# August 2025 Random Ramblings

Yet Another Value Podcast · 2025-08-19 · 31 min · https://www.youtube.com/watch?v=Vevc7gq5w_0

## Transcript

Andrew Walker

You're about to listen to the yet another value podcast with your host me, Andrew Walker. Today's podcast is my monthly ramblings for the month of August 2025. Look, I say this every ramblings, but this is my every ramblings I hang up and I say this was my most rambling ramblings yet. And I I definitely feel it on this one. So, it gets rambly, but hopefully you enjoy it. I get good feedback on these, so hopefully you enjoy it. Let's see the topics today. We're going to start out talking about just what a weird market is. I love to talk about both on here and on the blog. I love to talk about the overall market just it really helps me clarify my thoughts and I will tell you these are strange markets you know co was obviously a strange market but that was a panic market right now is just it is such a tale of two cities it's really pulling me apart so I want to talk about that uh talk a little bit about companies portrait analytics I believe they're going to be the sponsor of this episode they've got some great screens that I like to use and one that I've really been looking at is companies that miss earnings and the the company buys back stock aggressively into the earnings miss I I think it's such an interesting weird signal. You know, does the company not get it or is the value so high that they just have to do it? Then we're going to talk about just Sydney Sweeney hot girl marketing and owning a media company. I promise you I'm not trying to get on as a talking head hot taker hottaker, but I think there's really interesting business insights and questions there I had and especially around the Paramount UFC Paramount Larry Ellison deal connect them all hopefully in a good way. So, we'll talk about that. swinging when you have an edge. Just a lot of thoughts that I've personally been thinking about when news updates and you think you've got insight into situation, how you push yourself, how you process it, how you change your position. So, just really ramble on that. And then close down with a really interesting challenge trade. Uh BHC, the John Paulson buying 300 million stock from Carl Icon. Both of them have board seats. Thought that was just so interesting I had to put something there. So, going to get to all that rambled in the opening, but first a word from our sponsor. This podcast is sponsored by Portrait Analytics. People ask me all the time, what's your favorite stock screen to run to look at for ideas? Is it low price to earnings, high dividend yield? What what is it? And my answer is simple. I don't run screens. I somehow doubt that there's serious alpha and sorting through stocks that are trading under 10 times price earnings on Yahoo Finance. But portrait analytics has completely changed the game on screening. It lets you create bespoke screens to generate actually unique ideas. Let me give you an example of one that I've been using recently. I wanted to look for stocks with greater than 200 million market cap where the company has publicly discussed trading at a discount to peers and both the companies and insiders have been buying shares on the open market in the past 12 months. To me, that's an interesting screen. It's unique ideas. It's a blend of quantitative and qualitative. It's pulling things that aren't, you know, just purely numbers based that the insiders are talking about and it's building something that kind of fits with my view of the world and my view of the types of stocks that would be interesting. Portrait let me find a handful of companies that meet that criteria. The last time I did the screen, by the way, the screens run every day if you want them to, every week if you want them to. The last time I did the screen, it had four or five stocks that exactly hit that criteria. And then boom, I had a list of really interesting things that I actually might buy that I could sort through. Uh they it also showed me exactly where the company was talking about, how their valuation compared to peers, so I could see, hey, was this a one-off or are they consistently talking about in a way I think it's interesting. Anyway, I think it's completely changed the game for screening and for generating new ideas. If you're looking to up your screening game, you should check out Portrait Analytics at portraitanalytics.ai. I'll include a link in the show notes. All right. Hello and welcome to yet another value podcast. I'm your host, Andrew Walker. Uh if you like this podcast, it would mean a lot if you could rate, subscribe, review, wherever you're watching or listening to it. With me today, I'm happy to have on myself.

It’s time

It’s time for my monthly random ramblings for August. It’s August 15th or 16th—I’m not sure; it’s the middle of August. I’ve got a bunch of topics I’m going to ramble about today, and I hope you enjoy them.

I love doing these ramblings. The state of the markets that I publish at the end of every month in my monthly links helps me think about where we are in the markets and keep a clear head. I love talking about the markets and rambling about them, so we’re going to start by talking about what a weird market it is.

