Yet Another Value Podcast - Raper Capital's Jeremy Raper expounds on his letter to Bragg Gaming $BRAG

Episode Date: December 5, 2023

Jeremy Raper, Founder of Raper Capital, is back on Yet Another Value Podcast to discuss Bragg Gaming (NASDAQ: BRAG / TSX: BRAG), a global B2B content-driven iGaming technology provider. On November 22, 2023, Jeremy published "An Open Letter to the Chair of the Board of Bragg Gaming Group." on his website (link below), where he outlines strategic alternatives for the company. Jeremy and Andrew close out with Jeremy's take on the Spirit / JetBlue trial. For more information about Jeremy Raper and Raper Capital, please visit: https://rapercapital.com/ Jeremy's Letter to $BRAG management: https://rapercapital.com/2023/11/22/an-open-letter-to-the-chair-of-the-board-of-bragg-gaming-group/ Chapters: [0:00] Introduction + Episode sponsor: Alphasense [1:55] Jeremy's Letter to the Board of Bragg Gaming $BRAG; company/thesis background and why Jeremy wrote and sent the letter [17:20] Who is the right buyer for $BRAG? [24:51] $BRAG financing in September 2022 [31:14] $BRAG CEO and management performance [37:55] $BRAG final thoughts [38:35] Jeremy's take on Spirit / JetBlue trial [44:13] How Spirit / JetBlue trial compares to Twitter / Elon case [47:23] Spirit / JetBlue bear case [50:10] How Spirit / JetBlue case affects Hawaiian Airlines and Alaskan Airlines merger [54:11] Final thoughts Today's episode is sponsored by: Alphasense This episode is brought to you by AlphaSense, the AI platform behind the world's biggest investment decisions. The right financial intelligence platform can make or break your quarter. AlphaSense is the #1 rated financial research solution by G2. With AI search technology and a library of premium content, you can stay ahead of key macroeconomic trends and accelerate your investment research efforts. AI capabilities, like Smart Synonyms and Sentiment Analysis, provide even deeper industry and company analysis. AlphaSense gives you the tools you need to provide better analysis for you and your clients. As a Yet Another Value Podcast listener, visit alpha-sense.com/fs today to beat FOMO and move faster than the market.

This episode is brought to you by AlphaSense, the AI platform behind the world's biggest investment decisions. The right financial intelligence platform can make or break your quarter. AlphaSense is the number one rated financial research solution by G2. With AI search technology and a library of premium content, you can stay ahead of key macroeconomic trends and accelerate your investment research efforts. AI capabilities like smart synonyms and sentiment analysis provide even deeper industry and company analysis. Alphasense gives you the tools you need, to provide better analysis for you and your clients. As yet another value podcast listener, visit alpha-sense.com slash fs today to beat

FOMO and move faster than the market. That's alpha-dash-sense.com slash FS. All right. Hello, 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, wherever you're watching or listen to it. Obviously, five-star ourselves with me today.

I'm happy to have on probably the people's most popular. to be honest with you. This might be the 10th time. My friend, he's eating breakfast. He's better than Sam Bikman freed at multitasking. He can podcast and eat breakfast, just like Sam Bikman could League of Legends and HBC. My friend, Jeremy, how's it going? I'm doing great. Thanks, Andrew, having me back. Sorry, the SBF can pass and call me off goddamn. What's going on here? Am I on the right podcast? What's going on? No, just the dual sourcing and, you know. But anyway, today, Jeremy and I are going to talk about a few situations. One for sure, I think one or two more behind it. But before we get there, just a reminder to let everyone know, nothing on this podcast investing device. That's always true. But probably particularly through today, Jeremy and I are going to talk through, again, multiple situations. The first is a very, very small, very E-liquid microcap. The second is a legal situation. And neither Jeremy nor I are lawyers. Jeremy is not even a U.S. citizen. So he's going to be talking about U.S. court. And he's not even a U.S. citizen. But Jeremy, Jeremy, excited to have you. Look, the first time we're going to talk about the reason for you

coming on the podcast is you published, I think it was two weeks ago now, but you published a letter to brag gaming. I went and looked, podcast number 24, almost three years ago now, I think was you and I talking about brag gaming in a very different set of circumstances, but you published a letter to the brag gaming. If I had to sum it up and said, hey, sell yourselves. But I'll, I'll put it over to you, what's going on with brag and what did the letter say? Cool. So yes, I mean, you summed that very nicely. I wrote a letter to the board, to the CEO specifically, but also the rest of the board. The reason I mentioned that the CEO is the principal shareholder, known to 21% of the company, a gentleman by the name of Mattelj, Maziz. Look, I think before I get into the letter, I just give

a little bit of background. So those who hadn't heard the first podcast, so meaning the one from three years ago when Bragg was a different situation. So Bragg is a kind of, it's an amalgam of different companies, but at a tired, it's a B-to-B provider of gambling software and content to the, to the the eye gaming industry. Now, back in 2020 when we first, I think it was, yeah, 2020 when we first discussed that in the go-go days of post-COVID and, you know, online eye gaming exploding, work from home, people staying at home, the thesis around the stock was very different, okay? It was basically an undiscovered stock listed on a inferior exchange that was likely to go through an uplisting, and it had just restructured the earn out attached, or I guess the ownership,

transaction by which they acquired their main asset, which is a company called Orix Gaming, which is kind of the core of the business. And that's where the CEO is from. Exactly, exactly. So the CEO was kind of an aquire in the sense that he merged his former venture, Orix Gaming, into Bragg to get a U.S. listing, well, excuse me, a Canadian listing. And that earn out had a clock on it. Well, that earner had a cash clock on it.

They restructured that cash payout into a share transaction. So essentially, instead of taking a bunch of cash for his company, he ended up taking a bunch of stock. So it became more aligned with shareholders and obviously removed a huge overhang because it was a Canadian listed microcap that didn't have a lot of cash. So the assumption in the market then was that they'd have to do a hugely dilutive deal to pay him out if they could even do it. It was basically a going concerned type situation where they didn't have the cash, so you don't know what would have happened. So my argument at that time, which we discussed was, look, this company is growing very fast. The asset they acquired is actually very good.

