Investment Pitches

Pitch Summary:
Among individual stocks, a sizable overweight in capital goods firm Axon (+57%) was the top contributor. The company develops products and technology for the law enforcement industry. It is a high-quality firm with deep competitive moats, including what is essentially a monopoly in the taser business. More recently, Axon has expanded into AI-driven products that enhance police productivity, such as automated report writing and language translators, and these new products have seen strong adoption to date. Axon was our top holding and largest overweight on June 30.

BSD Analysis:
Axon is a public safety vertical monopoly, transitioning from a hardware vendor (TASER) to a high-margin, recurring software subscription model built around its body-cam evidence and digital records platform. The investment is driven by the Services segment flywheel, where hardware is merely a subsidized gateway to lock in municipal agencies for long-term, high-margin software contracts. Axon's structural moat is built on high switching costs, regulatory mandates for digital evidence, and an expanding suite of AI-powered features. This market dominance allows Axon to generate superior Free Cash Flow and execute a long-term compounder story that is protected by government spending stability.

Pitch Summary:
Pepsi was a detractor for the quarter with concerns about tariff impacts to its global beverage and snack businesses. However, Pepsi continues to be an example of a resilient company, enjoying dominant market share and pricing power. U-Haul traded down in large part due to macro sentiment related to its self-storage real estate investment trust (REIT) competitors. The truck rental business is undergoing an anticipated refresh cycle that dates back to supply chain constraints during the COVID-19 pandemic. Management continues to invest in the company with a long-term view that aligns well with our investment philosophy. Another detractor for the quarter was Kenvue, the spin-off of the Johnson & Johnson health division that occurred in 2023. Kenvue has a stable portfolio of well-known consumer brands that we believe will weather this difficult economic environment. The company’s discount to consumer peers has attracted recent activist pressure to drive shareholder value going forward.

BSD Analysis:
Pepsi is a consumer-staples assassin — dominating salty snacks globally while using beverages as a margin lever. Frito-Lay remains one of the strongest brand portfolios in modern CPG, with pricing power and distribution reach Coca-Cola can only envy on the snacks side. Pepsi’s innovation cadence and global distribution scale give it resilience regardless of macro conditions. The stock trades like a sleepy staple, but Pepsi’s execution puts it in the top tier of global brand operators.

Pitch Summary:
Contributors and Detractors Samsung has continued to be a strong contributor this year after being a significant detractor in 2024. It remains one of the most prominent global technology companies, and with its market position in memory chips, foundry, and phones, there are multiple paths to unlock value. South Korea has a new administration in office this year that is focused on closing the “Korean discount” that has existed for decades. The government has passed a broad set of regulatory changes to the Korean Commercial Code and additional legislation is anticipated. South Korea announced its Value-Up program last year, but participation for Korean companies was purely voluntary and adoption was limited. The new regulations require companies to significantly improve governance practices in South Korea, and the equity market should respond accordingly. Morgan Stanley Capital International (MSCI) elected not to reclassify South Korea from Emerging Market to Developed Market earlier this summer, but the new administration has established a taskforce specifically charged with meeting the requirements to be classified as a Developed Market by MSCI. KT&G was also a beneficiary of this regulatory reform, and the company also has aggressively bought back shares. Microsoft® performed well this quarter with strong performance in its cloud business.

BSD Analysis:
Samsung Electronics is a memory-cycle wrecking ball with massive upside as DRAM, NAND, and HBM pricing tighten. AI demand is pushing memory into a supercycle, and Samsung’s vertical integration in foundry, memory, displays, and components gives it unmatched optionality. The preferred shares give you all that leverage at a discount. Samsung’s balance sheet is pristine, capex is aggressive, and its HBM roadmap is improving fast. This is a global tech titan priced like a cyclical commodity name — and that mismatch is the opportunity.

Pitch Summary:
Alibaba was down 12.8%. Bear in mind, this comes off a stunning 55.3% March quarter return. Alibaba reported full year results, and by all accounts they were pretty good. Market chatter suggests some were disappointed by the Cloud revenue, but with 18% growth over the last year, we are not complaining. We liked the continuation of share buybacks, noting that for the year ended 31 March 2025, it bought back over 5% of its shares. Our Alibaba holding accounts for 3.3% of the Fund. We wrote last quarter that we were closely monitoring the position (hinting toward selling). We chose not to act, largely because we see it as one of the cheaper and most direct ways for the Fund to benefit from AI initiatives and Cloud infrastructure growth, and at the same time it provides geographic and economic diversity.

