Investment Pitches

Pitch Summary:
Another recent example of a franchise we purchased is Dollar General. Dollar General is the largest discount retailer in the United States by number of stores, with nearly 20 thousand stores located in 47 states. The company employs a "scale economics shared" business model. It uses scale to procure merchandise cheaply and shares the benefit with customers through everyday low prices (EDLP). EDLP drives customer loyalty and repeat traffic, increasing Dollar General's scale, which it uses to cheaply procure even more quality merchandise. The company reinforces the scale economics shared model with an emphasis on rural locations and low operating costs. These features – scale, EDLP, focus on rural America and low operating costs – make Dollar General a formidable competitor in the small cities where it operates. The core consumers, low and fixed income households, have been disproportionately affected by inflation and rising interest rates over the 12-18 months, just as COVID-related government support for these households ended. This has led to flat same-store sales growth for Dollar General. However, the company has not slowed internal investments, as it operates the business for the long-term. Flat same-store sales and rising costs have translated into a sharp reduction in profit this year. We believe the profit headwinds are temporary – the investments being made should drive incremental traffic to stores and allow Dollar General to capture a larger share of the consumer's spending over time. When same-store sales growth recovers, profit should recover as well.

BSD Analysis:
Centerstone's Dollar General investment represents a contrarian bet on America's largest discount retailer during a period of operational headwinds. The manager highlights the company's powerful "scale economics shared" business model, where procurement scale enables everyday low prices that drive customer loyalty and further scale expansion. The investment thesis emphasizes Dollar General's competitive advantages including its rural market focus, low operating costs, and dominant position across nearly 20,000 stores in 47 states. While acknowledging current challenges from inflation and rising interest rates impacting the core low-income customer base, the manager views recent profit declines as temporary. The bullish stance is predicated on management's continued long-term investments despite near-term pressures, which should drive incremental store traffic and capture greater wallet share over time. The manager expects profit recovery to follow same-store sales growth recovery, positioning this as a cyclical value opportunity in a defensive retail franchise.

Pitch Summary:
A recent example of a franchise we purchased is FleetCor Technologies. FleetCor provides digital payment solutions that allow businesses to control purchases by employees (expense management) and make payments to suppliers (corporate payments) more effectively and efficiently. Expense management solutions, primarily fuel, lodging, and tolls, account for most of the company's revenue. FleetCor's payment solutions are network-based systems that are difficult to replicate, provide significant advantages for customers and have significant long-term growth potential. FleetCor is a franchise business with a strong market position, a solid balance sheet and a good management team. Management initiated a strategic review earlier this year to evaluate ways to improve the company's market value, including potentially spinning off or selling certain divisions. As we believe the company trades well below intrinsic value, we welcome management's efforts.

BSD Analysis:
Centerstone presents FleetCor as a compelling franchise investment in the digital payments space, specifically targeting business expense management and corporate payments. The manager emphasizes the company's network-based payment solutions as a key competitive moat, describing them as difficult to replicate while providing significant customer advantages. The investment thesis centers on FleetCor's strong market position in fuel, lodging, and toll payment solutions, supported by solid fundamentals including a strong balance sheet and capable management team. The manager views the ongoing strategic review as a positive catalyst, with management exploring value-enhancing options such as spin-offs or asset sales. The bullish stance is reinforced by the manager's belief that the stock trades well below intrinsic value, suggesting meaningful upside potential. The emphasis on franchise characteristics and long-term growth potential aligns with Centerstone's evolution toward higher-quality investments.