The market's very hot. The market for this type of story is very hot. We recall that a company called GAN, GAN, had just reached it from London to the NASDAQ and the stock went up more. It went up 10, 15X at the peak. But yeah, anyway, even the initial move was 4-5X and initially it seemed that that business was doing very well. That's a whole other kettle of pitch. If I can tell out your porn for a second, I think the other interesting thing, and tell me if I'm wrong or misremembered, I think the other interesting thing was Bragg stock was trading at like 40 or 60 cents per share. And you notice that when the CEO converted and he was owed $10 million, let's say, he was owed $10 million. He switched it from cash to equity.

but he also switched it, and the equity was priced at like 80 cents per share. It was a premium. So it was, hey, you know, not only is this taking out this, you know, huge overhang, going concerned worrying, when you see somebody taking stock at a premium and insider taking stock at a premium, especially a lot of stock. That's a really bullish sign. Absolutely. That's right. I've actually forgot that. The stock was trading around 50. So to be clear, Bragg has since done a 10-for-one consolidation. So when we say 50-60 cents, in today's terms, we save $5.6. So the stock was trading. maybe $5, $6,000, and then the incoming CEO and vendor of this RX business struck,

restruck his equity award or the consideration at $8, something like that, close to $8 a share. And, oh, by the way, it was investing over a number of years. So he couldn't just immediately dump it either. So it was like a longer dated thing. And so the idea was, look, the overhang's gone, the growth story is exciting. The market is hot. They had already outlined very clearly that they intended to up less to the NASDAQ, they've since done, by the way. And, you know, this is, obviously, it was very, very cheap on

the fundamentals, but the kind of growth you were getting. And so initially that played out, and the stock did very, very well as kind of excitement around online guy gaming and online sports betting continued. This isn't a sports betting play, but they kind of bled over into this story. And also as the Canadian eye gaming market opened up. So this company actually didn't have any business in Canada at the time. It's listed in Canada. Most of the business in Europe, actually. And most of the tech talent is in Eastern Europe and some of it's in Israel, but nevertheless, it's Canadian listing. So the stock, you know, shortly after we spoke, then they hired a pretty impressive at the time anyway, new CEO, they said and did all the right

things. They bought a few other businesses. And they started this pivot to content. Now, the stock market initially rewarded that with a big rally. And so most of those initial content deals were struck with the equity much, much, much higher. So I think when we spoke about it was eight bucks a share, eight, nine bucks a share, and it went as high as 30, 35 bucks a share. Now, look, I stopped out, as very clear, I stopped out of the stock on that journey. I didn't get the highs. Obviously, I didn't get the lows, but just on valuation grounds, it didn't make sense that, you know, even in the mid-20s, let alone 30, 35. But nevertheless, I think a lot of people probably did hopefully quite well from that first go-round. But the story today is almost completely different,

because back then the story was about hypergrowth, exciting end markets, and a hot equity market, and capturing that and trying to monetize that from the company's perspective. The story now is we've gone through all the, what do you call it, the six or seven phases of grief. Now we have a company that's actually trading cheap on actual free cash flow, not a bit dark, not fake adjusted numbers. I think this company trades at a single digit multiple next year's free cash flow. And funnily enough, the company's been through the ringer on the fundamentals, but they've kept growing. So we can talk about some of the acquisitions they made on the content side,

whether they were, whether they've been paid out in the B&L or not yet. But they've done a complete pivot of the business. Whereas before the business was overwhelmingly focused on what I would call pure B2B, so the nuts and bolts of offering kind of a, let's say you, for example, you're a land-based casino and you want to start an online operation. There's various steps involved. You'll need player account management. You'll need, you know, obviously the tech stack back end.

You'll need content. You'll need games. You'll need account monitoring. you'll need compliance, you'll need treasury, all these kind of software pieces you'll need. So they did a lot of that B2B tech, which they offered either piece by piece or buy a turnkey solution to some new casinos. However, over time, they've migrated away from that model as it becomes much more clear that's a structurally a very difficult model. The reason that's difficult is because let's say you onboard a new casino or an up-and-coming casino, and let's say you do all their

tech. Let's say they do very, very well and they grow very quickly. Well, guess what? In three, four, five years, eye gaming is extremely cash generative if you can gain market share. If you capture the customer and they stick around once you've acquired the customer, you can make a lot of cash off them, essentially, right? So it can be turned into a very lucrative business once it grows and if you gain share rapidly. So all of a sudden your customers are generating a lot of cash down the line and guess what? What's one of the biggest costs to run the operational? If not the biggest cost is the tech stack. And if you've outsourced that and paid a big price to that or on a revenue share basis, then what will you do? You'll look to insource that.

Or even if that doesn't happen, what often happens is a successful casino brand will get bought by a larger player, which is essentially what's happened with their largest customer, right? But I mean, this is not unique at any stitch to brag. It's not a, I mean, it's almost a compliment, right? If your biggest business, you grew from zero to, you know, hundreds of millions of dollars of revenue and you're yourself are generating tens of millions of revenue from that one client because of the revenue share agreement, then all of a sudden a massive tier one operator globally comes and buys that, which already has the tech stack. Well, what are they going to do? They're going to try and cut you out. That's called that synergies. So in order to defray that risk going forward and over time, they are, and on the well on the way to this journey of becoming more and more of a content, one P content, first party content, and delivery play.

Right. So what they do is they've acquired a couple of studios. They also have their own in-house studio. They create casino-related content with casino games, slot games. And they bundle it together with some third-party content, some of it's exclusive, some of it's non-exclusive. Obviously, they try and have as much exclusive unique content. as possible and they create packages and then they either sell their content directly or they you know aggregate call it aggregated and they basically pipe it uh into all kinds of online

casinos as kind of a content offering so obviously the model is quite different that the gross margins go way up for that operation because incremental content margins are very very high if not you know near a hundred percent um but then obviously you have to spend money below the not below the line but at capex you know you have to create new content so you you get a higher gross margins through the P&L, but you're also investing cabex to create intellectual property. That becomes the content. So then it's a different kind of business model,

but nevertheless, one that has, they've demonstrated and continue to demonstrate, has better financial results, and also it's a bit more of a sticky offering. Because if you're thought of over time as a reliable content provider and creator, that's much sticky than someone just doing the nuts and bolts back into the casino,

who, once your customer has achieved a necessary scale, can just either cut you out. out directly or negotiate you out. It's if your favorite game, like, you know, if your favorite game is the Wheel of Fortune slot machine, right? I go to this, I go to this online casino every day to play the Wheel of Fortune slot machine. If they suddenly switch it and now it's the Jeopardy slot machine, like, you know, a lot of people will be out up in arms about it, especially, you know, the old ladies who love the Wheel of Fortune, they want Wheel of Fortune. They don't want Jeopardy. So you're risking huge customer churn if you do that, whereas if Jeremy is providing my

back end, my cash out, all that sort of stuff, if I'm bought by MGM and MGM implements my systems instead the Jeremy system has its energy, no customer is going to leave you because of that. Now, maybe there are some headaches when you make the Switch, but, you know, these large casinos know how to do it at this point. And actually, maybe a switch might actually speak to their largest customer that I believe, if I remember correctly, we'll go off them at some point, but it's still with them. Yeah. Yeah.

