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Now Salesforce trades around 13–14x free cash flow. The S&P 500 is closer to 21x. Coca-Cola is around 22x and grows slower. That gap tells you expectations have flipped, the market isn’t paying for the best case anymore. At 14x, Salesforce doesn’t need to prove it can grow at 20% to make sense; it just needs to stay stable, keep customers, and keep converting revenue into cash.

They’re managing costs better

Stock-based comp is now around 8% of revenue, down from over 10%. They also stopped hiring as many people. When costs slow down and revenue stays the same, profits go up.

This is the first time in a while the company seems to care about shareholders.

Customers don’t leave easily

About 90% of the Fortune 500 use Salesforce. It’s not just software. It holds years of customer data, workflows, integrations, and reports. You can’t just turn it off. Replacing it takes years and comes with risk.

So even if growth slows, the customer base stays.

It’s an Ecosystem, Not an App

If Salesforce were just a place to store phone numbers, you could export a file and switch to a competitor in an afternoon. But for the Fortune 500, Salesforce is more like an operating system.

Companies build custom applications on top of Salesforce using proprietary languages like Apex and tools like Flows. These custom apps do not translate to other systems. To leave, you have to rebuild them from scratch.

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A typical enterprise has Salesforce connected to their ERP system, their marketing tools, their customer support lines, and their email. Unplugging Salesforce breaks the data flow across the entire company.

Data Gravity

As a dataset grows, it becomes harder to move.

Years of customer interactions, purchase history, and support tickets are stored there. Migrating this data to a new structure is a large project with a high risk of corruption or loss.

Most companies have messy data. Moving requires cleaning it first—a project that can take months on its own.

The “Rip and Replace” Risk

Replacing a core system like Salesforce is often compared to changing the engine of a plane while it is flying.

If the new system fails or has bugs during the switch, sales stop, support tickets get lost, and revenue takes a direct hit.

You have thousands of employees who know exactly where to click to do their jobs. Moving to a new interface causes a large dip in productivity for 6–12 months as users relearn how to work.

What could go wrong

The stock is cheap for a reason.

1. If teams start working through AI agents, they might not log into Salesforce anymore. The AI just talks to Salesforce in the background. If Salesforce becomes invisible, they lose pricing power.

2. Salesforce charges per user. If AI makes teams more efficient, companies need fewer people. Fewer people means fewer licenses. The question is whether they can replace that revenue fast enough with usage-based pricing.

Why I’m looking at it now

At $175–$190, Salesforce isn’t priced like it has to keep growing fast.

If it becomes like Oracle with customer data, that’s not exciting, but it can generate cash for years. And at ~13x free cash flow, the market already treats it that way.

That’s the point and that’s why it’s worth watching.

Disclaimer: This article is for informational purposes only. It is not financial advice. I am not a financial advisor. I may buy or sell these stocks at any time. You must do your own research before investing

By reading this email, you agree to the full disclaimer found here: https://www.thevaluethesis.com/p/disclamier

Since that post, the sector volatility increased.

The software sector sold off this week. Gartner stock followed the trend. It closed yesterday at $209.61.

1. The Numbers: EBT and Cash

I do not use EBITDA. I focus on Earnings Before Taxes (EBT) and Free Cash Flow. These metrics show the true purchasing power of the business.

The EBT Yield Management raised guidance for 2025. They guide for Adjusted EPS of at least $12.65. The adjusted tax rate is roughly 23%. This implies Pre-Tax Earnings (EBT) of approximately $16.42 per share.

At a price of $209, the stock trades at roughly 12.7 times EBT. Inverting this gives an EBT Yield of 7.8%. For a monopoly asset with negative working capital, a nearly 8% earnings yield is a value price.

The Cash Conversion Accounting earnings can be manipulated. Cash cannot. Management guided for $1.145 billion in Free Cash Flow for 2025. This represents a conversion rate of 165% relative to GAAP Net Income. The business generates more cash than accounting profit.

2. The Equity Bond: Gartner vs. The 10-Year Treasury

The Risk-Free Rate The U.S. 10-Year Treasury currently yields approximately 4.2%. This coupon is fixed. If inflation rises, the real value of that coupon falls.

The Gartner Yield Based on the current price ($209) and the guided Free Cash Flow ($1.145 billion), Gartner offers a Free Cash Flow Yield of 7.5%. This is a spread of roughly 330 basis points over the risk-free rate.

The Difference When you buy the bond, your 4.2% yield is static. When you buy Gartner, your 7.5% yield is dynamic. It grows in two ways:

1. Organic Growth: Even with modest revenue increases, cash flow grows.

2. Share Cannibalization: In Q3 2025 alone, management bought back $1.1 billion of stock, reducing the share count by 4%.

Every share they retire increases the Free Cash Flow per remaining share. I prefer a 7.5% yield that grows over a 4.2% yield that stagnates.

3. The Event: The Digital Markets Sale

On January 29, Gartner sold the Digital Markets division (Capterra, Software Advice) to G2.

