Investment Pitches

Pitch Summary:
In April, CBL Properties announced it had met the conditions to extend its term loan maturity to late 2026, and that it expects to further extend the loan to November 2027. The company continues to have ample unrestricted cash on hand, and to have success in refinancing its premiere properties at lower costs. Earlier this month, the company announced it had refinanced the loan on its Cross Creek Mall property at a 6.9% rate, down from 8.2%. CBL will continue to dedicate its cash flow to a combination of debt reduction, return of capital, and investment in its best assets.

BSD Analysis:
CBL is proving that mid-tier malls aren’t dead — they’re just finally being run by operators who understand value retail. Post-bankruptcy, CBL has a cleaner balance sheet, more flexible lease structures, and a stronger redevelopment pipeline. Foot traffic is improving, rent spreads are stabilizing, and anchors are no longer the existential risk they were years ago. This is a gritty operator that benefits when consumers trade down and discounters expand. The market still prices CBL like a terminal case, but the fundamentals are undeniably healthier.

Pitch Summary:
PeakStone Realty has now sold all its non-core properties, and is currently marketing another office building that is expected to bring in $100 million. Once sold, PeakStone will have reached its leverage target and can then focus entirely on growing its industrial outdoor storage platform. Valuing only currently leased industrial properties using a 6% cap rate and valuing the remaining offices using a 9% cap rate yields net asset value of $30 per share. This should be discounted for ongoing corporate costs, but the company’s robust free cash flow yield supports a fair value much higher than current trading around $14.

BSD Analysis:
PeakStone’s portfolio mix makes it look like an office disaster, but the industrial and mission-critical assets underneath are carrying more weight than the market acknowledges. The post-spin chaos created forced selling and indiscriminate pricing, even as operations have stabilized. Management is aggressively deleveraging, selling non-core assets, and redirecting capital into segments with far better fundamentals. Office might drag the story, but it doesn’t define it — and the discount to NAV is so large that even a mediocre turnaround yields big upside. This is a contrarian REIT with torque.

Pitch Summary:
Net Lease Office Properties recently succeeded in selling a vacant Texas office property at an attractive valuation of $80 per square foot. The company is actively marketing several of its remaining higher-value properties. The company currently has distributable cash on hand of around $3, with more coming in each month. Excluding mortgaged properties, Net Lease is currently trading at a capitalization rate of around 18%. I continue to believe shares are worth $45-50.

BSD Analysis:
NLOP is the office REIT wearing the ugliest label in real estate — but the underlying assets are far more durable than the market narrative suggests. These are single-tenant, long-duration, mission-critical offices, not empty downtown skyscrapers bleeding occupancy. Cash flow is predictable, tenant credit remains solid, and long leases provide a shock absorber most office REITs would kill for. Refinancing risk is the primary fear, but the discount to asset value already looks absurd. If management extends maturities and stabilizes occupancy, NLOP could stage a violent re-rating from “write-off” to “quiet cash machine.”

Pitch Summary:
We have also bought shares of SigmaRoc Plc, a leading European producer of lime and minerals. SigmaRoc is another serial acquirer with an impressive record of buying the cast-offs of larger producers. SigmaRoc is the top lime producer in Scandinavia, the UK and Ireland, and much of Western Europe, and the number 2 producer in Germany, Poland, and Czechia. Lime is a critical input for numerous industrial processes, ranging from steelmaking to construction to food and beverage and cosmetics. Limestone producers have attractive economic characteristics reminiscent of cement and aggregates. Namely, they enjoy strong regional moats thanks to transportation costs and the challenges of bringing new quarries into production. I like SigmaRoc’s valuation based on its current asset base and profitability, but there is real potential for a wave of European infrastructure and defense spending to kick demand for SigmaRoc’s products into overdrive. European construction and infrastructure spending has been moribund at best for nearly two decades now, but Germany appears ready to unleash €500 billion in infrastructure spending. This wave of investment is very likely to be a positive for lime and minerals pricing, and Germany is SigmaRoc’s largest end market.

