Investment Pitches

Pitch Summary:
Hurco is a small industrial company. It makes computer numerical controlled (CNC) machines: for example, if you need to cut stone precisely, you control it digitally via these machines. I’ve owned Hurco in the past. It’s a fairly illiquid stock. The company depends on a cyclical industrial sector improvement. I don’t have a strong opinion on if/when that happens. I do have an opinion that the company trades at half its book value, meaning if it can sell its on the books inventory of machines for close to full price, it will be worth much more as a stock. That is a speculative bet as to whether it will, but this is also a small position for us.

BSD Analysis:
Hurco sells CNC machine tools—pure industrial cyclicality with a side of execution. The moat is niche product fit and dealer relationships, but capex cycles dominate. Orders evaporate in downturns and rebound suddenly when confidence returns. The failure mode is fixed-cost leverage meeting a weak manufacturing cycle. Pricing power is limited because customers shop hard and alternatives exist. The bull case is manufacturing recovery and reshoring capex. The bear case is prolonged weak demand and margin compression. This is not a secular growth story. Hurco is a cycle trade—timing and balance sheet matter most.

Pitch Summary:
PagSeguro is a payment and fintech business based in Brazil. It is trying to build a full digital bank business. Brazil is still a large, developing country with more and more people getting into banking. The new Pix payment system makes it easier to use banking services – it’s a free peer to peer money transfer system run by the central bank. This on the one hand eats at a payment company’s margins/business, and on the other hand may increase the TAM for PagSeguro’s business. The stock was up in 2025, but still trades very cheap. Analysts focus on classic payments platform metrics, such as TPV, while PagSeguro focuses on gross profit, which has gone up. The company is targeting 16%+ EPS growth, which would be impressive, and is also about to pay out a 8–9% dividend next year which isn’t properly being reported (most sites and brokerages show it as having a 1.4% yield).

BSD Analysis:
PagSeguro is a Brazil fintech tied to merchant acquiring and consumer financial services—scale matters, but competition is brutal. The moat is distribution into underserved merchants and integrated POS + services, not pure tech advantage. Macro risk is real: Brazil rates, credit losses, and regulatory shifts hit quickly. Pricing power is limited; growth often comes from product expansion and share capture. The failure mode is credit mispricing if it leans too hard into lending. The bull case is continued financial inclusion and operating leverage as volumes scale. The bear case is margin compression from competition and higher funding costs. PagSeguro is attractive when priced like a bank and executed like a fintech. When priced like a fintech and executed like a bank, it hurts.

Pitch Summary:
HNI is technically not a new buy for us. We received most of our shares when HNI bought out SCS, though I also bought a few shares in the last week of the year. As a Top 10 portfolio holding, it merits some discussion. We’ve invested in office furniture companies for a decade now. The first investment was Kimball International, where I bought because the company was splitting itself in two. The office business was incidental, but we held onto shares and, until the pandemic, did well. The pandemic tanked office furniture companies, not surprisingly, but we got bailed out when HNI bought Kimball shares. I then invested in Steelcase, a larger office furniture company. I thought it was unreasonably cheap, and that it would be likelier than not that more people would be working in offices in 5–10 years. Shares did well for a year or so, then stagnated, as the promised recovery in offices never quite came. HNI then agreed to buy it out, putting it on our winners list for 2025. We like HNI at current prices – we bought more at $42.25 / share – because shares have gotten cheaper since the Steelcase deal, and because the return to office theme hasn’t really played out, but might be soon. It’s not necessarily a clear trendline, and there’s a lot of choppiness in orders, but things seem to be getting better. HNI is priced for fairly low growth. It has successfully integrated Kimball into its business, which I suspect means it will have muscle memory in using the merger to cut costs and build earnings growth. I think even with just ~2% annual revenue growth and the forecast synergies, the stock could be worth $100 in the next 5 years. And if there’s any acceleration in growth, this could work out really well. If HNI has a messy integration, like Miller Knoll has had with its merger, we could be stuck for a couple years.

BSD Analysis:
HNI is cyclical manufacturing tied to office capex and housing-adjacent demand, with a brand and distribution moat that’s solid but not magical. Office furniture is structurally challenged by hybrid work; the category is smaller than it used to be. Hearth products can offset, but that’s also rate-sensitive and cyclical. The failure mode is demand softness plus fixed-cost deleverage. Pricing power exists only when supply is tight and demand is healthy. The bull case is a cyclical recovery with cost discipline and share stability. The bear case is secular decline in office spend and margin erosion. HNI is a cycle and restructuring story, not a compounder. You buy it when expectations are low and operations are improving.

