Investment Pitches

Pitch Summary:
While many Chinese AI-related companies now appear expensive, we have identified a compelling exception: Chongqing Machinery. Through its joint venture with Cummins, the company is one of just three major producers of high-horsepower diesel backup generators in China. These generators are essential for AI datacentres and broader grid resiliency. Global demand for large-scale generators has surged. For example, Generac recently estimated a global shortage of 5,000 high-end diesel generators in 2026, each priced around US$1 million. Chinese manufacturer China Yuchai has publicly stated it is turning away business due to capacity constraints, even after accounting for planned expansions. In contrast, Chongqing Machinery is in expansion mode and trading at attractive valuations. We initiated our position at a forward P/E of 7.5x, with profits growing at ~50% per annum. Adjusting for the firm's significant net cash and liquid securities, the enterprise value multiple falls to ~3.8x earnings. As its new manufacturing capacity ramps up in 2026, we expect earnings growth to accelerate further.

BSD Analysis:
The manager identifies Chongqing Machinery as an undervalued beneficiary of the global AI datacenter buildout through its diesel generator manufacturing joint venture with Cummins. The investment thesis is anchored on a significant supply-demand imbalance, with Generac estimating a shortage of 5,000 high-end diesel generators in 2026, each valued at $1 million. The manager notes that competitors like China Yuchai are already turning away business due to capacity constraints, while Chongqing Machinery is expanding capacity. The valuation appears compelling at 7.5x forward P/E with 50% annual profit growth, and an enterprise value of just 3.8x earnings after adjusting for net cash. The manager expects earnings growth to accelerate as new manufacturing capacity comes online in 2026. This represents a contrarian play on Chinese AI exposure through critical infrastructure rather than expensive direct AI companies.

Pitch Summary:
The release of ChatGPT-5 brought only incremental improvements, and AWS growth has notably lagged Microsoft and Google, who have proprietary AI models. We believe the market is only beginning to appreciate Google's AI leadership. The company controls the full web stack – search, browser, maps, YouTube, and more – and has now begun commercialising its TPU (Tensor Processing Unit), a chip it has developed over the past decade. We believe TPUs are the only real challenger to NVIDIA's GPUs. In its most recent quarterly earnings call, Google announced plans to offer its TPUs externally – a decision that could unlock significant standalone value. If this unit were valued in line with NVIDIA's GPU business, we believe Alphabet could justify a valuation multiple closer to 50x earnings, rather than its current ~20x. While regulatory risks remain – particularly the pending antitrust remedy involving its Chrome and ad-tech businesses – we believe the core business is deeply undervalued, barring an extreme outcome such as the forced divestiture of Chrome.

BSD Analysis:
The manager presents a compelling bull case for Alphabet based on the company's underappreciated AI leadership and potential TPU monetization. The thesis centers on Google's comprehensive control of the web stack and its proprietary Tensor Processing Units, which the manager believes are NVIDIA's only credible GPU competitor. The key catalyst is Google's recent announcement to offer TPUs externally, which could unlock significant standalone value. The manager's valuation analysis suggests Alphabet could trade at 50x earnings versus the current ~20x multiple if the TPU business were valued similarly to NVIDIA's GPU segment. While acknowledging regulatory risks around Chrome and ad-tech antitrust issues, the manager views these as manageable relative to the core business's deep undervaluation. The pitch reflects high conviction in Google's AI competitive positioning and the market's failure to properly value the TPU opportunity.

