Investment Pitches

Pitch Summary:
ThredUp (TDUP): ThredUp is a leading online marketplace for second-hand clothing with a unique infrastructure that we believe is very difficult to replicate. We accumulated many shares of this company at prices below $1.00/share. As was also the case with Outset Medical (OM) (comments below), we saw trading become somewhat irrational due to technical factors when the stock fell below $1.00/share, which provided us with a great opportunity. ThredUp has worked very hard over the past several years to become free cash positive and accelerated this effort with the divestiture of its money-losing business in Europe. Simultaneously, they began to see several key KPI’s meaningfully improve due to increased adoption of artificial intelligence that led to a step-up in search and conversion results. Finally, they benefitted from the implementation of tariffs, which has served to improve the relative value-proposition of second-hand apparel and reduce online customer acquisition competition from international apparel manufacturers. All these positives came together soon after the stock fell below $1.00, which has led to strong capital appreciation to over $7.00/share.”

BSD Analysis:
ThredUp is a leveraged play on the secular shift toward resale, sustainability, and value-conscious shopping, but the business is still in scaling mode with a long runway to profitability. Its automated processing centers are a real moat — expensive to build, hard to replicate, and essential for “industrializing” secondhand apparel. The challenge is getting utilization high enough to turn that automation into operating leverage rather than a cost burden. Customer acquisition remains efficient, but resale is a tough margin game that requires discipline, not hype. If ThredUp can improve throughput and average order value, the business model bends upward quickly. If not, it risks being another DTC darling that never reaches escape velocity. High upside, meaningful execution risk — classic early-stage consumer marketplace tension.

Pitch Summary:
Nelnet is aggressively rolling out AI across its business units, seeing breakthroughs in efficiency and throughput. AI tools can narrow thousands of template responses down to three, improve quality assurance by providing real-time feedback to agents, and handle customer requests before human intervention is needed. These gains materially improve servicing operations. At the same time, the Trump administration is requiring borrowers to resume repayment on $1.2 trillion in paused student loans. As the largest and most reputable servicer, Nelnet is likely to handle a significant share of this workload. The combination of AI-driven productivity gains and surging servicing demand positions the company for meaningful profit growth. We remain very bullish on Nelnet.

BSD Analysis:
Nelnet is far more than a student loan servicer — it’s a diversified financial services ecosystem with recurring cash flows and a stealthy venture arm. The loan servicing noise masks the strength of its payments, asset management, and fiber infrastructure bets. Regulatory uncertainty is constant, but Nelnet has navigated tougher cycles. The balance sheet is conservative, giving it room to keep investing in high-return opportunities. The market values it like a melting legacy servicer, ignoring the embedded growth engines. If the venture and fiber investments scale as expected, Nelnet could rerate meaningfully. This is a misunderstood compounder dressed as a boring finance company.

Pitch Summary:
Glass House (OTC: GLASF) was raided by ICE on July 10, with hundreds arrested and one worker tragically killed. ICE alleged the presence of underage undocumented workers, which would violate California cannabis labor law. Having toured Glass House dozens of times, I’ve never seen anyone who looked underage. Just a month earlier, Glass House contacted preferred equity holders with an offer to convert preferred equity into a new lower-interest convertible or redeem for cash. We redeemed, reducing our exposure. We haven’t reinvested in the common stock and have reduced exposure further across funds because the regulatory and political risks are currently unquantifiable.

BSD Analysis:
Glass House is a California cannabis operator betting big on scale and cultivation efficiency — a strategy few can pull off in the state’s chaotic market. Its greenhouse operations give it some of the lowest production costs in the industry, which is vital in a price-crushed environment. Regulatory dysfunction still weighs on sentiment, but Glass House’s volumes and cost base position it to outlast many competitors. The company is risky, but the operational setup is one of the strongest in California. If enforcement improves or retail stabilizes, upside is meaningful. Investors have priced in disaster, which creates room for surprises.

