Investment Pitches

Pitch Summary:
A similar situation can be seen outside the world of tech companies, in the staider financial services sector. Blackstone, manages almost US$1 trillion on behalf of mainly large institutional clients, almost double compared to three years ago. In the meantime, the world's largest alternative assets manager has built a team of hundreds of salespeople and partnered with major banks and brokers, to establish itself as a first mover in the $195 trillion private wealth channel. Meanwhile, Blackstone continues to raise larger funds among its traditional institutional clients that represent a $65 trillion market. It recently closed its $30.4 billion real estate fund for these clients – the largest ever of its kind. Even though Blackstone's share price has rallied 25% this year, it is almost 30% cheaper than it was at the start of 2022.

BSD Analysis:
Montaka presents a strong bull case for Blackstone based on the firm's dominant market position and successful expansion into new distribution channels. The fund highlights Blackstone's impressive asset growth, nearly doubling to $1 trillion over three years, demonstrating strong client demand and successful capital raising capabilities. The manager emphasizes Blackstone's strategic first-mover advantage in the massive $195 trillion private wealth channel, having built substantial sales infrastructure and key partnerships with major banks and brokers to access retail investors. This represents a significant addressable market expansion beyond traditional institutional clients. Simultaneously, Montaka notes Blackstone's continued success in its core institutional business, recently closing a record $30.4 billion real estate fund within a $65 trillion institutional market. This dual-channel growth strategy positions Blackstone to capture market share across multiple client segments. Despite the stock's 25% year-to-date gain, the fund emphasizes shares trade 30% below early 2022 levels, suggesting attractive valuation relative to the underlying business growth and market opportunity. The fund's conviction appears anchored in Blackstone's scale advantages, distribution capabilities, and ability to capitalize on the structural shift toward alternative investments.

Pitch Summary:
Meta is in the middle of executing a successful turnaround underpinned by its substantial AI investments, following disruption from Apple's app ad tracking changes, and white-hot competition from TikTok's short-form videos. Powerful AI capabilities have allowed Meta to overcome these headwinds. AI-recommended content has helped lift engagement, especially in 'Reels' short from videos, and AI-based targeting and measurement has increased the value of ads to marketers once again. In future, AI-enabled chatbots promise to expand Meta's $US10 billion message-based ads business by allowing smaller businesses to automate interactions with their customers. Yet Meta's share price is down 15% compared to 18 months ago when the company was grappling with a perfect storm – and that's after gaining 138% in the last six months.

BSD Analysis:
Montaka presents a compelling turnaround story for Meta, emphasizing the company's successful deployment of artificial intelligence to overcome significant competitive and regulatory headwinds. The fund highlights how Meta's AI-powered content recommendation algorithms have revitalized user engagement, particularly in Reels, helping the platform compete effectively against TikTok's short-form video dominance. The manager notes that AI-based ad targeting and measurement capabilities have restored advertiser confidence and spending following Apple's iOS privacy changes that initially disrupted Meta's advertising model. Looking forward, Montaka identifies AI-enabled chatbots as a significant growth catalyst for Meta's $10 billion messaging-based advertising business, enabling small business automation and expanding the addressable market. Despite the stock's remarkable 138% gain over six months, the fund emphasizes that shares remain 15% below levels from 18 months ago when the company faced its most challenging operating environment. This valuation disconnect suggests the market has not fully recognized Meta's successful AI-driven transformation and the sustainability of its competitive positioning. The fund's conviction appears rooted in Meta's ability to leverage AI investments to drive both engagement and monetization improvements.

Pitch Summary:
Microsoft is also capturing a large slice of the multi-trillion-dollar opportunity in cloud computing and AI, with annual revenues tripling in the last three years to $56 billion. Earlier this year, Microsoft's Azure cemented its place at the forefront of AI by deepening its partnership with OpenAI to provide customers access to the machine learning models behind ChatGPT, powered by Azure's cloud platform. Last quarter, Azure OpenAI customers jumped 10-fold. Microsoft also announced a new 'Copilot' AI assistant, which combines OpenAI's machine learning models with Microsoft's proprietary data to improve the productivity of Office applications like Word, Excel, and PowerPoint. Copilot versions of these programs look like they will command a 40% premium price and expand the appeal of Office beyond its current 382 million users. However, Microsoft shares trade roughly flat relative to the beginning of 2022.

BSD Analysis:
Montaka presents a strong bull thesis for Microsoft based on its strategic positioning in cloud computing and artificial intelligence markets. The fund highlights Microsoft's impressive Azure revenue growth, tripling to $56 billion over three years, demonstrating the company's successful transition to cloud-first services. The manager emphasizes Microsoft's strategic partnership with OpenAI as a key competitive advantage, noting a 10-fold increase in Azure OpenAI customers last quarter, which validates strong enterprise demand for AI-powered solutions. The introduction of Copilot AI assistant represents a significant monetization opportunity, with the potential to command 40% premium pricing across Office applications while expanding the user base beyond 382 million current subscribers. This pricing power suggests substantial margin expansion potential and recurring revenue growth. Despite these fundamental improvements and competitive positioning, Montaka notes the stock trades flat relative to early 2022 levels, indicating attractive valuation relative to business progress. The fund's conviction appears anchored in Microsoft's ability to leverage its existing Office ecosystem and Azure infrastructure to capture disproportionate value from the AI revolution.

Pitch Summary:
Amazon's AWS is capitalizing on a multi-trillion-dollar opportunity in cloud computing that is being supercharged by demand for AI. Over the last three years annual revenues for AWS have more than doubled to $US83 billion and long-term customer commitments reached $122 billion as customers shifted their IT spending to the cloud. More recently, AWS released several new AI capabilities, including its own specialized chips for machine learning models, access to more models, and AI-assisted programs. In some cases, AWS has already raised prices by 30% as demand has surged for cloud computing technology required to run AI services. Despite these advances and a 55% rise in the share price this year, Amazon's stock is down 22% from the start of 2022.