So the largest customer, I mean, jumping in here, but their largest customer is the leader in the Dutch, the Netherlands online gaming markets. It's a casino called BitCity. Yeah. They were acquired earlier, I think they'd be closed. early this year by Entain, the London listed kind of 5 billion pound market cap Bihimos, just acquired them as a B2C, you know, a successful B2C brand. So BETC started from zero.

The Dutch market only started being regulated a few years ago, I think the ZR3 this year. And so they were originally a client of brag. Basically, it was a casino and a box provider of their solution, turnkey offering as well as PAM, so that's player account management. And they built them up from literally startup to the number one operator in the market with bigger than 40% market share. So huge success story, and then they got bought by Entain, and Entain basically promised huge synergies to the acquisition, as you would do, Entain the global operator with, you know, over a billion of revenue. And, you know, they obviously have the resources to in-house a lot of that functionality, and they are starting to do that.

So the current, now, sorry, go, I just want to say, oh, I was just kidding, if you're domestic, Intane is, if I remember quickly, they're 50% of Bet MGM, and MGM brought the brand. and Entain brought all the back office, all the tech and everything. So, like, this is literally what they do. So they go by Bet City, and they're like, hey, we've already got this. Yeah, exactly. They have a huge number of B2C direct brands that they offer, and they obviously have a big back-end supporting all of them, and there's synergy element to that.

And so, look, these were announced publicly, but the Bragg does a lot of things for BetCity, and increasingly they will do those for Entain as well. So basically, Entain has now become at a whole, the Holter level the client of Bragg and so a lot of the other Entain brands will either are or will become bigger clients of Brags over time

but essentially the BetSiti entity is going to transition its PAM so the player account management software that kind of governs all the customer the customer details the customer information is very crucial so it's quite a crucial part of the business all that kind of back end software

will transition over to to Entain I think within two years. So late 2025 is what they've disclosed. Now, that doesn't mean all the content provision will transition over. That part is more open-ended. So this revenue is not going to zero. And importantly, the margin of the content provision and that part of the business is much, much higher than the PAM. And we can see that in the P&L today, as we'll discuss. But the point is this company, this client, BetCity a year ago, was, you know, low 40s percent of Bragg's revenue.

Today, it's 33, 34 percent of Bragged revenue. And a year from Today, it'll probably be, you know, mid-high 20s or maybe, let's say, mid-20s percent of revenue, and a lower number of EBITDA, given the margin differential. Nevertheless, you still have this issue where a large portion of your revenue and your number one customer is looking to decrease their reliance on you over time. There is a hard end date to a good part of that business. And look, you can offset it in other ways, and I'm sure they'll continue to grow. And I actually think their EBITDA will be higher next year, unless you're by considerable

margin. We can go into that. But this is a key risk, right? The point is, as an 80 and micro small cap company with, let's call it, limited resources, both limited financial resources, the point we'll cover in detail as well, and limited scope, you know, you're just setting yourself up to be taking advantage of by these guys over and over and or the next customer that comes along looks to kind of rate you over the calls after you've built their business. Like, structurally, you're in a very difficult position.

And so the whole crux of my idea or the letter is, look, you sell the business now, one, you'll get a massive premium. It's just very obvious to see why you would get a massive premium. We'll go into that. Two, there's a strong industrial logic. I mean, it's not just about making money. Of course, I admit it to make money, but it makes sense to sell the business for these kinds of structural reasons. You're sitting in the middle between your customers who, you know, the more successful you make them, the more ability you give them to get off of you and the potential acquires

of those assets who will inevitably look to cut you out. So it's kind of, you know, you're damned if you do, you're damn it if you don't. The only way to really get around that is to get bigger, right? whether that be via sale, or look, if they had a much more effective cost of equity currency, I wouldn't necessarily be arguing that they should be a seller, but the factor remains is when your equity trades at like a 20% free cash flow yield on next year's numbers, and recently they were forced to raise money at really, really distressed levels in a horrendously diluted structure. If you're forced to do deals like that, there's no point being a buyer,

because you can't make an accretion argument on any transactions. So there's a strong industrial logic to doing this, and there's an overwhelming financial logic to doing this. Now, that's kind of why I've, look, at it, of course, I speak with management and these points are not secret, and I make these points to them privately, and I make them publicly, but I think it's, it's important that the broader market understands exactly what needs to be done. And now a quick break to remind you that this episode is brought to you exclusively by AlphaSense, the AI platform behind the world's biggest investment decisions. AlphaSense gives you the tools you need to provide better analysis for you and your clients.

As yet another value podcast listener, visit Alpha-Dash Sense dot com slash FS today to beat FOMO and move faster than the market. That's alpha dash sense.com slash FS. Letter obviously says sell everything. Let me ask the most obvious question to the supplement. Who's the buyer here? Right? Because it's a, you know, Bragg is, it's an insurance situation where they've got, you know,

a lot of the revenues coming from what I'll call the legacy business, you know, providing the Bet City back office player account management and stuff. But as you said, a lot of that revenue is at risk over time. The Bet City is going away. I'm sure every other person who takes their player account management, if they're really successful, it's probably going away. Then they've got the content side. So, like, who is the right buyer for this?

I don't think in Taines about to go out there and buy them maybe. I mean, it'd be a bolt on and it would be pretty, it would kind of accelerate the move, I'd guess. But, you know, who's the right buyer for this business has been something that's always kind of struck me as weird? It's a good question. So, as you said, there's various pieces of the business. There's kind of the legacy or core B2 piece,

which I would argue is less valuable or less a core part of the offer. there is the pure B to C content provision, which I think is kind of the main focus of the business where most of the value is. So first things first, if you pull up Tegas, a little plug for Tegas, there was a transcript a few months ago,

maybe six months ago, where the ex-CEO of this company was asked this direct question. Okay, the ex-CEO being a gentleman, excuse me, I believe this interview was with the ex-CEO. It's really the only interview, the only ex-employee that made sense

for giving this kind of interview. I don't know for a fact that it was him, but I believe it was him. A gentleman called Rich Richard Carter, who's now running a competitive business called GigSec, well, gig media, which is listed in Sweden or Norway, one of the two, maybe Norway. Anyway, he was asked directly, okay, he was making the point in this TIGS interview, this business needs to be sold for kind of all the reasons I said. And he said, look, Playtech is an obvious buyer. So Playtech is a kind of diversified B2B provider. of iGaming solutions and software that had historically a couple

of front-end operations as well, has a lottery business as well, but essentially he thought they could be plugged in directly into Playtech, would use the content, aggregated with their own content, push it through their pipes, their distribution network, 10 times the size of brags, and extract huge synergies. Obviously,

there's a massive, cost synergy argument in acquiring a business like this, where you have your own tech stack, your own engineers, your own listed company costs, your own executive cater, which Cadre, which we'll get to in a second, which is actually quite costly in this for a small company. So he's a huge, you know, you might do that in your letter.

