Investment Pitches

Pitch Summary:
Twitter thread: Insiders selling; deteriorating margins; inflated price; over 60% downside;

BSD Analysis:
ChargePoint builds EV charging networks across North America and Europe. The short case emphasizes cash burn, poor unit economics, and heavy competition. Hardware sales are lumpy and low-margin, while SaaS revenue is still too small to carry the model. Tesla, oil majors, and utilities are expanding aggressively in charging, crowding the market. Financing needs are recurring, and profitability remains elusive, making equity vulnerable to sentiment reversals in EV adoption.

Pitch Summary:
Kyndryl spun out of IBM in 2021. Spin-offs by nature reflect management's intention to unlock shareholder value which may present an asymmetric set-up. Kyndryl's value lies in management's ability to work through their focused contracts – infrastructure services that, on average, generate 0% gross margin as a result of reckless bundling under IBM. More importantly, management has demonstrated their confidence in doing so by purchasing shares in the open market. Kyndryl's latest quarter reflects solid progress; gross margins have expanded by over 200 bps sequentially and more than 300 bps year-over-year. Pre-tax margins on recent signings are in the high single digits. We expect both gross and pre-tax margins to expand as post-signings get recognized from Kyndryl's backlog. Kyndryl continues to present compelling upside.

BSD Analysis:
Kyndryl represents a classic spinoff opportunity where management is actively working to unlock value from previously mismanaged IBM infrastructure contracts. The company inherited infrastructure services contracts that generated 0% gross margins due to IBM's reckless bundling practices, creating a clear operational improvement runway. Management's open market share purchases demonstrate strong conviction in the turnaround strategy and alignment with shareholders. The operational progress is evident in margin expansion, with gross margins improving over 200 basis points sequentially and 300 basis points year-over-year. New contract signings achieving high single-digit pre-tax margins validate management's ability to reprice services appropriately and demonstrate the earnings power potential. The substantial backlog provides visibility into future margin expansion as repriced contracts flow through revenue recognition. As an independent entity, Kyndryl can focus exclusively on infrastructure services optimization without IBM's competing priorities, creating an asymmetric risk-reward setup typical of successful spinoff investments.

Pitch Summary:
We have previously discussed our investment in Perimeter in several of our previous letters. While we maintain belief in the company's competitive advantages and its ability to withstand competition from Fortress, we have observed that the market is currently unwilling to look beyond this immediate concern. Consequently, we have made the decision to sell our remaining stake in Perimeter, considering that investors are unlikely to give the company due credit until it proves its ability to maintain its market share. From the outset of our investment, we anticipated the entry of a competitor into the market, albeit not as soon as it appears it will actually occur. Despite Perimeter's decent earnings report on May 10th, the market reacted negatively to the news of Compass Minerals acquiring the remaining interest in Fortress. This development led market participants to speculate that Compass Minerals might allocate resources towards disrupting Perimeter's market share. In retrospect, the optimal opportunity to exit our position would have been in December when news of Fortress's approval became widely known. This would have mitigated the impact of the subsequent developments. While we acknowledge the competitive landscape and the market's response, it's important to note that our decision to sell our stake in Perimeter reflects our uncertainty regarding the timing of the market's perception aligning with our own. We will continue to closely monitor the situation. At the current time, we believe there are better opportunities to allocate the fund's capital.

BSD Analysis:
Tourlite's exit from Perimeter Solutions reflects a strategic decision to prioritize capital allocation efficiency over fundamental conviction in a challenging market environment. While the fund maintains belief in Perimeter's competitive advantages and ability to withstand Fortress competition, the market's unwillingness to look beyond near-term competitive concerns created a valuation disconnect. The Compass Minerals acquisition of Fortress's remaining interest intensified market fears about potential market share disruption, despite Perimeter's solid operational performance. The fund's acknowledgment that competitive entry was anticipated, though earlier than expected, demonstrates thorough initial analysis but highlights timing risk in investment execution. The December exit opportunity around Fortress approval news represents a classic case study in catalyst-driven position management. The decision to reallocate capital to better opportunities reflects disciplined portfolio management, recognizing that fundamental value alone is insufficient without market recognition catalysts. This position illustrates the challenge of investing in competitively threatened businesses where market sentiment can persist longer than fundamental analysis suggests.

Pitch Summary:
The rising CFM56 engine lease rates are driven by increased interest rates, delivery shortages, and reliability issues with next-gen aircraft. Airlines are delaying maintenance events and using up green-time, which we expect to lead to significant growth in shop visits over the coming years. Given the escalating costs of OEM parts and servicing duration, FTAI is well-positioned to offer more cost and time-effective solutions though its modular factory and soon-to-be approved PMA parts. In recent quarters, FTAI's modular factory has demonstrated remarkable success, boasting numerous repeat customers and a steadily expanding customer base.

BSD Analysis:
FTAI Aviation is positioned to benefit from multiple favorable industry dynamics converging to drive engine maintenance demand and pricing power. Rising CFM56 lease rates reflect supply constraints from higher interest rates, new aircraft delivery delays, and next-generation engine reliability issues that force airlines to retain older aircraft longer. The deferral of maintenance events and consumption of green-time creates a building wave of shop visit demand that should accelerate over the coming years. FTAI's competitive advantage lies in its modular factory approach and pending PMA parts approval, which offer airlines superior cost and time efficiency compared to OEM alternatives. The growing base of repeat customers and expanding customer relationships demonstrate the value proposition's effectiveness and suggest sustainable competitive moats. As OEM parts costs and service duration continue escalating, FTAI's alternative solution becomes increasingly attractive to cost-conscious airlines. The combination of industry tailwinds and operational execution creates a compelling growth trajectory with expanding margins.

