Investment Pitches

Pitch Summary:
RIT also holds a stake in Epic Systems, a leading U.S. electronic health records provider founded by Judith Faulkner in 1979 with $70k of investment, and which delivered $4.6 billion of revenue in its recent reporting. In 2023, management continued to invest in Epic's cloud products, which are seeing strong traction – investments which we believe hold the promise to compound shareholders capital at attractive rates over the long term, as Judith has achieved since the company's founding.

BSD Analysis:
RIT's investment in Epic Systems provides exposure to a dominant player in the electronic health records market with an exceptional long-term track record. Founded by Judith Faulkner in 1979 with just $70,000, the company has grown to generate $4.6 billion in annual revenue, demonstrating remarkable capital compounding over decades. Epic's continued investment in cloud-based products positions the company to capitalize on the healthcare industry's digital transformation. The strong traction in cloud offerings suggests successful product-market fit and potential for accelerated growth. Founder-led management under Judith Faulkner provides continuity and proven execution capability. The healthcare technology sector offers defensive characteristics with recurring revenue streams and high switching costs, supporting long-term value creation potential.

Pitch Summary:
One company we are optimistic about is Scale AI, which specialises in labelling objects in photos and videos serving the requirements of self-driving cars, virtual/augmented reality, and U.S. Department of Defense applications. It has expanded its product offerings to assist in teaching computers how to generate content using AI. This company is a good example of the type of "picks-and-shovels" opportunities RIT pursues; companies which are positioned to thrive as a result of a broader trend rather than a particular outcome. We believe that Scale AI is well-placed to benefit from AI breakthroughs without the necessity of committing to a specific foundational model, whether from OpenAI, Meta or Google.

BSD Analysis:
RIT's investment in Scale AI represents a strategic "picks-and-shovels" approach to the artificial intelligence revolution. The company provides essential data labeling and annotation services across multiple high-growth verticals including autonomous vehicles, AR/VR, and defense applications. Scale AI has successfully expanded beyond its core data labeling business into AI content generation, positioning it to capture value across the AI ecosystem. The investment thesis centers on Scale AI's ability to benefit from AI advancement regardless of which specific foundational models ultimately dominate the market. This technology-agnostic positioning provides diversified exposure to AI growth while reducing single-point-of-failure risk. The company's established relationships with major technology companies and government agencies create multiple revenue streams and competitive moats.

Pitch Summary:
At the beginning of the year, we entered a position in Tempur Sealy, a prominent manufacturer, distributor, and retailer of mattresses, benefiting from the rising consumer demand for premium mattresses. We invested in this high-quality business at a valuation of less than 14 times earnings. Tempur Sealy operates in a fragmented industry, where its market share is nearly twice the size of its closest competitor, and where it holds the majority of the profit pool. This dominant position allows the company to make aggressive investments in defending its barriers to entry, including scale, vertical integration, and brand recognition, facilitating growth beyond industry peers. Notably, its major competitor, Serta Simmons, underwent Chapter 11 restructuring in 2023, and a substantial portion of the industry is grappling with cash flow issues. The combination of these factors, along with robust cash flow generation and a management team aligned with shareholders, provides a solid margin of safety for our investment.

BSD Analysis:
RIT's investment in Tempur Sealy capitalizes on the company's dominant market position in the fragmented mattress industry. The manager acquired shares at an attractive valuation of less than 14x earnings, reflecting the market's underappreciation of the company's competitive advantages. Tempur Sealy's market share is nearly double that of its closest competitor, giving it significant pricing power and profit pool control. The company benefits from multiple barriers to entry including scale advantages, vertical integration, and strong brand recognition. Industry consolidation opportunities have emerged as major competitor Serta Simmons filed for Chapter 11 bankruptcy in 2023, while other industry players face cash flow challenges. Strong cash flow generation and management alignment with shareholders provide additional downside protection for the investment.

Pitch Summary:
One fertile area for exploring market inefficiencies is event-driven stocks, exemplified by our recent investment in Talen Energy, a US power utility company. We initiated this investment after the company emerged from bankruptcy in 2023, driven by our belief in the substantial unrecognised value of its nuclear power plant, conventional gas power plants, and datacentre assets, that together provide a significant margin of safety for our investment. The company is a major beneficiary of the US government's decision to endorse the role of nuclear energy in supplying carbon-free baseload power. The US Inflation Reduction Act, enacted while Talen Energy was in bankruptcy, provides a floor to revenues for nuclear power plants, which means we have high conviction in the minimal downside risk for Talen Energy from our point of entry. Moreover, the management team is well aligned with shareholder interests in optimising the value of the investment.

