| Account | Shares | Price | Value | % of acct | Cost/sh | Gain $ | Gain % | Target |
|---|---|---|---|---|---|---|---|---|
| 401K | 3 | $370.45 | $1,111 | 0.05% | $403.99 | $-101 | -8.3% | — |
In short: ADDED to the investable universe — "We added another amazing company: Intuitive Surgical ($ISRG): Robotic-assisted surgical systems manufacturer." No rating is stated and it is not on the Buy sheet, so it enters the watchlist below Buy.
Intuitive Surgical makes the da Vinci robotic surgery system. Hospitals buy the robot once, then keep paying for the single-use instruments consumed in every operation and for service contracts — so most revenue recurs, and it grows with every surgeon trained on the machine.
This month it is added to the list of companies the letter considers good enough to own. It does not appear on the buy sheet, so the implication is that the quality is there but the price is not yet.
In short: On his watch list and in an upcoming video — "the first company in healthcare that I think is actually super good" from an investment perspective.
In short: The third name in Terranova's device exclusion — "they're not giving you that revenue growth" — and the one the archive has previously seen argued the other way, as a quality name thrown out with the healthcare bathwater. Here it is on the wrong side of the only screen he applies to the sector this episode.
Intuitive Surgical makes the da Vinci robotic surgery systems. It is the third name in Terranova's medical-device exclusion, and the one where the screen is most clearly doing the work: this is a high-quality franchise with an installed base of robots and recurring instrument sales, and it still fails his test because revenue growth has slowed.
The takeaway is about method rather than the company. A rule applied consistently will sometimes exclude good businesses; the discipline is in not making exceptions.
In short: A name he "historically avoided because it's in the medical field" and is now researching — "Intuitive Surgical has a very unique business model within the medical field, and I actually believe it's a very, very good business model," with a deep dive planned. The model in his words: "a printer and the ink type of company" — the surgical system is the printer, the single-use instruments and accessories are the ink, and servicing the complex systems is a third recurring stream; 2,000 new systems installed on a trailing-12-month basis, each dragging perpetual consumables and maintenance behind it. Unlike Lululemon there's no valuation cushion — a 31 forward PE and only a 2.56% free cash flow yield — but also no revenue problem: growth decelerating from ~20% to ~12–13% is what's derating it. "This is overall a very good business model of a company that continues to have its stock decline" (−36% YTD, −23% on the year, flat on five).
Intuitive Surgical makes the robotic systems surgeons use to operate. Carlson admits he has avoided medical companies for years — too much regulation, too much red tape, too hard to understand — so the fact that he is studying this one and planning a deep dive is itself the signal.
The reason is the shape of the revenue. He describes it as "a printer and the ink type of company." The robot is the printer: expensive-ish, sold once to a hospital, and not where the real money is. The ink is the single-use instruments and accessories that must be replaced for every operation, so revenue keeps arriving for as long as the machine is used. And there is a third stream — servicing the machines, which are complex and break down. Every new install therefore starts a stream of payments that lasts for years, and they installed about 2,000 new systems in the last twelve months.
Unlike Lululemon, this is not a bargain. It trades at 31 times next year's earnings and generates only a 2.56% free cash flow yield (the cash the business throws off, measured against what you pay for it). But it is also not broken: revenue is still expected to grow 12–13%. What has hurt the stock — down 36% this year — is simply that growth slowed from about 20%, and a share price built on 20% growth cannot stay there at 13%.
So the two names are opposite tests of the same idea. Lululemon is cheap with a problem to fix. Intuitive Surgical is a business whose quality he rates highly, being repriced for slower growth rather than for damage.
11:01I view it as a printer and the ink type of company. You know you need to buy a printer. It's not too expensive, you just get the printer in your home, but then you realize it runs out of ink. And then you have to buy ink and the ink is very expensive. And that's basically what this company does. The printer in this case are surgical devices that they sell to hospitals.
In short: Also named among Gardner's hundred-baggers. Cited as evidence for the "hold your stocks for the long term" claim — every one of those names "had crushing drops along the way, 80%, 85%, 90%" — with no view on the business here.
In short: Pro pick from the AI-medical family-office cage matches: down ~20% on a few missed quarters, but "they have the data" — priceless surgical-robotics data AI can harness over 10 years (robots guided across borders). Not cheap, but the FCF growth justifies it.
Intuitive Surgical makes the da Vinci surgical robots. It's down ~20% on a couple of missed quarters, and value investors won't call it cheap. But the insight from billionaire AI-medical family offices is that it owns the world's best surgical data — every robotic operation adds to a dataset nobody else has, and robots already let surgeons operate across borders. Feed AI that data over the next 10 years and it becomes hugely more profitable. He's buying the priceless data moat, not the current multiple — while everyone else crowds into chips.
