Investment Pitches

Pitch Summary:
Our most significant newish holding is Logistec Inc. The fund has maintained a small investment in the company for a few years now, but I elected to increase our holdings meaningfully in response to a promising development in May. Logistec is one of Canada's most successful public companies. It has the extraordinary distinction of being profitable every year for 50+ years, with no indication the streak is about to end. Logistec's main business is operating terminals at dozens of ports in Eastern Canada and the US. Simply put, this is a great business. Logistec enjoys strong pricing power and consistent demand for its services. Logistec's other segment is a profitable environmental services business that remediates polluted industrial sites and aging municipal water systems. Despite its track record of profitability and growth, Logistec struggled in recent years to attract the market's attention. Despite nearly doubling its earnings since 2018, its shares would not move. The company tried various means of highlighting its successes. It initiated quarterly earnings calls and published an investor presentation for the first time. No luck. The company was simply too small and its shares too illiquid for the market to capitalize the company properly in the short run. So in late May, Logistec's controlling shareholder (a company controlled by the daughters of the founder) contacted the board of directors to inform the company it was seeking a means of disposing of its shares. The company responded by initiating a sales process. I believe Logistec shares are worth in excess of $100 and that the company will achieve a sale price of at least $90 per share. This would represent a multiple of 10x 2022 EBITDA and ~9x 2023 EBITDA, accounting for a recent acquisition and improving results at both company segments. There is a strong appetite for port-related assets from infrastructure investors and pension funds. (Indeed, the Caisse de Depot et Placement du Quebec is a large existing holder of Logistec shares and is surely kicking the tires.) The presence of the smaller, less attractive environmental services business is a complicating factor, but a separate buyer can no doubt be found if necessary. While the timeline is uncertain, I would expect an announcement of some type before year-end. Even if no deal materializes, downside is limited by Logistec's modest valuation and the knowledge that the company is for sale. The fund was an enthusiastic purchaser of Logistec shares in the $50s. I remain very confident in our investment as shares sit at $65.

BSD Analysis:
The manager presents a compelling special situation investment in Logistec, a Canadian marine terminal operator with an exceptional 50+ year profitability streak. The investment thesis centers on a catalyst-driven opportunity following the controlling shareholder's decision to initiate a sales process in May 2023. Despite doubling earnings since 2018, the stock has been undervalued due to its small size and illiquidity, creating an attractive entry point. The manager targets a sale price of $90-100 per share, representing 9-10x EBITDA multiples, which appears reasonable given strong infrastructure investor appetite for port assets. The company's dual revenue streams from marine terminals and environmental services provide diversification, though the environmental segment may complicate valuation. With shares purchased in the $50s and currently trading at $65, the risk-reward profile appears favorable given the announced sale process and limited downside protection from the modest current valuation. The manager's confidence is reinforced by the company's strong fundamentals, pricing power, and consistent demand for port services.

Pitch Summary:
Tractor Supply also detracted from portfolio performance during the quarter. Despite uncooperative weather earlier in the quarter, the Company has executed nearly-flawlessly since the pandemic erupted in 2020. The Company is seeing early signs of a downshift in inflation which should benefit its margins after management made aggressive overhead and price investments for the benefit of employees and customers early in the pandemic. In addition, Tractor Supply continues remodeling its store fleet which increases a store selling space by up to 80%. Because the Company has not participated in the year-to-date rally for all-things-AI, we think shares are becoming more attractive both on a relative and absolute basis and continue to hold Tractor Supply as a core position.

BSD Analysis:
Wedgewood maintains a bullish stance on Tractor Supply despite recent underperformance, emphasizing the company's operational excellence and improving fundamentals. The manager highlights Tractor Supply's near-flawless execution since 2020, demonstrating management's ability to navigate challenging environments. With early signs of inflation moderation, Wedgewood expects margin expansion as the company benefits from previous investments in employee compensation and customer value. The fund views the ongoing store remodeling program as a significant growth driver, with selling space increases of up to 80% per location. The manager sees Tractor Supply's lack of participation in the AI-driven rally as creating attractive relative and absolute valuation opportunities. Wedgewood maintains the position as a core holding based on the company's rural lifestyle market leadership and execution track record. This represents a contrarian value play on specialty retail with margin expansion and store productivity catalysts.