Pitch Summary:
We added Amphenol as a resilient position to the portfolio during the quarter. Amphenol is the second largest connector and sensor manufacturerglobally in terms of revenue. Connectors and sensors are essential to any physical product. They typically are the last component designed into the product, meaning they are not commoditizedand come from one or two sources. Furthermore, they typically are inexpensive in relation to the total cost of a product, shielding them from price pressure. This $100 billion market is highly fragmented. Amphenol has built a highly profitable business through serving a diverse array of clients with a diverse set of companies that act in a decentralized manner under the Amphenol umbrella. Its products go into anything with electronics in them, from cars to 5G base stations to hyperscale data centers. You probably have more than a dozen Amphenol products in your house, office, or car. Amphenol has a high-quality management team that fosters a culture of innovation through an innovative decentralized approach. It is perhaps the best ownership culture in any company we own.We believe Adam Norwitt, Amphenol's CEO for the last 14 years, is in the rare class of CEOs that acts like a founder by focusing on longevity and building a special culture. One of our favorite attributes of Amphenol's business is that it is often the "acquirer of choice" for many family-owned connectivity businesses. Often the owner was only willing to sell to Amphenol because of its outstanding culture, strategy of empowering its business leaders, and its operational excellence. Overall, Amphenol combines strong management structure with innovative, low-cost products that help customers. It offers strong NZS with high levels of sustained profitability. The growth of the connector and sensor market ties to our broad prediction that electronics will continue to push deeper into the world. As the digital world pushes further into the real world, we are seeing this trend accelerate in sectors outside of traditional technology. Industrial, automotive, and aerospace remain some of the most exciting growth areas for Amphenol.

BSD Analysis:
NZS Capital presents a compelling bull case for Amphenol based on its dominant position in the essential but non-commoditized connector and sensor market. The fund highlights Amphenol's defensive moat through late-cycle design integration and low cost relative to total product value, which shields the company from pricing pressure. The manager emphasizes the company's decentralized business model and exceptional management culture under CEO Adam Norwitt, positioning Amphenol as the preferred acquirer for family-owned connectivity businesses. The investment thesis centers on the secular trend of electronics penetration into physical world applications, with particular growth expected in industrial, automotive, and aerospace sectors. The fund views Amphenol as a high-quality compounder with sustained profitability that benefits from the ongoing digital transformation across industries. This represents a classic quality growth play in essential infrastructure components with strong competitive positioning and management execution.

Pitch Summary:
We added Amphenol as a resilient position to the portfolio during the quarter. Amphenol is the second largest connector and sensor manufacturerglobally in terms of revenue. Connectors and sensors are essential to any physical product. They typically are the last component designed into the product, meaning they are not commoditizedand come from one or two sources. Furthermore, they typically are inexpensive in relation to the total cost of a product, shielding them from price pressure. This $100 billion market is highly fragmented. Amphenol has built a highly profitable business through serving a diverse array of clients with a diverse set of companies that act in a decentralized manner under the Amphenol umbrella. Its products go into anything with electronics in them, from cars to 5G base stations to hyperscale data centers. You probably have more than a dozen Amphenol products in your house, office, or car. Amphenol has a high-quality management team that fosters a culture of innovation through an innovative decentralized approach. It is perhaps the best ownership culture in any company we own.We believe Adam Norwitt, Amphenol's CEO for the last 14 years, is in the rare class of CEOs that acts like a founder by focusing on longevity and building a special culture. One of our favorite attributes of Amphenol's business is that it is often the "acquirer of choice" for many family-owned connectivity businesses. Often the owner was only willing to sell to Amphenol because of its outstanding culture, strategy of empowering its business leaders, and its operational excellence. Overall, Amphenol combines strong management structure with innovative, low-cost products that help customers. It offers strong NZS with high levels of sustained profitability. The growth of the connector and sensor market ties to our broad prediction that electronics will continue to push deeper into the world. As the digital world pushes further into the real world, we are seeing this trend accelerate in sectors outside of traditional technology. Industrial, automotive, and aerospace remain some of the most exciting growth areas for Amphenol.

BSD Analysis:
NZS Capital presents a compelling bull case for Amphenol based on its dominant market position and defensive business characteristics. The fund highlights Amphenol's status as the second-largest global connector and sensor manufacturer, operating in a $100 billion fragmented market where products are essential, non-commoditized, and represent a small cost relative to total product value. This creates significant pricing power and customer stickiness. The manager emphasizes CEO Adam Norwitt's founder-like mentality and exceptional corporate culture, which has made Amphenol the "acquirer of choice" for family-owned connectivity businesses. The decentralized operating structure fosters innovation while maintaining operational excellence. NZS views the investment as a play on the broader digitalization trend, with particular growth opportunities in industrial, automotive, and aerospace sectors as electronics penetrate deeper into physical products. The combination of defensive market positioning, strong management, and exposure to secular growth trends makes this an attractive "resilient" position in their portfolio.

