Episode 98: All-caps in focus —Market Insights Monthly special edition

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Kevin Headland

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Macan Nia

I want to invite our lead portfolio manager on our US Core Value team.

Sandy Sanders, I believe this is your actual first market insight monthly, if I'm not mistaken.

Macan Nia

That's right. Thank you. Thanks for having me. So we're put you on the hot seat.

Macan Nia

At this time. I want to invite, our lead portfolio manager on our US core value team, Sandy Sanders. He is a senior managing director, senior portfolio manager. He has been with Manulife, for 15 plus year. The mandate. We are going to talk about today is the main life us all cap fund. The main life us all cap fund is an all weather portfolio.

Macan Nia

What I mean by that. It can invest in all different types of style. It can invest in growth. You can invest in core. You can invest in value. It can also invest in various market caps. As the name suggests us all cap. It can start from those small caps if you invest in those mini caps. Also invest in large caps.

Macan Nia

So in this environment where we see small caps rally 10% it's given that up. Since that but you have different views of different market caps, different views of different style. The beautiful thing about this mandate, it is not restricted to any one of these themes. It will go where the opportunity is. And at this time, I would love to bring Sandy, who's joining us from Boston, to join us for Market Insight monthly.

Macan Nia

Welcome to Market Insight monthly. Sandy.

Sandy Sanders

Thank you. Thanks for having me.

Macan Nia

I believe this is your actual first market insight monthly, if I'm not mistaken. That's right. So we're put you on the hot seat. So thanks. Thanks again, Sandy, for taking time out of your day to, join us. Before we get started into the US equity markets, let's do a very quick background on the team, the investment philosophy.

 

Macan Nia

You've been running this seven step process for, I think, over since 2010. And this combined with your team you believe creates a lot, creates your investment edge versus your competitors. Walk us quickly through the seven step process and the importance of it.

Sandy Sanders

Okay. Well thanks. We we essentially employ a dedicated approach. We've got a 11 person investment team based in Boston. This is all we do. So these analysts are dedicated. They're not shared. And essentially we manage, $29 billion in total. US dollars as a team. And we've basically grown dramatically when we joined Manulife, back in 2010 for about at 2 billion to now, almost 29 billion.

Sandy Sanders

And this is really driven by focusing in on companies that have a competitive advantage, starting with a good business that we think is going to be here for the long term. Right. This is a marathon, not a sprint. So focusing on companies with a sustainable competitive advantage, then we go through our seven step process. This is a month of work.

Sandy Sanders

Essentially what we do is we go out in the field. We'll do about 700 meetings a year with companies essentially. Then our analysts will then work on each of these, seven steps where the company and we look at the competitive advantage, growth drivers, industry analysis, financial statement analysis. And the biggest and most important step mark on is the range of values.

Sandy Sanders

This is where we do for scenarios. We do a best case, a base case a bear and a worst. And these are five year minimum discounted cash flow models. Now think about that for a second. Most folks will forecast 1 or 2 years going forward. We do a five year minimum forecast. And the base case is what we think the stock is worth today or its estimate of intrinsic value.

Sandy Sanders

So that would be the 100 cents on the dollar. So if we think a stock is worth $100 in our base case, and the stock is trading at $70 this morning, 70 divided by 100, it's $0.70. So we look to buy stocks when they're $0.70 on the dollar and sell when they get to 100 cents. And that is the key.

Sandy Sanders

We also use a 10% discount rate across the board. And the reason is, is that we're trying to beat 10% for you and your clients. This is our hurdle rate. So we don't lower our discount rates when times are good and raise them when times are tough. That's really what we think is moving the goalposts. So no matter if it's Procter Gamble or if it's Amazon, it's the same discount rate.

Sandy Sanders

And that allows us to level the playing field with we follow 250 stocks. And every single morning the ranked by cents on the dollar. This is my sheet I have here. Every single morning we've got this list of 250 stocks ranked by cents on the dollar. So when stocks drop below $0.70, like we saw certainly in 2022, also during Covid, we will step up and buy when stocks get to 100 cents will sell.

Sandy Sanders

So that in a nutshell is our process. It's a month of work. So it's not just a quick analysis. Literally 200 hours of work per stock. And that's what we say. We have the homework done in advance ready to pounce when stocks fall down. And that's what this team is all about.

Macan Nia

Saying I don't think I've ever asked you this before, but the cents on the dollar really resonate rates, with investors. And it's a unique, I guess, value proposition that it seems like only your team uses the cents on the dollar. Where did this come out? Like, how did this come about?