I’m not trying to become a talking news head or a clickbait artist, but I do have some thoughts on the Sydney Sweeney controversy, and I want to throw those out there. They’re not hot takes; they’re business takes. Then I want to talk a little bit about swinging when you have an edge. To wrap it up, I might talk a bit about Buffett’s longevity—I don’t know—and there was an interesting challenge trade that I’ve got a post about, which I’m about to put up. I’d love to talk about that as well.

Look, it is just a weird market. Markets are up. I’m guessing again, since I’m recording this in the middle of August, that the S&P is up double digits on the year. I think the Russell is up low single digits. It’s been a pretty good year for the stock market, albeit a very volatile one if you think back to the beginning of April.

I can’t get it out of my head: It is still just a weird market. If something touches AI, it is a golden god. The stock is up and to the right. It can do no wrong. They’re beating earnings every time. If they miss earnings, they’re getting the benefit of the doubt. It is just a golden god of a stock.

The curious thing about the market is that the largest companies—we’ve been saying this for a long time—just keep out-earning. A few years ago, Facebook, Google, and all these companies were just infinite growth at unlimited ROICs because they were capital-light businesses. Now they’ve all latched on to AI, and they’re all just generating huge returns, apparently through AI.

It’s kind of a shame for active investors because if the Mag 7 is, what, 35% of the S&P 500, and all of the Mag 7 is pretty much tied to AI, then if you’re an active manager dealing in the type of poor businesses—old-economy businesses with no AI exposure—you are underweight AI. It’s almost impossible to keep up if you’re underweight AI when those businesses are doing that.

If you are AI, you are a golden god. Your stock can’t go down. You’re beating earnings every quarter. Expectations are getting raised. The backlog looks incredible. It is nirvana for you.

But outside of AI, it’s just really weird. I’ll give you a few examples. Deere, good old Deere—farm equipment—reports earnings, and the stock is down 10%. Retailers—I mean, it has been a bloodbath in retail. Pull up the Lululemon stock chart; you’re going to barf on yourself if you look at it.

Crocs—I’m going to talk about Crocs a little bit in a second—reported earnings a couple of weeks ago, and the stock is down 20% on earnings and tariff hits. You’ve got people debating, “Hey, I thought it was cheap,” and I probably agree with them. I have no position and no plan to take one, but they thought it was cheap at 100, and the company thought it was cheap at 100. It was, like—I can’t remember—8 times earnings, and now it trades at 80 or 85, so it’s 6 times earnings. If you thought it was cheap then and you believe in the brand, it’s even cheaper now.

Telecom—my God. Telecom is supposed to be the stable sector, but every cable company is reporting numbers and just imploding. A lot of the telecom infrastructure companies are reporting numbers and absolutely imploding. We’re seeing implosions up and down the board.

Oh, food. I forgot to mention my favorite one: food. Chipotle, Cava, Sweetgreen—I guess they’re high-end fast-casual concepts—but all of them are reporting negative same-store sales. Chipotle reported negative same-store sales, if I remember correctly. All these stocks are getting absolutely hammered.

I’m looking at this as I pull it up: Chipotle reported negative 4% comps. I know there’s noise and everything, but it’s just this really weird economy where AI is up and to the right and can’t stop, while you look at fast casual, down 4%. You look at telecom blowing up, and you look at the retailers. What is going on?

I don’t know how to explain this economy. I don’t know how to think about it right now. I’m still really thinking about it. For the last year, I’d say, “You look at these cyclical companies—mining companies, metals companies, U.S. Steel, carmakers, whatever—and they’re going through a pretty deep recession, and the stock market is not, and obviously the Mag 7 isn’t.”

But now it’s spreading. It’s not just that. I think most of the cyclicals I follow are reporting pretty rough numbers. Trucking companies are saying it’s pretty rough out there now. It’s spreading to the retailers. It’s spreading to the restaurants. It’s very weird for all these companies to be reporting not just recessionary numbers, but what seem to me to be high-level, deep-recessionary numbers, while on the other hand you’ve got the AI companies at absolutely outrageous levels of growth.

