Investment Pitches

Pitch Summary:
Adyen, the global payments platform, has been held in the Fund since early 2020. Its low-cost single software stack enables merchants to accept transactions across online, mobile, and in-store channels. Adyen reported good first-half results; however, cautious guidance amid macro headwinds from new U.S tariffs and import rule changes weighed on near-term sentiment. While revenue growth of 20 per cent year-over-year was a little softer than market expectations, the results highlighted resilient profitability and cash generation alongside continued customer growth. We believe Adyen's market position and the counter-cyclical investments it has made will allow it to capitalize on future growth opportunities and underpin a compelling long-term growth case.

BSD Analysis:
Adyen remains a high-quality compounder in the fintech space, leveraging its single, low-cost software stack for unified commerce across online, mobile, and in-store channels. While cautious guidance and short-term macro headwinds, particularly from new US tariffs and import rule changes, have weighed on sentiment, the long-term secular tailwinds from digital payment penetration are robust. The company consistently delivers resilient profitability and cash generation alongside expanding merchant adoption. Adyen's superior margin profile, supported by EBITDA margins exceeding 50% and a net cash balance sheet, positions it for sustainable long-term earnings growth of 20%. The company's strategic, counter-cyclical investments will allow it to fully capitalize on future growth opportunities and strengthen its global market position.

Pitch Summary:
Spotify's shift from pure user growth to disciplined monetization is increasingly evident. With nearly 700 million monthly active users and generating €700 million in free cash flow last quarter, the platform is demonstrating improving economics with scale while investing in podcasts and audiobooks to broaden revenue streams. Personalization remains its core strength, driving engagement, pricing power, and a more efficient flywheel that benefits creators, users and Spotify alike. Despite strong user and subscriber growth, Spotify's shares were weaker this quarter on softer short-term profit guidance. Our recent meeting with Spotify management underscored our conviction in the company's ability to sustain margin expansion and compound value over the long term.

BSD Analysis:
Spotify’s pivot from user-growth obsession to disciplined monetization has fundamentally changed the investment profile—and the market is only beginning to reprice that shift. With nearly 700M MAUs and rising ARPU, the platform finally has the scale to extract leverage from content costs and drive meaningful gross-margin expansion. Advertising and podcasting are becoming real businesses, not experiments, giving Spotify multi-engine growth optionality that competitors lack. AI-driven personalization continues to widen the engagement moat, supporting pricing power and a more efficient creator-to-user flywheel. Short-term margin wobble has kept sentiment cautious, but free-cash-flow generation is inflecting hard in the right direction. As economics improve and operating discipline hardens, Spotify looks well-positioned for a multi-year rerating.

Pitch Summary:
Leading emerging market consumer internet companies like MercadoLibre illustrate the scale of the opportunity to digitize consumption. The Latin American e-commerce and financial technology platform remains one of the largest positions in the Fund. While it detracted from performance during the quarter, it remains one of the leading contributors to performance over the last five years. Revenues continue to grow strongly as its decision to deepen free-shipping incentives in Brazil boosted gross merchandise volume (GMV). However, this squeezed margins, which weighed on the shares. We've seen this playbook before: near-term trade-offs that consolidate share, reinforce loyalty and ultimately strengthen the franchise to create long-term value.

BSD Analysis:
MercadoLibre remains the dominant e-commerce and fintech platform in Latin America, and its willingness to trade short-term margins for long-term share continues to pay off. Free-shipping investments in Brazil pressured profitability, but GMV acceleration and ecosystem engagement metrics suggest the competitive moat is only deepening. MELI’s fintech arm—often overshadowed—has become a powerhouse with improving credit performance and rising monetization across payments, lending, and wallet features. Network effects are strengthening, turning the platform into a one-stop economic hub that competitors struggle to replicate. With 20–25% revenue CAGR visibility and expanding operating leverage as shipping incentives normalize, MELI still looks like one of the best long-duration compounders in emerging markets. The market’s jitteriness around margins misses the bigger picture: this franchise is widening the gap.