Sandy Sanders

Well, essentially, we had a, a process where we have, you know, a fair value or intrinsic value estimate. That's what we think. The company, you know, is, is that's fully valued. So that would be essentially 100 cents. And then so that really created an easy framework for us to think about and to communicate to our clients.

Sandy Sanders

The cents on the dollar approach.

Macan Nia

So today, because I always love asking your team what's the value of the entire portfolio today.

Sandy Sanders

Okay. So today the Manulife US all cap portfolio is trading at $0.75 on the dollar today. So I said a nice healthy discount to what we think is worth. Essentially that's well within its normal range, basically of around 75 to $0.85 on the dollar over time, approximately. And that we think is a nice, way to think about the current discount in the market today, given what, you know, the concerns around consumer concerns, around slowing economy.

Sandy Sanders

There certainly is, we think some opportunity today.

Macan Nia

So what's the lowest this has been and what's the highest it's ever been and when?

Sandy Sanders

Well, yeah. When you think about the ranges we we basically have seen extreme ranges. And certainly in the October of 2022 and the depths of the Federal Reserve, when they were raising rates at a 75 basis point clip per time, the stock got down to basically, I'm sorry, to the portfolio with down $0.58 on the dollar.

Sandy Sanders

Also down to the mid 50s, during Covid in that, third and fourth week of March in 2020. So those are extreme events. Typically they're very short. And we saw yeah, pretty strong recovery. So that's fairly unusual. But in the neighborhood of basically $0.75 we think is a nice, discount. Remember to think about this is really important.

Sandy Sanders

Okay. The 100 cents on the dollar is not sitting still. These businesses are compounding in value. So as you think about it, we're using a 10% discount rate. That means that on average, that base case value should be growing at 10% per year. So that's what we're all all about is trying to buy Compounders at $0.70 on the dollar.

Sandy Sanders

And so that's why we avoid areas like no airlines, no automotives, no telecom, no utilities and no metals or mining. Those areas. You know, we think of more trading stocks basically they're they're generally not compounding over time. So that's another element here is it's quality approach looking for companies that are going to grow in value naturally and that, you know, that's really in think about it, I first invested in Amazon, over 20 years ago in 2003.

Sandy Sanders

And I'll split adjusted basis. Basically the stock was, you know, we were buying in at, you know, essentially a dollar a share. Our current base keeps value on Amazon now is approximately $275. So that's what we call compounding. That's a business that obviously has grown over the years. And that's a stock that we've invested in for now 20 years.

Macan Nia

So with the overall portfolio trading, let's just say round number $0.75 on the dollar. We know over the last couple of weeks and months, there's just been a slow deterioration in the broader U.S. economy. Still resilient. But you're starting to see that slowdown clearly. The team is still constructive on us equities in the medium to long term.

Macan Nia

What would you point out to those clients that are saying markets are trading near all time highs, U.S. economy slowing. Where does a U.S. equity manager get excited about the US economy? What data points do you look at that gives you confidence?

Sandy Sanders

All right. So what we've been looking at closely over the past few years is the wage data. When you look at wages by quintile. So basically by 20% pockets, the bottom 20% of wage earners in our country, essentially, that's where all the headlines are coming from. Yeah. Whether it's rising credit card debt, student loan delinquencies, but the bottom 20% of wage earners, they only make up 8% of retail sales.

Sandy Sanders

That's the big headline. Whereas you look at the middle three buckets, the 60% of wage earners in the middle, that's where you have essentially very robust balance sheets, strong employment wage growth. And they represent 75% of all retail sales. So it's the key. It's it's what basically got people got distracted the last year by looking at that bottom, bottom quintile of wage earners essentially that's you know, that the tail wagging the dog, if you will.

Sandy Sanders

So that's why we stayed constructive. I think the overall U.S., consumer here is in good shape. You have actually a balance sheet. You're a below 10% household debt service today. Near a 40 year low. You've got full employment, and you've got wage growth. So that's why we think the US consumer is resilient. And just because the fed raised rates, you know, 500 basis points over the last couple of years doesn't mean there's automatically a recession.

Sandy Sanders

And that's what we think people get too bearish and concern around, you know, just because what happened in the past is now it has to happen now to today. That's why we stay constructive. The US consumer to us looks fairly solid.