Disclaimer: This article is for informational purposes only. It is not financial advice. I am not a financial advisor. I may buy or sell these stocks at any time. You must do your own research before investing

By reading this email, you agree to the full disclaimer found here: https://www.thevaluethesis.com/p/disclamier

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This wasn’t about one issue. Two things hit at the same time.

First: the earnings headline.
UnitedHealth reported very low GAAP earnings and guided to lower revenue next year.

Most trading systems don’t read context. They see “lower revenue” and “no profit” and sell.

Second: the government headline.
The night before earnings, the US government proposed a 0.09% increase in Medicare Advantage rates for 2027.

With inflation running closer to 3–4%, that effectively means getting paid less in real terms.

Put together, the message the market heard was simple:

• Revenue down

• Profits under pressure

• Government pushing back

That combination spooked investors.

What Was Actually Going On in the Quarter

Disclaimer: This article is for informational purposes only. It is not financial advice. I am not a financial advisor. I may buy or sell these stocks at any time. You must do your own research before investing

By reading this email, you agree to the full disclaimer found here: https://www.thevaluethesis.com/p/disclamier

The quarter looked bad on paper, but most of the damage was intentional.

Management took a large one-time charge to deal with existing issues:

• Costs from the cyberattack

• Closing weaker parts of the business

• Cutting underperforming teams and contracts

They chose to deal with these problems now instead of letting them linger.

When you adjust for that, earnings were $2.11 per share, ahead of expectations. The business continued to generate strong cash. The headline numbers just didn’t show it.

Shrinking on Purpose

This is the part that really unsettled the market.

For the first time in years, UnitedHealth is planning to get smaller.

• 2025 revenue: about $448 billion

• 2026 guidance: about $440 billion

This is deliberate.

Management expects to lose:

• Around 1.3–1.4 million Medicare members

• Around 700,000 Medicaid members

These are members that were costing more than they were paying in.

Revenue goes down. Profitability improves.

Instead of chasing size, the company is focusing on margins and control. That usually looks uncomfortable at first.

The Government Question

The biggest unknown is still the government.

Medicare is expensive, and the US is trying to slow cost growth. The message from regulators is essentially:

“We’re not increasing payments. Become more efficient.”

If rates stay tight, insurers reduce extra benefits like dental, vision, and gym memberships. That affects real people.

UnitedHealth covers roughly 8.4 million seniors under Medicare.

Cutting benefits at that scale creates political pressure, especially going into an election year. The final decision hasn’t been made yet.

How AI Fits Into This

AI wasn’t mentioned as a buzzword. It was mentioned as a cost tool.

UnitedHealth plans to spend around $1.5 billion per year on AI, with the goal of saving roughly $1 billion per year starting in 2026.

Where that shows up:

• Call centres: AI helps staff find information faster

• Claims: more decisions handled automatically, with fewer manual steps

If revenue growth slows, lowering costs becomes the main lever. This is how they do that at scale.

Cash Tells a Different Story

While reported earnings were close to zero, cash flow was not.

UnitedHealth generated about $19.7 billion in operating cash flow over the year.

Earnings can be shaped by accounting choices. Cash reflects what the business actually produces.

Management plans to focus on paying down debt in early 2026. After that, they expect to restart share buybacks later in the year.

That matters more than short-term headlines.

Short-Term Issues vs. Long-Term Ones

It helps to separate what’s temporary from what really matters.

Short-term pressures:

• Higher medical usage

• Strong flu seasons

• Temporary cost spikes

These come and go, and are already factored into future pricing.

Long-term pressure:

• Government reimbursement levels

That’s the real debate. It may cap growth and force efficiency, but it doesn’t mean the business stops working.

Management described 2026 as a year to fix things, with expectations of returning to more normal growth in 2027 or 2028.

Looking Ahead: The Possible Paths

Everything from here depends on one thing:

The government’s final Medicare rate decision in April 2026.

From that point, the business likely follows one of three paths.

2026: A Year of Adjustment

This part is fairly clear, based on management guidance.

Revenue comes down slightly as unprofitable members are removed.
Costs improve.
Cash flow remains strong.
Buybacks return in the second half of the year.

Despite lower revenue, earnings still grow because margins improve.

Scenario A

Trigger:
The government raises Medicare Advantage rates to around +1.5% to avoid large benefit cuts for seniors.

Result:
UnitedHealth stops shrinking. Membership stabilises. Share buybacks accelerate in 2027.

Numbers:

• 2027 revenue: approximately $465 billion

• 2027 earnings per share: approximately $20.50

Stock implication:
At a normal valuation, the stock could recover to $430 or higher by 2027.

Scenario B

The government makes a small concession, around +0.5%.

Result:
UnitedHealth continues to shrink slightly for another year but protects margins through cost controls and AI efficiency.

Numbers:

• 2027 revenue: approximately $450 billion

• 2027 earnings per share: approximately $19.75, largely driven by buybacks

Stock implication:
The stock likely moves gradually higher into the $355–$375 range.

