Yet Another Value Podcast - HX Research's Enrique Abeyta on importance of power generation, power crisis + $TLNE thesis

Episode Date: May 17, 2024

Enrique Abeyta, Founder/CEO of HX Research, joins the podcast to share his thesis on Talen Energy Corporation (OTCQX: TLNE), an independent power producer ("IPP") and infrastructure company committed to the energy transition. For more information about HX Research, please visit: https://daily.hxresearch.net/ Enrique's write-up on $TLNE: https://daily.hxresearch.net/p/an-actual-way-to-make-money-from-climate-change Chapters: [0:00] Introduction + Episode sponsor: Fundamental Edge [2:29] What is Talon Energy and why are they interesting to Enrique + quick background of Enrique Abeyta / importance of power generation [21:46] Quirks with $TLNE thesis (re: OTC, utilities, etc... [27:25] Coming power crisis [31:13] $TLNE valuation [33:04] Evaluating and addressing risks: nuclear accidents, capital allocation [39:28] AI [47:18] Post-bankruptcy process [51:27] Upcoming election (risk of new administration [56:08] Demand response and final thoughts Today's sponsor: Fundamental Edge You’ve probably heard about the Analyst Academy from Fundamental Edge by now. So instead of repeating the basics, let’s talk a minute about what the Academy is and is not. The Analyst Academy is a practical course on the tools and skillsets required to succeed in the buy-side analyst seat. The instructors have experience from firms such as Maverick Capital, DE Shaw, Citadel, Balyasny and ExodusPoint. But what is the Academy NOT? It’s NOT a course on stock-picking. It IS a rigorous guide to learning a process. It’s NOT a guide to pod shop investing. The Academy attracts a wide range of equity investors, from multi-managers to long only to family offices. Rather than teaching a particular style, Fundamental Edge equips learners with the essential skills required to hit the ground running and support their PM. It’s NOT a financial modeling course. Modeling is, of course, part of the curriculum and plays a central role. But the Academy is more than that. It teaches idea generation, thesis communication and how to add value as an analyst. To learn more and access a 10% discount code, go to fundamentedge.com/YAVP

You've probably heard about the Analyst Academy from Fundamental Edge by now. So instead of repeating the basics, let's talk a minute about what the Academy is and is not. The Analyst Academy is a practical course on the tools and skill sets required to succeed in the by-side analyst seat. The instructors have experienced from firms such as Maverick Capital, D. Shaw, and Citadel. But what is the Academy not? It is not a course on stock picking. It is a rigorous guide to learning and process. It is not a guide to pod shop investing.

The Academy attracts a wide range of equity investor. from multi-managers to long-goly to family offices. Rather than teaching a particular style, Fundamental Edge equips learners with the essential skills required to hit the ground running and support their PM. It is not a financial modeling course. Modeling is, of course, part of the curriculum, and plays a central role.

But the Academy is more than that. It teaches idea generation, thesis communication, and how to add value as an analyst. To learn more and access to 10% discount code, go to Fundamentedge.com slash webiafp, or just see the 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, it 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 the founder, founder of HX research. Founder CEO, editor-in-chief, you name it. There we go. Enrique, how's it going? It's good.

I'm going to apologize very quickly. I was traveling for a month and just got back to. Connecticut. And if I sound like a frog, it's because my allergies are literally next level. So, you know, I'm usually not this deep voiced as I am right now. But this is what we got me today. Deeper voice is actually perfect for, I say radio, for audio. That's what you're looking for. People can be like, who's that handsome man that Andrews in? Yeah, exactly. I get my Tom Selleck vibes going on or something. I'm excited to dive into today's topic, which is actually one of the most popular under the radar, not under the radar, but the companies under the radar,

companies I know among value investors. But before we get there, let me just start the pod the way I do every podcast. That's with a quick disclaimer that nothing on this podcast investing advice. That's always true, but I'll say particularly true today because we're talking about a post-bankruptcy stock that is traded. Currently, it's only traded OTC. So everyone should just remember less liquidity, increased risk, all of those things. So please, this is in financial advice, consult a financial advisor, all about.

that stuff. Rike, the stock we're talking about today is talent energy. You and I are sitting here talking, it worked out, well, we're talking May 14th and they reported earnings last night. So I was literally just finishing up the earnings call before we talked. But I will, again, I will say this has been one of the most popular names I know of among value investors for the past 12 months. They've been dead on, right, because the stock has basically doubled since it can't emerge from bankruptcy. I've rambled. I'll pause there and turn over to you. What is talent energy and why are they so interesting? Okay. Well, let me give a little backdrop, too, because this is important. I mean, and I think you know a lot of this. So my background is I got into the hedge fund business in 1996, became a portfolio manager in 97, and then managed money for roughly 30 years. I founded several funds, co-founded some other funds. The reason this is relevant is one of the very first areas that I got involved in was the utility area. There were a bunch of analysts at Goldman Sachs led by a guy.

named John Raleigh, who unfortunately passed, another guy named John Ruggeski, who unfortunately passed in my buddy Greg Gordon. But I got an introduction to them. And what they showed me was that there are some really incredible opportunities that emerge in the utility industry around bankruptcies. And the reason that is, is that fundamentally utilities are set up to make money, right? They're built to be profitable. The only reason a utility goes bankrupt is because of the debt load that's put on top of it. So, and you're way too young to remember any of these names, but maybe some of the people out there, we did something similar to what we're doing here with Talon with Niagara Mohawk,

which was an upstate New York utility 25 years ago. There was one called Bangor Hydro Electric, you know, actually PC, a PSE and, sorry, Pacific Gas and Electric, PCG, you know, every five years, three to five years, the market serves up these opportunities. I laughed when you said I was, I laughed when you said I was too young for him, because I covered utilities in a prior life. But then you threw those names off. I was like, nope, never heard of these guys.

Yeah, yeah, yeah. Bangor, Bangor especially. But so basically what I learned was is whenever a utility goes bankrupt or is about to go bankrupt, you should get very interested. You may not want to buy it immediately. You want it to play through a little bit. But this just happened with PCG and the forest fires.

