Investment Pitches

Pitch Summary:
Agnico Eagle is a top-tier senior gold producer with an attractive organic growth pipeline and extremely low jurisdictional risk, deriving 100% of its net asset value from stable jurisdictions in North America, Australia, and Europe. Its strong market position supported by rising precious metals prices enhanced pool returns during the quarter. Agnico Eagle, a premier senior gold producer, benefited significantly from its robust organic growth pipeline and exceptionally low geopolitical risk, with its entire net asset value located in secure regions such as North America, Australia, and Europe.

BSD Analysis:
Barometer Capital presents a compelling bull case for Agnico Eagle Mines, emphasizing the company's premium positioning as a senior gold producer with exceptional jurisdictional safety. The manager highlights AEM's 100% exposure to stable, low-risk mining jurisdictions across North America, Australia, and Europe, which provides significant competitive advantages over peers operating in higher-risk regions. The investment thesis centers on AEM's attractive organic growth pipeline, which positions the company to capitalize on rising gold prices without the execution risks associated with major acquisitions or ventures into unstable regions. The fund's positive performance attribution during Q1 2025 validates this positioning, as precious metals gained favor amid global economic uncertainty. Barometer's emphasis on AEM's "top-tier" status and "extremely low jurisdictional risk" suggests confidence in the company's ability to deliver consistent returns. The manager's repeated mentions across multiple fund strategies indicate AEM serves as a core holding for precious metals exposure. This defensive yet growth-oriented positioning aligns well with the fund's broader strategy of maintaining inflation hedges during periods of economic uncertainty.

Pitch Summary:
Sumitomo Pharma is a Japanese pharmaceutical company historically focused on neurological and psychiatric drugs. Patent cliffs are always important for any pharmaceutical company, and Sumitomo knew that they were going to lose exclusivity for Latuda, a drug that was contributing 40% of sales, in 2023. To compensate, they first bought Urovant in 2022 (at $515mm valuation) for their core asset Gemtesa, a drug for overactive bladder. They followed that up by acquiring Myovant (at a valuation of $2.5bn) in 2023 for two drugs: Orgovyx for prostate cancer and Myfembree for uterine fibroids and endometriosis. We had been familiar with Myovant's pipeline and early commercial struggles through previous work, which made the acquisition stick out to us as a poor fit in a neuropsychiatric company. Commercializing drugs for oncology and women's health was unlikely to be the growth engine Sumitomo hoped it would be. Not surprisingly, all three drugs have been off to disappointing starts, with the next shoe to drop being a generic version of another well-known drug for overactive bladder, Myrbetriq, which is due to come off patent this year. This will surely intensify competition for Gemtesa. Although estimates have come down, we still see expectations for these three key products about 20% too high. Bottom-line expectations for losses remain optimistic by 50%, with projections for profitability in 2025 unlikely. With little help in the pipeline near term, we think the potential for 40% downside remains.

BSD Analysis:
Apis presents a compelling bear case for Sumitomo Pharma based on strategic missteps and deteriorating fundamentals following major patent cliff exposure. The fund highlights the company's loss of Latuda exclusivity in 2023, which represented 40% of sales, and criticizes management's response through poorly executed acquisitions totaling over $3 billion. Apis argues that the Urovant ($515mm) and Myovant ($2.5bn) acquisitions represent a strategic mismatch, as the company lacks expertise in commercializing oncology and women's health drugs outside its neuropsychiatric core competency. The fund emphasizes that all three acquired drugs (Gemtesa, Orgovyx, Myfembree) have underperformed expectations, with additional competitive pressure from Myrbetriq's upcoming patent expiration. Apis believes consensus estimates remain 20% too optimistic for the key products and 50% too high for bottom-line losses, with 2025 profitability projections appearing unrealistic given the weak pipeline. The fund sees 40% downside potential.

Pitch Summary:
E-Ink holds a monopoly position in electrophoretic display (EPD) technology, commonly known as e-paper. This unique technology consumes energy only when changing images on the screen, offering significant advantages over traditional displays. Unlike LCD or OLED screens, which require constant power to maintain an image, e-paper does not emit light from the panel. This makes it lightweight, power-efficient, and easily readable under direct sunlight. The technology is protected by patents acquired through past acquisitions and in-house R&D. E-Ink is the only manufacturer of the e-paper material and sits atop the supply chain network, collaborating with over 60 upstream and downstream partners globally. Today, e-paper is primarily used in e-readers like Amazon Kindle (40% of E-Ink's 2024 revenues) and Electronic Shelf Labels (ESL, which represents 60% of 2024 revenues), which are digital price tags used by retailers. The e-reader market is returning to growth after a period of stagnation, driven by new product launches as the technology transitions from black-and-white to color. The anticipated launch of Amazon's color Kindle by 2025 is expected to trigger a significant replacement cycle, further boosting market growth. The ESL market has seen remarkable growth over the last few years, catalyzed by labor shortages during the COVID-19 pandemic. Retailers have been adopting ESL to lower headcount and improve operational efficiency by centralizing pricing for both online and physical stores. Growth in the ESL business is accelerating again with recent adoption by Walmart, a key catalyst for the U.S. market where penetration remains close to zero. The potential scale of the Walmart rollout alone is as large as the global installed base, and many other retailers in the U.S. are expected to follow suit. Publicly traded distributors in Korea, France, and Sweden have all confirmed these substantial opportunities. In the medium term, new markets in outdoor signage, in-store advertising, and fashion retail are likely to further increase the overall total addressable market and growth for the company. At 25x 2025 earnings, the company trades at a substantial discount to its peer, Universal Display. We believe the market is underestimating the growth runway for E-ink. Our model suggests a 20% earnings CAGR over the next decade based on the existing business, which supports at least another 50% upside from today's price. There are ample untapped opportunities for e-paper, and we view this stock as a quality compounder for years to come.

BSD Analysis:
Apis presents E Ink as a monopolistic technology play with significant growth catalysts across multiple end markets. The fund emphasizes E Ink's unique position as the sole manufacturer of electrophoretic display technology, protected by patents and supported by a global network of 60+ partners. The investment thesis centers on two key growth drivers: the e-reader market revival driven by color technology adoption and Amazon's anticipated color Kindle launch, and the accelerating Electronic Shelf Label market catalyzed by Walmart's adoption in the underpenetrated U.S. market. Apis highlights that Walmart's potential rollout alone equals the current global installed base, with other major retailers expected to follow. The fund projects a 20% earnings CAGR over the next decade, supported by expanding applications in signage, advertising, and fashion retail. At 25x 2025 earnings, Apis views the valuation as attractive relative to peer Universal Display, with at least 50% upside potential.

