Investment Pitches

Pitch Summary:
The demand for data center space is as great as it has ever been. In the meantime, two of our holdings, Digital Realty and Equinix, stand to benefit from leasing and construction deals signed over the past couple of years. Beyond valuation risks—Digital Realty and Equinix are not cheap—there are other risks related to power availability and transmission. We continue to hold Digital Realty and Equinix at a level roughly in line with our benchmark since the risks outlined above are not likely to impact fundamentals over the near term. In fact, most of the recent leasing each REIT has done is with investment-grade companies. We consider those money-good deals. :contentReference[oaicite:4]{index=4}

BSD Analysis:
Digital Realty is capitalizing on a massive backlog of data center demand, entering 2026 with significant momentum as it scales its capacity to support the AI revolution. The company has successfully executed on its development program, delivering hundreds of megawatts of new capacity that is already largely pre-leased at attractive rental rates. While its historical performance has seen some volatility, the firm’s strategic focus on the intersection of cloud and AI infrastructure is driving a meaningful uptick in recurring revenue and core funds from operations. Digital Realty’s global scale, with over three hundred data centers across fifty metro areas, provides a unique platform for hyperscale and enterprise customers alike. With a strong pipeline of new starts and a focus on power-efficient infrastructure, the company is well-positioned for a sustained period of double-digit earnings growth.

Pitch Summary:
The demand for data center space is as great as it has ever been. In the meantime, two of our holdings, Digital Realty and Equinix, stand to benefit from leasing and construction deals signed over the past couple of years. Beyond valuation risks—Digital Realty and Equinix are not cheap—there are other risks related to power availability and transmission. We continue to hold Digital Realty and Equinix at a level roughly in line with our benchmark since the risks outlined above are not likely to impact fundamentals over the near term. In fact, most of the recent leasing each REIT has done is with investment-grade companies. We consider those money-good deals. :contentReference[oaicite:3]{index=3}

BSD Analysis:
Equinix has reached a major growth inflection point, recently raising its 2026 revenue guidance as the surge in generative AI drives unprecedented demand for its global data center platform. The company is seeing a massive shift in its booking mix, with over sixty percent of new deals now targeted toward AI workloads, half of which are coming from traditional enterprise customers rather than cloud providers. Equinix’s massive footprint and carrier-neutral model provide a critical competitive advantage, allowing it to act as the primary interconnection hub for the modern digital economy. Management has significantly increased its guidance for adjusted funds from operations, reflecting a faster-than-expected monetization of its AI infrastructure investments. As corporations continue to distribute their AI and cloud networking, Equinix’s role as the "connective tissue" of the internet ensures durable, high-margin growth.

Pitch Summary:
The industrial sector, which was maligned for a couple of years given burgeoning supply and slowing earnings growth, began to show signs of life. With supply additions dropping meaningfully in most areas of the country, market rents found a floor. Our top industrial holding, Prologis, though not our greatest overweight in the sector, performed very well. There is much to like about a sector that still trades at a reasonable discount and can in limited instances parlay existing property into data centers. :contentReference[oaicite:2]{index=2}

BSD Analysis:
Prologis is uniquely positioned to benefit from the ongoing recovery in the global logistics market, with vacancy rates expected to peak and rents beginning to inflect upward in 2026. The company is successfully diversifying its revenue streams by leveraging its massive land bank for data center development, with nearly forty percent of new projects now focused on digital infrastructure. As the world’s largest industrial REIT, Prologis benefits from unmatched scale and proprietary data analytics that help optimize its global "own and manage" portfolio. The company’s strategic capital initiatives and strong net effective rent changes are driving significant annualized net operating income growth. With net absorption in the United States projected to reach two hundred million square feet this year, Prologis remains the primary beneficiary of the structural shift toward more resilient and localized supply chains.

