Lake Cornelia Capital's Judd Arnold on $TOI and a bunch of other stuff

Summary

• Inflection Investing: Emphasis on finding liquid stories before or at inflection points, prioritizing liquidity and right-tail potential over strict valuation screens.
• TOI (The Oncology Institute): Pitched as a differentiated oncology services model using capitation to undercut hospital costs, with Florida-led expansion, improving margins, and potential private equity takeout.
• Healthcare Services: Discussion centered on capitation economics, payer relationships (Medicare Advantage), MSO vs. owned clinics, and scalability in dense markets like Florida and Texas.
• SOC (Sable Offshore): Framed as an option-like offshore oil story with significant upside if regulatory milestones clear, but with notable California regulatory and timing risks.
• AI Data Centers: Highlighted via Nebius as an example where liquidity and narrative drive attention, with strong investor appetite for AI infrastructure plays.
• Portfolio Construction: Sizing based on downside containment and ability to exit quickly; prefer liquid names and ramp sizing as conviction builds post-inflection.
• Risk Considerations: For TOI, execution and payer/CMS dynamics; for SOC, regulatory shocks; across trades, guarding against downside jump risk and narrative shifts.
• Market Approach: Less tethered to traditional valuation multiples; focus on sectors and stories where “people will care,” enabling rapid re-rating.

Transcript

All right. Hello and welcome to yet another value podcast. Happy holidays. I'm happy to be back. I can't wait for the new year podcast. We're kicking it off with a banger. Today I have Jed Arnold from Lake Cornelia Capital. We have a wide wide-ranging conversation about a whole bunch of stuff. We were actually supposed to talk about the death of Vegas, Caesar's gambling, casinos. We talk about so much stuff we don't even get there. But we you are going to enjoy it. We're going to talk a little bit of theory sizing up into inflection points. He's going to give the pitch for toi. We're going to talk just all sorts of stuff. I I really enjoy this conversation. I think you're going to, too. Jud just launched the late Cornelia Capital Substack. I'll include a link in the show notes, but uh you know, if you enjoy this pod, you'll you'll probably really enjoy subscribing to that, too. So, we're going to get there in one second, but first, a word from our sponsors. Today's podcast is sponsored by tried.com. Look, you've heard me mention TRDA multiple multiple times over the past few months on the podcast, and it's because it's a product I really like. TRDA is two bysters getting together onto an anonymized transcript. They talk about a stock that they know well and you know sometimes a bull and a bear, sometimes it's a bear and a bear, sometimes bull and a bull. But they're going to talk about it. The reason I like the product so much is it's interesting on two angles. A, if you're ramping up on a company, a stock, whatever, and you want to go talk to someone else who's following the stock deeply, you can do a call and you can learn really quickly about it. But B, my favorite thing about it is when they've got a transcript on a company that you're ramping up on, that you're following, you can go and see what two sharp buys are looking at, thinking about all the risk, all the opportunities, everything. Here's the best review I can give them. I've been pitching this for about four months. I get feedback from my viewers on the things that I put on the podcast. And the most frequent feedback from people who've tried TRDA I get is, "Hey man, I really like the product. My one complaint is they don't cover enough of my stocks. I hate it when I'm following, researching, doing anything on a stock." and they don't have a coverage on it. I need more coverage of TRDA. If that doesn't speak to the product, I don't know what else will. Look, this podcast, we were supposed to talk about Caesars. The ticker there is CZR. Me and Jud just ramble, ramble, ramble, ramble. We don't get to Caesars, but guess what? Trrada's got it got the hook for you. If you want to read a byside transcript of what's going on at Caesars and digital and gaming and all this sort of stuff, go to trtrada.comzr. That's trrada trata.comczr. and they've got an anonymized link that you can go read what TroR is all about, read up on Caesars, all that sort of stuff. So, thank you to Trota for the sponsoring this podcast. Go check them out. All right. Hello and welcome to the yet another value podcast. I'm your host Andrew Walker with me today. I'm happy to have one of the people's favorite guests based on the viewership metrics, the amount of response on Twitter. My god. But, uh, Jud Arnold from Lake Cornelia Capital. Jud, how's it going? >> Great to be here. Happy New Year and congratulations to you. New father, >> double double father. Double father. Yep. double man-to-man defense still. >> Oh my god, it's it's a lot. Uh well, we don't have to talk about that. Before we get started, quick disclaime remind everyone, nothing on this podcast investing advice. Jud and I have I mean, I think we had a list of like seven stocks. We were talking through three of them before, so we're going to talk about a lot, but just remember, you know, not investing advice. Please uh consult a financial adviser, do your own work, all that sort of stuff. Jud, you have had the glorious launch. the Twitter account was basically dormant for a month and then you for a year and then you came out, you had the glorious launch of Lake Cornelia, the Substack. I'll include a link in the show notes. Uh just on fire in terms of 4,000 page memos. I mean, my god, people tell me, Andrew, I don't know how you do so much. You're publishing like three 4,000 page memos a week it feels like. But um we we've got lots to talk about. Uh I wanted to talk Vegas. I wanted to talk to But I I'll toss it over to you. You're publishing on everything. Where do you want to start? What do you want to talk about? Well, you can go wherever you want. I I I think the Substack is something I've been thinking about for a while and I I think the transition big picture that I made was, you know, I left hedge funds at the start of 2020 and with like plan unknown and during COVID very rapidly, I had a few people reach out saying, will you work here? I didn't want to work for anybody ever again. So I offered to be a consultant and that was kind of my business for almost five years and which had a lot of positives and I'm still doing that with a few clients. Um one of the negatives that always bothered me which was something that bothered me going throughout my whole hedge fund career and this is something a lot of senior analysts talk through which is it's really hard to pitch a boss or a client something that's obvious. You have to be unique. you have to be like, I have this unique insight. That's always better. And I think generally that that's been nice, but it also put me in a box of like a mistake I've made historically is doing stuff that's too cute by half or just a little bit too fancy, too liquid, and whatnot. And I just had this moment of like, you know, I write a lot of stuff. People like what I read. What if I do a substack where I just say this is interesting? And I think the other aspect of this is interesting. And this is another thing for senior analysts that like it was illuminating. I used to have about 10 clients that would pay me for the consulting thing. What I found and it was so nuts because I go back through my career. I worked at three of the biggest funds out there. You know, as a senior analyst, you pitch an idea to the PM, what's your probability of the PM caring? Usually 10 to 20% the position being put on like 5% less than five. It's really hard. When I had 10 clients, I could see this in real time. So, at least every idea I pitched, I'd have one or two people that shared and would follow follow through. But then I I sort of had this this second uh hand epiphany, and this was something a friend of mine who I worked with at two funds brought up to me. Um, and this just sort of goes to like the business of what we do, which is we don't know which names are going to work. Okay? So, people would pay me for like I just want to hear what you're doing even if it's not what I'm doing. And one of my friends, he said, 'You know, I went through all my numbers for the last three years. When I was high conviction, only one in four, one in five times would the thing actually work. So, I think what I should do with my book is have, you know, these junior varsity