Investment Pitches

Pitch Summary:
Precipio is a microcap specialty cancer diagnostics company offering both molecular assay kits and pathology services. Its core product lines include HemeScreen molecular assays, and IV-Cell Culture media, as well as operating its own clinical laboratory. HemeScreen is a set of proprietary molecular tests for hematologic malignancies (i.e., blood cancers). IV-Cell culture media is a universal cytogenetic culture media used for testing of hematologic cancers (i.e., Leukemia). Both products utilize proprietary chemical assays that have been developed over the years and are kept as trade secrets by the company, providing them protection from anyone trying to copy their products. Precipio's estimated market share remains under 1% of its total addressable market in their current products. Both product end markets are growing within the broader $115B oncology diagnostics market. With the help of their key product distributors, including Thermo Fisher, McKesson, Medline, and Cardinal Health, the company has an excellent path to growth within their current product portfolio and the ability to launch similar new cancer diagnostic products into adjacent markets. The company has been on a multi-year path to get to cashflow and EBITDA breakeven. Through a combination of cost-cutting efforts and scaling efficiencies, they have been able to improve their pathology services gross margins from the mid-20s to the mid-40s over the last 3 years. CEO Ilan Danieli noted in their Q4 2024 results that they are past the point of needing outside capital, saying, "Managing a company that no longer relies on outside capital infusions for its survival enables us to make decisions based on growth and value creation without the constraints imposed by cash conservation concerns." The last three quarters further underscore their progress toward a positive cash flow, in which in each quarter they generated near zero EBITDA. In the last 2 years there have been two industry-related issues that have negatively impacted their business, which seem to be behind the company. Firstly, there was a hack at Change Healthcare, the country's largest clearinghouse which facilitates the majority of insurance billing nationwide. In February of 2024 that hack caused significant billing and payment delays into late 2024 for most healthcare providers in the country. The company relied on Change Healthcare's temporary funding assistance program in 2024 to help stabilize the company's balance sheet. This hack was resolved in late 2024, and the cash flow from payors that Precipio relies on has been fully restored. Secondly, in late 2024, the FDA provided a final rule regulating laboratory development tests (LDTs) as medical devices, which could have negatively impacted the entire diagnostic field's regulatory requirements by imposing extremely stringent, complex and costly regulations on laboratories in the US. This caused significant uncertainty among laboratories as to their ability to purchase assays such as HemeScreen, and as a result, many laboratories placed on hold all efforts to explore new products, impacting Precipio's Products Division growth. The rule was struck down in Q1 by a federal court in Texas, which vacated the rule, making it no longer legally binding. This uncertainty in the industry has been lifted from the company, and shortly after, Precipio saw numerous laboratories resume their interest in the company's products. Precipio currently has "going concern" language in their financial audit due to recurring operating losses and concerns about its ability to meet financial obligations without raising additional capital. This language reflected historical cash burn and uncertainty exacerbated by external disruptions such as the Change Healthcare cyberattack and the FDA ruling. However, in its most recent quarters, the company has demonstrated a meaningful shift toward financial stability, reporting positive operating cash flow and significantly improved revenue performance. On a recent call I had with the company's CEO, Ilan Danieli, he expressed a belief that continued cash flow positivity, combined with cost controls and increased customer demand, strengthens Precipio's financial position and will likely lead to the removal of the going concern language in upcoming filings.

BSD Analysis:
The manager presents a compelling turnaround story for Precipio, a microcap cancer diagnostics company positioned at an inflection point toward profitability. The investment thesis centers on proprietary HemeScreen molecular assays and IV-Cell culture media that address underserved niches in hematologic cancer testing, with trade secret protection providing competitive moats. Key catalysts include recent MolDx Medicare approval expected to generate $1M in annual high-margin revenue, resolution of regulatory overhang from FDA LDT rules, and recovery from Change Healthcare billing disruptions. The company has demonstrated operational leverage with pathology gross margins expanding from mid-20s to mid-40s over three years while approaching EBITDA breakeven. Management's capital discipline is evident through minimal equity raises and performance-based compensation structures. At 1x EV/revenue versus peers trading at 3-11x, the valuation appears compelling if the company executes on its path to sustained profitability and removes going concern language.

Pitch Summary:
Nilorn designs and delivers tags and labels for European clothing brands. The company combines just-in-time delivery with quality design that can elevate the customer's products in the eyes of the end consumer. Management uses free cash flow to grow the business and pay a dividend. The company's returns on capital are about 30%. Nilorn currently trades at an attractive upside-to-downside ratio.

