Ben Claremon (00:03:19):
And even a company like Cogent, which is a public company trades at like 20 times EBITDA and has a very similar business model to Lumen’s business services side. And, 20 times for Cogent and five times for all of Lumen, just doesn’t make sense to us. And the fact is since we’ve spoken, Southeastern, which is one of the largest shareholders and has filed a 13D has continued to push the company to highlight the value of its various assets. One of the [inaudible 00:03:49] side analysts reported that the company has hired bankers to look at selling the consumer business. You remember from our original podcast, that was one of our premises is that they would separate these two businesses. So honestly, things are in motion. I think people need to be patient but they get paid to wait because the dividend yield is like I think 6, 7.5, or 8% still. So, our conviction about Lumen really hasn’t changed and we continue to scratch our heads regarding the discount between comparable transactions and what we think the fibers are worth, and what the stock trades at.

Trey Lockerbie (00:04:22):
So a lot to unpack there. First of all, you mentioned you guys sold a little bit, bought some back as it fluctuated. What net were you guys kind of said… [inaudible 00:04:30] back to where you were and just took some money off the table or have you kind of de-risked a little bit more?

Ben Claremon (00:04:36):
No, I mean, I can just talk about the strategy that I co-manage where it’s our largest position. It went from a 10% position to a 15% position because of that and so, from a risk management perspective, I looked in the mirror and talked to my co-manager, who is our founder about this and the question was, “If it was a 10% position at $8 and it’s a 15% position at 16, what is a proper risk management thing to do?” And our perspective is, you take some money off the table because the gap between intrinsic value had closed to some degree and so you take a little bit off to risk manage, and then the stock promptly fall back. So, it’s still a 10% plus position.

Trey Lockerbie (00:05:20):
That kind of raises another question which is as far as rebalancing, is 10% sort of the optimal range for you guys for any one holding?

Ben Claremon (00:05:28):
This is an outlier. We look at this as a special situation. We think that the writing is on the wall that these assets are being separated and the company has not come out and said so but everything we see points to that. So, I would say periodically we are concentrated investors and we will take larger swings. Typically our position sizes are 2.5, 5 and 7.5. 10% is the… This is the largest position we’ve ever had. It speaks to our conviction, it speaks to the amount of work we’ve done, it speaks to our understanding of what’s going on with management internally. Could there be other 10% positions in the strategy’s future? Absolutely. But I mean, I would say this is not, quote, unquote normal for us. This is a big, calculated, very asymmetric bet in our mind.

Trey Lockerbie (00:06:15):
For those who are new to this discussion, I encourage you to go back to our episode number 326, where we really go deep on Lumen, and you can kind of get a feel for the company. Something at the end of our discussion was really interesting because somehow we brought up Viasat, which is another one of your largest positions I believe. And we started just talking about it casually and how Elon and Starlink have kind of entered the space as a competitor to Viasat. Now, I’m a longtime fanboy of Elon Musk and I follow his companies pretty closely and he seems to have this unstoppable advantage in the race for space domination, given his fleet of reusable rockets that he can launch at will or discount. And he’s now introduced Starlink, which is this constellation of satellites to beam down broadband all over the world and they already have hundreds of satellites in orbit. So, from my outside perspective, it appears that he’s only a short time away from producing billions of dollars worth of new revenue through this internet service. So why am I saying all of this? Well basically because you guys hinted at the fact that Viasat, which is the stock that we are spotlighting today, is a vastly superior company to SpaceX and Starlink in this initiative. And that really caught my ear and I’ve been wanting to learn more about it ever since.

Trey Lockerbie (00:07:35):
Now, I wish I had kind of listened to you at the time when you mentioned that, because it was trading around $30 a share and it’s now shot up to 60 and drifted back down to about 50s as of today, the low 50s. But I want to definitely spotlight this stock because I think that’s news to a lot of people who are very familiar with the Elon Musk PR machine and maybe have only really heard about Starlink. Let’s take the opportunity to learn about Viasat and I’d just like to start with a quick overview of Viasat and how it makes money. Let’s start there.

Ben Claremon (00:08:06):
So I’m going to give the spoiler, immediate spoiler alert and then I’m going to pass it to Eugene to answer the really the meat of your question. SpaceX has done incredible things with the launch technology and Starlink has a pole position to be really successful in a lot of rural broadband applications. But the truth of the matter is, in three to five years Viasat is going to be an inflight wifi and military connectivity-focused company.

Ben Claremon (00:08:33):
Rural broadband will be a competitive market where Viasat will have assets that can compete not necessarily with fiber but with whatever Starlink offers and it will be a competitive market just like DSL was, just like if you’re in Los Angeles and there are three or four different fiber providers that you can touch, it will be competitive. But the success of Viasat over the next three to five years will be based on their ability to penetrate inflight wifi globally and offer connectivity to the military that does not exist today, expanding the total addressable market well beyond what other people are even considering now. And now I’ll hand it to Eugene.

Eugene Robin (00:09:15):
I just wanted to clarify one thing. I do not want for people to think that any way we believe that Starlink is an inferior product to Viasat’s current like seed products, so I just wanted to say that and also preface what I’m going to say with the following that, I believe Elon will be the only person that’s successful within LEO barring Bezos throwing $20 billion at the problem because obviously, if you have an unlimited checkbook, I think you can do whatever you want with it really.

Trey Lockerbie (00:09:45):
LEO meaning lower earth orbit right? I just want to spell that out for people as well.

Eugene Robin (00:09:49):
Yes, sorry, I try to avoid acronyms, the lower earth orbit, so Jeff Bezos is also kind of in the game with Kuiper and that’s his constellation. Certainly, do you really want to talk about it and [inaudible 00:10:01] he probably has the best one which is money. He has almost an infinite… It’s a rounding error for him really as opposed to Musk as well as Viasat.

Eugene Robin (00:10:11):
So I just want to say that I’m firm like I really do believe that they will be successful, I think that he’s already successful, let’s put it that way. They’ll be a part of the pie that’s controlled by the LEO, lower orbit operators and they’ll be a part of the pie that’s controlled by the GEO or geostationary satellite operators like Viasat. That’s really how you have to think about it. It’s unfortunate but people think this is a zero-sum game where there’s going to be a winner-takes-all sort of thing where Elon’s kind of advanced space capabilities will allow him to win the entire pie. It’s impossible for many, many, many reasons which I’ll kind of touch on. But to answer the question I think you posed initially which was, how does Viasat make money? I kind of want to rewind the clock a little bit and I will give the disclaimer that once upon a time I had a real job and I was a software engineer and I actually worked on Viasat when I graduated from the school.

