Investment Pitches

Pitch Summary:
A&W, which many will know for its iconic Burger Family, traces its roots back to 1923 in California. The Canadian arm of the business opened its first location in Winnipeg in 1956. Soon after, A&W Canada pursued independence from the U.S. business, and by 1972, the business was acquired by Unilever. However, operational challenges prompted management to launch a buyout, creating the A&W we know today. Since 1991, A&W Canada has had only three CEOs, with the current CEO joining in 1992. Remarkably, the founders still own ~35% of the business 35 years later. This long-term ownership reflects a culture that not only attracts and retains talent but also fosters a shared commitment to sustainable, long-term success. A&W's culture permeates every aspect of its decision-making. For instance, a decade ago, the company undertook what we believe to be a thoughtful, five-year rebranding effort—the first in its history—to appeal to a new generation. This strategic focus on high-quality, sustainable ingredients rejuvenated the brand and positioned it as a leader in ethical sourcing. It was also a key factor in A&W winning the license to bring the UK-based Pret-A-Manger brand to Canada. Our conviction in A&W's potential was solidified through firsthand experiences. During our 2024 Tour du Canada, we added A&W to our watchlist and began engaging with management to understand Torquest's vision for the business. This culminated in a visit to A&W's Vancouver headquarters, where we spent three hours with the senior strategy team. Their depth of talent, cultural alignment, and hunger for growth left a lasting impression. Today, A&W is Canada's second-largest burger chain and has merged its operating business with its publicly listed royalty company, creating a pure-play multi-brand Quick Service Restaurant (QSR). The company boasts a strong track record of profitable growth, reinvesting in new restaurants at attractive returns and generating substantial cash flow. The recent Pret-A-Manger rollout and a valuation disconnect relative to North American QSR peers position A&W for significant value creation in the years ahead. A&W's culture and long-term focus are reflected in the tenure of its senior leadership. On average, members of the senior management team have been with the company for over 20 years (as seen in the graphic below), with several starting as cooks in A&W restaurants. This depth of experience and alignment is a testament to a culture that prioritizes growth, sustainability, and long-term success. Culture attracts talent, which we can see with the depth within the organization – there are multiple layers of high caliber talent at A&W. This culture also permeates decision making and strategy at A&W, leading to a focus on strategy that delivers long-term sustainable success for the business. Heightened conviction in our variant perception came from experiencing this culture first-hand and spending time with the team on their home turf.

BSD Analysis:
Langdon presents a compelling cultural thesis for A&W, emphasizing the company's exceptional management stability and founder ownership retention. The fund's investment rationale centers on A&W's transformation into a pure-play multi-brand QSR following the merger of its operating business with the royalty company. Management's 20+ year average tenure and the fact that several executives started as restaurant cooks demonstrates deep operational knowledge and cultural alignment. The successful rebranding effort and ethical sourcing positioning has differentiated A&W in the competitive Canadian QSR market. The Pret-A-Manger licensing deal represents a significant growth catalyst and validates management's strategic capabilities. Langdon's conviction was strengthened through direct management engagement and on-site visits, suggesting strong due diligence. The valuation disconnect relative to North American QSR peers implies potential multiple expansion opportunity as the company executes its multi-brand strategy.

Pitch Summary:
Among the top five detractors for the fourth quarter were two holdings from the Consumer sector: Royal Unibrew and FeverTree. Royal Unibrew, a leading European beverage producer, declined 8%, returning to our historical cost basis. FeverTree, a premium mixer company known for its tonic waters, experienced an 18% drop, ending 2024 approximately 20% below our average cost for the investment. These performance levels are far from what we would consider impairments. Both companies operate within the everyday purchase category, which we believe is less economically sensitive than large-ticket discretionary spending. Importantly, we believe FeverTree and Royal Unibrew maintain strong balance sheets and have significant potential to restore margins to historical levels. This gives us confidence that, with patience, the investments we have in these companies will yield meaningful rewards over the long term. As evidenced above, both companies are currently trading at their lowest earnings multiples in a decade, based on both 2024 and projected 2025 earnings. This is despite delivering impressive revenue growth over the same period—20% annualized for FeverTree and 10% for Royal Unibrew. From our assessment, the primary driver of this valuation compression has been margin pressures, which remain a critical determinant of their future value creation. This dynamic was evident at the time of our initial investment and continues to hold true today. With margins improving by 30% at FeverTree and remaining stable for Royal Unibrew, both companies have performed in line with our expectations. We believe it is only a matter of time before their stock prices reflect their strong underlying fundamentals.