Scenario C

The government keeps rates near the original 0.09% proposal.

Result:
Benefits are reduced further, membership declines again, and revenue remains under pressure.

Protection:
Even in this case, UnitedHealth is expected to generate around $18 billion in annual cash flow.

Stock implication:
That level of cash generation should limit downside, with the stock likely trading in the $295–$315 range rather than breaking down.

Summary

The short-term outcome depends on regulation, not demand.

The downside is supported by strong cash generation. The upside depends on how quickly the government eases pressure on the system.

The market is currently focused on the worst-case outcome. The next 12–18 months will show which path becomes reality.

Disclaimer: This is not financial advice. Investing involves risk.

The Trade Desk as a marketplace where brands buy ads across the internet.

Old world: Ford wanted TV ads → call a network → negotiate → slow, inefficient.
New world: Ford’s agency logs into TTD, uploads the ad, picks the audience (“men 25–40 who like trucks”), and presses go.

Within milliseconds, TTD’s system bids on ad slots across:

• Connected TV (Disney+, Hulu, etc.)

• Spotify, podcasts

• Websites (NYT, ESPN, etc.)

What they don’t do: they don’t buy ads inside Google Search or Meta (Facebook/Instagram). Those are closed ecosystems where outsiders can’t bid freely.

They take a small fee on every ad dollar that flows through their platform.

The moat

Google both owns a lot of the ad inventory (like YouTube) and runs one of the tools used to buy ads. That’s like the referee also owning one of the teams. Even if they try to be fair, the incentives are messy.

TTD is different:

Disclaimer: This article is for informational purposes only. It is not financial advice. I am not a financial advisor. I may buy or sell these stocks at any time. You must do your own research before investing

By reading this email, you agree to the full disclaimer found here: https://www.thevaluethesis.com/p/disclamier

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As I write this, markets are taking the headlines badly.

But this is exactly when you pay attention. The best chances are rare. They don’t show up often. When they do, you need to be ready.

Charlie Munger said opportunities come to a prepared mind. That’s the point: you do the work early.

Investing is mostly study, not action. Most of the time, the right move is to do nothing.

Right now, many good companies still look expensive. The prices leave no room for mistakes. So I’m building my watchlist, deciding what I’m willing to pay, and then waiting.

In late 2025, I shared Watchlist #1.

Here are 5 more businesses I’m watching, and the prices I’m waiting for in 2026

What they all have in common:

1. High Switching Costs — once you’re in, it’s hard to leave. These businesses become part of how customers operate.

2. Disconnected Narratives — the story around them is worse than the reality. Headlines and sentiment are driving the price more than the actual business performance.

3. Real Free Cash Flow — they generate cash after paying for what the business needs. That gives them options: reinvest, buy back shares, or strengthen the balance sheet.

4. A Moat I Trust — I believe they have real protection around the business. Something that makes it hard for competitors to take customers and profits.

All five are currently hated or ignored for reasons that are likely temporary or exaggerated.

And because sentiment has already pushed them closer to what I think is fair value, I’m watching these names more closely than the rest, to see if the price drops to where I’d actually want to buy.

My prices might surprise you. But my job isn’t to be optimistic. It’s to avoid big mistakes. I want a price that gives me breathing room.

That’s what a margin of safety is.

Disclaimer: This article is for informational purposes only. It is not financial advice. I am not a financial advisor. I may buy or sell these stocks at any time. You must do your own research before investing

By reading this email, you agree to the full disclaimer found here: https://www.thevaluethesis.com/p/disclamier

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The economy is strong. Ireland has a high concentration of multinational activity in tech, pharma, medical devices, and aircraft leasing, supported by a young workforce and strong export growth. Employment levels are high, wages have grown, and net migration continues to add demand.

Housing supply remains tight.

Any decent rental listing is gone instantly. Same with buying. Supply is not keeping up, and everyone feels it.

That’s the backdrop for $IRES, the largest residential landlord / residential platform in Ireland, with 3,652 homes, mostly in Dublin.

Occupancy is basically full: 99.5%.

It’s a simple model: own apartments in the most supply-constrained part of the country and collect rent.

The business has

• 3,652 units (mostly Dublin)

• 99.5% occupancy

• 99%+ rent collection

• Average monthly rent around €1,823 across the portfolio

• Net rental income margin: 78% (up 150bps)

The stock is down from €1.73 at the 2022 peak to around €0.93 today, as we head into the end of December 2025.

1) Interest rates repriced property values

When rates rise, property yields expand, and values fall. IRES even shows that Dublin PRS yields expanded 115 bps since Dec 2021, implying roughly a 32% decline in capital values.

So even if rents stay strong, your asset value can get marked down.

2) Rent controls and regulatory uncertainty

Ireland’s rent control framework has been a big overhang. IRES directly says restrictive rent regulations disproportionately impacted valuations.

You can feel this on the ground too:

• Private landlords are leaving.

• Costs are up.

• And the market assumes rental regulation will remain restrictive.

