Investment Pitches

Pitch Summary:
Shares of Avantor declined 17% in the second quarter and continued their decline into the third quarter after the company missed earnings and cut guidance. Uncertainty around budget cuts across academic research and commercial pharmaceuticals has created an increasingly competitive environment in the industry leading to market share losses at Avantor. Subsequent to quarter-end, we swapped a portion of our exposure into competitor Thermo Fisher Scientific as we continue to evaluate the dynamics at play. More recently, an activist investor reported a meaningful stake in Avantor and is advocating for a board overhaul, strategic review, or sale. We'd note that our fair value estimates are largely consistent with those disclosed in their letter and imply meaningfully higher levels. We continue to believe that Avantor reflects tremendous value at current levels, and we look forward to gaining a badly needed fresh perspective at the board level.

BSD Analysis:
Despite near-term operational challenges, Broyhill maintains a bullish long-term view on Avantor, viewing current levels as representing tremendous value. The company faces headwinds from budget cuts in academic research and commercial pharmaceuticals, leading to market share losses and guidance cuts. However, the manager's conviction is reinforced by activist investor involvement advocating for strategic alternatives, with fair value estimates aligning with Broyhill's internal analysis. The partial swap into Thermo Fisher Scientific demonstrates tactical portfolio management while maintaining sector exposure. The activist catalyst could unlock value through board changes, strategic review, or potential sale. Broyhill's continued ownership reflects their belief that current market pricing significantly undervalues the company's long-term prospects in the essential life sciences tools market.

Pitch Summary:
Shares of Philip Morris gained 16% in the second quarter. The story remains largely the same, with growth driven by its smoke-free portfolio, most notably ZYN (nicotine pouches) and IQOS (heated tobacco). What has changed is the general acceptance among investors of our initial thesis. Consequently, PM's valuation has expanded meaningfully since our initial purchases, with shares trading around 20x forward earnings today. Even after this move higher, the stock still trades below a market multiple, despite what we see as one of the most attractive organic growth runways in the consumer staples sector. We further reduced our stake in the second quarter, but PM remains a core position and our largest holding in the portfolio.

BSD Analysis:
Broyhill's Philip Morris thesis has gained broad investor acceptance, driving meaningful valuation expansion from their initial purchase levels. The investment case centers on the company's smoke-free portfolio transformation, particularly ZYN nicotine pouches and IQOS heated tobacco products. Despite trading at 20x forward earnings, the manager believes PM offers one of the most compelling organic growth trajectories in consumer staples while still trading below market multiples. The position management demonstrates disciplined profit-taking while maintaining conviction, as they reduced exposure but kept PM as their largest holding. The 16% quarterly gain reflects both fundamental execution and multiple re-rating. Broyhill's early recognition of the smoke-free transition has proven prescient, though they're now balancing valuation expansion against continued growth potential.

Pitch Summary:
Shares of Dollar Tree gained 32% in the quarter, with gains following our significant increase in the position after a sharp Liberation Day sell-off. We see higher price points on its products and the spin-off of Family Dollar as fundamental drivers of the thesis. However, market fears around tariffs provided the opportunity to buy shares at a price we believed provided a significant margin of safety. Our background in the dollar stores and deep knowledge of their supply chains allowed us to quickly assess the actual impact tariffs were likely to have and take advantage as shares fell following the initial announcement.

BSD Analysis:
Broyhill capitalized on market overreaction to tariff concerns, leveraging their deep sector expertise to assess the actual impact on Dollar Tree's supply chain. The manager's bullish thesis centers on two key value drivers: higher price points on products and the strategic spin-off of Family Dollar. Their specialized knowledge of dollar store operations provided a competitive advantage in quickly evaluating the tariff impact, allowing them to increase their position at what they viewed as a significant discount to intrinsic value. The 32% quarterly gain validates their contrarian approach and sector expertise. The position benefited from both fundamental improvements and multiple expansion as market fears subsided. Broyhill's ability to act decisively during the Liberation Day sell-off demonstrates their opportunistic investment approach and conviction in their analytical framework.