Macan Nia

Yeah. And those demographic how you broke it down into the quintiles and their contribution to retail sales. The same applies when you look at it from a GDP perspective. It's the top third that account over 50% of GDP. The bottom third account for less in the single digits. And that's the question that economists are asking is which one of these cohorts are going to drag one or the other.

Macan Nia

And so far it has been the higher tier cohort that's been able to keep that resiliency in the broader U.S. economy. So you mentioned a, again, I mentioned before, markets trading near all time high valuations, again, depending on how you look at it. So I can pinpoint the S&P 500 market cap weighted. It's trading at 26 times above its historical trend.

Macan Nia

But when I look at it at the equal weighted it's almost 20. You look at it from the way you guys look at, stocks. From our value valuation perspective, it's $0.75 on the dollar. So nowhere even close to those PE numbers. What where are you finding the opportunities today as we go through the summer.

Sandy Sanders

All right. The biggest theme that we think is really going to be playing out here over the coming, you know, 6 to 9 months essentially is a broadening out in the market. And that really started to hit its stride in July. Our portfolio sharply outperformed in that period in the month of July as the market broadened out, essentially the participation beyond from the magnificent Seven, really occurred in, in, in, you know, major force as people started to look at the fed cutting rates, this fall.

Sandy Sanders

And so we think that's an obvious, place to be is in a portfolio like Manulife us all cap, where you've got not only large caps, but you've got mid-caps, you've got small caps. So you have a nice broad exposure here of the big economy going down in market cap. And we think that in general, as the fed you know, is signaling they're going to they have been successful with their campaign of slowing down the economy bringing down inflation.

Sandy Sanders

And now what we see is, given the slowing signs of the US consumer on the low end, we think to modestly start to tap, to, to ease basically. And, and that really is we think the accelerant for broadening out beyond the Magnificent Seven. Meanwhile you've got a lot of now areas like housing, which is an obvious beneficiary of cutting rates.

Sandy Sanders

We've got some, homebuilder stocks, whether it be consumer discretionary, retailers, there's a lot of areas that will numb as the fed starts to pivot. And we think this portfolio is positioned to capture that.

Macan Nia

Yeah. And we've all been waiting for the last major central bank to start really cutting being the other Bank of Japan. But the US Federal Reserve, our base case has been on the team that they start in September. And it's and it just shows you how volatile and how quickly sentiment can change. A month ago, having a base case of one cut in September was you'd be called a lunatic.

Macan Nia

Maybe that's an aggressive word, but fast forward you get the volatility that we saw last week with the unwinding of the carry trade and then markets that trade became we need an emergency cut. And then now we're pricing in two cuts for September. And I still think that's a little bit optimistic. We'll likely see them start cutting in September.

Macan Nia

The reason I'm bringing this up is over the past couple of weeks prior to that, that couple of days of volatility, the narrative was changing. We're going to cut in September. That's going to benefit small caps. And you saw a tremendous rally in us small caps in one week being up 12%. It has completely given up that return since.

Macan Nia

So you're back down I think small caps are up low single digits. Year to date. The reason I'm bringing this up is because your mandate is across different styles, across different market caps. And what do you think of this notion of this great rotation where investors are saying now that the Fed's going to start cutting rates, it's going to benefit the domestic economy?

Macan Nia

Let's rotate out of these mega caps into small caps that have better valuations. As a portfolio manager that sees the entire spectrum, what do you think of this narrative that we should be rotating out of these large cap mega caps and going into small caps at this point?

Sandy Sanders

All right. Well, this this is really where it gets my juices flowing. It get given them Manulife us all cap. We can basically go down in cap range. Think of it as the best ideas portfolio. We can look at companies whether they're large cap, mid cap, small cap growth or value. So basically all nine style boxes for this strategy.

Sandy Sanders

And we will also be always minimum 50% large. So you have a nice healthy ballast of large caps. But with Manulife for us all cap today we are 42% of the portfolio is in mid and small, with the majority of that in Mid-caps. So essentially you have about a 10% in small today. And essentially you've got about a 32% in mid cap.

Sandy Sanders

All right. Now when we look at these smaller companies, we really look for companies that dominate a niche, that are profitable, that have a sustainable competitive advantage. So we don't lower our standards when we go down in cap range. And this is really important. Many folks get, you know, when you think about, you know, small cap area, this tends to be often speculative, particularly on the small cap growth side.

Sandy Sanders

So one easy way to think about it is think about security software. Right. As an example, there's probably 20 small cap growth security software names that are competing with these bigger companies. And for me to say that I know which company is going to be successful five years from now against a Microsoft, you know, it's a bit of a shot in the dark.

