Investment Pitches

Pitch Summary:
We also added to our holding in The Joint. We have owned The Joint on and off since May 2020. We re-entered the stock last spring after a 70% decline in the price. We have gradually added over the past year due to our belief in the quality of the asset and the long-term growth prospects of the business. I plan to share a more detailed analysis later this year.

BSD Analysis:
LVS Advisory has maintained a long-term relationship with The Joint Corp, holding the position intermittently since May 2020. The manager re-entered the position following a significant 70% price decline, viewing this as an attractive entry point for a quality business with strong long-term growth prospects. The approach has been to gradually accumulate shares over the past year, suggesting confidence in the business model and valuation at current levels. The Joint operates in the chiropractic services space through a combination of direct ownership and franchising, providing exposure to the growing alternative healthcare market. While the manager doesn't provide extensive detail in this letter, they indicate plans for a more comprehensive analysis later in the year, suggesting this is a significant holding that warrants deeper discussion. The gradual accumulation strategy reflects conviction in the long-term value creation potential despite near-term market volatility.

Pitch Summary:
We discussed our BJ's investment in our Q4 letter. The company has delivered strong financial results yet the market continues to underappreciate the quality and long-term earnings growth potential of this business. BJ's stock has also been punished due to results at Costco and Walmart where weakness in the general merchandise category has negatively impacted same store comps. However, the market appears to be missing that BJ's is primarily a grocer today and general merchandise represents more of a growth opportunity than a headwind. Furthermore, we expect BJ's to raise membership prices at some point in the next 1-2 years which will serve as a strong additional catalyst to earnings and is not currently baked into estimates.

BSD Analysis:
LVS Advisory maintains conviction in BJ's Wholesale Club despite market concerns stemming from weakness at larger competitors like Costco and Walmart. The manager argues the market is misunderstanding BJ's business composition, noting that the company is primarily a grocer rather than a general merchandise retailer. While Costco and Walmart have faced headwinds from general merchandise weakness impacting same-store sales, this dynamic represents less of a headwind and more of a growth opportunity for BJ's given its grocery-focused model. The company continues delivering strong financial results, but the market underappreciates both the business quality and long-term earnings growth potential. A key catalyst on the horizon is an expected membership fee increase within the next 1-2 years, which would provide significant earnings upside that isn't currently reflected in analyst estimates. This membership fee pricing power demonstrates the value proposition BJ's provides to its customer base and represents a direct earnings catalyst.

Pitch Summary:
We initiated our investment in Netflix during the summer of 2022 (discussed in our Q3 2022 letter). Netflix was a baby thrown out with the bath water by the market last year. We found Netflix attractive because the company signaled that it would hold expenses flat while better monetizing its account base via an advertising tier and paid sharing. Despite an impeccable track record of execution, the market didn't believe Netflix could navigate this transition. While the market now appears to buy into the expense story the market doesn't fully appreciate the revenue growth story that will play out from the new monetization initiatives. Furthermore, the stock's pullback during the banking crisis provided an attractive entry point for us to make Netflix an overweight position.

BSD Analysis:
LVS Advisory initiated their Netflix position during the summer 2022 selloff when the market was overly pessimistic about the company's transition strategy. The manager recognized Netflix's plan to hold expenses flat while implementing new monetization initiatives through an advertising tier and paid sharing features. Despite Netflix's strong execution track record, the market was skeptical about the company's ability to successfully navigate this business model evolution. The manager believes the market now understands the expense discipline story but continues to underestimate the revenue growth potential from these new monetization streams. The advertising tier and paid sharing initiatives represent significant incremental revenue opportunities from the existing subscriber base. The banking crisis-related pullback provided an opportunistic entry point to increase position size, making Netflix an overweight holding. This reflects high conviction in Netflix's ability to execute on its monetization strategy while maintaining market leadership.

