Investment Pitches

Pitch Summary:
CBL has been working to upgrade its portfolio of malls, selling some weaker class C properties and buying out its partners in high quality locations. The trust has also announced refinancing agreements on multiple properties, reducing interest costs and pushing out maturities. These actions, combined with continued debt reduction, leave the company on stronger financial footing and with substantial cash flow for distributions and investment. But at the end of the day, it’s simply tough for a tiny REIT with less than $500 million in free-floating shares to get much attention, particularly when it owns malls.

BSD Analysis:
Portfolio pruning and refinancing lower interest burden and extend maturities, positioning CBL for higher FFO and resumed distributions. While small float limits sponsorship, asset quality upgrades and deleveraging are tangible catalysts. Valuation remains depressed versus stabilized retail REITs, offering asymmetric upside as sentiment normalizes.

Pitch Summary:
The Losers, or as I prefer to call them, “Pre-Winners” Of course, not everything in the Alluvial portfolio has performed well this year. The fund has an 11% allocation to real estate investment trusts in out-of-favor sectors. Peakstone Realty is having a good year, up 20% as the trust’s transition from mixed office and industrial properties to purely industrial properties gains momentum. But while sentiment around offices has improved, shares of Net Lease Office Properties have not responded. The pace of property sales has been slower than I expected, but there is reason to believe we will see some significant property sales soon. The trust is now marketing its single largest asset, a one million plus square feet office building in central Houston. At $29 per share and excluding all properties encumbered by mortgages, Net Lease trades at a cap rate of nearly 18% and $87 per square foot of real estate. The trust also has multiple vacant properties it is working to sell that represent additional sources of value.

BSD Analysis:
Despite sector headwinds, NLOP’s asset sales (including a >1M sq ft Houston asset) and implied ~18% cap rate suggest deep discount to private values. Proceeds can de-lever and simplify the portfolio, narrowing the NAV gap. As dispositions progress, a re-rate toward peers is plausible; $87/sqft implied valuation looks conservative for long-duration net leases in recovering markets.

Pitch Summary:
McBride plc, our British soap and detergent producer, remains a core holding. Shares dipped in July following the mid-year trading update, only to rebound in September when the company reported exactly the same information they had provided in July. Perplexing, to say the least. McBride remains cheap by any measure, changing hands at less than 5x operating income and 6x earnings. The company’s balance sheet has been restored to health and dividends resumed. I can’t help but think a big factor in McBride’s persistently low valuation is its status as a UK-domiciled, London-listed company. The British economic outlook remains gloomy, and the London Stock Exchange is grappling with declining relevance and investor interest. McBride does have several large holders in its share register. Presumably, these shareholders are invested with an eye toward achieving good returns, not for the psychic rewards that accrue to owners of dishwasher pods and laundry powder manufacturers. If McBride shares continue to languish, I expect that one or more of these holders will push for the company to sell itself.

BSD Analysis:
Trading at ~6x earnings with a repaired balance sheet and resumed dividends, McBride offers clear re-rating potential as European private-label momentum supports margin durability. UK listing discount and neglected small-cap status are likely suppressing multiples; strategic interest or a sale process could unlock value. Cash generation and shareholder base pressure provide catalysts alongside operational stability.

Pitch Summary:
FitLife Brands also had a busy August, announcing and then closing a deal to acquire Irwin Naturals. Irwin is a major vitamins and supplements producer that decided to expand into ketamine therapy clinics. The results were disastrous, and FitLife was able to acquire Irwin Naturals’ assets (not including the shuttered clinics) out of bankruptcy. The $42.5 million purchase price was funded with balance sheet cash and bank debt. At $18, FitLife shares are trading at around 11x my estimate of 2026 free cash flow. Here is the part where I confess to not being a particular fan of FitLife’s industry. The vitamins and supplements space is competitive and the evidence for the effectiveness of most products is dubious. But this negativity is more than overcome by my glowing view of FitLife’s leadership. CEO and largest shareholder Dayton Judd has proved himself immensely capable in both operations and acquisitions strategy. Mr. Judd has a particular talent for identifying valuable brands and product lines owned by companies in financial distress or bankruptcy, acquiring those assets, and plugging them into FitLife’s existing distribution. The Irwin Naturals acquisition is impressive and the market has responded accordingly, but I am confident that FitLife is just getting started. I suspect that FitLife shares will have a home in Alluvial Fund for many years to come.

