Yet Another Value Podcast - $STVN: are oral GLP-1s really a death blow? | Aurelian Research's Leo Trudel

Episode Date: May 5, 2026

Stevanato (STVN) makes the glass vials and pre-filled syringes that GLP-1 drugs ship in. The stock has sold off on fears that oral GLP-1s replace injectables, but Aurelian Research's Leo Trudel argues that's a misread: biologics demand keeps growing, the mix is shifting toward higher-margin "high-value solutions," and switching costs in regulated drug delivery are real. We dig into the bull case, the oral-vs-injectable debate, capacity and oversupply risk, capital allocation, regulatory lock-in, and what would change Leo's view.[00:00:00] Podcast intro and guest welcome[00:03:08] Stevanato's business model: vials, syringes, high-value solutions[00:03:51] COVID boom and the destocking cycle[00:06:39] Why the stock sold off and what it implies[00:07:34] Market expectations vs. reality[00:11:55] Margin expansion from mix shift[00:14:40] Oral vs. injectable GLP-1s: the real debate[00:17:30] Why oral and injectable aren't interchangeable[00:19:44] Capacity additions and oversupply risk[00:21:00] Biologics demand beyond GLP-1[00:23:04] Management trust and capital allocation[00:26:52] Regulatory lock-in: the real moat[00:29:42] What could break the bull case[00:30:53] Future capex and where it goes[00:32:41] Industry structure and M&A outlook[00:34:37] AI tools in investment research[00:38:09] Closing thoughts and Leo's stanceLinks:Yet Another Value Blog - https://www.yetanothervalueblog.comSee our legal disclaimer here: https://www.yetanothervalueblog.com/p...Production and editing by The Podcast Consultant - https://thepodcastconsultant.com/

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All right, hello, welcome to yet another value podcast. I'm your host, Andrew Walker. Today, got an interesting one. I've got Leo Trudell from Aurelian Research on. We're going to talk about the Stebinato group. The ticker there is STVN. And this is an interesting one because this is the type of company that has, it is a compounder, right? They make injectables for biologics, for drugs.

This is a big, big winner of the GLP1 boom. But they've been investing tons of CAPX to meet the demand there. And they've kind of run into this weird pocket where, hey, you've got oral gLP ones coming along. How does that impact demand? Are they overbuilt? Are they underbuilt as all these biologists grow at 15% per year? You know, all this sort of stuff.

So it's a company that is trading for, it's trading like a normal good business. And I think traditionally it's been viewed as a great business with, you know, just the great mid to high single digit outlooks, customer lock in, great margins free cash flow. So it could go with the way. It's got a lot of interesting things. I'm going to have a talk with Leo about that. And we're going to get there in one second. But first, a word from us.

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All right. Hello. And welcome to you another value podcast. I'm your host. Andrew Walker. With me today, I'm happy to have on for the first time from Aurelian Research. Leo Tradell. Leo, how's it going? Doing amazing. Yeah. I think we have a great stock to talk today, and it's going to be fun. I love the enthusiasm. I'm pretty excited to talk about it as well. Before we get there, quick disclaimer, remind everyone, nothing on this podcast is investing advice. There's a full disclaimer at the end of the podcast. In the show notes, you can always go see that. So, Leo, the company we're going to talk about today is Stevenato. I don't know. They're traded U.S.,

but they're from Italy. So the name is a little long. How I say it's. Traded U.S. ticker is STVN for anyone who wants to, you know, go research them, all that sort of stuff. But I will, oh, and I should mention you've got a great research report that I've seen. I'll include a link in the show notes and everything if you want to follow that and kind of see it on the written page. But let's try and do it over voice and podcasts.

What is Devinato and why are they so interesting? Yeah. So, Stevenado, put it simply, what they do. containment delivery systems for large pharma. So if you have a gLP1 injection, for example, or a cartridge or a syringes, they will make the glass files. So they will make the glass files. Their customer, they have 23 out of the 24 largest pharma customer.

So they'll have Ellie Lilly, Novo Nordisk. They'll have Pfizer, Moderna, all of those that everyone knows. and it's been a great, I guess great as an understatement. It's been one of the best stories, one of the best kind of like love stories by fund manager over the last four or five years. So what happened is that the IPOed in 2021 during the pandemic boom. So of course, you can guess it. They do the glass files and the containment for the vaccines.