Pitch Summary:
We've long been in awe of Domino's Pizza's incredible success in the United States. Since 2010, Domino's U.S. shares have outperformed Microsoft, Netflix, Apple, Facebook, and nearly every major U.S. stock with an astounding +5,300% return. It accomplished this by focusing on impressively reliable and fast delivery, small stores (and small capital investment), improving food quality, embracing technology, and dominating its markets. It stole massive share from Pizza Hut's dine-in-centric model, and Domino's has become THE case study of how to turn around a restaurant franchise successfully. Enter DPC Dash – Domino's master franchise holder in mainland China – and a name we are very excited about. Recently, DPC Dash became public in 2023, and it has long suffered from changing ownership and ineffective management unwilling to invest in growth. Location count didn't even break 100 as recently as 2017 despite being in the market since 1997 (compared to competitor Pizza Hut's approximately 3,200 China locations). Everything changed in 2017 when new CEO Aileen Wang joined from McDonald's and began aggressively opening stores and replicating Domino's well-worn U.S. playbook. She also began localizing menus to regional tastes. DPC Dash is now up to 761 stores, but it's still a small fraction of the nearly 6,500 locations in the U.S. Management plans to achieve 2,000 locations by 2027, however, which is an eye-popping 27% store CAGR. Such aggressive growth might normally be a risk, but the brand recognition and pent-up demand for Domino's in China is truly unfathomable. Consider this: Domino's has over 20,000 locations worldwide, but the top 20 grossing locations in their first month are now all DPC Dash-owned locations. New stores have lines around the block, and DPC Dash doesn't even advertise! China is effectively a pizza desert – there are only 12 pizza restaurants per 1 million people in China compared to 232 per 1 million in the U.S., and the overall pizza category is growing at an impressive 16% annual rate. At only 11.5x 2025 EBITDA growing more than 30% with expanding margins, DPC Dash shares are incredibly cheap and we think it's set up to be a long-term compounder much like its U.S. counterpart. More simply taking a step back, we are shocked that the entire Domino's Chinese franchise can be had for just $1 billion. The stock is still very much under the radar since its IPO, but we think it's only a matter of time before shares get discovered and re-rated.

BSD Analysis:
Apis presents a compelling bull case for DPC Dash as a turnaround story with massive growth potential in an underpenetrated Chinese pizza market. The fund highlights the transformational leadership of CEO Aileen Wang since 2017, who has accelerated store expansion from under 100 locations to 761 stores while implementing Domino's proven U.S. playbook. The investment thesis centers on explosive store growth targeting 2,000 locations by 2027 (27% CAGR) in a market with only 12 pizza restaurants per million people versus 232 in the U.S. Apis emphasizes the remarkable brand strength evidenced by the top 20 grossing Domino's locations globally being DPC Dash stores, achieved without advertising. The valuation appears attractive at 11.5x 2025 EBITDA with 30%+ growth and expanding margins. The fund views this as a long-term compounder opportunity trading at a significant discount to its potential, with the entire Chinese Domino's franchise valued at just $1 billion.