Pitch Summary:
Recent developments indicate that FIP's portfolio of assets is experiencing an inflection point. The new 10-year Exxon contract has transformed Jefferson Terminal into a highly cash flow generative asset. By 2025, we anticipate Transtar and Jefferson together could generate over $120 million in cash flow. Value realization lies in management's ability to restructure the capital structure though debt refinancing and preferred equity redemption. While investors may be primarily focused on FTAI Aviation, we see an overlooked opportunity for investors in FIP.

BSD Analysis:
FTAI Infrastructure represents an overlooked value opportunity within the FTAI ecosystem, with assets reaching an operational inflection point that should drive significant cash flow generation. The 10-year Exxon contract at Jefferson Terminal provides long-term cash flow visibility and transforms the asset into a highly predictable income generator. The projected $120 million combined cash flow from Transtar and Jefferson by 2025 represents substantial value creation potential from the current market valuation. Management's focus on capital structure optimization through debt refinancing and preferred equity redemption should unlock additional value for common shareholders. The market's primary attention on FTAI Aviation has created a relative value opportunity in FIP, where similar quality infrastructure assets trade at higher multiples. The long-term contracted nature of the cash flows provides defensive characteristics while the capital structure improvements offer upside optionality. This represents a classic sum-of-the-parts opportunity where individual asset values exceed the consolidated trading multiple.

Pitch Summary:
APi Group continues to trade at a compelling free cash flow yield. The acquisition of Chubb, previously mismanaged by Carrier Global, offers numerous opportunities for value enhancement. The current share price appears to underestimate: 1) the growing resilience of APi's US safety segment, driven by recurring service revenue with higher margins; and 2) management's capabilities in turning around Chubb's operations. While there are execution risks associated with Chubb, there are several manageable initiatives such as addressing loss-making branches, real estate consolidation, and optimizing the salesforce, primarily focusing on the technicians to non-technical staff ratio. These efforts should lead to near-term margin improvements.

BSD Analysis:
APi Group presents a compelling value opportunity trading at attractive free cash flow yields with multiple operational improvement catalysts. The Chubb acquisition from Carrier Global represents a classic turnaround situation where previous mismanagement has created value enhancement opportunities for capable operators. APi's core US safety segment demonstrates defensive characteristics through recurring service revenue streams that generate higher margins and provide earnings stability. Management's track record and specific operational initiatives around loss-making branch closures, real estate consolidation, and salesforce optimization provide clear near-term margin expansion pathways. The focus on technician-to-non-technical staff ratios suggests disciplined operational management that can drive efficiency gains. While execution risk exists with the Chubb integration, the manageable nature of the identified initiatives and management's proven capabilities support the investment thesis. The market appears to undervalue both the defensive recurring revenue base and the turnaround potential.

Pitch Summary:
During the first quarter, we acquired the majority of our position in Latch, recognizing the value of Latch's technology that far exceeded its share price. Despite outstanding financials, our acquisition took place when shares were trading well below the $1.50 per share indicated on Latch's balance sheet. Our research unveiled a significant reduction in expenses and cash burn over the past year, supported by LinkedIn data demonstrating a decrease of over 50% in the number of employees. In an exciting development on May 16th, Latch made a notable move by announcing its acquisition of Honest Day's Work for $22 million in stock. This acquisition is particularly significant as it brings onboard the founder of Honest Day's Work, Jamie Siminoff, renowned for his successful property technology venture, Ring (acquired by Amazon). Jamie Siminoff will assume the position of CEO at Latch, and we see this as a strategic step to bring in an experienced leader who is strongly incentivized to drive an increase in the company's share price. On June 21st, we published an overview of our thesis on our website, tourlitecapital.com, and Twitter. As of August 10th, Latch was delisted from the Nasdaq due to the Company's inability to file restated financials by August 4th. As a result, Latch's shares fell over 50% and gave back a significant amount of our prior gains. While not impactful to the underlying business, this is expected to significantly reduce liquidity. Based on our conversations with management, we believe the company remains committed to restating its financial statements and eventually uplisting back to a major exchange.

BSD Analysis:
Tourlite's investment in Latch represents a deep value play on property technology with significant operational improvements already underway. The fund recognized the disconnect between Latch's technology value and its depressed share price, acquiring shares below the $1.50 balance sheet indication. The 50% reduction in employee count demonstrates meaningful cost-cutting and cash burn reduction, positioning the company for improved unit economics. The acquisition of Honest Day's Work and appointment of Jamie Siminoff as CEO represents a transformational catalyst, bringing proven property tech expertise from the Ring founder who successfully sold to Amazon. While the Nasdaq delisting created significant volatility and liquidity concerns, management's commitment to financial restatement and eventual uplisting provides a clear path forward. The thesis relies on operational turnaround execution under new leadership and eventual market recognition of the technology's value. The delisting presents both risk and opportunity, as reduced liquidity may create further value disconnects for patient capital.

