Investment Pitches

Pitch Summary:
ING Groep is currently undervalued relative to its large-cap European financial peers, despite its recent outperformance. The bank's strategic focus on achieving a 14% return on equity by 2027, coupled with its ongoing share buyback program, positions it well for future growth. Although ING faces headwinds from ECB rate cuts and a strong Euro, its valuation remains attractive, especially if it meets its 2027 profitability goals.

BSD Analysis:
ING Groep's valuation at approximately 9.8x its 2025-2026 earnings, with a potential drop to 7.9x if 2027 targets are met, underscores its appeal compared to the broader European financial sector, which trades at higher multiples. The bank's reliance on net interest income makes it sensitive to ECB rate decisions, yet its strategic initiatives, including a €2 billion share buyback, enhance shareholder value. ING's tangible book value premium over peers like ABN AMRO suggests market confidence in its superior profitability prospects. However, the risk of further ECB easing and a narrowing economic advantage in the Netherlands could impact future earnings. Overall, ING's current valuation and growth strategy justify a Buy rating, despite potential macroeconomic challenges.

Pitch Summary:
Rigetti Computing has recently experienced a significant increase in its stock price due to a breakthrough in reducing two-qubit gate error rates. While this development is promising for the company's long-term potential in quantum computing, the current stock price surge is seen as overextended. The market appears to have already priced in the potential profitability from future grants, such as the DARPA grant. Therefore, the recommendation is to sell the stock at current elevated valuations.

BSD Analysis:
Rigetti's recent achievement in improving qubit fidelity is a critical milestone in quantum computing, potentially positioning the company for lucrative government contracts like DARPA's Quantum Benchmarking Initiative. However, the company's financial health is a concern, with a high cash burn rate and significant shareholder dilution due to frequent share offerings. Rigetti's stock is trading at an inflated 24-25x book value, reflecting excessive investor optimism. Additionally, approximately 20% of its shares are shorted, which could lead to temporary price spikes if short sellers cover their positions. Despite these factors, the current valuation suggests that the market has already accounted for future profitability, making it advisable for investors to lock in profits and wait for a more reasonable entry point.

Pitch Summary:
As inflation continued to push prices higher and the threat of tariffs introduced the threat of further price increases, dollar stores presented an excellent opportunity for investment. As the low-cost (and in some towns the "only") provider at scale, both Dollar General (DG) and Dollar Tree (DLTR) can raise prices to increase both their top and bottom lines. Leading up to this point, both stocks were down significantly. We invested in both in early April. We continue to hold DLTR—in addition to its ability to take price, the company is undergoing a transformational change with the Family Dollar spinoff.

BSD Analysis:
Grey Owl's Dollar Tree investment thesis combines both tactical inflation-driven pricing power and a longer-term transformation story through the Family Dollar spinoff. The manager recognized DLTR's ability to raise prices during inflationary periods while maintaining its low-cost provider advantage in underserved markets. Unlike Dollar General which was sold for a quick gain, DLTR represents a more strategic holding due to the ongoing Family Dollar divestiture, which should unlock value and improve operational focus. The spinoff represents a significant corporate action that could reduce complexity and improve margins for the core Dollar Tree business. The continued holding suggests the manager believes the transformation story has further upside beyond the initial inflation-driven price appreciation. This position demonstrates the fund's ability to layer multiple investment themes - tactical inflation plays with longer-term corporate restructuring catalysts. The Family Dollar spinoff could potentially improve DLTR's competitive positioning and financial metrics over time.

Pitch Summary:
As inflation continued to push prices higher and the threat of tariffs introduced the threat of further price increases, dollar stores presented an excellent opportunity for investment. As the low-cost (and in some towns the "only") provider at scale, both Dollar General (DG) and Dollar Tree (DLTR) can raise prices to increase both their top and bottom lines. Leading up to this point, both stocks were down significantly. DG had fallen over 72% from an all-time-high in late 2022. We invested in both in early April. We sold DG in early July realizing a gain of over 28% in a few months.