So of course, sentiment is high on that. that and their sales actually were great because their customers are actually buying, you know, those glass files. So the stock did amazing. The growth was amazing. And what happened after that is that you had so much demand. All the big customers took, you know, so much orders for those glass files that you had this, what they call the distocking situation where your, let's say, Pfizer didn't need as much of those containment because they already ordered so much during the pandemic. Now the stock revenue wasn't as great. Still continue to grow, but the revenue was kind of flatish. And then it started to came back. So at the end of 2024, early 25, like, okay,

we're past stocking. So it can have a great story. Actually, I was invested and, you know, looked at the story before the stocking thing, which was interesting. And if the recovery came back, And then now we're facing a big kind of issue for investors. Stock is down 50% from its all-time high because people are fearing that GOP wants. So the Azampeg, the fat log, you know, drug, everyone knows, will turn away from injectable to a pill, basically. So of course, if it's, if it becomes a pill, well, you don't need to vanilla anymore. to have the, to manufacture this.

So the stock is on a lot. I think it's an overreaction. And I also think this is a great long-term compounder to have in your portfolio. So that's why I own it personally and we own it in that Arrealean research as well. That's great. That's great. A lot of things I want to dive into there, though. I do like how you bring it like the IPO, the IPO in 21, riding the COVID boom,

in early 2020 as the COVID starts, the stock, you know, in IPOs and it kind of goes up to 30, and then as you said, it declines. And then they hit the GLP boom and it goes back up to 30. And then now people are worried about orals and everything, and it kind of comes back down. And it's like, it's the same cycle over and over again, which I think is interesting. A lot I want to dig into there. But let me start with my favorite question asked. The market is a very competitive place. You know, I would, if I was adding on to this question, I would say even after kind of stock decline over the past year, the stock, trades for a nice multiple.

You know, I'd say it's probably 11 to 13 times EBITDA, depending forward backwards, how you count everything, but 11 to 13, pretty full multiple. So what are you seeing that the market is missing that kind of makes this a risk-adjusted alpha opportunity? Well, so first, yeah, that's a high multiple stock. Even now after a decline, you still have a decent multiple because of its high multiple I had before. So it used to be 20 times EBITDA.

but they convert on the best, you know, on a good one day they'll be, because they have a KAPEX cycle right now. But on overall, they will convert half of this to actual cash. So that your multiple on cash that they actually make at the end of the day is 40 times before that. So the swings on that stock are much higher because your multiple is just higher. So of course, when the story changes on these higher multiple stocks, there is more changes in your stock price.

And I think something that I've discovered, I guess, discovered. So the long-only funds that invests in stocks, this is the perfect stocks for them, basically. It's recurring revenue type of what they sell to the pharma. It's five to 10 years of revenue visibility. There's a margin expansion story you can sell to everyone. And there is the perfect trends and the perfect kind of like aging demand, more demand for biologics and all that. It's so easy to pitch to your PM that it's it makes it in a lot of the small cap funds. I've known a lot of small cap funds in North America.

And it's one of their biggest holding typically. And now the story got for the first time not as good. So now for the first time, they're like, okay, we might lose a part of the business. because of the glp one. So because they might lose kind of a part of their gLP one cartridges, everyone is like, whoa, okay, this is not a story that is as good as we thought.

And I think the stocks often moves way too much, basically. So every time there's a, there's a news, it ends up coming back. So the COVID boom, it moved too much. The stock was too high, $33 was too much. And then after that, oh, we're not in our stocking. The stock crashes 30, 40%, and then people recognize that these stocking wasn't that bad, and it comes back again. I think we're in the same situation where the stock crashed because people are, not people, sorry, but the firms and the large pharma companies are offering this overall GLP 1.