Pitch Summary:
MYR Group (MYRG): Like UPF Technologies, the MYR Group has a rather non-descript name and goes about its business in relative anonymity. The company provides electrical construction services, which leads many to associate them with boring, staid utilities. However, with 20% sales and 25% EPS CAGRs over the past five years, and many tailwinds for further strong performance, the reality is quite different. MYRG's operations are fairly evenly split between two divisions. The slightly larger of the two, Transmission & Distribution (T&D), provides a wide range of design, construction, upgrade, and maintenance services to the electric utility industry. The segment enjoys significant recurring revenues from Master Service Agreement work (50% of segment total) that utilities are often required to purchase – particularly in the wake of the PG&E scandal. The other division, Commercial & Industrial (C&I), offers electrical contracting services, again spanning the gamut from initial design to ongoing MRO, for large, complex projects like airports, stadiums, and hospitals. Both have seen robust, consistent growth in recent years. The future looks bright for the company as well. MYRG will be able to ride several powerful long-term secular growth drivers with lots of white space ahead, particularly aging infrastructure and grid decarbonization. Capital expenditures for electricity distributors (one of the most important revenue drivers for MYRG) should continue to grow around 6% in the years ahead, with expansion across all ownership segments. Meanwhile, the DOE estimates US transmission and transfer systems will need to grow capacity by 57% by 2035 in order to meet clean energy targets in currently enacted laws while maintaining moderate load. One particularly important source of growth will be utility-scale solar projects, for which supply chain constraints are finally easing and tax credits from the Inflation Reduction Act are incentivizing significant investment. Both its segments also stand to benefit greatly from the Infrastructure Investment and Jobs Act (IIJA), given its $73B investment in electric grid and energy infrastructure and significant funding for a wide range of public works projects that are also in MYRG's wheelhouse. This incremental demand from the initial disbursements seems to have already started showing up in the company's financials, with its backlog setting yet another new record in its latest quarter. Continued high readings of the Dodge Momentum Index (which is a leading indicator of non-residential construction spend) also augur well for the company. Based on its current backlog and management commentary, MYRG should be able to generate low double-digit organic revenue growth the next few years. Margins have been slightly pressured in recent years by the inflationary environment, but with newer contracts including provisions tied to those pressures, these are likely to tick higher as the older projects roll off. Putting it together, we think MYRG can approach $8.50 in EPS within a few years. CEO Richard Swartz has been at the company for more than 40 years, and since he took over the top job in 2017, MYRG has more than doubled the S&P's return. During his tenure capital allocation has been strong, as the company has executed a consistent, multi-faced shareholder return program while posting ROICs in the 15-20% range. Over time I've come to a greater appreciation of firms that have a track record of performance, particularly if the same jockey is still at the helm, so MYRG certainly scores points here as well. At its current $2B MC, MYRG has reached a size where it's likely starting to get more looks from larger institutions, particularly given the stability of its operations and the straightforwardness of the investment thesis. The company is also a backdoor play on the growth of data centers and related computing infrastructure, hot trends that many investors are looking to increase their exposure to. Finally, the company is executing a $75M buyback and has seen its share count decline modestly over time. All these factors are minor when taken alone, but combined should serve to push the supply/demand balance in our favor here.

BSD Analysis:
The manager presents a strong bull case for MYR Group, highlighting the company's impressive 20% sales and 25% EPS growth over five years despite operating in the seemingly mundane electrical construction sector. The investment thesis is built on multiple powerful secular tailwinds including aging infrastructure, grid decarbonization, and significant government spending through the Infrastructure Investment and Jobs Act ($73B for electric grid infrastructure). MYRG's business model benefits from recurring revenue streams, with 50% of T&D segment revenue from Master Service Agreements that utilities are often required to purchase. The manager emphasizes the company's positioning to benefit from the DOE's estimate that US transmission capacity must grow 57% by 2035 to meet clean energy targets. Strong management execution under CEO Richard Swartz (40+ years at company) has delivered superior returns and disciplined capital allocation with 15-20% ROICs. The $195 price target based on $8.50 projected EPS and 22x multiple implies a 20% IRR, though Monte Carlo analysis suggests potential for 30% IRR with favorable scenario outcomes.

Pitch Summary:
UFP Technologies (UFPT): UFPT is a Massachusetts-based company that designs and manufactures highly-engineered products, primarily for medical applications. 85% of sales are from its extensive portfolio of single-use, single-patient medical devices and sterile packaging solutions. The company was started in 1963 as United Packaging Corporation by three entrepreneurs in a garage with a band saw and a deli slicer. It changed its name to United Foam Plastics four years later to better reflect its specialties, and it made its public debut in 1993. Continuity has been a hallmark of the business in recent decades – it's still run by the son of one of the founders, and the CEO, CFO, and president have all worked at UPFT for 25+ years. UPFT's moat comes from decades-long customer relationships, for which it is often providing customized products built into the OEM's designs, have allowed it to enjoy strong returns on capital and operating leverage dynamics. Combining that with its secularly growing end markets and strong execution, over the past five years the company has managed to grow sales at 20% and EBITDA at 30%. Over that period, the stock has risen nearly 5x, a great result for any investor. Yet it pales in comparison to the returns seen by longer-term holders, who have been rewarded with an over 13,000% return in the past 20 years. Despite this tremendous performance, UFPT continues to go mostly unnoticed. Its market cap is only slightly over $1B, and only two analysts from relatively small shops cover it. The company is not promotional; its only press releases are generally to report its quarterly results. I've never seen it discussed on CNBC or online forums, and I had never even heard of the company until it showed up on a screen I ran this summer. Even more importantly than its sterling record thus far is its bright outlook for the years ahead. The global medical device market is forecast to grow 5.5% over the rest of the decade, and UPFT sees an opportunity for further penetration of its current client base, which already includes 25 of the 30 largest medical device manufacturers in the world. The combination of these growing markets and the company's success in winning new business from existing customers has led them to target 12-18% revenue growth (organic + M&A) over the next 3-5 years at an 15-18% operating margin (versus just over 12% in 2022). Given the industry tailwinds to its core MedTech segment, its strong track record of accretive acquisitions, and its history of conservative guidance, we think these numbers are certainly attainable. Thus far in 2023 the company is on the right track, posting 19% sales growth at 17% operating margins in the first half of the year. UFPT's current 25x LTM P/E multiple is clearly not deep value, but one must consider the context and positioning of the underlying business. Healthcare equipment and supply companies have traded at a premium across a wide range of economic climates thanks to very limited cyclicality and the inevitable demographic trends in their favor. Meanwhile, UFPT's current multiple is near the floor despite its being above the peer medians across all three of the screening metrics. Given its higher proportion of recurring sales, faster growth, and durable competitive niches, one could argue for a premium multiple for UFPT. However, even assuming a discount to peers, the upside is considerable. If the company manage to hit its targets, it should produce around $10 in EPS three years from now. At a 30x multiple, this would be worth $300, representing a 25% IRR from current prices. Further upside is possible if the company finds other deals as accretive as their recent ones, or if the stock finds its way onto a few more investor radars – something we think is likely now that it's crossed the $1B MC threshold for the first time. As with many firms that have been in a family for multiple generations, there are some risks related to certain aspects of corporate governance, such as restrictions on stockholder proposals and director election requirements. That said, it's easier to give a firm and its leaders the benefit of the doubt when it's produced exponential returns for common shareholders over a multi-decade period. Plus, the incentive alignments we want are there, such as reasonable levels of executive compensation and bonus incentives geared toward worthy metrics such as returns on capital. Taken together, I find the risks acceptable when considered in the context of the managers' track records and incentives, and relative to the potential returns from buying shares at current prices.