Pitch Summary:
TrueBlue (NYSE: TBI) has been ignoring HQI’s overtures for two years. With TBI’s share price falling and earnings weakening, we believe HQI may soon succeed in taking control. If they take control, they can run the Command Center playbook—selling off TBI’s branches as franchises, dramatically improving margins, and turning TBI into a cash cow. Our estimates suggest the combined company could generate $40–$50 million in annual EBITDA and could be worth upwards of $1 billion. We have re-established our position in HQI and initiated a position in TBI, expecting substantial upside if a deal materializes.

BSD Analysis:
TrueBlue is a labor outsourcing veteran caught in a brutal cycle of slowing hiring and economic uncertainty. But the company’s exposure to on-demand and industrial labor gives it torque when activity picks back up. Cost cuts and automation initiatives are starting to reshape the margin profile. The stock is priced like a secular decliner, yet the business has historically bounced hard after downturns. TrueBlue is not glamorous, but it is operationally leveraged. If macro surprises to the upside, earnings recovery could be sharp. This is a contrarian labor-cycle call.

Pitch Summary:
HireQuest (NASDAQ: HQI) is a company we know well. We believe its franchise staffing model is a superior approach within the staffing industry. We originally invested at $7 per share in 2020 and rode it up to $25 on optimism that HQI could roll up the fragmented, vertically integrated staffing sector into its more efficient franchise model. In hindsight, we underestimated three powerful headwinds—immigration pressure increasing labor supply, interest rate spikes causing workers’ comp friction with franchisees, and a poorly timed tech staffing acquisition that coincided with widespread layoffs. These dragged on earnings for 10 consecutive quarters. But several positive developments have emerged: workers’ comp drag is unwinding, the tech acquisition is now profitable, and immigration policy is tightening. More importantly, HQI expressed interest in acquiring TrueBlue (NYSE: TBI), reminiscent of how HQI went public by buying and successfully franchising Command Center’s branches—ultimately selling those branches for more than the acquisition cost. We believe HQI could run the same playbook with TBI, creating a cash-rich combined entity generating $40–$50 million in EBITDA and potentially worth upwards of $1 billion.

BSD Analysis:
HireQuest is a franchise-driven staffing company that thrives in fragmented labor markets. The asset-light model keeps margins strong and cash flow reliable even in slower hiring cycles. Acquisitions have been disciplined and accretive, reinforcing the network. Temporary staffing demand typically holds up better than full-time hiring in uncertain macro conditions. Investors ignore HireQuest because it’s small, but the fundamentals are cleaner than many larger staffing names. If labor markets stay dynamic, HireQuest continues to gain share. This is an underfollowed operator with real capital allocation skill.

Pitch Summary:
We also added a new GardenSM position in 3i Group, a global private markets manager with a ~55% ownership stake in Action, the leading discount retailer across Europe. Action has carved out a defensible niche in non-food discount retailing and its consistent 20% organic growth across store openings and sales growth are a testament to its value proposition for consumers. The stock trades at a discount to its value based on growing sales and margins for Action and shares appear capable of benefitting from the secular penetration of discount retailing across European markets.

BSD Analysis:
3i is the private-equity firm everyone wishes they bought years ago — a monstrous winner thanks to Action, the European discount retailer compounding like a Silicon Valley unicorn. The rest of the portfolio is solid, but Action alone drives staggering NAV growth. 3i’s disciplined, hands-on ownership style makes it stand out in a sector full of financial engineers. Cash generation is excellent, and the stock still trades at a discount to its real economic engine. This is elite private equity hiding in public markets.

