Telltales

by Top Mark Capital
  • 5.0 (6)
  • Investing
  • Updated Semiweekly

An investing podcast + substack for people who want to compound their wealth over the long run and don't mind sailing analogies telltales.substack.com

  1. 2d ago

    Weekend Update - W2637

    ▶ Explore this week’s Tape — live, sortable, drill-down → The Biggest AI Builder Just Chose Dilution Four weeks ago the argument in this column was that the AI buildout had turned into a credit trade — that what prices the complex from here is whether somebody else’s lender says yes. Oracle answered the question this week, in a filing, and the answer was not a lender. It was the shareholders. Start with the numbers everybody quoted. Oracle earned a record twenty-three billion dollars of operating cash in the quarter and spent twenty-eight and a half billion on capital expenditures, per the 10-Q filed Thursday¹². Free cash flow, in Oracle’s own release, negative five billion³. A record cash quarter that did not cover its own construction. Now the line that ran in the same statement of cash flows and made no headlines. Oracle sold roughly twenty billion dollars of stock through an at-the-market program during those same three months⁴. Four times the gap. That ratio is the story, because it separates two completely different acts. Covering a five-billion-dollar shortfall with five billion of equity is housekeeping. Raising twenty against it is a decision about the quarters that have not happened yet — get the money in the door now, on these terms, before the terms move. Management then put a sentence in the release confirming that, given how the new contracts are structured, there is no incremental impact on its plans to raise capital⁵. Translation: there are plans to raise capital, and we would like everyone to have finished absorbing that before anybody asks it as a question. The more interesting thing is the door Oracle did not use. The Cash Flow Memo already carries a hundred twenty-six billion dollars of net debt on this name⁶. You do not sell twenty billion dollars of your own stock into the best operating quarter in company history if long paper is cheap to you. Equity is the expensive money in every textbook and the patient money in every build — it cannot be called, it cannot be repriced, and it is indifferent to how long the conversion takes. Oracle bought the instrument that survives a slow cycle instead of the one that is cheaper in a fast one. That is a statement about duration, and it is being paid for in share count. Which changes how the backlog reads. Six hundred sixty-four billion dollars of remaining performance obligations, up two hundred nine billion year over year⁷, against a full-year guide of at least ninety billion of revenue⁸ — the order book runs past seven years of sales at the pace the company is underwriting this year. Fewer as the pace rises, but the shape holds. A backlog that long is not only a revenue promise. It is a capital expenditure commitment. Seven years of contracted compute has to be bought before any of it can be collected, and the buying leads the collecting by years. The funding line, not the bookings line, is what decides how this ends. The cashflow read is in Marcus’s column below — short version, the leaderboard is scoring cash and expectation as though they were the same asset. Every forward-sold infrastructure cycle has broken on this question, and it has never been demand. Long-haul fiber in 1999 sold capacity years ahead of delivery, booked the contracts, and financed the trenching in the capital markets. The backlog was real. The capacity got built. What failed was the assumption that money stays available at one price for the length of a build. Oracle starts somewhere materially better — a profitable software business with real earnings sitting underneath the construction — but the dependency is identical, and it is now on public display in a single filing. What changes the read. The tell on the next print is the funding line, not the revenue line. Bridge the following gap with more equity and this read holds: management is buying duration and paying in dilution, and every per-share figure Oracle guides to — the eight-dollar-ten non-GAAP EPS number included⁹ — sits on a denominator that is deliberately moving. Bridge it with debt against the hundred twenty-six billion already there¹⁰ and the arithmetic on the whole backlog changes, and the credit trade comes back on. The second thing to watch is conversion: eight hundred fifty megawatts of capacity delivered in the quarter, more than three hundred thousand GPUs since the end of May¹¹¹². Contracted revenue turns into cash at the rate the megawatts arrive. If the order book keeps climbing while the megawatts flatten, the spread between sold and deliverable is exactly where these cycles have always come apart. Wall Street’s consensus on the AI build: the binding constraint is silicon. Oracle sold twenty billion dollars of its own stock this quarter to say the binding constraint is capital, and it is the only one of these companies that filed the receipt. The Tape — W2637 Universe of 94 cashflow-memo names, snap dates 2026-09-04 → 2026-09-11. Composite is rank-sum percentile of FCF Yield + NTM Revenue Growth (higher = better balance). Banks and finance-book names shown separately. Telltales Yield — Top 10 From the Cashflow Desk — Marcus Graham The composite is flattening two different assets into one score this week. Most of the top ten earn their rank on cash yield — energy names and a couple of mature software businesses throwing off mid-to-high single digits. Nvidia earns its rank on growth alone: 68.2% NTM revenue against a 2.4% FCF yield, the only name in the top ten above 40x EV/FCF. Rank-sum scores them the same. They do not break the same way. The cash names break on a commodity price, which prints weekly. Nvidia breaks on an expectation, which does not print at all. And the DOJ inquiry into how the Groq license was structured is a question about deal structure, not about demand — worth separating before either gets read as a signal on the other. The test is whether the next print holds the growth the tape is already carrying. Telltales Yield — Bottom 10 This Week’s Reporters Sector Medians Debt / FCF Watch (highest leverage on TTM FCF) Weekly Price Movement Top 5 (week-over-week price) Bottom 5 (week-over-week price) Banks (shown separately — FCF metric not meaningful) Finance-book — FCF not comparable Customer-float / captive-finance / reserve businesses (IBKR broker float, KMX CarMax Auto Finance, PYPL customer funds, CRCL stablecoin reserves). The memo’s operating-FCF method overstates their FCF, so they are held off the ranked leaderboard pending the P&L-waterfall rebuild. Data Gaps 91 of 92 ranked-eligible names ranked. 1 dropped for missing FCF yield or NTM revenue growth; 7 shown separately (banks + finance-book, FCF not comparable). Source: cashflow-memo master_2026-09-11.csv. NTM growth from analyst-estimates consensus. Composite is a percentile rank, not a recommendation. The Issue — This Week's Brief The Cashflow Memo Oracle’s Record Cash Quarter Didn’t Cover Its Own Build Oracle earned a record $23 billion of cash this quarter, spent $28.5 billion, and raised guidance anyway. The companies actually generating cash spent the week getting sued. The Telltales Weekend Update. Ava Cabot and analyst Marcus Graham walk through what happened this week — and what’s coming next — across the 86 companies in the Cash Flow Memo. About 14 minutes. No filler. Download the memo at telltales.us. Hunt, Jason, and Mike are back Wednesday on episode E2638. Chapter markers * Time | Segment * 0:00 | Cold open * 0:45 | Theme — Healthcare’s two halves * 4:45 | Deep dive — Oracle * 8:45 | Rapid-fire * 11:45 | Close * 12:40 | Closing disclaimer Full transcript Cold open Ava: Oracle earned a record $23 billion of cash in a single quarter this week[^news-orcl-ocf-20260911]. It spent $28.5 billion in the same three months[^news-orcl-capex-20260911]. And then it raised the full-year revenue guide[^news-orcl-fy27guide-20260910]. That is the week in three numbers. The AI build is now big enough that a record cash quarter doesn’t cover it. Meanwhile four healthcare names in the Cash Flow Memo spent the week getting sued by hospitals, staring down a September 30 deadline in New York, and buying pipelines they can’t price yet. Nobody applauded any of that. Ava: Telltales Weekend Update. I’m Ava Cabot, with Marcus Graham at the cashflow desk. Theme — Healthcare’s two halves Ava: Healthcare split clean down the middle this week, and the two halves did opposite things with money. One half went shopping. The other half went to war with its own providers. Ava: Start with Vertex, because it did the biggest thing. Vertex closed the largest acquisition in the company’s history — Crinetics Pharmaceuticals, $8.8 billion, done on September 5[^news-vrtx-crinetics-20260905]. Three days later it published data on zimislecel, an islet cell therapy that restored patients’ own insulin secretion in Type 1 diabetes in the Phase 1/2 FORWARD trial[^news-vrtx-zimislecel-20260908]. Restored their own insulin production. Goldman put the stock on its Conviction List the day after that, with a $653 price target[^news-vrtx-gs-20260909]. Ava: On page 19, Eli Lilly closed one too. AtaiBeckley, $6.75 a share, roughly $2.8 billion, mental-health therapies, Nasdaq delisting initiated immediately[^news-lly-atai-20260911]. And the more interesting Lilly development came out of a competitor’s failure — Novartis missed on its lipoprotein-A cholesterol program, which raises the stakes on the competing shots Lilly and Amgen have at that same market[^news-lly-lpa-20260908]. Marcus — is the memo paying for any of this yet? Marcus: Both of these companies are buying revenue that doesn’t exist yet, and the memo is already paying full price for it. The memo has Vertex at 33x free cash flow, on $4 billion of it[^memo-vrtx-evfcf-20260911][^memo-vrtx-fcf-20260911]. Lilly’s at 50x[^memo-lly-evfcf-20260911]. Those aren’t cheap number