BSD Analysis:
Montaka presents a compelling bull case for Amazon centered on AWS's dominant position in the rapidly expanding cloud computing and AI markets. The fund highlights AWS's impressive revenue growth, doubling to $83 billion over three years, alongside $122 billion in long-term customer commitments, demonstrating strong customer retention and predictable cash flows. The manager emphasizes AWS's strategic AI initiatives, including proprietary machine learning chips and expanded model access, positioning the company to capture outsized value from the AI revolution. Notably, AWS has already implemented 30% price increases due to surging AI-related demand, indicating strong pricing power and margin expansion potential. Despite the stock's 55% year-to-date gain, Montaka argues the shares remain attractively valued, trading 22% below early 2022 levels while the underlying business has fundamentally strengthened. The fund's conviction appears rooted in AWS's multi-trillion dollar addressable market opportunity and Amazon's first-mover advantage in AI-powered cloud services. This positioning suggests significant long-term compounding potential as enterprises accelerate their digital transformation and AI adoption.

Pitch Summary:
GEHC is a leader in Imaging and Ultrasound machines, which includes PET and CT scans, MRI, X-Ray and ultrasounds – these account for nearly three quarters of revenues. GEHC is a global business with revenues well spread between the US, Europe, China and emerging markets. The business model is both predictable and resilient in our view: Predictable because 50% of revenues are recurring in nature, coming from servicing the machines, selling spare parts and consumables – giving the business attractive razor & razorblade economics. Resilient because Imaging is a mission-critical category for GEHC's customers - it is the most important revenue driving category for hospitals and one that is prioritised irrespective of the economic environment. We like the Imaging industry because it is effectively a three-player market between GEHC, Siemens Healthineers and Phillips, and the industry has continued to consolidate over the last 10 years. Scale gives the large players the ability to reinvest in R&D and to entrench their position through close relationships with hospitals. Our GEHC investment thesis is based on an under-appreciated margin opportunity as a newly independent company. We often see this with spin-off situations: A hidden asset with a renewed focus on capturing market share; A bloated cost structure that can be better optimised; and A newly independent and aligned management team. All of these are in place at GEHC. For a long time, the company has been run within the larger GE conglomerate and milked for its cashflows, with GE's investment priority being its Aerospace business (prior to COVID, we were investors in GE so have followed the company closely for a long time). However now as a newly independent entity, GEHC can focus on its core business with a fully independent and aligned management team that we expect will act with more urgency. The margin opportunity stands out when comparing GEHC to its closest peer Siemens Healthineers, whose Imaging business generates operating margins in the low 20s percentage compared to GEHC in the mid-teens. Our diligence suggests that there are no structural reasons for this margin differential – therefore we think GEHC will close the margin gap over time by addressing the low-hanging fruit in the cost base while also launching new, higher-margin products (resulting from the recent step up in R&D spend). We believe market expectations for GEHC's margins are too low and therefore see meaningful room to surprise to the upside - leading to high-teens earnings growth over the next few years. Another important tailwind for margins we expect will be the growing penetration of digital tools in Imaging, which GE has been investing behind. GEHC's large global install base of >4m machines gives them a strong advantage in terms of data collection, even more so today when data is extremely valuable and can be overlayed with software applications. We have already started to see strong demand from hospitals for these software applications because they can meaningfully reduce costs – for example by allowing doctors to read and analyse imaging scans in much shorter time windows, addressing both staffing issues and costs. The adoption of digital services will support growth, better service attach rates and ultimately improve margins – and importantly we do not think we have to underwrite this to get upside to the current valuation. We view GEHC's valuation as compelling at current levels, particularly with the meaningful improvement in free cashflow (FCF) generation we expect over the next 3 years. On current metrics, which we think still only reflect a depressed earnings base, the stock is trading at a discount to most medtech peers despite having a more attractive growth profile. On a more normalised basis, the stock is on a FCF yield of over 6%, which we think is very appealing. Being a newly independent company, there is still some scepticism with regards to management execution but we think the market will start to become more comfortable as the company starts to deliver on its margin opportunity.

BSD Analysis:
VGI Partners presents a comprehensive bull case for GE Healthcare as a classic spin-off opportunity with significant margin expansion potential. The manager emphasizes GEHC's leadership position in medical imaging with predictable recurring revenues (50% from services and consumables) and resilient demand from hospitals. Operating in a consolidated three-player market alongside Siemens and Philips, GEHC benefits from scale advantages and customer entrenchment. The core thesis centers on margin convergence with Siemens Healthineers, whose imaging business operates at low-20% margins versus GEHC's mid-teens. VGI believes this gap reflects operational inefficiencies rather than structural disadvantages, creating opportunity for meaningful margin expansion. Additional upside comes from digital transformation, leveraging GEHC's 4+ million machine install base for data-driven software solutions that reduce hospital costs. Trading at a discount to medtech peers despite superior growth prospects, GEHC offers over 6% normalized FCF yield with high-teens earnings growth potential.

Pitch Summary:
We continue to see upside to Amazon's two core businesses – Amazon Web Services (AWS) and retail/ecommerce. Whilst Microsoft and ChatGPT have captured the imagination of investors looking for AI exposure, the AI business at AWS is extremely well positioned to increase sales through its combination of software infrastructure products, proprietary training and inference chips (an alternative to NVIDIA). AWS is also developing large language models which are only beginning to be appreciated by the investment community. In addition, we see significant room for Amazon's retail business to surprise to the upside through margin expansion. After a period of massive capacity expansion and transport infrastructure investment, Amazon has rationalised its North American retail footprint and we believe it will reap the margin benefit of this over the coming years.

BSD Analysis:
VGI Partners maintains a bullish stance on Amazon, focusing on two key value drivers: AWS's underappreciated AI capabilities and retail margin expansion potential. The manager believes AWS is well-positioned in the AI race through its comprehensive infrastructure offerings, proprietary chips that compete with NVIDIA, and developing large language models that the market hasn't fully recognized. On the retail side, VGI sees significant margin expansion opportunity following Amazon's rationalization of its North American footprint after years of heavy capacity investment. The thesis suggests Amazon is entering a harvest phase where previous infrastructure investments will drive margin improvement. This dual-engine growth story combines AWS's AI positioning with retail operational leverage, positioning Amazon to benefit from both technological innovation and operational efficiency gains.

