Investment Pitches

Pitch Summary:
Sylogist Inc. (TSX: SYZ) was a top contributor in the quarter. We were active with the company over the last few months and have successfully negotiated a nomination agreement that allows us to appoint a director to its board. We are pleased with this result and believe the company is well positioned and reaching an inflection point in its growth. The company's last quarterly results are a positive indication, with organic growth accelerating to 17% (adjusted for currency).

BSD Analysis:
The manager demonstrates strong conviction in Sylogist through active engagement, successfully negotiating board representation via a nomination agreement. This activist approach suggests significant confidence in the company's prospects and management's strategic direction. The investment thesis centers on Sylogist reaching a growth inflection point, supported by accelerating organic growth of 17% on a currency-adjusted basis in the most recent quarter. The board appointment provides the fund with direct influence over strategic decisions and governance oversight. The strong quarterly performance indicates improving business momentum and execution. The manager's willingness to engage actively with management and secure board representation demonstrates deep conviction in the turnaround story. Sylogist appears positioned for continued growth acceleration in the enterprise software market serving non-profit and public sector clients.

Pitch Summary:
This valuation expansion and continued interest in technology was spurred in part by the rapid pace of innovation in artificial intelligence (AI). Of course, these advances have been occurring for years, but the spotlight has intensified with the mainstream adoption of ChatGPT and Open AI. We have some exposure to this theme within the portfolio. Copperleaf Technologies (TSX: CPLF) is another example. It provides decision analytics software that is AI-powered with analytics based on the vast quantities of domain-specific proprietary data that the company has collected from its global utility customers and partners. Both Copperleaf and PAR Technologies focus on integrating AI on top of existing proprietary data, which we believe offers them a unique advantage.

BSD Analysis:
The manager positions Copperleaf Technologies as a strategic AI investment within the utility infrastructure sector. The investment thesis revolves around Copperleaf's decision analytics software platform that leverages artificial intelligence capabilities. The company's competitive moat stems from vast quantities of domain-specific proprietary data collected from global utility customers and partners over time. This data advantage enables more sophisticated AI-powered analytics for infrastructure asset management decisions. The fund managers believe the combination of AI integration with proprietary datasets creates a unique competitive advantage in the utility software market. The timing aligns with increased focus on AI innovation following mainstream adoption of technologies like ChatGPT. Copperleaf appears well-positioned to monetize the growing demand for intelligent infrastructure management solutions across the utility sector.

Pitch Summary:
This valuation expansion and continued interest in technology was spurred in part by the rapid pace of innovation in artificial intelligence (AI). Of course, these advances have been occurring for years, but the spotlight has intensified with the mainstream adoption of ChatGPT and Open AI. We have some exposure to this theme within the portfolio. For example, PAR Technologies (NYSE: PAR) provides a unified commerce platform for restaurants and collects data from all touch points of restaurant operations and customer transactions. Both Copperleaf and PAR Technologies focus on integrating AI on top of existing proprietary data, which we believe offers them a unique advantage.

BSD Analysis:
The manager views PAR Technologies as a compelling AI play within the restaurant technology space. The investment thesis centers on PAR's unified commerce platform that captures comprehensive data across all restaurant touchpoints and customer transactions. The fund managers believe PAR's competitive advantage lies in its ability to integrate artificial intelligence capabilities on top of its existing proprietary data sets. This positions the company to benefit from the broader AI innovation trend that has gained mainstream attention with ChatGPT and OpenAI. The data collection capabilities across restaurant operations provide a valuable moat for AI-powered insights and analytics. The timing appears strategic as AI adoption accelerates across various industries, with restaurants representing a significant addressable market for technology solutions.

Pitch Summary:
Changes to FDA requirement enables consumer to bypass the company; the current business practice could result in a serious legal risk; the company's main product is 'commoditized'.

BSD Analysis:
Hims & Hers Health operates a telehealth platform for wellness and lifestyle prescriptions. The short thesis raises concerns around customer acquisition costs, sustainability of growth once pandemic tailwinds fade, and regulatory risk in online prescription models. Bears argue the business is marketing-heavy with low switching costs and limited moat.