So let's, anyways, let's go to the story. of talent this is what talent is okay talent is an independent power producer that is fully independent and has no uh electrical load that is guaranteed to go anywhere so they own generation assets as of today and this is uh and i when i keep on looking over here i'm going to go to a whole bunch of presentations that are that are fresh here as of today they own about 10 because they just completed the sale they own 10.6 megawatts of power generation which is primarily composed 2.2 megawatts of that is the Susquehanna nuclear plant now let's go back to a little bit of history there is a megawatts it's it's a little bigger than that right uh that's yeah that's the

Gigawatts. I'm reading off the thing. It's megawatt hours, which translates into gigawatts. Okay. Perfect. Yeah. Sorry. It's like, and then we get. No, I was just like, wow, that's, you know, I've done a lot of work in this company. They're a lot smaller than I have. No, no, no, no, no. Sorry. I, I, I, they listed as megawatt hours, which actually equals gigawatts. So, um, the history of the company, relatively simple. There was an old utility called Pennsylvania Power and Light, ticker PPL, which we've traded for 20 years. PPL went out and took their generation assets, and they combine them in a transaction with a private equity created entity that was called Riverstone. This was done back in 2015. The combined entity then went out and took on a lot of debt. And what happened is we went into the late 20 teens, I guess is what we would call it. Power prices in this country really moved a lot lower.

We saw a lot of gas power coming on. you begin to see a little bit of the of the renewables coming on just power prices went very low and as a result of that the company never was not profitable they just had way too much debt so they didn't have the profitability to service the debt so the company went into bankruptcy actually went into chapter 11 in may of 2022 and they emerged in may of 2023 now the process here and I'm not saying that there was anything done wrong or illicit or whatever, but it was a very accelerated process. They did go out and take bids for the assets, but the process, the way it was run, it very much appeared like the company really wanted to emerge as a standalone entity

and basically be in a position to take advantage of these assets, but with a better balance sheet. And we can get into a lot of subtleties about what the individual. bank bankruptcy court things they did and all that but net net the company came out and was publicly traded beginning in may of 2023 and the original share price here uh in may of 2023 so by the way we're just about we're just about a year uh here uh the original share price was uh was about i actually show the first trade at 44 uh on june 6 at 44 50 okay now at the time they had about 13 gigawatts. They had a data center business. They had a lawsuit with PPL around some other assets in Montana. There was this whole bunch of stuff. And they had about 2.6 billion of net debt. And remember,

this is listed OTC. And one thing I want to go back to, and I'm sorry, it sounds like I'm going to lose my voice, but I'm doing my best here. You know, when you said OTC, it's very interesting because OTC, the listed exchanges, the NASDAQ and the New York Stock Exchange have these bare minimums of things that you have to be able, representations you have to be able to make about your liquidity, your net equity, etc. We both know there's all kinds of ridiculous things that are listed on the NYSC and the NASDAQ. But what happens is having gone bankrupt very recently is something that definitely cannot put you on the on the on the on the on the NYSC or the NASDAQ so while you said that it has less liquidity and that is

absolutely true I don't know that I would always agree that it has less risk one of the most interesting spots to find is if you can find an OTC listed company post bankruptcy that is actually in just fine shape but they're not able to up list yet because they haven't had enough time enough quarters of retained earnings you know all these other other things so the company comes out of bankruptcy and it's got all these these little pieces um i'm going to cut to the chase and tell you what they got now and why it's important okay um today again we've got the 10 gigawatts there's 2.3 gigawatts of the um of the susquehanna plant of which they own 90 percent

the rest is a mix of natural gas a little bit of coal the vast majority of this 98 percent of it is in the PJM market, that's the Pennsylvania, Jersey, Maryland area. And what's interesting about this is these assets are completely free to do whatever they want them to do. And let's take a step back. And I'm going to go through some other big macro stuff right here as well. And a lot of this will seem quite obvious when I say it, but I don't think people really understand it. we have made almost no investment in real net power generation in this country for decades. While there has been an expansion, a tremendous amount of investment in solar and hydro, both of those have their own issues.

But at the same time, we've seen coal and we've even seen nukes come off. We saw Indian Point, which is one of the greatest tragedies of economic and energy policy, the fact that the Indian Point plant here in New York was taken offline is just like absolutely insanity. But what you've seen is net, net megawatt additions in this country have been essentially flattish, you know, low single digit growth as we add these renewables, which remember are, and I know a lot of the people on this, this podcast probably know this, those are intermittent, right? It's not always sunny. It's not always the wind isn't always blowing. sunny. There's 12 hours a day when it's not sunny. There's 12 hours a day when it's not sunny,

you know, and it's very expensive. And again, I'm going to go down a couple of different rabbit holes here. You know, when people go out and say this, well, renewables are now cheaper than everything else. Well, they're not counting the batteries that you actually have to build to be able to store it, nor are they counting building the transmission that you need to to build it. But what's happening now is with hypers, data centers, et cetera, we're seeing a material acceleration in the demand for power. Now, what does the material acceleration mean? That means that we're going from, you know, 0.5, 1%, 2% growth to perhaps 2, 4% growth. So these are not crazy numbers. But what happens is when you're running AI, and again, there's a lot of little subtleties in this

math, there is a claim that running artificial intelligence algorithms and all that is 10 to 50 times more power intensive than running what you would traditionally run in a data center. I don't know if I really believe quite that number. And there's an entirely other argument about people saying, well, the chips will get more efficient. But as the chips get more efficient, we're just going to use more chips. Like, there's no limit to this. But let's just take a very simple curve.

We've got a 1% growth in supply, and we've got a 2, 3, 4% growth in demand. The problem in power markets is that when power prices go up, they go up asymptotically or, you know, it's a version of exponentially, you know, it's not that all of a sudden people say, well, the power price was 50 and now it's 75. I'm just going to stop using my lights, you know, or I'm going to just stop my factory. There will be power load that will come off and all that. But we are sitting in front of, and I think we're in the second inning of what is going to be a decades-long, power crisis in this country. And it's the simplest thing in the world. You know, we can't build enough renewables. The renewables aren't intermittent. You can't get new nukes built. We'll go more to that. You can't even barely get new gas built. People are trying to take off coal. And as we go

into artificial intelligence data centers, et cetera, demand is accelerating demographic growth that is good enough, et cetera. Very, very simple equation. So what's fascinating about talent, Okay. And I'm going to cut right to the chase because we could go through, you know, all these things they did. They went out and they had a data center business that they built next to the nuke. It was called Cumulus. They just took that data center business and they sold it to Amazon. They got 650 million of proceeds, 3701 million of net proceeds. When Amazon bought it, Amazon also committed to expanding it by another 50%. But more importantly, Amazon contracted for several decades to buy the power from the nuke because they're basically co-located the data center of the

nuke to buy the power at $70 a megawatt hour right now pgm is clearing at about $45 a megawatt hour okay so where we sit today after all these things that have been done this is what talon looks like and it's very important this is this is where the rubber hits the road there are 58 million shares outstanding The stock this morning was trading at 106.95. It's up a couple dollars. I'm going to put 106.95 in my model here. That means we have a market cap of $6.2 billion. The net debt currently, and literally this is from their presentation that came out last night, is $845 million. That means we have an enterprise value of $7 billion, $7048. Okay. Now, I want to go through three things to think about when we think about this. The first. And I know a lot of investors who are smart money and critical will look at what I'm about to say and be like, oh, well, yeah, sure, that's true, but doesn't really matter. But I think it does. Susquehanna, when they built it and finished it in 1984, cost $8 billion to build. Inflation adjusted, that would be $24 billion today. If I can add, like, that's your inflation adjusted number, but I don't think that's your regulatory inflation adjusted number, right? Like, go look at what any modern, am I thinking about that correctly? Because go look at any modern power plant, 15 extra, like, time value, the regulatory, everything, go ahead.

