Investment Pitches

Pitch Summary:
Advantage Solutions works with brands and stores to sell products through stores. The company is one of the largest managers of in-store sampling programs in the U.S. (for example, would you like to try this new brand of: cheese/chips/dip/etc.) Advantage Solutions was a SPAC-merger completed in October 2020. Advantage Solutions is a capital light business that earns high returns on capital. It has a meaningful debt load, though the debt lacks onerous covenants and does not come due for several years. Advantage Solutions uses its free cash flow to repay debt and acquire smaller competitors. The company currently trades at an attractive upside-to-downside ratio.

BSD Analysis:
Curreen Capital maintains a bullish stance on Advantage Solutions, highlighting the company's dominant position in U.S. in-store sampling programs and its capital-light business model that generates high returns on capital. The manager appreciates the company's strategic use of free cash flow for debt reduction and acquisitions of smaller competitors, which supports market consolidation. While acknowledging the meaningful debt load, the manager views the lack of onerous covenants and extended maturity timeline as manageable risk factors. The investment thesis centers on the attractive risk-adjusted return profile, with the manager emphasizing favorable upside-to-downside dynamics. The company's post-SPAC status from 2020 suggests potential for operational improvements and market recognition. The focus on cash flow generation and debt management indicates strong financial discipline. Overall, the pitch reflects confidence in the company's market position and capital allocation strategy.

Pitch Summary:
Another recent addition to our portfolio is MRC Global, a distributor to oil & gas drillers, natural gas utilities, and other industries—think fittings, valves, pipes, and the like. MRC is an "ok" business—neither wonderful nor terrible, but simply boring and profitable. It is exposed to the ups and downs of the oil & gas market, but it has made strides to diversify its business into other, less cyclical markets. Most importantly, MRC has an unimpressive track record as a public company and some unhappy owners, and for those reasons I believe the company will be sold. MRC Global's history stretches back to its founding in 1921, as McJunkin Supply Company. The company would enjoy several decades of prosperity, culminating in a large investment from Goldman Sachs in 2006. Following a series of mergers and acquisitions, Goldman renamed the company "MRC Global", took it public in 2012, and then sold its remaining MRC shares the following year. This exit was well-timed, as MRC shares soon began a long decline, driven by a combination of inopportune investments and excess financial leverage. In 2015, urgently needing capital, the company turned to respected dealmaker Henry Cornell, a Goldman alum who was instrumental in MRC's creation. Cornell Capital put up $363 million to buy convertible preferred stock and MRC used the fresh capital to pay down debt and restore its firepower for additional acquisitions. Cornell probably expected to earn a good cash yield for a few years, then convert the preferred shares and sell as MRC's profits recovered and its valuation grew, but the rebound never really came. Following the investment, MRC's operating income reached only around 1/3 of 2013 levels before another round of write-offs and losses in 2020 as COVID caused energy demand to plummet. Recent results have been better—the company has built a good line of business supplying gas utilities and industrials, and debt has been paid down substantially—but MRC has been a disappointment for Cornell Capital. Turning to the present, MRC has a term loan that comes due in September 2024. The company wants to refinance the loan, but Cornell Capital, which clearly wants out of this underwhelming investment, has blocked its efforts to date, filing a lawsuit claiming MRC must seek Cornell's consent on the terms of the new debt. MRC expects to be able to pay off the term loan by drawing on its asset-backed line of credit, but this is a less than ideal solution. Enter activist Engine Capital, owner of 4% of MRC Global shares. Engine Capital has called for MRC Global to seek a sale, arguing it is the best way to cash out Cornell Capital and achieve a satisfactory result for all shareholders. In Engine's view, MRC's expressed strategy of continued mergers and acquisitions is unfeasible given the risks of ongoing litigation with Cornell Capital and MRC's high cost of capital. I wholeheartedly agree. On October 30, Bloomberg reported that MRC Global is working with financial advisors to explore a sale. If MRC Global is sold, I believe it could fetch a price in the mid-to-high teens. To recap: MRC's biggest capital provider is unhappy; an activist is unhappy; long-term shareholders likely are too, having lost half their investment since the IPO; and management can't be having much fun either with the headache of litigation and the looming term loan maturity. Something has to give, and I believe it will be MRC Global's existence as an independent public company.

BSD Analysis:
The manager presents MRC Global as a sale candidate driven by multiple unhappy stakeholders and structural pressures. While acknowledging MRC as merely an "ok" business, the investment thesis centers on forced catalysts rather than operational excellence. Cornell Capital, the largest investor with $363 million in convertible preferred stock, has been disappointed by years of underperformance and is actively blocking refinancing efforts while seeking an exit. The September 2024 term loan maturity creates additional pressure, with refinancing complicated by Cornell's litigation. Activist Engine Capital's 4% stake and public call for a sale adds momentum to the process, with Bloomberg reporting the company is already working with financial advisors. The convergence of an unhappy major investor, activist pressure, debt maturity constraints, and management fatigue creates a compelling setup for a strategic sale. Recent operational improvements including gas utility diversification and debt reduction should support valuation in a sale process. The manager's mid-to-high teens price target suggests meaningful upside from current levels, making this a classic special situation where corporate dynamics drive value realization.