Pitch Summary:
CDW detracted from performance during the quarter as the Company's gross profit slightly declined. Many of CDW's larger customers (by employee base) saw a slowdown in near-term spending as they navigated the banking turmoil earlier this year, in addition to digesting purchases made during the pandemic "omni-office" boom. CDW organizes itself across several end-markets, with each of these end markets at different stages of building out their omni-office presences. In the meantime, the post-pandemic IT environment has quickly evolved from supply scarcity (due to vendor shortages and strong demand) where CDW flexed its balance sheet to ensure inventory availability, to more recently helping customers manage never before seen levels of complexity related to a work-from-everywhere workforce. CDW's outstanding returns on capital, cheap multiple, and mission-critical functions it offers to vendors and customers continue to be an attractive risk-reward for portfolios.

BSD Analysis:
Wedgewood maintains a bullish view on CDW despite near-term headwinds, emphasizing the company's strategic value and attractive valuation. The manager attributes recent weakness to temporary factors including banking sector turmoil and customer digestion of pandemic-era IT purchases. Wedgewood highlights CDW's evolution from managing supply scarcity during the pandemic to now helping customers navigate unprecedented workforce complexity in the work-from-everywhere environment. The fund views CDW's diversified end-market exposure as providing multiple growth vectors as different sectors progress through omni-office buildouts at varying paces. The manager emphasizes CDW's outstanding returns on capital, compressed valuation multiple, and mission-critical role for both vendors and customers. This represents a contrarian value play on IT services and distribution, betting on CDW's ability to capitalize on ongoing digital transformation and hybrid work trends.

Pitch Summary:
Texas Pacific Land Corp also detracted from performance during the quarter. Oil and gas production on the Company's royalty interests were up slightly year over year while water-related and surface revenues surged +35%. The Company's holdings span nearly 880,000 acres in West Texas. Most of this land is located in the highly productive Delaware Basin of the Permian Basin. Although oil and gas prices will always be volatile over the short-term, we expect development activity on their acreage will grow at a solid pace, primarily driven by both domestic and multinational producers looking to maximize returns on increasingly scarce oil and gas capital expenditures.

BSD Analysis:
Wedgewood maintains a bullish stance on Texas Pacific Land despite recent underperformance, emphasizing the company's strategic land position and diversified revenue streams. The manager highlights strong water and surface revenue growth of 35%, demonstrating the value of TPG's non-royalty income sources. With nearly 880,000 acres in the highly productive Delaware Basin of the Permian, TPG owns premium acreage in one of North America's most prolific oil and gas regions. While acknowledging short-term oil and gas price volatility, Wedgewood expects sustained development activity driven by capital discipline among producers seeking maximum returns. The fund views TPG as benefiting from the scarcity value of prime Permian acreage as both domestic and international operators compete for high-return drilling locations. This represents a long-term play on Permian Basin development and resource scarcity in premium shale locations.

Pitch Summary:
PayPal was the leading detractor from performance during the quarter. Total payment volume grew +12% (foreign exchange neutral) while revenues grew +10% (FX-neutral) and adjusted operating earnings grew +19%. E-commerce industry sales trends have normalized back to their pre-pandemic trend of growth, with high-margin branded payments keeping track with the industry. Despite this, investors were concerned PayPal's fast growing, private label payments solutions will dilute Company returns. However, payments are a very scalable business, and we expect the Company will be able to manage both private label and branded to achieve attractive returns and double-digit growth. Although multiples in the payment industry have compressed, especially after the multi-year process of being added to the financial sector, PayPal's businesses are substantially different enough from traditional spread-based businesses, in addition to having much more compelling growth drivers, that PayPal's well-below market multiple should revert to its higher, historical average.