BSD Analysis:
Grey Owl identified Dollar General as a tactical opportunity during an inflationary environment, recognizing the company's pricing power as a low-cost provider with scale advantages. The manager's thesis centered on DG's ability to raise prices and expand margins during periods of inflation and potential tariff implementation, particularly given its position as the sole retailer in many rural markets. The investment was made after a significant 72% decline from 2022 highs, suggesting attractive valuation entry point. The position was executed as a short-term tactical trade rather than a long-term holding, with the manager successfully capturing a 28% gain over approximately three months. This demonstrates the fund's opportunistic approach to capitalizing on market dislocations. The quick exit suggests the manager viewed the opportunity as primarily a mean-reversion play rather than a fundamental transformation story. The success of this trade validates the manager's ability to identify and execute on tactical opportunities within their broader all-seasons framework.

Pitch Summary:
Revolve – Revolve was the only position in the portfolio that declined during the quarter, largely due to management's comments about a slowdown to mid-single-digit revenue growth in April—down from double digits the month prior—as well as initial guidance on tariff impacts. Since then, the company has indicated a return to double-digit growth and noted that cost headwinds are now more limited following a reduction in China-related tariffs. Despite this, the stock has remained under pressure. We've taken the opportunity to add to our position at what we believe are highly attractive valuations.

BSD Analysis:
The manager maintains a bullish stance on Revolve despite recent stock underperformance and temporary growth deceleration. The company experienced a slowdown to mid-single-digit revenue growth in April, down from double-digit growth previously, which concerned investors along with initial tariff impact guidance. However, management has since indicated a return to double-digit growth rates and noted that cost pressures have diminished following reductions in China-related tariffs. The manager views the persistent stock weakness as disconnected from the improving fundamental trajectory, creating an attractive buying opportunity. The decision to add to the position during the decline demonstrates strong conviction in the company's ability to return to historical growth rates. The manager believes current valuations are highly attractive relative to the company's long-term prospects, suggesting the market is overreacting to temporary headwinds. This contrarian positioning reflects confidence that Revolve's competitive advantages in online fashion retail remain intact despite near-term challenges.

Pitch Summary:
Wayfair – Wayfair reported results that were better than feared and has cited strong demand trends at recent investor conferences. After waiting more than two years for revenue growth to inflect, it now appears—based on both management commentary and recent results—that the tide is finally turning. One key unknown in the e-commerce landscape is the fallout from the de minimis loophole closure, which has negatively impacted Chinese players like Temu and Shein. While it's too early to know for sure, Wayfair could be one of the key beneficiaries of that disruption.

BSD Analysis:
The manager sees Wayfair at a potential inflection point after an extended period of revenue growth challenges. The company's recent results exceeded low expectations and management has indicated improving demand trends, suggesting the business may be emerging from its growth trough. After more than two years of waiting for revenue growth to recover, the manager believes the fundamental trajectory is finally improving based on both quantitative results and qualitative management commentary. A key potential catalyst is the closure of the de minimis loophole, which has disrupted Chinese e-commerce competitors like Temu and Shein. This regulatory change could create a competitive advantage for domestic players like Wayfair by reducing the cost advantage of Chinese imports. While the manager acknowledges uncertainty around this development, the potential for market share gains from disrupted competitors represents meaningful upside optionality. The combination of improving organic trends and potential competitive tailwinds positions Wayfair for a potential recovery in growth and profitability.

Pitch Summary:
Carvana – Carvana posted another exceptional quarter, growing retail units by 46%, revenue by 38%, and achieving an all-time high adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization) margin of 11.5%. Management reiterated their outlook for continued rapid growth and margin expansion, and most notably, introduced a bold new long-term target: 3 million annual retail units at a 13.5% EBITDA margin within 5–10 years. Knowing this team, our bet is they're aiming for the low end of that range—which would imply over 40% annualized unit growth, more than 5% above our prior expectations. We remain very encouraged by Carvana's trajectory and continue to view it as a compelling 5-year investment opportunity.

BSD Analysis:
The manager is highly bullish on Carvana's exceptional operational performance and ambitious long-term targets. The company delivered impressive Q2 metrics with 46% unit growth, 38% revenue growth, and record 11.5% EBITDA margins, demonstrating strong execution across key performance indicators. Management's new long-term target of 3 million annual units at 13.5% EBITDA margins represents a significant scaling opportunity that exceeds the manager's previous expectations. The manager's confidence in management's ability to achieve the aggressive timeline suggests strong conviction in the team's execution capabilities. The implied 40% annualized unit growth trajectory positions Carvana for substantial market share gains in the used car market. The combination of rapid growth and margin expansion indicates the business model is achieving operational leverage and efficiency gains. The manager views this as a compelling multi-year investment opportunity with significant upside potential as the company scales toward its ambitious targets.