Pitch Summary:
This episode strengthened our conviction in Interactive Brokers (our largest holding), which we view as having a superior business model. Schwab's model relies on capturing a disproportionate share of the upside from higher interest rates because it does not charge additional fees. Interactive Brokers shares most of the upside from higher interest rates because it primarily monetizes accounts with low-cost commission revenue. IB is now offering an industry-leading rate of 4.33% on uninvested cash which they are proudly advertising on TV and radio. The cherry on top is that Interactive Brokers does all this while taking virtually zero risk with its balance sheet. This allows Interactive Brokers to play offense and take market share while its competitors scramble to preserve liquidity.

BSD Analysis:
LVS Advisory views Interactive Brokers as their highest conviction holding with a superior business model that was validated during the March 2023 banking crisis. Unlike traditional brokers like Schwab that rely heavily on net interest margin expansion, Interactive Brokers generates revenue primarily through low-cost commission fees while still participating in higher interest rate benefits. The company is aggressively competing by offering industry-leading 4.33% rates on uninvested cash, which they're actively marketing to capture market share. Most importantly, Interactive Brokers maintains virtually zero balance sheet risk compared to traditional banks and brokers, allowing them to operate from a position of strength during periods of financial stress. This conservative risk profile enables the company to play offense and gain market share while competitors focus on liquidity preservation. The banking crisis has essentially created a competitive moat expansion opportunity for Interactive Brokers' differentiated business model.

Pitch Summary:
We exited Charles Schwab during the week leading up to the Silicon Valley Bank failure at a price in the high $60s. I sent an ad hoc note to partners on March 11 discussing our decision to sell the stock but I will add some additional context here. We invested in Charles Schwab during the summer of 2022 (discussed in our Q3 2022 letter) shortly after making our investment in Interactive Brokers. While Interactive Brokers is focused on faster-growing international markets and more sophisticated traders, Charles Schwab is a more mature US business focused on retirement accounts and wealth managers. Our investment thesis was that Schwab would benefit from higher interest rates and after years of investment would begin returning a significant amount of capital to shareholders. My view changed when it became clear that liquidity would become a greater issue for all banks in early March. We believe Schwab has enough liquidity to operate its business, but we no longer believe the company is in a position to return capital. Furthermore, Schwab saw a higher degree of deposit flight in Q4 than we expected leading us to believe the problem could get worse before it gets better. Schwab may even need to raise additional equity capital to reassure the market of its liquidity position which would drastically change the risk/reward calculation of investing in the stock. While we realized a ~6% loss on our investment, our ability to quickly recalibrate our views during the early stages of the March banking crisis prevented us from losing an additional 20%+ if we had held on until today.

BSD Analysis:
LVS Advisory strategically exited Charles Schwab ahead of the broader banking crisis, demonstrating nimble risk management during market stress. The original investment thesis from summer 2022 focused on Schwab benefiting from rising interest rates and initiating significant capital returns after years of infrastructure investment. However, the manager's view shifted dramatically as liquidity concerns emerged across the banking sector in early March 2023. Schwab experienced higher-than-expected deposit outflows in Q4 2022, signaling potential vulnerability to deposit flight during stress periods. The manager concluded that Schwab would likely need to preserve capital rather than return it to shareholders, fundamentally altering the investment case. There's also risk that Schwab may need to raise equity capital to reassure markets about its liquidity position, which would dilute existing shareholders. The timely exit at a modest 6% loss prevented significantly larger losses as banking stocks continued declining.

Pitch Summary:
We invested in Avid in early 2021 and I outlined our investment thesis here. Avid is the leading provider of technology solutions for creating professional audio and video entertainment content (Hollywood movies, studio albums, etc.). Our investment thesis was that Avid is the 'arms dealer' to the streaming war and would benefit to the extent that Netflix, Disney, HBO, and others ramp up spending on content. Our view today is that the streaming war is over and Netflix won. Most of the major streaming platforms have announced plans to contain spending growth which could limit Avid's growth in the coming years. Furthermore, Avid's stock price has performed well and currently sports a valuation at the high end of its historical range. Our investment in Avid was successful and while we continue to admire the company, we feel that there are better investments that we can make elsewhere among the companies we follow.

