Investment Pitches

Pitch Summary:
We have long considered Microsoft to be one of the world's best businesses. Its Azure cloud business sales grew 39% in the December quarter and likely could have grown even faster had the company devoted all of its AI computing capacity to Azure rather than directing part of it toward internal initiatives such as improving Microsoft 365 Copilot. In our view, that choice reflects well on management's long-term thinking. At current prices, Microsoft is trading at 21.3x NTM earnings, its lowest earnings multiple since December 2018. Could the stock fall further? Absolutely. But at today's valuation, we believe it is becoming increasingly compelling for long-term, patient investors.

BSD Analysis:
Boyar Research maintains a bullish stance on Microsoft despite the stock's 23.5% quarterly decline, viewing the selloff as creating an attractive entry point. The firm highlights Microsoft's strong fundamentals, including 39% Azure growth and management's strategic allocation of AI computing capacity toward long-term initiatives like Copilot enhancement. At 21.3x forward earnings—the lowest multiple since December 2018—the valuation has compressed significantly from the previous 31x multiple. The managers emphasize Microsoft's position as one of the world's best businesses and believe the current price offers compelling value for patient, long-term investors. While acknowledging further downside risk, they view the fundamental business strength and attractive valuation as creating an asymmetric risk-reward opportunity. The pitch reflects confidence in Microsoft's competitive moat and long-term AI positioning despite near-term market concerns about AI spending returns.

Pitch Summary:
As we mentioned above, American Express was our biggest detractor in the quarter due to concerns about AI replacing payment systems. The payments space is enormously attractive since it grows with overall spending plus the secular shift from physical cash and checks. Not surprisingly there are plenty of entrants looking to break in. At heart, the core card companies—Visa, Mastercard, American Express—are digital infrastructure companies. They process massive volumes of transactions in real time. They ensure that the vendor gets their money, the customer gets their product, and if something fails along the way, it is made right. Visa and Mastercard leave the customer credit function to their partner banks; American Express acts as both the payment system and the bank for their cardholders who carry balances. The market is deeply concerned that AI will disrupt the card business. We are AI optimists, but it is not clear to us that AI is a threat here. Suppose we send our AI agent out to buy running shoes. It is much more resourceful and patient than we are. It isn't limited to big American retailers; it can track a specific shoe to a Finnish specialty store or Japanese enthusiast; it can calculate exchange rates and shipping duties and delivery times. And in theory, it could finalize this purchase using some kind of AI-to-AI payment mechanism, maybe using crypto, circumventing the traditional card network. While this might be technically feasible, we're skeptical it will be widely adopted. The card networks are unrivaled in speed, flexibility, and, most importantly, fraud prevention and exception handling. In the payments world, there are "high trust" transactions between two parties who know and trust each other. Think paying your babysitter, splitting a meal with friends. These types of transactions can be handled using simple bank-to-bank transfers through platforms created by governments and bank consortia (Zelle in the US, Wero in Europe, Pix in South America) or private systems that run on top of these networks, like PayPal and Venmo. But the vast majority of the payments we make are considered "low trust," even with relatively trusted businesses like Amazon. We take for granted that if we buy something online and it never shows up, we can call our bank, tell them what happened, and be fully refunded. And from the merchants' perspective, if a customer wants to make a large purchase that will take time to pay off, credit cards can pay the merchant immediately while the cardholder pays the balance over time. Then there are "exceptions"—accidentally charging a customer twice, the wrong currency, returns, typos—and card networks handle these seamlessly countless times a day. This is a complex, smoothly running ecosystem and the main reason simple bank transfers—much less crypto transactions—haven't displaced cards. AI can do a lot, but we don't think it can recreate the network effects and massive ecosystem that the card companies have created. The most likely outcome is that AI systems—much like browsers and phones did when they were introduced—will simply use their operators' card information to pay for things.

