Investment Pitches

Pitch Summary:
Enterprise Products Partners (EPD) is positioned to outperform the S&P 500 over the next decade due to its strategic focus on low-cost natural gas processing and NGL production. The company benefits from its extensive infrastructure, including pipelines and export facilities, which allow it to capitalize on low-cost hydrocarbons from the Permian Basin. EPD's business model is resilient, with a significant portion of earnings derived from fee-based contracts, insulating it from commodity price volatility. The company's prudent financial management, evidenced by a balanced debt-equity ratio and strategic capital allocation, further supports its growth potential.

BSD Analysis:
EPD's financial health is robust, with a debt-to-equity ratio below 50%, which is conservative for the industry. The company's long-term debt has an average maturity of 18 years at a favorable interest rate of 4.7%, below current U.S. Treasury rates. EPD's capital expenditures have been strategically reduced, allowing for greater free cash flow and potential unit buybacks. The recent acquisition of Piñon Midstream enhances EPD's capabilities in the Delaware Basin, addressing the need for sour gas treatment and positioning the company for increased volumes in natural gas and NGL segments. Despite geopolitical risks and potential oversupply in petrochemicals, EPD's low-cost production and long-term contracts mitigate these threats. The company's focus on return on invested capital (ROIC) rather than mere earnings growth ensures sustainable value creation for unitholders. Overall, EPD's strategic investments and financial discipline make it an attractive investment for long-term growth and income.

Pitch Summary:
UnitedHealth Group, despite facing significant public relations challenges and scrutiny over its claims handling, remains a dominant player in the U.S. health insurance market. The company's extensive scale provides it with considerable bargaining power, and its integrated model of insurance and healthcare services offers unique synergies. While its current combined ratio suggests room for improvement in underwriting profitability, the company's strong balance sheet and historical profitability metrics provide a buffer against current controversies. The stock is considered a low-conviction buy, contingent on the company's ability to address its reputational risks and maintain its market position.

BSD Analysis:
UnitedHealth's valuation appears attractive relative to the broader market, with lower P/E and price/book ratios compared to the S&P 500, though not particularly low within the health insurance sector. The company's recent financial performance shows robust revenue and net income growth, with a notable 44.6% increase in EPS over the trailing 12 months. However, the combined ratio of 97.2% indicates that the company is operating close to the threshold of underwriting profitability, suggesting vulnerability to increased claims. Regulatory risks loom, particularly concerning potential legislation affecting its pharmacy benefit management operations. Despite these challenges, UnitedHealth's strategic advantages, such as its market-leading position and integrated service offerings, support a forecasted earnings growth of 5% annually over the next five years. This growth, coupled with a fair value estimate of $344, suggests a potential upside, albeit with caution due to the reputational and regulatory risks involved.

Pitch Summary:
Westlake Corporation, despite its strong fundamentals and vertical integration, faces significant challenges due to its exposure to volatile markets such as housing and infrastructure. The company's earnings are highly unpredictable, with historical trends showing significant fluctuations. Current macroeconomic conditions, including tariffs and energy costs, further exacerbate these challenges. While Westlake has made efforts to improve efficiency and reliability, these measures are insufficient to offset the broader market headwinds. Consequently, the stock is overvalued at its current price, and a more attractive entry point would be around $70 per share.

BSD Analysis:
Westlake's financial performance is heavily influenced by external factors such as tariffs and the housing market, which are currently unfavorable. The company's earnings volatility is evidenced by its historical pattern of significant beats and misses, making it a challenging investment to forecast accurately. Despite its investment in vertical integration and cost-saving measures, Westlake's profitability is hindered by rising raw material and energy costs, as well as unplanned operational outages. The company's dividend yield is less competitive compared to peers like LyondellBasell, which offers a higher yield and similar recovery prospects. Furthermore, Westlake's valuation multiples are not compelling when compared to its historical averages and industry peers. Given these factors, the stock's risk-reward profile is unattractive at its current valuation, and investors might find better opportunities in other chemical companies with more stable market exposures and higher yields.

Pitch Summary:
Pembina Pipeline Corporation is recommended as a 'buy' due to its robust cash flows supported by long-term contracts, strategic acquisitions, and a strong dividend yield. The company's recent acquisitions, including Alliance Pipeline and Aux Sable, have enhanced its market position and are expected to drive future earnings growth. Despite high debt levels and execution risks, Pembina's stable cash flow and strategic M&A activities make it an attractive investment in the midstream energy sector.