Pitch Summary:
CME operates futures and derivatives exchanges, including the Chicago Mercantile Exchange, the New York Mercantile Exchange, the Chicago Board of Trade, and the Dow Jones Index Services. On top of this, CME also owns other key assets related to foreign exchange trading & infrastructure and a strategic shareholding in Standard & Poor's (S&P) Index business. The key driver of trading activity for CME is in its interest rate derivatives products, where it has an effective monopoly in the exchange trading of interest rate derivatives in the United States, through its benchmark products across the entirety of the interest rate curve. Demand for interest rate derivatives is driven by volatility in interest rate markets, whose effect is compounded by the number of bonds held by those looking to manage interest rate risk and, by extension, market liquidity. The below chart of average daily volumes of interest rate derivatives and US Federal debt held by the public illustrates the extremely strong relationship between the size of the US Treasury market and volumes growth, although there are deviations around this primarily around Fed intervention (for example, at the start of the pandemic, volumes were suppressed by an enormous amount of Quantitative Easing (QE) and effectively zero interest rates which reduced the demand for hedging products). We expect the growth in the size of the US Treasury market, particularly in relation to privately held US treasuries as the Fed undergoes a balance sheet unwind, to remain a powerful underpinning of CME's interest rate derivatives business. CME's 1H23 results have been pleasing, with revenue growth of over 8% translating to EPS growth of 22%. CME has benefited from increased transaction and clearing fees because of pricing (Revenue Per Contract) and mix shifting towards higher revenue contracts. Similar to other exchange assets, CME has seen a significant increase in net interest income (NII), a result of underlying collateral balances earning a higher rate of interest as rates have increased sharply over the last 18 months. Current conditions are highly favourable for CME's interest rate derivatives business, other derivatives complexes and net interest margin and we see substantial upside risk to consensus earnings and free cashflow estimates. We believe that CME's assets are critical pieces of market infrastructure and will be recognised as such in the future.

BSD Analysis:
VGI Partners presents a compelling bull case for CME Group centered on its monopolistic position in US interest rate derivatives trading and favorable market conditions. The manager highlights CME's effective monopoly in exchange-traded interest rate derivatives, which benefits from the strong correlation between US Treasury market size and trading volumes. With revenue growth of 8% translating to 22% EPS growth in 1H23, CME is capitalizing on higher pricing and favorable contract mix. The rising interest rate environment has significantly boosted net interest income from collateral balances, creating a powerful earnings tailwind. VGI expects continued growth in privately held US treasuries as the Fed unwinds its balance sheet, providing structural support for derivatives demand. The manager views CME's infrastructure as mission-critical and believes current favorable conditions create substantial upside to consensus estimates. This thesis combines cyclical tailwinds with structural market positioning.

Pitch Summary:
Kiwetinohk is one of many shale gas companies that trade at a very low P/E (Price/Earnings). The reasons behind this are twofold: In the early 2010's, a lot of shale companies aggressively funded themselves through high amounts of debt. When oil prices deteriorated, a lot of these companies went bankrupt. This has earmarked the industry as very high risk. However, much has changed and management of these firms has become much more conservative. Debt levels are much lower than 10 years ago. In spite of that, P/E's are now much lower than back in the day instead of higher! A second reason why people are staying away from this industry is the ESG-aspect, as it is considered ESG-unfriendly. For Kiwetinohk, there is a third reason: It has decided to reinvest all their profits into ESG projects such as gas plants and CO2-storage facilities. This makes it a weird investment for tradition oil/value investors (who like dividends and positive cashflows), while it is still not ESG enough to be ESG-eligible. It also makes it tough to value, as you invest in an oil&gas company AND in a company that does not exist yet. As a flexible fund, we are able to tap into stocks that are less desirable for others. When you accept the complexities involved in valuing Kiwetinohk, what remains is a stock that trades at a clear discount. The biggest risk in Kiwetinohk (aside from declining oil&gas prices) is that the company reinvests its profits into unprofitable projects. But 1) this seems to be significantly priced in and 2) there is some protection we can draw on: it is very closely monitored by an oil industry focused investment firm that holds a significant stake (ARC Financial). We expect them to force a sensible and value enhancing strategy. Kiwetinohk is currently trading at less than 4.75x forward earnings, while companies like Shell and Exxon trade at 7.5- and 12-times earnings (with similar inventory life characteristics). All in all, this works out to a very attractive proposition.

BSD Analysis:
The manager presents a compelling value thesis for Kiwetinohk Energy, highlighting the company's extremely attractive valuation at less than 4.75x forward earnings compared to major oil peers trading at 7.5-12x earnings. The investment case centers on the market's triple discount: general shale gas skepticism from past bankruptcies, ESG concerns, and the company's unique reinvestment strategy into carbon capture and gas plant projects. While acknowledging the complexity of valuing a hybrid oil/gas and ESG infrastructure play, the manager views this as an opportunity for flexible investors. The presence of ARC Financial as a significant stakeholder provides governance oversight and strategic protection. The thesis assumes the market has overpenalized the stock for execution risks on ESG projects, creating an asymmetric risk-reward opportunity. However, the investment carries commodity price exposure and project execution risk that could impact returns if oil/gas prices decline or ESG investments prove unprofitable.

Pitch Summary:
In May, we were humbled when Leonardo shareholders elected all four of our candidates to the board of directors. We are excited for the journey ahead with a terrific group of managers and fellow directors. A very positive surprise occurred when meeting my new colleagues for the first time — each spoke with an incredible sense of urgency to help improve the company. Leonardo has been the worst-performing A&D stock in Europe, and was the only company to trade at a discount to its own historical valuation. We believe there are multiple factors behind this valuation overhang, and are focused on ensuring they are resolved over the coming years. We couldn't be more excited about the opportunities Leonardo has to accelerate growth, with its largely best-in-class and modern product portfolio, ready for "off the shelf," solutions that its customers need now more than ever in the past. Even today, shares are trading at a greater than 8% post tax FCF yield, based on a conservative consensus. The yield is even more attractive if we look forward to the next year or two. As we told investors we engaged with during the proxy campaign, the next few years will determine the next few decades for Leonardo. Since the new board and executives have been appointed, Leonardo's stock has flipped from being the worst performing aerospace & defense company to now best in class.