Eugene Robin (00:11:06):
So when I was there the part of the business that I worked in was the network systems group and the actual core of Viasat from its founding has been within encryption and decryption technology specifically for the military. So this isn’t a company that all of a sudden woke up and said, “Hey you know what we should do is get into military applications.” They’ve always been there, that’s been the core moneymaker from day one. They’ve actually been the displacer in that space, Mark Dankberg created a more advanced niche product that would then… Encryption and decryption specifically for inline network communications for the military. And slowly over time they became… They went from startup to disruptor to now a dominant player within that space for the DOD.

Eugene Robin (00:11:56):
So that’s actually how the core of how they make money is that defense side. And then naturally, most people, when they look at the company because all the glitz and glamor and the headlines and all that is specifically on the residential broadband they skirt over this, what we consider to be a diamond in the rough or the true jewel, which is the defense side. And it’s due to the defense side its high cash flow generative capabilities, Viasat’s been able to develop everything else that they have, so that’s actually the core of how they make money.

Eugene Robin (00:12:26):
In conjunction to that what they have is really a communications equipment business, which they sell ground network equipment to other satellite providers actually. And so that’s the one thing that’s really interesting because I think space tech it’s in this really interesting revolutionary kind of flowering point where we’re actually not so good doing. Behind me, there’s probably three dozen startups right now and all the large defense contractors that are in space, so we’re in the epicenter of it and as more and more money flows to it then Viasat will actually benefit on the communication equipment side because most people don’t have the 25 year track record of building space reliable equipment that Viasat does.

Eugene Robin (00:13:09):
Whether that be the antennas or the ground station network equipment or [inaudible 00:13:14], more nuanced things where they go into the satellites. So that’s one of the ways that they also make money and then the other one, obviously, is the… Well it’s called the satellite service society, which is, I think in a word, most people are kind of fixated on. So that’s the residential broadband. They do that through their seed service or I don’t know if they still call that, it’s called that anymore but then they have inside WiFi, so if you have a phone on JetBlue or American, that’s actually all powered by Viasat. It used to be powered by this company called Gogo, which, again if anyone’s ever flown and used Gogo, it’s one of the worst services I ever imagined. And then so device had to displace them. In fact [inaudible 00:13:54] so Delta officially signed on to have their entire fleet be switched over to Viasat through 2022 I believe.

Eugene Robin (00:14:03):
Anyway so they have inflight WiFi, then they have, call it the community WiFi, but it’s actually… It’s a really interesting little niche business that they don’t talk about as much but if you go to Mexico or parts of Brazil now they actually have these waypoints that they put in in rural, very poor areas. They can beam downside like connectivity to and from that waypoint it actually distributes connectivity to folks that can maybe pay a dollar a day roughly for internet access. And they actually provide a base scaled cheap connectivity solution for folks that cannot get connectivity around the world.

Eugene Robin (00:14:40):
Then lastly, due to their acquisition of RigNet, they’ll have a maritime business which is both offshore oil derricks. They have tankers, cruise liners, things like that, all need connectivity. So when you’re in the middle of the ocean you obviously you’re far away from any sort of wireless connectivity capabilities and you need… people now want to be connected all the time, so Viasat will be that bridge. So that’s kind of like the kind of try to go quickly over it, but that’s the Satellite Service Society, so those are like the three I guess legs of how Viasat truly makes money.

Trey Lockerbie (00:15:17):
Viasat’s revenues are only a couple of billion dollars right now but it seems like the satellite industry globally and connectivity and some of these other industries you mentioned that they’re playing in we’re talking about hundreds of billions of dollars, right? So, as far as market share goes, how do they kind of fit into the landscape? What would you say? Are they dominating on the… Obviously, on the US government space, do they have sort of a monopoly on that business, like just give us an idea of like their position in the space overall?

Eugene Robin (00:15:46):
So I’ll just start with the government system side. So if you look at their government revenue, there’s probably, I’m just rounding up… 1.1 billion in total revenue. Most of that, maybe 75% of it is on products. So that’s kind of the things that I described and the network encryptors, the handheld portable radios [inaudible 00:16:05] individual essential operations units. There’s the high-end encryption modems that go and get installed in like Black Hawks and F18s and things like that. So that’s the core of the project set within the government services and they have what they consider to be the service line. While that’s a catchall, the vast majority of that is actually the connectivity side that they use their current satellite systems and also partner with others and resell to the government. So that is about 200, call it 275 million. So tiny. The US market, just for America’s DOD, I’m not even talking about the UK or Australia or anyone else within our native complex, it’s four billion.

Eugene Robin (00:16:45):
Needless to say, there’s a large runway from where they are today to where they can be. In case people are kind of curious like, “Okay, well, what does that actually mean, what does a connectivity service provider actually do for the DOD?” Viasat’s specific line item is actually Air Force One and Air Force Two, so they power our presidents when they fly around on Air Force One. They’ve powered the actual connectivity, encrypted, hardened connectivity that goes into [inaudible 00:17:14] airplanes, that’s one of their biggest contracts. They also do special operations connectivity to SOCOM and obviously, I don’t know specifically what that entails for obvious reasons, but they either use their current satellites or most likely given where special operations folks operate, they’ll actually buy or resell effectively connectivity from an Intelsat or MR-SAT or SCS for sure, what I consider to be traditional, mainline distributors of satellite connectivity around the world. And why that’s important because the Viasat’s trying to build a global constellation with their ViaSat-3 constellation.

Eugene Robin (00:17:53):
Every time they cover a new part of the world it actually opens up the opportunity to sell back connectivity to their partners and for you let’s say the market it $4 billion just from the United States or our own DOD uses, you can imagine that if Viasat has the contract to deliver connectivity because they happen to have the hardware that’s you doing it for that part of the military right now, they can just basically redirect connectivity to their own and now instead of them paying, they’ll be selling someone else’s revenue and they’ll get that all coming to them. That’s I think if you want to talk about the [inaudible 00:18:33] that operate that’s kind of the military side.

Eugene Robin (00:18:36):
Then if you go connectivity services for broadband. So broadband, in the US there’s probably if you aggregate Hughes, which is the other main competitor to Viasat right now, and Viasat together you’re looking at somewhere around 2 million end-users and then I’m just rounding. So there’s two million satellite internet users. Elon believes that not only that market could be his, which I totally understand and agree with, but also on the periphery of DSL. Let’s really DSL, like if people use that term a lot but the way that the government defines what’s high-speed DSL is basically only 25 megabits per second download speeds. Most of us here in LA, probably have somewhere around a hundred.

