Investment Pitches

Pitch Summary:
Now, as an example of a tough question currently being posed by the market, we submit Microsoft, a company we actually owned from 2010 to 2020. To begin, we hold management in the highest regards, particularly the CEO and CFO, who created tremendous value for us during our ownership. When we originally purchased Microsoft back in 2010, the valuation was less than 10x after-tax earnings after subtracting the cash on the balance sheet. The question we had to ask at the time was whether Microsoft was a melting ice cube, or could the company deliver an equity-type rate of return even if earnings never grew again. To our regret, we sold Microsoft too early, failing to appreciate how technological developments, particularly those of AI/cloud, would transform the business. In the five years following our sale, from 2020 through 2025, Microsoft grew its top line at a 12% compound annual growth rate (“CAGR”), and its bottom line even faster. But let’s now look at what one must believe to be constructive on the return prospects at the current multiple of 30x+ earnings. Of course, 30x earnings on its own is not necessarily the wrong multiple if Microsoft can continue to grow at a double-digit rate over the coming five years, and market analysts have noted that the valuation looks inexpensive five years out even if revenue were only to grow at a more pedestrian CAGR of 10% during this period. Stepping back, we will note that Microsoft generated $293bn of revenue over the last twelve months. If revenue were indeed to grow at 10% CAGR over the next five years, Microsoft would theoretically generate $472bn in revenue in 2030, an increase of $178bn. The bulls will say this is achievable based on growth in the core business and an expanding total available market (“TAM”). However, to put the $178bn increase into perspective, Microsoft would need to add revenue greater than the aggregate sales of ERP leaders Oracle and SAP, who generated ~$100bn in combined sales over the past twelve months. We are not saying this can’t happen, but thankfully as benchmark agnostic investors, there is nothing forcing us to make the wager that it will.

BSD Analysis:
Microsoft enters 2026 as the undisputed powerhouse of the AI economy, with its Intelligent Cloud division now contributing over 40% of total sales. The investment narrative is anchored by the rapid monetization of its $23 billion in new AI-related contracts and the continued 36% growth rate of the Azure platform. For 2026, the company is prioritizing a massive capital expenditure program to eliminate capacity constraints and meet insatiable enterprise demand for Copilot and Azure AI services. While the stock trades at a premium forward P/E, this is justified by a historic track record of exceeding earnings expectations for eight consecutive quarters. Management is successfully transitioning the entire software stack toward an AI-first model, which is expected to drive high-margin, recurring revenue across its Productivity and Personal Computing segments. As traders look past near-term volatility, Microsoft remains the cornerstone holding for any portfolio seeking exposure to the industrialization of artificial intelligence.

Pitch Summary:
Our research indicates that Grown Rogue may operate at more than a 50% cost advantage relative to larger U.S. cannabis operators, who mainly grow indoors. This advantage matters because it allows the company to operate profitably in markets where others cannot like in markets like Oregon and Michigan. Further, this allows the company to produce outsized returns when it enters markets like New Jersey with constrained supply. In December, Grown Rogue announced it was sold out in New Jersey and had begun construction on Phase 2 of its indoor facility. The company has also started building a new facility in Minnesota—a market that is structurally short on cannabis flower and likely to remain so for some time.

BSD Analysis:
Grown Rogue is carving out a high-growth niche in the craft cannabis market, with its 2026 outlook supported by a wide and strong rising trend in its share price. The company is successfully leveraging its low-cost indoor cultivation expertise to expand into new markets like New Jersey and Illinois, following its dominant performance in Oregon and Michigan. For 2026, the investment case is driven by the firm’s ability to generate positive operating cash flow and maintain high margins while scaling its brand footprint. While the stock faces some short-term volatility, its technical signals indicate significant upside potential as it tests resistance levels near its all-time highs. Management’s focus on proprietary genetics and superior flower quality has resulted in "best-in-class" sell-through rates at the retail level. For investors seeking exposure to the high-end flower segment, Grown Rogue offers a disciplined, expansion-oriented playbook with an attractively low enterprise value relative to its growth rate.