BSD Analysis:
Alibaba is still the backbone of Chinese e-commerce, cloud, and logistics — and the market is pricing it like a dying retailer. Regulatory overhang has eased, the company is cutting fat, and cloud margins are improving as AI workloads ramp. The breakup unwind and low valuation give Alibaba massive rerating potential if sentiment shifts even slightly. Free cash flow is enormous, the core commerce franchise is still dominant, and the balance sheet is pristine. Alibaba is a misunderstood giant trading at distressed-asset multiples.

Pitch Summary:
LyondellBasell (down 15.7%) continues to struggle in the tough plastics market. In March management announced the shutdown of its Propylene Oxide Styrene and Monomer operations at Maasvlakte (the Netherlands), incurring a USD 117m cost to rid itself of a loss making operation. Similarly, in the June quarter it announced the “sale” of four European assets. It is not really a sale. It involves contributing funds to the assets in return for an earnout, and getting rid of liabilities associated with them. By doing so, LyondellBasell is absolving itself of future capital spending requirements (which are somewhat unknowable), resulting in better cash conversion and higher margins (by around 3% at the EBITDA level). We like it! Some assets are better held in private entities. And it is a preferable option to the alternative - shutting them down. Although the net impact of these deals is undoubtedly positive to earnings and cash flow, we remain conservative and have not factored this into our valuation. Amongst the tariff turmoil, LyondellBasell was heavily sold off. It looked too cheap to us, (trading at a 20% discount to our valuation) and we bought more to end the quarter with a 4.5% position.

BSD Analysis:
LyondellBasell is the global chemicals heavyweight investors love to ignore until margins spike — and with capacity rationalizing and global demand stabilizing, the setup is improving fast. Its scale and integration give it cost advantages in polyethylene and propylene chains, and upside from circular polymers and recycling technology is still underappreciated. The dividend is fat, cash conversion is excellent, and the balance sheet supports both buybacks and growth projects. This is a value-cyclical with surprisingly strong defensive attributes.

Pitch Summary:
Robert Half, the recruitment and out placement specialist, was a small position at the start of the quarter. Despite us buying a little more, after falling 23.8% it is an even smaller position now (2.1%). There’s not much we can elaborate on from last quarter’s report. All we can do is point to what appears to be a dichotomy. Whereas the general price levels of equities does not seem to imply too much of a deterioration in economic conditions, Robert Half's share price seems to imply a prolonged downturn. Our valuation, which we think is conservative, is based on a level of maintainable earnings not much higher than its average over an extended period of 10 years. And it trades at a 27% discount to it. Despite that, we fully recognise we may be missing something, and we anxiously await an imminent update as we write this.

BSD Analysis:
Robert Half gets hammered every cycle, yet it remains the premium staffing and consulting operator with a brand Fortune 500 companies trust. Permanent placement is weak — but Protiviti is thriving, and temporary staffing tends to rebound sharply when hiring cycles restart. The balance sheet is pristine, cash flow is strong, and Robert Half always emerges from downturns with more share. This isn’t a broken story — just a cyclically depressed one with torque on the other side.

Pitch Summary:
We have discussed in prior reports that Liberty Broadband (up 15.1%) trades at a discount to its implied price under the agreed deal with Charter Communications (up 10.9%). We didn't expect this to be corrected so soon. The catalyst was the Liberty deal being brought forward as a result of a different Charter deal - its proposed USD34.5 bn merger with Cox Communications. Charter’s Cox acquisition makes perfect sense. Cox is a major player in cable infrastructure - with over 40,000 miles of fiber across 24 states. Acquiring Cox at a multiple of a little over six times expected 2025 EBITDA, the acquisition is immediately accretive to Charter’s earnings. And in this case, the synergies are apparent - even to blind Freddy. It increases passings to 69.5 million (up 21.5%) and customers to 37.6 million (up 19.7%). Irrespective of the Cox deal proceeding, this sped up the Liberty consolidation. And so the discount referred to above narrowed from 8.9% to 1.4%. Meanwhile, back on Liberty turf, remember that its Alaskan operations (GCI) are not part of the Charter consolidation. Liberty’s management provided some indication as to how it sees GCI on a standalone basis. And its Chairman, John Malone, proffered his thoughts that it should trade at a premium to Charter’s earnings multiple, and to expect active management to pursue small bolt-on acquisitions in special situations (possibly distressed sales) focused on and around the communications industry. We are monitoring closely. Liberty represents 5.1% of the Fund.

