Investment Pitches

Pitch Summary:
Finally, we also acquired Intercontinental Exchange, owner of the New York Stock Exchange, along with several other exchanges, clearing houses, and technology services. The company has particular strengths in global energy futures and options markets – with demand for risk management services in these markets only strengthening, in our view. And similar to BAE Systems, Intercontinental Exchange benefits from market volatility – which, of course, there is plenty of today.

BSD Analysis:
Montaka's Intercontinental Exchange investment targets a diversified financial infrastructure company positioned to benefit from current market volatility and structural energy market changes. ICE's ownership of the New York Stock Exchange provides a stable foundation, but the manager emphasizes the company's particular strength in global energy futures and options markets where risk management demand is intensifying. The geopolitical conflicts and energy supply disruptions highlighted throughout the letter create sustained volatility that drives trading volumes and risk management needs across ICE's platforms. Like their BAE Systems investment, ICE offers countercyclical characteristics that benefit from market stress and uncertainty. The company's clearing houses and technology services provide additional revenue diversification beyond pure exchange operations. With ongoing geopolitical tensions, energy market restructuring, and general market volatility, ICE is positioned to capture increased trading activity and risk management demand across multiple asset classes. The investment provides portfolio diversification while capitalizing on the current volatile environment that the manager expects to persist.

Pitch Summary:
We acquired Uber on its recent stock price pull-back. Uber's competitive advantages stem from its large-scale networks and flywheels – between users, drivers, merchants, and advertisers – particularly as they interface with the complex and messy real world. (Similar to the advantages of DoorDash, which we already own.) And our analysis suggests these advantages will likely thrive in an agentic AI world. Furthermore, recent datapoints suggest the probability of potential disruption from autonomous vehicles is declining, while the probability of the mobility market expanding is increasing.

BSD Analysis:
Montaka's Uber investment capitalizes on a recent stock pullback to acquire a company with powerful network effects and real-world operational complexity that creates sustainable competitive advantages. The manager draws parallels to their existing DoorDash position, highlighting similar multi-sided platform dynamics between users, drivers, merchants, and advertisers that become stronger with scale. The key insight is that Uber's advantages will be enhanced rather than threatened by agentic AI, as the complexity of coordinating physical world logistics plays to the platform's strengths. Importantly, Montaka sees declining autonomous vehicle disruption risk, removing a major overhang that has historically pressured the stock. Simultaneously, they identify expanding mobility market opportunities that should drive long-term growth. The combination of reduced disruption risk, expanding addressable markets, and AI-enhanced competitive advantages creates an attractive risk-reward profile. The investment timing on a pullback allows entry at more favorable valuations while the structural thesis remains intact.

Pitch Summary:
We also acquired Taiwan Semiconductor Manufacturing Co – more commonly known as TSMC – the world's effective monopolist in AI semiconductor fabrication. Given Montaka's deep work in AI over many years, we've been following this company for some time. We had previously opted against investing in TSMC because of over geopolitical tail risk concerns, and we continue to handicap this investment for its concentrated exposure to Taiwan. That said, the combination of accelerating demand for AI compute, combined with limited opportunities to expand US electric power generation capacity, means enhanced power efficiency will likely be a primary source of compute capacity expansion for the world's cloud computing hyperscalers. And this gives TSMC extreme pricing power that we believe continues to be underestimated.

BSD Analysis:
Montaka's TSMC investment thesis centers on the company's monopolistic position in AI semiconductor fabrication and underappreciated pricing power dynamics. The manager acknowledges significant geopolitical tail risks from Taiwan exposure but believes the investment merits are compelling enough to warrant the risk. The key insight is that constrained US electric power generation capacity will force cloud hyperscalers to prioritize power efficiency over raw compute expansion, playing directly to TSMC's advanced node advantages. This creates a structural demand driver beyond typical AI chip growth, as hyperscalers must maximize performance per watt rather than simply adding more capacity. The manager's deep AI research background provides confidence in identifying this nuanced dynamic that markets may be missing. TSMC's effective monopoly in cutting-edge AI chip production, combined with power constraints creating pricing leverage, suggests the company can extract premium returns from the AI infrastructure buildout. The investment represents a calculated bet that TSMC's technological moat and pricing power will outweigh geopolitical risks.