Pitch Summary:
Wingstop, a quick-service restaurant franchisor specializing in fresh, made-to-order chicken wings, sandwiches and sides, is a stock we have owned before and harvested due to our valuation discipline. It is in the early stages of expanding both domestically and internationally, supported by favorable franchisee economics and growing brand awareness. After a few consecutive quarters of same-store sales missing heightened expectations, the stock was overly punished. This created a compelling opportunity for us to reinvest in a highly unique franchise with a solid long-term profit cycle growth profile, not only from domestic and international restaurant openings, but also from menu innovation, national branding, partnerships with delivery providers and a value-focused bundling strategy that continues to resonate with customers.

BSD Analysis:
Wingstop is a QSR phenomenon — one of the few restaurant brands with cult-like customer passion and franchise-unit economics that print money. Digital mix is sky-high, advertising is efficient, and flavor innovation keeps traffic strong. The asset-light franchise model fuels fast, profitable expansion, and chicken prices have normalized in Wingstop’s favor. This is one of the purest small-cap compounders in restaurants, still early in its global runway.

Pitch Summary:
During the quarter, we initiated new GardenSM positions in RBC Bearings, Wingstop and 3i Group. RBC Bearings is a leader in specialty bearings, gearing and motion control products. More than 70% of its revenue comes from sole, single or primary-sourced components, highlighting its critical role in customer supply chains. Its strategy of producing ahead of demand has enabled high on-time delivery and quality performance. RBC also leverages proprietary design software to engineer its products. We expect its commercial aerospace growth to accelerate as Boeing’s production recovers. In addition, upcoming contracts with Boeing and Airbus include price increases, which should cover the cumulative inflation RBC absorbed in recent years. We also believe its industrial end market will recover over time after facing cyclical pressures.

BSD Analysis:
RBC is a precision-components machine with enviable exposure to aerospace, defense, and industrial markets where tolerances matter more than price. Its acquisition of Dodge added a durable, high-margin industrial portfolio that provides ballast. As aircraft build rates climb and defense spending rises, RBC’s content per platform is expanding. Margins are elite, FCF is consistent, and RBC has pricing power because failure is not an option in its end markets.

Pitch Summary:
Gerresheimer develops and produces specialty products made of glass and plastic for pharmaceutical companies. After years of lackluster growth, we believed the new management team would deliver on accelerating revenue growth as it focused on higher value products (ready-to-fill vials, higher resistance glass vials, smart devices) and on biologics. We decided to sell Gerresheimer due to a series of external challenges, including rising energy costs, vial destocking, hurricane flooding and a cosmetics downturn. While these setbacks were largely outside of management’s control, the vial destocking directly impacted our thesis on growth in tubular glass and devices. We redeployed the capital from the sale into West Pharmaceuticals, a higher conviction holding.

BSD Analysis:
Gerresheimer is a quiet juggernaut in pharmaceutical packaging — vials, syringes, inhalers — the kinds of components drugmakers absolutely cannot risk on low-quality suppliers. Its shift into high-value, ready-to-fill solutions and biologics packaging is transforming the margin profile. Regulatory moats are deep, switching costs are enormous, and demand from injectable drugs is exploding. Gerresheimer is a boring-looking name with a biotech-boosted future.

Pitch Summary:
Saia operates in the less-than-truckload (LTL) shipping sector, a structurally attractive part of transportation with strong franchise characteristics backed by real estate and network advantages. While we have been positive on Saia’s strategic network expansion, we reduced our position in Q1 in anticipation of rising tariffs hurting industry volume growth—a risk that materialized in Saia’s recent earnings. We subsequently exited our position due to a lack of conviction in the company’s ability to deliver a profit cycle as it continues to invest in capacity expansion, while at the same time facing top-line pressure. Additionally, Saia appears to be compromising on price to drive growth.

BSD Analysis:
Saia remains one of the highest-quality LTL carriers in America, taking share consistently from weaker rivals through better service, tighter networks, and disciplined pricing. Yellow’s collapse turbocharged its growth, and Saia continues to consolidate the premium end of the market. With industrial production stabilizing and network density increasing, this company has some of the best operating leverage in transportation. Saia is the rare freight operator that wins in chaos and punishes competitors in calm.

