Investment Pitches

Pitch Summary:
As another example, I would have expected both VF Corp and Advance Auto to have performed well last year, as the company's situations are similar, and both made good progress on their turnarounds. But VF Corp dropped, before rebounding strongly and ending the year up, while Advance Auto dropped for most of the year. 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 fixed its balance sheet and is improving operations. Advance Auto currently trades at an attractive upside-to-downside ratio.

BSD Analysis:
The manager views Advance Auto Parts as a turnaround story with improving fundamentals that the market has yet to fully recognize. The company operates in the automotive aftermarket, selling essential maintenance items like batteries, filters, and motor oil through physical retail locations. Historically, the business generated strong returns on tangible capital approaching 20%, indicating the underlying business model's profitability potential. Management has successfully addressed balance sheet issues and is making operational improvements as part of the turnaround effort. Despite these positive developments, the stock underperformed in 2024, creating what the manager sees as an attractive risk-adjusted opportunity. The manager draws parallels to VF Corp's successful turnaround trajectory, suggesting similar potential for Advance Auto Parts. The current valuation provides compelling upside-to-downside characteristics given the operational progress.

Pitch Summary:
For example, GetBusy continues to grow its revenues without diluting shareholders, which makes its shares more valuable over time. Since 2018, the company has doubled revenues, while the share count is up less than 5%. This is a barely-profitable, U.K.-listed microcap. It pays no dividend and its growth rate is not high enough to excite interest. It is an ugly duckling, and ended 2024 selling for 1.5x revenues. I think that it is significantly undervalued—which is why we added to our position—but I do not know when the company will trade for a more reasonable multiple. I believe it is worth our wait because GetBusy continues to grow, and I think we will earn good returns on our investment – first from revenue growth and second from a higher multiple. 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:
The manager identifies GetBusy as a classic value opportunity trading at just 1.5x revenues despite doubling revenues since 2018 with minimal share dilution. The company operates in the document management software space serving accountants, a niche market with recurring revenue characteristics. While currently barely profitable due to growth investments, the underlying business units are profitable and sustainable across both UK and US markets. The manager appreciates the disciplined approach to shareholder dilution, with share count increasing less than 5% over six years of growth. The investment thesis relies on continued revenue growth combined with eventual multiple expansion as the market recognizes the company's progress. The manager acknowledges timing uncertainty but views the risk-reward profile as compelling given the low valuation and steady operational progress.

Pitch Summary:
We sold Kambi in the quarter, reinvesting the proceeds into Credit Acceptance. I grew uncomfortable with Kambi's business – which has an element of many small steps forward, then one big step back. Kambi provides an outsourced sportsbook to gaming company customers, and as those customers grow, they tend to bring this task in-house. While the company has succeeded in growing over time, it continues to lose its most successful clients as they grow and develop their own sportsbooks. Kambi is a great solution for small companies entering new markets, but if economies of scale in the gaming industry drive consolidation over time, Kambi would face difficulties. When I compared this to Credit Acceptance, another company that grows over time, I preferred that we own Credit Acceptance. Both are attractively priced, but I am more confident in Credit Acceptance's runway for growth. We received SEK 110.8 for our Kambi shares, and paid $449.61/share for Credit Acceptance. 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:
The manager switched from Kambi to Credit Acceptance, demonstrating a preference for Credit Acceptance's superior growth runway and business model durability. Credit Acceptance operates in the subprime auto lending space, a challenging but profitable niche where the company has consistently gained market share over two decades. The business model benefits from management's disciplined capital allocation, using free cash flow for both organic growth and opportunistic share repurchases. Unlike Kambi's customer retention challenges, Credit Acceptance has demonstrated sustainable competitive advantages in serving subprime borrowers through dealer partnerships. The manager views the current valuation as offering an attractive risk-adjusted return profile. The company's track record of profitable growth in a difficult market segment suggests strong execution capabilities and defensible market positioning.