Pitch Summary:
Glass House Brands could profitably grow cannabis when many competitors could not. Since then, Glass House has significantly outperformed the broader cannabis sector and now trades at a healthy valuation multiple that reflects both its cost leadership and its growth runway as additional greenhouses come online. While Glass House benefits from massive scale and state-of-the-art greenhouse cultivation, we believe its durable cost advantages position it to generate attractive returns even in a distressed industry environment. The company’s ability to operate profitably through oversupply cycles differentiates it from most U.S. cannabis operators.

BSD Analysis:
Glass House Brands enters 2026 with a massive competitive advantage, operating the largest cannabis cultivation footprint in California with a path toward record production volumes. The company is successfully navigating a challenging pricing environment by achieving a long-term production cost target of $95 per pound, significantly undercutting its competitors. For 2026, the investment thesis is anchored by the full build-out of "Greenhouse 2" and a vertical integration model that has made its "Allswell" brand a top-three seller in the state. Recent debt refinancing and a first-of-its-kind listing on the Robinhood platform have improved liquidity and broadened the firm’s institutional visibility. While wholesale headwinds persist, the company’s retail segment is outperforming the broader California market by over 20%, demonstrating powerful brand loyalty. As the industry moves toward federal normalization, Glass House’s massive scale and low-cost leadership position it as the premier "pure-play" on the California cannabis economy.

Pitch Summary:
Advance Auto Parts is a “Crazy Cheap” stock that has been punished for poor execution, inventory issues, and persistent market share losses. Management has begun a multi-year turnaround plan focused on simplifying the supply chain, improving in-stock levels, and rebuilding credibility with professional installers. While near-term earnings remain depressed, the company has meaningful operating leverage if sales stabilize and execution improves. At today’s valuation, the market appears to assume the problems are permanent, creating attractive upside if the turnaround gains traction.

BSD Analysis:
Advance Auto Parts is in the second year of an ambitious three-year turnaround plan, aiming for a 7% margin run rate by 2027 through massive operational overhauls. For 2026, the company is on track to deliver approximately 200 basis points of annual margin expansion as it prioritizes supply chain efficiency and better inventory management. The investment case is supported by a "flight to value" in the automotive aftermarket, with DIY trends remaining strong as consumers keep older vehicles on the road for longer. Management’s recent $0.25 quarterly dividend declaration reflects stabilizing cash flows and progress in rebuilding the firm’s financial credibility. While competition from AutoZone and O'Reilly remains intense, Advance's focus on narrowing the valuation gap through improved store-level execution offers significant upside potential. Investors are closely watching for the success of its gross margin expansion targets, which could trigger a massive reassessment of the stock’s current premium EV/EBITDA multiple.

Pitch Summary:
Fortrea is an example of our “Crazy Cheap” strategy: buying excellent businesses priced as if their current struggles will last forever. These are ugly ducklings that are especially unpopular, and their stock prices have often fallen hard for months. Fortrea faced headwinds, with weak financial results, the loss of a star CEO, and swirling fears about changing US health policy. “Crazy Cheap” stocks like Fortrea are often going through a painful period, but their low price creates an extremely attractive upside-to-downside. There is still downside risk, but it is dwarfed by the probability and magnitude of the upside. Overall, buying good businesses at “Crazy Cheap” prices has worked well for us.

BSD Analysis:
Fortrea Holdings is signaling a significant recovery in 2026, recently upgraded by analysts following a surge in net bookings and a book-to-bill ratio exceeding 1.23 times. The company is successfully navigating its post-spin-off period by securing robust demand from both large pharmaceutical firms and emerging biotech players. For 2026, the investment narrative is built on projected net savings of $40 million to $50 million and a quickening biopharma development cycle that is driving higher billable hours. While historical project blends have previously pressured margins, the company’s shift toward newer, higher-margin Phase I clinical pharmacology services is providing a turning point for profitability. Management’s progress on debt reduction and operational streamlining has rebuilt investor confidence after a period of choppy share price performance. With the stock currently trading at a significant discount to its intrinsic fair value, Fortrea offers a compelling "valuation reset" opportunity in the clinical research space.