BSD Analysis:
LVS Advisory exited their Avid position after a successful investment that began in early 2021. The manager's original thesis centered on Avid benefiting as the technology infrastructure provider to the streaming content wars, positioning the company as an 'arms dealer' to major platforms like Netflix, Disney, and HBO. However, the investment landscape has shifted as the streaming wars have consolidated with Netflix emerging as the dominant winner. The manager now anticipates reduced content spending growth across major streaming platforms, which could constrain Avid's future growth prospects. Additionally, the stock's strong performance has pushed valuation metrics to the high end of historical ranges, reducing the margin of safety. While the manager maintains respect for Avid's market-leading position in professional audio and video technology solutions, they believe superior risk-adjusted opportunities exist elsewhere in their investment universe.

Pitch Summary:
Talen Energy's distressed debt has been volatile ahead of the company's rights offering, where debtholders will be subscribing to additional equity in the company to own it upon emergence from bankruptcy.

BSD Analysis:
The manager is positioned in Talen Energy's distressed debt as the company navigates a bankruptcy restructuring process. The investment strategy involves participating in a rights offering where existing debtholders will convert their holdings into equity ownership upon the company's emergence from bankruptcy. This represents a classic distressed debt play where the fund aims to acquire assets at distressed prices and benefit from the company's reorganization. The volatility mentioned suggests the market is pricing in uncertainty around the restructuring process, potentially creating opportunities for patient capital. The manager's experience in distressed situations appears to inform this investment, as they seek to capitalize on the dislocation between current trading prices and ultimate recovery value. The electricity generation sector provides essential infrastructure services, which may support the underlying business value through the restructuring process.

Pitch Summary:
We have described our investment in DISH as similar in theme to previous dislocation investments made by the team where technical factors and outflows in an asset class, in this case, U.S. convertible debt, have resulted in outsized credit opportunities with favourable reward/risk after a period of volatility. The bulk of asset value at DISH is its 5G wireless spectrum licenses that have defined value even as its core satellite television business is free cash flow positive.

BSD Analysis:
The manager views DISH Network as a dislocation opportunity arising from technical selling pressure in the convertible debt market. The investment thesis centers on the significant value of DISH's 5G wireless spectrum licenses, which provide a substantial asset base independent of the company's traditional satellite TV operations. The manager emphasizes that even while the legacy satellite television business generates positive free cash flow, the real value driver is the spectrum portfolio. This represents a classic distressed credit opportunity where market technicals have created favorable entry points despite underlying asset value. The investment aligns with the fund's strategy of identifying asymmetric risk-reward opportunities in credit markets during periods of volatility. The manager's confidence stems from their experience with similar dislocation trades where temporary market dislocations created attractive investment opportunities.

Pitch Summary:
D'Ieteren SA ("D'Ieteren") – Belgian holding company (4.3% NAV)

D'Ieteren is a Belgian family-controlled holding company which owns a couple of automotive-related businesses, a couple of niche distribution businesses, an aspirational consumer brand, and some property assets. So far, so stodgy. There are many family-controlled companies listed on the Belgian market, and many far from inspiring. But this company has been through one of the most impactful transformations we have seen, aided by a huge turnaround in the market environment for its main asset, Belron - the windscreen repair and replacement business that trades under various brand names including Safelite, Autoglass, and Carglass.

Six years ago, Belron appeared to be an underperforming business that was being run for its employees in an ex-growth market, with unpredictable volumes and margins way below best in class. D'Ieteren had recently spent over 20% of its market cap on an expensive acquisition of a subscale aspirational consumer brand (Moleskine) with no connection to its core or its domain of expertise. Shareholders had seen zero aggregate return in twenty years.

D'Ieteren's shareholders have now made six times their money in the last five years. The recent returns have been so good that what was a pretty dismal long-term record is now respectable - since the pre-financial crisis peak in 2007, D'Ieteren has compounded at 13% per year, and by 9% over 25 years. Belron's revenues have grown 60% in five years and its operating profit has increased fivefold over the same period as a major industry tailwind has developed and management has started a journey of efficiency improvement prompted by the entry of a new shareholder and an equity-based incentive programme.

