$STVN：口服 GLP-1 真的是致命打击吗？| Aurelian Research 的 Leo Trudel

Today, I've got an interesting one. I've got Leo Trudel from Aurelian Research on. We're going to talk about Stevanato Group. The ticker there is STVN. This is an interesting one because this is the type of company that is a compounder, right? They make injectables for biologics and drugs. This is a big, big winner of the GLP-1 boom, but they've been investing tons of capex to meet the demand there.

They've kind of run into this weird pocket where, hey, you've got oral GLP-1s coming along. How does that impact demand? Are they overbuilt? Are they underbuilt as all these biologics grow at 15% per year? All this sort of stuff. It's a company that's trading like a normal good business, and I think traditionally it's been viewed as a great business with great mid-to-high-single-digit outlooks, customer lock-in, great margins, and free cash flow. So, it could go either way. It's got a lot of interesting things, and we're going to talk with Leo about that.

And we're going to get there in 1 second. But first, a word from our sponsors. Today's podcast is sponsored by AlphaSense. Look, earning season is coming up. It's basically already here as I'm recording this on April 20th. And earning season is tough. There are, you know, you're following dozens of companies. You're following the companies you're invested in. You're following all the companies that they that tack onto the companies you're invested in. And it takes a lot of time. You know, there's the famous story of when you're on the sell-side earning season, it is your Super Bowl. You late nights if you're on the sell-side, buy-side, pretty late nights as well on the buy-side trying to track all these things. And AI has real just for me personally, AI has changed how I approach earning season. You know, now I say, "Hey, all the companies that are tertiary, that are secondary to the main companies I'm covering, instead of feeling like I need to read their transcripts myself, I will go and I'll slap it in say AI and I'll say, 'Hey, summarize this.' Or 'Hey, AI, summarize five of these companies and tell me what the trends and all that sort of stuff.' And you know, AI in general is perfect for that, but AlphaSense in particular has great tools for it. I've particularly been using it for to prep for podcast and everything. But AlphaSense has the AI playbook for earning season to show you how to make better use of your time, how you can cover more companies, how you can conserve your time, how you can look at these companies closer in details with AI. It'll show you how leading investment strategists and corporate strategy teams are using AI to stay ahead of the pack. You know, summarize transcripts instantly, monitoring all their competitors, look at different metrics and everything. So, I I've just I've been blown away by both AI in general and AlphaSense in particular when it comes to summarizing, getting up to speed, moving quicker. I I feel like a kid in a candy store with how much more time I can spend on the creative side, things that I like to do, the investing things I like to do versus feel like, "Hey, I need to go read 20 more transcripts today." So, visit the show notes or check out the link in the title to download your complimentary copy of the AI playbook for earning season. And if you like to try AlphaSense for free, request a trial at alpha-sense.com/yavp. That's alpha-sense.com/yavp. All right, hello and welcome to yet 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 Trudel. Leo, how's it going?

Before we get there, quick disclaimer: 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 Stevanato? I don't know. They're traded in the U.S., but they're from Italy, so the name is a little bit long. How do I pronounce Stevanato?

Yeah.

They're traded in the U.S.; the ticker is STVN. For anyone who wants to research them and all that sort of stuff, I should mention that you've got a great research report that I've seen. I'll include a link in the show notes if you want to follow that and see it on the written page. But let's try and do it over voice and podcast. What is Stevanato, and why are they so interesting?

Stevanato, put simply, makes containment and delivery systems for large pharma. So, if you have a GLP-1 injection, for example, or a cartridge or syringes, they will make the glass vials. They have 23 out of the 24 largest pharma customers. They'll have Eli Lilly, Novo Nordisk, Pfizer, Moderna—all of those that everyone knows.

It's been a great—I guess great is an understatement—one of the best stories, one of the best love stories, among fund managers over the last 4 or 5 years. What happened is that they IPO'd in 2021 during the pandemic boom. So, of course, you can guess it: they make the glass vials and the containment for the vaccines. Of course, sentiment was high on that, and their sales were great because their customers were actually buying those glass vials.

The stock did amazingly well, and the growth was amazing. What happened after that is that you had so much demand. All the big customers took so many orders for those glass vials that you had what they call a destocking situation. Let's say Pfizer didn't need as much of those containments because they had already ordered so much during the pandemic. Now, the stock's revenue wasn't as great. It still continued to grow, but the revenue was kind of flat.

