Yet Another Value Podcast - Broyhill Asset Management's Chris Pavese on $AVTR, pick and shovel play for life sciences

Episode Date: March 21, 2024

Christopher Pavese, President & Chief Investment Officer at Broyhill Asset Management, joins the podcast to discuss Avantor, Inc. (NYSE: AVTR), a leading global provider of mission-critical products and services to customers in the life sciences and advanced technology industries. For more information about Broyhill Asset Management, please visit: https://www.broyhillasset.com/ Chapters: [0:00] Introduction + Episode sponsor: Tegus [1:35] As a generalist, how Chris and team arrived looking at healthcare + GLP-1 tangent [9:16] Overview of Avantor, Inc. $AVTR and why it's interesting to Chris [13:56] Laboratory Solutions (accounts for 2/3's of $AVTR revs) / how embedded is $AVTR with customer base (CDMO business) [20:19] VWR acquisition [23:02] Disconnect between reported numbers and large cap comparisons / understanding cyclicality in life sciences/healthcare [32:36] Variant opinion that generates alpha in $AVTR [37:14] Why not own $TMO or $DHR over $AVTR? [42:06] Capital allocation and M&A [46:22] Build vs. sell [48:35] Recovery story: bull or base case when $AVTR shared guidance [54:01] Return on due diligence work with $AVTR, perception as a complicated business [1:02:04] Tail risks [1:06:39] Final thoughts Today's episode is sponsored by: Tegus This episode is brought to you by Tegus, the future of investment research. From the beginning, Tegus has been committed to creating efficiencies in the research process by making it easy to access the content that investors need to get to differentiated insights. Today, they’re taking it one step further by bundling qualitative content, quantitative data, and better automation and technology together in the same platform. Instead of piecing together data from fragmented sources, just log in to Tegus to get expert research, company- and industry-specific metrics and KPIs, SEC filings, and more, all under the same license cost. You can even take your work offline with an Excel Add-in that updates almost any model with the latest financial data — keeping all your custom formatting intact. Tegus is the fastest way to learn about a public or private company and the only platform you’ll need for fundamental research. To try it free today, visit Tegus.com/value

This episode is sponsored by TIGIS, the future of investment research. From the beginning, TIGIS has been committed to creating efficiencies in the research process by making it easy to access the content that investors need to get differentiated insights. Today, they're taking it one step further by bundling qualitative content, quantitative data, and better automation and technology together in the same platform. Instead of piecing together data from fragmented sources, just log into TIGIS to get expert research, company and industry specific metrics and KPI's, SEC filings, and more, all under the same

license costs. You can even take a look at your work offline with an Excel add-in that updates almost any model with the latest financial data, keeping all your custom formatting intact. TIGIS is the fastest way to learn about a public or private company and the only platform you'll need for fundamental research. To try it for free today, visit tigis.com slash value. That's Tegus.com All right. Hello and welcome to the yet another value podcast. I'm your host, Andrew Walker. If you like this podcast, it mean a lot if you could rate, subscribe, review it wherever you're watching or listening to it. With me today, I'm happy to have on for the first time. Chris Paviz. Chris is, you're the CIO at Brayhill, right? That's correct. Yeah, it's got a complicated background.

I never know what to call everybody. But Chris, thanks for coming on. Yeah, thanks for having me, Andrew. Excited. Awesome. Super excited for today. Before we start talking, just want to remind everyone a quick disclaimer to remind everyone, nothing on this podcast is in. investing advice, please consult a financial advisor, do your own diligence, do your own work, all that sort of stuff, because this isn't financial advice. Chris, the company we're going to talk about today is Aventor. The ticker there is AVTR, really interesting company, lots to talk about. So I'll just quickly flip it over to you. What is Aventor and why are they so interesting? Yeah, and if it's okay, I'll even back up further than that and discuss a little bit

about what we're even doing in this space as generalists, because full disclosure up front, we are not healthcare specialists. Again, this is not investment advice. As you probably should have our director of research who's got a background in organic chemistry and has worked in various clinical labs who probably do this story better justice than I will,

but we'll give it our best shot. So I think when you and I first connected, I was probably halfway through, a tangent on GLP1. And so that's kind of where we started, just looking at the frenzy last year, looking for opportunities. You know, we wound up with several positions in the portfolio, more geared towards businesses that were overly punished from the craze around Ozympic and Wigofi, Wigovi.

I remember last October was like, look, nobody's ever going to have a hit replacement again because of, because of Wigovie. And it's like, well, you know, but my grandma actually, unfortunately, just broke her hips. Like, old people do break their hips. I don't know. It doesn't matter where they're fat, skinny, not moving, moving. Like, they break their hips. They're probably going to be some.

Yeah. And listen, right, like, you know, we've had no shortage of diet fats that have come and gone in the States. And, you know, all the while the obesity trend has been up into the right nonstop and maybe even accelerated. I just want to pause there. And we'll come back to Avatar. But I love because you all did a lot of research.

I do hear you when you say we've had all the. diet trends. But, you know, it is, there was, it's been around for a while, the GOP ones. Obviously, they just started picking up last year. It is a really interesting space. And look, I'm not going to go by Eli Lilly or one of these guys that traded huge things. These are blockbuster drugs. But it's crazy, right? Like, these are, they're almost miracle drugs and it's crazy. And it is interesting to think about things like, I don't think it's going to impact fast food, but it's a new risk for McDonald's or it's going to change a lot of things about society and it's really fascinated. I just love, you can go on anything with that, but I know y'all

did a ton of work on GLP once. Yeah, no, I think you're right. I mean, you know, where we shook out, and it depends on the business and the industry, right? But, you know, we were basically just reverse engineering trying to figure out what was baked into stock prices. And I think peak mania, at least for, you know, the stocks that were getting clobbered were, was kind of September, October last year right around the release or the you know the early conclusion of the novo select trials when when that study got released I mean there were stocks down 15 20 25 percent on the day the way we looked at it was you know you mentioned McDonald's right like you know they survived the Atkins right like you know you know French tribe

demand has continued to soar I agree with you and we tend to agree right like these are fantastic drugs will more than likely be among the best sellers of all time we've seen forecasts you know 100 billion addressable market or more in five 10 years right your guess as good as ours in terms of where that actually shakes out but listen they are great drugs drugs for the folks that need them I think there's just still so many questions right like Americans love magic pills to fix their problems I don't think we've got a great track record of staying on them, right? And the reality is, like, people that take these drugs for weight loss, doctors assume they're on them for the rest of their life. So we don't know