Pitch Summary:
We have followed Floor & Decor closely since 2017 and began building a position after the stock dropped to around $60. The company operates a category killer model with superior inventory depth and Pro customer penetration. Recent underperformance reflects cyclical housing weakness rather than structural impairment. We believe a recovery in housing turnover would drive significant operating leverage.

BSD Analysis:
Floor & Decor is a category killer in hard-surface flooring with a proven specialty big-box model. The moat is assortment depth, sourcing, and professional customer penetration—harder to replicate than it looks. The throttle is housing turnover and renovation demand; when housing slows, traffic follows. Inventory discipline matters because flooring is bulky, expensive, and punishes misreads. The bull case is share gains from independents and a housing normalization tailwind. The bear case is prolonged affordability stress and promotional pricing. Expansion works until site quality deteriorates. This is a great operator in a cyclical end market. Floor & Decor compounds—when housing lets it.

Pitch Summary:
We established a position in Timee at a valuation of 21x earnings. Our conviction was bolstered following the withdrawal of its most aggressive competitor, Mercari Hallo. This retreat validates the strength of Timee’s network and matching density.

BSD Analysis:
Timee runs a Japanese short-term work matching platform—high growth, but heavily dependent on marketplace liquidity and operational trust. The moat is convenience + supply reliability: if employers trust jobs will be filled and workers trust they’ll be paid, the flywheel turns. The risk is disintermediation and quality control—marketplaces get messy fast when fraud, cancellations, or regulatory scrutiny rise. Unit economics can look great during hypergrowth and then compress when incentives normalize. Competition is inevitable once the category proves profitable. The bull case is becoming the default “instant staffing” layer in Japan. The bear case is rising compliance costs and slowing growth as penetration increases. Timee is a real platform—but it’s still in the phase where trust is being earned, not assumed.

Pitch Summary:
The stock has halved since July, creating a rare opportunity to acquire a high-quality owner of monopoly assets at ~17x forward earnings. BCG owns dominant portals across autos, real estate, and jobs. We view fears of AI disintermediation as misguided.

BSD Analysis:
Baltic Classifieds is a local network-effects business: once liquidity is built in autos, real estate, and jobs, it tends to persist. The moat is marketplace depth in small geographies where brand and habit matter. Growth is strong when monetization rises and macro is stable. The risk is regional economic volatility and political shocks that hit advertising spend quickly. Competitive threats exist, but in classifieds, liquidity usually wins. The bull case is continued ARPU expansion with light capex. The bear case is cyclical downturn and take-rate pressure. This is a tollbooth with real network effects, but not immune to local macro. You buy it for compounding—if you accept geographic concentration risk.

Pitch Summary:
We utilised the recent market pessimism around AI losers to initiate a position in Adobe at 15x earnings, a valuation low that hasn’t been reached in over 13 years. While the bearish consensus view is that generative AI is an existential threat, the business continues to print very healthy financial results. We believe AI will increase demand for Adobe’s tools rather than displace them.

BSD Analysis:
Adobe’s moat is industry standard status: creatives and enterprises run on its file formats, tools, and workflows. Pricing power is real because switching breaks collaboration and professional identity. The risk is that AI lowers barriers and changes who creates—and how tools are chosen. Adobe can win AI, but it must avoid alienating users with pricing and licensing complexity. Competition will come from integrated suites and new AI-native creation tools. The bull case is deeper enterprise workflows and AI monetization layered onto subscriptions. The bear case is erosion at the low end and slower seat growth. Adobe is a great franchise forced to reinvent without upsetting its base. It’s defensible—just not complacency-proof.

Pitch Summary:
PAR remains a quality business, but it is temporarily out of favour. It is a small cap, unprofitable software company working through the overhang of a prior guidance reset. The investment case has strengthened materially in recent months, driven by what we view as a watershed moment for the restaurant technology industry. PAR is working towards signing a contract with a mega tier-1 which we believe to be McDonald’s.

BSD Analysis:
PAR is a restaurant software/platform bet that lives or dies on product reliability and multi-location wins. The moat is workflow stickiness once POS, payments, and back-office tools are standardized. The risk is brutal: restaurants churn, budgets tighten, and implementation failures get punished immediately. Competition is intense from both incumbents and well-funded POS platforms. The bull case is continued enterprise wins and expanding take rate across payments and add-ons. The bear case is growth that looks good but costs too much to acquire and support. This is not “SaaS = safe”; it’s “SaaS + restaurants = noisy.” PAR works when execution is boring and deployments are clean. The multiple only survives if retention stays elite.