Economic stats seem pretty flattish, so there’s just this very strange dichotomy. I honestly don’t know how to think about it right now. If anyone has the answer…

I'd love to hear it. That's just where I am. Speaking of companies that got I I mentioned Crocs a few times and I guess they're a sponsor now, so I can mention it. Portrait Analytics, which I think is great for AI screening, AI tools. I I think it's a really interesting way to if you're looking for companies that, you know, you can do a price earning screen and get I I think you'll get if you say, "Hey, I want companies trading for under 10 times earnings." You're going to get 400 companies. A lot of them is going to be kind of the chaff. You're going to have to sort through the wheat. A lot of them are going to be outside your wheelhouse. It's a really dumb screen and I think it's probably been picked up by Quant. What I like about Porch is you can say specific stuff. So anyway, I guess no free plugs, but there are sponsors I can give it. Uh, One of the screens I find really interesting is: “Find me companies whose stock was down 20% on earnings, where they bought back shares and the miss was driven by one-time items.”

I think that's a really interesting screen. When I run it, a lot of companies show up; right now, I'm looking at 14 or 15. A lot of them are retailers, including Crocs and Lululemon. I mention that for 2 reasons. First, I wonder if there's a signal in there: Did the company see that its Q2 results weren't looking good, but its stock looked so juicy that it couldn't help buying back and retiring shares? Or is it the reverse?

How many times have you seen a company buy back shares and then barf a quarter, with its stock going down 40%, and the next quarter they're not buying back any shares? Then you look at it and say, “Does this company know how to forecast? What is going on here?” They were buying back shares when the results were terrible, and now the stock is lower and they're not buying back shares.

Not that if you buy back shares in 2021 at $100 and the stock goes to $10 and you're in distress, I'm not saying you have to buy back shares just because the stock is down. But it's really weird if you're about to barf the quarter, buy back shares, and then stop after that.

So I look at Crocs as the perfect example. They bought back $100 million of stock intra-quarter at about $100 per share, and now the stock is at $85. In Crocs' case, reading between the lines, looking at their history and what they said on the call, I think they're going to keep buying back shares. I'd be shocked if they didn't. Crocs is a $4.5 billion–$5 billion company, so $100 million of stock in a quarter is a big slug for them.

There are a lot of companies out there. I think Vivid Seats is one that I've looked at recently where the business has been falling apart over the past couple of months. They are controlled by private-equity owners who are sophisticated, and they were buying back stock hand over fist as the business was falling apart over the past few quarters.

Then they reported Q2 results that were way below where anyone thought they would be, and now the company has kind of repurchased itself into financial distress. They're certainly not repurchasing, and analysts aren't even bothering to ask if they are because it's so clear that they don't have the resources. It's just weird. I don't know how to separate the signal from the noise there. I find it very interesting. I'm just such a sucker for buybacks; I find it interesting.

The last thing I'll note is that this screen—companies down 20%, buying back shares, and management arguing that it's a temporary thing—I've looked at it a little bit historically. I didn't have access to this screen 5 years ago, but I've looked at it a little bit historically, and generally 3 to 5 companies would hit the screen. Right now, there are 15. I'm not saying it's crazy, crazy out of the norm, but that's really high.

It's really interesting to me that so many of the companies, especially the retailers, are saying, “Hey,” and blaming the tariffs for why they missed. “One-time” is one of the factors that's key there. I think that's one of the interesting things about using a screen that marries AI with quant: they're saying it's a one-time miss. Historically, you'd see 3 to 5 companies; there are 15 here. It makes sense with the tariffs, but it's interesting that so many companies are blaming one-time items.

Again, if I marry that back to the weird stock thing, they're saying it's one-time, but I can't help but wonder if there's other stuff there. On restaurants, we're deporting a lot of people, right? Is deportation just shifting demographic trends? I know that sounds silly. It's not like we deported 1% of the population, but I think you could write a story where you say, “Hey, you deport 5 basis points of the population, but it's 5 basis points who are working age and who would be eating at these restaurants.”