I got a better number. Southern company literally just finished building a nuke that's a newer nuke, but slightly smaller, and they spent $30 billion on it. Okay. So like, you know, sometimes I am a big fan of Charlie Munger and Warren Buffett for what I call just plain fucking common sense. Here's the reality. I've got an enterprise value of $7 billion. I've got a nuke that cost $8 billion to build 30, 40 years ago. Inflation adjusted, et cetera, would cost $15 to $30 billion. Southern company just built one for $30 billion. This thing is worth more than $8 billion. Okay. It's probably worth double because if I'm one of these other companies, if I'm Constellation, if I'm Vistra, if I'm PS ENG, and I'm looking to expand capacity. Here's what I could do. I could go out and try to build a nuke. Well, Southern, it just took them two decades and double what they thought. Or I could go out and offer 15 billion for Talon and I have a functioning nuke the very next day. So again, you know, I know people will look and say, well, private market value, replacement value. I think it's very, very real here.

But let's go to the numbers too. Let's go to a couple other things. right now, the midpoint of the range of the EBITDA is 700 million. Okay. The new guidance is 600 to 800 million of EBITDA. And we don't need to go through operating cash flow versus EBITDA AI. EBDA is a good proxy here. It'll work just fine. Okay. 700 million. That means that today, this trades at 10 times EV to EBITDA. If I look at Constellation, which is very clearly the leader, Constellation trades at, I'm pulling it up on my Bloomberg here, Constellation trades at 17 times EV to EBTA, OK? Vistra, which has lower quality assets, trades at also 10 times EV to EBITDA. Vistra bought another company, ENGH, for 11 times EV to EBITDA.

But let's, so when we look at it, one could say, you could take this two ways, you could go and say, okay, at 10 times, so we know this replacement value, strategic value, at 10 times EV to EBITDA, perhaps this thing is fairly valued because that's where Vistra is, ENGH traded at 11 times EV to EBITDA. But let's talk about what happens to power prices next. right now the company, and I'm going to get these numbers slightly wrong, because I got like a six million tabs open here. So I'm going to try to get the press release. But right now, for 24, they are 88% sold forward. For 2025, they are 34% sold forward. And for 2026, they are 17% sold forward. So that means they have very large exposure to higher power prices. They say that for 26, every $10 of megawatt hour addition would equal $335 million of EBIT. So let's have some fun with math. We know PGM is trading at 45. We know Amazon gave them 70. Okay, Amazon's not

a dumb buyer. That's $25.3.35 times. That's $837 million of EBITDA on top of the $700 million of EBITDA that they're doing here. Now, perhaps I'm doing blue sky, right? Because I'm saying, what if the whole market trades? But if I go in and I plug in $1.5 billion of EBITDA, the stock's trading at five times. If I put a 10 multiple on that, you're looking at, you know, you're looking at a stock price that's, sorry, let me just redo this formula here. If I put a 10 multiple on it, you're looking at a stock price of 244. If I put constellations multiple, God forbid, 17 times, you're looking at a stock price

of 425. The stock's at 105. But I would argue that talent is actually better than Constellation in multiple ways. Number one, they are much more exposed to higher power prices. And we're going to go to what if power prices go the other way in a second. But the upside here to this is an IPP play, it is the greatest and purest upside. Number two, their balance sheet is absolutely incredible. They've got 845 million of net debt.

They've got 700 million at the midpoint. they're at 1.2 times net debt to EBITDA. They said that they would go to 3.5 times. Right now, they have a billion dollar buyback that's out there. That's on 6 million shares. So we're talking 16% of the of the shares outstanding. What's more if they went to 3.5 times net debt to EBITDA, I think it could go, you know, it would be close to 26% of the total shares. Number three, go ahead. Oh, I was just going to, I've never seen a company say, and they've been consistently saying this, say, hey, our leverage target is three and a half times, and we're roughly one times. I've never seen that big of a discrepancy before.

And I've never seen it so big where they said on the call last night, they're like, hey, if we did our entire buyback, we still wouldn't be at our leverage target. Like, I've never seen anything like this. And as you have said, these guys generate a ton of cash flow. So it's not like they'd get their entire buyback tomorrow. By the time they did this, they generate so much cash flow. Like, they'd be way under their leverage target. Still, it's really, it's really pretty crazy.

There's a quirk here. There's a quirk here. And this that gets back to where I started my story, not to just show that I'm old and that I've been doing this shit for a long time. I started my story because with my discussion, Niagara Mohawk and Bangor Electric, hydroelectric is because there's a quirk here with utilities, OTC markets, etc. So, you know, I think a lot of what's happening here, remember, you know, the vast majority of utility natural buyers are mutual funds, income funds, etc. They cannot buy an OTC stock. They cannot buy a stock that doesn't have a dividend. So those buyers are not there. The company itself, as part of the uplisting and all these other machinations that need to happen out of bankruptcy, they've had to be slow walking, the uplisting, the buyback, etc. So, you know, what you found here is you've actually found this like kind of cork in the financial system going right into what I think will be, you know, this incredible power cycle. And, you know, let me share just a couple other things here. You know, if you go back and actually look at the chart of PPL, you can pull this one up.

You know, this one goes back far enough and go back and look at what happened in 0607. That's the last time we went into a power cycle. PPL, which had rallied during the internet bubble, went from 10 to 50, okay? Now, it didn't stay at 50. It went from 50 back down to 25 after we went through the power cycle, but I don't think this power cycle is going to go any quicker. So that's a five-bagger. This stock so far is a two-bagger. Remember, every five-bagger has to be a two-bagger first, okay? That's point number one. Point number two, and again, and just so everyone knows, I have a free report. So I run a research firm, an investment news letter called HX Research. This is where I put in the plug, but it's actually very purposeful.