BSD Analysis:
Langdon presents a patient bull case for Royal Unibrew, viewing the 8% Q4 decline as a temporary return to cost basis rather than fundamental deterioration. The manager emphasizes the company's position as a leading European beverage producer operating in the defensive everyday purchase category. The investment thesis is anchored on attractive valuation metrics, with Royal Unibrew trading at decade-low earnings multiples despite consistent 10% annualized revenue growth. Langdon highlights the company's strong balance sheet and stable margin profile as key strengths during the current challenging environment. The manager's conviction stems from their belief that margin pressures are temporary and that the market has overreacted to near-term headwinds. Their patient approach reflects confidence in Royal Unibrew's ability to restore historical margin levels and deliver meaningful long-term returns. The combination of defensive business characteristics, solid fundamentals, and compelling valuation supports Langdon's optimistic outlook for the European beverage producer.

Pitch Summary:
Among the top five detractors for the fourth quarter were two holdings from the Consumer sector: Royal Unibrew and FeverTree. Royal Unibrew, a leading European beverage producer, declined 8%, returning to our historical cost basis. FeverTree, a premium mixer company known for its tonic waters, experienced an 18% drop, ending 2024 approximately 20% below our average cost for the investment. These performance levels are far from what we would consider impairments. Both companies operate within the everyday purchase category, which we believe is less economically sensitive than large-ticket discretionary spending. Importantly, we believe FeverTree and Royal Unibrew maintain strong balance sheets and have significant potential to restore margins to historical levels. This gives us confidence that, with patience, the investments we have in these companies will yield meaningful rewards over the long term. As evidenced above, both companies are currently trading at their lowest earnings multiples in a decade, based on both 2024 and projected 2025 earnings. This is despite delivering impressive revenue growth over the same period—20% annualized for FeverTree and 10% for Royal Unibrew. From our assessment, the primary driver of this valuation compression has been margin pressures, which remain a critical determinant of their future value creation. This dynamic was evident at the time of our initial investment and continues to hold true today. With margins improving by 30% at FeverTree and remaining stable for Royal Unibrew, both companies have performed in line with our expectations. We believe it is only a matter of time before their stock prices reflect their strong underlying fundamentals.

BSD Analysis:
Langdon maintains a bullish stance on FeverTree despite recent underperformance, viewing the 18% Q4 decline as a temporary setback rather than fundamental impairment. The manager emphasizes FeverTree's position in the everyday purchase category, which provides defensive characteristics during economic uncertainty. The investment thesis centers on a compelling valuation opportunity, with the stock trading at decade-low earnings multiples despite impressive 20% annualized revenue growth. Langdon highlights margin recovery as the key value driver, noting 30% margin improvement that aligns with their original investment expectations. The manager's confidence stems from FeverTree's strong balance sheet and the belief that current margin pressures are temporary rather than structural. Their patient approach reflects conviction that the market will eventually recognize the company's strong fundamentals and margin restoration potential. The defensive nature of the premium mixer business, combined with attractive valuation metrics, supports Langdon's long-term optimism for meaningful returns.

Pitch Summary:
By a wide margin, the most impactful item to discuss is the transaction announced on October 9th. CC Capital, a private equity firm in New York run by one of Blackstone's most senior retired dealmakers, will invest $250 million USD into Westaim. This will provide a ~40% stake and a path to control the Board over time, subject to certain stock and business milestones. Longtime supporters will recall that we have owned shares in this company since the inception of our firm (and even before establishing Langdon). We have always had deep respect for the quality of its assets and the capabilities of its leadership team. This transaction, along with the highly successful IPO of Skyward Specialty Insurance, serves as third-party validation that our initial assertions appeared to be correct. For a refresher, Westaim is an investment holding company, specializing in acquiring and developing or restructuring businesses operating primarily within the global services financial industry. While we have been fortunate at Langdon to enjoy extremely strong returns from our investment in Westaim it has very much been an "overnight success" a decade in the making. Since Langdon's first purchase in August 2022, we've earned 2x Multiple of Capital (MoC). Since 2014, Westaim's management team has worked tirelessly to build a private credit manager (Arena Investors) from scratch and to turn around a U.S. specialty insurance company (Skyward). In 2024, they successfully exited their investment in Skyward, which has nearly tripled since its IPO in Q1 2023. Skyward, also held in our portfolio, has contributed meaningfully to returns. The exit delivered an approximate 2.5-3x MoC, translating to roughly a 13% gross annualized return (IRR) in USD—or closer to 15% in CAD. You must be asking: "How could this company still be trading below net cash on its balance sheet?" That is the very question we've been asking for most of the past decade—and it remains valid today! The successful monetization of Skyward above where Westaim had it marked on its balance sheet at the end of 2022 attracted more investor interest in the material dislocation between price and value. It also brought in a highly experienced and successful investment firm (CC Capital), which will become Westaim's largest owner once the deal closes in Q1 2025. We were wall crossed on this transaction and voted in support of it. We believe it positions Westaim and Arena well to transition from a NAV-based valuation model to one that will eventually trade on earnings. Regarding alignment between CC Capital and Westaim, there are conditions to be met before a full take private could be executed. CC Capital is not allowed to make a bid for the remainder of the company for 3 years post transaction close. In addition, CC Capital cannot elect a 6th board member, of the 11-person board, until the stock price goes above $48.00 CAD ($8.00 pre-share consolidation). These terms create a multi-year runway for the public market to sensibly value this company. Beyond injecting capital into Westaim above market price, CC Capital is also contributing talent and an insurance platform. This platform will serve as the foundation for an insurance-led asset management firm, a model that has become a valuable driver of asset growth among alternative asset managers. Examples include Apollo/Athene, Ares/Aspida, Blackstone/F&G Annuities, and Brookfield/BIS. Westaim has already redomiciled to Delaware from Alberta, making it no longer a Canadian company (a reality we have argued for years). We expect several analysts to begin covering this company in its new incarnation in 2025. There is much more to this transaction than we can cover in this letter. However, after several meetings with the incoming management team, we feel very optimistic about the company's future prospects. We also see low downside risk, with the stock still trading below cash value.