BSD Analysis:
SigmaRoc is the materials roll-up that actually knows how to run a roll-up — focusing on high-margin quarries and specialty aggregates instead of chasing bloated megadeals. Its decentralized model gives local teams autonomy while still extracting corporate-level synergies, a formula that’s consistently lifted margins. European infrastructure and decarbonization mandates are real multi-year tailwinds, and SigmaRoc is positioned right where governments are forced to spend. The stock trades like a heavily cyclical industrial, but SigmaRoc’s niche assets generate cash through every cycle. With integration on track and leverage controlled, this is one of the better compounders in European building materials.

Pitch Summary:
Rounding out this quarter’s winners is Seneca Foods. Seneca is emblematic of Alluvial’s efforts to buy boring and little-known, yet highly profitable and undervalued companies. When we first began buying Seneca Foods, the company was coming off a bumper vegetable harvest. This meant a lot of corn and green beans to pack, resulting in high inventory and big borrowings on Seneca’s working capital line of credit. This scared off a lot of investors, but an occasional big pack year is just how it goes for Seneca. When the beans grow, can them. They know that for every bumper crop, there will be a year with more meager yields. Sure enough, this past year saw a modest harvest, and Seneca reduced its borrowings by $259 million, or a whopping $37 per share. Seneca’s balance sheet has normalized, to the benefit of shareholders. Intriguingly, a Seneca competitor, Del Monte, has entered bankruptcy after years of financial struggles. The bankruptcy may present Seneca with the opportunity to pick up some attractive assets at good prices.

BSD Analysis:
Seneca is the old-school canned produce company that always looks boring until inflation hits — then margins explode. The company has raised prices aggressively, cleaned up its fixed-cost base, and is benefiting from consumers trading down into value food categories. Seneca generates real cash, has meaningful agricultural assets, and runs a manufacturing footprint that’s expensive for competitors to replicate. This is a defensive, inflation-levered cash-flow machine trading at a tiny valuation because nobody pays attention. The mismatch between perception and performance is massive.

Pitch Summary:
Our other UK-traded holding, McBride Plc, also enjoyed a strong quarter. A university endowment had been a consistent seller of McBride shares, but ran out of shares to sell near quarter-end. Unfortunately, investors took a dim view of McBride’s July trading update and sent shares tumbling. The update didn’t contain anything surprising, just a recognition that the trend of European consumers trading down to private label soaps and detergents is plateauing and that margins would retreat from record highs. This was always the case. McBride operates in a competitive industry where bumper profits simply don’t last. However, I expect McBride to enjoy some permanent margin uplift thanks to its increased scale and investments in automation. Even if operating margins retreated all the way to pre-COVID averages, McBride would still be trading at mid-single-digit earnings multiple. McBride has succeeded in normalizing its balance sheet and will resume paying dividends later this year. Despite the dip, McBride remains one of this year’s best performers, up 25%.

BSD Analysis:
McBride is the private-label cleaning and household supplier that almost blew up during the energy spike — but the company clawed its way back through price increases and cost resets. Now, with input costs stabilizing, McBride’s operating leverage is showing up violently. Retailers are doubling down on private label, and McBride is positioned as a primary beneficiary of the shift from branded to value. Free cash flow is improving, leverage is falling, and volumes are recovering. The stock is still priced like insolvency is around the corner — but the turnaround is real and accelerating.

Pitch Summary:
Zegona Communications continued its winning ways, rising 6.4% in the quarter. Rumors of a possible buyout continue to swirl, as does speculation about the outcome of the sales process for Zegona’s fiber optic assets. I will be over the moon if a sale to Telefónica materializes, but that is not my base case nor is it necessary for a great outcome. In my view, the most likely scenario continues to be a sale of the fiber assets, followed by a return of capital and continued operational improvements at Vodafone Spain. Zegona’s June 30 reporting showed customer growth, improving margins and robust cash flow. Shares of Zegona have more than doubled from our average purchase price. While I continue to believe in the company’s prospects, there is no question that the risk/reward on offer is not quite what it was when shares traded at GBp 250. With that in mind, we have been trimming our Zegona position, preferring to keep some cash in reserve for other opportunities or to re-buy Zegona shares if they head lower.