Sandy Sanders

So we need to go with a company that already has a, we think, a strong, position in the market. It's got a significant competitive advantage and it dominates a niche. That's why I've always looked at. So these are the types of companies that we have in this portfolio. And so we don't want to look at that long tail of unprofitable small caps are basically very, very speculative.

Sandy Sanders

And in general.

Macan Nia

And that's a really interesting and important point that you brought up. You've seen this quick rotation into small caps, and I know our team was very, honest with advisors, a quick to remind advisors that a lot 40% of the Russell 2000 these type of companies are zombie companies. So they're insolvent. They may not be around in 3 to 5 years.

Macan Nia

And there's always that discussion between was passive a better approach or active. And we can have that discussion at nauseum. But when you look at the small cap space specifically, I think it's very obvious that you want to have an active manager in that space because, almost more than 50% or 40%, but 40% of companies in that space are not quality.

Macan Nia

And listen, we think the US economy, the path of least resistance is downwards. It doesn't mean that you're going to sell your entire U.S. equity weight, right? It means that you want to improve the quality of your US companies. And that's the quality aspect of it is important when you're looking at your mid-cap or small cap way you have that.

Macan Nia

But it's also to that style of quality. So if we get a slowdown, the market sells off. All these companies are likely to go down together. We're not going to promise you that. These companies are not going to go down with the broader market. Of course, they are more likely they're going to go down less. And also their businesses, to your point, are going to be around for what happens after every bear market.

Macan Nia

If there is a bear market, there's a subsequent bull market that's much more longer, in duration. So I think that's going to be a key theme that hopefully we get across in this, call is the importance of quality in your portfolio moving forward. I, you know, there's been a lot going on with, US selection.

Macan Nia

It just seems like almost every week. I know my dad back in March was asking me about Donald Trump and impact on US elections, and I told him that I can't do this now. It's March. Like we still have six months until this election day and I'm going to be burnt out. We're entering, we're mid to late August.

Macan Nia

It seems every week there's a bombshell report or something new happening from an investment lens as a portfolio manager who is managing equities in Boston, you've been through multiple election cycles. What type of advice would you give clients, and more importantly, how do you take that into your own portfolio? Or do you just are aware of the risks, but it rarely finds its way into actually making impact in the portfolio construction aspect?

Sandy Sanders

Yeah. Great question. We have a history here of outperformance, no matter if it's Democrat or Republican. And essentially there are checks and balances there.

Sandy Sanders

You know, that's important to maintain stability. Given that if you walk into a Home Depot today and I've asked the CEO this, you've got 31% of the SKUs are made in China. So if you want to still be able to buy, you know, a $9 and 99 cent hose from Home Depot, that's made in China.

Sandy Sanders

Like, these are the types of things that matter to everyday Americans essentially being able to have access to, you know, low cost goods, and affordability. And so that's one thing that stands out to me is that, you know, obviously watching this, relationship is important. If you look at the two countries added together, us and China, okay, you're talking about 47% of the world's GDP, these two countries alone.

Sandy Sanders

So it's a big deal. And so that's why, you know, that's the biggest thing that I'm watching as an investor is just making sure that partnership with China, with regards to just the trading, relationship remains stable. So as Trump, if he were to be successful, and we would try to understand the implications of that, based on, you know, what he does with regards to tariffs and so forth.

Sandy Sanders

But, you know, this is something that was quite unusual when he first was elected. Okay. I picked up one of those. Yeah, I looked at the and the MAGA hat right. I guess where it was made. China. The first.

Macan Nia

China.

Sandy Sanders

Right. So he is he's a businessperson. Okay. And that's kind of how you have to keep a level head. That's how I've always. Yeah. You know as an investor.

Macan Nia

I think you that you said it. Well you got to take off in as much as I think we all love to talk about politics and geopolitics, but when it comes to our clients, our fiduciary duty is to take off our political hot and put on our investment hat. And often those two narratives are different. And if former President Trump gets reelected, we've seen the playbook before, right from 2016.

Macan Nia

I think that despite all the headlines and the change in sentiment on a week to week basis, we know how markets did. And I think this, like you mentioned, the these two economies rely on each other. It is in neither of their interest, excessive penalize the other one because it comes at the cost of itself. And I think that's important to to, you know, look at it from a big picture.

