Yet Another Value Podcast - August 2025 Random Ramblings

Episode Date: August 19, 2025

In this August 2025 edition of Yet Another Value Podcast, host Andrew Walker returns with his signature monthly ramblings. Andrew unpacks the strange dynamics in today’s bifurcated market — where AI giants soar while traditional sectors flounder. He explores whether buybacks post-earnings miss signal strength or delusion, muses on “hot girl marketing” with a focus on Sydney Sweeney’s campaigns, and discusses what drives real ROI in celebrity partnerships. He closes with reflections on sizing up when holding a true edge, and a fascinating challenge trade: Paulson buying Icahn’s full stake in Bausch Health._________________________________________________________[00:00:00] Intro and episode overview[00:00:57] Market state and personal screens[00:05:34] AI stocks outperforming traditional sectors[00:06:32] Retail sector earnings crash[00:08:30] Market split explained further[00:09:36] Buybacks on post-earnings dips[00:14:27] Sydney Sweeney, HeyDude tie-in[00:18:38] Swinging when you have edge[00:24:07] Challenge trades concept[00:27:47] BHC Paulson-Icahn block deal[00:30:41] Closing remarks and disclaimerLinks:Yet Another Value Blog: https://www.yetanothervalueblog.com See our legal disclaimer here: https://www.yetanothervalueblog.com/p/legal-and-disclaimer

You're about to listen to the yet another value podcast with your host, me, Andrew Walker. Today's podcast is my monthly ramblings for the month of August 2025. Look, I say this every ramblings, but this is my, every ramblings I hang up and I say this was my most rambling ramblings yet. And I definitely feel it on this one. So it gets rambly, but hopefully you enjoy it. I get good feedback on these, so hopefully you enjoy it. Let's see. The topics today, we're going to start out talking about just what a weird market is.

I love to talk about both on here and on the blog. I love to talk about the overall market. It really helps me clarify my thoughts, and I will tell you, these are strange markets. You know, COVID was obviously a strange market, but that was a panic. The market right now is just, it is such a tale of two cities. It's really pulling me apart. So I want to talk about that. Talk a little bit about companies, Purchyard Analytics.

I believe they're going to be the sponsor of this episode. They've got some great screens that I like to use. And one that I've really been looking at is companies that miss earnings and the company buys back stock aggressively into the earnings miss. I think it's such an interesting one. weird signal, you know, does the company not get it or is the value so high that they just have to do it? Then we're going to talk about Sydney, Sweeney, hot girl marketing, and owning a media company. I promise you, I'm not trying to get on as a talking head hot taker, hot taker, but I think there's really interesting business insights and questions there I had, and especially

around the Paramount UFC, Paramount Larry Ellison deal, connect them all hopefully in a good way. So we'll talk about that. Swinging, when you have an edge, just a lot of thoughts that I've personally been thinking about when news updates and you think you've got inside of into a situation, how you push yourself, how you process it, how you change your position. So just really ramble on that. And then close down with a really interesting challenge trade. BHC, the John Paulson buying 300 million stock from Carl Icon, both of them have board seats. Thought that was just so interesting.

I had to put something there. So I'm going to get to all that. Rambled in the opening. But first, a word from our sponsor. This podcast is sponsored by Portrait Analytics. People ask me all the time, what's your favorite stock screens run to look at for ideas? Is it low price to earnings, high dividend yield? What is it?

And my answer is simple, I don't run screens. I somehow doubt that there's serious alpha in sorting through stocks that are trading under 10 times price earnings on Yahoo Finance. But Portrait Analytics has completely changed the game on screening. It lets you create bespoke screens to generate actually unique ideas. Let me give you an example of one that I've been using recently. I wanted to look for stocks with greater than 200 million market cap, where the company has publicly discussed trading at a discount appears,

and both the companies and insiders have been buying shares on the open market in the past 12 months. To me, that's an interesting screen. It's unique ideas. It's a blend of quantitative and qualitative. It's pulling things that aren't just purely numbers-based that the insiders are talking about and it's building something that kind of fits with my view of the world and my view of the type of stocks that would be interesting. Portjard, let me find a handful of companies that meet that criteria.

