Chit Chat Stocks - Is FIGS the Next Lululemon? With Alan Soclof (Ticker: FIGS)

Episode Date: August 25, 2022

Figs operates a direct-to-consumer healthcare apparel and lifestyle company. The business aims to sell its active/loungewear to healthcare workers and this product line ranges from lab coats all the way to socks. Listen as Brett and Ryan ask Alan questions about the company, its business model, and valuation. Enjoy the show! *****************************  This episode is sponsored by Stratosphere. Get started for free at stratosphere.io to get access to powerful data visualizations, specific company KPIs, and much more. ******************************  Access our “Not So Deep Dive” episodes by signing up for CCM+. Sign-up directly through Spotify or Apple Podcasts. If you listen on another podcast player, use this link and create a private RSS feed: https://anchor.fm/chitchatmoney/subscribe Need more information? Check-out our launch newsletter: https://chitchatmoney.substack.com/p/welcome-to-chit-chat-money-plus  ******************************  Want updates on future shows and projects? Follow us on Twitter: https://twitter.com/chitchatmoney  Interested to see more of Alan's work? Follow him on Twitter here: https://twitter.com/AlanSoclof?s=20&t=V47odJnM-U0udxz0SqOz3w Contact us: [e-mail]  Timestamps  Figs | (3:51)  Product | (9:29)  Disclosure: Chit Chat Money hosts and guests are not financial advisors, and nothing they say on this show is formal advice or a recommendation. Brett Schafer and Ryan Henderson are general partners and portfolio managers at Arch Capital. Arch Capital and its partners may hold securities discussed on this show. Learn more about your ad choices. Visit megaphone.fm/adchoices

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join us on there today. Welcome to Chit Chat Money. This is our Thursday deep dive interview where we interview an analyst covering a single stock in about 45 to 60 minutes. And today we have on Alan Sawcloth. Accidentally said it wrong at the start of the interview as Socloth. So don't mind that. Sawcloth. And we're talking about figs, which is- Not a fruit company. no and it's not fig newtons it's a uh it's sort of a burgeoning health care retail brand is maybe the way apparel apparel would probably be better okay um and i don't know did you have any highlights well it's it's and this isn't a knock it's a simple thesis

because they're executed so well and they have this simple strategy of selling scrubs plus other apparel items to healthcare professionals. And the big differentiator is they're stylish and people like it. And it's tough. You know, there's comparisons to Lululemon. There's comparisons to Nike. Allen covers the basis of all this.

Their management, their unit economics, why their margins are so high. You know, the benefits and downsides of getting powered by Shopify, international expansion opportunities. I mean, we cover the gambit here and it was just a great overview. Yeah. And Alan, I don't know if we mentioned this during the interview, but he has kind of this philosophy that makes investing pretty simple sometimes. He says he likes to invest with his eyes. I think FIGS is probably a great example of that sort of thesis or that approach to investing where you're kind of probably seeing it in the real world and seeing it be adopted by a lot of healthcare professionals.

So I'm going to leave it at that. Without further ado, here's our interview. Welcome to Chit Chat Money. On this show, hosts Ryan Henderson and Brett Schaefer interview industry experts and riff on the world of investing. As a quick reminder, Chit Chat Money is a CCM Media Group podcast. Ryan and Brett are also general partners at Arch Capital, and Arch Capital may have positions in the securities discussed in this podcast.

Anything discussed on Chitchat Money by Ryan or Brett or any other podcast guest is not formal advice or recommendation. Now, please enjoy this episode. All right. Welcome in. Today, we are joined by a friend from Twitter. And we went on your podcast a long time ago, but now we are returning the favor in a sense. And we're having a deep dive on figs.

his name is Alan Sokloff. He is the founder and writer at The Crossover, which we'll talk a little bit about at the end. But it's an interesting newsletter that blends public and private market investing. But let's focus on the company for today. It's FIGS. And I would say most people don't know what FIGS is, just since it targets a niche for the time being. So how did you come across figs as an investment. And then I know we both used to own Sprouts Farmer's Market. So yeah, I know you like to do boots on the ground research because you took a bunch of pictures in the Sprouts Farmer's Market one time. So have you had any experience with figs in the real world? Yes. So first of all, Brett and Ryan, thank you guys for having me.