Pitch Summary:
Inferior technology in a hyper-competitive market; all the main points of the bull thesis are flawed; the main business is destined to fall, similar to pagers and pay-phones; burning cash; never generated free cash flow;

BSD Analysis:
Viasat faces execution challenges in integrating Inmarsat, managing leverage, and sustaining growth in satellite broadband. Short reports emphasize capital intensity, slow payback periods, and competitive pressures from Starlink. Bears also highlight risks from satellite launch failures and capacity constraints.

Pitch Summary:
Just because something should happen doesn't mean it will happen, and this was precisely the case when the CMA surprised the market (and myself) by blocking Microsoft's potential acquisition of Activision. This deal shouldn't have been blocked by any regulatory body that acts objectively and is worth its salt (In my opinion that is), but the CMA decided to overreach and block the deal on the back of Cloud Gaming of all things. Regardless, we didn't buy Activision solely for the merger arbitrage opportunity and realized there was always a risk of the deal being blocked or shoved out a few more quarters when we initially purchased our shares. At the end of the day there are humans behind these anti-trust decisions; while they are supposed to act objectively and base their decisions on facts and evidence, they aren't objective decisions; they are subjective decisions, and if the CMA wanted to block the deal they could, and well, they did! To my surprise however, the stock traded down to only ~$79.00 before market open on the day the CMA released their decision not to allow the merger. At the time, I had decided it was best to lock in our gains, let the dust settle, and revisit the name once we had more regulatory clarity. A few days later, Activision traded down to ~$74, and we purchased a small position with the intention to add over the coming days/weeks. We then added on the European Commission's approval of the acquisition and on Diablo 4's great overall reception and sell-through. Then on July 11th, Judge Jacqueline Scott Corley denied the FTC's request for a preliminary injunction, and shortly afterward, Microsoft and the CMA submitted a mutual request for a pause of Microsoft's appeal in the U.K. Furthermore, according to CNBC, it appears Microsoft and the CMA have also already agreed on a small divestiture to help address the CMA's concerns. It now seems very likely that this deal will close by Tuesday of next week. While the position wasn't quite the same size as it was previously, the strategy this go around was essentially the same (If Microsoft closed, we would generate a very solid IRR; if it went back to the drawing board and Microsoft wanted to extend the closing date It was my expectation that Activision would ask for a higher price, and lastly if the deal were to break Activision would get its break fee). It's also worth mentioning that our fair value had moved up some off the back of Diablo 4's success. We believed that Diablo 4 would help move Activision's "base earnings" up for several years via DLC, In-game skins, and other forms of monetization. On top of this, the mobile version of their popular battle royale, Warzone, will launch later this year, and I had also expected Activision to pursue a material buyback in the event of a deal break. But in the end, what should have happened originally looks like it will, and we're happy with the outcome.

BSD Analysis:
The manager executed a sophisticated merger arbitrage strategy on Activision Blizzard's acquisition by Microsoft, demonstrating tactical flexibility in navigating regulatory uncertainty. Initially surprised by the CMA's blocking of the deal on cloud gaming concerns, the manager prudently locked in gains and re-entered at lower levels around $74-79. The investment thesis evolved beyond pure arbitrage to include fundamental value drivers, particularly Diablo 4's strong reception and monetization potential through DLC and in-game purchases. The manager identified multiple positive outcomes: deal completion at the agreed price, potential price increase if extended, or break fee plus standalone value if terminated. Recent regulatory developments including the FTC injunction denial and CMA's apparent willingness to accept minor divestitures suggest deal completion is likely. The standalone business case strengthened with Diablo 4's success and upcoming Warzone mobile launch, providing downside protection. This represents a well-structured risk-reward scenario where the manager balanced merger arbitrage returns with fundamental gaming industry exposure, ultimately positioning for what appears to be successful deal completion.