Eugene Robin (00:19:25):
The point is, the actual true address for a market for high-speed connectivity for Internet via satellite can actually be much greater and I actually think that’s one of the things that SpaceX truly gets, where it’s not just about, “Hey, I’m in the middle of nowhere, North Dakota and I really need to connect and I’d like to connect on a fast way to Internet,” but also, they can pick off people on the periphery of larger cities and things like that. The point is the pie is so massive that if LEO is successful that doesn’t mean that GEO won’t be, okay? And I think that’s really what people misunderstand here is that if they treat Viasat as some sort of weird short to the success of Elon. We fundamentally disagree and again, I’ll run over some of the reasons why the… So, but yes, I mean, if you think of TAM for broadband connectivity as anyone who has sub-par connectivity, that extends to a lot of people who are even in populated [inaudible 00:20:26].

Eugene Robin (00:20:26):
And I think that’s actually why Elon’s building what he’s building. He’s going out with the rule because that’s the proof point right and that’s the easiest thing to say like, “Hey look, it’s working and these people are hungry and starved for this connectivity,” but I think his overall goal is going to have to be if he really wants to make this economic to go after some of the DSL users that are actually CenturyLink probably.

Trey Lockerbie (00:20:49):
It’s easy to kind of get a quick sense that Viasat has been around for a very long time. In a lot of people’s eyes, it could be seen as, I don’t know, a dinosaur in the worst case, right? Compared to something like a SpaceX with reusable rockets, that are launching these things up. Let’s walk the listeners through why the disruption of Viasat might be very hard?

Eugene Robin (00:21:10):
Well it’s a great point he made about Viasat being a dinosaur and it’s a little… Let me just start there. Viasat isn’t a dinosaur, it’s actually on, specifically in GEO, it’s on the leading edge of GEO. And in fact, if Mark is correct about the, say the fourth generation, so these already sets things like eight terabytes per satellite, it will be the equivalent of everyone’s satellite currently in existence in GEO or being planned times, let’s say four. Just think about that. One generation four satellite will be that.

Eugene Robin (00:21:46):
The point is Viasat continues to iterate and develop and leap ahead of all the competition that they in GEO. I personally… This is our premise that if GEO was left alone and had no LEO competition, Viasat actually would eventually dominate and own 99% of it unless we had some national champions that were around just because France wanted to have their own or whatnot, but the technological progression there was such that they were starting to get to an inflection point just opening up a wider and wider, I guess, evolutionary advantage versus their competitors. Let’s put it that way, right?

Eugene Robin (00:22:27):
Now when you talk about comparing that to what Elon’s doing in LEO. So one, people need to understand the true difference between geostationary and low earth orbit is, the low earth orbit side of LEO means that they’re at like 550 kilometers above the earth which means that the… Just as a trait the speed of light travels a certain amount of time and so you can get 25-millisecond latency, so just how fast it takes your uplink for it to hit the satellite and come back down as a downlink. So geostationary is much, much, much, much higher up in space and so that means that the average ping or the average latency becomes somewhere around four to 600 milliseconds. Massively different.

Trey Lockerbie (00:23:14):
Is that really important though?

Eugene Robin (00:23:16):
It is if you’re a Twitch streamer or a gamer or a heavy Zoom user. So if you are doing Zoom over Viasat’s service, we’d obviously have a lag and delay, which is obviously, is annoying. You could do it, but you’d had to pause for the second and people don’t like that, so there is a more advanced use case for LEO that a GEO just cannot hurdle over right now and it will never do so just again physics being what it is. It is what it is right? So I think that’s really if we talk about the differentiators of LEO service versus GEO, that’s what it comes down to, it’s whether or not you’re doing a live video stream. If you’re not, if you’re just consuming bandwidth when it comes to browsing around the Internet or bringing up Netflix movies, YouTube, it doesn’t matter. I mean it’s indiscernible and in the way that they’ve kind of optimized the cache, things down at the modem level, it’s not a big deal.

Trey Lockerbie (00:24:16):
Starlink is very focused on the lower earth orbit, or the LEO side of the business. Viasat has a lot of assets on the geostationary side of the business. Not that they don’t have LEO as well, but they’re primarily focused on GEO and is that harder to disrupt?

Eugene Robin (00:24:33):
They do not have a LEO connectivity solution that’s consumer or business [inaudible 00:24:40]. They actually have a trial with the Air Force, building LEO satellites for a… Maybe a military constellation, but they do not have anything on the LEO side. They’ve been okay to, I think there is a plan. I think they have a 430 or something like that satellite constellation they could launch themselves, but they have historically claimed that it doesn’t make economic sense for them to do. Their main reason why is because, so a geostationary is a singular satellite. There’s not like thousands of them there’s just one. And Viasat has two and eventually they’ll maybe have like between six and 10 so that one satellite though can take its beams… Just think of them like spotlights and divide them up into many, many, many other tiny beams and then steer it and this is the thing that Mark pioneered, steer that beam into the highest bandwidth demand area that they have, which means that one satellite can effectively if you sell it correctly, utilizing now 90 to 95% of its overall capacity.

Eugene Robin (00:25:53):
Right, so you have sitting up top, it doesn’t move, it just says, “Okay, there’s more demand over here, so I just steer the beam that way.” LEO by its design is actually… Their satellites are much smaller, they are speeding across the sky, never-ending, always orbiting the earth or orbiting the earth and so you should think about the flight path of a LEO satellite. Most of the time it spends over uninhabited parts of the world, our world’s 70% water, so it’s beaming satellite connectivity to absolutely no one. We can get into like the more technical aspects of what Elon has to hurdle over, but one of them being… If you’re a LEO connectivity provider and you’re trying to let’s say, provide connectivity to a plane or a ship in the middle of the Pacific, you can’t. Even if you’re over them the reason why is because there’s no way for you to beam the request by the user on the ground or in the air [inaudible 00:26:51] back down to Earth and into the actual internet without having something called base stations. So in the middle of the Pacific, you can’t have a base station because well there’s nothing, there’s no fiber, there’s no… I mean it’s impossible for you to connect.

Trey Lockerbie (00:27:07):
How did the airplanes then going over the ocean have WiFi coming down, obviously from satellite with Viasat, how are they getting the…?

Eugene Robin (00:27:14):
So because GEO… Just think of GEO as a big flashlight shining on this part of the earth. Well that flashlight also sees base stations as opposed to LEO which is much, much closer to the ground and so its view angle is constrained to, I don’t know the specific sign of [inaudible 00:27:33], but let’s say it’s constrained to like a 50 square mile radius, right? If it doesn’t see a base station within its view angle then it can’t actually communicate with the internet, right?