Pitch Summary:
We highlighted how ASML is a monopoly in the semiconductor industry during an AI boom. Our writeup outlined the bear case arguments and explained our reasoning for why they were misguided. Other investors began to agree with our investment thesis, sending the stock from around €600 per share to north of €900 per share in the span of a quarter.

BSD Analysis:
ASML’s moat is near-monopoly control of EUV lithography—arguably the most important bottleneck in advanced semiconductor manufacturing. That’s not just technology; it’s an ecosystem of suppliers, physics talent, and decades of iteration. Demand is cyclical, but the strategic necessity is structural. The risk is geopolitics: export controls and China restrictions can reshape growth and mix. Customers are concentrated, but alternatives don’t exist at the leading edge. The bull case is continued node advancement and capacity buildouts. The bear case is capex digestion and policy-driven revenue ceilings. ASML is a monopoly priced like a monopoly—because it basically is. When the cycle turns, it still hurts, but the moat remains.

Pitch Summary:
We previously sold a position we held in Intuit, the accounting and tax software company, after it acquired Mailchimp in 2021 because we felt that Mailchimp fell outside its circle of competence and they paid about three times the right price, something which they attempted to justify by pointing out that half the consideration paid was in Intuit shares. What this implied about their valuation seemed obvious to us. For a while after we sold the shares AI hype drove the price but latterly the poor performance of the Mailchimp acquisition has become evident and reflected in the share price. We have started to rebuild a stake in the hope that the management has learned from the debacle.

BSD Analysis:
Intuit’s moat is workflow lock-in for small businesses and consumers—tax and accounting are not categories people “switch for fun.” The platform has pricing power because compliance risk and habit are stronger than feature comparisons. The risk is that AI could commoditize parts of preparation and advice, attracting new entrants at the edges. Still, distribution and trust matter in money workflows. Credit Karma adds growth but introduces cyclicality and regulatory sensitivity. The bull case is continued cross-sell across TurboTax, QuickBooks, and services. The bear case is slower growth and political attention in consumer finance. Intuit is a compounding machine when execution stays disciplined. It’s priced like discipline is guaranteed.

Pitch Summary:
EssilorLuxottica arose from the merger of French and Italian companies which dominate the market for eyeglasses, both frames and lenses. There is a tailwind for this business from people who do not yet have access to vision correction. In addition, it has some interesting innovations such as the Stellest lenses which help prevent deterioration for children with myopia and of course the Meta AI glasses.

BSD Analysis:
EssilorLuxottica’s moat is vertical integration: lenses, frames, brands, and distribution under one roof. That control creates pricing power and protects margins in a category consumers underestimate until they need it. The risk is regulatory and competitive scrutiny—vertical giants attract attention. Fashion cycles can hit frames, but vision correction demand is durable. Execution matters because integration at this scale can become bureaucracy. The bull case is continued premiumization and medicalized vision demand as populations age. The bear case is pushback from retailers and insurers on pricing. The multiple is earned if the company keeps turning integration into advantage rather than friction. It’s an oligopoly play with real operational skill.

Pitch Summary:
Brown-Forman and PepsiCo’s snack business seem to us to be directly in the crosshairs of the impact of reduced appetites from weight loss drugs. Whether or not our Novo Nordisk investment finally comes good, we believe that weight loss drugs and their impact are here to stay. In addition, the alcoholic drinks business faces headwinds from the impact of Generation Z’s drinking habits (lack of) and the legalisation of cannabis.

BSD Analysis:
PepsiCo’s moat is distribution and shelf power: it wins in snacks and beverages because it owns the route to the consumer. Frito-Lay is the real crown jewel—high-margin, habit-driven, and hard to displace. The risk is volume softness as consumers trade down and private label improves. Pricing power looks great until elasticity shows up with a lag. International expansion helps, but FX and local competition are constant. The bull case is steady compounding and resilient cash returns. The bear case is multiple compression when “defensive growth” slows. Pepsi is a quality staple—just not a growth stock in disguise.

Pitch Summary:
Novo Nordisk managed to reaffirm my belief that you should never say ‘Things can’t get any worse’. The company has parlayed a market leading position in what is probably the most exciting drug development for about three decades into a secondary position and has failed to prevent illegal generic competition in its core US market. One of our mantras has been that we should always invest in businesses which could be run by an idiot so that performance is not heavily reliant upon management. We have been made painfully aware that the range of businesses which can be run by an idiot is much more limited than we thought and hereafter we will aim to be more aware of the impact that poor management can have. Our experience also suggests that when we encounter poor management, engagement to change it is less effective than selling the shares. Meanwhile Novo Nordisk has appointed a new CEO and made wholesale board changes and the present rating (a PE of 13) appears to us to be expecting very little. If we did not already own it I suspect we would contemplate buying it as a good business which has been depressed by a ‘glitch’, albeit a rather large glitch.