Pitch Summary:
Which brings us to Six Flags Entertainment - FUN. This has been owned on and off for 25 years along with a few of its peers from time to time. It has cyclicality in the business and how investors value it. We would and continue to argue that a well-run regional theme park business is a solid moat business with high margins, returns and solid free free-cash flow. But it is not a straight line due to "need something new" capex spending and the vagaries of attendance, which can be affected by general economic conditions, gas prices, and the relative insanity of management on how they price tickets. But somehow, here we are 25 years later making almost the same pitch. We see higher labor costs as real, but much of the rest is the same. This is a place for kids under 21 to get the hell out of their parent's Dodge and for the next generation of parents who have exhausted every other entertainment option for their kids. You know who you are. One thing that has changed is we have a mess on a much bigger scale as Six Flags and Cedar Fair merged last year, bringing together a management team that couldn't run a theme park with a management team that can't run an integration. Naturally, we think we know better. And we aren't tied to legacy acrimony. So we are sticking our nose in the mix here and being public with this Letter to the Board. First a word to the math. Take the trailing 12 months and add 20% to it and put a ten multiple of EBITDA. Then take the Aspirational Plan in the Sky and take 20% off it and put on a ten multiple. That will give you roughly 39 and 77. That is unadjusted for nonsense or stock comp and uses the current debt level. The stock is 23 as of this writing. Different fun can be had taking capex down and making attendance projections on a DCF. And there is arguably well north of $500mm of potential asset sales that will barely dent operating earnings. One of the funny things about theme parks is many of them were built "way out of town" 30 years ago. Now, they are right in the middle of high-end suburban construction where "higher and better use" may be a value add. Read the letter. We have a "guy" who sits on the Board with a non-theme park background. That background was CFO for a decade of what has become ABInBev, so he has the ability to set in place proper integration at a pace that is not the current pony trot. This is not "activism," this is simply paying attention to what you own and helping shorten the road to the bank.

BSD Analysis:
The manager presents a compelling value opportunity in Six Flags Entertainment following the merger with Cedar Fair, viewing the current management integration challenges as a temporary headwind masking underlying business quality. The thesis centers on theme parks being high-margin moat businesses with solid free cash flow generation, despite cyclical attendance patterns. The valuation analysis suggests significant upside, with the stock trading at $23 while fair value ranges from $39-77 based on 10x EBITDA multiples applied to various scenarios. The manager identifies over $500 million in potential asset sales that wouldn't materially impact operations, plus real estate value creation as former "out of town" parks now sit in prime suburban locations. A board member with ABInBev CFO experience provides confidence in proper integration execution. The 25-year ownership history demonstrates deep sector knowledge and pattern recognition. The manager's activist-lite approach through board engagement aims to accelerate value realization without formal activism.

Pitch Summary:
Our second-largest position, AST SpaceMobile ("ASTS"), is a pioneer in space-based cellular broadband that will quite literally change the world should it succeed in its ambitious mission to solve a persistent and universal pain point for mobile users around the globe: eliminating coverage gaps while bringing affordable broadband to billions without basic internet services. As a quick refresher, AST was founded in 2017 by CEO Abel Avellan before going public as a SPAC in 2021. The company's raison d'être is to "connect the unconnected" by providing uninterrupted direct-to-device ("D2D") broadband coverage to everyday smartphones via the world's first and only purpose-built global low earth orbit ("LEO") network for D2D. In short, the company provides satellite-based cell tower services to wireless carriers around the world through basketball court-sized phased array antennas deployed in LEO, a key globally scalable enabling technology set to redefine wireless connectivity on a global scale. The emergence of AST represents a pivotal moment in the evolution of not just the company but the entire telecommunications industry, primarily because AST is not merely iterating on existing technology but is introducing a fundamentally new category of service that aims to bridge the digital divide and provide ubiquitous cellular coverage to underserved populations worldwide. Indeed, if we may be so bold, the company isn't just building a satellite network – it's constructing the final piece of digital infrastructure that will complete a century-long arc toward universal human connectivity. While the stock doubled in June, we continue to hold a substantial position at ~15% of NAV as our conviction that the company remains grossly undervalued based on normalized economics and long-term potential has only grown since we initially built our position last fall. In fact, pretty much since the day we got involved, AST has achieved several critical operational milestones that we believe have fundamentally altered its risk profile and future cash flow potential for the better. Ergo, the company was a standout performer for the quarter, surging 157% year-to-date and a whopping 122% in Q2 alone. However, despite its magnificent run, we remain both heavily invested and highly confident in CEO Abel Avellan and his team's ability to deliver on the company's ambitious roadmap. Indeed, even with the equity at ~$48.84/share (vs. our $17.91/share average cost), only a tiny fraction of the company's future growth prospects are currently reflected in its stock price. While the equity appears expensive on near-term numbers, the reality is Mr. Market remains behind the curve despite the massive outperformance of AST's equity year to date. As I type, our favorite emerging compounder is trading hands at a truly inexplicable 2.75x "steady state" EBITDA, i.e., AST's normalized earnings capacity once its global constellation is fully operational over the medium term.