Pitch Summary:
Wesco International is the scale player in electrical, communications, and utilities distribution and supply chain services. Originally founded in 1922 as the distribution arm of Westinghouse Electric and Manufacturing Company, Wesco recently completed the integration of a transformational merger with communications and electrical distributor Anixter International. As the scale player in a highly fragmented industry, Wesco has no direct publicly traded comparables, and this fact combined with pandemic and post pandemic macroeconomic volatility have left this newly constructed business trading at a material discount to its historical and intrinsic earnings power. In 2019 Wesco International was a business-to-business distributor serving industrial and nonresidential construction end markets. The business was cyclical and inevitable periods of stagnant industrial production and price stability pressured revenues and margins. A transformational merger with Anixter International made Wesco an economically resilient scale player in the secularly growing electrical, communication, and utilities end markets, but the deal added leverage in the midst of the COVID-19 induced economic shutdown. Decreased inventory turns from supply chain constraints were followed by post pandemic bullwhip effects as supplier lead times collapsed and buffer inventories were destocked. In the midst of such abnormal macroeconomic volatility, Wesco International so successfully integrated Anixter International that realized revenue synergies were more than thirteen times the initial guidance ($2.2 billion vs $170 million guide), leaving the transformed business trading at half of the markets' multiple. While valuation disconnects in business models without publicly traded comparables are nothing new (Mastercard, Moody's, Chicago Mercantile Exchange, and Ferrari were but a few), sustained earnings growth that shines light on these valuation asymmetries makes such opportunities short lived. With Wesco International, we see four main paths to sustained earnings growth and value creation. First, Wesco is growing revenues and margins by taking market share and improving its pricing algorithms. In providing a one stop shop for 150,000 customers to access 1.5 million products from 50,000 suppliers, Wesco adds value to customer and supplier supply chains alike by lowering cost of ownership and increasing resilience. With the pandemic's aftermath making supply chain resilience a focus for all executive suites, companies are increasingly outsourcing larger parts of their supply chains for Wesco to manage. A key value driver of this outsourced supply chain management is the more than seventy percent of Wesco's sales that are attached to services. Services such as working on site with product selection, application, technical support, and logistics drive meaningful cost savings and productivity benefits for customers. Yet, due in part to its previously subscale market position, Wesco was lacking in its ability to properly account for the unit cost of these services and its cost-plus pricing algorithm failed to capture the value provided. Anixter International mitigates this value leakage by bringing expertise in cost accounting and in value-based pricing. We see a long runway for Wesco to layer on services to drive customer productivity and supply chain resiliency, and we believe that properly pricing for the value created ensures that this revenue growth translates into earnings growth. Second, as the scale player, Wesco is now uniquely able to invest in technology in a way that has not been done before in business-to-business distribution. Central to any great process technology is well organized data that aids decision making across the enterprise. Previously, Wesco and Anixter lacked the scale to invest in technology to digitize their businesses. As the scale player in an industry where a majority of supplier sales go through distribution, Wesco has significantly more data on customers, operations, demand profiles, product flows, and what products customers need to maintain or upgrade. We see two main areas for Wesco to use technology to utilize this proprietary data to drive revenues, margins, and earnings growth. One, in accessing industry leading data at the point of sale, Wesco is able to proactively drive sales of higher margin products from preferred suppliers that work with Wesco to invest in innovation to drive end user demand. This represents a previously unutilized avenue to drive sales and mix. Two, while Wesco has a large network of logistics infrastructure capable of serving 99% of customers within one day, the network is sub optimized due to the historic focus on optimizing product flow between hub and spokes. Investments in technology have digitized the business such that data scientists and industrial engineers are now able to redesign and engineer processes to improve the physical flow of product from supplier to end customer, creating the impetus for increased inventory turns, reduced transportation costs, and growing margins. Collectively, investments in technology to digitize Wesco's business are set to increase sales effectiveness, build cost advantages, and differentiate with services that will widen the gap in value proposition between Wesco and its fragmented base of small, privately held competitors. Third, Wesco's scale and technological superiority position the company to accelerate existing trends of industry consolidation. With Wesco accounting for thirteen percent of an industry where the top two hundred competitors combined account for just fifty-one percent share, competitive dynamics make it difficult for the fragmented base of competitors to offer a full suite of solutions to customers. A self-reinforcing flywheel of industry leading volumes creates more margin dollars for technology investments that strengthen product and services breadth that then attracts more customers wishing to sole source their supply chains. A highly fragmented competitor set of small, local, private, multi-generational businesses do not have the resources to compete with this flywheel. After having completed more than fifty acquisitions since spinning out from Westinghouse in 1994, Wesco has a proven ability to use its economically resilient countercyclical cash flow stream to acquire and integrate businesses with growing, complementary product and service capabilities at mid-single digit post synergy multiples. We believe Wesco can triple its market share of a growing market at high incremental margin. Fourth, Wesco's earnings growth profile is backstopped by an effectual royalty stream on several long-term secular tailwinds. Chief among these secular tailwinds is electrification. With electrification affecting everything from transportation to home heat pumps, increased demand from data centers and renewable power generation is straining an electric grid in need of maintenance and modernization. Electricity has long been seen as a commodity, but it is fast becoming a value driver for wide swaths of the economy. Wesco touches every part of the electrical value chain from the generating station to the meter on a house, and as such collects a toll when a product is upgraded. Second among the secular trends that Wesco is accruing a royalty on is the increased demand for bandwidth. Wesco touches every part of the broadband value chain from the data center to the last mile of connectivity. With increased bandwidth demand from higher data and mobile usage, Wesco accrues a royalty when this infrastructure is upgraded. Third among the secular trends that Wesco accrues a royalty on is industrial demand from any North American manufacturing renaissance that comes from both building factories and modernizing existing factories by putting in more capabilities for connectivity, artificial intelligence, and the internet of things. As a business-to-business distributor, Wesco accrues a royalty on each of these three long term secular tailwinds without requiring capital expenditures, research and development, or subjecting themselves to any meaningful capital deployment risks. Wesco's position in the middle of the value chain provides a free option to ride several long-term secular tailwinds, all of which are further reinforced by $1.6 trillion in approved but not yet "shovel ready" fiscal spending (Infrastructure Investment & Jobs Act, Inflation Reduction Act, CHIPS and Science Act, and Rural Digital Opportunity Fund). In Wesco, we see shareholder value accruing from sustainable, long-term revenue and earnings growth driven by self-help initiatives, market share gains, industry consolidation and secularly growing end markets.

BSD Analysis:
The manager presents a compelling bull case for Wesco International, emphasizing the company's transformation from a cyclical industrial distributor into a scale leader following its merger with Anixter International. The thesis centers on four key value drivers: market share gains through improved pricing algorithms and service offerings, technology investments enabled by scale that create competitive advantages, accelerated industry consolidation opportunities, and exposure to secular growth trends in electrification and broadband infrastructure. The manager highlights that realized revenue synergies from the Anixter merger exceeded initial guidance by 13x ($2.2B vs $170M), demonstrating exceptional integration execution. With 13% market share in a fragmented industry where the top 200 players control only 51% combined, Wesco is positioned to benefit from a self-reinforcing flywheel of scale advantages. The company's exposure to electrification, broadband expansion, and North American manufacturing renaissance provides multiple secular tailwinds, while $1.6 trillion in approved infrastructure spending creates additional catalysts. The manager views the current valuation as materially discounted due to lack of public comparables and post-pandemic volatility, creating an attractive entry point for long-term value creation.

Pitch Summary:
NRP, a coal royalty company based in Houston, quietly emerged as one of our top performers last year. The company holds mineral rights for an extensive 12 million acres across the U.S., along with 3.5 million acres of underground pore space primarily for CO2 sequestration, predominantly in the southern regions. Furthermore, NRP holds a 49% stake in Sisecam Wyoming, a major global producer of natural soda ash – an essential component in glass and detergent production and increasingly used in solar panels and EV batteries. Sisecam Wyoming was recently taken private by its majority Turkish owners at a $1bn valuation, implying a $500mm value for NRP. In its history, NRP faced challenges of being overleveraged and navigating structural decline. With debt peaking at $1.5bn in 2014 and coal royalty revenues declining nearly 50% from 2014 to 2019 due to factors like coal plant closures, a shift to natural gas, and reduced steel demand from China, the company strategically managed to generate cash flow. Leveraging its royalty model and reducing selling, general and administrative expenses (SG&A) by 50%, aided by distributions from its soda ash stake, NRP used the generated cash to aggressively deleverage. Despite the headwinds, the company's balance sheet is now down to $260mm in net debt. Even as coal prices normalize, NRP continues to generate robust free cash flow, with interest expenses reduced by 70% through its successful deleveraging efforts. Despite its stock's strong performance, NRP is currently trading at only 4x free cash flow. Traditionally paying out around 20% of its free cash flow in dividends (approximately 3% yield today), we anticipate a significant increase in dividends once the debt and preferred shares are fully paid down by 2025. Beyond its core royalty businesses, additional upside potential lies in NRP's carbon-neutral initiatives. The company plans to lease acreage to entities developing carbon sequestration and renewable energy projects, providing an additional avenue for growth.