Pitch Summary:
SmartRent (SMRT): This quarter, we sold our remaining shares in SmartRent. "Disappointing" is the only way to describe our investment over the last three years. While shareholders could easily blame it on the macro environment, I think our investment mistake runs much deeper. It was misjudging the people. We first invested in mid-2022, and were excited by a rapidly growing software business, that was disrupting the multifamily apartment industry. Revenues grew ~+52% y/y the first year of our ownership, and traction continued in 2023 at ~+41% y/y. Meanwhile operating margins trended in the right direction, improving from -62% to -18% during that time frame – well on their way to profitability the following year. Starting with smart access (keyless entry), SmartRent had an opportunity to eventually become the "operating system" for multifamily rental operations. But the problems started as interest rates jumped over the past few years. For their multifamily customers, it became harder to finance & acquire new buildings for their portfolios. SmartRent's new deployments fell alongside these declining industry transaction volumes. SmartRent installation costs ~$1,300 per apartment unit, and ~$3 - 8 per month afterwards. Elevated interest rates mattered for a couple reasons. First, new buildings typically install SmartRent after being bought by a customer that uses SmartRent for the rest of their portfolio. For example, the bulk of SmartRent's customers are large public REITs or multifamily owners that own >10,000 units. When these customers buy a new 200-unit property, they're going to install SmartRent to integrate with the rest of their properties, since the technology allows them to efficiently manage the operations and maintenance of their entire portfolio. Second, the upfront cost of several hundred thousand dollars is considered capex, and financed as part of the property transaction or funded separately with debt. As interest rates rise, it makes it harder to borrow money and the interest burden harder to justify. But with over $200M on the balance sheet (~1/3rd of total market cap), we were betting that SmartRent had more than enough capital to weather this headwind. In the meantime, they could focus on deploying their backlog, and getting to profitability through pricing increases. For example, they had ~550K units actively "deployed" in 2022, but also a backlog of over ~850K "committed" units with signed contracts and just waiting to be installed. However, by early 2024, cracks started appearing in the thesis. We started seeing SmartRent's institutional customers delay their backlog installations – choosing to conserve cash instead of deploying it in an uncertain real estate environment. Not only did this affect growth, but also part of our original thesis is that the medium & small sized owners would be spurred to adopt this technology, forced by competition by the large players. These smaller operators tended to pay software rates closer to $8 per unit per month, versus the $3-4 the larger customers were paying. I always saw signing the large customers as benefitting SmartRent's brand (i.e. "if Equity Residential is using it, we [a smaller owner] should try it too"), while the real profits would come from higher margin "long-tail" customers. As such, these changes affected SmartRent's cash flow trajectory. However, the final straw came when I learned about the board of directors' disputes with Lucas (SmartRent's founder), on the interim growth strategy and their subsequent handling of the situation. Lucas wanted to launch new products to sell to their Top 15 customers (the ones who own >10,000 units), in an effort to grow wallet share / revenues with them. However, this came at the cost of higher R&D and manufacturing costs – a major reason why SmartRent wasn't profitable yet. Alternatively, the board wanted to focus on the high-margin software piece, and focus on raising ARPU and renewing their sales effort to grow their customers into the "long-tail" customer base (the ones who pay $8 per month). I agreed with the board's strategy, but ultimately disliked their way of handling the situation. I'll save the gritty details, but effectively the disagreement / lack of goodwill was so large, that Lucas resigned the same day that the board voted in going in a new direction (in July 2024). Obviously, the sudden departure of the founder & long-time CEO isn't good for anyone. The company spent six months looking for a replacement and announced a new CEO starting in February 2025. But Shane Paladin lasted a mere 6 weeks, before the board asked him to leave in April 2025. He was then replaced by Frank Martell, who has been on the board for a year. Frank was previously the CEO of LoanDepot, and the CEO of CoreLogic before that. While I believe the board ultimately made the right decision in bringing Frank into the seat, the manner in which it was handled left a bad taste in our mouth. I've met the Chairman of the Board, in-person and over Zoom several times. While I think he and the rest of the board have good intentions and are moving the company in the right direction, I just fear the company doesn't have enough sense of urgency. There are also a few members of the board where I question if there would be more appropriate replacements. I do think the fundamental business problems are fixable – but it needs the right people & culture in place. The company needs to move faster, and they just aren't at this time. As such, we chose to exit our position earlier this year. I don't think this is the end of the story for SmartRent, and still believe they'll reach profitability soon. But given the concentrated nature of our portfolio, we don't have room for companies who don't operate at their full potential. So we'll watch the situation unfold from the sidelines for now, and have reallocated the proceeds into more attractive opportunities. This mistake cost us -50.3% on the position. We purchased our shares at an average cost of $3.34 and sold them at an average of $1.66. We've learned a costly lesson in the misjudgment of people.