Pitch Summary:
We have spoken about this REIT many times in prior investor letters, most often to describe how it has buoyed fund performance. We can’t do that today. Half of Alexandria’s market value evaporated during the year, an outcome reminiscent of the Great Financial Crisis. That follows on poor performance during 2024 and 2023. In a very real sense, Alexandria’s trajectory, at least in terms of its relevance to DREF’s benchmark, followed an inverse path to Welltower. In 2023 Alexandria was the seventh largest company in the index, just slightly smaller than Welltower. Today it is the forty-second largest constituent representing just 57 basis points of our benchmark. And because Alexandria has been getting smaller over the years, passive investment funds have been rebalancing out of it, putting selling pressure on its share price. During Alexandria’s third quarter earnings call it became clear that the company expected positive inflection to be more likely a three-year proposition, perhaps even a bit longer. Making matters worse, Alexandria’s considerable development funding plan partly depends on leasing success in the core portfolio. If leasing velocity slows materially, as appears almost certain, the company needs to source capital from other areas. At its annual investor day this past December, Alexandria announced it would accelerate a non-core asset disposition program and cut the dividend, both of which materially alter the timing and scale of cash flows. Needless to say, the negative stock price reaction for Alexandria during the fourth quarter of 2025 was swift and significant. In all respects it looks like an overreaction, placing at a historic discount what we view as one of the best real estate businesses in the country. Unlike during the Great Financial Crisis, when the company’s balance sheet was stretched, today it is investment grade-rated with what we consider one of the most well-built balance sheets in the whole of our investment universe. Alexandria has all the markings of a quality company navigating a cyclical downturn but has ended up being priced like a distressed company facing mounting structural headwinds. :contentReference[oaicite:1]{index=1}

BSD Analysis:
Alexandria Real Estate Equities remains the gold standard in the life science real estate niche, focusing on its high-demand Megacampus ecosystems in top-tier innovation clusters. Despite facing near-term headwinds from market sentiment and legal filings, the company’s operational fundamentals remain robust with a high-quality tenant base comprised of the world’s leading pharmaceutical and biotech firms. Alexandria’s portfolio of laboratory and specialized manufacturing space is largely insulated from the broader office downturn, as the nature of research requires physical presence and specialized infrastructure. The company has proactively managed its balance sheet through strategic debt tender offers, ensuring it has the liquidity to continue developing its significant pipeline. While the stock currently trades at a defensive valuation, its five percent dividend yield and essential role in the biotech ecosystem provide a solid foundation for long-term total returns.

Pitch Summary:
To frame the discussion, we will use Welltower, a senior housing REIT, and Alexandria Real Estate, a REIT owner/developer of life science real estate. This pairing will be convenient given our under-owning Welltower and over-owning Alexandria, terms that will become better understood in a minute. Together they are the most important reasons for our underperformance during 2025 and, indeed, over the past few years. During the height of COVID, Welltower and other healthcare real estate stocks were battered. In the span of two years Welltower’s earnings dropped by a third as occupancy in its properties plummeted. Its valuation fell in sympathy and to our eye went too far. Welltower was a small position in the fund as the pandemic hit its peak, and we began adding to our position. When the pandemic receded Welltower began to show tremendous growth as it rebuilt occupancy, albeit off a very low base. Nevertheless, investors were cheered and the company began to experience multiple expansion. As its cost of equity dropped, the capital markets opened and Welltower began raising capital to purchase senior housing assets that, for all practical purposes, no one else wanted to own. That fueled even better earnings growth above and beyond what it was getting from occupancy growth. A virtuous cycle began where Welltower parlayed positive spread investing to become one of the biggest public real estate companies in existence. It is now the single largest company in our benchmark at almost 9% of its total market capitalization. This compares to 2022 when it was the fifth largest in the benchmark and only 4% of its total market capitalization. But like all good things, there are limits. Welltower has long been and still is the most expensive stock in our universe by a considerable margin, and that’s after accounting for robust growth expectations. :contentReference[oaicite:0]{index=0}