BSD Analysis:
The manager presents AST SpaceMobile as a transformational investment opportunity in space-based cellular infrastructure. The company's direct-to-device satellite network represents a paradigm shift in telecommunications, targeting billions of underserved users globally. Despite the stock's 157% year-to-date surge, the manager maintains conviction based on AST's 2.75x steady-state EBITDA valuation multiple. The investment thesis centers on AST's first-mover advantage in LEO satellite cellular services and its potential to bridge the global digital divide. With $1.5 billion in cash and milestone-based funding from telecom partners, the company appears well-positioned for constellation deployment. The manager emphasizes AST's transition from narrative to execution phase, with manufacturing ramping to 6 satellites per month. Risk factors include execution challenges in space deployment and achieving commercial scale, but the manager views these as manageable given recent operational milestones and strong balance sheet position.

Pitch Summary:
Our thesis on Nintendo, the Godzilla of video gaming, is quite simple. Armed with its Apple-like iterative hardware model and software-based ecosystem, as well as a growing active player base and ever-increasing digital sales, the company should generate substantial earnings growth that is decoupled from the "boom-bust" console cycles of old. As a reminder, we've held Nintendo for six years and counting, drawn initially to its absolute and relative undervaluation and fortress balance sheet, alongside its artistic culture, iconic intellectual property, consistent ability to generate high returns on capital, and historic transition from cyclical earnings to secular growth – attributes, mind you, that remain as we type despite how far the current heavyweight champion of the video game industry has come. And yet, despite all its recent success and a 39.8% return in Q2, we believe the market continues to undervalue the long-tail potential of franchises like Mario and Zelda in an expanding digital entertainment landscape, to say nothing of Wall Street's still amusing takes on next-gen hardware and software sales. We'll get to all that shortly, but what should be immediately obvious right out of the gate is Nintendo delivered a blockbuster quarter on August 1st, powered by the Switch 2's record-breaking launch. Results that, yet again, have validated both Nintendo's hybrid Apple-like console strategy and our larger investment thesis, while also demonstrating the company's pricing power and a level of global market penetration with no historical parallel. To be frank, even the "negatives" had a silver lining in Nintendo's latest report, as the temporary margin compression that hit Nintendo's financials should revert sharply as the hardware/software mix normalizes over time and the installed base effect kicks in. In any case, with the launch of the Switch 2, Nintendo began the final stage of its ongoing business model transformation. With an active playing base of 130 million+ users, the largest and most diverse integrated hardware/software ecosystem in all of gaming, over 34 million NSO subscribers, and an industry-leading (historically under-monetized) IP library that continues to shine, getting new life in a rapidly expanding number of movies, theme parks, retail stores, general merchandise licensing, and (we strongly suspect) a whole new crop of blockbuster games from its biggest franchises. In short, the future is bright and should only get better over the next several years at an absolute minimum. With the official launch of the Switch 2 behind the company, Nintendo has embarked on a new era that should see massive and consistent growth that consensus estimates continues to miss. This remains true, even today, after the single best console launch in the history of the industry. As noted in our Q1 commentary, our anticipation of blowout Switch 2 sales starting in June proved to be an understatement. Turns out the Big N sold over 3.5 million Switch 2 consoles in the first four days after its June 5th release date – and a semi-mind-blowing 5.82 million units over the 25-day period through June-end – making it the fastest-selling video game console in not just the company's history, but the industry's. And not by a little, but by a lot. In fact, to do it proper justice, it's fair to say Nintendo's new console was one of the most successful product launches in the history of consumer products and the entertainment space more generally.

