Investment Pitches

Pitch Summary:
Following trims over the last several quarters, we exited a position in Adobe due to concern about high levels of existing penetration of its product suite and competitive risks. AI won’t be winner takes all, and Adobe is an example where we believe AI is lowering barriers to entry and increasing competitive pressure on the business. The due diligence that led us to sell Adobe is part of a broader analysis we have been conducting about the impact of agentic AI, software systems which complete tasks autonomously.

BSD Analysis:
Adobe Inc. (ADBE) Adobe is the unbreakable creative and document workflow monopoly, possessing a structural moat derived from network effects, high switching costs, and the essential nature of its Creative Cloud and Document Cloud products. The core investment thesis is the AI-driven re-acceleration of its Creative Cloud segment via Firefly, which converts generative AI usage into billable events, forcing customers to upgrade seats and buy into its higher-priced enterprise tiers. The successful integration of AI solidifies its pricing power and justifies its premium SaaS multiple. Adobe remains a cash-flow fortress, with its subscription model providing superior revenue predictability and margin expansion.

Pitch Summary:
Biotech funding challenges and government funding pressure have negatively impacted companies supporting biopharmaceutical development like contract research organization (CRO) ICON. This has pushed out the timing of a CRO growth recovery, even after multiple quarters of spending rationalization among its customers. We exited ICON due to the lowering of our confidence in the timing of CRO business normalization.

BSD Analysis:
ICON is a top-tier clinical research organization with deep expertise in running complex trials, particularly in oncology and rare diseases where pharma is spending aggressively. As drug pipelines shift toward biologics and precision medicine, sponsors increasingly rely on CROs like ICON to accelerate timelines and manage regulatory complexity. Its scale, global reach, and strong backlog position it to keep taking share from smaller players who can’t match operational depth. The PRA Health acquisition continues to deliver margins and cost synergies, giving ICON meaningful operating leverage as volumes rise. While biotech funding cycles can create temporary noise, the long-term trend toward outsourced R&D is firmly intact. ICON’s execution has been consistently strong, and its client relationships tend to be sticky once embedded. This remains a high-quality compounder riding one of the most durable growth arcs in healthcare.

Pitch Summary:
After making progress on margin expansion through the first half of 2024, mass market retailer Target has more recently been challenged by continued shifts in consumer spending away from discretionary categories, like home and electronics, which make up the majority of the company’s sales and carry higher margins. Tariffs on imports from China are likely to further pressure Target’s business. Despite the company’s execution to protect margins in a difficult operating environment, we see risks weighted to the downside, leading us to exit the position.

BSD Analysis:
Target Corporation (TGT) Target is a disruptive retail compounder that has successfully navigated the omnichannel transition by weaponizing its physical store footprint into a low-cost, high-efficiency e-commerce fulfillment engine. The investment thesis is a bet on market share capture from weaker, debt-laden rivals and its ability to consistently draw affluent shoppers through its owned-brands strategy, which boast margins significantly higher than national brands. While near-term performance is subject to macro and inventory volatility, TGT's massive Free Cash Flow generation is consistently deployed into an aggressive share repurchase program and a reliable dividend, offering a defensive, long-term buyback machine trading at a discount to its intrinsic value.

Pitch Summary:
We also initiated a position in U.K.-based Linde, a well-run company operating in an attractive, consolidated end market of industrial gas, which is a key input in many industries including technology, chemicals, manufacturing, health care and electronics. Both the company and the industry are highly disciplined in terms of price and contracting structure, providing downside protection in periods of slower economic growth. The stock’s relative multiple has recently declined due to macroeconomic pressure on sales volumes, providing an attractive entry point. We believe an overlooked feature of Linde’s business is its role as primary provider of gases for rocket propellant and coatings used by companies operating space and satellite businesses.