Then it started to come back. So, at the end of 2024 and early 2025, it was like, "Okay, we're past destocking." It could be a great story. Actually, I was invested in it and looked at the story before the destocking thing, which was interesting. Then the recovery came back, and now we're facing a big issue for investors.

The stock is down 50% from its all-time high because people are fearing that GLP-1s—so, the Ozempic, the fat-loss drug everyone knows—will shift from injectables to a pill, basically. Of course, if it becomes a pill, you don't need Stevanato anymore to manufacture this. So, the stock is down a lot. I think it's an overreaction, and I also think this is a great long-term compounder to have in your portfolio. That's why I own it personally, and we own it at Aurelian 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 frame it: they IPO'd in 2021 riding the COVID boom. In early 2022, as COVID started, the stock IPO'd and kind of went up to $30. Then, as you said, it declines. They hit the GLP-1 boom, and it goes back up to $30. Now people are worried about orals and everything, and it kind of comes back down. It's like the same cycle over and over again, which I think is interesting.

There's a lot I want to dig into there, but let me start with my favorite question to ask. The market is a very competitive place. Even after the stock's decline over the past year, the stock trades for a nice multiple. I'd say it's probably 11 to 13 times EBITDA, depending on whether you're counting forward or backward and how you count everything. But 11 to 13 is a pretty full multiple. So, what are you seeing that the market is missing that makes this a risk-adjusted alpha opportunity?

Well, first, yeah, that's a high-multiple stock. Even now, after the decline, you still have a decent multiple because of its high multiple before. It used to be 20 times EBITDA. But on a good year, when they don't have a capex cycle—they have a capex cycle right now—they convert half of this to actual cash. So, your multiple on the cash that they actually make at the end of the day is 40 times.

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 are more changes in your stock price. I think something that I've discovered is that, for the long-only funds that invest in stocks, this is the perfect stock for them, basically.

It's recurring revenue-type business with what they sell to pharma. It's 5- to 10-year revenue visibility. There's a margin-expansion story you can sell to everyone. There are the perfect trends and the perfect kind of aging demand, with more demand for biologics and all that. It's so easy to pitch to your PM that it makes it into a lot of the small-cap funds. I've known a lot of small-cap funds in North America, and it's typically one of their biggest holdings.

Now the story, for the first time, got less good. So, for the first time, they're like, "Okay, we might lose part of the business because of GLP-1." Because they might lose part of their GLP-1 cartridges, everyone is like, "Whoa, okay. This is not a story that's as good as we thought."

I think the stock often moves way too much, basically. Every time there's news, it ends up coming back. The COVID boom moved too much. The stock was too high. $33 was too much. Then after that, "Oh, we're now in destocking." The stock crashes 30% to 40%.

And then people recognize that the destocking wasn't that bad. It comes back again. I think we're in the same situation where the stock crashed because the firms and the large pharma companies are offering oral GLP-1s.

There's a little fear that a portion of growth won't be as good. Well, people will see that the growth of the injectable GLP-1 will still continue, which I believe. Then you're still seeing growth. I think the stock will just come back.

It's too much at present. It's a community market.

Let me pause there. We'll dig into GLP-1 in a second, which I think is a very interesting—obviously, a very interesting—piece of the story. I think they said on their most recent call, “Hey, you know, GLP-1s grew—what was it?—over 20% or something in FY25.” And everyone was wondering, with the orals, “Hey, where's GLP-1 going?” If I remember correctly, they said mid-teens growth. So, even with the orals coming on, there's a lot of growth.

I'll pause there. We'll come back to that, but I just want to press you. You did hit on some high-level things, right? You said, “Hey, this was trading at 20 times EBITDA, which translates to 40 times free cash flow.” A lot of the best compounding small-cap funds have a big position.

You mentioned some things, but I don't think we really said, “What is the market pricing in that you're disagreeing with, or that the market is missing, that makes this a risk-adjusted alpha opportunity?” Because in my mind, when I looked at this, I guess what I saw was, hey, 20 times free cash flow, growing—I think they're guiding for high single digits in 2026.

So, if I just do 20 times free cash flow and high-single-digit growth CAGR, I kind of get it. It kind of comes out. That mental math guides me to, “Hey, this is like an 8% to 12% annualized IRR for the next 5 years,” which is awesome, which is nice. That's good, but it's not really screaming risk-adjusted alpha opportunity. So, where do you think you're really diverging from the market on this?