BSD Analysis:
Hayden Capital exited SmartRent after a disappointing three-year investment that resulted in a -50.3% loss, selling at $1.66 versus a $3.34 average cost basis. The manager attributes the failure primarily to "misjudging the people" rather than macro headwinds, highlighting critical governance and leadership issues. Despite strong initial fundamentals with revenue growth of 52% and 41% in consecutive years and improving operating margins from -62% to -18%, the investment thesis deteriorated due to rising interest rates impacting customer deployment decisions and internal management conflicts. The departure of founder-CEO Lucas following board disputes over growth strategy, followed by the rapid exit of replacement CEO Shane Paladin after just six weeks, demonstrated poor execution and cultural dysfunction. While the manager acknowledges the fundamental business problems are fixable and expects eventual profitability, the concentrated portfolio structure demands companies operating at full potential. The exit reflects a disciplined approach to capital allocation, prioritizing management quality and execution capability over purely financial metrics.

Pitch Summary:
ATTO represents a cautionary tale of a highly leveraged turnaround investment gone wrong. Initially, the company showed promise with its turnaround strategy, but a series of adverse events, including a cyber-attack and currency hedging issues, severely impacted its operations. The management's poor handling of these crises, coupled with the investor's decision to double down on the position, exacerbated the losses. The involvement of distressed debt investors and eventual bankruptcy highlight the risks associated with high leverage and the importance of managing position sizes and biases.

BSD Analysis:
The ATTO investment highlights critical lessons in risk management and the dangers of confirmation bias. The company's high leverage made it vulnerable to external shocks, and the investor's repeated doubling down on the position increased exposure to these risks. The lack of effective crisis management by ATTO's leadership further undermined the turnaround efforts. This case underscores the importance of setting limits on position sizes, especially in highly leveraged situations, and maintaining objectivity in the face of adverse developments. Investors should be vigilant about their biases and prepared to adjust their strategies when new information emerges.

Pitch Summary:
QLTU has been an exceptional investment, discovered through a bespoke screening process. The company's rapid growth and under-the-radar status contributed to its initial undervaluation. Despite being listed on a less prominent exchange, QLTU demonstrated strong value and quality attributes, including robust earnings, a solid balance sheet, and effective management with significant insider ownership. The market's oversight of this small-cap gem allowed for substantial appreciation as its fundamentals became more widely recognized.

BSD Analysis:
QLTU's success underscores the potential of identifying overlooked opportunities in less mainstream markets. The company's strong financial metrics and management's alignment with shareholder interests have been key drivers of its performance. The initial market oversight likely stemmed from its small size and listing on the Tel Aviv Stock Exchange, which may have limited analyst coverage and investor awareness. As QLTU continues to deliver consistent earnings growth, it may attract more attention, potentially leading to further valuation re-rating. Investors should consider the liquidity and market access challenges associated with investing in smaller exchanges.

Pitch Summary:
CEE is a strategic investment in the potential resolution of the Ukraine/Russia conflict. The fund currently trades at a premium over its Eastern European assets, excluding its Russian holdings, which are valued at zero due to sanctions. These Russian assets, once the largest part of the portfolio, are still owned by the fund and include rights to dividends held in America. The thesis is that once sanctions are lifted, the value of these Russian equities and dividends will be realized, alongside growth in European assets, leading to a significant increase in stock price. This investment is attractive due to its low correlation with the general market, providing diversification benefits.

BSD Analysis:
The investment in CEE is a calculated bet on geopolitical developments, specifically the lifting of sanctions against Russia. The fund's strategy of excluding Russian assets from its NAV presents a unique opportunity for value realization upon geopolitical resolution. The fund's management has maintained a conservative valuation approach, which could lead to significant upside once market conditions normalize. Additionally, the potential growth in European assets post-conflict could further enhance returns. Investors should be aware of the inherent geopolitical risks and the uncertainty surrounding the timing of sanctions being lifted.

Pitch Summary:
Also subsequent to the quarter, QRHC reported meaningful cash flow generation for the first time in two years. As I wrote in my July email, I would love to put the proceeds from CCRD into QRHC, a long-time position that has more than halved (twice) since September, but I am hesitant until I see the effect of recent managerial changes on operations. Cash flow generation is one of those small but important indicators. We have been selectively adding. However, I continue to think the Board is missing an opportunity to improve as well. ... The good news is, this source told me that the changes the company has recently made should yield improvements in 12-to-18 months again, everything he's told me has proved accurate - offering a sense of hope that our new CEO and his cohort can succeed even as our Board underwhelms.