one. And what we've heard and the diligence that we've talked to with folks in the industry and the medical communique, think about it like a third, a third, a third a third of patients stay on them and they're happy. A third have awful side effects and they can't take it anymore after you have several months or up to a year. But, you know, within a year or two, you lose two-thirds of the patients on the drugs. And then the last class is just folks that aren't consistent or just drop off because, right, at $1,500, $1,500 a month, that's tough. Right. So that brings up another question, too, in terms of what is going to be covered. And so we're based in Charlotte. North Carolina is actually one of the first states that has come out

vocally and said, listen, we can't cover these things. They're going to bankrupt us. We just, we cannot. We're not. Right. And so, you know, you've got governments pushing back already. You've got corporate insurance plans, right, probably fighting or requiring all sorts of behavioral modifications before they dole out the drugs. We don't know how long people are going to stay on them. We don't know what the long term consequences of people being on these drugs for longer than a few years. There's just, there's so many open questions. And market as it always does right was just quick to just take the reaction to the extreme um i don't have a view on lily or novo um here but you know we think there were there were businesses that got hit

extremely hard and i think the range of outcomes right in terms of you know this is you're right like the first c lp1 hit the market actually in 05 so these drugs have been out for a while but they didn't really hit mainstream until last year um and so So, you know, it's going to take time before we know what this looks like long term and market and, you know, the range of outcomes just given all those uncertainties is so wide and market, in our opinion, priced in, you know, for a lot of these businesses, just immediately priced in the worst case scenario. And so the way we looked at it, right, we didn't have a strong view as to what the upside was for Wigovi or Zempic, but we did have a strong view that, you know, there were lots of other scenarios on the table that were probably. probably in aggregate, a much better, much higher probability than the absolute worst case scenario that was being priced in. So it just seemed like a good risk reward. I just, I also thought it was kind of interesting. It was almost like obviously the market is a lot of people, a lot of

different companies, but it was almost like the market's left hand wasn't talking to the market's right hand because you would see, I mentioned like there would be companies that do hip replacements and I just use hip replacements generic. And they were getting hit five or 10%. It was like, I don't think GOP ones even impacts the demands for these long terms. Maybe people are like a little less overweight, you know, maybe they're a little healthier. So you're talking about four years down the line of reduction. But you see those getting hit. And then like something like Chibaldi or a wing stop, right?

The stocks are just absolute rocket ships. And look, I don't know how GLP ones are going to impact people's demand for a Chbode. Like they would tell you, hey, you go on Jop one. You actually want like better for you, more wholesome food. and maybe that plays into our, you know, all natural food flavors. I would say a mass control of a burrito, I love it, but maybe not the best. Wingstop, I think it's ours to argue that's better for you food.

But I guess I was just saying these stocks are just like up into the right. It's kind of funny because if GLP 1 is dying, you would, is killing these things or is killing the hit manufacturers. You think like a much more direct thing would be people don't want fried chicken from Wingstop or something, you know? Yeah, yeah, yeah. Market has made a whole lot of sense in these. last several months or even several years, but that's a whole other story. But I think we are way off target. Let's head back to Advantor.

Yeah. And so AVTR is actually at the other end of the spectrum. So this was an idea that came across through a friend. You know, we were talking a number, you know, we were talking about a similar setup across a number of names in her book. And these are businesses, you know, there's no shortage of them that over levered in a zero interest rate environment. COVID hit, got stuck with supply chain issues, so costs went through the roof, margins

collapsed. At the same time, all that leverage on the balance sheet all of a sudden was extremely costly as interest rates spiked. And, right, so, you know, a number of these businesses trade at mid-20s like multiples and, you know, post-COVID, boom, bust. We're trading in some cases at double-digit cash load yields, AVTR never got that cheap, but was trading at a massive discount to peers and where it's traded historically. And it was similar. So a lot of the, you know, we've got a lot of similar stories in the book where there's a number of self-help initiatives where these businesses are, you know, spinning back

off or selling off or unwinding acquisitions that they did and then taking proceeds to pay down debt and buy back stock at massively discounted prices. So we think that's a super interesting setup here. Avantor is not doing anything in terms of spinoffs or sales in terms of capital allocation, but I think just the robust free cash flow generation that the business throws off will allow it to de-lever substantially. So this business, they made a big acquisition. I want to say leverage got up to 7-8 or 8 or 9 times back in 1718 before they went

back public in 19, and we think it'll be back below target on our numbers next year. So backing way back up, how this ties to GLP1. So Vantor makes mission-critical products and services for a number of industries, the biggest being the bio-pharmaceutical industry. They're also suppliers to semiconductor industry, so it's kind of a backdoor AI play as well. If you want to think about that, that's going to be driving, you know, it's not as material as biopharma, but it will be a driver for the semi-end market. And then they've got academic and research and development. So they're, you know, biggest competitors, think about it as a, you know, I think people that know the industry better than we do would say it's kind of a, you know,

a B or C player relative to the A or B players and Danaher and Thermo. I'd like to think that that is changing. But I think that the discount on the stock more than justifies, you know, any quality that you're giving up in management team or business structure. And again, the tie to GLP1 is, you know, on the upside, you know, the number of drugs in, you know, in phase one, phase two, phase three trials that are GLP1 related is just astronomical. And given the supply chain bottlenecks in the industry, so right now, both Novel and Lilly, you know, do not outsource most of that manufacturing. We think as new drugs hit the, as new drugs are approved and come on the market, especially the oral, as opposed to injections, that's going to drive a good amount of growth for Avantour and a number of players in the industry that are well positioned as a lot of these companies are forced to outsource more of the manufacturing process to companies like Avantor. This episode is sponsored by TIGIS, the future of investment research.

From the beginning, TIGIS has been committed to creating efficiencies in the research process by making it easy to access the content that investors need to get differentiated insights. Today, they're taking it one step further by bundling qualitative content, quantitative data, and better automation and technology together in the same platform. Instead of piecing together data from fragmented sources, just log into TIGIS to get expert research, company and industry-specific metrics and KPIs, SEC filings, and more, all under the same license costs. You can even take a look at your work offline with an Excel add-in that updates almost any model with the latest financial data, keeping all your custom formatting intact.

