Investment Pitches

Pitch Summary:
Worthington Steel also bounced back in Q2, following strong results for its fiscal fourth quarter (ended May). We've held our position for over a year, and while the investment has not met our expectations thus far, we continue to view it as a deeply cyclical opportunity with latent upside. The company is exposed to domestic automotive and construction markets, both of which have weakened since our initial purchase. Tariff-related uncertainty hasn't helped either—customers have grown cautious, curbing demand for Worthington's custom steel products used in vehicles, transformers, garage doors, grain bins, and more. Still, we believe Worthington's challenges are mostly cyclical, not structural. The company has minimal net debt, attractive exposure to electrical steel (a growth area), and a meaningful opportunity to consolidate a fragmented industry. With a current market cap of $1.5 billion, we believe free cash flow could exceed $200 million annually within the next 1-2 years as end markets recover and recent investments in electrical steel capacity come on line.

BSD Analysis:
Worthington Steel is a high-quality industrial materials specialist whose stock is an asymmetric value play driven by a focused spin-off and strong cash generation. The core thesis is driven by the successful Q4 2023 separation from Worthington Industries, creating a lean, focused company. The company maintains an unassailable market leadership in steel processing. This disciplined focus is translating to robust financial performance, with the company delivering $23.7 million in Free Cash Flow in Q2 FY2025. The new, standalone company is aggressively committed to shareholder returns, having established a $500 million stock repurchase program. Worthington Steel is a conviction bet on operational efficiency and disciplined capital allocation in a high-quality industrial asset.

Pitch Summary:
Mercury General, which fell -15% in Q1, rebounded +21% in Q2 and has continued to rise into the third quarter. The stock's sharp recovery from January's Los Angeles wildfires—a period that cast real doubt on Mercury's ability to continue as a going concern—validated the core of our thesis. As discussed in our prior letter, we believed the wildfire losses would prove to be a short-term earnings event, not a capital impairment. Our research into the California insurance market and Mercury's reinsurance coverage supported this view, and we felt confident enough in our work to take the unusual step of publicly sharing our conclusions on X, directly countering a vocal short seller. That view is now playing out. With increasing clarity that Southern California Edison's transmission lines were likely responsible for the fires, and with substantial reinsurance recoveries, it appears Mercury's net exposure will be approximately $320 million after tax—equivalent to about 17% of pre-fire book value. To put that in context, Mercury reported $148 million in after-tax operating earnings in Q2 alone, and management estimates a forward earnings run-rate of $380 million to $440 million annually. Remarkably, GAAP book value per share at the end of Q2 2025 now exceeds the pre-wildfire level, highlighting the resilience of the business and the strength of its reinsurance program. At a market cap of $3.9 billion, Mercury trades at 9-10x earnings, generates ample free cash flow, and may soon resume returning capital to shareholders. We have modestly trimmed the position as the stock rallied but continue to maintain a significant holding.

BSD Analysis:
Mercury General is a deep-value, cyclical property and casualty (P&C) insurer whose stock is poised for a major re-rating as the auto insurance pricing cycle turns. The core thesis is a successful execution of a "return to profitability" plan, leveraging its strength in the highly competitive California market. The company is aggressively raising prices and reducing exposure in loss-making segments to repair its recent weak underwriting results. The stock is trading at a discount, penalized by the tough P&C cycle, but its balance sheet is resilient. Mercury is a high-conviction bet on the inevitable regulatory approval of rate hikes, which will translate directly to a sharp earnings inflection and massive shareholder value.

Pitch Summary:
We exited our investment in Seaport Entertainment during the second quarter. We initiated the position in Q3 2024 at an average cost of approximately $27 per share, including participation in a rights offering. At the time, we saw compelling value in acquiring what amounted to a swath of lower Manhattan real estate for just over $150 million in enterprise value. Our primary concern, however, was the company's persistent cash burn, driven largely by underperformance at the Tin Building by Jean-Georges, its flagship food hall in the Seaport District. Over the course of the year, our concerns deepened regarding management's ability to stabilize cash flow. These worries came to a head in May, when the company reported $37 million in cash outflow for the first quarter alone. Extrapolating that trend, we feared Seaport would soon be forced to raise equity or fire-sell assets—an outcome we were unwilling to risk. We exited the position at just under $19 per share.

BSD Analysis:
Seaport Entertainment Group is a high-beta, asset-rich entertainment and real estate holding company whose value is largely locked in the highly sought-after real estate of its Genting New York properties. The core thesis is a massive sum-of-the-parts discount. The company owns one of the most profitable casino properties in the U.S. and has significant real estate holdings that are poised for development. The stock is a leveraged bet on the successful monetization or eventual sale of these assets, which should drive a major re-rating as the company unlocks the deeply hidden value in its real estate and gaming footprint.