  2. 6d ago

    $500,000 vs. $50,000: Montana's Cancer Treatment Loophole

    Hunt, Mike, and Jason walk the Cash Flow Memo across an escalating Iran-US oil standoff, the widening federal deficit, a wave of new AI agent products from xAI and Meta, and a Montana law reshaping the economics of cancer immunotherapy. The Cashflow Memo Key Takeaways * Iran-US tensions escalated in the Persian Gulf (US Navy sinking Iranian shadow fleet tankers after a failed missile strike on the USS Abraham Lincoln) and pushed Brent over $100 intraday, but Hunt reads the ~$20 12-month backwardation as the market pricing de-escalation and holds his call that oil isn’t sustainable much above $90. * The $2 trillion US deficit and the $15 trillion US repo market (matched by ~$15 trillion in Europe) are the macro risk to watch: Hunt wants a credible 24-month path from Treasury Secretary Bessent to cut the deficit to $1 trillion or expects repo-market stress reminiscent of 2008’s Bear Stearns/JPMorgan rescue; Jason sees no political will to act absent a crisis. * Grokbot (xAI) is emerging as the household/enterprise AI-agent leader on $20-$300/month subscription tiers, with Meta building a comparable agent monetized through frictionless in-app purchases (e.g. Instagram) rather than subscriptions; Mike frames AI as a sustaining innovation for Microsoft’s knowledge-work franchise, while Jason argues Apple risks just selling screens if it doesn’t ship an equivalent iOS agent. * Montana’s expanded right to try law is opening a roughly $50,000 cash-pay alternative to Moderna’s roughly $500,000 personalized mRNA cancer immunotherapy, riding now-cheap DNA sequencing and AI-driven mutation targeting; Mike and Jason see no patent-infringement exposure since the underlying science is federally funded and public, and flag insurance reimbursement — not the FDA pathway — as the real gate on Moderna’s pricing power. * China’s share of global pharma licensing deals jumped to 42% in H1 2026 (from ~20% in 2023, near zero before that), with a Chinese-developed bispecific antibody now showing head-to-head superiority over Merck’s Keytruda on the PD-1 pathway; Jason and Mike flag drug development running 3x faster and 30-50% cheaper in China as a structural threat to US/Europe biotech economics. Show Notes [00:00:27] Oil: Why $90 Still Holds Iran’s failed missile strike on the USS Abraham Lincoln and the US Navy’s response — sinking Iran’s shadow fleet tankers — pushed Brent over $100 intraday, but Hunt reads the ~$20 12-month backwardation as the market betting this de-escalates rather than a new sustained regime. [00:04:27] Gas: Riding the Permian’s Coattails Higher oil prices mean more Permian drilling and more associated gas supply, a headwind Hunt is weighing against otherwise supportive gas fundamentals. [00:04:47] Deficit: A $15 Trillion Repo Market Under Strain The $2 trillion federal deficit and a $15 trillion US repo market (matched by roughly $15 trillion in Europe) are where Hunt expects the next crack to show, unless Treasury Secretary Bessent delivers a credible 24-month path to cut the deficit in half; Jason doubts the political will exists absent a crisis. [00:08:47] A New Framework: Two Years Back, Three Years Forward Hunt introduces his personal method for underwriting a five-year plan — two years of real backward-looking analysis plus three years forward — starting with SpaceX’s capital-intensive, data-center-driven growth, and previews Amazon/Google-style capital spenders against Apple/Nvidia-style cash generators. [00:11:23] Agents: Grokbot Goes Mainstream xAI’s Grokbot is already automating Mike’s household admin (registering appliances, renewing car registration, booking hotels) on $20-to-$300-a-month tiers, with Meta building a comparable agent monetized through frictionless in-app purchases rather than subscriptions. [00:17:50] Microsoft and Apple: Sustaining Innovation vs. Just Selling Screens Mike argues AI is a sustaining innovation for Microsoft’s knowledge-work franchise if it ships a good enterprise agent; Jason warns Apple risks becoming a screen-seller if it doesn’t integrate an equivalent agent into iOS, even after Apple’s same-day Apple Intelligence event. [00:21:02] Montana: A $50,000 Alternative to a $500,000 Cancer Treatment Montana’s expanded right to try law lets clinics offer personalized mRNA cancer immunotherapy for roughly $50,000, versus Moderna’s roughly $500,000 approved treatment, using now-cheap DNA sequencing and AI-driven mutation targeting; Mike and Jason see no patent issue since the underlying science is public and federally funded, with insurance reimbursement the real constraint on Moderna’s pricing. [00:28:14] China’s Pharma Surge China’s share of global pharma licensing deals hit 42% in H1 2026 (up from ~20% in 2023 and near zero before that), including a Chinese-developed antibody now beating Merck’s Keytruda head-to-head, as China develops drugs roughly 3x faster and 30-50% cheaper than the US and Europe. Download this week’s Cash Flow Memo at telltales.us and join us next Wednesday for more on Nvidia’s frontier-model ambitions and China’s pharma push. Cashtags $AAPL $AMZN $GOOGL $JPM $META $MRK $MRNA $MSFT $NVDA This post and the information herein are intended for informational purposes only. The views expressed herein are the author’s alone and do not constitute an offer to sell, or a recommendation to purchase, or a solicitation of an offer to buy, any security, nor a recommendation for any investment product or service. While certain information contained herein has been obtained from sources believed to be reliable, neither the author nor any of his employers or their affiliates have independently verified this information, and its accuracy and completeness cannot be guaranteed. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, timeliness or completeness of this information. The author and all employers and their affiliated persons assume no liability for this information and no obligation to update the information or analysis contained herein in the future. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit telltales.substack.com