Pitch Summary:
As mentioned above, we acquired BAE Systems. This is a large-scale, best-in-class defence contractor with significant diversification across technologies and customers globally. BAE Systems is not only well positioned to benefit from the structural acceleration in global defence spending, but it also provides Montaka's portfolio with some countercyclical value drivers during times of war, as we've experienced in recent weeks. We believe a rearmament supercycle is underway, driven by a shift away from US-backed global security toward a more multipolar world. This structural trend should persist over the next decade, as nations reassess their long-standing security reliance on the US and commit to higher, sustained defence expenditures. We view one of the leading global defence contractors BAE Systems (LSE:BA.) as a beneficiary of this structural transformation. With a diversified geographical footprint, exposure to spend on both sides of the Atlantic and strong backlog visibility, BAE is well positioned for durable earnings growth over the coming years. We see three characteristics that make BAE particularly attractive: 1. Global diversification and exposure - With extensive operations across the UK, USA, Saudi Arabia, Australia and Japan, BAE is among the most globally diversified defence suppliers in the world. BAE derives ~20% of its revenue from its home market (UK) and ~40% from the US, whereas the major US "Primes" – such as Lockheed Martin, Northrop Grumman, General Dynamics – depend on the Pentagon for over 70% of their top line. Unlike the major US defence contractors, BAE's unique geographical footprint better insulates it from the fiscal risks of any single nation while positioning the company for higher military expenditures across both sides of the Atlantic and abroad. 2. Strong backlog visibility - BAE's extensive R&D capabilities and long-standing relationships are reflected in its assignment to several marquee, sovereign defence programs including the AUKUS submarine project in Australia and the Global Combat Air Programme (GCAP) between Japan, Italy and the UK. These multi-decade initiatives have contributed to a record £84B order book for BAE (31 Dec 2025), providing strong visibility to utility-like cash flows. 3. Asymmetric upside & portfolio diversification - BAE has compounded earnings per share (EPS) at a high-single digit rate over the last 10 years and has delivered 22 consecutive years of dividend growth for shareholders. There is asymmetry between the defensive nature of the company and the significant upside we see from potential future geopolitical escalations. Scenarios such as Russian incursions on Europe or Chinese aggression towards Taiwan could result in defence budgets surging well beyond already increased targets. Finally, BAE also helps to diversify against the longer-duration, technology-oriented segments of our portfolio.

BSD Analysis:
Montaka presents a compelling bull case for BAE Systems centered on the structural rearmament supercycle driven by geopolitical fragmentation and reduced US security guarantees. The manager highlights BAE's superior geographic diversification compared to US defense primes, with only 60% exposure to UK/US markets versus 70%+ Pentagon dependence for competitors like Lockheed Martin. The £84B order backlog provides exceptional cash flow visibility through multi-decade sovereign programs including AUKUS submarines and the Global Combat Air Programme. BAE's defensive characteristics are balanced by asymmetric upside potential from escalating geopolitical tensions, particularly in Europe and Taiwan. The company's consistent high-single-digit EPS growth and 22-year dividend growth streak demonstrate operational excellence. NATO members crossing the 2% GDP defense spending threshold for the first time, with commitments to reach 5% by 2033, creates a multi-year tailwind. The investment also provides portfolio diversification benefits against Montaka's technology-heavy holdings during a period of software sector volatility.

Pitch Summary:
Booking Holdings Inc. recently completed a 25-for-1 stock split, making its shares more accessible to retail investors. Despite beating Q4 earnings estimates, the stock is down 18% year-to-date, indicating negative institutional sentiment. The company faces regulatory challenges, including an investigation by Italy's antitrust authority and a significant fine in Spain, which could impact its margins. Additionally, a recent data breach has raised concerns about its security practices. The rise of AI-driven travel tools poses a threat to Booking's business model, potentially eroding its market position. With insiders selling shares and no insider purchases, the stock's outlook appears bearish.