We don't give out free ideas, but this is one we chose to give out free. We actually have, if you go to daily.hXresearch.net, we have a report that goes out and walks through this. There will be a link in the show notes for people who want to go see that. So we'll make sure there's access to that. And it has that. And just so you know, our newsletter is not written for Wall Street professionals. it's written for ordinary people. So there's a lot of like very ordinary language. Like it's written so your uncle could understand it, not a guy who runs a hedge fund.

But by the way, the work that underlies it is the same work that I did in all my hedge funds. So one of the other courts with this thing is in the very inappropriately named Inflation Reduction Act, what they did do is they put a floor, a tax credit floor underneath nuclear generation and prices. That floor where it sits today is at about $42. Susquehanna's costs are at about $22. So this is just literally insane. The company right now can earn no less than $20 per megawatt hour out of this asset. They have basically, I won't say unlimited upside, but they have huge exposure to the upside. They have this incredible unlevered balance sheet. And this is going to come back. They're going to uplist the stock. It's going to be listed on the NYSC. You know, you can go

through the press releases and you'll see they're doing all these steps. I don't know when that happens. It can happen next week. It can happen next month. I actually don't care. But this is going to kind of get to where I think this eventually goes. I don't think this is a publicly traded company in 12, 18 months. I think that the minute that it up lists, you're going to see Constellation, you're going to see Vistra, you're going to see Southern, you're going to see PSE and G, they're going to go. And if I was on the board of those companies, this is what I would do. I would go and I would say, okay, to build this capacity would cost me $30 billion and take me 20 years. I'm going to pay, I'll pay $15 billion for the damn thing. I have the capacity

in six months. Okay. You know, it's completely unhaged capacity. And by the way, when we talk about, you know, what would be the dilution of that, even if I take Southern which is a more regulated utility, Southern trades at, you know, trades at 13 times EV-Divata. So if Southern came in and paid stock with the synergies, you know, all this, they can pay double the price. So I don't even think it's going to be around. Brett Coffron, founder and lead trainer of Fundamental Edge, barely remembers his first year as a hedge fund analyst. Most of that year was spending a blind panic. Was his research any good?

Was he learning fast enough? What did his PM really want from him? Training on the by side was non-existent 15 years ago when Brett was a new analyst at Maverick. Then he actually got demoted. Then he worked harder, found mentors, and asked for uncomfortable feedback. Eventually, he turned it around, learning by osmosis from the talented people around him, and rose to managing director. But is this the best way to develop talent? Brett doesn't think so, and that's why he founded Fundamental Edge.

The Fundamental Edge Analyst Academy provides students with the tools, frameworks, and confidence to excel in any fundamental equity analyst seat in the industry. lose the panic and fast track your career on the by side. Find out more info about their next cohort at Fundamentedge.com slash or just see a link in the show notes. Isn't Southern all regulated? Would they move into unregulated? Am I misremembering that?

I believe they are all regulated. I do believe they could move into the unregulated if they wanted to. It doesn't change the underlying thesis. I agree with you. I just, when you said Southern. PSC and G. I think you're completely regulated. Yeah.

Yeah, PS-E-N-G is a better example where it's a combination of regulated and unregulated. But I'm going to tell you, I'm going to give you something else here. Like this power crisis that's coming, you know, and when I say this, this isn't doom and gloom, like go out and buy gold kind of thing. This is just very simple fucking math. You know, the demand and supply are going to move in a way that we're going to have a shortage of power. And when prices go up, they don't go from 45 to 50.

at times they go from 45 to 245 and we will not be able to react quick enough this is an extended power cycle it will go on years i will also tell you that right now when you look at the hyperscalers these you know when you look at amazon you look at microsoft you look at uh meta you know you look at google they all understand this so i i have a piece of data i can't share where i got the piece of data from but it was a conversation with a very large regulated utility that has a exposure to the largest area of data centers in the country. They said that if they have the generation tomorrow, it would still take three years to build the transmission to get the generation to where they needed it. So that means your only choice is you have to build your data centers next to the actual generation. So the deal that they did with Amazon, that talented with Amazon, is called a behind the meter deal. There's literally no meter. It just goes straight into it. I believe, and I truly believe this, that sometime in the next 12, 18, 36 months,

you are going to see a major company, Microsoft or Amazon, come in and make a bid for Constellation, make a bid for Vistra. I don't know that they're going to make a bid for Talon because it doesn't really move the needle. But my point is, this is one of the rarest assets in the world. It has no analyst coverage, great balance sheet, huge earnings upside. And, you know, again, you say people are talking about it, you know, value guys, but what all the value guys have done, and I have a very different strategy, I do a lot of eclectic stuff, but I also do a lot of growth. All the value guys are looking at the stock and say,

I can't buy the stock. It just went from 50 to 100. By the way, since we recommended it in my paid newsletter in February, it's up 60%. So everyone goes, I can't buy the damn stock. You know, I'm the opposite. I'm like, okay, you know what you do in that situation is you buy a quarter, a third, a half of what you would want to own at 60, 70, 80. And then if you're right, you still made money on that quarter or half. And if you're wrong about the tactical timing, you're freaking happy because you get to buy in the stock. So on just the stock being up, I find one of the hardest things to do is to buy a stock that's been face raping, especially because I know some of the people who were, who were part of the emergence group here,

who backs out the emergence. I know them and they were pounding the table in the 40s and 50s. And I know people were pounding the table like you in the 60s, four months ago. It's one of the hardest things to do. But as you said, like, A, the execution here has been unbelievable selling the Amazon. People weren't even factoring in value for Amazon. And even the Bulls who I knew who were like, oh, $10, they did not see how big the Amazon and that says nothing to the contract. But B, like you've mentioned, look, I've got this in my thing just to remind my, in my spreadsheet, just to remind myself, over the past six months, okay, talent's doubled. Great. Cege, doubled. VST, doubled. Like, it's not like you've had, hey, here's a bank,

you know, you'll see a bankrupt company. It emerges at five times, peers traded 10 times. Eight trades to nine times. Ah, you missed it. Here it's, hey, this emerged at, let's call it eight times to be fine. And peers traded at 12. All the peers went to 20, and this is traded up to 14. So it's more industry move than this specific asset move.

I'll let you continue because I've really enjoyed hearing you just walk through the story without. Yeah, no. Look, there's a whole bunch of things. I remember every value stock that went up five or tenfold went up twofold first. Right. So let's just call it a value stock. like let's have you know screw call it a gross stock let's call it a value stock if you know

there are people that make five baggers in value stocks every single time they make a five bagger in a value stock you know what the stock did first it went from 50 to 100 so you know i think it's i think that's a key that's just a basic human psychology thing you have to get over you know the other thing here too i think that the upside to earnings here if this were just okay you know power prices are going to be stable at at 40 50 dollars a megawatt hour or the asset trade's a little cheap, 20, 30% discount to some of the others. It might get bought. It would be a really good story.