    $500,000 vs. $50,000: Montana's Cancer Treatment Loophole

  3. Sep 6

    Weekend Update - W2636

    ▶ Explore this week’s Tape — live, sortable, drill-down → ONEOK Bought a Ratio ONEOK announced a four-point-four-billion-dollar acquisition last weekend and raised nine billion dollars to pay for it. The gap between those two numbers is the story, and it is not what the headlines carried. Four-point-four billion buys Brazos Midstream’s Permian gathering and processing assets. Five billion retires debt¹. Page ten of the Cash Flow Memo carries ONEOK at about thirty-three billion dollars of net debt², so five billion is a real dent. The interesting part is which five billion, and what replaced it. Start with what Apollo actually bought, because nine-billion-dollar minority equity investment conceals more than it reports. Apollo gets a Class B interest in a newly formed holding company, ONEOK Holdings, L.L.C. It is nonvoting. No board seat, no liquidation preference, structurally subordinate to every existing ONEOK bond. It is entitled to fifteen percent of the operating company’s quarterly cash flow, and its total return is capped at a seven percent internal rate of return for the first nine years. ONEOK can buy the whole thing back beginning on the eighth anniversary of closing, at that same capped return³. Apollo took a bond’s return while standing in an equity’s place in the stack. Now what ONEOK bought. One sentence in the release explains the other twelve: the investment has been reviewed with ONEOK’s credit rating agencies, all of which consider the transaction as credit-enhancing, and ONEOK expects to receive full equity credit⁴. Every concession in the paragraph above is priced to earn that clause. This instrument was assembled by people who knew precisely which boxes a rating methodology checks. Pro forma 2027 leverage lands near three and a quarter times debt to EBITDA, and not one common share was issued⁵. Apollo, in the same release, called it flexible, high-grade capital solutions at scale, structured around ONEOK’s long-term strategic objectives. Translation: we found the boxes and built something that ticks all of them. Then the tender offer, filed the same day and buried under the acquisition headline. ONEOK is offering to repurchase up to two billion dollars of its own notes across twenty series, and the acceptance priority order tells you what it wants back. Level one is the three-point-nine-five percent notes due 2050. Level two, four-point-two percent due 2047. The list runs long-dated and low-coupon at the top, and the company adds, in a parenthetical, that most of the targeted notes currently trade below par⁶ — below face value, because those coupons sit under what the market charges today. So ONEOK is retiring some of the lowest cash coupons on its balance sheet and funding the gap with money that costs seven percent. The cash cost of the capital went up. The ratio the agencies quote went down. Both by design. None of that makes it a bad trade. Seven percent capped is genuinely cheaper than ONEOK’s cost of common equity, every dollar of value above the cap accrues to the shareholders already there, the capital account amortizes as distributions run past the cap, and the call option hands the whole claim back inside a decade. Against issuing stock or thirty-year paper at today’s yields, it is the cheapest of the three doors. It is a well-built instrument. What it is not is a reduction in the claims on ONEOK’s cash. The leverage did not leave the company. It moved to a line the leverage ratio does not read. Midstream has built this shape before, and ONEOK has built it twice. On June 30, 2017, the company acquired every ONEOK Partners unit it did not already own⁷, collapsing a structurally separate claim on the same operating cash flow back into the common, because by then that claim had become the expensive way to fund a build. Nine years later there is a new structurally separate claim on the same operating cash flow, with the buy-back written into the document on day one. Call that a cycle rather than a criticism. Funding structures get cleverest at exactly the point where assets are dearest and internal cash flow is furthest from covering the plan. Oracle reports Thursday running the same trade with none of the engineering. The cashflow read is in Marcus’s column below; short version, the cash line on that page is the least useful number on it. What changes the read. The near test has a clock on it. The early tender deadline is 5 p.m. New York time on September 14, with the offers expiring September 29⁸. Watch how much of the two-billion-dollar cap fills and where those 2050s clear. Fill it at a discount and the five-billion extinguishment is cheap and quick. Fall short and ONEOK finishes the job through make-whole calls, which is the expensive door. After that: Hart-Scott-Rodino clearance and a fourth-quarter close on Brazos, then the first print carrying a noncontrolling-interest line where none existed. The read breaks if the agencies deliver anything less than the full equity credit the company says it expects. Every number in this structure is priced off that one word. Wall Street’s consensus on ONEOK: a balance-sheet repair with a growth acquisition attached, and Wells Fargo took its target to a hundred and six dollars on the EBITDA outlook⁹. The Brazos EBITDA is real, bought at roughly seven and a half times the assets’ estimated 2027 number, with fourteen rigs running on the acreage¹⁰. The deleveraging is a ratio. The Tape — W2636 Universe of 94 cashflow-memo names, snap dates 2026-09-02 → 2026-09-04. Composite is rank-sum percentile of FCF Yield + NTM Revenue Growth (higher = better balance). Banks and finance-book names shown separately. Telltales Yield — Top 10 From the Cashflow Desk — Marcus Graham Oracle is the only name in this universe reporting before the next issue, and the leaderboard cannot price it, because the cash leg is negative by construction. Capex ran $55.7B TTM against $67.4B of revenue. Eighty-three cents of every revenue dollar, into the build. That is the cost of the build, not the flag the screens read it as, and no multiple belongs on a denominator management is deliberately spending through. What prices Oracle right now is conversion, and 45.6% NTM revenue growth is the market underwriting a backlog it has not yet seen turn into cash. Reading the negative cash line as deterioration is the screen standing in for the work. The test on the September 10 print is whether the capex guide steps up again alongside the revenue guide, or capex flattens while revenue accelerates. Only the second one shortens the payback. Telltales Yield — Bottom 10 This Week’s Reporters Sector Medians Debt / FCF Watch (highest leverage on TTM FCF) Weekly Price Movement Top 5 (week-over-week price) Bottom 5 (week-over-week price) Banks (shown separately — FCF metric not meaningful) Finance-book — FCF not comparable Customer-float / captive-finance / reserve businesses (IBKR broker float, KMX CarMax Auto Finance, PYPL customer funds, CRCL stablecoin reserves). The memo’s operating-FCF method overstates their FCF, so they are held off the ranked leaderboard pending the P&L-waterfall rebuild. Data Gaps 91 of 92 ranked-eligible names ranked. 1 dropped for missing FCF yield or NTM revenue growth; 7 shown separately (banks + finance-book, FCF not comparable). Source: cashflow-memo master_2026-09-04.csv. NTM growth from analyst-estimates consensus. Composite is a percentile rank, not a recommendation. The Issue — This Week's Brief The Cashflow Memo A Quiet Earnings Week Is When You Find Out What Management Believes Three new CEOs, four energy checks, and two guides the market read in opposite directions The Telltales Weekend Update. Ava Cabot and analyst Marcus Graham walk through what happened this week — and what’s coming next — across the 86 companies in the Cash Flow Memo. About 13 minutes. No filler. Download the memo at telltales.us. Mike, Jason, and Hunt are back Wednesday on episode E2637. Chapter markers * Time | Segment * 0:00 | Cold open * 0:45 | Theme — Energy writes the checks * 4:45 | Deep dive — Broadcom vs. Snowflake * 8:45 | Rapid-fire * 11:45 | Close * 12:40 | Disclaimer Full transcript Cold open Ava: A quiet earnings week is when you find out what management actually believes. Only three companies in the Cash Flow Memo report over the next two weeks[^earn-orcl][^earn-len][^earn-fdx]. So this week didn’t hand us prints. It handed us decisions. Apple replaced Tim Cook[^news-aapl-ceo-20260901]. Albemarle went outside the company for its next chief executive[^news-alb-ceo-20260903]. Four energy companies committed serious capital, including a merger that would create the largest regulated electric utility in the country[^news-nee-merger-20260904]. And two enterprise software names reported on the very same Wednesday and got read in completely opposite directions. Nobody had to guess what these managements think this week. They showed you. Ava: Telltales Weekend Update. I’m Ava Cabot, with Marcus Graham at the cashflow desk. Theme — Energy writes the checks Ava: Start with the loudest thing that happened in a quiet week. Four energy companies, across four completely different parts of the business, all committed capital inside seven days. Power, upstream, midstream, and LNG. Nobody was reporting. Everybody was spending. Ava: NextEra first. Shareholders on both sides approved the $66.8 billion all-stock merger with Dominion Energy — a deal that would create the largest regulated electric utility in the United States[^news-nee-merger-20260904]. And in the same week, NextEra Energy Resources committed to a $13 billion natural gas complex in Fayette County, Pennsylvania[^news-nee-gasplant-20260901]. Marcus, the cashflow take. Marcus: Notice what NextEra is paying with. It’s an all-stock merger[^news-nee-merger-20260904] — they’re issuing paper, not writing a check, and t