Pitch Summary:
Bel Fuse is an electronic components manufacturer, and despite the rather large run-up in share price, we are still being provided with an attractive opportunity to buy a good business at a dirt-cheap price today. They design, manufacture and market a broad array of products that power, protect and connect electronic circuits. Like many industrials, they have 1,000s of SKUs (stock keeping units, which is just a fancy way of saying product), so I won't be diving into each product they make, but a few examples would be magnetic ethernet connectors for servers, fuel quantity monitors for aircraft, and cable assemblies + fuses for electric vehicles. Most of their products aren't exactly "ground-breaking" or super differentiated, but this is true of any electronic component manufacturer. Despite selling some commoditized products, these companies benefit from a low-cost but high cost of failure product offering. For example, while a fuse itself is usually a cheap and commoditized product in relation to the product it goes in, it remains an essential safety device that can save several other components. Customers want and need these products to work, and work well. Furthermore, while the switching costs for most of these commoditized products are usually low, it just doesn't make sense in most cases to risk failure and pick up pennies in front of a steamroller. However, because there typically aren't significant technological differences between fuses, connectors, etc., switching is easy. Hence, businesses offering these more commoditized components need to make sure inventory levels stay stable to maintain customers. If your fuses and other products are consistently in stock at distributors and affordable, it's unlikely customers have any good reason for switching. These more commoditized products are usually sold through distributors (~33% of Bel's business is through distribution) rather than to customers directly because these products tend not to be "custom built" for a specific end product. However, commoditized/distribution doesn't necessarily always mean low margin, and Littelfuse (one of Bel Fuse's competitors) is a good example of this. Despite having 75% distribution exposure in their electronic components segment, they still maintain low-twenties operating margins. Then on the flip side of things, these companies also have long-standing large contracts/relationships for more custom-engineered products (~67% of Bel's business). These relationships tend to be balanced, but the customer does have more "pull" in some cases. Price-downs are commonly included in larger/longer-term contracts based on volumes, and price increases are usually only passed on to the customer when a contract ends/comes up for renewal. This means it might sometimes take a few years to pass on pricing to customers. In contrast, distributor pricing can typically be passed on within a couple of months to a year. As mentioned, this isn't a totally one-sided relationship, and manufacturers will usually negotiate some form of content growth in exchange for price downs as well. For example, if an EV manufacturer wants Bel Fuse to come down 5% on its cable assemblies, then Bel Fuse might say that is fine, but they'll want the EV manufacturer to offer them more content opportunities in exchange, such as Bel Fuse now supplying the fuses on that same EV – This is a benefit of these longstanding relationships and allows for both the customer and manufacturer to win. Overall, these are pretty good businesses, with most sporting solid organic growth and strong end markets such as aerospace, networking, and electric vehicles (all of which Bel Fuse has a good amount of exposure to). They also benefit from the continued electrification of almost everything; look no further than Bluetooth/Wi-Fi-enabled temperature-controlled coffee mugs, and some even have LEDs! For these reasons, they usually trade around 10x-12x+ EBITDA (multiples have expanded some recently with LFUS and TEL at 15x and 13x, respectively), and some like Amphenol trade at a whopping 18x multiple, but to be fair, they are considered the gold standard. The thesis here is straightforward, just like AstroNova, we believe Bel Fuse's EBITDA is going to expand materially over the coming years, from $83M in 2022 ($100M LTM) to $120M in 2024, and we also don't think $140M is out of the cards for 2025. At the start of this letter, I stated that one of our portfolio companies had increased its intrinsic value significantly – Bel Fuse is that company. In the most recent quarter, EBITDA margins nearly doubled y/y from 8.5% to 16.3%, and it's worth noting that Q1 is also their weakest quarter due to seasonality (Chinese New Year), but despite this, margins still increased 150bp sequentially! This quarter had smashed our expectations, and we subsequently increased our position. But how did margins double you might ask, and is that even sustainable? Well, Bel Fuse makes good products that customers want, but there was practically zero attention paid to the bottom line under the current CEO's tenure – this led them to actually selling some products at a loss (yes, really). However, a new CFO was appointed in early 2021 (Farouq Tuweiq), and he is now turning that around. Under his tenure, EBITDA margins have more than doubled since 2020, and Gross margins are up over 500bps and comparable to peers. Another interesting note is that Bel has yet to have a quarter where one of its segments isn't dragging down the others. In this quarter, it was Magnetics, which is facing inventory issues that will eventually clear up but have led to a 670bp decline in gross margins sequentially in the interim. This isn't related to a demand problem however, but rather a bottleneck that some of their customers are facing. For example, Cisco might have enough Bel Fuse RJ45 connectors for their servers but can't get enough power supplies from Bel Fuse to get the product out the door, so once supply for these missing parts catches up with demand, magnetics should normalize. The company has also recently undergone some restructuring that should add ~$5M in cost savings as we exit 2023, and as the company continues to benefit from more operating leverage and some final price increases, I believe they can get to 18% EBITDA margins or higher in 2024. I've spoken with Farouq many times and continue to be impressed with him, and he also continues to purchase shares in the open market. Bel Fuse's newly found attention to margin expansion can also be seen with the recent selling of their Jersey City headquarters in June of this year and their subsequent move to a less expensive property outside the city. While I doubt this moves the needle, it shows Bel Fuse's continued devotion to improving their bottom line. Considering all the above, we see Bel Fuse doing around $120M in EBITDA for 2024 (give or take a couple of million in either direction). This means that at the current share price of ~$57, Bel Fuse trades at just a ~6.00x EBITDA multiple while peers trade at 12.00x+. This large disconnect in value should close over time as the market realizes Bel Fuse's margin expansion is here to stay and isn't even done yet. While we don't believe Bel Fuse deserves a 12.00x multiple today for a couple of reasons (They still have lower margins than peers, and there is a controlling shareholder as well - whom we are slowly getting more comfortable with over time), we see no reason they shouldn't be trading at 9.00x-10.00x which implies a share price of $83-$92 before accounting for incremental cash gen (capex runs around just $10M in a normal year, so the business is far from capital intensive). Bel Fuse has also traded at an average of 7x-8x EBITDA over the past decade (when it was a worst business, selling products at an actual loss and had materially lower margins). Even at an 8.00x multiple, you would still get to $73/sh today. If we look out a few years to 2025/2026, I don't think it takes egregious assumptions to get to $120+ a share. LSD topline growth, 19%+ EBITDA margins, credit for incremental cash gen, and a 10.00x multiple get you there – those seem like reasonable assumptions to me today.