BSD Analysis:
Pembina's financial performance in Q1 2025 demonstrates the positive impact of its recent acquisitions, with a 12% increase in adjusted EBITDA and significant growth in cash flow from operations. The company's strategic focus on long-term, fee-based contracts ensures stable revenue streams, while its forward dividend yield of 5.56% reflects confidence in sustained earnings. However, investors should be cautious of potential risks such as commodity price fluctuations, regulatory challenges, and interest rate increases, which could impact profitability. Pembina's ability to manage its debt and execute on its growth strategy will be critical in maintaining its competitive edge in the energy infrastructure industry. Overall, Pembina's strong fundamentals and growth prospects make it a compelling investment opportunity for those seeking reliable income and long-term capital appreciation.

Pitch Summary:
Eagle Point Credit (ECC) is facing significant challenges, as evidenced by a 21.74% decline in its stock price since December 2024, despite a broader market increase. The company's high dividend yield of 23.73% is overshadowed by a steep expense ratio of 9.53%, which is considerably above the industry norm. The stock's performance is poor, and the high yield is not enough to compensate for the declining share price, making it an unattractive investment.

BSD Analysis:
Eagle Point Credit's performance has been lackluster, with its stock price declining significantly more than the dividends it offers, even before considering tax implications. The high expense ratio of 9.53% is a red flag, as it is well above the typical threshold of 1% that investors generally find acceptable. Despite positive analyst recommendations, the stock's fundamentals do not support optimism. The company's reliance on CLOs, which are complex financial instruments, adds another layer of risk, especially in volatile market conditions. Furthermore, the correlation between declining stock price and net asset value suggests underlying financial weaknesses. Investors should be cautious, as the current yield is primarily a result of the falling stock price, not improved operational performance. Without a clear catalyst for turnaround, ECC remains a speculative and high-risk investment.

Pitch Summary:
Advanced Micro Devices (AMD) has demonstrated significant growth potential, driven by its robust performance in the data center and AI segments. The company's MI series, particularly the MI325X and MI350, has gained traction among enterprise and cloud customers, enhancing AMD's competitive position against industry leader Nvidia. With strong financial results in Q1 2025, including a 57% year-over-year growth in the Data Center segment and improved profitability, AMD is well-positioned for continued expansion.

BSD Analysis:
AMD's strategic focus on the data center and AI markets is yielding impressive results, as evidenced by a 36% increase in quarterly revenue to $7.4 billion and substantial margin improvements. The company's MI series, leveraging advanced technologies like the 3nm process node and HBM3E memory, is capturing significant demand from hyperscalers and enterprise clients. Despite geopolitical challenges, such as U.S.-China trade tensions, AMD's ability to resume MI308 shipments to China underscores its resilience and adaptability. The forward-looking EV-to-EBITDA multiple of ~36.8x reflects market confidence in AMD's growth trajectory, supported by its innovative product roadmap and strategic customer relationships. As AMD continues to close the gap with Nvidia, its commitment to innovation and expansion in AI and data center solutions positions it as a formidable player in the semiconductor industry.

Pitch Summary:
The investment thesis for Alphabet centers on the potential undervaluation of its non-search assets amidst market panic over the rise of large language models (LLMs). The thesis posits that the market's fear of LLMs disrupting traditional search has led to Alphabet's shares trading at decade-low valuations, effectively pricing in only its Google Cloud, YouTube, and Android businesses. This presents a buying opportunity, as these assets alone could justify Alphabet's current market cap, with the potential for significant upside as Google Cloud continues to grow.

BSD Analysis:
Alphabet's Google Cloud Platform (GCP) is positioned as a key growth driver, with sales reaching $50 billion annually and margins expected to expand significantly. The cloud market remains largely untapped, with over 85% of IT spend still on-premises, suggesting substantial growth potential for GCP. Alphabet's strategic buybacks have reduced its share count, enhancing shareholder value. The company's diverse revenue streams, including YouTube and Android, contribute to its resilience. Despite competitive pressures from emerging cloud providers, Alphabet's established position and ongoing innovation in AI and cloud services provide a strong foundation for future growth. The market's current valuation appears to underestimate these strengths, offering a compelling entry point for investors.