Pitch Summary:
James Fisher, a 175-year-old engineering services company, operates across 18 countries serving energy, renewables, and defense sectors. FY2024 sales were £438m, EBITDA £51m, EBIT £29.5m, and ROCE 8.2%. The company became over-leveraged due to poor acquisitions, but new leadership has restructured into three divisions, disposed of £56m in assets, and aims for margin recovery to 10% and ROCE of 15%. Current valuation (~4.5× EBITDA, 0.6× EV/Sales) implies over 200% upside to normalized 10× EBITDA. :contentReference[oaicite:2]{index=2}

BSD Analysis:
James Fisher is emerging from a multiyear misallocation hangover with a cleaner balance sheet and a management team finally willing to attack structural inefficiencies. The new divisional structure brings needed clarity, and recent asset sales signal a disciplined shift away from low-return legacy businesses. While end-markets like energy, renewables, and defense remain fundamentally healthy, the real story is margin normalization as Fisher unwinds the effects of past acquisitions. ROCE has room to climb meaningfully if management delivers on its 10% margin and 15% ROCE targets. Valuation remains washed out at a fraction of normalized EBITDA, leaving significant rerating potential as execution stabilizes. If the turnaround continues on its current trajectory, Fisher has the makings of a classic small-cap recovery compounder hiding in plain sight.

Pitch Summary:
Flowtech Fluidpower operates across 16 locations with 500+ employees and 75,000 products in stock. FY2024 sales were £112m with a gross margin of 38.2%, EBITDA of £15.9m, and net debt of £15m. The company’s operating margin remains low (2.5%) but has a target of mid-teens as operational and digital restructuring programs complete. Chairman Roger McDowell and CEO Mike England are executing a transformation plan, aiming for EBITDA >£18m and EV/Sales re-rating to 1.3× from 0.5×. With Harwood and affiliates owning ~30%, the firm has strong shareholder alignment. :contentReference[oaicite:1]{index=1}

BSD Analysis:
Flowtech Fluidpower is the kind of small-cap industrial that gets ignored until the operating leverage suddenly smacks the market in the face. The company sits in the unsexy but mission-critical world of fluid power distribution — the stuff that keeps factories, equipment, and infrastructure actually working. After a painful reset in demand and margins, Flowtech has been quietly rebuilding with tighter inventory control, stronger procurement discipline, and a sharper focus on higher-value engineered solutions. The balance sheet has improved, cash generation is back on track, and management is finally behaving like stewards of a scalable platform rather than a loose collection of bolt-ons. Despite this, the stock trades like it’s one bad quarter away from irrelevance, even though end-market exposure (automation, infrastructure, MRO) is stabilizing. If industrial activity continues to rebound, Flowtech’s margin recovery could outpace consensus, creating real multiple expansion. This is a sleeper industrial recovery play that’s being valued like a turnaround — which is exactly where the upside lives.

Pitch Summary:
Vanquis Banking, formerly Provident Financial, serves approximately 1.7 million customers and holds a 15% share of the UK non-prime credit market. The company’s turnaround is led by a new management team addressing legacy cost structures, accounting provisions, and complaints-related expenses. With Tier 1 capital at 18.8%, deposits of £2.4bn, and a NIM of 18.4%, the bank is well-capitalized. The management has targeted £60m in cost reductions (upgraded by £15m, with a further £20m expected by 2026) and projects ROTE to recover to “mid-teens” by 2027. The shares trade at 0.5× book value with a 10%+ dividend yield, implying more than 100% upside as profitability normalizes. :contentReference[oaicite:0]{index=0}

BSD Analysis:
Vanquis Banking Group (VANQ) represents a classic deep-value turnaround story in the UK non-prime credit market. The core thesis is that a new management team is actively addressing legacy cost structures and regulatory burdens, which led to prior underperformance. Management is aggressively pursuing efficiency, targeting £60 million in cost reductions, with plans to deliver an additional £20 million by 2026. The stock is dramatically undervalued, trading at only 0.66x Price-to-Book value and a forward P/E near 8x earnings, which analysts argue implies more than 100% upside as profitability normalizes. With a Tier 1 capital ratio of 18.5% and a strong base of retail deposit funding, the balance sheet is robust, significantly reducing tail risk in this lending niche. The main catalyst is the expected ROTE recovery to mid-teens by 2027, driven by cost cuts and resilient demand for high-margin lending to underserved consumers.