Pitch Summary:
Among our top detractors were Aris Water Solutions, Saia and Gerresheimer. Aris offers full-cycle water handling and recycling solutions in the Permian Basin with a focus on the Delaware Basin. Wastewater is a by-product of oil production that needs to be collected and safely disposed of, and our research indicates the water-to-oil ratio in the Delaware Basin is also among the highest. Aris has built proprietary assets, including collection pipelines, water-handling facilities and disposal wells, in the region, with more pipeline and facilities permitted but not yet installed. Although the quarterly results and guidance announced in May were better than expected, shares were negatively impacted by lower oil prices and greater macroeconomic uncertainty. Aris’ revenues are partially tied to well completion and oil recovery activities, and those tend to move in line with oil prices and economic activity. We remain patient in a small GardenSM position.

BSD Analysis:
Aris is the water midstream operator riding the structural need for sustainable water management in U.S. shale. Recycling is rising fast, disposal economics are tight, and operators rely on Aris’s infrastructure because water handling is mission-critical and capital-intensive. As drilling stabilizes, Aris’s volumes grow, margins expand, and contracts stay sticky. This is an essential services business hiding inside an energy ticker — and the market still hasn’t priced in how durable its cash flows are.

Pitch Summary:
Spotify is a leading global audio streaming franchise with 675 million monthly active users. We believe its position in the supply chain is solid given a secular trend of fragmentation in the music industry as well as internal product and pricing initiatives. Spotify reported another set of strong earnings results, including 10% growth in monthly active users and 15% revenue growth. A recent court ruling against Apple should also benefit Spotify as it can now offer direct subscription options and more competitive pricing by linking users to its website, which bypasses Apple’s 30% commission on in-app purchases. Spotify has already reported conversions from its free- to premium-tier service meaningfully increased among Apple users.

BSD Analysis:
Spotify is proving its business isn’t a low-margin streaming grind — it’s becoming the operating system for global audio. Price hikes are sticking, ad monetization is scaling, podcasting is no longer a money furnace, and the marketplace model is boosting margins. User engagement is massive, churn is low, and the company’s personalization engine remains industry-defining. As Spotify layers on advertising, creator tools, and AI-driven content discovery, its economics get better — not worse. This is premium infrastructure for the audio world.

Pitch Summary:
iRhythm develops and markets the Zio, a wearable patch that monitors irregular heartbeats. Its advanced technology is well positioned for broad adoption as doctors and insurers push for earlier detection of atrial fibrillation to prevent strokes. Shares climbed after strong earnings, with 20% revenue growth and gross margins rising to 69% thanks to scaling and efficiency gains. Management also raised its forward guidance.

BSD Analysis:
iRhythm is the category killer in ambulatory cardiac monitoring — a medtech disruptor replacing bulky Holter monitors with Zio patches that cardiologists and patients actually prefer. Reimbursement noise hurt sentiment, but adoption keeps climbing because Zio produces better data, faster diagnoses, and happier doctors. Margins are recovering as scale increases, and iRhythm still has a long runway as arrhythmia prevalence rises with aging demographics. Once pricing stabilizes, this business snaps back hard. It’s a premium clinical-data platform masquerading as a device company.

Pitch Summary:
Among our top Q2 contributors were Babcock International, iRhythm and Spotify. Babcock is the second-largest supplier to the UK Ministry of Defense and the leading supplier and servicer to critical programs and infrastructure, such as nuclear submarines, ships and shipyards. After a series of major asset disposals, Babcock is predominantly a defense company, owning critical infrastructure and the largest nuclear-capable workforce. Babcock has a unique competitive advantage that will enable it to benefit from increasing defense spending. As a result, the company is earning numerous opportunities outside the UK. Furthermore, new management has stabilized the company by improving the balance sheet and implementing plans to deal with troubled contracts. The upshot should be improving margins over the next few years. In June, the company reported strong results, with 11% revenue growth, 17% operating profit growth and a backlog expansion to £10.4 billion.