BSD Analysis:
The manager presents a compelling bull case for UFP Technologies, emphasizing the company's dominant position in medical device manufacturing with 85% of sales from single-use medical devices and sterile packaging. The investment thesis centers on UFPT's strong competitive moat through decades-long customer relationships and customized product integration with OEMs, resulting in impressive historical performance with 20% sales growth and 30% EBITDA growth over five years. The manager highlights significant secular tailwinds from the growing medical device market (5.5% growth forecast) and UFPT's penetration opportunity with existing blue-chip clients. Management's conservative guidance of 12-18% revenue growth and 15-18% operating margins appears achievable given current execution trends. The valuation argument is particularly compelling, with UFPT trading at 25x P/E despite superior growth metrics compared to peers trading at 50x median multiples. The manager's $300 price target implies a 25% IRR based on $10 projected EPS and 30x multiple, with additional upside potential from M&A and increased institutional coverage as the company crosses the $1B market cap threshold.

Pitch Summary:
Earlier this month, we released an investment memorandum on one of our portfolio holdings American Coastal Insurance Corporation which can be found here. Since we wrote this memo, American Coastal has released its Q2 2023 quarterly results, which we found to be quite positive and which has led to an increase in our net income estimates for FY23 through FY25. During the quarter, American Coastal's average premium price per new policy written was significantly higher than I had expected, even in spite of the hard market environment. Based on my estimates, this could result in gross written premium (GWP) for the 12-months ending 6/1/2024 of $750MM or greater, and even possibly closer to $800MM, versus the expectations that I had laid out in the memo of $700MM. Furthermore, based on the company's continued expected premium price increases, GWP should increase yet again for the 12 months ending 6/1/2025, which may also end up higher than my previous estimate. We continue to view American Coastal as an unusually compelling investment today, and believe that shares could appreciate by +100-200% from today's prices over the next 2-3 years.

BSD Analysis:
The manager expresses strong bullish conviction on American Coastal Insurance, projecting potential returns of +100-200% over the next 2-3 years. Recent Q2 2023 results exceeded expectations, leading to upward revisions in net income estimates through FY25. The company is benefiting from a hard insurance market environment with premium pricing power exceeding initial projections. Gross written premium estimates have been revised upward from $700MM to potentially $750-800MM for the 12 months ending June 2024, with further growth expected in 2025. The manager views the current valuation as compelling relative to the growth trajectory and pricing environment. The insurance sector's cyclical nature and American Coastal's positioning in coastal markets suggest the company is well-positioned to capitalize on continued premium increases. This represents a high-conviction position with significant upside potential based on fundamental improvements.

Pitch Summary:
The most clear example of trimming our winners by too much and too early has been our premature, intermittent trimming of our ownership in Mader Group. As longtime readers of our partnership's letters know, we first acquired shares of Mader Group upon launch in July 2021 at AUD $0.95/share. Shares have since appreciated by an astonishing +689% to AUD $7.50/share. We were right, and in a big way(!), but unfortunately have not participated in the full reasonable extent of gains that we potentially could have. In late 2021, there were shares of Mader Group that I had sold due to managing portfolio concentration, which are shares that if put in an identical situation I would still sell today. In the quarters since, though, I'd continued to intermittently trim our position, given what I viewed as an increasingly rich valuation multiple, which today stands at 39x trailing P/E or far above that of our typical holding. I had also held a dash of hope that perhaps the stock price would retreat and present better buying opportunities for us to re-load our position. The rest has been history, as Mader Group has continued to smash expectations, its share price has continued to climb, and, should the company continue growing anywhere near its recent EPS growth rate of +50% for the foreseeable future, it is hard to argue that its multiple of 39x P/E isn't justified.

BSD Analysis:
The manager presents Mader Group as a prime example of a winning position that was trimmed too aggressively, resulting in missed gains. Originally purchased at AUD $0.95 in July 2021, the stock has delivered exceptional returns of +689% to AUD $7.50, validating the initial investment thesis. Despite the rich valuation of 39x trailing P/E, the manager acknowledges that the multiple may be justified given the company's impressive +50% EPS growth rate. The position was trimmed due to concentration management and valuation concerns, but the company has consistently exceeded expectations. This case study highlights the challenge of balancing risk management with allowing winners to run. The manager's reflection suggests strong conviction in the underlying business quality and growth prospects. Going forward, this experience reinforces the importance of holding onto high-quality compounders even at elevated valuations.