Pitch Summary:
Frontdoor is a “Crazy Cheap” company that is known for its home warranties, including its American Home Shield brand. The company has faced years of poor customer satisfaction ratings and operational challenges, which pushed the stock price down to unusually low valuation levels. Management has been improving service quality and reducing churn, while also investing in technology to better match contractors with homeowners. If these improvements continue, Frontdoor’s earnings power could normalize, and the valuation could re-rate meaningfully from today’s depressed levels.

BSD Analysis:
Frontdoor enters 2026 as the undisputed leader in the home warranty market, successfully leveraging its "2-10 Home Buyers Warranty" acquisition to dominate both new construction and existing home segments. For 2026, the company is targeting organic revenue growth of 3% to 6%, supported by dynamic pricing capabilities and tech-enabled efficiencies that have pushed EBITDA margins toward 24%. The investment case is bolstered by strong free cash flow generation, which is being prioritized for aggressive share repurchases while maintaining a conservative leverage ratio below 2.0x. Despite a subdued housing market, the company's "non-warranty" on-demand services are seeing record adoption as homeowners prioritize maintenance over high-interest relocation. Management’s focus on contractor utilization and service delivery costs is insulating the bottom line from inflationary pressures. With a $3 billion enterprise value and a market-leading brand in American Home Shield, Frontdoor remains a top-tier play for defensive housing exposure.

Pitch Summary:
We added to GetBusy in late 2024 at £0.56/share, a “Crazy Cheap” valuation. GetBusy raised its outlook in September 2025 following the announcement that a large competitor was exiting the market (Thomson Reuters’ FileCabinet CS). GetBusy’s directors and executives repeatedly bought stock at rising prices after the September release. Statistically, this pattern of heavy insider buying at rising prices is a positive signal, and the stock remains “Crazy Cheap”.

BSD Analysis:
GetBusy is demonstrating resilient growth in 2026, with its document management and productivity software capturing increased share among specialized accounting and legal firms. The company’s high-margin, recurring revenue model is driving steady cash flow, allowing for continued investment in AI-driven automation tools that reduce administrative friction for its users. For 2026, the investment thesis is anchored by a significant improvement in operating leverage and a clear path toward sustainable GAAP profitability. While the stock trades at a high P/E ratio, this is justified by its dominant position in niche professional services and its successful expansion into the North American market. Management’s commitment to product innovation, particularly around secure cloud collaboration, has resulted in high customer retention and low churn rates. For growth-oriented investors, GetBusy offers a capital-light software play with significant potential for margin expansion as it scales its global user base.

Pitch Summary:
We bought our position in Siemens Energy in early 2024, anticipating that the end of a decade-long stagnation in global electricity demand would drive improved operating results. After being evenly matched since 2008, increasing efficiency had finally been overcome by increasing usage of electrical devices, and U.S. electricity consumption had resumed making new highs. Since then, the combination of deferred infrastructure maintenance, continued electrification throughout the economy, and the rapid rise of AI has spurred a new cycle of demand. Siemens Energy has been a direct beneficiary of this return to growth.

BSD Analysis:
Siemens Energy is a premier play on the global energy transition in 2026, with consensus estimates implying a massive 78% growth in earnings as the Wind segment finally approaches profitability. The company is benefiting from unprecedented demand for grid infrastructure and manufacturing capacity expansion, particularly in high-voltage transmission and gas services. For 2026, the investment case is bolstered by a multi-billion dollar order backlog and the successful resolution of legacy turbine reliability issues that previously weighed on the stock. Management’s focus on the PJM Interconnection policy initiative is expected to accelerate order activity for power grid modernization across North America and Europe. While the competitive landscape in wind remains intense, Siemens Energy’s dominant position in gas-to-power and grid technologies provides a stable, high-margin foundation. Institutional investors view the stock as a critical "picks-and-shovels" holding for the decarbonization of the world’s power grids and the build-out of AI-optimized data centers.

Pitch Summary:
VF Corp manages apparel brands, including The North Face, Timberland, and Vans. The company has fixed its balance sheet, improved capital allocation, and rebuilt its management team in an effort to return the business to growth. I believe that the company has good brands, the skills to manage them well, and a management team that can handle the challenges that the company faces. VF Corp currently trades at an attractive upside-to-downside ratio.