BSD Analysis:
Babcock International is a high-stakes, military-industrial turnaround story, where a newly disciplined management team has successfully converted a massive balance sheet risk into a cash-compounding powerhouse. The entire thesis is built on an irreplaceable defense and nuclear moat. After years of pain, the firm is now fully deleveraged—net debt excluding leases is down 80% to just $textsterling 56}$ million and net debt/EBITDA is a tiny 0.2x. This financial cleanup has unlocked the earnings engine, with Nuclear revenue soaring 14% and Group underlying operating profit up 19%. The future is secured by a $textsterling 9.9}$ billion contract backlog and structural tailwinds from geopolitical instability driving defense spending. Management is on track to hit its upgraded medium-term target of ≥9% operating margin and ≥80% cash conversion, while aggressively buying back shares with surplus free cash. The stock is poised for a major re-rating, trading at a discount despite its pivotal role in the UK's nuclear submarine fleet and civil decommissioning programs.

Pitch Summary:
Historically, during tectonic computing shifts, the best investments throughout the cycle have typically been the technology leaders—whether it was IBM during the mainframe era, Intel and Microsoft during the PC era, Apple and Qualcomm during the smartphone era, or Amazon and Microsoft during the cloud computing era. We don’t see much reason to stray from the playbook for the era of accelerated compute. The highest margin businesses in semiconductors are NVIDIA and Broadcom, which are the technology leaders for AI infrastructure and the compute and the networking layers. NVIDIA leads in system computing, while Broadcom leads in ethernet networking and custom ASIC design (helping to make hyperscaler capital expenditure more efficient and conversely freeing up more budget for NVIDIA). Both are considered pivotal to the AI infrastructure build-out. We see a catalyst-rich path for both, NVIDIA as it accelerates its product roadmap and scales out its rack-level ecosystem, and for Broadcom as it begins to ramp its new Tomahawk 6 switch and as it hits a projected inflection point in new customer ASIC ramps from 2026–2028.

BSD Analysis:
Broadcom is the custom silicon king in the AI infrastructure race, leveraging an unrivaled $110 billion backlog to drive exponential growth. The core thesis centers on its role as the key ASIC supplier to hyperscalers like Google, Meta, and the newly signed OpenAI, securing a massive $10 billion order that validates its dominance in XPU accelerators. This focus on custom silicon is a structural advantage, as ASICs are more power-efficient and lower the Total Cost of Ownership (TCO) for the massive inference workloads that drive real-world AI services. Broadcom expects its AI semiconductor revenue to exceed 60% growth in fiscal 2026, positioning it to capture a critical portion of AI CapEx. The company's lead in high-speed networking and the high-margin VMware software division provide a crucial, stable revenue base, fueling a world-class 42.4% Free Cash Flow (FCF) margin. Trading at a justified premium given its growth profile and robust 65% EBITDA margins, Broadcom remains an indispensable, high-quality compounder.

Pitch Summary:
NVIDIA's Computing Architecture Is Helping Enable the Scale Up of Agentic AI NVIDIA’s new accelerated compute architectures have enabled the scale up of agentic AI by reducing the inferencing costs per token. The B200 and B300 introduce higher density high-bandwidth memory (HBM) to remove bottlenecks for large context windows. For context, the GB300 (which is currently in testing and in volume shipments to hyperscalers in 2H 2025) is almost 700X more efficient at inferencing than the Ampere chips that were in production in 2020–2021. NVIDIA’s management is emphasizing “lowest cost per inference token” as the design goal of new product launches. NVIDIA has demonstrated expertise in advancing the inferencing efficiency of its compute architecture, supported by an ambitious roadmap and accelerated product cadence that creates significant hurdles for competitors attempting to keep up. Following the debut of its Blackwell architecture in late 2024, the B300 (shipping in 2H 2025) is expected to deliver a 50% boost in inferencing efficiency with only a 10%–15% increase in system cost (ASP) versus the B200. This enhancement offers substantial performance-per-dollar advantages for hyperscalers building out large clusters over the next few years. The upcoming Vera-Rubin architecture in 2026 and Feynman in 2028 are both strategically designed to help optimize inferencing workloads, which we expect will further cement NVIDIA’s dominance. On top of the rapid hardware progress, NVIDIA's CUDA and TensorRT stack is also helping to boost inference throughput. “Rapid advancements in NVIDIA software algorithms boosted Hopper inference throughput by an incredible 5X in one year and cut time to first token by 5X,” stated NVIDIA CFO Colette Kress on the Q3 FY2025 earnings call.