There's a little fear that a portion of growth will not be as good when people will see that, okay, the growth of the GLP 1 injectable will still continue, which I believe, then you're still seeing a, I think that the stock will just come back. It's too much depressing. Yes, it's a competitive markets. Let me apologize there. We'll dig into GLP1 in a second, which I think is a very interesting, obviously a very interesting piece of the story. And I think they said on their most recent call, they're like, hey, you know, GLP1s grew, what was it, like over 20% or something in FY25. and everyone was wondering with the Orals,

hey, where's GEOP1 going? If I remember, you said mid-teens growth. So even with the Orioles coming on, there's a lot of growth. So I'll pause there. We'll come back to that. But I just want to press you on one thing. You did hit on some high-level things, right? You said, hey, this was trading at 20 times EBITDA,

which translates to 40 times three cash flow. A lot of best, like, kind of compoundering small-cat funds has as a big position. You don't have some things, but I don't think we really said, like, what is the market? what is the market pricing in that you're kind of disagreeing with that make, or that the market is missing, that makes this a risk adjusted alpha opportunity, right? Because in my mind, when I looked at this, I guess what I saw was, hey, 20 times free cash flow, right? Growing, I think they're guiding for high single digits in 2006. So if I just do like 20 times free cash flow, high single digits, growth cycle, like, I kind of get, it kind of comes out that mental math guides me to, hey, this is like a,

8 to 12% annualized IRA for the next five years, which is awesome, which is nice. Like, that's good. But it's not like really screaming risk-adjusted offer opportunity. So like, where do you think you're really diverging from the market on this? So there's two things that would be kind of missing to that Kager. There's the margin expansion story, which is amazing, I think, because typically the company, when you pitch you a margin expansion story is that we have to cut costs, we have to execute. It happens half of the time, you know, like it gets pushed back.

In this stevenado situation, they have two types of revenue, basically. They have their high-value solution. Basically, it's twice the gross margin on the containment because they arrived pre-sterealized, ready to be filled, and they are the only one that works with biologics. So what you have is that almost half of the revenue of the company is growing at about 15% to 18% and the other half of the revenue is growing at about 2%. So you and the other half has twice a gross margin. So you basically have a complete mix shift on the revenue base of the company and

they don't have any cost. You don't have to change the cost structure. And if you continue that growth, it's about 1.2% of EBITDA margin expansion only by continuing that growth, that shift to high-value solution because there's just so much demand for biologics and because that segment makes more sense for the company. So if you combine, you know, there are a bit of the margin that grows from 25 to maybe 30, 32 in five years, plus the low single-digit growth and now they're turning to free cash for profitable. So they did this immense capex, 100 of millions in new plants, and new plants in Fisher and the States, in Italy.

So now you're turning free cash flow positive. Your margins are growing heavily without even, you know, cutting costs. And I think the growth will be maybe more low single digit, in my opinion. So that's driving. My model, I have 18.6% EBITDA Kager. So when you have that plus free cash flow adding up to, you know, to your net debt balance, you get to a much more attractive Kager. So I think there's the margin story that's there.

There's the free cash flow cycle, well, the capex cycle that's turning to the free cash flow that's there. And the growth, I would be a bit over the market because I think the market is just too stressed on GLP1. And for my discussion with some IQVI researcher and my doctor actually, I think there's still a place for GLP1. Injectable? Yeah, injectable.

Thank you. I like the discussion with the doctor. I might need to have a discussion with my doctor about GLP1, but for entirely different reasons. Let's go on GLP1. So the worry here is, and I kind of see it like compounding, right? Your worry is, hey, they've had this great growth driven by GLP1. And now that there are orals instead of injectables, which all else equal, everyone's always going to prefer an oral to an injectable, right?

Now that there's oral instead of injectables, oral take share, injectables go down. And I think it's not just, hey, you lose the GLP1 business, but it's, hey, you just did this big Kappex cycle that you kicked off because there was like unlimited GLP1 demand. So not only do you lose that

GLP1, but now you're overbuilt, you're overcapacized, the whole industry is built for GLP1, that's not there because it's all going oral. So you don't just lose that volume, all of a sudden the whole industry is oversupplied. So how do you kind of get comfortable with the outlook for orals versus injectable GLP1? Because I will tell you, again, I believe the biologic story.

Like, I think they've got to quote, biologics are the future. Like most of the new drugs and everything seems to be the innovation seems to become biologics. But if GLP-O-1s go away, biologics can't feel on that hole for a long, long time. So how do you kind of get comfortable with the outlook for GLP-1s? And not just in 26, but 27, 28, 29. Yeah. The first point is 10% of the population that's addressable to the GLP1 was treated. So we're only at 10%. That's what's numbers in 25. So because the GLP1 market is growing so much, even if you have a high percent of market share that's taken from your injectable, you still have growth. That's the view. That's my view. That's the view. That's the view. for the company as well. Is that fair?