There are 2 things that would be kind of missing to that CAGR. There's the margin expansion story, which is amazing, I think, because typically when the company pitches you a margin expansion story—“We have to cut costs; we have to execute”—it happens half of the time. It gets pushed back.

In this Stevanato situation, they have 2 types of revenue, basically. They have their high-value solution. Basically, it's twice the gross margin on the containment because they arrive pre-sterilized, ready to be filled, and they're the only ones that work 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%. That high-value half has twice the gross margin. So, you basically have a complete mix shift on the revenue base of the company, and you don't have to cut any costs or change the cost structure.

If you continue that growth, it's about 1.2% of EBITDA margin expansion just by continuing that shift to the high-value solution. There's just so much demand for biologics, and that segment makes more sense for the company.

So, if you combine their EBITDA margin, which grows from 25% to maybe 30%–32% in 5 years, with the low-single-digit revenue growth, now they're turning free-cash-flow positive. They did this immense CapEx—hundreds of millions in new plants, including new plants in Fisher, in the States, and in Italy. Now you're turning free-cash-flow positive, and your margins are growing heavily without even cutting costs.

I think the growth will be more low-single-digit, in my opinion. That's driving my model. I have an 18.6% EBITDA CAGR. When you have that, plus free cash flow adding up to your net debt balance, you get to a much more attractive CAGR.

I think there's the margin story. There's the free-cash-flow cycle: the CapEx cycle is turning to free cash flow. And the growth—I would be a bit over the market because I think the market is just too stressed on GLP-1. From my discussion with some IQVIA researcher and my doctor, actually, I think there's still a place for injectable GLP-1s.

Yeah, injectables. Thank you. I like the discussion with the doctor. I might need to have a discussion with my doctor about GLP-1, but for entirely different reasons.

Let's go on GLP-1. 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 GLP-1, 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?”

Yeah, it's true.

Now that there are orals instead of injectables, orals take share and injectables go down. I think it's not just, “Hey, you lose the GLP-1 business,” but it's, “Hey, you just did this big CapEx cycle that you kicked off because there was unlimited GLP-1 demand.”

So, not only do you lose that GLP-1, but now you're overbuilt and over-capacitated. The whole industry is built for GLP-1 growth that's not there because it's all going oral. You don't just lose that volume; all of a sudden, the whole industry is oversupplied.

How do you get comfortable with the outlook for orals versus injectable GLP-1? Again, I believe the biologics story. I think they've got a quote: “Biologics are the future.” Most of the new drugs and all the innovation seem to come from biologics, but if GLP-1s go away, biologics can't fill in that hole for a long, long time.

So, how do you get comfortable with the outlook for GLP-1s—not just in 2026, but 2027, 2028, and 2029?

Yeah. The first point is that 10% of the population that's addressable to GLP-1 was treated. So, we're only at 10%. Those were the numbers in '25. Because the GLP-1 market is growing so much, even if a high percentage of market share is taken from your injectable, you still have growth. That's my view, and that's the view of the company as well.

Is that fair? 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 who get cancer, and we only treated 10,000.” It's great if it's going to 100,000, but if version 2 of the cancer drug comes out that has 10% of the morbidity, extends your life by an extra 6 months, and is better in every way, shape, and form, it doesn't matter that the market's going from 10,000 to 100,000 because everybody's taking version 2, right?

I worry with the GLP-1s. It is true they're growing massively, but orals are easier to make and more convenient. 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%, or 100% market share for GLP-1s?

Well, their effectiveness—from my take, from my doctor and IQVIA and the research I did—the effectiveness of the orals will never match the effectiveness of the injectables because of the nature of the drug. You can put about 70 times more potent molecule in the injectable version than in the actual drug.

That's fair. So, are the outcomes on oral—and again, I haven't researched this, so I'm learning on the spot—dramatically different than the outcomes on injectables?

For now, they're heavily different. You're still seeing some benefit, but right now it's about half. Half is what you get.

Basically, the view right now is that for higher-severity cases, you need the injectable. 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. For morbidly obese patients, they're going to be treated with the injectable in the first place, always, basically.

The view of doctors right now is, we'll start you on an injectable, and your maintenance treatment will be the oral for normal patients. For severe patients, it's fully injectable.

Then you also have older patients, let's say, that live in retirement homes and 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 taken every morning. If you forget it once or twice, the effectiveness goes almost to zero.