BSD Analysis:
Curreen Capital holds Nilörn Group as a specialized provider of tags and labels for European clothing brands, operating a high-return business model with exceptional capital efficiency. The company's returns on capital of approximately 30% indicate a highly profitable niche business with strong competitive positioning in the fashion accessories market. The manager values the company's combination of just-in-time delivery capabilities with quality design services that add tangible value to customers' products and enhance end-consumer perception. This value-added approach likely creates customer stickiness and pricing power in what could otherwise be a commoditized business. Management's balanced capital allocation between business growth and dividend payments suggests confidence in the sustainability of cash generation while returning excess capital to shareholders. The focus on European clothing brands provides geographic diversification while serving a large and established market. The attractive upside-to-downside valuation combined with the exceptional returns on capital suggests the market may be undervaluing this specialized, high-margin business. This represents a quality small-cap investment in a niche market with strong fundamentals and shareholder-friendly management.

Pitch Summary:
GetBusy provides online document exchange systems—primarily for accountants. GetBusy spun out of Reckon in August 2017, and has continued to grow since then. GetBusy does not earn money, investing through higher expenses to grow its existing businesses and attempting to launch new products. The underlying businesses are profitable and sustainable in the U.K. and U.S.

BSD Analysis:
Curreen Capital maintains a position in GetBusy, a specialized software provider focused on document exchange systems for accounting professionals. The company spun out from Reckon in August 2017 and has demonstrated consistent growth in its core markets since independence. While the company currently operates at a loss due to strategic investments in growth and new product development, the manager emphasizes that the underlying businesses in both the U.K. and U.S. markets are profitable and sustainable. This suggests the current losses are driven by deliberate reinvestment rather than fundamental business model issues. The company's focus on the accounting vertical provides a defensible niche with recurring revenue characteristics and high switching costs. The manager's confidence in the underlying business profitability indicates belief that current growth investments will eventually translate to overall profitability. This represents a growth investment in a specialized software company with proven market traction that is temporarily sacrificing profitability for market expansion and product development. The spinoff structure may have created an overlooked opportunity in a niche but stable market segment.

Pitch Summary:
Frontdoor sells home service plans to homeowners. The company contracts with HVAC and other contractors and dispatches them when customers have problems with one of their major home appliances and systems (furnace, air conditioning, refrigerator, electrical system, etc). Frontdoor spun out of ServiceMaster in October 2018. Frontdoor serves about 2% of U.S. homes, and uses its free cash flow to grow organically, pay down debt, repurchase shares, and more recently – to launch an app that connects service experts with customers on a video chat. Frontdoor currently trades at an attractive upside-to-downside ratio.

BSD Analysis:
Curreen Capital holds Frontdoor as a home service plan provider with significant market penetration opportunity and multiple growth initiatives. The company operates in the large home warranty market, serving approximately 2% of U.S. homes while providing repair and replacement coverage for major home systems and appliances through a network of pre-qualified contractors. Since spinning out from ServiceMaster in October 2018, the company has demonstrated disciplined capital allocation across organic growth, debt reduction, and share repurchases. The manager highlights the company's recent innovation with a video chat app connecting service experts directly with customers, suggesting management's focus on technology-driven service improvements and customer experience enhancement. The low market penetration of 2% in a large addressable market indicates substantial runway for organic growth. The company's asset-light business model, relying on contractor networks rather than owned service capacity, should generate strong cash flow conversion. The attractive upside-to-downside valuation suggests the market has not fully recognized the company's growth potential and operational improvements since the spinoff.

Pitch Summary:
Credit Acceptance is a subprime auto lender, enabling subprime borrowers to buy vehicles from used car dealerships. The business has profitably gained share in a large and difficult market for more than two decades. Management allocates free cash flow to growing the business and repurchasing shares at attractive prices. Credit Acceptance currently trades at an attractive upside-to-downside ratio.

BSD Analysis:
Curreen Capital maintains a position in Credit Acceptance, recognizing it as a specialized subprime auto lender with a proven track record of profitable market share gains over more than two decades. The manager values the company's ability to successfully navigate the challenging subprime lending market, which requires sophisticated underwriting capabilities and risk management expertise. The business model focuses on enabling subprime borrowers to purchase vehicles through used car dealerships, addressing a significant market need while generating attractive returns. Management's disciplined capital allocation approach, combining business reinvestment with opportunistic share repurchases, demonstrates effective stewardship of shareholder capital. The company's long-term track record of profitable growth in a difficult market segment suggests sustainable competitive advantages and operational expertise. The manager's emphasis on the attractive upside-to-downside valuation indicates confidence in the company's ability to continue generating strong returns despite the inherent risks in subprime lending. This represents a bet on management's proven ability to profitably serve an underserved market segment.

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. The company uses its free cash flow to repay debt and acquire smaller competitors. Advantage Solutions currently trades at an attractive upside-to-downside ratio.

BSD Analysis:
Curreen Capital holds Advantage Solutions as a capital-light business with attractive economics in the retail marketing services sector. The company operates as one of the largest in-store sampling program managers in the U.S., providing a critical service that connects consumer brands with retail customers through experiential marketing. The manager appreciates the business model's high returns on capital and asset-light structure, which typically generates strong cash flow conversion. While the company carries meaningful debt from its SPAC transaction in October 2020, the manager notes the favorable debt structure with non-restrictive covenants and extended maturity profile. The company's capital allocation strategy focuses on debt reduction and strategic acquisitions of smaller competitors, suggesting a disciplined approach to growth and balance sheet management. The manager's previous reference to excellent results from this investment indicates strong performance since initiation. The attractive upside-to-downside valuation suggests continued value potential despite the company's post-SPAC challenges.

