Investment Pitches

Pitch Summary:
S&P Global ($SPGI) is one of the financial market's greatest toll businesses. White Brook bought a position during the first quarter when one of the quarter's AI driven market sell-offs drove the price from >$550 to ~$380 on the speculation that artificial intelligence will destroy its moat. In reality growth and tumult in private credit, data center financing, and AI driven financial engineering products reinforce the necessity of the company's services as a provider of ratings, analytics, and insight. While a stable or declining interest rate environment is more favorable for corporate bond issuance and refinancings to benefit the ratings division, the Company's energy and commodities division will continue to prosper as companies consider new investment. We believe the company is a rare combination of defensive resilience and high-growth potential and are thrilled by the price that we were able to buy it.

BSD Analysis:
White Brook Capital views SPGI as a high-quality defensive growth play purchased at an attractive valuation during AI-driven market volatility. The manager characterizes the company as one of the financial market's greatest toll businesses, emphasizing its essential role in credit ratings and financial analytics. The investment thesis directly contradicts market fears about AI disruption, instead arguing that emerging trends in private credit, data center financing, and AI-driven financial products actually reinforce demand for SPGI's services. The manager secured the position during a significant selloff from over $550 to approximately $380, representing a 31% discount from recent highs. The pitch highlights SPGI's diversified revenue streams, with both traditional ratings business and energy/commodities divisions positioned to benefit from different market conditions. The manager's confidence stems from viewing SPGI as possessing both defensive characteristics and growth potential - a rare combination in today's market. This represents a contrarian bet against AI disruption fears while capitalizing on temporary market pessimism.

Pitch Summary:
Perma-Fix Environmental ($PESI) is a hazardous waste disposal company in the early days of a J-curve in revenue growth. Their most significant near term opportunity is the disposal of nuclear waste at their Hanford plant. On their last earnings call they announced the start of their ramp was delayed a quarter. This $200 million market capitalization company with $60 million in revenue will add $1-2 million per month in revenue to grout low activity nuclear waste in the next year as the disposal ramps to at least $70 million per year for the next 10 years. Additionally, there is an additional opportunity to earn a piece of an additional $4 billion in work currently being evaluated and awarded by the Department of Energy where Perma-Fix has the only regional facility to support the contract. Another option for increased growth is the company's second, fledgling business. The company has the ability to either earn their cost of capital on their next generation PFAS chemical destruction facilities (so called "forever chemicals"), or to sell or wind down the effort. The Company believes that their technology destroys PFAS more economically, more safely, and with fewer byproducts than its leading competitors. The division's revenue is minimal to date, it has been a significant (for PESI) use of capital, and has significantly underperformed initial expectations. If this effort also inflects, as the company believes it will in the next year, the upside for the stock will be remarkable. If it doesn't, the effort should be shut down - shortening the time to Perma-Fix's cash flow breakeven, increasing the company's return on capital, and supporting the stock's upside.

BSD Analysis:
White Brook Capital presents PESI as a compelling growth story centered on nuclear waste disposal with significant government contract exposure. The manager highlights the company's position at the beginning of a revenue J-curve, with the Hanford plant representing the primary near-term catalyst. Despite a one-quarter delay in ramp timing, the manager projects substantial revenue growth from $1-2 million monthly additions, scaling to $70 million annually over the next decade. The $200 million market cap company with $60 million current revenue appears positioned for dramatic scale expansion. The manager also identifies a potential $4 billion Department of Energy opportunity where PESI holds unique regional facility advantages. The secondary PFAS destruction business represents an asymmetric risk/reward scenario - either significant upside if the technology proves commercially viable or improved capital efficiency if wound down. The manager's thesis relies on government spending trends in environmental remediation and PESI's specialized capabilities in nuclear waste processing. This appears to be a classic small-cap growth play with government contract visibility and multiple expansion potential.

Pitch Summary:
Icon Public Limited Company ($ICLR) is a global contract drug manufacturing company we've followed for some time but was always too well priced to own. In February, the company disclosed an internal investigation into revenue recognition that would impact revenue by less than 2%. The stock fell 40%. We like the fundamentals of the contract drug manufacturing industry and ICON's record $24+ billion backlog. Previous to the restatement the company had the opportunity to address its cost structure even while being well positioned in the high-growth oncology and GLP-1/obesity therapeutic segments. We don't believe the restatement should impact their margin opportunity, their existing contracts, or their ability to win new business and anticipate a significant rally after their formal restatement filing and funds again feel like they can "trust the numbers." We believe the company trades at a low double digit multiple of free cash flow, a fraction of its historical average and a price that materially underestimates the strength of their business.

BSD Analysis:
White Brook Capital views ICLR as an opportunistic value play following a 40% stock decline triggered by a minor revenue recognition issue affecting less than 2% of revenue. The manager emphasizes the company's strong fundamentals, including a record $24+ billion backlog and favorable positioning in high-growth therapeutic segments like oncology and GLP-1/obesity treatments. The investment thesis centers on the temporary nature of the accounting investigation and the expectation that investor confidence will return once formal restatements are filed. The manager believes the current valuation at a low double-digit free cash flow multiple represents a significant discount to historical averages and fails to reflect the underlying business strength. The pitch suggests substantial upside potential as the market re-rates the stock following resolution of the accounting concerns. The manager's confidence stems from their belief that the restatement won't impact margins, existing contracts, or new business wins. This represents a classic contrarian value opportunity where temporary headline risk has created an attractive entry point.