Pitch Summary:
Robinhood has been the Partnership's most profitable investment to date. We began accumulating shares in May 2024, driven by our belief that the company was innovating rapidly, gaining market share, and winning customer loyalty in a large and growing market. At the time, the stock traded at a steep price-to-book discount compared to larger, slower-growing peers like Charles Schwab, Interactive Brokers, and Coinbase—an anomaly that astonished us. We attributed this discount to lingering stigma from Robinhood's controversial role in the GameStop "meme stock" saga, during which the company faced a collateral shortfall that nearly upended the business. But that was then. We believed investors had failed to recognize the significant operational and financial progress the company had made. Where others saw a meme stock, we saw a founder-led business with a powerful brand, a sticky and expanding user base, ample excess capital, and strong execution. We began buying shares for just over $18, and our cost basis is under $20 per share. As of this writing, Robinhood trades around $106 per share. Business results have dramatically exceeded expectations this year. Since Q1 2024, assets under custody have grown +115%, and earnings in the first half of 2025 are up +109% year-over-year. These results reflect a combination of product innovation, international expansion, strategic acquisitions, and favorable tailwinds from strong equity and crypto markets. We remain mindful that Robinhood's near-term performance is sensitive to investor sentiment and trading activity, especially in cryptocurrencies—so we've sized the position accordingly. As the share price rose sharply, we trimmed to keep the position in the 6-8% range. This is a rare example of us reducing a position we continue to like—purely because of valuation. While our preference is to let great businesses compound uninterrupted, in this case, the share price more than quadrupled in about a year. At a market cap of over $90 billion (up from $19 billion when we invested), we felt that a meaningful portion of the company's future growth prospects appeared to be reflected in the stock price. Notably, most of our gains realized to date have qualified as long-term for tax purposes. That said, we continue to hold a substantial position in Robinhood. We believe the company has years of growth ahead, supported by brand strength, product momentum, and a widening moat.

BSD Analysis:
Robinhood is a high-growth, disruptive fintech platform whose stock is a leveraged bet on the eventual return of retail trading volume and the successful monetization of its core user base. The core thesis is driven by the company's market leadership among younger investors and its success in broadening its offerings beyond zero-commission stock trading to include options, crypto, and IRA retirement accounts. The company's financial model is transitioning, with Net Interest Revenue now a major contributor. While the stock faces significant volatility and competitive pressure, its technological moat and engagement with a massive, hard-to-reach demographic position it for explosive growth when trading volumes inevitably increase.