BSD Analysis:
The manager presents Natural Resource Partners as a successful turnaround story trading at an attractive 4x free cash flow multiple despite strong recent performance. The investment thesis centers on the company's dramatic deleveraging from $1.5bn debt in 2014 to just $260mm net debt today, achieved through aggressive cost reduction and cash generation from its royalty model. The 49% stake in Sisecam Wyoming provides significant embedded value, recently marked at $500mm based on the Turkish owners' $1bn private transaction valuation. NRP's diversified asset base includes 12 million acres of mineral rights and 3.5 million acres of CO2 sequestration space, positioning it for the energy transition. The manager expects substantial dividend increases once debt and preferred shares are eliminated by 2025, as the company historically distributed only 20% of free cash flow. Additional upside comes from carbon sequestration and renewable energy leasing opportunities on the company's extensive acreage. The combination of cheap valuation, improving capital allocation, and optionality on energy transition themes creates a compelling risk-adjusted opportunity.

Pitch Summary:
Within the Korean defense space, we maintain a long position in Poongsan, whose business is focused on two seemingly unrelated areas – copper refining and munitions. The world has very few munitions pure plays as most of these businesses are either owned by governments or small parts of large conglomerates. As mentioned earlier, the price of 155mm shells has doubled or more and shortages have become extreme. By law, Korea does not allow defense exports to war zones which is why they are not selling their arms directly into Ukraine. Rather, the orders have been to restock inventory in Europe and the U.S. Poongsan's munitions can be used with Korean howitzers and tanks as well as western produced equipment. The company recently announced a doubling of capacity for its munitions business. Disclosure is very limited but given what we have seen from European peers (namely Rheinmetall discussed below), we suspect the margins on these exports are in the 25-30%+ range, dramatically higher than domestic Korean margins. Historically, the copper refining division has contributed 50-60% of company earnings and, as a result, the market has placed a low earnings multiple on the stock, typically 4-8x p/e. With the increased contribution from defense, the mix from copper should drop substantially and the market should place a much higher multiple on earnings. Recently, Rheinmetall purchased a private munitions producer in Spain paying 1.2 billion Euros for 400 million of sales. Using this ratio to value, Poongsan would at least double the stock price and we would still get the copper business for free. It should also be noted that copper is seeing a resurgence in price which is expected to drive Poongsan's copper profits much higher as well.

BSD Analysis:
The manager presents a compelling dual-catalyst thesis for Poongsan Corporation, positioning it as a rare pure-play munitions manufacturer with significant copper exposure. The investment case centers on the global defense spending surge driving ammunition shortages and price increases, with 155mm shell prices more than doubling. Poongsan's recent capacity doubling announcement positions the company to capitalize on restocking orders from Europe and the U.S., with estimated export margins of 25-30%+ versus lower domestic margins. The valuation argument is particularly attractive, with the stock trading at 4-8x P/E due to market focus on the cyclical copper business. As defense revenues grow and command higher multiples, the manager expects significant re-rating potential. Using Rheinmetall's recent acquisition multiple as a benchmark suggests Poongsan could double while investors essentially receive the copper refining business for free. The copper tailwind from rising prices provides additional upside to the thesis.

Pitch Summary:
In June two of our stocks, Vinci and Eiffage, fell as much as 15%, although they have already begun their recoveries. The primary concern was a new government led by the right-wing National Rally who have previously discussed nationalising France's motorway concessions. Of course, quite the opposite has now happened as the left-wing alliance won more seats than anyone, although not a majority, resulting in a hung parliament. That said, we do discuss below the risks of nationalisation (and why we believe they are incredibly low) and the upside potential for both companies over the next few years as the durable, non-motorway businesses continue to grow as a percentage of profits and value. Both Vinci and Eiffage derive about 30% of their value from French motorway concessions, down from about 60% fifteen years ago. Given these assets have fixed lives (i.e. until the concession agreement expires) and the remaining 70% of the businesses are growing strongly, this proportion will mathematically continue to shrink over the next few years. There are two dynamics in the French toll roads we particularly like – inflation protection and structural growth. Tolls on the French motorway network benefit from contracted increases in inflation that amount to 70% of CPI, which becomes increasingly valuable as inflation risks return. Motorways also offer structural growth as more traffic, both light vehicles and heavy trucks, use the network. France is key to many trade routes in continental Europe and lorries are still a cost-effective way of moving freight. Over time traffic has grown steadily at 2%, and this is before any inflationary increase. Both companies generate high levels of organic free cash flow and have shown incredible capital allocation over the past 25 years. Initially, when acquiring the concessions to diversify their civil works businesses and, more recently, their investments in broader infrastructure assets, energy contracting, renewable concessions and construction. These new businesses are performing very well, with record order books and rising margins, supporting strong growth for the foreseeable future. In effect, the cash flow from concessions have afforded these companies the opportunity to invest in a diverse range of new businesses with wide moats, and far longer duration than the concession assets themselves, resulting in major value creation for shareholders. Despite this, and due to the political overhang, they trade at the widest discount to intrinsic value of the past ten years. Morgan Stanley estimate Vinci's upside to intrinsic value at 50%, and Eiffage's at closer to 80%, similar to our own figures. That latter point is worth dwelling on – 100% of the value of Eiffage today is represented by the fair value of their motorway assets, which represent far less than half of the total value of the company. Fundamentals are strong, the stocks have never been cheaper, while business mix is improving. With strong balance sheets and growing dividend yields already approaching 5% (compared to long-term averages of 3%), the outlook for capital returns and capital investment are strong. Exposure to global growth themes such as rising air traffic, the energy transition and the need to replace and improve infrastructure will support growth over the next decade, with very limited competitive threats. We believe the upside potential for shareholders is currently material, and we earn defensive, inflation-linked cash flows while we wait.

BSD Analysis:
The manager presents an exceptionally bullish case for Eiffage, highlighting an extraordinary valuation disconnect where the entire market cap equals just the fair value of motorway assets representing less than half the company's total value. This creates an 80% upside to intrinsic value according to Morgan Stanley estimates, significantly higher than Vinci's 50% upside. Like Vinci, Eiffage has successfully diversified from 60% to 30% motorway exposure over fifteen years while building a portfolio of growing infrastructure and energy businesses. The nationalization risk is deemed negligible given the €50bn government cost (105% of Eiffage's current market cap) and legal protections. The toll road business provides defensive characteristics with 70% CPI inflation pass-through and 2% structural traffic growth. Strong free cash flow generation has enabled strategic investments in renewable concessions and energy contracting with record order books and expanding margins. The combination of defensive motorway cash flows, exposure to energy transition themes, and extreme valuation discount creates compelling asymmetric returns with limited downside risk.

