Cautiously Optimistic

There are an infinite number of halfway points from A to B

[Cautiously Optimistic @Tulip__Capital]

Reading The Prize: The Epic Quest for Oil, Money and Power. Excellent

One interesting analogy to today is the U.S. gov’s support of $INTC

Winston Churchill led an effort that convinced the British gov to take a majority stake in Anglo-Persian Oil (modern day BP) for national security reasons. The world was shifting from coal to oil power, but Britain (importantly, the Royal Navy) had virtually no domestic oil production. Churchill believed that relying on foreign energy supplies, which could ultimately become hostile to British interests, posed an existential strategic risk

This decision was highly controversial at the time, but in hindsight it proved enormously successful.

Of course, the comparison isn’t perfect and there are differences between situations, but the underlying logic feels familiar

[Cautiously Optimistic @Tulip__Capital]

Bc these 2 slides

TEM is a vastly lower quality business - and that’s being overly generous

[avidresearch @avidresearch]

$GH Q2 $335M
$TEM Q2 $382.5M (growth will accelerate even more with $PSNL acquisition)

Explain why $GH is $21B and $TEM is $8B ??

[Cautiously Optimistic @Tulip__Capital]

Also… Eric keeps emphasizing dilution. Tempus has a dual-class share structure. Class B shares vote 30 to 1.
Eric controls 100% of the Class B stock

So PSNL shareholders aren’t just receiving capped paper - they’re also receiving low-vote Class A shares. lol. Lmao.

[Cautiously Optimistic @Tulip__Capital]

Eric Lefkofsky on Tempus’ 2Q call:

“In terms of Personalis, I can’t see a scenario where they would want to terminate, even if we were slightly below the floor. […] As you can imagine, they very much want to do this deal. It would be highly disruptive if this deal didn’t get done on their side. And I just can’t envision any scenario, even if they end up getting a few fewer shares, where it doesn’t go forward.”

Sure, agreed, but that isn’t the full story. $PSNL is not the only loser in a busted deal. The probability of closing - and the magnitude of disruption if the deal fails - was exacerbated by the unnecessary one-sidedness of the merger agreement. This is a logical deal that was made far more contentious than it needed to be

Closing matters just as much to $TEM. Its MRD franchise *is* Personalis. xM is a rounding error. It has no reimbursement and limited evidence generation. This deal doesn’t accelerate a strategy. It supplies one

$16.25 is defensible. The structure isn’t. It’s one-sided, and every meaningful lever sits with Tempus. The exchange ratio locks at 0.3356 once TEM hits $48.42, 7.7% below its unaffected close. Above that, PSNL gives up all the upside. Between $48.42 and $46.00, PSNL absorbs all the downside. It’s an all-stock deal with a buyer-only cash election (yes, I’m aware that half is likely cash). The $46 termination right is a kill switch with no meaningful protection. It arises only after the final exchange ratio is fixed and carries no top-up or reset. The only remedy is to blow up the deal

The damage compounds while PSNL waits. Closing is guided for late ‘26/early ‘27. That’s 4-8 months of demotivated employees, turnover and potential slippage in MolDx submissions, contracting, publications etc. By the time the walk-away right exists, the standalone alternative it is supposed to protect could be hollowed out. Momentum is gone. I’m not sure that path still exists

The vote was effectively settled before it was scheduled. Tempus must vote its ~12% block for its own acquisition and Merck’s ~13% is locked up. ~25% of shares were committed at signing. Against a plain majority vote, the deal clears on ~1/3rd of everyone else, with no MOM condition. In a sale where (i) the buyer is an affiliate that moves 80-90% of PSNL's clinical volume and (ii) Merck, the reported rival bidder, is backing Tempus, minority rights seem relevant… Notably, TEM and PSNL are filing a 13E-3 (applicable to controlled/affiliate deals) while declining the one term that would make the minority’s vote matters

[Cautiously Optimistic @Tulip__Capital]

“…prior to the closing the market price of Tempus’ Class A common stock falls below $46.00 giving rise to the right for Personalis to terminate the Merger Agreement…”

Tempus already flirting with $46. The market has spoken. Put this sorry deal out of its misery.

[Cautiously Optimistic @Tulip__Capital]

@tweetatmehomie @Archimedes20311 This is a dog shit deal

[Cautiously Optimistic @Tulip__Capital]

It’d be cool if we could keep backpacks the size of wine barrels off the subway and at home

[Cautiously Optimistic @Tulip__Capital]

When Theodore Roosevelt was serving as President of the NYC Board of Police Commissioners, he was asked if he was working towards the presidency. There are many lessons to be learned from his response:

“Never, never, you must never either of you remind a man at work on a political job that he may be President. It almost always kills him politically. He loses his nerve; he can't do his work; he gives up the very traits that are making him a possibility. I, for instance, I am going to do great things here, hard things that require all the courage, ability, work that I am capable of... But if I get to thinking of what it might lead to—" … He stopped, held us off, and looked into our faces with his face screwed up into a knot, as with lowered voice he said slowly: "I must be wanting to be President. Every young man does. But I won't let myself think of it; I must not, because if I do, I will begin to work for it, I'll be careful, calculating, cautious in word and act, and so—I'll beat myself. See?"

[Cautiously Optimistic @Tulip__Capital]

@tweetatmehomie @Banana_Oncology Wow yep. I’m a fool lol

[Cautiously Optimistic @Tulip__Capital]

Nearly every quarter since $TEM IPO, there’s been some combination of changes to reporting, disclosures, definitions etc. This is not normal or healthy

[Cautiously Optimistic @Tulip__Capital]

@TheYapperwock @Banana_Oncology Not suggesting GH won’t buying anything. Im saying I think it’s unlikely it buys a tumor informed assay. That’s not what Metasight is. That was tiny and more of a technology add-on

[Cautiously Optimistic @Tulip__Capital]

@Banana_Oncology $GH has Reveal Ultra, an ultra sensitive tumor informed assay. That’s expected to launch this year. GH also has G360 Tissue, so it has some experience in tissue. Doubt it buys anything, but possible. This market is very dynamic

[Cautiously Optimistic @Tulip__Capital]

@tweetatmehomie I think partially related to CRUSH RFI. Gugg and Leerink both published on this today, although not sure what provoked it bc there haven’t been any recent updates from CMS et al (to my knowledge)

[TheLAPurchaser @TheLAPurchaser]

What is the best way to tap into sellside research for agentic due diligence?

I don’t want any more deep research based on seeking alpha and the motley fool.

How do I tap into MS, GS, BAML to create a primer, without plugging in via API?

[Cautiously Optimistic @Tulip__Capital]

@tailrisked @ContrarianCurse Thanks. Very interesting. The narrative shift on the stock has been incredible

[Cautiously Optimistic @Tulip__Capital]

@tailrisked @ContrarianCurse Who’d GH hire / what role?

[Cautiously Optimistic @Tulip__Capital]

“Like an elementary school child who wins a prize even for finishing last, Mr. Florance’s bonuses are perhaps the costliest “Participation Award” our firm has witnessed.”

💀

[Daniel S. Loeb @DanielSLoeb1]

As Jessie Livermore said, in Reminiscences of a Stock Operator and further quoting Eccleastes, "There is nothing new under the sun." There will always be a need for engaged shareholders to utilize the principles of Capitalism and Democracy to hold boards accountable.

https://t.co/sR0Y1QAQKE

[Cautiously Optimistic @Tulip__Capital]

@midwit_capital @Banana_Oncology It’s even better. In a change of control, the royalty steps up. Foresight also pays $PSNL a one time fee in the LSD millions