Pitch Summary:
The Fund also purchased TE Connectivity (TEL) in the Technology sector. TEL is a leading manufacturer of connectors and sensors that help protect the flow of power and data in end market applications. We believe it has a sustainable competitive advantage due to leading market share of the global connector market with a dominant position in automotive connectors, strong pricing power, high customer switching costs and intangible assets. TEL revenues didn't grow over the past two years and now appear to be on the cusp of inflecting higher as end markets recover, driven by new growth opportunities in electric and autonomous vehicles, renewable energy, factory automation, artificial intelligence, and cloud computing applications. As shown on the next page, TEL had a relative dividend yield of 1.4x the S&P 500, which was also at the high end of its historical range. The company has a strong balance sheet and has raised its dividend an average of 7% over the past five years. We expect more dividend increases going forward.

BSD Analysis:
Madison added TE Connectivity as a technology holding, timing the purchase at a cyclical inflection point after two years of flat revenue growth. The investment thesis is built on TEL's dominant market position in global connectors, particularly automotive applications, supported by strong pricing power and high customer switching costs. The manager sees multiple secular growth drivers converging including electric vehicles, autonomous driving, renewable energy, factory automation, AI, and cloud computing applications. The relative dividend yield of 1.4x the S&P 500 represents an attractive entry point at the high end of historical ranges. TEL's financial profile includes a strong balance sheet and superior dividend growth averaging 7% annually over five years, well above ROK's 5% growth rate. Madison expects continued dividend increases as these secular trends accelerate and drive revenue inflection higher from current trough levels.

Pitch Summary:
The Fund purchased Rockwell Automation (ROK) as a new Industrial holding. ROK is a high-quality global industrial automation equipment and services company. We believe it has a sustainable competitive advantage due to its large installed base of mission-critical automation equipment, high customer switching costs, strong brand reputation, and intangible assets. ROK experienced a cyclical downturn in orders, revenues, and earnings in 2024 that created an opportunity to purchase stock at an attractive valuation. As shown in the graph below, ROK had a relative dividend yield of 1.4x the S&P 500 at the time of purchase, which was its highest relative yield since the 2008-2009 financial crisis. Company orders appear set to trough throughout 2025 and long-term demand for automation products should grow faster than GDP, driven by favorable secular trends including U.S. reshoring and supply chain de-risking. ROK has an A-rated balance sheet by Standard & Poor's and has raised its dividend an average of 5% over the past five years. We expect continued dividend increases going forward.

BSD Analysis:
Madison initiated a position in Rockwell Automation during a cyclical downturn, capitalizing on the stock's highest relative dividend yield since the 2008-2009 financial crisis at 1.4x the S&P 500. The manager's thesis centers on ROK's sustainable competitive advantages including its large installed base of mission-critical equipment, high customer switching costs, and strong brand reputation. The cyclical nature of the downturn in 2024 created a compelling entry point, with orders expected to trough in 2025 before recovering. Long-term secular tailwinds including U.S. reshoring and supply chain de-risking should drive automation demand above GDP growth rates. The company maintains financial strength with an A-rated balance sheet and a consistent dividend growth track record of 5% annually over five years. Madison expects continued dividend increases as the business cycle recovers and secular trends accelerate adoption of industrial automation solutions.