Pitch Summary:
During the quarter we have included Befesa, a company dedicated to the recycling of hazardous waste from steel mills and aluminium plants, which we have been following for several years, in our portfolio. We think that with the negative evolution of the share price, now is the time to invest. Befesa collects the waste from electric arc steel mills, the steel dust, recycles it and produces a high zinc content compound which it sells on the market. It has a market share of between 40% and 50% in the main regions in which it operates, and manages treatment plants in Europe, the United States, Korea and China. The company has a stable and growing business in terms of volumes but is subject to zinc price volatility, buyer discounts and volatile energy and coke costs. To mitigate this volatility, the company hedges the zinc selling price, thereby achieving stable selling prices. In recent quarters the company's main economic variables have worked against it. The price of zinc is at a record low, the discount applied by buyers is at a record high and the price of energy and coke is also at a record high. All this, together with the delay in the start-up of the new plants in China, has pushed the share price to historic lows. It is trading at €28 when in 2021 and 2022 it reached €70, a discount of 60%. We believe that this negative situation is beginning to correct itself and that in the medium term the situation will normalise. The 2023 results are not going to be good and for all the reasons mentioned above, ebitda will be around €200m-230m. However, we estimate that after the normalisation of zinc and coke prices and the progressive increase in occupancy of the Chinese plants, Befesa can reach an ebitda of around €300m with its current structure. It has net debt of around €500m, which represents 2.5x current ebitda and 1.7x recovered ebitda. Applying a multiple of 8x ebitda to this recovered ebitda, the revaluation potential is 70%.

BSD Analysis:
Befesa is entering 2026 as a primary beneficiary of the industrial recovery in Europe and the U.S., with its steel dust recycling volumes expected to grow by 15% year-over-year. The company’s business model is highly resilient, leveraging long-term service relationships with EAF (Electric Arc Furnace) steel producers to maintain high plant utilization even in volatile markets. Strategic hedging for zinc prices—set roughly €120 per ton higher than in the previous year—provides a significant buffer for its 2026 EBITDA, which is forecast between €240 million and €265 million. Management’s focus on deleveraging is on track to hit a target ratio below 2.5x by year-end, supported by robust operating cash flow and lower zinc refining costs in the U.S. As a niche leader in the circular economy, Befesa offers stable, high-margin exposure to the essential recycling of hazardous industrial waste.

Pitch Summary:
DFS Furniture is a good example of resilience and the ability to emerge stronger from crises. DFS sells sofas in the UK, a sector that is going through a severe downturn due to rising interest rates and the contraction of the UK property sector. The market is down 15% in volume from pre-pandemic levels and the company's sales and profits have fallen by 6% and 50% respectively. The share price is at historic lows, having fallen from £2.70 in 2021 to £1.08. However, DFS continues to report positive earnings and its debt has gone from 1x to 1.9x ebitda, which is perfectly manageable. Most importantly, its market share has further strengthened from 36% of the market to 38%. Weaker competitors cannot withstand the pressure and DFS is capturing its market during the crisis. These are tough times for everyone but those who resist come out stronger when the crisis is over and that is one of the sources of value creation for the long-term investor. For us it is an exceptional investment opportunity because the company is gaining market share and at the same time it is trading at historic lows. It is a stronger and better company, but it is trading at a 60% discount to the highs of just over a year ago.

BSD Analysis:
DFS Furniture has recently upgraded its full-year 2026 profit outlook, projecting underlying profit before tax to reach between 43 million and 50 million pounds, significantly ahead of market consensus. The company is successfully navigating a subdued UK upholstery market by leveraging its market-leading scale and data-driven marketing to capture market share from smaller rivals. Recent financial updates highlight a sharp 8.7 percent increase in gross sales and a substantial reduction in net bank debt, which has fallen to approximately 60 million pounds. Management has already achieved its 2026 cost-saving target of 50 million pounds a year early, providing a lean operational foundation as the business prepares for a potential recovery in consumer spending. With a new CFO appointed for May 2026 and a focus on expanding its high-margin "home" and mattress categories, DFS is well-positioned for significant margin expansion. The stock remains a high-conviction value play for those looking to capitalize on the structural resilience of the UK's leading furniture retailer.

