Mike, Hunt, and Jason work through a revised oil thesis, the converging big-retail battle between Amazon, Walmart, and Costco, a hyperscaler preview, and the most-favored-nations finish line in pharma.
The Cashflow Memo
Key Takeaways
Hunt revised his oil thesis: the Strait of Hormuz impasse with Iran now looks structural after the US rejected Iran’s offer of a 5-year enrichment pause, pushing near-month oil from a ~$90 anchor toward a $110–$120 range with downstream pressure on natural gas as Permian associated gas keeps Waha hub pricing in negative territory.
Big retail is converging on the same customer: Walmart’s PE ran from low-20s to mid-40s, Costco trades at 47x with a $440B market cap and no debt, and Amazon’s 12-month PE has fallen below Walmart’s for the first time despite running zero-margin retail monetized through advertising and a logistics network now larger than UPS.
The hosts singled out Costco as the most challenged of the three on valuation alone — 47x for a retailer with an unclear growth runway leaves no margin of safety, while Amazon retail looks structurally underpriced if AWS is roughly two-thirds of the $2.8T EV (implying ~$1.2T for everything else, vs. Walmart’s $1T enterprise value).
Defense tech is the next disruption beat: $30,000 drones have effectively kept US destroyers offshore in the Gulf, F-35-style cost-plus contracting is broken, and Palantir-style product-first defense companies (Palantir was added this week to the Netflix page in the memo) are the model — Hunt is hunting for a drone-company addition next.
Healthcare update: the White House finalized Most Favored Nations contracts with all 17 top pharma companies (Regeneron last), Lilly is on an acquisition spree, and Teva bought a biotech with no approved drugs in market — Jason stays constructive on generics manufacturers as the structural winners of the looming patent-cliff wave.
Show Notes
[00:00:18] Disclaimer Standard informational disclaimer.
[00:00:27] Exhibit C: Oil and the Hormuz Impasse Hunt walks through a meaningful change in his oil supply/demand view — the US-Iran embargo now looks structural after Iran’s enrichment offer was rejected. Near-month oil targets shift toward $110–$120.
[00:05:38] Exhibit B: Gas and the Permian Problem Stronger oil pulls more associated gas out of the Permian, pushing Waha hub pricing into negative territory and supporting a bearish gas outlook into 2027.
[00:09:00] Exhibit A: Federal Cashflow and Defense Spending Healthcare cost flattening, Doge aftereffects, and why the real defense fight is about efficiency, not topline.
[00:11:58] Defense Tech Disruption Jason and Mike on Palantir’s product-first model, the F-35 lesson, and why the prime-contractor lobby is the main obstacle to better procurement.
[00:14:14] New Memo Additions: Palantir and Micron Hunt adds Palantir to the Netflix page and Micron to the telecom page in this weekend’s 4/27 draft.
[00:15:35] Big Retail: Amazon vs Walmart vs Costco Walmart and Costco trade at mid-40s PE; Amazon’s PE has slipped below Walmart’s for the first time despite hidden value in retail and logistics.
[00:23:04] Why Costco Looks Most Challenged At 47x with no obvious growth runway, Costco has the thinnest margin of safety of the three.
[00:25:43] Hyperscaler Preview AWS is roughly 50% larger than Azure, implying AWS is ~two-thirds of Amazon’s EV and leaving the retail + logistics piece around $1.2T — vs. Walmart’s $1T.
[00:28:33] OpenAI, SoftBank, Oracle WSJ flags OpenAI missing 2025 budget targets, with knock-on effects to SoftBank, Oracle, and AMD — Jason notes the spending plan hasn’t actually changed.
[00:29:33] Pharma: Most Favored Nations Complete White House finalized MFN contracts with all 17 top pharma companies, Regeneron last. FDA is exploring real-time trial-data review.
[00:31:03] M&A: Lilly Spree, Teva Strategy Shift Lilly keeps acquiring; Teva buys a biotech with no approved drugs — a possible drift away from generics at the worst time, given the patent-cliff tailwind ahead.
[00:32:30] Coming Attractions Hyperscaler deep dive, Anthropic, a drone-company memo addition, and Circle on the Mastercard page.
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Cashtags
$AMZN $WMT $COST $PLTR $MU $MSFT $GOOG $ORCL $AAPL $NVDA $LLY $REGN $TEVA $SPOT $TMUS $VZ $T $UPS $MA $AMD
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