BSD Analysis:
The manager presents a compelling bull case for Nintendo based on its successful transition from cyclical console cycles to a sustainable ecosystem model. The Switch 2's record-breaking launch validates the thesis, with 5.82 million units sold in 25 days representing the fastest console launch in industry history. Nintendo's 130+ million active user base and expanding digital ecosystem create recurring revenue streams beyond traditional hardware cycles. The manager emphasizes Nintendo's undervalued IP portfolio spanning movies, theme parks, and merchandise, suggesting significant monetization upside. Despite the stock's 39.8% Q2 return, the manager believes Wall Street continues to underestimate the platform's long-term growth potential. The investment thesis centers on Nintendo's Apple-like iterative model creating predictable, secular growth rather than boom-bust cycles. With strong pricing power and global market penetration, Nintendo appears positioned for sustained outperformance as the gaming ecosystem matures.

Pitch Summary:
BKNG is an oligopolist which is the world's largest online travel agency (OTA). The company has a competitively advantaged business as a two-sided platform with strong network effects, long growth runways, and a low risk of disruption. It has an advantaged business model that relies on: steady GDP+ (4%–5% per annum) travel demand growth, continued rise in online booking penetration, a dominant and growing position in the attractive and fragmented European accommodation market (hotels and alternative accommodations), and a growing dominant position in Asia, growth in both sides of its network (travelers and accommodation partners) due to flywheel effects, and a capital deployment strategy that is focused on returning excess cash to shareholders, supplementing underlying earnings growth and bolstering total returns to shareholders via dividends and share buybacks. Booking Holdings is the world's leading online travel agency (OTA) for travelers and local partners (hotels, car rental companies, airlines, etc.) in more than 220 countries and territories. The company generates revenue primarily from transaction fees for bookings made through its various platforms. It dominates the attractive European hotel and alternative accommodations market and has a growing share of the Asian market. BKNG operates in the simple and understandable travel market and is expected to grow faster than the travel sector due to continued online penetration and continued share capture: Travel demand has typically grown at GDP+ (4–5%) and is expected to continue growing at similar rates with the worldwide rise of the middle-class consumer. Furthermore, online accommodation bookings continue to gain share at the expense of traditional bricks and mortar travel agencies, constituting 67% of accommodations/rooms booked in 2023 and estimated to be 68% in 2024. While this is unlikely to get to 100%, it will likely continue to rise in the foreseeable future with the rise of the middle class globally and their access to the digital economy. Finally, BKNG continues to gain share at the expense of competing online and offline travel agencies given its marketing spend, continuous investment in its technology platform, and its growing loyalty program which results in stickier customers who are likely to remain in its ecosystem. These factors ought to allow BKNG to sustainably grow Gross Booking Volumes and Revenues in the high-single-digits (HSD) for the foreseeable future. BKNG has a durable and growing competitive advantage versus its main and smaller rivals. BKNG is a "platform company" that has a double-sided network with critical mass on both sides and a self-reinforcing positive flywheel effect: Attracting Supply (Accommodations): the volume of travelers on Booking.com makes it an indispensable distribution channel for independent hoteliers and other property owners who would be unable to access a global audience on their own: Furthermore, BKNG's platform provides them with tools to manage their listings, monitor revenue, and gain insights from guest feedback. Attracting Demand (Travelers): As more properties join the platform, the selection/variety of accommodations increases, making BKNG the go-to platform for travelers seeking the widest selection of options and prices, reinforcing the value proposition for new and existing property partners. Lowering Customer Acquisition Costs (CAC): The network effect's key benefit is the ability to acquire and retain customers more efficiently. As the brand becomes more recognizable/trusted, a growing number of customers come to BKNG directly, through its app or website, rather than through paid search (Google paid search represented $3bn of BKNG's $7bn marketing spend in 2024): This higher direct-booking mix (mid 50% as of 2024 up from low 50% in 2019) reduces marketing spend as a percentage of gross bookings (4.4% in 2024 down from 5.15% in 2019). Cross-Selling/Ecosystem Lock-in ("Connected Trip" Strategy): Once a customer makes a hotel booking, BKNG can seamlessly offer flights, car rentals, and other services. This not only increases the lifetime value of the customer but also makes the ecosystem stickier, which is further reinforced via BKNG's Genius loyalty program: Genius loyalty program offers rewards such as pricing discounts, free upgrades, and priority customer service support to travelers, and enables suppliers who participate in the program to generate incremental demand, increasing customer lock-in. BKNG's scale has allowed it to gain share at the expense of both its direct rivals (Expedia and Airbnb) and smaller regional players: Geographic Dominance: BKNG is the dominant force globally, particularly in the attractive and fragmented European and Asian markets. It's the market leader in Europe, with some estimates putting market share around 35–40%. EXPE is the market leader in the less attractive US region, with an estimated share of 60–75% of gross bookings, where large hotel chains (with greater negotiating leverage and competing websites of their own) dominate, translating into lower profitability for EXPE. Accommodation Listings: BKNG has the largest and most diverse inventory, with over 28 million listings, (traditional hotels and over 6.6 million alternative accommodations). This makes its platform a true "one-stop shop" for any type of lodging. ABNB's inventory is focused almost exclusively on alternative accommodations, with approximately 7.7 million listings, reducing its attractiveness for travelers looking for widest selection. EXPE has a much less impressive 3 million accommodation listings across its various brands (Expedia, Hotels.com, Vrbo, etc.), reducing the attractiveness of its network. Marketing Spend and Strategy: BKNG is the highest spender in absolute terms, but its marketing efficiency is a key strength. In 2024, BKNG spent $7.3 billion on marketing (31% of revenues). Its scale allows it to generate better cost per click than competitors in paid search. Furthermore, its pivot in recent years to focus more on direct brand marketing to drive more consumers to its properties also improves its marketing efficiency. BKNG's capital deployment has amplified its superior financial performance over the past 10-years which we believe is sustainable going forward: BKNG has compounded revenues at 10.8% per annum over the past 10 years, despite the 50%+ drop in revenues in 2020 due to COVID: Management have set long-term forward targets of 8% growth per annum in Gross Bookings and Revenues which we believe is eminently reasonable/achievable given further penetration of online travel demand and the company's history of gaining share against its direct and smaller rivals. The company has compounded adjusted net income at 10.1% while delivering 15% EPS growth over the same period on the back of share buybacks: Management has reduced diluted share count by approximately 36% over the past 10-years. Management have set mid-teens EPS growth as their target for the foreseeable future: Given projected 7–9% topline growth going forward and a fixed cost base that accounts for a little over a third of operating costs, we believe the company can deliver low teens net income growth given the embedded operating leverage. We see the bridge to mid-teens EPS growth coming from share buybacks. BKNG is currently trading at 22.5X NTM P/E (in line with its 10-year historical range) and 1.02X NTM relative P/E to the S&P 500, a slight discount to its historical range. We believe a market multiple is attractive for a company projected to grow earnings at a mid-teens rate. Its FCF yield (5.0% on FY2025 estimates) plus our forecast FCF growth in low teens suggest an expected return of mid- to high-teens over the coming years.