BSD Analysis:
Linde plc (LIN) Linde is a quintessential defensive industrial powerhouse, commanding a high-margin, oligopolistic position in the global industrial gas market that the market consistently undervalues. Its business is structurally non-cyclical and high-margin due to its long-term, inflation-adjusted, take-or-pay contracts with massive industrial clients. The investment thesis is a clean, reliable compounder that is now a critical enabler of the clean energy transition, supplying essential gases like hydrogen, carbon monoxide, and oxygen for blue hydrogen and carbon capture projects. LIN's unwavering focus on operational excellence, leading to its best-in-class EBITDA margins, justifies its premium valuation and makes it a durable core holding for any industrial portfolio.

Pitch Summary:
Our other focus was continuing to diversify the portfolio beyond traditional growth areas to gain exposure to attractive secular trends and prepare for wider large cap leadership. We did this through the purchase of two non-U.S. companies who are leaders in their industries. Netherlands-based Airbus, which designs and manufactures commercial aircraft, aerospace components and defense systems, stands to benefit from increasing long-term demand for commercial aircraft to support air travel. Aging of the existing fleet along with rising travel demand in relatively less penetrated regions like Asia–Pacific support a robust pipeline of replacement demand for Airbus for years to come. Airbus has a solid platform with the current A320 family before needing to scale up a new family of planes, putting the company in an attractive period for free cash flow growth. The company’s smaller defense segment also stands to benefit from the EU ramping up defense spending as the U.S. pulls back on its overseas security commitments.

BSD Analysis:
Airbus SE (AIR.PA) Airbus is an unavoidable duopoly giant in commercial aerospace, benefiting from a multi-year, record-high backlog that provides unassailable revenue visibility for the next decade. The investment thesis is a pure, leveraged play on the global need for more fuel-efficient aircraft, driven by airline fleet renewals and structural air traffic growth in emerging markets. The key catalyst is the successful and profitable ramp-up of A320neo family production rates, which will drive significant operating leverage and free cash flow generation over the next several years. The main risk—supply chain constraints—is the very factor that ensures the backlog remains robust, guaranteeing a consistent path to higher margins as production normalizes.

Pitch Summary:
The Strategy’s select growth exposure increased during the quarter due to the strong performance of the higher-beta stocks in this growth bucket as well as the purchase of ServiceNow. The company provides an end-to-end software-as-a-service (SaaS) platform to help enterprise customers automate and standardize business processes in areas like IT, customer services, sales and data security. ServiceNow also has a monetizable generative AI product being adopted by its customers. We have liked the business for a long time and took advantage of the April selloff to establish a position.

BSD Analysis:
ServiceNow, Inc. (NOW) ServiceNow is the enterprise workflow kingpin, possessing an increasingly durable platform moat that makes it a mandatory, high-switching-cost subscription for Global 2000 companies seeking digital transformation. The investment thesis is centered on the massive, untapped opportunity for workflow automation across non-IT functions like HR, Customer Service, and Operations, with generative AI (via Now Assist) acting as an immediate, high-margin revenue accelerator. Management's consistent strategy of moving upmarket into larger, more complex deals is driving margin expansion and Free Cash Flow growth. Unlike many growth stocks, NOW's high customer retention and strong net expansion rate provide superior revenue visibility and justify its premium SaaS multiple.

Pitch Summary:
We also added a starter position in Marvell Technology in June. Marvell is a company we have been tracking through our ownership of Nvidia and work on the AI semiconductor complex over the last several years. Similar to Broadcom, Marvell designs chips and networking equipment that power technologies like AI, cloud computing and 5G infrastructure and has a particularly strong interconnect business. While Marvell has a high-quality asset portfolio to compete in the custom application-specific integrated circuits (ASICs) chip business, the stock has lagged AI accelerator peers like Nvidia and Broadcom as its ramp in AI revenue has been slower than others in the ecosystem. We believe this dynamic can reverse in coming years as more of Marvell’s customer wins ramp up. Marvell’s valuation has compressed significantly over the past six to nine months and the stock now trades at a healthy growth-adjusted discount to AI semi peers, providing an attractive entry point.