What’s changed

Two things are starting to tilt the setup.

1) Rate cuts = less pressure on valuations

IRES notes that the ECB has already cut rates multiple times since peak inflation (they reference eight cuts between June 2024 and June 2025).

Lower rates help in two ways:

• cheaper funding over time

• less pressure on property yields / capital values

  

2) The regulatory tone is shifting

In June 2025, the government announced reforms aimed at more “clarity and certainty”.

And the big practical point is this: from 1 March 2026, rents can reset to market for new tenancies (in the situations covered).

That matters because IRES believes the portfolio is under-rented vs market, they show 19% reversion.

Rent gap math

IRES currently generates approximately €86.6m in annualised rent.

Management estimates around 19% rent reversion across the portfolio as rents reset to market levels over time. This implies a potential rent gap of roughly €19–20m once turnover and resets occur.

That gives:

• Current annual rent: €86.6m

• Estimated rent reversion: €19.9m

• Implied annual rent: €103–106m

Assuming no additional asset sales, this represents the rental income capacity of the existing portfolio.

Against the current equity market capitalisation of €488m, this implies a gross rental yield in the low-20% range, before operating costs, interest, or reinvestment.

The Investment Thesis

When inflation reached close to 9% and maintenance costs increased sharply, IRES could only increase rents by about 2%. In real terms, earnings declined.

I generally prefer businesses with pricing power against inflation and competition. IRES does not fully meet that criterion, it operates within a regulated framework.

That said, it owns real assets in established Dublin locations, maintains 99.5% occupancy, and generates predictable rental income. Demand for rental housing remains high, and supply remains limited.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. The views expressed here are my own and should not be taken as a recommendation to buy or sell any security. I do not currently hold a position in the stock mentioned in this report. Please conduct your own due diligence or consult a certified financial advisor before making any investment decisions.

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• Price/Book Ratio = 0.74x.

• P/E Ratio (TTM) = 7.5x

• 3.7% dividend yield.

Total assets sit at $345.7 million. While the bank slightly shrank overall, the loan book increased to $275.5 million, and deposits rose to $280.7 million. Crucially, they lowered their interest expense, meaning they paid less to fund the bank than they did last year. With total equity hitting $40.7 million, the book value is now $40.64 per share. Directors have over $27 million of their own cash sitting in the bank’s deposits.

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Gartner ticks all those boxes. a strong competitive advantage, excellent cash flow, and a price that offers a margin of safety.

Here is a look at how the business actually makes money, and why I think it is currently selling for less than it is worth

1. The Business Model: High Margins and Upfront Cash

Gartner sells research and advice to corporate executives.

• Operating Leverage: They produce intellectual property (reports and data). Once a report is written, the cost to sell it to one client or one million clients is the same. This allows for very high profit margins on every new subscriber.

• Recurring Revenue: Most of their revenue comes from multi-year subscriptions, making the business predictable and stable.

• Negative Working Capital: Clients pay their bills upfront at the start of the contract. This means Gartner collects the cash before they deliver the service, giving them a constant “float” of money to invest or return to shareholders.

  

2. The Competitive Advantage

Their primary product (the “Magic Quadrant”) has become the industry standard for rating technology vendors.

• For Buyers: Corporate executives rely on these ratings to justify billion-dollar spending decisions to their boards. It provides them with necessary independent verification.

• For Sellers: Technology companies effectively must subscribe to Gartner to understand how to be rated. If they are not rated, they risk being invisible to buyers. This creates a self-reinforcing loop that is very difficult for competitors to break.

Imagine you’re the head of technology at a big company, and you’re facing a high-stakes, $50 million decision on what new software to buy

• if you pick the wrong software, the company loses money, and your job is at risk.

• If you pick the right software, you just did your job.

So, what do you do? You pay Gartner a subscription fee to see their report cards (the famous “Magic Quadrant”).

If Gartner says a software is a leader, and you buy it, you are safe. Even if the software fails, you can tell your boss, “I bought what the experts recommended.”

That is why managers are happy to pay Gartner’s fee: It is a small price to pay for peace of mind.

It is essentially “Career Insurance” for executives.

In summary:

• It’s a Subscription: They collect money every year, recurring like a utility bill.

• It’s Highly Profitable: They write a report once and sell that same PDF to 15,000 different clients.

• Cash Upfront: Customers pay the bill at the start of the year (negative working capital).
  

3. Why Is It On Sale?

The stock is currently trading at a discount because of two market fears:

• Cyclical Headwinds: Gartner charges per user. As the tech sector has laid off employees recently, the number of paid subscriptions has temporarily dropped.

• Structural Fear (AI): Investors worry that Artificial Intelligence will replace the need for human analysts, destroying Gartner’s pricing power.

Disclaimer: The author holds a long position in Gartner (IT). This content is for informational purposes only and should not be considered professional financial advice. All investments involve risk.