positions and then I'll ramp up when I'm start when it's starting to play out. And that's sort of high conviction inflection investing. And that's that's what it is. So, all of this is sort of merged together. I I'm really liking this Substack thing. I I I deeply appreciate the response. I'm like super thrilled with how it's impacting me and my investment process, which is it's I feel like less pressure to be unique, but also do stuff that's interesting. Okay. F everything we were going to talk about before. You said I took I don't know if you saw I was taking a lot of notes. You said a few things that really struck a cord through just things I've been thinking about and everything. So, we're going to talk about those and then we'll come back to Vegas and everything else if we get a chance. Let me start with you said um let's start in terms of let's start with the two cube by half. So one thing I have really been thinking about is hey 2Q by half versus simple right and the simple to me is historically I really liked the financial engineering stories right hey we've got this thing it's going to be a 2% topline grower it trades for 10 times free cash flow they're going to buy back all the cash flow goes to share buybacks and you know the famous financial lever buyback story as they grow they take on more debt so that you get even more like I used to love that story I don't think any of them have worked over the past 10 years and I would think that's an example of simple versus some of the stuff you and I have talked about or done like you know hey this is a dispack that went insane the private equity sponsor needs to sell all their shares the company you know three of the four divisions are absolute garbage and they're going to have to shut them down but this one good company if they can just like refy everything it's going to the moon like that's a really hairy story and I think 10 years ago I lean towards the simple stories and now I lean towards the more complex stories but then I come back I'm like damn these more complex stories will rip your face off when you get them wrong so I'd love to here how you're thinking about it. You've been I would add one more continuum to what you said because the other thing that sort of looped into this and they go hand in hand is liquidity >> and for every name that's worked for me, it's gotten really liquid. And I kept too many names I found where I'm fighting the battle of will it get liquid and I'm buying it illquid hoping that like I'll get the mega payoff when it becomes liquid. And you do the inverse of that and you're like what if I go just to the next level up where I trade valuation obviousness because that's really what I was doing which is the less liquid names the valuation was like transparently cheap where the more liquid comparable names and I'll give a few examples of this the valuation wasn't as obviously cheap but it was already liquid okay so and I'll give you know a few examples of both right like mixt which became powerfle which became ao never really got liquid Okay, it's still obviously very cheap. Well, I don't I don't know if it's obviously very cheap because the stock's kind of gone sideways, but you can like on traditional valuation metrics, you're like, "Okay, seven, eight times EVA like this thing could trade for 20 times blah blah blah blah blah." All right. I looked at like and it really crystallized for me with with uh Nimbus uh or Nebius NBIS. Um, you look, you were the one, if I can hop in here, you were the one who told me about Nebius, a few other people. I can't think of a stock that I have traded more poorly. Like, if I had just bought it when we talked about it, and I did and never sold a share, I'd be be a lot bigger office that I'm talking to you, and oh, that that stock just in >> with Nebius, you could push back on everything. Okay? And we started talking about this at 18 and like I really had a chance to lean in at 20. Okay? And that was after the venture capital funds came in. this was post tariff and like you could really >> the number one thing I would say to people when I was talking about it is I'm 100% certain that people will care was trading like one to two million shares out of the gate I was like this is going to be a QQ like highly liquid trades 25 million shares a day it's just like you have too many pisses pieces with arcade you know um like a management team that's known you have all these pieces and it became super liquid and so if something is already liquid or your high conviction on it being liquid. And the G growth story is somewhat tangible, you know, and not hard. And I put ASATs in this bucket, too, which is as one I'm not involved with, but it's one like I look back over the last 5 years, it's one like when they got that first contract and it ripped to five, then came back to four uh like two days later and you know, the warrants were at one. I'm like, people care. This thing can go to 50 to 100. People would say, "How are you getting there?" I go I don't know I just know it's going 50 or 100 and it's liquid is all is all get out and so you know TE is an example um which is T1 energy which was frier and we're like I I have two notes on my substack about it it's a solar name but it's one where like I came to it I'm like I knew this at Dispatch it was always a liquid one it's liquid still now we have a story this is worth my time exponentially more than the other stuff so if I could just so it sounds to me liquidity like you're really talking about liquidity things that trade and I I like how you framed it things that people care about right as uh whether you believe the technology or not and I know people on both sides of that of believing the tech and the optionality there whether you believe it or not it's space communications people are going to care NBIS it is uh data center cloud data center for AI right people are going to care if you get it how do you think about people are going to care to which I've done some work on and we might talk about later. Uh that that probably fits nicely. There's a lot of shares out there. They had a big private equity sponsor give out shares LPS, which is obviously a disaster. People probably care if it works, but you know, it's so less so. And I like healthc care services. What I'll say is when you're right, they're always going to care. I feel convicted enough like and the the care there though is you can get you have to get more granular which is it's a 20% grower in healthcare services that has a fixed capital structure and a like a multi-year you know 5 10y year massive like size to tam and high quality business like if they can execute people will care they're going to sh they're going to show up let me ask the liquidity question a different way when you said as and and NDIS you know I think What pe what I hear a little bit is, hey, I'm looking for the story before it inflects or as it inflects, right? And that's an interesting style of trading, but it doesn't have anything with valuation or fundamentals. So, are you like kind of increasingly divorced from that where you're just trying to find, hey, I want the story before it inflects. And like I know people who they want the story before it inflects and then it inflcts and they sell and maybe it's a zero long term, but they, you know, they're out before it goes. It went from 40 to 200 to zero and they're out at 150 160. one piece to that which is which are critically important which is yes I'm less tethered to traditional valuation metrics >> um and more tethered towards story and liquidity okay >> but because I think my advantage is an ability to move quickly and to appreciate things that have a big I think it is right tail the good one or is left tail the good one >> right tail is generally the good one but hey the world's left tail huge right tail so like let's go back like I started on this journey really, you know, leaving traditional valuation stuff and thinking more conceptually about like just the nature of inflection investing really you know I'll say in 2017 2018 at my last hedge fun when I had to start looking at capital market stuff because I started the first eight nine years of my career were in distress debt and I was the energy commodity chipping like believe me I was as tethered to valuation and I I was pulling up a uh I was prepping for this podcast and I pulled up and I I saw uh you know a fund in 2013 files a 13D and says hey Jud Arnold will be resigning from this board and I was like oh that was a distress debt board seat like that's that's the shipping one um >> but um which was a I mean I still remember you were