BSD Analysis:
Wedgewood maintains a bullish view on PayPal despite recent underperformance, emphasizing strong fundamental growth metrics. The manager highlights solid operational performance with 12% payment volume growth, 10% revenue growth, and 19% adjusted operating earnings growth. While investors worry about margin dilution from private label payment solutions, Wedgewood believes PayPal's scalable business model can manage both branded and private label offerings profitably. The fund views e-commerce normalization as positive for PayPal's high-margin branded payments business. Wedgewood argues PayPal's business model differs significantly from traditional financial services, warranting a premium valuation multiple. The manager expects PayPal's compressed valuation to revert to historical averages given superior growth drivers compared to spread-based financial businesses. This represents a contrarian value play on digital payments leadership and multiple expansion potential.

Pitch Summary:
Microsoft also contributed to performance during the quarter. Revenues grew +10% (foreign exchange adjusted) whereas operating income grew +14%, helped by +18% growth in Office365 and 31% growth in Azure and other cloud services. Although the Company guided to a deceleration in its core businesses, Microsoft has ample opportunity to drive attractive double-digit growth over a multi-year timeframe. We recognize investors have disproportionately favored software and tech stocks year to date, driving multiples to relative and historical highs. As a result, we paired some of our weighting in Microsoft earlier in the year; however, it remains a core position in portfolios.

BSD Analysis:
Wedgewood maintains a bullish stance on Microsoft despite acknowledging elevated valuations in the software sector. The manager highlights strong operational performance with 10% revenue growth and 14% operating income growth, driven by robust Office365 (+18%) and Azure (+31%) expansion. While management guided to some deceleration in core businesses, Wedgewood believes Microsoft can sustain attractive double-digit growth over multiple years. The fund acknowledges the year-to-date outperformance of software stocks has driven multiples to historical highs, prompting position trimming. However, Microsoft remains a core holding based on its cloud leadership and productivity software dominance. The thesis centers on Microsoft's ability to capitalize on digital transformation trends through its integrated software and cloud platform. This represents a quality growth play on enterprise software and cloud computing adoption.

Pitch Summary:
Copart helped contribute to portfolio performance during the quarter. Gross profit rose +11% and operating income grew +12% as the Company benefitted from a combination of a reversion of automobile total loss frequency to levels closer to pre-pandemic levels, as well as continued share gains at U.S. automobile insurance customers. As vehicles, particularly in the U.S., become ever more sophisticated and complex, they become more difficult and expensive to repair. If a vehicle can't be repaired, Copart's auctions are the destination of choice for the lion's share of insured vehicles that are declared total losses. Copart should continue to benefit from this long-term trend, especially as insurers struggle with their own labor retention issues, which we think will incentivize them to utilize more of Copart's ancillary salvage processing services. We continue to hold Copart as a core position, as its high returns on capital from its dominant competitive positioning should be sustainable over time.

BSD Analysis:
Wedgewood presents a compelling bull case for Copart based on secular automotive trends and market dominance. The manager highlights strong operational performance with 11% gross profit growth and 12% operating income growth, driven by normalizing total loss frequencies and market share gains. The fund's thesis centers on increasing vehicle complexity making repairs more expensive, thereby increasing total loss rates and benefiting Copart's auction platform. Wedgewood views Copart as the dominant destination for insured total loss vehicles, creating a sustainable competitive moat. The manager expects insurers' labor retention challenges to drive increased utilization of Copart's ancillary services, expanding revenue opportunities. The fund maintains Copart as a core holding based on high returns on capital and durable competitive positioning. This represents a long-term structural play on automotive complexity and insurance industry dynamics.

Pitch Summary:
Alphabet was also a top contributor to performance as revenues returned to year-over-year growth after a brief period of post-pandemic advertising spending digestion. The Company's Cloud division also turned a small profit on a roughly $30 billion revenue run-rate. The Company's internal engineering prowess should continue to drive longer hardware useful life and better profitability for this unit over time. Alphabet and its Google subsidiary have been pioneers in AI development, creating some of the most important software and hardware specifications and standards that developers rely on today. Alphabet should be able to continue to capitalize on its long-term AI investments by rolling out product improvements for users and advertisers featuring more automation that can deliver better returns.