There's a huge synergy argument across the board, but even if we're talking one, one-half percent of revenues as a synergy number and then taking out the corporate overhead, I mean, you know, this is a business that is reporting 17 million euro of EBITDA this year and I think north of 20, 21 million of EBITDA next year. I mean, I could bump those numbers up pretty easily four or five million euro just like that. you could get 20, 30% through synergies alone without even talking top line or whatever. But yeah, so Play-Tick is an obvious one,

but there are the more kind of slightly off-the-wall type potentials as well. So let me give you a couple. So because a lot of the focus of the business now is developing this content, this unique content offering, and that has largely been built not only in-house, but through a couple of acquisitions called Wild Street Gaming and Spin Gaming, which themselves are building online content based off of land-based slot games, okay?

So there is a need for a lot of other US, particularly in the North American market as iGaming, which is still in its infancy comparatively compared to overseas market. So that's another point we have to understand. Acquiring what is essentially a backdoor, a 1P content play like Bragg for some kind of land-based casino looking to bulk up their eye gaming operation is a tiny ticket for someone like a Boyd gaming or,

I mean, Bally's is extremely leveraged. so I hate it. I don't necessarily think they're the right acquire, but I think avoid would make a lot of sense. They bought a company called Parlor Interactive, which is essentially just buying content with their online game operating. You could see another even online player that wants to bulk up their native content, like an evolution gaming, which has recently bought bets on, the Swedish listed B2C, look to buy unique content as a way to differentiate themselves versus vis-a-vis other online guys. So you could have a whole suite of land-based, transitioning to online guys who want to buy content and distribution. You have a whole suite of land-based,

a lot of guys who are already online or to bulk up or make their own offering more unique or differentiated could buy it as well or you could plug it into a mixed model player like a B2B, i.e. a play tech that has just a huge consolidation or synergy argument. Either way, the core of the argument is you cannot find a comparable transaction done in the last two years at less than a 10 times multiple. You cannot find one. I've got some other question, but let me ask you, this might be skipping too far ahead, but there is a company that I believe you and I may have actually also podcasts on GAN gaming that, you know, they, they followed something very similar where they are, we did. I think, I can't remember. But they, is this GAN, like GAN, GAN, the one that

relisted, yeah. Yeah, yeah, they were one enlisted. They relished. Everybody told me that the easiest relisting. They're going to get a huge multiple. I was like, I don't believe in relisting multiples. Stock went up 10x and then stock went down like 95%. They were very distressed and people who can go look. My question was, so Sega Sammy makes a huge, premium, you know, the CEO resigns. Sega Sammy makes an offer at a huge premium. GAN is pretty much distressed at that point. But my question is, was Sega Sammy a logical buyer of this? It seemed a little out of left field. Would there just be out of left field buyers kind of like Sega Sammy when when Brad goes off? Absolutely. Absolutely. If you don't shake the tree and see who's

out there, you'll never know. Seagasami is a $5 billion Japanese content player that had invested a bunch of money trying to build a casino in Japan. They have a JV with a casino. in Korea, but essentially they have no online eye gaming business at all, globally, okay? So, I don't know, 12 months ago they put a new slide in the deck saying, hey, we'll investigate eye gaming is a new potential growth area. And then 12 months later, look, boom, they throw a crazy price on GAN, which, as you said, was highly distressed. Were it not for this acquisition probably would have been restructured.

I mean, I think there is still some risk the deal doesn't close, and the stock's trading at a wild premium because essentially the market realizes if or when this deal. There's a long timeline to close this deal because there's a required licensing transfers and Seagasami's a new entrant, right? So they have to be fully vetted by Nevada Gaming Commission, for example. And that's going to take a year. And in that year, GAN will probably burn the rest of their cash. And they have some debt, which is out to see Gassami.

So it was kind of like a loan to own, and they came through with that a above market bid. When that bids 100 million EV, the EV of GAN to brag, this growing, cash flow generating, almost, I mean, zero net debt, essentially. have some debt, but no net debt. Entity, today is, you know, 50% more than that. But in a sales scenario, just on an apples to apples basis, like Bragg should be worth two, three X, what Dan is worse. And again, as you said, again, is kind of distressed. But the premium on just like the day before price to the next day was 100%-ish.

100%. Yeah, yeah. Maybe Greg's 100%. Maybe it's that. But, you know, it does suggest private market values are probably a lot higher than public market values if you find a buyer. Look, I don't think there's any debate private market values are much, much higher. There hasn't made a transaction.

I mean, I put it in my letter, but the average multiple is mid-teens. I think the median, or maybe higher, and the median multiple is also teens, right? So, you know, there are like seven or eight transactions. Excuse me, there. Let me ask you. So there were two negatives that I had, and you and I started talking about this over the summer, you know, but the first negative that just it stuck in my mind. It was in the past, and I probably shouldn't have because obviously the stocks are great,

but let's talk about the converts. that they issued in 2020, because I think people look at these and they hear cash flow growing business, they hear growing, all this sort of stuff. And then you see these converts and you're like, what the hell? So do you want to talk about the converts they issued? I think it was September 2022. It was. He was. So they issued a kind of, though there's no sugar coating it. It's a death spiral convert is what she is to an entity called Lind, L-I-N-D, which is a New York-based hedge fund of some repute, let's say, where essentially there was no fixed strike to the convertible.

In other words, I don't have it off the top of my head. It was 75% of 5-day VWAP. Yeah, 95% of 5-day VWap, and it was 10 to 15 million dollar market cap. And the market cap at the time was a good deal lower that it is now, meaning it was at then strike, it was still significantly dilutive, right? But the point is, it doesn't matter how low the stock is. every month this company, Lind, meaning the buyer of the convert, would have the right to convert a minimum of $500,000 worth of stock at a 5% discount to whatever the price was.