BSD Analysis:
The manager presents a compelling turnaround story in Bel Fuse, an electronic components manufacturer trading at a significant discount to peers despite dramatic margin improvement under new CFO Farouq Tuweiq. The investment thesis centers on a margin expansion story where EBITDA margins nearly doubled year-over-year from 8.5% to 16.3% in Q1 2023, driven by operational improvements after years of selling products at a loss. The company benefits from exposure to strong secular growth trends including electrification, aerospace, networking, and electric vehicles, while maintaining sticky customer relationships through both distribution channels (33%) and custom-engineered products (67%). At 6.0x 2024E EBITDA versus peer multiples of 12x+, the valuation disconnect appears substantial. The manager projects EBITDA growth from $83M in 2022 to $120M in 2024, supported by continued margin expansion, restructuring savings of $5M, and operating leverage. With management demonstrating commitment through share buybacks and cost reduction initiatives like relocating headquarters, the operational transformation appears sustainable. The path to $83-$92 per share (9-10x EBITDA) seems reasonable given the improving fundamentals and peer comparisons.

Pitch Summary:
So that raises the question, WHY is AstroNova cheap? • $100M market cap & illiquid (making it difficult for larger institutions to buy today) • Earnings are depressed (the stock has no sell-side coverage and does not screen well) • The business is boring and misunderstood (selling airplane cockpit printers probably doesn't come across as the best business in the world at first glance, and it definitely isn't a shiny new AI company, but it is a monopoly!) • The company provides no guidance, and past results aren't exactly linear (This makes modeling future earnings with any sort of confidence time-consuming for those who are not already familiar with the story) • Management is also far from promotional (but are solid operators) The next question is HOW does AstroNova's valuation get corrected? In my opinion, the value disparity is likely to be corrected by one of two scenarios; One, the market begins to take notice of this business and realizes EBITDA is likely to nearly double sometime over the next 12-24 months, or two, EBITDA doubles, and the market is forced to pay attention. In the unlikely scenario that the shares do not react positively to the anticipated EBITDA growth, the company could proactively retire shares or explore other alternatives to unlock value for shareholders. As a quick update on the business, our fair value hasn't moved much since our last letter. Still, there have been encouraging developments in the business's product identification segment, and having caught up with management and with the thesis on track, I don't believe it unreasonable to say that AstroNova's share price should be starting with a three rather than the two we model.