BSD Analysis:
Zegona is the opportunistic telecom acquisition vehicle that specializes in buying unloved assets on the cheap and squeezing value out of them. Its Vodafone Spain deal is exactly the kind of distressed asset Zegona thrives on: structurally important, operationally flawed, and mismanaged for years. Zegona’s playbook is straightforward — cut what’s broken, invest where returns are highest, and extract cash relentlessly. The market is still skeptical because European telco sentiment is awful, but that’s exactly why Zegona’s timing is interesting. If they execute even half of the operational turnaround, equity upside is large.

Pitch Summary:
Talen Energy was the biggest contributor to this quarter’s returns. In June, the company announced an agreement with Amazon to provide 1,920 megawatts of nuclear power to Amazon datacenters through 2042. The agreement provides a highly valuable long-term earnings stream for Talen. When power delivery reaches scale in 2032, Talen expects the agreement to provide incremental annual free cash flow per share of at least $7. I think this guidance will prove far too conservative based on continued share repurchases. Talen continues to shift its activities away from merchant power production and toward providing clean energy to datacenters on long-term, highly predictable contracts. As a result, investors are starting to value Talen shares less like those of an electricity wildcatter and more like a quasi-regulated utility with a blue-chip end customer. Every business would love to find a way to make more money and take less risk doing it, and that’s exactly what Talen is achieving. A portion of Talen’s rise is due to the market’s exuberance over anything relating to AI and data centers. But unlike the AI darlings trading at 50 or 100 times their 2030 wildest fantasy earnings, Talen’s valuation remains grounded in reality at just a mid-teens multiple of 2026 free cash flow. Just hours after I finished the first draft of this missive, Talen announced an agreement to purchase two modern high-efficiency combined-cycle gas generation facilities in Pennsylvania and Ohio. These plants will help Talen satisfy the burgeoning demand for power from the data center industry. The purchase is hugely beneficial to Talen’s free cash flow. Shares reacted well to the news, but we don’t think the market fully appreciates the impact the purchase will have on Talen’s long-term results. We gladly purchased additional Talen shares when the news broke.

BSD Analysis:
Talen is the restructured power generator that came out of bankruptcy leaner, meaner, and positioned for the AI-driven power crunch. Its PJM footprint and data-center adjacency give it leverage to one of the strongest electricity-demand tailwinds in decades. The balance sheet reset was transformative, and Talen now throws off real cash instead of just burning it. Mid-merit gas assets and flexible generation capacity make it a direct beneficiary of tightening grids. The market hasn’t caught up to how powerful the AI-electricity link is. Talen has serious rerating potential as investors revisit the power shortage narrative.

Pitch Summary:
ASML is the sole supplier of EUV lithography tools, the only technology capable of producing sub-7nm chips essential for AI, smartphones, and advanced computing. Its machines represent decades of R&D, coordination with 5,000+ suppliers, and unmatched IP, creating an irreplicable moat. ASML controls 100% of EUV and >90% of leading-edge DUV markets, while Chinese competitors lack the know-how to replicate its systems. The investment case rests on its position as a “tollbooth” on computing, collecting recurring service revenues while expanding into High-NA and Hyper-NA tools. Key investor concerns include slowing lithography intensity and customer concentration (TSMC dominates demand), but the author argues long-term growth drivers outweigh these. Revenue growth is expected from wafer volume (4–7% CAGR), EUV layers (3–5%), higher doses, and pricing (2–3%), producing topline growth of 9–15% per year. Margins are expected to expand from ~35% EBITDA to 40–45% by 2030. At ~25x 2025 earnings, ASML offers a 15–22% expected IRR with durable monopoly economics. Risks include recession, Taiwan geopolitics, and temporary over-earning, but the company’s unique position makes it indispensable to the global semiconductor ecosystem.

BSD Analysis:
ASML represents one of the deepest moats in global technology, controlling the bottleneck for cutting-edge chips. The pitch likens fears of “peak litho” to past concerns about Moody’s over-earning — near-term volatility matters little to multi-decade compounding. Even with TSMC as the only leading-edge customer, the ecosystem’s profitability ensures ASML’s pricing power. With monopoly economics, technology leadership, and margin expansion, the risk/reward is attractive for patient investors.