Remarkably, after such a journey, we think the stock remains very cheap.

BSD Analysis:
Ennismore presents a compelling bull case for D'Ieteren, a Belgian holding company that has undergone a dramatic transformation driven primarily by its Belron windscreen repair subsidiary. The manager highlights Belron's dominant market position (30-35% US market share, up to 67% in some European markets) and structural advantages including scale economies in procurement, complex supply chain management, and strong relationships with insurance companies who value quality service over price. The emergence of ADAS recalibration as a high-margin growth driver is particularly attractive, with only 30% penetration currently trending toward 100% over time. Management incentives were realigned through a 2018 private equity partnership, driving operating margins from 6% to 18% while maintaining strong returns on assets above 20%. The manager values the sum-of-the-parts at EUR 12.5-13bn against current enterprise value of EUR 8.2bn, suggesting significant upside potential. With predictable cash flows and multiple growth drivers, D'Ieteren appears positioned for continued value compounding in various economic environments.

Pitch Summary:
Union Pacific (UNP) is the 2nd largest railroad network in the United States just behind Burlington Northern Santa Fe. The firm operates in the Western, Midwestern, and Southern portions of the United States. 90% of UNP sales come from the US and 10% from Mexico. Over the past decade, railroads gained market share from the trucking industry because it costs 10-40% less to ship via rails than trucks. The company has a long history of consistent operating growth and profitability. The shares fell from a high of $278 in May of 2022 after the firm experienced operating challenges due to a slower macro environment and higher expenses. Below $200 a share, the valuation is attractive at 16.5 times 2023 EPS estimates versus a typical valuation range of 18-19 times earnings. The railroad pays a 2.63% dividend yield and grows its earnings and dividends consistently at 10% + per year.

BSD Analysis:
Matrix added Union Pacific as a new position in their Dividend Income strategy, capitalizing on the stock's decline from $278 to below $200 following operational challenges. The manager emphasizes UNP's position as the second-largest U.S. railroad network with dominant geographic coverage across Western, Midwestern, and Southern regions. The investment thesis is built on railroads' structural cost advantage over trucking (10-40% lower shipping costs) and resulting market share gains over the past decade. At 16.5x 2023 earnings, the valuation represents a discount to the typical 18-19x range, while the company maintains a 2.63% dividend yield with consistent 10%+ annual earnings and dividend growth. The geographic diversification with 90% U.S. and 10% Mexico exposure provides stable revenue streams.

Pitch Summary:
During the quarter, we started a new position in PNC Financial, swapping out from Truist Financial. Both companies are strong, well-managed regional banks, but in the recent sell-off of regional bank stocks, we believed this was a quality upgrade with similar upside potential. PNC Financial is the 6th largest bank in the United States by assets. The firm's branch network extends from St. Louis to Pittsburgh and down to Texas and Florida. PNC has a long history of being a "relationship-based" bank with more of its revenues coming from lower-risk clients and lower-risk service fees such as treasury, payments, and asset management. We view PNC positively for its growth potential from national expansion, lower credit risk historically, a disciplined acquisition strategy, valuation discount to historical metrics, and strong technology. The firm pays a safe and healthy dividend yield which should grow nicely due to good earnings growth and a conservative payout ratio.

BSD Analysis:
Matrix Asset Advisors initiated a position in PNC Financial as a quality upgrade from Truist Financial during the regional banking selloff. The manager views PNC as the 6th largest U.S. bank by assets with a diversified revenue model emphasizing lower-risk fee income from treasury, payments, and asset management services. The investment thesis centers on PNC's relationship-based banking approach, national expansion opportunities, and historically superior credit risk management. The firm trades at a discount to historical valuation metrics while maintaining strong technology capabilities and a disciplined acquisition strategy. The dividend yield is considered safe with growth potential supported by earnings expansion and conservative payout ratios.