Pitch Summary:
Advance Auto Parts is a store-based retailer of aftermarket automotive parts and supplies. This includes batteries, windshield wipers and fluid, air filters, motor oil, etc. The company has historically earned decent (approaching 20%) returns on tangible capital. The company is attempting a turnaround, and has cut its dividend and replaced its CEO. Advance Auto currently trades at an attractive upside-to-downside ratio.

BSD Analysis:
Curreen Capital maintains a position in Advance Auto Parts, viewing it as a turnaround opportunity in the automotive aftermarket retail space. The manager highlights the company's historically strong capital efficiency, with returns on tangible capital approaching 20%, indicating a fundamentally sound business model when properly executed. The investment thesis appears centered on the company's ongoing turnaround efforts, including significant management changes with a new CEO and capital allocation adjustments through dividend cuts. These actions suggest management is prioritizing operational improvements and balance sheet strengthening over shareholder distributions. The manager's reference to previous successful investments in distressed situations like this one indicates confidence in the turnaround strategy. The attractive upside-to-downside valuation suggests the market has heavily discounted the shares, potentially creating an asymmetric risk-reward opportunity. This represents a classic value investment in a cyclical retailer undergoing operational restructuring.

Pitch Summary:
We bought Siemens Energy at €14.10/share. This is a new position for us, and about 2.5% of the fund. Siemens Energy spun out of Siemens in September 2020. Siemens Energy combines a world-class electrical power generation business, a world-class electricity transmission business, and an onshore and offshore wind turbine business that is attempting a turnaround. My current view is that—after more than a decade of stagnation—the electrical power industry has returned to growth, Siemens Energy will successfully turn around the wind business, and we bought this company at a very attractive upside-to-downside valuation.

BSD Analysis:
Curreen Capital initiated a new 2.5% position in Siemens Energy at €14.10 per share, viewing it as an attractive turnaround opportunity in the recovering electrical power industry. The manager's thesis centers on the belief that the electrical power sector has emerged from over a decade of stagnation and returned to growth, positioning Siemens Energy to benefit from this industry tailwind. The company's diversified portfolio includes world-class power generation and transmission businesses alongside a struggling wind turbine division that management expects to successfully turn around. The investment appears to be a value play, with the manager emphasizing the attractive upside-to-downside valuation at current levels. This represents a contrarian bet on both the company's operational turnaround and the broader industry recovery. The timing of the investment, coming roughly 3.5 years after the spinoff from Siemens, suggests the manager believes the market has not yet recognized the improving fundamentals. The position sizing at 2.5% indicates moderate conviction while allowing room for additional purchases if the thesis plays out favorably.

Pitch Summary:
IG Design Group is a UK-based producer and distributor of gift packaging, craft and party supplies, homewares, and other items. After a number of years of growing earnings and dividends, IG Design acquired two large US competitors, first Impact Innovations in 2018 for ~$75M, then CSS Industries in 2020 for ~$95M. Integrating these US acquisitions did not go well and they've been struggling to bring their "DG Americas" division to profitability ever since. After hitting a high of over 7 GBP/sh in late 2019, supply chain struggles and the underperforming US acquisitions forced them to cut their once growing dividend entirely. The stock price proceeded to get cut by over 80% in 2022. They were able to stabilize the business and delivered a much better bottom line result in 2024, but only right before disaster struck again. One of their larger customers, Joann Fabrics, after initially restructuring in 2024, went bankrupt again in early 2025, which likely was the beginning of the end for DG Americas. Given the seasonal working capital demands of their business and uncertainty presented by tariffs, management decided to exit the US business completely. DG Americas was sold to a liquidator for a nominal sum of $1 and a 75/25% split of net proceeds between the IG Design and the liquidator, respectively. Even if they receive a material sum from the liquidations, it will be a far cry from what they purchased the US businesses for 5-7 years ago. Clearly this was a terrible experience and outcome for the company and any unfortunate shareholders along for the ride. You're probably wondering why anyone would want to touch this company and certainly wondering why I'm bothering talking about it. IG Design's core business, "DG International", has hummed along just fine throughout this entire debacle. During FY25, the DG International segment generated $28.1m in adjusted operating profit before corporate costs. In fact, DG International has consistently churned out $20-$30m in adjusted operating profit for most of the last decade. They still anticipate some headwinds for FY26 and will incur some costs related to DG Americas for a couple months prior to selling to Hilco Capital (the liquidator). Importantly, management sees adjusted operating profit returning to $13-15m in FY27. That target seems very achievable, especially since they can finally put all of their attention to their more profitable, stable segment. The market cap today is around $80m USD and they have $85m in net cash, so there's not much good news baked in. While I don't expect much in terms of proceeds from the DG Americas liquidation, they have received $8.4m so far. I've estimated DG Americas owns over $30m of real estate and some smaller structurally profitable segments but it's unclear how well the good parts are structured separately from the bad parts and also how material wind-up costs could be. For those reasons I'm keeping expectations low for any proceeds from the DG Americas liquidation. While I truly think the bulk of bad news is behind them, owning even a small position has been a headache to say the least. When it comes to small LSE traded companies, and especially AIM-listed companies, I'm disappointed by the lack of respect given to minority shareholders, dark-room style trading on the AIM, and trading updates with as little information as possible. In my experience, it's always better to communicate to shareholders in a straightforward manner, delivering bad news clearly and up-front, owning up to mistakes, and discussing the path forward. Continually trying to paint everything in the most rosy way (especially significant mistakes) often leads to distrust of management. My favorite companies are ones that continually underpromise and overdeliver, and my least favorite do the opposite.