Pitch Summary:
One such interesting idea that meets both of the "sweet spot" criteria above is Bank of Georgia, the #1 bank in the country of Georgia. Bank of Georgia is a very profitable bank that offers a great product for its customers, but…it's located in Georgia, which causes most potential investors to discard it from the consideration set immediately. Furthermore, Bank of Georgia (a $2 billion market cap company listed in London and part of the FTSE 250) only trades $3 million per day, which makes it uninvestable for even the subset of funds that might otherwise consider it. Our research, in addition to showing that Bank of Georgia is very well-run and shareholder-focused, leads us to be excited about Georgia as a country – a country that, after the Rose Revolution in 2003, is a pro-Western democracy with low levels of corruption, high economic freedom, low inflation, a stable exchange rate, and high GDP growth that seems poised to continue for years to come. Georgia is a small country with only 3.7 million people. Partially as a result, the banking sector is very consolidated, with the top two banks (Bank of Georgia and TBC Bank) having a combined 80% market share, split almost evenly between them – one of the best banking market structures in the world. The dominance of these two banks and the small size of the market makes it unattractive for foreign competitors to enter, a different situation than in some neighboring countries like Uzbekistan. Furthermore, the small size and relative immaturity of the market has prevented a meaningful non-bank capital market from developing, which leaves Bank of Georgia and TBC Bank as the only games in town for financing and deposits. Fintechs are not really present either; these banks are the fintechs, with instant payments between customers, unsecured consumer loans via app, and dominance of the card payment ecosystems (Bank of Georgia has 54% acquiring market share in the country, up from 38% in 2020). As a result, these two banks seem poised to capture much of the value created by the financial sector in Georgia, with little leakage to competitors or alternatives. Combined, these attributes (very consolidated market, limited non-bank competition) have led to strong and enduring NIMs and ROEs for the top two banks. Over the past 10 years, through a variety of environments, ROE has averaged 24% for Bank of Georgia and 22% for TBC Bank. This average period also includes numerous years prior to a shift to digitalization, which drove substantial operating efficiency improvement for both banks; Bank of Georgia's cost-to-income ratio, a measure of operating efficiency, has dropped by 12 points since 2014, meaning it can sustainably generate higher ROEs for the same NIM. This year, Bank of Georgia is poised to generate a ~29% ROE. Unlike in some other oligopolistic sectors, these high ROEs have not come from exploiting or underserving customers. In terms of pricing, we hear Bank of Georgia and TBC Bank compete aggressively for customers, though not to the point of irrationality. In terms of service, both banks are rated highly, and in particular their digital offerings are world-class – we've heard from former executives who've worked in both Georgia and the UK that the Georgian bank mobile apps offer a much superior customer experience, "21st century vs. 20th," with the UK gradually catching up via digital banks like Revolut and Monzo. Out of the 3.7 million total population of Georgia, 1.2 million use Bank of Georgia's mobile app monthly, of whom 48% use it daily, a high DAU/MAU ratio that reflects its ease of use and pervasiveness in day-to-day payments (as one reference point, the Facebook app's global DAU/MAU ratio is 68%). Bank of Georgia has a retail customer NPS of 61, which is unheard of amongst universal banks globally; this is up from 27 in 2017, a reflection of the substantial work new management has done since 2019 to re-focus on customers and improve on that metric. Bank of Georgia's management team is excellent. Over the past two decades, the bank has had three strong, Western-educated CEOs: Lado Gurgenidze (2004-2006), who turned around a previously mismanaged bank, grew the loan book from $66 million to $399 million, listed the company in London, then later became Prime Minister of Georgia; Irakli Gilauri (2006-2018), who further grew the loan book 9x to $3.5 billion; and the current CEO Archil Gachechiladze (2019-present), who has now grown the bank's loans to $7 billion. We have studied the tenures of all three leaders and traced the development of the bank over time, through various economic cycles. Our conversations with former employees indicate that these leaders have built a strong culture that makes the bank one of the top places to work in Georgia. The culture has a strong focus on risk management, with one aspect being a focus on maintaining conservative capital ratios; the current common equity tier 1 capital ratio (CET1) is 18.7%, 4 points above the regulatory minimum as set by its regulator (for reference, Bank of America's CET1 ratio is 11.6% and PNC Bank's is 9.5%, though there are differences in calculation, e.g., GAAP vs. IFRS). More than 80% of top management's compensation is paid in deferred shares, which vest in tranches over up to 8 years, a structure that helps align management's incentives with that of shareholders. The investment case is simple: consistent with its history and boosted by tailwinds such as digitalization driving higher operating efficiency, Bank of Georgia should generate a normalized ROE of ~25% (vs. the current ~29%) for many years to come. Half of the ROE will be reinvested into loan growth, driving low teens growth; the other half, or close to half, will be paid out via dividends and share buybacks. How much should one be willing to pay for this type of unusually high return profile? If a bank with this normalized ROE were based in the US or Western Europe (clearly a big "if" – but just taking a hypothetical), we believe it would easily command a multiple of between 2-4x book value, which would represent ~8-16x normalized earnings; such a valuation may likely be an undervaluation of such a bank, as increased ROE points above the cost of capital drive compounding value creation and are increasingly rather than linearly more valuable. Bank of Georgia currently trades at 1.1x book value, which represents 4x current earnings and <5x normalized earnings. And at the current price, we expect to receive a ~13% yield from 2024 dividends & buybacks. Given its market share dominance, management quality, and growth prospects, this is far too cheap of a valuation, even after considering its somewhat unusual home country. Factoring in low teens earnings growth, low teens capital return, ~3% annual currency depreciation via USD (which would be faster than historical trends), and a moderate increase in valuation (we assume we exit at 1.35x book, reflecting how a Georgian bank may never get a full valuation it deserves), we anticipate receiving a 25% IRR in USD on our investment.