So, for everyone in retirement homes, the preference is injectable because that's what works for people. Of course, it's so much more effective. 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 was that orals are coming out. It's not like I'm studying this.

But let me push back one more time, mainly because I'm fascinated, and I do ask people here, when we talk regulatory moat lock-ins—I really like these businesses. I've got a long history with them.

If I'm just sitting here and hearing Leo tell me, “Hey, right now orals are half as effective as injectables,” and for your dramatic cases—type 2 diabetes, people who are severely overweight, maybe older people who can't adhere 100% to taking daily pills on an empty stomach—you want them on injectables, right? I say, “Hey, that's great.”

But again, STVN alone took all of its free cash flow for the past couple of years and plowed it into CapEx, right? So, I'm kind of looking and saying, “Hey, you know, if the market went from 10 5 years ago to 150 today, and you've got all this capacity build-out, and 135 of that 150 is going to be on orals and 15 is going to be on injectables, then yes, the market grew 50% over 5 years.”

That’s awesome, but we just built up enough capacity for the market to go from 10 to—it wasn’t 150; maybe it was 100, maybe it was 130. We’re going to be really oversupplied here.

So, I guess my pushback to that would be, 1, the story is not only GLP-1. The biologics market—about half is kind of your GLP-1 and all that, and the other half is every other type of biologic—has been growing at about 15% to 18% CAGR for the last 5 years. Biologics are basically the new type of drug being used. Sixty percent of the R&D right now in the world for the new drugs that will come out is on biologics. There are peptides that are coming soon. There are so many types of drugs.

The capacity build-out was not only for GLP-1; it was for the rest of the biologics. So, right now, they’re still capacity-constrained. Last year, it was growing—that’s what they were telling us. So, if that’s true, even if GLP-1 is flat—it’s supposed to grow, but let’s say it is—you’re still having the pickup from the rest of the biologics. I don’t think it’s a massive risk because the entire rest is capacity-constrained in the first place.

Another view we can take is, okay, the company was founded in 1949 by the Seven Arcs family. Now it’s run by Franco Seven Arcs, so they’ve been doing this business since 1949. I think they’ve seen so many types of recent blockbuster drugs driving revenue that I would be surprised if they made this massive mistake of completely overspending on CapEx for a drug. I think they’ve seen it; they know that there is a pill as well that can be taken. It’s not like it came out of the sudden, out of the blue—it’s been known. So, I think there are these 2 things: first, there’s the other driver, and then you have to put a certain amount of trust in the management team.

No, I hear you, though. They would not be the first family-controlled company that kind of struck oil, where in 2022 all the guys started calling and being like, “Hey, unlimited demand. You build it, I will fill it.” It’s not lost on me that they get into that unlimited demand, sink a ton of CapEx into it, think they’ve got good contracts, and then demand tapers 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, and they say, “Hey, our customers are giving us their forecasts; they’re good for it.” Again, I’ve seen this in others: you’ve got visibility until it’s not. These are not firm contracts where they’re take-or-pay and guaranteed to take them. You’ve got good visibility until they say, “Hey, actually, we’re going to be doing a lot more orals,” or something.

But I guess this is—I think for sure the stock doesn’t deserve what it used to be before this GLP-1 thing. Of course, it’s a negative. Of course, they’ll lose some revenue from the projections they used to have. So, of course, there needs to be an impact on the stock price, but an impact of going from $25 or $27 to $15, I think that’s just way too much.

That’s what I did. I said, “Okay, let’s say half of GLP-1 goes away—the entire revenue of the company.” They’re still trading at like 14 to 15 times EBITDA, which is cheaper than what they used to trade at before that. So, I think it’s also a narrative.

And the risk there, I think—some of the mistakes I’ve made in the past are, let’s say you really think you’re right on your story, that GLP-1 is an overreaction and all that. Sometimes the risk, too, can be that even 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 oral,” “Eli Lilly developed a new oral,” the market is still scared of every piece of news and the stock still gets impacted by every piece of news, even if you end up being right. So, I think that’s another risk you need to keep in mind.

It’s funny you say that, because I’ve had this happen with negative news in companies before, and I even see it in SaaS right now. You look at software-as-a-service companies, and they’re getting hammered left and right. A cloud company announces something, everything’s down 20%. It announces again, it’s down another 20%. Then you see them report numbers, and you’re like, “These numbers look pretty damn good.” It’s not a bad thing.