Pitch Summary:
Delek owns refineries and 64% of logistics MLP DKL, whose value nearly equals DK’s entire EV, leaving the market implicitly valuing refineries at just ~$505M. The refineries should generate $455M mid-cycle EBITDA, implying significant upside at 5x multiple. Management has cut $100M costs, sold retail, and is aligned through ownership. Options for unlocking value include DKL repurchases, a merger, bolt-on acquisitions, or a sale. Current stock at $22.69 compares to base case value of $51.85. The pitch highlights a favorable 3.5x upside/downside ratio with a near-term earnings inflection. Risks include tax leakage from a spin-off and cyclical refining exposure. Overall, valuation gap is large and closing catalysts are underway.

BSD Analysis:
BSD case: Market values DK refineries far below replacement cost due to ownership structure and complexity, but catalysts like MLP restructuring and earnings recovery will close the gap.

Pitch Summary:
The author has made Sangamo Therapeutics their top biotech conviction, concentrating 60% of their portfolio in SGMO because they believe the market is massively mispricing a late-stage turnaround. The core of the thesis is ST-920, a Fabry gene therapy with striking Phase 1/2 data (improved kidney function, patients coming off ERT) and an FDA-endorsed accelerated approval path using eGFR slope as the primary endpoint. With less than three months of cash at the time of writing, the company is forced into a near-term resolution, and management signals (hiring for BLA/commercial roles, refusal of a large dilutive raise) are interpreted as strong evidence that a substantial partnership or buyout is close. Beyond Fabry, Sangamo owns a Phase 3-ready Hemophilia A gene therapy formerly partnered with Pfizer, a ZFP-TF gene regulation platform for CNS diseases, CAR-Treg cell therapy, the MINT targeted integration platform, and highly prized BBB-penetrant AAV capsids already licensed to Astellas, Lilly and Genentech. The author’s base case assumes a sizable Fabry partnership plus some monetization of other assets, yielding risk-adjusted equity value around $6 per share, roughly 10x the current price. A bull case, where Fabry is a blockbuster, HemA is revived, CNS programs hit, and platforms are valued strategically, could justify a $2–4B+ takeout (low- to mid-teens per share or higher). They see a 90%+ probability of a shareholder-friendly deal (partnership or acquisition) versus a small chance of heavy dilution or insolvency, making the setup, in their view, extremely asymmetric.

BSD Analysis:
Sangamo sits at the intersection of late-stage rare-disease gene therapy and platform-style genomic medicine, which gives it both concentrated product risk (Fabry/HemA) and diversified technology optionality (ZFP-TF, capsids, MINT). The Fabry asset is legitimately differentiated on current data—improving renal function with clean safety—and fits neatly into the strategic gaps of established lysosomal-storage players like Takeda and Sanofi, which strengthens the partnership/buyout narrative. However, the Street’s skepticism is not irrational: the company has a long history of failed pivots, partner terminations, and value-destructive dilution, so investors discount management signaling more heavily than the author does. The cash crunch is a true double-edged sword: it forces corporate action but also hands negotiating leverage to potential partners, who may demand economics that cap upside versus the author’s DCF outputs. The platform assets (CNS ZFP-TF, CAR-Tregs, MINT, STAC-BBB capsids) are real and externally validated, yet they are long-dated and most of their value will only be realized if a well-capitalized acquirer embeds them into a broader pipeline. From a risk-reward perspective, the equity resembles a call option on a near-term transaction plus a medium-term Fabry approval; sizing and timing are therefore critical, and 60% concentration would be far too aggressive for most institutional mandates. A more conservative analyst would probably underwrite a smaller probability of a clean, non-dilutive deal and assign heavier weight to scenarios involving interim dilution followed by a later partnership. Even under that more cautious framework, today’s market cap arguably implies little to no value for Fabry or the capsid licensing stream, which suggests mispricing but perhaps with a smaller margin of safety than the author assumes. Ultimately, this is a classic biotech special situation: highly binary over the next 6–18 months, with outsized upside if a strong partner or buyer validates the science and terms, and very real downside if negotiations stall or macro risk appetite evaporates at exactly the wrong time.