And by the way, restaurant stock overall has not changed, so now there's a little bit more of a knife fight for each customer because there are just that many fewer. I don't know; it's hard for me to describe. Weird market, weird everything. Weird world. Let's move on.

Speaking of Crocs, I mentioned Crocs a lot, and I told you I wanted to dive into the Sydney Sweeney debate. I don't mean that I want to take one side or the other; I certainly don't. But there were 2 interesting things about the Sydney Sweeney debate that had me thinking about the stock market.

First, Sydney Sweeney—the reason I mention her is that she was the sponsor for Hey Dude. Hey Dude is the brand that Crocs bought, and they said it was going to be this great acquisition that would diversify them and all that sort of stuff. It has not gone that way so far. She was named the head of creative for Hey Dude last year, or something like that. To my knowledge, it has not budged the needle one iota.

So I was kind of surprised when she hopped onto American Eagle. I guess she's a big brand. Where I'm trying to go with this is: Look, she already failed at Hey Dude, and Hey Dude is much different from American Eagle. But I do wonder—if I just step back from Sydney Sweeney for a second—there are lots of companies that have what I call hot-girl marketing.

I'll talk to some CEOs of fitness brands, and they'll be like, “Look at all these girls we've got pitching our things.” You talk to people in medtech, especially aesthetics—Botox, plastic surgery, that sort of stuff—and they'll say, “Hey, we've got the Kardashians sponsoring us,” or, “We've got these hot fitness Instagram girls sponsoring us.” Hot men, too, to be fair. It could be hot men. Energy drinks especially, and protein powders, are getting huge, jacked men to sponsor them. You'll sell to one guy right here if you do that.

But I do wonder, especially on the hot-girl side, if there's real ROI here. Did American Eagle really look at this and say, “Let's get a movie star to sponsor this and run this buzzy campaign”? Yes, their brand was in the news quite a bit, but I saw reports earlier this week that their foot traffic is actually down year-over-year since they launched the Sydney Sweeney ad.

Sydney Sweeney is an A-list-level movie star; I'm sure she doesn't come cheap. I'd be really interested to know how these companies judge the ROI, or if it's just Botox companies going and talking to hot-girl marketing or hot-guy marketing and saying, “Hey, we're going to give you some free Botox injections if you put it on your story.” How do they judge the incremental demand?

The reason I worry about this is that we've seen this in public companies, and I think you'll see the parallel very quickly. Movie studios are a hot item: Every decade or so, a rich guy comes along and buys a movie studio. Why do they buy the movie studio? There's always a business case. This dates back to Coke buying Columbia in the 1980s. There's always a business case for buying the movie studio.

Right now, David Ellison, backed by his father, Larry Ellison, is buying and taking control of Paramount. There's always a business case. But what is it actually? I suspect it's an ego-stroking thing.

With a movie studio, you could be the head of the movie studio. You get to approve or not approve movies; all the movie stars are coming up and hobnobbing with you, and all of them are sucking up to you. You can probably get a couple of pet projects that you want to approve that might—if you've got a worldview or something—speak to that. But they're not really financial purchases, in my mind. Yes, I'm sure they convince themselves they're going to be a financial purchase, but it doesn't really work out well for them.

How did it work for those guys with the hot-girl marketing? I wonder how much these people look at it and say, “Hey, we've got a financial case,” versus how much it's middle-aged, high-up men who just want access to—or want to be able to talk to—these hot girls, or anything. The Sydney Sweeney thing really brought it back to mind. I'd be pretty surprised.

Now, it did take off—it really took off. So maybe you say all marketing is good; all word of mouth, all news is good news.

Maybe it results in a lot of incremental sales. Obviously, it’s been hotly debated. I’m guessing it went way more viral than they would have hoped for in their wildest imagination, but does it translate to sales to run that huge campaign and pay a huge movie star? I don’t know.

When I go down the line of some of the smaller ones, I do wonder if they’re like, “Hey, you know…” A lot of the Instagram and TikTok influencers are smaller, so it’s smaller dollar figures, but I’m guessing the ROI is absolutely zero or negative. I wonder how much of it is just stroking the egos of the management teams and getting access to that.