BSD Analysis:
The Irwin Naturals asset purchase is a classic roll-up move at an attractive price, likely lifting scale and channel leverage; pro forma valuation near ~11x 2026 FCF looks undemanding for a consolidator with high-ROI tuck-ins. Execution competence (owner-operator CEO, disciplined M&A) mitigates category risk. Balance sheet flexibility post-deal and cross-selling into existing distribution should expand margins and cash conversion, supporting a multi-year compounder profile.

Pitch Summary:
Our largest position continues to be Zegona Communications and my, what a year the company has had! In August, Zegona announced a binding agreement to sell a portion of its fiber optic network joint venture to Singapore’s sovereign wealth fund. When completed this quarter, the transaction will result in a large cash inflow for Zegona, enabling it to distribute a meaningful special dividend and effectively redeem the preferred shares it issued to Vodafone in the Vodafone Spain buyout. Zegona continues to work toward monetizing another fiber optic joint venture, which should result in another large cash inflow. Together, these transactions substantially derisk the Zegona story. When we first invested, we were buying into a leveraged buyout situation where value creation was dependent on deleveraging through asset sales. Though I considered it unlikely, the process could have been derailed by skeptical regulators, jittery capital markets, or any number of macroeconomic troubles. Management has come through for shareholders in a big way with these asset sales. These transactions crystallize the value embedded in Zegona’s fiber optic network, normalizing the balance sheet and allowing Zegona to focus on operational improvements. “Multiple arbitrage” is a well-known corporate strategy where a company trading at, say, 10x earnings attempts to buy companies for 5-8x earnings, hoping the market will continue to capitalize the resulting combined earnings at 10x. Happily, it also works in reverse. The market values Zegona at about 6x cash flow, but the company keeps on finding assets it can sell for 12x or more. Zegona is rumored to be considering a sale of its mobile network infrastructure in conjunction with competitor MasOrange, and may also be considering a sale of data centers it acquired with Vodafone Spain. Either transaction would result in material additional cash proceeds that could be used for deleveraging, investment in growth and efficiencies, or returned to shareholders. Despite their excellent performance year-to-date, I continue to see upside of 50% or more in Zegona shares. The company’s efforts to return to subscriber growth and improve margins should bear fruit in 2026, and further asset sales and return of capital announcements are potential catalysts.

BSD Analysis:
Zegona is executing textbook multiple arbitrage: selling fiber assets at ~12x+ cash flow while the holdco trades near ~6x, creating tangible NAV uplift and deleveraging. Pending monetizations (mobile infrastructure, data centers) and special distributions reduce balance-sheet risk and accelerate value realization. As operational improvements show through in 2026 and the Vodafone Spain integration matures, a 50%+ upside case is credible given re-rating potential and capital returns.

Pitch Summary:
Broadcom was added to the Equity Income portfolio in April and has been the best YTD performer. The company benefits from AI chip demand and high-margin software diversification. It dominates custom AI chips (ASICs) for hyperscalers like Google, Meta, and OpenAI, with AI-related revenue expected to grow over 170% this year to $24B. Networking leadership in Ethernet further strengthens its moat as datacenter demand expands. VMware integration continues to drive subscription growth and stable free cash flow. Shares recovered after tariff-driven weakness, as fears of EPS cuts proved overblown.

BSD Analysis:
Broadcom’s exposure to custom AI silicon and networking infrastructure makes it a key beneficiary of AI adoption. With 90%+ software margins, strong FCF, and consistent dividend growth, the firm trades around 18x forward earnings—undemanding for its duopolistic AI position behind NVIDIA. Its diversification, pricing power, and capital discipline sustain long-term earnings compounding.