Actual Post Content:
My #1 Biotech Conviction: Sangamo Therapeutics ( $SGMO ) A 30-Year overnight success in the making Introduction – Betting Big and Going Contrarian. As startupper as well as biotech investor, I’m used to taking calculated risks, but allocating 60% of my administrated portfolio's to Sangamo Therapeutics is another level of conviction. I’m under no illusions: Sangamo is high risk, high reward. The company has stumbled in the past and currently faces a make-or-break cash crunch. Best-in-Class Fabry Data: Just weeks ago, Sangamo presented jaw-dropping clinical results for its Fabry disease gene therapy (ST-920, also called isaralgagene civaparvovec) in an interim Phase 1/2 analysis. The FDA has essentially given Sangamo the green light for an accelerated approval path on this Fabry therapy. Signs of an Imminent Deal: If you read between the lines, there are numerous signals that Sangamo is preparing for a major partnership or buyout very soon. Perhaps the strongest signal of all: Sangamo’s management appears so confident in a forthcoming strategic deal that they rejected a dilutive financing lifeline. One reason I’m comfortable making an outsized bet on Sangamo is the breadth and depth of its pipeline. This is not a one-trick pony biotech as most others. Sangamo’s pipeline spans from near-term commercial assets (Fabry, Hemophilia A) to cutting-edge platforms (ZFP-TF gene regulation, CAR-Tregs, integrase editing (MINT), BBB-crossing capsids). In my base case, Sangamo secures a partnership for Fabry very soon, providing a cash infusion and shared costs going forward. Summing those, base case total enterprise value might be around $1.5–2.0 billion… that works out to about $6 per share. In a bull case, Sangamo’s platforms would be valued not on current cash flows but on strategic value – it’s not crazy to think Sangamo could be seen as, say, a $4–6B company in a takeout. To summarize: I believe there’s ~90%+ chance that shareholder-friendly news (partnership or buyout) occurs imminently, versus maybe ~10% combined chance of a highly dilutive or disastrous outcome. I’ve done my homework, double-checked my assumptions, and challenged my own thesis repeatedly. Sangamo Therapeutics is egregiously undervalued relative to its assets and imminent catalysts. I started building a position like 2 months ago and right now, Sangamo is my highest conviction idea for 2025-2027. If I were asked to bet on any Biotech company to become Big Pharma someday - Sangamo would be the one to call. Disclosure: I am long SGMO (obviously!) and the opinions expressed are my own.

URL: https://x.com/soeren_berlin/status/1948947936299110768

Pitch Summary:
United Tractors, Indonesia’s largest heavy equipment distributor and contract miner, trades at 5x P/E, 0.8x book, and 9% yield despite a strong track record of growth and capital returns. Controlled by Jardine Matheson, it operates in equipment distribution, contract mining, coal/gold mining, and renewables. Since IPO it has compounded EPS 11% CAGR and returned $4.2B in capital. The stock is out of favor due to EM outflows, coal exposure, and Indonesian politics. Yet with net cash, aligned management, and strong shareholder backing, downside is limited. At $5.4B market cap, investors get a dominant player with growth, capital return, and diversification at all-time low multiples. Upside could be 15–20% IRR with re-rating, while risks include faster coal decline or political instability. A take-private by Astra is possible, providing upside.

BSD Analysis:
BSD case: Severely undervalued due to EM/coal stigma, but fundamentals, dividend, and strategic optionality support strong upside with low downside risk.

Pitch Summary:
KNF, a vertically integrated building materials company spun out of MDU, trades at $82 with >40% upside to $115 PT. It has underperformed peers badly (down 20% YTD vs. ROAD +20%) due to mgmt downplaying Q2 results and Oregon’s road bill delay, creating a buying opportunity. The business is strong in aggregates, asphalt, and readymix in midwestern/western US with favorable local oligopolies and high barriers to entry. Despite near-term weather/project delays, fundamentals remain intact with pricing power, cost improvements, and accretive M&A. KNF has historically traded at a premium but now trades at a discount, which seems unjustified given growth and M&A optionality. Risks include weak Q2 results and political funding delays, but downside is ~15% vs. 40%+ upside. M&A optionality from peers like CRH/ROAD adds further de-risking. The pitch argues the market has overreacted to temporary issues.