BSD Analysis:
The manager presents a compelling value thesis on AstroNova, identifying it as a misunderstood monopoly in airplane cockpit printers trading at a significant discount due to its small size, illiquidity, and lack of sell-side coverage. The core investment thesis centers on an anticipated doubling of EBITDA over the next 12-24 months, driven by improvements in the product identification segment. At a $100M market cap, the company appears to be flying under institutional radar, creating an opportunity for patient capital. The manager's confidence in management's operational capabilities, despite their non-promotional approach, suggests strong fundamental execution. Recent encouraging developments in the product identification business provide validation of the turnaround story. The valuation correction catalyst could come from either market recognition of improving fundamentals or the actual EBITDA doubling forcing attention. With shares currently trading in the $20s and the manager suggesting fair value should start with a $30 handle, this represents meaningful upside potential for a monopolistic business with solid operators at the helm.

Pitch Summary:
EPAM Systems is a high quality IT service provider that has been a compounder stock. EPAM's winning streak came to an end in 2022. With Russia's invasion of Ukraine the stock fell from $550 per share to $180 per share as the market was worried about EPAM's workforce/delivery centers in Ukraine, Belarus and Russia. The management at EPAM did a wonderful job derisking the company from this exposure. They exited Russia by not only leaving their clients there but also by closing their delivery centers in the country. By the end of 2022, EPAM's exposure to these volatile countries had reduced from 60% of overall workforce to 30% of overall workforce. EPAM moved some of the affected employees to neighboring countries and ramped up their hiring efforts in India and Latam. Due to this, the stock moved up to $450 per share a few months later in August 2022. However, very recently, EPAM reduced their guidance for 2023. They first reduced their guidance during their earnings but then followed this up with a further reduction in guidance a few weeks later. The management is now expecting negative growth in 2023. We first got involved with EPAM after it sold off in March 2022 but have recently added to the position. EPAM is currently available for 21x depressed 2023 earnings per share. It is a $12 bn market capitalization company with $1.7 bn in net cash and a $500 mn share repurchase authorization. An investor purchasing shares at these valuations can expect to compound with earnings growth with the added call option of multiple expansion if EPAM is once again seen as a durable growth franchise. We believe that is the most likely outcome.

BSD Analysis:
White Falcon presents EPAM as a high-quality IT services compounder facing temporary headwinds that create an attractive entry point. The manager details EPAM's successful navigation of geopolitical risks, reducing Eastern European workforce exposure from 60% to 30% while expanding in India and Latin America. Despite near-term growth challenges with 2023 guidance calling for negative revenue growth, the manager views this as cyclical rather than structural, emphasizing EPAM's strong competitive position in digital transformation services. The investment thesis relies on EPAM's superior engineering capabilities, diversified client base, and positioning as an AI enabler rather than AI victim. At 21x depressed earnings with $1.7 billion net cash and $500 million buyback authorization, the valuation provides significant downside protection. The manager expects a return to growth within 2-4 quarters as client project deferrals normalize, with potential for multiple expansion as EPAM regains its growth franchise status.

Pitch Summary:
Teck Resources (TECK.B): Teck Resources is a diversified mining company and produces essential natural resources such as zinc, copper, steel making coal. A new mine in Chile called QB2 has come online this year meaning that all capital expenditures to build this mine (and project risks) are behind us and all free cash flows from selling resources from this mine are in front of us. The world is short copper and not enough capital has been spent to explore for copper in the last 10 years. Given leads and lags in bringing new supply into the market and increasing use in electrification, we believe copper will be a structural winner over the next 10 years. Also, Teck is currently in 'play' which means that other companies are vying for its assets. It is uncertain how this all plays out but we believe this puts a floor under the stock price. Recently, we increased our position in Teck to make it a top 5 position.

BSD Analysis:
White Falcon's Teck Resources thesis combines operational catalysts with structural commodity trends and potential corporate activity. The investment benefits from the QB2 mine in Chile coming online, eliminating construction risks while positioning the company to capture future cash flows from copper production. The manager emphasizes copper's structural supply deficit, noting insufficient exploration capital over the past decade combined with rising electrification demand creating a favorable long-term setup. The timing appears optimal as major capital expenditures are complete while commodity tailwinds are building. The position also benefits from Teck being "in play" with multiple parties interested in its assets, providing downside protection through potential takeover premiums. The manager's conviction is demonstrated by increasing the position to top-five status, reflecting confidence in both the operational execution and strategic value of the assets. The diversified mining exposure across zinc, copper, and steelmaking coal provides multiple commodity exposure vectors.