Pitch Summary:
Crawford United gave us some good news, authorizing a buyback of up to 300,000 shares, or 8.5% of the total outstanding. Shares performed well in 2023 as the previous year's motivated seller quit flooding the market with shares. Still, Crawford United trades at only around 8x earnings despite a strong earnings trajectory and the lowest debt in several quarters. Following the buyback authorization, shares jumped from the high $20s into the low $30s. Sometimes all it takes to catalyze a reaction in a stock is management communicating to the market that it thinks shares are cheap and it is willing to do something about it. It really is that simple. Just after year-end, Crawford United announced its first acquisition in a while, paying $7 million to buy Heany Industries, a 92-year-old provider of industrial coatings and ceramics, mainly to the aerospace industry. Depending on how Crawford chose to finance the deal and the earnings multiple they paid, I think the acquisition could increase cash earnings by 25 cents per share.

BSD Analysis:
The manager views Crawford United as an undervalued industrial company trading at an attractive 8x earnings multiple despite strong fundamentals including improving earnings trajectory and the lowest debt levels in several quarters. The investment case was strengthened by management's authorization of a substantial 8.5% share buyback, which both signals management's confidence in the business and provides immediate catalyst for share price appreciation. The stock responded positively to the buyback announcement, moving from the high $20s to low $30s, demonstrating the market's recognition of the value creation opportunity. The recent acquisition of Heany Industries, a 92-year-old aerospace coatings provider, could meaningfully boost earnings by an estimated $0.25 per share. With technical selling pressure from a motivated seller now removed and management actively deploying capital through both buybacks and strategic acquisitions, Crawford United appears well-positioned for continued outperformance. The combination of low valuation, strong balance sheet, and proactive capital allocation creates multiple paths to value realization.

Pitch Summary:
I remain enthusiastic about another large holding of ours, FitLife Brands. Last I reported, FitLife had just closed on its acquisition of the assets of MusclePharm, a once high-flying exercise supplements brand that been mismanaged into bankruptcy. The potential synergies for FitLife and MusclePharm were obvious, with FitLife able to use its existing manufacturing relationships to create the product and then leverage its strong online channels to offer the product to customers. One of FitLife's first tasks is to convince online retailers that previously stocked MusclePharm products to do so again. While FitLife has yet to report fourth quarter results, it appears progress is being made. Retailer iHerb.com, once a significant seller, now indicates MusclePharm products are "coming soon." FitLife shares have performed well. The market is giving the company credit for its successes in acquiring choice assets out of bankruptcy and optimizing them. I don't think the company is anywhere close to running out of opportunities.

BSD Analysis:
The manager maintains strong conviction in FitLife's roll-up strategy, particularly following the MusclePharm acquisition from bankruptcy. The investment thesis centers on FitLife's ability to acquire distressed supplement brands at attractive valuations and integrate them using existing manufacturing relationships and direct-to-consumer distribution channels. Early signs of the MusclePharm integration appear positive, with key retailer iHerb indicating product availability is "coming soon," suggesting successful re-establishment of distribution relationships. The market has recognized FitLife's execution capability, with shares performing well as the company demonstrates its ability to optimize acquired assets. The manager sees a long runway for additional acquisitions in the fragmented supplement industry, where brand mismanagement creates ongoing opportunities for a skilled operator. This appears to be a classic small-cap consolidation play in a niche market where operational expertise and distribution capabilities create sustainable competitive advantages.

Pitch Summary:
In the quarter, we invested in a highly attractive spin-off security: Net Lease Office Properties (NLOP). The word "office" is enough to give many investors chills, and that's why the opportunity existed in the first place and continues to exist. Fortunately, the overwhelming pessimism allowed us to build a large position at a very attractive price. It's no secret that offices as an asset class are under pressure. Work-from-home policies are putting downward pressure on rents and occupancy, with many companies opting for less space as leases expire. Some REITs, eager to avoid the stigma of office ownership, have chosen to dispose of their office properties however they can. REIT W.P. Carey elected to spin off a hodgepodge of office assets as Net Lease Office Properties. The spin-off was tiny, taxable, and stuffed full of assets about as popular as the flu, so it's no surprise it landed with a thud. Shares of NLOP traded as low as $11 in the first days of trading. We began accumulating shares around $13 and continued to buy as they rose into the upper teens. Even now, as shares hover around $24, I continue to believe NLOP remains very much undervalued. When I called NLOP a "hodgepodge of office assets", I meant it. The REIT owns everything from quality buildings on 10-15+ year leases to marginal properties on short-term leases that must soon be repositioned or redeveloped. Geographic and industry diversification is good, with no exposure to the most challenged office markets. At $24, NLOP trades at $103 per square foot of leasable space, a large discount to a highly conservative estimate of market value. This discount makes for a potentially interesting investment, but my favorite part of the story here is the built-in catalyst: NLOP was designed to liquidate from the get-go. This REIT is too small to attract a large base of investors and its property holdings are too scattershot to pursue a coherent strategy. The registration document puts it plainly, stating that Net Lease Office Properties would "…seek to maximize shareholder value through dispositions of high-quality office properties…" The liquidation process is off to a good start. In late December, the company sold off four of its initial 59 properties, and at very good prices. Two properties with solid, long-term leases were sold at an average of $170 per square foot while two properties with expiring leases sold for $87 per square foot. NLOP applied the proceeds of the property sales toward its debt, which I must point out is both high-cost and substantial. The good news is this debt will be reduced rapidly from a combination of robust cash flow from the property portfolio and continued asset sales. Debt reduction will allow more and more cash flow to accrete to shareholders. With so many different assets and an office market in flux, its best to be conservative on NLOP's valuation, but I am very comfortable using a figure of $130 per square foot to value the company's 8.4 million square feet of leasable space. Net of debt, that comes out to around $38 per share. I see upside to this valuation if NLOP can continue selling its well-leased properties at $170/square foot or higher, and its "fixer-uppers" at $75/square foot or better. I am happy to hold our NLOP shares until we achieve a price much closer to liquidation value.