BSD Analysis:
NVIDIA is the unassailable, high-margin kingmaker of the AI revolution, converting its technological dominance into a grotesque amount of cash flow. Its true moat is not just its GPUs, but the CUDA software ecosystem, which locks in every hyperscaler and AI lab with high switching costs that are virtually unbreachable. Bears continue to scream "AI bubble," but their argument is fundamentally flawed: the demand is sustained by the increasing complexity of models (like OpenAI's Q1 and Q3), which demand exponentially more compute intensity, confounding the "AI efficiency" bears. With triple-digit data center revenue growth and gross margins exceeding 70%, NVIDIA's premium valuation is utterly justified by its strategic position, cash generation, and multi-year backlog. The stock is a core holding for anyone looking for leveraged exposure to the trillions of dollars of value that AI is set to unlock.

Pitch Summary:
The author argues that Monolithic Power Systems ($MPWR) is being overly penalized by the market despite accelerating exposure to AI-driven enterprise demand. They believe MPWR is poised to regain share at NVIDIA while benefiting from a rapidly growing ASIC power business, which could drive enterprise data revenues up 40–50% YoY in the back half. The author also sees early signs of stabilization in MPWR’s non-enterprise analog segments, which consensus appears to be discounting too harshly. Long-term, they view MPWR as a structural share gainer with an owner-operator culture and decades-long track record of taking share from peers like Texas Instruments. At ~$580/share, the stock is framed as pricing in an unrealistic loss of AI opportunity, with fair value estimated around $922. The author is cautiously adding, citing strong long-term tailwinds across AI, robotics, EVs, and power-intensive compute.

BSD Analysis:
The analog and power semiconductor industry structurally rewards execution, application-specific design wins, and long customer qualification cycles, favoring incumbents with deep system-level expertise. MPWR’s competitive position is strongest in high-performance power management for data center, AI, and ASIC applications, where efficiency and density are mission-critical and switching costs are high. Secular AI capex expansion supports sustained above-market growth, while diversification across hyperscaler and custom silicon customers reduces single-customer risk over time. Short-term sentiment has been pressured by peer results and fears of NVIDIA share loss, but multi-sourcing dynamics often expand total content rather than eliminate suppliers. The key risk is that non-AI analog demand remains weaker for longer, delaying operating leverage and justifying a lower multiple. However, consensus appears to embed conservative assumptions across both AI and legacy segments simultaneously. If enterprise data becomes a majority of revenue, MPWR’s growth and margin profile would warrant premium valuation versus traditional analog peers. In that scenario, current pricing understates the durability of MPWR’s long-term earnings power.