BSD Analysis:
The manager presents Booking Holdings as a compelling quality compounder on their shopping list, emphasizing its oligopolistic position as the world's largest online travel agency. The investment thesis centers on BKNG's two-sided platform with powerful network effects, where increased supply attracts more travelers and vice versa, creating a self-reinforcing flywheel. The company benefits from secular tailwinds including GDP+ travel demand growth (4-5% annually) and continued online penetration (67% in 2023, rising to 68% in 2024). BKNG's competitive advantages include the largest accommodation inventory (28 million listings), geographic dominance in attractive European and Asian markets (35-40% European market share), and superior marketing efficiency despite high absolute spend ($7.3 billion in 2024). The company has demonstrated strong historical performance with 10.8% revenue CAGR over 10 years and 15% EPS growth driven by aggressive share buybacks (36% share count reduction). Management targets mid-teens EPS growth going forward, supported by 7-9% topline growth and operating leverage. At 22.5x NTM P/E and 5.0% FCF yield, the manager views the valuation as attractive for a business projected to deliver mid-to-high teens returns.

Pitch Summary:
AutoZone is an oligopolist in the simple and understandable aftermarket automotive parts industry with high barriers to entry, predictable high free cash flow-generation, forecastable long-term growth, and operating in an industry characterized by rational competition. It has a consistent operating history of double-digit EPS growth with high returns on capital and a management team that is focused on maximizing shareholder value. When we bought AutoZone, the stock had a reasonable valuation, trading at a significant discount to the S&P 500.