Pitch Summary:
Banc of California has shown some financial improvements following its merger with PacWest Bancorp, such as increased net interest income and a higher net interest margin. However, the stock has underperformed the broader market, and its high price-to-earnings ratio, coupled with concerns about asset quality, suggests caution. Despite analysts' optimistic revenue and earnings forecasts, the stock is not currently attractive enough to warrant a bullish stance.

BSD Analysis:
Banc of California's strategic decision to reduce high-cost brokered deposits and lower its debt load has led to a more streamlined balance sheet. However, the decrease in deposits and loans from 2023 to 2024, followed by a slight recovery in early 2025, indicates ongoing challenges. The company's exposure to real estate mortgages, which constitute over half of its loan portfolio, presents risks, especially given the current economic climate. While the bank's net interest margin has improved, its return on assets and equity remain below industry benchmarks, suggesting inefficiencies. The stock's valuation, with a P/E ratio of 15.5 based on projected earnings, is higher than preferred, especially when compared to peers. Unless Banc of California can significantly enhance its asset quality and operational efficiency, the stock remains a hold rather than a buy.

Pitch Summary:
Hercules Capital (HTGC) is currently undervalued relative to its historical premium to NAV, presenting a compelling opportunity for a long position. Despite a recent correction following a disappointing earnings report, HTGC's total return on NAV remains robust, indicating a strong underlying portfolio. The market's overreaction to the earnings miss has created a mispricing opportunity, especially when compared to Ares Capital (ARCC), which is trading at a relatively higher premium.

BSD Analysis:
Hercules Capital has consistently outperformed its peers and the broader market over the past decade, as evidenced by its superior total return metrics. The recent price correction, driven by a temporary earnings setback, has not materially impacted its portfolio quality, as indicated by its stable credit assessment score based on Moody's methodology. With a premium correction already in place, HTGC's valuation appears attractive, especially given its historical performance and sector positioning. The upcoming earnings season could serve as a catalyst for a revaluation, potentially narrowing the premium gap with ARCC. Investors should consider the liquidity and borrowing costs associated with a pair trade strategy, as HTGC's current premium offers a favorable entry point for those anticipating a mean reversion.

Pitch Summary:
BlackRock's strategic expansion into private credit and real estate, coupled with its robust growth in assets under management, positions it well for continued revenue and EPS growth. Despite a recent earnings miss, the company's acquisitions of HPS Investment Partners and ElmTree Funds are expected to drive significant growth in high-margin areas. The firm's ability to capture a portion of the $7 trillion in sidelined money market funds further supports a bullish outlook.

BSD Analysis:
BlackRock's aggressive push into private markets and technology is a strategic move to diversify its revenue streams beyond traditional asset management. The acquisitions of HPS Investment Partners and ElmTree Funds are pivotal, as they enhance BlackRock's capabilities in private credit and real estate, sectors that typically offer higher fees and margins. The firm's forward P/E multiples suggest a valuation that is competitive with peers like Carlyle Group, KKR, and Apollo, which are also expanding in private credit. BlackRock's strategic entry into the Indian and European markets could provide additional growth catalysts, leveraging demographic trends and infrastructure investment opportunities. However, increased competition in private credit from non-bank lenders poses a risk, as highlighted by industry leaders like Jamie Dimon. Despite these challenges, BlackRock's diversified product offerings and strategic acquisitions provide a solid foundation for long-term growth.

Pitch Summary:
Blink Charging is attempting to transition from a speculative play to a more stable business by integrating its operations across the electric vehicle charging value chain. Despite trading at historical lows and facing investor skepticism, the company is showing signs of operational improvement, such as a shift towards recurring revenue and cost rationalization. However, it remains unprofitable and heavily reliant on external financing, making the investment case highly contingent on future execution and market conditions.

BSD Analysis:
Blink Charging's financial trajectory has been marked by rapid revenue growth, from $6 million in 2020 to over $126 million in 2024, yet it continues to incur significant operating losses. The company's strategy to focus on recurring revenue streams could stabilize its financials in the long term, but it currently faces a cash burn rate that limits its runway to approximately two quarters. The stock is trading at a price-to-sales ratio of about 0.8x, reflecting its lack of profitability and investor caution. Comparatively, its peers like ChargePoint and EVgo trade at similar or higher multiples, suggesting that Blink's valuation is weighed down by its operational challenges. The company's future hinges on its ability to scale its DC fast-charging network and achieve positive EBITDA, which could lead to a re-rating of its stock. However, the competitive landscape, with players like Tesla and major oil companies entering the fray, poses significant risks. Blink must demonstrate consistent operational reliability and financial discipline to justify its strategic positioning and potential upside.