Pitch Summary:
Precious Metals Royalty basket (WPM, SSL, TFPM): In the current macroeconomic environment, there are many ways to 'win' with gold. It is remarkable that even with record positive real yields, gold is flirting with all time highs. Why? Western central banks are increasing interest rates which means that they will have to pay more interest on the record levels of debt that their government's owe. Where will the money come from to pay the higher interest expense? The answer is simple - more debt and more money printing! We believe the gold knows this! We believe that precious metals will protect real purchasing power and act as a hedge to the portfolio when macroeconomic uncertainty arises. Owning royalty companies at reasonable valuations gives us a high quality exposure to precious metals without project or cost inflation risks inherent in a mining company.

BSD Analysis:
White Falcon's precious metals thesis centers on macroeconomic dynamics driving gold demand despite elevated real interest rates. The manager identifies a structural contradiction where central banks raise rates to combat inflation while governments face unsustainable debt service costs, ultimately requiring more debt issuance and money printing. This creates a compelling environment for gold as a store of value and inflation hedge. The investment approach through royalty companies provides superior risk-adjusted exposure compared to traditional mining operations, avoiding project execution risks and cost inflation pressures. The manager views current valuations as reasonable for high-quality precious metals exposure. The position serves as portfolio insurance against macroeconomic uncertainty while benefiting from gold's recognition of underlying monetary system stresses. The royalty model offers leveraged exposure to precious metals prices with more predictable cash flows than traditional mining investments.

Pitch Summary:
Amazon.com (AMZN): Amazon is a controversial investment. It had been 'profitless' for much of its existence and divided investors on the ultimate sustainability of the business model. We believe that Amazon has two very strong businesses - an e-commerce business (including ads) backed by a top-notch logistics network and an internet infrastructure business called AWS that is an oligopoly with Microsoft and Google. We believe Amazon has a superior culture that allows it to succeed in its various business lines. Importantly, Amazon is inflecting on free cash flow (FCF). We model that it will produce $6+ in FCF per share in three years. If this is valued at 3-3.5% FCF yield then Amazon is a $200 stock. Amazon also has a portfolio of venture bets (which consume a lot of capital) and all these are upside options for an investor.

BSD Analysis:
White Falcon presents a bull case for Amazon centered on the company's two dominant franchises: e-commerce with advertising and AWS cloud infrastructure. The manager acknowledges Amazon's historically controversial "profitless" growth model but emphasizes the inflection point toward significant free cash flow generation. The investment thesis relies on Amazon's superior execution culture and competitive moats in both e-commerce logistics and cloud oligopoly positioning alongside Microsoft and Google. The manager's financial modeling projects over $6 per share in free cash flow within three years, which at a 3-3.5% yield supports a $200 price target. The position benefits from Amazon's portfolio of venture investments providing additional upside optionality beyond the core businesses. The manager views the current period as a critical inflection point where Amazon's massive capital investments begin generating substantial cash returns for shareholders.

Pitch Summary:
Advanced Micro Devices (AMD): Under CEO Lisa Su, AMD has made one successful bet after another - both on technology and strategy. Chiplet architecture, advanced 3D packaging, modularity and adaptability in chip design, strong TSMC partnership for leading nodes all helped AMD differentiate itself in the marketplace. We also liked the fact that AMD was diversified in product lines as well as end markets. Further, it was free cash flow positive at the bottom of the cycle and had a net-cash balance sheet. AMD was a secularly growing company that was facing cyclical issues available at 18x earnings, and these earnings had been revised down several times. The risk was that further revision in earnings will be needed and we were happy to buy more if that was the case. Today, the stock is more than fully valued but Nvidia's guide and AMD's optionality in GPU's give us second thoughts in trimming more.

BSD Analysis:
White Falcon's AMD thesis highlights the company's successful strategic execution under CEO Lisa Su, emphasizing technological differentiation through chiplet architecture, advanced packaging, and strong TSMC partnerships. The manager appreciates AMD's diversification across product lines and end markets, providing resilience during cyclical downturns. The investment was initiated when AMD traded at 18x earnings during a cyclical trough, with the company maintaining positive free cash flow and a net-cash balance sheet despite headwinds. The secular growth story combined with temporary cyclical pressures created an attractive entry point for a high-quality semiconductor franchise. However, the manager acknowledges current valuation concerns, noting the stock is "more than fully valued" at present levels. The position benefits from AMD's GPU optionality in the AI market, particularly given Nvidia's strong guidance, which provides upside potential despite stretched valuations.