BSD Analysis:
The manager presents a compelling contrarian thesis on NLOP, a spin-off REIT trading at a significant discount due to office market pessimism. The investment case centers on a built-in liquidation catalyst, with the REIT explicitly designed to maximize shareholder value through property dispositions rather than operating as a going concern. At $24 per share, NLOP trades at only $103 per square foot versus the manager's conservative $130 valuation, implying 55% upside to the $38 target price. The liquidation thesis is already proving out, with recent asset sales at $170/sq ft for quality properties and $87/sq ft for shorter-lease assets, both above the manager's base case assumptions. The high-cost debt burden, while substantial, creates additional value as rapid debt paydown from asset sales and cash flow will increasingly benefit equity holders. The diversified geographic footprint and avoidance of the most challenged office markets provide downside protection. This appears to be a classic special situation where market sentiment creates opportunity for patient capital willing to hold through the liquidation process.

Pitch Summary:
Finally,wecontinuetoholdBRileyFinancial(RILY).B.Rileywasasignificantdetractorfrom performanceduring2023asshort-sellingargumentswereverypubliclymadethroughouttheyear.The firstshortsellingthesisquestionedtheirdepositquality(theydon'ttakedeposits)andthewisdomoftheir investmentbook(they'vemostlyworkedoutverywell).They'vemorerecentlymovedtoallegationsof fraud,questioningtheveracityofRiley'sfinancialstatementsandtheintegrityofpeopletheFirmhas donebusinesswithwithoutevidencethatthecompanyitselfhascommittedwrongdoing.WhileIusedto shortstocksforaliving,andthereareshortsellersIbelievedogreatworkandwarrantasellfirst,ask questionslaterphilosophy,Ibelievethisgroup'sanalysisismistakenand,insomecases,confused.I assignalowprobabilitytotheshortsellers'bestargumentsbecomingtrue.However,eveniftheyare, giventhecurrentshareprice,Ibelievetheshareswouldstillrepresentacompellingopportunityover time.Today,giventhepriceofitspubliclytradedequityanddebt,veryhighreturnscanbeachievedby thecompanyjustbyshrinkingitsprincipalinvestmentbusinessbylettingoutstandingloanstocustomers matureandpayingdowndebtorbuyingbackstockwiththeproceeds.Theycanwinbydoingnothing. Additionally,theirbasecapitalmarketsbusiness,wheretheytakeminimalrisk,isenteringaperiodof enhancedpotentialopportunityashundredsofbillionsofdollarsofdebtinRussell2000companies becomesdue,providingRiley'sinvestmentbanktheopportunitytohelpcompaniesarrangemergersand acquisitionsorplaceequity,andfirmstrade.Iliketherisk-rewardinRILYsharesandlookforwardtoa returnmeasuredinmultiplesofitscurrentvalue.

BSD Analysis:
The manager maintains a contrarian bullish position in B. Riley Financial despite significant short-seller attacks and poor 2023 performance. The manager, with professional short-selling experience, dismisses the fraud allegations as mistaken and confused analysis lacking evidence of company wrongdoing. The investment thesis centers on asymmetric risk-reward at current depressed valuations. Even in worst-case scenarios, the manager believes shares represent compelling value given current equity and debt pricing. The company can generate high returns simply by shrinking its principal investment business and using proceeds for debt reduction or buybacks. A significant catalyst exists in the capital markets business, which faces minimal risk while positioned for enhanced opportunity as hundreds of billions in Russell 2000 debt matures, creating M&A and equity placement opportunities. The manager expects returns measured in multiples of current value.

Pitch Summary:
GreenPlainsisatroubledinvestment.Thestockdidnotperformasexpectedin2023andhashad adifficultstartto2024.TheCompanycontinuestobewellpositioned,generatingsolidmarginsoneach kernelofcornasthecorncrushmarginstaysmeaningfullypositive.Furthermore,theindustry's progressionisclear.Thereisanopportunityforethanolproducerstoincreaseshortandlongterm profitabilitybyderivinghigheramountsofcornoil,specialtyalcohols,andhigh-densityfeedproteinfrom eachkernelofcorn.It'salsoincreasinglyclearthattherequiredcapitalwillpreventmanycurrent operatorsfromtransitioning.GreenPlainswasfortunatetobeginitsconversionrelativelyearlyandto havethescalenecessarytocompletethetransition. Duringtheyear,theregulatoryenvironmentbenttowardsethanolproducersasthefederal governmentstoppedpreventingseveralmidwesternstatesfromblendingahigherpercentageofethanol intogasolineandincludedtheirsubstratesinInflationReductionActclimatechangesubsidies. Finally,thecompanyisattheforefrontoftheethanolindustry'ssustainableaviationfuel(SAF) development,afutureusecasethatwoulduseasubstantialportionoftheUS'currentethanolproduction iftoday'sethanolplantsweretosupplyit.Thisyear'sdevelopmentswerepositiveforGreenPlainsand portendadramaticallyhigherearningsstreamwithinayear,evenhigherintwoandhigherstillinthree, makingthestockincrediblycheap,particularlylookingtwoorthreeyearsout. TheproblemisthatGreenPlainsmanagementconsistentlyoverpromisesandunderdelivers, havingpushedoutthemonetizationofitshighproteinfeedandcarbonsequestrationapprovaltimelines multipletimes.Today,thestockpriceindicatesthatthestreethaslittleconfidenceinmanagement's abilitytoexecuteonthecommunicatedvision.Activistinvestorsarealreadyinvolved,andIexpectone, giventhestrongstrategicpositionofthecompanybuttheflailingstockprice,willbecomeactiveinthe stockintheshortterm.WhiteBrook'sviewofthecompany'sintrinsicvalueisamultiplehigherthan today'sprice.