But the 2 things are: A, it will be an overhang for basically forever. Now, with GLP-1s, eventually, if they fill up that capacity, I think at some point they’ll get a multiple reassessment. But then on the other side, you’re like, “Hey, maybe the market is right.” I remember I used to be an unabashed cable bull, and a few years ago you’d look at the results and say, “I don’t really see 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 it went from, “It’s not impacting [us],” to, “Oh, it’s a small impact,” to, “It’s a big impact,” and 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 regulatory moat lock-in. You’re the guest, so I’ll let you explain. The reason people love these businesses is the regulatory moat that you like. Why don’t you explain how that works and everything?

Yeah, they call this the spec-in, basically. When Pfizer develops a new drug, how they have to develop it is that they have to make the patent not only on the molecule—the drug itself—but also on what container and delivery system the drug will be in, basically. So, how they do this entire approval, which of course costs millions of dollars and years of R&D, is they’ll pick 1 or 2, typically 2, types of containers. So, typically, it’s going to be Stevanato and another company, another competitor.

They always pick 2 because it allows them to switch if there’s an issue. It’s just a norm. Then, once you’re basically spec’d in during the R&D phase, it gets launched, and you cannot decide, “Oh, I don’t want to take Stevanato because it increased price. I want to go on West Pharmaceutical Services.” You can’t do that because you’d need to do the entire R&D process, which takes years and millions of dollars. So, no one is accepting those changes to the R&D process. Once you’re spec’d in, it continues basically for the life of the drug, which is why everyone loves those businesses in the first place.

It is absolutely spot-on. But I will say, I’ve followed this space for a while. I’ve always loved it. I used to be in private equity, and we always loved it then because it’s very modelable, right? You get them on long-term contracts. Yes, the drug might go off-patent, or maybe the competitor comes and takes share, but generally you’ve got pretty good visibility, and you know, “Hey, we get 5% per year volume,” all this type of stuff.

That said, I’ve been following these long enough, and every single one I’ve ever followed—whenever they stumble, everybody says, “Oh, they’ve got great lock-ins. They’ve got great lock-in.” Then one quarter they come out and say, “Hey, our volumes are going to be below what we were projecting. We lost a tech transfer or something.” 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?

On the one hand, it seems correct to me, and it is literally legally correct. It’s hard to tech-transfer. 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; it takes a really long time. But on the other hand, every company says, “Hey, we’re getting ready to gear up to win 1 really big tech transfer.” And I always go, “If you can win it, then they can win it.” How are you supposed to say something? Help me bridge the 2, and how strong is this moat actually?

Yeah, well, from the earnings calls and the research I did on Stevanato, this is not something they’ve said they’ve lost. So, I guess it’s a good thing because they probably don’t lose too much. In my view, it’s pretty strong overall. The real thing is, since the IPO, in the last 4 or 5 years, they haven’t lost large contracts. There haven’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 Stevanato specifically on this. But what I would say is the risk is more the back-end demand and the volume, specifically. When the stock trades, it trades on, “Oh, hey, we’re going to be flat this year.” The stock goes down 20%. I think this is what we should care more about, because I haven’t seen that too much for this stock 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. That's more what to worry about there.

Yeah. How do you think about capital allocation here? Right now, all the cash flow is going into this big capacity expansion that they're doing, but that will end eventually. The other great thing is that the basic rule of thumb that I always thought—and this is super basic—is that half of EBITDA kind of drops down to free cash flow. So, if you do that calculation, as soon as CapEx drops, and hopefully EBITDA grows because all that CapEx starts delivering and eventually you get a return on that capital—hopefully a really good return, because, as we said, this is a regulated business—often, you should get the price. 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, a lot of these businesses historically have been cash-return businesses. But the way Stevanato got into several of these different markets is more through bolt-ons than giant M&A, and this is an industry that's always thrived on bolt-ons and M&A. Which path do you think the company will go down as the free cash flow starts rolling in?

Honestly, I think they'll do a bit of both. I think it's going to be a mix. They'll do a bit of M&A, in my view, and they'll do a lot of buybacks as well when they get more free cash flow. 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.

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 it 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 a factory and some customers for cheaper, it's good for the business overall and accretive to the value of the company. But I think there are going to be lots of buybacks overall.