Pitch Summary:
ThredUp – As we noted in our Q1 letter, ThredUp is undergoing a significant inflection point that's rapidly shifting investor perception of the business. The company delivered strong Q1 results, beating expectations and raising guidance for Q2 and the full year. While the stock has already had a strong run year-to-date, we continue to see meaningful upside over the coming years as ThredUp scales into its existing fulfillment center capacity.

BSD Analysis:
The manager views ThredUp as experiencing a significant business inflection that is reshaping investor sentiment. The company demonstrated strong operational execution by beating Q1 expectations and raising forward guidance, indicating accelerating momentum. The manager maintains a bullish outlook despite the stock's strong year-to-date performance, suggesting the current valuation doesn't fully reflect the company's potential. The key investment thesis centers on ThredUp's ability to scale efficiently into existing fulfillment infrastructure, which should drive margin expansion and profitability improvements. This operational leverage story appears to be in early stages, with the manager expecting meaningful upside as the company optimizes capacity utilization. The inflection point narrative suggests ThredUp has moved past earlier growth challenges and is now positioned for sustainable expansion. The manager's confidence in continued upside despite recent gains indicates strong conviction in the long-term value creation opportunity.

Pitch Summary:
We also exited our position in Visa, a company we've long respected for its formidable moat, high margins, low capital intensity, and near-duopolistic control of global card payments alongside Mastercard. However, growing concerns about potential disruption from digital assets and blockchain technology prompted us to reassess its outlook. While Visa remains a fundamentally strong business, we believe its market is vulnerable to competitive pressures that could lead to a significant valuation derating or extended period of stagnation.

BSD Analysis:
Alpine Capital exited their Visa position despite long-standing respect for the company's exceptional business model characteristics, including formidable competitive moats, high margins, low capital intensity, and near-duopolistic control of global card payments with Mastercard. The manager's bearish turn stems from growing concerns about potential disruption from digital assets and blockchain technology threatening Visa's traditional payment processing dominance. While acknowledging Visa remains fundamentally strong, Alpine believes the company's market position is increasingly vulnerable to competitive pressures from emerging payment technologies. The manager anticipates this disruption risk could lead to significant valuation derating or an extended period of business stagnation. This exit reflects a forward-looking assessment of technological disruption risks outweighing current business strength.

Pitch Summary:
We sold our stake in Micron Technology, a standout S&P 500 performer in 2025,as its rapid price surge drove valuations above our comfort levels. To maintain our positive outlook on the semiconductor sector, we reallocated the proceeds to the iShares Semiconductor ETF (SOXX), ensuring diversified exposure. Our initial investment in Micron was a calculated move, capitalising on its significant decline from prior highs while recognising its strong long-term fundamentals and competitive advantage.

BSD Analysis:
Alpine Capital exited their Micron Technology position after the stock became a standout S&P 500 performer in 2025, with valuations rising above the manager's comfort levels. The original investment thesis was opportunistic, capitalizing on Micron's significant decline from previous highs while recognizing the company's strong long-term fundamentals and competitive advantages in memory semiconductors. Despite the sale, Alpine maintains a positive outlook on the semiconductor sector, reallocating proceeds to the iShares Semiconductor ETF (SOXX) for diversified exposure. The exit reflects disciplined portfolio management and valuation discipline rather than a fundamental change in view of Micron's business quality. The manager's approach demonstrates tactical profit-taking while maintaining sector exposure through a broader ETF vehicle.

Pitch Summary:
We capitalised on attractive valuations in the semiconductor sector by initiating a position in Lam Research Corporation, a premier semiconductor equipment manufacturer. Lam Research drives technological advancement by producing the machinery essential for semiconductor fabrication, positioning it as a vital enabler of the industry's growth, akin to a modern utility. This addition strengthens our exposure to the semiconductor ecosystem while aligning with our focus on innovative, high-quality businesses.