BSD Analysis:
Welltower is currently experiencing a historic growth cycle, reporting its thirteenth consecutive quarter of over twenty percent net operating income growth in its senior housing portfolio. The company is benefiting from a profound supply-demand imbalance in the senior living sector, driven by favorable demographic trends and a significant reduction in new construction over the past several years. By transitioning toward a pure-play rental housing platform, Welltower has successfully expanded its operating margins and increased revenue per occupied room. The company’s massive investment activity and strategic portfolio transformation have solidified its position as the preeminent owner of healthcare-related real estate. With occupancy rates continuing to climb and a strong balance sheet supporting further acquisitions, Welltower remains a top-tier pick for investors seeking high-quality, inflation-protected income.

Pitch Summary:
Consider Reckitt Benckiser, the UK-listed maker of Lysol, Mucinex, and Durex. The company recently completed the divestiture of its slower-growth Essential Home business, leaving behind a focused hygiene and health portfolio with a clear path to accelerating organic growth and a large pile of cash recently returned to investors. Yet despite this improved business quality, shares still trade at a 20% discount to the market, as improving fundamentals at the core business are clouded by recent portfolio moves. The remaining overhang is an infant formula subsidiary facing lingering litigation. Ironically, recent industry-wide recalls have created an opportunity to gain share, as Reckitt's Enfamil was unaffected — a development that could improve near-term results and better position the segment for an eventual sale, unlocking billions of pounds in additional buyback capacity at a share price that already reflects an unusually pessimistic outcome. In the meantime, we own a business that sells products people reach for every day — whether the economy is booming or not — at a valuation that compensates us handsomely for the wait.

BSD Analysis:
Reckitt Benckiser is undergoing a strategic simplification of its portfolio, highlighted by the recent divestment of its Essential Home business and a commitment to return significant value to shareholders. The company is refocusing on its high-margin core segments in health and hygiene, where its powerhouse brands like Mucinex and Lysol command dominant market positions. Following a major share consolidation and special dividend in early 2026, the firm is moving toward a more streamlined capital structure designed to enhance earnings per share. While the consumer goods sector remains competitive, Reckitt’s focus on premiumization and science-led innovation provides a strong defense against private-label threats. Management’s disciplined approach to capital allocation and operational efficiency is expected to drive steady margin expansion and consistent cash flow generation. For investors, the "new" Reckitt offers a more focused and shareholder-friendly way to gain exposure to global household essentials.

Pitch Summary:
Watches of Switzerland best exemplifies the opportunity we see in small, non-US companies today. The company is effectively the listed proxy for Rolex—commanding roughly 50% of Rolex sales in the UK and now rolling up the fragmented U.S. market. The business model is exceptional: full-price sales, multi-year waitlists, near-zero inventory, e-commerce risk, and ~20% store-level margins. Yet shares collapsed by 80% from 2022 highs on fears that Rolex's acquisition of Bucherer signals disintermediation in distribution. At 11x depressed earnings with a pristine balance sheet and attractive returns on capital, the market is pricing WOSG as if its century-old franchise is permanently impaired. We see it differently, and as our conviction in the opportunity deepened, we increased our exposure through a dedicated investment vehicle alongside a small group of partners.

BSD Analysis:
Watches of Switzerland has recently upgraded its growth forecasts for 2026, signaling robust demand for luxury timepieces despite a volatile global macroeconomic environment. The company continues to gain market share in the United States and the United Kingdom, leveraging its deep relationships with premier brands like Rolex and Patek Philippe to secure a consistent supply of high-demand inventory. Strategic acquisitions, such as the recent purchase of luxury showrooms in Texas, are significantly expanding the firm’s geographic footprint and regional influence. While high-interest rates have pressured some consumer spending, the top-tier luxury segment remains incredibly resilient, with demand consistently outstripping supply. Management’s ability to maintain high EBIT margins while investing in a sprawling retail network underscores the strength of its operational model. This combination of brand prestige and disciplined execution makes the group a premier way to play the enduring strength of the luxury market.