BSD Analysis:
Langdon presents a compelling bull case for Westaim, highlighting a transformational $250 million investment from CC Capital that validates their long-held thesis. The manager emphasizes Westaim's successful track record, including a 2.5-3x return on their Skyward exit and 2x returns since Langdon's 2022 investment. The pitch centers on a significant valuation disconnect, with the stock trading below net cash despite strong asset quality and management capabilities. CC Capital's involvement brings institutional validation, additional capital, and an insurance platform that positions Westaim to transition from NAV-based to earnings-based valuation. The structured deal terms provide downside protection while creating a multi-year runway for market revaluation. Langdon views the redomiciliation to Delaware and expected analyst coverage as additional catalysts for value recognition. The manager's decade-long conviction and intimate knowledge of the business, combined with the recent third-party validation, supports their optimistic outlook for the company's transformation into an insurance-led asset management firm.

Pitch Summary:
One recent example of maintenance research was a trip to Germany and Italy with ATS Corporation. ATS is a provider of automation solutions to manufacturers around the world. The business is driven by talented engineers who design and assemble automated assembly technology that is installed into manufacturers in the Life Science, Food and Beverage, Transportation, Packaging, and Energy sectors. An example of this would be production of an automated assembly line that manufactures inhalers for asthmatic patients or epi-pens for those who have anaphylaxis. We spent time with local operators at ATS Life Science Tooling, Comecer, and CFT Group. Two of these three businesses were acquired by ATS in the past five years, and we expect all of them to be meaningful drivers of growth and returns on capital in the years ahead. These trips give us the opportunity to observe operational changes post-acquisition, meet with local talent, gain a deeper understanding of growth and margin drivers, and experience first-hand the decentralized culture that management has fostered. The culture at ATS is similar to Langdon's, with both organizations driven by a shared focus on continuous improvement.

BSD Analysis:
Langdon maintains a bullish view on ATS Corporation based on their direct operational due diligence and cultural alignment with management. The manager emphasizes ATS's position as a global provider of automation solutions across diversified end markets including life sciences, food and beverage, transportation, packaging, and energy sectors. The investment thesis is strengthened by the company's successful acquisition strategy, with two of three recent European acquisitions (ATS Life Science Tooling, Comecer, and CFT Group) expected to drive meaningful growth and returns on capital. Langdon's on-site visits to Germany and Italy provided firsthand insight into post-acquisition integration and the company's decentralized culture focused on continuous improvement. The manager highlights ATS's engineering talent and specialized automation capabilities, citing examples like automated assembly lines for medical devices such as inhalers and epi-pens. The cultural similarity between ATS and Langdon, both focused on continuous improvement, suggests strong management alignment. The bullish stance reflects confidence in ATS's ability to execute its acquisition strategy while maintaining operational excellence across its global platform.