BSD Analysis:
GreenWood's successful proxy campaign at Leonardo represents a classic activist turnaround opportunity in European aerospace & defense. The fund secured all four board seats in May 2023, positioning them to drive operational and strategic improvements at Europe's worst-performing A&D stock. Leonardo trades at a significant discount to historical valuation while peers command 40% premiums, creating substantial re-rating potential through improved execution and capital allocation. The company's best-in-class, modern product portfolio provides ready-made solutions for heightened defense spending globally, yet this strategic advantage remains unrecognized by the market. Management's demonstrated sense of urgency for improvement, combined with GreenWood's board influence, creates a powerful catalyst for change. The 8% post-tax free cash flow yield on conservative estimates provides attractive downside protection while the company executes its transformation. Early market validation is evident as Leonardo's stock performance has already shifted from worst-in-class to best-in-class since the new board appointment, though fundamental improvements are still ahead.

Pitch Summary:
We feel the same way about our first Coinvestment, CTT. When talking with one of our largest partners this past month, this topic came up. When speaking of our efforts at our first coinvestment (CTT), he mentioned it was a bit like a tree falling in the forest - was anyone there to witness it? Using the metaphor, he said that we've been able to succeed in most everything we set out to do, but the returns have been still under our hurdle rate. While CTT is the second fastest growing parcel/post company by earnings, with UPS being the toughest to displace, the stock has lagged the fundamentals, and it remains deeply undervalued. As another partner also encouraged during the quarter, "don't get mad, buy more." We are pleased the CTT board joined us in supporting a third share repurchase program. Given our strong belief in the deliverability of management's ambitious 2025 target, to roughly double operating income, the company has already come close to achieving the low end of its guidance range for 2025. And the team maintains a high sense of urgency in continuing to grow better, faster, and greener than the rest of the industry. That's right- industry-leading growth and quality of service, paired with a net zero carbon footprint by 2030. The 13% post-tax FCF yield remains incredibly supportive, and as e-commerce is re-accelerating in Iberia, we are excited that we were able to use the opportunity to add this position to our separate account portfolios during the quarter.

BSD Analysis:
GreenWood presents CTT as a fundamentally strong but undervalued logistics play with significant operational momentum despite lagging stock performance. As their first coinvestment, the fund has achieved operational success while stock returns remain below hurdle rates, creating a classic value-performance disconnect. CTT ranks as the second-fastest growing parcel/post company by earnings globally, trailing only UPS, yet trades at a compelling 13% post-tax free cash flow yield. Management's ambitious 2025 target to double operating income appears achievable, with the company already approaching the low end of guidance range in first half 2023. The combination of industry-leading growth, superior service quality, and commitment to net zero carbon footprint by 2030 positions CTT advantageously in the accelerating Iberian e-commerce market. GreenWood's ability to influence capital allocation through board support for the third share repurchase program demonstrates the benefits of their coinvestment approach. The fund views recent portfolio additions across separate accounts as opportunistic given the valuation disconnect and re-accelerating e-commerce trends.

Pitch Summary:
On the contrary, the market seems unfazed that Bolloré recently tendered for over 20% of its net shares outstanding. While it was only able to buyback 8% in the tender, it has an active buyback taking place throughout the capital structure, and it trades near an all-time wide discount of over 70% to its net asset value (NAV). This is while nearly all of the assets are getting sold and converted to cash or liquid securities. Vincent and Cyrille Bolloré have used the past few years to both theirs and our advantage. Bolloré is perhaps a great poster child for the owner operator class over the past decade. Since we purchased the stock in late 2016, it has only modestly outperformed the global benchmark. But over that time, it more than doubled its operating businesses' profit, has acquired control of Vivendi, spun out Universal Music Group (UMG), sold both its logistics businesses, tendered for over 20% of its net shares outstanding, and has begun the process of simplifying the share count by squeezing out Socfin. The fact that it has only modestly outperformed global benchmarks since then, means the investment remains even more attractive today than when we bought it.

BSD Analysis:
GreenWood presents Bolloré as a compelling value opportunity trading at a massive 70% discount to net asset value despite active asset monetization and aggressive capital returns. The fund emphasizes the disconnect between fundamental progress and market recognition, highlighting management's successful execution of a multi-year transformation strategy. Since GreenWood's 2016 investment, Bolloré has more than doubled operating profits while executing major corporate actions including Vivendi control acquisition, Universal Music Group spinout, and logistics business sales. The 20% tender offer and ongoing buyback program demonstrate management's commitment to returning capital to shareholders. Vincent and Cyrille Bolloré's owner-operator approach has created substantial value through portfolio simplification and asset conversion to cash and liquid securities. The fund views the modest benchmark outperformance despite fundamental improvements as evidence of continued undervaluation. GreenWood positions this as a classic "Builder" investment where patient capital is rewarded through disciplined capital allocation and strategic asset optimization.

Pitch Summary:
Few have been as assertive as two of our core non-coinvestment positions: RH and Bolloré. In the past 8 months, RH has already repurchased 22% of its shares outstanding. While recent earnings have been hit recently by the slowdown in the luxury housing market, both the company's opportunistic repurchase activity, and forward indicators suggest the lull is now behind the company. CEO Gary Friedman was an early outspoken critic that the "Covid-bump" to earnings would be fleeting and thus he never stopped re-investing in the company's long-term vision to "climb the luxury mountain," by opening flagship locations in England, the US, and launching an entire new product line. This is classic Builder behavior - to invest right through a down-turn, growing operating expenses and capital spending much faster than the benchmark "guiders" focused on hitting their quarterly guidance. Friedman did this during the 2008 housing crisis, and he has once again shown his long-term vision during, and coming out of, Covid. Shares have responded positively in recent months.