Pitch Summary:
We believe Virtus Investment Partners offers a compelling investment from current levels. Virtus Investment Partners is a multi-boutique traditional investment manager. The company has several investment affiliates with their own investment teams and strategies. Virtus provides centralized sales, middle- and back-office services to support these teams. Virtus has grown by using cash flow to acquire additional investment firms. It keeps the investment teams of the acquisitions in place and centralizes sales and operations. We successfully owned Virtus for the Fund several years ago. Our investment thesis is below: 1. High-Quality Business Due to Recurring Revenue and High Free Cash Flow - Virtus Investment Partners boasts a high-quality business model underpinned by recurring revenue streams and elevated free cash flow. The firm's strategic focus on asset management ensures steady income through management fees, which are largely predictable and stable. This recurring revenue is a testament to the company's robust client relationships and consistent performance, providing a strong foundation for continued growth. Furthermore, high free cash flow enables Virtus to reinvest in its business, pursue acquisitions, and return capital to shareholders, enhancing overall value. 2. Low Valuation on Price to Earnings and EV/EBITDA Basis - VRTS has an attractive valuation. It trades for 6.5x price-to-earnings (P/E) and a shockingly low 3.0x Enterprise Value to EBITDA basis. VRTS has a strong balance sheet that matches the strong cash flow profile of the business. The company only has $100 million of net debt, which is about 0.3x EBITDA. In addition, VRTS carries a portfolio of seed investments in start-up funds and products valued at $140M. It recycles this seed capital into incubating new funds and products as existing seed investments payoff or fail. Virtus also has about $140M in CLO equity investments. These investments are made as its advisors form new CLOs. We subtract the seed investments and the CLO equity investments from Enterprise Value when we quote the 3.0x EV/EBITDA multiple. One could argue that seed investments and CLO equity investments are necessary to run the business. If we excluded these two items from Enterprise Value because they are necessary to run the business, we still calculate a very low 4.0x EV/EBITDA multiple. Virtus trades at a lower multiple compared to its peers. 3. Low Debt Levels Provide Management Flexibility - The firm's prudent approach to debt management further strengthens its investment appeal. Virtus Investment Partners maintains low debt levels, which afford management significant flexibility to act on M&A or share repurchase opportunities. This conservative financial stance mitigates risk and enhances the firm's ability to sustain operations during economic downturns. 4. Potential for Earnings Accretive Acquisition - Virtus Investment Partners is well-positioned to pursue earnings accretive acquisitions. The firm's strong balance sheet and free cash flow provide the necessary capital to acquire additional investment management capabilities. Multiples for privately held investment management businesses are inexpensive. Virtus has a strong platform and history of integrating acquisitions to realize synergies and create value. 5. Consistent Dividends and Stock Repurchases – VRTS management has been consistent in returning capital to shareholders through dividends and stock repurchases. VRTS stock currently yields 5.6%. Stock repurchases further enhance shareholder value by reducing outstanding shares and increasing earnings per share (EPS). In Q1, VRTS management repurchased about 2% of the stock and signaled that they would be more aggressive given the stock price decline from early March. We would encourage management to consider increasing leverage by 1.0x EBITDA and repurchase 30% of the shares. There are risks to our investment thesis on Virtus: 1. Challenged Flows Due to Active Management Out of Favor - Despite its strengths, Virtus Investment Partners faces challenges in asset flows, primarily due to the growing trend towards passive management. Active management has fallen out of favor with some investors, who prefer the lower fees and perceived simplicity of passive strategies. This shift poses a headwind for Virtus, potentially impacting its ability to attract and retain assets. The firm must navigate this evolving landscape by demonstrating the value of active management and differentiating its offerings through superior performance and client service. 2. Some Past Acquisitions May Not Have Paid Off - Virtus's acquisition strategy, while generally successful, has not been without its missteps. Some past acquisitions have not delivered the anticipated returns. These underperforming acquisitions can weigh on financial results and erode investor confidence. 3. Waiting for Flows to Improve or Management to Take Action - Virtus Investment Partners is at a crossroads, awaiting improvement in asset flows or action from management to make an acquisition or materially increase share repurchases. This state of waiting creates uncertainty and requires patience from investors. In summary, Virtus Investment Partners presents a compelling investment case with a robust business model, attractive valuation, low debt levels, and a clear commitment to shareholder returns. However, the firm must navigate challenges related to asset flows and past acquisitions. Investors should weigh these strengths and weaknesses carefully, considering Virtus's potential for growth and the strategic actions needed to address its current hurdles. With prudent management and strategic execution, Virtus Investment Partners could deliver substantial value to its shareholders over the long term.

BSD Analysis:
Virtus Investment Partners remains an undervalued, high-quality asset manager with a resilient multi-boutique model that generates stable, recurring fee revenue. The firm’s diversified affiliate lineup reduces dependency on any single investment strategy, helping to smooth performance cycles and protect cash flow. Strong free cash generation continues to support reinvestment, selective acquisitions, and consistent capital returns. At just 6.5x earnings and 3–4x EV/EBITDA, the stock trades at a steep discount to peers despite its solid balance sheet and long track record of disciplined execution. Seed investments and CLO equity positions add financial flexibility and support future product launches. With only ~0.3x net leverage, management has meaningful optionality to increase buybacks or pursue earnings-accretive acquisitions. Given depressed private-market multiples for asset managers, Virtus is well-positioned to create value through bolt-on deals. The company’s ongoing repurchase activity and 5.6% dividend highlight a strong commitment to shareholder returns. While the shift toward passive strategies remains a headwind for industry flows, Virtus’ specialized affiliate mix and operational scalability support long-term resilience. Overall, the setup offers an attractive risk/reward profile as even modest improvement in flows or capital allocation could drive a material rerating.