BSD Analysis:
RIT's investment in Talen Energy represents a compelling event-driven opportunity following the company's emergence from bankruptcy in 2023. The manager identifies substantial unrecognized value in Talen's diversified power generation assets, including nuclear, conventional gas, and datacenter facilities. The investment thesis is underpinned by favorable regulatory tailwinds, particularly the US Inflation Reduction Act which provides revenue floors for nuclear power plants. This regulatory support significantly reduces downside risk from RIT's entry point. The company benefits from the government's strategic endorsement of nuclear energy as a carbon-free baseload power source, positioning it well for the energy transition. Management alignment with shareholder value creation provides additional confidence in the investment's potential.

BSD Analysis:
ENFN provides modern order execution management and portfolio accounting solutions targeting the large, disruption-ready asset management market dominated by legacy technology providers. The company faced headwinds as its core hedge fund client base experienced challenges, but new management has implemented turnaround initiatives focused on customer success, product innovation, and market expansion. Early progress in 2023 demonstrates the effectiveness of these strategic changes, positioning the company for healthy revenue growth and margin expansion. The addressable market remains large and underserved by modern technology solutions. NCG believes continued execution on the turnaround strategy could drive significant value creation as the business becomes more resilient and diversified.

BSD Analysis:
VCYT has leading diagnostic tests in thyroid and prostate cancer markets, with new management having solidified strategy around areas with strong growth potential and differentiated offerings. NCG is re-entering after previously selling due to acquisition uncertainty and management turnover, now seeing clearer strategic direction. The company maintains strong growth potential in core thyroid and prostate cancer markets while developing a healthy pipeline of future tests. VCYT operates profitably with a strong balance sheet supporting growth ambitions, providing financial flexibility for continued innovation. The combination of established market positions, pipeline development, and solid financial foundation creates multiple pathways for value creation in the growing molecular diagnostics market.

BSD Analysis:
PDFS provides market-leading advanced analytics for the semiconductor supply chain, helping customers improve process efficiency and product reliability. The company's solutions become more valuable as semiconductor complexity increases, benefiting from long-term industry trends toward advanced chip architectures. A strategic transition to recurring revenue models has generated strong, consistent growth with healthy margins and cash flow profiles. The company maintains a strong competitive position in its core market while developing a pipeline of new solutions that could expand the growth opportunity. NCG views this as a high-quality technology play with defensive characteristics and multiple growth vectors in the critical semiconductor ecosystem.

BSD Analysis:
SEMR provides online visibility management software that helps businesses drive awareness and website traffic, becoming increasingly critical as commerce shifts online. The company employs an efficient product-led growth strategy, allowing prospects to use free versions before upgrading to full functionality, which drives cost-effective customer acquisition. NCG is re-entering after previously selling due to growth concerns, now seeing stabilized growth and improved profitability trends. The attractive valuation relative to strong growth prospects creates compelling risk-reward dynamics. Recent operational improvements and the continued shift toward digital marketing create favorable tailwinds for sustained growth in this large addressable market.

BSD Analysis:
ALKT is gaining market share from legacy competitors by providing modern digital banking solutions that help credit unions and banks compete with larger financial institutions. The company's enhanced features and modern architecture address critical needs for customer attraction and retention in an increasingly digital banking environment. Despite being part of the challenged 2021 IPO class, ALKT has delivered solid fundamentals including 25%+ revenue growth and positive cash flow generation. The stock remains significantly below IPO levels despite strong operational performance, creating an attractive valuation opportunity. NCG believes continued execution on the growth opportunity could drive substantial value creation as the company scales its modern platform.

BSD Analysis:
CCS is well-positioned to capitalize on favorable housing demographics and constrained existing home inventory, as many homeowners remain locked into below-market mortgage rates. The company's focus on entry-level buyers targets a large, underserved market segment with strong demand fundamentals. CCS benefits from financial strength that enables mortgage rate buydowns for prospective buyers, providing competitive advantage in the current high-rate environment. The company has demonstrated operational excellence with healthy margins and strong return on equity metrics. NCG sees this as a quality homebuilder positioned to capture market share in an attractive demographic-driven market with structural supply constraints.