TIGIS is the fastest way to learn about a public or private company and the only platform you'll need for fundamental research. To try it for free today, visit tigis.com slash value. That's T-E-G-U-S dot com slash value. Perfect. That's a great overview. So, you know, a lot of the, they did a really interesting investor day back in, December, if crazy December is that far away at this point, which I'd encourage anyone who's interest in the space to read. So, you know, they pitch themselves as a, I'm just

looking like right at the front of their thing, life sciences tool play. We are a picks and shovel model. We razor blade model where we sell consumable. So if you think life sciences are going to grow, like we're a great picks and shovel play on that. They mentioned playing with the, they mentioned they sell to all the top 20 pharma players and everything. So I guess just to start. Two-thirds of the revenue are from laboratory solutions. Can we just dive into what is laboratory solutions? Yeah. So lab solutions, so that is today the bulk of the, you just mentioned, it's the bulk of the revenue of the business. And let's back up too. So one of the exciting things from the investor day, right, is they've recently restructured the

business. So they used to report, and I can't stand, I guess it makes sense for some businesses, right but they used to report the segments on a on a regional breakout um i think this new reporting structure is more than just you know window dressing i think it makes a lot of sense i think it'll allow them to better allocate capital and and streamline both businesses um so the two businesses are lab solutions and bioscience production lab solutions think about it as their cash cow it's two thirds of the two thirds of the top line today running at about 15 percent operating margins You can think of this as a kind of steady, low, mid-single-digit grower with 80% of their sales in consumables. So they are deeply embedded in customers' lab ecosystems, helping with scientific discovery in highly regulated environments with extremely high-quality standards, offering instruments,

consumables, equipment, services, and digital solutions. And I think you mentioned, they're the number one or two player in the industry, and they count every one of the top 20 pharmaceutical firms in the world as customers. So that gives you a sense of their reach in that industry. You mentioned they're deeply embedded, right? So, I mean, a favorite of a lot of investors has been the CDMO, right? The people who make the drugs, where they, they will, the CDMOs will tell you, hey, no one ever switches from us because when your drug is approved, like in the FDA orange book that it's approved, the drug is approved at a specific site. So you generally don't have people switching unless there are just such bad issues because they have to go and like get the FDA to change the orange book and approve them at a different site. When you're looking at lab solutions and they say we're deeply embedded, right? That quote deeply embedded, which is music to any, every investor's years. When you've got a high margin, like, Life sciences, drugs, these are very high margin businesses. And when you've got anything that's deeply embedded into the process, you hear, hey, recurring revenue, not super economically sensitive, probably some pricing power over time.

So I just want to ask, like, give an example of a product and how deeply embedded is this? Like, are these actually getting put into FDA orange books or is it like, like if I wanted to switch to a thermo or Danaher who are like kind of frenemies, they compete on some things, they supply on some things. But if I wanted to switch a product, like, what would it look like for that? Yeah, you're right. It does not happen, right? So, like, the majority of these products are literally specked into customers' processes. And oftentimes, you've got, you know, ABTR, you know, staff on location with their customers. To your point, so they actually sell into a lot of CDMOs.

And just reading through, right, if you go. through transcripts, you know, talk to folks in the industry, former current employees, customers, suppliers. You know, once a drug is in development and gets FDA approval, to your point, there's no switching. One, right, like the cost of Ventura's products relative to the end, you know, the end customer is total cost of goods. is less than 1% right it's it's just immaterial so changing for price is not something that ever even enters the equation once a drug is approved um quality is really right the the the standout that drives quality and service is what drives um the customer decision to begin with and the vantor

i think has a good track record there and just the depth of the product and the breadth of the product and the breadth of the products of the offer um gives them a good starting point in into research and development processes. But once they're there, if a Pfizer wants to make a change to something event or, you know, an eventor consumable in their development, once that drug is approved, they literally have to resubmit for approval to the FDA. So it is that embedded into the manufacturing process that making a change in many cases requires them to actually go back and seek out FDA approval again, which is just not going to happen. That makes all sense.

I'm just like I was looking. So VWR was the big acquisition they did in 2017. I'm just looking at their site and you can their website. And it's just crazy like the amount of stuff they have. And it's just hard for me to understand like how much of this is distribution or how much of this is like really sticky. Because one thing, you know, I put products. The first thing that pops up is VWR premium aluminum foil.

And I'm like, well, that is a consumable. I could see how that actually would get kind of sticky where like you're getting from the same supplier, their onset. But it's it's premium aluminum foil, you know, and they've got that's what I'm just hitting on because it's up top and it's kind of silly. They've got antibodies, nucleic acid, like there are other things. But that was just one of it's like, well, how much is like really sticky versus if I wanted the thermophisher aluminum foil? Like I could switch to that, you know? Yeah. I mean, here I'm looking at a quote we've got in front of us from one of the calls we did.

right BWR specialty with single use equipment let's see so they're selling you know again it's it's a mention of the razor razor blade model right there's they're selling bags with tubing filters modalities into bioreactors and you're thinking okay they're selling bags okay how much could those possibly run but those are 15 grand apiece to give you a sense of the type of stuff

And that's a good, yeah, that's a good point, you know, the distinction between VWR and the old, you know, JT chemical business, you know, you can think of it, you know, as, you know, VW, the strategy was basically marrying the vertical scale of that massive distribution to the higher, with the higher margin proprietary materials and chemicals of that legacy AVR business, AVTR business. And, you know, what our, what my, you know, the comparison my colleague made was VWR was basically the Amazon for lab consumables. And they were the early pioneer of digital ordering. And it was basically, you know, if you're a large business, it was a one-stop shop. And that was their advantage. Right. And so when you marry that with the chemical company, that now all of a sudden allows them to move much higher margin products through that distribution channel. And you've seen, right, margin gains since the public went, since the company went public again in 19.

And we think you'll, you know, and those, you know, we had a spike in margins during COVID and we can get into what happened during the pandemic. And now, you know, the entire inventory, the entire industry, you know, ABTR included is dealing with the repercussions and the fallback and normalization of that demand. So margins are a good bit compressed, but longer term, I think there's a pretty good story here of expanding margins on fixed cost leverage, increasing shift to higher margin proprietary products, which you've seen grow, you know, increasing share, even in the last few years. We think that continues. They're also growing faster than the rest of the book. So you've got natural margin expansion and mix shift. And then on top of that, you've got fixed cost leverage. So margins should just be naturally, right, naturally trending higher over time. You mentioned, so I guess let's jump there.