BSD Analysis:
Liberty Broadband is basically Charter stock on leverage — but the market still isn’t pricing in Charter’s long-term durability. Broadband remains an essential utility with enormous margins, and DOCSIS 4.0 upgrades will extend cable’s competitive relevance far longer than skeptics believe. Liberty’s structure amplifies Charter’s per-share growth thanks to aggressive buybacks. The discount to NAV is real alpha. This is one of the cleanest long-term value dislocations in telecom.

Pitch Summary:
Thor (up 18.1%), the recreational vehicle producer, released third quarter results which highlighted strong margins and cash flow, and management reassuringly maintained guidance. It also announced reauthorization of its share buyback, and that it had recently bought in the order of USD 25m. Thor operates in a cyclical industry which has been at the bottom of the cycle for a prolonged period. Our valuation is largely predicated on “mid-cycle” maintainable owner’s earnings. Thor trades at 10.9 times that level and offers a 9.1% free cash flow yield. We do not see it as expensive.

BSD Analysis:
Thor is the global RV king, and while the RV market is in a downturn, the company’s cost resets and inventory normalization put it in prime position for the next upcycle. Consumers are still committed to outdoor recreation, and pent-up demand will release once rates ease. Thor’s scale, dealer network, and brand portfolio give it margin leverage no smaller OEM can match. Cycles matter here — but Thor’s setup entering the recovery is far cleaner than the market is pricing. This is classic high-beta cyclicality with strong fundamentals underneath.

Pitch Summary:
Both our auto dealerships performed well. Autonation was up 22.7% and Group 1 Automotive was up 14.5%. Just like nature abhors a vacuum, markets commentators like to attribute cause to price movements. We can’t oblige in this case. All that has happened from our perspective is that these businesses continued their accession from cheap investments to those that are more fairly priced (to reach a level which is still far from expensive). Together, they account for 7.6% of the Fund.

BSD Analysis:
Group 1 is one of the most operationally disciplined dealership groups in the U.S., with a heavy tilt toward parts, service, and F&I — the profit engines that keep earnings steady even in choppy auto markets. Its international operations add diversification most peers lack, and management executes with relentless margin focus. Consolidation continues to favor scaled operators like GPI, and the balance sheet gives it room for more M&A. The stock trades cheaply because investors fear the auto cycle, but GPI’s business mix blunts that risk. This is a quietly excellent operator trading at a deep discount.

Pitch Summary:
Both our auto dealerships performed well. Autonation was up 22.7% and Group 1 Automotive was up 14.5%. Just like nature abhors a vacuum, markets commentators like to attribute cause to price movements. We can’t oblige in this case. All that has happened from our perspective is that these businesses continued their accession from cheap investments to those that are more fairly priced (to reach a level which is still far from expensive). Together, they account for 7.6% of the Fund.

BSD Analysis:
AutoNation has turned from a dealership network into a high-margin used-car, F&I, and service powerhouse, with less dependence on volatile new-vehicle volumes. Inventory discipline is tight, margins are strong, and AutoNation’s data-driven pricing keeps it ahead of weaker competitors. The company continues to buy back stock aggressively, shrinking the float while generating strong free cash flow. As the auto market normalizes, AN stands ready to snap up share from smaller, less sophisticated dealers. This isn’t your grandfather’s dealership operator — it’s a capital-allocation machine.

Pitch Summary:
Last quarter we noted Linamar, the industrial manufacturer, was particularly hard hit by the tariffs. That conclusion, logical at the time, now appears incorrect after Trump’s Executive Order of April 29. So the price more than rebounded - it was up 30.6%. And not only is it now expected that there be no direct tariff impact, because Linamar’s products are United States-Mexico-Canada Agreement (USMCA) compliant (and the US is still respecting this), it is now seeing opportunities to become a North American supplier for customers that are currently buying from Asia and Europe (thereby enabling those customers to avoid a 25% tariff). Whilst all this is surely a positive, it doesn’t address the broader issue, which is the slump in auto production. Whilst first quarter results were impressive (with strong market share growth) it is far from being immune. We are cautious, but Linamar is not expensive, trading at a free cash flow yield of 16.2%. It represents 3.6% of the Fund.