Pitch Summary:
Six Flags was our third-largest detractor from performance. Our original underwriting leaned on our successful track record of investing in the industry, combined with operational upside and meaningful cost savings following the combination of Cedar Fair and Six Flags. We believed recession fears were misplaced, given historically resilient attendance at parks, and the merger created levers for improvement and balance-sheet optimization through asset sales, as the majority of the company's profits were generated by a handful of parks. We underweighted the risk that integration, weather, and a struggling low-income consumer would deliver significantly softer results in a tough discretionary backdrop, and that “fixable” would take longer than opportunity cost, or the company’s overleveraged balance sheet, could justify. We sold half of our position after second quarter results fell short of our expectations and the CEO stepped down, and later fully exited the position.

BSD Analysis:
The new Six Flags Entertainment Corporation is focused on realizing substantial merger synergies following its combination with Cedar Fair, aiming for 180 million dollars in run-rate cost reductions. The company is undergoing a massive capital investment cycle, committing one billion dollars to new rides and park upgrades to broaden its appeal across more diverse customer demographics. While current leverage remains a point of focus for analysts, the company’s goal to reduce debt below four times EBITDA by the end of 2026 provides a clear roadmap for financial stabilization. Strategic technology upgrades and improved food and beverage offerings are expected to drive higher in-park spending and offset seasonal attendance volatility. As the largest operator of regional theme parks in North America, the combined entity offers unmatched scale and a more resilient, diversified revenue stream for the long term.

Pitch Summary:
Avantor was a close second. When we initiated the position, we underwrote a classic recovery setup: orders bottom, gradually recover, and earnings inflect. While this cycle has played out longer than we initially expected, with uncertainty magnified by unpredictable government policy, the industry upturn has become increasingly difficult to ignore. The issue for Avantor has been that a cyclical downturn morphed into competitive and operational challenges, with company-specific execution masking the industry upturn. Consequently, we cut the position in half after the company announced management changes and second-quarter results that again fell short of our expectations, and reinvested the proceeds into Thermo Fisher, the primary beneficiary of Avantor’s challenges. We continue to maintain our reduced position in the company as we view AVTR as a rare strategic asset with multiple self-help levers, with the option of a strategic sale should those levers fail to impress recently engaged activists.

BSD Analysis:
Avantor is positioning 2026 as a pivotal transition year, launching a comprehensive restructuring program known as Project Revival to restore organic growth and margin health. The company is doubling down on its flagship VWR brand and digital e-commerce capabilities to enhance the customer interface and capture emerging demand in bioprocessing and lab solutions. While end-market uncertainty in government and education remains a headwind, the underlying shift toward specialized bioscience production provides a durable long-term tailwind. Management’s focus on optimizing its business segments and reducing processing costs is aimed at creating a more agile and profitable enterprise by the end of the year. For investors, Avantor represents a tactical turnaround play within the essential life sciences supply chain, with significant potential for valuation re-rating as the revival plan hits its operational milestones.

Pitch Summary:
Fiserv was our biggest detractor from performance on the year. This was a particularly painful loss because we thought we owned a dominant business with a flawless record of consistent execution, trading at a large discount to the market and to its own history. We increased our investment through the first half of the year because we believed the market was overly punitive in assessing short-term headwinds and slowing growth at Clover. As the stock’s decline accelerated and the valuation collapsed, we actively questioned what we might be missing, seeking additional context, perspective, and data to stress our assumptions. In hindsight, we over-weighted the probability that the sell-off was driven by competitive dynamics and overlooked the probability of more structural issues beneath the surface. As it turned out, that “flawless execution” was a red flag. We immediately exited the position when we concluded the company was unanalyzable.