4. Why I Think The Market Is Wrong

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Right now, that comparison is getting harder. The S&P 500 is trading around 25x forward earnings, well above its historical average. Great companies at a fair price are almost nowhere to be found.

When the market gets expensive, I continue to study companies and get my watchlist ready. I demand a high margin of safety, so these stocks might never reach my price. But if they do, I would consider adding them.

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But if you zoom in to October 2025, the chart tells a different story. The stock experienced a significant contraction, shedding nearly 40% of its value following a Q3 earnings call where the new leadership team reset expectations.

The market has effectively repriced Fiserv from a “Growth Compounder” to a “Distressed Utility.” This analysis explores the mechanical reasons behind this drop, the structure of the business, and the valuation metrics that currently define the stock.

1. The Business: Two Engines

According to recent 10-K filings, Fiserv’s ~$19–$20 billion in revenue is derived essentially from two distinct business models.

Segment A: Financial Solutions

• Approx. Revenue Split: 47%

• The Function: This segment acts as the operating system for financial institutions. Products like DNA, Premier, and Signature serve as the “Core Banking” platforms. When a consumer checks their balance or transfers funds, Fiserv’s software often manages the data.

• The Structural Dynamic: High switching costs. Migrating a bank’s core ledger is operationally complex, expensive, and risky for a bank. Consequently, client retention rates in this segment have historically hovered near 99%.

Segment B: Merchant Solutions

• Approx. Revenue Split: 53%

• The Function: This segment handles payment processing for businesses.

  • Small Business: The Clover point-of-sale system (hardware + software).

  • Enterprise: The Carat platform, which manages payments for large global merchants.

• The Structural Dynamic: Revenue is driven by transaction volume and software subscriptions. Distribution is heavily aided by bank partnerships (e.g., a bank offering Clover to its business clients), providing a distinct channel compared to digital-first competitors.

2. What Happened in October?

For several years, the market priced Fiserv based on expectations of consistent “double-digit” earnings growth. To achieve these targets, the company focused heavily on margin expansion.

In October 2025, the new CEO, Mike Lyons, provided a candid assessment of the company’s infrastructure. The core message was that maintaining long-term competitiveness requires significant immediate investment.

• The Pivot: Management announced a need to increase capital expenditures to modernize legacy banking platforms.

• The Consequence: This spending is expected to compress margins in the near term. The company labeled 2026 a “transition year,” leading investors to revise their earnings models downward.

3. The Valuation Data & Expected Return

The stock is currently priced as if growth will permanently stagnate.

Valuation Snapshot (Late 2025 Context)

• Current Stock Price: $63–$65

• Forward Earnings (2025 Guidance): $8.55/share (adjusted EPS)

• P/E Ratio: 9.5x (Historic Low)

  • S&P 500 Average: 24x

  • Visa/Mastercard: 30x+

  • Fiserv 5-Year Average: 17x

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Price-to-Earnings: 7.8×

If you are looking for the next tech rocket ship, this one isn’t for you.
Sirius XM is a mature, slow-moving monopoly on satellite radio

The thesis here isn’t about growth, it’s about capital return. You’re buying a business that generates more than a billion dollars in free cash flow every year and sends most of it back to shareholders through dividends and buybacks.

The Business

Sirius XM is really two businesses masked as one:

• The Satellite Business: This is the core. It puts radio in cars. It has high margins (59% gross margin ) and incredibly sticky customers (churn is only 1.6% ). Even though everyone has Spotify on their phone, 33 million people still pay for Sirius because it’s easy, curated, and integrated into the dashboard.

• Pandora & Off-Platform: This segment fights the brutal streaming wars against Spotify and Apple. It operates at much lower margins (31% gross margin ). The bright spot? While music streaming revenue is dipping, their Podcast business is booming, growing enough to actually pull total segment revenue up 1% this quarter.

Free Cash Flow

If you check the portfolios of top value investors, you will spot Sirius XM. I think the reason is the Free Cash Flow. Despite revenue declining slightly (-1% YoY), the company is exceptionally converting those revenues into free cash flow.

• Q3 Free Cash Flow: $257 Million.

• 2025 Guidance: They just raised it to $1.2 billion.

Because the satellite network is already built and the major costs are behind them, they don’t need heavy reinvestment to keep the service running. Most of the cash generated each quarter can flow straight through to shareholders instead of being recycled back into the business.

Dividends + Buybacks

The Dividend: At current prices, the stock yields about 5%.

The Buybacks: Second, share repurchases have resumed. After pausing during the Liberty Media split, they bought back about 860,000 shares in Q3 2025, totaling roughly $20 million

Even if the business shrinks 1% a year, as long as they reduce the share count by 4–5% a year, your personal slice of the profit actually gets bigger.

Risks

• The “CarPlay” Threat: While Sirius has a monopoly on satellite radio, they face “substantial competition” from tech giants (Amazon, Apple, Google). Every car with Apple CarPlay makes it easier to cancel Sirius for Spotify.

• Auto Sales Dependence: Sirius depends on new car sales to acquire subscribers. If the auto industry slows down—whether due to tariffs or broader economic issue, the number of people starting free trials will decline.