27:34So everyone right now is in the chips, right? The microns and the semis, which is a commodity, which is going to absolutely crash and burn. But nobody's, look at intuitive surgical. It's down like 20%. Beautiful business, but guess what? It missed. It missed a few quarters. It missed a few quarters, but they have the data. So in other words, what the smart money is doing is they're looking at what companies have great data.
In short: From a private ideas dinner with billionaire medical-technology family offices: "these companies are going to benefit from AI in a huge way. Massive increase in profit margins." AI makes Intuitive's surgical data "so much more valuable — they've got a real big moat"; also the robotics leg of the 100-million-robots decade.
Intuitive Surgical makes the robots surgeons operate with. The idea came from a private dinner he hosted with billionaire family offices that specialize in medical technology, and the argument is about data rather than valuation: every robotic operation adds to a dataset nobody else owns, and AI makes that dataset dramatically more valuable — "they've got a real big moat" and the result should be a "massive increase in profit margins."
The second half of the case is positioning. Healthcare has fallen from 16% of the S&P 500 to 8% in five years purely because money drained into technology — the sector is at half its old weight even though it is where the most jobs are being created. Buy the quality companies that were sold for their sector's sake.
19:21the world, the Intuitive Surgical. These companies are going to benefit from AI in a huge way. Massive increase in profit margins. Intuitive Surgical's data that they have — artificial intelligence makes that data so much more valuable. They've got a real big moat. And so, yes. So, I agree with you.
In short: The Hugo analogy and the Hugo risk in one: Hugo sits "precisely where Intuitive Surgical stood in 2005 before it built a $130 billion market cap" — but da Vinci's installed-base, clinical-evidence and ecosystem advantages are substantial and actively defended.
In short: AI-medical family offices "love the surgicals" — Intuitive has the best data (the Tesla-road-data analogy). Unloved while everyone's in chips; "if you buy Intuitive Surgical now on the 200-day moving average that's a really screaming buy" — AI on its data turns it into "an absolute profit beast."
Intuitive Surgical makes the da Vinci surgical robots. The insight comes from billionaire family offices specializing in AI medicine: Intuitive owns the world's best surgical data — like Tesla's library of road data, every robotic operation adds to a dataset nobody else has, and robotics already lets surgeons operate on patients in other countries. Feed AI that data and the company becomes "an absolute profit beast" over the next 5–10 years.
Meanwhile the stock is unloved — healthcare has been sold down to make room for tech and the quants are short the whole sector — so buying it here on its 200-day moving average is, to him, "a really screaming buy."
40:02And the data in the future of artificial intelligence, the big beneficiaries are companies like Intuitive that have that incredibly valuable data. I think and I'm hearing this from the — like I said, the top family offices in the AI medical field. These stocks are unloved — everyone's in the chips. And if you buy Intuitive Surgical now on the 200-day moving average to us that's a really screaming buy because over the next 10 years, 5 years the data and the artificial intelligence that's going to take that data — it's going to turn
In short: #QualityTuesday stock pitch. "Intuitive Surgical makes money by selling da Vinci surgical robots. It generates recurring revenue from instruments, accessories, and service contracts used in every procedure." The moat is the razor-and-blades lock-in: "every time a hospital buys a robotic surgery system, ISRG gets a new customer for life. And hospitals worldwide are buying these systems faster than ever." Described as "a quality healthcare tech leader with a strong moat and high switching costs." The disclosed numbers: net cash position, net profit margin 28.4%, ROIC 18.4%, forward P/E 47.8x, and a +26.6% CAGR since 2001. No entry price, target multiple or valuation verdict is given.
Intuitive Surgical makes the da Vinci robot — the machine a surgeon sits at to operate through tiny incisions instead of by hand. The robot itself is only the entry point. Every operation performed on it uses instruments and accessories that wear out and must be replaced, and every machine needs a service contract. So the money keeps arriving long after the sale, in proportion to how much the hospital uses it.
That is why Slegers calls a robot sale "a new customer for life." Surgeons train for years on a specific system, hospitals write it into their protocols, and switching means retraining an entire theatre team — the switching costs are practical rather than contractual, which is the more durable kind. The financials back the description: no net debt, 28.4% of revenue converted to profit, an 18.4% return on the capital employed, and a 26.6% annual return to shareholders since 2001.
The number to weigh against all of that is the price: 47.8 times next year's expected earnings. Slegers gives it without comment. Read against the rest of the issue — four sections arguing for dull, essential, cheaply-bought businesses — this is a quality pitch, not a valuation one.
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