BSD Analysis:
Marvell Technology, Inc. (MRVL) Marvell is a highly focused AI infrastructure pure-play that the market often miscategorizes as a cyclical semiconductor company. Its structural advantage lies in its deep design wins in custom, high-speed networking and connectivity solutions, which are essential for linking NVIDIA and other AI accelerators in hyperscale data centers. The investment thesis is a leveraged bet on the next wave of AI spending, particularly the shift toward faster interconnects and Cloud Custom Silicon (ASICs), where Marvell's expertise creates high switching costs for its cloud customers. The stock offers a clear runway to premium valuation as the Data Center segment continues to accelerate, with its networking and custom chip revenue proving less cyclical and more high-margin than traditional chip sales.

Pitch Summary:
In the semiconductor sector, we trimmed our position in Taiwan Semiconductor to manage the risk amid intensified geopolitical tensions between the U.S. and China in 2025, directing the proceeds into the purchase of a position in Broadcom. Adding Broadcom, a leader in semiconductor design for communications and networking devices, enables the Strategy to better participate in the development of custom silicon chips for AI computing. Broadcom is well-positioned for continued healthy investment in AI, working with several large technology companies to develop custom silicon that we expect to grow alongside robust demand for Nvidia’s all-purpose GPUs. The company’s cloud infrastructure software business should also continue to grow for the next several years given its entrenched position within enterprises.

BSD Analysis:
Broadcom Inc. (AVGO) Broadcom is the pan-industrial oligopoly king, executing a highly disciplined strategy of acquiring high-quality, scarce technology assets and immediately applying its rigorous management playbook to strip costs and generate outsized Free Cash Flow (FCF). The investment thesis is a leveraged play on FCF and capital return, driven by the structural stability of its semiconductor and software divisions. The successful integration of VMware is the critical catalyst, positioning AVGO as a key player in the hybrid cloud infrastructure space and providing an immediate, significant boost to its already robust FCF per share. For investors, AVGO is a predictable, high-yield compounder that uses its dominant market position to return capital through an aggressive dividend and buyback policy.

Pitch Summary:
In the semiconductor sector, we trimmed our position in Taiwan Semiconductor to manage the risk amid intensified geopolitical tensions between the U.S. and China in 2025, directing the proceeds into the purchase of a position in Broadcom. Adding Broadcom, a leader in semiconductor design for communications and networking devices, enables the Strategy to better participate in the development of custom silicon chips for AI computing. Broadcom is well-positioned for continued healthy investment in AI, working with several large technology companies to develop custom silicon that we expect to grow alongside robust demand for Nvidia’s all-purpose GPUs. The company’s cloud infrastructure software business should also continue to grow for the next several years given its entrenched position within enterprises.

BSD Analysis:
Taiwan Semiconductor Manufacturing Company Limited (TSM) TSMC is the world’s most critical industrial bottleneck, possessing a technological monopoly on cutting-edge chip fabrication that no competitor, not even Intel, can currently match. Its dominance in the 3nm and 2nm nodes makes it the indispensable partner for every major AI and hyperscale company, effectively acting as a massive, high-margin, capital-equipment-as-a-service provider. The stock is a direct, leveraged play on the secular growth of AI and advanced computing, with its geopolitical risk—the Taiwan contingency—serving as the only significant factor depressing its multiple. Buying TSM is a high-conviction bet that the global reliance on its fabrication technology creates a "silicon shield" that will protect its commercial advantage and ensure continued state-level support.

Pitch Summary:
Tiny Louisiana thrift (~$272m assets) trading around ~65% of TBV (≈69% of adj. TBV after fair-value marks). Converted from mutual in 2021 and is now past the 3-yr MHC window, so sale optionality exists, but author thinks near-term sale is unlikely given very young exec team and extreme overcapitalization (Tier 1 ~47%). Balance sheet was derisked (sold ~74% of AFS in 1Q24); AOCI only ~-$3.1m and FV markdowns a modest ~$4.7m vs TBV ~$80.6m (TBVPS ≈ $19.16 vs price $12.48). Loan mix has shifted riskier (C&D up 10×; C&I >2×; OO-CRE +50%), with a median 12-qtr delinquency ~2.8%; deposits are mixed (CDs ~⅓; brokered ~7%; NIBD ~14%). Aggressive capital return underway: ~21% of shares repurchased since IPO; fresh 5% authorization (114k sh) with ~73k bought by 3/31/25. Takeout math pegs value around $21/sh (~1.1× TBV), but base case is multi-year compounding via asset growth + buybacks and a sale in 5–7 years.