It wasn't as bad as the bed bath and beyond stuff, but if people remember the bedbath and beyond the distress financing they did, taking advantage to their means stock, like this is similar, where you just say, hey, you're not in it because you're betting on the company going higher, you're really doing a really sophisticated form, and this had other components here, but a sophisticated form of financial arbitrage where you're just getting this type of discount and you get out of it and you create a lot of profit. Yeah, exactly. So great for the buyer, I suppose, but in terms of what does it say about the company? Obviously, it's not great. It's kind of scary, right? So I talked to the management in some detail about this. And I mean, even today, I'm not entirely happy with

the reasoning that they gave for the transaction, to be completely frank with you. But essentially, what they thought or the conditions of the market at the time. Remember what the market was like in the summer of 2022. So the market bottoms, I believe, very early October 22, the border market. Yep. Tech valuations were on their knees. Okay. You could pull up a chart of things that, I don't know, DocuSign, Peloton, Drafting. Facebook was 95. Facebook was 95. It's over Facebook today. Yep. Yeah, exactly. So anything that was tech, anything that was long duration, anything that was kind of high gross, high revenue growth, low or no profits, you couldn't give it away. You couldn't give it away. So at that moment, Bragg was ramping on a number of new contracts, and they had

a slight need for working capital, and they decided to overraise because they had a good forward outlook on future bookings and growth, but of course, you need working capital to invest in new client implementations, right? So they needed money. For one of the better word, they needed money. And they, unfortunately, they started negotiating for things like fixed term financing a term loan, you know, secured term loan over the summer, and market just continued deteriorating, right? So they were saying at that point that it was a choice between kind of non-callable, meaning paper that you'd be locked in at a very high rate for, say, five years at mid-teens, which is essentially what GAN, so going back to GAN,

Gad did a similar thing where much, much more distressed, but they pulled the trigger on some fixed financing that was, I think, non-call three or four or something, and it was, you know, 15% yield or something. So they had a choice of a deal like that, despite the, much better characteristics of their business. Market didn't care, small microcap, unloved, broader market environment was absolutely horrendous. They had a choice between some kind of deal where they'd be locking into paying mid-teens on some secured paper for a number of years, or doing this convertible transaction where they thought their equity would hold up, and therefore

it would be much less dilutive. Because the dilution increases as you go down, because they're still going to sell the fixed number of shares or fixed dollar amount worth of shares, it doesn't matter the price is 10 or 4 or 3 or whatever. And I was making the point to them that guys like, they're just going to say, I mean, again, the liquidity had also dried up, right? So I don't think they're that sophisticated, but there is a silver lining. The silver lining is one, during discussions with people like me and others, you know, we made it clear after a few months that, and obviously the business was performing, right? So they got through the working capital short term need to start to generate significant cash. So instead of giving shares or allowing

lint to convert their shares and then sell. They just simply just repaid the converts in cash. So to be clear, that was at the company's option, right? So they did have this view that ultimately they would be able to repay those monthly allotments mostly in cash, not shares. And obviously for the last few more four or five months, they've been paying all in cash because of businesses cash generative. But at the time, it was a render signal. I mean, what does it say about your cost of capital, where your equity is trading flat on a five-year view or four-year view or even down on a 4-year view, the business has gone up 4x in revenue terms and 5x, no more. Three to 4x in revenue terms and 5x and EBITDA terms and you're selling,

you're effectively forced to sell equity down at that point. Lynn was selling equity at $4, $5, so $0.50, right? It's just a horrendous look. Doing business with people like that is just a horrendous look and I can explain it. This is like a massive overhang. So, you know, this is still front and center for a lot of investors' minds. When I mentioned the story, you know, they can see the numbers. They like the business.

they can see the business execution has been very, very good on various fronts. I mean, not just this Bette City thing, which they built from zero, but four years ago, when we spoke first, or three and a half, four years ago, 45% of the business was in Germany, okay, a market that was largely unregulated, that then got regulated, and essentially forced all those gray market revenues to near zero. They, nevertheless, despite close to 40% of the business going to near zero in the ensuing two years, the business has still compounded aggressively, 30% plus on organic plates,

and managed to replace all that lost revenue by moving to new markets and finding new customers. So they've done an excellent job in terms of the business execution, and it's absolutely a busy job in terms of capital management telling the story, and understanding capital allocation, cost of capital, understanding that part of the equation, which, as you know, is all we really think of, a lot of we spend most out of waking hours thinking about how to maximize it. Not an antitrust these days. Not an antitrust.

Let me ask, CEO, he was aqua-hired. If I remember correctly, he stepped in in the past year, right? He was the chief of strategy or chief of tech, whatever, and then he stepped into the role. So I guess what's just like how much of the prior missteps were kind of on him and, you know, in your conversations, he's very motivated because I think he's 21% of the company, if I remember. Yeah, yeah. He's a large shareholder. Yeah. Look, you're the largest shareholder.

You want the thoughts going up. but sometimes large shareholders also don't want to get rid of their baby. They want to be the CEO. They want it to be public. In your comfort, like, how much of the prior missteps would you kind of put at his feet versus maybe prior management or someone else's feet? And what's your read of what his view of the situation is? Right.

Okay. So I should probably be slightly more careful in my comments here. Look, I think, let's look at the historical record, okay? He sold his prior company originally for a large amount of cash. Okay? So the original deal for him to sell Orix to Bragg was almost entirely dollar-mating in cash. It then got restruck in equity at what he thought and what we thought were attractive terms. It was essentially eight times EBITDA of a very rapidly growing business with the local runway.

Okay? So he thought he was getting very, very cheap equity. That would be worse a lot more, right? With good execution. At that point, he stayed CEO of Orix, so in other words, the European heart of the business. But he was not head of Bragg. You know, he was not on the board initially, and he was not in charge of brought a company strategy. So they brought in a professional CEO, a guy called Richard Carter, who had run SB Tech and sold that business to draft kings.

Yep. And he was the one who drove this, to be fair, he was the one that drove this content-driven pivot and entering into the North American gaming market, principally via two acquisitions that I mentioned earlier, spin gaming and a wild street gaming, which at the time were very expensive, but were struck over Whirlmaline stock as well. So we're struck with expensive stock, but we're too expensive, okay? And since it'd be largely written down. So the point is, you know, Matt, Matt, Mattowish, Matt's for short, is, you know, kind of plugging away, growing the European nuts and bolts of the business, not on the main board of the Canadian holding company,

which is doing these other deals in North America, which is still a very small part of the business, and all those zero parts of the business two, three years ago. Now, after two, three years of shareholder, this satisfaction the by the way Mr Carter left

some period of time ago 18 months ago whatever because he overpaid these deals didn't work out they brought in another guy

a gentleman called Yanive Sherman and Israeli you know guy with a good pedigree in gaming X triple 8

you know listed London gaming long pedigree in eye gaming but based in Israel didn't load any stock getting a lot of comp

did a fine job as far as I can can see on the execution, but apparently not so popular with elements of the shareholder base, which obviously at this point has been seeing the equity just go straight down for two years, right? So this all kind of came to a head last AGM, which would have been, you know, less than six months ago, you can pull it up, where there was an unexpected, very large protest vote against the CEO. Essentially, you know, he won re-election, but 25, over 25% of the company voted against him. And this is, you know, this is an open register, right? So Matt's owns 21%, and then no one else owns

one, two percent or whatever, right? So if that meant there were a bunch of Canadian dudes. Now, in Canada, you don't need to disclose your holdings unless you reach 10%. That's the rule. So it's high, I mean, it's not highly possible. It's a fact that a bunch of hedge funds own, you know, or hedge funds, Canadian funds owed a bunch of stock in the 3 to 7% range. And it's had never disclosed it.