great to be on the show today big big fan so when how did I first of all it's interesting to hear that not everyone knows figs you know because at this point it's all like I see anywhere I walk thinking about figs figs figs seeing what people are wearing and things like that but it did not used to be that way. So I think I was first introduced to it in 2019. I went to a pain management doctor, had a bad back. It's good now, thankfully. And he was looking great wearing scrubs that were tight fitting, slick, really not what you think of historically when you think of scrubs. And, um, I asked a couple of questions, what's the brand, whatever, but ultimately really felt that it was probably like a small niche company and it wasn't investable. And then

really forgot about it for a couple of years. Um, and I would see it here and there, but really off my radar. Uh, and then, um, fast forward to right when I started working on Workweek, the company I'm at now, I was watching Mitchell Green, who's the head of Leading Edge Capital, their crossover fund, so invest both in public and private markets. And they were big investors and figs in the private markets, and also bullish on them in the public markets. So then I was also a little skeptical then, thinking, okay, is this like a SPAC of some sort, probably like a probably high growth company losing a lot of money, what I was trying to stay away from at that point. But then I started doing my due diligence and was really blown away. I'm sure

we'll talk about the fundamentals, but you got a company that's growing revenues at a serious rate, free cash flow, positive IPO, not a SPAC and management really impressed me. And then as I started my due diligence on the company, all I saw was sprout was not sprouts. All I saw was figs everywhere it's actually funny because you can find figs at sprouts the fruit um but um the uh yeah dad jokes um so uh and then i started seeing figs everywhere and um i was intrigued and hooked so yeah all right um yeah you did some boots on the ground research i mean you talk about what they sell and that's the scrubs that nurses and other maybe medical professionals might wear but what's maybe the question is what do they sell maybe besides that and who is what is their

target market like can you give a size you know is it three million is it 10 million people for sure so first um one more thing regarding the boots on the ground all i do now is ask my friends that are becoming doctors or nurses what do they wear things like that specifically more people like on on the i would say this word on niches unlike the the ancillary sides to it like dieticians things like that so um i'm always if you're a doctor reach out to me i'd love to hear your thoughts on it but um so yes they sell um scrubs i think they have 13 um core styles in six different colors and that makes up about 80 percent of the sales and um also when you think of market size, there's about 20 million healthcare professionals in the US and 120 million in the

world. I think that's a $12 billion market domestically and about, I'll check on it, but a 70 billion market globally. So it's pretty big. So that's the TAM in many ways. So 80% of the sales are from the core lines, but also they do a lot of one-off special scrubs, let's say, depending on the season, time of year, things like that. And then they also have a fast-growing lifestyle line where they're really trying to get you to buy things like jackets, sweaters. They have a partnership with New Balance for shoes, different things like that. And that's fast-growing. I think in the past quarter, there was 70% growth year over year there. And as time goes on, they're getting more and more

into other components of selling to healthcare workers. Like another example is Figs Pro, they call it, where it's a whole clothing line focused on like hospital administrators and things like that. So you got polos, you got pants, you got a more casual sweaters. And in my eyes, that's very intriguing too. So really building their brand outside of just the core scrub line.

files. Chit Chat Money Plus costs $5 a month. You can subscribe directly through Spotify or Apple Podcasts, or if you listen on another platform, click the link in the show notes to go through the simple steps of signing up. If you're a regular listener to the show, we think the membership will provide tons of additional value. On top of the stock research episodes, members will get one Arch Capital Fund episode a month where we outline why we bought, sold, or continue to hold a stock in the Arch Capital Investment Fund, along with shows on our broader investment strategy. Sign up and become a Chit Chat Money Plus subscriber today. We can't wait for you to join our community. Okay. So how often does, like, is this a recurring

purchase for a customer? Like how many scrubs tops do you have to buy? Yeah. Great question. And it's something I thought about a lot. Like when I originally was looking into the company, it's like, shouldn't this be a recurring order revenue type of program, right? Like let's say every three months, you get a new pair of scrubs. But management decided that was not the optimal financial model. And I think the results are proving that that's true. So logically, like I've tried to think about it, talk to doctors, people have quite a few, you're not wearing the same pair of scrubs every day. So I think five to seven pairs is pretty normal. And, and I'm sure we'll talk more about the unit economics later, but they're pretty expensive,