Pitch Summary:
We initially wrote up Shelly Group in our 2024 1Q investor letter. Since our initial investment pitch in early 2024, we have only gained more confidence in the business, the leadership, and the strategy. Alone with our growing confidence in the business, the company has hit major milestones including, uplisting to Frankfurt XTRA exchange (April 2024), held their first Capital Markets Day (November 2024), converted the company's legal structure to a European Company or "SE" (December 2024) and continued to grow the business at +40%. Many of these actions make the company more attractive to western investors due to the increase regulatory and legal support. The current valuation is also 25% below (16x NTM EBITDA vs 21x NTM EBITDA) what the valuation was at the time of our previous writeup. Along side continued revenue growth in the 40-50% yoy for the last three quarters, the company has rolled out several new products, and laid out a strategic plan to drive their business over the next 5 to 10 years. Shelly held a Capital Markets day on November 5th in which they shared an in-depth strategic vision of their home automation devices and software business. Shelly Group's new business strategy represents a calculated push to solidify its position as a leader in the smart home market while expanding into adjacent opportunities like home security and commercial / industrial monitoring. Shelly is expanding their business from being solely a device manufacturer to becoming an integrated smart home platform with software revenue streams. This evolution is backed by years of strong technological innovation, robust customer engagement, and strategic market expansion efforts to expand outside of their core markets in Europe. The group's commitment to addressing consumer needs with scalable, efficient, and eco-friendly solutions aligns perfectly with broader trends favoring sustainability and automation. At the core of Shelly's strategy is the development of their software offerings that pair well with their devices and add value to the ecosystem. This integrated ecosystem accessible via app or in home is designed to provide seamless management of smart home functionalities, including energy optimization, predictive maintenance, and advanced security. The company is leveraging its proprietary data lake and cloud solutions to create a foundation for recurring revenues through high margin subscription-based services. With a focus on community-driven innovation (Shelly has a loyal base online of automation enthusiasts), Shelly's products are shaped by user feedback, enhancing customer loyalty and accelerating market adoption. The Shelly ecosystem brings to the average consumer a truly smart home interface that many have dreamed possible for decades, but only extremely expensive high-end systems would allow. The Shelly app becomes your smart dashboard to managing everything from when lights are on to the height of your shades. Shelly has multiple levers that it is working to continue its extremely fast revenue growth path (+40% since 2022). Geographic expansion will be a significant driver of Shelly's growth in the next few years. The company is doubling down on decentralizing its sales operations to enhance regional engagement and improve customer experiences. New hires in key markets, including the Nordics and the United States, are expected to boost local sales and deepen relationships with distributors and resellers. Over 50% of Shelly's revenues currently come from DACH countries (Germany, Austria, and Switzerland), but long term they believe the US will wildly outpace DACH countries. New hardware product launches have significant greenspace within home automation devices. Shelly has major product expansions coming in cameras, smart locks (through the LOQED acquisition in July 2024), and intelligent sensors. Shelly currently offers 92 hardware product SKUs as of Q3 2024, which is heavily weighted to energy and lighting management devices. They expect to add both new devices in new and existing categories as well as offering additional series of Professional focused devices which will be focused on the higher end professional installation market. I expect the company to significantly expand their offerings at quickly until they fill out their home automation device offering. Shelly's growth and margin expansion will be significantly impacted by the push into software verticals that sit alongside their devices which complete the ecosystem. While software is very small piece of Shelly's current revenue, over the next 5 years it will expand to be a significant revenue stream. Software offerings will include Shelly X Software (a no code software platform for developing and managing their devices), cloud management & data lake, energy management solutions, and the Shelly app. These software offerings will be monetized through a mix of subscription revenue and usage fees. Shelly Group's traditional customers have been DIY-centric, due to the low cost and high flexibility of their devices. The company is shifting to add a focus to professional installer market. By expanding into the professional home installer market and the industrial IoT sector, Shelly is tapping into new revenue streams and broadening its customer base. This diversification positions the company to leverage the growing demand for integrated smart building solutions. The introduction of the Shelly Pro and Plus series, designed to cater to both professional installers and DIY homeowners, highlights this approach by offering innovative features that meet diverse customer needs. On top of their main growth drivers that I highlighted, their road to 2030 Vision includes AI, predictive maintenance, and advanced energy management solutions as sources of additional growth. If Shelly executes on even 50% of their ambitions the company will be 5x larger in 2030.

BSD Analysis:
Deep Sail Capital demonstrates exceptional conviction in Shelly Group, with growing confidence since their initial Q1 2024 investment as the company executes on multiple strategic initiatives. The manager highlights significant corporate milestones including Frankfurt XTRA uplisting, European Company conversion, and sustained 40-50% revenue growth, all enhancing institutional investor accessibility. At 16x NTM EBITDA, Shelly trades at a 25% discount to the manager's previous valuation, providing attractive entry points. The company's strategic evolution from hardware manufacturer to integrated smart home platform with recurring software revenues represents a compelling business model transformation. Shelly's expansion beyond core DACH markets into the US, combined with product diversification into cameras, smart locks, and professional-grade devices, provides multiple growth vectors. The software monetization strategy through subscription services and cloud solutions offers significant margin expansion potential. The manager's projection of 5x growth by 2030 reflects confidence in Shelly's ability to capitalize on smart home adoption trends and expand their 92-SKU product portfolio across DIY and professional markets.

Pitch Summary:
The new positions in Q4 included e.l.f. Beauty, a high-growth, digitally-savvy cosmetics company and Vertiv a global leader in designing, manufacturing, and servicing critical digital infrastructure solutions that will significantly benefit from the coming Blackwell/Grace Nvidia upgrade cycle.