BSD Analysis:
The technical analysis reveals two open area gaps below the current price, suggesting potential declines to $177.76 and $168.11. The regulatory landscape in Europe is increasingly challenging for Booking, with the Digital Markets Act imposing stricter rules. The company's reliance on its aggregation model is threatened by AI advancements, which could bypass traditional platforms. Despite attractive cash flow and shareholder returns, the financial risks from regulatory fines and compliance costs are significant. The valuation does not adequately compensate for these risks, and the stock's high forward earnings multiple may not be justified given the potential headwinds.

Pitch Summary:
ON Semiconductor has experienced a significant stock price increase, driven by strong performance in its automotive, industrial, and AI data center segments. The company reported record free cash flow and a substantial share repurchase program, indicating strong financial health. However, the stock's valuation is considered fair, with a PEG ratio of about 1, suggesting it is not undervalued. The company is focusing on high-growth secular trends, targeting a revenue CAGR of 10% to 12% and significant margin expansion. Despite these positives, the stock's technical indicators suggest a potential pullback, with the RSI near historical highs.

BSD Analysis:
ON Semiconductor's recent performance has been bolstered by its strategic focus on high-growth areas, such as AI and automotive applications. The company's decision to shed non-core assets is aimed at stabilizing its core product offerings, although this could result in a $300 million revenue headwind. The management's ability to navigate these divestitures will be crucial. Additionally, the company's exposure to macroeconomic risks and trade tensions could impact its performance. Despite these challenges, the market remains optimistic, with a majority of analysts maintaining a bullish outlook. Investors should watch for updates on the company's AI strategy and exit plans in the upcoming earnings report.

Pitch Summary:
Ford Motor Company is facing significant challenges with its electric vehicle (EV) strategy, which has been deemed ineffective by management. Despite a brief period of investor relief following the Q3 2025 report, the company's EV sales are collapsing, and a major restructuring has been announced. Ford's stock has underperformed compared to peers like General Motors and Toyota, with a negative real return over the past five years. The company's low valuation multiples, such as a price-to-sales ratio of 0.27, are not enough to protect shareholders from potential future setbacks. Recent events, including a $8.1 billion impairment charge related to EV manufacturing capacity rationalization, highlight the risks involved.

BSD Analysis:
Ford's fiscal year 2025 results were in line with expectations, but the company faces ongoing profitability issues, with significant GAAP losses reported. External factors, such as a fire at an aluminum supplier and tariff impacts, contributed to $4 billion in cost headwinds. Despite some positive signs in the EV segment, the management's acknowledgment of a failing EV strategy suggests further challenges ahead. Competition in the EV market is intensifying, with Tesla ramping up investments, posing a threat to Ford's market position. The company's cash flow pressures are expected to continue, with limited room for growth investments and strategic initiatives.

Pitch Summary:
RTX Corporation is poised to benefit from increased global defense spending due to geopolitical tensions, such as the conflicts in Ukraine and the Middle East. The company's strong backlog growth, driven by rising demand for defense products like Tomahawk missiles, indicates robust future revenue potential. Although current capacity constraints limit immediate growth, RTX is investing in expanding production capabilities, which should enhance its ability to meet demand over time. The company's profitability remains solid, with expanding margins and a strong earnings performance. Despite a high valuation, the recent pullback in stock price offers a favorable entry point for long-term investors. Overall, RTX's growth prospects and strategic positioning in the defense industry support a Buy rating.

BSD Analysis:
RTX's strategic investments in expanding production capacity, such as new facilities in Morocco and Poland, are crucial to addressing current supply constraints and capitalizing on the strong demand for its products. The company's ability to secure significant contracts, like the $12 billion naval systems sale to Germany, underscores its competitive position in the defense market. While the immediate growth may be tempered by production limitations, the long-term outlook remains positive as RTX continues to enhance its capabilities. The geopolitical landscape, characterized by persistent conflicts and rising defense budgets, provides a favorable environment for RTX's business. Investors should consider the company's robust backlog and strategic initiatives as indicators of sustained growth potential.