BSD Analysis:
Meditation Capital presents a compelling value thesis on Bank of Georgia, the dominant bank in Georgia with 40% market share in a highly consolidated duopoly structure. The manager emphasizes the bank's exceptional profitability metrics, including a 24% average ROE over 10 years and an expected 29% ROE in 2023, driven by limited competition and strong digital capabilities. The investment case centers on the bank's world-class mobile banking platform (1.2M monthly users with 48% daily usage) and exceptional customer satisfaction (NPS of 61). Management quality is highlighted through three successful Western-educated CEOs who have grown the loan book from $66M to $7B over two decades. The valuation appears deeply discounted at 1.1x book value and <5x normalized earnings, compared to 2-4x book for comparable Western banks. The manager projects a 25% USD IRR based on low-teens earnings growth, substantial capital returns (~13% yield), and modest multiple expansion to 1.35x book. Key risks include currency depreciation and geopolitical concerns, though the manager views Russian invasion risk as minimal given current territorial arrangements.

Pitch Summary:
Clinica Baviera is presented as a high-quality, family-led ophthalmology platform with strong shareholder alignment, consistent dividends, and a solid net cash position. Structural demand is driven by aging demographics and rising prevalence of eye diseases, with procedures largely paid out-of-pocket and insulated from strained public healthcare budgets. The business benefits from high barriers to entry rooted in specialist talent, brand reputation, and capital intensity, with historical acquisition multiples supporting valuation credibility. Key risks include potential control actions by the Chinese majority shareholder, reputational sensitivity inherent to healthcare, and some macro cyclicality. On conservative assumptions, the pitch argues for ~50% equity upside alongside a 6%+ dividend yield.

BSD Analysis:
The ophthalmology services industry is structurally attractive, characterized by fragmented supply, high practitioner dependency, and resilient demand driven by medical necessity rather than discretionary spend. Clinica Baviera’s competitive position rests on brand trust, surgeon density, and scale economics, which together create meaningful local moats and pricing power. Secular tailwinds from aging populations and privatization of elective procedures support steady volume growth with limited reimbursement risk. Net cash and disciplined capital allocation reduce downside risk and enable opportunistic M&A in downturns, reinforcing long-term compounding. The principal strategic risk lies in governance, where majority ownership could cap minority optionality despite strong operating fundamentals. Reputational risk is real but historically well-managed, and technological advances are more likely to enhance throughput than displace demand. At below-historical multiples, the market appears to undervalue the durability of earnings and balance-sheet strength. For a defensive healthcare compounder with yield, the risk-adjusted return profile remains attractive.

Actual Post Content:
Quick Sketch Thesis 1/n. Let's dive into Clinica Baviera ($CBAV) Strengths: - Family-owned business. The CEO is the founder (1992) and has a significant stake (>10%). - Aligned with shareholders. Strong dividend payouts and sound capital allocation over the years. - As of 08/15/23, the company holds a net cash position of 38M. - Growing prevalence of eye diseases due to an aging population. These surgeries are not covered by the increasingly burdened public healthcare system. - High entry barriers (talent, reputation, and capital). Past acquisitions in similar companies at much higher multiples. - Historically, the company has traded at P/E ratios of 15-20. Risks: - Possibility of a hostile takeover by the majority Chinese shareholder, potentially limited by the prestige of being a European publicly traded company. - Reputational risk. Negative publicity regarding malpractice or dissatisfied patients. - Business with a cyclical component. A severe recession could impact fundamentals. However, lesser than in the past cyclicality as most operations are not purely aesthetic. - Disruption. While it may still require eye interventions, technological advancements could serve as a catalyst rather than a risk. Easy valuation: Assuming Net Earnings of 35M€ in 2026 and a PE of 15 (lower than past average) it's easy to imagine the stock trading arround 30€/share. This is an 50% upside from current levels. While enjoying a 6%+ dividend, the wait becomes pleasant. Credits to @aleix_amoros for the original idea.

URL: https://x.com/dittoinvest/status/1695407255477215545

Pitch Summary:
Weak management with a bad track record; too late into the game; the main technology is inferior to market standard; the competitors already provide the technology; Update 5/6/25 - Previous failures in different markets suggest possible failure in new market. Years behind established technologies, with little competitive edge and poor data, trailing competitors in efficacy and safety.

BSD Analysis:
Pulse Biosciences is developing pulsed-field ablation devices but remains pre-commercial. Bears emphasize cash burn, financing reliance, and uncertain regulatory timelines. With minimal clinical adoption data, valuation reflects speculative optionality rather than fundamentals.