BSD Analysis:
Quest is an environmental services and waste-management consolidator focused on recycling and sustainability programs for national accounts. It benefits from corporations outsourcing waste compliance and ESG-driven reporting. The model scales through multi-site clients who value standardization over local haulers. Margin improvement is all about routing efficiency and contract discipline. Acquisitions add growth but require integration rigor. As sustainability mandates increase, Quest’s value proposition strengthens. This is a small-cap infrastructure efficiency story with steady demand.

Pitch Summary:
At the end of July, CCRD announced its intention to sell itself to Euronet Worldwide (EEFT) in an all-stock deal valued at $30 / share. Our returns were substantially enhanced by doubling the size of the position when the stock declined in late '23 and early '24. As I wrote back in July, I had anticipated a sale before year-end, and although this isn't the one I'd hoped for, it solves multiple problems for both companies. CCRD gains a haven where it can rebuild revenues in a post-Apple Card world (this deal wouldn't happen if the company believed it would keep processing the Apple Card), CCRD shareholders have an offramp for their stock if they want and EEFT adds a substantial and well-tested digital payments platform to its legacy ATM networks, prepaid mobile cards and money transfer business.

BSD Analysis:
CoreCard provides card-management software that powers modern fintechs, enabling flexible credit, prepaid, and BNPL products. Demand is tied to fintech innovation cycles, which creates lumpiness but also high upside. The business is small but strategically important for clients who need customizable, compliant transaction platforms. CoreCard runs lean, producing solid margins and cash flow despite its size. The challenge is scaling efficiently — the company must expand infrastructure without losing its bespoke edge. As card issuance modernizes, CoreCard sits in a sweet niche. A micro-cap fintech infrastructure play with leverage to secular payment growth.

Pitch Summary:
Shares of Chinese technology giant Alibaba traded down following strong first quarter performance. While the company reported revenue and profit growth for its most recent quarter, results narrowly missed consensus expectations. We believe that Alibaba is well positioned to benefit from Chinese investment in generative artificial intelligence (AI). The company also continues to invest in growing its businesses and improving operating efficiencies, even as it returns cash to shareholders through dividends and stock repurchases.

BSD Analysis:
Alibaba’s latest quarterly results showed solid revenue and non-GAAP earnings growth despite macro headwinds, with net income for the September quarter exceeding RMB 40 billion. The company continues to repurchase shares and has introduced regular dividends, signaling confidence in cash-generation capacity and a shareholder-friendly capital allocation stance. Cloud computing, logistics and international commerce provide additional growth vectors beyond the core domestic marketplace. While regulatory risk and competitive intensity remain elevated, the stock trades at a discounted teens P/E multiple relative to global mega-cap tech peers, embedding conservative expectations. If execution on AI initiatives and margin discipline continues, there is meaningful upside as sentiment toward Chinese equities normalizes.

Pitch Summary:
London-based Willis Towers Watson is one of the largest global insurance brokerage and consulting companies. The company continues to execute on its turnaround plan to improve profitability. The divestiture of its direct-to-consumer insurance distribution business at the end of 2024, however, caused a decline in cash flows for its most recent quarter and weighed on its shares. We like Willis Towers Watson’s high customer retention and ability to participate in nominal economic drift, and we continue to believe that the company’s turnaround plan will help drive growth and improve returns.

BSD Analysis:
WTW delivered around 5% organic revenue growth and double-digit adjusted EPS growth in its most recent quarter, alongside expanding margins and improving free cash flow, reflecting successful execution of its turnaround agenda. The disposal of lower-margin direct-to-consumer operations temporarily reduced reported revenue but improves mix and strategic focus on higher-value advisory and broking. Shares trade at roughly the mid-teens P/E, a modest premium to traditional insurance brokers but below many global professional services peers, suggesting room for re-rating as margin expansion continues. With sticky client relationships, pricing benefits from nominal GDP growth and a cleaner portfolio, WTW offers a compelling compounder profile for long-term investors.