  4. Sep 2

    Moderna Only Owns Half of Its Own Cancer Vaccine

    Hunt, Mike, and Jason walk the Cash Flow Memo across energy, the federal balance sheet, and healthcare, joined by Montana in San Diego for a deep session on cancer vaccines and how immunotherapy actually works. Nvidia’s quarter and the robotaxi launches close the show. The Cashflow Memo Key Takeaways * The hydrocarbon squeeze has moved from crude to products: with Hormuz closed and Ukrainian drones hitting Russian refineries, the crack spread on No. 2 oil (diesel and heating oil) is running about $80 against a normal all-product spread of $20 to $25. * Natural gas is pinned near $3.50 for both 2026 and 2027 because supply, not demand, is the problem (supply goes 100 to 118 Bcf/d from 2022 to 2027 against demand of 100 to 117), and since most of that growth is Permian associated gas priced off crude, Hunt would hold existing gas positions but add exposure through an oil stock instead. * With the deficit estimated at $1.55 trillion this fiscal year and interest, roughly $1 trillion of defense, and $1.65 trillion of statutory Social Security effectively untouchable, Hunt expects the Fed to follow through on Jackson Hole by running the ~$6 trillion balance sheet down rather than raising Fed funds, which pushes the 10-year above its current ~4.70%. * BioNTech ended a phase 2 colorectal cancer vaccine program that showed no benefit over monitoring after surgical resection, which alongside Moderna and Merck’s phase 3 progress narrows the thesis: cancer vaccines appear to work only in immunotherapy-sensitive tumors and only paired with a checkpoint inhibitor such as Keytruda, where Moderna splits economics 50/50 with Merck under a pre-COVID deal. * Nvidia guided to roughly 70% year-over-year growth that management said would have been a doubling absent memory and TSMC capacity constraints, and at $186 billion of run-rate free cash flow it now sits $50 billion ahead of Apple on $360 billion of run-rate revenue versus Apple’s $470 billion, though the hosts expect it to finish third in self-driving behind Tesla and Waymo. Show Notes [00:00:19] This Week’s Memo Mike sets the format: 30 minutes across energy, technology, and healthcare, built on the 20-page Cash Flow Memo. [00:00:47] Exhibit C: Oil, Iran, and the Product Squeeze Iran remains a stalemate, and the energy secretary’s claim that 10 million barrels a day are getting through does not match what tanker trackers see. The constraint is products, not crude, with the crack spread on No. 2 oil near $80 against a normal $20 to $25 all-product spread. [00:02:37] Exhibit B: Gas Pinned at $3.50 Through 2027 Demand growth is fine at 100 to 117 Bcf/d from 2022 to 2027, but supply runs 100 to 118 and most of the growth is Permian associated gas priced off crude. Hunt would hold gas positions and add through oil. [00:05:10] Exhibit A: Jackson Hole and the Balance Sheet Inflation is running 3.5% against a 2% target. Hunt’s read is that the Fed tightens by running the roughly $6 trillion balance sheet down rather than raising Fed funds, which lifts the 10-year from its current 4.70%. [00:08:21] Where the Deficit Fight Actually Lands Interest is fixed, defense is just under $1 trillion and rising, and Social Security at $1.65 trillion is written into law. That leaves Medicare and Medicaid, which is why healthcare policy and healthcare investing keep converging. [00:09:10] Page 15: Setting Up the Cancer Vaccine Question Pfizer, Merck, Moderna, BioNTech, and Vertex. Moderna and Merck reported phase 3 progress, and Moderna splits whatever cash flow its cancer vaccine IP generates 50/50 with Merck under a pre-COVID deal. [00:10:24] BioNTech Ends a Phase 2 BioNTech shut a colorectal cancer vaccine program after patients who received the vaccine post-resection showed no benefit over those simply monitored. Jason and Montana argue the screen is immunotherapy sensitivity: tumors without enough accumulated mutations never stand out to the immune system in the first place. [00:12:40] Keytruda: History, Mechanism, Side Effects Approved for melanoma in September 2014, non-small cell lung and head and neck in 2015, and general solid tumors in May 2017. It is a PD-1 inhibitor that blocks the tumor’s off switch for the immune system, which is also why over 10% of patients develop thyroid disease. Tecentriq works similarly; BioNTech’s pumitamig is a newer bispecific. [00:18:42] From Lethal to Manageable Montana reframes the goal: not curing cancer but converting it to a condition patients live with. ADCs, radioligand therapy, CAR T, and bispecifics all push toward better efficacy with lower toxicity. Jason sees a step change in about five years and combination therapy five years after that. [00:22:21] Nvidia’s Quarter and the Law of Large Numbers Nvidia guided to roughly 70% growth next year, which management said would have been a doubling if memory makers and TSMC could supply it. [00:23:27] Cybercab, Waymo, and Who Wins Self-Driving Tesla’s Cybercab is launching in Austin and Waymo just went live in San Diego with roughly 40 vehicles. Nvidia sells a development kit to traditional automakers, but only Mercedes has shipped anything worth discussing, and Mike argues the automakers outsourced their competency long ago and will have to outsource self-driving too. [00:26:46] Nvidia Passes Apple on Free Cash Flow Nvidia’s run-rate free cash flow is $186 billion against Apple’s $136 billion, a $50 billion gap, on $360 billion of run-rate revenue versus Apple’s $470 billion. Download the memo at telltales.us and join us next Wednesday. Cashtags $AAPL $BNTX $F $GM $MRK $MRNA $NVDA $PFE $TSLA $TSM $VRTX This post and the information herein are intended for informational purposes only. The views expressed herein are the author’s alone and do not constitute an offer to sell, or a recommendation to purchase, or a solicitation of an offer to buy, any security, nor a recommendation for any investment product or service. While certain information contained herein has been obtained from sources believed to be reliable, neither the author nor any of his employers or their affiliates have independently verified this information, and its accuracy and completeness cannot be guaranteed. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, timeliness or completeness of this information. The author and all employers and their affiliated persons assume no liability for this information and no obligation to update the information or analysis contained herein in the future. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit telltales.substack.com