Pitch Summary:
Given the relative valuations of many FinTech stocks that have been hitting 10-year (Visa) or all-time lows (SSNC, EEFT, etc.), FinTech is noticeably out of favor on Wall Street, especially post-SIVB-bank failure/financial sector scare. One FinTech stock we have been buying is Nashville-based i3 Verticals (Nasdaq: IIIV). IIIV is a software and payment solutions provider, mainly to the Public (e.g., municipalities for utility payments, states for auto registration billing), and Healthcare sectors. IIIV was originally known as more of a pureplay payment processor, but over the last few years, the company has employed a software acquisition strategy whereby they acquire the software assets and then layer their payments engine onto the acquired businesses to fuel organic growth. Through the implementation of this strategy, IIIV has been rapidly shifting to a higher mix of recurring SaaS revenue and transitioning from majority "payments" revenue to a majority "software" company. Now, "Software and Services" constitute 65% of their revenue and 72% of EBITDA, and the company's gross margins have expanded from an already healthy 69% to a robust 77% in the most recent quarter. It is our thesis that the market will soon take notice of this positive mix shift and value the company more as a software firm than a pure payments company. Profitable, growing payments companies tend to trade closer to what IIIV trades at (9-12x EBITDA), while software companies with similar profiles will tend to trade closer to 15-20x, or higher, especially those with noncyclical end customers like IIIV's. Last quarter IIIV grew revenues 17%, including roughly 10% organic growth, while also achieving overall recurring revenue growth of 17%. We foresee ongoing opportunities for growth as they continue to layer payments over their software assets – especially within their Healthcare vertical, which has only recently launched. More importantly, the company claims that with their more complete offering of software solutions to state agencies, they are now being invited to and winning more RFPs at a larger scale. Their management team has reiterated over the last few quarters that they have made substantial progress in integrating their 48 acquisitions since 2018 into more complete subvertical solutions that can win statewide mandates. For instance, in the most recent quarter, they called out a 5-year contract from their "Justice Tech" division with a state-level mandate, and a state level DMV solution that utilizes several of their software products. In other words, they are building cost and revenue synergies across their asset base and beginning to see preliminary success, something we view as crucial for the stock to re-rate higher. The management team is led by serial payments industry entrepreneur Greg Daly, who has gotten the "band back together," and recruited executives from his previous companies iPayment Inc. and PMT Services, the latter of which Daily founded and was sold for over $1 billion dollars over 20 years ago. IIIVs management team has exhibited a disciplined approach to M&A. In an era when many executives and buyout firms were paying >10x revenue for young and growing software firms, IIIV has not paid >10x EBITDA for small software tuck-ins. They are now becoming even more conservative with aims to cap the multiple at 8x, partially because of higher interest rates crimping how accretive the acquisitions would be to the company. The biggest risk we will be watching for is whether they are simply unable to make the types of accretive acquisitions they have been making for the past 2-3 years, in which case the upside will be more subdued. The most direct public trading comp in our view, Tyler Technologies (NYSE: TYL), is well followed and has been anointed by investors as a high-quality, scarce software asset that routinely garners one of the highest valuations in the public software space. Given IIIV is not a public sector pure play like TYL, it is unlikely to receive the same stratospheric valuation. However, the stock's current massive discount given its robust growth and healthy overall profitability is too extreme for savvy investors not to take notice. If they don't, we think the Board will gladly welcome a strategic acquirer to come in and close the valuation gap at a more opportune moment sometime in the next few years. Our base case price 12-month target of $32 gives the shares ~50% upside and is derived from using 15x NTM EBITDA – a > +50% discount to TYL.

BSD Analysis:
Voss Capital presents a compelling value opportunity in i3 Verticals, a Nashville-based fintech company undergoing a strategic transformation from payments processor to software-focused business. The fund's thesis centers on IIIV's successful shift toward higher-margin recurring SaaS revenue, with software now comprising 65% of revenue and 72% of EBITDA, driving gross margins from 69% to 77%. The company demonstrated strong fundamentals with 17% revenue growth and 10% organic growth, while maintaining disciplined M&A practices by acquiring software assets at reasonable 8-10x EBITDA multiples. Management's track record is notable, led by serial entrepreneur Greg Daly who previously sold PMT Services for over $1 billion. The investment opportunity lies in a valuation disconnect where IIIV trades at 9-12x EBITDA like a payments company, while comparable software firms command 15-20x multiples. With a $32 price target representing 50% upside based on 15x NTM EBITDA, the position offers attractive risk-adjusted returns in a quality business serving non-cyclical government and healthcare end markets.