Pitch Summary:
Robert Half is a professional staffing company specializing in temporary placements in the fields of finance and accounting, technology, and administrative and customer support. Robert Half also operates Protiviti, which provides consulting in a variety of fields including risk management and internal audit. The U.S. staffing industry has experienced three consecutive years of muted activity following a period of unusually strong labor demand after the pandemic, when U.S. unemployment fell to multi-decade lows. As companies have been digesting excessive prior hiring of permanent employees, the use of temporary labor has suffered a significant cyclical downturn, leaving temporary workers at a historically low share of the overall workforce. Beyond cyclical pressures, current investor concerns center on the potential for artificial intelligence to reduce demand for certain roles and automate aspects of the recruiting process. An alternative view holds that disciplines such as tax and audit require considerable professional judgment and risk assessment that extend beyond historical data and rules-based implementation, sustaining the need for human expertise. Further, proprietary information relating to individual temp employee performance in various roles, which has been accumulated by the likes of Robert Half over decades, may prove to be a valuable asset to employers in a world in which AI renders it difficult to discern fact from fiction. Additionally, although barriers to entry in staffing may seem low, Robert Half benefits from an extensive two-sided professional network, long-running proprietary candidate data and expertise in matching specific skill sets to defined client needs. Furthermore, Federal Reserve Bank of St. Louis data through March 2026 refute the notion that artificial intelligence has been playing a role in declining temporary staffing. There is also little evidence within those data series to suggest that professional services will be pervasively impacted. Meanwhile the broader U.S. temporary workforce has recently begun to show signs of stability near 2.5 million workers. Robert Half is extremely well-financed with a debt-free balance sheet and a substantial cash balance. The nature of the company's business requires very little capital-intensity, and the company continues to produce a material amount of free cash flow, even in deeply depressed operating conditions. Management continues to strategically retain experienced recruiters despite near-term earnings pressure, recognizing that new recruiters require approximately two years to reach average productivity, and that the ability to retain recruiting staff in a cyclically depressed environment represents a strategic competitive advantage. There are also signs that Robert Half and a few industry peers have made increased efforts to hire additional recruiters in anticipation of an eventual cyclical upturn. The company's shares trade at a low single-digit multiple of normalized cash flow. The company has generated positive annual free cash flow for more than three consecutive decades and has consistently returned much of that cash to shareholders through dividends and share repurchases. The company's dividend, which, at the present share price, offers a near-double-digit yield, is currently supported by ongoing cash generation.

BSD Analysis:
Third Avenue's Robert Half investment capitalizes on a cyclical trough in the professional staffing industry following three consecutive years of muted activity as companies digest excessive pandemic-era hiring. The manager's thesis counters AI displacement concerns, arguing that finance, accounting, tax, and audit roles require professional judgment beyond rules-based implementation, while Robert Half's decades of proprietary candidate performance data becomes increasingly valuable in an AI-driven world. The company's competitive advantages include an extensive two-sided professional network, proprietary candidate data, and specialized skill-matching expertise that create meaningful barriers to entry despite the industry's apparent simplicity. Federal Reserve data supports the manager's view that AI has not materially impacted temporary staffing demand, while the broader temporary workforce shows signs of stabilization. Robert Half maintains exceptional financial strength with a debt-free balance sheet, substantial cash position, and consistent free cash flow generation spanning over three decades. The company trades at a low single-digit multiple of normalized cash flow while offering a near-double-digit dividend yield, with management strategically retaining experienced recruiters to capitalize on the eventual cyclical recovery.