But nevertheless, very significant shareholders. Now, those guys obviously banded together to cast this massive protest vote against Mr. Sherman, who, as I said, had done a fine job on the, on the ex-examination. of the business, but had shown zero interest in creating shareholder value, okay, and was getting paid a lot of money, frankly, and was not based in Canada, was spending most of his time in Israel and managing the business remotely, which, and again, is it primarily a European business, but with a growing, growing presence in North America, he's, you know, not on the ground, so to speak. So there's a bit of, you know, dissatisfaction there after, you know, stock prices

gone down 90% or whatever it was at that time in two years. So, so he basically was voted with massive no confidence, had to go. He had to go. So then, Matt, he had to go. So then came back. And during that time, Matt's had been, I believe, chairman, but had no executive functionality. So it's a non-executive chairman. So he stepped into the seat very recently, kind of at the behest of these shareholders. And obviously, we're all in favor of that, because he's a big shareholder, he's a line. He knows the business better than anyone. He's the original engine of the whole kind of value creation with business. But with very much a mandate to maximize value for shareholders. So I cannot sit here and tell you he's going to sell the business tomorrow.

but that along with other actions that have been announced in the last kind of couple of months in particular are suggestive that that the business is um i don't know maybe on the road to to being put up and i think i think it makes a lot of sense i mean for all the reasons we we suggested but particularly at this juncture when there've been a number of other transactions and extremely attractive multiples to the sellers for i don't know maybe not perfectly comparable assets, but, you know, forget the GAN transaction, which was highly distressed and had a complete beachhead new buyer with no original position, so no opportunity for acidities. Like, an Australian largely slot manufacturer, aristocrat, went and bought a, went and bought Neo Games, NGMS,

NASDAQ listed company, which, look, a bunch of the businesses, I Lottery, which is something that Bragg doesn't do, call it 40% of the business is eye lottery, but the rest of it is basically B2C, I gaming content and software. and it was essentially almost apples to apples, okay? And they pay 15 times EBITDA for this thing. So even if you accord a very high multiple with a lottery portion, fairly or unfairly, the residual multiple in the rest of the business is still,

I mean, today, Bragg trades at five times EBIT their current year, and on my numbers, like, four and a half times next year. So it's like, I mean, it's just, you're getting no credit, right? And then I mean, you know, five or six other transactions like that as well. No, I just, to me, it's like, look, you've got a business. it's never going to get a multiple again at this this rates, right? Like, it's just the whole sector of these GAN, brag, they're too small. You can't justify the DNA cost. You can't justify the overhead. Like, they just, they need to merge. There's the industrial logic to it. It makes total sense. We've seen the multiples. It just makes tons of sense to me. Look, I think it's a great, I think it's a great idea. You've got the letter on your website. I guess I do want to talk about one or two other situations real quick, but any last thoughts on brag here? I think they'd covered it. I mean, the letter was kind of short and sweet. I mean, It's useful for me It's not that aggressive

It's one of the tough things about having you on sometimes It's like hey Jeremy's got great ideas But if the idea is hey you know Industry multiple is in a sale or 12 And you trade it for yourself It's like how are we're going to talk for an hour man I know we've managed We've managed 40 minutes already

Look at that So let's start to one other situation But I'll just remind everyone before we get there Rag is very small and quite illiquid So just please remember Extra degree of risk with that consults financial advice this is an investing advice. Go see the disclaimer at the front of the podcast if you need to hear more of that. Anyway, the one other situation we want to talk about was you and I are both

throwing our antitrust hats on with Spirit JetBlue. The trial is largely over. The last thing is you and I are talking, what is today, December 3rd. You and I are talking December 3rd. We'll have closing arguments December 5th, but we've got all the trial done. You know, it's funny. I've got, let's say 90% of the imbalance when I talk about Spirit are like, I want to hear more on Spirit. And then 10% are, man, we've talked about Spirit a lot. I think we're okay in spirit. But you're in spirit, you're a voice who I, you know, I subscribe to your, your offering everything. So I've heard you talk about it there, but people in this podcast probably haven't heard you talk about spirit. So how are you thinking about spirit with the

whole trial wrapped up and everything? Look, I, it's funny. I'll give you an analogy is how I think about it. So, well, maybe I'll save the analogy for slightly, slightly further on. I've heard a lot of your discussion with Chris, Krista Muth, and obviously Lionel Hutz, which was excellent and maybe more of a legal kind of professional legal perspective on it, but you just keep it very simple. Like the government's argument is just a weak argument. Like it's just a bad, not only is it a weak argument, it's being weakly argued. Like just pure blocking of tackling of how you make an argument. So we all know that the government has a very, very narrow position, that this idea that even if one customer gets harmed on one route in one isolated market, that the law exists

to kill that merger. Okay. So in and of itself, that's an extremely narrow position. But Lionel made this point on Twitter, and this is really a key point. The government still has to prove their argument. They can't just say their argument. So much of the government's argumentation has just been a claim with very, very, very weak evidence

just on the face of it. So take, for example, the whole topic of divestages. This is kind of a perfect example. So, you know, as in normal most mergers, you know, you propose a merger and the government has a problem with it on antitrust grounds,

and you want to get the merger done. so if you're the acquiring companies, you suggest the potential solution, and that often is to divest some of the asset. Well, instead of actually arguing why the divestages would not solve the problem, they literally just kind of say, try to explain the way saying there's no guarantee that would close. Well, that's not an argument. There's no evidence for that. That's a claim. It's just a basic claim. Not one founded in reality, by the way. One of the things I said originally with this was spectrum brands was a big win for a lot of event investors. And that was different because there was no cash. Like, it was a cash.

but they were selling a sub. So it wasn't, you know, this deal goes through. We get about $30 per share. People had to bet on a remaining subcone and everything. But Spectrum Grants had agreed to a divesture and the government went to court and said,

this deal is illegal. It's going to harm so many people. It was high end doorknob, which is kind of silly. It's like it's kind of harm rich people with high in Doorknobs. And then Spectrum Brands came and said, hey, we've got a divesture that solves all of your harm.