BSD Analysis:
Deep Sail Capital established a new position in Vertiv, positioning the fund to benefit from the next generation of AI infrastructure buildout. The manager specifically highlights Vertiv's exposure to the Blackwell/Grace Nvidia upgrade cycle, indicating strong conviction in the AI infrastructure investment theme. Vertiv's comprehensive portfolio of power, cooling, and IT infrastructure solutions positions it as a critical enabler of data center expansion and modernization. The company's global leadership in critical digital infrastructure provides significant competitive moats and recurring revenue streams through services. As AI workloads drive higher power densities and cooling requirements, Vertiv's specialized solutions become increasingly valuable to data center operators. The timing of this investment aligns with accelerating AI adoption and the need for more sophisticated infrastructure to support advanced computing workloads. Vertiv's established customer relationships and technical expertise in mission-critical environments provide strong barriers to entry and pricing power in the expanding market.

Pitch Summary:
The new positions in Q4 included e.l.f. Beauty, a high-growth, digitally-savvy cosmetics company and Vertiv a global leader in designing, manufacturing, and servicing critical digital infrastructure solutions that will significantly benefit from the coming Blackwell/Grace Nvidia upgrade cycle.

BSD Analysis:
Deep Sail Capital initiated a new position in e.l.f. Beauty, recognizing the company as a high-growth player in the cosmetics industry with strong digital capabilities. The manager's characterization of e.l.f. as "digitally-savvy" highlights the company's competitive advantage in reaching younger consumers through social media and digital marketing channels. e.l.f. Beauty has demonstrated exceptional growth by offering high-quality cosmetics at accessible price points, disrupting traditional beauty industry dynamics. The company's cruelty-free positioning and direct-to-consumer capabilities align with evolving consumer preferences and shopping behaviors. e.l.f.'s success in mass retail channels while maintaining strong digital presence provides multiple growth vectors and market reach. The timing of this investment suggests the manager sees continued momentum in the affordable luxury beauty segment. The company's ability to leverage social media trends and influencer marketing positions it well for sustained growth in the competitive cosmetics market.

Pitch Summary:
Additionally, Rocket Labs USA and TSS Inc were up 161% and 66% in Q4. TSSI is a strategic partner for Dell that has a significant opportunity around data center integration, specifically in the liquid-cooled data centers.

BSD Analysis:
Deep Sail Capital identifies TSS Inc. as a strategic beneficiary of the data center infrastructure buildout, particularly in liquid-cooled systems. The company's 66% gain in Q4 reflects market recognition of its positioning in the rapidly evolving data center market. TSS's partnership with Dell provides significant competitive advantages and access to enterprise customers requiring sophisticated data center solutions. The focus on liquid-cooled data centers positions the company at the forefront of next-generation infrastructure needed to support AI and high-performance computing workloads. Liquid cooling technology is becoming increasingly critical as data centers face higher power densities and thermal management challenges. TSS's specialization in mission-critical IT solutions and data center integration services aligns with the growing demand for advanced cooling solutions. The manager's emphasis on the Dell partnership suggests strong validation of TSS's capabilities and potential for sustained growth in the expanding data center market.

Pitch Summary:
Additionally, Rocket Labs USA and TSS Inc were up 161% and 66% in Q4. Rocket Labs is an exciting founder-led space, rocket, and satellite company that we believe has a multi-decade growth path ahead of it as investment in space development expands.

BSD Analysis:
Deep Sail Capital views Rocket Lab as a compelling long-term growth story in the expanding space economy. The company delivered exceptional performance with a 161% gain in Q4, reflecting strong market recognition of its positioning in the small satellite launch market. As a founder-led organization, Rocket Lab benefits from visionary leadership and entrepreneurial focus, which the manager clearly values. The fund sees a multi-decade growth trajectory driven by increasing investment in space development and commercialization. Rocket Lab's integrated approach spanning launch services, satellite manufacturing, and spacecraft components provides multiple revenue streams and competitive advantages. The company's Electron rocket has established a strong track record for small payload delivery, positioning it well in the growing small satellite market. The manager's confidence in the long-term secular trends supporting space development suggests this position aligns with their growth-oriented investment philosophy.