Okay, it'd be a really nice story. That's not what we're talking about, okay? That Amazon deal buying a major amount of power at $70 a megawatt hour. And I will also tell you, there is no single power producer, I believe, in the country that has this much available, clean, green energy in the next three, four years that's out there. And remember, Microsoft and Google, they're going to want the, they're going to want the green energy. You know, and you mentioned the, you mentioned the Amazon thing. The Urquot sale. You know, the Ircott sale went off. They sold a bunch of gas powered gas chip fire generation into the Texas

market. That's Urquot. They sold it at 10 times EBD, but they did the refinancing. I mean, these guys are just nailing it every single step of the way. So, you know, look, what could go wrong? well, you know, the first thing for people who aren't very educated about this, and I don't mean that as insult to say, well, there could be a nuke accident. We could go through in the history of nuclear accidents. There have been 35 people that have died. There are 150 people that die in wind every single year. Nuke accident is like if you're listing the risks, yes, that is a risk.

There's no doubt about it. But one of the things I've come to appreciate is like whenever you're buying something, like there is these tail risk, right? Like, A, you could say the same thing about C.G. there could be a nuke accident. But you could say the same thing, like I've invested in refiner's before. Refiner's are much more likely to have a burn the plant down accident, a turnaround mishap where the plant shut down for six months, much more likely than a nuke to have it.

You go by GM. Guess what? The plant there is probably more likely to burn down or have an issue than a nuke these days because nukes are so regulated. So I'm not saying that's not a risk, but if you were like, I am not buying a nuclear power producer because I am worried about nuclear risk. And that was the difference between you buying, not buying. I'd say, hey, you're probably overweighting the tails a little too much. And you're just bad at math and history, to be honest. Like, I'm a math guy. Like, I can look at,

you know, when you look at actually the downtime of the U.S. nuclear fleet and the actual math behind every single nuclear accident that's happened, you know, by not buying it, you are making an extremely, extremely low probability bet. That's how I kind of look at those. things, right? That's what I'm saying. If you're not buying for that, you're lighting an extremely low probability thing. And like, you can not believe the story or not. But if that's the breaking point, you're really overweighting those tales, I would say.

And so, you know, the other thing that that would, what would keep me up at night? And it doesn't, you know, a nuke accident, you know, perhaps there's some issue with the capacity, but they've not had any issues with this plant pretty much ever. You know, what does the company do with all the cash? I mean, what happens when they go to next? cash positive, you know, all of that. They've shown themselves to be incredibly responsible. I mean, I'll tell you.

Eminay, you mentioned everyone I know thinks the end game as SEG acquires them, right? Like that is the end game. And I want to go back to you. You discussed that earlier. I want to go back to that in a second. But let me take the opposite risk. They were asking the call. These guys are going to be generating earnings.

Every power plant, every power producer wants to get bigger. What if you go the other way? Like, is there a risk of them going and, you know, now that they've got the ERCOT done, what if they paid 30 times for another? small a nuke. I don't know where they'd buy it, but what if they went on a buying spree, right? Is there a risk of capital allocation? This management team says, hey, we've been executing like crazy. Why don't we start growing this story? We haven't seen it from them so far. Well, first off, they've never talked about doing it. We haven't seen it. There's nothing

available for sale. And they're too small to go after any of the bigger things. So, yes, it sits there as a theoretical risk, but I put it very similar to the theoretical risk that I that I'd put, you know, on a nuclear accident. To me, the biggest shame about this is I think the stock gets bought at $150,200 when if we just let it go across the next five years and let them buy back a shit ton of stock and let the power prices throw through, this could be a $2, $300, $400. That's the risk to me. On the M&A risk, I just, this is OTC traded so they don't have great, they don't have

SEC filings yet. They don't have any of the great disclosures. As far as I can tell, none of the backstop group has really sold any of their shares. And the backsop group was a very concentrated group of very sophisticated investors. Like I would just say, I think the company knows who controls them. And as long as that backstop group is for the most part in there, they could do stuff without diluting the shareholders, right? But the backstop group has board seats as well.

I think it's going to be very difficult for them to get M&A over the finish line with a group of sophisticated. You're saying for them to go and buy something else. Yeah, yeah, yeah. I think it would be very difficult for them to be like, we're going to buy something for 30 because that backsop group, they've got a big winner. here and they've got a lot of money. I think they're going to want to say, let's not. The biggest challenge at the moment, but I want to say this, the biggest challenge at the

moment right now is a trading challenge, and I call it the NVIDIA challenge. Okay, go back to NVIDIA, and we wrote a lot about this at the time back in February and March, and, you know, and I combine, I'm multidisciplinary. So, you know, entry points matter. Tactical trading matters and where it really matters to, I mean, we'd all love to say, oh, I'll just buy it and I throw it in a box and I don't, I don't look. get it again for five years. First off, if you're running money professionally, that's a good way to get fired. Second, if you're just a human being, there's very few human beings that can do that. So, you know, Invidia back in February March, and NVIDIA is awesome and their earnings have

gone up a gazillion percent and all that. You know, the stock was, you know, 20, 30 percent extended from its 50-day moving average. What happens is when stocks get that extended from their moving averages, they do retrace. They consolidate. Usually they don't consolidate. consolidate by going flat, they consolidate with a lot of chop. That's exactly what NVIDIA's done. You know, the 50-day moving average here is $95. But, you know, again, we're talking about a utility here. So if the stock tomorrow went from 107 to 93, you're talking about an 11% return. Who cares, man? Like, you know, we're not playing for 10% here. We're playing for 50, 100, 200%. So I think that you do need to tactically enter the trade at this

point. But, and I'll give you this one last piece, away from the M&A, we have not even started the positive earnings revisions as a result of the power crisis that's facing this country. Okay. I don't know when that's going to start. It may start this summer. It's more likely to start next summer. But when that starts, these things are just going to grow ballistic. And when people talk about AI stocks, you know, I'll let's, I'm going to make a comparison here with NVIDIA because it's important. You know what Nvidia is doing now that they're in the secondary market, Nvidia's chips are selling for double what you could buy them from for, for, for from Nvidia doesn't have any chips. So you know what Nvidia is doing? They're building more fabs to