And the judge kind of looked at the government. I was like, you guys are arguing that there's all this harm and they've got a divester that it solves all this. Why am I not hearing anything about the investor? And to me, like, the government, and this is something another lawyer told me, which I'm, I'm giving away what I'm going to say in the future pods. But another lawyer told me, hey, the government has gone and they've argued a lot of things where they've argued theory of harm, but they haven't been able to point to any proof of harm, right? There's all these theories, but they can't point to any proof. They can't show it. And like, they're arguing all these theories. They can't point to any proof of harm. And they're completely ignoring the divestures. It seems crazy to me. yeah i mean it is crazy they didn't spend any time trying to i mean look to be fair jet blue didn't really pull them up on this in the trial so so it's kind of tangous at the point but the underlying principle that some low-end consumer is massively harmed because they cannot buy a no frills

ticket from boston to tucson uh for 25 dollars even though the average ticket price is 150 because of all the add-ons and bundlings and the fact that only you know what is it it's i think it's less than a third of customers actually buy the fully unfundled offer with nothing else. Okay, the idea that that is somehow a superior offering ipso facto in and of itself versus, say, a higher priced but presumably better service product from a JetBlue or another carrier. That in itself is a huge assumption that was never proven or attempted to be proven. I just went and bought, okay, I just went and bought a ticket on Ryanair from Greece to Rome, okay, so from Corfu, some Greek island.

They said the price is going to be 40 euro. And by the time I actually got to check out, it was like 400 year. I mean, it was literally like bags, kids, this, that meal, you know, it was like went up three, big, four, five, X. The government is trying to argue that somehow this, this ephemeral, almost not existing, unbundled minimum offer that doesn't really exist except on that first screen you click on, when you go through the booking process, that is somehow, uh, uh, by the way, they won't actually ever remove that because as it's become clear in the trial, literally every other airline, particularly United is offering for unbundled on increasing number of rounds. By the buy, they're trying to argue that removing that in favor of a higher price, but better service, better value offering, which by the way will offer more connections, more flexibility, more rebooking possibility, more latency for cancellations, which is huge, actually, given some of the shortages in the industry. They're trying to argue that is somehow superior, just because it is a cheaper product. I mean, that in itself is a, you know, I think that's kind of an aggressive argument. But they didn't even try to justify that position.

They just assume it is the case. And now a quick break to remind you that this episode is brought to you exclusively by AlphaSense, the AI platform behind the world's biggest investment decisions. AlphaSense gives you the tools you need to provide better analysis for you and your clients. As yet another value podcast listener, visit Alpha-dashcense.com slash FS today to beat FOMO and move faster than the market. That's alpha-dash-sense.com slash FS. one of the things like you and I were both in Twitter versus Elon Moss which I talk about all the time but it was a big win and you know we we were very much against it like people go look the market at a price at 50 50 you me a few people were saying we've seen all the facts this is 95% plus to close like and it was a really big win so that's one of the reasons we keep referring to it but where was they going with that I wasn't trying to talk well I think you I think you are probably trying to say that look the market the market is always going to discount these things and has a has a tough time handicapping the right odds, even in cases where the legal, kind of, the legal state of play is relatively

clear. I assume is what you're going to say. Something like that. I don't think it wasn't, but that is true. And, you know, I will say, like, look, Twitter, I think you and I both thought this was 95% plus to win. Here, there is a chance the government wins, right? Like, I personally am probably at the highest end of people. I think, based on the case I've seen, I'm like 75 to 80%, oh, I know where I was going to be there in a second. The lawyers who have talked to have argued in front of a judge that said, dude, you can't really go much higher than 60 because it's one judge. This is the government, not Elon Musk. The government does get a lot of deference. This case isn't crazy. But where I was trying to go was, you know, with Twitter, with a lot of things,

I'm not a lawyer. I try to come to things logically. And I just logically look at this and I say, hey, you've got the number six airline buying the number seven airline. They agree, hey, any markets, any gates or any airports where we have too much concentration between the two of them, we'll just get rid of the gates. Like, to me, there's no antitrust issue there. And that just logically really flies with me. I think to you, that logically really flies with you. I understand that's not the law here, but just logically, I just keep looking at that and come back to it. And then, yeah, I guess I'll just let you comment on that if you want to. Yeah, I mean, there is the, you know, does this pass the smell test, this kind of common sense test, which maybe is not in the

law, but we all practice it as, you know, market practitioners with, with, you know, money at risk and these kind of things. But, I mean, it's interesting you touch on the Twitter, the Twitter example. So a lot of people keep asking me on X, you know, you thought Twitter is 95% chance to get done, where, why is this, you know, this seems clear card, why is this only 75%, 80%. Then the answer to that is, as you alluded, there is a extremely narrow basis upon which you could see the judge kind of giving the case to the government, whereas, I mean, a very narrow one and a orally argued one, but it does actually exist in the law, right? The judge could decide, you know, there's a very small, something of consumers who will be harmed

by this transaction. That harm outweighs the benefits to the broader population or, you know, anyone who rides on the big floor now. And I don't care about, you know, offsetting benefits necessarily and therefore I have to. I mean, you know, this is kind of very, very unlikely in my view, but that does exist in the law. Whereas in the Twitter case, I literally cannot see any, we didn't even get to the trial, but even in all the pretrial rambling and discussion, I could not see any principle. We feel all that argumentation that was actually supported in any law at all. So that's kind of the difference between those two. But just going back

to the point, I think it's very important. You looked at our Twitter DMs, people would disagree, but yeah. Oh, no, no. I do know the bears who will say, go ahead. No, no, go ahead. No, you go. You're the gas. Well, I've just could. So the beer point is that, okay. I'm giving it to you. I'm giving it to you, you go. All right. So, so

the hilarious thing to me is the government called these two expert witnesses, right? And so the whole, the whole of the case, the whole of the case is presaged upon this notion that spirit as one of the largest ULCCs is some kind of uniquely disruptive force, okay, that there's this massive, unalloyed benefit to having them in the market that cannot be offset by whatever JetBlue tries to do against the others, that if somehow you know the spirit effect and, you know, just them seeing around in the market creates benefits to consume, blah, blah, blah, blah. And that whole conception is like saying you have two guys

boxing, okay? And despite the fact that when around 11, We're in round 11 of a 12 round flight. And one of the guys is bleeding from his left right, his right eye, and he's like, sucking gas. He can barely stand up. She's taking punches, left, right and center. And then the complementator's like, this guy looks fresh. This guy's ready to go. This guy's going to take it to the other.