Pitch Summary:
LKQ underperformed in the third quarter as the North American collision repair market failed to stabilize. The company faced weaker volumes amid inflation-driven repair cost increases and slower vehicle miles traveled. RS Value Team exited the position, citing persistent industry headwinds and the impact of new tariffs on imported parts.

BSD Analysis:
LKQ’s scale advantages in aftermarket and recycled auto parts remain intact, but near-term fundamentals have weakened as collision volumes struggle to stabilize and insurers push back on rising repair costs. Inflation and tariff pressure have squeezed margins at a time when industry demand is already soft, exposing how sensitive the model is to slower traffic and fewer miles driven. Management’s cost discipline has helped cushion the downside, but not enough to offset the macro drag or restore investor confidence. With parts tariffs adding a new layer of uncertainty, the stock’s risk-reward profile has shifted from attractive cyclical recovery to a more muddled waiting game. While LKQ still owns the most efficient distribution network in the space, the catalyst path is cloudy without a clear volume rebound. Against cleaner setups elsewhere, the name screens more like dead money in the near term than a mispriced compounder.

Pitch Summary:
Valero Energy produced strong returns in the third quarter as it optimized operations and benefited from U.S. natural gas cost advantages. The firm’s disciplined capital allocation, focus on return on invested capital (ROIC), and refinery efficiency underpin sustainable free cash flow generation. RS Value Team maintains a positive outlook, citing structural advantages in refining economics and shareholder-friendly capital policies.

BSD Analysis:
Valero is the kind of refinery giant that Wall Street keeps treating like a melting ice cube, even as it quietly prints cash at a rate most industrials can’t touch. Crack spreads may ebb and flow, but Valero’s scale, complex refinery slate, and Gulf Coast positioning give it a structural cost advantage that smaller players simply can’t replicate. Diesel tightness, resilient jet demand, and underinvestment in global refining capacity keep the margin setup far stronger than the bears want to admit. Meanwhile, renewable diesel and ethanol aren’t window dressing — they’re high-return growth vectors that let Valero ride decarbonization tailwinds without blowing up its economics. The balance sheet is clean, buybacks are aggressive, and free cash flow remains absurdly high relative to the current multiple. If energy markets stay even moderately tight, Valero’s earnings power looks far closer to a new baseline than a cyclical peak. This is one of the few refiners with both torque and staying power, and the market still isn’t paying up for it.

Pitch Summary:
Elevance Health shares rose as investors reassessed the sector’s outlook following UnitedHealth’s regulatory issues. The company’s disciplined pricing, net cash balance sheet, and integrated PBM model (Carelon) underpin strong execution. Management expects EPS to normalize toward $34–$40 per share as Medicare margins recover in 2026.

BSD Analysis:
Elevance is quietly becoming the adult in a room full of managed-care operators stumbling over regulatory landmines. While UnitedHealth soaks up the headlines, Elevance has been quietly compounding with disciplined pricing, airtight underwriting, and an integrated PBM (Carelon) that actually pulls its weight. The market still treats the Medicare margin mess as permanent, but management’s guidance implies a snapback toward normalized EPS of $34–$40 — a level that makes today’s multiple look borderline negligent. With a net cash balance sheet, double-digit ROIC, and a buyback program that chews through shares like clockwork, Elevance is effectively manufacturing EPS while the rest of the sector is still doing damage control. As repricing works through Medicare and Medicaid, margins should repair faster than consensus expects, setting up a multi-year rerating. Add in the potential share shift from UNH’s regulatory chaos, and Elevance looks like a defensive growth machine hiding in plain sight.

Pitch Summary:
ODFL was added as a new position, reflecting confidence in its dominant market share and superior profitability within the LTL trucking industry. With 20% operating margins and a net cash balance sheet, ODFL’s pricing power and reinvestment discipline provide a sustainable advantage. Management’s strategy of investing through cycles has solidified its moat and earnings consistency.