Macan Nia

So, so I'm going to go through your top ten because I know I, we could talk for an hour, to be honest. But, being very mindful of advisors time. We have half an hour. I want to go through your top ten. I want to go through some of the names, and I want to do a, a lightning round because some might look at your portfolio and say, well, this top ten looks somewhat similar to, let's say, an S&P 500 market cap weighted.

Macan Nia

And I'm going to talk about the differences after this. But let's go through Lightning Round quickly through a couple of names that I think investors that we get questions on all the time. So let's start with Amazon. You said you were with Jeff Bezos basically from the beginning. You have a great story of when basically he was Amazon was nothing.

Macan Nia

You were in his office. But Amazon I think it's off 16% from the high still up 10% year to date. Going through some challenges near-term, why do you like Amazon.

 

Sandy Sanders

Okay, Amazon basically it's really three lakes to this dual. It's online retail. It's cloud and has digital ads. This last two part last two legs are growing faster than the retail piece and they're higher margin. So you've got a natural mix up in margin. So it's a positive mix story. That's the biggest point to the overall thesis is that we do think margins are going to be grinding higher.

Sandy Sanders

For example, most recently the last two quarters they're had about a 10% operating margin. That's up substantially versus several years ago. We also think that you have a valuation case to be made here. So not only do you have strong fundamentals, but valuation today we're looking at worst basically $0.60 on the dollar okay. The stock is bouncing around these current levels.

Sandy Sanders

Our base case value now is 275. So that essentially we think it's a stock with this recent pullback. We think we like the the position. We've continue to you Ebit one of our largest active weights in the portfolio.

Macan Nia

So let's go to the the poster child of artificial intelligence Nvidia. It has had an incredible run. It's off 20% for. So technically a bear market. It's up over 100% year to date. So let's take that slight selloff in with a grain of salt. But in this most recent earnings specifically with tech investors are now coming to the realization not realization, but the understanding, okay, these multiples we have driven up because of AI potential impact to its business.

Macan Nia

Now investors are asking, okay, how quickly are these names going to be able to monetize this AI trend? Very similar to the two different scenarios, but kind of like the show your value from the meme stocks or from those stay home stocks from Covid. For those Canadian investors, we know the marijuana stocks multiples bid up. And then it's like, okay, you got to show me how are you looking at Nvidia?

Macan Nia

How are you looking at these other tech names when it comes to AI and when it comes to monetizing? The AI.

Sandy Sanders

All right. So the biggest thing I want to get across here, in addition to comments on Nvidia, is that we can hold on to our winners with all cap. We can buy a company when it's a mid-cap and hold on to it as it becomes a large cap. And that's what you know when you think about a small cap manager or a mid-cap manager, they have to sell their best ideas, right?

Sandy Sanders

Because a taxable event. Whereas with an all cap strategy, Manulife us all cap, we can hold on to winners. And that's why exactly done with Nvidia. We bought it back in 2018. Going back, you know, six years, six plus years ago when it was essentially a, a large mid-cap, it was on the back of a Bitcoin mining hangover.

Sandy Sanders

And essentially we bought the stock thinking about they were getting a strong toehold in the data center. And what's happening is that you've got essentially Intel, which has been the primary, dominant provider in the data center and essentially their CPU was basically the only game in town. But what's happened is, is that the GPUs in Nvidia have taken up significant real estate on the motherboard in that server computer.

Sandy Sanders

And that is the trend is that there's more dollars going towards these GPUs because they make the computer faster and they can multitask at multiple at multiple speeds faster than the GPU ever could. And so that's why they've gained so much market share. So Intel's share has gone from 90% basically down to 60% in just two and a half years.

Sandy Sanders

It's been a dramatic loss of market share in the data center for Intel. And this has been all to, Nvidia's benefit. So we've been invested in the Manulife US all cap in Nvidia during this entire period. And today, you know, obviously there's going to be pretty significant comparisons coming. The key is about inventory. So this is this is when you think about it, this is a, you know, it's selling widgets, right?

Sandy Sanders

It's selling semiconductors. And you have to be careful because, there is an inventory cycle that comes along with that versus if you look at, let's say, a workday or a Salesforce, that's a or even a Microsoft. That's a subscription model. So you've got nice recurring steady revenue. So in Nvidia we have trimmed it several times. And we will like we will be trimming it again.

Sandy Sanders

But that we just did a deep dive into generative AI. And what we discovered is that there's been obviously billions and billions spent on these GPUs, but the overall ROI still is remaining quite low. And so we need to see that you're starting to see it from Microsoft, with their they're charging on a monthly basis for an AI, $30 per seat.