Pitch Summary:
Harley-Davidson manufactures motorcycles and accessories, sells financial services and earns brand licensing revenue. While its brand remains iconic, its core motorcycle market in the U.S. and the heavyweight bikes in which Harley-Davidson specializes, have suffered several years of sales declines. Some recent declines are attributable to the aftermath of the demand pull-forward that occurred during COVID, though demand for new heavyweight bikes has been stagnant-to-declining for years. For Harley-Davidson specifically, the last several years have also been marked by multiple activist campaigns, board turnover, management changes and a string of strategic missteps. One central strategic misstep, which represented a priority for previous management, included a virtual exit from lower priced entry-level bikes in favor of more expensive and higher profit margin bikes. While conceptually appealing, that strategy ignored the need to attract new entry-level customers and that entry-level bike purchases also lead to incremental demand for high margin customizations, branded accessories and financial service contract originations. Possibly most important, however, was a lack of recognition that stuffing dealerships with far more big expensive bikes than are in demand is bad for dealer economics, creates dealer frustration and discontent and ultimately results in significant price discounting to clear stale excess inventory. Our sense is that elements of the strategy changes being implemented by new management create the opportunity for far better operating performance from the core motorcycle business and it is evident that significant progress has already been made in clearing older inventory from dealership floors. It is also notable that, despite manufacturing 100% of its bikes destined for the U.S. market in its Wisconsin and Pennsylvania plants, tariff expenses have created a major financial headwind for Harley-Davidson. While we can't say when this situation may improve, a very substantial tariff expense is yet one more headwind facing Harley-Davidson today, which may not prove to be permanent. Further, Harley-Davidson's electric motorcycle venture, LiveWire, has been a significant drag on Harley-Davidson since its birth and electric motorcycle sales have fallen stunningly short of expectations. As recently as 2022, LiveWire had projected it would sell more than 50,000 electric motorcycles in 2025 but ultimately achieved only about 1% of that volume target. Because Harley-Davidson owns nearly 90% of publicly traded LiveWire, its significant operating losses remain consolidated within Harley-Davidson's financial statements, creating a very significant optical drag on Harley-Davidson's operating performance. Harley-Davidson has been providing ongoing support to sustain the business, though management has indicated that LiveWire has received its final financial lifeline from the company. A solution that disentangles the consolidation of the two companies, such as the eventual insolvency of LiveWire, would remove the optical drag on Harley-Davidson's operating profits and the distractions of a failing non-core business. We view an eventual LiveWire insolvency as highly probable. On a more positive note, last year, Harley-Davidson Financial Services (HDFS), the company's financial services subsidiary, was able to release a very substantial amount of capital through a creative transaction in which it sold a substantial portion of its existing financial receivables and created a future flow agreement for most of its retail motorcycle loans to partners KKR and PIMCO. Harley-Davidson also sold a 4.9% equity stake in HDFS to each partner. HDFS will retain roughly one-third of new retail loan originations going forward and earn ongoing loan servicing fees from its partners. The proceeds from the transaction enable Harley-Davidson to further invest in manufacturing operations and continue returning capital to shareholders. The new structure of HDFS will operate with less capital intensity, more fee generation and higher returns on capital. The transaction also highlights the underlying value of HDFS, which has historically been underappreciated by the market. Harley-Davidson plans to detail its operational improvement strategy later this spring. While there's urgency to finally put the company back on the right path, Harley-Davidson is afforded flexibility from a sizeable net cash position in its industrial operations. Market expectations remain very low, with the company's shares trading at a sizeable discount to tangible book value and a modest multiple of very depressed earnings.

BSD Analysis:
Third Avenue's Harley-Davidson investment represents a classic turnaround opportunity with the iconic motorcycle manufacturer trading at a significant discount to tangible book value amid depressed earnings. The manager's thesis centers on new management's strategic pivot away from previous missteps, including the failed strategy of abandoning entry-level bikes for higher-margin heavyweight models that stuffed dealer inventory and hurt dealer economics. Key catalysts include inventory normalization at dealerships, the probable insolvency of the failing LiveWire electric motorcycle venture which would remove optical earnings drag, and the creative restructuring of Harley-Davidson Financial Services with KKR and PIMCO that unlocked substantial capital. The company maintains a strong net cash position providing strategic flexibility, while the HDFS transaction created a more capital-efficient, fee-generating structure with higher returns on capital. Despite facing headwinds from tariff expenses and cyclical demand weakness, the manager expects operational improvements as management details its turnaround strategy and market expectations remain extremely low.

Pitch Summary:
OSAKA Titanium Technologies ("Osaka Titanium") is a leading producer of titanium products, including titanium sponge and ingots, as well as high-performance materials, such as titanium powder used in additive manufacturing and silicon monoxide used in lithium-ion batteries. Titanium is identified as a critical mineral by the United States government, and titanium sponge production is a vital input in aerospace and defense applications, including aircraft engines and airframes. Segments of the titanium industry have suffered an extended downcycle driven by elevated inventories, overcapacity, higher levels of recycling, increased availability of scrap and aggressive competition from Russia and China. The titanium sponge industry's woes were further compounded by Boeing and Airbus-related supply chain disruptions, strikes, quality issues, airframe and engine problems and delayed FAA certifications. However, in immediate reaction to the Russian invasion of Ukraine, the aerospace industry's response was to build-up channel inventories and buffer stocks, which led to a short-lived surge in sponge production capacity utilization that was followed by a subsequent drop in utilization as production levels at Boeing and Airbus remained constrained. The resulting hangover effect has left Osaka Titanium currently grappling with elevated working capital and lower than expected utilization rates and profitability, which in turn led to downward guidance revisions at the same time as the company progresses on a 25% capacity expansion. The Russian invasion of Ukraine, however, has caused Western aircraft supply chains to reconsider reliance on Russian-made titanium and to seek alternatives, which has resulted in improved forward-looking supply and demand dynamics for the handful of remaining producers capable of producing high grade titanium, the largest of which is Osaka Titanium. The confluence of events has understandably weighed on Osaka Titanium's share price, which allowed the Fund to initiate a position at a significant discount to estimated net asset value (NAV) and replacement cost. Despite near-term headwinds, Osaka Titanium remains a global leader in high-grade titanium sponge for aircraft applications with a unique opportunity to provide a solution to the Western aerospace supply chain as the company's expansion project is completed by the first quarter of 2028 at the same time as the Western aerospace industry strives to reduce Russian dependency. Going forward, we believe the company has good prospects to grow shareholder value as working capital levels normalize, volumes and price realizations improve, margins expand, and as the company enters a planned, rapid deleveraging phase post completion of its expansion project. Importantly, improved profitability levels can already be observed in the aircraft supply chain downstream from Osaka Titanium, which one would expect to provide further support for an eventual rebound in profitability at the company.