Pitch Summary:
In June two of our stocks, Vinci and Eiffage, fell as much as 15%, although they have already begun their recoveries. The primary concern was a new government led by the right-wing National Rally who have previously discussed nationalising France's motorway concessions. Of course, quite the opposite has now happened as the left-wing alliance won more seats than anyone, although not a majority, resulting in a hung parliament. That said, we do discuss below the risks of nationalisation (and why we believe they are incredibly low) and the upside potential for both companies over the next few years as the durable, non-motorway businesses continue to grow as a percentage of profits and value. Both Vinci and Eiffage derive about 30% of their value from French motorway concessions, down from about 60% fifteen years ago. Given these assets have fixed lives (i.e. until the concession agreement expires) and the remaining 70% of the businesses are growing strongly, this proportion will mathematically continue to shrink over the next few years. There are two dynamics in the French toll roads we particularly like – inflation protection and structural growth. Tolls on the French motorway network benefit from contracted increases in inflation that amount to 70% of CPI, which becomes increasingly valuable as inflation risks return. Motorways also offer structural growth as more traffic, both light vehicles and heavy trucks, use the network. France is key to many trade routes in continental Europe and lorries are still a cost-effective way of moving freight. Over time traffic has grown steadily at 2%, and this is before any inflationary increase. Both companies generate high levels of organic free cash flow and have shown incredible capital allocation over the past 25 years. Initially, when acquiring the concessions to diversify their civil works businesses and, more recently, their investments in broader infrastructure assets, energy contracting, renewable concessions and construction. These new businesses are performing very well, with record order books and rising margins, supporting strong growth for the foreseeable future. In effect, the cash flow from concessions have afforded these companies the opportunity to invest in a diverse range of new businesses with wide moats, and far longer duration than the concession assets themselves, resulting in major value creation for shareholders. Despite this, and due to the political overhang, they trade at the widest discount to intrinsic value of the past ten years. Morgan Stanley estimate Vinci's upside to intrinsic value at 50%, and Eiffage's at closer to 80%, similar to our own figures. Fundamentals are strong, the stocks have never been cheaper, while business mix is improving. With strong balance sheets and growing dividend yields already approaching 5% (compared to long-term averages of 3%), the outlook for capital returns and capital investment are strong. Exposure to global growth themes such as rising air traffic, the energy transition and the need to replace and improve infrastructure will support growth over the next decade, with very limited competitive threats. We believe the upside potential for shareholders is currently material, and we earn defensive, inflation-linked cash flows while we wait.

BSD Analysis:
The manager presents a compelling bull case for Vinci following a 15% decline driven by French election concerns and nationalization fears. The thesis centers on the mathematical impossibility and economic irrationality of motorway nationalization, with the government facing a prohibitive €50bn cost and loss of €7bn in annual tax receipts. Vinci's diversification strategy has reduced motorway exposure from 60% to 30% of value over fifteen years, while the remaining 70% of growing businesses create a more balanced portfolio. The toll road business offers attractive inflation protection (70% of CPI pass-through) and structural growth from 2% annual traffic increases. Strong free cash flow generation has enabled strategic capital allocation into infrastructure, energy, and renewable concessions with record order books and rising margins. Morgan Stanley estimates 50% upside to intrinsic value, while dividend yields have increased to 5% versus historical 3% averages. The combination of defensive cash flows, exposure to global infrastructure themes, and significant valuation discount creates compelling risk-adjusted returns.

Pitch Summary:
Medpace is a contract research organization (CRO) that operates as a service provider to the pharmaceutical/biotech industry. There are many services offered by CRO's, and Medpace focuses on being a full-service clinical trial provider. Medpace helps to design and run the human-intensive Phase 1-4 clinical trials for small to mid-size biotech companies. One of Medpace's competitive advantages is they have a large majority of their employees in one location, far away from their competitors and with many universities nearby. This provides a tremendous opportunity for recruiting and training employees to fit their model. It also helps the economics of the business to operate in a city that has a relatively lower cost of living. When we were in Cincinnati, we were able to see how much their main campus has grown (~30% over the last 24 months to 6,000 people) and better understand the future expansion potential that existed - think years and years of further headcount growth (which is what drives revenue!). In addition to being our first 'Roadie', it was also a first to see corporate swag in a vending machine in the parking garage…the hoodie I bought has become a staple in our 'corporate swag Friday' office dress policy. I think Isaac wishes he had grabbed one as well, though he did walk away with something more valuable. The investment he led, and that we made into Medpace, is the first to have doubled our clients' money! We remain very supportive shareholders and think the future remains bright for their full-service approach.

BSD Analysis:
Langdon celebrates a significant success with Medpace, marking their first investment to double client capital since inception. The manager's thesis centers on the company's differentiated full-service clinical trial model serving small to mid-size biotech companies across Phase I-IV trials. The competitive advantage stems from geographic concentration in Cincinnati, providing access to university talent while maintaining lower operating costs compared to competitors in major metropolitan areas. Recent campus expansion of 30% over 24 months to 6,000 employees demonstrates strong demand for their services and validates the scalability of their business model. The direct correlation between headcount growth and revenue generation provides visibility into future performance, with years of expansion potential ahead. The company's focus on human-intensive clinical trials positions them well in an increasingly complex regulatory environment where specialized expertise commands premium pricing. Langdon's field research and management meetings reinforce confidence in the operational execution and strategic direction. The full-service approach differentiates Medpace from competitors who may focus on specific trial phases or therapeutic areas.

