Yet Another Value Podcast

Liberty Global: Unlocking Value Through Corporate Restructuring

"Mike Freeze is 100% driven to unlocking all this value. Liberty Global trade is really cheap. He points to a recent spinoff and hints at further share buybacks and deconsolidation moves that could unlock latent value."

The discussion highlights Liberty Global as an undervalued asset. Despite a flat share price over the past decade, CEO Mike Freeze is expected to pursue share buybacks and spinoffs, which could unlock significant latent value through strategic corporate restructuring. Investors attuned to value catalysts in media-related companies might view this as an attractive, medium-term opportunity.

Strong Insider Alignment Through CEO Compensation Structure

-0.45%current return

"if he sticks around through 2027 and the company achieves $36 of EPS, he gets another 150,000 shares."

The CEO of Molina has significant skin in the game as evidenced by a compensation package that rewards long-term performance. The structure aligns management interests with shareholder value, suggesting that the CEO is incentivized to drive EPS growth and overall company performance over the coming years.

Inorganic Growth via Strategic Acquisitions

-0.45%current return

"they will buy guys that have administrative expenses of 10 to 12%... and then they put them through the Molina playbook to bring those costs down."

Molina has been actively pursuing inorganic growth through bolt-on acquisitions. The strategy involves acquiring smaller, regional insurers with higher administrative expense ratios and then applying its efficient operating playbook to lower those costs. This approach not only increases its member base but also helps improve overall profitability.

Risk From Rising Medical Costs Outpacing Rate Increases

+0.45%current return

"if medical costs continue to go up faster than the rates, you could have irrational policy that impacts Medicaid in general. And you could see that ... the period in which the profitability will be lower will be extended."

A key risk highlighted for Molina is that rapid increases in medical costs—driven by factors such as redetermination effects, increased utilization of behavioral health services, and higher procedural costs—could outpace the upward adjustments in premiums. This mismatch could extend the period of thin profitability across the industry, though Molina’s efficiency still allows it to remain profitable relative to peers.

Molina’s Resilience Through Low-Cost Administration

-0.45%current return

"Molina is actually still making money. Not as much money as it used to. So normally it operates at about a 4% margin. Right now we're at about 2%."

Molina Healthcare continues to post profits despite a compression in its operating margins (from 4% to 2%). This is largely attributed to its focused business model in Medicaid, which enables it to maintain lower administrative expenses compared with its peers. Its cost-efficient operations act as a competitive moat and provide the company with resilience amid rising medical cost pressures.

Platform as a System of Record Enabling AI and Data Flywheel Effect

-6.21%current return

"When you become the system of record, you just get this data mode. And it means that your audit costs go down, your internal reconciliations become super efficient and, with modern AI, you can even have the platform generate detailed insights across exposures. That is so freaking powerful when you can trace the life-cycle of a security end-to-end."

Shomik highlights the strategic advantage of C-WAN becoming the core system of record for its clients. This integration not only simplifies back-office functions and compliance but also creates a data flywheel that enables AI-driven insights. By reducing operational friction and enhancing risk management, this system could drive further customer stickiness and potential cross-selling opportunities as clients grow their complexity.

Attractive Valuation and Integration Potential for C-WAN

+8.54%current return

"I do think like part of what's interesting right now is the fact that the valuation is, in my opinion, quite compelling where it currently is. ... you have a 90 to 98% gross retention business that was sticky ... and then you just put a shittier business on top, that you're now saying you're going to transform. That I think is actually the opportunity."

Shomik Ghosh discusses how Clearwater Analytics (rebranded as C-WAN) is trading at an attractive valuation based on ARR multiples and free cashflow yield. He explains that despite the challenges brought by their acquisition of lower-quality assets, the company has a highly sticky customer base. The integration of these acquisitions into a comprehensive, end-to-end platform could unlock significant risk-adjusted alpha, making it a compelling opportunity from a valuation and growth perspective.

Crocs: Evaluating Mispricing Amid a Robust Operational Foundation

+3.36%current return

"I recalled that summer 2022, Crocs was trading at about five and a half to six times earnings, which raised questions about mispricing versus potential collapse. However, after speaking with several former employees and reviewing internal changes pre-COVID, it became clear that the company built a fantastic foundation that enabled it to benefit from COVID tailwinds."

Andrew presents a nuanced view of Crocs by contrasting the initial concerns of mispricing (trading at low multiples) against the company’s strong operational foundation and transformative actions taken before COVID. Expert calls with former employees helped to validate that the business improvements were sustainable, supporting a bullish outlook despite earlier valuation concerns.

SoftWave's Superior Medical Device and Sales Process Bolsters Bullish Thesis

+47.89%current return

"And by the way, on a company that we own and it has FDA clearances, it's very interesting. I asked several doctors about SoftWave and received a range of responses about perceived safety and product quality, which reinforced my conviction; we remain long the shares."

Andrew discusses SoftWave, a medical device company with multiple FDA clearances, highlighting that its product defect rate is significantly lower (1% vs. 10% for peers). The commentary underscores the importance of understanding both product superiority and the sales process through expert calls. This qualitative insight from expert calls has reinforced the host’s conviction in remaining long on SoftWave.

Buy TBRD Ahead of TSX Uplisting Catalyst

"By the end of this year, Thunderbird will uplist to the TSX exchange, which, with its stricter buyback rules and improved liquidity, could drive a rerating from its current low valuation of around 1.6x EBITDA to approximately 3 to 4x free cash flow. This liquidity and valuation catalyst presents a compelling long opportunity for TBRD."

Thunderbird Entertainment (TBRD), a microcap Canadian media company trading at a very low multiple (approximately 1.6x EBITDA), is poised for a catalyst as it uplists to the TSX exchange by year-end. The uplisting is expected to improve liquidity and trigger a re-rating of the stock potentially to 3-4x free cash flow. Investors can consider accumulating TBRD in anticipation of this near-term positive revaluation.

EchoStar ($SATS) Trade Call Based on Spectrum Liquidation Catalysts

-8.11%current return

"My perspective is that the stock is now trading with a fantastic risk-reward profile. Based on back-of-the-envelope math, EchoStar has already unlocked about $23 billion from spectrum sales, with additional spectrum assets potentially returning another $11-$12 billion -- which nets a baseline value around $55 per share at a time when the stock trades around $62-$63. With the crown jewel AWS 4 spectrum estimated to add roughly $26-$27 billion in value, this trade could push the stock close to triple digits within the next two to three months. I want to see it hit around $100 a share just from the realized spectrum value."

The insight recommends taking a position in EchoStar ($SATS) as the current spectrum liquidation process provides a robust floor and a significant upside potential. With recorded spectral transactions already unlocking over $23 billion and additional assets valued at $26-$27 billion, the stock is positioned to move from current levels ($62-$63) toward a target near $100 per share. The near-term catalyst is expected around the upcoming Paris show, making this a high conviction, actionable trade for short-term investors.