Pitch Summary:
Keurig Dr Pepper Inc. reported stable Q1 2026 results with strong performance in its refreshment beverage segment, which grew sales by 11.9%. Despite challenges in the coffee segment due to price volatility, the company is expected to benefit from stabilizing coffee prices and the recent acquisition of JDE Peet's, which should bring cost synergies and enhance growth. The company's stock appears undervalued, with a fair value estimate of $41.5, suggesting a 46% upside. The market seems to be overly concerned about the uncertainty surrounding the JDE Peet's acquisition and the potential business separation.

BSD Analysis:
Keurig Dr Pepper's refreshment beverage segment has outperformed major competitors like Coca-Cola and PepsiCo, indicating strong market share gains. The coffee segment, while currently under pressure, is poised for recovery as coffee prices moderate. The integration of JDE Peet's is expected to contribute significantly to revenue growth and margin improvement through cost synergies. The company's forward P/E ratio is notably lower than its peers, highlighting its undervaluation. With a strong outlook for 2026, driven by organic growth and strategic acquisitions, Keurig Dr Pepper is well-positioned for future success.

Pitch Summary:
Unum Group is currently trading at a valuation that requires substantial earnings growth or premiumization to justify its price. The company has a history of trading at a discount due to its exposure to long-term care (LTC) risks and high incidence of disability claims. Despite improvements and a strong market position in disability insurance, the company's valuation is unlikely to exceed 8-9x P/E in the medium to long term. The company's diversification into voluntary benefits and HR management is not seen as a competitive advantage against broader insurers. The current valuation does not offer a market-beating rate of return, and the stock is considered a Hold rather than a Buy.

BSD Analysis:
Unum's focus on disability insurance exposes it to higher claim incidences, particularly from non-apparent conditions like mental health and chronic ailments, which contribute to its discounted valuation. The company's attempts to diversify into lower-margin business lines may dilute its core strengths and increase operational complexity. With a history of litigation and claim disputes, Unum faces ongoing challenges in managing its risk profile. The company's strategic focus should remain on optimizing its disability insurance offerings rather than expanding into new areas. Given the current economic environment and interest rate sensitivity, Unum's growth prospects remain uncertain, and its valuation does not justify a higher multiple.

Pitch Summary:
Medtronic plc, a stalwart in the medical devices industry, has shown consistent revenue growth and a strong product portfolio. However, its valuation remains high relative to its growth prospects, with a PEG ratio of 2.76. The company's recent product launches, such as the Cardiac Ablation Solutions and the Stealth AXIS robotic system, show promise but face intense competition. Medtronic's high debt load and modest returns on invested capital are concerns, and its valuation may not justify its current price. The company is expected to report over 7% revenue growth, but achieving this may be challenging given the competitive landscape.

BSD Analysis:
Medtronic's Cardiac Ablation Solutions segment has shown impressive growth, driven by its PFA portfolio, which has gained significant market share. The Stealth AXIS system offers unique capabilities in spinal surgery, potentially providing a competitive edge. However, the HUGO robotic-assisted surgery system faces stiff competition from Intuitive Surgical's da Vinci system, which dominates the market. Medtronic's financials reveal a high debt burden and rising inventories, which could impact future profitability. While the company remains a solid long-term investment for dividend-focused investors, its current valuation may not offer an attractive entry point for growth-oriented investors.

Pitch Summary:
Southwest Airlines Co. is currently facing significant challenges due to the recent war with Iran, which has caused oil prices to spike. As a major cost component, higher fuel prices are squeezing airline margins, and Southwest has ended its fuel hedging strategy, leaving it exposed to these cost increases. Management plans to pass these costs onto customers through higher ticket prices, but there is uncertainty about how long this strategy can be sustained without affecting demand. The company's strong balance sheet, with over $3 billion in cash and manageable debt levels, provides some resilience. However, the ongoing geopolitical tensions and potential for prolonged high fuel costs present significant risks.