BSD Analysis:
BSD case: KNF’s sell-off reflects short-term noise, not structural weakness. Strong assets, pricing power, and consolidation opportunities provide asymmetric upside.

Pitch Summary:
Occidental Petroleum (“OXY”) received a major legislative tailwind when Republicans unexpectedly preserved and enhanced the Section 45Q tax credit for carbon capture, utilization and sequestration (“CCUS”). The credit was increased from $130/ton to $180/ton when CO₂ captured from direct air capture (“DAC”) plants is used for enhanced oil recovery (“EOR”). Previously, the higher credit applied only to permanent sequestration, not EOR. The new parity enables the market to determine optimal CO₂ use. OXY lobbied heavily for this change, which will materially improve the economics of DAC-linked EOR—critical for extending the life of mature Permian assets. The company is expected to announce the start-up of its first DAC facility, Stratos, in the coming months. As Stratos scales, process improvements should reduce costs and de-risk OXY’s emerging carbon management business. By integrating carbon removal credits, sustainable aviation fuels, net-zero fuels, and EOR, OXY aims to build a synergistic low-carbon energy platform.

BSD Analysis:
Occidental is a shale titan with a huge bet on carbon capture that could become a generational moat if the economics land. The Permian assets throw off strong free cash flow even at mid-cycle prices. Berkshire’s stake provides a sentiment anchor and validation of the long-term strategy. Debt continues to fall, enabling larger shareholder returns over time. Oxy’s CCUS strategy is ambitious, but if it works, Oxy becomes the low-carbon preferred producer globally. Investors still price it like a standard E&P. This is a high-conviction, high-optionality energy story.

Pitch Summary:
Strathcona Resources (“SCR”), a Canadian oil and gas producer, commenced a hostile takeover attempt of MEG Energy. The day before launching the bid, SCR divested its natural gas assets and became a pure-play oil sands company. This repositioning was well received by the market as SCR shares hit a near 52-week high. SCR’s initial offer—0.62 SCR shares + $4.10 cash—represented virtually no premium when first approached in April. SCR increased its credit facility to $3B with an additional $250M accordion feature, likely to provide flexibility to raise the cash portion of the bid. The company has a history of using ~75% of its borrowing facility in prior acquisitions, implying ~$2.4B of deployable debt capacity. This suggests SCR could increase its cash consideration significantly, potentially supporting an offer in the high-$20s per share for MEG. SCR’s long-term strategy centers on consolidating oil sands assets and eventually becoming an attractive target for supermajors once shale declines and reserve scarcity intensifies.

BSD Analysis:
Strathcona is the aggressive consolidator reshaping the Canadian upstream landscape. Private-equity discipline runs through the business: cost control, scale, and optimization. Its diversified portfolio — heavy oil, thermal, Montney — gives it resilience across commodity cycles. The company is still new to public markets, so institutional ownership hasn’t fully adjusted. Cash flow power is significant, and future capital return potential is large. Strathcona is built to get bigger, leaner, and more profitable. A heavyweight in the making.