Pitch Summary:
Ferguson is the largest scaled specialty distributor for North American plumbing/HVAC/waterworks. Its revenue is split roughly 51% residential, 49% non-residential; 60% repair & replace (R&R) and 40% new housing builds. About 85% of revenue is finished goods, and 95% of revenue is U.S.-based. Shares traded down 16% post-earnings earlier this year on fears of commodity deflation and weak outlook, yet revenue held steady. The market priced in zero new-home growth, but Ferguson’s specialty mix and pricing resilience suggest otherwise. Management continues to execute with pricing power, efficiency, and M&A-driven compounding. The firm’s multi-year tailwinds in waterworks, civil infrastructure, and data centers support durable growth.

BSD Analysis:
Brasada maintains a bullish stance on Ferguson due to its market leadership, disciplined capital allocation, and robust end-market diversification. Despite housing softness, infrastructure and waterworks demand provide countercyclical balance. With EBITDA margins above 11% and consistent M&A execution, Ferguson trades attractively at ~15x forward earnings, offering dependable FCF growth and mid-teens ROIC.

Pitch Summary:
Medpace is one of the leading contract research organizations (CROs) focused on small and mid-sized biotech companies. Founded in the early 1990s by Dr. August Troendle, who still serves as CEO and owns roughly 20% of the company, Medpace has compounded organically at roughly 20% per year for over three decades. In Q2 2025, revenue grew 14.2% to $603.3 million, net income reached $90.3 million ($3.10 per diluted share), and EBITDA rose 16.2% to $130.5 million with a margin of 21.6%. The company repurchased ~1.75 million shares for $518 million, signaling confidence in its intrinsic value. Management lifted 2025 guidance to $2.42–$2.52 billion in revenue and GAAP net income of $405–$428 million.

BSD Analysis:
Optimist Fund views Medpace as an elite founder-led CRO compounder with unmatched capital discipline, operational efficiency, and alignment. The firm’s consistent 20% organic growth, 21%+ EBITDA margins, and active repurchases reflect a superior business model anchored in niche biotech relationships. At ~22x forward EPS and strong cash conversion (>90% FCF/NI), Medpace remains well positioned to gain share as biotech funding normalizes. Founder alignment and disciplined capital allocation enhance long-term compounding potential.

Pitch Summary:
Carvana continues to deliver strong performance, posting record highs across nearly every key financial metric. Retail units sold rose 41% year over year to 143,280 vehicles — the highest in company history — while total revenue increased 42% to $4.84 billion. Adjusted EBITDA reached $601 million, good for a 12.4% margin, more than 2x industry average profitability. Management expects retail unit growth to continue sequentially and raised its full-year 2025 outlook for adjusted EBITDA to between $2.0 billion and $2.2 billion, up from $1.38 billion in 2024. Longer term, the company continues to target 3 million annual retail units with a roughly 13.5% adjusted EBITDA margin.

BSD Analysis:
The fund identifies Carvana as a high-conviction turnaround with accelerating profitability and market share gains in digital auto retail. With EBITDA margins over twice the sector average and improving asset turnover, Carvana’s capital-light logistics and scale efficiencies offer a durable competitive moat. Trading near 10x forward EBITDA with strong FCF inflection, continued deleveraging and operational discipline should drive multiple expansion.

Pitch Summary:
ThredUp delivered an impressive quarter. Revenue rose 16% year over year to $77.7 million — the company’s fastest pace in several years — and adjusted EBITDA increased roughly 100% year over year, highlighting strong operating leverage. Customer metrics were equally encouraging, with active buyers growing 17% to 1.47 million and new buyer acquisition surging 74%. Management raised full-year guidance and now expects approximately 15% revenue growth, and an adjusted EBITDA margin of about 4%. Despite accelerating momentum, analysts still forecast only ~10% revenue growth over the next couple of years — well below our base case of 15–20%. ThredUp remains our largest investment.

BSD Analysis:
Optimist’s thesis on ThredUp underscores its leadership in online resale with accelerating buyer acquisition and improving profitability. The firm’s cost leverage and growing brand equity support sustained revenue growth exceeding consensus expectations. At current valuations (~3x sales) and transitioning to positive free cash flow, ThredUp’s scalability, network effects, and expanding margin profile point to a multiyear compounder trajectory as circular fashion adoption rises.