BSD Analysis:
GreenWood presents a compelling bull case for RH based on aggressive capital allocation and contrarian leadership during market downturns. The fund highlights RH's massive 22% share repurchase program over 8 months as evidence of management's opportunistic approach to capital deployment. CEO Gary Friedman's strategy of investing through cyclical weakness while maintaining long-term vision is positioned as a competitive advantage. The manager emphasizes Friedman's track record of similar contrarian investments during the 2008 housing crisis, suggesting pattern recognition of successful cycle management. Despite near-term headwinds from luxury housing market slowdown, forward indicators and recent positive share price performance suggest the company is emerging from the trough. The "climb the luxury mountain" strategy through flagship expansion and new product lines demonstrates commitment to market share gains during competitor weakness. GreenWood views this as classic "Builder" behavior that creates long-term value through counter-cyclical investment.

Pitch Summary:
Paywalled (We believe the XP model is on the brink of implosion, with infuriated brokers, a broken sales culture, and meddling management among the company’s many problems.)

BSD Analysis:
XP is a Brazilian brokerage/wealth manager. Shorts focus on margin pressure, regulatory exposure, and macro headwinds. Slower retail flows and higher rates have shifted investors into fixed income. Regulators scrutinize fee structures. Expansion into banking adds credit risk. Premium valuation is vulnerable in a slowing Brazil.

Pitch Summary:
Since inception, we have not changed any positions. We have always been 100% invested in Reysas Logistics. However, as Reysas' stock increased nearly 6 fold, the attractiveness of the investment lessened. Having said that, we still expect a high return going forward. We bought Reysas logistics at around 94M market cap. Today (2nd August 2023) it is at 540M. Our estimate for its value is split into 2. - Part 1 Reysas owns 62% of Reysas REIT. We think Reysas REIT is worth in the area of 1.5B-2B today. 62% thereof is around 1-1.2B. - Part 2 The Logistics. We think the intrinsic value of that part today is above 750M. Reysas REITs market cap is 400M. We think that Reysas REIT will be worth around 3B within the next 5 years. (7-8 times the stock price today) Since Reysas owns 62% of Reysas REIT, it owns 190M worth of Reysas REIT's shares. This means that we are paying 350M for the rest of Reysas' Logistics. For us to have the same favourable return potential over 5 years, we would need the rest of Reysas Logistics to be worth 7-8 times the 350M we are paying for today. This implies around a 2.5-3B valuation, or 3-4 times our current estimate for its minimum intrinsic value. The "obvious" gap in price versus value seems to be in Reysas REIT's favour. However, Reysas will definitely have higher returns on capital over time, and that is difficult to value, especially if you look out over, say, a 10 year period. REIT's have limited capital allocation possibilities, which is a factor we have to keep in mind. Over the very long term, Reysas will most probably win the race. Reysas had extreme demand for logistic services, some of which they could not service because of lack of vehicles. Banks are pulling back on lending since there are restrictive policies on the interest rates, which are lower than the inflation rate. The only logical step to take was to get the capital raise from issuing shares. Since the father and son own a lot of the company's shares, whatever actions affect shareholders, heavily affect them. So, if they find the capital raise valuable, it's probably valuable for us too. Consider this: If they can earn 30% return on the new issued capital p.a, but they are raising it at ⅓ the Intrinsic value, then it would be roughly equivalent to them raising capital at intrinsic value to earn a 10% return p.a, or us investors earning 10% p.a on the money we put in the capital raise. It is highly likely that the return from the transportation vehicle purchases is higher than 30% p.a. Something we saw that we liked was that Egemen Doven, the Vice Chairman, agreed to buy all shares that were not going to be bought from the capital raise, at fair value. In the end, Egemen bought out around 1 Million shares at 1 Million USD. The truth is that no one understands Reysas as much as Egemen and his Father Durmus. If they are buying at these prices, this is a true signal. People sell for many reasons, but they only buy for 1. Having said that, we can expect another 1000% return from here in the next 10 years, and this can come mostly by holding Reysas/Reysas REIT.

BSD Analysis:
Bilbel Capital maintains a concentrated 100% position in Reysas Logistics, viewing it as significantly undervalued despite a 6-fold price appreciation since inception. The manager's sum-of-the-parts valuation assigns 1-1.2B to Reysas' 62% stake in Reysas REIT and over 750M to the logistics operations, implying substantial upside from the current 540M market cap. The thesis centers on Reysas REIT's potential to reach 3B in value within five years and the logistics business generating 30%+ returns on invested capital from vehicle purchases. Management's insider buying during the recent capital raise, particularly Vice Chairman Egemen Doven purchasing $1M worth of shares, reinforces the investment conviction. The fund expects another 1000% return over the next decade, primarily through holding Reysas and its REIT subsidiary. Strong demand for logistics services that exceeds current capacity provides a clear growth catalyst, while the company's ability to generate high returns on capital expansion supports the bullish long-term outlook.

