I am a Fan of Joel Greenblatt and his investment principles. If...

I am a Fan of Joel Greenblatt and his investment principles. If you use the magic formula and you can calculate the ROIC is around 300%, the highest I have ever seen. People can argue it is the goodwill that makes this calculation delusional, but we do know that over time, goodwill tend to appreciate. So your number is just a start. With incremental revenue and better procurement and business process etc, I think the your definition of ROIC will up substantially after the acquisition was made.

The supply of dentists far outstripped supply. This is a tailwind for ONT(and insurance providers) because it will be easier and cheaper to find replacement. It is weird that DR. Holmes does not give us LFL or SSS numbers for his practices like PSQ did. Anyway, the incremental revenue will fall into the bottom line simply by adding capacity to acquired practices. This is his playbook all along so acquisitions are leading indicators where EPS is going. Buyers have to be aware in order for this investment to work, ONT needs to make ever bigger acquisitions. Let's say we shareholders all have absolute faith in DR. Holmes. Fingers crossed.

I am not worrying too much about the valuation got bid up by corporates. This is an industry famous for its boom and bust and the cycle eventually turns when it went to an extreme. I looked at PSQ's numbers briefly and it is unclear to me if they make any money on their marginal revenue. Just curious what kind of relationship it has with insurers. They have to be doing a lot of work for those companies because otherwise it is impossible to ramp up revenue that quickly. PSQ is probably sacrificing the long term for the short term. And look at the compensations they receive. The AR does not even bother to add those numbers together!

In 2011, 2012 and 2013 my hurdle rate used to be 40% to invest in a stock with almost no downside. How things have changed. At this valuation, ONT is not going to do 20% a year and I expect 10%-15% going forward with dividend. The good news is, the odd to lose money at this price is very low so I am planning to put in a lot of capital to work.