DNOW spun out of National Oilwell Varco at $35 in late 2014. A year later it was $13. Today it is around $16. Steve Gorelik's argument is that ten years of that chart is one long headwind rather than a broken business: 1,800 US rigs at the spin, under 600 now, global oil and gas investment 40% below 2014 in real dollars, and DNOW still grew margins and bought companies at 4 to 5x EBITDA the whole way through. Rigs have started ticking back up. The MRC Global merger brings $75m of synergies to two businesses that earned $325m of EBITDA apart in 2024. Management has soft-targeted $350m of EBITDA for 2027 against roughly a $3.5B enterprise value, which Steve gets to about $300m of free cash flow on a $3B market cap.My pushback is that 10x is not deep value, and the double comes almost entirely from multiple expansion back to the 5 to 6% free cash flow yield the market used to pay. Why is 10x the wrong number and not 12 or 14? We also get into the acquisitive compounder paradox, whether the incremental drilling actually shows up in US shale or somewhere else, the Oracle implementation they inherited from MRC and why they are now running it alongside SAP on purpose, the $50m of stock they bought back in the middle of that mess, and whether a business private equity would happily lever to four or six turns belongs in the public market at all. Steve's 2029 case is $30 to $32 per share.This episode is sponsored by Fiscal.ai: https://fiscal.ai/yav. I am a customer and I pay for their API with my own money. Two things I use it for constantly. First, they have a huge database of fund letters wired into the API, so when I am prepping a podcast or looking at an event my agent pulls every recent letter on the name and tells me what the bull and bear cases actually are. Second, financials with sourcing attached: I ask for a model and every line links back to the company specific KPI, segment, or ratio it came from, so I can click through and see exactly where the number is from. Use my link, fiscal.ai/yav, for 15% off their AI connector.Chapters:

Nobody gets excited about a distributor

What DNOW actually sells

The roll-up playbook, without the leverage

Why the 2014 spin never worked

My pushback: does the drilling come back in the US?

Shale payback periods and rigs getting less efficient

The MRC Global deal

Upstream plus downstream: what the combination buys you

The ERP implementation they inherited

Why 2027 guidance sits below what the two did apart

Free cash flow yield as the North Star

Buying growth at 4 to 5x while trading at 8 or 9

Paying down debt and buying back stock at the same time

$50m of buybacks in the middle of the mess

Running SAP and Oracle side by side on purpose

1,907 rigs at the spin, 571 today

The 2029 case: $30 to $32 per share

Should this company even be public?

Would private equity lever it up?

Water, utilities and data centers