buying 10-year-old BLCC's for $11 million and it was just like you're buying them at at scrap. Um but um I thought like really getting on my own and leaving in 2020 and leaving hedge funds completely you lose and this really goes to like the nature of like what I do and there the more people I meet sort of on this journey of like it's mostly people who run money just their own money. It's like hard to get other people's money to do this because but it's names that like are hard to pitch but you know you want to pitch them. So like Nick and I just keep going back like NBIS there's no person I pitch that to that said this is a terrible idea. I every single person was like it's awesome like help me with the sum of the part story because that's what I can lean on to pitch my boss. >> Yeah. >> You know like I can pitch downside and like as you know another one and WGS I would throw into this this bucket which is this exo company and genome company that went bottomed at like two and went to I think it's at 140 right now. It's another one. Um, >> no, the way I've kind of thought about this, and you can tell me if I'm wrong, this might be too married to fundamentals, but what you don't want, you don't want a stock, as I said at the beginning, that's trading at 10 times price to earnings, right? Because that is the quants, the computers, they're all over that. That's fairly priced. What you want is I I'm sure you're at least some familiar with Talon, TLN. This is a company that to very much simplify it for viewers, they own a big nuke out in PJM, right? And what you want is somewhere where, hey, the financials mean nothing, right? It has a 500 megawatt G, a 500 megawatt nuke or whatever. And what you want is a place where the financials mean nothing because all of a sudden the demand for meats is going up up up up. And it's hit that inflection. And you'll never see it in the financials trailing, but like the megawws are just like infinite money printing machines. I don't know if that quite made sense, but that's like how it does. And I would go further on that topic, which is I mean Talon, look, Talon is the spin-off for PPL. PPL was my biggest equity position at my first hedge fund. Um, it like made the start of my career. I've been to that plan. It's awesome. Um, and when it came out, I looked at the I was like, power hasn't worked. I was like, that power was my original. >> You want to know why I didn't feel like it? Say I did distress debt. I was involved in TXU and a few others. And when it came out and I had all these generalists pitching it to me, I was like, you guys have no effing clue how hard this is. Like all of these go bankrupt every seven years. Maybe you catch a cycle. Never thought you'd catch a cycle. So that's where I was sort of going, which is you you covered power for a while. How many years did we watch with Vistra? Oh, it's a 20% free cash flow yield and like all this stuff like and you like I I literally moved away from power. It was where I started in investment banking. I've been to more power plants in this country than anybody probably on Wall Street. Um I bought power plants like in the Calpine bankruptcy. But I I I don't know where where CG is trading today. CG is the nuke spin-off uh from constellation. Like last time I looked at that 35 times earnings >> and so to and the point I would make and that was after more than a decade of all these power names NRG all this stuff trading at 15 to 20% free cash flow yields the the story being share cannibals when you get the wave of generalist money coming in and the story changes you are going to price at something stupid and you know and so what in terms of focus I I don't know if it's like divorce from reality or valuation reality, but like I deal in the liquid world. And I think, you know, I the first two funds I worked at were 15 to 20 billion AU uh AUM at the time, single manager funds. You were really restricted on stuff you could buy. You can't play this game of I think people will care, buy it, you have meaningful size, and then exit. Like you have to actually be correct when you're at that AUM size. You know, when you're running 500 million, a billion dollars, like if as long as there's a little at the end, like does it matter if you're not intellectually perfectly correct on a 20-year basis that the terminal value was X? Oh, like, you know, money flows in. So give yourself credit to call what I'll call skill-based alpha or ski sorry skill-based sector alpha which is like a factor when I was at the big pot shop which is there's there's single company idiosyncratic and the deop for people who don't you know most people get it the average stock and this is there's a wide range right 40% of the return is typically the market 30%'s the sector 30%'s the company so if you can call the sector that's almost that's worth basically the same thing as calling the individual stock and it's best when you can call both, right? So you're looking for stories where the where the individual company and the sector are both trading in value and when you find that like does it does valuation matter in the whole checklist of of the stock decap not really you know one question what you just said TOI and I'm just using TOI we can talk about it later but TOI is small enough and there is sector right it's healthcare there's going to be oncology payments Medicare medic all all this sort of stuff but it's small enough and unique enough like when I think healthcare I Fizer, I think tenant hospitals, right? When you're dealing with something that's small and a uniqueish business model, do you think sector matters as much? Does it matter just because of the tailwinds or when you're doing that? Like to me, I would say, hey, if Jud and I were looking at tenant healthcare, I'd probably agree with your 40 3030 and we could split hairs if it's 30 for what, you know, but when you look at TOI, I'd kind of be like, yeah, on a day-to-day basis, maybe it's like probably 40% market for something that small 20% sector. Overall, I I think like the stock on something like more a little I know you were talking about liquidity, but a little smaller, a little more ei liquid uh with a little more inflection. I think it's actually going to be a lot more stock. Do you think I'm wrong or did I choose a one of the things I like about TOI and healthcare services in general? And this is this goes back to why people will always care for a healthcare services name >> if it's showing it because you can have these many, you know, what is the sector for TOI? It's literally a company onto itself. I'm do it's still the same process which is do they have a story and I mean this is where it's like is it the company or is it the sector you know but certainly let's well let's start with market for a second economically completely insensitive shortterm yes there's market implication but on a two-year basis 90% of the idiosyncratic move to the stock is the the stock itself for for something like TOI and that's something you can size a lot more than you know a commodity based company or a consumer retail GDP exposed per cyclical thing. So that's one of the reasons why I was able to say to myself, you know, hey, I'm going more liquid, but like, hey, this is a really, you know, this this is this is one to sort of take that risk. But with TOI, where I really ramped the thing up because I was involved with it, I wrote a lot about it in 2023, uh, and I left the scene in 2024. I roundt tripped the thing from 35 cents, went up to 220, I got out at 65 cents, and the thing ended up bottoming at 12 cents uh during tax loss selling last November. Uh and it bounced off, you know, 480 a share a few months ago. It's back today to about I think four bucks or 420. Um you know, and we put it, you know, our our substack note that we put out. We think it can be somewhere between 15 and 30 bucks uh in two years. It's still trading under one touch revenue, which is just nuts. But to go from like a reasonable position size to like a full massive ramp into the thing. Um, you know, and I own, you know, somewhere between two and 4% of the company. Um, the story of oncology services really, you know, in this multi-year penetration, which is basically with oncology services, they give cancer, they dispense cancer drugs. That's the business. They buy the drugs from the drug distributor. They give them to the cancer patients. You can go into the clinics and get the, you know, fluid chemotherapy or they'll give you an oral chemotherapy drug like Katruda. Okay? And they make 15 to 20% margins. What their business model is verse other guys because about 