Pitch Summary:
Nu Holdings (NU): Nu is a neo-bank based in Brazil. Nu is running the Capital One playbook where the business model is to lend to a credit starved population and leverage data and analytics to offer a superior product. Then, with this data, cross sell higher margin products to a subset of the customers. Nu has data and cost to serve advantages (no branches) and is gaining market share as it can lend at lower yields, have relatively lower NPLs and still make a high ROE. We believe Nu is a world class institution in every sense of the word. We initiated this position at 10x 2025E earnings estimate of $0.38 per share. Since then, management has executed well and brought forward profitability due to which current consensus estimate for 2025E earnings is $0.48 per share for a forward P/E of 15x.

BSD Analysis:
White Falcon presents a compelling bull case for Nu Holdings, positioning it as a superior digital banking franchise executing the proven Capital One playbook in Brazil's underbanked market. The manager emphasizes Nu's structural advantages including data analytics capabilities, cost efficiency from its branchless model, and ability to cross-sell higher-margin products to customers. The investment thesis centers on Nu's market share gains through competitive lending rates while maintaining lower non-performing loans and generating high returns on equity. The manager's conviction is reinforced by management's execution exceeding expectations, with 2025 earnings estimates rising from $0.38 to $0.48 per share since initiation. At current levels, the stock trades at 15x forward earnings, representing reasonable valuation for a high-quality digital banking franchise in a large addressable market. The position benefits from Brazil's credit-starved population and Nu's technological moat in data-driven lending decisions.

Pitch Summary:
We last provided some analysis and in-depth discussion about our airline holdings in the depth of the pandemic (our March 2020 report). At the time we wrote about the inevitability of airline consolidation in Europe, and noted that we foresaw an industry structure consisting of fewer but stronger participants and more rational pricing. After all, we had already seen the collapses of Flybe, the UK carrier (in early March 2020), and Germanwings (the Lufthansa subsidiary) in early April 2020. This has only continued. In January this year Flybe (which was relaunched in April 2022) collapsed again, as did Flyr (a Norwegian startup airline that commenced in June 2021). Meanwhile, after a three year search by the Italian government for an acquirer, it was announced in May that Lufthansa will buy a 41% stake in ITA Airways (the successor of Alitalia), and the Portuguese government is reportedly getting close (as at the end of June) to its partial privatisation of TAP, the country's major airline. It has always been the vision of Ryanair's management to offer a "no frills" product, operate at maximum efficiency, provide low everyday pricing and thereby force out inefficient operators. The pandemic seems to have fast tracked this endeavour. And during all this, what has not been widely reported, is the General Court of the European Union ruling that the European Commission was wrong to approve the EUR 6b financial aid package given by the German government to Lufthansa and the EUR 130m package given by the Italian government to three airlines holding an Italian licence. The Court has annulled both Commission approvals. Ryanair, which did not receive any financial assistance, instigated these actions. Recent news for Ryanair has all been pretty positive. Let's start with the announcement of its confirmed order of 300 new Boeing 737-MAX-10 aircraft (150 firm and 150 options) for delivery between 2027 to 2033. At current list prices the deal (funded mainly by internal cash flows) is worth over USD 40b - although we are quite sure Ryanair did not pay that! Management expects half of these new planes to replace B737NG aircraft. With 20% more seats and much greater efficiency, they will widen its cost advantage, and facilitate capacity expansion to 300m passengers per year by March 2034 (a 5.4% annual growth rate). Following this, management announced full year results (for the year ended March 2023). They exceeded our expectations (even after adjusting for the pull forward effect of fuel hedge gains), and they even surpassed our long term maintainable earnings estimates. Put simply, Ryanair experienced market share gains everywhere, and dominated short haul air travel in Europe. As the world becomes even more embracing of travel and experiences, we think there's more to come. After reviewing the results, we increased our passenger number, revenue per passenger and profit margin assumptions (which were very conservative) and these led to a material increase in our valuation of the business. So much so that, even after the strong rally, we were questioning whether to buy more (we didn't). But with cash flow and earnings yields of around 10%, and trading at a discount to our revised valuation, we are very comfortable with the Fund's current 3.9% position.