• Debt: They carry significant debt ($9.0B ), with a leverage ratio of 3.8x. In a high-rate environment, that debt gets more expensive to service.

• Satellite Risk: While CapEx is down, it isn’t zero. In the first nine months of 2025, they spent $186 million just on satellite construction. If a satellite fails (like SXM-7 did), it is a multi-year, capital-intensive problem to fix.

Bear Case

The bear argument rests on the view that the business is in a slow, irreversible decline due to technological shifts and changing consumer habits.

• Revenue: The financials confirm a slow contraction. Total revenue dropped 1% in Q3 2025 to $2.16 billion, and is down 2% year-to-date.

• Subscriber Loss: The core engine is losing paying customers. SiriusXM self-pay subscribers decreased by 40,000 in Q3 2025. Pandora is seeing steeper declines, with Monthly Active Users dropping 5% year-over-year to 41.6 million.

• Demographic & Tech Headwinds: The company explicitly acknowledges that “changing consumer behavior” and “new technologies” (like in-dash infotainment) are risks that could reduce subscribers. Substantial competition from streaming giants like Spotify, Apple Music, and YouTube, which offer free or low-cost alternatives that appeal to younger demographics.

Bull Case

The bull argument relies on the company’s exceptional ability to generate cash and return it to shareholders.

• Extremely Low Churn: Despite the competition, SiriusXM’s self-pay monthly churn remains remarkably low at 1.6%. This indicates a very “sticky” core customer base that is not easily defecting to streaming.

• Massive Free Cash Flow: The company is a cash generator. It produced $257 million in free cash flow in Q3 alone and raised its full-year 2025 guidance to approximately $1.225 billion.

• Capital Returns (Dividend + Buybacks): Management is using this cash to pay shareholders.

  • Dividends: They declared a dividend of $0.27 per share in Q3 2025.

  • Buybacks: After the Liberty Media transaction, repurchases resumed. In Q3 2025, the company bought back 860,448 shares for approximately $20 million.

Right now, shareholders are getting roughly a 6% annual return, mostly from the quarterly dividend of $0.27 per share and the buybacks that restarted in Q3, when the company retired about $20 million worth of stock.

Disclaimer: This article is for informational purposes only and does not constitute financial, investment, or legal advice. Analysis is based on public SEC filings and earnings reports; however, accuracy is not guaranteed and market conditions change. Investments involve significant risk, including the potential loss of principal. Always conduct your own due diligence and consult a qualified financial advisor before making investment decisions. The author holds no position in the securities mentioned.

The market tends to overreact to short-term changes, and by short term, I mean a few quarters that create uncertainty. So this kind of swing doesn’t surprise me.

My job is to separate noise from fundamentals to understand what really changed, what didn’t, and whether there’s value left beneath the panic.

The recent decline comes down to slowing growth in North America, cut guidance, and rising competition. The headlines sound bad. But when you look beyond them, the business still stands strong — both financially and operationally.

Do we really understand what’s happening here — and why the stock is down?

When I say a stock is down, I’m really talking about the market’s perception of the company’s value, not just a price move on a screen.

But what actually makes a company’s value decline? It happens when earnings power weakens, the balance sheet deteriorates, the long-term outlook becomes riskier, or when the brand starts to lose relevance, innovation slows, competition tightens, and the moat erodes.

You could expand that list further, macro shifts (rates, spending cycles), operational mistakes (poor execution, inventory build-up), or capital decisions (buybacks at the wrong time, over expansion). But the core idea stays the same: the value falls only when something real and lasting changes beneath the surface.

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So, do I see any of that here with Lululemon? Let’s look.

What I see is a premium global brand, with massive expansion potential in Europe and China, a strong balance sheet, cash in hand, and better margins than most of its peers — around 60% gross margins, a billion dollars in cash, and zero debt. The company is buying back shares, expanding internationally, and doing it profitably.

Then what’s the problem?

U.S. growth has slowed, consumers have become more selective, and management made a few mistakes: slower product refreshes, higher inventories, and some pricing missteps. The market punished those hard.

But those are fixable issues, not structural ones. The business underneath still looks strong.

A Split Story

If you’ve listened to the company’s recent earnings calls or gone through the filings, you’ll notice something interesting, it’s really two stories in one.

International growth is running in the mid-20s, while the Americas are soft. That’s the split. So the natural question is — why is the business growing strongly overseas but slowing at home? And why is that hitting the bottom line?

I’d say it’s a mix of things — tariffs, supply chain costs, inventory build-up, and a cut in guidance.

Each one on its own wouldn’t break the story, but together they’ve pressured margins and spooked investors who were expecting smoother execution.

The Americas are weak — consumers have turned cautious, and competition in premium activewear has intensified, especially as Nike and Adidas leaned heavily on discounts this year. Consumer sentiment has shifted too. The sense of newness just wasn’t there for Lululemon, traffic held up, but visitors didn’t quite feel the excitement of fresh products.