BSD Analysis:
Linamar continues to outperform its auto-supplier peers by not acting like one — the company’s industrial and access-equipment divisions give it stability the market underprices. With major wins in EV platforms and North American reshoring tailwinds, Linamar has real growth drivers beyond traditional ICE components. The balance sheet is strong, capital allocation is disciplined, and margins keep creeping higher. Linamar is consistently better run than its valuation implies. The market is late catching on.

Pitch Summary:
The big news came from the management team of one of the Fund’s largest investments. Dick’s Sporting, (down 1.2%) announced its USD 2.5b acquisition of Foot Locker, the mammoth sports footwear retailer with 3,266 stores globally. The claimed rationale was as usual; earnings accretion (but does this come with extra risk); and cost synergies (in the medium term). Ordinarily we would be extremely skeptical, but with Dick’s management team having been conservative and consistently delivering above expectations over the last 7 years, we are only mildly skeptical. Foot Locker has appeared on our radar in the past. Its share price had fallen from the low to mid $20’s late last year to $12.87 at the time of Dick’s $24.00 offer (which was cash with option of scrip). Given this perspective, the “premium” paid is perhaps not so high as it appears. And in any case, of far more relevance, the acquisition multiple is a reasonable 6.1 times adjusted 2024 EBITDA. On the same day, Dick’s announced preliminary first quarter results which were inline with our expectations. Not unexpectedly, the market was more than mildly skeptical about the merger and Dick’s was down 14.6%. Intuition was telling us that, whilst the direction of market movement was appropriate, the extent of it was a little too drastic. We bought more. Not long later Dick’s reported official first quarter results and re-affirmed its guidance. We made some minor tweaks to our numbers. On our analysis this business is generating returns on total capital in the high 30% range, and trades at an owner’s earnings yield of 6.5%. We are happy to maintain our 6.8% position.

BSD Analysis:
Dick’s is still the undisputed heavyweight champion of U.S. sporting goods retail. Its private brands (CALIA, DSG, VRST) are margin machines, and no competitor can match its combination of scale, assortment, and omnichannel execution. Store remodels and experiential layout upgrades keep customers loyal, and the Pro customer base is becoming a legitimate profit engine. The market treats Dick’s like a cyclical retailer, but its loyalty, private label, and category dominance say otherwise. This is a premium business in a sector full of mediocre operators.

Pitch Summary:
HZO faced pressure this quarter as retail boat sales continue to normalize post-COVID, compounded by higher interest rates. That said, the company is quietly transforming its business model by increasing its mix of service, storage, and marina operations—higher-margin, recurring revenue streams that improve business quality and reduce cyclicality. The market seems focused on the next quarter. We're focused on the next few years. We added slightly to our position at what we believe are attractive long-term prices.

BSD Analysis:
MarineMax is the luxury boat dealer the market always buries during down cycles — and that’s usually the best time to buy it. Inventory normalization is underway, high-end buyers haven’t disappeared, and MarineMax’s acquisition spree has created a vertically integrated marine retail empire. Its service, storage, and marina operations throw off sticky recurring revenue that traders constantly underestimate. The company’s customer base is wealthy, loyal, and largely rate-insensitive compared to mass-market discretionary categories. Sure, cyclicality is real, but MarineMax enters the recovery leaner and more profitable than previous downturns. When demand rebounds, MarineMax’s operating leverage tends to hit in one violent upward move.

Pitch Summary:
Vox continues to build value through disciplined royalty acquisitions and cash-flowing assets in Tier 1 jurisdictions. This quarter brought updates on multiple key projects advancing toward production. With more than 60 royalties, several near-term catalysts, and a capital-light model, Vox is well-positioned to grow free cash flow without the dilution or capex risk that plagues traditional miners. We continue to believe the market underappreciates the earnings power and embedded optionality in the portfolio.

BSD Analysis:
Vox Royalty is a tiny royalty shop punching way above its weight by buying assets the big boys overlook. Its portfolio is packed with near-term producing royalties that carry massive optionality if metal prices tighten — especially gold, copper, and battery metals. The company’s insane deal flow engine surfaces high-IRR royalties faster than peers, and its asset-light model converts revenue into cash with mechanical efficiency. Management is disciplined, balance sheet is clean, and the company is building scale without dilution bombs. The market treats Vox like a speculative microcap, but the royalty model offers asymmetric upside with muted operating risk. If commodity prices cooperate, Vox’s cash flow acceleration could surprise the sector.