So I read their analyst day and it's like every buzzword you want to hear, we touch GLP1, we touch gene therapy, we touch cell therapy, we touch MRNA, like everything you want to hear. We're a consumable, we're built in as we've discussed, we're built into the process, we're consumable. So we've got like this recurring revenue. We touch every growth area. in health care. Hey, we think our long-term guidance is mid-single-digit revenue with operating

margin expansion. Like everything I hear, I'm like, oh, my God, this is great. And then I just want to try to marry that to, I look at this and I see 2022 revenues down. Two, 2023, revenues down or flat. 2000-24 guidance. Revenues down or flat, right? I see all that. They're talking about, hey, we're going to get this margin expansion. We're taking 300, I think the number is 300 million. and costs out of the business. Plus, we're going to get operating leverage. 2024, Q1, margins are going way down in Q1. And, you know, over the year, they'll recover,

but they're still going to be below 2023. So I look at that all, and I'm like, I'm reading this and I'm seeing thermo comparisons. I'm seeing Danaher comparisons. It trades at a nice multiple. I'm just like, my number one question I wanted to give you, there's just this disconnect from what I see at the analyst day and like the numbers and everything they're reporting to me.

So I know that's the de-stock you talked about it, but just tell me, like, why am I seeing this disconnect? Yeah, and so that's, and I think this is a good time to start with what the industry went through during COVID. You know, and I started out with the disclaimer that, you know, we are not health care specialists. And so, you know, hopefully we don't get too in the weeds into, you know, what these, you know, what people are actually doing with these products and differentiating between, you know, a pipette or beaker from Evantor versus another competitor. But I think the advantage that a generalist brings to this industry today

is we've seen several, you know, we've invested across inventory cycles previously. Healthcare investors and healthcare management teams, right, have historically enjoyed extremely predictable, steady, slow, medium growth, depending upon where in the healthcare supply chain, what sub-industry you're looking at. But they've essentially had zero cyclicality, right? There's no economic.

I've never heard anyone describe it that way. And when you said it, something clicks, like, that is such an interesting way to frame it. Because you're right. Healthcare, especially if you're supplying to pharma companies, you never had any issues with, hey, you know, all of a sudden we need 100,000 orders of MNRA and the next year we need nothing. Like they've never had that. They always had great visibility, sometimes a drug and bust. But I just loved it. I've never heard it because anyone who deals with coal or oil and gas or anything else knows about bullwips and all this, but healthcare did not too. Please continue. But I wanted to tell you how much I enjoyed that because I've never heard someone say that before. Yeah, no, appreciate it. And listen, we're,

we tend to look for simple things we can understand. This industry is not that. But I think like our simple approach to it was just through that lens, right? So you've got an entire industry, you've got management teams across the entire industry and largely an investor base across the entire industry that has never experienced any degree of cyclicality, right? And then all of a sudden we get a global pandemic in 2020 and you have, you know, combine that with, you know,

the most speculative venture frenzy we've ever seen, right? And a lot of that money went into biopharma and drug development and IPOs and research and development budgets. On top of that, you had a surge in vaccine testing and development. And so what used to be a steady mid-single-digit top-line growth industry, this is life sciences tools, you know, you have, of several quarters or even several years where quarter after quarter management was saying, well, now we think our long-term organic growth targets are more six or seven. Now we actually think they're seven to eight. Now we actually think they're eight or nine. And no one, it never even occurred to anyone that, you know, that was artificially inflated by, you know, all the

things we just talked about. And then in addition, it was even double, you know, it was even double or triple magnified by the fact that supply chain issues during COVID meant that in addition to the surge in demand, customers were ordering two or three X what they needed to make sure they got what they needed, right? And so you had artificially inflated demand on top of the surge in demand that was real, although temporary. And then all of a sudden, all of those things went into reverse, right? Like supply chains freed up. Supply chains freed up. Supply chains free up so all of a sudden customers are left sitting on you know a year of inventory plus and we'll circle back there in a second you know venture funding dried up as you know valuations at least at

least for a short amount of time started getting back to normal and that meant you know R&D budgets dried up and obviously right vaccine testing and development slowed and so you know just as none of these management teams or investors in the space saw the cycle to the upside, they then went through a period where you had like literally two years of negative earnings revisions, quarter after quarter, it was miss guy down, miss guy down, miss guy down, miss guy down to the point where by the time we got, and thankfully we didn't get to the industry until about fall last year, so better lucky than good. But when we stepped in and looked at it, that was the lens we were looking at it through. My colleague again, so the first question I had when we looked

at this business was, how are we possibly going to know where the body, right, like what are we looking at in terms of indication of a body? And there's a number of things we can look at and point to. But where we hunger hat was, and again, And we've got a colleague here that was in the industry working at labs. And she said, listen, a lot of these consumables have a 12-month shelf life. So to some extent, like there's some portion of that inventory that's just going to have to be replaced. And we were already, you know, 12, 18, 24 months into a drawdown in, you know, a second half of last year. So it felt like, you know, it felt like the cycle should be closer to.

a bottom than a top famous last words and yet for the last you mentioned the investor day which was last December we also had several healthcare conferences since then you had the big jpm conference you had several earnings reports both q3 and q4 and really for the last almost yeah i'd say more than six months now every call you listen to to with either ABTR or anyone else in the space, it's extremely obvious that things are not getting worse and are improving. But no one is willing to call the bottom. And so this gets back, or the recovery. So this gets back to your initial question, like, where's that massive disconnect between the numbers we saw in the investor day or the guidance for 24 and the long-term

structural economics of the business. And they'd lay this out in the investor day, and I think that's the best way to think about it. You kind of need to think about it in two periods, right? First is reversion back to trend as you have some restocking and orders pick up. And I think during that period, whether it's, you know, whether it's 12, 6 months, 12 months, 24 months, you're going to see top line accelerate above normal, above organic, right, long-term trend. You're going to see margin growth accelerate much faster than you otherwise would be, right, as capacity utilization picks up and inventories are replenished. And then you can talk

about the long-term assumptions that management has laid out there for the company. But I think before you get there, you see a big snapback in the numbers. And that's really where we got more comfortable owning something that now looks like on the surface, it's trading at 25 times forward earnings, which is not something, you know, a value investor, traditional value investor would get particularly excited about. We just don't think those earnings numbers are anywhere close to the right ballpark. And that's because management teams are not willing to forecast of recovery and the consensus is not willing to underwrite a recovery. And so what's in the numbers right now for 24 is basically the business stays where it is, zero improvement.

It just kind of trends along the bottom. So you mentioned, I want to go to the analysts and management team not willing to underwrite or recovery. We'll come back to, I also want to come back to the analyst, the Investor Day targets in second, but just on the analyst, like, I guess my first question when I started researching this was I was going to ask you, hey, okay, I agree, this is a really good business. got the consumables, all those stuff we've talked about. All right.