It's like completely divorced from the situation on the ground. Like the very first interjection the judge in this case made. The very first one was, do you think Spirit's business model is sustainable? This was the first question he asked. Okay, so even from day one It's clear he's reading the news He's seeing that the bonds trade at 70 cents a dollar The trade of 30% yield

The equity trades in the toilet Like there's lots of discussion online saying This would be going concerned We're not for this deal And then the whole trial The government asked Jeff O'CFO Do you think SIR suffered a map? The government had it

I couldn't believe it I couldn't understand why they did that That was crazy That was crazy But even a lot of the discussion From their in spirit executives Was look You know the business models have changed very rapidly

in a very short period of time. We, and spirit themselves in the last earnings release said, we will have to increase revenue per seat, irrespective, meaning that means raise prices. So, I mean, this is all part of the public discourse, both in the courtroom, particularly in the courtroom and outside the courtroom. And so the idea that the government then puts their experts on the stand, okay? They're expert witnesses who do the economic analysis of the potential harm,

which has huge problems with it, but the most basic problem was, we're going to look at 2017 to 2019 as our period of analysis. just decide based on that. Five years ago. I mean, airline industry changes every day. And it's so obvious. And you kind of look at something five years ago and have any relevance. It's like this boxing analogy. It's like taking a guy in round 11 and think he's fighting as a fresh fighter when he's about, he's out on his feet. So, um, that's throwing Mike Tyson up there right. Or throwing Mike Tyson up there today and be like, the champ is in the rain. He's going to murder someone. If you're like, yeah, if this was 1991, he'd be killing people. But this is 2002. He'd kill me

Yeah, but a train box today. Exactly. I do want to ask one question real quick, because this is, people have heard us, or me particularly ramble about Spirit a lot, but there is one thing. We are talking December 3rd, Sunday, December 3rd, not five hours ago. Hawaiian Airlines and Alaskan Airlines announced the merger where Alaskan is buying Hawaiian for, what was it, like $18 per share, which is a huge premium. Yeah, for huge premium.

Hawaiian had closed below $5 a share the next day. And we got a lot of questions along, rightly so, who were saying, hey, does this have any impacts on the deal? And I have my thoughts, but I want to flip it over to you for your thoughts. Sure. I mean, originally I thought it had less relevance just because we're already at the end of the trial and the stakes have already been set out, right? So, no, facts land in the trial where they land.

However, that was probably wrong. And someone corrected me quickly on Twitter because, obviously, in the case that JetBlue wins, we still have to figure out where the equity is going to trade, right? And so given the huge premium put on Hawaiian equity, which, by the way, was a similarly distressed in, of course, not 100% apple-sapples, but similarly distressed to save, given the huge premium, it's very, I mean,

you wouldn't see a 400% premium unless there was competitive tension in my view. So I don't believe Alaska was the only bidder. They were probably the winning bidder, and therefore that competitive tension implies that the recut risk, if JetBlue were to win, then the recut risk, which is something I've been very focused on and worried about,

goes down immeasurably, goes down immeasurably. That's in the case JetBlue wins. And in the case JetBlue loses and the deal breaks, you can make a similar argument that downside is actually much, much lower because essentially there's wheeling buyers, or at least the fleet, this fleet of planes. Now, I don't want to get too ahead of myself. We'll see how it saved equity trades.

I'm willing to give a lot more credence to this idea that JetBlue, if they win, they're much more likely to simply close than try to recut. knowing that, you know, there's other biases assets and the market is kind of spoken on other equivalently distressed assets. So I would probably recut my decision tree that way, right? If this still goes through, I think the equity of save should, sorry, if the trial within, if JetBlue wins the trial, I would think save equity trades a bit better than otherwise to account for that. But I don't want to get too carried away because I do think, look, Alaska and

Hawaiian are not ULCC is the argument that the government would make would have to be a different argument they could not use this unique disruptor argument that have to use a much more traditional antitrust argument, which, by the way, there's a huge overlap at the root level between Alaska and Hawaiian. So the argument's probably better in that case. But yeah, at a high level, it means Alaska Airlines CEO thinks this deal is going through the safety. So I agree with you. I think downside has gone off for Spirit as a standalone. I think you and I did have always had a little bit of a disagreement on price-recut risk here. I just think the contract is pretty clear. I know I'm sure Jeff Blue would like to cut it. I just,

I don't see the lever for them to really cut it if they win this trial, but I agree with you that this decreases that or at least decreases the potential price cut. And then that's to me the most interesting thing, right? Like closing arguments are in two days. We will have a ruling on this trial in the next three weeks. And Alaskan and Hawaiian, they saw the whole trial go through. And before the closing arguments and everything, they decided, hey, let's signed this deal that is definitely going to be an antitrust problem that is definitely going to be an antitrust problem

where the spirit jet blue ruling is going to be a huge piece of the precedent for it and to me if that doesn't say hey I'm sure Hawaiian Alaska have a lot more resources than me maybe not you but certainly me they've got a lot more recess it tells me that they at least that they think this trial is going

very well and that they think the odds of especially and would be or sorry Alaskan who would be on the hook for breakfeet Hawaiian they think this deal is going through and they felt comfortable signing. That's my putting this spin on it. I think that's correct. Somebody could tell me crazy. Maybe the competitive tension was enough that they just said, hey, we've just got to sign this now. If we wait another two days, I don't know who the other buyer would be, but so other buyer is going to come in and swoop in and take it from us. But to me,

that's probably my biggest takeaway. Look, we've been going for almost an hour. This has been great. But anything else you want to say, spirit, brag, anything else you want to add? Well, the only other thing I wanted to say was, what a massive FU to the government. They haven't even got to closing arguments. And already these other airlines are coming out saying, we can dunk on the government. Those guys suck, which is essentially the high-level takeaway is like, yeah, they've made a pathetic case.

And if that's the best they can do, then all these other potential mergers are going to come out of the woodwork. Because you know why? They need to consolidate because the business has changed. Going back to underlying point, right? They need to cut costs. They need to gain more scale because otherwise it's purely the has and the have-nots. Like Hawaiian and Alaska are in different circumstances than spirit,

different business models, different geographical areas, less pressure, Hawaii, I mean, Hawaii has some idiosyncratic issues going on. But the underlying kind of rationale for getting bigger to achieve scale versus vis-a-vis the big four is irreputable, right? And the fact that, as you said, they're doing it before closing arguments. They've seen all the, well, as they've been hollowing this trial, it's hugely important for the rest of the industry. It sends a very strong message. So, yeah, I mean, hopefully we get the resolution we deserve in the coming weeks or that we hope that our analysis has led to. And maybe then we'll meet up in Honolulu when the antitrust case kicks off for Alaska

and Hawaii in six months. I know Lionel was sending you. The nice thing is Honolulu is about the midpoint between me and you. So maybe you be Lionel and a few others. We can have a five out of vacation. It's my wife when I leave. When you and I leave our wives with the kids, we're going to be clear. This is not a vacation. This is a serious. Is this? This is work. This is work. I'll be seeping a pinia collata on like Kiki. Work. Always. Maybe they can come with us. Who knows? But, Jeremy, this has been great. You know, people, ravercapital.com. You can find you on Twitter. I'm sure anybody who's listed this podcast. Again, I think this is our 10th or

11th one. So I'm sure anyone knows ready to find you if they want you. But Jeremy's analysis is seconds and on. Appreciate you coming on. And we will chat soon, bud. 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.