Trey Lockerbie (00:27:46):
On that point. How much in your estimation does SpaceX truly pose a risk to Viasat? It sounds like they are going to really take over this rural total addressable market if you will for people who aren’t connected to the internet and you guys seem okay with that, right? That doesn’t seem to encroach on Viasat’s turf that much. I’m wondering does SpaceX and Viasat actually benefit from each other in any way in this regard?

Eugene Robin (00:28:09):
So a couple of things. One, I actually don’t think that he’s going to win, I said two million rural users. I actually don’t think he’s going to get to two million. I think probably 400,000 is what he’s capable of really serving really well. If he sticks to the 100-megabit-per-second download speeds and unlimited actual capacity which I have a high… I don’t think he’ll do that, I think he’ll actually amend the plans if he gets really successful. Maybe like they’ll degrade the service.

Trey Lockerbie (00:28:39):
How many satellites would that take also? Because he’s talking about hundreds of satellites going into space.

Eugene Robin (00:28:44):
I think 4400 that he’s now okayed to do, add about 550 kilometers, it will allow him to do about 400,000 to maybe 500,000 users in a quality service, right? I just want to help people understand, so because the satellite is what it is right? Fiber, you can have multiplexers that you can swap out and you can take one strand and subdivide it into a thousand strands and it’s all done via both software and also hardware on the ground and it’s a very like adaptive medium like you could swap equipment out every month if you want, right? LEO satellites you can’t do that with. So once you launch them up there, to refresh the entire system would take you a year to three years. Think of a satellite as like a fixed amount of bandwidth and you can take that bandwidth and slice it up and dice it up among a bunch of his users, but then you have to start making trade-offs between capacity and actual speed.

Eugene Robin (00:29:41):
So if you’re in, right now he’s serving, I don’t know, 10,000 or 40,000 users and people love it. If you 10x that can you have the same quality of service? Maybe. If you go 20x that I don’t think you can. It’s physics right. I mean there’s a certain amount of capacity that he has to use. He can divide it up among all the users. If there’re too many users then he has to degrade the quality of the services, kind of like our cellphone towers right? If there’s 10,000 people connected to one tower, it’s going to be like you’re on 2G.

Trey Lockerbie (00:30:13):
So it’s the opposite of a network effect in that regard right? Ironically, given the name, but the more people using it, the less-

Eugene Robin (00:30:20):
That’s exactly right, which is why Elon has said like, “Hey I want to get to 40,000 satellites,” and why does he say that? He’s not saying it just for fun, he actually needs to have the density of those satellites in number to provide the same service to more and more people, because again, at any given time if you’re going to be a Starlink user, you’re going to be maybe seeing two, maybe four satellites above you and each of those satellites is small and technically, if you really want to get down to it, can serve maybe 500 people. So if you’re in a rural area in Iowa with 20,000 people who really want connectivity, actually physically speaking he can’t capture 100% of the market. I hope that makes sense like, so he’ll do really, really well but if he wants to get 100% of the market, he’s going to have to degrade everyone else’s connectivity which would then make it be on par with or even worse than like what Hughes or Viasat can provide.

Eugene Robin (00:31:22):
So there’s a limit to how much he can win which goes back to our point which it’s not a winner takes all pie, it’s going to be Elon and Starlink have this nice slice, Viasat has this slice, Hughes has this slice and declining, but they’re going to win in some way right? I think you also asked like, “Can they help each other?” There are network effects in the sense that he’s actually his promotion machine is so great because he’s advertising for satellite connectivity in general and what is that going to do for providers like Viasat who can, let’s say they can septuple their quality of their service over the next three years or just by providing more and more bandwidth, I think they’ll be able to ride on the coattails of this great PR machine that Starlink has and saying, “Hey, if you want 100 megabits per second, we could also do that.” And you can say that we’re not going to charge you $500 for the equipment. We’re going to charge you 25 or 50, maybe even give it to you for free.

Trey Lockerbie (00:32:22):
As well as a race to space. Are we talking about a race to the bottom as well? Meaning that all this capacity coming from space in the near future, does that just like crush the price of the Internet? I mean, are we going to be paying pennies for connectivity and does that actually have a negative effect on these companies’ revenue streams?

Eugene Robin (00:32:40):
Great, great, great, great question. Think of it this way. I don’t think the price of internet… Have you paid more for your Internet since 1998? I don’t think so. I think most people have paid between 50 and $120 for the longest time ever and you can… They’ll run promotions, you’ll threaten to switch over from Spectrum to [inaudible 00:33:01] or whatever, but in the end the price has been roughly the same. What’s actually changed and plummeted is the price for bit deliver and that’s the key here. So when you think about who’s going to win in the future it’s going to be the person with the lowest price per bit because in the end connectivity is a commodity. You don’t care as a consumer, whether you’re in the military, well maybe I should caveat that, maybe [crosstalk 00:33:28]-

Trey Lockerbie (00:33:28):
Encryption right?

Eugene Robin (00:33:28):
Right, exactly right. But let’s say you’re a maritime consumer or a backhaul consumer or you’re just a regular consumer at your house. If you can care really who it is, you just want good service, you want most of it and you want it for the cheapest price possible. It’s very simple. So what does that mean? I mean is that the folks in the satellite space with the lowest cost per bit are going to be the dominant players.

Eugene Robin (00:33:52):
If you think about the overall capacity, let’s say this pie. Your overall share of the revenue attached to the capacity will be your equivalent share of the capacity pie. Right, I mean if you’re selling a commodity and there’s really no differentiation a bit is a bit, then your share of that pie will be dependent upon how good is your actual space tech. And so, I think this is exactly why we believe that Viasat will provide a larger than a current slice of the pie in the future. And also, I really do think that Musk and Starlink are correct, that pie will grow and the more and more capacity and connectivity that there is up in the sky, the more and more use cases will show up. And then you’ll start seeing crazy stuff like, “Oh sensors around…” I mean I’m just making things up like instead of building a wall why don’t we actually employ sensors it’s for-

Trey Lockerbie (00:34:49):
Does Starlink have a vertical almost integration with Tesla vehicles that are obviously getting connectivity on the highways and stuff, is that part of the benefit? Is there an advantage that it’s going to benefit Tesla in some way from having these satellites in space?

Eugene Robin (00:35:03):
It’s funny, I believe that Starlink has told its beta users, “Please do not take the satellite dish and drive around with it on top of your truck or whatever, your Tesla, or we’ll actually turn it off and take it from you.” But that’s ending, I’m going to say June. They put something out where they’re going to allow their users to be mobile. So I think, again, one of the sneaky things that he’s going to do is, I think he will integrate the service in some way, I think that’s how he thinks, with Tesla and it’ll be kind of like the Sirius sort of, “Hey, I bought this car had Sirius radio already pre-installed.” It’ll be, “Hey, I bought this Tesla, it already had Starlink pre-installed.”