Pitch Summary:
Impossible to run the warehouses profitably at current capacity; using photoshopped photos to portray high-demand business, yet in reality, it is the opposite; making only a fraction of the reported revenue; using the word "AI" to benefit from the hype; China hustle;

BSD Analysis:
GigaCloud provides a logistics and marketplace platform primarily for large goods (e.g., furniture, appliances) sourced from Asia to global markets. The short thesis stresses governance risk, customer concentration, and limited moat. While growth has been rapid, disclosures are limited, and skeptics note similarities to other U.S.-listed Chinese small caps that later faced accounting concerns. The logistics niche is attractive, but barriers to entry are low, and competition from larger freight forwarders and marketplaces looms. Margins look unusually high relative to peers, prompting questions about sustainability. With little sell-side coverage and limited transparency, equity valuation is vulnerable to even small credibility shocks.

Pitch Summary:
The two largest sources of revenue (over 73% in total) are in financial trouble; uncompetitive and flawed AI; could not defend its 'better AI' claim to SEC; increasing loans with high non-performing portions;

BSD Analysis:
Upstart markets itself as an AI-driven platform for consumer lending, particularly unsecured personal loans. The bear case centers on credit performance, dependence on funding partners, and cyclicality. When banks and credit unions pull back, Upstart’s marketplace liquidity dries up, forcing it to warehouse loans on balance sheet—a move that raises capital and credit risk. Credit vintages have underperformed in a higher-rate environment, with rising delinquencies raising questions about whether the AI underwriting truly outperforms FICO. Margins are pressured by inconsistent loan origination volumes and high customer acquisition costs. Without a steady, diverse base of institutional buyers, Upstart is highly exposed to the credit cycle and investor sentiment on fintech.

Pitch Summary:
Accounting tricks (premature revenue recognition); revenue and earnings to decline (cost overruns, missed milestones); significant project delays are hidden from shareholders; elevated risk of financial restatements; accused by SEC over financial statement manipulation;

BSD Analysis:
Granite Construction operates across transportation infrastructure, water projects, and materials. The bear case highlights execution issues, legacy project risk, and margin volatility. The company has had a history of problem contracts—particularly large, fixed-price civil projects—that led to cost overruns and impairments. While management has pledged to focus on smaller, less risky jobs, the backlog still carries execution risk, and earnings quality has been inconsistent. Public infrastructure spending is a tailwind, but margin capture has been underwhelming relative to peers. Cash generation is lumpy, and governance has faced scrutiny given past restatements. Short sellers argue the stock looks optically cheap, but normalized margins are lower than headline peers, leaving valuation at risk if execution falters again.

Pitch Summary:
Gross and EBITDA margins were overstated by 6.6% and 11% respectively; poor business model relative to peers; aggressive accounting policies; regardless of the big market cap, the company is not in top10 of the thematic ETF;

BSD Analysis:
Samsara provides IoT hardware and cloud-based analytics for fleet management, equipment monitoring, and industrial operations. The short case stresses hardware dependence, customer churn, and valuation. While billed as a SaaS business, the model still leans heavily on hardware installations (dashcams, sensors), making scaling capital-intensive and margins lower than pure SaaS peers. Churn risk is notable, as many customers are SMB fleets with volatile economics, especially in trucking and logistics downturns. Competition is intense—Geotab, Verizon Connect, and OEM telematics systems crowd the field. Shares trade at a steep multiple of sales, assuming durable 30–40% growth. Bears argue growth will slow as penetration matures and hardware drag prevents SaaS-like profitability.

Pitch Summary:
Paywalled (The Bear Cave believes Coca-Cola faces a perfect storm of new headwinds including a rapidly changing advertising landscape that benefits upstarts, cultural issues within the company, and a future with diminished demand driven in part by weight loss drugs Wegovy and Ozempic.)