Pitch Summary:
Watches of Switzerland (WOSG) lowered its guidance for the 12-months ending April 2024 after a weak Christmas holiday period in the UK and some negative product mix in their Rolex deliveries (more stainless steel watches were produced than expected) which caused lower average selling prices. We did not fathom this business trading at or near invested capital when we made the investment and feel confident that no private owners of authorized Rolex agencies are willing to sell their businesses at the trading multiple of this company today. We have never invested assuming the 'greater fool theory' where we hope people pay a higher multiple for a dollar of earnings. A large portion of our time is spent on maintenance research, which includes meetings with industry stakeholders. In the case of WOSG, this has manifested as private meetings with participants in the luxury watch industry and an upcoming visit to the largest industry conference in Geneva. We think this business will grow in the mid-teens after 2024 and we are also comforted by the track record of 15%+ EPS growth since IPO despite this year appearing to be down 35% year-over-year. As we wrote last quarter, we will make mistakes; and so far, our holding period return would put WOSG in that camp for us. We believe bad news should travel as fast, if not faster, than good news, and so commit to always being accountable and transparent in sharing these updates.

BSD Analysis:
Langdon acknowledges a significant misstep with Watches of Switzerland, which declined approximately 50% during the quarter following reduced guidance and weak holiday performance. The manager's thesis remains intact despite the poor execution, emphasizing the disconnect between public market valuation and private market values for authorized Rolex dealerships. They highlight the company's historical track record of 15%+ EPS growth since IPO, suggesting the current 35% earnings decline represents a temporary setback rather than structural deterioration. The fund expects mid-teens growth resumption post-2024, supported by ongoing industry research including meetings with luxury watch stakeholders and attendance at Geneva's premier industry conference. The position trades near invested capital levels, which the manager views as an attractive entry point given the scarcity value of authorized luxury watch retail licenses. While acknowledging this as a mistake in their portfolio, the long-term thesis on luxury watch retail distribution remains compelling. The transparency in discussing underperforming positions demonstrates disciplined risk management and accountability.

Pitch Summary:
At the end of the quarter, we have a new top holding as we decided to increase our investment in Royal Unibrew. Royal Unibrew is a multi-beverage company headquartered in Denmark, involved in production, distribution, and selling both in Europe and Internationally. In just 3 years, Royal Unibrew has made 11 acquisitions, spending over US$900 million and doubling the size of their invested capital that took over 30 years to accumulate. In parallel, input costs per hectoliter have increased by over 50%, largely due to the inflationary environment beverage manufacturers have had to navigate over the last few years (think freight, bottle caps, glass, cans, and sugar). As a result, we believe their returns on capital are temporarily depressed at about half the historical levels. Over the last 6 months, we have visited 3 of these companies acquired by Royal Unibrew and had the opportunity to meet with local management to understand the diligence process and post-integration improvements. We have also met with Unibrew's management team in 3 different countries this quarter and are confident their value creation plans will bear fruit for years to come. The team will be heading to the Netherlands in May 2024 to attend their Capital Markets Day (Investor Day) and tour the Vrumona facilities Royal Unibrew acquired from Heineken late last year. The market's skepticism of Royal Unibrew's ability to create value from these acquisitions seems apparent in that the company trades at its lowest cash earnings multiple since 2013 on what we believe are near trough earnings. We believe Royal Unibrew to be an unequivocally better business than it was in 2013, with a multi-niche and multi-beverage production footprint across Europe, as well as a unique distribution network in the Nordics. We believe the fundamental downside to the current share price is limited, offering an attractive risk-reward in a business that sells everyday affordable items that are well insulated from any consumer-led recession.

BSD Analysis:
Langdon presents a compelling value opportunity in Royal Unibrew, positioning it as their new top holding based on temporary margin compression and market skepticism. The manager's thesis centers on the company's aggressive acquisition strategy, having completed 11 deals worth $900 million over three years, effectively doubling invested capital. The fund believes current returns on capital are artificially depressed due to inflationary pressures on input costs, which have increased over 50% per hectoliter. Extensive due diligence including visits to three acquired companies and meetings with management across multiple countries reinforces their confidence in the integration process. The valuation appears attractive at the lowest cash earnings multiple since 2013, despite what they view as a fundamentally superior business with enhanced geographic diversification and distribution capabilities. The defensive nature of everyday beverage consumption provides downside protection during potential economic weakness. The upcoming Capital Markets Day and facility tour suggest continued engagement and monitoring of the investment thesis.

Pitch Summary:
Interactive Brokers (IBKR) is a financial technology company, listed in America and operating globally. Fifty years ago, it was the first firm to use computer generated share price sheets and the first to introduce handheld computers on the American Stock Exchange, and this spirit of technological innovation has catapulted them to the market leading position they have today. Today the business is an online trading platform, used by sophisticated individual investors as well as hedge funds, wealth managers, and other brokers. Their history of successful innovation has rewarded the company with three concurrent competitive advantages: • Lower prices for customers • Lower operating costs • Better service The company has been rated lowest cost broker every year since 2002 by Barrons. Looking at their margin loans and deposit rates below we can see why. Customers of IBKR benefit from a multitude of enhancements which are unavailable on rival platforms. Advanced trading tools include one hundred different order types, Application Programming Interfaces (APIs) and smart routing technology to ensure best execution. This is in stark contrast to other firms like Charles Schwab or Robinhood who receive "payment for order flow" by sending their customers' orders to others to execute, presumably at a worse price given the profits of these intermediaries. IBKR have even invested in tools which allow customer orders to be matched against each other at mid-prices, saving both buyer and seller the cost of a bid / offer spread. It achieves all this at a fraction of the cost that rivals incur, meaning IBKR earns higher margins than peers, while offering greater service and functionality, at lower costs to the customers. Cash costs per account have fallen from $5 to $0.50 over the past fifteen years, and today IBKR's operating margin is 70% while Charles Schwab and others earn margins in the range of 20-40%. The optimal distribution strategy is one where the proposition is so appealing it acts like a force of gravity pulling in customers towards it in an exponential way. This is what has been happening at IBKR where advertising costs are a fraction of competitors, leaving more internal resources in the business to reinvest in better technology and even lower prices. The distribution strategy for the business has revolved around building out the technology to cater for a wider groups of clients. Having previously focused on sophisticated individuals, in 2012 they introduced a platform for wealth managers, fund manager groups, and investment advisers. In the same way that Visa has benefitted from the start-up banking revolution, IBKR has also been selling their technology to other online platforms who cannot compete with their efficiency and scale. They now have 6% of the global prime broking market up from just 1% in 2016. Individuals now make up less than half of the client assets across the business. Strategically the business is incredibly well-positioned to continue to grow customer accounts. They currently have 2.5m accounts, up 270% since 2019, and have a target to reach 20m over the medium term (for context Charles Schwab have 40m accounts) and 80m over the very long term. We have high confidence that this is achievable, and over time their competitive advantages could even lead to them surpassing this figure, provided their rollout of IBKR Lite is successful. There are two primary sources of revenue at IBKR, the first of which is trading revenue. Across their 2.5m accounts, customers place around 200 trades per year, at an average cost of $3 per trade, giving $1.5bn in trading revenue. Trades per account have been falling gradually over time due to the mix of customers, although this is dwarfed by account growth. Commission levels fluctuate depending on the securities being traded (shares, options, futures etc) and we estimate that they will stay broadly flat over time. The company also earns a net interest margin (NIM) on customer deposits and margin loans. They have interest-earning assets of around $119bn which earn around the Fed Funds rate +0.5%, and interest-bearing liabilities of $106bn which cost around 70% of the Fed Funds rate -0.5%. At current interest rates this yields around 2.5% NIM or $2.75bn of NIM. Clearly there is sensitivity around the level of interest rates, although interest-earning assets have doubled since 2019 and are likely to move in tandem with account growth over time. Likewise, demand for margin loans increases as rates fall, creating a partial offset to this risk. Given the business pays market leading levels of interest on customer accounts, they do not see the level of switching experienced at peers. This resulted in record profits for the firm of $2.8bn or $5.72 per share. Supporting these profits, and the continued strategic investments, is a fortress balance sheet which is 99% invested in short-term liquid assets, no long-term debt, and equity of $13bn which is multiples of the regulatory requirements. IBKR has the best-in-class product allowing them to grow and take market share in an industry which grows at 7-10% per year. If you have the best product or service, customers find their way to you. Not as smoothly as other businesses but, importantly, in one direction. Why would you leave if the product and service is better and cheaper? This fly trap creates a flywheel of value creation which can continue for a decade or more. Over the past ten years the company has grown it's comparable EPS at 18% per year, and we believe the future is brighter than the past due to the current scale of the franchise. We invested in shares of Interactive Brokers in January this year.