I agree, it's good business. But as you said, it's trading at 25 times earnings. And sure, they've got a nice long-term growth story. But, you know, when I pull up A&R on Bloomberg, which is analyst recommendations, I don't really read a lot of sell side research. But the first thing I see is I think there are 24 analysts covering this in 18 or buy and six or holds. Right. So I guess my question to you would just be like, the purpose of all investing is to generate alpha, right? Other than that, let's just like toss it all into the S&P 500 index and go to the beach.

Or, you know, maybe we should just toss it all into Dogecoin and just yellow. But that's the person. So my question was, like, what is your variant opinion that generates alpha? Because when I lay out 25 times EPS, the whole cell side has this rated by, I hear you on the recovering the train. I'm like, you know, that seems like the type of thing that you sleep well at night, but you don't like really generate alpha with, you know? Yeah, I think so fair point, we're always cautious, right, owning something where consensus is overly bullish. I wouldn't say, right, like 15 out of the, you know, on our numbers looks like, you know, 15 of 21 analysts rated a buy. That's probably average.

I don't have those numbers off the top of my head, but that's probably pretty close to average for sell side rankings. I would guess if you look at, you know, just the percentage rankings over. over time. But I think the bigger, the bigger point is when you actually drill down and look at the models and look at the consensus is penciling in, they're just not there. So for example, for this year, you know, the streets got sales declining through the first half of the year, which is consistent with our first half assumptions. And then they've got, you know, revenues rebounding, and I use that term loosely, 3% in the second half and 5% next year.

We think while COVID was certainly presented some challenges to the industry, I think it is absolutely wildly bullish for this industry longer term, just in terms of the developments we saw in MRNA, vaccine development, the amount of money and attention that went into science and research and development, like that is going to pick up the organic growth rate overall of this industry. And, you know, they were growing mid-single digits pre-COVID. We think this is a better business with a better mix today with more tailwinds than they had historically. So I think, you know, post-COVID, normalized growth is probably more, you know, closer to high single-digit.

than mid single digits. And like we just said, we expect revenue, right, coming out of the recovery to be faster than that. And so that would imply something faster than high single digits to get us back to trend. And again, consensus is that 3% growth in the second half, 5 next year. I just does, I think, so, you know, in terms of alpha, I think, I think where the alpha comes and where you really see momentum in the stock here is when that turns. So just as management teams and consensus were surprised on the downside

and had to just constantly revise estimates lower, we think we're setting up for a massive upgrade earnings revision cycle, where we've got several quarters, if not longer, where consensus is just playing catch up to the recovery cycle, which is going to make those numbers, right, which is, especially on the out years, like our numbers aren't that much different for this year, but once you go out, you know, more than two or three years, so we typically, you know, we're typically looking for three to five year doubles, right? And so if you forecast, you know,

on our numbers that far out, like we're significantly ahead of consensus. And, you know, if you'd look out beyond just the near-term recovery, the multiples look much more reasonable times you one thing you said at the beginning like right when we're starting talking you said hey a vtr is like a b or c player and hopefully they're improving but they're a b or c player and some of their competitors are thermo fisher and dinner like not in all their segments but thermos fisher especially and i there was an interesting somebody in twitter responded hey like why not go with the better player and you joked oh at these prices it's it's just so tempting and it's so interesting we're we're so enthused or something.

And I just, what did I see that? Like, why not just own Thermo Fisher or Dan or her, which are much better companies? Because I know, like, I have had this problem before.

I'm always attracted to, like, the cheaper little brother over the better, larger peer, whether it's Warner Brothers over Netflix or the worst run cable company over the bed. And, like,

sometimes that works. But in general, like, if you look at history, it's a painful existence. Paying up to buy, buy the best player has really outperformed. And I just, like, I have seen that. You were joking about it online. I just want to ask, like, you know, Thermo Fisher and Dana are training it like

that much of larger multiples. And you would probably get a lot of the same, a lot of the same upside. So just wanted to throw out the comparison. Like, why not go with one of those? Why pay you down a little bit? Yeah. And so I think, so a couple things. Spot on. I think it's like the curse of the value investor. It's the discount cap closing. It's trading for a half-term discount and it's the most expensive half-term you'll ever see. I mean, and we do it over and over again and just refuse to learn that lesson. Well, I won't say refuse. So the one exception would be, you know, we've talked tobacco before. At one point last year, we own three companies in the sector and at some point between now and then we just, you know, I was just shaking my head and I'm like, this doesn't make any sense.

Like, we're just going to own what we think is the best management team, the best position business, with the best growth profile. It's literally trading at, you know, almost 2x, some of the other tobacco companies in the sector. But we don't think those are the right comp. I think the better comp for Philip Morris, for example, is really more just, you know, global consumer staple sector. And which, you know, PM is trading at a massive discount to those businesses with substantially better economics. So that's hopefully the one example where maybe I can say that we've started to learn that lesson, although time will tell whether or not that was, that's going to work out or not. No, in this case. Interesting one, because I've done a decent bit of tobacco and I will tell you like everyone gets tempted by the BTI multiple.

I just did a podcast on them. It's a very interesting company. It's very interesting thesis. But I have talked to people who are like deeper in the weeds in tobacco and industry insiders. and a lot of them will be like, look, multiple for everything, price for everything, and you're definitely getting offered great odds with BTI. But if the Philip Morris team just runs circles around the BTI team. And, you know, that is a big multiple discrepancy between the two.

So you are, it's not a half turn. You're paying a big turn. But it is, that industry color was interested in there. Anyway, please continue. Yeah. And so a couple things with the Ventour, right? Like, I like the, you know, certain elements of the self-help story here. Again, right, like I mentioned at the outset, there's no spinoff or sale of underperforming segments here.

But, you know, from what we've seen so far, new CFO seems to be, seems to be on point. You know, we talked about the new reporting structure. I think there's real opportunity there. You mentioned the cost saving plan that they rolled out at the Investor Day. that should help hit those margin targets over the next few years, even if we don't see the recovery that we're expecting. And then there's a couple other things, right? So you've got, you know, you've got Dannaher and Thermo,

which are massive businesses, right? So, you know, Danaher is just shy of 200 market cap, thermos north of 200. AVTR is 17 billion. We're living in the NVIDIA world. 200 billion that's worth of numbers, man. Brilliant. Pocket change, pocket change.

And so I like, you know, the debt pay down. So you've got value accruing to equity as leverage comes way down. We've got, here let me pull up my numbers here real quick, Andrew. So we've got, yeah, I mean, we've got leverage below 3X next year. And then again, with the cash flow conversion and the free cash flow that this business throws off. I think M&A is more likely than buybacks. You know, that's, I guess, another ding on management. We can sit here and debate their track record there.