BSD Analysis:
Fiserv is currently navigating a major operational transformation, shifting its focus toward sustainable long-term revenue growth and deeper client integration through its Clover and Carat platforms. While the company has recently recalibrated its near-term guidance to account for increased investment spending, its role as a backbone of global financial services remains fundamentally secure. The ongoing AI transformation in partnership with IBM is expected to unlock significant cost savings and product enhancements over the coming years, positioning Fiserv at the forefront of the fintech evolution. Although current margin pressure reflects a pivot toward operational discipline, the company’s robust free cash flow provides the necessary capital to maintain a balanced approach to share repurchases and balance sheet management. As the company moves past this transitional phase, its expanded presence in the merchant-acquiring market should drive a return to historical growth levels.

Pitch Summary:
Dollar Tree rallied sharply after tariff-induced panic proved overblown and the cleaner post-Family Dollar business began to shine through. While the turnaround has been uneven, the simplification of the business and improvements in execution at the core Dollar Tree banner reinforced our view that normalized earnings power is materially higher than the market had been discounting. We see the stock’s recovery as a partial unwind of excessive pessimism rather than a full repricing of the opportunity ahead.

BSD Analysis:
Dollar Tree is entering a transformative new era as it shifts toward a multi-price point strategy that allows for a significantly broader and more relevant product assortment. The company’s long-term outlook through 2028 targets double-digit earnings growth, fueled by the aggressive rollout of its "Dollar Tree Plus" initiative and the streamlining of its Family Dollar portfolio. By breaking the restrictive one-dollar price ceiling, the firm is successfully capturing a more resilient middle-income customer base while protecting margins against inflationary pressures. Strategic investments in supply chain automation and store technology are beginning to yield operational efficiencies that should drive a high-teens percentage increase in earnings per share for 2026. Despite a competitive retail landscape, Dollar Tree’s evolution into a high-performance value retailer makes it a compelling play on disciplined growth and consumer value.

Pitch Summary:
IQVIA contributed meaningfully as fears around biotech funding and clinical activity began to ease. While sentiment toward the sector remains fragile, the company’s role as a mission-critical infrastructure to drug development remains unchallenged. The first leg of the industry’s recent rally was sparked by stabilization, rewarding patience through a prolonged industry downturn. We expect the next leg to gain steam as the recovery accelerates.

BSD Analysis:
IQVIA remains a dominant force in the life sciences sector, uniquely combining its massive healthcare data assets with industry-leading clinical research services. The company is currently trading at a notable discount to its fair value, presenting a tactical opportunity as it benefits from a surge in high-value clinical trials within the obesity and cardiometabolic space. While debt coverage remains a metric for investors to watch, IQVIA’s strategic alliance with major research institutions and its AI-driven analytics platform provide a wide competitive moat. Management’s focus on high-growth therapeutic areas and digital clinical trials is expected to drive meaningful margin expansion as the biotech funding environment continues to stabilize. With a valuation significantly below its historical average and peer group, the stock offers an attractive entry point for investors seeking exposure to the long-term digitization of global healthcare.

Pitch Summary:
Phillip Morris was a top contributor for the second year in a row as the company continued to benefit from Zyn's explosive growth. After years of skepticism, the trajectory of reduced-risk products became increasingly difficult to ignore. In our view, the stock’s recent performance reflects a narrowing gap between perception and fundamentals, validating our thesis that the transition away from combustible cigarettes would drive a re-rating for the industry leader.

BSD Analysis:
Philip Morris International is leading the most significant transformation in the tobacco industry, with its smoke-free portfolio now contributing over forty percent of total revenue. The company’s IQOS and ZYN brands are global category leaders, providing a powerful engine for growth as combustible cigarette volumes continue their structural decline. Management has recently raised its 2026 earnings guidance, reflecting strong pricing power and the rapid adoption of nicotine pouches in the United States and international markets. While the company faces regulatory scrutiny and intense competition in the oral nicotine space, its massive scale and first-mover advantage create a formidable moat. Philip Morris maintains a best-in-class dividend yield and a commitment to a smoke-free future that is increasingly being recognized by ESG-conscious investors. The stock remains a premier defensive holding with a unique growth kicker from its successful pivot toward reduced-risk products.

