would say the really good aspect of this news story or discussion we're having on bond yields and depreciation schedules is that almost all of these companies report within the next couple of weeks. So we'll certainly be able to have answers on this and likely follow up in upcoming shows. But that is all the time we have for today.

As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards, and it's not approved by advertisers. Advertisements are sponsored content and provide for informational purposes only. To see our full advertising disclosure, please check out our show notes. Thanks for producer Dan Boyd and the rest of the Motley Fool team. For Jon, Matt and myself, thanks for listening, and we'll chat again soon.

Wells Fargo is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Jon Quast has no position in any of the stocks mentioned. Matt Frankel, CFP® has positions in Bank of America, Berkshire Hathaway, and Oracle and has the following options: long September 2028 $220 calls on Oracle and short September 2028 $270 calls on Oracle. Tyler Crowe has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway, DigitalOcean, Fastenal, JPMorgan Chase, Oracle, Taiwan Semiconductor Manufacturing, and Tripadvisor. The Motley Fool recommends Expensify. The Motley Fool has a disclosure policy.