Pitch Summary:
Aritzia, founded in 1984, is an everyday luxury fashion house focused on the female consumer. Aritzia and its halo of brands; Wilfred, Babaton, TNA, Super Puff, Sunday Best have been well known to Canadians for years. Revenues at Aritzia increased from $875MM pre-COVID to $2.2B for the fiscal year ending February 2023, driven by growth in eCommerce and the United States. We have spent time with several key leaders at Aritzia to better understand their store real estate and distribution strategies. It is clear that the company invests in talent as thoughtfully as it does in capital. For example, founder Brian Hill spent nearly a decade recruiting their Head of Real Estate before she joined. Similarly, Aritzia waits patiently for its target location to become available—whether in a mall or on a street—before committing to long-term leases. Over the past two years, the business navigated a major catch-up capital expenditure program that was needed after the business saw eCommerce revenues nearly quadruple through the pandemic. While the capital program was sensible, the front-loaded nature and its impact on cash generation surprised us. For us at Langdon—and for Aritzia's management team—this has been a valuable lesson in communication. With these distribution network investments now behind them, we have seen the business deliver on expected margin improvements while continuing to grow. We are excited for what lies ahead as they continue to invest in U.S. growth, which now represents over 55% of revenues, while patiently laying the foundation for international expansion in the years to come.

BSD Analysis:
Langdon presents a bullish case for Aritzia based on the company's successful transformation from a Canadian retailer to a North American growth story. The manager highlights impressive revenue growth from $875MM pre-COVID to $2.2B by February 2023, driven primarily by e-commerce expansion and U.S. market penetration. The investment thesis centers on management's disciplined approach to talent acquisition and real estate strategy, with the founder spending nearly a decade recruiting key executives and waiting patiently for optimal store locations. While the manager acknowledges being surprised by the front-loaded nature of recent capital expenditures and their impact on cash generation, they view the completion of distribution network investments as a positive inflection point. With the U.S. now representing over 55% of revenues and margin improvements materializing, Langdon sees Aritzia well-positioned for continued growth. The international expansion opportunity provides additional upside potential as the company leverages its proven North American playbook globally. The manager's bullish stance reflects confidence in both the business model and management team's execution capabilities.

Pitch Summary:
Esker is a French software company and one of our portfolio holdings. The business provides mid-to-large enterprises' finance departments with highly sticky software the digitizes business logic and automates workflows in areas of order-to-cash and source-to-pay. Notable customers include NVIDIA, Dairy Queen, Heineken, and the Trudeau International Airport. On September 18th, Esker Management announced a cash offer together with private equity firms Bridgepoint and General Atlantic. The €262 per share bid implies a valuation of 7.2x 2024 EV/Sales and 67.6x EV/EBIT, after expensing capitalized R&D which is roughly 2x on our cost and a 61% IRR. The company had been on our watchlist from Langdon's inception, and while SNCF strikes prevented us from visiting Esker's HQ during our 2022 trip to France, it did not stop us from organizing a three-hour demo of their solutions upon our return. This gave us a clear sense of the value-add and future growth prospects. We made our first investment in July 2023 after several months of diligence, and increased our weight in November, after gaining conviction in their ability to improve margins without sacrificing growth. This healthy tension between profitability and growth is even more pronounced for a company like Esker, given the length of sales cycles, lower implementation margins, and upfront sales bonuses. While the company continued to experience record bookings, management grew increasingly frustrated with the market's underappreciation of their success. To paraphrase the COO Emmanuel Olivier, they were drinking champagne to celebrate record contracts signed, while the market was concerned with the upfront costs it required. With new owners, Esker's Management believes they can focus on longer-term value creation. While Esker has delivered a solid return for clients, we regard it as only a satisfactory outcome relative to the time invested. We believe the company could have exceeded Bridgepoint's offer through compounded earnings growth over a 3–5-year horizon. On the other hand, there is no shortage of high-quality ideas we think we can redeploy our proceeds into if the deal goes through.

BSD Analysis:
The manager presents a detailed case study of Esker, a French enterprise software company specializing in finance department automation. The investment thesis centered on the company's highly sticky software solutions that digitize business logic and automate workflows for order-to-cash and source-to-pay processes. The manager conducted thorough due diligence including a three-hour product demo, which provided conviction in the value proposition and growth prospects. The investment was initiated in July 2023 and increased in November 2023 based on management's ability to balance margin improvement with growth. The takeover offer at €262 per share represents a 2x return and 61% IRR, validating the investment thesis. However, the manager views this as only a satisfactory outcome, believing the company could have delivered superior returns through organic growth over 3-5 years. The successful exit demonstrates the manager's ability to identify undervalued software companies with strong fundamentals and sticky customer relationships.