BSD Analysis:
VF Corporation is successfully executing its "Reinvent" transformation program in 2026, recently delivering revenue growth and margin expansion across its core brands like The North Face and Timberland. For 2026, the company is prioritizing debt reduction and has successfully brought its leverage ratio below 3.5x following the strategic divestiture of the Dickies brand. The investment thesis is supported by a turnaround in the Americas region, which recently saw its strongest performance in over three years, and a return to positive growth in the global digital channel. While the Vans brand continues to undergo a multi-year stabilization phase, the overall portfolio is benefiting from a "flight to quality" among cost-conscious consumers seeking durable outdoor apparel. Management’s commitment to a quarterly dividend of $0.09 per share reflects confidence in the company’s stabilizing free cash flow and long-term earnings trajectory. As the company leans into its new "Outdoor and Active" reporting segments, investors are rewarding the clearer, more focused strategic direction.

Pitch Summary:
During the quarter I built a position in Ascent Industries (“ACNT”). ACNT is a small specialty chemicals company that is transforming from an over-levered conglomerate into a pure-play with a pristine balance. In early 2024 the company revamped its management team with the election of a new CEO & CFO. Since then, ACNT has sold off its tubular steel assets, thereby eliminating $70m of debt and leaving the company with almost $60m of cash. Management stabilized operations by raising prices and exiting unprofitable business, improving gross profit materially despite lower revenue. With facilities running at roughly 50% utilization, the company can scale revenue significantly with minimal capex. Operating leverage, proprietary product mix, and a recent $10m+ annualized program win support the case for EBITDA margins expanding to greater than 20%.

BSD Analysis:
Ascent Industries is undergoing a strategic pivot in 2026, shifting its focus from cyclical tubular products toward higher-margin specialty chemicals and industrial applications. The company’s specialty chemicals segment is capturing new growth in the oil and gas and personal care sectors, leveraging its vertically integrated manufacturing model to protect margins. For 2026, the investment narrative is centered on a balance sheet cleanup and a refined capital allocation strategy intended to unlock the intrinsic value of its underappreciated assets. While the firm’s market capitalization remains relatively small, its presence in high-barrier niches such as pulp and paper and agricultural chemicals provides a resilient cash flow base. Management is prioritizing operational efficiency and footprint optimization to counter potential volatility in raw material costs. For value-oriented investors, Ascent offers a "sum-of-the-parts" turnaround play with significant upside as it demonstrates consistent profitability in its core chemical business.

Pitch Summary:
Last letter I discussed the capital structure arbitrage whereby I bet on the discount of the A & B shares collapsing. In November both classes of equity sold off on their Q3 earnings release, a report that I actually viewed positively. I took that opportunity to cover our shorts thereby positioning us to make money based on both a) overall valuations recovering and b) the B discount shrinking. Since then, both classes of equity have reached all-time highs and the spread currently sits in the single digits.

BSD Analysis:
Bel Fuse is a primary beneficiary of the 2026 aerospace and defense super-cycle, with its stock recently upgraded to a strong buy as it consistently outperforms revenue and margin expectations. The company’s EBITDA surged over 80% year-over-year, driven by the successful integration of Enercon and a significant shift toward high-margin power and interconnect solutions. For 2026, the investment case is bolstered by a record book-to-bill ratio and a gross margin profile that has surpassed the 39% threshold due to operational efficiencies. While the firm faces integration risks from recent acquisitions, its dominant position in mission-critical electronic components for data centers and military aircraft provides a durable competitive moat. Management’s aggressive cost-cutting measures, including facility closures and workforce optimizations, have resulted in a leaner, more profitable organization. Investors view the current valuation as an attractive entry point for a high-growth industrial technology leader with a clear path to double-digit earnings appreciation.