BSD Analysis:
The manager acknowledges Green Plains as a troubled investment with poor recent performance but maintains a bullish long-term view based on compelling fundamentals. The company is well-positioned with solid corn crush margins and early positioning in industry transformation toward higher-value products including corn oil, specialty alcohols, and high-density feed protein. Regulatory tailwinds include federal support for higher ethanol blending and Inflation Reduction Act subsidies. The sustainable aviation fuel opportunity represents a massive potential catalyst that could consume substantial US ethanol production. Management execution remains the key risk, with consistent overpromising and timeline delays eroding market confidence. The manager expects activist involvement given the disconnect between strategic positioning and stock performance. Despite near-term challenges, the intrinsic value is viewed as multiple times the current price, making it incredibly cheap looking two to three years out.

Pitch Summary:
Mosaic(MOS)andGreenPlains(GPRE),ourcommodity-sensitiveinvestments,remain substantialpositionsintheportfolio.Thecompaniesareanaturalhedgetoeachotherinsomeways,as thepriceofcornisafeedstockforGreenPlainswhileitbolstersthepurchasingpowerofMosaic's customers.Ontheotherhand,higheroilpricesareapositiveforGreenPlains,whiletheoppositeistrue forMosaic. TheMosaicthesisdidn'tchangeduring2023.Theworld'spotashandphosphateneedsgrowata ~2GR,andthepriceforpotashandphosphate,whichdeclinedfromCovidpeaksduring2023,is likelytobeatleaststablein2024.Mosaiccontinuestogeneratesubstantialfreecashflowonabusiness withlesseningcapitalintensity,andthebalancesheethasaverymanageabledebtload.TheCompany's CEO,JackO'Roarke,announcedhisretirementattheendof2023,butIexpectthecompanytogofrom strengthtostrengthaslong-timeheirapparentBruceBodineleadsthecompanyin2024.Ibelievethe companywillcontinuetoreturncapitaltoshareholdersthroughenhancedstockbuybackswhileinvesting inhigh-returnbrownfieldopportunitiesthatwillcontinuetogrowlong-termfreecashflowpershare. Additionally,shouldbatterymanufacturersadoptmorephosphateintheirbatteriesasTeslaandFord havebeguntodo,itcouldsignificantlychangethedemanddynamicsofoneofitstwoproductsandensure Mosaic'ssignificantcashflowsyearsintothefuture.

BSD Analysis:
The manager maintains a bullish view on Mosaic despite commodity price volatility, emphasizing the structural growth in global potash and phosphate demand at approximately 2% CAGR. The investment thesis remains unchanged, focusing on the company's substantial free cash flow generation with decreasing capital intensity and manageable debt levels. Leadership transition from retiring CEO Jack O'Roarke to heir apparent Bruce Bodine is viewed positively. The manager expects continued shareholder returns through enhanced buybacks while investing in high-return brownfield opportunities to grow long-term free cash flow per share. A potential catalyst exists in the battery market, where Tesla and Ford's adoption of phosphate batteries could significantly alter demand dynamics. The company serves as a natural hedge against corn price inflation in the portfolio alongside GreenPlains.

Pitch Summary:
BuildersFirstsource(BLDR)remainsthelargestpositionintheportfolio.Asinterestrateshave settled,single-familyhomebuildinghasacceleratedinlate2023andearly2024,andthecountry continuestobeunder-housed.BuildersFirstsourcegenerallychargesafixedpercentageonthebuilding materialsitdistributes,excludingitsprivatelabelbrandsthatusuallysolveauniqueproblemforwhich theypriceatadiscounttothealternative.Managementhasproventhemselvestobeexcellentfreecash flow-focusedoperatorsandgoodcapitalallocators.Afterayear,wherethestockwasup~1.5x,Iexpecta moremutedbutstillpositivereturnin2024andbeyond.

BSD Analysis:
The manager maintains a bullish stance on Builders FirstSource as their largest portfolio position, citing the company's strong positioning in an accelerating housing market. The thesis centers on the structural housing shortage in the US and the company's business model of charging fixed percentages on building materials distribution. Management's track record of excellent free cash flow generation and capital allocation provides additional confidence. The stock delivered exceptional returns of approximately 150% in the prior year, leading the manager to moderate expectations while maintaining a positive outlook. The company's private label brands that solve unique problems at discounted pricing provide competitive advantages. With interest rates stabilizing and single-family homebuilding accelerating, the fundamental backdrop remains supportive for continued growth.