Okay, so you think it's buybacks to start with. I guess the last thing—it's 2024 or 2023 now, because time is a flat circle and it all blends together—but Catalent used to be publicly traded, and Novo took them out because they were having this capacity shortage, right? I've been a little surprised we haven't seen more M&A on the heels of Novo buying Catalent. Obviously, they're not purely similar businesses, but Catalent did have a lot of similar stuff to this. Catalent was much bigger, but it did have similar capabilities.

Just when you think about the landscape here, why do you think we haven't seen more M&A? It sounds like you think it's more share buybacks, but do you think Stevanato could see some type of industry consolidation? Would Stevanato be an attractive target to someone?

The first point is that there are already only 4 or 5 companies that run the entire industry. You have West Pharma, Stevanato, Schott, Gerresheimer, and Vetter—the four big ones that you always go to for those types of services.

I think there can be a risk. If West says, "I want to buy Stevanato," I don't think it's going to go through. There are going to be some regulatory issues there, because you need 2 or 3 of these companies to be on your drug in the first place.

I would be surprised if there is continued consolidation. And the reason I think Stevanato hasn't bought smaller companies itself is because they just had great returns on their new plants. They're like, "There's so much demand. Do you want to buy a new plant or buy this smaller competitor?" I think they're going to buy a new plant. I don't think they're going to get bought out. I would be surprised, honestly.

Yeah. Okay, that makes sense. Let me ask you, just because I've been obsessed with it and it's something I'm going to try to start asking guests at the end: How are you using AI in your research workflows and all that type of stuff?

My best use case for now is everything the company says. I'll go on FactSet, download every transcript of the company, and throw this into Claude or chat. What I like to do is look at what management said before and whether it actually ended up being true. That's something that's 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? I'll put that in and check the management track record, because otherwise it just takes so much time without AI.

I think that's a really great use case. For financial modeling, it's not there yet. Financial modeling is fine, but to me, it's a use case like—it's fine. It doesn't blow my world.

But as you said, that's one thing. I used to spend hours when I was researching companies going back through all of their proxies to find, "Hey, how did they reward this guy this year versus this year?" Now you just toss all the proxies in Claude and say, "Do it." I love your use case. That's another one I've gotten great at: "The company just provided its 2026 guidance. Go tell me how the company guided for the past 5 years, and how many times did they miss versus hit?"

That'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?

That's my best use case for now. I've used it sometimes to run competitor checks—guess who's the customer or the competitor, finding who the biggest hidden competitors are in different geographies—but nothing too particular. I think that's really my best use case, because sometimes I say, "Okay, I want to look back. It's going to take me 3 hours," but it takes me 3–5 minutes instead. I think that's my best one.

Yeah. How have you done it, Andrew, for yourself?

Well, I'm still evolving in using it, but just little things. For the podcast, I've been typing my podcast notes, and now I keep them all in one folder. When I started researching for this podcast, I said, "Go look at how I've prepared for my past 5 podcasts, analyze Stevanato, and pull out some questions and stuff." We're still getting there, but I'm trying to get it to work more iteratively, where I'll tell it, "Hey, this worked; this didn't. Do more of this."

For me, idea generation has been the big one. Over the past couple of weeks, I've said, "Find me 5 ideas that I would be interested in." Then I'll give it feedback: This idea was terrible; this idea was good. The ideas have gotten much more aligned with my style. I'm trying to figure out ways to make it more iterative, but people are doing really interesting stuff, and I'm worried that, in my little shoebox of a closet with no computer skills, I'm falling behind.

Yeah, cool.

All right. We'll wrap it up here. I'll include a link to Leo's write-up in the show notes, and people can follow up. But, Leo, thank you so much for coming on. I'm looking forward to having you on again.

Actually, I have a quick question for you. Would you buy Stevanato right now, or would you not?

No, for a very simple reason. I followed the space for a long time. I very much like the business and believe in it, but there is no distress angle and there is no event angle. I don't know where I'm really differentiated. Again, it's like 12–14 times EBITDA, and I look at that and say, "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."

Okay. I guess it's not the real value type of distress situation, for sure.

Yeah, I agree.

Yeah, it's the lack of a distress or event angle where I consider it a compounding, Excel-spreadsheet-type business, which is fine. But historically, that's just not where I've had the most success, and I don't think it leans into my style or skill set. I always like to follow them and study them, though. That's why I find them interesting.

Okay. Cool.

All right, Leo. We'll talk soon. Later, man.

Thank you. Bye. 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 advisor. Thanks.