Pitch Summary:
During the quarter I acquired shares in Janus Henderson Group (“JHG”) after they received a non-binding acquisition proposal by their largest shareholder to acquire the company at $46.00. With the stock trading below this initial salvo and at a relatively modest premium to its unaffected price, I viewed the risk / return profile to be attractive. I acquired shares over the next few weeks as the market continued to doubt the likelihood of an eventual transaction. A definitive agreement was reached at the end of December to sell the company at a price of $49.00 / share. I continue to own shares as the IRR to close remains attractive.

BSD Analysis:
Janus Henderson is navigating a stable 2026 as it successfully diversifies its portfolio into high-growth alternative investments and active ETFs. The firm's AUM has stabilized, supported by a resurgence in institutional inflows and a strategic partnership with CNO Financial Group that enhances its private credit capabilities. For 2026, the investment case is bolstered by a healthy dividend yield of approximately 3.3% and a consistent track record of capital return via share repurchases. Management is currently focused on leveraging proprietary data analytics to improve fund performance and capture a larger share of the "democratized alternatives" market for retail investors. While traditional active management faces fee compression, Janus Henderson’s focus on specialized, high-conviction strategies provides a resilient earnings floor. The company maintains a fortress balance sheet with significant cash reserves, providing flexibility for tuck-in acquisitions that align with its "Janus Henderson Investors" brand legacy.

Pitch Summary:
Disney is a classic example of asset quality being obscured by cyclical and managerial noise. Few companies in the world possess a comparable portfolio of intellectual property, global distribution, and experiential monetization. As Disney rationalizes its streaming strategy, restores profitability in its Direct-to-Consumer segment, and continues to compound value through its parks and experiences segment, the company’s underlying earnings power becomes increasingly visible. Importantly, Disney’s franchises are not merely content libraries — they are multi-decade brands that monetize across film, television, parks, merchandise, and licensing. In our view, the market has focused excessively on near-term disruption while underappreciating the durability of Disney’s long-term cash-flow generation.

BSD Analysis:
Disney enters 2026 with a sharpened focus on "operating discipline" after achieving sustained profitability in its streaming division. The investment case for the current year is built on a projected double-digit growth in adjusted EPS, driven by higher pricing for Disney+ and continued strength in the Experiences (Parks and Cruises) segment. For fiscal 2026, the company is prioritizing cost rationalization in its linear networks and theatrical divisions to offset headwinds from a cooling advertising market. While the stock reflects some caution around sports rights inflation and ESPN's digital transition, its current forward P/E of 16.2x sits below the media industry average, suggesting a valuation cushion. Management has weighted growth toward the second half of 2026, anticipating that new cruise ship launches and international park expansions will serve as primary catalysts. For investors, Disney represents a core "recovery and scale" story, with an implied 28% total upside over the next three years as margin expansion takes center stage.

Pitch Summary:
Advanced Micro Devices represents a long-duration share-gain story driven by execution rather than hype. Over the past decade, the company has demonstrated a consistent ability to take share in large, complex markets by delivering competitive performance, strong software ecosystems, and disciplined capital allocation. In data centers and AI infrastructure, AMD has emerged as the most credible alternative supplier to incumbent leaders, benefiting from customers’ desire for diversification, pricing leverage, and architectural flexibility. While near-term margins can fluctuate as the company invests to expand its platform, we believe AMD’s long-term earnings power is substantially greater than implied by a narrow focus on any single product cycle.

BSD Analysis:
AMD is positioned as the most compelling AI trade for 2026, with the market focusing on the third-quarter launch of its MI450 "Helios" systems. This next-generation GPU lineup is expected to provide the rack-scale performance leadership that AMD previously lacked, making it a direct competitor to NVIDIA for hyperscale AI trainers. Management has set an aggressive long-term target of $20 non-GAAP EPS, supported by a projected 35% compound annual growth rate in revenue through 2027. For 2026, the company is also expanding its lead in the server CPU market, where its EPYC processors are on a path to achieving over 50% revenue market share. While the stock experienced volatility in late 2025, analysts see a 30-40% upside in 2026 as the "AI PC" inflection point drives a replacement cycle for its Ryzen processors. Institutional accumulation remains high at 72%, signaling strong professional confidence in AMD’s ability to capture a significant portion of the $1 trillion compute market.