Pitch Summary:
Wayfair delivered one of its strongest quarters in recent years, with accelerating growth, expanding margins, and positive free cash flow. Revenue increased roughly 5% year over year to $3.27 billion — or closer to 6% when adjusting for the company’s exit from Germany — marking its fastest top-line growth since Q1 2021. Profitability was equally impressive. Wayfair generated $205 million of adjusted EBITDA, representing a margin above 6% for the first time since Q2 2021, and implying a roughly 27% incremental EBITDA margin. This level of operating leverage highlights the powerful earnings potential embedded in the model. If Wayfair can sustain even moderate revenue acceleration at these incremental margins, profitability and free cash flow generation should expand meaningfully — with EBITDA potentially rising from ~ $450 million last year to over $2 billion within the next five years. Overall, the quarter demonstrated a business that is regaining top-line momentum while unlocking significant operating leverage.

BSD Analysis:
Optimist Fund emphasizes that Wayfair is at the early stages of a multi-year margin and profitability inflection driven by disciplined cost controls and accelerating demand recovery in home furnishings. The company’s demonstrated operating leverage (~27% incremental EBITDA margin) validates scalability and fixed-cost absorption benefits. Trading near 12x forward EBITDA and with improving free cash flow yield, Wayfair is positioned for a re-rating as e-commerce penetration stabilizes. Key catalysts include U.S. housing normalization, ad-tech monetization, and European market retrenchment efficiencies.

Pitch Summary:
Shares of enterprise software developer Salesforce traded down after the company provided lower-than-expected forward sales guidance during its most recent earnings release. This prompted concerns about the company’s transformation from a software-as-a-service (SaaS) business to an AI-powered enterprise business (its Agentforce platform) and an overall slowdown in revenue growth. We believe that Salesforce is well positioned to grow and scale Agentforce over time, and we continue to like its operational strength, market dominance and focus on balancing growth with improving profitability.

BSD Analysis:
Near-term growth deceleration masks improving margin structure and robust FCF conversion. As Agentforce adoption ramps and Data Cloud cross-sell deepens, net revenue retention should stabilize. With net cash, buybacks, and ~25% operating margin ambition, CRM’s multiple can hold as growth re-accelerates.

Pitch Summary:
Comcast is the largest multinational telecommunications and media conglomerate in the US, with brands including Xfinity cable, NBCUniversal (theme parks and TV stations with Peacock streaming service) and UK-based pay-TV company Sky. The company reported better-than-expected results for its most recent quarter, but shares traded lower due to ongoing declines in broadband subscribers. Our investment thesis remains intact, as we believe Comcast has the scale, density and cost advantages to outperform both fixed wireless and other fiber internet providers over the long term. Meanwhile, the other parts of the business have been performing well, and Comcast continues to generate strong cash flows and return capital to shareholders through both dividends and share buybacks.

BSD Analysis:
Despite broadband churn, CMCSA’s network economics and converged offerings underpin durable cash generation. Parks and content drive diversification; disciplined capex and buybacks support EPS growth. Valuation at ~9–10x EBITDA is attractive versus peers if broadband trends stabilize and ARPU lifts.

Pitch Summary:
Tobacco company Philip Morris reported better-than-expected earnings for its most recent quarter, but slightly soft sales weighed on the stock. The company attributed the sales weakness to supply issues in Indonesia and Turkey due to regulatory changes. However, its noncombustible products continue to lead growth. We remain constructive on this cash flow-generative business and are pleased with Philip Morris’s commitment to returning cash to shareholders through reliable dividends and stock repurchases.

BSD Analysis:
IQOS and other RRPs drive mix upgrade and resilient cash flows, offsetting combustible volume pressures. Temporary supply/regulatory issues should ease; dividend growth and buybacks enhance TSR. Shares trade at a discount to staples with superior FCF yield and pricing power.

Pitch Summary:
Shares of Elevance Health, the health insurer and healthcare-services provider formerly known as Anthem, traded lower on concerns about reductions in Medicaid coverage and increased utilization of services. The company reported a decline in earnings for its most recent quarter and reduced its forward guidance. We believe that margins will eventually stabilize as higher premiums cycle through its customer base. We continue to view Elevance as a well-managed company positioned to benefit from long-term secular demand for its managed care services in the US.