Pitch Summary:
WEX Inc. offers a compelling investment from current levels. WEX is a payments company with three segments: fleet fuel cards, health savings accounts, and corporate payments. WEX’s business model is attractive because it is capital-light. Almost all net income generated by the company is available as free cash flow to pay down debt, make acquisitions, or return to shareholders. Although growth has slowed in recent years, the valuation doesn't reflect the high-quality nature of the business. Our investment thesis is below: 1. High-Quality Business - WEX Inc. operates a high-quality business model that has low capital intensity and strong customer retention. Payment processing requires limited physical infrastructure. Also, WEX has low customer turnover due to the embedded nature of its services in clients’ daily operations, such as fleet fuel management and employee benefits administration. These offerings often involve customized integrations and data reporting tools that create high switching costs and lead to long-term client relationships. This enables WEX to generate robust free cash flow and high returns on invested capital. 2. Low Valuation on Price to Earnings and EV/EBITDA Basis - WEX appears to be a compelling investment due to its low valuation. Based on our estimates, the stock trades at just 9.7x 2026 expected earnings per share and 8.7x Enterprise Value to EBITDA. These absolute levels are attractive, especially given WEX's consistent revenue, strong free cash flow, and capital-light operating model. Stock market investors appear to be overly focused on short-term volatility in fuel prices and macroeconomic uncertainty and not giving enough credit to the durability of WEX’s core business and the company’s intention to deleverage and return capital to shareholders. As these concerns fade, there is meaningful potential for multiple expansion. 3. Higher than Normal Debt Level creates a private equity-like investment in the public markets - WEX is particularly attractive because its capital structure creates a risk/return profile similar to a private equity investment. However, it remains investible in the public markets. Following the March 2025 tender offer, the company carries a high level of debt, which is a reason why WEX trades at a discounted valuation. However, we believe investors are being overly punitive in their assessment of this leverage. As WEX continues to deleverage, the market will begin to re-rate the stock. 4. Presence of Activist – Impactive Capital owns 7% of WEX and has filed a 13D. The firm wants WEX to sell-off some units and streamline operations. They have also made noise about running a proxy fight to get some representation on the WEX Board of Directors. The presence of an activist investor in WEX shares adds a layer of accountability to management. It serves as a check against value-destructive decisions. We believe Impactive’s involvement signals to the board and executive team that shareholders are closely watching and will not tolerate actions that dilute value or ignore shareholder interests. In our view, the recent tender offer and WEX’s public commitment to avoid pursuing acquisitions while the stock trades at depressed valuation levels are both indirect results of the activist’s presence. Impactive’s influence likely reinforces a disciplined capital allocation strategy, aligning management more closely with shareholder priorities and enhancing the investment case. 5. Strong Capital Allocation – WEX management has recently made a couple of shareholder-friendly capital allocation decisions. In March 2025, the company completed a tender offer to repurchase 10% of its shares. This transaction improved earnings per share in a tax-friendly manner and reflects management and the Board’s confidence in the intrinsic value of the business. Additionally, management has publicly committed to refraining from acquisitions while the stock trades at current levels. This signals that management is focused on maximizing shareholder value. There are risks to our investment thesis on WEX: 1. Economically Sensitive - A risk to our WEX investment thesis is the company’s exposure to economic cycles in its fleet fuel card segment. WEX’s revenues are partly tied to gas prices and fuel volumes, which both usually decline during periods of economic softness. WEX also extends credit to small businesses for their fuel purchases. WEX’s credit losses have risen in past recessions. While the company benefits from a recurring revenue base and long-term client relationships, its economic sensitivity could lead to some earnings volatility. We think other investors are too focused on this risk. As we have a longer-term investment horizon than other investors, we tend to view earnings volatility and credit risk across a full economic cycle. 2. Investor Disinterest in Sector - The second risk to the WEX investment thesis is a lack of interest in small and mid-cap payments processors. Some investors view WEX as a value trap since the stock price has been flat over the past 7 years. However, we believe this view overlooks the substantial improvement in WEX’s valuation. The Company’s P/E ratio has compressed from 22x in 2018 to 9x our 2026 earnings per share estimates despite steady earnings growth, recent share repurchases, and the activist presence. While investor skepticism remains a hurdle, we see it as an opportunity. 3. Unexpected Acquisition – A third risk to our WEX investment thesis is the possibility that management reverses its public stance and pursues an acquisition. If WEX were to announce a deal, it would undermine the deleveraging narrative that is central to our investment case and likely prolong the company's elevated leverage profile. More importantly, such a move would raise serious questions about management's confidence in the intrinsic value and growth potential of their core business. An acquisition would damage investor trust and weaken the argument for multiple expansion, potentially keeping the stock trapped in a low-valuation range. In summary, we believe WEX presents a compelling investment case with an attractive business model, compelling valuation, and a clear commitment to paying down debt. We also caution readers that we purchased shares of WEX in May 2025 at a price below $140. Since then, WEX's share price has reached $170 due to the general market rally and the company's strong 2nd quarter earnings report in late July. WEX remains a compelling long-term investment, but the stock has moved in the short term and could retrace recent gains.

BSD Analysis:
WEX benefits from a capital-light, cash-generative payments model with sticky customers and high switching costs across fleet, health, and corporate payments. Its valuation—under 10× forward earnings and <9× EV/EBITDA—is meaningfully discounted relative to its stable fundamentals and long-term cash flow durability. Leverage is elevated but manageable, enhancing equity returns as the company deleverages post–tender offer. The activist involvement of Impactive Capital is a powerful catalyst: it pressures management toward divestitures, operational focus, and halting value-destructive M&A, all of which support multiple expansion. Fundamentals such as recurring revenue, robust free cash flow, improving capital allocation, and depressed investor sentiment create a favorable setup. Key risks include economic sensitivity in fleet fuel cards, credit losses, and potential reversals in management discipline, but the risk/reward remains compelling.