Pitch Summary:
Travel is usually anchored around 1-5 critical or "must-meet" situations, and then density is built out from there. For this trip, the anchors included Yeti, where Isaac requested more detail on their point of sale retail presence across Europe; Euronext, both at its global headquarters in La Defense and the recently integrated Borsa Italia Exchange in Milan; and a visit to the brewery recently acquired by Royal Unibrew in San Giogio di Nogaro, Italy. The Yeti work involved touring dozens of retail locations to get a better sense of the brand's presence across Western Europe. This research confirmed some concerns around their progress in Europe - which was highlighted as a priority several years ago - but also revealed the still untapped potential of the region once their product portfolio is better aligned with local preferences. In other words, that market is not interested in expensive hard coolers, given that ice is not commonly purchased in Europe, nor are 40oz drinking cups. We did revise lower our forward-looking assumptions for Europe, which today represents about 1-2% of the revenues overall.

BSD Analysis:
The manager conducted extensive field research across Western Europe to assess YETI's retail presence and market penetration. The analysis revealed mixed findings regarding YETI's European expansion strategy, which had been identified as a priority several years ago. While the research confirmed existing concerns about the company's progress in Europe, it also highlighted significant untapped potential in the region. The key insight was that YETI's current product portfolio is misaligned with European consumer preferences, particularly regarding hard coolers and large drinkware. European consumers don't commonly purchase ice and show little interest in 40oz drinking cups, which are core YETI products. As a result of this field research, the manager revised downward their forward-looking assumptions for YETI's European business, which currently represents only 1-2% of total revenues. The stance appears neutral as the manager sees both challenges and opportunities in the European market.

Pitch Summary:
Finally, early in the quarter we reduced our Alphabet position substantially, by almost half, and added a position in UnitedHealth. Health insurance in the US is a large, defensive growth industry and UnitedHealth is the market leader. Not only the largest, but also a business with incredibly consistent execution and the foresight to invest outside of their core business. From 2000 to 2023 they have grown their earnings at 18% per year. Much like McKesson and Cencora's investments in technology to better service their suppliers and customers, UnitedHealth has used the cash flows generated from their core business to fund a "services" business, called Optum. This side of the business now generates 50% of profits and is growing faster than the underlying health insurance given the value created for customers through partnerships. It's rare to see periods of share price weakness for this sector which has an incredible record of consistent delivery. However, the past year presented one such opportunity and we used this to further increase our allocation to US healthcare. Between these three we expect around 15% EPS and cash flow growth over the next five years. They trade at an average multiple of about 17x PE, cheaper than the market by some distance, and among the most attractive within our defensive growth universe.

BSD Analysis:
The manager presents UnitedHealth as a compelling defensive growth opportunity, highlighting the company's market leadership and exceptional long-term track record of 18% annual earnings growth from 2000-2023. The investment thesis centers on UnitedHealth's successful diversification beyond core health insurance through Optum, which now generates 50% of profits and grows faster than the base business. This services division creates additional value through customer partnerships and demonstrates management's strategic foresight in capital allocation. The manager emphasizes the rarity of weakness in this consistently performing sector, making the recent opportunity particularly attractive. With expected 15% EPS and cash flow growth over five years and a 17x PE multiple below market averages, UnitedHealth offers compelling value within the defensive growth universe. The position represents increased allocation to US healthcare, reflecting confidence in the sector's structural advantages.

Pitch Summary:
McKesson, the drug distribution business, was added into the portfolio in late 2022. This year we cut the position back following a 70% rise in the shares. Subsequently shares have fallen -15% on the back of a more accelerated generic roll out (with lower profit margins) for Humira, one of the drugs which they distribute. We used this weakness to increase our allocation to the drug distributors by adding Cencora, a direct peer of McKesson, which fell similarly on the news. One of the risks we have identified in the distribution model is the concentration of customers. Pharmacies and hospitals in the US are pretty concentrated, meaning customer churn can have an outsized impact on revenues. By reducing our exposure to McKesson and diversifying into Cencora we have marginally increased our allocation to the sector, which we continue to like for all the reasons from our initial note, while meaningfully reducing this concentration risk.

BSD Analysis:
The manager executed a tactical rebalancing within the drug distribution sector, using market weakness as an opportunity to optimize risk exposure. The 15% decline in Cencora shares following accelerated generic rollout for Humira created an attractive entry point for a direct peer to McKesson. This move demonstrates sophisticated portfolio construction by maintaining sector exposure while reducing single-name concentration risk. The manager acknowledges the inherent customer concentration risk in US drug distribution, where consolidated pharmacy and hospital customers can create revenue volatility through churn. By diversifying across two leading distributors rather than concentrating in McKesson alone, the strategy maintains conviction in the sector's fundamentals while mitigating company-specific risks. The approach reflects confidence in the drug distribution business model despite near-term margin pressures from generic competition.