too. $85 to $98 for tops and bottoms. But the nice thing is for a majority of healthcare professionals, they do make a relatively nice salary. So they can afford that, but it's also important. So to answer the question, I'd say five to seven, but also there's a lot of people that whenever the chance to get the latest scrub style, whenever they do like a drop or something like that, they'll pick up a new one. And part of what's really at the core of FIGS is their marketing and brand awareness in the healthcare space. When their net promoter score, which I really never get much value, but I think is in the low 80s or something like that, which is really high people love the figs brand in the healthcare space and so much of that is due to um the

branding around that they call their healthcare professionals awesome humans they're big on tiktok they're big on instagram reels um they they gave hundreds of thousands of scrubs and masks away during covid so people want to be affiliated with figs customers want to support figs and um 70 of orders last year i think were um from recurring customers which shows the powers i'll check that here it is yeah 70 of sales are from repeat customers um so i think that's pretty powerful yeah i mean it's not uh this isn't really a comprehensive investment thesis but they look cool so and that's a huge i feel like that is a huge part of this like it's kind of like lululemon in that sense exactly and um i invested in lululemon in i think it was

2015 it was at around 100 bucks a share don't worry i sold it didn't make too much money on it i sold it i think at 130 um and um obviously i've been trading mid low 300s now so that one got away from me and and i've always over the years tried to find the next lululemon again i When you see something in society that's really picking up, especially when it has better. So FIGS is actually growing faster and more profitable than Lululemon was at the same point. So that's something that I find intriguing when you think about the two. But you're spot on. They look cool.

That matters. That's what's taken Lululemon far. yeah um who are who is figs competing with is it just like traditional scrubs that they're trying to steal market share from um yes and no so the easy answer is yes that scrubs are historically a very commoditized product where basically you can pick up scrubs or um some hospitals work differently some they just give them out some there's general distribution stores things like that but um biggest answer yes and people weren't feeling good in their scrubs and something figs talks about a lot that um these are people and arguably the most important

profession and we don't give them a nice uniform to wear they don't look good they don't feel good So the easy answer is yes. And then there's a few companies that are aggressively trying to disrupt and compete with FIGS. The one I keep my eye on and watch closely, I think it's pronounced Janu, they raised a $75 million venture round in January 21 or 22. Interestingly, their price is at a very similar level. I thought they would have tried to come in at a lower price rating, but they're coming in at a similar letter. I think, at the end of the day, something that management of things talks about is no

one innovates faster than them in this space. No one has a relationship with the customers like they do. the scrubs themselves are functional meaning that there's um something that legacy scrubs i'll call it that's the medium-minded legacy scrubs don't have uh there's places for um to put your um to rings in a pocket when you're washing your hands it's um repellent of different fluids and and figs protects their ip actively and um so yeah i'm i'm looking at the website right now and so it's more than i guess it's they got tops pants joggers jackets vests it it sounds like it's a little more extensive than just the like what what they need solely at the workplace am i getting

that right? For sure. So a lot of those clothes actually work in the workplace, right? That the hospitals are often cold. So they will wear the sweaters or things like that in the hospital itself, but also outside. And I think that's something that I'm very bullish on. You think um, Lululemon people now wear it as everyday clothes. Right. Um, and the, I think that's part of figs opportunity is to continue to grow into other aspects in that lifestyle brand, in that figs pro you think about, um, when people love a brand and I know, um, you guys keep your eye on Callaway golf, right? One of their most impressive brands is Travis Matthew. you. And you look at the growth that's going on there. Now they're totally moving from a men's

clothing line to a woman's clothing line as well and seeing serious success. So with figs, and I'm sure this is down the road because the opportunity in front of them is massive. They only have 2 million active customers. But can they get their spouses wearing figs? What about onesies for their kids right i think it's really endless as long as you continue to create a great brand all right you talked about the profitability what do the unit economics for figs look like and i guess why are they so good um you said they're better than lula lemon which is top notch from a profitability standpoint in the apparel industry how efficient are they with their marketing spend And I guess maybe, do you think it's because that they're targeting this specific audience that may have better spending power, they may have higher incomes, and they're not competing with, say, a Nike or anyone else?