I mean, like, I'm trying to make a good analogy on the spot, but a new cancer drug comes out, and they say, hey, there are 100,000 people in America that get cancer, and we only treat 10,000. Like, it's great if it's going to 100,000, but if version 2 of the cancer drug comes out that is, like, you know, 10% of the morbidity, extend your life by an extra six months, better in every way, shape, and form, it doesn't matter that the market's going from 10 to 100,000, because everybody's taking version 2, right? I worry with the GLP-1s, hey, it is true they're growing massively, but orals are easier to make and more convenient.

I don't, you know, if I run this forward 18 months, 24 months, 30 months, if orals are this as good as it seems they are, and I don't know. It's not like I'm doing crazy amounts of research on GLP-1, but why wouldn't Orals have 95, 98, 100% market share for GLP-1s? Well, their effectiveness, so the effective, from my take from my doctor and Acuio in the research I did, the effectiveness of the orals will never match the effectiveness of the injectable because of the nature of the drug. So you can put about 70 times more potent molecule in the injectable version than the actual drug. So is the overall. is the is the outcomes on oral and again i have a research this so i'm learning on this one is the outcomes on oral dramatically different than the outcomes on injectables for now it is heavily

it's so you're still seeing some benefits but right now it's about half so half is what you get but basically the the view right now is for higher like For a higher severe case, basically, you need the injectable. So that's either it's for a case of diabetes that's very important, type 2 diabetes, for example, you need the injectable and the oral doesn't do anything, basically. And for morbidly obese patients, they're going to be treated on the injectable in the first place, always, basically.

So the view of doctors right now is we'll start you on an injectable and your retainer will be the oral for normal patients and for severe patients, it's full injectable. And then you have also the older patients, let's say, that live in, that don't have their full autonomy. Taking the drug is extremely difficult because you need to be on an empty stomach and it needs to be taking every morning. If you forget once or twice, the effectiveness, you know, goes almost to zero. So you need, so everyone in, you know, the retirement homes, the push is injectable because that's what works for people. And of course, it's so much more effective and effective.

So if you want to treat your diabetes, you don't want something that's half effective. You want to actually get what's effective. That's fascinating. Again, all I knew is oral are coming out. It's not like I'm saying. But let me try to push back one more time, just mainly because I'm fascinated. And I do, as people will hear when we talk, right, it sort of lock. I do really like these businesses.

I've got a long history with them. If you are going, again, if I'm just sitting here and I'm hearing Leo tells me, hey, right now, orals are half as effective as injectables. And for your dramatic cases, right, your diabetes type 2, severely overweight, maybe older people who can't adhere basically 100% to empty stomach daily pills, you want them on injectables, right? I say, hey, that's great. But again, I mean, STVN alone took.

all of their free cash flow for the past couple years and plowed it into CapEx, right? So I'm kind of looking and saying, hey, you know, if the market went from 10, five years ago to 150 today, and you've got all this capacity buildup and, you know, 135, that 150 is going to be on orals and 15 is going to be on injectables, then yes, the market grew 50% over five years. That's awesome. But we just built up enough capacity for, you know, the market to go from 10 to it wasn't 150, maybe it was 100, maybe it was on 30, we're going to be really oversupply here. So I guess my pushback to that would be one, the store is not only GLP1.

So the biologics, about half is kind of your gLP1 and all that. And the other half is every type of biologics that's been growing at about 15 to 18% Kager for the last five years. And biologics are the new, basically it's the new. type of drug being used. 60% of the R&D right now in the world is on biologics, on the new drugs that will come out. There is peptides that is coming soon. There is so many types of drugs. So the capacity built out was not only for the GLP 1. It was for the rest of biologics. So if you're basically, and right now they're capacity constraint, still at the moment, last

training is called. That's what they're doing telling us. So if that's true, if you're a GLP 1, even if it's, let's say it's flat for, they're supposed to grow, but let's say it's flat, you're still having the pickup from the rest of the biologics. So I don't think it's a massive risk because there's an entire risk that's capacity constrained in the first place. And then that's the other views that we can say, okay, the company was on in 1949 by the Franco family, a stepanado family, sorry. Now it's run by Franco, Stevenato.

So they've been doing this business for, since, 1949, I think they've seen so many types of recent blockbuster drug that's driving the revenue. I would be surprised if they do this massive mistake of completely overspending on CAPEX for a drug that, I think they've seen it. You know, they know that there is the pill as well that can be taken. It's not like it's been, it came out out of the sudden, out of the blue, like it's been known. And so I think there's these two things.