Pitch Summary:
On May 15, Strathcona Resources (“SCR”), a Canadian oil and gas producer, commenced a hostile takeover for MEG Energy (“MEG”), our fund’s largest position. Separate from the transaction (though part of its overall plan), SCR announced the day before a major divestiture of its natural gas assets, the proceeds of which will be used to repay all of its debt. Post-sale, SCR became a pure-play oil sands company with steam-oil assisted gravity drainage (“SAGD”) operations in Cold Lake and Lloydminster. The future strategy was well received by the market as SCR shares rose to a near 52-week high at $30.92/share. The next day, SCR announced the bid for MEG, using the inflated SCR shares as partial consideration. At the time, MEG shares traded at $21.30/share, down 10% from the start of the year and mirroring the decline in oil prices. SCR’s offer currently stands at 0.62 shares of SCR + $4.10 cash for each share of MEG. At the unaffected price (i.e., pre-announcement), SCR is offering a total consideration of $23.72/share, a 9.3% premium. Prior to the public offer, SCR quietly approached MEG on April 28 after acquiring ~9% of MEG on the open market. If we calculate the value of the offer back on April 28, SCR effectively offered no premium for MEG’s shares, an offer MEG’s board correctly rejected. Given the recent increase in SCR shares, the company is pitching the bid as one with a 9.3% premium—opportunistic given oil prices and producers had fallen post-Liberation Day. MEG shares now trade above SCR’s offer because the market expects a higher bid from SCR or another acquirer such as Cenovus, Suncor, or CNQ. MEG has begun a strategic review. As MEG evaluates options, we ponder an appropriate premium. Oil sands assets have historically sold at 20-40% premiums. Husky previously bid with a 44% premium in 2018. Today, MEG’s strong balance sheet (only $815M of debt) and best-in-class Christina Lake SAGD asset support a similar premium. The thesis is simple: if MEG uses free cash flow to buy back stock, it will likely retire half its shares in 5 years and the stock will double. We’ve long doubted MEG would remain independent due to its single high-quality asset. Liberation Day-induced oil price declines pushed the stock lower, making MEG vulnerable to opportunistic bidders like SCR. Would we be happy owning SCR shares? Yes—for the right price. SCR is a roll-up created by Waterous Energy Fund (“WEF”), which has systematically acquired unwanted assets to form one of Canada's largest producers. SCR is now debt-free after selling Montney for $2.84B. Combining MEG and SCR makes strategic sense, though SCR produces more yet generates lower cash flow and carries off-book management expenses paid through WEF. SCR has also increased its credit facility to $3B (with $250M accordion), suggesting capacity to raise the cash portion of its offer. At $4.10/share cash, SCR would borrow ~$960M, but facility size suggests ability to raise cash consideration substantially. Historical SCR deals use ~75% of the facility, implying ~$2.4B borrowing capacity—enough to raise cash consideration to ~$10/share (≈$29/share total). MEG’s advisors will evaluate higher bids. As the offer stands, the premium is too small and shareholders will reject it. We will not tender before the September 15 deadline.

BSD Analysis:
MEG is one of Canada’s highest-quality heavy oil producers, benefiting from strong operating efficiency and leverage to improving differentials. Its Christina Lake project remains a world-class SAGD asset. Deleveraging is unlocking meaningful free cash flow, setting up for stronger shareholder returns. Heavy oil demand is more durable than the market assumes, especially with global supply tightening. MEG’s cost structure gives it serious torque to oil prices. Investors often underestimate how clean the story has become. High-operating-leverage energy exposure without the balance sheet drama.

Pitch Summary:
During the quarter, the Fund increased its exposure to Australian diversified developer and asset manager Lendlease Group. Founded in the late 1950s, Lendlease established itself as a leading Australian real estate developer and construction company, but a long history of overseas expansion resulted in capital allocation missteps and volatile earnings. As a result, the company’s shares now trade near levels last seen during the Global Financial Crisis, despite the strength of its core Australian operations. Management has embarked on a major simplification strategy, including asset sales, cost reductions, balance-sheet deleveraging, and share buybacks. Fund Management estimates net asset value of approximately A$10 per share, well above the prevailing share price in the low A$5 range.

BSD Analysis:
Lendlease is a deep-value, diversified global property and construction giant whose stock is an asymmetric recovery bet on its massive, high-value urban regeneration and development pipeline. The core thesis is driven by the company's successful completion of a global corporate restructure, which simplifies the business and focuses resources on its core, high-return markets (Australia, Europe, Asia). The company maintains an unassailable moat in complex public-private development partnerships (e.g., major U.S. military housing projects), ensuring long-term, contracted revenue streams. The stock is a conviction bet on the eventual closing of the discount to Net Tangible Assets (NTA) as its development pipeline is successfully executed.

Pitch Summary:
Supernus Pharmaceuticals announced an opportunistic acquisition of Sage Therapeutics, which will be funded by Supernus’ $460 million net cash balance. Sage is a company which makes the first and only F.D.A. approved treatment for postpartum depression and, itself, possesses net cash in excess of $420 million as of its most recent filing.