They're more insulated from the competition. yeah um so to answer the first question um marketing was about 17 of sales last year um and then um the gross margins of the product historically were low 70 and but over covet with supply chain issues they are um now in the high actually last quarter we think it was still 70s they're going to be going into the high 60s um but they think that's a short run thing and um so the 20 ebitda margin is their goal in the long run so they really think that this uh can be a cash cow obviously if they continue to execute and so much of that is because of the um the the amount they charge and their clientele similar to lulu and then also so much of their

marketing does come from word of mouth right the on instagram they have 750 000 followers tick tock they're getting big people love it and they just started expanding overseas they were just in uh australia canada couple the uk and last quarter started uh looking into a few international companies with very little marketing and they uh said and i quote extraordinarily pleased with the progress there just because of the word of mouth energy that really um the the company gets i might have missed it there um what did you they're they're generating cash how much cash did you say they were generating yeah so they were free cash flow positive if you look at the two past years um and then this past quarter they went negative um but that was done

actively so in 2019 they um did a million dollars in free cash flow last year about 19 and a half two years ago about 19 and a half million and then last year 63 million um and yeah so that's serious cash and then this past quarter um they their free cash flow was negative 23 million um and but that was actively done meaning they wanted to increase inventories their inventories went up more than the free cash than they lost in free cash flow not because their inventories are rising because sales are slowing but they suffered like so many others from serious supply chain issues and their logic is let's get ahead of it we have the cash on our balance sheet um high 100 million dollars maybe like 170 million or something like that why not use it i think that's

That's a sign of great management, great use of capital. Yeah. What were some of the supply? So I guess, do they source their, or do they manufacture their merchandise like abroad, I'm assuming? Yeah, yeah. So I don't, I haven't spent too much time looking into the supply chain issues, but I don't think a lot of it was on the sourcing end, but rather the transportation. So they moved a lot of their transportation from, I think, ocean freight to air, which is obviously more expensive. But when you think about LTV perspective, getting and then also the people that are actually doing this job, it's not like people waiting to get their PlayStation.

It's you want health care workers to have the scrubs that they want, that they feel comfortable in. and i really like the um the move that figs made to uh raise inventories yeah yeah they had to grow then they have the gross margin to you know to do that i mean it's falling from 70 to 60 something percent that's cannot be a huge deal i mean just thinking about the bridge from you know you're saying high 60 it's gross margins and then they have 17 spent on sales and marketing what is the i know there's going to be some gna in their corporate overhead but what is the bridge to you know the 20 percent EBITDA margin are they spending a lot of R&D is there a lot of you know innovation research on on all the new products they're coming out of like

have they talked about the specifics on what they're going to be spending on from operational operationally yeah so a lot of it's R&D I think they got looking at it right now I don't know this by heart got a full disclosure you know um 288 million dollars in SG&A so that's was that 60 65 percent there and then um r&d too right they they want to um really keep pushing the needle of um both the technology and styles and things like that i just saw that charlie munger poster for the first time so loving that the listeners don't know but we have the goodfellas poster uh but we put charlie munger and warren buffett and carl icon's head on it yeah so that's what i was referring to uh custom made

in the studio but continue out yeah uh and then um also but i think you're right when you think about it logically there should be a little more margin to squeeze in there which um i think is pretty bullish yeah and okay go ahead i guess is so it sounds like they've really caught fire kind of in the that health care professionals market and i could see how that has a bit of a word of mouth slash you see everyone at work you're like yeah that person looks great at work 20 other people are like wow suzy's looking great today you know i better pick up some of these um but can you see this expanding outside of health care professionals could this be like like what would warrant you walking around in figs clothing i almost already was

walking around in fixed clothing other than you being a shareholder i mean if you weren't an investor let's put that yeah yeah okay to not be an investor um but answer is um that they might not need to leave the health care space at all right so with 2 million active customers 12 million uh health care workers in the u.s 120 million globally they're barely anywhere globally and already projected to do 510 to 530 million in revenue this year right and they're all in big u.s cities they still feel that there's serious room to be disrupted um so i know they did a big push in philadelphia houston seattle um they do these pop-up shops where you can buy in person they said they had 600 people a day over a weekend and it's um and

then you see the massive growth in the lifestyle space too uh and they can they could continue to build out more and more uh but they have discussed in the past moving into other verticals i think it's something you could see them do when the company more when the company is more mature They've discussed other industries where uniforms are full-time, like construction industry, let's say. I can envision that construction workers wearing their cool FIGS gear, things like that. But yeah, I don't think they will in the short run, definitely, or need to move outside the healthcare space. All right, let's move to management. You mentioned you like them a lot.