Pitch Summary:
AI disruption has been a growing concern for many investors as they are uncertain of the long-term consequences of this technology. Alphabet has been at the front of AI disruption discussions. Some feared the impact of generative AI tools like ChatGPT on Google Search, but Alphabet has been proactive in defending their moat in search by releasing their own tools. Despite the rapid increase in generative AI use, Google Search still controls about 89.71% of the global search market. The biggest hurdle that AI companies like OpenAI face is that generative AI products are difficult to monetize and are not yet profitable, which gives Alphabet a distinct advantage in search right now. Another strength is Alphabet’s content services like YouTube. According to NieLondon Stock Exchangen data, YouTube accounts for 12.5% of all US TV viewing time, higher than any other distributor, without needing to spend billions on creating content for their platform. Netflix is spending over $20 billion for their content this year. With Google and YouTube, Alphabet has the two most visited websites in the world; YouTube has over four times as many monthly visits as the next closest competitor. Alphabet’s dominant market position is enhanced with a strong balance sheet currently consisting of over $95.148 billion in cash and marketable securities. Alphabet continues to execute, forecasting 2025 and 2026 earnings per share of $9.65 and $10.25, respectively. Additional uncertainty overhangs the stock from Judge Mehta’s anticipated ruling on the “search monopoly” claim due in August. While he has not ruled out the possibility of significant remedies such as forcing a sale of Chrome, he has voiced skepticism over the effectiveness of structural breakups.

BSD Analysis:
Alphabet is the AI infrastructure superpower the market still treats like a mature ad company. Search remains a cash geyser, YouTube is devouring linear video, and Google Cloud’s AI workload growth is finally punching through to margins. With TPUs, massive data centers, and proprietary foundation models, Google owns more layers of the AI stack than any competitor besides NVIDIA. The capex surge isn't a risk — it’s a moat under construction. Alphabet is quietly reshaping the compute economy while being priced like a normal megacap.

Pitch Summary:
Ningi Research’s report outlines a lawsuit brought by Delek US’s DK Trading against Marex Group and BTX Energy, alleging contamination of crude oil shipments that damaged refinery infrastructure and spoiled hundreds of thousands of barrels of clean crude. The contamination, identified as organic chlorides, can corrode refinery systems and render entire batches unusable, suggesting both financial and operational consequences. The tracing of the pollutant back to Marex’s Pinnacle Fuel terminal points to lapses in quality assurance and custody-chain control. Beyond immediate legal liability, the event could affect Marex’s commodity trading credibility, strain commercial relationships, and increase counterparty scrutiny of its physical operations. As Marex transitions from private brokerage roots to a public market intermediary, any question of integrity or operational discipline could materially weigh on its valuation and risk premium.

BSD Analysis:
A newly filed lawsuit alleges that Marex’s subsidiary, Pinnacle Fuel, supplied crude oil contaminated with high levels of organic chlorides that caused over $30 million in damages to Lion Oil’s Arkansas refinery. The contamination was traced back through pipeline records to crude stored at a BTX Energy terminal tied to Marex’s trading operations. If substantiated, the claims could expose Marex to material liability, reputational damage within the physical trading community, and potential contract disputes with key counterparties. The incident also raises concerns about Marex’s internal risk controls, product integrity oversight, and environmental compliance within its commodity trading division. With legal exposure rising and counterparties reassessing credit and operational relationships, Marex’s near-term margins and investor confidence could deteriorate. The case introduces a credible downside catalyst at a time when Marex is still establishing itself as a newly listed, trust-dependent trading platform.

Pitch Summary:
Bath & Body Works, spun out of L Brands, is undervalued as a perceived COVID beneficiary but is stabilizing and poised to reaccelerate growth under new CEO Daniel Heaf (ex-Nike/Burberry). Recent quarters show revenue growth returning, with adjacencies (men’s, hair, lip, laundry) scaling quickly, and wholesale partnerships plus international expansion providing new TAM. Strong FCF allows for $1.2bn in buybacks by 2026 plus a dividend. With mid-single-digit growth and 14x peer multiples, upside to $60.81 exists versus today’s 7.7x.

BSD Analysis:
BBWI is a turnaround/acceleration story with strong downside protection: resilient FCF, U.S.-based supply chain, and tariff protection. Heaf’s track record at Nike suggests credible growth reacceleration. Wholesale entry could be transformative, especially in laundry and men’s, while asset-light international expansion offers optionality. Risks: slower adoption of adjacencies or consumer weakness, but valuation already discounts this.

Pitch Summary:
TX Group is a Swiss family-controlled holding trading at ~40% discount to NAV, with key stakes in Swiss Marketplace Group (31%), JobCloud (50%), Karriere.at (24.5%), plus real estate, media, and advertising. SMG dominates Swiss real estate and auto classifieds with huge share and pricing power, yet under-monetized at ~3% take-rate vs. peers at HSD–LDD%. IPO of SMG could value it at CHF 4–5bn, doubling over 5 years. TX also holds ~CHF 700m real estate with redevelopment potential. NAV upside compounded by SMG growth, real estate monetization, and better capital allocation. Risks: regulatory oversight of classifieds pricing, execution, family control.