Actual Post Content:
I just get the sense that $MPWR will get some share of NVDA and they also have a very fast ASIC business, perhaps will actually grow faster than NVDA. I think both ASIC and NVDA will drive the enterprise segment to a beat this Q in perhaps over the next few quarters as AI capex appears to not be slowing down. I am sure this thesis applies to many other names but MPWR seems to not be optimistically reflecting this opportunity which I think it should. There's a possible bottoming out in their non enterprise Analog business as well. I like it here and think it's been a bit discarded. Cautious because of the $TXN results and some other analogs but overall I like the management and I like the LT story. The NT looks really strong and 2H pick-up from ASICs is growing by my estimation at 40-50% YoY. If this continues then the Enterprise Data segment is going to be 50% or more of the business in a few years. There is upside if they capture more $NVDA share than expected, and just as they lost share I feel that they could also capture it. MPWR's story is one of excellence and gradual market share wins over decades led by an owner operator. They have taken share from $TXN and others over years of execution. Even though they lost exclusivity in NVDA and had some hiccups, I feel that it's a little too penalizing at this valuation and consensus estimates are baking in a conservative growth rate for the non Enterprise Data segments. My range for fair value is 922/sh for 25% upside. I want to add more because the LT story with robots and EV's and AI chips is so strong and my general thought is that MPWR will likely be top market share in several growth end markets. Not adding too much though because of recent tepid results from a few competitors. Buying some $mpwr here. It's a gamble but estimating $nvda revs/profits roughly 15%. This move implies a full loss of $nvda. Given the many generations of partnership between these two companies, and the need for nvda to have multiple partners, this sell off seems overdone a bit. Buying some here. What am I missing on $MPWR? At 580/sh, it seems to be pricing a pretty steep discount on the non-AI segment and the AI segment. The company has demonstrated an ability to grow 1.5-2x faster than the industry, why exactly would all of this change just based on the edgewater report? Perhaps the stock was in decline prior to the edgewater report?

URL: https://x.com/Fierce__beast/status/1950574656336847077

Pitch Summary:
Alibaba is an archetypal "complexity discount" trade where the market over-focuses on China macro headwinds, ignoring the durability of its core e-commerce and cloud segments. The bull case targets a $300/ADS valuation within three years, driven by Taobao-Tmall Group (TTG) share stabilization and an inflection in Alibaba Cloud, which is currently dominating the Chinese AI infrastructure market.

BSD Analysis:
Alibaba is an archetypal “complexity discount” trade where the market anchors on China macro, prior governance scars, and messy non-core assets, while the two segments that matter—TTG and Cloud—quietly reassert durability. TTG’s bear case has been perpetual share bleed and margin compression, but the more plausible path is share stabilization plus take-rate expansion as Alibaba imports the Amazon ads/Prime playbook into an ultra-low starting take rate, turning platform power into monetization rather than just GMV. The current delivery subsidy war is a cyclical, self-limiting cash burn that likely fades as regulators lean against malinvestment, when it does, TTG earnings power should re-emerge and the multiple should stop pricing “permanent promo hell.” Cloud is the higher-quality asset: accelerating growth, rising margins, and a strategic moat in a geopolitically insulated market where foreign hyperscalers are de facto share donors. Net cash and ongoing buybacks provide real downside support while waiting for the SOTP to simplify in investors’ heads. The main risk is that competition keeps forcing structurally lower TTG profitability or Beijing policy reopens uncertainty, but the setup offers asymmetric rerating torque if Cloud growth and TTG monetization both stay on track.

Pitch Summary:
Shoei is a dominant Japanese manufacturer of premium motorcycle helmets, holding an estimated 60% global share of the high-end market. The company is a high-quality niche compounder currently trading at a cyclical trough following the normalization of the post-COVID "outdoor boom." With fit-and-finish attributes that drive intense brand loyalty and ROICs historically ranging from 40% to 70%, Shoei is positioned for a significant re-rating as global inventories stabilize.

BSD Analysis:
Shoei represents a classic "quality mispriced" setup where a cyclical volume dip is being mistaken for structural decline. Despite a ~12% sales volume decline in FY 2025 due to channel destocking, the company’s pricing power remains a "margin machine," with net sales and operating income actually growing for the eighth consecutive year through 2024. The business model is anchored by vertically integrated Japanese manufacturing, which ensures quality control that low-cost competitors cannot replicate. As of January 2026, the global motorcycle helmet market is projected to expand at a 6.76% CAGR through 2034, with Shoei maintaining its "premium moat" even in a sluggish consumer environment. Valuation has compressed to ~16x P/E, a level inconsistent with a fortress balance sheet (net cash) and a management team that consistently raises wages (12 years running) and maintains a ~50% payout ratio. As destocking concludes, Shoei’s incremental margins will likely reassert, driving a multiple reversion toward historical averages and offering substantial upside for patient capital.