    Moderna Only Owns Half of Its Own Cancer Vaccine

  5. Aug 30

    Weekend Update - W2635

    ▶ Explore this week’s Tape — live, sortable, drill-down → The Bid Was the Business PayPal spent the summer being priced by a buyer rather than by a business, and on Friday it found out which of the two it actually had. Advent and Stripe abandoned an approach that had run to roughly fifty-three billion dollars, a deal that would have ranked among the largest leveraged buyouts ever attempted¹. The stock gave back thirteen percent². Nothing about the company changed on Thursday night. What changed was the number of people willing to pay for it. Price what walked away. The Cash Flow Memo has PayPal at about six and a half times trailing free cash flow, near a fifteen percent free-cash-flow yield, on close to seven billion dollars of trailing cash generation³. Then the memo does something to PayPal it does not do to anyone on the leaderboard: it takes the name off the ranked list entirely, because an operating-cash-flow method overstates cash for a business that holds customer funds⁴. So take the haircut. Take a generous one. You are still looking at a company the public market prices in single digits, that a buyout firm and a strategic spent a summer trying to take private, and that as of Friday has no bid above the tape. Six and a half times is only a price if somebody can fund it. A fifty-three-billion-dollar take-private does not get funded out of equity. It gets funded out of the leveraged-loan and private-credit market, which spent this same week being asked for something else. CNBC reported Broadcom in talks over a chip financing package running to seventy or eighty billion dollars, forty-five senior and thirty-five junior, with Blackstone and Apollo among the firms discussed as putting up the money⁵. One deal, one week, aimed at chips that have not shipped. Larger than the entire PayPal buyout. Those are not literally the same firms, and the comparison is an argument rather than a report. They are the same appetite. Private credit is a finite bid, and for most of the last decade its natural habitat was the PayPal trade: mature, cash-generative, unloved, with enough coverage to carry debt. That capital now has a shorter, better-paying alternative underwriting infrastructure. When the marginal lender has somewhere better to be, the marginal buyer of cheap cash flow stops turning up, and a multiple that looked like a mispricing turns out to be the clearing price. Salesforce is the control. It gained twenty-three percent on Thursday, its best day since 2020, for producing evidence that its cash flow survives the technology everyone assumed was coming to kill it⁶. Nobody had to finance that. The equity market re-rated it in a single session, at no cost to anybody. PayPal’s re-rating needed a sponsor, a lender and six weeks, and it did not survive the stock rising into the offer. A leveraged bid with no premium left in it is an expensive way to own what you were already looking at. Marcus’s column below is on Micron, which has the opposite complaint: the market will pay for the cash flow, just not for more than one year of it. What changes the read. The near test is not PayPal’s next print. Enrique Lores took over in March and is running a standalone plan⁷; that is a two-year story and the tape will price it as one. The test that matters is Wednesday and the weeks after it: whether the Broadcom package clears anywhere near its reported size, and where the junior tranche prices⁸. If seventy or eighty billion dollars of AI paper places easily, the bid underneath every cheap cash-flow name in the memo stays where it went. If the junior tranche struggles, capital comes back to businesses that already generate cash, and this is the first name it re-prices. The frame breaks if a strategic, rather than a sponsor, pays a real premium for a mature cash-flow business in the next two quarters. That would say the equity market is the marginal buyer again, and none of the above matters. Wall Street’s consensus on PayPal: a cheap stock that just lost its catalyst. The catalyst was never PayPal’s to lose. It belonged to the credit market, and the credit market is busy. The Tape — W2635 Universe of 94 cashflow-memo names, snap dates 2026-08-21 → 2026-08-28. Composite is rank-sum percentile of FCF Yield + NTM Revenue Growth (higher = better balance). Banks and finance-book names shown separately. Telltales Yield — Top 10 From the Cashflow Desk — Marcus Graham Micron is the one name in the top ten where the forward multiple and the trailing multiple are arguing, and the forward one is winning. The tape has MU at a 6.1x forward P/E against 92.8% NTM revenue growth — that combination is the market underwriting one enormous year and then a cycle turn. The trailing side says the cash has not arrived yet: a 2.6% FCF yield, because capex is consuming almost everything the memory cycle generates. Consensus reads a single-digit forward multiple on a semiconductor as cheap. It is a duration bet, and the duration is one year. The test is whether capex converts to free cash flow before pricing rolls. Thesis breaks if the NTM growth estimate starts coming down while the capex commitments stay fixed. Telltales Yield — Bottom 10 This Week’s Reporters Sector Medians Debt / FCF Watch (highest leverage on TTM FCF) Weekly Price Movement Top 5 (week-over-week price) Bottom 5 (week-over-week price) Banks (shown separately — FCF metric not meaningful) Finance-book — FCF not comparable Customer-float / captive-finance / reserve businesses (IBKR broker float, KMX CarMax Auto Finance, PYPL customer funds, CRCL stablecoin reserves). The memo’s operating-FCF method overstates their FCF, so they are held off the ranked leaderboard pending the P&L-waterfall rebuild. Data Gaps 91 of 92 ranked-eligible names ranked. 1 dropped for missing FCF yield or NTM revenue growth; 7 shown separately (banks + finance-book, FCF not comparable). Source: cashflow-memo master_2026-08-28.csv. NTM growth from analyst-estimates consensus. Composite is a percentile rank, not a recommendation. The Issue — This Week's Brief The Cashflow Memo The Week the AI Build Went on Credit Oracle and Amazon burned tens of billions to build it. Salesforce sells it for 13 times free cash flow, Palantir for 125. The Telltales Weekend Update. Ava Cabot and analyst Marcus Graham walk through what happened this week — and what’s coming next — across the companies in the Cash Flow Memo. About 14 minutes. No filler. Download the memo at telltales.us. Hunt, Jason, and Mike are back Wednesday on episode 2636. Chapter markers * Time | Segment * 0:00 | Cold open — the build stops paying for itself * 0:45 | Theme — Who’s paying for the build: Oracle, Broadcom, Amazon * 4:45 | Deep dive — Salesforce vs. Palantir * 8:45 | Rapid-fire — Lantheus, PayPal, and the forward week * 11:45 | Close — Consensus Watch * 12:40 | Disclaimer Full transcript Cold open Ava: Three companies, three different answers to one question: who actually pays for the AI build? Oracle’s answer is that the customer does — the VA raised its contract ceiling by $17 billion[^news-orcl-va-20260820]. Broadcom’s answer is that it will co-sign, reportedly putting its balance sheet behind up to $80 billion of somebody else’s borrowing[^news-avgo-debt-20260821]. Amazon’s answer is that it will just pay — 2 million more GPUs, announced Thursday[^news-amzn-gpus-20260827]. And on the other side of all that spending, two companies sold AI software this week to enormous applause, at multiples almost 10 times apart. Somebody is wrong about what this revenue is worth. Ava: Telltales Weekend Update. I’m Ava Cabot, with Marcus Graham at the cashflow desk. Theme — Who’s paying for the build Ava: Start on page 2 of the Cash Flow Memo, where Oracle, Broadcom, and Salesforce all sit. Three companies, three completely different answers to the same question this week: who is actually paying for the AI build? Ava: Oracle’s answer is that somebody else is. The Department of Veterans Affairs raised the ceiling on Oracle’s health-records contract by up to $17 billion last Thursday, taking the whole deal from just under $10 billion to roughly $27 billion, and extending the work through 2031[^news-orcl-va-20260820]. The VA’s stated reason, quoting the modification: unanticipated complexities slowed software deployments, which resulted in the contract’s ceiling being reached sooner than originally planned[^news-orcl-va-20260820]. The agency runs 164 medical facilities and now hopes to finish all of them by 2031[^news-orcl-va-20260820]. More money, more years, same job. And the market has already filed its opinion on how that trade is going: Oracle closed the week around $151 against a 52-week high of $346[^memo-orcl-price-20260828]. That is more than half the company gone in under a year, while the order book got bigger. Marcus — what does Oracle look like from the cash side right now? Marcus: Oracle is spending almost as much on capital equipment as it books in revenue, and that is the whole Oracle story at the moment. Trailing 12 months, capex ran about $56 billion[^memo-orcl-capex-20260828] against $67 billion of revenue[^memo-orcl-rev-20260828]. Free cash flow came in at negative $19 billion[^memo-orcl-fcf-20260828]. So the multiple isn’t the right frame on this name — there isn’t one, the denominator is negative, and that’s the cost of the build rather than a flag. What actually prices Oracle is whether the contracted revenue lands on schedule. The VA contract is a tell on exactly that, and it isn’t a flattering one. The ceiling went up because the deployment went slow. Ava: Broadcom’s answer is different. Broadcom will co-sign for you. Ava: CNBC reported a week ago Friday that Broadcom is in talks over a chip financing deal of upwards of $70 to $80 billion, aimed at supporting AI companies — Anthropic among them[^news-avgo-debt-202608