build more chips. Do you know what all the competitors of Nvidia are doing? They're building more fabs to build more chips. So eventually, no matter what the demand is for artificial intelligence chips, there's going to be a lot of supply. You know what ain't happening here? They ain't building any more new nooks anytime soon. So I think when we talk about an AI play, this is the best AI play out there because you have this incredible combination of value, asset value plus growth. And the growth hasn't even kicked it. So I think it's really, really unique situation. Let me jump. So let's stick on AI. And again, you touched on this earlier. But I think one of the worries right now is, look, for a lot of investors, this became clear

kind of late last year for a lot of it started to get a lot of mainstream coverage. I mean, demand is through the roof. There's this great chart where PGM for years had been forecasting flat demand for, you know, the next 10 years, maybe 1% growth. And over the past six months, like they hadn't been able to take up their demand forecasts

enough. And if you read out on Q1 earnings calls, they actually go through this well. They say, look, for years, this was, you know, we had, as you laid out, we had the green stuff coming online, we had solar, we had wind, nukes were shutting down, like, because of energy efficiency, deindustrial, like, we just weren't seeing a lot of demand growth. And all of a sudden, we've got this insane amount of demand growth, it's true boom times. I guess my question there, my question I'm going to ask is,

what if we're getting ahead of ourselves, right? What if AI hits a wall or all of a sudden, all these companies who, you know, AI, it's a huge data consumer. But one of the reasons we haven't seen energy growth over the last 20 to 30 years is because everything got a lot. lot more energy efficient. What if we start seeing all these AI plays, you know, whether it's because of the manufacturing and because AI gets so smart, it says, oh, here, here's how we can, you know, generate 20% of energy energy. What if all of a sudden we see it hit a wall and it reverses? Aren't we in a mammoth oversupply case there? Or does that, like, you break the thesis? No, I mean, your thesis about energy efficiency, the energy efficiency of, of semiconductor

chips has increased by 1,000 percent across the last 15 years. And we are using. using 10,000 percent more energy from semiconductor chips than we weren't 10 years ago. That was my point earlier. Does that make sense? I'm making those numbers up, but you get my point. Yes, the chips are getting a lot more efficient and all that. But you actually brought up some points that I didn't, you know, because there's two other trends that are there.

First off, EV and hybrid, that energy has to come from somewhere, okay, and it will continue expand. I know people are soured on EB right now, but that is a wave that's going to continue. And the other thing is the reshoring of industrialization, which I will say this, no matter what happens politically, and I will give credit to both Trump and Biden, which, me just saying those words, it gives me the icks, you know, but both of them have done a lot to actually work to bring back industrialization in this country. So before we even get to data, data centers and AI, we've got electric vehicles, we've got reshoring and all that. So I really struggle, you know, my best case scenario is that power prices go up, but not a crazy amount. That's my best case scenario. I just, look, we get a massive recession, maybe, but, you know, it's hard to put in there.

I mean, again, COVID's not a good example because I was going to say COVID, power consumption actually went up because all of a sudden everyone was using their computers all day long. So, let me just a little bit more on the AI. I guess the other side of the risk would be right now, like there is this crazy rush to invest in AI demand, right? And it does seem pretty clear it's going to be huge. But I don't think many people have found a lot of revenue use cases for AI. And I guess my worry would be back in the early 2000s, right? It was clear data usage which is going to be off the charts. Fiber was the future.

Everyone was building insane amounts of fiber. And then you have the dot-com crash happens. And we were so overbuilt on fiber, right? What if we run into a scenario where everybody's going like crazy to invest in AI demand right now? And then nine months from now, NVIDIA says, hey, we're seeing our leading edge consumers pull back because there's no revenue. And all of a sudden, all the AI startups are bankrupt. And that wouldn't impact the current demand because I doubt AI and data computer. But you could see like this huge increase in demand kind of level off.

Does that make sense? So your fiber example that you just used is I wrote in a note about Nvidia in March. and I actually do think that's exactly what happens in the chips side on artificial intelligence. I think prices collapse. I think, you know, the fiber example is a perfect example. We're going to get out over our skis. It still doesn't change the talent example. You know, that's the, that's the thing with the cases.

Let me move to the next. Yeah, if we want to talk in video, I agree with you. I actually went, because the other thing that I did in the late 90s in utilities, in addition to bankrupt utilities, I don't know if you remember this, Montana Power and Light, where they had all these fiber overbuilds and people we're saying, oh, well, if we take the fiber that we build here and, you know, there's, what were the companies, gosh, I'm trying to remember there were like three or four fiber companies, global crossing, you know, all this. We owned all of these. And then what we would do is

we buy the utility, we'd hedge out the fiber side, you know, all this kind of stuff. So we've seen it. And I think you're going to see that in AI. This is a company trading at 10 times EVD, but with a brilliant balance sheet, unique asset. You know, so yes, I think that could happen. That's what keeps the stock from going up in a straight line. But I don't think it's a material risk at all. Slightly different risk. Nukes, very difficult to build, to put it lightly. We take decades, not years, probably decades.

What about the risk of everyone sees this coming, right? At this point, I think most people see it coming. You can go hop on, I think it was the Kinder Morgan call, where they were making the case for natural gas demand growing up because of everything you're talking about. And you mentioned it briefly, but it's not just the eye. Electrification of vehicles are coming at someone. point, re-industrialization, forget electrification of vehicles, electricification of everything

in the home, like all of this is coming? What if, is there some risk of Nat gas build out, right? Like, Nat gas is the way a lot of our homes are spot. Just, you know, I guess it would take a lot more competency in the regulatory body than I think is possible, but could you just see Nat gas come to the rescue? We build, you know, 100 Nat gas baseload plants and that kind of foretails the rise and power prices that you're talking about. in a half a dozen years, a decade maybe. But I mean, where are you based, Andrew? You're based in New York, right?

Yeah, so we both know what's happened in New York. They shut down Indian Point, then they won't let them build the damn pipelines. Like, so as long as there is a, as long as there is a Democratic Party in this country and that Democratic Party has any influence or control over any energy regulatory impact, you're not going to see it. Now, I will tell you what will happen in my opinion, because we're seeing it now with Newk. I think this power crisis hits. I think it hits. Again, which summer I don't know, okay? It could be, could this summer.

I believe you will see what you just said happen. I think you will see the Democratic Party, the centrist portion, basically say, okay, here's my options. We can fight climate change or people can have their lights on. And when that vote comes down, I think they're going to go for the damn lights on. need to build out of gas. But even that's going to take, you know, and again, I get back to my transmission thing. Yeah, the damn transmission line takes three years.