Pitch Summary:
Brookfield Corporation is a leading global alternative asset manager with more than $400 billion of assets under management. The group has a strong heritage as an owner and operator of real assets and is among the largest global investors in infrastructure, real estate, and renewable power. Since 2019, Brookfield has also been the majority owner of Oaktree Capital Management, a prominent credit-focused investment firm led by Howard Marks. Brookfield Corporation is by far the largest balance sheet investor among alternative investment firms, with more than $50 billion in internal permanent capital invested alongside clients. Under the leadership of Bruce Flatt, who personally holds a shareholding of more than $2.5 billion, Brookfield has compounded at twenty percent per annum for three decades, equating to more than a 200x increase in shareholder value. While most publicly traded asset managers derive value principally from fee income, Brookfield has long had two core drivers of value: internal invested capital and asset management fee income. However, in 2022 Brookfield announced its intention to spin off its asset management division into a separate public company, anticipating that pureplay exposure would highlight the value of the asset management franchise. This transaction would create two public companies - the pureplay asset management business that would retain the name Brookfield Asset Management, and the remainco that would be renamed Brookfield Corporation. Management believed that, valued under a framework comparable to peer alternative asset managers, the new entity could be valued as high as $60 - $80 billion. In addition, because Brookfield Corporation would retain seventy-five percent ownership of the asset manager, the transaction would serve as a revaluation catalyst for the remainco, as Brookfield Corporation would then own ± $50 billion of a publicly listed asset manager in addition to the ± $50 billion of operating assets it already owned. One notable difference, however, was that in contrast to peers like Blackstone that earned significant fee income from carried interest, the transaction was structured such that Brookfield Corporation would keep all carried interest from the existing funds and one-third of all carried interest from all future funds. This was a significant component of value, as realized carried interest was expected to be approximately forty percent of all fee income going forward, and realized carry from existing funds would account for virtually all carry through 2030. Nonetheless, on December 12, 2022 the demerger was successfully completed, and Brookfield Asset Management began to trade at a $60 billion valuation, or roughly 30x fee related earnings. At the same time, shares of Brookfield Corporation lost $15 billion of market capitalization. Therefore, while the transaction was intended to shed light on value across Brookfield, the lofty valuation fetched by the asset manager actually served to increase the discount of Brookfield Corporation even further. Approximately ninety-three percent of cash earnings power was retained by Brookfield Corporation in the transaction, but its equity value fell by twenty percent. This created a unique opportunity to invest in what was already an under-appreciated high-quality business. Brookfield Corporation's invested capital growth is supercharged by profits from one of the best business models in the world, alternative asset management. The alternative asset management sector has tripled in size over the last decade, growing from approximately $5 trillion to $15 trillion in assets under management. However, Brookfield and other large global platforms have managed to grow at nearly double this rate, or in excess of twenty percent per annum. Institutional investors (pensions, endowments, sovereign wealth funds, etc.) account for ~$100 trillion in global investable assets, and these groups have doubled their allocations to alternatives over the past decade. The rationale is simple: private markets have outperformed their public counterparts by 400 basis points per annum across both equity and credit. Moreover, while private asset classes have traditionally been perceived as requiring an illiquidity premium, allocators are increasingly weighing the inconveniences of liquidity (i.e., career risk) in their decision making. If two investments are expected to have identical returns over the long term, is daily liquidity really worth the heartache of knowing that at some point you will have to explain to your board why an investment is down thirty percent in six months? What's more, the largest markets in global finance remain practically untouched by alternatives. Individual investors account for ~$170 trillion in global investable assets, and their exposure to alternative investments is negligible. The democratization of alternatives is reaching an inflection point, and it will be the platforms with the longest track records and best brands that will flourish in this new channel. Increasing institutional allocations aside, consider that if alternatives reach only ten percent penetration in retail portfolios, this would double the current market size. This has set up the alternative investment sector for yet another robust decade of growth. To add to this, Brookfield in particular is well positioned. The group has strong franchises in asset classes that are growing immensely in investor demand, such as renewables and infrastructure, and its acquisition of Oaktree has supported the rapid scaling of its insurance business. Today, Brookfield oversees more than $400 billion in assets under management that generates $2.2 billion in fee related earnings. Brookfield expects to raise more than $100 billion in new AUM per year over the next five years and grow fee related earnings at twenty percent per annum. Bringing this all together, the result is a base case scenario of $60.2 per share, or seventy-nine percent upside to intrinsic value. Expressed another way, Brookfield Corporation is expected to reach $88 per share over the next five years, which would result in a 2.6x multiple on capital and twenty-one percent IRR from the current share price.

BSD Analysis:
Emeth Value Capital presents a compelling bull case for Brookfield Corporation following its 2022 demerger from its asset management division. The fund manager argues that the market has created a significant valuation disconnect, with Brookfield Corporation retaining 93% of cash earnings power while losing 20% of equity value post-spin. The investment thesis centers on Brookfield's unique position as the largest balance sheet investor among alternative asset managers, with over $50 billion in permanent capital invested alongside clients. The company benefits from secular tailwinds in alternative investments, where institutional allocators have doubled their allocations over the past decade due to private markets outperforming public markets by 400 basis points annually. Management expects to raise over $100 billion in new AUM annually over the next five years while growing fee-related earnings at 20% per annum. The fund's conservative base case model assumes Brookfield misses its 2027 targets by 20% and applies discounted multiples to peer comparisons, yet still projects $88 per share within five years. This represents a 21% IRR from current levels, supported by the company's diversified portfolio of high-quality infrastructure, renewable power, and real estate assets with inflation-linked cash flows.