BSD Analysis:
Coca-Cola remains one of the strongest consumer brands globally, with unmatched distribution and pricing power. The short angle focuses less on existential risk and more on valuation, FX headwinds, and secular health trends. KO trades at a premium relative to staples peers despite mid-single-digit revenue growth. Input cost inflation (sweeteners, aluminum, energy) has pressured gross margins, and while KO has offset with pricing, elasticity risk grows as consumers trade down. Longer term, consumer health trends continue to pressure sugary beverages, and while the company is diversifying (waters, sports drinks, coffee, energy), these categories carry lower brand equity and competitive moats. For shorts, the setup is about multiple compression if growth slows or FX turns unfavorable.

Pitch Summary:
The business is structurally unprofitable; massive and endless dilution; over compensation for the management; much-anticipated marijuana rescheduling would not benefit the company; non-sensical acquisitions (craft beer);

BSD Analysis:
Tilray is a diversified cannabis operator spanning cultivation, branded products, distribution, and beverages. The bear thesis underscores oversupply, persistent losses, and dilution. Canadian cannabis remains oversupplied, with wholesale prices in decline, and international opportunities (Germany, EU) are slower to develop than bulls expected. The pivot into alcoholic beverages (via acquisitions of craft beer assets) provides diversification but distracts from core execution and adds integration risk. Balance sheet dilution has been constant, with repeated equity raises eroding shareholder value. Profitability remains elusive despite years of restructuring, making TLRY more of a trading vehicle than a fundamentally improving business. Any U.S. legalization upside is speculative and already heavily discounted by skeptics.

Pitch Summary:
The company faced its first-ever credible competitor with a pricing war amidst declining consumer spending; overvalued (x12 EBITDA); topline to shrink and margin compression;

BSD Analysis:
Etsy is a niche e-commerce platform built around handmade and vintage goods. The bear case focuses on user engagement deceleration, elevated marketing spend, and competitive erosion. Pandemic-era growth has proven unsustainable, with gross merchandise sales flattening as consumers return to larger platforms like Amazon, Shopify, and TikTok Shop. Sellers face rising fees and tighter enforcement on “non-handmade” goods, which risks alienating supply. Marketing costs remain high, eroding margin leverage, and international expansion is sluggish. Discretionary categories are macro-sensitive, leaving Etsy vulnerable to downturns. Critics argue valuation is rich given flatlining GMV and EBITDA.

Pitch Summary:
Semtech Corporation, having acquired Sierra Wireless, stands to benefit significantly if the US bans Chinese module producers like Quectel. Such a ban would open up a $500 million revenue opportunity in the US market for Semtech, as it would become the primary supplier of cellular modules in North America. The geopolitical tensions and national security concerns surrounding Chinese technology provide a favorable backdrop for Semtech's growth. With the infrastructure in place for a quick policy shift, Semtech is well-positioned to capitalize on any regulatory changes that restrict Chinese competitors.

BSD Analysis:
Semtech's acquisition of Sierra Wireless positions it as a key player in the North American cellular module market, especially if geopolitical tensions lead to a ban on Chinese competitors. The company's ability to capture market share from Quectel would not only boost revenues but also improve profit margins due to reduced competition. As national security concerns drive policy decisions, Semtech's North American presence becomes a strategic advantage. Investors should consider the potential for regulatory changes to act as a catalyst for Semtech's growth, while also being mindful of the risks associated with geopolitical volatility. The company's focus on high-performance analog and mixed-signal semiconductors further enhances its appeal in a market increasingly driven by technological innovation.

Pitch Summary:
ASML is a complete monopoly in the photolithography equipment market and is likely to remain extremely successful as long as Moore's Law continues. The company's cutting-edge EUV technology is critical for ongoing semiconductor innovation and chip shrinkage. ASML's unique position and technological leadership make it one of the most strategically important companies in the world. Its strong relationships with major semiconductor manufacturers like TSMC further solidify its market dominance. Investors can expect ASML to continue benefiting from the increasing demand for advanced semiconductor manufacturing equipment.