That's actually my next question. So why don't we go? Like, this management team took them public. They did a bunch of acquisitions. Leverage comes out when they're public. They do a bunch of acquisitions in 2021. And I think they pay pretty, they pray pretty lofty premiums, pretty lofty multiples for these things. And today they're sitting here and saying,

look, we're over, we're not over levered in a distress way. We just, our leverage is higher than we want. We're going to bring it down to three times earnings. Every dollar that we make going forward is going to pay down debt until we get to three X. And then we're going to look to do MNA again. And I just wanted to ask on that because I look at them and say, you know, capital allocation is really important.

They actually had some interesting lines in their analyst day where one of the EVP said, hey, the most interesting three years of my career was I was the IR guy at a company. and I understand what you as investors look for. We're going to be laser focused on return on capital. We're going to be laser focused on all that sort of stuff. And I was like, oh, that's awesome. But I'm rambling. They did all these overpriced acquisitions in 2021.

And now they say, hey, now that we've done those overprice acquisitions, we're going to pay down all this debt, and then we're going to go do more acquisitions. And I kind of looked at it and I was like, I don't know. So I'll just toss that over to you. Like, what do you think about management as I roll all that out to you? I mean, the model, right, In terms of M&A, the model lends itself to making acquisitions and expanding product lines

and plugging it into this distribution platform, right? So agree that some of the acquisitions they did, especially the most recent leading up to the pandemic, definitely did not, right? And they were buying on those inflated COVID numbers that we were just talking about. was the main problem with the acquisition they did, but most of the industry was doing the same thing and as excited and talking up the same numbers. But I do think in terms of, you know, what those acquisitions did do actually is increase, um, increase the proportion of business in their biofarmus segment or biosolution segment, which is the fastest growing highest

margin segment of the business. So I think, you know, from a strategic standpoint, at least in terms of the product portfolio, I think what they were doing, sense and they've done a good job over time identifying markets and markets they wanted to be in, right? So I think the biggest driver of organic growth in the industry is looking at the end markets that each of these businesses are in. And the biopharma segment, you know, AVTR is among the highest in the group in terms of their exposure there, which should raise their organic growth profile. There's a case to be made, right? And we we've been back and forth to folks that have speculated that, right, these, you know,

this is being built to sell, right? You've had, it was private equity owned in the past. You know, we actually know some of the folks at New Mountain Capital or have been connected with someone that has, has, has, knows those folks well, you know, for a, it probably doesn't make sense for a thermo, just given the overlap their Fisher segment. But for Danaher, right, at a, you know, at 200 billion market cap to swallow or Vantor, I think that could be interesting. I would actually like to see them grow into, right, like get past this period, grow into, I would like to see them, I would like to see them, I would like to see our numbers pan out first before we just settle for a takeout premium here. I think that will be a better result for us, but I don't think that's, I mean, I think that's a decent, you know, we're not here speculating on M&A, but it's a decent fit. And you also have, you know, a pretty good model, again, going back to Thermos acquisition of Fisher, which basically did the same thing that ABTR did in terms of allowing them to pipe, you know, higher margin consumables through a distribution platform. So a larger player buying them did strike me as something, or them going back, private equity ownership struck me as something that could be natural in games.

Like private equity obviously love these businesses because they should be pretty stable ignoring the COVID effects. Private equity's owned this before. They ran it with eight to ten times leverage. Like that's a lot of leverage. You can pay a big multiple for that. Dana Her buying them struck me. I guess just a quick question on that. I don't doubt there'd be synergies, but I don't think it'd be.

a regulatory problem. We don't have to get into hypothetical interest. But one question I have there is, hey, as you said, New Mountain owned them until they IPOed them in 2018, 2019. If these guys were going to sell to a Danahur or strategic, wouldn't they have just sold it five years ago instead of

kind of now, like if that was them game? It seems to me like management wants to build here. I hope they do. I'd be disappointed if they cashed out here. I think they're setting up for right when this recovery picks in again i think i think they're setting up for a super interesting

period where fundamentals are accelerating hopefully you could even see a situation like we did during covid right again because healthcare investors aren't used to semiconductor like inventory cycles um but you can see right like if we get to a point where if normalized growth is seven eight percent um right if they're accelerating for several quarters in a row off the lows to double-digit top-line growth. There's the street to start assuming that that's the new normal and they're going to grow like that for a number of years and then what type of multiple does the company get?

And then going back to the multiple, Andrew, so we sort of triangulate, we look at free cash flow. I think just given the leverage in the business to sort of compare apples to apples, it makes more sense here, at least from a relative standpoint, to look at eVD, or Evita EBIT. And the gap there looks much wider, right?

So looking at forward numbers, Danaher is at 26, thermos at 24, and ABTR is more like 18. So 18 doesn't sound cheap, but again, I think that number is depressed. The company gave out, obviously you think there is a recovery story that management hasn't underwritten, analysts aren't underwritten, you're kind of thinking happens as the supply chain fully normalizes. I did want to ask you because they say, hey, our long-term kind of engine is double-digit EPS growth, mid-single-digit revenue growth.

So obviously you're getting some operating margins on that. And I always have an interesting thing when a company presents guidance at investor relations or at an analyst day. Do you view that like long-term guidance, right? Not near-term, longer-term guidance, which is supposed. Is that the bull case or the base case when you see that? Because I can always go both ways, right? I say most of the companies I see that present long-term guidance miss, but at the same time, like, this is what they're saying.

Obviously, you've talked about how you see the cycle playing out and everything. So just wanted to ask you, like, how do you view that guidance? Yeah, so it's a good question. And right, like in general, I'd say it's absolutely company and management team specific, right? Yeah, some companies will management teams will give out numbers and, you know, that's automatically the bull case at best a new discount from there. You say that because I'm laughing at the old