The last time I did the screen, by the way, the screens run every day if you want them to, every week if you want them to. The last time I did the screen, it had four or five stocks that exactly hit that. criteria and then boom i had a list of really interesting things that i actually might buy that i could sort through uh they it also showed me exactly where the company was talking about how their valuation compared to peers so i could see hey was this a one-off or are they consistently talking about in a way i think it's interesting anyway i think it's completely changed the game for screening and for generating new ideas if you're looking to up your screening game you should check out

portrait analytics at portrait analytics. i'll include a link in the show notes all right hello and welcome to the yet another value podcast i'm your host andrew walker if you like this podcast would mean a lot if you could rate subscribe review wherever you're watching or listening to it with me today i'm happy to have on myself it's time for my monthly random ramblings for august it is august it's 15 16th i'm not sure it's the middle of august uh i got a bunch of topics i'm going to ramble about today i hope you enjoy them i'll get to the topics in a second but before i do quick disclaimer remind everyone that nothing on this podcast is investing advice please consult a financial advisor, all that jazz, full disclaimer at the end of the podcast,

or you can see the legal disclaimer on the website if you are interested in it. Okay, so today, for August, I have a few ramblings. One, I just want to, I love to do these ramblings, you know, the ramblings, the state of the markets I publish at the end of every month in my monthly links. It kind of helps me think about where we are in the markets and keep a clear head and everything. So I love to talk about the markets and ramble up those. We're going to start by talking about just what a weird market it is.

Then I have, look, I'm not trying to become a talking newshead or a ClickFit auditorist, but I do have some thoughts on the Sydney-Sweeney controversy, and I want to throw that out there, but it's not hot takes, it's business takes, I promise you that. And then I want to talk a little bit about Swing when you have an edge, and then to wrap it up, might talk a bit about Buffett's longevity. Yeah, I don't know. And there was an interesting, what I like to call a challenge trade. I've got a post that I'm about to put up on that, but I'd love to talk about that as well.

So let's start with thoughts on the markets. Look, it is just a weird market. Like, markets are up, you know. I'm guessing, again, I'm reporting this in the middle of August. I think the S&P's up double digits on the year. I think the Russell is up low single digits. So it's been a pretty good year for the stock market. I'll be it, you know, you think back to the beginning of April, a very volatile one.

But I can't get out of my head. It is still just a weird market. You know, I see if something touches AI, it is a golden god. The stock is up to the wrong. right, doesn't matter, can do no wrongs. They're beating earnings every time. If they miss earnings, they're getting the benefit of the doubt. It is just a golden god of a stock. And the curious thing about the market is, you know, the largest companies, we've been saying this for a long time, the largest companies, they just keep up performing. And, you know, a few

years ago, Facebook, Google, all these, it was just infinite growth at unlimited RICs because they were capitalized businesses. And now they've all latched onto AI. They're all just generating huge returns, apparently, through AI. And it's kind of like a shame for active investors, the market is, if Mag 7 is, what, 35% of the S&P 500, and all of Mag 7 is pretty much tied to AI, well, then if you're an active manager with, you know, if you're dealing in the type of just poor businesses, you know, old economy businesses with no AI, especially, you are underway to AI, and it's almost impossible to keep up if you're underweight AI when those businesses are doing that.

So if you were AI, you are a golden god. Your stock can't go down. You're beating earnings. every quarter expectations are getting raised. The backlog looks incredible. It is just nirvana for you. But outside of the AI, it's just really weird. And I'll just give you a few examples.

Deer, good old deer, you know, farm equipment, reports earning the stocks down 10%. Retailers, I mean, it has been a bloodbath in retail. Lulu Lemon stock, pull that up. Well, you're going to barf on yourself if you look at the Lulu Lemon stock chart. Crocs, I'm going to talk about Crocs a little bit in the second, but, you know, they reported earnings a couple weeks ago, and the socks down 20% on earnings and, you know, tariff hits. You've got people debating, hey, I thought it was cheap.

And I probably agree with them. I have no position, no plan to state one, but they thought it was cheap at 100. And the company certainly thought it was cheap at his 100. It was like, you know, I can't remember eight times earnings. And now it trades to 80 or 85. So it's six times earnings. So if you thought it was cheap then and you believe in the brand, even cheaper now, Crofts, Telecom, my God, you know, telecom is supposed to be the stable sector,

but every cable company reporting number and just imploding. A lot of the telecom infrastructure companies reporting numbers and just absolutely imploding. We're seeing implotions up and down the board. Oh, food. I forgot to mention my favorite one. Food. You know, Chippolde, Kava, Sweet Green. These guys are, I guess, they're high-end fast casual concepts, but all of them are reporting,