BSD Analysis:
Novo Nordisk has a defensible moat in metabolic disease built on clinical outcomes, physician trust, and manufacturing scale that’s hard to replicate fast. GLP-1 success is real, but the market prices it like a monopoly with infinite runway. Capacity expansion extends the moat, yet also increases the risk of future price pressure once supply constraints ease. Competitors will close the gap—not because Novo is weak, but because the profit pool is too large to ignore. Payers and politicians will demand their share of the economics as volumes scale. The bull case is multi-indication expansion and durable leadership; the bear case is rebate-driven margin compression and faster competition. Novo can remain a great company while the stock de-rates if expectations get ahead of reality. This is regulated dominance—powerful, but never sovereign.

Pitch Summary:
Compass Group demonstrates that cornered resources need not be physical or brand-led to be powerful. Its advantage stems from exclusive, long-term contracts embedded within complex institutional environments such as hospitals, schools and large corporate campuses. Once established, these relationships are difficult to replicate due to operational scale, compliance requirements and switching action for the client. While Compass also benefits from scale efficiencies, the cornered resource emerges through contract-based exclusivity that effectively removes competitive access for extended periods. This turns client relationships into scarce assets, supporting predictable cashflows and reinforcing Compass’s position as a structurally advantaged operator rather than a commoditised service provider. This is all evidenced well by their industry-leading ‘client contract retention rate’ of over 96%, annually.

BSD Analysis:
Compass’ moat is operational scale in outsourcing—procurement, labor management, and contract execution that smaller caterers can’t match. Switching costs are behavioral and contractual: once Compass is embedded in a campus or hospital, ripping them out is painful. The business benefits from a long-term outsourcing trend, but it’s still tied to volumes—office occupancy, events, travel, education schedules. Wage inflation is the permanent boss fight, and margins depend on passing costs through without losing contracts. Execution excellence matters more than strategy decks. The bull case is continued outsourcing plus steady margin expansion from scale. The bear case is a demand shock or contract resets that compress returns. Compass compounds when the world is functioning; it de-rates when the world goes hybrid.

Pitch Summary:
Diageo represents one of the clearest examples of brands crystallising into cornered resources. Its leading spirits brands are reinforced by production realities that competitors cannot accelerate, most notably long-dated ageing inventories and protected geographic areas of distribution. A rival can copy a label, but it cannot replicate decades of maturing whisky stock or compress centuries of brand heritage into a marketing cycle. This combination of time-based scarcity and cultural embeddedness gives Diageo durable pricing power that is unusually resilient through economic cycles. In Helmer’s terms, the brand ceases to be merely persuasive and instead becomes an independently owned, scarce asset that underpins long-term returns on capital. That said, recent demand following a Covid-led surge has softened, particularly in South America. It will be the job of Sir Dave Lewis—the former Tesco turnaround CEO, to reintroduce a greater cost discipline across the business and ensure their leading global brands are well positioned for the evolving landscape of consumer tastes.

BSD Analysis:
Diageo’s moat is brand equity in global spirits plus distribution reach that keeps competitors boxed out of shelf space and menus. Premiumization has been the engine, but premium is not immune to consumer stress and de-stocking cycles. The category is “defensive” until it suddenly isn’t—on-premise weakness and downtrading show up fast. Pricing power exists, but elasticity is rising as consumers get smarter and retailers get pushier. Emerging markets provide runway, but FX and policy risk are constant. The best case is steady compounding with buybacks and disciplined portfolio management. The bear case is multiple compression when growth slows and the market stops paying for “quality staples.” Diageo is a great business that can still be a frustrating stock at the wrong entry price.

Pitch Summary:
BAT’s cornered resource is rooted in the intersection of brands, regulation and distribution. While tobacco branding is often dismissed as a legacy advantage, in reality BAT’s global brand portfolio operates within one of the most tightly controlled consumer markets in the world. Regulatory barriers, licensing regimes and advertising restrictions make it extraordinarily difficult for new entrants to emerge, while incumbents retain the right to distribute, price and innovate within defined boundaries. Over time, these constraints have transformed brand equity from a marketing asset into a scarce economic one. The result is a market structure where share is defended less by spend and more by structural exclusion, giving BAT a cornered resource that continues to support cash generation well beyond the industry’s tobacco volume peak.