Pitch Summary:
I have written on GTX many times previously, and I will not bore partners with a rehash. Instead, I want to focus on the significant slowdown in battery electric vehicles (BEV) growth. The slowdown I have long predicted is materializing, and I believe the "stronger for longer" tail of internal combustion engines (ICE) and hybrid power trains, which account for ~60% of the company's EBITDA, has materially increased in value. Despite this, GTX currently trades ~5x my 2024 FCF and I believe GTX will return at least half to shareholders via buybacks. Simply put, I believe the slowdown in BEV is heading on a collision course with GTX's valuation and proper capital allocation. Without a significant reacceleration in BEV sales, it is difficult to see how GTX will not be a significant winner eventually. However, rather than rehash all the puts and takes of the bull versus bear debate, I want to update our risk/reward framework over the next three years. To the downside, if BEV unit growth reaccelerates towards a mid-30s growth rate, I believe GTX's EBITDA could be roughly flat in 2027 as continued share gains in existing ICE and hybrid powertrains and a modest cyclical recovery offset the mix lost to BEVs. Importantly, I believe GTX would generate roughly $1.2B in FCF in that time, with half going to buybacks and half to debt paydown. Depending upon assumptions for what price the shares are repurchased, a punitive 4x EV/(EBITDA-capex) multiple would yield a stock price roughly flat to up slightly from current levels. To the upside, if BEVs were to continue decelerating, I estimate GTX's 2027 EBITDA could be 25% larger than at present and EPS could reach $3. Further, in a world where BEV penetration is plateauing, hybrid powertrains requiring GTX's state-of-the-art turbos would play a critical role in decarbonizing transportation. For instance, MIT estimates the savings from switching from internal combustion to hybrid results in a ~50% reduction in CO2 versus a 65% reduction from BEVs. If GTX were to trade 12x earnings, roughly the standard auto supplier multiple before the 2020 recession, shares would trade $36 versus $9 today. While I am acutely aware government mandates, continued BEV innovation, and falling battery prices could boost BEV demand, I believe GTX is an opportunity where we stand to lose little if wrong while making a great deal if proven right.

BSD Analysis:
McIntyre's GTX thesis centers on the slowing battery electric vehicle adoption creating a longer runway for internal combustion and hybrid powertrains, which generate 60% of the company's EBITDA. The manager sees an asymmetric risk/reward setup with GTX trading at only 5x 2024 free cash flow while generating substantial cash for buybacks and debt reduction. In the bear case scenario with BEV growth reaccelerating, GTX would still generate $1.2B in FCF over three years with flat EBITDA, providing downside protection. The bull case envisions 25% EBITDA growth by 2027 if BEV adoption plateaus, with hybrid powertrains becoming critical for decarbonization given their 50% CO2 reduction versus 65% for BEVs. At normalized 12x earnings multiple, shares could reach $36 versus $9 today, representing 300% upside. The investment benefits from GTX's technological leadership in turbocharging and the company's aggressive capital allocation strategy. McIntyre views this as a compelling asymmetric opportunity where limited downside risk meets significant upside potential.

Pitch Summary:
In a vacuum, SHC screens as my ideal type of business: one half of a duopoly market with good long-term growth where the product sold is mission critical to customers, with high switching costs, yet the product's cost is immaterial to their customers. In the case of SHC, the company is one of two scaled outsourced providers of medical device and pharmaceutical sterilization services. SHC is diversified across almost all major medical device and pharmaceutical manufacturers, boasts a 100% retention rate with top customers, and has consistently grown sales at close to 10%. Further, sterilization represents ~1% of their customers' cost of goods sold, and SHC has an ~55% EBITDA margin. Normally, a consistent 10% growth story with 55% margins would trade at a significant multiple. Indeed, from when SHC IPOed in late 2020 until legal fears derailed the stock in fall 2022, shares consistently traded over 18x EV/EBITDA and 25x P/E, yet shares currently trade less than 12x my 2024 EV/EBITDA and 15x my 2024 EPS. I believe a trifecta of headwinds has held SHC back since the settlement. Importantly, I believe those headwinds will largely abate in the next year or two, and that SHC's multiple can normalize while the business continues to grow. First, SHC slightly missed expectations due to destocking at medical device manufacturers as global supply chains normalized, a phenomenon seen in many industries. I believe this is the largest issue holding SHC back and I expect it to be resolved this year. Second, med device stocks broadly fell last year due to fears surrounding GLP-1s' impact on obesity-related medical procedures. While SHC is correlated with med device stocks, I do not believe GLP-1s will materially impact SHC's volumes, as the risk is speculative, long-term in nature, and the "at risk" obesity-related portion of medical devices is under 5% of SHC's overall mix. Third, I believe many investors are still hesitant to invest in SHC in case the legal liabilities resurface. As partners know, I have invested in numerous companies with legal overhangs, but it is difficult for investors without relevant experience to believe the coast is clear, so to speak, even after the bulk of the storm has passed. This represents an opportunity to purchase shares in SHC at a discount despite its current litigation outlook being manageable and not too different from most companies' legal risks. A similar phenomenon has played out with our CC investment over the last five years. In 2019, a short seller simply pointing out that there was legal risk caused a 70% drop in the stock. In 2023, CC announced a massive settlement, followed by legal risks putting that settlement at risk, yet the stock did relatively little on the news in both directions. It takes time for people to digest litigation risk, and it is difficult to know precisely when they will. But eventually, they do, and I believe the normalization of SHC's multiple to levels seen before its collapse in fall 2022 represents a significant catalyst. I estimate SHC will earn $700MM in 2026 EBITDA and $1.50 in 2026 EPS. 18x EV/EBITDA and 25x P/E yields $37 versus the current share price of $15.