This thing, this is a crazy setup, man. Like, you rarely see things like this. I've got an article I need to finish. I'll probably try to publish it around when we get this podcast out. But I'm with you. The moment you start having consumers have brownouts because of this, you're going to see a regulatory response and it's going to be politicians, no, right? One of the few invalible rules is if the lights start going out, all the politicians get

fired, the moment you start seeing lights start going out, you're going to see politicians saying, hey, bring the coal plants back online. Forget about it. And, you know, coal plants are probably interesting. I don't know any publicly traded waste. Some publicly traded plants have coal plants. Coal to Nat gas conversions, I think they've already been happening, but that's a natural to me. I think you could have a lot there. But if we start seeing brownouts, every single thing that's, it's going to be open the floodgates. All right, let me talk about the two last big risks we have. You mentioned it earlier, but I've done bankruptcy before. You've done bankruptcy report. Right. There are ways to bias the process one way or another, but it does strike me that talent emerged at a less than $5 billion dollar valuation, if I'm remembering correctly, roughly $5 billion. We can say $5 billion just to make the math easy. Today, they're $7 billion and they're probably going higher, right? When you're in the bankruptcy process, everybody gets a shot. And it does just strike me. Now, things have gotten hotter, the demand, everything we're talking about. But CEG, everyone thinks they're going to buy them. And CEG had a chance to buy these guys for about $5 billion, 12 months ago.

And they didn't. And I understand the bankruptcy process could be biased. But if CEG had gone to the bankruptcy judge and said, here's $5 billion in cash, $5 billion in cash, pay off every creditor, everything, like fully finance, we're, you know, we're a huge company investment great. They didn't. They didn't pursue that. Now, there could have been any reasons.

But one of the sticking points. I'll tell you the reason. I'll tell you the, because that's just not the way that corporate boards work, especially on, on, you know, utilities. They would rather have it go public, get cleaned up, get uplisted, and pay double than go through all the mess. If I was on the board and Constellation while it's a rocket ship, you know, is, and by the way, I don't know that Constellation is going to be the buyer because I think Constellation, the board, the same conservatism that caused Constellation to not buy Tallin a year ago is the same. conservatism that's going to lead them to look at it and say, oh, well, I can't buy it. It just doubled.

But there's going to be someone out there that's going to do it, you know, that's going to figure it out. So it just, if you understand how boards work, they want, they want clean, they want simplicity. You know, they're not in the constellations, not in the business of buying bankrupt IPPs with data centers and lawsuits. And that's not their thing. And if I was on that board, well, I would be a very different kind of board member. But I bet you the board just said, you know what? Maybe, but it's just too complicated. Let's just wait.

Having dealt with some boards, you and I would get fired because, you know, Buffett once said, hey, people ask them why you voted for, I think it was a Coke pay package and you said you can't be the person who burps in the boardroom too many times. And I know for a fact, and I think you would have the same issue. We'd burp in the boardroom and they'd be like, all right, this guy's got to go, right? We're here to collect $200,000 a year and work 12 days a year. These guys are, they're asking hard questions. It's too much up.

You know, just on a year ago, I think I agree with you. And this comes back to the M&A risk of Talon doing M&A. A year ago, Talon had, as you said, the data centers, they had the ERCOT assets. Those are gone now. So Talon, if you think about it, they've been putting themselves into a cleaner package, a cleaner bow. And whether that's a cleaner bow to go public and be the premier, hey, we are basically only a clean nuclear plant or it's to sell to Talon, Vistra, whoever, hey, just buy this clean, unregulated nuclear plant, one or the other, but they've been setting themselves

up for clean breath. Last risk I want to ask you. But can I tell you, if I was on the board of talent, you know what I would say? This is what I would say. It's real easy. Guys, we're going to throw off a billion to a billion and a half of free cash flow a year. We got six hundred, six billion a market cap, let's just buy the whole fucking thing back. And, you know, Utility Vistra has basically gone out and done that, if I remember correctly. I haven't looked at them in a while. But I mean, last year they were a very popular value investor stock. I think they probably still are and they've done incredibly and they were just buying back stocks. Now they've been really helped by all the power supply demand dynamics you talk about. But let me get you the last risk. Yeah. By the way, I'm looking

at Vistra just sorry to interrupt. Vistra just went, yeah, they did go from 500 million shares in 2018 to 349 million shares at the most recent report. So they brought back 30% of the shares. That's what I think that. That's what I think if I was on the board, it's very simple. We got a simple business. Let's not fuck it up. Let's buy back a ton of stock. The stock goes to the moon. And if someone wants to come in and offer us double, then we'll get to the moon quicker.

You know, and that's it. The last risk. And this is actually, I think, the largest risk here. You know, these guys have all been transformed. The nukes especially, CG and Talon have been transformed by, as you mentioned earlier, the IRA with the PTC downside protection, right? And go read Talon's Q1 earnings. talk about it. Hey, we're asymmetric because power prices go down $10 and we start getting

that PTC floor prices. Power prices go up $10 and, you know, we're basically, there's things in the PTC, but we're basically uncapped upside. There's a decent chance there's a change of an administration over the next year. And I could imagine, I don't think so, but I could imagine a new administration comes in and says, F it. We're going to burn the entire IRA to the ground and we're going to take away those PTC payments. And if that happens, the downside, a lot of that downside protection goes away as well as some of the earnings and stuff, right? So what? Go ahead. You see where I'm going. Politically, though, I understand exactly what you're saying. Politically, like, let's talk about Trump versus Biden. Trump had as president was a very rational

economic actor. He made rational economic decisions. And he certainly did not do what unfortunately the Biden administration has done, which is basically start with, okay, anything Trump did, we're going to undo. Was the, you know, the, I'm just, this is my view of things. I think they're both terrible. Let me just be clear. But when you look factually, the Biden administration came in and took, oh, everything trumped in and said, let's do the opposite.

The Trump administration didn't do that with the Obama stuff. In fact, they kept some of it. They did this on it. So I hear you. I think it's more likely to go the other way. I think it's more likely if, you know, the Biden administration's already, I think both parties, you know, what I'd like to see is, you know, the money that they're putting into semiconductors put into nukes, you know, France did it. Canada did it with hydro. You know, China's doing it. Why, you want to, you want to win an election when we get brownouts and blackouts, we're going to build all these nukes. And, you know, the only issue that is, as we mentioned, like, nuke, even if you were clearing the regulatory tape hurdles, right? If we just took away all the red tape, it would, it would. still take five years to get a nuke online. And I think I'm being...

Oh, I'm saying like, we make a national moon... I guess if you were like moonshot, you could get it. But I'm being really generous if we said we were going to... We know this is a problem five years. Like, you don't solve the brown and blackout problem in five years. Like, you have to start five years ago to solve the brownout and blackout. But there is... There is, I'm going to say this.