BSD Analysis:
Wedgewood maintains a bullish view on Alphabet, citing the company's return to revenue growth following post-pandemic advertising normalization. The manager highlights Google Cloud's achievement of profitability on a $30 billion revenue run-rate, demonstrating the unit's improving economics. Wedgewood emphasizes Alphabet's pioneering role in AI development, noting the company's creation of fundamental software and hardware standards used across the industry. The fund expects Alphabet's engineering capabilities to drive operational improvements and margin expansion in Cloud over time. The thesis centers on Alphabet's ability to monetize long-term AI investments through enhanced automation for both users and advertisers. The manager views Alphabet as well-positioned to capitalize on AI trends given its foundational research and development. This represents confidence in Alphabet's AI leadership and cloud profitability trajectory.

Pitch Summary:
Apple contributed to positive performance during the quarter despite declining revenues and operating earnings mostly driven by difficult comparisons in its Mac segment. iPhone sales grew as supply chain bottlenecks seem to be in the rearview mirror, with component prices falling. The Company also highlighted the torrid growth of its App Store ecosystem, which saw over $1.1 trillion in billings on the platform during 2022, more than double the billings in 2019. Apple has tremendous leverage across the mobile economy due to the App Store's mission-critical relevance to both developers and users. We continue to hold Apple as a top weighting in the portfolio because this asset-light ecosystem drives sustainably high returns on invested capital.

BSD Analysis:
Wedgewood presents a comprehensive bull case for Apple, emphasizing the company's ecosystem dominance and capital efficiency. The manager highlights the App Store's explosive growth, reaching $1.1 trillion in billings in 2022, demonstrating Apple's leverage across the mobile economy. Despite near-term revenue headwinds in Mac sales, iPhone growth is recovering as supply chain issues resolve. The fund values Apple's asset-light business model, particularly the high-margin services ecosystem that generates sustainable returns on invested capital. Wedgewood views the App Store as mission-critical infrastructure for both developers and users, creating powerful network effects. The manager maintains Apple as a top portfolio weighting based on the durability and scalability of its ecosystem. This represents a long-term conviction play on Apple's platform dominance and services monetization.

Pitch Summary:
Meta Platforms was the top contributor to performance during the quarter. The Company managed to grow adjusted expenses more in line with revenue growth, which helped re-establish managements credibility with investors with respect to future profitability and returns. The Company also guided to accelerated revenue growth as product investments are beginning to bear fruit relative to easier comparisons from a year ago. Meta has been at the forefront of investing in some of the most valuable artificial intelligence IP extant, particularly with its ranking and recommendation systems that are in use across its suite of user-facing products and advertiser-facing tools. Despite the recent frenzy of attention around "Gen-AI," Meta has been researching and developing generative-AI tools for years, so we don't expect to see a large ramp up in expenses around this phenomenon. Although we trimmed Meta as positions reached our maximum weighting, it ended the quarter as our largest holding.

BSD Analysis:
Wedgewood maintains a bullish stance on Meta Platforms, highlighting the company's improved expense discipline and credibility restoration with investors. The manager emphasizes Meta's long-standing AI investments, particularly in ranking and recommendation systems that power both user-facing products and advertiser tools. The fund views Meta as well-positioned for the generative AI trend without requiring significant expense increases, given years of prior research and development. Despite trimming the position due to portfolio weighting limits, Meta remains their largest holding. The thesis centers on Meta's AI leadership, operational efficiency improvements, and accelerating revenue growth as product investments mature. The manager appears confident in Meta's ability to monetize its AI capabilities across its ecosystem. This represents a conviction play on Meta's transformation and AI-driven growth potential.

