Investment Pitches

Pitch Summary:
Turning Point Brands rose roughly 80% during 2025, reflecting accelerating growth in its modern oral nicotine segment, particularly the FRE brand, which grew over 600% year over year. The company benefits from long-term secular decline in combustible cigarette use while gaining share in smokeless and alternative nicotine products. A joint venture with Tucker Carlson to promote the ALP smokeless tobacco brand added to investor enthusiasm. Despite governance concerns and underinvestment in dividends, SCC believes the business remains a high-quality compounder.

BSD Analysis:
Turning Point Brands operates in nicotine-adjacent categories where regulation is the real moat. Demand is resilient, pricing power is meaningful, and brand loyalty is stronger than outsiders expect. The business benefits from being small enough to move quickly but large enough to command shelf space. Regulatory risk cuts both ways—raising barriers to entry while constantly threatening disruption. Growth comes from portfolio management and category shifts rather than volume expansion. Cash flow is solid, but capital allocation discipline determines long-term returns. The bull case is stable demand plus smart tuck-in acquisitions. The bear case is adverse regulation or misjudged category bets. TPB compounds quietly as long as regulators don’t move the goalposts too far.

Pitch Summary:
Pershing Square Holdings (PSHZF), the largest position in the portfolio, finished 2025 up 37% including dividends, outperforming the increase in its net asset value and leading to a narrowing of its discount to NAV. The long thesis remains twofold: first, confidence in Bill Ackman’s ability to outperform markets through stock selection and hedging; and second, the opportunity for further discount-to-NAV compression. Management actions, including continued share repurchases and structural changes around Howard Hughes Holdings, reinforce alignment with shareholders. Simply closing the current discount would result in substantial upside even without NAV growth.

BSD Analysis:
Pershing Square Holdings is a concentrated bet on Bill Ackman’s judgment, not a diversified portfolio in disguise. The moat is activist influence and capital allocation skill, which only works when conviction is right and timing cooperates. Concentration amplifies both alpha and drawdowns—there’s nowhere to hide when a thesis breaks. Structural discounts to NAV persist because liquidity, volatility, and manager risk are inseparable. The portfolio skews toward high-quality, cash-generative businesses, but concentration means mistakes matter more than averages. Leverage and derivatives can accelerate outcomes in both directions. The bull case is sustained correct calls plus capital returns narrowing the discount. The bear case is a few wrong macro or single-name bets resetting credibility. Pershing Square works when conviction meets discipline—and punishes complacency brutally.

Pitch Summary:
The Fund initiated a position in Waste Management during the quarter. The company operates in a consolidated industry with high barriers to entry and strong pricing power. Strategic investments in renewable natural gas and recycling automation, along with the Stericycle acquisition, are expected to drive long-term earnings and free cash flow growth.

BSD Analysis:
Waste Management is monopoly-like infrastructure wrapped in a dull service label the market chronically underappreciates. Landfill ownership creates irreplaceable assets protected by regulation, geography, and politics. Pricing power exists because trash collection isn’t optional and competition is structurally limited. Route density and scale drive margin expansion that smaller operators can’t replicate. Sustainability and recycling add upside without threatening the core business. Investors mistake low excitement for low quality. Cash flow is resilient across economic cycles. Capex reinforces the moat rather than chasing growth. This is real-asset compounding that wins quietly every year.

Pitch Summary:
Home Depot shares declined as housing market weakness and cautious consumer spending pressured near-term expectations. Lower transaction volumes weighed on revenue growth despite stable professional demand. Management emphasized long-term demand drivers such as aging housing stock and repair needs. Near-term macro conditions, however, dominated performance.

BSD Analysis:
Home Depot monetizes the reality that homes constantly need fixing. Pro customers provide recurring, less discretionary demand. Housing cycles slow big projects, not maintenance. Scale drives pricing power and logistics efficiency. Investors fear rate sensitivity reflexively. The housing stock keeps aging. Share buybacks amplify returns. Execution is the moat. This is retail infrastructure tied to permanence.

Pitch Summary:
Western Digital was a top contributor during the quarter as the broadening AI megatrend continued to fuel demand for high-capacity, cost-effective data storage. The company reported strong quarterly results, reflecting improving pricing and utilization in its storage businesses. Management highlighted increasing demand tied to AI workloads, which require significantly greater data storage intensity. Investor sentiment improved as the market recognized Western Digital’s leverage to AI-driven infrastructure buildout.