you know, Chipotle reporting negative same-store sales, if I remember correctly. Like, all these stocks are just getting absolutely hammered. They're reporting negative same-store sales. Yeah, I'm looking at Chol-D-A-as-I-pulled-up. Troy reporting negative 4% comps, and I know there's noise and everything, but it's just this really weird economy where AI just up to the right, can't stop, but can you look at like fast casuals down 4%. You look at telecoms blowing up. You look at the researchers, like, what is going on? I don't know how to explain this economy. I don't know how to explain it. I don't know how to

think about it. For last year a lot, I'd say, hey, you look at these cyclical companies, you know, you look at mining companies or metals company, U.S. steel, car makers, whatever, and they're going through a pretty deep recession, and the stock market was not, and obviously the max 7 wasn't, but now it's like spread. It's not just, I think most of the, I'm not a cyclicals expert by far, but most of the cyclicals I follow are reporting pretty trout numbers and, you know, trucking companies are saying it's pretty bad up there. It's spreading to the retailers. It's spreading to the restaurants. It's very weird for all these guys to be reporting, I mean, not just recessionary. It seems to me high level, deep recessionary numbers. While on the other hand,

you've got the AI guys in just like absolute outrageous levels of growth and economic stats, believe them, don't believe in whatever, seem pretty flattish. So just this very strange dichotomy. And I honestly don't know how to think about it right now. I'm really still thinking about it. If anyone, if anyone's got the answer, I'd love to hear it, you know? So that's just kind of where I am. Speaking of companies that got, I mentioned Crocs a few times. And I guess they're a sponsor now, so I can mention it. Portrait Analytics, which I think is great for AI screening, AI tools. I think it's a really interesting way to, if you're looking for companies that, you can do a price earning screen and get, I think you'll get, if you say, hey, I want

companies trading for under 10 times earnings, you're going to get 400 companies. A lot of them is going to be kind of the chaff. You're going to have to sort through the wheat. A lot of them are going to be outside your wheelhouse. It's a really dumb screen, and I think it's probably been picked up by quant. What I like about Portia is you can say specific stuff. So anyway, I guess no free to plugs, but they're sponsors I can give it. One of the screens I have Porsche run that I find really interesting is, hey, find me companies whose stock was down 20% on earnings, who they bought back shares Intraporter,

and the company says the miss was driven by one-time items. And I think that's a really interesting screen. And the reason I mention it is, A, when I do it, a lot of the companies, right now I'm looking at the screen, 14 or 15 companies show up. A lot of them are retailers, including crofts, and Lulu Leven. I mentioned that for two reasons. A, I wonder if there's a signal in there, right? Hey, the company, the company saw, oh, our Q2 results aren't looking good, but our stock looks so juicy. We just can't help but go in and start

retiring shares. Or is it the reverse? You know, how many times have you seen a company buyback shares and then barf a quarter and their stock goes down 40% and the next quarter they're not buying back any shares? And then you look at it and say, does this company know how to forecast? Like, what is going on here? They were buying back shares when the results were terrible. Now the stock's lower and they're not buying back shares. Not that, you know, if you buy back shares in 2021 at 100 and the stock goes to 10 and you're in distress, I'm not saying you have to buy back shares just because the stock's down.

But it's really weird if you're about to barf the quarter to buy back shares and then stop after that. So I just look at that in Crocs is the perfect example, right? They inch or quarter, they buy back $100 million of stock at about $100 per share. and now the stock is at 85. And in Crox case, you know, just reading between the lines, looking at their history, looking at what they said on the call, I think they're going to keep buying back shares.

I would be shocked if they didn't. But there are a lot of companies out there, you know, and oh, by the way, Crox is a $4.5 billion company, so $100 million of stock in a quarter is a big slug for them. There are a lot of companies out there. I think Vivid Seats is one that I've looked at recently where their business has been falling apart over the past couple months and they are controlled by private equity owners who are sophisticated

and they were buying back stock hand over fist as the business was falling apart over the past few quarters and then they report Q2 results which were way below where anyone thought they would be and now the company's like kind of repurchase themselves into financial distress and they're certainly not even analysts aren't even bothering to ask if they're repurchasing stock because it's so clear that they don't have the resources so it's just weird um it's just weird i don't know how to separate the signal from noise there. I find it very interesting. I am just such a sucker for sure. I find it interesting. Oh, and the last thing on note, you know, this screen, I mentioned Portrait Analytics, this screen, company down 20% buying back shares, management argues