50% of the people patients go get the service via a hospital and that's the highest cost thing and about 95% of the ecosystem is fee for service. The next level is all the big drug the big three drug distributors uh McKessan Sora and well whatever the source bergen is and Cardinal Health are starting to roll all these up. There's a private all the private equity firms are coming in TPG owns one of the biggest ones called oneon oncology their business model this is the drug distributors rolling these up is saying the fee for service benchmark for drugs is ASP average sales price plus 6% that's what you get paid well we're the big three drug guys we can procure ASP minus 20 and so we can make 20% margins on ASP plus 6 in a fee for service model and we're cheaper than a hospital because we're going to do it all in an in an outpatious thing so we're going to be lower than the fee for service benchmark on patient services when you come in for your fluid chemo and then on the drug dispensing we're going to be really good because we can procure cheaper. What TOI does is one level further, which is they're going to look at this menu of 10 drugs. Look at what what you're doing. They're like, "We're gonna service you. We're gonna give you This is sort of a weird way. It's hard for me to describe this without sounding like morbid. Like they're they're doing what's best for the patient, don't get me wrong, but like if you can get the same patient outcome for a $2,000 a year therapy versus 20,000 a year, TOI is like we're going to be we're going to do the 2,000." Okay. where the big three drug distributors they want volume like max volume as much as they can to goes to individual health plans you know all the big Medicare advantage guys and says we will we will be 20% cheaper than fee for service we'll take this and the typical Medicare advantage premium payment per month per member is you know somewhere between a,000 and 1,500 bucks the oncology piece is somewhere that TOI touches is somewhere between 30 and 50 bucks to goes to a you know insurance company like Humanana is like, "We will take that capitated risk on your whole network, all your members, and we're going to lock in 30 buck PMPs and we're going to save you 20 bucks on top of saving you 20 buck PMPs. You're not going to have to think about this. We're just going to do the whole thing. We're specialized in this." And so they're really ramping up, you know, as they expand. The business used to be 95% California. California is sort of a weird island into itself in terms of healthcare. um because you have all these big physician groups that act as like mini insurance companies. TOI just is really expanded in Florida. So in California, the PMPMS because the physic physician groups do most of the stuff in terms of administration, delegation, stuff like that. And credentiing is like $3 PMPs. In Florida, they're earning $35 PMPs. And there's a bunch of states like Florida. So um 20% margin business. you're you're seeing what I you know product market fit in terms of this new service. They're the only people doing it. He got a new CEO in about two and a half years ago when the company was really struggling. Um and he really leaned in sort of you know pulled this out of nowhere. I mean the company looked like it was going to go under. Um but let me jump in. So all right I I thought we were still talking this stuff but we're talking COI now. I I've looked at this a few times and I guess my my first thing is as you said they're managing the oncology for uh fee for service. Why can they do this so much cheaper? Well, like I understand, hey, nobody's going to argue with me that fee for service there's tons of fat to be cut, right? Like as you said, guess what? Just forget everything else. If you give someone a 6% margin, they're incentivized to give you the $20,000 pay uh drug over the $2,000 drug just because 6% on 20,000 is worth a heck of a lot more than 6% on 2,000, right? So, I I totally get that. But why are these the only guys who can do it? Like, why can't someone else do it? Why can't you and I start this up? Why can't the drug distributors, as you said, do it? Why can't the hospitals do it? Like, why are these the only guys who can do this? >> Sure. Two levels of this, right? So, most of this care is coming through hospitals. Okay. And this is hospitals is like a two to three% margin business. You can go through AI. You can call a million GLG or Alpha Sense experts. No one will give me the actual number other than it's material and big part of hospital earnings is dispensing cancer drugs oncology drugs via their pharmacy. Okay? And so from the highest level at CMS, take something at CMS, Centers for Medicare and Medicaid. Okay? They crack down on scam durable medical equipment. That's where they they've gone. like oxygen's been a big focus. A lot of people you and I know I don't know if you own it, the Sonia wave. Um >> I I I knew I thought you were going to mention I was like look I I've had a lot of people wound care is a really scary area to me and I'm not a >> solution to the wound care scam but CMS is like really going after this wound care like skin graft thing. Okay. CMS isn't going after oncology drugs because one it's oncology. They don't want to kill people. two, the hospitals behind the curtain are tell CMS like, "Hey man, this is like 25 30% of the total margin of the hospital, which is a 2% margin business, is dispensing oncology drugs." Like, if you crack down on this, there's going to be real issues in the health care system. So, you start at that level. All the big three drug distributors were like, "Oh, you're going to let hospitals just like charge for the highest drugs and be really expensive for, you know, inatient? Great. We'll undercut them with outpatient oncology delivery at ASP plus 6 and we'll just be way cheaper and it doesn't matter that we're volume based, you know, just trying to pump it because the fee for service benchmark is set by this insane hospital spend which CMS is like winking and nodding and letting happen. That's a huge business, right? So, if you're anybody but the big three hospital or big three drug distributors, you're like, what can I do? So TPG when they bought one oncology three years ago who did they partner with Bergen at the time now you know they changed the name to Sora or whatever the heck the the company's called. Okay because all the value is getting the drugs really cheap. Um TOI doesn't really have competition in the next layer which they do which is like okay we take we look at what the big three guys are doing. What if we instead of prescribe, you know, being really focused on volume, what if we prescribe, you know, a cheaper m cocktail of drugs that that we know does the same thing. Okay, that's a huge business. Now, what's the negative of it? it doesn't scale as fast because you need to have a a great oncologist in every, you know, in every era or in every area that you are and you need to get oncologists to cooperate with you to to like stay on the menu, right? And so the big oncology groups, what they struggle with when people try to do this is like if you don't own the oncology clinics yourselves and you do it in an MSO model, these oncologists that that are in your MSO, they're just not going to cut cut rate. They're not going to deliver enough value. And this has been the problem for EVH, um you know, Evelyn Health, which is like a valuebased provider, um where they don't really, they don't have any doctors. Their MLR blew out massively. the stocks gone from 35 to four over two years because they don't have enough control over the network and clinician behavior. So for TOI you need to have an oncologist in like you need to build out all these clinics that takes time. Each oncologist you hire is six to six to nine months. The aha moment for them was in Florida they realized because of the market structure of oncologists and patients they could get leverage over the oncologists and execute an MSO model. So let me start with where MSO doesn't work. TOI is in Nevada, mostly in Las Vegas. Okay, so Las Vegas is just an island. There's three million people in that metrop, you know, that MSO or metrop MSA metropolitan statistical area. Okay, I don't know, there's like 50 oncologists that matter, right? If you do an MSO network and you don't like what the oncologist is doing, you call them up and you say, I don't like how you're prescribing drugs to all these people. you're doing it way too expensive. Then an oncologist can say, well, I control the members. Where else are you going to go? There's not that many oncologists