Pitch Summary:
Micron Technology (MU) is our largest position because it sits at the intersection of structural demand growth and improving industry discipline. Memory is no longer a commodity business driven solely by boom-bust PC cycles. It has become a strategic input for AI, cloud infrastructure, and data-intensive workloads, particularly through high-bandwidth memory. At the same time, the supply side of the industry has consolidated meaningfully, with fewer rational players, higher capital intensity, and better pricing discipline than in prior cycles. Micron’s manufacturing scale, technology leadership, and expanding exposure to AI-driven demand position it to generate materially higher through-cycle free cash flow than the market has historically assumed.

BSD Analysis:
Micron is a primary beneficiary of the 2026 AI infrastructure super-cycle, with shares up nearly 280% over the last twelve months as demand for high-bandwidth memory (HBM) continues to outpace supply. Management has successfully pivoted the business entirely toward the enterprise and AI markets, exiting its consumer-focused "Crucial" brand to maximize margins on high-value data center components. For 2026, the investment thesis is anchored by CEO Sanjay Mehrotra’s outlook that supply tightness will persist into 2027, ensuring strong pricing power for its advanced memory solutions. Despite the massive run-up, the stock still appears relatively cheap on a forward-earnings basis, with fiscal Q1 2026 revenue surging 57% year-over-year. As memory becomes a critical bottleneck for AI chips from NVIDIA and AMD, Micron’s role as an essential hardware provider makes it a top-tier "picks-and-shovels" play. Investors view the current valuation as a bargain-basement entry into a market with durable, long-term fundamentals.

Pitch Summary:
Berkshire Hathaway was a top contributor in 2025, reflecting its “port in the storm” characteristics during periods of heightened volatility. The company delivered another year of solid operating performance across its businesses. As legendary CEO Warren Buffett steps aside and Greg Abel assumes the CEO role, we remain confident that Berkshire’s reputation and prospects are firmly intact. The company’s balance sheet strength and diversified earnings base continue to provide resilience. Berkshire remains a core long-term holding.

BSD Analysis:
Berkshire Hathaway is operating with a record-breaking cash pile in 2026, currently estimated at over $380 billion, positioning the conglomerate as the ultimate "lender of last resort" in a concentrated market. The 2026 investment case is marked by a shift in portfolio strategy, including a notable exit from legacy positions like Kraft Heinz and a continued reduction in Apple holdings to maximize liquidity. For the current fiscal year, analysts expect a slight decline in EPS to approximately $19.98, reflecting the normalization of insurance investment income and a cautious stance on new equity deployments. Under Greg Abel’s leadership, the focus has moved toward internal capital expenditure within Berkshire Hathaway Energy and BNSF Railway to drive long-term earnings power. While the stock has slightly underperformed the AI-heavy S&P 500 recently, its status as a "fortress asset" with an average price target of $537 offers a compelling 11% upside for risk-averse investors. The upcoming Q4 earnings report will be critical for assessing the firm's appetite for a major "elephant-sized" acquisition.

Pitch Summary:
Perimeter Solutions capped a strong 2025 by signing a new, extended contract for its firefighting solutions and services with the U.S. Forest Service. The agreement has a longer duration, expands Perimeter’s portfolio of services, and introduces a new pricing structure. These changes are intended to reduce earnings and cash flow volatility tied to the severity of individual fire seasons. The contract improves revenue visibility and stability. The company benefited from increased confidence in the durability of its business model.

BSD Analysis:
Perimeter Solutions enters 2026 following a major strategic expansion, recently completing its $685 million acquisition of Medical Manufacturing Technologies (MMT). This move significantly diversifies the firm away from its core, weather-dependent wildfire retardant business, providing a high-margin, recurring revenue stream in the medical device sector. The company’s financial health remains stable, supported by a senior secured notes offering that closed in early January to fund its growth initiatives. While the wildfire safety segment continues to benefit from an intensifying global climate-fire feedback loop, the MMT acquisition is the primary driver of the 2026 valuation re-rating. Management is now focused on applying its "operational value-driver" playbook to this new segment to drive consolidated EBITDA growth. For investors, Perimeter offers a unique blend of a defensive, high-moat chemical monopoly and a newly acquired high-growth medical manufacturing platform.