BSD Analysis:
The manager presents a compelling bull case for Interactive Brokers based on three sustainable competitive advantages: lower customer costs, superior operational efficiency, and enhanced service quality. The investment thesis centers on IBKR's technology-driven moat that enables 70% operating margins versus competitors' 20-40%, while simultaneously offering customers the lowest costs in the industry. The company's flywheel effect is particularly attractive, where technological superiority drives customer acquisition at minimal advertising costs, generating more resources for further innovation and price reductions. Revenue diversification across trading commissions ($1.5bn) and net interest margin ($2.75bn) provides multiple growth vectors, with account growth of 270% since 2019 demonstrating strong momentum. The balance sheet strength with $13bn equity, no long-term debt, and 99% liquid assets provides defensive characteristics while funding continued investment. Management's ambitious but achievable targets of reaching 20m accounts medium-term and 80m long-term suggest significant runway in a 7-10% annually growing industry. The 18% historical EPS growth rate appears sustainable given the company's expanding scale advantages and market share gains in prime brokerage from 1% to 6%.

Pitch Summary:
We do still own some Nvidia as the forward multiple isn't egregious and it powers over 90% of AI workloads. This company is only becoming increasingly important though the hyperscalers are actively trying to save money through their own ASIC programs. The moat CUDA provides has been underestimated time and time again. While I don't think Nvidia has quite the upside as some of the other companies in the portfolio, it has a product that the best companies in the world literally can't get enough of.

BSD Analysis:
The manager maintains a measured bullish stance on NVIDIA, recognizing its dominant position in AI infrastructure while acknowledging valuation constraints. The company's control over 90% of AI workloads demonstrates exceptional market positioning, with the CUDA software ecosystem creating a persistent competitive moat that has repeatedly proven more durable than expected. Despite hyperscaler efforts to develop proprietary ASICs to reduce dependency, NVIDIA's technological leadership and software integration continue to drive demand from the world's leading technology companies. The manager notes that while NVIDIA may not offer the same upside potential as other portfolio holdings, it provides exposure to a product experiencing unprecedented demand from high-quality customers. The forward multiple appears reasonable rather than egregious, suggesting the stock isn't dramatically overvalued despite its AI narrative premium.

Pitch Summary:
This company is the leader in meal kits, which is a historically tough business but they have a fast-growing segment of ready-to-eat meals that is now about a quarter of the business. The company actually has solid infrastructure for creating and distributing meals at scale and we started our position at under 5x my estimated earnings. For a company that could accelerate growth, is rationalizing spending in the core business, and led by a founder, this seems like a pretty reasonable price.

BSD Analysis:
The manager sees value in HelloFresh despite the challenging meal kit industry dynamics. The company's evolution beyond traditional meal kits into ready-to-eat meals represents a strategic pivot, with this faster-growing segment now comprising 25% of the business. The existing infrastructure for meal creation and distribution at scale provides operational leverage for expansion into adjacent categories. The manager initiated the position at an attractive valuation below 5x estimated earnings, suggesting significant downside protection. Key investment drivers include potential growth acceleration, cost rationalization in the core business, and founder leadership providing strategic vision and execution capability. The combination of operational improvements, category expansion, and attractive entry valuation creates a compelling risk-adjusted opportunity in a company transitioning from a challenged business model to a more diversified food platform.

Pitch Summary:
I've been very patient with Tesla. Frankly, I'm a big believer in Elon but I also hate investing in companies where the narrative far outweighs any financial evidence. I do see a path to Tesla being one of the world's largest companies but slight growth in a cyclical industry with very little pricing power is not a recipe for strong forward returns. Though the AI/robotics narrative is strong, I'm not adding at current prices since we haven't seen much of the narrative translate into the earnings yet. This cognitive dissonance can be an uncomfortable tension but I'm trying to look at the big picture here. So while I fully admit that Tesla may be overvalued in the short run, the long-term destination of the company should not be underestimated.

BSD Analysis:
The manager expresses a nuanced view on Tesla, balancing long-term conviction in Elon Musk's vision with near-term valuation concerns. While acknowledging Tesla's potential to become one of the world's largest companies, the manager is troubled by the disconnect between narrative and financial fundamentals. Current automotive operations show only modest growth in a cyclical industry with limited pricing power, creating headwinds for near-term returns. The AI and robotics narrative, while compelling, has yet to materially impact earnings, creating cognitive dissonance between story and results. The manager maintains the position but refuses to add at current prices, suggesting the stock may be overvalued in the short term. This reflects a disciplined approach to a high-conviction, long-term holding where valuation discipline prevents additional investment despite belief in the ultimate destination.