BSD Analysis:
Southwest Airlines' decision to end its fuel hedging in 2025 has left it vulnerable to the current oil price surge, a situation exacerbated by the geopolitical instability in the Middle East. While the company has a robust cash position and a relatively low level of current debt, the strategy of raising ticket prices to offset fuel costs is fraught with risk, particularly if the conflict persists and oil prices remain elevated. The airline's ability to maintain passenger volumes in the face of price hikes is uncertain, and management's reluctance to update guidance reflects this ambiguity. The stock's current price near $38 is considered overvalued given these risks, and a safer entry point would be below $29.09 per share, aligning with a market cap under $15 billion.

Pitch Summary:
Tesla's Q1 2026 results show a mixed picture with a headline gross margin beat, but underlying challenges persist. The auto gross margin ex-credits was 19.2%, above the expected threshold, yet this included significant one-time benefits. The company has raised its CapEx guidance to over $25 billion for FY2026, signaling a capital-intensive phase that will likely result in negative free cash flow for the rest of the year. Despite a record order backlog, deliveries declined, and energy storage deployments fell sharply. Tesla's future growth hinges on the successful ramp-up of new products like the Cybercab and Semi, and the eventual materialization of Robotaxi revenues.

BSD Analysis:
Tesla's current valuation remains high, driven by expectations of future success in autonomy and energy sectors. However, the increased CapEx and explicit guidance of negative free cash flow indicate a challenging period ahead. The market's reaction to the earnings release reflects a cautious stance, balancing the margin beat against the substantial capital commitments. The company's ability to manage its cash reserves and debt issuance will be critical as it navigates this investment-heavy phase. The energy segment's performance will be closely watched, as it is a key component of Tesla's growth narrative. Investors should be prepared for potential volatility as the company works to align its ambitious projects with financial performance.

Pitch Summary:
ServiceNow reported a strong Q1 2026 with subscription revenue of $3.671 billion, beating guidance. The company's AI monetization is transitioning from narrative to commercial reality, with a revised AI revenue target of $1.5 billion. Despite the strong quarter, the stock sold off due to a conservative guide update, which included Armis acquisition impacts. The market reacted to the guide's quality rather than the quarter's performance, with concerns over margin pressures and geopolitical risks. However, the demand side remains robust, and the company's shift towards non-seat-based pricing models could mitigate long-term risks.

BSD Analysis:
ServiceNow's Q1 2026 results highlight a strong demand environment, with broad-based workflow strength and high renewal rates. The company's AI monetization strategy is gaining traction, evidenced by significant growth in Now Assist product deals. The integration of Armis, while initially pressuring margins, is expected to normalize by 2027, suggesting a temporary impact. The shift towards non-seat-based pricing models indicates a strategic move to counter potential seat compression risks. Despite the stock's post-earnings decline, the underlying business fundamentals and strategic initiatives support a positive long-term outlook.

Pitch Summary:
Tesla's Q1 earnings report revealed a mixed bag of results, with a 24% EPS beat overshadowed by concerns about its robotaxi expansion and cash flow issues. Despite positive free cash flow of $1.4 billion, the company warned of future cash burn due to a 20% increase in its 2026 capex budget to $25 billion. The lack of new EV models and reliance on AI infrastructure investments raise questions about Tesla's strategy. Regulatory credits, a significant profit contributor, are expected to decline sharply, further pressuring margins.

BSD Analysis:
Tesla's decision to focus its substantial capex on AI infrastructure and humanoid robots, rather than new EV models, suggests a high-risk strategy that may not yield immediate returns. The company's reliance on regulatory credits, which are set to decrease, will likely impact profitability. Additionally, the need for retrofitting existing vehicles for full autonomy adds to operational challenges. With increasing competition and the necessity for price cuts to move inventory, Tesla's financial health could be strained without new revenue streams from its robotaxi ambitions.

Pitch Summary:
Netflix reported strong Q1 results with revenue exceeding guidance and consensus, driven by membership growth, higher pricing, and increased ad revenue. The company's content strategy, including exclusive events like the World Baseball Classic, has significantly boosted subscriber growth, particularly in Japan. Netflix's pricing power remains robust, with minimal churn despite significant price hikes. The company's advertising revenue is also growing rapidly, expected to reach over $3 billion by 2025. Netflix's financial health is strong, with impressive free cash flow and a healthy balance sheet, allowing for aggressive share buybacks.