BSD Analysis:
Near-term MLR pressure appears cyclical; pricing resets and acuity adjustment should restore margins in 2026. ELV’s diversified book, disciplined underwriting, and services adjacencies (Carelon) support EPS compounding. Trading below peers on P/E with strong FCF and buybacks, the setup is favorable for multiple normalization.

Pitch Summary:
Japan’s Shimano, which manufacturers bicycle parts, fishing components and rowing equipment, lowered its forward guidance during the quarter because of weakness in overseas markets and ongoing inventory adjustments. Our investment thesis remains intact, as we are confident that Shimano can work through accumulated inventories after the strong but unsustainable demand for its products during the Covid-19 era. In addition to high-quality products and dominant global market share, the company has a strong history of returning capital to investors.

BSD Analysis:
Inventory normalization should trough over the next few quarters, setting up volume recovery into 2026. With net cash, dominant share, and premium brand, Shimano can sustain high teens ROE through cycles. Valuation has compressed; dividend and potential buybacks offer downside support while outdoor demand stabilizes.

Pitch Summary:
C.H. Robinson is the largest freight broker in North America, linking transportation providers to businesses across industries. The company has implemented automated AI processes to cut costs and expand margins. Improved pricing may be in prospect as stricter licensing requirements promulgated by the US Department of Transportation in September take hold and capacity tightens.

BSD Analysis:
Automation and pricing discipline should lift CHRW’s gross profit per load as the cycle tightens. Cost takeout and network density support EBIT recovery; balance sheet is solid to fund buybacks/dividends. Shares trade near mid-teens forward P/E—undemanding if volumes normalize and contractual pricing resets higher.

Pitch Summary:
Shares of tech giant Alibaba were strong during the quarter. With large infrastructure/data centers and leading open-source models, the company’s cloud business has accelerated to capitalize on the AI boom in China. Its partnership with Nvidia, announced in September, further underscores Alibaba’s commitment to its AI and cloud operations. At the same time, the company’s core e-commerce business continues to grow, with improved operating efficiencies that enable it to return cash to shareholders through dividends and stock repurchases.

BSD Analysis:
BABA’s AI-driven cloud reacceleration, coupled with improved e-commerce efficiencies, sets the stage for margin recovery. The balance sheet remains strong, and resumed dividends/buybacks signal confidence. Trading at a discount to global platform peers on EV/EBITDA and P/E, a rerate is plausible as governance improves and cloud monetization scales.

Pitch Summary:
Shares of Alphabet, the parent company of Google and YouTube, were strong during the quarter as the Department of Justice delivered favorable rulings on embedding Chrome as the default browser on phones and retaining the company’s current corporate structure with no need to divest divisions. Beyond its core ad and search businesses, Alphabet provides a full stack solution within AI: spanning research, infrastructure/data centers and integrated end products. Valuation remains reasonable, in our view, and the company continues to share its ample store of cash with investors through dividends and buybacks.

BSD Analysis:
Favorable legal outcomes remove breakup risk while AI stack integration (model, infra, apps) supports multi-year monetization. Cloud profitability is improving, ads remain resilient, and net cash plus ongoing buybacks underpin EPS growth. At ~22x forward P/E with 25%+ EBIT margins, risk/reward is attractive versus mega-cap peers. Key catalysts: Gemini product velocity, Cloud backlog growth, capex ROI.

Pitch Summary:
Oracle is one of the world’s largest independent enterprise software companies. The company reported a large increase in backlogs during the quarter, including a substantial, five-year cloud-computing contract with OpenAI. In addition to a significant near-term lift to Oracle’s top line from this contract, we expect margins on these revenues to expand over time.

BSD Analysis:
The OpenAI contract boosts backlog visibility and underscores Oracle’s growing relevance in AI workloads atop OCI. With mix shifting toward cloud IaaS/SaaS and high attach on database, operating leverage should expand margins. Valuation (~20x forward EPS) remains reasonable given double-digit cloud growth, sizable buybacks, and accelerating RPO. Watch for capex productivity and Gen2 DC ramp as near-term catalysts.