BSD Analysis:
Western Digital lives inside brutal memory cycles that punish impatience. Demand for storage keeps growing, even as pricing whipsaws. Technology transitions add execution risk. Investors trade the cycle rather than the capacity value. Consolidation improves supply discipline over time. AI workloads increase storage intensity. Cash flow turns violently with pricing. This is cycle leverage, not secular decay. Timing matters more than narratives.

Pitch Summary:
We initiated a position in Donnelley Financial Solutions (DFIN), a provider of capital markets and compliance-related technology solutions. The company is transitioning toward a software-as-a-service model for governance reporting, M&A filings and IPO registrations, which has reduced investor visibility and contributed to undervaluation. While near-term results were obscured by pension termination charges and the impact of a government shutdown, software solutions revenue grew 10% in 3Q25, with compliance solutions up 16%. Gross margins expanded to 62.7%, reflecting the higher profitability of the software model. DFIN maintains a strong balance sheet with low leverage and significant free cash flow, enabling aggressive share repurchases. We set a conservative price target of $66, implying meaningful upside as investors gain confidence in the stability and growth of the software-driven business.

BSD Analysis:
Donnelley provides compliance and reporting software that companies can’t skip. Regulatory deadlines don’t move for sentiment. Revenue is recurring and sticky once workflows are embedded. Growth is modest but reliable. Investors ignore compliance businesses as boring. Yet switching risks are real and avoided. Margins improve with software mix. This is governance infrastructure, not publishing nostalgia. Regulation prints money quietly.

Pitch Summary:
Lakeland Industries (LAKE) was our weakest performer in 4Q25, declining 45.31%. We had reduced our position ahead of its FY3Q26 report due to concerns around sales and merger integration. While results were weaker than expected, we believe the share price decline was an overreaction amplified by year-end tax-loss selling. LAKE retains a strong balance sheet, and we see a clear path to revenue growth in the global fire protection market through both organic initiatives and acquisitions. Following the quarter, a new holder filed a 13D and now owns 8.38% of the shares.

BSD Analysis:
Lakeland supplies protective apparel where safety regulations create steady demand. Orders spike during crises, then normalize painfully. Investors misread normalization as decline. Regulatory compliance creates baseline demand. Scale and distribution matter more than branding. Margins are volatile but cash flow appears when demand spikes. This is not a growth compounder. It’s insurance inventory for the real world. Volatility is inherent, not fatal.

Pitch Summary:
Mayville Engineering (MEC) was our top 4Q25 performer, rising 34.8%. Shares rallied as investors began to look past 2025 cyclical sales weakness and envision the potential sales strength a 2026–2027 recovery could bring. The stock also benefited from enthusiasm around the Accu-Fab acquisition, which opened the data-center equipment market to MEC. While we remain positive on the company’s long-term prospects, we expect the cyclical recovery in its agriculture, truck, and consumer recreational end markets to be gradual and uneven. As a result, we modestly trimmed our position.

BSD Analysis:
Mayville Engineering is a contract manufacturer leveraged to industrial and infrastructure demand. Margins swing with utilization and mix. Customers value reliability and integration more than headline growth. Investors fear manufacturing cyclicality reflexively. Backlogs provide visibility through downturns. Operational discipline matters more than volume growth. Reshoring trends support long-term relevance. This is execution risk priced like obsolescence. Cycles pass, capacity remains.

Pitch Summary:
Mettler-Toledo reported strong earnings that boosted investor confidence, driven by robust sales growth and an upbeat outlook for the Life Sciences Tools industry. Demand from pharmaceutical and laboratory customers supported revenue momentum, while operational discipline preserved margins.

BSD Analysis:
Mettler-Toledo sells precision instruments where accuracy is existential, not optional. Its equipment sits inside regulated workflows that customers don’t casually replace. Growth is steady, margins are elite, and capital needs are low. Investors complain about valuation every cycle. Yet pricing power persists because failure is costly. Service and consumables extend lifetime value. Cyclicality exists but doesn’t break the model. This is monopoly-like economics hiding behind lab coats. Precision compounds.

Pitch Summary:
Rockwell Automation advanced after reporting strong third-quarter results that highlighted improving organic growth and margin expansion. Investors responded positively to signs that industrial demand was stabilizing, while management execution and pricing discipline supported profitability. The Fund believes Rockwell will continue to perform well if economic growth broadens beyond AI in 2026.