BSD Analysis:
The manager presents a compelling defense of American Express against AI disruption fears that drove the stock's underperformance. They argue that the payments industry benefits from secular growth trends including the shift from cash to digital payments and overall spending growth. The thesis centers on American Express's role as both payment processor and credit provider, creating a dual revenue stream advantage over Visa and Mastercard. The manager dismisses AI disruption concerns by highlighting the complexity of the payments ecosystem, emphasizing fraud prevention, exception handling, and network effects that would be difficult for AI systems to replicate. They view the current market concerns as creating an attractive entry point for a business with durable competitive advantages. The analysis suggests confidence that AI will ultimately integrate with existing payment infrastructure rather than replace it, similar to how browsers and mobile phones adopted existing payment methods.

Pitch Summary:
Fossil Group, Inc. has experienced a significant decline in demand for its products, resulting in negative bottom-line results over the past years. Despite a 500% increase in stock price over the past 12 months, the company does not appear fundamentally attractive. Sales have declined by 12.3% in fiscal 2025, with broad-based weakness across all product categories and geographic regions. The company's turnaround plans have yet to materialize, and macroeconomic challenges, such as low consumer confidence and high energy prices, further complicate its outlook. Although there have been some improvements in gross margin and cost control, the path to profitability remains unclear. The stock is considered a potential value trap, and I recommend a sell rating.

BSD Analysis:
Fossil's ongoing struggles with declining sales and demand across all regions and product categories highlight a fundamental issue with its market positioning. The company's 'Transform and Grow' initiative shows some promise in terms of cost control and margin improvement, but without a compelling product offering, these efforts may not be enough to drive a successful turnaround. The macroeconomic environment, including elevated energy prices due to geopolitical tensions, poses additional risks to profitability. While the balance sheet remains relatively healthy, with manageable debt levels, continued net losses could erode financial stability over time. The valuation metrics may suggest undervaluation, but the deteriorating fundamentals justify the discount, making FOSL a risky investment for value investors.

Pitch Summary:
The Invesco S&P 500 BuyWrite ETF (PBP) has been upgraded from a Sell to a Hold rating due to its tactical superiority in the current market environment. PBP's aggressive option-writing strategy, which was previously seen as a constraint for upside capture, is now well-aligned with a range-bound to pressured market outlook. This ETF is expected to outperform several popular S&P 500 Buy-Write strategies in the near term. The current market conditions, characterized by a cooling AI trade, uncertain AI monetization economics, and geopolitical uncertainties, favor PBP's strategy. While SPYI remains a superior long-term play, PBP's aggressive positioning is likely to deliver better returns in the short to medium term.

BSD Analysis:
PBP's aggressive option-writing strategy is evidenced by its full coverage of assets under management (AUM) with options, compared to SPYI's more conservative approach. This positioning allows PBP to capture additional returns in a flat or correcting market, as seen in recent performance where it outperformed both SPYI and the S&P 500. The ETF's yield gap with SPYI has also narrowed, making it more attractive for income-focused investors. While PBP may underperform in a strong bull market, its current strategy is well-suited for the anticipated market conditions over the next 2-3 quarters. This outlook supports the decision to upgrade PBP to a Hold rating.

Pitch Summary:
Customers Bancorp has experienced significant appreciation, with a 126.6% increase since August 2023. The company has demonstrated strong asset growth, with deposits rising to $20.78 billion and loans increasing to $16.60 billion by the end of 2025. Despite these positives, the high percentage of brokered and uninsured deposits, along with a riskier loan portfolio, pose potential risks. The bank's current valuation, with a price-to-earnings multiple of 12.7, suggests it may be overvalued compared to peers. Given these factors and the potential for a worsening economic climate, a cautious 'Hold' stance is recommended.

BSD Analysis:
Customers Bancorp's asset quality remains a strong point, with a return on assets of 1.20% and return on equity of 13.28%, outperforming many peers. However, the bank's reliance on brokered deposits and high uninsured deposit exposure could be concerning in a volatile market. The company's strategic reduction in securities exposure and increased leverage to boost cash and loan growth are noteworthy but add to the risk profile. While the declining interest rate environment has been beneficial, future rate cuts could negatively impact profitability. Overall, while the bank's fundamentals are solid, the current market conditions and valuation warrant a more cautious approach.