Pitch Summary:
We initiated a position in Charles River Labs in Q3. CRL is a high-quality company in the drug discovery and development outsourcing space with a broad range of services from basic research to contract manufacturing. The company has operating margins of 20% or more and generates substantial free cash flow. The past few years have been challenging for companies in the drug development space, as capital has become increasingly constrained and research and development spending has remained stagnant. However, CRL has the operating history and mix of businesses to be successful over the long term. The customer base is diverse and CRL benefits from the increased dynamics of outsourcing by its biopharmaceutical clients. The company's top line has grown at a 12% compound annual rate over the last 10 years, even with the recent downturn. Management is solid, and we've known them for decades. We believe Charles River's earnings power can reach approximately $15 in 2028, assuming modest growth. We also use a sum of the parts at ~12x EBITDA (earnings before interest, taxes, depreciation, and amortization) to assess the attractiveness of CRL. This implies an intrinsic value of $228. Importantly, we think we are being conservative, as we don't build in a resumption of double-digit revenue growth in our valuation framework. However, we anticipate revenue growth of 4% from 2024 to 2028 and a modest margin recovery, aided by restructuring and cost-outs.

BSD Analysis:
Madison initiated a position in Charles River Laboratories, recognizing it as a high-quality leader in drug discovery and development outsourcing with operating margins exceeding 20% and strong free cash flow generation. Despite recent challenges from constrained biotech funding and stagnant R&D spending, the fund managers believe CRL's diversified service offering and customer base position it well for long-term success. The company has demonstrated resilience with 12% compound annual revenue growth over the past decade, even through the current downturn. Madison values management's long-term track record and expects the outsourcing trend to continue benefiting CRL as biopharmaceutical companies seek cost efficiencies. The fund's conservative valuation framework projects $15 in earnings power by 2028 with modest 4% annual revenue growth and margin recovery through restructuring. Using a sum-of-the-parts analysis at 12x EBITDA, Madison derives an intrinsic value of $228 per share, suggesting meaningful upside without assuming a return to double-digit growth rates.

Pitch Summary:
Small cap initiated on Eagle Materials, a leading U.S. manufacturer of heavy construction materials such as Portland cement, concrete, and aggregates, and light building materials such as wallboard and recycled paperboard. We view Eagle as an excellent company with very attractive financial traits. EXP aligns well with our preference for high-quality holdings, given its strong margins, high return on invested capital (ROIC), and return on equity (ROE). With the residential construction cycle in a prolonged downturn, we see this as a timely opportunity to invest in Eagle. Demand for wallboard has been declining for several years, and operating rates for the industry are in the 70s, which means they have a lot of excess capacity. Investors, while somewhat mollified by the resiliency of the business, have lost patience with many construction-exposed names. During the downturn, Eagle has gained market share due to its geographical footprint and cost-competitive wallboard assets. Further, we believe we are close to a bottom in residential construction demand, and at this price, we are willing to be patient for the cycle to turn. Management is excellent and allocates capital very judiciously with copious share buybacks. Our current intrinsic value estimate does not assume meaningful margin expansion and has relatively conservative buyback assumptions. We calculate intrinsic value at $269/share.

BSD Analysis:
Madison initiated a position in Eagle Materials, viewing it as a high-quality cyclical play in construction materials with attractive financial metrics including strong margins, high ROIC, and ROE. The investment thesis is predicated on a cyclical bottom in residential construction, with wallboard industry operating rates in the 70s indicating significant excess capacity. Madison believes Eagle has gained market share during the downturn through its superior geographical footprint and cost-competitive assets. The fund managers appreciate management's disciplined capital allocation through aggressive share buybacks, which should enhance returns as the cycle recovers. With residential construction demand potentially bottoming, Madison sees this as an opportune entry point for a patient capital approach. The company's resilient business model has maintained investor confidence despite prolonged construction weakness. Madison's intrinsic value estimate of $269 per share incorporates conservative assumptions on margin expansion and buyback activity, suggesting substantial upside potential.