it's a temporary thing. I've looked a little bit at historically. Again, I didn't have access to portrait five years ago, but I've looked a little bit at it historically, and generally three, five companies will hit the screen. Right now, 15, so I'm not saying it's crazy, is the other than normal. But that's really high. And it's really interesting to me that you've got, you know, it makes intuitive sense, I think, where a lot of the companies are, especially the retailers, are saying, hey, they're blaming the tariffs for why they miss one time, right? Again, the one time is one of the factors that's key there. And I think that's one of the interesting about using a screen that marries AI with Quant. But they're saying it's a one-time

miss. Historically, you'd see three to five companies. There's 15 here. But it makes sense with the tariffs, but it's interesting that so many companies are blaming one time. And again, if I marry that back to the weird stock thing, they're saying it's one time, but I can't help but wonder if there's other stuff there. You know, just on restaurants, we're deporting a lot of people, right? Is the deportation, is it just kind of shifting demographic trends? And I know that sounds silly. It's not like we deported 1% of the population, but I think you could write a story where

you say, hey, you deport five basis points of the population, but it's five basis points who are kind of working age and who would be eating at these restaurants. And by the way, the restaurant, the restaurant overall stock has not changed. So now there's a little bit more of a knife bite for each customer because there's just that mighty fewer. I don't know. It's hard for me to describe. Weird market, weird everything.

I don't know. We're in a world. Let's move on. Speaking of Crocs, I mentioned Crocs a lot. And I told you I wanted to dive into the Sydney-Sweeney debate. And I don't mean that as in I want to take one side or the other. I certainly don't. But there were two interesting things about the Sydney-Sweeney debate that, yeah,

that kind of had me thinking about the stock market. And the first was Sydney Sweeney, you know, speaking of Crocs, the reason I mentioned is she was the sponsor for Hey Dude, and Hey Dude is the brand that Crocs bought, and they said it was going to be this great acquisition, diversify, all this sort of stuff, has not gone that way so far. She was, last year, she got named the head of creative for Hey Doids or something. To my knowledge, has not budged the needle one Iona.

So I was kind of surprised when she hopped onto American Evil. I guess she's a big brand. And where I'm trying to go with this is, look, she already felt like, Hey, dudes and Hey, dude, this is much different than American Eagle. But I do wonder, if I just stepped back from Sydney, Sweeney for a second, there are lots of companies that have what I call hot girl marketing. You know, I'll talk to some CEOs of fitness brands. They'll be like, look at all these girls who've got pitching or things.

You talk to people in med tech, especially aesthetics, right? Botox, Plastic Survey, that's your stuff. They'll say, hey, you know, we got the Kardashian sponsoring us. or we got these hot fitness Instagram girls sponsoring us, or hot men, too, to be fair, could be hot men. You know, I think energy drinks, especially and protein powder is getting huge jacked men to sponsor. You'll sell one guy.

You'll sell to one guy right here if you do that. But I do wonder, especially on the hot girl side, is there real ROI here? Like, did American Eagle really look and get a movie star to sponsor this from one of this fuzzy campaign? And yes, their brand was in the news quite a bit, but I saw there was reports earlier this week that their foot traffic is actually down year over year since they launched the Sydney Sweeney ad and Sydney Sweeney she's an A-list

level movie star you know I'm sure she doesn't come cheap I'd be really interested like in these companies how do they judge the ROI or if it's just you know Botox going and talking to hot girl marketing or hot guy marketing saying hey we're going to give you some free Botox injections if you put it in if you put it on your story like how do they judge the incremental how do they judge the incremental demand? And the reason I worry about this is, you know, we've seen in public companies, I think you'll see this parallel very quickly.

Movie studios. Movie studios are a hot item for, you know, every decade or so, a rich guy comes along and buys a movie studio. And why do they buy the movie studio? There's always a business case. There's always a business. And this is dating back to Coke buying Paramount in the 1980s.

There's always a business case to go and buying the movie studio. Right now, Larry Ellison's son, back by Larry Ellison, is buying and taking control of per month. There's always a business case. But what is it actually? I mean, I suspect it's an ego-stroping thing, right? Now, with the movie studio, you could be the head of the movie studio. You get to approve or not approve movies.