Sandy Sanders

You're also seeing it from Salesforce. We also saw a recent interesting partnership with Salesforce and Workday that they are combining their data sets to provide, AI products to all of their customers together, which is pretty interesting. We are both of those stocks as well in the portfolio. So overall, I do think Macan will see AI ROI move up over the coming several years, but it definitely is early days.

Macan Nia

Okay, so let's quickly because I'm going to be mindful of time. I want to go through three names. We've been talking about the tech names a lot. Let's go into the top ten in terms of three names that aren't tech Morgan Stanley.

Sandy Sanders

When you look at the capital market cycle, we do think after the 2021 period where you had the massive, fall off in activity with IPO, secondaries, debt issuance, and with the fed raising rates dramatically, they really just put a hard stop to the capital market cycle. And I sat down, with Henry Kravis, the founder of KKR, had dinner with him.

Sandy Sanders

That's another stock that we own in the portfolio. And essentially he said to me, Sandy, you know, I've been doing this a long time. Capital market cycles, they always come back. And it's true. And this is, we think, going to benefit Morgan Stanley. They are the number two investment bank in the world behind Goldman Sachs. So it's Goldman and Morgan Stanley.

Sandy Sanders

We own both of those stocks in this portfolio. We do think both of their earnings will benefit and a return in capital markets activity. As we go for the next you know several years.

Macan Nia

And it's interesting you say that the return of capital market business. But the capital market business has also been recently strong in the most recent earnings. Right. So when you look at this again, why you want to knock the managers when you look at the US banks, those US banks that are more focused on the consumer, whether it's, Wells Fargo, Bank of America, they're pointing out the challenges with the consumer space, whereas these capital market, businesses, whether it's Goldman Sachs or Morgan Stanley, they've been actually benefiting from this as we move forward against short term volatility is likely going to continue medium to long term as the fed continues to cut rates.

Macan Nia

It's going to be very stimulated for these these investment banks that, you know, lower rates are better for their, better for their margins and their profits. And then last but not least, because I mentioned three, I want to we talk Morgan Stanley, we talked for last but not least, let's talk to an energy name that finds itself in your top ten.

Macan Nia

I'm going to butcher this name. Cheniere Energy.

Sandy Sanders

Junior. Oh that's it. So liquid natural gas. Okay. This is a company that has 50% market share of all LNG exports in North America. It's a big number. It's half of the market. Okay. So when you look at the overall supply, basically we've got a ton of it in the Permian Basin, low cost feedstock that we've been able to convert to a, liquid down.

Sandy Sanders

They've got two major facilities that are already up and running for multiple years down in Corpus Christi, Texas and Sabine Pass, Louisiana. And so it's a big, successful company that's become very profitable. And when you look at what's happened, the biggest thing to think about is that when you look at China, it's still 70% of their electricity is from coal.

Sandy Sanders

Oh, wow. Okay. Very dirty, way to get the electricity. And then when you have the Ukraine situation happen, obviously Europe was sitting there, very exposed. And so Cheniere has been able to, supply gas to these areas. Essentially they ship on boat, and they are basically sold out for the next five plus years.

Sandy Sanders

So the way to think about it, McCown, is that they have contracts with utility companies that take in the gas, and these are contracts that are generally ten plus years in length. All right. So it's not like a, you know, an Exxon or Chevron or, you know, a speculative driller where you're just kind of betting on the oil price.

Sandy Sanders

These are long term contracts, ten years in length. And that's what it's 85% of the revenue is contracted. And so that's a very stable business. They also have a great math team. We they just came into our office and saw one on one. They've got a nice, share buyback program as well as a dividend. So it's a great story.

Macan Nia

Yeah. And I think that speaks to you. I imagine that when you're looking at, modeling a company, it's not over the next couple of years, which might be tough with a traditional driller or a carnival Phillips or one of those big names where with them, they have those long term contracts. It's much easier for you, to, you know, model out those cash flows, those profits on and so forth.

Macan Nia

So with that Sandy, again, like I mentioned, we could go talk for hours talking about stocks. I always love, listening to your optimism, but I want to be mindful of everyone's time. I want to thank you for taking time out of your busy day. We know you just got back from vacation. I know, so I'm sure you're going to spend the next week digging out of your emails, but I just wanted to thank you, for joining us on Market Insight Monthly.

Macan Nia

Sandy.

Sandy Sanders

Thanks so much.

Kevin Headland

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