The Pomp Podcast
00:42:17 · Jordi Visser
[00:42:17] S2: be ahead of Meta soon. I mean, there's... It's Tesla and Meta are staring in front of them, so they're a drug company. Here's the thing I want people to think about. So NVIDIA's stuck in mud. Their PE has collapsed. They announced 70% revenue growth. Their PE is down at 13, 12, who knows whether it's bullish on NVIDIA? No. No. And here's the reason why. There are two things about Eli Lilly comparing them to NVIDIA that are very different. Number one, the great thing about Eli Lilly in this world of AI infrastructure trades, they are making money on the health care problems in The United States where the spending is coming, is guaranteed every year. It is noncyclical. So they've historically... Because they didn't have... These growth numbers for a pharmaceutical company are insane. Now most of this is related to obesity, but the penetration that they've had... Remember, this has been an injectable. Now they're moving to an oral. They have about ten percent of people, from what I saw in the thing, diagnosed with obesity in The US. They've only penetrated ten percent at this point, which means they still have a lot of room, especially with pills. The prices are going down. Their volumes are going faster than their price decline. You love to see that. I think they've called that Jevons paradox. I don't really know. But as the price goes lower and more coverage happens, Globally, this is... That was just The US numbers. But globally, they are less than, I think, 3%. I think it's 2% of of the global. So they still have more money from that, and that's where most of their growth is coming from. But when you go through the other areas like dementia, oncology, immunology, they've got significant revenue growth there. And what people have to understand is it's one thing to be dealing with just obesity and diabetes. It's another thing to have this growth area that is also there from all of the drug discovery that they're spending time on. That stuff is gonna be down the road. I love having call options. If they come up with some cure on something, what happened to Moderna when they came through with something that's still up for debate? You get this massive rise because they start building in the numbers. So you have the noncyclicality, which means it's a diversification on the other things. I'm sitting here. I I say, okay. My biggest position is x...
00:44:40 · Jordi Visser, Anthony Pompliano
You know, I... My biggest position was Marvell. Well, then it just fell 20%. My biggest position is now Eli Lilly because it went up 10%. Regardless, Eli Lilly has been unbelievable, and all of this is happening as it's about to post its tenth positive year in a row, and this one will be another 30%. So it's been compounding in this very steady fashion on the back of the diabetes situation, but they've got a lot more call options with inside their numbers. [00:45:08] S3: Is it fair to say that your thesis on Eli Lilly is one foot in the old world, one foot in the new world? What I mean by that is, you're basically saying Eli Lilly is one of the best ways to profit off of the US government's lack of spending discipline because they are going to spend money, and a significant portion, 20, 30%, whatever it is, goes to health care, of which Eli Lilly is a very big, component. Money ends up in their pocket for that. At the same time, all of the AI stuff, quote, unquote, the new world, Eli Lilly is leaning very hard into that, and they're able to drop prices, accelerate growth, use m and a, right, all those things. Like, Eli Lilly may be one of the most interesting businesses, I think I hear you're saying, where they're benefiting from these, like, long term kind of traditional trends of health care and aging population and obesity, but they're also almost disrupting themselves to a degree with all the AI stuff. And you put those together, it's like one plus one equals five, and that's why you're bullish?