Pitch Summary:
DiscoverIE Group plc is a leading designer and manufacturer of highly differentiated electronic components for mission critical industrial applications. The company specializes in bespoke, application specific products, including magnetics, sensors, power electronics, and connectivity solutions, that are designed into customer systems and typically remain in place for the life of the product. Examples include custom temperature sensors used in specialized medical devices and X ray sensors embedded in airport security scanners. These niche, high value components are small in cost but critical to system performance and reliability. The strategy is simple and disciplined: operate in structurally growing end markets, focus on low-volume, high-complexity components that are difficult to switch, and compound growth through organic design wins and bolt-on acquisitions. This model has enabled 20%+ EPS and free cash flow per share growth over the past 10 years. While challenging end markets led to negative organic growth in both fiscal 2024/fiscal 2025 and compressed the valuation from over 25x earnings to ~15x today, we believe the business is entering the early stages of a cyclical recovery. In our view, this supports the potential for ~20% EPS growth over the next five years alongside meaningful multiple expansion. With aligned management, disciplined capital allocation, and a focused growth strategy, DiscoverIE fits squarely within the type of under-appreciated industrial technology compounder we seek to own.

BSD Analysis:
DiscoverIE Group is a leading international designer and manufacturer of customized electronics for industrial applications, focusing on niche markets with long-term growth tailwinds. The company’s strategy centers on high-margin, essential components that are designed into customers' products, creating high switching costs and predictable recurring revenue. DiscoverIE is particularly well-positioned to benefit from global trends in renewable energy, medical technology, and industrial automation. The company has a proven track record of growing through both organic innovation and a disciplined M&A strategy, successfully integrating specialized businesses into its global platform. With a strong order book and a focus on increasing its international reach beyond Europe, the group is on track for continued earnings expansion through 2026. For investors seeking exposure to the "picks and shovels" of the industrial internet of things and the green economy, DiscoverIE offers a high-quality, diversified portfolio.

Pitch Summary:
DiscoverIE: A High-Quality Industrial Compounder at an Inflection Point DiscoverIE Group plc is a leading designer and manufacturer of highly differentiated electronic components for mission critical industrial applications. The company specializes in bespoke, application specific products, including magnetics, sensors, power electronics, and connectivity solutions, that are designed into customer systems and typically remain in place for the life of the product. Examples include custom temperature sensors used in specialized medical devices and X ray sensors embedded in airport security scanners. These niche, high value components are small in cost but critical to system performance and reliability. The strategy is simple and disciplined: operate in structurally growing end markets, focus on low-volume, high-complexity components that are difficult to switch, and compound growth through organic design wins and bolt-on acquisitions. This model has enabled 20%+ EPS and free cash flow per share growth over the past 10 years. While challenging end markets led to negative organic growth in both fiscal 2024/fiscal 2025 and compressed the valuation from over 25x earnings to ~15x today, we believe the business is entering the early stages of a cyclical recovery. In our view, this supports the potential for ~20% EPS growth over the next five years alongside meaningful multiple expansion. With aligned management, disciplined capital allocation, and a focused growth strategy, DiscoverIE fits squarely within the type of under-appreciated industrial technology compounder we seek to own.

BSD Analysis:
Luceco is a specialized manufacturer and distributor of high-quality LED lighting, wiring accessories, and portable power products with a strong footprint in the United Kingdom and expanding global operations. The company is benefiting from the ongoing secular shift toward energy-efficient lighting solutions and the increasing electrification of homes and businesses. Luceco’s integrated supply chain and efficient manufacturing base allow it to maintain competitive pricing while delivering strong operating margins. The company has shown a consistent ability to generate cash, which it uses for strategic bolt-on acquisitions and consistent dividend payments to shareholders. Despite facing inflationary pressures and supply chain fluctuations, Luceco’s diversified product portfolio across the DIY, professional, and industrial channels provides a reliable revenue base. For investors, Luceco represents a solid value play on the fundamental infrastructure needed for the global energy transition.