here. I don't have to comply. And whereas in Florida, you have density of patients and you have density of oncologists and you have density of hospital. So you want you want these areas like so it's it's Florida, Texas, Ohio, and I want to say North Carolina are the markets where you have this convergence. of hospitals disproportionately are setting the fee for service benchmark. You can get leverage over oncologist because there's enough density and there's enough people in every area area. So TOI think they think they can service areas in Florida and other like you know three or four other states with only 20% own clinics and 80% MSO and that's how you scale because if you don't have an MSO network the scaling is going to be so slow. you're so much deeper on this than me, but let me ask I think like the question when I was researching it that popped up, you know, again, I looked at this back in 2021 with the Spack deck. Their Spack deck when they did this, you know, the peers they listed and the business model is not the same because it's oncology, but it is it has a lot of rhymes, you know, in terms of, hey, the golden market is Florida. Hey, we're undercutting hospitals. The peers they listed were Canó, Village MD, Oak Street, One Medical, right? >> All the primary care guys. Yep. And they all went I mean I got beat up but like you know. >> Yeah. And all of them either ended in tears for their investors or the investors managed to get the bag off to someone you know like Oak Street gets bought by CVS. CVS takes a $6 billion write up. Cano like as you're saying this I I I knew like Barry Sternlick takes Cano public through his IPO says the CEO of Keno is the best entrepreneur. >> I know I look I got I I Yeah, I got hurt on that one. Like so let's talk about what this thing isn't. Okay. Um the there's no MLR risk like everybody like the MLR variability. These guys are delivering mid70s MLRS but it's not like primary care where you can have like loose season or this stuff. The biggest driver is drugs. It's drug costs. They know they know that they're like all we have to do the the benchmark is so high. We have this huge gap and we we're just going to prescribe these different drugs. And then the second piece is cost was that they've shifted. They were four to one oncologist versus nurse practitioner and now they're they're getting nurse practitioner versus oncologist is getting one to one. Um so they're saving on labor but it's an itchy business. They screwed up. Part of the the other reason is this was this is a recent pivot over the last 18 months where they shifted to the sort of delegated model in Florida. What they did out of the spa is they just said, "Okay, we're going to land grab across the country." They took SGNA from 40 million to 120 million in two years. Built out enough all this capacity and the patients didn't show up and this they just lit money on I mean they they lit money on fire. Fast forward to this year or or so I'll say 2024, they started adding a lot of contracts. They're they've got to uh evad break even in Q4 and now you're gonna start getting you know 20% incremental margins. >> So the gross margin on this business I looked at that is like 15 or 17%. How do you get 20% incremental margin with 15 or 20 >> this is the other piece of how gnarly this thing is on a capitated business the margin is 15 to 20%. You have a big fee for service piece in California. All right. But you also the fastest growing piece of their business this year in Florida is fee for service. Why? They built the clinic. They get the oncologist. While they're waiting for these capitated contracts to come in, they're open for fee for service business. And what they've been stunned with in a pleasant way in Florida was the demand for outpatient because their service level is so much higher than a hospital um and other oncologists. they're getting all this fee for service business in. So as that fee for service capacity transitions or that I say the capacity transitions from predominantly fee for service in Florida to capitated over the next two years as you start layering in all these contracts the margin you're going to go on the on the dispensing side it's going to go from ASP plus 6 to full capitated and on the patient services which is the incl clinic you know um chemo IV stuff and it's also some hematology stuff that all goes from you know c you know fee for to fully capitate it. So, you're going to win. You're going to get a margin. >> I think that all makes sense though. I will be honest. It you're deep into this. It's over. Let me let me ask the last question. I mean, the same question I would ask when people were pitching Molina Healthcare or all the health insurance like I do all the Medicare health insurance. I do worry like, hey, even if you're right, CMS is pretty rigid, right? And if they came and they saw this or the insurance companies said like, "Hey, you guys are all like on all fixed costs and you're making a good profit, like we don't care that you're cheaper than the hospitals. We're just taking your rates down and you can either go pound sand or you can take it." Like I do worry like just like the ruling from on high if that makes sense. >> Yeah. Not like I mean I sort of walked through this on why like it's not like durable medical equipment or the skin graphs, you know, because it's it's it's a huge piece of hospital earnings. Yeah. And you know, the big three drug distributor rollups, like CMS loves them. They're like, "You're saving money. This is great. You're on the right side of this." I I think the most telling discussion I've had with the company. I did a site visit. I got to meet the chief medical officer and their headcologist in Florida. Their head Florida oncologist actually was the oncologist at Chenmed, which is private, but it's like universally considered like the best valuebased primary care provider out there. He switched over to TOI 2022. He was like and I this whole talk with him he's like this is the way it's supposed to go and whatnot. The most illuminating conversation I had with him is Katruda comes off patent in I think 2028 and I I asked them I was like what do you think happens? Do you think it's just a one for one immediate step down as biosimilars and generics step in and is it going to go down? And they both like immediately looked at me they're like no way. I go, "So, you're literally I they're like oncologists aren't going to move that quickly and they're everyone's going to play the game because it's it it's over 95% fee for service that they're like maybe over four or five years it's going to converge to the lowest like not even the lowest cost Katruda, but like a lower quartortile Katruda generic." They're like, "It's going to take years for that to play out." I go, "So, we could literally be making 20 30% of the company's profits just on generic Katruda versus the benchmark." And they're like, "Yeah, you know, it it I remember we a long time ago there was a roll up by back that was just like, hey, this was over the UK, I believe, but it it was basically what you're saying like, hey, you buy old brands after they're off patent, and this was like 10 or 15 years, and there's still some doctors who just like prescribe the brand and you've got a little bit of pricing power. It's not like the greatest thing in the world, but when you pay a nice multiple, it's like it's actually a royalty stream. That's really interesting. Let me go back to just finish though for people for people listening just very we story about it. Let me give you everybody the valuation number real quick. Okay, this thing's trading at 7 times revenue. It's got it's going to have zero IBIDA in Q4. It's been negative IBIDA. I think it's it's going to do 20 to$40 million of IBIDA next year. And I think you're building up to 75 million bucks of Ebada uh by 2027 exit rate. Um there's about 130 million shares. Net debt's about 40 40 million bucks. My target I think this can go to like two to three times uh sales if you really believe in it because the TAM is so big as they execute more states, but this is going to be it's going to be time as people buy in. Street numbers are also insanely low. They've beaten and raised all year. So, I think the street revenue number this for 2026 is about 600 uh and change. Don't quote me on that. Um, but you're going to get guidance coming up and I think just mathematically I I think you still have a lot of upside on the annual guide. So, I'm going to start thinking about this when it gets closer to two times revenue if I'm so lucky. Um, but I I think there's just a ton of valuation room