Pitch Summary:
RICK is the only publicly traded owner of adult nightclubs in the US. Currently they own 57 clubs across 13 states and an additional 12 sports-bar restaurants with the “Bombshells” concept. With few municipalities issuing new adult entertainment licenses these businesses function as local monopolies with excellent unit economics. These clubs have limited potential buyers with RICK establishing themselves as the buyer of choice for any club owners looking to sell. This provides a long runway for growth. RICK continues to do what it does best—generate cash, reinvest it intelligently, and grow shareholder value. They remain the dominant consolidator in the gentlemen’s club industry, a space with over 500 targets that meet their acquisition criteria and very little real competition. The most recent quarter showed steady operating results and strong free cash flow. The stock remains undervalued relative to normalized earnings power, especially given the capital allocation discipline this management team has shown.

BSD Analysis:
RCI is the cash-flow monster that traditional investors pretend they’re too classy to own — meanwhile, it’s out-executing half the consumer space. The nightclub portfolio throws off absurd margins, and RCI keeps rolling up operators who can’t match its discipline or regulatory expertise. Bombshells, once dismissed as a gimmick, has turned into a legitimate high-ROI restaurant chain with national expansion potential. Management is ruthless on capital allocation — buying assets cheap, improving operations, and letting cash flow do the talking. Leverage is controlled, returns on capital are elite, and regulatory noise is mostly just noise. At today’s multiple, the market is still pretending nightlife is a moral hazard — but RCI is proving it’s a durable, cash-printing operating model.

Pitch Summary:
European Residential REIT, a TSX-listed Dutch multifamily REIT controlled by CAPREIT, is liquidating after a series of asset sales at or above IFRS NAV. Since mid-2024, it has sold €1.29 billion of assets versus €1.27 billion of book, and returned value through special distributions totaling C$1.9 per unit in 2024–25. With only ~1,000 units left (down from 6,700), management is running a formal process with CBRE and Ruben Capital to sell the remainder. Buying at C$2.6 implies recovering most of the basis in September via a C$0.9 distribution, with final liquidation proceeds by year-end implying a strong IRR.

BSD Analysis:
This is a classic liquidation play with visible downside protection. Management has proven capable of selling assets at NAV or better to institutional buyers like Fortress and Dream Unlimited. Tax treatment and low liquidity are the main constraints, but in a tax-sheltered account, the setup is compelling. Risks are limited to wind-down costs and execution timing. For investors seeking a short-term, catalyst-driven return, ERE.UN offers an unusually clear path to value realization within months.

Pitch Summary:
The idea is to use cheap long-dated put options on a basket of speculative stocks—Palantir, Robinhood, Coinbase, and Netflix (subbed for illiquid Applovin)—as a portfolio hedge. These stocks are trading at euphoric multiples far above their 2022 trough valuations. If they merely revert, option payoffs could be 10–25x. For example, Palantir at 76x sales could fall to 9x, while Coinbase’s revenue base is vulnerable to fee compression and crypto cycles. Robinhood and Netflix show similar fragility. Allocating 1–2% of a portfolio to this hedge can provide asymmetric downside protection in a crash or prolonged correction.

BSD Analysis:
This hedge idea emphasizes optionality and asymmetry rather than fundamental value. The PARC basket represents fragile, high-beta names that could collapse if sentiment shifts. Compared to expensive traditional hedges like Costco puts, PARC options are unusually cheap. Risks are limited to premium paid, while upside protection is substantial. It is not a call on timing but recognition that bubbles burst unpredictably. This makes the strategy attractive for value investors seeking portfolio insurance at a low cost.