SPAC projections where it was like, you know, if we were living in those SPAC projection world, there'd be flying cars outside my window as I looked over and stuff. So like sometimes it's not just the bull case, it's the Super Bowl case. Yeah. I mean, honestly, when we look at the underlying drivers

of these markets and how much has changed over the last 10 or even five years I think I mean they seem low now we're not right like in our out year numbers we don't we're not

like yeah I'm looking at our numbers here right and beyond 26 where the numbers are wonky because we're sort of we're assuming some sort of aversion to trend which is an acceleration right like we're kind of four and a half you know

four or five six percent top line what that also excludes right is historically I mean this is going back to M&A but we're not modeling any M&A if you got any advice on how to model M&A I'm all ears but yeah so we've just got the cash building up on the balance sheet but that's going to be supplemental to top line growth but like they were growing like that's in line with where they were growing pre-COVID and again I think this is a better business I think the end market shift that they've seen should accelerate growth and i think the growth of those end markets has accelerated right so we've talked about vaccine development and mrna right none of that stuff is going away um you've got

you know a massive pipeline of biologics right that are getting you know increasing increasing share of drug development um biologics are you know we've seen numbers up to 25 percent more expensive to develop right so so a lot of that cost is going to go going to tools and science industry. You've got like regenerative medicine, for example, being one of the fastest growing segments in biologics. You've got, you know, and I don't, hopefully, please don't ask me to explain the difference

between small molecule and large molecule drugs. Suffice to say that large molecule drugs are growing faster. They're more complex and they're a lot more expensive. So they require extra purification, greater quality, control, et cetera. So that trend is accelerating growth. And then you've got the whole gene editing, gene cell therapy, right? Like we're at CRISPR and systems like that fall under where by some numbers have grown like 50 to 100 percent annually over the last several years. So, you know, is that growth going to continue at that rate? Probably not. But is it going to grow faster than

mid single digits? Absolutely. So I actually think If they execute, and again, I know, right, like one of the pushbacks here is on the management team, especially relative to Danaher. It's interesting, right? Like, they even have ABTR business systems, which is clearly just cherry picked from down at like Danahar operating system, right? Like, but, you know, just looking at the markets that they're in, looking at the potential for things like GLP1, looking at the potential, again, you know, I was half joking. about AI, but right, like, it's hard to argue with the demand for semiconductors that that's going to drive, right? And I mean, that's the other thing that we talked about is, you know, we talked about being specced into development and research pipelines and processes on the

pharma side, right? On the semiconductor side, the requirements, right, in terms of, you know, in terms of quality control, purification, silicon, in terms of chemicals and materials, like there's not a lot of people in the world that can do that. How much of their revenues from like semiconductor derived sales? I want to say, give me one second and I'll pull that number. I want to say offhand, it's 25%. Oh, that's a lot.

Let me ask one more question. So these guys, you know, I think both you and I would say, hey, if you came to us and we're like, I've got a phase two large molecule oncology drug. Like, are you interested? We both have, well, you know, they're better people than us for to do that. So this isn't that air that much complication. But you know, it is the end market studying. And you said it a little bit earlier in the podcast.

And I know we talked offline. And you're like, hey, you know, of course, let's do a podcast on the most complicated stock in the portfolio versus tobacco. Right. Everyone can kind of understand tobacco. I'm not saying it's easy, but most people understand, hey, tobacco, there's a regulatory risk. It's shrinking in the developed markets. You've got tax issues, but a lot of cash flow comes in and that sort of stuff. Dollar stores.

Most people understand, hey, dollar stores. Like, there's a big mode, you know, a lot of cash flow comes in. Dollar General is not going to pay their employees. There's going to be birds pooping on the pillows. That was a hilarious story for people who haven't seen that. But those are simpler business. I guess the last thing I kind of wanted to ask is like, hey, we've got this complicated business. And I get myself in trouble with complication all the time where I'm like, hey, I'm just

50 hours of work doing this, 500 hours of work doing this. Like, hey, Andrew, maybe you should have just like gone and spent 20 hours and like really understood Apple and, you know, invested in something like you really understand that like really fits your role. So I guess the last question I wanted to do is like the return on brain damage here versus a dollar store or tobacco or pick your stock. But, you know, this is a complicated business. done an hour-long podcast and we couldn't even fit in one segment that's like 40% of EBITL

year. So just return on brain damage, the complication. Is this story, is there better things to invest in, if that makes sense? Yeah. So great question. Absolutely appreciate the return on brain damage comment. Like, I think that's usually underappreciated in the industry where we all think we're the smartest folks on the planet and we can understand anything we want to. It's the guys you invested in dog whiff hat coin and they're the richest people in the world all of a sudden. Yeah. I mean, I typically have a really high bar for this stuff. So if you ask anyone on the team more often than not, like, and especially the first time I'm looking at something, I'm a slow learner. So more often than not, like the first time someone put something

in front of me, it could be a year or two before I feel like I'd know the business, know the management team, know the industry, and really are comfortable doing anything. This is absolutely an exception for us. I think the comfort level came from right where we started at the outset and just identifying where we think we have an edge. And that's just, listen, we've invested across enough cycles that we know that if you wait if you're waiting for tangible evidence of a recovery to be right in front of you before putting money to work you've missed it right and and so to some extent like you have to be comfortable being uncomfortable um and i think just when we look at where the numbers are shaking out from our perspective in the out years you know we felt like we still

had a margin of safety there but i hear you like this isn't You know, so we first looked at this, again, sometime last fall summer, I handed it off to her director of research. She spent about a week on it, gave me a write-up, and I, yeah, we sat down. I said, okay, please explain this to me in English. And we didn't do anything with it for months because, again, it was like, okay, I just, I don't know this industry. And again, right, like, we've known on the surface, right? Of course, like everybody's familiar with Danaher and the story there. Everybody is familiar with Thermo and some of the phenomenal business models in this space.

Unfortunately, they're usually priced as such, right? So prior to this, unfortunately, or maybe it's for the better, we hadn't spent or I hadn't spent hardly any time trying to understand life sciences and tools. just because, you know, you pull them up and, yeah, they all look like great businesses, but they all trade at what appear to be. They all trade like great businesses. They look like great businesses and they trade like great businesses. Yeah. And so I think, you know, and then COVID came along and, right, it was just like this massive

speed bump that the industry has never seen and it seemed like it was a, and, you know, by the way, right, like, I mean, going back to your original question, are there better opportunities? this like we were focused on GLP1 that's where our head was I mean that that's also goes back to you know return on brain damage and thinking through like when we're looking at new investments right it's and and you know a lot of people may disagree with this but one of the factors is you know is this something we're going to want to

research right like is it something that we can spend like you know I spent a day in the library reading you know a thousand pages of transcripts on life sciences and initially that wasn't a whole lot of fun but now it's kind of fun now that I can sort of understand the terminology and I can see the commentary and the cycles and where people are just being hesitant

and so one is is this something that's going to be fun are we going to be excited enough and have enough enthusiasm to stick with it and do the deep work that we need to do to get comfortable? Two is can we do it fast enough to capitalize on the opportunity?