  6. Aug 26

    "I Don't See How An Investor Can Not Own SpaceX"

    Hunt, Mike, and Jason walk the Cash Flow Memo: oil and gas exhibits, the deficit math nobody wants to do, the Moderna/Merck cancer-vaccine economics, and the SpaceX position Hunt says he’ll probably regret saying out loud. The Cashflow Memo Key Takeaways * Hunt left Exhibit C’s supply/demand untouched: 10-12M bbl/d still clears Hormuz on tankers running with GPS off, near-month crude falls from $87 to roughly $81-82 while the ’27 strip barely moves ($75 to $73-74), so E&P underwriting stays anchored at $70-75 — the price EOG and Magnolia investors are already using. * Gas supply got revised up (’26 dry gas 109.5 Bcf/d, ’27 111.5, with 13 of the 18 Bcf/d added since 2021 coming out of the Permian and Waha back to $2 against a $2.70 Henry Hub), but LNG demand at 20.5 Bcf/d next year narrows the supply-demand gap to about 1 Bcf/d, which is what makes the $3.50 ’27 forecast work. * Exhibit A’s arithmetic leaves one lever: interest expense went from $400B in 2018 to $1T at a 3.5% average rate, defense sits near $1T and Social Security is demographically fixed, so Hunt’s path to a smaller deficit is extending Medicare to everyone and phasing out a $1.2T Medicaid program — and he expects Bessent to have to put a number on deficit reduction in a Monday press conference. * The Moderna cancer-vaccine readout is thinner than the reaction: endpoints met and a statistically significant recurrence reduction, but no hazard ratio and no p-value published, and the economics run to Merck, which shared costs 50/50, takes 50% of vaccine profit plus 100% of Keytruda, roughly 75% of the combined pie against a Keytruda patent cliff in early 2028. * Hunt’s I don’t see how an investor can not own SpaceX: 12M Starlink customers, a permitted 100M sq ft Texas fab aimed at making chips without ASML machines, and Memphis delivering 1.5 GW for $28B — leased out two-thirds to Anthropic and one-third to Google — while data centers stall in every other state; Mike’s counter is that traditional methods give you no margin of safety near $100 (they wanted $80), so size it small and hold your nose ahead of a Tesla/SpaceX merger he expects inside a year. Show Notes [00:29] Oil Markets & Hormuz Ten to twelve million barrels a day still move through Hormuz on tankers with their GPS switched off, which is why crude is drifting down rather than up. Near-month falls from $87 toward $81-82 while the ’27 strip holds near $73-74. [03:43] Natural Gas Production & Demand Dry gas production revised up to 109.5 Bcf/d for ’26 and 111.5 for ’27, with 13 of the last 18 Bcf/d of growth from the Permian. LNG demand at 20.5 Bcf/d next year is what closes the gap and supports $3.50. [05:59] National Debt & Deficit Interest expense went from $400 billion in 2018 to a trillion today at a 3.5% average rate. Hunt walks Exhibit A column by column and lands on Medicare and Medicaid as the only line item with real room. [11:22] Medicare/Medicaid Reform Discussion Jason and Mike stress-test extending Medicare to everyone: fraud and waste as the conservative sell, unwinding ACA underwriting rules, and killing 51 overlapping layers of management. [12:56] Moderna Cancer Vaccine Update The trial met its endpoints, but no hazard ratio and no p-value were published. Merck co-developed it pre-COVID on a 50/50 cost share and takes roughly 75% of the combined profit with Keytruda going off patent in 2028. [16:02] SpaceX Investment Thesis Hunt: I don’t see how an investor can not own SpaceX. Compute scarcity, 12 million Starlink customers, and a 100 million square foot chip facility permitted in Texas. Mike on why the valuation gives you nothing to hold onto. [23:47] NVIDIA / Google Compute Memphis put in 1.5 gigawatts for $28 billion, all NVIDIA equipment, leased two-thirds to Anthropic and one-third to Google. Why is Google leasing NVIDIA capacity when its whole plan was TPUs? [26:20] Meta Litigation & Social Media Rules Forty-nine state attorneys general and Meta appear to be converging on roughly $18 billion, shared with YouTube and TikTok. The agreed rules: two hours a day for children, a midnight-to-6am block, parent-only settings. [29:12] AI Agents & Next Week Agents are the story now, and they’re the middle segment next Wednesday. Get the Cash Flow Memo free at telltales.us — roughly 80 companies with updated financials, plus Exhibit A (federal finances), Exhibit B (natural gas), and Exhibit C (oil). New episode every Wednesday. Cashtags $ASML $GOOGL $META $MGY $MRK $MRNA $MSFT $NVDA $SNAP $SPCX $TSLA $TSM This post and the information herein are intended for informational purposes only. The views expressed herein are the author’s alone and do not constitute an offer to sell, or a recommendation to purchase, or a solicitation of an offer to buy, any security, nor a recommendation for any investment product or service. While certain information contained herein has been obtained from sources believed to be reliable, neither the author nor any of his employers or their affiliates have independently verified this information, and its accuracy and completeness cannot be guaranteed. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, timeliness or completeness of this information. The author and all employers and their affiliated persons assume no liability for this information and no obligation to update the information or analysis contained herein in the future. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit telltales.substack.com

    "I Don't See How An Investor Can Not Own SpaceX"