What are the thoughts on that? And then to combine here, there's been a lot of hype, I guess, not hype, but Shopify has talked about, you know, this being a huge success story for their marketplace. What are the positives and negatives for working with Shopify? Right. So first, let's talk about management. Originally, they had two CEOs. That just changed recently. But Trina Spear is a very, she has experience on Wall Street working in private equity, really in the weeds.

She was more of a business mind behind it. And then Heather Hasson is really the creative mind and who first originally saw, man, there's an opportunity here. So they really had different responsibilities from the beginning. And then only this past quarter did Trinoff become the full-time CEO, a move I really like to make sure that business is at the forefront of the company. And then Heather got moved to an executive chairman position. So really think about the long term for FIGS, the designs, the styles, how to continue to innovate, things like that.

And so we talk about management. I mentioned already earlier, I really like that inventory move. I think that's very impressive. But also they always stress high revenue growth along with profitability. they talk about profitability a lot and for me that's a key part of the thesis and then um there's something else i like about management at the end of the calls they take shareholder questions and and real ones too like they uh at they were at or they voluntarily talked about their stock price which is down they voluntarily talked about um how the competitors in the space

What are they doing there? My answers today from on here are borrowed from Trina Spears answers for the end of the call. So I just see a real sense of transparency, hardworking, value and shareholder equity and really serious, too. I think they they want to know they're they're a female only management team. daniella turnshines the cfo so you have three women leading the charge and i think there's a they see a real opportunity to say hey women can do this too and do this big time um so all in all i'm really intrigued by their story and then the um shopify component i like it um i think the lack of stores is part of also why their gross margins are so high right that there's no um uh like lululemon has stores and also that works really well with their

customer base doctors aren't all the time going out shopping things like that they want to be able to buy order when they need it get it fast and shopify you're affiliated with one of the greatest companies in the world and and yeah we obviously think about the stock price but the company itself is continuing to do great and will continue to be the e-commerce leader globally and having them as a great partner is great and something that you'll continue to see as time goes on for many great companies do you think the shopify relationship will help them with the international expansion because i kind of just you brought that up shopify you know as the global presence with a lot of their companies do you think that's an advantage compared to

someone else maybe one of those smaller startups uh yes and no i think so much of the thesis internationally will be the answer is yes obviously it will help but um i'm much more focused on will the same word of mouth the same brand affinity that you have domestically carry over to overseas because if that is the case um we got a winner on our hands so that's what i'm really looking out there yeah and i guess one more follow-up on international yeah is something that gives you comfort with figs that the demand is super durable that you know health care workers are going to be in need till the end of time uh right hopefully and you know that like compared to say betting on oh gosh what's a good one just like a trendy apparel brand that sells

i don't know t-shirts or whatever this might have more durability and from from this core this core audience yeah yeah i definitely think that and you see that durability from other um brands as well right think about nike everyone loves buying nike and the brand seems to get stronger and stronger over time at the same time no one knows the future no one knows what's going to happen and part of why i like the figs investment is the risk profile right yeah they're trading at 1.37 billion dollars i checked right before we hopped on uh and so that's about two and a half times forward sales but there's cash generation and i read a piece from seth carman recently like there's no sure things like i'm not saying for myself personally of course that

um i don't know if this will be a grand slam it's continuing to do your due diligence your research continuing to learn i'm very comfortable with the risk profile at these levels and then the international expansion is a way i will continue to reevaluate my thesis they have a really good metric where they break down um my average order volume um where basically the size of the basket that um people order and that's growing with the lifestyle brands being added which i really like to see so when people are buying scrubs they're buying more clothes on top of that uh and and and yeah i guess so then by having a shopify powered website are a lot of the fulfillment needs um or like like just the logistics behind uh shipping the

orders is that done by shopify or maybe we should ask like are they on amazon are they trying to avoid that marketplace i guess logistic question so yeah so i'll answer the first one with a truth and say i don't know um i don't i haven't spent too much time looking at the um fulfillment and logistics of it i don't think they're on amazon and there's a way to figure out very quickly um yeah well let's confirm quick by searching as i find some scam ones as i am talking a little bit slower i am also googling they are on amazon okay so maybe they Maybe Amazon does their fulfillment, but Shopify might not at the moment. Yeah.