Pitch Summary:
Ryanair is a business we have admired for years. From peak to trough this year the shares fell by -38% on the back of weaker short-term fare guidance. We saw this as an opportunity to add a full position to the portfolio. The business case may be well known to our readers but, in brief, they have by far the lowest cost structure in the incredibly competitive short-haul market in Europe. They have made decisive, counter-cyclical capital investments, buying planes at discounts when others stepped back. This has resulted in them having the lowest cost, fully owned, fleet with lower carbon emissions and longer useful life than competitors. They have achieved this while holding average fares flat for the past ten years, growing revenues through ancillaries such as early boarding or on-board food and drinks. The most important element of "service" for an airline is punctuality, and Ryanair consistently score top of this ranking in Europe. Market share has grown consistently from 5% twenty years ago to 20% today, and passenger numbers are estimated to grow a further 50% from here. Today Ryanair has a net cash balance sheet, while competitors have excessive leverage and impending capital expenditure programs to replace aged fleets. This leaves room for greater capital return over the coming years, which has already begun with a meaningful buy back this year as their 30% return on capital results in significant excess cash flow. Airlines are clearly risky investments which, like banks, have generally generated poor returns for shareholders. However, like banks, there are exceptions, and Ryanair is one of them.

BSD Analysis:
The manager presents a compelling bull case for Ryanair based on its structural competitive advantages and opportunistic entry timing. The 38% share price decline created an attractive entry point for a business with the lowest cost structure in European short-haul aviation. Ryanair's counter-cyclical fleet investments have resulted in a modern, fuel-efficient fleet with lower emissions and longer useful life than competitors. The company has demonstrated pricing discipline by keeping fares flat for a decade while growing revenues through ancillary services. Market share expansion from 5% to 20% over twenty years, combined with an estimated 50% passenger growth runway, supports the long-term growth thesis. The net cash balance sheet contrasts favorably with leveraged competitors facing costly fleet replacement cycles. With a 30% return on capital generating significant excess cash flow, the company has initiated meaningful capital returns through share buybacks.

Pitch Summary:
Portfolio holding Toyota Industries still has more than 100% of its market capitalization in cross-shareholdings but has recently made significant improvements in disclosure on capital allocation and in shareholder return policy, including a commitment to significantly reduce policy-held shares and its largest ever share buyback. We have long felt that the possible unwind of these substantial cross-shareholdings supported the skew of outcomes for the stock and have engaged with management on this topic for several years.

BSD Analysis:
Mondrian's investment in Toyota Industries represents a compelling value unlock opportunity driven by the unwinding of Japan's cross-shareholding system. The company holds cross-shareholdings worth more than 100% of its market capitalization, creating a unique asymmetric return profile as these holdings are monetized. Management has recently demonstrated commitment to shareholder value creation through improved capital allocation disclosure and the largest share buyback program in company history. The manager's multi-year engagement with management on cross-shareholding reduction appears to be yielding results, with the company now committed to significantly reducing policy-held shares. This structural change should improve return on equity and increase management accountability to shareholders. The investment thesis hinges on the substantial value that can be unlocked as Toyota Industries transitions from a cross-shareholding structure to a more shareholder-focused model. Mondrian views the recent policy changes as validation of their long-term engagement strategy and expects continued progress in value realization.

Pitch Summary:
Portfolio holding Mitsubishi Electric, for example, has taken all these steps and is moving closer to global governance best practices which should allow the industrial conglomerate to realize more of the value in its strong and growing core businesses and net cash balance sheet. It was encouraging to see the company proactively announce an additional mid-quarter share buyback in response to recent market volatility.

BSD Analysis:
Mondrian views Mitsubishi Electric as a beneficiary of Japan's ongoing corporate governance reforms, highlighting the company's proactive adoption of shareholder-friendly practices. The manager emphasizes that Mitsubishi Electric has implemented comprehensive governance improvements including large share buybacks, dividend increases, addition of independent directors, better management compensation alignment, and divestiture of non-core assets. The company's strong net cash position provides financial flexibility during market downturns while supporting continued shareholder returns. The recent mid-quarter share buyback announcement demonstrates management's responsiveness to market conditions and commitment to capital allocation discipline. Mondrian believes these governance enhancements will help unlock value in the company's core industrial businesses. The investment thesis centers on the structural transformation of Japanese corporate practices creating a favorable environment for value realization. The manager's confidence appears reinforced by the company's balance sheet strength and operational focus on higher-return core segments.

Pitch Summary:
Loblaw, a subsidiary of George Weston Limited is Canada's largest grocery retailer and a national leader among the traditional supermarket industry. The company operates over 2400 stores across Canada under store banners: Loblaws, Shoppers Drug Mark/Pharmaprix, No Frills, Real Canadian Superstore, Fortinos, Zehrs Markets, Provigo, Maxi and T&T Supermarket. The company's integrated approach combines food retail, pharmacy services, and digital commerce. They've successfully developed a multi-format value architecture with discount, conventional and premium stores under different banners. Loblaws' leading loyalty program PC Optimum allows for personalized offerings in combination with PC Financial. We believe the company can continue to execute its strategy through various economic cycles, delivering attractive returns and dividend growth.