  7. Aug 23

    Weekend Update - W2634

    ▶ Explore this week’s Tape — live, sortable, drill-down → Twelve Times Free Cash Flow Bought One Company and Trapped Another Two of our companies signed deals this week, and the Cash Flow Memo prices them almost identically: about twelve times trailing free cash flow, roughly an eight percent free cash flow yield, page fifteen and page six¹²³⁴. One of them got bought at a premium. The other one had to be its own buyer. The multiple decided none of that. Leverage did, and the leaderboard the memo ranks on does not measure leverage at all. Start with what an acquirer is actually buying. Curium agreed to take Lantheus out whole — a hundred and two fifty a share in cash plus contingent value rights worth up to twelve dollars more, call it eight billion dollars, per the merger 8-K, with a close pushed out to the first half of 2027⁵. The agreement landed five days after the FDA approved Tauklarify, the company’s tau imaging agent for Alzheimer’s evaluation⁶. What Curium is buying is a business carrying about one turn of debt against its cash flow⁷. Not a multiple. Cash flow with nobody else’s name on it, which turned out to be the scarce thing this week. Charter ran the same arithmetic from the other side of the table. It closed a thirty-four and a half billion dollar acquisition of Cox and Liberty Broadband, took the largest internet and cable footprint in the country, and then took the acquired company’s name⁸. Same twelve times trailing free cash flow. Ten turns of debt against it⁹, on fifty-four billion dollars of revenue that is going backwards¹⁰. The market prices that equity under four times next year’s earnings¹¹, which is less a verdict on the business than an estimate of who ends up owning the cash it throws off. Ten turns. Charter has been at this altitude before. It filed Chapter 11 in March 2009 and came out that November having shed about eight billion dollars of debt, roughly forty percent of the stack, and some eight hundred and thirty million dollars a year of interest expense, per the company’s own release¹². That trade worked because broadband was still a growth business. Cut the debt, keep the subscribers, let the growth re-lever you back into solvency. The same trade is not available on revenue that shrinks, and the fix on offer this time is a bigger footprint bought with more paper. The California Public Utilities Commission approved the merger on August thirteenth and attached affordable-broadband and network-upgrade conditions to the sign-off¹³. A regulator collecting spending promises from a company whose free cash flow is committed a decade out. Everyone signed. The cashflow read is in Marcus’s column below; short version, the composite ranks cash yield and growth and stops there. Scroll down to the debt-to-free-cash-flow table in The Tape and read it as something other than a risk screen. It is a list of the companies in this memo that will be approached rather than approaching. The ones that fund the next move with equity because the cash is already spoken for. The ones that answer to a lender before they answer to an owner. Last week’s essay argued the AI buildout had turned into a credit trade. This week credit walked into a healthcare name and a cable name priced within a tenth of a turn of each other and decided which one was the asset. What changes the read. Lantheus is still trading under the hundred and two fifty in cash¹⁴, which is what an eighteen-month regulatory close does to a spread — the cash alone is barely above where the stock sat into the weekend, and the full package, contingent value rights paid out, is about fifteen percent above it. The test is the antitrust review of two radiopharmacy businesses combining, and the contingent value rights are where the argument over the Tauklarify ramp actually gets settled. On Charter, the date is mid-September, when the full Spectrum portfolio lands in Cox markets¹⁵. Watch what the integration gets funded with. Out of operating cash flow and the read holds. New paper against the same cash flow and ten turns becomes eleven, into a refinancing that has to underwrite a declining revenue line. Wall Street’s consensus on Charter: the largest broadband network in the country, at that price, has to be the cheapest thing on the board. It is the cheapest thing on the board because the equity stands last in line. Lantheus is this week’s quote on what it costs to stand first. The Tape — W2634 Universe of 94 cashflow-memo names, snap dates 2026-08-15 → 2026-08-21. Composite is rank-sum percentile of FCF Yield + NTM Revenue Growth (higher = better balance). Banks and finance-book names shown separately. Telltales Yield — Top 10 From the Cashflow Desk — Marcus Graham Salesforce is no longer being priced as software. It is being priced as an annuity, and the dashboard is where that shows up. Going into Wednesday’s print, the memo has CRM at a 7.8% FCF yield, roughly four times the 1.9% median for the tech names in this universe, against NTM revenue growth of 9.4%. That pairing does not belong on a software comp sheet. It belongs on a pipeline. Consensus is still arguing about whether the agent products re-accelerate the top line; the multiple stopped waiting for that answer some time ago and re-rated onto the cash. The test on the 8/26 print is current RPO growth, not the EPS line. If RPO tracks the revenue guide, the annuity read holds. If it steps up, the tape has been pricing the wrong company — call that 30%. Telltales Yield — Bottom 10 This Week’s Reporters Sector Medians Debt / FCF Watch (highest leverage on TTM FCF) Weekly Price Movement Top 5 (week-over-week price) Bottom 5 (week-over-week price) Banks (shown separately — FCF metric not meaningful) Finance-book — FCF not comparable Customer-float / captive-finance / reserve businesses (IBKR broker float, KMX CarMax Auto Finance, PYPL customer funds, CRCL stablecoin reserves). The memo’s operating-FCF method overstates their FCF, so they are held off the ranked leaderboard pending the P&L-waterfall rebuild. Data Gaps 89 of 92 ranked-eligible names ranked. 3 dropped for missing FCF yield or NTM revenue growth; 7 shown separately (banks + finance-book, FCF not comparable). Source: cashflow-memo master_2026-08-21.csv. NTM growth from analyst-estimates consensus. Composite is a percentile rank, not a recommendation. The Issue — This Week's Brief The Cashflow Memo Repriced Without a Print Nothing that repriced the memo this week came out of an earnings report. The Telltales Weekend Update. Ava Cabot and analyst Marcus Graham walk through what happened this week — and what’s coming next — across the 86 companies in the Cash Flow Memo. About 13 minutes. No filler. Download the memo at telltales.us. Hunt, Jason, and Mike are back Wednesday on episode E2635. Chapter markers * Time | Segment * 0:00 | Cold open — four repricings, zero prints * 0:45 | Theme — the legal bill: Meta and Eli Lilly * 4:45 | Deep dive — two deals, same price: Lantheus and Charter * 8:45 | Rapid fire — Harrow, Celsius, Walmart, Tesla, forward calendar * 11:45 | Close — Consensus Watch and the Wednesday tease * 12:45 | Disclaimer Full transcript Cold open Ava: Nothing that repriced this memo this week came out of an earnings report. A California jury put a number on Meta[^news-meta-verdict-20260820]. Eli Lilly agreed to plead guilty and write a check to make a marketing case go away[^news-lly-zyprexa-20260821]. A rival radiopharmacy company agreed to buy one of our healthcare names outright[^news-lnth-curium-20260819], five days after the FDA approved its newest product[^news-lnth-fda-20260814]. And a $34.5 billion cable merger closed, creating the largest internet and cable company in the country[^news-chtr-close-20260820]. Four repricings. Zero earnings prints. Ava: Telltales Weekend Update. I’m Ava Cabot, with Marcus Graham at the cashflow desk. Theme — The legal bill Ava: Meta spent this week finding out what its product design is worth in a courtroom, and the number in the headline is not the number that matters. A California jury found the company liable on 75,000 separate violations of state consumer protection law, and a judge separately found that Meta’s platforms constitute a public nuisance. $375 million in civil penalties[^news-meta-verdict-20260820]. That is the part that is now settled. The open part is bigger. 29 state attorneys general are still in federal trial in California, alleging Meta deliberately designed Facebook and Instagram to be addictive, and they are asking for up to $200 billion in damages plus limits on the algorithmic feed[^news-meta-trial-20260818]. And a former Meta engineering director testified that Mark Zuckerberg ran a culture that treated child safety as secondary to growth[^news-meta-testimony-20260820]. Not a plaintiff’s lawyer. Their own engineering director. Marcus, what does a jury verdict actually cost? Marcus: The penalty isn’t the problem, the finding is. A public-nuisance ruling is a template every other state attorney general can now run without having to win the argument themselves, and it lands on a cash flow that has already been cut in half this year. The memo has Meta at 32x trailing free cash flow[^memo-meta-evfcf-20260821] on $43 billion trailing twelve, and that number is down about 73% from the prior TTM[^memo-meta-fcf-20260821]. Not because the business slowed. Because the buildout ate it. What I’d watch is which attorney general files next, and whether it lands before or after the capex guide. Ava: So the jury did the cheap part first. And the guide didn’t help either. Meta told the Street to expect $61 billion to $64 billion in the third quarter, midpoint $62.5 billion, below where the Street was sitting[^news-meta-q3outlook-20260820]. Meanwhile the company is cutting staff across WhatsApp, Instagram, and Reality Labs in another team r