Pitch Summary:
The Schwab US Dividend Equity ETF (SCHD) is recognized for its strong dividend yield and long track record of dividend growth. It offers a low expense ratio and a diversified portfolio that acts as a hedge against overvalued stocks. SCHD's methodology includes a qualitative filter that ensures holdings are reliable dividend payers with controlled debt and strong return on equity. However, the ETF's focus on mature, dividend-paying companies may limit upside potential during periods of high-tech growth. The current market conditions, characterized by a preference for growth stocks, suggest that SCHD may not outperform in the near term.

BSD Analysis:
SCHD provides diversification by holding stocks across various sectors, including energy, healthcare, and consumer defensive, which are often underrepresented in typical portfolios. This diversification can protect against concentration risk, particularly in tech-heavy indexes like the S&P 500 and Nasdaq. However, the ETF's exclusion of high-growth tech stocks due to its dividend track record requirement may result in opportunity costs during bullish tech cycles. While SCHD remains a solid long-term hold, the current market environment favors growth-oriented indexes, making it less attractive for immediate investment.

Pitch Summary:
The Fidelity Total Bond ETF (FBND) offers a conservative investment approach with a high allocation to quality securities, making it suitable for risk-averse investors. Despite its active management, the fund maintains a relatively low expense ratio, which can enhance long-term returns by minimizing costs. FBND has shown resilience and outperformance against benchmarks like the Bloomberg U.S. Aggregate Bond Index, even amidst fluctuating interest rates. The fund's focus on high-quality investment-grade securities results in greater interest rate sensitivity, which may impact short-term performance. However, its monthly dividend yield of 4.68% provides a steady income stream. Given the current economic climate, with inflation pressures and stable 10-Year Treasury yields, FBND remains a viable option for investors seeking moderate returns with reduced risk.

BSD Analysis:
FBND's active management strategy has allowed it to outperform passive peers like the Vanguard Total Bond Market ETF (BND), despite a higher expense ratio. The fund's significant allocation to U.S. Treasury Notes and AAA-rated securities underscores its conservative stance, appealing to investors prioritizing capital preservation. The use of derivatives for hedging further mitigates potential losses during volatile market conditions. While the fund's duration of 6.02 years indicates sensitivity to interest rate changes, the current economic environment suggests limited upward pressure on rates, supporting FBND's stability. The fund's ability to adapt its portfolio through active management positions it well to navigate ongoing market challenges, including persistent inflation and geopolitical tensions affecting oil prices.

Pitch Summary:
O'Reilly Automotive, Inc. is positioned as a high-quality consumer discretionary stock with potential for earnings growth and multiple expansion. The company is expected to benefit from SG&A leverage, leading to consecutive quarters of earnings beats. O'Reilly's strong presence in the auto aftermarket, with a significant share in the DIFM segment, positions it well against competitors like AutoZone and Advance Auto Parts. The company is anticipated to achieve a mid-5% comp in Q1, surpassing street estimates, and is expected to restore its higher historical multiples as earnings consistency improves.

BSD Analysis:
O'Reilly's strategic investments in wages and talent retention are expected to mitigate labor cost pressures, enhancing its competitive edge. The company's conservative guidance approach suggests potential for upward revisions, especially as SG&A pressures subside. With a stable DIY mix and cost inflation from tariffs, O'Reilly's gross margins are likely to expand. The stock's current valuation at 26.8x earnings presents an opportunity for multiple expansion to the low-30s, aligning with industry peers. Risks include potential declines in cost inflation and labor costs, but the aging vehicle fleet supports sustained demand for aftermarket services.