BSD Analysis:
Bristol Gate initiated a position in Loblaw, recognizing it as Canada's dominant grocery retailer with over 2,400 stores operating under multiple banners across various price points. The company's multi-format strategy spanning discount (No Frills), conventional (Loblaws), and premium (Real Canadian Superstore) segments provides comprehensive market coverage and defensive characteristics. Loblaw's integrated approach combining food retail, pharmacy services through Shoppers Drug Mart, and digital commerce creates multiple revenue streams and customer touchpoints. The PC Optimum loyalty program, combined with PC Financial services, generates valuable customer data and enhances customer retention through personalized offerings. This ecosystem approach provides competitive advantages and pricing power in the Canadian retail landscape. The company's diversified format strategy and strong market position should enable consistent execution across economic cycles. Bristol Gate expects Loblaw to deliver attractive returns and dividend growth given its market leadership, operational scale, and integrated business model in the essential consumer staples sector.

Pitch Summary:
In early August Premium Brands released earnings which provided clarity to investors regarding second half volume growth. Coming from a significant capital expenditure cycle that increased capacity in many of its production lines in the US, the company can now capitalize on increasing US demand and new product launches. It also proceeded with a sale and leaseback of a real estate asset making progress on its debt deleveraging. The company beat on EPS and revenue compared to FactSet estimates. The company also reiterated its FY25 guidance, highlighting strong expected performance for the second half of the year. Management kept the dividend constant and indicated a focus on buybacks when leverage targets are met.

BSD Analysis:
Bristol Gate maintains a positive outlook on Premium Brands following strong Q2 earnings that beat consensus estimates on both EPS and revenue. The company has completed a significant capital expenditure cycle that expanded production capacity across multiple US facilities, positioning it to capitalize on growing US market demand and new product launches. The sale-leaseback transaction demonstrates management's commitment to debt deleveraging while maintaining operational flexibility. Premium Brands' reiteration of FY25 guidance with emphasis on strong second-half performance indicates confidence in the business trajectory. Management's disciplined approach to capital allocation, maintaining the dividend while prioritizing debt reduction, reflects prudent financial stewardship. The focus on share buybacks once leverage targets are achieved suggests future shareholder returns. The company's expanded US production capacity and new product pipeline position it well to capture market share in the growing specialty foods segment.

Pitch Summary:
Toromont Industries released strong Q2 earnings on July 29, that beat analyst consensus estimates on earnings per share and revenue. Toromont seems well positioned to capitalize on the AI fuelled Data Center construction fervor, providing power generation and cooling on sight solutions. Its recent acquisition AVL, while still a small contributor at just 8% of the Equipment Group sales, it claims now over 25% of its backlog. Toromont, equipped with a pristine balance sheet has now another growth lever and investing in increasing capacity in the US to cater specifically the Data Center power solutions demand.

BSD Analysis:
Bristol Gate views Toromont Industries favorably following strong Q2 earnings that exceeded consensus estimates on both EPS and revenue. The company is strategically positioned to benefit from the AI-driven data center construction boom through its power generation and cooling solutions. The AVL acquisition, while currently representing only 8% of Equipment Group sales, has already captured over 25% of the company's backlog, indicating strong market demand for data center infrastructure solutions. Toromont's pristine balance sheet provides financial flexibility to invest in US capacity expansion specifically targeting data center power solutions. This positions the company as a key beneficiary of the ongoing AI infrastructure buildout. The combination of strong operational execution, strategic positioning in high-growth markets, and robust financial health makes Toromont an attractive investment. The company's ability to leverage its Caterpillar relationship and expand into specialized data center solutions represents a compelling growth opportunity in the current technology infrastructure cycle.

Pitch Summary:
Open Text reported earnings in early August that helped contribute to positive investor sentiment. The main driver of returns was the announcement of a management change. The board's Executive Chair T. Jenkins shared the company's focus on its core Content segment and possible dispositions of lower growth segments that was well received by the market. On the results, OpenText reported a 32% increase in cloud bookings for the quarter driven by demand for their new AI-driven Titanium X platform. The company also announced a 5% increase in its quarterly dividend and a $300 million share repurchase program. The company also provided an optimistic Fiscal Year 2026 outlook, projecting a return to total revenue and accelerated cloud revenue growth.