BSD Analysis:
Alluvium presents a compelling bull case for Ryanair centered on European airline consolidation and the company's competitive positioning. The fund managers argue that the pandemic accelerated industry consolidation, with weaker competitors like Flybe and Flyr collapsing while Ryanair emerged stronger without requiring government assistance. The investment thesis hinges on Ryanair's operational efficiency and cost leadership strategy, which positions it to gain market share as the industry rationalizes. The company's massive aircraft order of 300 Boeing 737-MAX-10s demonstrates management's confidence in long-term growth, targeting 300 million passengers annually by 2034. Recent financial results exceeded expectations, with the company dominating European short-haul travel and achieving market share gains across all regions. Management's ability to maintain cost discipline while expanding capacity creates a widening competitive moat. The fund values the business at a 10% cash flow yield despite recent share price appreciation, suggesting continued upside potential.

Pitch Summary:
SMARTRENT, INC. (SMRT) SmartRent is the leading smart home technology company focused on rental housing in the U.S. Multifamily owners and operators love their products which include smart access keyless entry, water leak detection and smart thermostats/climate control. They also offer self-guided tours for prospective tenants to see units, resident and staff management software and parking flow optimization. Based in Scottsdale, AZ, the company sells hardware devices and software that generates recurring revenue as they monitor their services. At Old West, we are always looking for great owner/operators of companies to partner with. Lucas Haldeman founded SMRT in 2017 after serving as CTO at Colony American Homes, at the time a large owner of single-family rental homes. It was in that role that he realized the need for technology solutions to provide more efficient property management. Haldeman owns $15 million of SMRT stock, ranking him as the company's largest shareholder. Over the past five years SMRT has attracted the top multi-family operators in the country as customers, including the top seven apartment REITs. Invitation Homes, the largest owner of single-family rental homes, is one of SMRT's 500+ customers. As far as competition goes in this space, SMRT has said they have more units deployed than all their competitors combined. SMRT is rapidly riding the road to profitability. Revenue grew by 53% from 2021 to 2022 and forecast to grow by 43% in 2023 to $240 million. Gross and net margins continue to improve, and CEO Haldeman has repeatedly said they will be EBITDA positive by this year-end. The company has $200 million of cash on its balance sheet with no debt. SMRT went public in April 2021 as a SPAC at $10 per share. The share price quickly went to a high of $14 and then like most SPACs, dramatically fell to a low of $2.15 per share. Our average cost is $3.70, and it currently trades at $3.82. The market cap is $762 million, and the $200 million of cash equates to $1.00 per share. To give you an idea of their growth potential, SMRT has installed 600,000 units and there are 45 million rental units across the U.S., and with no serious competition today it's going to be exciting to watch SMRT grow.

BSD Analysis:
Old West Investment Management presents a compelling bull case for SmartRent based on the company's dominant market position and strong growth trajectory. The fund manager highlights SMRT's leadership in smart home technology for rental properties, with more deployed units than all competitors combined and relationships with top apartment REITs. The investment thesis centers on the massive addressable market opportunity, with only 600,000 units installed out of 45 million total rental units in the U.S. Revenue growth of 53% in 2022 and projected 43% growth in 2023 to $240 million demonstrates strong momentum. The company's path to profitability appears clear, with management guiding to EBITDA positive by year-end 2023 and improving gross margins. The balance sheet provides significant downside protection with $200 million cash and no debt, representing $1.00 per share in net cash. Founder-CEO Lucas Haldeman's $15 million stake aligns management interests with shareholders. At a $762 million market cap and current trading price of $3.82 versus the manager's $3.70 average cost, the valuation appears attractive for a high-growth technology company approaching profitability in a large, underserved market.

Pitch Summary:
The actual transaction was for the benefit of the CEO, who deceived investors by getting rid himself of a failing business plus his personal debts; lofty and missing financial forecasts;

BSD Analysis:
Applied Digital develops data centers for high-performance computing and crypto mining. Shorts cite overreliance on volatile crypto demand, capital intensity, and weak customer contracts. Questions remain on long-term profitability as competition in AI hosting grows.