BSD Analysis:
Alpine Capital initiated a position in Lam Research based on attractive valuations in the semiconductor equipment sector. The manager views Lam Research as a premier manufacturer of semiconductor fabrication equipment, positioning it as a critical enabler of industry growth. The investment thesis characterizes the company as a 'modern utility' due to its essential role in producing machinery required for semiconductor manufacturing. This strategic addition enhances Alpine's semiconductor ecosystem exposure while maintaining alignment with their focus on innovative, high-quality businesses. The timing appears opportunistic, capitalizing on sector-wide valuation compression. The manager sees Lam Research as benefiting from the ongoing AI-driven semiconductor demand cycle.

Pitch Summary:
Consequently, we've added Galaxy Digital Holdings—a digital asset and AI infrastructure-focused company—to select portfolios, seeing it as an asymmetric investment opportunity. The investment centres on its Helios data infrastructure facility in West Texas, which has shifted from Bitcoin mining to AI use, leveraging 800MW of approved ERCOT power to avoid 36-month delays, with an additional 1.7GW (totalling 2.5GW) in progress to meet growing AI demand. A recent deal with CoreWeave for the initial 600MW ensures strong cash flow and stability. Effective management execution could deliver substantial returns over the next 2–3 years, though volatility is anticipated in the coming months.

BSD Analysis:
Alpine Capital views Galaxy Digital as an asymmetric opportunity positioned at the intersection of digital assets and AI infrastructure. The manager's thesis centers on the company's strategic pivot from Bitcoin mining to AI data center operations through its Helios facility in West Texas. The investment case is strengthened by Galaxy's substantial power capacity of 800MW already approved by ERCOT, with an additional 1.7GW in development, totaling 2.5GW to meet surging AI demand. A partnership with CoreWeave for 600MW provides immediate cash flow visibility and operational stability. The manager expects substantial returns over 2-3 years if management executes effectively, though acknowledges near-term volatility. This position aligns with Alpine's broader thesis on AI infrastructure demand and electricity requirements for data centers.

Pitch Summary:
Toast combines two of what we believe are among the most compelling business models in the world – vertical market software and payment processing. Toast's focus is on the restaurant industry, where they started as a cloud-based point-of-sale (POS) system and evolved into a software platform that functions as the operating system of a restaurant. Toast also processes payments for their customers, and we view Toast's model as one of the most elegant combinations of SaaS and payments in the broader market. Toast is founder-led by Aman Narang, one of Toast's original three founders, who assumed the role of CEO early last year. We initiated an optionality position in the summer of 2022. Toast went public at the height of the growth market in November 2021 in a highly anticipated IPO at a demanding valuation; the stock eventually declined ~80% peak-to-trough in 2022, creating a compelling entry point. Their platform embodies several aspects we look for in optionality positions – most notably they are taking a digital approach to a market that was previously underserved by technology and stuck running legacy, on-premises POS systems. We believe Toast has the opportunity to deploy the classic innovator's playbook of starting downmarket (SMB restaurants in this case) and moving upmarket. Toast has a clear data advantage via insights into their customers from processing their payments real-time, and they have leveraged those data to introduce new products, including Toast Capital, a lending platform for SMB restaurants, which has become a meaningful contributor to their gross profits and their customers' success. Importantly, Toast is a classic example of a company creating a non-zero-sum outcome within their ecosystem; they help their customers run more efficiently and create new revenue streams in a notoriously low-margin and competitive industry, yet they only extract a relatively low toll. We believe the restaurant and hospitality sector is likely to follow other vertical software markets toward winner-take-most dynamics, where one provider achieves a dominant position. One of Toast's key differentiators is that its go-to-market model is inherently local. The company builds city by city, using a "boots on the ground" sales approach to gain traction. As each market scales, Toast hits critical mass and builds a local network effect; they receive more inbound leads and referrals, driving a significant boost in sales efficiency. Toast calls these markets "flywheel markets" as they follow a predictable S-curve. Businesses that are driven by local network effects are unique and difficult to disrupt; Toast's scaling in local markets is reminiscent of the early days of Uber. While the initial thesis on Toast centered on their ability to win independent restaurants (their average location has roughly $1M in annual revenue), Toast's platform has proven optimal for restaurants with multiple locations. As such, we believe that Toast has out-of-the-money optionality in their ability to move into the enterprise market (i.e., larger restaurant chains). Proof points of their ability to move upmarket continue to surface, with the company having announced landmark wins with Marriott, Top Golf, and, most recently, Applebee's, where Toast will be deployed across all of Applebee's 1500 locations nationwide. Toast's progress toward profitability continues to exceed our expectations. When we initiated our position nearly three years ago, the company was operating at roughly breakeven. Today, Toast delivers non-GAAP EBITDA margins in the low 30% range, reflecting both cost discipline and the benefits of scaled flywheel markets. Notably, this profitability has been achieved while continuing to invest heavily in the core platform and in strategic areas such as hospitality, enterprise, and international expansion. Over time, we believe Toast's profitability profile could resemble that of best-in-class vertical market software companies, with margins exceeding 40%.