Pitch Summary:
SLB is the world’s largest oilfield service company. In addition to commodity price weakness during the quarter, share performance was dampened by concerns that tariffs and trade uncertainty could negatively impact oilfield service providers. While rig counts and drilling activity have declined this year, the majority of the slowdown has been in North America. In contrast, OPEC+ has increased production, which should benefit SLB given that it derives approximately 80% of its revenue from international and offshore markets.

BSD Analysis:
Recent quarterly results show SLB growing EPS modestly year over year while generating more than $1 billion of quarterly free cash flow, even as North American activity has softened. International revenue still represents about 80% of total, where investment in offshore and Middle East capacity remains relatively robust versus North American shale. The balance sheet is solid, supporting dividends and opportunistic buybacks while funding technology investments and digital initiatives that can lift margins over time. Trading at a low-to-mid-teens forward P/E and single-digit EV/EBITDA, SLB offers attractive exposure to a multi-year international oil and gas investment cycle, albeit with inherent commodity and policy risk.

Pitch Summary:
Becton Dickinson develops and manufactures medical devices, instrument systems and reagents used in a variety of professional and public settings. The company reported lower-than-expected revenue for its most recent quarter because of weakness in its research instrument and diagnostics businesses resulting from lower global research spending and the impact of tariffs. We continue to like Becton Dickinson’s ability to generate cash and its commitment to enhancing shareholder value through stock buybacks and dividends.

BSD Analysis:
Despite a softer quarter in certain research and diagnostics lines, BD’s latest fiscal year showed revenue growth of roughly 8% and high single-digit adjusted EPS growth, underscoring the resilience of its diversified portfolio. Gross margin expansion driven by productivity initiatives indicates underlying pricing power and cost control. The company has returned over $2 billion to shareholders recently via dividends and repurchases, while maintaining investment in innovation across injection systems, infusion therapy and diagnostics. At a mid-20s P/E multiple, BD is not cheap, but offers a high-quality, cash-generative exposure to secular healthcare demand with some cyclical upside as research spending normalizes. Tariff headwinds appear manageable relative to the breadth of the franchise.

Pitch Summary:
Taiwan Semiconductor (TSMC) is the world’s largest semiconductor foundry, a primary manufacturer of advanced chips used in generative artificial intelligence with Nvidia, Broadcom, Intel, Advanced Micro Devices and Apple among its clients. TSMC reported continued strong sales during the quarter, with an expanded contribution from AI. We believe TSMC has extended its edge over competitors to become the de facto foundry for many customers. The company has made significant efforts in recent years to geographically diversify its manufacturing base, including in the US.

BSD Analysis:
TSMC’s monthly sales data show revenue growing more than 30% year over year in recent periods, driven by leading-edge nodes used in AI and high-performance computing. Gross margins remain among the highest in the industry, reflecting its technological lead and pricing power at 3- and 5-nanometer processes. The company is investing aggressively in new fabs in the US and other regions, which creates near-term capex headwinds but strengthens geopolitical resilience and customer stickiness. Shares trade at a premium to the broader semiconductor group on earnings and EV/EBITDA, justified by its dominant share in leading-edge foundry and long-run AI demand. For long-term investors, execution on overseas fabs and continued process leadership are the key variables, but the structural positioning is highly attractive.

Pitch Summary:
Meta—the parent company of Facebook, Instagram and WhatsApp, among other social-media platforms—reported strong revenue and earnings growth during the quarter, driven by increases in both ad impressions and price per ad. The company continued to aggressively invest and hire in AI, even as it develops its core advertising businesses. We believe these results demonstrate Meta’s ability to focus on both profitability and efficiency in conjunction with ongoing investments in the core ad business, the metaverse and other AI applications.

BSD Analysis:
Meta is growing revenue at a high-teens to ~20% clip while maintaining very high operating margins, driving strong free cash flow that funds large-scale buybacks. Despite heavy AI and infrastructure investment, leverage is modest and the balance sheet carries substantial net cash, supporting strategic flexibility. Shares trade at roughly the high-20s P/E, which screens attractive relative to an estimated fair multiple in the high-30s given growth and profitability. The pivot away from loss-making metaverse spend toward AI, along with ongoing user and monetization growth across Reels and messaging, provides multiple avenues for upside. Regulatory and antitrust scrutiny remain overhangs, but the core ad franchise and AI optionality support a constructive long-term view.