International markets are strong, China and Europe both delivered double-digit growth, expanding quickly in regions that are still far from saturation. The brand remains unknown to many potential future loyal customers, which makes this a genuinely exciting story, if it’s executed well.

That global diversification is exactly what gives Lululemon its resilience. When one region slows, others pick up the pace.

Think of Coca-Cola, Nike, or Apple, brands that travel effortlessly across borders, cultures, and lifestyles. There’s something special about that. Most products can’t even scale smoothly between U.S. states, let alone countries.

Lululemon has that rare potential, the ability to become a truly global lifestyle brand, not just a retailer. That’s a powerful advantage over time.

The company has now reached nearly 800 stores globally, with new openings supported by solid demand and strong unit economics. This is profitable growth, not expansion for the sake of expansion.

Even as the company grows rapidly internationally, its margins remain among the best in retail. Yes, they’ve dipped slightly because of tariffs and higher costs, but at around 58%, they’re still well above peers like Nike and Adidas.

That kind of margin strength says a lot, it means the brand still commands pricing power, and more importantly, it still has the trust and loyalty of its customers.

Is the Market Right to Value Lululemon at $20 Billion?

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Just picture this, all in one app:

• Payments & QR: $PYPL, $SQ, Apple Pay, Google Pay

• Banking & savings: Revolut, Chime, Monzo

• E-commerce marketplace: $AMZN, $SHOP, $EBAY

• Grocery & delivery: $DASH, $UBER, Instacart

• Travel: $BKNG, Expedia

• Classifieds & real estate: AutoTrader, $Z

• Advertising for merchants: $GOOG, $META

• SME lending & BNPL: $AFRM, Stripe Capital, $PYPL Credit

• Government & utilities: driver’s licence, tax payments, electricity, water — all inside the same app

Now imagine logging into one single app, one ID, one wallet where you can pay your bills, book a trip, advertise your store, buy groceries, or apply for a small business loan, all without leaving the platform.

Add AI on top of it.
It knows your full transaction history, spots fraud instantly, manages your cash flow, underwrites credit, and suggests better financial moves. It becomes your operating system for daily life.

That’s exactly what Kaspi ($KSPI) has already built in Kazakhstan, while most Western markets are still trying to stitch together a dozen different apps to do the same thing.

Investment Thesis

Kaspi’s biggest strength is its three-sided network effect, connecting consumers, merchants, and payments under one roof, with Kaspi Pay at the core.

The more people use the app, the more merchants join the marketplace.
As more merchants accept Kaspi Pay, the app becomes more useful for consumers.
Each side strengthens the other and that flywheel creates a strong moat.

Merchants can grow their business directly through Kaspi, take loans, advertise, and expand their reach. Consumers can shop, pay, and get instant financing. Every part of the ecosystem talks to each other, creating a level of integration that’s rare even by global standards.

I see limited downside here, backed by predictable earnings, strong free cash flow, and zero need for outside capital.
Even after the Hepsiburada $HEPS acquisition, Kaspi still sits on a net cash position.

At today’s valuation, you’re looking at a cash-rich, dominant platform trading at single-digit earnings multiples

Business Overview

Kaspi.kz runs two main apps:

• Kaspi Super App (Consumer) — used by millions daily for payments, shopping, travel, transport, and finance.

• Kaspi Pay (Merchant) — built for entrepreneurs and SMEs, offering QR payments, delivery, accounting, loans, and advertising.

Engagement is through the roof: on average, users make 75 transactions per month inside the app — that’s how deeply embedded it is in daily life.

Kaspi now owns 66.35% of Hepsiburada in Türkiye and is acquiring Rabobank A.Ş, which gives them a local banking licence. Türkiye is early-stage, but if they replicate even half of what they’ve done in Kazakhstan, it’s meaningful upside.

1H 2025: Solid Growth, Despite Headwinds

Headline results (excluding Türkiye):

• 2Q 2025 revenue: KZT 734B (+20% YoY)

• 2Q 2025 net income: KZT 276B (+14% YoY)

• 1H 2025 revenue: KZT 1.4T (+20% YoY)

• 1H 2025 net income: KZT 535B (+15% YoY)

Including Türkiye:

• 1H 2025 revenue: ≈ KZT 1.8T ($3.5B)

• 1H 2025 net income: ≈ KZT 513B ($987M)

By segment:

• Payments: TPV +21% YoY; revenue +16%; net income +19%.

• Marketplace: GMV +15%; revenue +25%; take rate 10%. e-Grocery up 57% YoY. Smartphones weaker due to IMEI registration law, but excluding smartphones, e-commerce GMV grew 31% YoY showing strong core demand.

• Fintech: TFV +17%; revenue +21%; net income +8%. Deposit rates rose 26% YoY

Capital Allocation & Türkiye

2025 is an investment-heavy year:

• The final $526.9M payment for Hepsiburada closed in July. ( $HEPS )

• The Rabobank A.Ş acquisition in Türkiye is expected to close in 2H 2025, with roughly $300M in capital deployed.