BSD Analysis:
Bull: deep discount to (adj.) TBV; tiny AOCI/FV marks; fortress capital; proven CEO (ex-HOMB) with buyback cadence; eventual sale optionality. Skeptic: rising risk in loan book; funding mix (CDs/brokered, NIB only 14%); microcap illiquidity; timing risk—sale likely years away. Diff: unusually high capital (Tier 1 ~47%) gives big buyback/M&A flexibility; fair-value “clean” vs many peers.

Pitch Summary:
Overcapitalized Louisiana thrift (~$272M assets) trading at ~69% of adj. TBV (after fair value marks). Post-2021 mutual conversion, buybacks (21% since IPO), young mgmt (ex-Home Bancorp CFO as CEO). Takeout math ≈ $21/sh (~10% above TBV) but sale likely 5–7 yrs out; near-term value from asset growth + continued repurchases.

BSD Analysis:
Attractive downside support via high capital (Tier 1 ~47%), modest AOCI and fair value marks; risks: rising brokered/public funds mix, higher-risk loan growth and elevated delinquencies offset by excess capital. Likely a slow-burn compounder with eventual M&A optionality.

Pitch Summary:
Cloudflare is positioned for significant growth due to its robust platform for application and AI development, particularly through Cloudflare Workers. The company has seen strong customer adoption and is expanding its large customer base. However, the stock is trading at a high premium, which suggests that much of the growth potential may already be priced in. As a result, the recommendation is to hold the stock, with a target price of $173 based on future sales forecasts.

BSD Analysis:
Cloudflare's strategic focus on expanding its customer base, especially large accounts, has resulted in impressive revenue growth. The company's investment in sales and marketing has paid off, with a notable increase in revenue from large customers. Despite the high valuation, Cloudflare's growth prospects remain strong, driven by its innovative Cloudflare Workers platform and AI capabilities. The company's financial health is solid, with a growing cash position and no current share repurchase or dividend plans. However, the premium valuation requires careful consideration, as any failure to meet growth expectations could lead to a significant revaluation. Investors should be aware of the economic uncertainties and potential margin pressures that could impact future performance.

Pitch Summary:
Wayfair Inc. is currently overvalued with a Forward P/E ratio exceeding 80x, despite its lack of profitability and minimal revenue growth. The company's attempts to cut costs by exiting unprofitable markets and reducing its workforce are insufficient to justify its high valuation. Additionally, Wayfair faces intense competition from major retailers like Amazon and Walmart, which offer similar products with better delivery and brand strength. The company's initiatives, such as opening physical stores and targeting affluent consumers, are unlikely to drive significant profitability in the near term.

BSD Analysis:
Wayfair's financial metrics reveal a challenging path to profitability. The company's Forward P/E ratio of over 85x is unsustainable given its limited competitive advantages and ongoing losses. Despite a revenue CAGR of 5.4% from 2019 to 2024, the company's growth is not robust enough to support its current valuation. Wayfair's market position is further weakened by its lack of product exclusivity and brand differentiation, making it vulnerable to competition from both large-scale retailers and niche boutique websites. The company's AI initiatives, such as the Muse tool, have not demonstrated significant sales impact, and its retreat from AI investments suggests a need to focus on core business areas. With a high beta and substantial long-term debt, Wayfair's risk profile is elevated, and its valuation is likely to compress as market expectations adjust. A DCF analysis indicates an implied share price of approximately $31, reinforcing the view that the stock is overvalued. The company's exposure to a slowing US housing market and consumer spending downturn further exacerbates its downside risks, while potential catalysts like ad sales growth and cost-cutting measures offer limited upside potential.