BSD Analysis:
Third Avenue initiated a position in Osaka Titanium Technologies during a cyclical downturn in the titanium industry, purchasing shares at a significant discount to net asset value. The manager's thesis centers on the company's strategic position as a leading producer of high-grade titanium sponge for aerospace applications, particularly as Western supply chains seek alternatives to Russian titanium following the Ukraine invasion. Despite near-term headwinds including elevated working capital and lower utilization rates, the company is completing a 25% capacity expansion by Q1 2028. The investment opportunity stems from temporary industry challenges including Boeing/Airbus supply chain disruptions and inventory overhangs, which have depressed valuations. The manager expects value creation through working capital normalization, improved volumes and pricing, margin expansion, and rapid deleveraging post-expansion completion. The thesis is supported by improving profitability in downstream aerospace supply chains and the critical nature of titanium as a strategic mineral for defense applications.

Pitch Summary:
Founded in 1960, Hang Lung Group is a well-capitalized Hong Kong-based real estate enterprise that owns approximately 2.9 million square feet of highly leased retail and office properties in Hong Kong and Shanghai with a near net-cash position. Importantly, the company also owns a 65.1% interest in Hang Lung Properties, a separately listed real estate operating company with an additional 29 million square feet of retail centric properties in Hong Kong and Mainland China, as well as 10 million square feet of developments and residential projects available-for-sale. In combination, Hang Lung Group is viewed to control one of the most productive (and valuable) retail-centric portfolios in the Asia Pacific region, with some of its iconic properties including Plaza 66 in Shanghai and the Fashion Walk in Causeway Bay. The path to establishing this platform has been far from easy though. As a matter of fact, Hang Lung Properties has spent the better part of three decades building out the core portfolio of its 11 market-dominant mixed-use locations, with more than $15 billion of "capex" in Hong Kong Dollars this decade alone. At one point, Hang Lung Properties even had to reduce its dividend, with Hang Lung Group electing to take shares instead of cash for further support. Due to such strong sponsorship, Hang Lung Properties can now embark on a more operational focused strategy under Chair Adriel Chan at an opportune time. For instance, Hang Lung Properties is delivering its final ground-up mixed-use development this year (i.e. Westlake 66 in Hangzhou) at the same time prime retail locations seem to be benefitting from a rebound in retail sales, as well as a structural focus on further boosting consumption in the region. The supply-and-demand dynamics for the residential markets have also improved in Hong Kong and tier-1 Chinese cities more recently. Therefore, it is not difficult to envision a path whereby Hang Lung Properties further improves its financial position beside residential sales, while reinstating a higher dividend alongside improved cash flows. Given the changes on the regulatory front, the company could also explore placing a portion of its highly recognized "66"-branded properties into a REIT vehicle to surface additional value over time. Such actions would likely result in a material improvement to Hang Lung Properties' cost of capital, with the stock currently trading at less than 40% of book value. That said, these developments would have a more significant impact for Hang Lung Group, in our view, when considering its stock trades at roughly 20% of book value, as well as more than 50% below the market value of its stake in Hang Lung Properties (without even factoring in the directly owned assets). Such a setup is referred to as a "double discount" at Third Avenue, and one that can be quite rewarding, in our experience.

BSD Analysis:
Third Avenue identifies a compelling "double discount" opportunity in Hang Lung Group, which trades at approximately 20% of book value and more than 50% below the market value of its stake in Hang Lung Properties. The company controls one of Asia Pacific's most valuable retail portfolios, including iconic properties like Plaza 66 in Shanghai, after investing over $15 billion HKD in development this decade. With the final development (Westlake 66) completing this year, Hang Lung Properties can shift to operational focus under new leadership, benefiting from retail sales recovery and structural consumption growth in the region. The managers see potential for dividend reinstatement, improved cash flows, and possible REIT monetization of the "66"-branded properties given regulatory changes in China's REIT market. The holding company structure creates significant value arbitrage, as Hang Lung Group trades at a massive discount to its underlying assets while maintaining a near net-cash balance sheet.

Pitch Summary:
Founded in 1978, Brookdale is a leading owner and operator of senior housing properties with nearly 600 communities across the U.S. serving more than 50,000 residents. While the portfolio is vast, the company has a particular focus on assisted-living and memory-care properties, which sector specialists would point out as a more resilient segment with "needs based" demand and private-pay residents. Those same professionals would also likely perceive Brookdale as one of the premier operators in the assisted-living segment. That said, the company has endured a difficult ten-year stretch. In fact, the Fund was previously invested in Brookdale but elected to move on after the previous management team made a somewhat hasty acquisition (i.e. Emeritus) at the same time the sector was facing elevated levels of supply. In combination with the headwinds the senior housing sector encountered amid the pandemic, Brookdale has generally been on the "defensive" in recent years shedding Emeritus locations, restructuring debt and associated leases, and attempting to stabilize its core portfolio. While undoubtedly a challenging period, Fund Management believes the next five years will be transformative. To wit, Brookdale has solidified its financial position by returning to profitability and reducing its loan-to-value ratio below 40%, with the remaining debt largely comprised of non-recourse mortgage debt. The company has also improved its operational structure by adding a well-regarded CEO (with previous experience at industry peer Sunrise Living) and adopting a more decentralized framework. In addition, Brookdale has tremendous growth prospects with the opportunity to significantly increase its 82.1% occupancy rate alongside hugely supportive demand trends (i.e. the 80+ year-old demographic is expected to increase by 55% in the U.S. over the next decade). As a result, Brookdale is positioned to close the performance gap with industry peers, in our view, as well as approach a 95.0% occupancy rate over time. Should such a path materialize, the company has the potential to generate more than $3.5 billion of annual revenues. By our estimates, a disproportionate share of that incremental cash flow would fall to the bottom line given the inherent operating leverage in senior housing (i.e. high fixed costs) and $2.0 billion of tax loss carry forwards. Therefore, it would not be inconceivable for Brookdale to utilize retained earnings to further reduce its debt levels and reinstate an annual dividend. The company could also engage in additional "bolt on" acquisitions to expand its platform within core markets for the rapidly growing senior population. That said, such a scenario does not seem to be "priced in" with Brookdale trading at a discount to its owned real estate in our estimation—without factoring in any value for its operating platform, third party management business, or deferred tax assets.