Last one on movie studios, as I think about it: Larry Ellison bought control of Paramount, and then they announced a massive, massive deal to bring the UFC to CBS. I think it was $7.7 billion. Huge, huge deal. That is how much they’re paying. It is NFL-level. It is way, way bigger.

The UFC was making—I’m just looking at a news article—$550 million per year from ESPN. It’s going to $1.1 billion per year on CBS. It’s a big number. I wonder how much of that was, “Hey, I’m not saying sports rights don’t have value. No one believes they have more value than I do, but that is a huge number for the UFC, which is not as good a property as, to take two examples, the NFL or the NBA.”

I wonder how much of that was having a movie studio titan in there who wants to flex his muscles. He wants to sit ringside at UFC. He wants to hobnob with the celebrities. I don’t know if that’s a financial deal so much as an ego indulgence.

All right, I’ve rambled on long enough about that. Let me switch to something I talk about with my friends a lot. I don’t have an answer here, but one thing that I’ve tried, especially with my friends—and I’ve even tried this on the podcast now, although it’s difficult to do—is, when someone has an edge, when someone has something really unique, how do you push them to swing?

I think it’s really interesting. One thing I’ve thought about asking on the podcast before is: There’s the Buffett punch-card rule. If you had 10 stocks, and you could only invest in 10 stocks with a punch card—every time you invest money, you punch it—you would be a much better investor because you would be so selective.

I’ve thought about asking people, “Hey, this idea you’re pitching—most people are long the stocks they pitch on the podcast. I kind of have that requirement: you’re long it, you believe in it. But is this a once-a-month idea? Is this a once-a-year idea? Is this a once-every-5-years idea? Is this a punch-card idea?”

The reason I don’t ask it is because it’s an awkward conversation. People run portfolios of different sizes and everything. How is somebody going to come on and pitch a podcast and then say, “Oh, I think this is just an average, good idea”? You’re just putting them on the spot in a bad way.

But the reason I ask is that, when I talk to people and try to suss this out, and I hear them say, “Hey, this is a punch-card idea,” or they’ve got some information that’s really flipped it, I want to push them to say, “Hey, if this is such a good idea, why aren’t you bigger? If you’re at 10%, why aren’t you at 15%? Why aren’t you at 20%? Why aren’t you at 50%?”

It can be good or bad, but I think it’s a really interesting way of talking and thinking about ideas and quantifying the edge.

The reason it’s on my mind is that I’ve had a few recently where, for me personally—and I’m not going to name stock names—or for friends, there was a new bit of information. Sometimes the new bit of information had been out there for a month, and sometimes it had been out there for a day. But there was a new bit of information that materially changed the thesis, sometimes in a very positive way and sometimes in a very negative way.

I’ll just speak for myself: I have trouble when the new piece of information comes out, particularly if something is already a large position, increasing it and going for the jugular. I don’t know if that’s good or bad on my part.

I had one recently where a piece of information came out that I thought was almost certainly going to be good news. I already had a big position, but I didn’t increase it. In hindsight, I was talking to someone, and they were like, “Hey, man, you had a real edge. You had a differentiated view on that news. You knew what was coming, or you thought you knew what was coming. Why didn’t you increase it?”

To me, it was push and pull: “Hey, I was already huge here, man. This was already a big position—one of my biggest. How can you get bigger?” But on the other side, it was, “Hey, if you were running the Kelly criterion or whatever in your model, it would tell you to get bigger based on this new information.”

It’s about re-underwriting and talking to people. I do the podcast a lot, and I talk to a lot of friends. It’s one thing that I’ve tried to step back on. When I’m talking to a friend and they mention an idea to me one month, and then they mention something new the next month, I really do try to push them and say, “Hey, this seems like new, incremental information. Are you buying? Are you selling? Are you pushing?”

I don’t really have a conclusion there, but it’s just something I really think about. It’s one of the hard things about investing.