Pitch Summary:
High Income Securities Fund (PCF) is a closed-end fund that primarily invests in other closed-end funds, BDCs, and SPACs. Despite its positive performance, it lags behind its peers like RiverNorth Opportunities and Saba Closed-End Funds ETF. The fund's valuation appears stretched, and it trades at a discount to NAV, which has been slightly reduced by recent share buybacks. Given its underperformance relative to peers and the current market euphoria, we recommend selling PCF and reallocating capital to better-performing funds.

BSD Analysis:
PCF's strategy of investing in a mix of CEFs, BDCs, and SPACs positions it as a diversified fund of funds. However, its performance has been lackluster compared to peers, with a five-year total return of 44% versus CEFS's 100% and RIV's 60%. The fund's Sharpe ratio of 0.64 and standard deviation of 8.7% indicate moderate risk-adjusted returns. The managed distribution policy, which targets a 10% annualized payout, may lead to capital return if not supported by investment income. Recent buybacks have narrowed the discount to NAV, but the fund's reliance on bullish markets and current market euphoria suggest downside risks. Investors might consider reallocating to RIV or CEFS, which have shown stronger performance and potentially more stable returns.

Pitch Summary:
VictoryShares Dividend Accelerator ETF (VSDA) is marketed as a vehicle for dividend growth, but its underlying fundamentals do not support this narrative. The ETF's top holdings have shown minimal earnings growth, and the dividend growth rate appears artificially inflated. Despite its focus on dividend growth, the ETF's yield is low, and its expense ratio is relatively high. Given these factors, VSDA does not present a compelling investment opportunity and is rated a 'sell'.

BSD Analysis:
VSDA's strategy of focusing on dividend growth rather than yield is appealing in theory, especially in a rising interest rate environment. However, the ETF's top holdings, such as Franklin Resources and T. Rowe Price, have demonstrated stagnant or negative earnings growth, which undermines the sustainability of its dividend growth claims. The average payout ratio of 67.90% among its top holdings leaves little room for further dividend increases without earnings growth. Furthermore, the ETF's turnover rate of 50% suggests a lack of long-term strategic focus, potentially leading to higher transaction costs and reduced returns. Despite a CAGR of 16.90% in dividends since 2018, this growth appears to be more of a managed illusion than a reflection of underlying performance. In comparison to its peers, VSDA has underperformed on a total return basis, making it an unattractive option for investors seeking reliable dividend growth supported by strong fundamentals.

Pitch Summary:
Sezzle has experienced a significant stock price surge, driven by strong financial performance and increased consumer engagement. However, the current valuation appears excessive, and the potential for asset quality deterioration poses a risk. The company's robust growth is fueled by higher consumer approvals, but this also increases exposure to credit risk. Given these factors, a neutral stance is recommended until further clarity on asset quality emerges.

BSD Analysis:
Sezzle's impressive growth, with a 123% YoY revenue increase in Q1 2025 and a quadrupling of GAAP EPS, underscores its operational strength. The company's ability to attract new consumers has driven this growth, but it also raises concerns about future asset quality. The approval rate for new consumers has increased, potentially leading to higher delinquency rates. Sezzle's valuation, with a forward P/E of 53x and EV/sales of 13x, is significantly above the sector median, suggesting limited upside potential at current levels. Management's guidance on increased provisions for credit losses further supports a cautious approach. Monitoring the company's asset quality and market reactions to upcoming earnings will be crucial for future investment decisions.

Pitch Summary:
Modiv Industrial presents a compelling investment opportunity due to its unique focus on net-leased, mission-critical manufacturing facilities. The company's strategic pivot away from diversified real estate to a specialized industrial portfolio aligns with macroeconomic trends such as U.S. onshoring and increased demand for domestic manufacturing infrastructure. Modiv's conservative capital management, including a focus on reducing leverage and maintaining high tenant retention, supports its potential for significant equity gains. The stock's current valuation, at a low forward FFO multiple, suggests an asymmetric upside, particularly if interest rates ease and management continues its disciplined approach.