Pitch Summary:
Latham Group – Latham delivered a solid third quarter, with net sales of approximately $162 million, up ~7.6% year-over-year, outperforming a generally flat U.S. in-ground pool market and reflecting continued traction across key product lines, including pool covers, liners, and fiberglass pools. Adjusted EBITDA itself grew roughly 28.5% to about $38.3 million. Latham also narrowed and modestly raised its full-year guidance, signaling confidence in its outlook despite broader industry headwinds, with net sales now expected in the ~$540–$550 million range and adjusted EBITDA of ~$92–$98 million. Overall, the quarter demonstrated a business that continues to grow revenue, expand profitability, and execute on strategic priorities even in challenging end-market conditions. We are pleased with results. On the negative side, Latham’s CEO, Scott Rajeski, announced his retirement. The incoming CEO appears credible, coming from James Hardie, a much larger organization, but we have not yet had the opportunity to engage with him and plan to do so following year-end results. Given the unexpected leadership change, we reduced the position from 6% to 3% of the fund. This was not driven by a change in our view of the business, but by our emphasis on management quality and familiarity. Until we build conviction in the new leadership, our overall conviction is lower.

BSD Analysis:
Latham Group is the largest designer and manufacturer of in-ground residential swimming pools in North America, with a dominant position in the high-growth fiberglass pool category. The company is benefiting from a structural shift in the industry as homeowners increasingly prefer fiberglass for its lower total cost of ownership and faster installation times compared to traditional concrete. While the pool industry is sensitive to interest rates and housing turnover, Latham’s leading market share and strong dealer relationships provide a resilient competitive advantage. The company is focused on operational excellence and cost-out initiatives to protect margins during cyclical downturns while preparing for the next wave of demand. With a robust pipeline of innovative products and a focus on the massive replacement and remodel market, Latham is well-positioned for long-term growth. The stock offers a way to play the premiumization of the home and the long-term resilience of the outdoor living sector.

Pitch Summary:
Monday.com – In November, Monday.com reported a mixed quarter, with revenue and free cash flow growing approximately 26% and 10% year over year, respectively. Enterprise performance continued to accelerate, while growth in small and mid sized customers further decelerated. We held the position through year end and into 2026, believing management could execute against the objectives they had outlined, supported by a strong historical track record. However, following the company’s fourth quarter earnings release earlier this week, we have fully exited the position. The reported results were not aligned with our forecasts, and more importantly, management was unable to clearly articulate what is occurring within the business. When we lose confidence in the accuracy or clarity of management’s communication, we exit. That is what we have done here.

BSD Analysis:
Monday.com remains a top-tier player in the Work OS category, despite a recent reset in market expectations regarding its 2026 growth trajectory. The company continues to deliver robust revenue increases, driven by high adoption of its core platform and new products like CRM and Dev. While management has adopted a more conservative outlook due to increased competition and the shifting AI landscape, the firm’s ability to move up-market into larger enterprise accounts remains a key strength. Monday.com is prioritizing disciplined investment in its go-to-market strategy and product innovation to ensure long-term defensibility against legacy incumbents. The company maintains a strong net-dollar retention rate and a healthy balance sheet, providing the flexibility needed to navigate a moderating growth environment. For investors, the current valuation provides a more attractive entry point for a high-quality SaaS business that is essential for modern, hybrid workforce management.

