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Strategies & Market Trends : Burryology

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To: ndxcharm who wrote (42)	11/23/2025 11:22:16 PM
From: Sean Collett	Read Replies (1) of 46

I subscribed. My investing foundation was built off Dr. Burry so it is a treat to be able to get a deeper dive into his modern thinking. The price is a steal given how much he's already given for free. Maybe one day he will post back on SI! I did leave a comment + note on one of his newer posts, " The Cardinal Sign of a Bubble: Supply-Side Gluttony", about $ORCL. I started diving into a few of these AI names and there's just so much to observe: Depreciation and amortization in 2020 were 17.6% of EBITDA leaving 82.4% to EBIT but now because of their rapid CAPEX spending the past few years D&A is 25.88% and EBIT is 74.12%. Explains why they need to spread the depreciation out given the hit to earnings it would create. One needs to assume all this growth CAPEX will turn into sustainable dollars and if it doesn't then? The real kicker is the growth in SBC. In 2020 this was 12.1% of CFO but in 2025 it's now 22.4%. You can see the impact in FCF too because they had ($394M) of FCF in 2025 but if you don't add back SBC (as Aswath would teach you should not) then FCF was ($5,068M). All the while their share count has increase by 5% since their June 2023 10-K and this with them spending $600M last year to buy shares back! Front-door buybacks....oh and they generated $653M from issuance of stock. Then you have such a large growth in SBC and at the same time the the dividend paid has increased going from $0.19 in 2019 to $0.50 in recent quarters. Their current EBITDA is ~$23,852M and for past five years it's compounded at 7.18%. Even assuming they compound that for the next 5 years at 5% (which gets them to $30,441.87) and we give them a generous 15x EV/EBITDA and apply a 10-12% discount this puts their price around $66.05-72.28/s which is a decline of 63.63%-66.77% from where they are today @ $198.76/s. Of course if the market were to correct then the 5% growth and the 15x would be rather generous, but I highlight as I think even in today's conditions this is a risky investment. Throw in the CDS spreads starting to rise on the debt fears with and it gets even riskier: Happy investing, -Sean

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