And this is a very serious thing here. I do think there's a 1% chance that we see a... the World War II or power crisis kind of thing. Does that make sense to you? It gets so bad that we say we've got to do a Marshall plan. That's exactly what I was referring to in clearing the red tape. Yeah, yeah. I think that, you know, I don't know, like, look, it's headed in that direction, whether it tips over.

But if it tips over, you know, as bad as it can be, they'll get through it. I mean, we ultimately, America, you know, was a, I think it was a misquote to Winston Churchill but said that, you know, democracy is the worst system, except that's better or whatever America gets it right eventually by doing everything wrong first or something like that. I don't know. I'm butchering the quote. My point is when push comes to shove, I think the right decisions are made. And by the way, look at the inflation reduction act and the $10 tax subsidy to Nukes.

If I would have told you that the Biden administration, which is pushed as hard left as any administration in the history of the country, would go out and put a $10 floor under Nukes, you'd be like, what the hell are you talking about? And they did it and they're going to renew it. So, you know, I think it gets there. But let's come back to one thing. I don't care about any of it. By talent, it's going up a lot.

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speakers, judges, stocks pick competition, and network with fellow alumni. Mark your calendars for the spring of 2025 for the next conference. Visit Fundamentedge.com slash JFP or just see a link in the show notes for more information about the next academy cohort. You know, just one last thing, because I do want to mention the one other thing that I don't think it's a risk because it's been around for a while and it's never been successfully implemented, but we live in a very connected, very smart society. And the one thing that people always talked about is demand response, right? And you could see, it does not take, you saw this in Europe over, you know, summer of 2022. It does not take much of a demand response to really lower the energy usage of

the grid. Now, a lot of the energy usage is coming from AI where it's very, you know, AI, one of the things with it is, in my dumb, dumb mind, and I was like, oh, you know, you shut down the AI from 5 to 6 o'clock when everybody's got their AC on. That's not how AI works. It has to run 24-7, so it's very hard to do demand response with that, though maybe you could, but, you know, you could imagine in a connected society with connected thermometers, like maybe you make a push, hey, every, we're going to, the government's going to pay for everyone to get a connected AC, and it's automatically going to adjust when the grid's hot or

when, you know, no one's home. It's automatically going to adjust your AC from 7. 73 to 74 and that small change it actually makes a mammoth difference I don't think that that's not a risk per se to talent it is probably a risk to the Super Bowl like prices go parabolic because the the greatest is always over demand go ahead I'll say two things got to quit smoking yeah no I've never I've never had a cigarette in my life by the way I'm the same one of the reasons I have I've had some interesting tobacco pitches recently and I think one of the hurdles I have is I've never done tobacco I've never done dip or anything so when I look at these guys I'm like, do people really do that? Yeah, I'll smoke a cigar, but I actually haven't even had a cigar in years. I just like I've been traveling for 37 days. I got back to Connecticut and all the trees are exploding and it just kicked my ass. I'll say two things.

The chances of them actually getting that through government policy are just about the same as them building 50 nukes. The other thing is I wouldn't extrapolate Europe in particular with Germany. That experience, Germany is a very highly industrialized economy that we're, depends on tremendous amount, not on consumption, but industrialization. So Germany's ability to drive their power consumption down had very much to do with the nature of the German economy. So yes, there are things that can play. But I'm going to go the other side for you. Go look at natural gas prices in Germany when the invasion happened. I mean, you know, they went to the moon, asymptotic, okay? These things go asymptotic.

And when this happens, like, you know, it's, I don't want to say these are meme stocks or something like that. Oh, the chart looks like a mean stock. But, but I just, I don't know the upside is, I saw it before. I saw it with Montana Power and Light. I saw it with, I mean, Southern Company. I was looking at the chart of Southern Company back then, you know, Ex-Lawn at the time. You know, we've seen this before. It's just taken 20 years.

And remember, let's just stick with PPL. This is the last thing I'm going to say. Stick with PPL. PPL went from 10 to 50. Talent just went from 50 to 100. That means that it can go up three more fold. The numbers support it. We know the stock market supports it.

And there's nothing else like it. Once this gets uplisted and all that, again, the biggest shame about talent is I don't think we're going to see any of that upside because someone's going to buy it. It is funny. You know, every time I have somebody and I'm talking to them like, you know, The stock's at 20, and my biggest worry is the largest shareholder does a take under at 30. And I'm always like, you know, if I bought a stock at 20 and they got 10030, there are worse problems in the world to have. If you started recommending this at 60 and it got bought for 150, I hear you.

You see the very bright future so clearly. And again, the crazy thing here is you run this forward to next year and you can easily see them doing 400, 500 million and free cash flow to equity. And you start thinking, hey, these guys are going to be, even if they're buying back shares, they're going to be one X leverage. They say they want to get to three and a half. You start doing the equity return math on paying that out plus leveraging this thing up. And you're like, oh, my God. But again, I just, this was fantastic.

We're going to have to have you on for another one the next time you've got a conviction name that's as interesting as talent. But I do just want to remind everyone, because we talked hugely bullish, hugely bullish numbers. I'm just going to remind everyone. OTC traded. Doesn't mean Enrique, he's obviously done. great work here. This is a very public, but OTC traded, increased risk, all that work. Please consults financial advisor, do that everything. I'm going to include a link in the show notes to Enrique's write-up on talent. Can you just send me an updated one so I make sure I'm linking everyone

to the right one? Yeah, we actually, though, I update the one that's up there. I update it, and we're going to put out a separate note. So if you subscribe to daily.hxresearch.net, it's my free daily on the website. There's the original note with a couple updates on Friday or early next week. I'm going to do a note on the power crisis, the power cycle. Let me also give another disclosure. I don't own the stock. I don't allow myself to own any of the stocks that we have active recommendations on. So, you know, that can go both ways. Some people are like, oh, you don't have skin in the game. My view is, you know, I want to actually, I make my money, not by trading stocks. I make my money by giving great ideas to my readers. And so, you know,

I want to focus on that. I don't want any conflicts of interest there. So, you know, You know, yeah, I have no conflict of interest here other than me wanting to find kick-ass stocks for you all to make money. Perfect. Cool. Well, again, this was fantastic. Talent Energy, TLNE. There will be a link to Enrique's right up on the show notes. And looking forward to having you on for another rounds.

And hopefully I'll be less allergies next time. A quick disclaimer. Nothing on this podcast should be considered an investment advice. Guess or the hosts may have positions in any of this. stocks mentioned during this podcast. Please do your own work and consult a financial advisor. Thanks.