From 2026 onward, Kaspi plans to balance growth investments with capital returns, and I expect the company to start paying dividends to shareholders.

Valuation — Growth

Kaspi earned around $2.0B in 2024.
Assuming 15% net income growth, that puts:

• 2025E net income: $2.3B

• 2026E net income: $2.65B

• Shares outstanding: 190M

At a $15B market cap ($79/share):

• P/E 2025E: 6.5×

• P/E 2026E: 5.7×

• Net cash: $2B +

You’re paying mid-single-digit earnings multiples for a super app that’s still growing mid-teens, with a clean balance sheet.

On a free cash flow basis, adjusted for loan outflows, Kaspi’s core FCF is around $2.9B, which puts it at roughly 5× core FCF.

Even using conservative assumptions, growth slowing from mid-teens to high single digits by the end of the decade the stock looks deeply undervalued.

You’re basically paying value-stock multiples for a business with growth, durability, and compounding power.

Risks

I think the biggest risk here is geography. Kazakhstan sits close to Russia, and that proximity will always keep a small discount on the stock — it’s just part of investing in the region.

Regulation and deposit costs are the other two things to watch. The new 10% tax on government bond income and higher reserve requirements already shaved about 200 basis points off margins this year. Rising rates also pushed deposit costs up roughly 26% year over year. It’s not alarming, but it’s worth keeping an eye on if the rate environment stays elevated longer than expected.

As for competition, I’m not worried. If you look at Kaspi’s daily and monthly user data, they’re far ahead of Halyk Bank or anyone else in digital engagement.

The other area that needs time is execution in Türkiye. Hepsiburada is improving, but integrating the banking operations through Rabobank A.Ş will take work. It may weigh on margins in the short term, but the long-term opportunity looks meaningful.

Takeaway

Kaspi is one of the few true super apps in the world a fintech, marketplace, and bank, all rolled into one.

You’ve got:

• Proven management with a compounding mindset.

• A three-sided platform built around real user needs.

• Predictable earnings and strong free cash flow.

• A fortress balance sheet with net cash.

• Insider ownership and minimal stock-based comp.
  
  
  

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  Disclaimer

  The author of this analysis is a current shareholder in Kaspi.kz ($KSPI). The views and opinions expressed here are personal and for informational purposes only. This does not constitute financial or investment advice. All investment decisions should be made based on your own research and due diligence.

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• 2023: +33%

• 2024: +36%

• 2025 YTD (as of November 1): +32%

• Since 2023: +139% vs. S&P 500 +61%

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A Business Built for Efficiency

Molina runs managed-care health plans for people covered under government programs, mainly Medicaid and Medicare. It also participates in state insurance marketplaces under the Affordable Care Act.

Roughly three-quarters of its revenue comes from Medicaid, where the company works with state governments to deliver care for low-income families.
This business isn’t flashy, but it’s steady.
Molina’s moat lies in its deep operational expertise, understanding complex state rules, keeping administrative costs low, and running an efficient network while maintaining quality of care.

For years, that efficiency has been its competitive edge.

What Went Wrong This Year

After several strong years of growth, 2025 brought a sharp increase in healthcare costs.
People who delayed medical treatments during the pandemic returned for care, many of them sicker and requiring more expensive procedures. Specialty drug costs also rose sharply, while hospitals passed along higher wages and inflation-driven expenses.

All this hit Molina’s profitability at once.
The medical cost ratio, essentially the share of every premium dollar spent on care, rose above 91%, up from the company’s usual range of 88–90%.
That small change in percentage terms has a large impact on margins.

The ACA (Marketplace) business was hit hardest. Medical costs there rose faster than premiums, forcing Molina to cut its footprint in weaker markets and raise prices significantly to restore profitability.

Why It’s Likely Temporary

Healthcare inflation isn’t permanent.
State reimbursement rates are already being reset for 2026 with more current cost data. Molina is exiting the least profitable counties and repricing others. Medicaid, which drives most of earnings, remains solidly profitable.

As demand normalizes and state rate adjustments catch up, the pressure on margins should ease.
This isn’t a structural problem, it’s timing.

What Management Is Doing Right

Rather than chase growth, Molina is staying disciplined. It’s shrinking exposure in unprofitable ACA markets, raising premiums where necessary, and continuing share repurchases while the stock trades well below intrinsic value.

That’s a rational use of capital, buying more of a business that remains strong at a time when sentiment is weak.

The balance sheet is solid, giving management room to invest and stay patient.

Investment Thesis

Molina’s stock has fallen about 46% in 2025. The market seems to think the business is in trouble. I don’t completely disagree, but I believe the issue is temporary. To me, it looks more like the company is dealing with a short-term gap between rising medical costs and slower state rate adjustments.

This post reflects my own opinions and research. It is shared for educational purposes only and does not constitute investment advice. Investors should always conduct their own due diligence or consult a professional adviser before making decisions.

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