if this thing starts working. And I think the exit here is likely private equity. you know, one of the private equity back or drug distributor back guys shows up and buys you. >> It's It just worries me because this I mean, look, this was this was the piss for all the valuebased guys and a lot of them did get taken. I know, but there's no there's really no MLR risk. And it's also like to add though to your bare point, like >> EVH really scared a lot of people because that was the value based on name. And it's worth it for people to go through both. Like EVH is a not really that great of a business like high customer concentration, whatnot. But anyway, >> I'm going back to my notes from at the start of the episode when you were talking about launching Lake Cornella. You mentioned uh pitching to a PM as a senior analyst versus pitching as a consultant or maybe you know writing on Lake Cornia. I'm interested how how have you seen people you know def work with you differently as a consultant or when you write something up versus when you've kind of been the senior analyst or the head of research or whatever it is at places. I think the biggest thing is when you're a consultant and like look I've done well enough in my career. I so it it's part of that too where like if people don't like the name I'm just like okay great like I'm not gonna take it personally. This isn't my job. I don't need to like I'm not upset about two things. Whereas you know I'm just I'm upset that you don't like my idea but like okay I got other clients I can pitch this to and I'll find another name. When you work for somebody how many good ideas are you realistically going to come up with? >> That's the tough thing, right? like you're an analyst and you're convicted and it's just it's why most analysts don't last for forever with the PM because you get one name, you do a lot of work, you get convicted. Hopefully the PM likes it, but if they don't, like if you're a 10 out of 10 and they're a meh, it's really hard no matter which way. >> Exactly. You have this transmission problem. Yeah. >> Which is, you know, and then even if they like it, they're going to buy it when you don't like. They're going to, you know, they're not going to trade it perfectly. You wouldn't size it. And so you have this it's a transmission problem of things that you would love to put in the book where you would like to put in how that actually happens and then your compensation you know as a function of the latter versus the former you know and then I think it's something you know your own's our buddy too uh from one one main one main capital he he did a great interview I think it was like a month ago and he made this point about going off on your own that like investing is a deeply personal uh experience and it's like art and at some point you just reach a point where you just say you know I want to do it my way. Um, and that's I that really resonated with me because it's like as I've gotten older, my willingness to sort of engage with people when they don't like something. I like having the veto of oh, you don't like it? Great. I don't owe you anything. I'll move on to the next one. because what you want to guard against um and I think one of the the other reasons why I love the substack verse sort of how I was doing this before which is getting high conviction pitching a memo and then screaming about something on Twitter is you don't want to you want to stay intellectually as open as possible and the more debates that you have to like viciferously defend yourself I think it's a negative and it really impacts your ability to think clearly and cogently you know the big decision I made just go you know going back in 2020 25. I mean, it was my my decision of the year was I was very prolific and public on my feelings on stable offshore. Uh, and we got back involved, you know, a couple weeks ago. Um, and we'll we'll see how that plays out from here. That's certainly like you can do five podcasts on that from here. But a name that I was very public on, you can start getting dicey. And I I I sold the whole position in the 20s and I I like I I need to keep that ability to do that and I I you know and >> the way the news flow on table works you could do a podcast on them every day. Uh probably the let me let me ask you a different question. One other thing you mentioned at the start and this is something I've been thinking a lot about having a small position and ramping it up as it inflats. Right. And the reason I've been thinking about this a lot is because most of the big successes I've seen are are very similar to what you think. I I'll give one. My friend Jeremy Raper, right? Uh he Twitter >> when Twitter was getting getting su or suing Elon Musk to close the deal. >> You know, I I specifically remember there was something that came out in a court docket and Jeremy was like he'd been following it. He had a small position. He had a small position. I don't want to like give away his trade and I could be misremembering but and he came and he was like this is the inflection. Elon is done. He cannot win this case. And he pulled the trigger. And like my I I just had that one in mind because it's Jeremy. It was kind of public. And but the best guys I see do this. They're waiting. They're waiting. And then there's the inflection and boom, they hit it. Right now, I do worry on the other side like it's very easy to see that and pull the trigger. But you know, you know how it works. You're following a name deeply and you see something and you're just so convicted. There's a lot of selection bias. And also the guys who I've seen blown up have been, "Hey, I see this. It's the inflection. Boom. boom, I pulled the trigger and you were wrong. So, I guess I want to ask you like how do you weigh, oh, this is the inflection versus, oh my gosh, am I just confirming my own biases and you know it's very easy. I love this, I love this. Oh, all the news positive. Oh, I was wrong and it's a zero. So, how how do you kind of weigh that as you're looking for the inflection? >> Well, look, the biggest defense against all of this is make keeping a liquid portfolio uh and having retaining the ability when you're wrong to hit the eject button as soon as possible. Like, we're not burdened, you know, I buy a 1520 billion dollar fund. Like I'll just go back like the first guy I worked for. Um I mean there was two of them who ran the fund. One guy did everything but run the money. One guy ran the money. But people be like oh you see the returns they be like whoa that's not that great. I'm like you try to run 20 billion at 14 net with 4% ball. Tell me how that works for you. It's like you know every dollar of AU just gets exponentially more difficult. you know, for us, we're hanging out super liquid things. And I mean, I think that's that's important. I sort of mentioned sort of like with Twitter and with Substack sort of and and you know, keeping myself as mentally open as possible. I I think that that's a big piece. The second piece is at this stage, I kind of know I I felt what it feels like to be right enough times. And so holding on and being like, okay, it's I'm going to get conviction. it's going to come and if I don't have it, all right, or if I do that and I'm wrong, you know, we can exit because it's liquid. I think >> can I just let me push back on one thing you said? You said a few times, if I'm wrong, I can exit because it's liquid. And I think I would guess that you are a much better trader and changer of your mind than I am. But like Intel, I I'm sure you don't know this, but this is a company that a lot of people I looked at I looked at deeply. I to me I saw clear red flags and a lot of people looked at it and a lot of them got out you know they bought in at 20 30 it ran up to 200 a lot of them got out there a lot of them got out at 100 but one day you woke up and hey the co is a fraud the stock's been halted and it's going to open up and probably via zero right and not investing advice I don't know but I I guess my that's an extreme example but you keep saying hey if I'm wrong it's liquid I can exit I mean sometimes you wake up to these things and you're wrong and it's not liquid something yeah if you something with downside jump in it and like you know sable's topic toour whether there's actually downside jump jump to default as I would say in a CDX context you know or a risk our trade that's got break risk however you want to describe it you know when you're in names you know I'm going to remove fraud unless it's like fraud is clearly on >> I just use because it's a good the stock literally got halted so