00:46:09 · Jordi Visser
[00:46:09] S2: This has to do with if they didn't have Mounjaro and the whole Ozempic cash cow business. Like, you like to see a business that... Like, when... If you go through Apple, people have to remember, like, before the iPhone, yeah, they were turning the biz... I mean, Steve Jobs had turned it around, but how much did the iPhone change everything? And look at their hardware numbers to go from what it was to what it is today. When you get a cash cow, you can get into other things like services, and they've turned themselves into a service business. For Eli Lilly, this cash cow side is enormous. All pharmaceuticals do not have this cash cow, and this cash cow is growing every single year right now. What are they doing with the cash? I made the joke, but Novo Nordisk had the same thing, and they used the cash to go pay dividends. And this is... I mean, this was a... They didn't wanna make a bet. Eli Lilly has made significant AI bets. If I try to describe to people the importance of TuneLab, the importance of the data center that they did for themselves, the setting up a location outside Stanford out in Silicon Valley to basically work with NVIDIA. When you see NVIDIA and the CEO Dave Ricks on stage together and you listen, I mean, I spent a lot of time to just hear the plan, make sure that this was smart, but if you have all that cash, I have believed for the last three years that unfinished IP was incredibly valuable. And what I mean by that is when a biotech company goes public, which was a massive part of, I mean, the the COVID years and even before that, when they would go public, you have to have science behind that to raise the money that was necessary. So it's not like these were harebrained schemes or scams that would eventually go... These were IP. Now maybe they weren't able to finish them, but if all of a sudden they're getting closer and closer and Eli Lilly goes, okay. We'll we'll we'll buy you guys. And they're doing these m and a's to buy these IPs that they think are worthwhile. Now when you add in the benefits that came from Ozempic, they don't know why dementia's better. They don't know why, you know, the chronic inflammation, why all of a sudden people have less knee pains, why addiction went down.
00:48:24 · Jordi Visser, Anthony Pompliano
There's a lot of science in this that Eli Lilly has data from all of these millions of people and what they've gone through coming out that, should help them from the data collection. So when you go through everything and you really think what this is, I think this is a very unique part of AI. So when I say this will be the biggest AI company, compared to NVIDIA, there is a risk of an overbuilt. You have to build that in. This is a cyclical thing, and I do think at some point, we're seeing that with Intel today. Why is Intel down so much? It's not because the demand's not there. Their PC sales are suffering. Why is that? Because memory costs have gone higher, and you can't even get the memory. The bottleneck issue keeps these companies from actually being able to accelerate as much as they would, and so that's why you see these multiples compressing. For Eli Lilly, [00:49:17] S3: I don't... They don't have this issue. Mhmm. [00:49:19] S2: They don't they don't have to worry about this. This is a very different thing. So this gets into the application is the the major story here. [00:49:26] S3: Because of the AI and cybersecurity concerns, do you have any cybersecurity stocks that you are buying or interested in?
00:49:26 · Anthony Pompliano, Jordi Visser
[00:49:26] S3: Because of the AI and cybersecurity concerns, do you have any cybersecurity stocks that you are buying or interested in? [00:49:33] S2: So I do not spend a ton of time on single companies with inside the space. If I wanted to say the only software company that I own is Palantir, and Palantir is becoming a much bigger position for me relative to the semi names because Palantir has outperformed so much. I've talked about Palantir in here, but this got into the sovereign AI thing. And if you go back from the day that Alex Karp spoke about the importance of sovereignty, AI sovereignty, and you go look at what Palantir has done since that day, you made a lot of money if you went out and bought Palantir. So I... That is kind of my theme on this. These names trade at such high multiples, and that means I really have to drill down and I have to get a sense. I think all the demand side is gonna be there, but if you ask me, do I believe that a lot of that demand is already built into the stock? There is no doubt that those names could go sideways for a year and a half, just like we've seen in the semiconductor names for the last four months while their earnings have grown. It can just be stuck in the mud.
00:50:34 · Anthony Pompliano, Jordi Visser
[00:50:34] S3: Alright. Before I let you go, I want you to think of, is there anything that you did with AI this week that is a little tip for everybody? While you're thinking, I'm gonna tell them one that, that I figured out. I used Grok bot, and I set up a bot, genealogist. And I basically sat then maybe fifteen minutes telling it, hey, here's my parents' names, my grandparents' names, here's family lore. I think that there's somebody named this that did this, blah blah blah. Go find as far back in my family lineage as possible. And I knew some detail. Like, I knew the town that my great grandfather comes from in Italy. I know this or that. But actually, you'd be surprised some stuff I don't know. [00:51:18] S2: Mhmm.