BSD Analysis:
Third Avenue presents a compelling turnaround thesis for Brookdale Senior Living, emphasizing the company's transformation from a troubled operator to a stabilized platform positioned for demographic tailwinds. The managers highlight Brookdale's improved financial position with sub-40% loan-to-value ratio and return to profitability, alongside operational improvements including new leadership and decentralized structure. The investment case centers on occupancy recovery from 82.1% toward 95%, driven by the 55% expected growth in the 80+ demographic over the next decade. With $2 billion in tax loss carryforwards and high operating leverage, incremental revenue should flow disproportionately to the bottom line. The managers estimate potential for $3.5 billion in annual revenues and see opportunity for dividend reinstatement and bolt-on acquisitions. Trading at a discount to owned real estate without credit for the operating platform or deferred tax assets, Brookdale appears significantly undervalued relative to its transformation potential.

Pitch Summary:
Shares of Mattel, the world's second-largest toy manufacturer, underperformed this quarter following management's strategic decision to significantly increase spending in 2026. This investment will temporarily depress margins and bottom-line profitability. While the scale of this spending surprised many investors, our discussions with management have convinced us that this is the correct long-term decision for the business. Our thesis is predicated on Mattel's ability to effectively monetize its expansive intellectual property through growth beyond the traditional toy market—specifically in digital gaming, entertainment, and brand licensing. These revenue streams are significantly more profitable than traditional toy sales and are expected to drive Return on Invested Capital (ROIC) higher. The increased spending in 2026 is directly tied to accelerating top-line growth within these high-margin categories. We believe these investments will bear fruit in 2027 and beyond, and we maintain our position.

BSD Analysis:
The manager maintains conviction in Mattel despite near-term underperformance and margin compression from increased strategic spending. The investment thesis focuses on the company's transformation from a traditional toy manufacturer to a diversified intellectual property monetization platform. Management's decision to invest heavily in digital gaming, entertainment, and brand licensing represents a strategic pivot toward higher-margin revenue streams. The manager's direct engagement with management provides confidence in the long-term value creation strategy, despite short-term earnings headwinds. The emphasis on ROIC improvement through IP monetization aligns with the fund's investment philosophy. The position reflects patience with management's capital allocation decisions and belief in the execution timeline. The contrarian stance during a period of investor skepticism demonstrates the fund's long-term orientation and willingness to endure temporary volatility for strategic transformation.

Pitch Summary:
FedEx Corporation is a globally recognized brand operating a logistics network that delivers packages and freight to individuals and businesses worldwide. We originally initiated a position in FedEx as the company shifted its compensation metrics to focus more heavily on Return on Invested Capital (ROIC). This strategic pivot signaled the potential for improved returns driven by expanded margins and lower capital intensity. Recently, the company's successful execution of this strategy has contributed to the stock's outperformance. Additionally, FedEx is approaching the completion of the spin-off of its freight trucking business, a move that will allow both the Express Delivery and Freight segments to optimize their respective paths toward higher ROIC. We continue to hold FedEx, as we believe internal cost savings and disciplined pricing will drive further margin expansion. We expect incremental free cash flow to continue accruing to shareholders through ongoing share repurchases.

BSD Analysis:
The manager maintains a bullish stance on FedEx based on the company's strategic shift toward ROIC-focused compensation metrics and operational improvements. The investment thesis centers on margin expansion through cost savings and disciplined pricing, supported by the upcoming spin-off of the freight trucking business. This corporate action is expected to unlock value by allowing both segments to optimize their capital allocation strategies independently. The manager views the recent outperformance as validation of management's execution capabilities. The emphasis on free cash flow generation and shareholder returns through buybacks aligns with the fund's value-oriented approach. The position reflects confidence in FedEx's ability to improve capital efficiency in a competitive logistics market. The timing appears favorable given the completion of strategic restructuring initiatives.