no matter how >> good you know certainly like it was out there that like hey maybe this guy's sketchy it was a spack like you had to like ascertain like at least a 5% chance of that, right? Or something with huge quarterly earnings volatility like a consumer retail name, something where you know, you really get in there and you're like, "Wow, most of the stock falls like quarter." So, I I I think I would wrap that all into this, which is a function of being able to size something is directly related to your ability to ascertain and feel conviction on your downside outcome. >> And that that's it. And so like you think about let's just start with Sable because it's top of Jour versus you know TE or TOI right like you have to respect the fact that Sable like maybe the California coastal commission or the governor of Cal like here's the menu of scenarios where you could wake up to you know down 25 down 40%. Right? And like that's realistic and that has to impact sizing, right? And so because you're trying like think about it threedimensionally, right? It there's two there's a few aspects to making a lot of money. There's the stocks that you like, right? And then you think about the total potential P&L in a year, right? From the price that you like it to the price that it goes. And you're trying to capture simplistically as much of that bar, be it horizontal or vertically, I don't care how you think, you know, pick one. You're trying to capture as much of the bar as possible. And it's like the whole Bernard Baroo or or some other trader was like, you know, you miss the first 20, you miss the last 20, you capture the middle 60, right? And that's like if you're doing it perfectly, that's sort of Steve Cohen, too, uh, as well, which is never try to call the bottom that the market will tell you and wait for a breakout. Okay, the second order aspect to that debate is sizing as well. So, it's really not vertical or horizontal bars. It's really this cube, right? Now, the other side of that cube, you know, the the potential P&L from $10 a share to 20, say maybe that's the range of the year. How big were you at 10, 11, 12, 13, 14, all the way up to 20. And then there's the downside, you know, below the iceberg, if you will, risk that you're taking, which really bleeds into portfolio management as well. So, it's not just are you right. So, take the name for three years. my probability of being able to ascertain and understand it correctly projected is it in my circle of competence? Well, it probably wasn't at the beginning three years ago when I put the trade on. When I really ramped the thing up, I'm like, I think I'm right. My conviction level of me missing something is very high. Here's the bounded downside. I can really size this thing up. Um, and that so that all wraps up in one thing. And I I would agree with you like I've been guilty of this as well. like there's certain names you just can't sign, >> you know. Let me let me ask. So, we mentioned Nebus at the beginning and for those who don't know, Nebus is the old Yandex. They basically, you know, Russia invades Ukraine, Yandex gets force. They emerge and rough numbers, they emerge, the stocks at let's say 18. They've got $15 per share of cash plus kind of three startups that are worth anywhere from, depending who you ask, zero to $100 per share, and they move into the data center business. Right? That's one. So I just said $18 per share with $15 of cash. Now they will burn cash on the data center business. Right now let's just compare it to the other farstream sable billion dollars of debt loan loan tax on mobile. California government does not want them producing. If California government wins they'll never produce a billion dollars of debt. It's a zero right. One of the things I've struggled with and I use those because they're too we've mentioned them on the podcast and they're so too diametrically opposed. Like how do you have those two in the same book? Because for me, like I I looked at a lot of net cash biotechs this year, right? Like trading below net cash. How can I have those in a book with literally anything else because on those it's just like kind of a liquidation to cash play, very little downside unless management likes it on fire, which one or two of them they did light it on fire, but you know, it's it's tough to do that. How do you have something with just such diametrically risk uh different risks in the same book? say both of those if you say sable in 2024 like we put the trade on actually in 2023 when the pre >> we don't we don't have to have only be sable and neb it's a key point though which is sable in 2023 I bought the warrants at a dollar pre-close and for most of 2024 as well I would argue the duration of the investment whether you were right or wrong was sufficiently long enough such that your downside was protected by vault you Now these are 100 ball scenarios and this is where I was going back to right tail. If you if you are correct that people will care and the right tail potentially will be the perception of right tail is big enough right so sable people are like okay if you're right it's a hundred bucks the stock you know was trading 15 bucks before Santa Barbara settled with them on the valves in 20 in the summer of 2024 um you know what is it just an option theory right like they had enough cash the coastal commission hadn't woken up yet you didn't think you could die but like if you were going to die like you were going to die two to three years from now when you're sitting there in 2024. So like what is that worth? It's worth a ton. And Nebi is too like that's what got me there which which was okay the sum of the parts is kind of helpful but like okay if we play this out these are the best data center guys out there. They're like execution Jedis. They have the best relationship with Nvidia outside of any company in the United States and people are you know they're vetted by institutional investors and whatnot. I was like, "Okay, this is probably, you know, I I I was like, this is probably 75." How wrong I was. So, it's sort of, you know, a 10 by75, but with two to three years of duration. Okay. So, then like even if I'm wrong on the sum of the parts, math, day one, like is it really going to get worse than 15? And but this is where time becomes the enemy for you and you have to be disciplined as well. This is where liquidity, right? So Sable or, you know, Sable did, you know, struggled. It bounced off 303 times in 2025, but you got late summer after the GEK ruling and nothing was happening with the fire marshall. All of a sudden, you know what you were leaning on in 2024, which was an option with massive duration and massive massive >> options really start. It's really compressed. And so if you're not going to lean on valuation traditionally, you have to at least lean on option theory which comes down to right tail potential and then vault. That makes total sense. No, it's it's a really and you know I will say I don't know if you're following the Warner Brothers Paramount Netflix deal. Uh it's probably a little bit larger than the stuff you normally I have. Yeah. >> Yeah. I get a lot of people who are like, "Oh, how can you own Warner Brothers right now?" Disclosure. I own Warner Brothers, I guess. But how can you own Warner Brothers right now? there's uh antitrust rights. I'm like, look, there is going to be antitrust, a discussion on antitrust and we can have that, but in the next 30 days, you're not going to get a DOJ or FTC ruling. Actually, the only one you could probably get is positive if they cleared uh if they cleared Paramount. You're not like that's a conversation for a different day. >> I would I would go further with this point for people and I bring this up like so after I left Distress Dad, I went to a big pod shop. They relaunched their event driven group. I was the non-risisk Aarb guy on the risk arb team. So, I got to see a $4 billion risk art book and like this was right during Abby Shire and the inversions and whatnot. My team >> the uh what was it? It was the uh what was the inversion apocalypse? There was two of them. One of them was >> Fiser and then I'm not going to remember the other one if you said it's another drug company. >> It was Fizer Allergan I think and it was >> Arban >> but you know then my team watched you know I had fun at Newberger Berman. They're still there. Uh um it's not my team anymore. I went to 2020. Um but I got to see you know seven eight years of risk. I think it it should be mandatory for any event driven investor to study the ACORN broken merger. Uh so for Zenius >> Oh I I know this one. Yeah. >> For