Trey Lockerbie (00:35:47):
Meaning like now you got your full self-driving on the highway and now you’ve got Netflix streaming on your car perfectly.

Eugene Robin (00:35:52):
Exactly and again I think one of the limbers to truly having upon these vehicles is connectivity and sensors and so if you’re out in the middle of Arizona and your car needs to have some sort of way points that are pre-programmed and downloaded onto it and are adaptive. And I think the connectivity will… If you have a higher throughput connective exclusion I think that will enable things like that.

Eugene Robin (00:36:18):
Like I said there’s things that high earth and connectivity through space that we haven’t even thought of that will appear and I think that’s really the long-term business case for Starlink [inaudible 00:36:30].

Trey Lockerbie (00:36:31):
Speaking of Tesla, Ben, Tesla seems to be holding the crown for like the major ESG company on the public markets right now. But I’ve heard you say that Viasat is the ultimate ESG company. I would love to know why. Can you elaborate on that?

Ben Claremon (00:36:47):
I’ve said that a little bit facetiously, but think about it this way. So how many years ago did Google with their Loon program, where they’re putting hot air balloons up in the air and trying to beam connectivity to poor areas for that weren’t connected or Mark Zuckerberg of Facebook saying that he was going to connect the world’s poor and Elon talking about it as well. Viasat is already doing that through their Community WiFi business. And so if you just look at what they’re doing in Mexico as Eugene described, they already have a profitable business that beams satellite connectivity to a central, basically a little ground station. And then that WiFi is then dispersed at the Town Square where people can actually use it and these are people who have never had connectivity before.

Ben Claremon (00:37:26):
Probably the ultimate ESG stock is I think a little bit overstated but the truth of the matter is, you read all these articles about, “Oh look up, look at these great companies trying to connect people,” Viasat is already doing that and so they have a pilot in Brazil, they have a business in Mexico, they’re already doing North Africa when the two satellites come out EMEA and APAC, there’s going to be an opportunity to connect millions if not billions of people who through their community WiFi business that have never had connectivity before, right? So if you believe that a good way to raise people out of poverty, a good way for people to be connected to the world is to have an Internet connection. Then Viasat is a really good social sustainability company and it will also be a good business model for them. Because what they’re trying to do is they’re trying to fill up the capacity and so I think one of the things and you just kind of touched on this. But one of the things that people are always looking for, is they’re looking for some silver bullet.

Ben Claremon (00:38:23):
You’re like, “Well what’s the one thing you’re going to do to fill up the capacity?” With Viasat, it’s everything, so they’re putting up these three ViaSat-3 satellites. One over North America, one over APAC, and one over EMEA. APAC and EMEA, our sense is that they’re going to be heavily weighted towards the military. If you just think about what our US military cares about, they care about what’s going on in the Middle East and North Africa. And they care about what’s happening in the Pacific. Listen, there’s not going to be any Starlink with base stations in China. You’re not going to put physical base stations in China, so you have to have a high throughput sat, GEO satellite.

Ben Claremon (00:38:59):
If you want connectivity to our troops or our marines or our navy in the Pacific right? And so, the military… Our sense is that it’s going to take up a fair amount of the capacity in those satellites. But then there’re just so many other ways to win, right? There’s global inflight WiFi which we haven’t talked about. So Eugene already made the joke about Gogo and how bad it is. If you fly JetBlue right now, you’ll see a better experience than is anyone else is offering with device that service but that’s… Let’s just be clear. That’s the Viasat-2 satellite. When the Viasat-3 satellite is up in early 2022, you’re going to see much better inflight WiFi and it’s going to just, our sense is that whatever globally Gogo can offer it’s going to be not even anywhere near what Viasat can offer. But then, when EMEA and APAC are up as well, those satellites, you’re going to have global connectivity. So you’re going to be able to fly from New York to Tokyo and you’re going to have connectivity, hopefully the whole time, obviously there could be intermittent outages, but you’re going to have… When the APAC satellite’s up you’re going to be able to have connectivity the whole time.

Ben Claremon (00:40:02):
That is a business that doesn’t exist today. No one who’s flying from LA to Tokyo right now has connectivity, right? And so, that’s if you think about the TAM expanding, Viasat is a field of dreams like if you build connectivity through inflight WiFi that’s global, people will come. And so when you have inflight WiFi, you have some rural broadband and you have the military and then you community WiFi. Our sense is that they’re going to have no issues filling up this capacity because use cases are going to be a comm that hasn’t existed yet. And people who have never been connected will be connected. You asked us a question, like there’s all this capacity coming out. I mean, I just read their charter call today. I mean, they’re talking about, I think the average user for charter fixed broadband is like 700 gigs a month and a lot of the users are now using over a thousand gigs a month.

Ben Claremon (00:40:50):
It is unbelievable the demand for bandwidth. And where’s that coming from? It’s coming from video, it’s coming from gaming. I mean, think about it. People used to watching TV, now they’re not. Now they’re streaming everything and you can’t stream, if you don’t have an internet connection. And so what that’s doing and videos are high, takes a lot of bandwidth. So we just think that the total addressable market and demand for bandwidth is growing so much faster than any amount of capacity that Viasat can build.

Eugene Robin (00:41:17):
When they go internationally and do transatlantic, transpacific flights, those customers are sometimes two to four times more valuable than a domestic US customer. So the actual addressable market for inflight connectivity could be, a moonshot of it would be a billion dollars but I don’t even think it’s a moonshot because honestly, you’re talking about that’s probably six and a half thousand tails. 6000 tails. And they’re already on track to get to two and a half thousand from what we can see today and that’s without the APAC connectivity in place. That’s without most of the African subcontinent, African continent in place. And without any of the Indian Ocean passages, so the actual number of CRR is so immense that that’s the actual true business case for Viasat to continue to build these things.

Eugene Robin (00:42:04):
And I will add that for the equivalent consumer, I would rather have 1000 tails than half a million consumers. The reason why those 1000 tails.

Trey Lockerbie (00:42:17):
Tails meaning?

Eugene Robin (00:42:18):
So meaning planes. So 1000 planes. I’d rather have that than four or 500,000 consumers because those four to 500,000 consumers have a natural churn about 2.5 to 3.5%. The planes have zero. So the actual to get the same profitability levels for inflight WiFi are that much greater than having a consumer broadband business and by the way, I strongly get Elon, they know this. They’re not going to just let other people take this market. They will get there eventually I believe. I think it’ll take them longer than I think they think. They have to have FAA clearances to get their equipment on board. Actually, I don’t think they have air mobile antennas currently developed, so the point is like for the addressable market, Viasat and their growth trajectory on the inflight connectivity side itself could make this company into a call it the five billion-dollar, six billion-dollar entity just by itself without having any of the military or commercial, residential side.