BSD Analysis:
Netflix's ability to maintain double-digit growth is supported by its strategic expansion into live content formats, such as sports, which can attract new audiences and improve retention. The company's pricing strategy, coupled with its unmatched content library, positions it as a must-have service, providing resilience in uncertain economic times. Netflix's advertising segment is poised for significant growth, enhancing its revenue diversification. The company's operational efficiency is reflected in its expanding gross margins and strong reinvestment metrics, indicating a compounding growth trajectory. With a solid financial position, Netflix is well-equipped to continue its aggressive share repurchase program, enhancing shareholder value.

Pitch Summary:
Rapid Micro Biosystems ($RPID) also continues to be an extremely favorable risk reward. On their fourth quarter call, similar to last year, they also offered underwhelming guidance. The reasons given were that there can be no assurance that a new large deal can be won this year and that the large contract they are executing on ends, in part in February 2027, not December 2026, and therefore more machines than hoped might slip into the next calendar year. We believe guidance to be conservative given increasing business momentum with significant early rollouts with Amgen, Samsung Biologics, and Merck Millipore - all of which have capacity and are likely to place large follow-on orders. We also believe the company has good line of sight to increased gross margin upside starting in 2Q'26 when their new vendor agreements kick in. We believe management is exceptionally conservative, the company is well positioned, and the company represents the best risk reward in the portfolio.

BSD Analysis:
White Brook Capital identifies RPID as their highest conviction position, describing it as the "best risk reward in the portfolio" despite conservative management guidance. The manager views the underwhelming fourth-quarter guidance as overly cautious, citing strong business momentum with major pharmaceutical clients including Amgen, Samsung Biologics, and Merck Millipore. These early rollouts with large-capacity customers position the company for substantial follow-on orders, contradicting management's conservative outlook. The manager also highlights upcoming gross margin expansion beginning in Q2 2026 from new vendor agreements, providing additional earnings leverage. A key concern involves contract timing, with a large existing contract ending in February 2027 rather than December 2026, potentially pushing some machine deliveries into the following year. However, the manager believes this timing issue is temporary and doesn't affect the underlying business trajectory. The investment thesis relies on the gap between conservative management guidance and actual business momentum with blue-chip pharmaceutical customers, suggesting significant upside potential as results exceed expectations.

Pitch Summary:
Sanara Medtech ($SMTI) continues to be an extremely favorable risk reward. On their fourth quarter call they offered revenue guidance of 13-17% growth in line with sell side expectations but below the 20% some hoped for. At their valuation, we believe the forecasted growth to be more than good enough and likely to be revised upward. Perhaps underappreciated is that Sanara's products are largely distributed by third parties who, to be effective, need to be at a hospital for a procedure - to ensure Sanara's products are used. The more doctors who use their product at a specific location, the more reliably distributors show up to distribute their products. Negatively, Chemo Mouthpiece, their JV with InfuSystem did not receive upgraded coding from CMS under the durable medical equipment payment structure. While the subsidiary is well capitalized and is likely to press on, that upside option is likely a much smaller opportunity, and may be impaired. Hopefully it closes the book on the old management team's efforts. We continue to believe the upside present is a multiple of the current share price and that the company is now exceptionally well led.

BSD Analysis:
White Brook Capital maintains strong conviction in SMTI despite modest revenue guidance that disappointed some investors expecting 20% growth versus the delivered 13-17% range. The manager views the current valuation as attractive relative to the growth profile and expects guidance revisions upward. A key insight involves the company's distribution model, where third-party distributors become more reliable as doctor adoption increases at specific hospital locations, creating a positive feedback loop for market penetration. The manager highlights improving evidence of product efficacy and management's focus on increasing per-hospital doctor penetration as growth catalysts. However, the Chemo Mouthpiece joint venture with InfuSystem faced a setback when CMS didn't provide upgraded coding for durable medical equipment payments, reducing this opportunity's potential. The manager views this as closing the chapter on previous management initiatives while expressing confidence in current leadership. The investment thesis centers on multiple expansion potential from the current share price, supported by improving fundamentals and execution under new management.