Pitch Summary:
JOE owns approximately 165,000 acres in the Florida Panhandle. It has been widely known that JOE traded for a tiny fraction of its liquidation value for years, but without a catalyst, it was always perceived to be "dead money." Over the past few years, the population of the Panhandle has hit a critical mass where the Panhandle now has a center of gravity that is attracting people who want to live in one of the prettiest places in the country, with zero state income taxes and few of the problems of large cities. The oddity of the current disdain for so-called "value investments" is that many of them are growing quite fast. I believe that JOE may grow revenue at a rapid rate for the foreseeable future, with earnings growing at a much faster clip. Meanwhile, I believe the shares trade at an attractive multiple on Adjusted Funds from Operations (AFFO), while substantial asset value is tossed in for free. Besides the valuation, growth, and high Return on Invested Capital (ROIC) of the business, why else do I like JOE? For starters, land tends to appreciate rapidly during periods of high inflation. More importantly, I believe we are witnessing a massive population migration as people with means choose to flee big cities for somewhere peaceful. I suspect that every convulsion of urban chaos and/or tax-the-rich scheming will launch JOE shares higher, and it will ultimately be seen as the way to "play" the stream of very wealthy refugees fleeing for somewhere better.

BSD Analysis:
The manager presents a compelling demographic and migration thesis for St. Joe Company, which owns 165,000 acres in Florida's Panhandle. After years of trading below liquidation value as "dead money," the investment case has been catalyzed by the Panhandle reaching critical population mass that creates gravitational pull for new residents. The manager expects rapid revenue growth with even faster earnings growth, driven by wealthy individuals fleeing urban areas for Florida's combination of natural beauty, zero state income tax, and peaceful environment. The valuation appears attractive on AFFO metrics while providing substantial embedded asset value. Key investment drivers include high ROIC, land appreciation during inflationary periods, and structural demographic shifts favoring low-tax, low-density locations. The manager views each episode of urban unrest or wealth taxation as potential catalysts that will drive JOE shares higher as it becomes the primary vehicle for playing the "wealthy refugee" migration trend.

Pitch Summary:
Will Marex (MRX – USA) be a structural beneficiary of elevated commodity volatility and trading volumes as we move from a unipolar world, and into a multipolar one with increasing structural imbalances?? That is a bet I can actually underwrite. Climbing down from my soap box, let's talk about Marex, which recently pre-announced blow-out results for the first quarter, and saw its shares appreciate by 38% from before the announcement until the shares peaked out 13 trading days later. As a guy who mostly invests in inflecting securities with un-capped upside, I'm always amazed at how a good earnings report can reset all of the valuation metrics. I originally expected Marex to earn around $4 to $5 a share in 2026 (up from $4.12 in 2025). Following a huge March for them, I now expect Marex to earn well in excess of $5 and more like $6 a share in 2027. Putting a 20 times earnings multiple on that (it's a business that grew revenues 27% in 2025 with a 27.6% ROE), gets you to $120 a share for a fair value as we begin to approach next year, when compared to $44.58 at quarter end—which is quite the mismatch. The reason that we focus on high-quality businesses with accelerating fundamentals, is that when you get it right, you REALLY get it right as all the metrics reset higher. Despite a large share price move since pre-announcing first quarter results, the shares remain optically quite cheap with a single-digit forward multiple, and the fair value is likely to keep increasing as they continue to grow the business, with an added benefit from periods of elevated volatility and trading volumes. Marex focuses on trading solutions for mid-market commodities firms, hedge funds and futures speculators. Marex continues to take market share from bulge bracket firms who are unable to offer competitive levels of services to mid-market firms, while consistently purchasing smaller players who cannot afford the increased compliance costs of participating in a global market. My view is that in the increasingly volatile and financialized markets of the future, CFOs will feel a need to hedge not just commodity risks, but currencies, interest rates, freight rates, weather derivatives and all sorts of other products that may not even exist today. As the CFO, you get a large bonus for hedging correctly, and few penalties for hedging poorly, since Adjusted EBITDA tends to adjust the losses away. With retail investors increasingly fixated on gambling, why shouldn't the C-Suite do the same?? Meanwhile, Marex trades at a high single-digit 2027 estimated earnings multiple, has grown earnings at an impressive rate, and has consistently earned unusually high returns on equity, despite constantly reinvesting in the business. I see this as something of a long-term compounder that overlaps in many of my favorite themes, with many tailwinds and opportunities to continue to consolidate a sector with few scale competitors for M&A opportunities.

BSD Analysis:
The manager presents a compelling bull case for Marex as a structural beneficiary of increasing global commodity volatility and market fragmentation. Following strong Q1 results that drove 38% share appreciation, the manager has raised earnings estimates from $4-5 per share in 2026 to over $6 per share in 2027. At a 20x multiple, this implies a $120 fair value target versus the $44.58 quarter-end price. The investment thesis centers on Marex's market share gains from bulge bracket competitors who cannot serve mid-market clients effectively, while acquiring smaller players struggling with compliance costs. The company demonstrated strong fundamentals with 27% revenue growth in 2025 and 27.6% ROE. The manager views increasing market volatility and financialization as secular tailwinds that will drive demand for hedging products across commodities, currencies, rates, and emerging derivatives. Despite recent gains, shares trade at single-digit forward multiples, offering attractive risk-adjusted returns in a consolidating industry with few scaled competitors.