Zenius. This German company was buying Acorn. This this generic drug company. Okay. They sued over a Mac material adverse exchange. It was going to Delaware court and nobody wins on a Mac. Now did kind of look like Acorn lie like their facility didn't work. The stock was like 10 like I think the takeout was at 32 or 33 bucks all cash. The stock was 12 bucks into the trial and you had this 25 day period before the trial started and the stock went from you know 11 to 12 to 18 during those three weeks. And you talk to people and by the way, Presentius won, Acorn was zero, it went bankrupt. But to your point, and this is sort of on downside risk and and narrative, right? This is everything. Everybody, it was the most genius trade watching that thing unfold because the people wrong it. You had a m a lot of people were short and all the long guys were like, "Everybody's short. You can't die before the trial. There's a trial. I know." And the the the thing peaked a day be a day before the trial started. the stock peaked and you know pro it went from 18 all the way down but they're like it 30 you know do your probability weight 33 verse zero you know >> I also don't think people thought it was a zero zero at the time right so I don't think people thought that and look until the trial like the company's always going to especially a company that bad they're always going to risk it for the trial right they're always going to take that risk and heading into the trial you mentioned peaks the day before because guess what there might be a settlement right every other me like Acorn Fresn This is so interesting because every other MAE case has basically settled because the even the buyer knows like, hey, we wanted this strategically, right? So, if we can get a price cut, the seller generally knows things aren't great if they're getting sued. So, there's generally a lot of room for a cut. Acorn's the unique case because they were supposed to be running clean rooms and there were cockroaches running around the clean rooms. Like, that's the one unique case >> and it's he's just a f. So you know timeline and monetizing and thinking through an option that like all this stuff it comes together and like the more it's one of the other lessons which is you can you can you know why do I write going back to the substack why do I write a collective you know I wrote about ebank PayPal people are like why are you doing that I go because in everything there's a lesson and you don't know where the lessons are going to come together and being free to explore is just it's it's so fun going back you know to Warner Brothers where you know I looked at it I put on some Netflix. I took it off because I just older stuff was more exciting. But like Netflix is super, you know, where's it now? I haven't I haven't even checked. >> Let's go pull up the handy Bloomberg. It's uh 90. >> I mean, Netflix is super interesting to me. You know, you they free cash flow finally in, you know, inflected. The thing's pooping pooping cash. You had a negative guide into it that, you know, on a single stock basis before the deal happened, right? Um, you had a broken bull story that looks very secular to me. Then you have this which is like, you know, even people long at the long only community throws up their hands which is, you know, is Netflix going to raise their price? And if they don't raise their price, the stock's going to be in mer merger purgatory for two, three years. The best I could hope for is T-Mobile during um the Sprint merger, which I thought was going to be in purgatory for 18 months. that actually the stock T-Mobile did very well. But like that is an outlier of an example of something facing regulatory risk that works. So if you're long Netflix, what you're really rooting for is no, you know, it completes on, you know, your existing terms. That would be, you know, resolution would be helpful. >> Yeah. If you're long Netflix, you're hoping Paramount comes in 34 and they don't raise. The second best thing is you complete the deal on your terms. Um the the worst thing that could happen is you they bomb and then they take on a bunch of debt >> from from a Netflix perspective. You know, I think it's interesting because I I mean they did have soft earnings, but I do think they bought Warner Brothers and they've never bought anything, right? When they when this came together, when this all I kept telling people, man, Netflix has bought one thing in their entire history, right? They they bought that small comic book publisher. These guys don't buy anything. They're not going to buy Warner Brothers for, you know, rounds to a hundred billion dollars. No effing chance. They bought them. They won. And they, you know, it might not have been the best best bid, but it was very close to the Paramount bid. Warner Brothers thought it was Spear. Whatever. I think Netflix is going to have a little bit of taint on them for the next couple years just in terms of investors are going to wonder, hey, what was Netflix seeing in their business that they needed to go buy Warner Brothers? Right? And now Netflix is going to say, hey, great synergies, we can run it the best, all this sort of stuff. And they're probably right, but I think investors, whether they buy Warner Brothers or not, for the next two years, I think investors are going to be saying, "What was Netflix so worried about that they needed to do the one of the largest M&A deals of all time from this company that does everything organic?" >> Fair. I mean, I think that's kind of the thesis from 110 to 90 um on the way down. Um you know, because you had the earnings miss into this and I think that that's what I was sort of getting at, which is, you know, if if they don't screw up like, you know, or if you know, they they lose and they walk, that would be great. I mean, I think the other side of it, which, you know, who know whose uh the synergy number looks really juicy to me on the low side from Netflix, only $2 billion of synergy seems e exponentially low. Uh but so I think Netflix has really hurt more on just the mer the potential merger purgatory. It's interesting. My problem with risk arb since I've left uh hedge funds though, it's like I go through the like once every other year I feel like I find myself in a merger arm situation. I'll put on a position and then two days later I'll remind myself I don't need to do this anymore. I know. >> Yeah. >> You do it and you're like, "Oh, cool. I'm paying for 10% upside, 15% upside." And then you're like, "Oh, if I, you know, hit against people, everyone's look like, >> you know, you got to look at a hundred of these situations to find something fall out." And it's usually the weird thing that falls out. And that's why I'm I'm sort of fixated on Netflix because these three-way mergers, they start pricing weird things. And I think most people sort of get get that. >> Netflix. The other thing I I mean I've got a again big position in Warner Brothers, but it it's they're so big. I I do like the everybody says when something really big happens like hey there's not enough risk or capital in the world to close the spread. And I've never seen for Warner Brothers I when I was putting this on I have never seen a stock get a $30 per share topping offer hostile bid and the day it came out it was trading at 27. I've never seen a company in a bidding war trade below one of the the cash bids which is what I thought was so interesting there. super agreed and then they went hostile. I mean it's just the political I mean it's a fascinating we haven't seen this you know for I can't remember the last one that was really >> well we had fizer uh fizer who who was b bidding them in meta I mean literally just two months ago we saw that was it nova who bit against them I can't remember but before that it had been a while maybe Disney Fox Comcast but uh okay we're way off topic uh this has been great you know we're gonna have to schedule a followup because I have I'm I have 15 questions and notes on Caesars in Vegas that we're not going to be able to get to today, but this has been awesome. Uh, I'll include a link to Lake Cornelia substack in there. I was a pretty pretty damn early subscriber and it's fun reading all the eclectic stuff and everything, but John Arnold Lake Cornelia, thanks for hopping on, buddy, and I'll hope to see you soon. Have a good one. Thanks so much. >> A quick disclaimer, nothing on this podcast should be considered investment advice. Guests or the hosts may have positions in any of the stocks mentioned during this podcast. Please do your own work and consult a financial adviser. Thanks.