Pitch Summary:
Pioneer Power has transformed following the divestiture of its e-Bloc segment in 2024, leaving it with e-Boost mobile EV chargers and the soon-to-launch HOMe-boost generator. After a $16.7m special dividend, the company has $25m net cash versus a $35m market cap, creating a strong balance sheet for a microcap. e-Boost is gaining adoption from school districts and transit agencies needing charging solutions without permanent infrastructure, winning multiple multimillion-dollar orders in 2024–25. Federal programs like the EPA’s Clean School Bus and the FTA’s low/no emission grants provide tailwinds, with thousands of EV buses expected 2025–27. HOMe-boost, launching in 2H25, targets luxury homes and small businesses with a unique prime-rated backup power and EV charging solution, priced at $45–65k per unit. e-Boost revenues grew from $1m in 2023 to $23m in 2024, with $27–29m expected in 2025 and margins guided toward 30%. CEO Nathan Mazurek, a 20% owner, aligns incentives and has a track record scaling PPSI’s businesses. Valuation is highly discounted at <3× 2025 EBIT and ~1× book, with peers ENS and GNRC trading at 9–20×. Risks include order lumpiness and funding program uncertainty, but upside potential is significant if execution continues. The thesis frames PPSI as a deep-value, growth-inflected microcap.

BSD Analysis:
PPSI’s net cash equals ~70% of its market cap, providing downside protection, while demand for mobile charging is underpinned by structural EV adoption and grid bottlenecks. HOMe-boost provides upside optionality if adoption scales, especially among high-end residential and small commercial users. Execution risk remains high for a microcap, but order wins validate the product-market fit. Compared to peers, PPSI trades at an extreme discount, suggesting asymmetric risk-reward.

Pitch Summary:
DigitalOcean positions itself as a developer-friendly cloud infrastructure provider but is criticized for accounting maneuvers, related-party transactions, and weak fundamentals. The short thesis argues that its core business is stagnating, with growth propped up by acquisitions, while GPU rental operations face intense competition from better-capitalized peers. DOCN has $1.5B converts due in 2026, creating refinancing risk that could consume cash flow and expose shareholder dilution. Related-party entities linked to Access Industries allegedly obscure true expenses and inflate profitability, especially in China GPU sales. Governance issues are underscored by repeated material weaknesses, restatements, and a revolving C-suite. The company has redefined KPIs, extended depreciation schedules, and excluded key capital costs to present artificially strong free cash flow metrics. Regulatory risks loom as U.S. export restrictions tighten on GPU sales to China, threatening a material portion of revenues. Despite past share buybacks, dilution remains due to high SBC, and free cash flow generation is questioned. Valuation frameworks suggest >60% downside, with comparisons to Rackspace or OVH implying much lower multiples. The author concludes DOCN’s equity could be option value if GPU economics and balance sheet risks materialize.

BSD Analysis:
DigitalOcean’s challenges mirror over-levered roll-up models where acquisitions mask core weakness. The reliance on Access Industries-linked entities raises red flags around transparency and governance. Competitive disadvantage in GPUs, combined with tightening U.S.–China regulations, could impair growth further. The balance sheet’s heavy convert load makes dilution or refinancing a key risk, while KPI and FCF manipulations erode credibility. Compared to peers like OVH or hyperscalers, DOCN appears structurally subscale and overpriced.

Pitch Summary:
AAR Corp is positioned to benefit from an aging global aircraft fleet and increasing demand for maintenance, repair, and overhaul (MRO) services. The 2024 acquisition of Triumph Product Support enhanced its component repair capabilities, expanded its parts distribution mix, and opened opportunities in proprietary PMA parts. With strong visibility toward ~20% EPS growth for the next 2–3 years, AAR is deleveraging and creating optionality for buybacks and M&A. Its Parts Supply segment, which holds ~10% market share, benefits from OEM partnerships and aftermarket growth, while its USM segment provides a natural hedge. MRO operations are expanding with new hangars in Oklahoma City and Miami, backed by secured contracts. AAR also owns Trax, an ERP platform cross-sold to airlines with growing revenue per customer. Margins have expanded as the company divests lower-margin operations, and management now guides organic sales growth of 5–10% and EPS growth of 10–15%. Comparisons to peer VSEC suggest valuation upside as AAR trades at a discount despite improving business quality. Overall, the pitch emphasizes structural tailwinds, margin expansion, and a rerating opportunity.

BSD Analysis:
AAR’s improving mix toward higher-margin distribution and ERP provides more stability and earnings leverage. The company’s deleveraging profile strengthens the case for multiple expansion, especially as it benefits from OEM outsourcing trends. Risks include cyclicality in aircraft demand and execution on PMA growth without alienating OEMs, but secular demand for MRO capacity provides a long runway. With VSEC trading at much higher multiples, AAR has room to rerate as investors recognize its quality improvements.