Pitch Summary:
This quarter, the Fund also initiated a position in London-listed Savills Plc ("Savills") for its established credibility, global reach, and attractive valuation. As a leading real estate services company founded in 1855, Savills offers comprehensive services across commercial, residential, and specialized property through 700 offices worldwide. The franchise's reputation for quality, particularly in Asia and the U.K., underpins its ability to attract and retain clients, supporting its long-term growth prospects and justifying the Fund's investment rationale. A major recent development for Savills is its anticipated acquisition of the U.S. real estate services group Eastdil Secured, which significantly strengthens its U.S. platform and creates new opportunities for revenue growth and operational synergies. The transaction is expected to close in the coming months. Despite this strengthening of its business, Savills trades at approximately 5 times EBITDA, while U.S. peers trade above 10 times. The wide valuation gap highlights a clear opportunity for share price appreciation as Savills integrates Eastdil and delivers on its growth objectives. If the market does not recognize this value, management could pursue a primary U.S. listing, a move that has unlocked higher valuations for other U.K. companies. In summary, Savills offers investors a well-established global franchise with significant potential for both operational improvement and valuation re-rating.

BSD Analysis:
Third Avenue initiated a position in Savills, a 170-year-old global real estate services franchise, based on compelling valuation and strategic transformation potential. The manager's thesis focuses on Savills' established market position across 700 offices worldwide and its pending acquisition of Eastdil Secured, which will significantly strengthen its U.S. platform. At 5x EBITDA versus 10x+ for U.S. peers, Savills appears dramatically undervalued despite its quality franchise and global reach. The Eastdil acquisition represents a transformative catalyst that should drive revenue synergies and operational improvements while expanding Savills' U.S. footprint. The manager identifies multiple value realization paths, including organic growth from the enhanced platform, potential re-rating as synergies materialize, and the possibility of a U.S. primary listing to unlock valuation arbitrage. This appears to be a classic value play on a quality business trading at a significant discount to peers, with clear catalysts for both operational improvement and multiple expansion. The investment demonstrates the manager's focus on established franchises with transformation potential at attractive entry points.

Pitch Summary:
In this regard, Fund Management took advantage of weak market sentiment and volatility to initiate a new investment in Hang Lung Group ("Hang Lung"). The primary rationale for this investment is Hang Lung's strong position in the premium and luxury retail property sector, its well-established '66' mall brand, and its strategic presence across Hong Kong and mainland China. The company's early and ongoing expansion into mainland China demonstrates a long-term vision, resulting in 11 strategically located malls, including a significant new opening this quarter. Despite its high-quality portfolio, Hang Lung's shares are deeply undervalued, trading at just 22% of book value and an 8 times earnings multiple—offering investors exposure to premium assets at compelling valuations. Fund Management identifies several potential share price catalysts, including a transition to higher returns following years of development and capital expenditure intensity that is now completing. This is combined with the acceleration of Chinese luxury retail activity, with Hang Lung's China retail sales rising 18% in 4Q 2025 and momentum continuing. Furthermore, there are several avenues to realize value: simplifying and completing the legacy residential developments, pursuing a possible merger with Hang Lung Properties, and potentially divesting assets into a managed Chinese REIT.

BSD Analysis:
Third Avenue initiated a position in Hang Lung Group, viewing it as a deeply undervalued premium retail property play with significant upside potential. The manager's thesis centers on Hang Lung's dominant position in luxury retail across Hong Kong and mainland China, highlighted by its established '66' mall brand and strategic portfolio of 11 malls. At just 22% of book value and 8x earnings, the valuation appears compelling for a quality retail property platform. The investment case is strengthened by accelerating fundamentals, with China retail sales up 18% in Q4 2025 and momentum continuing into 2026. Key catalysts include the completion of a heavy capital expenditure cycle that should drive higher returns, potential corporate actions like a merger with Hang Lung Properties, and possible REIT spin-offs. The manager sees multiple paths to value realization in what appears to be a classic deep value opportunity in Asian real estate. The timing of the investment during market volatility demonstrates disciplined opportunistic investing in quality assets at distressed valuations.

Pitch Summary:
Finally, we initiated a position in Bangkok Bank, a deeply discounted, overcapitalized Thai bank where cautious lending, margin pressure, elevated reserves, and a weakening macroeconomic backdrop have weighed on earnings and masked the underlying earnings power of the franchise.

BSD Analysis:
Pzena initiated a position in Bangkok Bank, identifying it as a deeply discounted, overcapitalized Thai bank trading below intrinsic value. The manager believes current challenges including cautious lending practices, margin pressure, elevated loan loss reserves, and weak macroeconomic conditions have temporarily masked the bank's underlying earnings power. The overcapitalized balance sheet provides a margin of safety and positions the bank well for future growth when conditions improve. Conservative lending standards, while currently limiting growth, should result in better asset quality during economic recovery. The investment represents a contrarian bet on Thai banking sector recovery and the bank's ability to deploy excess capital productively. Current depressed valuations appear to reflect peak pessimism about the operating environment. This aligns with Pzena's value approach of investing in quality franchises during periods of temporary earnings suppression.

Pitch Summary:
We also initiated a position in Porsche, a leading luxury automaker. The company is currently suffering from a drop in sales in China. Additionally, Porsche overestimated demand for its electric-only models. Sales should improve as old models are refreshed with combustion engines and new models are released into new market segments. Finally, the company's strong brand should help it sustain strong margins through the cycle.