In blackjack, it’s very easy. You’re dealt 11, the dealer is dealt 6, and it’s very easy to know to double. The dealer is showing 6, and you get a 5; it’s very easy to know to hit again because you’ve got 11 now, right? It’s very easy to update because it’s very mathematical.

Investing isn’t mathematical. You’re always dealing with probabilities, but they’re unknown probabilities, right? What does this 8-K mean? What is that press release for you? You never really know. Having people to talk and think through it with can be really helpful.

Real edge comes along rarely. When you have it, sometimes having somebody push and say, “Hey, is this real edge? If you really believe that, why aren’t you buying?” can really help.

The counterpoint is that, a lot of times, especially my friends who know names really well, they’ll say, “I have this big position. I’ve got this check, right? I understand the industry. It’s starting to have a cyclical downturn, and analysts aren’t onto it yet.”

You might say, “Oh, cool. Are you selling or reducing the position?” They might say, “No, no, no, no. The long-term value is too great.” They might be right, but if you’ve got a check that the numbers are going down, you probably want to trade around that in some form.

That could be reducing your position. It could be shorting a basket of stocks with similar beta and saying, “Hey, this company is so good, I’ll short a basket with a similar beta.” It could be buying puts. Whatever it is, if you’re really following a company, often there is news where you will have an edge and insight into it, and I think updating the trade around that is critical.

Okay, that was rambly. I don’t even know where I was going with that, but I had notes. It’s obviously been on my mind. I’ve been thinking about it a lot, so I just wanted to rant on that.

Let me go to the last one. I’m about to put a post up on this, but I think it’s worth mentioning and discussing.

In fantasy football, normally when you do a trade, it’s, “I have 3 running backs, you have 3 wide receivers. I have 0 wide receivers, and you have 0 running backs. Let’s do a trade.” Obviously, there’s relative value and everything, but that’s the trade.

But there’s what I call a challenge trade. You have a running back, and I have a running back. I think your running back is better than mine, and you think my running back is better than yours, so we trade. That is a direct challenge trade.

In the wide receiver-running back conversation, a trade could work out well for both of us, right? My running back does great for you, and your wide receiver does great for me. We both got what we needed.

In this trade, we trade running back for running back. Either my running back does better than yours, or your running back does better than mine. One way or another, one of our teams improves, and one of our teams gets worse. There’s no getting around it.

You can relate. I know a lot of people might not listen to football, but I think you probably get what I’m saying.

In investing, all investing is basically a challenge trade, right? You buy a stock on the market, and you are challenging the anonymous seller on the other side. They’re saying, “I think there are better risk-adjusted opportunities elsewhere,” and you’re saying, “I think this is a good risk-adjusted opportunity.” Lots of different things can come into play, but at its core, that’s it.

What’s interesting is that most investing is anonymized. If you’re buying and someone is selling, you don’t know who’s selling, and you don’t know their thesis.

Every now and then, that’s not true. For instance, a private equity firm owns 20% of a company and announces a secondary. You know who’s selling, but you don’t know why. They could be selling because they’re at the end of their fund life, or they could be selling because they think the business is about to implode. So, you’re taking some risk there.

Why do I mention this? Bausch Health Companies, or BHC, is a stock I own nothing in, for full disclosure, so I don’t have a position. I think it’s very interesting that this is the former Valeant. They’re overlevered, and I believe they’ve paid their shareholder lawsuits from the Valeant days out, but Valeant went on an acquisition binge, and they’ve got all the debt from that acquisition binge. Obviously, the company exploded.

It is now a creature of financial engineering, and there are 2 sophisticated shareholders who are in here: John Paulson and Carl Icahn. Both own roughly 10% of the stock. For the past 2 years, maybe longer, the key thesis on BHC has been pretty simple: it’s a financial engineering story. They’ve got tons of debt, but the debt is cleverly structured, and if you can get assets out of the debt and into equity holders’ hands, then you can shift value from the debt to equity. Because they’ve got so much debt, any value you can shift from debt to equity creates a fortune. I’m simplifying a little bit, but this is basically right.