BSD Analysis:
FWRG differentiates itself in the competitive restaurant space through innovative daytime-focused menus featuring fresh, quality ingredients combined with exceptional service execution. The unique single-shift operating model drives superior service quality while generating attractive unit-level economics compared to traditional full-service restaurants. With over 500 locations established and potential for 2,000+ US restaurants, the company has significant runway for geographic expansion. The focus on breakfast, brunch, and lunch creates a defensible niche with less competition than dinner-focused concepts. NCG views this as a scalable restaurant concept with proven unit economics and substantial growth potential in an attractive market segment.

BSD Analysis:
AUGX addresses critical healthcare pain points of clinician burnout and patient dissatisfaction by automating medical documentation, allowing doctors to focus on patient care rather than administrative tasks. The company has delivered strong growth with current solutions while developing enhanced AI-powered offerings that could fully automate documentation processes. This technological advancement could significantly expand the addressable market and growth opportunity. The solution directly tackles major healthcare industry challenges, positioning AUGX to benefit from increasing demand for efficiency tools. NCG sees substantial potential as the company scales its AI capabilities and expands market penetration in a large, underserved market.

BSD Analysis:
ACVA is disrupting the traditional wholesale used vehicle auction market by transitioning from physical to digital marketplace operations. The company has methodically built a two-sided marketplace that creates value for both buyers and sellers through innovative features and competitive pricing. Consistent market share gains each year demonstrate the platform's effectiveness, while the business approaches profitability inflection. NCG believes continued execution could drive sustained high growth while establishing strong competitive moats. The digital transformation of a traditionally offline market presents significant long-term opportunity. This represents a classic marketplace disruption story with improving fundamentals and clear path to profitability.

BSD Analysis:
DCBO is gaining market share in the learning management system space through its unique dual-platform approach serving both traditional internal training and high-demand external use cases. The company's competitive advantage lies in addressing greenfield external applications, an area of increasing strategic importance for enterprises. NCG expects sustained strong revenue growth driven by product innovation, competitive disruption, and expanded distribution capabilities. The platform's versatility positions DCBO to capture share in a fragmented market while expanding margins and cash flow generation. This represents a differentiated SaaS play with multiple growth drivers and improving unit economics in an attractive end market.

BSD Analysis:
NCG is re-entering CSTL after previously selling due to acquisition uncertainty, now viewing the deals as value-accretive. The core skin cancer franchise continues delivering solid volume growth while remaining significantly under-penetrated across all markets. The manager expects sustained growth momentum with a path to cash flow breakeven by 2025. Valuation compression over three years has created an attractive entry point, while the company's strong balance sheet supports continued growth investments. The diversified test portfolio spanning skin cancer, esophageal cancer, and mental health provides multiple growth vectors. This represents a quality growth story in medical diagnostics with improving fundamentals and reasonable valuation.

Pitch Summary:
Tandem Diabetes Care (TNDM) offers a next-generation insulin pump for patients with diabetes. TNDM is a company we have owned in the past but sold as they went through a period of slowing growth rates due to a lack of product innovation. With 4 new product launches expected in 2024, the stage is set for a reacceleration of growth in this large and growing end market. With expectations low and valuation depressed from historical averages, we believe there is room for upside if TNDM can deliver on their 2024 guidance and the new products rollout as expected.

BSD Analysis:
NCG is re-entering TNDM after previously exiting due to slowing growth from lack of innovation. The manager sees a compelling turnaround opportunity driven by four new product launches expected in 2024, which should reignite growth in the large diabetes market. The investment thesis centers on a product cycle inflection point that could drive revenue reacceleration. With low expectations and compressed valuations providing downside protection, the risk-reward appears favorable. The manager believes successful execution of the 2024 product roadmap and guidance delivery could drive significant upside. This represents a classic turnaround play in a company with proven capabilities in a growing end market.

Pitch Summary:
Castle Bioscience (CSTL) is a medical diagnostics company with a portfolio of tests addressing skin cancer, esophagus cancer, and mental health. CSTL is another name we have owned in the past, with our sale due to uncertainty regarding their acquisition activities. Since that time, their skin cancer franchise has continued to deliver solid volume growth and the acquisitions have turned out to be solid contributors to the growth of the business. The company remains under-penetrated in all their markets, so we believe growth should remain solid. Valuation has compressed significantly over the last three years, and we believe they have the balance sheet strength to continue driving growth while moving toward cash flow breakeven in 2025.