Trey Lockerbie (00:43:26):
Let’s talk a little bit about the risks involved because you mentioned all of this capacity coming online. I mean, you mentioned Starlink’s, tens of thousands, I think you said 40,000 satellites going up into space. My tiny human brain is making this assumption like that sounds like a lot of satellites and that’s going to clutter our skies and there’s inherent risks to that if I step back it’s probably like space is infinite but the world is very large. That’s probably negligible in the grand scheme of things. Is there any risk to putting this much material up into our stratosphere basically?

Eugene Robin (00:43:59):
Well it depends who you talk to, so obviously Starlink and Kuiper they’d say no with a caveat, the caveat being, you need to have good, what they consider space junk management schemes and you need to have a good like collision avoidance systems and being really good at tracking things and just to clarify that for your listeners. So Elon has, but I think 4400 is the FCC okayed number, it’s not 40,000. He wants to eventually get there, but that will take another round of regulatory approvals and years and years of study and blah blah blah. So I think for what he can accomplish today, it’ll still be very impressive but it’s not going to be 40,000. One of the things that people push back on their model is like, well, if there’s a collision, you might actually cause this cascading effect of just destruction in space because if you have so many things crossing [crosstalk 00:44:56]-

Trey Lockerbie (00:44:55):
The domino effect right?

Eugene Robin (00:44:57):
Exactly, yeah, you might actually… And this is the Kessler syndrome, actually the term for it where a satellite that’s out of control that causes… One collision can actually cause an infinite number of collisions and then that space junk that is left behind that you can’t control anymore will basically make that band of the earth’s atmosphere inoperable for all satellite connectivity or solutions in general, which would be really, really bad because it’s not just about SpaceX right? We have the International Space Station there, we various other countries have their own satellites, whether it’s spy satellites or whatever it may be orbiting there. So you have to think about the world, not just yourself. So there is certainly, there are risks there, but at least our SCC has deemed it irrelevant when it comes to Starlink’s, they literally like this week approved their 4400 to go up, so that will happen. I mean there are many other I think risks in general and if that 4400, once it operates for a couple of years and if they can show that it’s safe, then I think the regulators might relax a little bit, but I think up until that point, you still have, I mean, I guess four to five years before they allow him to do anything more than what they have right now in the docket.

Trey Lockerbie (00:46:13):
All right and I’ve heard you talk about the government side of the business for Viasat and that it can make up as much as $46 a share just on its own. And obviously, the stock’s currently in the low 50s, so that’s a lot, that’s the majority of the share price right now, but I’m curious. The assumption sounds like Starlink is not going to come after that business mainly because Viasat has this really long-standing relationship with the government and that its encryption technology is very strong. But all of those things sound like kind of, if I’m thinking about Elon Musk and his relationship with the government as well as his ability in the… to create encryption in other ways or advanced technology in other ways, that doesn’t sound that defensible to me. If he’s coming after it. Do you guys look at him as a risk for coming after that government business at all?

Eugene Robin (00:47:02):
I don’t think that he’s going to go into the hardware side. There’s actually a ton, the moat there’s much greater than I could even possibly describe because it’s not just like you’re making hardware, right? Because you’re going into a highly regulated environment and where you have to have NSA type points for your certifications for a lot of the equipment. So these aren’t like, “Oh let me just slap together something and we’ll commercial off the shelf it,” and voila have a government contract. These are boxes that have been pre-cleared and tested a lot of the Alphabet agencies and NSA being the primary one that allow for hardened jam-resistant communications in the middle of war. And trust me, the military doesn’t move quickly when it comes to changing over providers because if someone’s coming along saying like I can do this better. In the end, you have to prove that you can operate in that hostile environment and what Viasat has is three decades worth of proving that they’re able to operate in those hostile environments within an encryption, decryption, and compression algorithm that allows for incredibly high throughput amounts of data to go through the typical war fighter’s hands.

Eugene Robin (00:48:22):
I would put the chances of him getting to the parts space at zero. I think obviously connectivity… Again, I don’t want people to think like I’m naysaying Starlink in any way. I do believe wholeheartedly that he will provide some connectivity for certain government solutions going forward. Again just from the GEO report I mentioned, it’s four billion today that market, so again, can Viasat win 20% of it and get 800 million revenue from their current 275? I think so. Can SpaceX get their share? I also think so. There is enough here to go around, let’s put it that way. In the end, they serve different use cases and that’s really important to understand.

Eugene Robin (00:49:08):
Again, if you’re a geostationary provider and they need connectivity for whatever reason, in the middle of the South China Sea. I’m going to guess that you’re going to get the call and not the LEO version, because the LEO doesn’t have secured, I guess offload point or no gateways that the DOD would trust. I know what people’s like, “Oh, well he’s going to put floating barges in the middle of the Pacific.” Okay, try to sell that to an admiral who’s like, “Wait a minute, I’m going to be reliant on something that can be sunk with a submarine? Explain that to me again?” So anyway, there’re a lot of advantages that Viasat has to protect itself in the defense side and honestly, they’re a drop in the bucket right not when it comes to the connectivity revenue from the DOD and I still believe people totally miss that point. They completely don’t understand how competitively positioned they are for the future with the caveat being that they need to have the global satellite network up. So those two ones that come [crosstalk 00:50:17]-

Trey Lockerbie (00:50:16):
And that’s the ViaSat-3 constellation.

Eugene Robin (00:50:18):
Correct.

Trey Lockerbie (00:50:19):
And when is the debut of that, like when should we expect that to be in the sky?

Eugene Robin (00:50:24):
The first one which goes over North and South America effectively the Americas satellite comes up in… Well, the launch should be… They say Q1 calendar. Q1 of 2022, so call it eight months from now. Seven to eight months from now. And then you should start seeing revenue within 12 months.

Trey Lockerbie (00:50:44):
And in your opinion the market is just not pricing that in?

Eugene Robin (00:50:49):
In fact this has been the history of Viasat stock. We’ve owned this in different sizes for six years and in between the first satellite and second satellite, actually caused by SpaceX, because SpaceX was going to be the launch provider for Viasat-2 and then if you guys recall they had an issue with a couple of their rockets blowing up and so they canceled all launches for like four months until they figured out what was going on with the rocket systems which causes massive backlog of satellite companies who had to be pushed to the very back of someone else’s line, so Viasat had contracted out with Arianespace to do their second launch. It had to wait an extra year and a half effectively.