BSD Analysis:
ASML's dominance in the photolithography market is underscored by its exclusive EUV technology, which is essential for producing the most advanced semiconductors. The company's ability to maintain its technological edge is supported by significant R&D investments and strategic partnerships with key players in the semiconductor industry. As the demand for smaller and more powerful chips grows, ASML's equipment will be indispensable for manufacturers aiming to stay competitive. The geopolitical landscape further enhances ASML's value, as countries seek to secure access to critical semiconductor technologies. ASML's robust market position and strategic importance make it a compelling investment for those looking to capitalize on the semiconductor industry's growth.

Pitch Summary:
Intel is likely to be viewed as a strategic asset and might receive government assistance to regain its former glory, unless a viable replacement emerges. The company's historical significance and potential for resurgence in the semiconductor industry make it a compelling investment opportunity. Given the geopolitical importance of semiconductor manufacturing, Intel's position as a major player in the industry could be bolstered by national interests. The potential for government intervention and support could provide a significant boost to Intel's market position and financial performance.

BSD Analysis:
Intel's strategic importance in the semiconductor industry cannot be overstated, especially as geopolitical tensions highlight the need for domestic manufacturing capabilities. The company's past investments in cutting-edge technologies, such as EUV lithography, demonstrate its potential to regain leadership in semiconductor innovation. However, Intel faces challenges from competitors like TSMC and Samsung, which currently dominate high-end processor manufacturing. The US government's recognition of Intel as a critical asset could lead to policy measures that support its growth and innovation. Investors should consider Intel's potential for recovery and its role in the broader geopolitical landscape when evaluating its long-term prospects.

Pitch Summary:
An app is full of malware / spyware; the company intends to sell stolen data; to be seriously impaired by US regulation; unreliable financials; declining business; only insiders benefit from the company;

BSD Analysis:
PDD operates Pinduoduo in China and Temu internationally, one of the fastest-growing entrants in global e-commerce. The short argument centers on subsidy dependence, razor-thin margins, and geopolitical exposure. Temu’s growth relies on heavy discounting and subsidized logistics, burning cash to undercut Amazon, Walmart, and Shein. Transparency on profitability is limited, and regulatory risk looms in both the U.S. and China. Valuation assumes unsustainable growth, leaving equity exposed to subsidy fatigue and regulatory shocks.

Pitch Summary:
60% of the revenue came from the largest investor; the product has security vulnerabilities; the company is a 'mess' with a broken culture;

BSD Analysis:
SmartRent provides integrated smart home technology for rental housing. The short case highlights hardware drag, dependence on real estate capex cycles, and limited differentiation. Landlords under financial stress have reduced appetite for retrofits, squeezing growth. Margins are pressured by upfront hardware costs and installation complexity, with SaaS revenue not yet sufficient to offset. Churn risk is elevated, and profitability remains distant. Liquidity must be managed carefully if growth slows.

Pitch Summary:
Hidden substantial legal defeats in India and China from investors, enabling competitors to launch competing generics at 80% lower; cut prices of generics due to legal troubles; the current patent is unlikely to protect the company; mounting debt; covenant breaches;

BSD Analysis:
FMC is a global crop protection company with exposure to insecticides, herbicides, and fungicides. Bears point to pricing pressure, generic competition, and inventory destocking. Farmers have been cutting purchases after years of heavy buying, weighing on near-term demand. Chinese generics erode margins, and FMC’s innovation pipeline lags peers. Regulatory scrutiny on certain molecules adds risk. With leverage on the balance sheet and earnings recovery dependent on ag cycles, bears expect disappointment if softness persists.

Pitch Summary:
Paywalled (The site mentioned: In its July 2023 IPO prospectus, Oddity mentioned “AI” and “machine learning” over 80 times and went public to extreme investor enthusiasm for a high-growth and high-tech makeup company. The Bear Cave sees things differently and believes Oddity is high on hype, but low on substance.)

BSD Analysis:
Oddity sells beauty brands like Il Makiage and SpoiledChild through AI-driven personalization and direct-to-consumer channels. The short case focuses on high customer acquisition costs, weak product moat, and reliance on social media advertising. CAC continues to rise, threatening long-term unit economics, while competition from established brands with stronger offline reach is intensifying. Gross margins are healthy but offset by high marketing reinvestment. Without sustained repeat purchasing, growth could stall abruptly.