BSD Analysis:
Old Dominion is the undisputed apex predator of LTL, running circles around competitors who still act like trucking is a commodity business. Its relentless reinvestment in terminals, fleet, and service quality has created a self-reinforcing moat that weaker carriers simply can’t match — hence the industry-leading 20%+ operating margins even when freight demand is running on fumes. Management treats the balance sheet like a sacred artifact, staying net cash while others lever up and pray, giving ODFL the firepower to grab market share when the cycle turns. As the freight slowdown bottoms, Old Dominion is set up for textbook operating leverage: volumes stabilize, pricing holds, and suddenly EPS ramps harder than consensus dares to model. The company’s discipline, efficiency, and refusal to chase low-quality freight makes it the cleanest pure-play compounder in transportation. With rational pricing across the sector and capacity tightening, ODFL looks primed to remind the market why it’s the benchmark everyone else pretends to be.

Pitch Summary:
Micron surged 36% in Q3, extending its year-to-date gains to 99%. Investors increasingly recognize Micron’s dominant position in supplying high-bandwidth memory (HBM) chips critical for AI computing. Stronger pricing and capacity expansion underpin robust profit momentum, with AI demand driving multi-year growth visibility.

BSD Analysis:
Micron is emerging as one of the clearest long-term beneficiaries of AI-driven memory demand, with its leadership in high-bandwidth memory (HBM) positioning it at the center of the AI compute buildout. Strong pricing momentum across DRAM and NAND, combined with disciplined supply reductions industry-wide, is driving a powerful earnings inflection into FY26. The company’s balance sheet remains healthy, enabling aggressive capacity investments in advanced nodes and packaging technologies critical for next-generation AI accelerators. As inference workloads proliferate, memory intensity per unit of compute continues to rise, giving Micron multi-year visibility into above-cycle revenue growth. Operating leverage is expanding rapidly as utilization improves and pricing resets off historic lows. With normalized earnings likely to exceed prior peaks, valuation still offers room for multiple expansion relative to other AI hardware suppliers. Overall, Micron stands well positioned as a cyclical compounder with structural AI tailwinds reshaping the economics of the memory industry.

Pitch Summary:
Our Payments Technology basket is composed of businesses with exceptional long-term upside potential. Built on modern technology stacks and led by forward-thinking management teams, these businesses are steadily taking share from legacy incumbents while also benefiting from secular growth in digital transactions and the tailwinds of inflation. We purchased more PayPal and Shift4 at attractive valuations.

BSD Analysis:
Shift4 is building a differentiated end-to-end payments platform with strong traction in hospitality, restaurants, and large event venues, positioning it to capture high-value verticals that remain underpenetrated by modern processors. Despite recent volatility, the company continues to post 20%+ organic net revenue growth, supported by a growing merchant base and increasing adoption of its integrated commerce solutions. Scale benefits are driving margin expansion, while product breadth—from SkyTab POS to alternative payments and global acquiring—improves customer stickiness and cross-sell potential. The Global Blue acquisition adds incremental distribution and international reach, even if IFRS accounting initially created modeling noise for analysts. Trading at a compelling valuation relative to its growth profile and peers, Shift4 offers meaningful upside as execution and revenue clarity improve. Free cash flow growth and disciplined capital allocation further enhance the long-term compounding story. As vertical integration continues to deepen and channel partnerships expand, Shift4 remains one of the more attractive mid-cap fintechs levered to secular cashless and ecommerce adoption.

Pitch Summary:
Our Payments Technology basket is composed of businesses with exceptional long-term upside potential. These are enduring investments that should be evaluated over years, not quarters, as their value compounds gradually through innovation and scale. Built on modern technology stacks and led by forward-thinking management teams, these businesses are steadily taking share from legacy incumbents (by helping their customers, both businesses and consumers, operate and transact more efficiently, rapidly, and affordably) while also benefiting from secular growth in digital transactions and the tailwinds of inflation. We purchased more PayPal and Shift4 at attractive valuations.

BSD Analysis:
PayPal’s refocus on its core checkout franchise, combined with disciplined cost management, is creating a clearer path toward margin stabilization and renewed earnings growth. Despite muted near-term TPV acceleration, the company is benefiting from rising branded checkout engagement and early traction in improving authorization rates—both meaningful drivers of transaction margin expansion. Venmo monetization remains underappreciated, with continued adoption among merchants offering incremental revenue optionality. Trading at a discounted earnings multiple relative to its historical average and the broader fintech sector, PayPal’s valuation already reflects conservative expectations. Free cash flow remains robust, enabling ongoing buybacks that support per-share compounding even in a slower growth environment. Product simplification under new leadership and better pricing discipline should gradually rebuild investor confidence. With a durable two-sided network, strong brand equity, and improved execution, PayPal offers an attractive risk-reward setup for long-term investors.