Pitch Summary:
For the second quarter in a row, Kraken Robotics was the fund's top contributor, as excitement about the future of their battery and sensor business continues to grow. The best-performing position in the quarter was again Kraken Robotics, which I highlighted in our Q2 investor letter.

BSD Analysis:
Deep Sail Capital maintains strong conviction in Kraken Robotics, with the position serving as the fund's top contributor for two consecutive quarters. The manager highlights growing market excitement around the company's battery and sensor business, suggesting strong momentum in their core technology offerings. Kraken operates in the specialized marine robotics sector, providing software-centric sensors and underwater robotic systems to military and commercial markets. The repeated outperformance and manager's continued confidence indicate the company is executing well on its technology roadmap. The focus on miniaturized technologies for unmanned underwater vehicles positions Kraken in a niche but growing market with significant barriers to entry. The sustained positive performance suggests the market is recognizing the value of their specialized capabilities and potential for expansion in defense and commercial marine applications.

Pitch Summary:
This quarter we are highlighting Honeywell (HON) as a relative yield example in the Industrials sector. HON is a premier industrial conglomerate with leading businesses in commercial aerospace, industrial automation, energy sustainability solutions, and building automation. A common theme across these end markets is that HON embeds its products into the operations of its customers, which generates recurring revenue from aftermarket products/services and leads to high customer switching costs. We believe HON has a sustainable competitive advantage due to its wide installed base of equipment, strong reputation, pricing power, high customer switching costs, and technological expertise. Our thesis on HON is that it appears well positioned for consistent growth, driven by a recovery in commercial aerospace following the Covid pandemic coupled with favorable secular trends in automation, remote security management and energy savings in buildings. The company made a strategic shift in recent years away from lumpy product sales towards connected systems and software, which lowers cyclicality and increases recurring revenues; we estimate that 30% of revenues are recurring in nature. This focus on software and recurring revenues has resulted in strong returns on invested capital (ROIC) over time that have easily exceeded the company's weighted average cost of capital (WACC), something we expect to continue for years to come. The fund originally purchased HON during the pandemic and added to the position in June 2024, after it reached a historically cheap relative valuation. As shown in the graph below, at the time of the most recent position increase, HON had a 2.3% dividend yield (top panel) and a relative dividend yield of 1.65x the S&P 500 (bottom panel), which was an all-time high. Based on this valuation metric, HON had never been cheaper compared to the overall market. The company has an A-rated balance sheet by Standard & Poor's and is a Dividend Aristocrat that has increased its dividend each year since 1992. Over the past five years, HON has increased its dividend an average of 6% per year. We expect similar dividend increases in the future, which will help grow income and protect against inflation.

BSD Analysis:
Madison's thesis on Honeywell centers on the company's transformation from cyclical product sales to recurring software and services revenue, with management estimating 30% of revenues are now recurring. The fund managers highlight HON's competitive moats including high customer switching costs, wide installed base, and technological expertise across aerospace, automation, and building technologies. They view the post-COVID aerospace recovery and secular automation trends as key growth drivers. The investment was initiated during the pandemic and increased in June 2024 when HON reached historically cheap valuations with a relative dividend yield of 1.65x the S&P 500 - an all-time high. Madison emphasizes HON's financial strength with an A-rated balance sheet and Dividend Aristocrat status, having increased dividends annually since 1992 at an average 6% rate over the past five years. The managers expect continued strong returns on invested capital exceeding the company's cost of capital, supported by the shift toward higher-margin, less cyclical software revenues.

Pitch Summary:
VF Corp manages apparel brands, including Dickies, The North Face, Timberland, and Vans. Under its prior CEO, the company's poor capital allocation (including overpaying for Supreme and maintaining a too-high dividend after spinning out Kontoor) forced it to pause its model of using excess free cash flow to acquire good brands and manage them well. The company has now cut its dividend (twice) to a reasonable level and brought on a new CEO who has a track record of successfully turning around businesses. I believe that the company has good brands, the skills to manage them well, and a management team that is righting the ship. VF Corp currently trades at an attractive upside-to-downside ratio.