Pitch Summary:
Oracle, one of the world’s largest independent enterprise software companies, reported strong results during the quarter, largely driven by its cloud operations, which comprise approximately 75% of revenues. Oracle has benefited from the shift to a cloud-first approach by enterprises and an overall increase in industrywide capital expenditures on artificial intelligence. Strategic partnerships with companies including Microsoft and Alphabet broaden Oracle’s reach to address diverse customer needs. Growth in remaining performance obligations suggests continued strong prospective revenues.

BSD Analysis:
Oracle’s fundamentals remain robust, with total quarterly revenue growing at a low-double-digit rate and cloud services and license support up in the mid-teens year over year, underscoring the durability of its cloud transition. Remaining performance obligations above $400 billion provide multi-year visibility into future revenue streams. The stock trades at an elevated high-40s P/E on trailing earnings, a premium to its historical average, reflecting investor confidence in sustained cloud growth and AI-related workloads. While valuation is demanding, incremental operating leverage from scale and continued expansion of Oracle Cloud Infrastructure can support earnings growth that justifies a premium multiple. Balance sheet strength and recurring cash flow also underpin ongoing buybacks and dividends, which enhance per-share value.

Pitch Summary:
In parallel, companies like Maxar are seeing increased demand for high-resolution satellite imagery to support military operations. Major US tech firms are also developing proprietary satellite networks for internal communications. Until recently, Europe lagged in satellite deployment. That has changed. Recognising the strategic importance of space-based infrastructure, Ursula von der Leyen’s budget has earmarked significant funding for new launches, with a goal of increasing from 2 to 8 launches per year in the near term.

BSD Analysis:
Maxar is a high-stakes play on commercial and government space imagery, geospatial intelligence, and satellite manufacturing. Its WorldView and Legion constellations provide some of the highest-resolution commercial imagery on the planet — a capability increasingly tied to national security, defense analytics, and AI-driven mapping. The company went private to clean up its capital structure and absorb the cost overruns tied to satellite delays, giving it breathing room to execute without quarterly scrutiny. Demand for real-time, high-fidelity imagery has surged as conflict zones and climate monitoring become policy priorities. Maxar also has a meaningful manufacturing arm building satellites for commercial constellations and government customers. The risk is operational execution — Maxar has stumbled before — but the strategic relevance of its capabilities keeps demand durable. If Legion performs as advertised, the equity story could re-rate meaningfully when it eventually returns to public markets.

Pitch Summary:
Park Aerospace manufactures high-performance composite materials (ablatives) used in jet engines and missile systems. Its products are essential to both commercial aerospace and defense applications. Even in the event of a ceasefire in Ukraine, demand appears resilient. Notably, President Zelensky has reached an agreement with former President Trump to purchase $100 billion in military equipment, funded by rising European defense budgets. Anticipating only a temporary ceasefire, Ukraine has already requested 10 additional Patriot missile systems, which require materials that Park Aerospace supplies. Moreover, ongoing demand for commercial engines further supports the company’s growth outlook.

BSD Analysis:
Park Aerospace is a small but highly specialized supplier of advanced composite materials used in aerospace structures, radomes, and defense applications. As commercial aerospace production ramps and defense spending strengthens, Park benefits from rising volumes and a shift toward lighter, higher-performance materials. Its footprint is lean, and once a material is qualified on a platform, it tends to stay there for decades — a big moat for a company of this size. Margins can swing with mix and plant utilization, but Park’s long-cycle content gives it solid visibility. Expansion into next-gen composite technologies positions the company for incremental share gains as airframes modernize. It’s not a household name, but it sits in the slipstream of durable aerospace fundamentals. For patient investors, Park is a subtle but levered way to play aerospace recovery.

