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Friday, November 6, 2026

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@AsifSuria 1 click

Asif Suria on X

Exactly! I've been long $LION for a while and violated my rule of never averaging down after @garyHeff made me see that this was one of those cases where an exception made a lot of sense. That was when LGF was trading at around $6. I should have held on to the $STRZ spinoff but I didn't see it the same way you did and that was a mistake. Hoping the deal for $LION is in the high teens or over $20 so Jon can get a wonderful payout based on his new incentive plan.
@calvinblissett 1 click

Calvin Blissett on X

Great question. My short answer is that CareCloud ($CCLD) sells an outcome and selling that outcome requires trust and experience: getting doctors paid. Commoditizing AI makes that cheaper for CareCloud to deliver, not easier for someone else to copy. I also think they are very well positioned to deliver AI and keep reaping its benefits an they alluded to as much on the Q3 call. RCM is the bloodflow of a medical practice. It’s how the practice gets paid, and nobody experiments with their cash flow to save a few dollars on a cheaper AI tool, especially when small practices are hesitant to adopt AI to begin with. One missed month of collections can sink a small practice, so trust and a track record matter more than the newest model. Practices sign multi-year contracts, and a CareCloud rep told me the most common objection he hears is that prospects are “locked in a contract” with someone else. The stickiness that keeps practices from leaving their current vendor works for CareCloud once it has them. Hospitals are stickier still: the rep put hospital sales cycles at 1–3 years. The data from doing the work is part of the moat and not replicable at least quickly. They process claims for thousands of practices. On the Q3 call, management said denial rates fell from about 8% to under 4% in a year, against the 6–8% the large RCM firms publish and the 7–8% benchmark for physician practices. Zero-touch claim processing rose from 74% to 84%. A startup can buy the same model. It can’t buy the claims history, the payer-specific rules or the people who handle the exceptions that lead to Carecloud being MUCH better than industry benchmarks Cheaper AI widens their cost advantage. They already run a large team in Pakistan at a fraction of US labor cost, and AI is now cutting manual claim touches by 44%. In the CEO’s words: “Our team now handles more volume with the same headcount.” It shows in the margins. Revenue minus direct operating costs went from 47.8% to 50.5% of revenue, and adjusted EBITDA margin hit 29%, against about 13% in 2023. When AI gets cheaper for everyone, the operator with the most volume to run it on wins the most. It’s like Walmart with barcode scanners: everyone could buy one, but Walmart got the most out of it. They also said software development is a growth engine (I plan on asking about economics which they said were good and given their track record I believe), my take is this is a way for them to utilize that cost advantage and monetize that while it is still very potent relative to the industry. What is a risk here is the Warren Buffett tiptoes at the parade analogy and the Charlie Munger distinguish when the economics stick to your ribs versus just go all to the customer, I think that is a real risk but over a time frame long enough that in today's price it isn't super concerning. Follow up to above: RCM is usually priced as a percentage of what the practice collects (a royalty like what Bill Ackman loves as mentioned recently in his Oct 26 Equity Mates interview which I enjoyed: https://t.co/AyJVuRKudW). When AI cuts denials from about 8% to under 4% (Q3 call), the practice collects more, and CareCloud’s fee rises with it. The client is better off and so is CareCloud. This is Charlie Munger's win-win business model (more data in writeup on this), what lead him to $COST and away from Valeant and $CACC. The core moat is the relationships and the volume of work that already exists. At about 5x EBITDA (see writeup for what peers trade at in TRANSACTIONS (13.6x for one set and 18x for another), the market is pricing CareCloud as an AI loser when it’s one of the bigger beneficiaries IN MY OPINION

Investor Letters

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Problems at Twist Bioscience (TWST)

Twist Bioscience’s $200 rebound followed an Anthropic-linked short squeeze, yet its DNA and protein services face broad competition while…

TWST $8B
Hunterbrook 4 clicks

VSH Earnings Review

Vishay reported record Q3 revenue of $979 million, up 24%, and guided Q4 to about $990 million as rising backlog and margins contrast with…

VSH $3.6B
Cestrian Capital Research 3 clicks

New Ideas From The Road

Aurelion Research increased healthcare exposure and sees opportunities in banking and defense, alongside research on Alcoa, Nike, ONON and…

MDA $4.2B
Aurelion Research 4 clicks

Site Centers (NYSE:SITC)

Site Centers' $3 per-share return-of-capital distribution and December delisting leave a discounted liquidation stub, with two properties…

CURB $3.6B
Real Assets, Real Value 4 clicks
QTWO · long

Q2 Holdings INC (qtwo)

Q2 Holdings sells banking software to more than 1,200 financial institutions and 27.8 million registered users, after selling off with…

QTWO $4.7B
Value Investors Club

Short CNM

Core & Main faces a short thesis centered on the risks in its roll-up strategy.

CNM $8.9B
Shallow Dives 1 click

Short LUMN

Lumen Technologies faces a fading boost from its PCF-related sugar high.

LUMN $4.6B
Shallow Dives

The Skills AI Can’t Replace

Duolingo is presented as an AI-resilient opportunity after SaaS stocks sold off on fears that coding tools will compress software moats,…

DUOL $7.6B
Modern Value Investing

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