BSD Analysis:
Pzena initiated a position in Porsche during a period of operational challenges, viewing current weakness as a buying opportunity. The luxury automaker faces headwinds from declining Chinese sales and overestimation of electric vehicle demand. However, the manager expects a recovery driven by product cycle improvements, including refreshed combustion engine models and expansion into new market segments. Porsche's premium brand strength provides pricing power and margin sustainability even during cyclical downturns. The investment thesis relies on the company's ability to navigate the EV transition while maintaining its luxury positioning. Current challenges appear temporary and addressable through product strategy adjustments. This represents a classic value investment in a high-quality franchise trading at depressed levels due to near-term execution issues. The strong brand moat should support margin resilience and long-term value creation.

Pitch Summary:
We also initiated a position in Magnum Ice Cream, a spinoff of Unilever with the largest global market share (18%) of any competitor, and a range of brands including Magnum, Breyers, and Ben & Jerry's. Magnum's earnings have been weak due to rising raw material costs and declining growth related to higher GLP-1 uptake. We expect both margins and volumes to recover, as out-of-home consumption grows globally, fueled by increased travel and growth in developing markets. We also expect Magnum to further penetrate at-home consumption channels (grocery stores) where it has been underrepresented.

BSD Analysis:
Pzena initiated a position in Magnum Ice Cream, a Unilever spinoff with dominant 18% global market share and strong brand portfolio including Magnum, Breyers, and Ben & Jerry's. The manager sees current weakness as temporary, driven by rising raw material costs and declining growth from increased GLP-1 drug usage affecting appetite. The investment thesis centers on margin and volume recovery through multiple growth drivers. Increased global travel should boost out-of-home consumption, while developing market expansion provides additional volume growth. The company also has significant opportunity to penetrate at-home grocery channels where it remains underrepresented. The spinoff structure may have created temporary selling pressure, providing an attractive entry point. This represents a classic value play on a market-leading franchise trading at depressed valuations due to cyclical headwinds.

Pitch Summary:
We also initiated a position in United Utilities, a regulated water and wastewater utility in the northwest region of England. The UK water sector is under pressure due to an adverse regulatory environment and negative public sentiment regarding sewage pollution from storm overflows. Given the significant need for capital to remedy years of underinvestment, we believe increased spending will ultimately drive multi-period rate base growth.

BSD Analysis:
Pzena initiated a position in United Utilities, betting on a recovery in the UK water sector despite current regulatory and public sentiment challenges. The manager's thesis focuses on the necessity for significant capital investment to address years of underinvestment in water infrastructure. This required spending should drive multi-period rate base growth, providing a foundation for earnings expansion. The investment appears contrarian, as the sector faces pressure from adverse regulation and negative sentiment around sewage pollution issues. However, the regulated utility model provides some earnings visibility and the essential nature of water services offers defensive characteristics. The manager likely sees attractive valuations reflecting current pessimism while positioning for inevitable infrastructure upgrades. This aligns with Pzena's value approach of investing in out-of-favor sectors with improving fundamentals.

Pitch Summary:
LVMH, the world's leading luxury conglomerate with a collection of 75 brands across fashion, jewelry, cosmetics, spirits, and retail, has been impacted by a decline in Chinese demand across categories, as well as a broader slowdown in overall volumes, exacerbated by recession fears. We believe Chinese demand weakness will stabilize as real estate prices trough, leading to improving consumer sentiment.

BSD Analysis:
Pzena initiated a position in LVMH during the quarter, viewing the current weakness as a buying opportunity. The manager believes the luxury conglomerate's challenges are temporary, primarily driven by declining Chinese demand and broader volume slowdowns amid recession fears. The investment thesis centers on a recovery in Chinese consumer sentiment as real estate prices stabilize. LVMH's diversified portfolio of 75 premium brands across multiple luxury categories provides defensive characteristics and pricing power. The manager appears confident that the current headwinds are cyclical rather than structural, positioning for a rebound in luxury demand. This contrarian approach aligns with Pzena's value investing philosophy of buying quality companies during temporary weakness. The timing suggests the manager sees attractive entry valuations relative to the company's long-term earnings power.

Pitch Summary:
Rightmove (Long -17%) shares were weaker during the quarter as concerns over the impact of AI on the longer-term growth prospects of classified businesses continued to weigh. This thematic was consistent with its Marketplace peers, as well as across Software names deemed susceptible to structural change. From a macro perspective, a more subdued outlook for U.K. housing and rising interest rate expectations has likely also had an impact on investor sentiment. While we continue to monitor the evolution of AI in the sector, we see Rightmove as being well placed to navigate the introduction of this technology given its strong market position – over 80% of real estate search traffic – which locks in positive network effects as the U.K.'s leading real estate marketplace.

BSD Analysis:
Despite the 17% quarterly decline, L1 Capital maintains conviction in Rightmove's dominant market position and defensive characteristics against AI disruption. The fund acknowledges AI-related concerns affecting classified businesses broadly but emphasizes Rightmove's exceptional market share of over 80% of UK real estate search traffic as a key competitive moat. This dominant position creates powerful network effects that should provide resilience against technological disruption and new entrants. While macro headwinds from UK housing market softness and rising interest rates create near-term pressure, the fund views these as cyclical rather than structural challenges. Rightmove's marketplace model benefits from high switching costs and strong customer relationships with estate agents, providing defensive revenue characteristics. L1 Capital's analysis suggests that the market has overreacted to AI concerns, creating an attractive entry point for a high-quality digital monopoly. The company's strong cash generation and market leadership position it well to adapt to technological changes while maintaining its competitive advantages in the UK property market.