BSD Analysis:
McIntyre presents a compelling value thesis on Sotera Health, emphasizing the company's duopoly position in medical device sterilization services with exceptional business quality metrics including 55% EBITDA margins and 100% customer retention. The manager identifies three temporary headwinds creating the opportunity: supply chain destocking, GLP-1 drug concerns affecting medical device stocks broadly, and lingering litigation fears despite settlement resolution. The valuation disconnect is stark - SHC trades at 12x 2024 EV/EBITDA versus historical 18x+ multiples for a business with consistent 10% growth and mission-critical services. The sterilization cost represents only 1% of customers' COGS, providing pricing power and defensive characteristics. McIntyre's $37 price target implies 147% upside based on normalized 18x EV/EBITDA and 25x P/E multiples applied to 2026 projections. The thesis relies on multiple expansion as temporary headwinds resolve and the market recognizes the durable competitive advantages of this essential healthcare services provider.

Pitch Summary:
SYENS is a Belgian chemicals business that spun out of Solvay in December 2023. The company is a global leader in specialty polymers and its portfolio of products is used in automotive, electronics, healthcare and other end markets. Additionally, SYENS is one of the few companies in the world that can provide lightweight composite materials critical for modern commercial aircraft and for the latest-generation airborne defense platforms. The spin-off separated out all of the commodities businesses. Hexcel is the most comparable specialty polymer company and it trades at a fancy 29x the 2024 EPS consensus estimate. Since the spin-off, SYENS shares have been weighed down by economic slowdown concerns, but we expect that the company's niche products should, through the economic cycle, enable it to retain pricing power while growing. We acquired our shares at €92.32, or less than 12x the 2025 EPS consensus estimate, which we expect it to exceed. SYENS shares ended the quarter at €94.26.

BSD Analysis:
Syensqo represents an attractive spinoff opportunity in specialty chemicals, trading at less than 12x 2025 earnings compared to comparable Hexcel at 29x multiples. The December 2023 Solvay spinoff created a pure-play specialty polymers company with leading positions in automotive, electronics, healthcare, and aerospace markets. The company's unique capability in lightweight composite materials for commercial aircraft and defense platforms provides significant competitive advantages and pricing power. Post-spinoff weakness due to economic concerns creates an attractive entry point for a business with defensive characteristics and niche market positions. The separation from commodity businesses improves the quality and predictability of cash flows. Greenlight expects the company to exceed consensus estimates, suggesting potential upside to already reasonable valuation multiples. Specialty chemicals benefit from high switching costs and technical expertise barriers. The aerospace and defense exposure provides growth drivers independent of broader economic cycles.

Pitch Summary:
VTRS is a manufacturer of generic and off-patent branded drugs. The company was created in 2020 after a merger between Mylan and a division of Pfizer. We previously invested in Mylan, but sold five years ago due to concerns around management's ability to deliver on promises, as well as deterioration in the generic industry. Those concerns were well-founded, as the shares proceeded to decline by more than 60% after we exited. After a recent management change, we decided to take another look and found that after years of sharp declines, generic drug pricing has stabilized and competition has been diminished. The company's revenue and cash flow are now growing, and we expect this improvement to accelerate. VTRS' new management team has simplified its drug portfolio via various divestitures and has committed to returning 50% of free cash flow to shareholders through "aggressive" share buybacks, implying a double-digit capital return based on our estimates. We acquired our shares at an average price of $10.63, or just 4.0x 2024 consensus earnings. VTRS shares ended the quarter at $10.83.

BSD Analysis:
Viatris presents a compelling turnaround story in the generic pharmaceuticals space, trading at an extremely attractive 4.0x 2024 earnings multiple. Greenlight's previous experience with Mylan provides valuable context, having correctly exited before a 60% decline due to management and industry concerns. New leadership has addressed these issues through portfolio simplification and disciplined capital allocation. The generic drug industry has stabilized after years of pricing pressure, with reduced competition creating a more rational environment. Revenue and cash flow growth are accelerating, supported by improved industry dynamics and operational efficiency. Management's commitment to return 50% of free cash flow through aggressive buybacks implies double-digit shareholder yields at current prices. The combination of cyclical recovery, operational improvements, and shareholder-friendly capital allocation creates multiple value drivers. Viatris benefits from essential healthcare demand and a simplified business model focused on profitable products.

Pitch Summary:
ALIT is a software-based provider of health and wealth benefits and payroll solutions for large enterprises. Over the past few years, the company has undergone a significant cloud-based platform upgrade and has been successful at growing both revenue and profits. The business is much higher quality than most that meet our disciplined valuation criteria. Customer retention is approximately 98% and margins are healthy. We believe that the efficiency of this new platform will enable further cost cutting, leading to improved cash flows that can be used to pay down debt and repurchase its shares. There should be further margin upside, as AI enables ALIT to replace labor with technology. We also believe that a significant overhang on the stock was recently removed when its private equity sponsors exited. We acquired our position for an average price of $7.98, or 10.9x 2024 consensus earnings. ALIT shares ended the quarter at $8.53.