  8. Aug 19

    This Time, the Hare Beat the Tortoise

    Hunt, Mike, and Jason go more than half healthcare this week: Moderna’s Merck-partnered mRNA cancer vaccine cleared phase 3 in melanoma and the stock doubled. Plus Hormuz at a standstill, $7 trillion of federal spending with only one line left to cut, and xAI putting agents on the shelf. The Cashflow Memo Key Takeaways * Hormuz traffic has gone from 15-20 ships a day to effectively zero and Hunt sees an indefinite stalemate, so with WTI at 82 last Thursday against a 2027 strip at 73, the backwardated 2027 price is the number to underwrite because it is the number operators use for their own capital decisions. * Gas printed under $3 front-month while the 2027 strip holds near $3.40, and with the Permian supplying two-thirds of US supply growth, new Gulf Coast pipelines narrowing Waha to roughly 50 cents under Henry Hub, and LNG feedgas above 18 Bcf/d this year, the 108.5 and 110.5 Bcf/d supply estimates for ’26 and ’27 both look too low. * On Exhibit A’s $7 trillion of FY26 federal spending, healthcare is the only line with real money in it (Medicaid alone is $600 billion, half federally funded), because defense is heading to $1.1-1.2 trillion and interest is locked at a 3.5% average rate with the 10-year at 4.6% - and Jason put Medicare improper payments near 6% with fraud between 3% and north of 10%. * Moderna doubled on a Merck-partnered phase 3 melanoma readout (Keytruda alone versus Keytruda plus a personalized 34-antigen mRNA vaccine) that met all endpoints on a press release with no data attached, validating a decade of platform work rather than a single drug. * The capital-allocation scoreboard flipped: BioNTech was the safer steward and still holds roughly $15 billion of COVID cash to Moderna’s $3 billion as of the March balance sheet, but the hare reached the cancer readout first, and Montana’s read is that the trial proves the technology rather than the drug, which is what makes Moderna’s nine other cancer studies matter. * xAI shipped off-the-shelf Grok agents that cut agent build time from months to about a day, 64% of OpenAI’s tokens are now consumed agentically rather than through human prompts, and that demand curve widens the compute gap further just as Nvidia backstops the physical shell of an OpenAI data center in Ohio and the governors of Pennsylvania, New York, and Texas impose one-year delays or audits on new projects. Show Notes [00:00:30] Exhibit C: Iran, Hormuz, and the Stalemate Traffic through the strait has fallen from 15-20 ships a day to near zero on projectile risk. Hunt sees no path to resolution and argues the 2027 strip at 73, not spot at 82, is the price that should drive investment decisions. [00:04:03] Exhibit B: Natural Gas and the Permian Problem Front-month gas under $3 against a 2027 strip near $3.40. New pipelines have pulled Waha to roughly 50 cents under Henry Hub, and rising associated gas means the published supply estimates are almost certainly too low. [00:05:51] Exhibit A: $7 Trillion and One Place to Cut Long rates are rising worldwide on deficits, not just in the US. Hunt walks the spending columns and finds healthcare is the only category with real savings available, with Medicaid at $600 billion the specific target. [00:10:58] Moderna vs. BioNTech: Page 15 The two mRNA COVID winners diverged on capital allocation - BioNTech kept roughly $15 billion, Moderna ran cash down to $3 billion. Then Moderna announced results and doubled. [00:12:44] The Phase 3 Melanoma Readout Jason lays out the Merck joint development study: stage 3 and 4 melanoma patients, surgical resection, then Keytruda alone versus Keytruda plus an mRNA cancer vaccine. All endpoints met, though no data was released with the press release. [00:13:51] How the Cancer Vaccine Actually Works Montana explains antigen identification via genetic sequencing, the 34 most prominent antigens per tumor, lipid encapsulation, and priming the immune system to catch recurrence before it becomes a tumor. [00:17:48] Nine More Cancers: Does the Platform Travel? Mike asks how investors should handicap the same approach across Moderna’s nine other studies. Montana’s answer: this proves the technology, not a drug - the question is whether the antigen flags stay identifiable. [00:20:07] MRD Testing and the Sequencing Layer Minimal residual disease testing as a monitoring tool, reading cell-free tumor DNA from a blood draw to guide treatment protocols before an end-of-treatment scan. [00:22:06] xAI Ships Agents Off the Shelf Grok agents cut build time from the months Mike and Jason spent to about a day. Jason’s read: AI is just software, and the endpoint is a personal assistant that ships on every phone. [00:25:25] The Token Gap Widens Agentic consumption is now 64% of OpenAI’s tokens versus human prompts. If an agent ships native on every handset, demand steps up again against compute that already cannot serve it. [00:27:43] Nvidia Backstops a Data Center Shell Nvidia is guaranteeing the building, not just the GPUs, on an Ohio site with OpenAI as end customer. Ben Thompson frames it as discounting by taking risk instead of cutting price. [00:28:48] Governors Hit Pause One-year delays in Pennsylvania and New York, an audit requirement in Texas, and a public-sentiment problem that Jensen Huang himself is flagging as a constraint on where the chips can go. Get the Cash Flow Memo at telltales.us and subscribe for a new episode every Wednesday. Cashtags $BNTX $MRK $MRNA $NVDA $PFE This post and the information herein are intended for informational purposes only. The views expressed herein are the author’s alone and do not constitute an offer to sell, or a recommendation to purchase, or a solicitation of an offer to buy, any security, nor a recommendation for any investment product or service. While certain information contained herein has been obtained from sources believed to be reliable, neither the author nor any of his employers or their affiliates have independently verified this information, and its accuracy and completeness cannot be guaranteed. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, timeliness or completeness of this information. The author and all employers and their affiliated persons assume no liability for this information and no obligation to update the information or analysis contained herein in the future. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit telltales.substack.com

    This Time, the Hare Beat the Tortoise
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About

An investing podcast + substack for people who want to compound their wealth over the long run and don't mind sailing analogies telltales.substack.com

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  • Creator
    by Top Mark Capital
  • Years Active
    2021 - 2026
  • Episodes
    305
  • Rating
    Clean
  • Copyright
    © Mike Nicoletti
  • Show Website
    Telltales

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