BSD Analysis:
Supernus Pharmaceuticals is a deep-value, specialized biopharma pure-play whose stock is an asymmetric recovery bet on the successful expansion of its Central Nervous System (CNS) franchise. The core thesis is driven by the successful launch and patent protection of Qelbree (non-stimulant ADHD treatment) and Trokendi XR. The company is defensively positioned, with 48% institutional ownership, signaling professional money's belief in the long-term value of its specialized portfolio. Despite a recent 18.4% stock dip, the underlying demand for its psychiatric and neurological drugs is non-cyclical. The stock is a leveraged play on successful pipeline expansion and the inherent value of its established CNS brands.

Pitch Summary:
Cantaloupe Inc. (“CTLP”) is a leading provider of payments hardware and software solutions to the unattended and self-service retail sector. The company’s end markets have expanded over the years from a focus on vending machine transactions, which entail small transaction sizes, to a range of micro markets entailing larger transaction sizes. Importantly, the combination of higher transaction volumes and values, from which CTLP earns a spread, have been a tailwind for CTLP’s operating performance. CTLP has a history of competing well in an industry benefiting from automation and labor-saving trends and the growth of self-serve commerce. During the second quarter, not long after the Fund established its CTLP position, Providence Equity Partners, a technology-focused private equity firm, agreed to pay $848 million to acquire CTLP. The cash offer, priced at a meaningful premium to the then-prevailing trading price and within our estimated range of net asset value for the company, has been accepted by CTLP’s board of directors.

BSD Analysis:
Cantaloupe is a high-growth, cloud-based unattended retail technology pure-play whose stock is a conviction bet on the structural digitization of vending and micro-markets. The core moat is its end-to-end SaaS platform, which provides a crucial operating system for managing payments, logistics, and inventory across over 1.3 million devices. The company's massive scale and focus on high-margin recurring subscription revenue ensure stability. Cantaloupe is successfully converting its customer base to its advanced Seed software, driving higher Average Revenue Per User (ARPU). The stock is a conviction bet on the inevitable, multi-year shift to cashless, automated retail.

Pitch Summary:
One recent partnership investment that we think serves as an example of the undiscovered, undervalued, high-quality companies we seek is Dadelo S.A. (DAD.PW) which trades on the Warsaw Stock Exchange. We accumulated shares in Dadelo between November 2024 and February 2025 as a Top 5 position at an average cost of 23.27 zł. As of the end of this prior quarter, Dadelo’s shares had appreciated by +61% to 37.50 zł. At our time of purchase, we estimated that we were buying shares at 18x our estimate of 2024 net profit for a business that since 2017 has organically grown its annual revenues at a +39% CAGR, or by a factor of 11.7x, and is still currently growing its revenues at a rate of approximately +50% YoY. Dadelo is an omni-channel bicycle retailer that sells bicycles, parts, and accessories exclusively in Poland. Dadelo has won 7% share of Poland’s bicycle, parts, and accessories market to date, has become Poland’s #1 bicycle retailer, and has earned excellent reviews from customers on well-regarded websites such as Opineo.pl. We believe Dadelo has accomplished this by offering free 24-hour delivery for 95% of orders regardless of basket size, offering among the widest SKU selections, and offering among the lowest prices. Based on our research, it appears that Dadelo possesses a strong competitive advantage through its operational relationship with Oponeo, which provides state-of-the-art warehousing, technology infrastructure, and vendor management capabilities that would be extremely difficult for smaller competitors to replicate.

BSD Analysis:
Dadelo appears to be a smaller, under-followed consumer or commerce name, which typically means the opportunity and the risk both come from execution rather than macro magic. In these businesses, the key investment variables are unit economics (gross margin, fulfillment costs, CAC), repeat purchase behavior, and whether the brand or platform has any real defensibility. If management can scale profitably—especially by growing repeat customers and improving logistics—earnings can inflect quickly. If not, the stock becomes hostage to discounting, rising marketing costs, and working-capital pressure. Investors should focus on cash conversion, inventory discipline, and evidence of durable demand rather than top-line noise. Small caps can look cheap right before they dilute, so balance-sheet runway matters as much as the product. If the business is proving it can generate cash while growing, that’s when the story becomes investable.