First, there's the other driver, and then you have kind of a trust you need to put in at some point in a management team. No, I hear you, though. You know, they would not be the first family controlled company that kind of struck oil, where in 2022, all the guys start calling you and being like, hey, unlimited demand. Like, you build it, I will fill it. And, you know, it's not lost to me on their most recent earning call. they get into that unlimited man. They sink a ton of cap acts in. They think they've got good contracts.

And then the demand teepers off for some reason. And they're like, ooh, we've got a lot of capacity. They would not be the first. And it does strike me that on their earnings calls, they're out here saying people are asking them about demand. They say, hey, our customers are giving us their forecast. They're good for it. Like, again, I've seen this in fiber.

I've seen this another. Like, those are, you've got visibility until it's not like these are firm contracts where they're take or pay, guarantee. guarantee take them, you've got good visibility until they say, hey, actually, we're going to be doing a lot more orals or something. So unless you have anything else there, I want to move on some other stuff. But if you've got anything else there, we've definitely. I guess this is, I think for sure, the stock doesn't deserve what it used to be before this JLP one thing. Of course, it's a negative. Of course, they'll lose some revenue out of the projection they used to have.

So I think, of course, you need to have an impact on the stock price, but an impact of, you know, going from $25, $27 to $15. I think that's just way too much. Even if you completely, that's what I did, I said, okay, let's say half of GLP won't goes away, the entire revenue of the company. they were still trading at like 14, 15 times EBITDA, which is cheaper than what they used to trade before that. So I think it's also a narrative. And the risk there, I think what I've been sometimes some mistakes that did in the past is like, let's see you really think you're right on your story that, you know, it's, it's,

JLP one is an overreaction and all that. Sometimes the risk too can be even maybe if you end up being right. in the future, because there's so much news about, hey, this is a new oral, hey, this is a new OOL, I literally develop a new oral. The market still is scared every news and the stock still gets impacted on every news, even if you end up being right. So I think that's another risk to keep in mind. It's funny you say that because I've had this in companies before where I'm like, hey, like the negative news, even SaaS right now, right? You go look at offers and service companies. And they're getting just hammered left and right, like, Claude announces something.

Everything's down 20%. And it's down again. It's down another 20%. And they report numbers and you're like, these numbers look pretty damn good. It's not a thing. But the two things are, A, it will be an overhang for basically forever. Now, the thing with GLP ones is eventually, you know, if they fill up that capacity, I think at some point they'll get a multiple or assess one.

But it will be, but then on the other side, you're like, hey, maybe the market is right. Like, I remember I used, I am embittered cable wool. And a few years ago, you look at their results and you say, I don't see where I don't really see like fiber taking huge share. It's really hard to say where it's hitting the financials, but it just kept happening. And all of a sudden, like, you know, it went from it's not impacted to, oh, it's a small impact, too. It's a big impact. And like, it kind of turned out the market was right there. Now, this is a capacity story, not a permanent competition story, but it's just an interesting way to think about.

it. Let me go to, let's go to a regulatory remote locking. So what I won't explain it. You're the guess. I'll let you explain. You know, the reason people love these businesses is the regulatory remote, the FDA lock. Why don't you explain like kind of how that works and everything? Yeah, they call this the specin, basically. So when Pfizer develops a new drug, how they have to develop it is they have to make the patent not only on the molecule, the drug, the drug. drug itself, but also on what containment and delivery system will be the drug, will be the drug on basically. So how they do this entire approval that of course costs millions of dollars, years of R&D, is

they'll pick one or two, typically two of containment. So typically it's going to be Savano and another company and another competitor. So I always speak to because it allows them to switch if they're an issue, it's just norm. And then once you're basically spec in in the R&D phase, it gets launched and you cannot decide to, oh, I don't want to take Stavano because increased price. I want to go on West Farmer. You can't do that because you're specting. You need to do the entire R&D process, take years and millions of dollars. So no one is accepting those changes to the R&D process.

So once you're specting, it continues basically for the life of business. the drug, which is why everyone loves those businesses in the first place. So absolutely spot on, absolutely spot on. But I will say, so I followed the space for a while. I've always loved it. You know, I used to be in like the private equity stuff. Like we always loved it then because it's very, it's very modelable, right? Like you get them, you get them on long-term contracts.