Pitch Summary:
The next iteration of NVIDIA’s GPU architecture, Rubin, is scheduled for release in 2026 and is set to significantly alter the energy infrastructure within data centres. We are actively evaluating which companies stand to benefit most from these shifts. The core architectural changes will likely drive: • Increased demand for supercapacitors – miniature batteries that store energy at the chip level. • Greater reliance on advanced semiconductors that enable voltage step-down closer to the chip, with silicon carbide (SiC) and gallium nitride (GaN) emerging as preferred materials over traditional silicon. We are currently assessing a handful of names that may be well positioned, including AEHR Test Systems, Navitas Semiconductor, Delta Electronics, and Aixtron. It's increasingly clear to us that we will hit an energy limitation on data centre development probably around the middle to end of next year. Companies like Argan, Power Solutions International, Tecogen, Bloom Energy, Willdan and Solaris may benefit. While there will be many ways to take advantage of this shortage, we believe the current valuation of these stocks does not yet reflect the future opportunity set, and we are waiting for more attractive entry points. There are many that draw similarities between the current rapid pace of data centre development and the many miles of fibre optic cable that were laid down when the internet was invented. We believe that this analogy is flawed. Fibre infrastructure, once laid, does not scale proportionally with demand. The system does not require a doubling of fibre to support a doubling of usage. In contrast, AI inference and model training are compute and power-intensive tasks that scale non-linearly with usage, and the infrastructure must grow accordingly. A more material threat to demand would be a breakthrough in compute efficiency – a new way of achieving the same computational output with less energy. We continue to monitor this risk.

BSD Analysis:
NVIDIA isn’t just riding the AI wave — it is the wave, with a hardware–software stack so entrenched that hyperscalers effectively budget around Jensen Huang’s roadmap. The company’s dominance in accelerated computing gives it absurd pricing power and margins rarely seen in semiconductors. CUDA remains a formidable moat, locking developers and enterprises into an ecosystem that compounds with every AI model trained. Supply constraints are easing, but demand from LLM training, inference, and AI factories continues to outpace even aggressive capacity expansions. Competition is rising, yet NVIDIA keeps moving up the stack into networking, software, and full-stack platforms where it captures even more value. The risk isn’t whether AI slows — it’s how long NVIDIA can remain the bottleneck everyone is forced to pay. For now, it’s still the house in a casino it built.

Pitch Summary:
Our investments here are unchanged with Friedrich Vorwerk showing significant earnings momentum in Q2. The company cited the potential for far more significant growth as a result of the hydrogen energy pipeline plan the German Cabinet recently passed. The potential scale of the opportunity would be 4-5x more than the revenue the company generated in the last 12 months. The German Cabinet also passed their spending proposal for infrastructure work starting in 2026. We continue to believe that we are early in this infrastructure cycle, with both Friedrich Vorwerk and Strabag well positioned to benefit from the upcoming surge in public sector demand.

BSD Analysis:
Friedrich Vorwerk sits right in the flow of Europe’s massive energy-transition capex, specializing in grid, pipeline, and high-voltage infrastructure work that governments are finally funding at scale. The company’s engineering and EPC capabilities position it as a direct beneficiary of Germany’s push for electrification, hydrogen transport, and grid reinforcement. Backlogs are strong, but execution and workforce management remain the key swing factors in margin performance. These projects are complex and politically sensitive, meaning Vorwerk’s reputation and track record matter more than price alone. The business is cyclical at the bidding level but structurally supported by multi-decade infrastructure deficits. As Europe accelerates hydrogen and transmission build-out, the company’s pipeline should thicken. This is a niche but high-leverage play on the continent’s energy modernization.

Pitch Summary:
Additional pressure came from currency headwinds, with over half of sales generated outside the US. The company did report better-than-expected organic growth in Self Care and Essential Health, reflecting some underlying resilience. Management remains focused on accelerating Health & Beauty growth and leveraging its strong brand portfolio to support longer-term recovery.

BSD Analysis:
Kenvue is a high-quality CPG spin-off that trades at a discount due to post-separation financial noise and short-term organic sales headwinds. The investment thesis is a bet on the structural strength of its billion-dollar power brands (Tylenol, Listerine, Neutrogena) and the eventual realization of massive cost savings and gross margin expansion from supply chain optimization under its "Our Vue Forward" program. The stock is a de-risked play on owning a portfolio of essential, recession-resilient consumer health products with predictable cash flow and high pricing power. The successful, final sell-down by its former parent, Johnson & Johnson, eliminates the technical overhang, positioning Kenvue for a justified multiple re-rating as its operating margins normalize.