Eugene Robin (00:51:29):
So and in that lull that’s when the initial shorts came out and [inaudible 00:51:33] did a great piece and attacked at exactly the right time and people said, “Oh my God, this is a terrible company, they’ll never grow because their rural broadband’s getting eaten by 4G,” and whatever. 4G was the bogeyman back then. And so we suffered for two years like idiots and then the satellite was launched and revenue started increasing and the cash flow started coming through and all of a sudden they into the ’90s. And I think the same thing’s happening right now really, I mean, Starlink is the new bogeyman, but that bogeyman is much scarier because he gives a much better PR. And so I think we believe that there is a good buy point even today for someone who has longer than a two quarter-time horizon and can wait out the volatility.

Eugene Robin (00:52:20):
We believe that they will be rewarded with a much higher stock within the next two years.

Trey Lockerbie (00:52:24):
And Gwynne Shotwell loves mentioning… The CEO of SpaceX has mentioned that obviously, their core focus Starlink is consumer-based, but she also mentioned that while SpaceX might not be a company that makes sense to go public, Starlink could be. Meaning they could spin that off potentially and take Starlink public.

Trey Lockerbie (00:52:44):
So I have to ask, if that were to happen, is that a stock that you guys would be looking at pretty closely and even investing in?

Eugene Robin (00:52:52):
It depends on what the price is, I mean we’re cheapskates and value guys we have a problem with cracking open the wallet and paying for growth. I will say that, I almost guarantee you that if Starlink were to go public, there would be an immediate long-short trade where people would go long Starlink and short the traditional providers which unfortunately I think Viasat would be lumped into that mix. It would be to the people’s detriment but I think that that would be the natural thing that someone would do. I highly doubt that they’ll do this in terms of the separating it up because I like Elon and his like chutzpah, his ability to like just make things, will things to happen. But one of the things that I think and one of his core beliefs is he needs to go to Mars. He can’t raise the money to go to Mars without Starlink, that’s part of SpaceX. No one’s going to give SpaceX money to go build a cool rocket to go take [crosstalk 00:53:47]-

Trey Lockerbie (00:53:47):
Right, Starlink is his AWS kind of feature.

Eugene Robin (00:53:49):
Exactly, exactly. I think Starlink is going to fund his other adventures in space and I think he totally understands that point and I don’t know why they would separate out of companies, it doesn’t make sense from a fundraising perspective.

Ben Claremon (00:54:02):
There’s no way Starlink is making money right now. Now that hasn’t stopped anybody from going public especially if there’s a SPAC involved, but let’s just think about it this way. To be a Starlink subscriber it is $99 a month and then $500 for the dish. We’ve seen estimates for the dish that you put on your house of two to $3,000 in cost. So they’re selling it to you for $500 and they’re paying two to $3,000 just for that, plus the costs of their satellites which we haven’t even talked about is astronomical, especially as it on a per-bit basis compared to what Viasat can get for the ViaSat-3 constellation. So my guess is that Starlink is bleeding and now I mean just like with Viasat there will be an inflection point at some point if they get enough users.

Trey Lockerbie (00:54:49):
Let’s talk about that and not making money, right? And let’s talk about the Viasat financials because they are also not making earnings at the moment and their free cash flow has been pretty abysmal and I don’t know if that has to do with the acquisition, you mentioned, but talk us through how we should think through Viasat’s financials and where the earning are going to turn around?

Ben Claremon (00:55:08):
Looking at the income statement is difficult. I think you have to focus on the cash flow statement. And as Eugene always says, you have to look at cash flow from operations because they’re going to continue to spend on satellite CapEx because Mark Dankberg and the team, see this gigantic opportunity to basically revolutionize again, the geostationary world and to as we talked about increase the total addressable market by providing connectivity that didn’t, used to exist. So right now, we’re literally near the bottom of their financials because inflight WiFi has been crushed, by COVID, right? Nothing having to do with them. They’ve been spending a ton on R&D to finish the ViaSat-3 constellations and I guess they’re already spending a little bit on ViaSat-4. But if you just think about a satellite, you build it and you look the most levered and the least profitable the day before it launches, and then it launches and you get to reap the benefits.

Ben Claremon (00:56:00):
So it’s just like a piece of real estate, right? You build a building and you have all this debt and you have no revenue until you start to lease it up. So think about that and so basically over the next 18 to 24 months they’re going to launch three satellites, they’ve already spent the majority of the CapEx for the Viasat-3 constellation and so you’re going to see a cash flow inflection point happen in our estimation very quickly and so here’s what’s really important about that. With just Viasat-1 and Viasat-2 up they weren’t particularly self-funding, right? They would have to take on debt in order to build a Viasat-3 complex.

Ben Claremon (00:56:38):
Now, when those three satellites are up and if they’re as successful as we think they can be, Viasat will be self-funding from then on and will be able to fund this device F in for constellation over time without taking on equity or debt. They’ve just been a little bit subscale. Because remember, as Eugene said, they’ve got into the connectivity business in 2011, and this was a core military encryption company until Mark Dankberg decided that they could completely disintermediate the traditional GEO world. And so I think they benefit significantly from having more scale, more total free cash flow to be able to fund whatever adventures. Whether that’s a LEO constellation for the government, whether it’s their own LEO constellation for consumer broadband, they’re going to have the cash flow but our point is that you’re just not going to see it right this moment and so really, as Eugene said, people have underestimated Mark Dankberg at every turn like they have with Elon to some degree. But you’re going to see in our estimation the cash flow turnaround, the leverage comes down and the profitability rise significantly as these satellites are launched and that’s going to in our estimation change people’s perception of the stock.

Trey Lockerbie (00:57:53):
Well this is what I love about you guys because of all the value investors I know, you guys are in these trenches and I’ve just loved watching you guys with Lumen and now with Viasat. I mean, these are companies, like if I use my own tool on our TIP finance website, it’s not very compelling, right? The free cash flows on this thing are pretty negative and without doing a ton of research like you guys have, it’s not something I would even probably consider but you guys seem to be well-positioned for these turnaround moments where these things like you mentioned, unlocking the value. And that’s really what it is. It’s this game of… With value investing, right is, we’re doing this research to unlock this hidden value that the market isn’t seeing and so I really highly weigh your opinion, especially you Eugene, because you have so much experience with this company in particular.

Trey Lockerbie (00:58:41):
But with all that said, I have to wonder how your experience might bias your opinion on this. You’re very close to this company and I’m wondering on the flip side of buying, what would convince you guys to sell Viasat? What would you see and be looking for to say, “Okay, this is the time to let it go.”?

Eugene Robin (00:58:57):
I think that’s a fantastic question. We have a robust, we call it a devil’s advocate process, so typically a position has two longs and one short and we assign people the short, so you have to come up with every single reason under the sun that our key variables on the long side will not happen. And you have to bring evidence-based data to back up your assertions right? And so luckily in Viasat’s case, there’s not two long, one short. It’s only one long and then everyone else short.