Pitch Summary:
The small cap team initiated a new investment position in Hexcel Corporation. Hexcel is a global leader in advanced composite materials, specializing in the production of carbon fiber reinforcements, resin systems, and honeycomb structures. These materials are critical for lightweight, high-performance applications, particularly in the commercial aerospace, space, and defense sectors. Hexcel's products are used in aircraft frames, wings, engines, and other structural components, offering strength and durability while significantly reducing weight. Major clients include aerospace giants like Airbus and Boeing. We like the duopoly market structure and deep moats of Hexcel's business. The cycle has been in a prolonged downtrend due to the COVID supply chain shocks, creating bottlenecks in engines and the struggles of Boeing and Spirit Aerosystems. We believe these headwinds are now largely behind us. The competitive moats in this business are significant. Capital intensity is relatively high, while incumbency and vertical integration provide a huge competitive advantage. Certification in wing and fuselage requires massive regulatory approval, which leads to even higher switching costs. Furthermore, the industry has a benign competitive structure, with Japanese firm Toray being the only other direct, scaled composite material competitor, having a combined share in wing and fuselage that approaches 90% and holding sole-sourced positions with original equipment manufacturers (OEMs). We believe the intrinsic value for this franchise is $85.

BSD Analysis:
Madison initiated a position in Hexcel Corporation, viewing it as a compelling opportunity in advanced composite materials for aerospace applications. The fund managers appreciate the duopoly market structure with Toray as the only other scaled competitor, creating significant competitive moats through high capital intensity, vertical integration, and regulatory barriers. The investment thesis centers on a cyclical recovery from COVID-related supply chain disruptions that have pressured Boeing and Spirit Aerosystems. Madison believes these headwinds are largely resolved, positioning Hexcel for a recovery. The company's products are mission-critical for aircraft structural components, creating high switching costs due to extensive certification requirements. With combined market share approaching 90% in wing and fuselage applications and sole-sourced positions with OEMs, Hexcel enjoys strong pricing power. Madison's intrinsic value estimate of $85 per share suggests meaningful upside potential from current levels.

Pitch Summary:
Warrior Met produces met coal which is used for steelmaking. They are a largely export driven producer (97%) with a large cost advantage as they can ship to Europe and South America in ~2 weeks versus Australian competition of ~5 weeks. Some rough math on HCC (quarter-end price of $39 and market cap of ~$2BB and $0 net debt) • They have a current project coming online in 3 years with an estimated value of $1BB or $19 per share per management. I use a more modest discount rate and operating cash flow as the future is tough to know and get to $300-$500MM or $6-$9 per share. • Excess cash of $5 per share • The existing business requires $100MM in capex and generates midcycle operating cash flow of $500MM.... resulting in ~$8 in FCF per share. Some believe this number is closer to $800-$900MM per year. Let's presume non-heroic FCF yield of 15-20% on $500MM = $40-$53 per share • New project of $6/$9 + Excess Cash of $5 + Operating business $40/$53 per share = $51-$67 per share vs. current price of $39 Note the above is a very rough calculation and shows the wide margin of safety baked in the price. We may decide the operating business is worth more than a 15-20% yield…. but for now, we do not have to make any big leaps with respect to valuation. The Company has not been active in the share repurchase market to preserve their NOL's (avoid triggering a change in control). As the NOL's are used up in the coming 12 months they should be able to aggressively repurchase stock and significantly increase the intrinsic value per share.

BSD Analysis:
The manager presents a detailed sum-of-the-parts valuation for Warrior Met Coal, highlighting significant undervaluation with shares trading at $39 versus estimated intrinsic value of $51-67. The company benefits from substantial competitive advantages including 97% export focus and superior logistics with 2-week shipping times to Europe/South America versus 5 weeks for Australian competitors. The investment thesis combines current cash generation from existing operations ($8 FCF per share), excess cash ($5 per share), and a major development project valued conservatively at $6-9 per share. With zero net debt and mid-cycle operating cash flow of $500MM, the existing business alone justifies current valuation at 15-20% FCF yield. The upcoming utilization of NOLs should unlock aggressive share repurchases, further enhancing per-share value creation. The manager emphasizes the wide margin of safety and conservative assumptions underlying the valuation framework.