BSD Analysis:
The manager initiated a position in AutoZone as a replacement for S&P Global, attracted by its oligopolistic position in the aftermarket automotive parts industry. The investment thesis centers on AutoZone's simple, understandable business model with high barriers to entry and rational competitive dynamics. The company demonstrates strong financial characteristics including predictable free cash flow generation, consistent double-digit EPS growth, and high returns on capital. Management's focus on shareholder value creation through disciplined capital allocation further supports the investment case. The manager found the valuation attractive at the time of purchase, with shares trading at a significant discount to the broader S&P 500. This represents a classic quality compounder investment, emphasizing predictable cash flows and sustainable competitive advantages in a stable end market.

Pitch Summary:
We sold our position in S&P Global (SPGI) and initiated a new position in AutoZone (AZO). We originally bought SPGI because, along with Moody's Corp., it was one of two market leaders in the credit ratings space in the US. It similarly had an oligopolistic position in the provision of equity market indices (alongside MSCI and Russell), owning the most recognized equity index brands with the S&P and Dow Jones franchise market positions. Both these core businesses play a crucial role in the functioning of the US and global capital markets. However, it was their $44bn acquisition of IHS Markit, which had data and research services for Oil and Gas, Financial Services, Health Care, Automotive, and other verticals which was a problem. The $44 billion acquisition of IHS Markit was the largest in SPGI's history. After a year of assessing the acquisition's underwhelming growth and returns, we decided to exit our position and redeploy the capital into AutoZone (AZO).

BSD Analysis:
The manager exited S&P Global due to concerns over the $44 billion IHS Markit acquisition, which represented the largest deal in SPGI's history. While acknowledging SPGI's oligopolistic positions in credit ratings (alongside Moody's) and equity indices (with the S&P and Dow Jones franchises), the manager became disillusioned with the acquisition's performance after a year of evaluation. The IHS Markit deal, which added data and research services across multiple verticals including Oil & Gas, Financial Services, Healthcare, and Automotive, failed to deliver expected growth and returns. This underperformance prompted the manager to redeploy capital into what they viewed as a simpler, more predictable business model. The exit reflects a disciplined approach to capital allocation, prioritizing businesses with clearer value creation paths over complex conglomerates with integration challenges.

BSD Analysis:
EQUAM participated in Rieter's highly dilutive capital increase to fund the acquisition of Barmag, Oerlikon's artificial textile fiber machinery division. The complex transaction involved a capital reduction followed by a two-tranche rights offering at CHF 3.43 and CHF 5.31 per share, raising CHF 477 million total. The fund executed an arbitrage strategy, exercising rights in tranche A at CHF 3.43 while simultaneously selling existing shares at CHF 6.52. Post-transaction, the combined Rieter-Barmag entity trades at 3.9x normalized EBITDA with a market capitalization of CHF 464 million. The leverage profile appears manageable at 3x current EBITDA and 2.1x normalized EBITDA, including acquisition debt. The manager views the dilutive structure as creating opportunity for participating shareholders while penalizing non-participants. This appears to be a value-oriented play on industrial consolidation in textile machinery, with the fund benefiting from both the arbitrage opportunity and the strategic combination's potential synergies.

Pitch Summary:
During the quarter, we began investing in Domino's Pizza, the British company that operates the brand in the United Kingdom and Ireland. Domino's does not manage restaurants directly, as it acts as a master franchisee. Its revenue comes from the sale of raw materials to franchisees and the collection of royalties for the use of the brand, so its asset structure is very light and its operating risk relatively low. Domino's has the largest number of franchised pizzerias in the United Kingdom, a total of 1,378, which, compared to the 381 of its nearest competitors, shows its high market share. It plans to open around 600 new franchises in towns with fewer than 10,000 citizens, where its franchisees achieve higher average sales than restaurants in large cities. It is also considering launching a new brand, drawing on its powerful network of franchisees. We have begun investing in Domino's, taking advantage of the weakness of its share price, which has fallen 43% so far this year. Although employment remains stable and retail sales are steady, consumer confidence in the United Kingdom is very low. The possible tax increase in the Labour government's next budget, which comes on top of previous increases, has led many consumers to reduce their spending. In this context, sales volume has fallen slightly, but Domino's has continued to increase its market share in the pizza delivery segment (+5.6 pp to 53.7% share). First-half results reflected weak consumption, with like-for-like sales falling 0.1% and EBITDA falling 7.4%, much less than the decline in the share price. The company has ex-IFRS16 debt of 2.3x and offers an equity free cash flow yield of 9%.