The 1 big asset they have is BLCO, Bausch + Lomb, and that is worth quite a bit per share. Most of it sits in an unrestricted subsidiary. The thesis for the past 3 years—and the company has said this—is that they want to get it to shareholders, right? The best way would probably be to spin out the remaining shares of BLCO to BHC shareholders. They IPO’d BLCO about 3 years ago, and 19% of it trades on the public stock exchange. You can see it.

The remaining shares are worth—some days, they’ve been worth more than BHC’s share price; some days, they’ve been worth most of it. But if you could do that, it would create enormous value. Why do I mention all that? Well, Icahn and Paulson both sit on BHC’s board, and both own 10%, so both of them are very privy to all the internal negotiations: Are there risks that we can’t do any of the spin-off stuff Andrew just talked about? What are the opportunities? What are the other factors? They are privy to all of that.

On Friday, Paulson bought all of Icahn’s stake—over $300 million—from Icahn. Not only did he buy all of Icahn’s stake, but he did it at $9. The stock was trading at $7. It had been trading as low as $6 a couple of days before, but there was a rally, and Paulson was actually buying stock on the open market as well. He did it at $9. That is just a fascinating, challenging trade to me, right? Normally, if you’re selling 10% of a company in a block, you have to take a huge discount.

What were Paulson and Icahn seeing that made them get together? Icahn said, “Hey, I want to sell this block,” which could be for any reason, and Paulson said, “Based on what we both know, I think I will generate a fantastic return if you give me $9.” Because if you came to me and said, “I own 10% of a company. The stock trades at $7. I’d like to sell it to you,” I’d say, “Okay, my first bid is $4.” Then we’d probably negotiate and settle around $5.

If you went to an investment bank and said, “Hey, I want to unload this 10% block. I’m a sophisticated shareholder with a board seat. I’d like to blow out of this stock,” the investment bank would probably say, “Cool. We think we can get it done for $4.50 and maybe $5,” right? You’d be trading at a huge discount. So Icahn goes to Paulson—or maybe Paulson goes to Icahn; I don’t know. We don’t know the whole story here—but something they say gets them to say, “Hey, yes, if Icahn wanted to exit this, normally he’d be taking a huge discount, but both of us think it should go for $9.” What did they know? What was going on there?

Because here’s the other thing: Icahn has to sell, right? If they know tomorrow they’re going to sell BLCO for $100 per share and all the proceeds will go to BHC shareholders, and the stock is worth $50, Icahn’s not selling for $9. He’s holding on for that. On the contrary, if they know everything’s terrible, Paulson’s not buying at $9. He’s taking a huge discount, or he’s not doing the trade at all.

I just think it’s such a fascinating, challenging trade. I’ve been looking at it. I have no position, but the stock spent most of Friday trading in the high $7s range. It looks like it kind of ticked up to the mid- to low-$8 range at the end of the day. You’re buying a stock where a sophisticated shareholder who sits on the board just bought 10% of the company—$300 million at $9 per share. Normally, I’d say, “Hey, sophisticated shareholders—anything could happen.” But here, it’s such a financial engineering story, and the person has so much insight into the financial engineering stuff. I think that’s a very interesting signal, and buying at a discount to that—very, very interesting.

Okay, anyway, I’ve rambled enough. These ramblings are always hard because I’m like, “Hey, man, I’m rambling, but I don’t know if I’m making any sense. Do people want to hear this?” People generally give pretty good feedback, but every one I do, I hang up and then I say, “That was the rambliest one I’ve ever done.” Then the next one I hang up and I say, “I feel like that was even more ramblier.” So, thank you for listening to my ramblings.

I’ve got a couple of great podcasts coming up, especially my friend Art Boken, who is coming on for one on process improvement and stuff that I think people are really going to enjoy. There are some really interesting ideas on the podcast coming up as well. Thank you for listening. I’m looking forward to sharing those with you guys, and we will talk next month.

A quick disclaimer: Nothing on this podcast should be considered investment advice. Guests or the hosts may have positions in any of the stocks mentioned during this podcast. Please do your own work and consult a financial adviser. Thanks.