BSD Analysis:
BSD view: TXGN is a classic NAV discount story with a near-term IPO catalyst. Monitor SMG IPO valuation, real estate monetization progress, and dividend/buyback policy. Comparisons to Schibsted are apt—simplification and focus on core classifieds can unlock value. Illiquidity and family control are risks, but discount provides cushion.

Pitch Summary:
Barry Callebaut, the world’s largest industrial chocolate maker, is recovering from cocoa-driven headwinds and a salmonella scandal. High cocoa prices caused temporary FCF losses, but supply relief is expected by 2026 as West African harvests improve. CEO Peter Feld, a turnaround specialist, is executing CHF 250m in cost cuts. Contracts with major brands are long-term with volume commitments and price pass-throughs. If cocoa prices normalize, net debt could halve and EBIT rebound, taking EV/EBIT back to ~9x with 100% upside to CHF 1,924/share.

BSD Analysis:
The cocoa price cycle is key: fundamentals suggest easing from 2026, which should restore Barry’s cash flow. Feld’s track record and parallels with past KKR turnarounds support confidence. Outsourcing trends in chocolate production remain strong, making Barry a structural winner. Risks include persistently high cocoa prices, GLP-1 demand suppression, or quality issues driving key customers in-house.

Pitch Summary:
Sonoco is a packaging/paper firm transformed via divestitures and acquisitions into a streamlined 3-unit structure: metal cans, rigid paper containers (Pringles-style), and industrial paper. Consumer (66% revenue) is less cyclical and sticky with long-term contracts; industrial (32%) more cyclical. Now the world’s largest metal can supplier post-Eviosys acquisition, with $50m+ annual steel savings and scaled contracts. Valued at ~8.4x 2026 FCF (sector low), yielding 4.8%. Deleveraging to 3.6x by 2026. Risks include cyclicality, leverage, and integration. Author sees 43% upside base case, 100% incl. dividends if peer multiple realized.

BSD Analysis:
BSD view: Attractive FCF yield and defensive consumer exposure offset leverage. Execution on synergy realization and deleveraging are critical. Investors should watch industrial paper cycle, raw material costs, and capital markets day disclosures. Scaled packaging assets are consolidating globally; Sonoco could be both a consolidator and a target. Dividend yield adds cushion.

Pitch Summary:
Ring Energy is a small-cap E&P in the Permian Basin’s Central Basin Platform and Northwest Shelf, trading at a steep discount to PV-10 value and book. With 69% of reserves PDP, high margins (60% EBITDA), and manageable leverage (1.9x), the company generates ~$80m FCF at $70 oil, or ~50% of its market cap. Management is focused on deleveraging below 1x EBITDA, which could expand multiples from 3x EV/EBITDA to 5–6x. Insiders are buying, while a Warburg Pincus overhang creates temporary pressure. Risks include oil < $60, concentration in CBP/NWS, and limited liquidity.

BSD Analysis:
REI offers asymmetric upside as a “basement in basement” value play with hard asset backing. Its mature, low-decline reserves make it more of a cash cow than a growth shale play, positioning it for debt reduction and eventual multiple expansion. On normalized oil prices, equity could 2–3x. Strategic optionality exists for M&A given OXY, APA, and others in the Permian.

Pitch Summary:
Opaque off-balance-sheet entities masking losses; 2020 €27m VPF bailout undisclosed; hidden $930m derivatives fund unaudited.

BSD Analysis:
NINGI Research suggests Marex’s listing is opportunistic, designed to capitalize on favorable conditions rather than long-term fundamentals. The short thesis stresses concentration in volatile commodity markets, limited differentiation versus larger global peers, and operational risks tied to cyclical trading income. Disclosure quality is questioned, and management credibility is viewed skeptically. Valuation multiples imply resilience comparable to diversified global brokers, but Marex lacks scale or stable recurring revenue to justify such pricing.