Pitch Summary:
Drive Shack ($DSHK) is a unique and innovative leisure and entertainment company that offers guests an immersive experience through its state-of-the-art driving ranges, golf courses, and now, its latest offering – The Puttery mini-golf venues. The company has come a long way since its inception in 2016, evolving from a Real Estate Investment Trust (REIT) focused on golf courses to a multifaceted leisure and entertainment company that is committed to creating unforgettable experiences for its customers. Originally known as Newcastle Investment Corp., the company went through a significant transformation in 2016, changing its name to Drive Shack and divesting its assets in traditional golf courses to focus on creating modernized golf entertainment venues. Since then, the company has opened several top-of-the-line driving ranges across the United States, offering guests an unparalleled experience that merges technology, entertainment, and sports. In 2018 the first Drive Shack was opened in Orlando followed by 3 more the following year. These venues are technology driven driving ranges with food and beverage options similar to Top Golf. The venues are expensive to build at around $20MM and the ROIC was in the 15%-20% range vs the improved Puttery concept which has proven to have a lower cost per venue and a higher return in addition to shorter construction timeline. In 2020, Drive Shack expanded its portfolio to include The Puttery, a concept that brings a new level of fun and excitement to the traditional game of mini golf. With cutting-edge technology, chic design, and a range of food and beverage options, The Puttery venues are quickly becoming the go-to destination for friend outings, corporate events, and social gatherings. The Q3 2022 earnings report (11/21/22) showed a loss of -$0.09/share before the voluntary delisting from the NYSE on 12/13/22. At this time the company was in trouble and needed to raise capital to continue construction commitments for new Puttery venues. Bankruptcy looked to be a serious risk. The Chicago Puttery was recently opened before this report and since then Pittsburgh is now open. With each Puttery venue adding roughly $2MM in EBIT based on the current 92.3MM shares outstanding each will contribute $.02/EPS so we can expect the most recent loss per share to be cut in half by those openings alone. The company announced a term loan facility of $26.5MM on 3/8/23 which should be able to cover the opening of 3-4 more venues as last estimates had each venue costing $7MM. With the additional income from those venues, we should be at or approaching break even based on the latest loss/share number. The most recent earnings report showed some progress with a loss of -$0.07/share. With the stock currently trading around .38/share I can see the market having a strong reaction to the upside after the next earnings update if the company can communicate a plan forward that eliminates any bankruptcy risk. It seems operating the current venues and planning to only open 1 or two venues per year based on cashflow in the near term may be the correct play in this high interest rate environment and with the current depressed share price. With the very attractive unit economics of The Puttery venues providing 25%-33% ROIC I am happy to add shares at these levels because if leverage is managed correctly, I see a long runway for growth and countrywide expansion of the concept over the next decade or more. The recent change in CEO and CFO gives me more optimism and I have increased the position.

BSD Analysis:
The manager presents a detailed turnaround thesis on DSHK, focusing on the superior economics of The Puttery concept versus traditional Drive Shack venues. The Puttery venues generate 25-33% ROIC at $7MM per venue versus 15-20% ROIC at $20MM for Drive Shack locations, representing a significant improvement in capital efficiency. With each new Puttery venue contributing approximately $2MM in EBIT or $0.02 EPS, the path to profitability appears achievable with recent openings in Chicago and Pittsburgh. The $26.5MM term loan facility provides sufficient capital for 3-4 additional venues, potentially bringing the company to breakeven from the recent -$0.07 EPS loss. The manager sees significant upside potential with shares trading at $0.38, particularly if management can communicate a clear plan to eliminate bankruptcy risk. The recent management changes and disciplined expansion strategy of 1-2 venues per year based on cash flow generation demonstrates improved capital allocation. However, the high leverage and previous bankruptcy concerns present meaningful downside risks that require careful monitoring.

Pitch Summary:
The fund's top position is RCI Hospitality (RICK). RICK is the only publicly traded owner of adult nightclubs in the US. Currently they own 54 clubs across 13 states and an additional 13 sports-bar restaurants with the "Bombshells" concept that has recently began franchising. With few municipalities issuing new adult entertainment licenses these businesses function as local monopolies with excellent unit economics. RICK has recently become positioned to open a Club/Casino/Steakhouse in Central City Colorado. I believe that investment will perform well and have a high ROI for the company in addition to opening a new path to allocate capital.

BSD Analysis:
The manager presents a compelling thesis on RICK as a unique monopolistic business model in the adult entertainment space. With 54 clubs across 13 states and limited new licensing from municipalities, RICK operates with significant competitive moats and pricing power. The expansion into the "Bombshells" sports-bar concept through franchising provides additional revenue diversification and growth opportunities. The upcoming Club/Casino/Steakhouse venture in Central City Colorado represents a strategic capital allocation opportunity that could generate high returns while opening new business verticals. The combination of monopolistic positioning, excellent unit economics, and strategic expansion initiatives supports the manager's bullish conviction. However, the pitch lacks specific financial metrics or valuation analysis to quantify the investment opportunity. The regulatory and social risks inherent in the adult entertainment industry are not addressed in the analysis.

Pitch Summary:
In last year's annual report we detailed how 2022 was something of an annus horribilis for IAC. The company suffered a dual shock of significant NAV weakness and discount widening as it was caught in the perfect storm of a rising cost of capital and deteriorating fundamentals. This made it your company's largest detractor in FY22. In 2023 the shares have started to make a recovery, rising +57%, with a +25% increase in our estimated NAV boosted by a narrowing of the discount from 45% to 31%. Having added to the position by about a third in early January, averaging down our cost base, IAC has been one our best performers this year. NAV growth has been almost exclusively driven by MGM (37% of NAV) and Angi (18% of NAV), shares in which have returned +51%, and +65%, respectively. In IAC CEO Joey Levin's quarterly letter at the start of the year, he talked of a "back to basics" strategy. This has clearly been evidenced at Angi, the homeservices marketplace. Since becoming CEO of Angi a little under a year ago Joey has steadied the ship. Measures to reduce the cost structure have been implemented, with a -14% year-on-year reduction in sales team headcount and -50% reduction in capex in Q1. He has started to simplify the product offering and ambition, reducing losses from Services (from -$19m to -$2m as they exit un-economic offerings). Arguably this is the "easy" bit and the next stage of showing the business can successfully drive top-line growth is the hard bit – with the jury very much still out as to whether this is possible. That said, the "easy" bit is not to be sniffed at - after all the company churned through three CEOs in five years who couldn't do it! With earnings starting to ramp up, we believe this creates a base from which value can be grown and extracted. At the current $2.3bn enterprise value – which equates to 1.3x trailing sales and ~10x 2025 EBITDA -we believe the business could be of interest to financial buyers given the attractive cash generative nature of the core Ads & Leads business and room for cost cutting from non-core areas. This would be an attractive outcome for IAC shareholders, giving the company significant capital to allocate. Alternatively, although sceptical, we remain open minded to Joey Levin continuing to drive fundamental improvements, re-igniting growth and margins – something to which the market doesn't appear to be assigning a high probability. Turning to Dotdash Meredith (11% of NAV) – the digital media company that was established in 2021 when IAC's Dotdash acquired the storied media brands of the Meredith Corporation – there are also signs of improvement. Whilst 2022 had always been billed as a transition year, a deterioration in ad markets, compounded by a much slower and more complex than anticipated integration, meant the first twelve months of ownership were ones to forget. In 2023 the integration issues are now behind them, with the focus now solely on navigating a challenging macro environment. In aggregate, management describe the ad market as being in a state of "stable weakness", albeit with significant variation by category. We remain somewhat cautious on the heavy lifting that the second half of the year will have to do for Dotdash Meredith to reach management guidance of $250-300m adjusted EBITDA but, given the high incremental margins the business earns, are excited about the prospects for meaningful recovery in earnings and growth over the medium term – validating the acquisition. Despite the strong share price performance, the stub remains lowly valued, at an implied $1.5bn (inclusive of Dotdash Meredith level debt). At this price you are paying 5.6x this years depressed EBITDA for Dotdash Meredith and receiving every else for free. History shows that IAC shares perform well when the market wakes up and starts valuing the "for free" part. In this vein we are particularly excited about Turo (9% of NAV), a car sharing marketplace where guests can rent cars from a community of hosts akin to Airbnb. The business has many of the hallmark's IAC look for: 1) large addressable market with long-growth runway; 2) network effect protected competitive position; 3) capital light business model with attractive unit economics. Earlier this year IAC increased its stake in the company from 26% to 31% at an implied $2.3bn valuation (whilst they also own a warrant which could see their stake increase to a further 10%). Recently there have been rumours that the company - which filed an S1 in early 2022 – might be looking to IPO, with the rally in equity markets having created a more hospitable environment. We believe this is exactly the kind of event that can help drive IAC shares higher and combined with the prospects for improved fundamental performance and earnings growth at Dotdash Meredith and Angi, makes us optimistic about prospective returns. Indeed, management seem to share our optimism and have become more aggressive at deploying the company's balance sheet, buying back 3.7% of the outstanding shares between February and early May (at an annualised rate of c.18%).

