⁠Hidden Value Gems
I like this concept 👉 Forbes Cover Curve

h/t @yardeni https://t.co/Ll1ok7D3Bo
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⁠Hidden Value Gems
Curious what you think?

What is the probability that Trump rolls back tariffs within a month?
- Less than 25%
- 25-49%
- Over 75%
- 50-75%
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⁠Hidden Value Gems
Some interesting stock comments in the latest David Einhorn letter (besides Fartcoin).

New positions 🛒 $CNH $CNC $PTON
Increased 🛍️ $CPRI
Exits 🚮 $LIVN $ODP $THC Defence ETF (expecting RU-UKR war to end soon)

Theses on select names 👇

1/3
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⁠InsideArbitrage
Triumph Group $TGI to be Acquired by Warburg Pincus and Berkshire Partners for $3 Billion -
✈️Triumph shareholders will receive $26.00 per share in cash, representing a premium of 38.74% from the stock’s last close.
✈️The deal is expected to close in the second half of 2025.
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⁠Dimitry Nakhla | Babylon Capital®
Insights from a Hedge Fund Legend 🪨

Mark Massey, founder of AtlaRock Partners, boasts an impressive track record, with CAGR of >20% since 2016 📈

When asked about the most critical investment mistakes and how to avoid them, Massey shared his expert advice👇🏽 https://t.co/OZKamI0hFO
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⁠Startup Archive
Baiju Bhatt on raising Robinhood’s seed round and being rejected over 70 investors

Baiju Bhatt and Vlad Tenev were five years into their entrepreneurial journey when they came up with the idea for Robinhood.

As Baiju puts it:

“We had been entrepreneurs for the better part of five years and didn’t have a whole lot to show for it.”

And when they tried raising seed funding for it, they were rejected by somewhere between 70 and 110 investors.

These investors told the founders all the reasons Robinhood would fail — “no one wants to trade stocks from their phones,” “you didn’t know how to build consumer products,” “there’s a ton of other brokerage products out there people can use.”

Baiju reflects on this experience:

“There were a lot of no’s and it was very difficult back then. But over time I learned to channel it and use it as positive motivation.”

Then Baiju and Vlad finally caught a break when prominent venture capitalist Tim Draper decided to take a chance on them. Initially however, Draper said no because he didn’t think they’d be able to secure a broker-dealer license and the founders were paying themselves ~$70k salaries:

“Great idea, but it’s never going to happen, and you guys are paying yourselves too much,” he said.

The founders left the meeting confused — they could barely make rent and pay back their student loans with what they were paying themselves. But then they got an idea:

“We’ll tell him that we’re not going to pay ourselves until we get this approval.”

Draper said yes, and the Robinhood founders got to work on building a company that is today worth almost $50 billion.

Video source: @ThePeelPod @TurnerNovak (2025)
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⁠Dimitry Nakhla | Babylon Capital®
A quality valuation analysis on $PYPL 🧘🏽‍♂️

•NTM P/E Ratio: 18.75x
•All-Time Mean: 29.34x

•NTM FCF Yield: 7.31%
•All-Time Mean: 5.12%

As you can see, $PYPL appears to be trading below fair value

Going forward, investors can receive ~56% MORE in earnings per share & ~42% MORE in FCF per share 🧠***

Before we get into valuation, let’s take a look at why $PYPL is a good business

BALANCE SHEET✅
•Cash & Short-Term Inv: $11.92B
•Long-Term Debt: $9.98B

$PYPL has an excellent balance sheet, an A- S&P Credit Rating, & 20x FFO Interest Coverage

RETURN ON CAPITAL✅
•2019: 12.4%
•2020: 11.5%
•2021: 13.6%
•2022: 12.7%
•2023: 14.8%
•LTM: 16.6%

RETURN ON EQUITY✅
•2019: 15.2%
•2020: 22.7%
•2021: 20.0%
•2022: 11.5%
•2023: 20.5%
•LTM: 22.2%

$PYPL has strong return metrics, highlighting the financial efficiency of the business

REVENUES✅
•2019: $17.77B
•2024E: $31.71B
•CAGR: 12.27%

FREE CASH FLOW❌*
•2019: $3.86B
•2024E: $6.09B
•Decrease: 9.37%

NORMALIZED EPS✅
•2019: $3.10
•2024E: $4.59
•CAGR: 8.16%

SHARE BUYBACKS✅
•2018 Shares Outstanding: 1.20B
•LTM Shares Outstanding: 1.06B

By reducing its shares outstanding by 11.6%, $PYPL increased its EPS by 13.1% (assuming 0 growth)

MARGINS✅
•LTM Gross Margins: 40.1%
•LTM Operating Margins: 17.7%
•LTM Net Income Margins: 14.1%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~56% MORE in EPS & ~42% MORE in FCF per share

Using Benjamin Graham’s 2G rule of thumb, $PYPL has to grow earnings at a 9.38% CAGR over the next several years to justify its valuation

Today, analysts anticipate 2025 - 2027 EPS growth over the next few years to be greater than the (9.38%) required growth rate:

2024E: $4.59 (-10.1% YoY) *FY Dec

2025E: $4.90 (6.9% YoY)
2026E: $5.47 (11.7% YoY)
2027E: $6.35 (16.0% YoY)

$PYPL has an ok track record of meeting analyst estimates ~2 years out, but let’s assume $PYPL ends 2027 with $6.35 in EPS & see its CAGR potential assuming different multiples

21x P/E: $133.35💵 … ~15.8% CAGR

20x P/E: $127.00💵 … ~13.9% CAGR

19x P/E: $120.65💵 … ~11.9% CAGR

18x P/E: $114.30💵 … ~9.8% CAGR

As you can see, $PYPL appears to have attractive return potential if we assume >19x earnings & aggressive return potential if we assume >20x earnings

The 🔑 isn't a mean reversion in $PYPL's multiple, but a modest increase (still below its historical average) - a reasonable and safe assumption

Everyone wanted $PYPL when it traded 50x earnings, not many wanted it when it traded for 12x earnings ☯️

There’s STILL negative sentiment around $PYPL and this sentiment is already being changed as management continues to make good progress

Today at $87💵 $PYPL still appears to be a good consideration for investment (albeit, with some turnaround / competitive risks & a smaller margin of safety)
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𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.

𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.

𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭[...]

𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬 𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲.
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