Pitch Summary:
Gold Fields Limited is rated as a Strong Buy due to its significant operational improvements and financial performance in 2025. The company has transitioned from a multiyear build story to demonstrating substantial cash flow generation, particularly from its Salares Norte mine, which has become the highest free cash flow contributor. The company increased its attributable production by 18% and significantly boosted its normalized profit and adjusted free cash flows. With full ownership of Gruyere and improved asset quality, Gold Fields is poised for further growth. The company's updated dividend policy and plans for additional capital returns underscore its strong cash flow position.

BSD Analysis:
Gold Fields' strategic focus on optimizing its portfolio and improving asset quality is evident in its recent performance. The successful ramp-up of Salares Norte and the consolidation of Gruyere have enhanced the company's operational efficiency and financial stability. The market has yet to fully recognize these improvements, as reflected in Gold Fields' discounted valuation relative to sector medians. The company's growth drivers, including continued optimization and potential developments at Windfall, provide a solid foundation for future earnings growth. However, maintaining operational stability at Salares Norte is crucial to sustaining the rerating story.

Pitch Summary:
Artisan Partners Asset Management Inc. (APAM) is positioned with a significant skew towards non-consensus strategies, which are less aligned with the mega-cap and US market indices. This positioning may be less advantageous given the current market dynamics, particularly with the ongoing Iran War affecting cost of capital assumptions. The firm's AUM growth has slowed, and while it logged strong performance in 2025, the tech-led recovery in April is likely to benefit more passive asset management companies. APAM's exposure to value-weighted AUM may not capitalize on the potential end of the Iran War, which could favor tech-led indices.

BSD Analysis:
APAM's strategic focus on non-consensus and anti-indexed strategies, such as US mid-cap and ex-US growth, positions it uniquely in the asset management industry. However, this focus may limit its ability to benefit from a tech-led market recovery, which is more sensitive to changes in cost of capital assumptions due to the Iran War. The firm's AUM growth, while solid, faces challenges from market turmoil and potential outflows. Furthermore, the firm's valuation at around 10x PE is in line with European asset managers, but lower than passive-focused peers like State Street Corporation, which trades at 12x. This suggests that while APAM may offer stability, it might not capture the upside potential of a resolved Iran War scenario.

Pitch Summary:
Macy's, Inc. is facing challenges due to macroeconomic volatility, including stubborn inflation and geopolitical tensions, which have impacted consumer spending and pricing flexibility. Despite these headwinds, Macy's maintains structural and operational efficiency, allowing it to stay afloat with a solid client base and increased credit card revenues. The company's premium pricing strategy targets a more resilient consumer segment, which helps mitigate some risks. However, the limited sales and earnings growth drivers in the current market environment suggest that Macy's is more focused on risk mitigation than growth. The stock is trading at a reasonable valuation, with a target price of $25.08, indicating some upside potential, but the narrow gap between the target and current price suggests limited explosive growth.

BSD Analysis:
Macy's has managed to maintain a decent operating margin despite revenue pressures by reducing capacity and controlling costs. The company's robust liquidity position, with $1.2 billion in cash and no debt maturing within the year, provides a buffer against potential financial strains. The recent policy easing cycle may support consumer spending through credit card usage, benefiting Macy's through increased credit card revenues. However, the ongoing geopolitical tensions and rising oil prices could further strain the supply chain and increase cost pressures. While Macy's fundamentals are strong, the technical indicators suggest bearish tendencies, and the stock's valuation reflects limited upside, leading to a hold recommendation.

Pitch Summary:
Northrop Grumman reported a clean operational quarter, with significant improvements in its Aeronautics margin. However, the company's decision to hold its guidance at peak multiples, coupled with increased capital expenditures, led to a negative market reaction. The upcoming F/A-XX down-select in Q3 2026 presents a binary catalyst for the company. Northrop Grumman's strong defense portfolio, particularly in weapons and munitions, positions it well for future growth. However, the company's current valuation reflects high expectations, and any delays in key programs could impact its stock performance.