You know, all the movie stars are coming up and hobnobbing to you. All of them are sucking up to you. You can probably get a couple pet projects that you want to approve that might, you know, if you've got a worldview or something that speaks to that. But they're not really financial purchase in my mind. Yes, I'm sure they convince themselves they're going to be a financial purchase, but it doesn't really work out well for them, you know, how to work for those guys. With the hot grow marketing, I wonder how much these people look at them and say, hey, we've got

a financial case versus how much it's, you know, middle-aged men, high-up men, just they want access to, they want to be able to talk to these hot girls or anything. So the Sydney-Sweeney thing really brought it back to mine. Like, I'd be pretty surprised. Now, it did take, it really took all. So maybe you can say all marketing is good, all word of mouth, all news is good, good news. Maybe it results in a lot of incremental sales. You know, obviously it's been hotly debated.

It certainly, I'm guessing, it went way more viral than they would have hoped for in their wildest imagination. But does it translate it to sales to, you know, run that huge campaign, pay a huge movie star? I don't know. And when I go down the line of some of the smaller ones, I do wonder if they're like, hey, you know, and a lot of the Instagram and TikTok influencers, they're smaller. so it's smaller dollar figures, but I'm guessing the ROI is like absolutely zero or negative, and I wonder how much it is just stroking the egos of the management teams and getting access to that.

You know, last one on movie studios, as I think about it, you know, Larry Ellison, he bought Control of Paramount, and then they announced a massive, massive deal to bring the UFC to CBS. And it was, I think it was $7.7 billion. Huge, huge deal. I mean, that is how much they're paying. That is NFL. It is way, way bigger. The UFC was making, I'm just looking at a news article,

it was making $5.50 million per year from ESPN. It's going to $1.1 billion per year on CBS. It's a big number. And I wonder how much of that was like, hey, I'm not seeing sports rights don't have value. No one believes they have more value than I do. But that is a huge number for the UFC, which is not as good a property as to take one,

the NFL, the NBA. And I wonder how much of that was, you got a movie studio type, in there and he wants to flex the muscles. You know, he wants to sit at ringside at UFC. He wants to hobnob with the celebrities. I don't know if that's a financial deal so much as a ego much you want. All right.

I have rambled on long enough about that. Let me switch to something I talk to with my friends a lot. You know, I don't have an answer here. But one thing that I've tried, especially with my friends, and I even try this on the podcast now, it's difficult to do. But when someone has an edge, when someone has something, something really unique. How do you push them to swing? And I think it's really interesting. You know, one thing I've thought about asking on the podcast before is, hey, there's the Buffett

punch card rule. You know, if you had 10 stop, if you could only invest in 10 stocks with a punch card every time you invest in when you punch it, you would be a much better investor because you would be so selective. And I thought about asking people, hey, you know, this idea you're pitching, most people are along the stocks they pitch on the podcast. You know, I kind of had that requirement. you're longer, you believe in it, but I've thought about asking, hey, is this, you know, is this a once-a-month idea? Is this a once-a-year idea? Is this a once-a-year idea? Is this a once-a-five-year idea? Is this a punch-card idea? The reason I don't ask it is because it's an awkward conversation, right? People run portfolios. There's different sizes and

everything. Maybe how is somebody going to come on and pitch a podcast and then come and say, oh, I think this is just, you know, an average good idea. You're just putting them on the spot in a bad way. But the reason I ask is when I talk to people and I try to suss this out and I hear them say, hey, this is a punch card idea, or they've got some information that's really flipped it, you know, just pushing them to say, hey, if this is such a good idea, why aren't you bigger? You know, if you're, nothing is investing advice, obviously, but if you're 10%, why aren't you 15%, why aren't you 20? Why aren't you 50? It can be good or bad, right? But I think it's a really interesting way of talking and thinking to people about it and kind of quantifying

the edge. And the reason I'd tell my mind, look, I'm just rambling, but I've had a few recently where for me personally, and I'm not going to name stock names, or for friends, there was a new bit of information out, and sometimes the new bit of information was out there for a month, and sometimes it was out there for a day. But there was a new bit of information out that materially changed the thesis, sometimes in a very positive way, sometimes in a very negative way. And again, I'll just speak for myself. I have trouble when the new piece of information comes out,

particularly if something's size large already, increasing it, you know, going for the jugular. And I don't know if that's good or bad on my part. Like, you know, I had one recently where a piece of information came out, I thought it was almost certainly to be good news, already had a big position and I didn't increase it. And then in hindsight, I was talking to someone and they were like, hey, man, you had a different view on that news. You knew what was coming or you thought you knew what was coming.