Pitch Summary:
Liberty Broadband’s operating entity, Charter Communications, has faced negative headlines, but there are important differences versus other challenged holdings. Connectivity at home and on the go has become a non-discretionary expense for most households, underpinning the durability of Charter’s cash flows. Charter’s mobile service continues to win in the market, creating a converged bundled product. While the company still has work to do on its network upgrade program, 2025 is expected to mark the peak year of spending. As investment moderates, free cash flow should improve, supporting continued share repurchases.

BSD Analysis:
Charter Communications is currently navigating a period of valuation dislocation, trading at a significant discount to peers with a P/E ratio of approximately 4.6x. The 2026 narrative is focused on the stabilization of its broadband base through converged "Spectrum One" bundles and the rollout of WiFi 7 infrastructure to defend against fiber and fixed wireless competition. While quarterly revenues have shown slight contractions, the company continues to generate robust net income and has successfully tapped debt markets with a $3 billion notes offering in early 2026 to manage its maturity profile. The investment thesis is increasingly split: value-oriented analysts point to a massive gap between the current share price and long-term price targets near $275, while skeptics focus on the sustained erosion of the core broadband market share. The key catalyst for 2026 remains the January 30th earnings report, which will dictate whether management can align market sentiment with its strong underlying cash flow generation.

Pitch Summary:
CarMax faces a challenging operating environment. Availability and affordability of late model used vehicles (CarMax’s strongest category) remain constrained, while online competitor Carvana has taken share. At the same time, CarMax’s own investments in its omni-channel capabilities have yet to deliver improvements, prompting strategic changes and the CEO’s ousting. While we continue to respect CarMax’s brand and scale advantages, the near-term path to improved fundamentals became less visible. This led us to step aside and monitor developments from the sidelines.

BSD Analysis:
CarMax enters 2026 undergoing a significant "strategic reset" following a challenging third quarter that saw retail used unit sales decline by 8.0%. In response, management has pivoted toward a high-volume, lower-margin strategy, intentionally reducing retail gross profit per unit to regain price competitiveness against digital-first rivals. A bright spot remains CarMax Auto Finance (CAF), which delivered a 9.3% increase in income, demonstrating the company’s ability to monetize its full-spectrum underwriting model even in a high-rate environment. For 2026, the investment case hinges on the success of its omni-channel integration, with digital capabilities now supporting over 80% of retail transactions. While steep vehicle depreciation remains a headwind, the company's aggressive SG&A reduction plan—targeting $150 million in savings by 2027—provides a pathway for margin recovery. Investors are closely watching for a bottom in comparable store sales as the "lower price, higher marketing" approach takes hold in the current fiscal year.

Pitch Summary:
Google parent Alphabet was the Fund’s top performer in both periods. The latest release of the Gemini AI surpassed expectations, with several benchmarks showing Gemini’s performance moved to the front of the pack. While relative standing among frontier models remains fluid, Alphabet’s progress reinforced its position among perceived AI winners. The company continues to benefit from its scale, proprietary data, and infrastructure advantages. These strengths underpin long-term growth across advertising, cloud, and AI-driven services.

BSD Analysis:
Alphabet enters 2026 as a premier leader in the artificial intelligence era, successfully transitioning its core search business to incorporate generative AI via the Gemini model. The company is benefiting from a significant structural advantage through its seventh-generation Tensor Processing Units (TPUs), which reduce internal compute costs while attracting major third-party enterprise deals. For 2026, the investment narrative is bolstered by Google Cloud’s continued path toward higher profitability and YouTube’s resilient advertising revenue despite a fragmented media landscape. While regulatory challenges and antitrust scrutiny remain persistent risks, Alphabet's massive $100 billion-plus cash pile provides a substantial cushion for aggressive share repurchases and strategic investments. Management’s focus on "Other Bets," particularly in autonomous driving via Waymo, offers long-term optionality beyond digital advertising. With a P/E ratio that remains attractive relative to its "Magnificent Seven" peers, Alphabet provides a balanced profile of growth and value.