Pitch Summary:
Corporación América Airports is currently rated as a sell due to its inefficiencies, high debt load, and the economic instability in Argentina, despite a technically undervalued DCF analysis suggesting a large upside.

BSD Analysis:
Corporación América Airports faces significant challenges, including a high capital expenditure requirement and unpredictable revenue streams due to the volatile nature of the air travel industry. While the company exhibits some monopolistic traits, such as high barriers to entry and network effects, its operational inefficiencies and declining profitability are concerning. The company's presence in economically unstable regions like Argentina further exacerbates its risk profile. Despite a DCF analysis indicating a potential 216% upside, the massive debt load and management inefficiencies make it a risky investment. Investors should carefully weigh these risks against the potential rewards, considering their own risk tolerance.

Pitch Summary:
Western Gold Resources is strategically positioned to capitalize on the current surge in gold prices due to its low capital expenditure and quick development timeline for the Duke Gold Project. The company's valuation presents an asymmetric opportunity, as it is fully funded to commence production with a market cap of 46.4 million AUD.

BSD Analysis:
Western Gold Resources has secured sufficient funding to initiate phase 1 of the Duke Gold Project, which is expected to generate significant cash flow if gold prices remain at current levels. The project is set to begin production in early 2026, with a short mine life of 14 months for the initial phase. Despite the limited resource size and average grade, the low CAPEX and rapid development provide a compelling investment case. The company's financial position is bolstered by a recent cash raise, and it holds a net cash position after accounting for its debt facility. The potential for high returns is contingent on maintaining favorable gold prices, which could lead to substantial pre-tax and post-tax profits.

Pitch Summary:
Ekinops has faced significant share price decline due to poor results and low visibility, but may present a contrarian opportunity.

BSD Analysis:
Ekinops' recent share price decline, driven by reduced orders from a major client and the departure of its CEO, has created a challenging environment for the company. However, the market's reaction may have been overly negative, presenting a potential contrarian opportunity for investors willing to take on higher risk. The company's focus on optical transport solutions positions it in a growing industry, and any stabilization in orders or management could lead to a recovery in share price. Investors should carefully assess the risks and potential for a turnaround as Ekinops navigates its current challenges.

Pitch Summary:
Zevra Therapeutics has strong insider buying and recently completed a significant asset sale, positioning it for reduced cash burn and future profitability.

BSD Analysis:
The insider buying at Zevra Therapeutics, combined with the sale of its Pediatric Rare Disease Priority Review Voucher, highlights confidence in the company's financial health and strategic direction. The asset sale provides substantial cash inflow, reducing the company's cash burn and supporting its path towards profitability. As Zevra approaches operational break-even, the potential for earnings growth and value creation becomes increasingly attractive. Investors should consider the company's strong balance sheet and focus on rare disease therapies as key drivers of future success.

Pitch Summary:
Software Service Inc. offers a compelling growth story with strong fundamentals, including high EBITDA margins and a cash-rich balance sheet.

BSD Analysis:
Software Service Inc.'s strong financial position, with almost 30% of its market cap in cash and high EBITDA margins, underscores its potential for sustained growth. The company's focus on healthcare software solutions positions it well in a sector with increasing demand for digital transformation. Despite the lack of immediate catalysts, the company's solid fundamentals and growth trajectory make it an attractive investment opportunity. Investors should consider the potential for long-term value creation as Software Service Inc. continues to expand its market presence and capitalize on industry trends.

Pitch Summary:
Activist Land & Buildings IM is urging Six Flags to spin off its real estate unit, FUN REIT, to unlock significant value.

BSD Analysis:
The activist campaign by Land & Buildings IM to spin off Six Flags' real estate unit, FUN REIT, highlights the potential for substantial value creation. The estimated value of the REIT, up to $6 billion, represents a significant portion of Six Flags' enterprise value. Recent board changes and a standstill agreement with activist Sachem indicate a willingness to consider strategic alternatives. Investors should evaluate the potential for a spin-off to enhance shareholder value, while also considering the operational and financial implications for Six Flags as it navigates this activist pressure.