BSD Analysis:
Northrop Grumman's strategic investments in its defense capabilities, particularly in the B-21 program, underscore its commitment to long-term growth. The company's focus on maintaining a steady buyback program reflects confidence in its financial outlook, despite rising capital expenditures. Northrop Grumman's exposure to the defense budget cycle provides a stable revenue base, although the timing of budget resolutions remains a key risk. The company's ability to execute on its key programs, such as the F/A-XX and B-21, will be critical to its future success. Investors should watch for developments in these programs and any changes in defense spending priorities.

Pitch Summary:
GE Aerospace delivered a strong operational performance in Q1 2026, with significant growth in orders and services. However, the company's decision to hold its full-year guidance and cut its departures outlook led to a negative market reaction. The stock's high valuation, combined with concerns about the commercial aerospace cycle, resulted in a significant sell-off. GE's reliance on the commercial aftermarket makes it vulnerable to macroeconomic pressures, particularly in the Middle East. The company's future performance will depend on its ability to stabilize departures and capitalize on its defense segment.

BSD Analysis:
GE's strategic focus on its defense segment, which accounts for approximately 27% of its revenue, provides a potential growth avenue amid commercial aerospace uncertainties. The company's aggressive share buyback program signals management's confidence in its earnings potential, although it also poses a risk if earnings do not meet expectations. GE's ability to navigate the current macroeconomic environment, particularly in terms of fuel costs and geopolitical tensions, will be crucial. The company's strong order backlog supports its long-term growth prospects, but near-term challenges remain. Investors should monitor GE's departures data and commercial aerospace trends closely.

Pitch Summary:
RTX Corporation demonstrated a strong quarter by raising both sales and EPS guidance, driven by its Raytheon segment. The company maintained its commercial outlook despite a challenging macro environment, and its Q1 free cash flow increased by 65% year-over-year. The stock's modest decline of 3.6% was the smallest in its peer group, indicating resilience. The company's defense operations, particularly in munitions and missile production, are becoming significant earnings drivers. RTX's ability to convert its defense order book into revenue is a key differentiator.

BSD Analysis:
RTX's strategic focus on expanding its defense capabilities, particularly through its Raytheon segment, positions it well for future growth. The company's framework agreements with the Department of War are likely to enhance its supply chain capacity, supporting long-term demand. Despite the commercial aerospace sector's uncertainties, RTX's diversified revenue streams provide a buffer against potential downturns. The company's disciplined capital allocation, including debt reduction and dividend payments, underscores its financial stability. RTX's continued investment in capacity expansion suggests confidence in sustained demand growth.

Pitch Summary:
TSMC reported a Q1 revenue of $35.9 billion, reflecting a 41% YoY growth, driven by booming demand for advanced chip technology. The company commands a 72% market share in semiconductor manufacturing, with dominance in advanced nodes below 3nm, crucial for AI applications. TSMC's technological leadership and capacity constraints ensure continued outperformance. The company's 2nm node is already in high-volume production, outpacing competitors like Samsung and Intel. TSMC's strategic capacity expansions in Taiwan, Arizona, and Japan further solidify its growth trajectory.

BSD Analysis:
TSMC's ability to maintain a technological edge in semiconductor manufacturing is a testament to its robust R&D and capital expenditure strategies. The company's focus on advanced nodes, particularly sub-3nm, positions it uniquely to capitalize on the AI-driven demand surge. Competitors like Samsung and Intel lag significantly in yield and production capabilities, reinforcing TSMC's competitive moat. With substantial CapEx planned for 2026, TSMC is poised to widen its lead, ensuring long-term growth and market dominance. The strategic geographic expansion of its fabs also mitigates geopolitical risks, ensuring a stable supply chain.

Pitch Summary:
ReadyTech (RDY) is significantly undervalued, trading at a fraction of its intrinsic value due to historical missed revenue targets and a broader sell-off in software stocks. The company has a strong market position in vertical SaaS, with high retention rates and a diversified portfolio across HR, Education, and Government sectors. RDY's Enterprise strategy, particularly in Education, is poised for success with potential large contract wins that could drive revenue growth and validate its business model. The company's current valuation does not reflect its growth potential or the possibility of corporate activity, such as a takeover or divestment, which could unlock significant shareholder value.