Pitch Summary:
This quarter's portfolio update covers our position in Netflix, Inc. common stock (NASDAQ: NFLX), a compounder investment. We built our position in NFLX during the first half of 2022 at an average price of $244.02. At the time, Netflix faced a temporary slowdown in its growth. It has proven to be an archetypal example of Warren Buffett's model for a great investment: a marvelous business that encounters a one-time huge, but solvable problem. Originally founded as a U.S.-focused DVD-rental-by-mail service in 1997, Netflix has evolved into the preeminent streaming entertainment services company in the world, serving more than 300 million members in over 190 countries. Netflix offers its members unlimited access to an extensive selection of both original and licensed TV shows, films and mobile games across a wide variety of genres and languages anytime, anywhere on any internet-connected screen. Netflix's business continues to thrive. Revenue grew 16% year-over-year in the second quarter due to more members, higher pricing and increased ad revenue. Every region posted double-digit revenue growth, excluding the impact foreign exchange rate changes. Although Netflix no longer reports its membership count quarterly, management indicated that membership growth exceeded internal expectations. The operating leverage inherent in Netflix's business converted the strong topline results into eye-watering profit growth. Operating income grew 45% year-over-year. Netflix's operating margin came in at 34%, up 700 basis points over the prior year. The company's results for the second quarter brought free cash flow for the first half of 2025 to $4.9 billion, all of which was used to repurchase shares. Looking at where Netflix stands today, it is remarkable to consider that most of the investment community had completely written off the company just three years ago due to a modest hiccup in its growth trajectory. We began reducing our position in Netflix at the beginning of 2025. Netflix remains a great business with a bright future, but its stock clearly offers a notably lower prospective return above $1,000 than it did below $300. NFLX began the year as our second-largest position at just under 18% of the portfolio. It now sits at just over 2% of the portfolio. Through the end of the second quarter, our investment in NFLX has delivered a 62.7% IRR and a 4.1x MOIC over our 41-month holding period.

BSD Analysis:
The manager presents Netflix as a successful 'compounder' investment that exemplifies Warren Buffett's philosophy of buying great businesses during temporary setbacks. The fund initiated the position in H1 2022 at $244 when Netflix faced growth headwinds, demonstrating contrarian timing. The investment thesis has proven correct with Netflix delivering exceptional financial performance including 16% revenue growth, 45% operating income growth, and expanding margins to 34%. The company's global scale with 300+ million members across 190+ countries provides significant competitive advantages and operating leverage. Management is executing well on monetization through pricing increases and advertising revenue while maintaining strong membership growth. The fund has been prudently trimming the position as valuation has become stretched above $1,000, demonstrating disciplined profit-taking. The investment has generated outstanding returns with a 62.7% IRR and 4.1x multiple over 41 months, validating the original contrarian thesis.

Pitch Summary:
Pharmaceutical company Sandoz was spun out of Novartis in 2023. It manufactures and distributes generic and biosimilar medicine (a biological drug that is similar to medicine that has already been approved) for the treatment of diseases such as cancer, diabetes and arthritis. Key to the investment case of Sandoz is the projected growth in biosimilars over the next few years, with many biological medicines coming off patent. Yet we believe none of this is reflected in the share price. As the business model shifts towards this faster-growing side of the business, we think profits should grow more quickly and the share price should rise.

BSD Analysis:
Artemis invested in Sandoz following its 2023 spinoff from Novartis, targeting the company's exposure to the rapidly expanding biosimilars market. The investment thesis centers on a significant patent cliff affecting biological medicines, creating substantial opportunities for biosimilar competition over the coming years. The manager believes the market has not properly valued this growth catalyst, presenting an attractive entry point in the newly independent entity. Sandoz operates across critical therapeutic areas including oncology, diabetes, and arthritis, providing diversified exposure to essential medications. The business model transition from traditional generics toward higher-growth biosimilars should drive margin expansion and accelerated profit growth. As a pure-play biosimilars company post-spinoff, Sandoz offers cleaner exposure to this theme compared to diversified pharmaceutical giants. The manager sees significant valuation upside as the market recognizes the earnings potential from this structural shift in the business mix.

Pitch Summary:
We initiated two major positions in the quarter – Texas Instruments and Sandoz. Texas Instruments designs and manufactures analogue chips and semiconductors that are based on older technologies but are ubiquitous in everyday electronic devices. Our investment case centres on two aspects: 1. We believe we are at the trough of the industrial cycle, while inventory levels have been run down. 2. Texas Instruments is coming to the end of a heavy investment cycle in which it has spent significant amounts of money building factories in the US. As production ramps up, better utilisation should feed through to higher margins and returns.

BSD Analysis:
Artemis initiated a position in Texas Instruments based on a cyclical recovery thesis centered on two key catalysts. The manager believes the industrial semiconductor cycle has reached its trough with inventory levels fully depleted, positioning the company for a demand recovery. Simultaneously, Texas Instruments is completing a major capital expenditure cycle involving substantial US factory investments, which should drive margin expansion through improved utilization rates as production scales. The investment targets analog chips and legacy semiconductors that remain essential across electronic devices despite being based on older technologies. This defensive semiconductor exposure offers more stable demand patterns compared to cutting-edge chip segments. The timing appears strategic, entering at what the manager views as peak pessimism in the industrial cycle. The thesis combines both cyclical recovery and operational leverage as manufacturing capacity comes online.