BSD Analysis:
NZS Capital presents a compelling bull case for Toast, emphasizing the company's unique positioning at the intersection of vertical market software and payment processing within the restaurant industry. The manager highlights Toast's evolution from a simple POS system to a comprehensive restaurant operating system, creating significant switching costs and customer stickiness. The thesis centers on Toast's ability to execute the classic innovator's playbook of starting with SMB restaurants and moving upmarket, with recent enterprise wins at Marriott, TopGolf, and Applebee's validating this strategy. The local network effects and "flywheel markets" approach creates defensible competitive advantages reminiscent of Uber's early expansion model. Toast's dramatic profitability improvement from breakeven to 30%+ EBITDA margins demonstrates operational leverage and market penetration success. The company's data advantage through real-time payment processing enables product expansion into adjacent services like Toast Capital lending. NZS views the restaurant software market as likely to consolidate into winner-take-most dynamics, positioning Toast as the potential dominant player in a large, underdigitized vertical market.

Pitch Summary:
Adobe's current share price does not reflect the company's strong financial performance and market position. Despite concerns that AI could negatively impact Adobe's business by reducing the workforce in graphic design, the opposite is likely true. AI-enhanced products will make businesses more reliant on Adobe, increasing its pricing power. Adobe's cash flows and revenue are at all-time highs, and the company has a strong history of share buybacks. The market has undervalued Adobe, with its PE ratio dropping to 23, despite its sustainable competitive advantages and continued revenue growth.

BSD Analysis:
Adobe's financials are robust, with free cash flow exceeding long-term debt, indicating zero insolvency risk. The company's strategic share buybacks, amounting to 5.9% of its market cap in 2024, demonstrate its commitment to returning value to shareholders. Adobe's industry-standard products create a network economy, making it difficult for competitors to dislodge its market position. The company's brand recognition and customer loyalty further strengthen its competitive moat. Concerns about AI's impact on Adobe are overblown, as the company's innovative AI tools like Firefly are likely to enhance its product offerings and market appeal.

Pitch Summary:
Waters (Health Care, Environmental Testing & Monitoring) moved lower during the quarter, driven by increasing attention on the US Administration's attempt to moderate drug pricing in the US. If successful, this could have a negative downstream effect on life science tools companies such as Waters. The stock also traded down on its Q1 earnings release. Whilst the results were solid, they were below elevated investor expectations.

BSD Analysis:
Waters is a premium player in analytical instruments, chromatography, and mass spectrometry, serving pharma, biotech, and advanced materials researchers. Its installed base is massive, generating sticky recurring revenue from consumables and services. While growth can ebb with biopharma funding cycles, Waters’ position in regulatory workflows keeps demand fairly defensive. The company is modernizing its portfolio and improving software integration, which should enhance customer lock-in. Margins are strong due to premium pricing and high-value instruments. Waters may grow slower than some life-science peers, but it executes with discipline and stability. This is a steady picks-and-shovels name in scientific research.

Pitch Summary:
Wayfair reported results that were better than feared and has cited strong demand trends at recent investor conferences. After waiting more than two years for revenue growth to inflect, it now appears—based on both management commentary and recent results—that the tide is finally turning. One key unknown in the e-commerce landscape is the fallout from the de minimis loophole closure, which has negatively impacted Chinese players like Temu and Shein. While it’s too early to know for sure, Wayfair could be one of the key beneficiaries of that disruption.

BSD Analysis:
Wayfair is a high-operating-leverage e-commerce name that looks awful in downturns and incredible when demand normalizes. Cost-cutting and logistics improvements have shifted contribution margins meaningfully higher. Wayfair owns the online home category despite endless competition attempts. When housing stabilizes, discretionary home spending typically rebounds with a lag, giving Wayfair a powerful second-derivative effect. The company doesn’t need hypergrowth; it needs steady volume and disciplined cost structure. Investors still treat it like a terminally broken model, but the turnaround is taking shape. If demand recovers, Wayfair’s earnings rebound can be dramatic.