Pitch Summary:
A disappointing close to what was once an exciting investment, plagued by too many roadblocks along the way. Our initial investment in Sequoia should have been a simple thesis with the market capitalisation backed by a significant amount of cash following the Morrison divestment, and a short 3-5 year payback period for the remaining enterprise value. The simple way to achieve this was to return excess cash to shareholders by way of special dividend immediately following the sale, but ego got in the way causing further mediocre capital allocation.
The first of a string of problematic developments was the commencement of proceedings against Tim McGowen, the vendor of Informed Investor, inclusive of the business better known as ShareCafe. These proceedings sought the recovery of $3.5m from Tim arguing falsified information in breach of various warranties and provisions of the Share Purchase Deed. This ended up being a total waste of time and money that likely eroded further ShareCafe goodwill as months later the case was resolved with no admission of liability.
The second wave called an extraordinary general meeting led by Michael Glennon (Glennon Capital), Tony Jones, and Brent Jones (Founding family of Interprac) in an attempt to dethrone Garry Crole and other members of the board. The requisitionists asserted perhaps rightly that acquisitions and stock trading activity were destroying value. At the time I had a personal call with both Michael and Garry upon which neither side were fully convincing. I decided I was more fearful of the knock-on effect of Jones leaving Interprac and made a divestment prior to the meeting. Following a successful outcome for Garry I re-entered in a much smaller position.
The last is growing controversy with Interprac and the actions of a small minority of their authorised representatives, Venture Egg Financial Services, Miller Wealth Group, & Rhys Reilly. These AR’s were running a concerning sales tactic for the First Guardian Master Fund and Shield Master Fund which involved persuading Australians to set up an SMSF and invest a major part of their wealth within these funds. Some great reporting from the Australian reveals that client money also made its way without consent towards Euree, a recent minority investment made by Sequoia run by James Hird. Long story short, there was wrongdoing by a multitude of parties (the funds, trustees, ratings agency, platforms, licensee, advisers etc.) which ASIC is now investigating having also launched a large scale media campaign as of late.
The whole story smells a lot like Dixon advisory collapse that occurred just a few years ago. This involved the setup of SMSFs for clients which invested into the US Masters Residential Property fund which also happened to lose money. In a stroke of unethical genius E&P placed their Dixon subsidiary into administration early and transferred the majority of their advice business across the other license, dodging significant liability and eventually shifting it onto the industry through the compensation scheme of last resort (CSLR). There is recent precedent that the CSLR may cover the bill for a good portion of the recent collapse too and even imitation with Libertas.
In the interest of space Sequoia was one of our smallest holdings and the combination of potential liability and perennial mismanagement that has led to cumulative reported losses since our investment have weighed on me, leading to capital re-allocation. Fortunately our time with Sequoia yielded a positive 12% IRR and added 2.2c to our unit price. It is not often our decisions get immediate feedback having avoided a drawdown later in the month as another telling article claiming that the Shield Master Fund lent the Morrison settlement to get it across the line.

BSD Analysis:
Sequoia is building an integrated platform for Australian financial advisers, blending dealer services, investment products, compliance, and wealth management tools. As advisers leave the big banks, independent licensees like Sequoia are gaining share. The company’s diversified revenue streams help absorb volatility in any single segment. Execution on acquisitions and integration will determine margin expansion. Regulatory uncertainty remains a risk but also fuels the migration toward independent networks. Sequoia is a small but growing platform in a structurally shifting wealth ecosystem. If scaled properly, operating leverage could be significant.