And I think that was the tricky one here Because when this thing, you know, all these businesses started to move right around fall, right, September, October, October, November last year. So it's, you know, do we want to look at it? Can we get there fast enough where the opportunity is still going to be there? Is there enough upside, if we're right, that it's going to be, you know, that make one and two worthwhile? And, you know, can we bring some sort of differentiated view? to this sector. And I think just, you know, just by definition for the fact that we're looking, literally looking at it for the first time, you know, I think we were coming to it with a fresh

perspective. And I think that's where, I think that's where we got comfortable. I still couldn't tell you half of what their products do. But the reality is like sometimes, sometimes we fool ourselves into knowing like that type of minutia and thinking that that helps the investment case. When really, it's really just one or two or two or three things, you really need to get right. And I'm not sure that, you know, being able to tell a VTR product from a thermo product, from whoever else they compete with on the shelf is going to, is one of those things. This episode is sponsored by Teegis, the future of investment research. From the beginning, Teegis has been committed to creating efficiencies in the research process by making it easy to

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To try it for free today, visit tegis.com slash value. That's t-e-g-us.com slash value. One of my favorite things, I think it was in one of the Peter Lynch books, but he talked about, hey, there was an analyst who you could say, you could literally go to a store and he could pull a bottle off the shelf and be like, oh, this Clorox product, this was clearly made in their Puerto Rico plant. And, you know, the Puerto Rico plants, their third most efficient plant. This is probably a 75 cent margin product that they're selling.

He's like, look, that's great, but the analyst's way underperform. I'm sure he could literally model it plant by plant, but you're kind of missing the forest for the trees once you do that. Last question, and then I'll let you go because we're starting to move on. There's risk in everything, right? But I think one of the interesting things about Thermo, Dan Heur, ABCR, all these companies is if you and I talked, most of our risk. most of the risks we've talked about would be

along two factors. One, they overpay for an acquisition, right? Like they did in 2020, I think it's fair to say they were. Or two, we would say, hey, you know, you buy this and hold it for 10 years. Your return might not look great if you pay 20 times EBITDA, and it turns out that we were kind of wrong on the mid-single-digit growth and the operating leverage.

But it's not going to rip your face off, right? You'll do fine. You'll do two or three percent if you're wrong, and this is a normal grower and margins don't really explain. Every, we've learned time and time again, there is huge tail risks to anything. They just want to ask like on AVTR or Thermo

or didn't hurt, like what is the big tail risk you worry about where if you and I were talking two years from now, we're like, oh my God, this stock was down. This stock or Thermo or different was down 75%. You know, because it does happen. Like Boeing, nobody would have thought, oh, they would forget to put bolts on all their doors

or they didn't forget to, they wouldn't install the right software and the planes would just be crashing left and right. But what is your big worry here where the big tail risk you say? Yeah, great question. We could normally rattle that off, right off the bat for you just about every name in the book. This is trickier, right? Like the big ones, I think, are the obvious ones, which aren't going to kill us, right? It's a dumb acquisition, overpaying for dumb acquisition. And short term is, right, we're wrong and we don't see a snap back in demand in the second half.

And, you know, the folks that, you know, the few folks that started sort of sniffing around and getting involved in the sector over the last three to six months wind up reversing course. And so you see, right, like, you see the multiple compress. And we don't get the earnings growth. But again, right, like, that's just a function of time. I think we ultimately grow into that. It's hard, you know, we started at the outset with the picks and shovels analogy, which I think is fantastic. So I was actually in London last week, and this was one of the names I was presenting on.

And I gave the analogy of, you know, the field of genomics and gene editing being the equivalent of this century's gold rush and the life sciences sector, right, providing the picks and shovels. AVTR literally traces its roots back to the California gold brush. So VWR actually started as a chemical company in San Francisco in 1852, which is just, you know, it's just a nice little story. But, you know, going back to that picks and shovels analogy, I think one of the things that makes it hard to say, okay, like this would blow up the business is they're in, right, like you said at the outset and like they pointed out at the investor day, They're in so many different product pipelines across so many different industries.

It's tough to say that, like, right, if this customer blows up, that's going to kill them, or if this goes wrong, this is going to kill them, right? Like, semiconductors are cyclical, but, you know, the secular demands there. Biopharma apparently is cyclical, but we still think the secular demand is there. I guess you could say, like, you know, because they're speculating the products in R&M, the right like if there's you know i i guess you can envision a scenario where you know there's safety issues or some of the consumables in a drug pipeline are responsible for literally killing people that are taking those drugs like i mean we can start thinking about scenarios like that but

it's it's just it's really hard to see yeah it's it's hard it looks it makes total sense and there doesn't have to be an answer but i just think about things like this goes way, way back. But, you know, if 20 years ago, I'd been like movie theaters, give me a doomsday thesis for movie theaters, it would have been kind of, this is me personally, I'm not putting on anyone else, it would have been hard for me to say, hey, here's a doomed day scenario for movie theaters. Because I've been like, look, since the modern media age, movie theaters have been around.

Now, doesn't mean they're not, they're a good or bad investment. I just would have said, I can't see a way where movie theaters are just like shutting down, left or right. Yes, movie theaters go bankrupt all the time because they run a lot of leverage. But, you know, I would have been hard pressed to paint a doomsday scenario for movie theaters. Whereas today, I'm just like, oh, yeah, movie theaters are boned. They're boned out the wazzy, right? Like, I'm sure there will be movie theaters in the future, but there are going to be almost certainly a lot fewer of them because all these companies have discovered, hey, we can put these things on our streaming services.

And I would have just had trouble envisioning that. So I'd like to ask because I'll ask any investor I talk to about a lot of companies. And every now and then an investor will come up with a really good one. I'll be like, wow, I hadn't thought about that, and I love to underwrite it. But look, as you said, these guys are supplying tools to do research and development on drugs for the most part. Guess what? We're probably going to be research and developing drugs. Humans are probably going to want to be healthier, live longer, 10 years from now, five years from now, 500 years from now. So, cool. Anything else you want to talk about, Chris?

No, this was helpful. This was helpful. This was fun. And listen, if anybody comes back to you with a laundry list of things that are killed a stock, please pass it along. They're not coming to me. I'm including a link to. to Broi Hill's website and the show notes and your Twitter. So people just go straight to Chris. Skip the middle of the end up there. Yeah, perfect. Well, Chris, this was a ton of fun.

I think we're a little bit over an hour at this point, but we're going to have to have you back on to talk. I'm really interested in tobacco. Dollar stores are pretty interesting, too, but I am really interested in tobacco. So we're going to have to have you back on in the near future talk about that. But Chris BVC really appreciate you coming on and we will chat soon. Yeah. Thanks.

Good to be with you. A quick disclaimer. Nothing on this podcast should be considered an investment advice. Guests or the host may have positions in any of the stocks mentioned during this podcast. Please do your own work and consult a financial advisor. Thanks.