BSD Analysis:
NCG re-entered CSTL after previously selling due to concerns about the company's acquisition strategy. The manager's renewed confidence stems from the successful integration and contribution of those acquisitions to business growth. The core skin cancer franchise continues delivering solid volume growth, validating the underlying business strength. NCG emphasizes CSTL's significant under-penetration across all target markets, providing substantial runway for continued expansion. The investment thesis is enhanced by compressed valuations over the past three years, creating an attractive entry point. The manager believes CSTL's strong balance sheet positions it well to fund growth initiatives while progressing toward cash flow breakeven in 2025. This represents NCG's confidence in CSTL's diversified diagnostic portfolio spanning skin cancer, esophageal cancer, and mental health. The combination of market under-penetration, successful acquisitions, and attractive valuation creates a compelling growth opportunity.

Pitch Summary:
Tandem Diabetes Care (TNDM) offers a next-generation insulin pump for patients with diabetes. TNDM is a company we have owned in the past but sold as they went through a period of slowing growth rates due to a lack of product innovation. With 4 new product launches expected in 2024, the stage is set for a reacceleration of growth in this large and growing end market. With expectations low and valuation depressed from historical averages, there is room for upside if TNDM can deliver on their 2024 guidance and the new products rollout as expected.

BSD Analysis:
NCG re-initiated a position in TNDM after previously exiting due to slowing growth from limited product innovation. The manager's renewed interest stems from four new product launches planned for 2024, which should drive growth reacceleration. The investment thesis centers on TNDM's next-generation insulin pump technology in the large and expanding diabetes care market. NCG views current expectations as low and valuation as depressed relative to historical levels, creating an attractive risk-reward setup. The manager believes successful execution of the 2024 product roadmap could drive significant upside given the reset expectations. This represents a turnaround story where NCG is betting on renewed innovation driving growth recovery. The timing appears favorable as the company emerges from its innovation lull with multiple new products ready for market. NCG's familiarity with TNDM from previous ownership provides confidence in the company's execution capabilities.

Pitch Summary:
Clearwater Analytics Holdings (CWAN) provides a software platform to simplify investment accounting and analytics for asset managers, insurance companies, and corporations. The company has been gaining share in a fragmented and large end market, and is currently generating around $400m in revenue of a targeted multibillion dollar end market opportunity. CWAN was part of the 2021 IPO class – many of these companies came public at high valuations and with high expectations, and then experienced poor stock performance. CWAN delivered solid fundamentals throughout that period, most recently experiencing >20% revenue growth and 30% EBITDA margins in Q3'23, but the stock has not done much since the IPO. With a more attractive valuation now, we believe there is opportunity for compounding of company value ahead.

BSD Analysis:
NCG added CWAN as a new position, attracted by its strong fundamentals despite poor stock performance since its 2021 IPO. The manager emphasizes CWAN's market share gains in the large, fragmented investment accounting and analytics market. With $400 million in current revenue targeting a multibillion-dollar addressable market, CWAN has significant expansion potential. NCG highlights the company's solid execution during the challenging post-IPO period, delivering over 20% revenue growth and 30% EBITDA margins. The investment thesis centers on the disconnect between strong operational performance and depressed valuation. The manager believes CWAN's consistent fundamental execution positions it well for value compounding as market sentiment improves. This represents a classic NCG investment in a quality growth company trading at an attractive valuation due to broader market conditions rather than company-specific issues.

Pitch Summary:
Natera (NTRA) is a leader in cell-free DNA diagnostics, primarily dedicated to oncology, women's health, and organ health. Their goal is making personalized genetic testing and diagnosis part of the standard of care to drive earlier and targeted interventions to improve patient outcomes. NTRA has developed a leadership position with tests like Signatera in oncology, Panaroma for NIPT (non-invasive prenatal testing), and Prospera for organ transplant assessment. Signatera addresses a newer area of oncology testing called MRD (minimum residual disease), which is experiencing significant growth and in which NTRA has an early mover advantage. After years of heavy investment to drive revenue growth, NTRA continues to deliver solid topline growth and is now on the cusp of being cash flow positive.

BSD Analysis:
NCG initiated a position in NTRA based on its leadership in cell-free DNA diagnostics across multiple high-growth healthcare segments. The manager highlights NTRA's strong competitive positioning in oncology through Signatera, women's health via Panorama, and organ health with Prospera. The investment thesis particularly emphasizes NTRA's early mover advantage in minimum residual disease (MRD) testing, a rapidly growing oncology segment. NCG views NTRA's mission of making personalized genetic testing standard of care as a significant long-term opportunity. After years of heavy R&D investment, the company continues generating solid revenue growth while approaching cash flow breakeven. The manager believes NTRA's diversified test portfolio across three major healthcare verticals provides multiple growth drivers. This positioning in personalized medicine aligns with broader healthcare trends toward precision diagnostics and earlier intervention.