Pitch Summary:
Carvana posted another exceptional quarter, growing retail units by 46%, revenue by 38%, and achieving an all-time high adjusted EBITDA margin of 11.5%. Management reiterated their outlook for continued rapid growth and margin expansion, and most notably, introduced a bold new long-term target: 3 million annual retail units at a 13.5% EBITDA margin within 5–10 years. Knowing this team, our bet is they’re aiming for the low end of that range—which would imply over 40% annualized unit growth, more than 5% above our prior expectations. We remain very encouraged by Carvana’s trajectory and continue to view it as a compelling 5-year investment opportunity.

BSD Analysis:
Carvana has executed one of the most improbable corporate revivals of the past decade, transitioning from a bankruptcy candidate to a margin-expanding e-commerce dealer. The debt restructuring gave it room to breathe, and cost discipline reshaped the financial model. Its logistics footprint remains a competitive advantage in a notoriously inefficient industry. Used-car supply remains tighter than expected, benefiting Carvana’s marketplace dynamics. Bears still cling to the old narrative, but operating trends keep smashing those assumptions. This is still a volatile, leveraged story — but the existential risk has dramatically faded. Carvana now plays offense, not survival.

Pitch Summary:
ThredUp – As we noted in our Q1 letter, ThredUp is undergoing a significant inflection point that’s rapidly shifting investor perception of the business. The company delivered strong Q1 results, beating expectations and raising guidance for Q2 and the full year. While the stock has already had a strong run year-to-date, we continue to see meaningful upside over the coming years as ThredUp scales into its existing fulfillment center capacity.

BSD Analysis:
ThredUp is building the logistics backbone of online resale, a business that looks chaotic until you understand the operating leverage inside the processing model. As consumers downshift, resale adoption accelerates — providing ThredUp with a structural tailwind. Efficiency gains in the distribution centers are finally showing up in unit economics. Brand partnerships are a sleeper catalyst, helping retailers manage their own circular-economy narratives. The company doesn’t need explosive growth; it needs throughput, automation, and steady take-rate improvement. Bears price it like a terminal cash-burning experiment, but contribution margins are improving. ThredUp is high-beta, but the turnaround is real.

Pitch Summary:
Toast combines two of what we believe are among the most compelling business models in the world – vertical market software and payment processing. Toast’s focus is on the restaurant industry, where they started as a cloud-based point-of-sale (POS) system and evolved into a software platform that functions as the operating system of a restaurant. Toast also processes payments for their customers, and we view Toast’s model as one of the most elegant combinations of SaaS and payments in the broader market. Toast is founder-led by Aman Narang, one of Toast’s original three founders, who assumed the role of CEO early last year. We initiated an optionality position in the summer of 2022. Toast went public at the height of the growth market in November 2021 in a highly anticipated IPO at a demanding valuation; the stock eventually declined ~80% peak-to-trough in 2022, creating a compelling entry point. Their platform embodies several aspects we look for in optionality positions – most notably they are taking a digital approach to a market that was previously underserved by technology and stuck running legacy, on-premises POS systems. We believe Toast has the opportunity to deploy the classic innovator’s playbook of starting downmarket (SMB restaurants in this case) and moving upmarket. Toast has a clear data advantage via insights into their customers from processing their payments real-time, and they have leveraged those data to introduce new products, including Toast Capital, a lending platform for SMB restaurants, which has become a meaningful contributor to their gross profits and their customers’ success. Importantly, Toast is a classic example of a company creating a non-zero-sum outcome within their ecosystem; they help their customers run more efficiently and create new revenue streams in a notoriously low-margin and competitive industry, yet they only extract a relatively low toll. We believe the restaurant and hospitality sector is likely to follow other vertical software markets toward winner-take-most dynamics, where one provider achieves a dominant position. One of Toast’s key differentiators is that its go-to-market model is inherently local. The company builds city by city, using a “boots on the ground” sales approach to gain traction. As each market scales, Toast hits critical mass and builds a local network effect; they receive more inbound leads and referrals, driving a significant boost in sales efficiency. Toast calls these markets “flywheel markets” as they follow a predictable S-curve. Businesses that are driven by local network effects are unique and difficult to disrupt; Toast’s scaling in local markets is reminiscent of the early days of Uber. While the initial thesis on Toast centered on their ability to win independent restaurants (their average location has roughly $1M in annual revenue), Toast’s platform has proven optimal for restaurants with multiple locations. As such, we believe that Toast has out-of-the-money optionality in their ability to move into the enterprise market (i.e., larger restaurant chains). Proof points of their ability to move upmarket continue to surface, with the company having announced landmark wins with Marriott, Top Golf, and, most recently, Applebee’s, where Toast will be deployed across all of Applebee’s 1500 locations nationwide. Toast’s progress toward profitability continues to exceed our expectations. When we initiated our position nearly three years ago, the company was operating at roughly breakeven. Today, Toast delivers non-GAAP EBITDA margins in the low 30% range, reflecting both cost discipline and the benefits of scaled flywheel markets. Notably, this profitability has been achieved while continuing to invest heavily in the core platform and in strategic areas such as hospitality, enterprise, and international expansion. Over time, we believe Toast’s profitability profile could resemble that of best-in-class vertical market software companies, with margins exceeding 40%.