Pitch Summary:
During the quarter we added a new position in Union Pacific Railroad. Union Pacific (UNP) is the 2nd largest railroad network in the United States just behind Burlington Northern Santa Fe. The firm operates in the Western, Midwestern, and Southern portions of the United States. 90% of UNP sales come from the US and 10% from Mexico. Over the past decade, railroads gained market share from the trucking industry because it costs 10-40% less to ship via rails than trucks. The company has a long history of consistent operating growth and profitability. The shares fell from a high of $278 in May of 2022 after the firm experienced operating challenges due to a slower macro environment and higher expenses. Below $200 a share, the valuation is attractive at 16.5 times 2023 EPS estimates versus a typical valuation range of 18-19 times earnings. The railroad pays a 2.63% dividend yield and grows its earnings and dividends consistently at 10% + per year.

BSD Analysis:
Matrix Asset Advisors added Union Pacific as a new position in their Dividend Income strategy, viewing the railroad as attractively valued after a significant decline from 2022 highs. The manager highlights UNP's position as the second-largest U.S. railroad network with operations spanning the Western, Midwestern, and Southern regions. The investment thesis is built on railroads' structural cost advantage over trucking (10-40% lower shipping costs) and UNP's consistent track record of operating growth and profitability. Trading at 16.5x 2023 EPS estimates versus a typical 18-19x range, the valuation appears compelling below $200 per share. The 2.63% dividend yield is supported by consistent 10%+ annual earnings and dividend growth, making it an attractive income-generating investment with appreciation potential.

Pitch Summary:
During the quarter, we started a new position in PNC Financial, swapping out from Truist Financial. Both companies are strong, well-managed regional banks, but in the recent sell-off of regional bank stocks, we believed this was a quality upgrade with similar upside potential. PNC Financial is the 6th largest bank in the United States by assets. The firm's branch network extends from St. Louis to Pittsburgh and down to Texas and Florida. PNC has a long history of being a "relationship-based" bank with more of its revenues coming from lower-risk clients and lower-risk service fees such as treasury, payments, and asset management. We view PNC positively for its growth potential from national expansion, lower credit risk historically, a disciplined acquisition strategy, valuation discount to historical metrics, and strong technology. The firm pays a safe and healthy dividend yield which should grow nicely due to good earnings growth and a conservative payout ratio.

BSD Analysis:
Matrix Asset Advisors initiated a position in PNC Financial as a quality upgrade from Truist Financial during the regional banking selloff. The manager views PNC as the 6th largest U.S. bank by assets with a relationship-based business model generating lower-risk revenues from treasury, payments, and asset management services. The investment thesis centers on PNC's national expansion potential, historically lower credit risk profile, disciplined M&A strategy, and strong technology platform. The bank trades at a discount to historical valuation metrics while offering an attractive dividend yield supported by conservative payout ratios. Management expects dividend growth driven by earnings expansion and views the current selloff as creating an attractive entry point for this high-quality regional bank franchise.

Pitch Summary:
Paramount is an ENP (exploration and production) in the energy space. It has no debt and ~$660MM in cash/securities (15% of the mkt cap). Management is fully aligned with us as they own 47% of the Company. Over the next 2 years the company should generate ~9-10% in annual free-cash flow presuming fairly bearish energy prices. I tend to believe this is on the lower end as China reopens and the lack of worldwide energy developments becomes more pronounced.

BSD Analysis:
The manager presents Paramount Resources as a high-quality energy exploration and production company with exceptional balance sheet strength and aligned management. The debt-free structure with $660 million in cash and securities (15% of market cap) provides significant financial flexibility and downside protection. Management's 47% ownership stake ensures strong alignment with shareholders, reducing agency risk common in the energy sector. The conservative projection of 9-10% annual free cash flow yield assumes bearish energy prices, suggesting meaningful upside potential if commodity prices strengthen. The manager's bullish outlook is supported by China's reopening and underinvestment in global energy development, which should support higher prices. The combination of fortress balance sheet, aligned management, attractive free cash flow generation, and favorable supply-demand dynamics creates a compelling risk-adjusted opportunity in the energy space.