There's a reason I didn't study supply chain in school. I mean, what about, so you briefly mentioned the market cap. It looks like it's just under $1.7 billion. How are you kind of valuing the business? What does that translate relative to some, what are some of the metrics or valuable ratios that you use? Yeah. Yeah. So I do keep in mind, I try to stay away from price to sales in general,

but I think with a young company like this, it's important to look at. So you see two and a half times forward sales. I'm not focused on EBITDA margin in the short run, but as the company matures, I think I'm going to start looking at the margin there. But a lot of my valuation, interestingly, has gone to Lululemon and where Lulu was at in this journey. I know a lot of people will focus on competitors today, but I really look at Lulu gives us a great trajectory. And if Lulu was at $2.2 billion when Figs was at $1.5 billion at the same part of their journey, as I mentioned earlier, Figs growing faster. more profitable, it should be the other way around. Lulu should be less than Figs was at this point in the journey. And as a long-term investor, I'm not really worried about is it

1.3, 1.1, 1.7, right? So I'm not too focused on certain economics and really because if they execute, it won't matter, right? And that's my perspective there. But I do look at Lulu a lot and also some different retail names i've looked at all birds before and what's really interesting there with all birds the margins are pretty sure like the mid 50s there but they're losing money um and they're at around 650 million dollar market cap um i don't remember the exact numbers there but i've also looked at all birds but yeah it's i mean i guess it's a little tough to value given the on any sort of cash flow or income metric given the recent the last year or so has been difficult what do you think what kind of profit margins do you think they could have as if they

you know grow and execute like you um yeah so they've made it very clear that by um by 2025 end of 24, three goals, a billion dollars in revenue, 70% plus gross margins, 20% EBITDA margins. So on a billion dollars in revenue, there should be $200 million in real operating margin from that. And hopefully almost all of that would end up being free cash flow. Right. Yeah. And there's inventory stuff, but that'll get worked out over time. let's wrap things up what do you think could go wrong with a figs investment little pre-mortem here i mean what what are the risks you're seeing yeah and i love that you're asking this question because i don't think it comes up enough um but with figs specifically two things one is

repeat orders right as i buy um figs i have eight different scrubs in my closet do i continue to want to buy a ninth a tenth do i want to replace my old ones or is it i've got my 10 scrubs they're the product is too good i don't need to buy more um so that's a big thing and then two is that international expansion um simply put is figs as cool uh abroad internationally as it is domestically i think it is i think that style travels uh and um and yeah but i think those are the two things that could go wrong all right i think that's all the questions we have to have anymore do you want to give a little maybe elevator pitch around what the crossover is since, uh, what I'm going to promote. Yeah. We'll throw a link in the show notes for anyone

listening. That's interested. Yeah, for sure. So I am a creator at work week media, a new B2B creator focused media company. We're about 10 months old. Uh, and I head up the crossover, which is a newsletter, uh, that breaks down the intersection between the public and private markets. So crossover investing is a rapidly growing field in the investment arena. A lot of the top venture firms like Bessemer, Tiger Global, KOTU are investing both in the public and private markets. They're looking to leverage their knowledge of the private markets, but also take advantage of discrepancies between the valuations in between the two. So what I'm really looking to do is identify, I tap in both worlds independently, like breaking down

a venture funding round, but also just doing a pure stock analysis. But what I normally do is compare a public to a private company and try to put together a thesis using insights from each one, not only on the respective industry, but also the respective companies. Like on Thursday, i'm going to be dropping a piece uh breaking down beyond meat and a company called meaty so looking at uh beyond meat all of their financials growth in the industry and then media is another alternative protein company that um raised 150 million dollars pretty recently so what does media think that they can do that beyond me can't things like that and also for the stock investors out there i made um what i call a crossover portfolio where i share eight or nine of my

favorite stocks i track and i manage it as if it was real money uh sharing um where i'm building positions how i'm building positions and and yeah but um in short that's the crossover all right perfect well that's going to do it um i guess if anyone wants to follow you what's the twitter handle? At Alan Sockloff, A-L-A-N-S-O-C-L-O-F. Perfect. I want to remind our listeners that Brett and I are not financial advisors. Anything we say or discuss here on Chit Chat Money is not formal advice or recommendation. We are, however, general partners at Arch Capital, so clients may have positions in the securities discussed in this podcast. Thank you all for listening. Thank you, Alan, for joining us. We'll see you guys next time.

Bye.