BSD Analysis:
BAT’s moat is addiction economics plus a global distribution machine that newcomers can’t replicate. Combustibles still fund everything, but the terminal multiple keeps compressing because the market treats the category as melting ice. Reduced-risk products are the bridge, but the bridge is regulated, taxed, and politically weaponized. Pricing power is real—until illicit trade and downtrading accelerate. The dividend is the headline, but the real story is how fast cash flows decline versus how fast BAT can pivot. Litigation and regulation are permanent, not occasional. Bulls underwrite yield-backed durability; bears underwrite a structurally shrinking franchise with headline risk. BAT isn’t about growth—it’s about managing decline better than the market expects.

Pitch Summary:
It is my belief that, on average, our holdings trade at a discount of at least 50% to what any independent buyer would pay for them. We own DKSH Malaysia, the No1 distributor of fast-moving consumer goods and medical supplies in the country. Its Swiss parent, which owns 74% of the shares, has just offered to buy us and other minorities out at RM6.15 a share. Before the offer was announced DKSH(M) was trading a bit below RM5.00. Under the scheme of arrangement, Pangolin can block the bid as we control more than 10% of the independent shares. As we value the company at above RM11 per share, no way will we sell at such a low price. According to our estimates, net profit should have increased by around 15% in 2025 and the company trades on a PE of around 6x.

BSD Analysis:
DKSH Malaysia operates as a market-expansion services provider, helping global brands penetrate and scale across Malaysia’s consumer, healthcare, and industrial markets. Its value lies in distribution reach, regulatory expertise, and long-standing customer relationships. Revenue is resilient because DKSH sells services, not just products. Growth is steady rather than flashy, anchored by healthcare and FMCG exposure. Margins are modest but stable due to asset-light operations. Parent-group backing adds governance strength. DKSH Malaysia is a defensive EM services platform with predictable cash flow.

Pitch Summary:
Micron Technology has shown impressive growth in its recent earnings report, with a 20.6% sequential and 56.7% year-on-year revenue increase, driven by higher shipments and favorable pricing. The company's gross margins and operating income have also seen significant improvements. The demand for DRAM and NAND, especially in the cloud and AI sectors, is driving strong sales and income growth. Despite the stock's recent surge, the supply chain constraints and increased demand for high-bandwidth memory continue to support pricing strength. Micron's guidance for the next quarter indicates further growth, with expected sales of $18.7 billion and improved margins. The company's financial performance is expected to continue improving, with significant increases in EBITDA and free cash flow projections.

BSD Analysis:
Micron's strategic positioning in the memory and storage market, particularly with its focus on high-bandwidth memory and solid-state drives, aligns well with the ongoing trends in AI and data center expansion. The company's ability to navigate supply chain challenges and capitalize on pricing opportunities has bolstered its financial outlook. The updated price target reflects a strong conviction in Micron's growth potential, driven by robust demand and operational efficiencies. The anticipated increase in EBITDA margins to 69% by 2028 underscores the company's capacity to enhance profitability. Additionally, Micron's commitment to shareholder returns, including share repurchases and debt reduction, further strengthens its investment appeal.

Pitch Summary:
Lemonade Inc. presents a compelling investment opportunity due to its AI-driven platform that is reshaping the insurance cost structure. The company has made significant progress in reducing Loss Adjustment Expense (LAE), flattening operating expenses, and compressing customer acquisition costs as premiums scale, indicating meaningful operating leverage and potential future margin expansion. Despite a 60% increase in stock price since the last coverage, Lemonade remains an attractive long-term compounder. However, its premium valuation assumes near-flawless execution, which is risky given its deeply negative margins and ongoing cash burn. The company's AI technology allows claim adjusters to handle more claims efficiently, potentially leading to high profitability as the business scales.

BSD Analysis:
Lemonade's integration of AI technology is a systemic change to its business model, potentially leading to high profitability if scaled effectively. The company's LAE ratio is significantly lower than that of large carriers, and it has already halved this ratio over the past three years. Lemonade's operating model allows for cost-effective growth, with gross profit surging by over 260% while expenses have increased only slightly. The company's tech-driven approach extends to customer acquisition, with a significant portion of new customers coming from existing Lemonade products, reducing the blended customer acquisition cost. However, the high valuation and current negative profitability pose risks, as any execution misstep could lead to a sharp decline in stock price.