Pitch Summary:
Civeo is a workforce housing company (mining and energy sector) for those who are living/working away from home in more remote locations. They provide lodging, food services, housekeeping and property maintenance in Canada, Australia and the United States. CVEO went through a brutal stretch during COVID yet still generated the equivalent of 12% of its market-cap in cash in a lousy year. In the coming years this business could be worth 2-3x where it's priced now as more development is needed in their end markets. It's hard to predict any given year of this business but they should be able to earn $3-$5 in cash in most years which equates to 15-24% free cash flow yield.

BSD Analysis:
The manager views Civeo as a leveraged play on increased energy and mining development, providing essential workforce housing services in remote locations across three countries. The company's resilience during COVID, generating 12% of market cap in cash during a challenging year, demonstrates the defensive nature of its business model. The thesis centers on accelerating demand for natural resource development driving accommodation needs in remote areas. With projected annual free cash flow of $3-$5 per share, the investment offers an exceptional 15-24% yield at current prices. The manager's 2-3x upside target reflects the cyclical nature of the business and anticipated recovery in end markets. While acknowledging year-to-year volatility, the long-term outlook appears compelling given structural energy needs and limited competition in remote workforce housing. The international diversification across Canada, Australia, and the US provides geographic risk mitigation.

Pitch Summary:
BLDR is a manufacturer and supplier of building materials with a focus on residential construction. Historically this business was cyclical with minimal pricing power as the primary products sold were lumber and other non-value-add housing materials. Since the GFC, BLDR has focused on growing their value-add business that is now 40%+ of the topline. The company has modest leverage and has been using their abundant free-cash-flow to buy in over 30% of the stock in the last 18 months. While mortgage rates are higher, they are not unusual versus history. The low rates of the last 5-10 years are the outlier. We have a structural shortage of housing in the USA. With existing homeowners locked into low-rate mortgages, the aspiring homeowner may increasingly need to find a home from a homebuilder. The next 6-12 months could be rocky as people adjust to the increase in pricing and rates. Eventually the housing market should adjust to the new normal (or rates could go down). Normalized free-cash-flow per share looks to be in the range of $8-$12 per year. At quarter end pricing of ~$89 that implies a free-cash-flow yield of 9-13%. If we owned this business privately and someone offered us a this annual cash-flow yield, we would be jumping at it!

BSD Analysis:
The manager presents a transformation story for Builders FirstSource, highlighting the company's evolution from a cyclical commodity business to one with 40%+ value-added products that provide better pricing power. The structural housing shortage thesis is compelling, particularly as existing homeowners remain locked into low mortgage rates, forcing new buyers toward homebuilders. Management's aggressive capital allocation, retiring over 30% of shares in 18 months using free cash flow, demonstrates confidence and creates value for remaining shareholders. The 9-13% free cash flow yield at normalized earnings of $8-$12 per share appears attractive, especially given the company's modest leverage profile. While acknowledging near-term volatility as markets adjust to higher rates, the manager's long-term view focuses on structural housing demand and the company's improved business mix. The private market analogy effectively illustrates the compelling valuation opportunity.

Pitch Summary:
Below is the rough Berkshire on-a-napkin valuation. Again, this is a rough exercise. • Cash of ~$79,000 per class A Share Down/Base/Up marks cash at book value to an 11% premium or $87,000 • Investments based on December prices ~$252,000 per class A share Presume a range of stock prices that result in: Down = $225,000 per class A share (-11%- assumes portfolio is overpriced) Base = $294,000 per class A share (+17%) Up = $382,000 per class A share (+51%) • Operating businesses that should generate ~$18,000 of pre-tax income per Class A share Down = 9x = $168,000 per share – equates to ~8% FCF yield Base = 11x = $205,000 – equates to ~7% FCF yield Up = 12.5x = $233,000 – equates to ~6% FCF yield • Overall (vs. $469,000 at quarter end) Down = $480,000 (+2%) Base = $586,000 (+25%) Up = $702,000 (50% underpriced) We added a short of Apple vs. the Berkshire position. Apple has become a large part of the BRK business and wanted to limit our exposure to that investment as it seems expensive. Going forward I expect Berkshire to compound at above average returns from this price.