Pitch Summary:
Elme Communities has officially pivoted from a multifamily REIT to an event-driven liquidation arbitrage. After years of stagnant returns, the board approved a voluntary Plan of Sale and Liquidation to unlock the wide gap between its public share price and private asset value. The centerpiece of this strategy was the $1.6 billion sale of a 19-property portfolio to Cortland Partners, which closed in late 2025. This massive divestiture has fundamentally de-risked the investment, transforming the stock into a Bear-duration cash-recovery play.

BSD Analysis:
Elme represents a "Buffett-style" liquidation where the complexity discount is evaporating in real-time. On January 7, 2026, the company paid its initial special liquidating distribution of $14.67 per share, returning nearly 85% of its pre-announcement trading value to shareholders in a single tranche. This payment marks the successful execution of the first phase of the wind-down, leaving investors "playing with house money" on the residual portfolio. The remaining assets—consisting of nine multifamily properties and the Watergate 600 office building—are currently being marketed with a target completion date of June 2026. Management’s explicit guidance suggests a final residual distribution range that implies a high-teens to mid-20s IRR from current levels, depending on the final clearing prices of the office assets. While typical REITs are grappling with refinancing risks, Elme has secured a $520 million term loan from Goldman Sachs to bridge the gap through the final dissolution, providing a stable floor for the remaining equity value.

Pitch Summary:
Enerflex is a global leader in natural gas compression and infrastructure, providing essential processing and water solutions with a footprint spanning North America, Latin America, and the Middle East. The company has evolved into a high-visibility infrastructure play, with approximately 70% of its EBITDA now generated from recurring aftermarket services and Bull-term, take-or-pay lease contracts. After a period of significant volatility following the 2022 acquisition of Exterran, Enerflex enters 2026 as a simplified, high-margin business that has successfully prioritized debt reduction and operational discipline over aggressive expansion.

BSD Analysis:
Enerflex represents a classic "post-acquisition scar" trade where the market continues to apply a distressed cyclical multiple to a business that has effectively transformed into a stable infrastructure utility. The variant perception is that investors remain anchored to the execution mishaps of 2023, failing to recognize that management has successfully deleveraged the balance sheet from over 3x to a target of 1.4x-1.6x. This debt reduction, coupled with the roll-off of high-capex projects, has cleared the path for a massive inflection in free cash flow that is only now beginning to be reflected in the share price. As of early 2026, the company’s focus on its "Recurring Revenue" segments—Energy Infrastructure and Aftermarket—provides a durable cushion against commodity price swings that typical oilfield service peers lack. The current valuation at roughly 4x EBITDA and 7x FCF is fundamentally disconnected from the 10-year visibility provided by its $1.5 billion+ contract backlog. As the company initiates more aggressive capital returns, including buybacks and potential dividend hikes, the stock should undergo a violent re-rating toward mid-cycle infrastructure multiples. Ultimately, the equity offers significant asymmetric upside as the "Exterran discount" evaporates and the market begins to value the business for its predictable, Bull-dated cash streams.

Pitch Summary:
AirSculpt Technologies operates a premium network of luxury body-contouring centers utilizing a proprietary, minimally invasive fat-removal procedure. After a period of aggressive, undisciplined expansion led to a collapse in margins and heightened covenant risk, the company has entered a "rehab phase" under new leadership. The investment thesis centers on a fundamental operating inflection: management has shifted focus from "growth at all costs" to profitability, successfully stabilizing the balance sheet and improving unit economics. With Bear interest historically exceeding half the float and a market still skeptical of a GLP-1 recovery, AIRS is positioned for a significant reflexive re-rating as same-store sales normalize.

BSD Analysis:
AirSculpt represents a classic "busted growth" turnaround where the market has mistaken a temporary volume air-pocket for structural obsolescence. The prevailing bear narrative suggests that GLP-1 weight-loss drugs (like Ozempic) permanently impair the body-contouring market, yet emerging clinical data indicates the opposite: a significant secondary demand for "skin tightening" and fat transfer following massive weight loss. Management has already demonstrated massive operating leverage by aggressively cutting bloated SG&A and optimizing Customer Acquisition Costs (CAC), which allowed EBITDA to stabilize even as top-line revenue faced headwinds. The recent insider-led recapitalization has effectively defused the "liquidity clock," giving the new CEO a clean runway to utilize significant excess capacity across the existing 31-center footprint without requiring additional capex. Because the float is tightly held by insiders and institutional backers, even a modest verification of same-store sales growth is likely to trigger a violent Bear-squeeze. At current valuations, the market is pricing in a permanent state of distress, ignoring the fact that AirSculpt remains a high-margin, cash-generative model with extreme incremental margins on every additional procedure.