BSD Analysis:
AVI Global Trust presents a compelling turnaround story for IAC after a difficult 2022. The manager highlights IAC's recovery with shares up 57% and NAV increasing 25%, driven primarily by strong performance in MGM (+51%) and Angi (+65%). The investment thesis centers on CEO Joey Levin's "back to basics" strategy, particularly evident at Angi where cost reduction measures have been implemented including 14% headcount reduction and 50% capex cuts. The manager values IAC at an attractive 1.3x trailing sales and ~10x 2025 EBITDA, suggesting potential interest from financial buyers. Key catalysts include the turnaround at Dotdash Meredith, which is moving past integration issues toward $250-300m EBITDA guidance, and the promising Turo investment (9% of NAV) with potential IPO prospects. The manager emphasizes IAC's discount valuation where investors pay 5.6x depressed EBITDA for Dotdash Meredith and receive other assets "for free." Management's aggressive share buyback program (3.7% of shares repurchased at 18% annualized rate) demonstrates confidence in the turnaround story.

Pitch Summary:
Scynexis's main compound, ibrexafungerp, was the first antifungal with a new mechanism of action to be approved by the FDA in more than 20 years. Unfortunately, the company and its drug – approved to fight vaginal yeast infections under the brand name Brexafemme – struggled mightily to compete with the available generic options, which are much cheaper and often good enough. A second approval of Brexafemme late last year for recurrent yeast infections should help expand the market, but the big news is a recent development deal the company signed with GSK that could be worth almost $600 million in milestone payments. The British pharma giant should do a much better job at selling Brexafemme, and ibrexa is also in Phase III trials for the treatment of the deadly invasive candidiasis (IC) infection. If successful in that indication, ibrexa could be a $1 billion-plus drug within a few years. Scynexis will earn a mid-teen percentage of sales in royalties from GSK if that happens while still retaining all rights to other antifungal compounds in its pipeline. Antifungal resistance is a major emerging worldwide health threat, and new medicines like the ones Scynexis is developing are critically important.

BSD Analysis:
Jacob Asset Management presents a turnaround story for SCYNEXIS centered on the transformative GSK partnership. The manager acknowledges the initial commercial struggles of Brexafemme against generic competition but positions the GSK deal as a game-changer worth up to $600 million in milestones. The investment thesis hinges on GSK's superior commercial capabilities and the potential for ibrexafungerp to address the larger invasive candidiasis market, which could generate over $1 billion in peak sales. The manager emphasizes the compelling risk-reward profile, with SCYNEXIS retaining mid-teen royalties while GSK handles commercialization. The broader thesis is supported by the growing threat of antifungal resistance, positioning SCYNEXIS's novel mechanism of action as addressing a critical unmet medical need. This represents a classic biotech value play with significant upside potential from successful Phase III trials.

Pitch Summary:
Zhihu is a leading social media sites in China, with more than 100 million people using its question-and-answer service every month. Often compared to Quora here in the U.S., Zhihu has expanded its business model beyond advertising to offer up paid subscriptions, vocational training, and e-commerce. The company has also been aggressively incorporating AI technologies into its service and recently announced an initiative with the Chinese start-up Model Best to create an LLM called Luca, using its huge database of questions and answers as one of the primary sources of data for the model. Like many public Chinese Internet companies today, Zhihu trades at an incredibly low valuation due to investor concerns about the country's economy and its increasingly tense relationship with the U.S. While these are valid concerns, we believe the upside potential more than compensates for the risks involved.

BSD Analysis:
Jacob Asset Management identifies Zhihu as a contrarian value opportunity in the Chinese internet space. The manager emphasizes the company's strong market position with over 100 million monthly active users and successful business model diversification beyond advertising into subscriptions, vocational training, and e-commerce. The AI angle is particularly compelling, with Zhihu leveraging its vast Q&A database to develop the Luca large language model in partnership with Model Best. The investment thesis is fundamentally a value play, with the manager acknowledging legitimate concerns about China's economy and US-China tensions but arguing that the current valuation more than compensates for these risks. This represents a classic contrarian bet on Chinese internet companies trading at depressed multiples despite maintaining strong underlying business fundamentals.