Pitch Summary:
Sun Country Airlines is positioned as an undervalued player in the airline industry, leveraging a unique hybrid model that integrates passenger, charter, and cargo operations. This model allows the company to adapt to market fluctuations and capitalize on diverse revenue streams. The airline's strategic expansion of its Amazon cargo partnership and fleet growth are expected to enhance its operational efficiency and profitability. Despite recent challenges, Sun Country has demonstrated consistent profitability and cash generation, making it a compelling investment opportunity with significant upside potential.

BSD Analysis:
Sun Country Airlines is trading at a significant discount compared to its industry peers, with a forward P/E ratio of 10.04, which is about 51% below the sector median. This undervaluation is further highlighted by its forward PEG ratio of 0.27, indicating that the market is not fully recognizing its growth potential. The company's strategic focus on expanding its cargo operations, particularly through its partnership with Amazon, is expected to drive substantial revenue growth. Analysts project a sharp increase in EPS over the next few years, with a 52% rise in 2026 and a 38% increase in 2027. This growth trajectory, coupled with a robust EBITDA margin recovery, underscores the company's potential for long-term value creation. While risks such as high leverage and economic sensitivity exist, the stock's current valuation presents an attractive entry point for investors willing to navigate these challenges.

Pitch Summary:
The Hershey Company is currently facing significant challenges, including rising cocoa prices, potential long-term declines in demand for sugary products, and supply chain disruptions. Despite these headwinds, the company's strong brand and pricing power may help mitigate some of these pressures. However, earnings are expected to contract significantly in 2025, and the company's valuation remains high relative to historical averages. Given these factors, a Hold rating is appropriate as the company navigates these challenges.

BSD Analysis:
Hershey's current valuation appears stretched, with forward P/E ratios remaining elevated despite a projected 36% contraction in EPS for 2025. This suggests that the market may not have fully priced in the expected earnings decline. The company's ability to maintain stable revenues through price hikes indicates strong brand loyalty, yet the stagnation in volume growth, particularly in North America, raises concerns about long-term demand. The diversification into salty snacks, which has shown a 4% growth, could offset some risks associated with declining sugary snack consumption. However, the unprecedented rise in cocoa prices poses a significant threat to margins, and the effectiveness of Hershey's hedging strategies will be crucial in managing this risk. While the company's defensive nature and dividend yield offer some appeal, the ongoing challenges warrant a cautious stance until clearer signs of resolution emerge.

Pitch Summary:
Alibaba Group is positioned for substantial growth driven by its strategic focus on AI and cloud computing. Despite recent earnings disappointments, the company's AI-related revenues have maintained triple-digit growth, and its cloud business is expected to benefit from China's tech renaissance. The stock is currently undervalued, trading at a forward P/E ratio of 12.7x, which is below its historical averages. With a target price of $136.35, there is significant upside potential as the market recognizes Alibaba's role in the industrial AI sector.

BSD Analysis:
Alibaba's investment in AI and cloud infrastructure, totaling approximately $53 billion over the next three years, is expected to yield significant economic benefits due to lower costs in China compared to Western peers. The company's cloud-native infrastructure and AI models, such as Qwen, are gaining traction across various industries, enhancing its competitive edge. Despite geopolitical risks, including U.S.-China trade tensions and potential delisting concerns, Alibaba's robust customer base and cross-selling opportunities provide a strong foundation for future growth. The stock's current valuation, combined with expected operating leverage improvements from FY2027 onwards, suggests a compelling investment opportunity. Analysts' recent earnings downgrades may underestimate Alibaba's potential, particularly in AI monetization, which could drive a positive shift in market sentiment.

Pitch Summary:
Verizon is currently undervalued with a fair value estimate of $48.86, representing an 18% upside from the current price of $41.26. The company offers a strong dividend yield of approximately 6.5%, which is attractive for income-focused investors. Despite a competitive market, Verizon maintains a narrow economic moat due to its efficient scale and cost advantages. The company's strategic initiatives, such as the acquisition of Frontier and the development of AI Connect, are expected to drive future growth.