BSD Analysis:
Curreen Capital presents a turnaround thesis for VF Corp centered on new leadership and improved capital allocation discipline. The manager acknowledges the company's recent missteps under previous management, including overpaying for Supreme and maintaining an unsustainable dividend policy after the Kontoor spinoff. However, the investment case is built on the underlying strength of VF's brand portfolio, including The North Face, Timberland, Vans, and Dickies, which the manager views as high-quality assets. The key catalyst is the new CEO's proven track record in business turnarounds and the company's recent actions to restore financial flexibility through dividend cuts. The manager believes VF retains the operational capabilities to manage premium brands effectively, and that the current management team is implementing the necessary changes to return the company to its historical model of disciplined brand acquisition and management. The current valuation appears to reflect the company's recent struggles while not fully crediting the potential for operational improvement under new leadership.

Pitch Summary:
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. The company spun out of Siemens in September 2020. After many years of weak electricity demand in OECD countries, Siemens Energy is benefiting from a cyclical boom in demand.

BSD Analysis:
Curreen Capital presents a cyclical recovery thesis for Siemens Energy, emphasizing the company's portfolio of world-class power generation and transmission assets. The manager acknowledges the mixed quality of the business segments, with strong core operations in power generation and transmission offset by a struggling wind turbine division undergoing turnaround efforts. The investment case is built on a cyclical inflection point, as electricity demand in OECD countries recovers after years of weakness. As a 2020 spinoff from Siemens, the company fits Curreen's preference for post-spinoff opportunities that may be undervalued by the market. The manager appears to be betting that the cyclical demand recovery will drive significant earnings improvement across the portfolio, particularly benefiting the high-quality power generation and transmission businesses. The timing of this investment suggests confidence that the electricity demand cycle has turned positive, creating a favorable operating environment for Siemens Energy's core competencies.

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 20%. Nilorn currently trades at an attractive upside-to-downside ratio.

BSD Analysis:
Curreen Capital presents a compelling bullish case for Nilörn Group based on its strong competitive position in the European apparel accessories market and exceptional financial metrics. The manager highlights the company's differentiated value proposition combining just-in-time delivery with quality design services that enhance customer brand perception. The investment thesis is anchored by impressive fundamentals, including approximately 20% returns on capital, which indicates strong pricing power and operational efficiency. The company's balanced capital allocation approach of reinvesting for growth while paying dividends demonstrates management's confidence in the business model and commitment to shareholders. The manager views the current valuation as offering attractive upside potential relative to downside risk. This appears to be a high-quality, profitable business trading at a discount, fitting Curreen's strategy of finding overlooked European small-cap opportunities with strong fundamentals.

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 presents a growth-oriented bullish case for GetBusy, a document exchange software provider focused on the accounting sector. The manager acknowledges that the company is currently unprofitable at the consolidated level due to aggressive reinvestment in growth initiatives and new product development. However, the investment thesis is based on the underlying profitability and sustainability of the core businesses in both the UK and US markets. As a 2017 spinoff from Reckon, GetBusy fits Curreen's pattern of investing in overlooked post-spinoff opportunities. The manager appears confident that the current investment phase will eventually translate into meaningful profitability as the business scales and new products gain traction. This represents a higher-risk, higher-reward position where the manager is betting on management's ability to successfully reinvest for growth while maintaining the strength of the core profitable operations.

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 acquire complementary businesses.

BSD Analysis:
Curreen Capital presents a bullish case for Frontdoor based on its home service plan business model and significant market opportunity. The manager highlights that Frontdoor currently serves only 2% of U.S. homes, suggesting substantial room for market penetration and organic growth. The investment thesis centers on the company's disciplined capital allocation strategy, using free cash flow across multiple value-creating initiatives including organic growth, debt reduction, share repurchases, and strategic acquisitions. The business model appears to have attractive unit economics given the recurring revenue nature of home service plans and the company's ability to generate consistent free cash flow. As a 2018 spinoff from ServiceMaster, Frontdoor represents the type of overlooked, post-spinoff opportunity that Curreen Capital specializes in identifying. The manager's confidence in the business model and growth runway suggests this is a core holding with long-term appreciation potential.