BSD Analysis:
Bristol Gate maintains a bullish stance on OpenText following strong Q3 results and strategic repositioning. The company's 32% increase in cloud bookings demonstrates robust demand for their AI-driven Titanium X platform, positioning them well in the enterprise software transformation. Management's focus on the core Content segment and potential divestiture of lower-growth divisions should improve operational efficiency and margins. The 5% dividend increase and $300 million share repurchase program reflects strong cash generation and management's confidence in the business. The optimistic FY2026 outlook projecting accelerated cloud revenue growth suggests the company is successfully transitioning to higher-margin recurring revenue streams. OpenText's strategic pivot toward AI-enhanced solutions and cloud-first approach aligns with enterprise digital transformation trends. The management change and portfolio optimization strategy should unlock shareholder value through improved focus and capital allocation.

Pitch Summary:
Colefax is a tiny, illiquid, founder-led luxury home-furnishings group with a 90-year heritage and one of the strongest design brands in high-end interiors. The company has retired 81% of its shares since 1999 and sits on £3.77/share in cash, giving it an EV/EBIT of only ~3.1x. Its Product division (fabrics + wallpaper) is the real economic engine, with 8–12% EBIT margins, near-100% FCF conversion, outsourced production, and premium pricing power in the US, which now represents over half of sales. Near-term, US tariffs (+10–50%) are a headwind, but Colefax can mitigate them by shifting production out of India, lifting prices, and leaning into its highest-margin US brands (Cowtan & Tout). Buybacks are likely to continue, especially after low tender uptake, and a dividend shift could attract UK yield investors.

BSD Analysis:
Colefax represents a structurally underappreciated luxury design asset trading at deep-value industrial multiples despite brand equity that would command a premium valuation in any strategic process. The company’s long operating history, exceptionally disciplined founder-led stewardship, and ultra-lean, outsourced production model give it a level of earnings durability rarely seen in micro-caps. Its U.S. business—the highest-margin geography and the epicenter of global luxury interiors demand—continues to exhibit resilient order flow even as broader home-furnishings markets soften, demonstrating genuine pricing power and brand stickiness. Tariffs will create noise over the next few quarters, but management has credible levers across price, sourcing, and mix to fully offset the impact over a 12–18 month window. With an extraordinarily clean balance sheet, consistent cash generation, and a decades-long track record of buying back stock at steep discounts, capital allocation remains a core part of the thesis. The combination of low float, high insider alignment, and depressed EV/EBIT multiples sets up a meaningful re-rating if discretionary demand stabilizes or if the company adopts a more explicit capital-return framework. Given the ongoing consolidation in luxury décor and design houses globally, Colefax also carries under-priced optionality as a strategic acquisition target.

Pitch Summary:
American Eagle is a Gen Z-focused retailer with denim strength and a growth engine in Aerie/Offline activewear. After a disastrous Q1 with inventory write-offs, guidance cuts, and sales declines, the stock is down ~50% YoY. Aerie’s stumble stemmed from fashion misses and external factors (tariffs, cold weather), but long-term growth trends remain intact. The July 2025 Sydney Sweeney “Has Great Jeans” campaign went viral, driving all-time high web traffic and sold-out SKUs, setting up strong back-to-school sales. AEO also executed a 10% ASR buyback around lows, improving EPS outlook. With $0.50 dividend, clean balance sheet, and a CEO with large equity ownership, management is aligned. The setup is favorable: high short interest, low expectations, but brand interest peaking. If Aerie regains growth and denim benefits from campaign momentum, EPS could rebound to $1.50 and the stock rerates to 10–12×, offering 40–70% upside.

BSD Analysis:
Q1: sales declines in both AE & Aerie; $75m inventory write-off; ASR completed ($200m, ~10% shares). Dividend $0.50. Supply chain now <5% China by YE25.

Pitch Summary:
Freightos runs a digital freight marketplace (Webcargo, Freightos.com) and a data subscription business (FBX index, pricing). 65% of revenue comes from subscriptions, 35% from marketplace take-rates. With ~80% market share in air freight booking platforms, Freightos enables price discovery, instant booking, and tracking. Despite being left for dead post-SPAC and freight downturn, KPIs (GBV, transactions, revenue) continue to rise. The platform benefits from opacity in freight forwarding and cartel-like commission structures. Strong network effects arise as data + marketplace reinforce each other. Blue-sky potential includes scaling into ocean freight, belly cargo utilization, and higher take-rates. Strategic shareholders (Qatar Airways, FedEx, SGX, Prudential) add credibility.

BSD Analysis:
Run-rate GBV ~$1.3b; take-rate 0.83%; >70% airlines onboard; gross margin >72%; targeting EBITDA breakeven by 2026.