BSD Analysis:
The manager presents a cautious turnaround thesis on IG Design Group following the complete exit from its troubled US operations. The core DG International business has demonstrated resilience, consistently generating $20-30m in operating profit over the past decade despite the US division's struggles. With an $80m market cap supported by $85m net cash, the downside appears limited while management refocuses entirely on the profitable international segment. The liquidation of DG Americas, while destroying significant shareholder value from the original $170m acquisition cost, eliminates a persistent drag on profitability and management attention. However, the manager's neutral stance reflects ongoing concerns about corporate governance standards and communication transparency typical of smaller LSE-listed companies. The projected return to $13-15m operating profit by FY27 appears achievable given the historical performance of the core business, though execution risk remains given management's track record with the failed US expansion.

Pitch Summary:
FILA reported a strong Q1 with revenues up 4% and adjusted EBITDA up 7% YoY. FILA has also committed to paying .80/sh in dividends for 2025, .40 was paid in May and .40 will be paid in November. They reaffirmed previous guidance for 2025 but cautioned Q2 could be softer due to tariffs, from delayed customer orders and/or softer US consumer spending. Understandably, shares pulled back on these comments. More surprisingly, last week when Intermonte (one of the equity research firms covering FILA) published a revised 2025 EBITDA target of €95m (vs. €102m previously) due to US consumer weakness, it sent the stock down almost 15% on heavy volume. What I thought was seemingly priced in, apparently caught some by surprise, so again FILA looks very undervalued in my eyes. At 8.50/sh, FILA shares trade at only 5x EV/EBITDA if you only give them credit for the 6% ownership in DOMS they can sell without impacting their shareholder rights at all. They still own a remaining 20% of DOMS, worth 283m. I believe the reason they changed the relevant rights threshold at DOMS from 26% to 20% is very clear. They intend to sell another 6%. But in order to maximize leverage in any negotiation with a potential buyer, there is no reason to definitively declare your intention to sell. Importantly, FILA is not under any post-IPO lockup or other restriction on their remaining shares. In the right scenario, if they wanted, they could sell the entire stake. At present, FILA relies very little on DOMS for any manufacturing capacity. If they were to retain their stake and maintain relevant shareholder rights, I think the path forward could be to increase utilization of DOMS as a manufacturing hub, thereby making FILA more of the capital-light brand owner and distributor. This would obviously take time and resources but DOMS has been consistently expanding capacity and could continue doing so. Then on the other hand, if FILA wanted to sell its entire stake in DOMS (valued around 370m), in my mind it would make sense to do so before becoming more intertwined. There are many other scenarios as to how this could play out, but curiously a common market perception seems to be that FILA will never sell any more DOMS. FILA's management team has created significant value with a number of pieces over the years, most notably Dixon Ticonderoga and DOMS, and I believe will continue to do so. I think shares present a very attractive opportunity at current levels and have added to our position accordingly.

BSD Analysis:
The manager presents a compelling value thesis on FILA, highlighting the company's undervaluation following market overreaction to modest guidance revisions. At 5x EV/EBITDA excluding DOMS stake value, the stock appears deeply discounted despite solid Q1 performance with 4% revenue growth and 7% EBITDA expansion. The key catalyst centers on FILA's 26% stake in DOMS, valued at €370m, which provides significant optionality for value realization through partial or complete divestiture. Management's strategic flexibility to either monetize the DOMS holding or leverage it as a manufacturing hub creates multiple paths to unlock shareholder value. The manager's confidence in adding to the position reflects conviction in both the core business fundamentals and management's proven track record of value creation through strategic transactions. The dividend commitment of €0.80 per share provides additional downside protection while the market awaits resolution of the DOMS strategic review.

Pitch Summary:
A position in PNC Financial (PNC) was established during the quarter. PNC Financial is a large regional bank with $560 billion in assets and 2,200 branches across the Mid-Atlantic, Midwest and Southeast with retail and corporate banking operations as well as asset management services. In 2022, PNC acquired the US subsidiary of Spanish financial group BBVA, increasing PNC's size by roughly 25%. The bank has also been successful at organically expanding its customer base, both in commercial banking and in retail. Its expanding client base has led to solid loan, deposit, and fee income growth. Shares of PNC were purchased at 13.1x earnings with a 3.4% dividend yield.