Pitch Summary:
Paramount is an ENP (exploration and production) in the energy space. It has no debt and ~$580MM in cash/securities (14% 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's bull thesis on Paramount Resources emphasizes the company's exceptional balance sheet strength with zero debt and $580 million in cash representing 14% of market capitalization. The significant management ownership of 47% ensures strong alignment with shareholders and reduces agency risk. The investment offers compelling risk-adjusted returns with 9-10% annual free cash flow yield even under bearish energy price assumptions. The manager believes this represents a conservative baseline as China's reopening and global underinvestment in energy development should support higher commodity prices. The debt-free structure provides significant downside protection while positioning the company to capitalize on energy market opportunities. With substantial cash reserves and aligned management, Paramount appears well-positioned to generate superior returns through the energy cycle while maintaining financial flexibility for opportunistic investments or shareholder returns.

Pitch Summary:
CONSOL Energy is an American energy company focused on the coal sector. The business has undergone a shift from being a majority producer of coal for domestic energy purposes to an export-driven producer of coal for non-power generation purposes. Over the last few years, the Company has delevered to a near-zero net-debt position and is trading at a 25-30% unlevered free cash flow. While there is a negative stigma associated with coal (and some deserved) there are parts of the world that have limited energy alternatives and will require coal supply over the coming years. I expect the company to commit a large amount of the free-cash-flow to buying in cheap stock and the per share intrinsic value to grow substantially over the next 3 years.

BSD Analysis:
The manager presents a contrarian bull case for CONSOL Energy based on its strategic transformation from domestic thermal coal to export-focused non-power generation coal markets. The company's deleveraging to near-zero net debt provides significant financial flexibility and reduces execution risk. Trading at 25-30% unlevered free cash flow yield, the valuation appears deeply discounted despite the coal sector's negative sentiment. The investment thesis relies on global energy supply constraints and limited alternatives in certain international markets that will continue requiring coal supply. Management's expected aggressive share repurchase program using abundant free cash flow should drive substantial per-share intrinsic value growth over the next three years. While acknowledging coal's deserved negative stigma, the manager focuses on the company's pivot toward non-power generation applications and export markets where demand remains more resilient.

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 $10-$14 per year. At quarter end pricing of ~$136 that implies a free-cash-flow yield of 7-10%.

BSD Analysis:
The manager's bull thesis on Builders FirstSource centers on the company's successful transformation from a cyclical commodity business to a value-added products provider, with 40%+ of revenue now coming from higher-margin offerings. This strategic shift has enhanced pricing power and reduced cyclicality compared to the historical lumber-focused model. The structural housing shortage in the US provides a compelling long-term tailwind, particularly as existing homeowners remain locked into low-rate mortgages, forcing new buyers toward homebuilders. Management's aggressive capital allocation, retiring over 30% of shares in 18 months, demonstrates confidence and enhances per-share value creation. While acknowledging near-term volatility from higher mortgage rates, the manager views current rates as historically normal rather than elevated. The valuation appears attractive at 7-10% normalized free cash flow yield, providing downside protection while positioning for housing market recovery.

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 10-15% annual yield.

BSD Analysis:
The manager presents a compelling bull case for Asbury Group based on the durability of its parts and services business model, which generates over 50% of profits and provides recurring revenue streams. While acknowledging near-term headwinds from normalizing car margins and rising interest rates, the thesis centers on ABG's structural advantages including its razor-razorblade model that captures both vehicle sales and ongoing service relationships. The manager appreciates the company's transition to an omni-channel model that reduces operating costs and improves customer experience, benefits not recognized by the market. With management aggressively repurchasing shares using free cash flow, the investment offers attractive risk-adjusted returns. The valuation appears compelling at 10-15% free cash flow yield based on normalized earnings of $25-35 per share. The fragmented industry structure provides consolidation opportunities for large, well-capitalized dealers like ABG.