Yes, the drug might go off patent or maybe, you know, the competitor comes to take share, but generally you've got pretty good visibility. And you know, like, hey, we get 5% per year. volume, all this type of stuff. That said, you know, I've been following these long enough, and every single one I've ever followed, you know, whenever they stumble, we say, oh, they've got great lock-ins, they've got great lock-in. And then one quarter, they come out and they say, hey, our volumes are going to be below what we were projecting. We lost a, you know, we lost a tech transfer or something. Or every time you talk to one of them about growth,

particularly smaller ones with more excess capacity, they'll say, oh, we plan on winning. a competitive tech transfer, right? And you're like, it's hard for me to hold both in my mind, right? Like on one hand, it seems correct to me, and it is literally legally correct. It's hard to tech transfer, like FDA approval, takes months and months. It's not even just that it's millions of dollars, but it's the time and the effort and everything. Like, it takes a really long time.

But on the other hand, every company says, hey, we're getting ready to gear up to win one really big tech transfer. And I always be like, if you can win it, then they can win it. Like, how are you so safe? Help me, like, kind of bridge the two and how strong is this moat actually? Yeah. Well, from the earnings calls and the research I did on Sevenado, this is not something they've

said they've won them. So I guess it's a good thing because it probably don't lose too much. The, in my view, it's pretty strong overall. The real kind of like, I have from, from, you know, since the IPO, four or five years, they haven't lost large contracts. There hasn't been those impacts. So I don't think there's anything to flag there for this company. I don't have more insights for Steven Lowe specifically on this. But what I would say is the risk is more the back in demand and the volume specifically. I think because on what it trades, it trades on, oh, hey, we have this

stock situation. We're going to be flat this year. Stock goes down 20%. I think this is what we should care more about because I haven't seen that too much for this talk in the future. So I think it's more like we have to take more confidence in the guidance and what's going to happen for the next few years. And that's more what to worry there. Yeah. How do you think about capital allocation here, right? Like right now all the cash flow is going into this big capacity expansion that they do. But that will end eventually. And then the other great things, I mean, the basic rule of thumb that I always thought, and this is super basic, but half of EBDA kind of drops down to free cash flow. So if you do that number, you know, as soon as the CAPEX drops and

hopefully EBDA grows because all that CAPEX starts delivering and, you know, eventually get a return on that capital, hopefully a really good return because as we said, this is a regulated business, you should give you, but they're going to be generating quite a bit of cash. How do you think about capital allocation here? And if I can just lead the witness slightly, you know, a lot of these businesses historically have been cash return businesses, but the way Sabano got into several of these different markets is some more Bolton than like giant M&A, but this is an industry that's always thrives on Bulton's MNA. So which path you kind of think the company will go down as the free cash flow starts rolling in? I think, honestly, I think they'll do a bit of both of

them. I think it's going to be a mix. They'll do a bit of MNA in my view, and they'll do a lot of buybacks as well. Because I think they know when the stock overreacts and they'll just jump on the buybacks as soon as they get more free cash flow. And I think the dividend will stay low. I think it's just to pay the family right now. It's about 0.4%. I think they should stay low.

It's going to be a mix of buybacks and acquisitions. The good thing is that when you trade at a high multiple and you can buy, you know, a factory and some customer for cheaper. It's good for the business overall and against the value of the company. But I think there's going to be lots of buybacks overall. Okay, so you think it's a buyback. And I guess last thing, you know, in I can't remember if it was 24 or 23 now because time is a flat circle. It all blends together.

But, you know, Catalan used to be publicly traded and Novo took them out to, because they were having this capacity shortage, right? And I've been, if I can just inject my own commentary, I've been a little surprised we haven't seen more M&A on the heels of Novo buying Catalan. And obviously they're not purely similar business, but Catalan did have a lot of similar stuff to this. And Catalan was much bigger, but it did have similar. Just when you think about the landscape here, why do you think we haven't seen more M&A? And it sounds like you think it's more share buybacks. But do you think Savano would, could we see some type of,

kind of industry consolidation, would Stavano be an attractive target to someone? Well, the first point is that there's already only four, four to five companies that run the entire industry. You have West Farma, you have Stevenado, you have shot, Gerasheimer, or kind of the four big ones that you always go to for those types of services. I think there can be a risk. Like, if West says I want to buy Stevenado, like, I don't think it's going to go through. Like, there's going to be some regulatory issues there because you need two or three of these companies to be on your drug in the first place.