BSD Analysis:
The manager established a new position in PNC Financial, attracted by the regional bank's substantial scale and geographic diversification across key US markets. The investment thesis is built on PNC's successful integration of the BBVA USA acquisition, which expanded the bank's footprint by 25% and enhanced its competitive positioning. The bank's organic growth strategy has proven effective, with expanding customer relationships driving loan, deposit, and fee income growth across both commercial and retail segments. At 13.1x earnings, PNC trades at a reasonable valuation for a large regional bank with $560 billion in assets and a diversified revenue stream. The 3.4% dividend yield provides attractive income while the bank benefits from potential interest rate tailwinds. PNC's extensive branch network of 2,200 locations across the Mid-Atlantic, Midwest, and Southeast provides strong market presence and customer acquisition capabilities. The combination of organic growth momentum and successful M&A integration positions PNC well for continued market share gains in key regional markets.

Pitch Summary:
Shares of Keurig Dr Pepper (KDP) were purchased in the quarter. KDP is a leading beverage company with a diversified portfolio spanning carbonated soft drinks, coffee, energy drinks, and premium waters. The company was established in 2018 following the merger of Keurig Green Mountain Coffee and Dr Pepper Snapple. Some of its well-known brands include Dr Pepper, Snapple, Canada Dry, A&W, Evian, Green Mountain Coffee Roasters, Peet's Coffee, and others. KDP's increasing exposure to high-growth categories such as energy drinks (C4 Energy, GHOST) and ready-to-drink coffee, coupled with an improving at-home coffee business, position it well for sustained long-term growth. KDP also has a strong innovation pipeline, with new product launches in carbonated beverages and coffee. In the coffee segment, Keurig remains the number one single-serve brewer in North America. Despite macroeconomic headwinds, KDP has maintained mid-single-digit revenue growth and high-single-digit EPS growth in recent years, differentiating it from other Consumer Staples companies. Management has also enacted a cost savings plan from sourcing and distribution consolidation as well as administrative streamlining. Shares of KDP were purchased at 16.6x 2025 earnings with a dividend yield of 2.8%.

BSD Analysis:
The manager initiated a position in Keurig Dr Pepper, viewing it as an attractive diversified beverage play with exposure to high-growth categories. The investment thesis centers on KDP's strategic positioning in energy drinks and ready-to-drink coffee segments, which offer superior growth prospects compared to traditional carbonated beverages. The company's dominant market position in single-serve coffee brewing through Keurig provides a defensive moat in North America. Management's execution on cost optimization through supply chain consolidation and administrative efficiency improvements supports margin expansion potential. The valuation at 16.6x forward earnings appears reasonable for a consumer staples company delivering mid-single-digit revenue growth and high-single-digit EPS growth, particularly given the 2.8% dividend yield. KDP's differentiated growth profile within the typically slow-growth consumer staples sector makes it an attractive defensive growth play. The strong brand portfolio spanning multiple beverage categories provides diversification and cross-selling opportunities.