Pitch Summary:
Given the relative valuations of many FinTech stocks that have been hitting 10-year (Visa) or all-time lows (SSNC, EEFT, etc.), FinTech is noticeably out of favor on Wall Street, especially post-SIVB-bank failure/financial sector scare. One FinTech stock we have been buying is Nashville-based i3 Verticals (Nasdaq: IIIV). IIIV is a software and payment solutions provider, mainly to the Public (e.g., municipalities for utility payments, states for auto registration billing), and Healthcare sectors. IIIV was originally known as more of a pureplay payment processor, but over the last few years, the company has employed a software acquisition strategy whereby they acquire the software assets and then layer their payments engine onto the acquired businesses to fuel organic growth. Through the implementation of this strategy, IIIV has been rapidly shifting to a higher mix of recurring SaaS revenue and transitioning from majority "payments" revenue to a majority "software" company. Now, "Software and Services" constitute 65% of their revenue and 72% of EBITDA, and the company's gross margins have expanded from an already healthy 69% to a robust 77% in the most recent quarter. It is our thesis that the market will soon take notice of this positive mix shift and value the company more as a software firm than a pure payments company. Profitable, growing payments companies tend to trade closer to what IIIV trades at (9-12x EBITDA), while software companies with similar profiles will tend to trade closer to 15-20x, or higher, especially those with noncyclical end customers like IIIV's. Last quarter IIIV grew revenues 17%, including roughly 10% organic growth, while also achieving overall recurring revenue growth of 17%. We foresee ongoing opportunities for growth as they continue to layer payments over their software assets – especially within their Healthcare vertical, which has only recently launched. More importantly, the company claims that with their more complete offering of software solutions to state agencies, they are now being invited to and winning more RFPs at a larger scale. Their management team has reiterated over the last few quarters that they have made substantial progress in integrating their 48 acquisitions since 2018 into more complete subvertical solutions that can win statewide mandates. For instance, in the most recent quarter, they called out a 5-year contract from their "Justice Tech" division with a state-level mandate, and a state level DMV solution that utilizes several of their software products. In other words, they are building cost and revenue synergies across their asset base and beginning to see preliminary success, something we view as crucial for the stock to re-rate higher. The management team is led by serial payments industry entrepreneur Greg Daly, who has gotten the "band back together," and recruited executives from his previous companies iPayment Inc. and PMT Services, the latter of which Daily founded and was sold for over $1 billion dollars over 20 years ago. IIIVs management team has exhibited a disciplined approach to M&A. In an era when many executives and buyout firms were paying >10x revenue for young and growing software firms, IIIV has not paid >10x EBITDA for small software tuck-ins. They are now becoming even more conservative with aims to cap the multiple at 8x, partially because of higher interest rates crimping how accretive the acquisitions would be to the company. The biggest risk we will be watching for is whether they are simply unable to make the types of accretive acquisitions they have been making for the past 2-3 years, in which case the upside will be more subdued. The most direct public trading comp in our view, Tyler Technologies (NYSE: TYL), is well followed and has been anointed by investors as a high-quality, scarce software asset that routinely garners one of the highest valuations in the public software space. Given IIIV is not a public sector pure play like TYL, it is unlikely to receive the same stratospheric valuation. However, the stock's current massive discount given its robust growth and healthy overall profitability is too extreme for savvy investors not to take notice. If they don't, we think the Board will gladly welcome a strategic acquirer to come in and close the valuation gap at a more opportune moment sometime in the next few years. Our base case price 12-month target of $32 gives the shares ~50% upside and is derived from using 15x NTM EBITDA – a > +50% discount to TYL.

BSD Analysis:
Voss Capital presents a compelling value opportunity in i3 Verticals, a Nashville-based fintech company undergoing a strategic transformation from payments processor to software-focused business. The fund's thesis centers on a significant business model shift that the market has yet to recognize, with software and services now comprising 65% of revenue and 72% of EBITDA, driving gross margins from 69% to 77%. The company achieved strong 17% revenue growth with 10% organic growth, while expanding recurring revenue by 17%, demonstrating successful execution of their acquisition-driven strategy. Management's disciplined M&A approach, paying under 10x EBITDA for tuck-in acquisitions compared to industry multiples exceeding 10x revenue, positions the company well for continued accretive growth. The experienced leadership team, led by serial entrepreneur Greg Daly who previously sold PMT Services for over $1 billion, provides credibility to the transformation strategy. With 48 acquisitions since 2018 being integrated into comprehensive vertical solutions winning state-level mandates, IIIV is building meaningful competitive moats in public sector and healthcare markets. The fund's $32 price target implies 50% upside based on 15x NTM EBITDA, representing a significant discount to comparable Tyler Technologies while offering similar growth characteristics with superior margin expansion.

Pitch Summary:
Not really a short research, but revealed a number of concerns: The non-consumable market has been weak; operational issues; shortage of employees; merchandising errors; inflated inventory; high management turnover; high competition;

BSD Analysis:
Dollar General is a rural discount retailer. The bear case highlights shrinking margins, operational strain, and consumer headwinds. Inflation and wage pressures have eroded profitability, while rapid store expansion has weakened execution. Shrink and stock-outs are worsening. Lower-income customers are under acute stress, limiting pricing power. Once considered a defensive compounder, DG now faces re-rating risk if earnings visibility fails to improve.

Pitch Summary:
Twitter thread: Insane projections; spent 7 years only to make a prototype; high-level managers are resigning; market cap is x4 to x10 times the peers who are way ahead; deceptive promotion;

BSD Analysis:
Eve, spun out of Embraer, develops electric air taxis (eVTOL). Shorts stress long commercialization timelines, high capital needs, and regulatory uncertainty. Competitors like Joby and Archer are further ahead, while Eve relies on Embraer branding. With no revenues until 2026+ and cash burn mounting, dilution risk is high. Equity trades more on SPAC/eVTOL hype than fundamentals.

Pitch Summary:
Bringing "better.com" to market via SPAC; fair value is ~81 cents vs. current price of $32; CEO has a long history of bankruptcies, deception and fraud; its financials make WeWork look like MSFT; without Softbank, the company would go bankrupt; SPAC ran to $50 due to short-squeeze; 98% downside;

BSD Analysis:
Better Home & Finance entered public markets via SPAC as a digital-first mortgage originator. Shorts argue structural headwinds in mortgage origination, poor unit economics, and dilution risk. Rising rates have crushed volumes, while CAC is high. Repeated equity raises erode value, and refinancing volumes have collapsed. Liquidity pressure is acute, with the model structurally unprofitable without a housing rebound.

Pitch Summary:
Series of misrepresentations; the revenue will be minimal and capped due to noncompetitive award; stockholder dilution; minimal test flights in reality; overvalued with unfounded projections; Update 8/27/25 - Follow-up report: $6b order book is questionable and inflated; "Launch Edition" is faked; reminiscent of Nikola's tactics; fundamentally flawed aircrafts;

BSD Analysis:
Focused on eVTOL sector risks: certification uncertainty, inflated orderbook credibility, heavy R&D spend, dilution risk, and peer competition (Joby, Lilium, incumbents).