BSD Analysis:
Alight represents a high-quality software business trading at an attractive 10.9x 2024 earnings multiple, meeting Greenlight's disciplined valuation criteria. The company provides mission-critical HR and benefits solutions to large enterprises with exceptional 98% customer retention, indicating strong competitive moats and recurring revenue streams. Recent cloud platform upgrades position ALIT for improved operational efficiency and margin expansion through cost reduction and automation. The artificial intelligence opportunity could further enhance margins by replacing labor with technology, providing multiple expansion catalysts. Private equity sponsor exit removes a significant overhang, potentially improving stock liquidity and institutional ownership. Strong cash flow generation enables debt reduction and share repurchases, creating additional shareholder value. The enterprise software market benefits from digital transformation trends and sticky customer relationships. ALIT's combination of quality business metrics, reasonable valuation, and multiple value creation levers makes it an attractive addition to the portfolio.

Pitch Summary:
Finally, our fifth largest winner was Vitesco Technologies Group (Germany: VTSC), which returned 44% in 2023. We introduced our investment at the Sohn Investment Conference in May, and in October, the controlling shareholder announced that it would tender the remaining shares at a premium. From the start of the year to the tender price, the shares advanced 73%. While we were not happy with the tender price as we believe it dramatically undervalues the company, our 2023 performance was enhanced by this development.

BSD Analysis:
Vitesco Technologies delivered a 44% return for Greenlight, culminating in a takeover announcement that validated their investment thesis. The German automotive technology company was featured at the prestigious Sohn Conference in May, demonstrating Greenlight's confidence in the position. The controlling shareholder's tender offer in October drove shares up 73% from year-start to the tender price, providing strong absolute returns. However, Greenlight's disappointment with the tender price suggests they believed the company was worth significantly more, indicating potential undervaluation even at the takeout level. This automotive supplier specializes in powertrain technologies and electrification solutions, positioning it well for the industry's transition to electric vehicles. The takeover premium reflects strategic value in Vitesco's technology portfolio and market position. While the exit was profitable, it represents a case where fundamental value exceeded even the premium takeout price.

Pitch Summary:
Tenet Healthcare (THC) returned 55% during the year and was our fourth largest winner. The stock climbed as the company was able to reduce its reliance on expensive temporary labor and benefited from a stronger healthcare utilization environment, especially on the outpatient side. We did even better by trimming about a third of our position into mid-year strength and then buying much of that back into autumn weakness that was triggered by what we believe are irrational fears that new weight loss drugs will materially reduce demand for hospital care and outpatient surgery. The shares recovered late in the year, particularly after the company sold three hospitals at a premium valuation, which caused the market to rethink the value of the remaining business.

BSD Analysis:
Tenet Healthcare generated a solid 55% return as the hospital operator successfully addressed labor cost pressures and benefited from improving healthcare utilization trends. The company reduced expensive temporary staffing costs while outpatient volumes strengthened, driving margin expansion. Greenlight demonstrated skilled trading by trimming positions into strength and adding back during weakness caused by overblown concerns about weight loss drugs impacting hospital demand. The autumn selloff created an attractive re-entry opportunity based on what the manager views as irrational market fears. A key catalyst was the premium sale of three hospitals, which helped the market recognize the underlying asset value of the remaining portfolio. This validates Greenlight's thesis about hidden value in healthcare real estate. The healthcare sector benefits from demographic tailwinds and essential service demand. Tenet's operational improvements and asset optimization strategy position it well for continued value creation.

Pitch Summary:
Kyndryl Holdings (KD) returned 87% for the year and was our third largest positive contributor. This one is a bit trickier to explain, as the company does not currently make money. The loss estimates for 2024 began the year at almost $1.80 per share and ended the year at $0.47 per share. Obviously, this is progress. As a reminder, KD was the result of the spin-out of IBM's infrastructure services business. It began its post-spinout life saddled with a bunch of unprofitable long-term contracts. The company's strategy has been to combine improved services with pricing adjustments on renewals in order to eventually earn a reasonable margin. The company has made substantial progress toward this goal, as new bookings came in at improved margins, providing confidence that normal margins can be achieved over the intermediate term. The company has a very large revenue base, so better margins can make a big difference. We estimate that with normal margins, KD can eventually earn $4 per share. Even after appreciating in 2023, the stock trades at just 5x that ultimate earnings power.

BSD Analysis:
Kyndryl delivered an impressive 87% return despite being unprofitable, as the IBM infrastructure services spinoff executed a successful turnaround strategy. Loss estimates improved dramatically from $1.80 to $0.47 per share, demonstrating meaningful operational progress. The company inherited unprofitable legacy contracts from IBM but is systematically repricing renewals and improving service delivery to achieve sustainable margins. New bookings at improved margins provide confidence in the turnaround trajectory. With Kyndryl's massive revenue base, even modest margin improvements translate to significant earnings power. Greenlight estimates $4 per share in normalized earnings, making the current valuation of 5x ultimate earnings compelling. This represents a classic restructuring story where patient capital can benefit from operational improvements. The IT services market provides stable demand, and Kyndryl's scale offers competitive advantages once margins normalize.

Pitch Summary:
CONSOL Energy (CEIX) was our second largest positive contributor, with a total return of 61%. The shares began the year trading at only 2.4x 2023 EPS estimates, and even though estimates fell more than 25% over the course of the year, the investment worked out well. Midway through the year, the company switched its capital allocation policy to emphasize stock repurchases and the shares took off. CEIX ends the year at a "nosebleed" P/E of 5.1x 2023 estimates and 5.8x 2024 estimates.