Pitch Summary:
Shelly Group is one of the more unique opportunities that I stumbled upon in my time as an investor. Shelly Group is a 20-year-old Bulgarian-headquartered company that was originally named Teracomm Ltd. and later changed its name to Allterco AD prior to renaming the company Shelly Group in 2023. The company shares trade on the German and Bulgarian Stock exchanges. For the last 10 years, the company has focused on development in the smart device and internet of things (IoT) markets. Shelly found early success in the smart device market with the MyKi, a kid's digital watch similar to an Apple Watch, in 2015. Shortly after that, in 2018, the company launched their Shelly brand of home automation devices, which focused on ease of use, versatility, and open programmability. Early success with smart home relay switches used to automate, track, and optimize power switches has eventually allowed Shelly to expand to a wider IoT offering, which now includes energy metering, security, lighting, and control systems. Since their launch, Shelly IoT home automation devices have become well known within the DIY community as the most versatile IoT devices, delivering the highest value. There is a significant community of DIY enthusiasts in Europe that are customer advocates for Shelly Group smart home products. At the current point in time, I view Shelly Group as a very early disruptor in the IoT space. The company has a large and growing TAM, with a massive opportunity to expand into the US and into the professional installer vertical. Shelly is more than just an IoT device designer and reseller. Shelly has developed on their own IoT chip, the "Shelly Chip," which is optimized for smart home usage which is launching in their 3rd generation devices. Shelly is also working on their own Operating System to run on their devices, as they currently use a third-party OS called Mongoose OS. Shelly is creating an open system for running IoT devices selling directly to consumers, while their competitors are taking the opposite approach of creating a closed system exclusively sold through professional installers. I think the Shelly approach will end up with a larger share of the IoT market in the end and offer more value to their customers than the alternatives. The focus of the business since 2018 has been the design and marketing of smart home and industrial building optimization devices, representing over 97% of their 2023 revenues. The niche that Shelly Group fills is the DIY home automation niche, but as they expand their portfolio of products and their geographic footprint, they are beginning to expand into the professional installer market. Shelly's revenue growth since they launched their IoT offerings has been explosive, going from zero to $75 million in just 5 years, most recently showing growth of 57.3% in 2023. This explosive growth is driven by one major factor: Shelly delivers the best value to its customers. Shelly stands out from its competition on all metrics, including affordability, ease of use, available resources online for troubleshooting, and programmability. I will briefly touch on each of the metrics. On affordability, Shelly is priced between high-priced, often closed systems from Western European and US companies like Gira and Siemens and low-quality white-label Chinese products. On ease of use, Shelly's products do not require any centralized hubs or control devices and use WLAN or Bluetooth for easy connectivity. All devices can be managed via an app and are easily programmed through JavaScript. Most of their competitors force users into a specific control environment that requires specific devices to connect and program devices. On available resources, Shelly Group has a vibrant online community of DIY enthusiasts located mainly in continental Europe but expanding rapidly to the US. The company has a Facebook group with almost 90,000 followers as well as a Shelly-supported online ticket system to answer customer questions. On top of that, they offer a knowledge base website with an easy-to-navigate structure that offers APIs, documentation, and installation guides. On programmability, Shelly Group has a philosophy of openness and is agnostic to how their customers want to use their devices. Their devices are compatible with all smart home systems, including Google Home and Amazon Alexa. Connectivity to their devices is done through WLAN or Bluetooth, making them easily accessible to anyone with a smartphone or a wifi router. Their devices will also support the Z-Wave standard through their recent acquisition of Qubino in January. Their devices are programable through Javascript, certain APIs, and the Shelly app. Outside of these main points of product advantages, the business model is extremely interesting due to the Shelly Cloud or Shelly Premium App, which works on a recurring subscription model. Shelly Group relaunched their Premium App in the fall of last year with new functionality and updated features like event logs, visualization, weather-based execution, device failure detection and a whole lot more. The app costs 4 euros a month and will begin to provide some gross margin leverage into the business model. Shelly Group is run by Co-CEO's Wolfgang Kirsh, Dimitar Dimitrov, and Shelly USA CEO Svetlin Todorov. While the mix of CEO responsibilities spread across multiple people is not ideal, it does work in this situation, as the key members of the management team are also the company's largest shareholders. Dimitar and Svetlin were initially co-founders of the company, and they both own 30% and 32% of the shares, respectively. If you are looking for a founder-led management team with skin in the game, this is a near-perfect situation, with current management highly incentivized to grow the value of the company. Shelly has been able to take share quickly in the home automation market because the company is a software company with a user focus rather than a hardware company. While Shelly Group's focus has shifted over the years, its DNA is that of an engineering-led software development company. Shelly Group's initial foray into the IoT market was driven by their own developers' desire for a DIY home automation product that they could easily program themselves. From this core developer focus, the company has built a sizable business within the DIY home automation market, but they have three main levers they are working on that could provide substantial long-term growth opportunities: geographic expansion, adjacent product introduction, and penetration into the professional installer market. Currently, Shelly Group revenues are broken down geographically into 49% DACH countries (Germany, Austria, Switzerland), 43.7% rest of Europe, and 7.3% rest of the world. Shelly Group is relatively new to Amazon and supplying its products to the US. Over the next few years, as the IoT and home automation markets mature, Shelly is in a prime position to expand into the US through both the distributor channel, the online channel, and the professional channel (more on that below). Management has said they expect the US to eventually be equal to the size of the DACH business, if not larger. Shelly Group has historically sold a small number of products within their brand, mainly focusing on power switches. Since 2022, the company has expanded the number of products from 50 to close to 100. These new products have come from expanding into adjacent categories like security and lighting, as well as product lines with additional features. Shelly Blu and Shelly Qubuino product lines have recently been announced or released and have specific product features like upgraded Bluetooth range or Z-Wave device capability. Compared to some of their professional home automation competitors, Shelly still lacks products in several verticals, like home networking, video monitoring, and other IoT categories. As time goes on the product lineup will significantly expand. Shelly has a long history of profitability. They have had profitable net income every quarter since 2018. The company's management sees this profitability continuing even as their growth has taken off. Due to their asset-light model of outsourcing production, they can keep growing at a high rate without the need for incremental capex investments in production facilities. Due to this fact, there will be little need for capital on a go-forward basis outside of investments in inventory as they scale. I expect the only large capital outlays that they might make are either product expansion acquisitions or share repurchases, although due to their low liquidity, I don't expect them to buy back shares anytime soon. Currently, the shares trade at around a forward EV/EBITDA of 21x, which I view as reasonable for a company growing revenues at 45% YoY (as was just pre-announced last week for Q1 results). I view the growth potential for Shelly Group as the largest of the companies in our portfolio, as their growth levers are enormous and their penetration globally is very small. The company issued a 2026 goal last year, in which they see growing revenues to +200 million euros with an EBIT of +50 million euros. If they can execute on their plans by 2026, you are looking at a company growing revenue and EBIT at close to 40% CAGR over that period. I believe not only will Shelly grow at a 40% CAGR, but they could easily grow faster over that period and with better margins than forecasted. 21x EV/EBITDA seems fair to me for a company I want to own and allow it to grow for many years. Shelly Group is in such a unique situation because it has many growth opportunities as well as shares that are largely inaccessible to many investors or undiscovered. With the management alignment, the software developer focus on hardware, and how they fit into the competitive landscape, I believe Shelly Group is remarkably well positioned to grow into a multibillion-dollar company. The plan the company has laid out suggests they will grow by 40% for the next few years and likely above 20% for many years after that. Shelly has all the elements of an exceptional investment.