BSD Analysis:
EQUAM initiated a position in Domino's Pizza Group during the quarter, capitalizing on a 43% share price decline driven by weak UK consumer sentiment and potential tax increases. The manager highlights Domino's asset-light business model as a master franchisee, generating revenue through raw material sales and royalties rather than direct restaurant operations. With 1,378 franchised locations versus competitors' 381, Domino's maintains dominant UK market share and plans 600 new franchises in smaller towns where unit economics are superior. Despite challenging conditions, the company gained 5.6 percentage points of market share to reach 53.7% in pizza delivery. The fundamental deterioration appears modest relative to the stock decline, with like-for-like sales down only 0.1% and EBITDA declining 7.4%. At 2.3x debt-to-EBITDA and 9% free cash flow yield, the valuation appears attractive for a market-leading franchise operation. The investment thesis centers on temporary consumer weakness creating an opportunity to own a dominant franchise platform at depressed valuations.

Pitch Summary:
Medtronic is a leading medical device company developing therapeutic devices for chronic diseases. It is an innovative organization, often reaching market first with differentiated technology across pacemakers, heart valves, insulin pumps and surgical tools. New CEO Geoff Martha has refocused the company after years of depressed returns following the expensive Covidien acquisition, bringing fresh leadership and concentrating R&D on highest-growth areas like renal denervation for hypertension and pulsed field ablation for atrial fibrillation. The planned spin-off of the diabetes business fits with management's effort to focus on highest-margin growth drivers where Medtronic has core competencies. Through disciplined capital allocation and operating efficiencies, Medtronic should leverage 5-6% organic growth into high single or low double-digit earnings growth. With an earnings yield of 5%, the shares appear undervalued.

BSD Analysis:
The manager presents Medtronic as a turnaround story under new leadership with compelling valuation. CEO Geoff Martha's strategic refocus addresses previous value destruction from the Covidien acquisition, concentrating resources on high-growth, high-margin opportunities. The emphasis on renal denervation and pulsed field ablation represents cutting-edge therapeutic areas with significant market potential. The planned diabetes business spin-off should unlock value by allowing focused execution on core competencies. The company's innovation track record in reaching market first with differentiated technology provides competitive advantages in medical devices. The financial framework of leveraging 5-6% organic growth into high single or low double-digit earnings growth demonstrates operational leverage potential. At a 5% earnings yield, the valuation appears attractive for a leading medical device company undergoing strategic transformation. The combination of portfolio optimization, R&D focus, and disciplined capital allocation suggests meaningful value creation opportunity.

Pitch Summary:
H World Group, China's largest private hotel operator with over 12,000 hotels and one million rooms, operates a pioneering "manachised" model that delivers exceptional unit economics. Under this structure, H World retains operational control by appointing each hotel's general manager, while franchisees carry operating costs and property owners fund development. This model generates 22% operating margins for H World, with franchisees having three- to five-year payback periods and the lowest development and operating costs per room in the market. The company's competitive moat comes from supply chain scale, a loyalty program generating 60% direct bookings and proprietary technology that enables self-service hotels to operate with minimal staff. H World targets two million rooms in the medium term, representing low-teens annual growth as China's branded hotel penetration increases from 40% toward the 70% seen in developed markets. The company is capturing share from inefficient state-owned chains and repositioning toward higher-margin midscale and upscale segments to meet demand from China's emerging middle class. The valuation is striking: the stock trades near 2020 levels, while revenue and operating earnings have doubled. H World generates over $1 billion in EBITDA, comparable to Hyatt and InterContinental, yet carries an enterprise value below $12 billion versus $19-23 billion for those peers.

BSD Analysis:
The manager identifies H World's "manachised" model as a differentiated approach delivering superior unit economics in China's hotel market. The 22% operating margins significantly exceed industry norms, while the three-to-five-year franchisee payback periods ensure sustainable growth. The competitive moat appears robust, combining supply chain scale, direct booking loyalty (60%), and proprietary technology for operational efficiency. The growth trajectory toward two million rooms represents substantial expansion opportunity as China's branded penetration increases from 40% to developed market levels of 70%. The repositioning toward higher-margin segments aligns with China's emerging middle class consumption trends. The valuation disconnect is compelling - trading near 2020 levels despite doubled revenue and earnings, with enterprise value at roughly half of comparable international peers despite similar EBITDA generation. This suggests significant multiple expansion potential as the market recognizes the business model's quality and growth prospects.