Eugene Robin (00:59:30):
So I’m 150% aware of my own ingrained bias. I’m the first one to admit. So I think you described yourself as an Elon fanboy. I’m a Mark Dankberg fanboy because I work for the man and I understand the culture within Viasat. I love that company, I truly do, but I have nothing but good things to say about it and I am the first person to admit that I am 100% biased. You can be a fanboy, but as long as you look for disconfirming evidence, that’s how you maintain rational sanity, and Ben and Jeff and Andrew, another one of our colleagues, they keep me grounded constantly.

Eugene Robin (01:00:09):
I will say that over the course of the last two years, what’s really changed is I took the probability of Elon’s success from like a 30% chance to 100. And I adjusted our model, the assumptions of like residential broadband growth and revenue contribution from it accordingly, right, because again, I don’t want to have my head in the sand. I mean this man is doing great things. He’s literally building a massive network that has never been seen from scratch and he’s there. He’s already built it. He’s not building, he’s built it. So I don’t want to say like, “Oh well, that’s not going to affect Viasat.” Of course, it will. You would be a maniac to say that there won’t be some knock-on effects, right? And so certainly the residential broadband space, there will be. And I think we’ve, in our adjusted expectations of them, encapsulated that.

Eugene Robin (01:01:00):
When would we sell it? There’s always a price, right? I think it is a compounder. I think every single day, it gets more valuable, but if I woke up tomorrow, I don’t know, if something happened and then all of a sudden it’s worth $200 a share, I don’t know. I mean, we’re small-cap investors. It’s probably inappropriate for us to own something that’s 15 billion, or $20 billion anyway.

Eugene Robin (01:01:19):
So, that’s one way that acts as his portfolio. Another way is you’re shown through data, factual data, that we’re incorrect in our assumptions on inflight WiFi growth, that we are incorrect in our assumptions on the defense side growth. And we are incorrect in our assumptions in their defensibility in the residential broadband. If that starts happening, I mean, like, “Okay, totally wrong. I’m sorry. I apologize for our clients and take our medicine.” But until that happens, until the data comes in that disconfirms what we believe to be the growth trajectory here, there is no reason to stall it because again, I really do believe this is a compounding machine. It’s not a gram. It’s not a point to point [inaudible 01:02:01].

Trey Lockerbie (01:02:01):
You touched on one of the reasons to sell might be potentially, one reason that I love referencing, which is getting tomorrow’s price today. So let’s talk a little bit about that and close out there with your sort of overall intrinsic value assumption.

Eugene Robin (01:02:16):
We think of typically underwrite things in three-year chunks. The really annoying thing here is COVID. Besides the inflight WiFi issue, it delayed the launch by now, it’s coming up to almost a year; supply chain issues because people are just literally not being able to be at work or getting sick and so having to close down their cleaning rooms and things like that. Also, the supply chain was disrupted. I mean, it really delayed things immensely.

Eugene Robin (01:02:44):
But from here, if we just assume a normal cadence and then launching the EMEA once six months after this first Americas one and then the APAC one another six to nine months after the EMEA one, we believe that over the next three years you could see an upside of somewhere between 120 and $150 a share. The intermediate level, I would say, once the Americas one is launched and the revenue profile starts adjusting to the new revenue opportunities that they’ve set up for the Americas one, we believe that the intermediary stop will be between the 80s and then we will get the full upside over the next year and a half after that, following the EMEA will launch. Because EMEA, that revenue will be knowable revenue, being like, they have Americas revenue right now, right and so whatever they can get as additional revenue on the America’s side, which you can argue like, “Well, let’s say we’re not going to get as much on residential and they’re just going to be defensive. It won’t be actual real grower,” which I think are fair points. But on the EMEA side, it will literally be like brand new like, “Oh my God.” All of a sudden you wake up and they have an extra 250 million of revenue falling through that then you’ll see the pop-up in cash flow from operations, and then that’s actually the inflection point.

Eugene Robin (01:04:06):
You will start seeing them generate free cash flow. And I think once that happens, it’ll still solve the problem of what everyone points out, which is, “Hey, I love these guys. They’ve been building these things. That’s fantastic but how do we know they’re actually successful because in the end, there’s been no free cash flow generated?”

Eugene Robin (01:04:23):
And I think once the EMEA one’s up, the CapEx should normalize somewhere around six to $800 million, that’s our assumption. And you’ll start generating a decent amount of free cash flow and it will actually build up and allow them to do other things, whether it’s add-on to acquisitions or the return of cash flow shareholders in some way. So, I think that’s kind of the progression of the upside that we’re [inaudible 01:04:49].

Trey Lockerbie (01:04:49):
Fantastic. Well, Ben, Eugene, I always enjoy talking with you guys and digging in deep on these pics because it’s just fascinating. And I mean, there’s just something so exciting about this race for space we’re witnessing and alive for today. And I’m going to really enjoy the progress of both Starlink and Viasat. So, before we let you go, I want to make sure we give a handoff to Cove Street, any of your social platforms or any other resources you guys want to highlight?

Ben Claremon (01:05:17):
We definitely are out there. We’re not some opaque hedge fund that doesn’t talk about our positions. We’re happy, as we talked about, with Lumen with you and Viasat here. So, if you go to our website, covestreetcapital.com, and go to our thoughts tab, you can see any number of interviews and discussions that Eugene and I have had. If you’re on Twitter, I’ve re-emerged on Twitter over the last six months and you can find me, the Inoculated Investor, pretty active on Twitter as well.

Ben Claremon (01:05:43):
We approach everything with a fair amount of humility. And we understand that with both Lumen and Viasat, we are making very contrarian statements that other people may have very applicable and coherent questions about. And so we’re always happy for people’s feedback. So, reach out to us, find us on the website and reach out to us, if you have feedback or questions because we’re always interested in people’s perspectives, especially if they know these companies and these industries well, we will incorporate their information into our own mosaic as well.

Trey Lockerbie (01:06:14):
All right gentlemen, thank you again for coming on the show. Hope to do it again soon.

Ben Claremon (01:06:18):
Thank you, Trey. Really appreciate the time.

Trey Lockerbie (01:06:21):
All right, everybody. That’s all we had for you for today’s episode. If you’re loving the show, definitely don’t forget to follow us on your favorite podcast app and follow me on Twitter as well @TreyLockerbie. Lastly, I’d be remiss if I didn’t remind you to check out the TIP finance tool. Just Google TIP Finance and it should pop right up. And with that, we’ll see you again next time.

Outro (01:06:42):
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