BSD Analysis:
ReadyTech's focus on mission-critical software in industries with complex regulatory requirements provides a competitive edge and reduces the risk of revenue loss due to AI disruptions. The company's strategic shift towards Enterprise clients, supported by substantial R&D investments, positions it well for future growth. Despite current low margins due to upfront costs, RDY's resilient revenue model and potential for margin expansion through cost controls or AI-driven efficiencies present a compelling investment case. The presence of a major shareholder, Pemba Capital Partners, and past takeover interest suggest a high likelihood of corporate activity, which could further enhance shareholder returns.

Pitch Summary:
Evoke plc is exploring strategic alternatives, including a potential sale of its international online assets. The company has faced challenges from regulatory tightening and integration issues following the William Hill deal. However, a sale could unlock significant SOTP value. Recent talks with Bally’s Intralot suggest a potential share and cash takeover, valuing Evoke at approximately 50p per share, up from 40.5p.

BSD Analysis:
Evoke's exploration of strategic alternatives is a response to ongoing market pressures and integration challenges. The potential sale of its online assets could streamline operations and enhance focus on core competencies. The interest from Bally’s Intralot indicates market confidence in Evoke's underlying value, despite recent headwinds. A successful transaction could provide a much-needed boost to Evoke's valuation and offer a clearer path to profitability. Investors should consider the risks associated with regulatory changes but also the potential upside from a successful strategic realignment.

Pitch Summary:
Rayonier Advanced Materials has initiated a strategic alternatives review following the abrupt resignation of its CEO. The company has engaged Morgan Stanley to explore potential takeovers or asset sales. Despite facing challenging market conditions in the chemicals sector, the company possesses valuable technology assets. The review was prompted by unsolicited expressions of interest, suggesting potential undervaluation.

BSD Analysis:
The strategic review by Rayonier Advanced Materials indicates a proactive approach to unlocking shareholder value amidst challenging market conditions. The involvement of Morgan Stanley underscores the seriousness of the review process. While the chemicals industry faces headwinds, Rayonier's technology assets could attract interest from potential buyers, especially those looking to expand their cellulose-based product offerings. Investors should monitor developments closely, as any strategic move could significantly impact the company's valuation and market position.

Pitch Summary:
Kongsberg Gruppen plans to spin off its Kongsberg Maritime business, creating a separate stock market listing. This strategic move comes amid a favorable environment for European defense stocks, which have seen significant re-ratings. The spin-off will allow Kongsberg to consolidate its defense and aerospace units, potentially leading to a more focused and efficient operation. The maritime business, with its distinct valuation metrics, could attract new investors.

BSD Analysis:
The decision to spin off Kongsberg Maritime is timely, given the current geopolitical climate that favors defense stocks. By separating its maritime operations, Kongsberg can streamline its focus on defense and aerospace, potentially enhancing operational efficiencies and shareholder value. The maritime business, once independent, may be valued on its own merits, attracting investors interested in shipbuilding and maritime technology. This restructuring aligns with broader industry trends of specialization and focus, which often lead to improved market performance.

Pitch Summary:
First Tracks Biotherapeutics was spun off from AnaptysBio, separating its royalty business from the clinical-stage biotech unit. This separation allows for distinct valuation metrics for the two entities. UBS has initiated coverage with a target price of $45, indicating significant upside potential from the current price of around $19. The company holds valuable royalty rights, which could drive future revenue streams.

BSD Analysis:
The spin-off of First Tracks Biotherapeutics is a strategic realignment that allows investors to focus on the biotech's potential without the overshadowing of the royalty business. The volatility observed in its stock price reflects market recalibration to its standalone prospects. With UBS's optimistic target price, there is a clear market expectation of growth, driven by the company's innovative pipeline and strategic partnerships. Investors should consider the inherent risks of clinical-stage biotechs but also the substantial rewards if the company's therapies succeed.