BSD Analysis:
The manager presents a compelling bull case for Shelly Group, a Bulgarian IoT company disrupting the smart home automation market through a DIY-focused, open-platform approach. The investment thesis centers on explosive revenue growth (57% in 2023, from zero to $75M in 5 years) driven by superior value proposition across affordability, ease of use, and programmability compared to closed-system competitors. Key competitive advantages include proprietary chip development, asset-light manufacturing model, and strong founder-led management with 62% ownership alignment. The company trades at 21x forward EV/EBITDA despite 45% revenue growth, with management targeting €200M revenue and €50M EBIT by 2026 (40% CAGR). Three primary growth levers include US market expansion (currently 7% of revenue), product line extension (doubled to 100 products since 2022), and professional installer market penetration. The recurring subscription model through Shelly Premium App provides additional margin leverage, while consistent profitability since 2018 demonstrates operational discipline during rapid scaling.

Pitch Summary:
Rubrik, meanwhile, is a next-generation data storage, backup and recovery provider showing strong, double-digit subscription revenue growth. We believe its cloud-based offerings have resonated with its Fortune 500 customer base, positioning it well to continue to take share from legacy data backup providers. The introduction of new AI data security products could offer an additional revenue source to Rubrik's business.

BSD Analysis:
ClearBridge participated in Rubrik's IPO, marking their first IPO investment since 2021, indicating high conviction in the opportunity. The investment thesis centers on Rubrik's next-generation cloud-based data management platform disrupting legacy backup providers. The company is demonstrating strong double-digit subscription revenue growth and has successfully penetrated Fortune 500 enterprises, indicating product-market fit at the enterprise level. The managers see a clear market share gain opportunity as enterprises migrate from legacy on-premise solutions to cloud-based data management. Additionally, Rubrik's introduction of AI-powered data security products provides a potential new revenue stream that could accelerate growth. This represents a growth play on the secular shift to cloud infrastructure and the emerging AI data security market.

Pitch Summary:
We initiated a new position in online pet retailer Chewy in the consumer discretionary sector. We believe the company has exited a period of tough comparables achieved during COVID-19 and that the decline in pet products spending has begun to stabilize. The company's initiatives in warehouse automation, pharmaceutical services and private label products are strong catalysts, and Chewy has built a loyal base through peerless customer service to improve its margins as customer growth inflects positively.

BSD Analysis:
ClearBridge initiated a position in Chewy based on the thesis that the company has moved past difficult COVID-era comparisons and that pet product spending is stabilizing. The managers highlight three key operational catalysts: warehouse automation improvements, expansion into pharmaceutical services, and private label product development. They emphasize Chewy's competitive moat through exceptional customer service, which has created a loyal customer base. The investment case centers on margin expansion potential as customer growth trends turn positive. This represents a classic turnaround play on a company emerging from a challenging period with multiple operational improvements driving future profitability. The timing appears strategic as the pet retail market stabilizes post-pandemic.

Pitch Summary:
During the quarter, we initiated a position in Equifax. Equifax is a leading provider of consumer and commercial credit information globally. Equifax is well positioned to see high single-digit revenue growth and margin expansion after technology upgrades, which should result in double-digit earnings growth for the next few years.

BSD Analysis:
Madison initiated a new position in Equifax, viewing the credit reporting giant as attractively positioned for sustained growth. The managers highlight Equifax's dominant market position as a leading provider of consumer and commercial credit information on a global scale. The investment thesis centers on the company's recent technology infrastructure upgrades, which are expected to drive operational efficiency and margin expansion. Madison projects high single-digit revenue growth supported by these technological improvements and enhanced service capabilities. The combination of revenue growth and margin expansion is anticipated to generate double-digit earnings growth over the next several years. This represents a classic technology-enabled transformation story within the financial services sector, where operational leverage should drive superior profitability metrics.