Pitch Summary:
ThredUp – ThredUp delivered an excellent third quarter, with revenue up approximately 34% year over year, one of the fastest growth rates in its recent history. Adjusted EBITDA improved to $3.8 million, or a 4.6% margin, from roughly breakeven last year, while active buyers increased about 26%, driven by strong new buyer acquisition. Management also raised full year revenue guidance, signaling confidence in the outlook. Notably, management highlighted that new buyer growth accelerated to 81% year over year in October, up from 54% in Q3, following a rebrand and the launch of a new product recommendation feed in late September. While fundamentals continue to strengthen, the stock has declined over the past five months. These dislocations between price and fundamentals are common in the types of businesses we invest in and have led us to add to the position. ThredUp remains our largest holding.

BSD Analysis:
ThredUp is a leading player in the rapidly growing resale market, utilizing its proprietary "operating system for used clothing" to simplify the consignment process for millions of consumers. The company’s Resale-as-a-Service platform has become a critical partner for major retailers looking to participate in the circular economy, providing a high-margin, recurring revenue stream. While the firm has faced challenges with its international operations, it is increasingly focused on its core United States business where it sees the highest efficiency and growth potential. ThredUp’s investment in automated distribution centers is finally bearing fruit, leading to significant improvements in processing costs and overall gross margins. Despite near-term stock volatility, the long-term tailwinds for sustainable fashion and value-conscious shopping remain exceptionally strong. As the company moves closer to consistent free cash flow generation, it stands out as a unique ESG-aligned growth opportunity in the retail space.

Pitch Summary:
Carvana – Carvana’s strong financial trajectory continues reporting record third-quarter results, with 155,941 retail cars sold (+~44% YoY) and total revenue of ~$5.65 billion (+~55% YoY), both all-time quarterly highs. The company generated adjusted EBITDA of ~$637 million +~50%, with an adjusted EBITDA margin of ~11.3%, well above typical industry profitability levels. Carvana remains a top 5 holding.

BSD Analysis:
Carvana has executed one of the most remarkable operational turnarounds in the retail sector, moving from liquidity concerns to becoming a highly profitable leader in the used vehicle market. The company’s focus on unit economics and operational efficiency has led to record-breaking gross profit per unit, setting a new benchmark for the industry. Retail unit sales are projected to reach significant new highs in 2026 as the company leverages its unique inspection and reconditioning centers to outpace traditional dealers. While the stock remains volatile and sensitive to interest rate environments, Carvana’s massive infrastructure and superior digital customer experience create a formidable competitive moat. The company is also benefiting from a favorable shift in consumer perception, with more buyers opting for the convenience of its online model over traditional showrooms. For investors, Carvana represents a high-beta play on the continued digitization of the automotive industry.

Pitch Summary:
Wayfair – Last quarter, we highlighted that Wayfair’s Q2 results were the strongest we had seen in several years and supported our thesis that the business was positioned for a meaningful rebound as the home furnishings market recovered. Q3 built on that momentum. Revenue grew 9% year over year, accelerating from 6% in Q2, while adjusted EBITDA increased more than 70% year over year. These results provide further evidence that Wayfair’s future profit growth remains substantial and is materially underappreciated by the market. Wayfair continues to be a top five holding.

BSD Analysis:
Wayfair is emerging from a period of restructuring with a significantly more efficient business model and a renewed focus on capturing market share in the home goods sector. The company has demonstrated a notable acceleration in revenue growth, particularly in the United States, supported by its sophisticated logistics network and a maturing international presence. In 2026, Wayfair is expected to generate record levels of free cash flow as it benefits from operational leverage and improved international margins after exiting underperforming markets. While macroeconomic headwinds remain a concern for big-ticket consumer spending, Wayfair’s strong repeat customer rates and growing luxury segment provide a solid foundation for growth. The brand’s investment in a physical retail footprint is also beginning to pay off, creating a multi-channel experience that enhances customer trust and engagement. As the e-commerce leader in a fragmented home category, Wayfair is well-positioned for long-term margin expansion and value creation.