Pitch Summary:
BYD, the global leader in electric and hybrid vehicles, delivered 4.3 million units in 2024, not far from Tesla's 1.8 million and Toyota's 10 million, a remarkable acceleration from just 600,000 units in 2021. The company's competitive advantage stems from something rare in the automotive industry: deep vertical integration. While traditional manufacturers rely on fragmented supplier networks, BYD designs and manufactures key components in-house, from batteries to semiconductors. This isn't just about control; it's about fundamental cost advantage. As the world's largest mobile battery maker before entering autos, founder Wang Chuan-Fu envisioned EVs as "batteries on wheels" and built the company to exploit the structural simplicity of electric drivetrains, which require fewer than 50 components versus 1,200+ in internal combustion engines. The result is a 15-25% cost advantage over legacy automakers, allowing BYD to offer compelling value while maintaining margins not far from Toyota levels. The company commands 35% of China's EV market and 30% of its battery market, with successful expansion underway in South Asia and Latin America. Europe is next. The stock trades at over 7% normalized earnings yield despite double-digit growth potential, as the stock price consolidated while price competition temporarily pressures margins.

BSD Analysis:
The manager highlights BYD's exceptional vertical integration as a sustainable competitive advantage in the rapidly evolving EV market. The company's evolution from battery manufacturer to automotive leader demonstrates strategic foresight, with the "batteries on wheels" vision proving prescient. The 15-25% cost advantage over legacy automakers provides significant pricing flexibility and margin protection. BYD's scale achievements are impressive - 4.3 million units delivered in 2024 represents remarkable growth from 600,000 in 2021. Market leadership positions in both Chinese EVs (35%) and batteries (30%) create multiple revenue streams and operational synergies. International expansion into South Asia and Latin America, with Europe next, suggests significant growth runway beyond the domestic market. The 7% normalized earnings yield appears attractive given double-digit growth potential, with temporary margin pressure from price competition creating an opportunistic entry point.

Pitch Summary:
Alibaba is one of China's digital infrastructure backbones, a $150 billion revenue company that has evolved from Jack Ma's startup into the dominant force in Chinese e-commerce and cloud computing. The company commands 45% of China's e-commerce market through Taobao and Tmall, platforms that connect 10 million merchants with one billion customers. After years of competitive pressure from JD.com and Pinduoduo, Alibaba's market position has stabilized, and its scale enables high-margin operations while taking less from merchants than competitors. The regulatory environment has shifted dramatically since 2023, with Beijing moving from crackdown to active support, explicitly endorsing Alibaba's aggressive capital return plans of 117 billion CNY in 2025 backed by 500 billion CNY in net cash. What makes Alibaba particularly compelling is how its cloud business is accelerating. Holding an estimated 30% of China's cloud market, the company seamlessly integrates its Qwen LLM into the e-commerce ecosystem, attracting businesses to its cloud infrastructure while delivering practical AI applications. With 100,000 corporate clients already using Qwen, and China's cloud penetration still far below Western markets, the runway is substantial. The stock trades at an 8% earnings yield despite this combination of stable e-commerce cash generation and high-growth cloud potential.

BSD Analysis:
The manager presents a compelling bull case for Alibaba centered on its dominant market position and AI-driven cloud acceleration. With 45% market share in Chinese e-commerce and stabilizing competitive dynamics, Alibaba has demonstrated pricing power and operational leverage. The regulatory shift from crackdown to support, evidenced by Beijing's endorsement of aggressive capital returns, removes a key overhang. The cloud business acceleration is particularly noteworthy, with Qwen LLM integration creating a virtuous cycle between e-commerce and cloud services. At 100,000 corporate clients and only 30% cloud market share in an underpenetrated market, the growth runway appears substantial. The 8% earnings yield valuation suggests significant upside potential given the combination of stable cash flows and high-growth cloud prospects. The manager's timing appears astute, capitalizing on regulatory clarity and early AI monetization.