Pitch Summary:
Zoetis detracted from portfolio performance in the quarter, despite a solid U.S. launch of Librela, a drug to treat osteoarthritis in dogs, in the U.S. Management addressed safety concerns on Librela, citing extremely low incidences of Ataxia in dogs. We believe that concerns about these safety issues negatively impacted Zoetis in the quarter. Shares now trade at a discount to five-year average valuation multiples and continue to benefit from increase pet ownership and increasing protein demand in the company's livestock business.

BSD Analysis:
Aristotle Atlantic maintains a bullish stance on Zoetis despite temporary setbacks from safety concerns surrounding Librela, its osteoarthritis treatment for dogs. The fund views the market's reaction as overblown, noting management's clarification that Ataxia incidences are extremely low. The successful U.S. launch of Librela demonstrates Zoetis's innovation capabilities in companion animal health, a high-growth market segment. The manager highlights attractive valuation metrics, with shares trading below five-year average multiples, creating an opportunistic entry point. Zoetis benefits from two powerful secular trends: increasing pet ownership driving companion animal spending and growing global protein demand supporting livestock health investments. The company's diversified portfolio across companion animals and livestock provides balanced exposure to both defensive and cyclical end markets. The fund expects the safety concerns to subside as real-world data validates Librela's safety profile, allowing the stock to re-rate higher.

Pitch Summary:
Darling Ingredients detracted from portfolio performance in the quarter, as shares were weak following an in-line quarterly earnings report in which Darling refrained from providing full-year guidance due to low fat prices and its view that fat prices had bottomed. Rather than attempting to predict where fat prices might go during the year, management explained that it wanted to wait until the first quarter earnings call to provide more color. The company did talk about a soft floor for EBITDA in the $1.45 billion to $1.55 billion range for the year should fat prices remain depressed. Darling Ingredients remains confident in the discussions it is having with global cargo and passenger air carriers about takeaway agreements for its planned sustainable aviation fuel production, and any announcement could prove to be a catalyst given the depressed valuation currently. We believe shares should re-rate as investors gain confidence in the long-term cashflow generation ability of the company's unique assets.

BSD Analysis:
Aristotle Atlantic maintains a bullish long-term view on Darling Ingredients despite near-term headwinds from depressed fat prices. The fund views the current weakness as temporary, with management providing EBITDA guidance of $1.45-1.55 billion even under stressed commodity pricing scenarios. The manager highlights Darling's strategic positioning in sustainable aviation fuel (SAF) production, with ongoing discussions with global airlines for takeaway agreements representing a significant catalyst opportunity. The fund emphasizes the company's unique asset base and long-term cash flow generation capabilities, suggesting current valuations are attractive. Darling's integrated business model in rendering and renewable fuel production provides defensive characteristics during commodity cycles. The manager expects shares to re-rate higher as investors gain confidence in the sustainability of cash flows and the potential for SAF contract announcements. The company's ESG-aligned business model positions it well for the energy transition.

Pitch Summary:
Apple contributed to portfolio performance in the first quarter due to the strategy's underweight relative to the benchmark. Investors continue to be concerned about weak handset sales globally, as well as declining market share and competitive dynamics in the Chinese market, as Huawei has returned to the market with a more competitive premium-priced handset. Apple has yet to demonstrate a competitive AI product, which could present further competitive headwinds for the company.

BSD Analysis:
Aristotle Atlantic maintains a bearish outlook on Apple, implementing an underweight position that contributed positively to performance during Q1 2024. The fund identifies multiple structural headwinds facing the company, including weak global handset sales and deteriorating competitive positioning in China. Huawei's return to the premium smartphone market poses a direct threat to Apple's market share in one of its most important regions. The manager highlights Apple's lack of a competitive AI product offering as a significant strategic gap that could create additional competitive pressures. This AI deficiency is particularly concerning given the industry's rapid shift toward AI-integrated devices and services. The fund's underweight positioning reflects skepticism about Apple's ability to maintain its premium pricing and market leadership amid these mounting challenges. Apple's traditional innovation cycle appears to be lagging behind emerging technology trends.

Pitch Summary:
Nvidia contributed to portfolio performance in the first quarter, as the company continues to see accelerating demand for its GPU semiconductors from hyperscalers and enterprises. Nvidia's GPU semiconductors continue to be the industry-leading building blocks of the accelerated computing data-center architecture to drive AI compute and applications.

BSD Analysis:
Aristotle Atlantic maintains a bullish stance on Nvidia, highlighting the company's dominant position in AI infrastructure. The fund emphasizes Nvidia's accelerating demand from hyperscalers and enterprises for GPU semiconductors, which serve as critical building blocks for AI compute applications. The manager views Nvidia's technology as industry-leading in accelerated computing data-center architecture. This positioning aligns with the broader AI transformation trend, where Nvidia's specialized chips are essential for training and deploying large language models and other AI applications. The fund's positive attribution from Nvidia during Q1 2024 reflects the market's recognition of the company's strategic importance in the AI ecosystem. Nvidia's pricing power and technological moat in high-performance computing continue to drive strong financial performance and market leadership.