BSD Analysis:
CONSOL Energy delivered a strong 61% return for Greenlight despite facing estimate cuts of over 25% during 2023. The coal company began the year at an exceptionally low 2.4x earnings multiple, providing substantial downside protection even as fundamentals weakened. The key catalyst was management's strategic shift to prioritize aggressive share buybacks, which drove significant stock appreciation. Even after the strong performance, CEIX trades at what the manager sarcastically calls a "nosebleed" 5.1x 2023 earnings and 5.8x 2024 estimates, indicating continued deep value. This demonstrates how disciplined capital allocation can unlock value even in challenged industries. The coal sector benefits from supply constraints and energy security concerns. Greenlight's success here reflects their ability to identify undervalued assets where management actions can drive shareholder returns.

Pitch Summary:
In 2023, Green Brick Partners (GRBK), which had been our biggest loser in 2022, turned into our biggest winner, posting a 114% gain. It began the year trading at under 8x 2023 EPS estimates, which almost doubled over the course of the year. The shares begin 2024 trading at about 7x 2024 estimates. While it is unlikely that the company will again double the published estimates, GRBK appears to us to be poised for another strong year.

BSD Analysis:
Greenlight Capital achieved a remarkable 114% gain on Green Brick Partners in 2023, making it their top performer after being their worst position in 2022. The homebuilder entered 2023 trading at an extremely attractive valuation of under 8x earnings estimates, which nearly doubled throughout the year as the company executed well. Despite the strong performance, GRBK still trades at only 7x 2024 estimates, suggesting continued value. The manager's confidence in another strong year ahead reflects the company's ability to exceed expectations and the persistent valuation discount. This turnaround story demonstrates Greenlight's patience with quality businesses trading at compelling valuations. The homebuilding sector benefited from improved market conditions and GRBK's operational execution. While estimate doubling is unlikely to repeat, the low valuation multiple provides a margin of safety for continued outperformance.

Pitch Summary:
Turning to some positive news, Andvari's best performing holding in 2023 was Constellation Software whose stock had a total return (share price and dividends) of 58.9%. Constellation's spin-offs, Topicus.com and Lumine, also had stellar years. In just twelve months, Constellation acquired over 100 niche, vertical market software businesses. Most of the acquisitions were small enough that the purchase price was not reported. However, there were several large transactions in 2023 where Constellation was able to allocate hundreds of millions of capital. To demonstrate the solid growth and compounding of Constellation's results, it was just 7 years ago in 2016 that the company first reported annual revenues of $2 billion. Starting with the second quarter of 2023, Constellation reported $2 billion of revenues for a single quarter. Although Constellation has not yet reported its results for 2023, Andvari believes annual revenues will be at least $8.2 billion and free cash flows will be about $1.7 billion. Because the businesses Constellation acquires usually have high margins and low organic growth, Constellation is not able to fully reinvest the cumulative free cash flows back into the businesses it owns. Thus, much of the intrinsic value of Constellation is dependent upon its ability to reinvest these free cash flows at high rates of return by acquiring more mission critical software businesses around the world. As Constellation has grown larger, it has continued to produce excellent results by maintaining its decentralized operating structure. Constellation founder and CEO Mark Leonard has also pushed down capital allocation responsibilities further and further down to business unit leaders. Whereas ten years ago Leonard and the board of directors would be approving nearly every proposed acquisition, business unit leaders now decide for themselves whether to pursue an acquisition if the purchase price is below a certain threshold. Leonard and the board of directors now only consider large acquisitions. This delegation of responsibility has allowed Constellation to deploy capital at a sustained and rapid pace. Finally, it's important to note Constellation's acquisition criteria have evolved slightly to enable the acquisitions of larger businesses while maintaining a relatively high hurdle rate for returns. Small acquisitions have been Constellation's bread and butter for decades. Average returns on these have been 20% or higher. But to be competitive in large deals that have a purchase price of $100 million or more, Constellation has conceded it must accept a return in the mid-teens. This is still quite high by the standards of any investor. As shareholders, we've seen a handful of larger deals come to fruition in the last several years. In sum, Constellation remains an impressive business. Andvari estimates Constellation is currently trading at a forward free cash yield of just under 3%. This, coupled with a track record of having compounded free cash flows at an annualized rate of 18.8% over the last eight full fiscal years, suggests future returns to shareholders are likely to remain above average even if free cash flow growth declines to the low teens.

BSD Analysis:
Andvari presents a compelling bull case for Constellation Software, highlighting the company's exceptional 58.9% total return in 2023 and impressive operational execution. The manager emphasizes Constellation's remarkable growth trajectory, noting revenues grew from $2 billion annually in 2016 to $2 billion quarterly by Q2 2023, with projected 2023 revenues of $8.2 billion and free cash flows of $1.7 billion. The investment thesis centers on Constellation's proven acquisition strategy of purchasing niche, vertical market software businesses with high margins and mission-critical applications. Andvari particularly values the company's decentralized operating structure and Mark Leonard's delegation of capital allocation decisions to business unit leaders, enabling rapid deployment of capital across 100+ acquisitions in 2023 alone. The manager acknowledges Constellation's evolution toward larger acquisitions with mid-teen returns versus historical 20%+ returns on smaller deals, but views this as necessary for scale while maintaining attractive hurdle rates. At a forward free cash yield under 3% and an 18.8% annualized free cash flow growth rate over eight years, Andvari believes the valuation remains reasonable for continued above-average returns. The pitch reflects confidence in Constellation's ability to compound capital through disciplined acquisitions and operational excellence in the fragmented vertical software market.