Pitch Summary:
Shelly Group continues to truck along. It now is offering chips to make smart appliances even smarter. Through a partnership with Samsung, your fridge can now connect to the Shelly platform. This significantly widens the TAM as there are millions of appliances and Shelly can produce these chips for an extremely low cost with high functionality. While the stock is up more than 2x since our purchase price, I haven't even thought of selling a share. I think the company could reach $60 million in EBIT by the end of 2026, which implies a 10x multiple of today's price. A 20x multiple would mean another double in two years, which I'd be very happy with. Broadly, that's how I think of margin of safety–if the company can reasonably double in two years, then the risk/reward is probably pretty solid.

BSD Analysis:
The manager remains highly confident in Shelly Group's smart home automation platform despite the stock already doubling since purchase. The Samsung partnership represents a significant TAM expansion opportunity, enabling Shelly chips to enhance millions of existing appliances with smart connectivity. The company's ability to produce high-functionality chips at extremely low cost creates a compelling value proposition for appliance manufacturers. The manager's conviction is evident in having no intention to sell despite substantial gains, projecting $60 million EBIT by end-2026. At current valuation, this implies a 10x multiple on today's price, with potential for another double if the company achieves a 20x multiple. The manager's margin of safety framework focuses on companies that can reasonably double within two years, suggesting strong confidence in Shelly's execution capabilities and market opportunity in the expanding IoT ecosystem.

Pitch Summary:
Staying in Latin America, MELI continues to spin its commerce/payments flywheel. While it started out as an e-commerce platform, its fintech business is now much larger. When management pulled back on giving out loans for fear of a worsening economy, overall revenue growth picked up with accelerating GMV in the core e-commerce business. Then, the finance business segment started to reaccelerate when the team realized nonperforming loan ratios were lower than expected. But the segments aren't fully independent. There is a beautiful synergy as on-platform payments lower the friction for the commerce business and faster delivery times lead to more orders and therefore more payments. Meanwhile, MELI also offers a plethora of tools for merchants in both commerce and finance. The company is still growing more than 30% and it has a leading brand in Latin America. Someday Nu and MercadoLibre will bump up against each other but I think we still have at least 5 years before they start competing head-on. For less than 30x forward earnings, the valuation is still reasonable for the company.

BSD Analysis:
The manager highlights MercadoLibre's successful evolution from e-commerce platform to integrated commerce-fintech ecosystem in Latin America. The company demonstrates strong strategic flexibility, initially pulling back on lending during economic uncertainty, which paradoxically accelerated core e-commerce GMV growth. As credit conditions improved and NPL ratios came in better than expected, the fintech segment reaccelerated, showcasing management's prudent risk management. The synergistic flywheel between commerce and payments creates powerful network effects, with payment friction reduction driving more transactions and faster delivery increasing order frequency. The comprehensive merchant tools across both segments strengthen competitive positioning. With 30%+ growth and leading Latin American brand recognition, the forward multiple below 30x appears reasonable. The manager notes potential future competition with Nu Holdings but believes both companies have sufficient runway for at least five years.

Pitch Summary:
Nu is executing on its own audacious vision of becoming one of the largest companies in the world. It surpassed 100 million customers at the beginning of Q2 and is marching towards the next 100 million. As it doubles down on gaining market share in Mexico, it continues to build out its superapp in Brazil. High income clients can now book flights, shop, get a payroll loan, buy ETFs, exchange currency, get a business loan based on their personal loan limit, get a cellphone plan, and much more. Nu's mission is to fight complexity–nothing in that mission statement revolves around banking. I don't want to fully get caught up in the vision, but the management team has the skills to back up the story. Meanwhile, the top-line is still growing in excess of 30% and margins are encroaching on 30%, while the forward multiple is less than 20x. If we could find 10 companies of this caliber, I would be thrilled.

BSD Analysis:
The manager is highly bullish on Nu Holdings' transformation into a comprehensive financial superapp across Latin America. The company has achieved significant scale with over 100 million customers and is expanding rapidly in Mexico while deepening penetration in Brazil. The platform's evolution beyond traditional banking into flights, shopping, investments, and telecommunications demonstrates successful ecosystem development. The "fight complexity" mission statement suggests a broader technology platform rather than a traditional financial services company. Strong execution metrics support the vision with 30%+ revenue growth and margins approaching 30%, creating attractive unit economics. The forward multiple below 20x appears reasonable for the growth profile and market opportunity. The manager's enthusiasm is evident in stating this represents the type of high-quality growth company the fund seeks to own.

Pitch Summary:
This is the Swedish microcap that we wrote up last quarter. Intellego makes dosimeters, which are small paper cards that change color when exposed to UV light (specifically UV-C). It seems like a very basic product but the company has strong patent protections and is the brand leader in the space. Since dosimeters are such a low-cost item (often under $5), Intellego has forward-vertically integrated into distributing UV machines to increase dosimeter sell-through. While it's dilutive for margins and ROIC, it strengthens the competitive advantage significantly. We think it's possible for the company to do $20 million in EBIT next year and maybe $15 million in FCF but the market cap is only a little more than $100 million. For 40%+ growth, we think this is a very good deal and I wouldn't be surprised to see the stock double over the next year. Obviously, no guarantees since there are clear risks with a long history of questionable cash flow and board member shenanigans. However, this company fits the Infuse Formula to a tee.

BSD Analysis:
The manager presents a compelling microcap opportunity in Intellego, a Swedish dosimeter manufacturer with strong competitive positioning. The company benefits from patent protection and brand leadership in UV-C measurement devices, creating a defensible niche market. The forward vertical integration into UV machine distribution, while margin-dilutive, strategically strengthens the competitive moat by increasing dosimeter demand. The valuation appears attractive with projected $20 million EBIT and $15 million FCF against a ~$100 million market cap, implying reasonable multiples for 40%+ growth. The manager acknowledges execution risks including historical cash flow issues and governance concerns, but believes the risk-reward profile is favorable. The potential for 100% returns within a year reflects the significant upside from successful execution of the growth strategy.