I would be surprised if there is continued, like, and the reason for, I think, why Stevenel didn't buy smaller companies itself is because they just had great returns on their new plants. They're like, hey, we do there's so much demand. Do you want to buy a new plant or buy this smaller competitor? I think I'm going to buy a new plant. I guess I don't think they're going to get bought out. I would be surprised, honestly.

Yeah. It makes sense. Let me ask you, just because I've been obsessed and it's something I'm going to try to start asking guests. How are you using AI in your research, workflows, all that type of stuff? My best use case for now is everything the company says. So I'll go and fax it. I'll download every transcript of the company. I throw this into Claude or chat.

And what I like to do is look at what management said before and if it actually end up being true. Because that's something that is important for me, especially in small caps. Is the management team always pitching dreams and it never happens or does it happen in the first place? So I'll put that and I'll check the management track record because otherwise it just takes so much time without AI. I think that's a real great use case. And for financial modeling, it's not there yet. You know, I'm not like financial modeling. It's fine.

But to me, it's a use case. Like, it doesn't blow my world. But as you said, that's one. Like, I used to spend hours when I was researching companies going back through all of their proxies to find like, you know, hey, how did they reward this guy this year versus this year? And now you just toss all the proxies and claw it and say, do it. And I love your use case.

That's another one. I've gotten great at like, hey, okay, the company just provided their 2026 guidance. Go tell me how the company is guided for the past five years and how many times have they missed versus him. That's something that takes a heck of, it's pretty basic, but it takes a heck of a lot of time on your own.

Claude does it while I go get a cup of coffee. So anything else interesting you've been using AI for or anything? That's my best excuse for now. I've used it. Sometimes to run like competitor checks, like test who's the customer,

the competitor, these kind of like finding who are the biggest hidden competitors and all that and the different geographies, but nothing to portray. I think that's really my best use case because sometimes like, okay, I want to look back.

It's going to take me three hours, but it takes me three five minutes instead. I think that's my best one. Yeah. How have you done it, Andrew, for yourself? I'm still evolving and using it, but just less things. Like I'll tell you, for the podcast,

podcasts. I started like, I've been typing my podcast notes and now I keep them all in one folder. And then every time I, so when I started researching for this podcast, I said, hey, go look at how I've prepared for my past five podcasts and pull out analyze Devano and pull out some questions and stuff. And we're still getting there, but like trying to make with clawed and particularly co-work, trying to get stuff more iterative where I'll tell it, hey, this worked, this didn't do more of this and trying to get it more iterative. for me, like idea generation has been the big one where I've just over the past couple weeks said, find me five ideas that I would be interested in, and then I'll give it feedback on this idea was terrible, this idea was good, and the ideas have gotten like much more to my style. So just I'm trying to figure out ways to make it more iterative, but people are doing just like really interesting stuff. And I'm worried just me in this little shoebox of a closet with no

kind of skills is flying behind. Yeah. Cool. All right, well, hey, we'll wrap it up here. I'll include a link to Leo's write-up in the show notes, all that. People can follow up. But Leo, thank you so much for coming on and looking forward to having you on again. Go ahead. I'd like to have you a quick question for you, actually.

Yeah. Would you buy a stvonado right now? No, very simple reason. Again, I followed the space for a long time. I very much like the business and believe in it. But there is no distress angle. There is no event angle. I don't know where I'm like really differentiated.

Again, it's like 12 to 14 times EBDA, and I look at it and say, oh, it's a fine business and it could be a fine compounder, but it's just not really what I personally invest in right now. Yeah. Okay. I guess it's not the real value type of distress situation for sure. Yeah. It's the lack of like distress or event angle where I'm like, I consider a compoundering, a compounder in Excel spreadsheet type business, which is fine.

But for me, that's just like, historically, it's not where I've had the most success. And I just don't think it leans into my style or skill set. But I always like to follow them and study them and stuff. So that's why I kind of find them interesting. Okay. Cool. All right. We'll talk to you.

Thank you. Bye. 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. The Madamy Holmes bike for brain health supporting Baycrest returns on May 31st

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Thanks.