BSD Analysis:
Rockwell is factory automation infrastructure for customers who can’t afford downtime. PLCs and control software embed deeply into production lines, creating brutal switching costs. Near-term industrial softness hits orders, not installed base value. Software mix and services improve margin quality over time. Investors treat Rockwell like a cyclical equipment vendor. That misses how automation spend is tied to labor scarcity and reliability. Digital transformation extends relevance beyond hardware. When factories modernize, Rockwell is already inside. This is industrial software wearing steel-toed boots.

Pitch Summary:
KLA benefited from another strong earnings report as customers continued investing heavily in AI-related semiconductor manufacturing. The company’s tools are essential for improving yields at advanced process nodes, making it a key enabler of the AI infrastructure build-out. Consistent execution and high-margin service revenues supported strong shareholder returns.

BSD Analysis:
KLA’s inspection and metrology tools are non-negotiable as nodes shrink and defect tolerance collapses. Advanced manufacturing makes inspection more valuable, not less. Semiconductor cycles push revenue timing, not relevance. The lack of true substitutes turns customer concentration into pricing power. Margins look like monopoly economics because they effectively are. Investors overreact to capex pauses. AI and advanced packaging increase inspection density. KLA sells certainty in an uncertain process. Complexity pays tolls here.

Pitch Summary:
Teradyne performed strongly as its long-term investments in AI-semiconductor testing began to pay off. The company started winning new testing sockets and gaining market share, particularly in advanced chips used for AI workloads. Improved order momentum reinforced confidence that Teradyne is well positioned to benefit from the next phase of semiconductor complexity and capital spending.

BSD Analysis:
Teradyne sits at the chokepoint of semiconductor quality, selling test equipment chips cannot ship without. As complexity rises, testing intensity increases, even when unit volumes wobble. Cycles delay orders, but roadmaps don’t get canceled. Customer concentration looks risky until you realize switching is operational suicide. Margins reflect IP depth and mission-critical status, not commoditized hardware. Investors trade capex sentiment too aggressively. AI and advanced packaging expand the test burden. Teradyne gets paid for complexity. Bottlenecks don’t negotiate.

Pitch Summary:
SanDisk was a top contributor in both the quarter and the year as the ongoing AI megatrend drove strong demand for memory and storage, while industry supply growth remained constrained. Shares surged as pricing and utilization improved, benefiting from rising data center and AI workloads that require high-performance NAND storage. Management execution and favorable industry dynamics supported exceptional returns, prompting the Fund to trim the position after the sharp rally to diversify exposure.

BSD Analysis:
SanDisk historically represented the intersection of storage demand and semiconductor innovation. Flash memory cycles were brutal but instructive. IP around NAND and controller technology created differentiation. Pricing volatility dominated sentiment more than fundamentals. Storage demand only grew more mission-critical over time. Investors underestimated content growth per device. Operational leverage cut both ways. This was silicon infrastructure before infrastructure was fashionable. Cycles punished impatience, not relevance.

Pitch Summary:
Eli Lilly rebounded sharply during the quarter as concerns around pricing, penetration, and competition for its GLP-1 weight-loss drugs eased. Stronger-than-expected demand data reinforced confidence in the durability of its obesity and diabetes franchises. The company’s innovation pipeline and execution supported renewed investor optimism.

BSD Analysis:
Lilly is executing one of the most powerful drug cycles in modern pharma. Obesity and diabetes therapies redefine standard of care. Demand exceeds supply, shifting risk to manufacturing execution. Pricing power reflects outcomes, not marketing. The broader pipeline reduces single-asset dependency. Political noise hasn’t slowed adoption. Investors debate peak sales prematurely. Lilly keeps expanding indications and capacity. This is pharma dominance with real-world proof.

Pitch Summary:
Applied Materials outperformed as optimism around AI-driven semiconductor capital spending persisted. Improving prospects at key customers such as Intel supported confidence in sustained demand for advanced manufacturing tools. The company benefited from its broad exposure across logic, memory, and foundry customers, positioning it well for the next phase of semiconductor investment.

BSD Analysis:
Applied Materials is the largest supplier of semiconductor manufacturing equipment, sitting upstream of every major chip roadmap. As nodes shrink, process complexity rises, increasing tool intensity. Capex cycles create volatility, not irrelevance. Customers rely on Applied across deposition, etch, and materials engineering. Margins reflect scale and IP breadth. Investors trade cycle timing too aggressively. AI and advanced packaging extend demand. This is picks-and-shovels leverage to silicon complexity. When fabs spend, Applied prints.