Why didn't you increase it? And to me, you know, push back and forth. It's like, hey, I was sort of huge here, man. This was already a big position. One of my biggest, like, how can you get bigger? But on the other side, it was like, hey, if you were running the, you know, The Kelly Criterion or whatever in your model, it would tell you to get bigger based on this new information.

So it's just like re-underwriting, talking to people. I do the podcast a lot. I talk to a lot of friends. It's one thing that I've tried to step back. Like when I'm talking to a friend and they mentioned an idea to me last month and they mentioned something new this month, I really do try to push them and say, hey, this seems like new incremental information. Are you buying?

Are you selling pushing? I don't really have a ramble there, but it's just something I really think about. And it's one of the hard things about investing. You know, in Blackjack, it's very, it's very easy in Blackjack. You're dealt in 11. The dealer's Delta 6. It's very easy to know it to double. You're Delta 6.

The dealer is Delta 6. You get a 5. It's very easy to know it to hit again because you've got 11 now, right? It's very easy to update because it's very mathematical. Investing, it's not mathematical. You're dealing probabilities, but it's unknown probabilities, right? What does this AK mean? What is that pressure release?

You never really know. And it's just having people to talk about and think through with it can be really helpful. And look, real edge comes along rarely. And when you have it, sometimes having somebody push and say, hey, is this real edge? If you really believe that, why aren't you buying can really help. And the counter, you know, I know a lot of times, especially my friends who know names really well, they'll say I have this big position. I've got this check, right?

Or I understand the industry, it's starting to have a cyclical downturn, right? And analysts aren't onto it yet. But like, oh, cool. Or you saw him? You're reducing the position? No, no, no, no. The long-term value is too great. And they might be right.

But, you know, if you've got to check that numbers are going down, you probably want to trade around that in some form. Now, could it be reducing your position. It could be shorting a basket of stocks with similar beta and then just saying, hey, this company's so good. I'll short a basket with the similar beta. It could be buying puts, whatever it is. But, you know, if you're really following a company,

oftentimes there is news that you have hedge and you have insight into. and I think updating the trade around that is critical. Okay, that was rambly. I don't even know where I was going with that, but I had notes. It's obviously been in my mind. I've been thinking about a lot. So just want to rant on that.

Let me go to the last one. I'm about to put a post up on this, but I think it's worth mentioning and discussing. So in fantasy football, normally when you do a trade, it's I have three running backs. You have three wide receivers. I have zero wide receivers.

You have zero running backs. Let's do a trade. Now, obviously, relative value and everything, but that's the trade. But there's what I call a challenge trade. you have a running back, I have a running back. I think your running back is better than mine. You think my running back is better than yours.

We trade. That is a direct challenge trade. If in the wide receiver's running back conversation, it could work out well for both of us, right? My running back does great for you. Your wide receiver does great for me. We both got what we needed. In this trade, we trade running back for running back.

It is either my running back does better than yours or your running back does better than mine. But one way or another, one of our teams improves, one of our teams gets worse. There's no cutting it. You can relate. I know a lot of people might not list to football, but I think you probably get what I'm saying.

In investing, all investing is basically a challenge trade, right? You buy a stock on the market. You are challenging the anonymous seller on the other side. They are saying, I think there's better risk-adjusted opportunities elsewhere, and you are saying, I think this is a good risk-adjusted opportunity. Lots of different things can come into factor, but that's square. What's interesting is most investing is anonymized. So when the person, if you're buying and someone is selling,

you don't know who's selling and you don't know their thesis. Every now and then, that's not true. For instance, private equity firm owns 20% of a company. They announce a secondary. You know who's selling, but you don't know why. They could be selling because they're at the end of their fun life, or they could be selling because they think the business is about to implode. So you're taking some risk there.