BSD Analysis:
Toast is becoming the operating spine of the restaurant industry, embedding payments, software, and workflow into thousands of SMB kitchens that simply can’t function without it. The market obsesses over profitability, but Toast’s strategy is textbook fintech: land the POS, expand with payments, then layer on higher-margin services. The unit economics per cohort keep getting better as restaurants use more modules. Switching costs are brutal — once a restaurant runs on Toast, ripping it out mid-service is basically operational suicide. Bears hate the gross margin profile, but Toast is moving toward a SaaS-fintech hybrid that historically commands premium multiples. If they crack multi-location chains, the model scales fast. This is a misunderstood infrastructure asset disguised as a POS vendor.

Pitch Summary:
Rocket Companies announced two transformative acquisitions during the first half of 2025, of (1) Redfin [PR here] and (2) Mr Cooper [PR here]. In connection with the Redfin transaction, which recently closed, Rocket collapsed its "Up-C" structure and now all of the company's common stock has equal voting rights. The Mr Cooper transaction is expected to close by the end of 2025. • Redfin Acquisition: Valued at $1.75B (or $12.50/RFIN share). Stated rationale: "By combining Redfin's home search and real estate agent network with Rocket's mortgage origination and servicing capabilities, [RKT] envisions a more seamless experience from search to close, to servicing and future transactions." The company has already announced that clients buying a house using a Redfin agent and obtaining a Rocket Mortgage to finance the purchase will receive preferred mortgage pricing: "Clients who finance their home through Rocket Mortgage and buy a home listed by a Redfin agent or purchase with the help of a Redfin agent will have a one percentage point reduction in their interest rate for the first year of their loan or receive a lender credit at closing, up to $6,000."

• Mr Cooper Acquisition: Valued at $9.4B (or 11 RKT shares for each COOP share). Rocket shareholders will own approximately 75% of the combined company on a fully diluted basis (pro forma for the Redfin transaction), while Mr. Cooper shareholders will own approximately 25%. Stated rationale: "(1) Combined company to service more than $1.2 trillion in loan volume. (2) Integrating Rocket's originations-servicing recapture flywheel with Mr. Cooper's servicing platform will drive down costs and improve the experience for the companies' nearly 10 million combined clients, representing one in every six mortgages. (3) Transaction is expected to generate annual run-rate revenue and cost synergies of approximately $500 million, contributing to organic revenue growth while increasing operating leverage and maintaining significant capital and liquidity."

BSD Analysis:
Rocket Companies is a high-beta, high-risk mortgage technology pure-play whose stock is a leveraged bet on the eventual, inevitable decline in interest rates. The core thesis is driven by the fact that earnings are forecast to grow 111.65% per year once the housing affordability issues subside and the refinance market inevitably returns. The company is actively positioning for this rebound by attempting to acquire strategic assets like Redfin. The stock is trading at a trough valuation, penalized by the cyclical low in mortgage origination volume. Rocket is a high-conviction bet that its operating leverage will drive a massive earnings inflection the moment interest rates fall and refinancing volumes surge.