Pitch Summary:
Natera continued to outperform during the quarter as adoption of its flagship diagnostic product accelerated. Positive clinical data and improving reimbursement visibility bolstered investor confidence, reinforcing the company’s leadership in non-invasive genetic testing. Demand momentum across oncology and women’s health supported strong revenue growth and validated the long-term commercial potential of its platform.

BSD Analysis:
Natera operates at the forefront of genetic testing with strong positions in oncology and women’s health. Clinical data quality is the core asset. Adoption continues to expand as testing becomes standard of care. Reimbursement dynamics create volatility. Cash burn concerns weigh on sentiment. Investors fixate on losses instead of clinical embedment. Scale improves unit economics over time. This is diagnostics with real workflow integration. Science drives the moat.

Pitch Summary:
Outset Medical (OM) was by far the biggest loser for the quarter, as the company missed earnings and experienced a massive sell-off. We believe the decline was compounded by significant tax-loss selling by large institutions that became price insensitive toward year-end. OM closed 2025 at $3.71 per share and bottomed around $3.30 despite having $4.55 of net cash per share and net current asset value of $7.11 per share. We feel the company is on track to do about $125M in sales, with a meaningful portion consisting of high-margin recurring revenue. For these reasons, we substantially increased our position, making OM the largest position in the fund.

BSD Analysis:
Outset Medical is attempting to disrupt dialysis delivery with home and acute-care solutions. Clinical benefits exist, but adoption has been slower than early optimism suggested. Regulatory, reimbursement, and hospital economics drive uptake. Cash burn remains the central risk. Investors punish the stock accordingly. If utilization scales, operating leverage is dramatic. Dialysis demand is not discretionary. Execution, not science, is the hurdle now. This is medtech asymmetry at work.

Pitch Summary:
Two examples of what we would consider to be “gray area” losses that adversely affected us in 4Q25 were Arq (ARQ) and Lakeland Industries. ARQ suffered very expensive delays in its efforts to bring on the GAC capacity we were counting on to drive growth going forward. These issues now appear to go beyond simple delays and into a potential questioning of their core underlying production methodology. This has led to a significant reduction in cash flow expectations, which has also brought the company’s balance sheet into play. While not viewed as a terminal situation, execution risk increased materially.

BSD Analysis:
Arq is transitioning from legacy activated carbon into cleaner, specialty materials. Execution risk is high during business transformation. Demand for environmental solutions provides long-term relevance. Near-term financials remain messy. Investors price skepticism appropriately. If new products scale, margins improve materially. Capital discipline will decide survival. This is industrial reinvention under pressure. Optionality outweighs comfort.

Pitch Summary:
As a side note, we were actually able to more than make-up for our XOMA losses in the days following the disappointment. On the day of its adverse data read-out, XOMA’s partner, Rezolute (RZLT), fell over 90% and traded well below net cash value, despite having another potential billion dollar indication in its pipeline. We were able to purchase shares of RZLT that morning. The stock has more than doubled from our cost-basis in short order. This rapid recovery validated our view that the sell-off was indiscriminate and disconnected from long-term value.

BSD Analysis:
Rezolute is a clinical-stage biotech targeting rare metabolic disorders with high unmet need. The science is promising, but outcomes remain binary. Clinical execution and regulatory clarity will determine everything. Cash runway is a constant concern. Investors price in failure aggressively. If data validates efficacy, upside is nonlinear. Commercial potential exists due to orphan pricing dynamics. This is not diversification — it’s a bet. Size accordingly.

Pitch Summary:
Two similar examples of process-driven losses from the fourth quarter of 2025 were the declines we experienced in shares of XOMA Royalty Corp (XOMA) and Clearpoint Neuro (CLPT). We consider both of these companies to be platform companies, with XOMA operating in the biotech royalty space. XOMA is leveraged to a broad portfolio of partnered products that should drive long-term growth. The stock had been a winner for Minot Light due to excitement around potential near-term data read-outs and approvals of partner products. Unfortunately, disappointing data and regulatory outcomes during the fourth quarter caused the stock to correct. Though disappointing in the near term, we continue to own XOMA and believe it has a bright future ahead with many more shots on goal.

BSD Analysis:
XOMA is a royalty company monetizing biotech innovation without funding R&D itself. Cash flows depend on partners’ success rather than internal execution. Revenue is lumpy, but margins are extremely high. Investors struggle with valuation due to complexity. The portfolio approach reduces binary risk relative to single-asset biotechs. Optionality exists if pipeline assets mature. Capital allocation discipline is key. This is biotech exposure without biotech burn. Patience is the currency.