BSD Analysis:
Modiv Industrial's strategic focus on mission-critical manufacturing facilities positions it well to capitalize on the reshoring trend in U.S. manufacturing. The company's triple-net-lease structure ensures stable income with minimal operating expenses, appealing to income-focused investors. Modiv's disciplined capital allocation, including selective property acquisitions and a cautious approach to equity issuance, reflects a commitment to shareholder value. The insider ownership of over 8.5% indicates strong alignment between management and shareholders, further bolstered by recent insider purchases. Despite risks such as tenant concentration and interest rate sensitivity, Modiv's robust occupancy rate and long lease terms mitigate some of these concerns. The potential for FFO growth, coupled with a dividend reinvestment strategy, suggests a credible path to doubling the investment over five years, assuming favorable macroeconomic conditions and continued operational execution.

Pitch Summary:
Dell Technologies is poised for significant growth due to a surge in AI server orders, which has substantially increased its order backlog. Despite a recent EPS miss, the company's robust order activity and strategic partnerships, particularly with Nvidia, suggest a strong revenue growth trajectory. Trading at 13x forward earnings, Dell appears undervalued, with a potential upside as it capitalizes on the growing demand for AI infrastructure.

BSD Analysis:
Dell's strategic positioning within Nvidia's ecosystem and its partnership with AI-focused companies like CoreWeave enhance its competitive edge in the rapidly expanding AI server market. The company's ability to efficiently manage and ship its backlog indicates a faster revenue recognition cycle, which should positively impact its financial performance. Despite concerns about margin pressure due to high inventory levels, Dell's operating income in its Infrastructure Solutions Group is expected to grow, driven by aggressive capex plans from partners. With a forward P/E ratio of 13x, Dell's valuation offers room for expansion to its historical average of 15.1x, suggesting a potential price target of $143.4. This reflects a 16% upside, making Dell an attractive investment opportunity in the technology sector.

Pitch Summary:
JEPQ is positioned to outperform due to its lower fees and strategic use of equity-linked notes (ELNs) alongside Nasdaq stocks, which allows for greater upside potential in a rising market. The ETF's partial option overlay strategy is advantageous in the current environment of subdued volatility, offering a better return/risk profile compared to funds with full option overlays.

BSD Analysis:
JEPQ's rapid growth in assets under management (AUM), reaching $27.92 billion since its inception in 2022, underscores its appeal. The ETF's expense ratio of 0.35% is competitive, enhancing its attractiveness relative to peers like QYLD, which has a higher expense ratio of 0.60%. JEPQ's strategy of investing up to 20% in ELNs, combined with a proprietary algorithm for stock selection, provides a balanced approach that mitigates downside risk while capturing upside in a favorable market. Historical performance data shows JEPQ's total return of 64.58% over the past three years, significantly outpacing QYLD's 36.51%, largely due to its less restrictive option overlay. Given the current geopolitical and macroeconomic conditions, with the VIX index stabilizing, JEPQ's strategy is well-suited to continue delivering superior returns.

Pitch Summary:
Mesa Laboratories, Inc. is positioned for growth due to its strong order backlog and potential revenue increases in FY 2026. Despite recent revenue growth and strategic acquisitions, the company remains unprofitable and offers a dividend yield below the sector median. The stock is currently trading at a premium compared to peers, but its valuation is supported by projected revenue growth.

BSD Analysis:
Mesa Laboratories has demonstrated robust order growth, particularly in its Sterilization and Disinfection Control segment, which is crucial given the expanding Chinese sterilization market. The acquisition of GKE has significantly contributed to revenue growth, yet the company has not achieved profitability, with a net loss of $2 million in FY 2025. The forward EV/Sales multiple of 2.77X suggests a valuation slightly below the industry median, indicating potential undervaluation if revenue projections materialize. However, the company's high debt level and low dividend yield suggest a focus on reinvestment over shareholder returns. Investors should monitor the upcoming Q1 2026 results for further insights into the company's financial trajectory and order fulfillment capabilities.