Pitch Summary:
Enhabit provides healthcare and hospice services in patients' homes. The company serves patients covered by Medicare, Medicare Advantage, private Insurance and Medicaid – with reimbursement rates declining in that order, from the higher levels paid by Medicare to the lower levels paid by Medicaid. Enhabit was spun out of Encompass Health in July 2022. Historically, the business earned high returns on capital and grew both organically and through acquisitions. The company has struggled since the spinoff, with declining revenues and higher costs, which drove it to repeatedly seek covenant relief from its lenders. Enhabit currently trades at an attractive upside-to-downside ratio.

BSD Analysis:
Curreen Capital presents a contrarian bullish view on Enhabit, a home healthcare and hospice services provider that has faced significant operational challenges since its 2022 spinoff from Encompass Health. The manager acknowledges the company's current struggles including declining revenues, rising costs, and covenant relief issues with lenders. However, the investment thesis is based on the historical strength of the business model, which previously generated high returns on capital and grew through both organic expansion and acquisitions. The manager appears to be betting on a turnaround, viewing the current distressed valuation as offering compelling upside potential relative to downside risk. This represents a classic value play on a temporarily impaired but fundamentally sound business model. The manager's willingness to add to the position during Q3 at $7.83 per share demonstrates conviction in the turnaround thesis despite near-term headwinds.

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 presents a bullish case for Credit Acceptance based on its proven track record of profitable market share gains in the challenging subprime auto lending space over two decades. The manager highlights the company's disciplined capital allocation strategy, using free cash flow for business growth and opportunistic share repurchases. The investment thesis centers on the company's competitive moat in serving a difficult market segment that many lenders avoid. The manager views the current valuation as offering an attractive risk-reward profile. This appears to be a core holding given its inclusion in positions larger than 5% of the fund. The pitch emphasizes the company's operational consistency and management's shareholder-friendly capital allocation decisions. The manager's confidence in the business model and current valuation suggests this is a high-conviction position in the portfolio.

Pitch Summary:
Liberty TripAdvisor Holdings (LTRPA) 0.50% Exchangeable Senior Debentures due 2051 - Liberty TripAdvisor is a holding company whose principal assets include a 21% economic and 57% voting interest in TripAdvisor, Inc. (TripAdvisor), one of the world's largest publicly traded travel guidance platforms. As a result, the value of Liberty TripAdvisor is tied to the value of its equity stake in TripAdvisor, which we believe covers the $330 million Senior Debenture with sufficient margin of safety. TripAdvisor features strong credit fundamentals including a 2.4x gross leverage ratio, net cash on its balance sheet, positive free cash flow, and growing non-core asset value. We began purchasing the bonds in early 2024 in the low 90s after identifying language in the bond indenture permitting holders to 'put' their bonds to the company at par in March 2025, long before its 2051 maturity date, creating an event-driven opportunity to earn a rate of return greater than the yield to maturity. As Liberty TripAdvisor had minimal cash itself, we believed the owners would tap TripAdvisor to assist with repaying this debt and avoid forfeiting the controlling ownership position to creditors. A third-party review of the company's credit documentation, corporate structure, and a campaign to identify and organize other bondholders supplemented our analysis. We continued our purchases in 4Q24 at an average yield-to-put (YTP) of 16.4%. In late December, Liberty TripAdvisor announced it would be acquired by TripAdvisor in a transaction providing for our bonds to be repaid with cash by the March put date. Subsequent to the announcement, we continued purchasing bonds for our short-term high yield strategies at an average YTP of 6.7%.

BSD Analysis:
CrossingBridge executed a sophisticated event-driven credit strategy in Liberty TripAdvisor, identifying a contractual put option that created asymmetric risk-reward dynamics. The fund's analysis centered on the underlying value of TripAdvisor's equity stake providing adequate coverage for the $330 million debenture, supported by strong credit fundamentals including net cash and positive free cash flow. The manager's activist approach, including third-party documentation review and bondholder organization, demonstrated institutional-quality execution beyond typical credit analysis. The 16.4% yield-to-put represented exceptional risk-adjusted returns given the March 2025 put protection. The subsequent acquisition announcement validated the investment thesis, with bonds purchased post-announcement still offering attractive 6.7% yields to the accelerated repayment date. This investment exemplifies CrossingBridge's ability to identify and capitalize on complex credit structures with embedded optionality. The successful outcome demonstrates the value of deep credit documentation analysis and activist bondholder coordination.