BSD Analysis:
The manager conducts a sum-of-the-parts valuation of Berkshire Hathaway, breaking down cash, investment portfolio, and operating businesses to arrive at intrinsic value estimates. The base case scenario suggests 25% upside to fair value of $586,000 per Class A share versus the $469,000 quarter-end price. The analysis values operating businesses at 11x pre-tax earnings, implying a 7% free cash flow yield, while the investment portfolio is marked 17% above December prices. Notably, the manager hedged Apple exposure through a short position, recognizing concentration risk as Apple represents a significant portion of Berkshire's value. The valuation framework appears conservative, with the downside scenario still showing modest upside. The manager's confidence in above-average future compounding reflects Berkshire's diversified business model, strong balance sheet, and Warren Buffett's capital allocation track record.

Pitch Summary:
Asbury Group operates auto dealerships across the United States. While much attention is paid to the number of cars sold, the strength of the model comes from the back of the house in parts and services where more than 50% of the profits come from. We are exiting a period of high margins on new and used car sales. Shortages of inventory have allowed dealers to make record profits when selling a car. As inventories normalize and interest rates rise, I fully expect the dealers to make less profit (called the GPU) when selling a car. Car prices cannot go up ad-infinitum and at some point, there will be buyer pushback. Less discussed is while profits per car are at all-time highs, the volumes sold have mirrored prior recessions. My expectation is that dealers will likely make less per car but will mitigate some of that pressure by selling more cars, especially used vehicles, as prices drop. When an auto dealer sells a car to a consumer, they capture both the trade-in (inventory to sell) and the relationship for parts and services. It is a razor-razorblade model in a highly fragmented industry (many dealerships are owned privately by families). The large dealer groups have transitioned to an omni-channel model where much of the selling/pre-buy activity can be done online reducing the need for headcount and making the transaction smoother for their customers. The lower operating costs of the business are not appreciated by the market. They are appreciated by us and the management teams as most dealers, including ABG, have been buying in lots of stock with their free-cash flow. ABG should be able to earn $25-$35 in free-cash flow per share in a "normal" year. At quarter-end pricing that implies a 12-17% annual yield.

BSD Analysis:
The manager presents a compelling bull case for Asbury Group based on the durability of its parts and service business model, which generates over 50% of profits. While acknowledging near-term margin compression as inventory normalizes and interest rates rise, the thesis centers on the company's razor-razorblade model where vehicle sales create long-term service relationships. The manager appreciates the operational efficiency gains from omni-channel capabilities that reduce headcount costs, a benefit not recognized by the market. With projected free cash flow of $25-$35 per share in normalized conditions, the investment offers an attractive 12-17% annual yield at current prices. The fragmented industry structure and management's aggressive share buyback program using free cash flow further support the bullish outlook. This appears to be a classic value play on a cyclical business trading at depressed multiples despite structural competitive advantages.

Pitch Summary:
Pre-revenue biotech company with only one experimental drug; the Phase 2 results had lack of statistical significance but the company manipulated the results; Phase 3 study struggles to enroll patients; with the current design, the study will take 12 to 20 years; CEO uses the company as his personal piggybank; price target - $3.

BSD Analysis:
GLSI is an early-stage biotech focused on breast cancer therapies. The bear case is speculative valuation, single-asset dependency, and lack of late-stage trials. With no approved products and limited pipeline diversification, the company’s market cap rests on clinical outcomes that remain highly uncertain. Ongoing cash burn and reliance on equity raises compound dilution risk.

Pitch Summary:
A significant unrealized loss that could lead to a similar situation as SIVB; suffering balance sheet and bleeding deposits;

BSD Analysis:
Schwab has seen deposit flight and rising funding costs, compressing net interest income. The collapse of regional peers drew scrutiny to Schwab’s balance sheet, particularly its large held-to-maturity securities portfolio with significant unrealized losses. While client assets are sticky, bears argue higher rates will keep pressure on margins. The valuation assumes stability, leaving little cushion if outflows persist.