Pitch Summary:
I initiated a position in Cogent Communications, led by Dave Schaeffer, a remarkable founder-operator with technical acumen, astute business sense, and a long-term ownership mindset. Schaeffer has shown a propensity for making transformative bets while effectively managing risk and allocating capital shrewdly. In 1999, Schaeffer secured $500 million to build an affordable, all-fiber internet network. The telecom market's collapse in 2000 allowed Cogent to buy 13 companies, built at an initial cost of $14 billion, for just $60 million. Over the last few decades, Cogent has grown into a $3 billion company, producing $600m in revenue and nearly 40% EBITDA margins. Revenues have increased by 10% annually, and margins have expanded by 200bps annually. As a result, Cogent produces significant cash flow, which it has used to return over $1bn to shareholders; it has repurchased 22% of shares outstanding and increased dividends for the last 41 sequential quarters, with a current dividend yield of ~5.75%. Cogent is a strong business in its current state. However, my interest was piqued by the exceptional potential behind Cogent's recent acquisition of Sprint's former wireline business, which it is purchasing from T-Mobile following the acquisition of Sprint. At its peak, the Sprint business generated an impressive $40 billion in revenue and $16 billion in EBITDA, employing around 70,000 individuals. The initial capital investment to build the network was approximately $20 billion. Unfortunately, due to neglect, the business has declined to about $440 million in revenue, with an EBITDA loss of around $300 million and a workforce of only 1,320 employees. Cogent is buying the business for $1 and will receive ~$760m in payments from T-Mobile over the next 4.5 years to cover expenses while it integrates the company and restores it to profitability. Dave Schaeffer believes he can turn the $300m loss into a $90m profit. The acquisition opens potential new revenue streams that could see the company 3x revenue and 5x free cash flow over the next few years. The market is not crediting the company for the transformational potential of the deal, while the T-Mobile payments significantly de-risk the acquisition.

BSD Analysis:
The manager initiated a position in Cogent Communications based on the transformational potential of its acquisition of Sprint's former wireline business from T-Mobile. The thesis centers on CEO Dave Schaeffer's proven track record of value creation and capital allocation, having built Cogent into a $3 billion company with 40% EBITDA margins and consistent shareholder returns. The Sprint acquisition represents an asymmetric opportunity where Cogent pays $1 for assets that cost $20 billion to build, while receiving $760 million from T-Mobile to fund the turnaround. Schaeffer plans to transform a $300 million EBITDA loss into a $90 million profit by leveraging Cogent's network efficiency and focusing on profitable revenue streams. The deal provides access to wavelength services in a $2 billion addressable market, potentially enabling 3x revenue growth and 5x free cash flow expansion. The manager views this as a classic value creation opportunity where the market hasn't recognized the transformational potential of combining Cogent's operational excellence with Sprint's underutilized fiber infrastructure. Risk mitigation comes from T-Mobile's upfront payments and Cogent's proven integration capabilities.

Pitch Summary:
We believe that the share price gains of Nvidia have been remarkable this year and the past five years that we have owned the shares. The company illustrates our philosophy of owning businesses that we believe are exceptional and run by management teams that can produce uncommon earnings growth consistently over long periods. Nvidia, over the last decade, has entered several growing global markets with its advanced semiconductors, specialized networking equipment and proprietary software. As a result, it has entrenched itself as a leader in each one. Yet some superior companies grow their earnings faster than we or others can foresee and we believe that Nvidia is such a company. Its earnings increased nearly four-fold in five years. When earnings power grows rapidly, investors generally give such businesses very strong valuations. Nvidia has been no exception. Although we think Nvidia is a business whose earnings power will continue to grow rapidly, its valuation has risen considerably, and, as such, we modestly trimmed the holding.

BSD Analysis:
Stewart Asset Management presents a compelling bull case for Nvidia, highlighting the company's exceptional execution across multiple high-growth markets over the past decade. The fund emphasizes Nvidia's leadership position in advanced semiconductors, specialized networking equipment, and proprietary software, which has created strong competitive moats. The manager notes that Nvidia's earnings increased nearly four-fold over five years, demonstrating the company's ability to exceed even optimistic forecasts. This exceptional earnings growth has been driven by Nvidia's strategic positioning in several expanding global markets. While acknowledging that the valuation has become stretched due to recent gains, the fund maintains conviction in Nvidia's long-term earnings power and growth trajectory. The modest trimming of the position reflects prudent portfolio management rather than a change in fundamental thesis. Stewart's five-year holding period and continued ownership despite trimming suggests strong conviction in Nvidia's competitive advantages and growth prospects.