Why did I mention this? BHC is a stock. I own nothing in it for full disclosure. So I don't have a position. I think it's very interesting, though. This is the former Valiant. They are over levered with, I believe they've paid their shareholder lawsuits from the Valiant days out, but Valiant went on an acquisition binge, and they've got all the debt from

the acquisition binge, and obviously the company exploded. It is now a creature of financial engineering, and there are two sophisticated shareholders who are in here, John Paulson and Carl Icahn, both own roughly 10% of the stock. They both own roughly 10% of the stock. And for the past two years, maybe longer. The key thesis on BHC has been pretty simple, a financial engineering story. Can you get, they've got tons of debt, but the debt is cleverly structured. And if you can get assets out of the debt into equity holders' hands, then you can shift

value from the debt to the equity. And because they've got so much debt, any value you can shift from the debt to equity creates a fortune, right? I'm simplifying a little bit, but this is basically right. And the one big asset they have is BLCO, Balsian loan, and that is worth quite a bit for share. And most of it sits in an unrestricted sub. And the thesis for the past three years, and the company said this,

where they want to get it to shareholders, right? And the best way would probably be the IPO, BLC, about three years ago, 19% of it trades on the public stock exchange. You can see it. The best way would probably be, if you could spin out the remaining shares of BLC shareholders, the remaining shares are worth,

some days it's been worth more than BHD's share price. Some day it's been worth most of it. but if you could do that, that would create a normal side. Why do I mention all that? Well, Icon and Paulson both said on PhD's board, both own 10%. So both of them are very privy to all the internal negotiations. Hey, are there risks that we can't do any of the spinoff stuff? Andrew just talked about.

What are the opportunities? What are the other factors? They are privy to all of that. Both own 10%. On Friday, Paulson bought all of Icon's stake, over $300 million from ICON. And not only did he buy all of Pulsant of ICON stake, but he did it. You know, the stock was trading at seven.

It had been trading as low as six a couple days before, but there was a rally. And Pulsin was actually buying stock on the market as well. He did it at nine. And that is just a fascinating, fascinating challenge trade to me, right? Normally, if you're selling 10% of a company in a block, you have to take a huge discount. But what were Pulsant and Icon seen that made them get together? And Icon said, hey, I want to sell this block. Could be for any reason, right?

I want to sell this block and Paulson said, hey, based on what we both know, I think I will generate a fantastic return if you get nine. Because if you came to me and said, I own 10% of a company, the stock trades at seven, I'd like to sell to you. I'd say, okay, my first bid is $4. And then we'd probably negotiate and settle around $5. If you went to an investment bank and said, hey, I want to unload this 10% block. I'm a sophisticated shareholder with a board seat. I'd like to blow out of the stock. The investment bank would probably say, cool, we think we can get done for $4.50 and maybe $5, right? You'd be tricking a huge discount. So Icon goes to Paulson, or maybe Paulson goes, I don't know.

We don't know the whole story here, but they go and something they say, gets them to say, hey, yes, if ICON wanted to exist, this, normally he'd be taped, trading at a huge discount, but both of us think it should go for nine. Like, what did they know? What was going on there? Because here's the other thing. Icon has to sell, right? So if they know tomorrow they're going to sell BLCO for $100 per share and all the proceeds will go to BHC shareholders and the stock's worth 50, Icon's not selling for nine. and he's holding on for that. On the contrary, if they know everything's terrible, Paulson's not buying that nine.

He's taking a huge discount or he's not doing the trade at all. So I just think it's such a fascinating challenge trade. I've been looking at it. I have no position. But, you know, the stock is as I, as a, where did it close? It was, oh, okay. So it spent most of a trade in the seven, high sevens range. It looks like it kind of tipped up to the mid to low eight ranges at the end of the

the day. But, you know, you're buying a sophisticated shareholder who sits on the board just bought 10% of the company $300 million at $9 per share. And normally I'd say, hey, sophisticated shareholders, anything could happen. But here, it's such a financial engineering story. And the person has so much insight into the financial engineering stuff. I think that's a very interesting signal. I'm buying the discounts to that. Very, very interesting. Okay, anyway, I've rambled enough. These ramblings are always hard because I'm like, hey, man, I'm rambling, but I don't know if I'm any sense? Do people want to hear this? Do people generally pretty good feedback? But I, you know, every one I do, I hang up and then I say, that was the rambliest one I've ever done. And then the

next one I hang up and I say, I feel like that. So it was even more ramblayers. So thank you for listening to my ramblings. Got a couple of great podcasts coming up, especially my friend, Art of Boken is coming on for one on process improvement and stuff that I think people are really going to enjoy to some really interesting ideas on the podcast as well coming up. So thank you for listening. Looking forward to sharing those with you guys. And we will talk next A quick disclaimer, nothing on this podcast should be considered an 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 advisor.

Thanks.