BSD Analysis:
Verizon's financial outlook remains stable with an expected EPS growth of 2-3% and ongoing debt reduction efforts. The telecommunications market is projected to grow at a CAGR of 3.5% over the next five years, providing a supportive backdrop for Verizon's operations. The company's dividend growth is anticipated to be modest at around 1.75%, aligning with its payout ratio of approximately 58%. Verizon's valuation metrics, such as EV/EBITDA and Price/Book, indicate a discount compared to its historical averages, reinforcing the undervaluation thesis. The Diagonal Put options strategy employed has demonstrated significant returns, highlighting the potential for active management to enhance investment outcomes. However, investors should remain cautious of interest rate risks and competitive pressures in the wireless segment.

Pitch Summary:
Meta Platforms is making significant strides in artificial intelligence, positioning itself as a formidable player in the AI space. The company plans to invest hundreds of billions of dollars in AI infrastructure and talent, aiming to develop advanced AI technologies and models. This strategic shift is expected to drive substantial growth, particularly in enterprise-focused AI applications, potentially leading to increased revenue streams and a stronger competitive edge.

BSD Analysis:
Meta's aggressive investment in AI is a strategic move to diversify its revenue streams beyond traditional social media advertising. By developing advanced AI models and infrastructure, such as the Prometheus and Hyperion superclusters, Meta aims to compete with leading AI developers like OpenAI. The company's focus on enterprise applications, including AI-powered advertising and voice intelligence through the acquisition of PlayAI, could significantly enhance its business offerings. However, these investments may pressure margins and free cash flow in the short term. Meta's valuation, trading at a premium compared to its peers, reflects market optimism about its growth prospects. The target price of $775 suggests confidence in Meta's ability to capitalize on its AI initiatives, despite the inherent risks of such large-scale investments.

Pitch Summary:
Our investment in Farfetch Ltd.'s term loan is a good example of an investment where the margin of safety not only protected our end investor's capital, but also allowed us to earn a pleasing return across our credit Portfolios. Farfetch is an ecommerce marketplace for the luxury goods industry. Think of the business as the "Amazon of Luxury" – connecting brands and boutiques selling Cartier, Louis Vuitton and Gucci products to consumers. The business had its initial public offering (IPO) in 2018 and was considered a "unicorn," reaching a peak valuation of over US$26 billion in market cap in 2021. We spent some time studying Farfetch as an equity idea as a result of our experience owning Compagnie Financière Richemont S.A. ("Richemont"), the owner of luxury brands such as Cartier and Van Cleef & Arpels. Over the past 20 years, Richemont had invested more than US$5 billion building out Farfetch's largest luxury ecommerce competitor, YNAP (Yoox Net-a-Porter). A successful luxury ecommerce marketplace was the vision of Richemont's founder and Chairman Johann Rupert, but the market wasn't happy with its continued operating losses impacting the bottom line of the consolidated business. In August 2022, Richemont decided to throw in the towel on its ecommerce experiment and merge YNAP with Farfetch, taking back 53 million shares of Farfetch and convertible debt as a return. Our insight about the business focused on a much smaller segment that Farfetch operated called Farfetch Platform Services (FPS), a software provider to brand websites. FPS operates the backend of websites like Cartier.com, and also manages online sales, customer service and inventory/logistics in exchange for a 15 to 20% take rate on website sales. As a part of the merger, Richemont would move all their brands to FPS over time. While we viewed this as a potential major driver of earnings outside of its primary marketplace business, we ultimately passed on investing in the equity because, while the idea was big, the core segment was still burning cash. We were also concerned because the Richemont deal was going through a year-long European antitrust review, and at the time we saw a potential bubble in online luxury sales as a major risk. The idea had a second chance in September 2022, when we learned that Farfetch was looking to raise a senior secured term loan of up to US$600 million to help bridge the business until the YNAP deal closed. Given the non-siloed nature of our Investment Team, we were able to quickly form a view on the proposed debt issuance. We saw an opportunity to lend money to this business based on our initial insight on FPS' potential and the Richemont partnership, but with a much larger margin of safety derived from being higher in the capital structure. There was more cash than debt on the balance sheet at the time of the deal, and our debt would be first in line to be repaid. Behind our position in the capital structure was US$1 billion of convertible bonds and US$4 billion of market cap held by shareholders. Even if that US$5 billion of value declined to zero, Farfetch had US$1 billion of cash on hand along with over US$400 million of inventory and US$500 million of receivables on its balance sheet that could be liquidated at a discount. All of this would need to be burned through before we would see an impairment in our loan. This gave us comfort in our margin of safety despite our concerns around the core marketplace business. The next 12 months proved difficult for the business. Farfetch went through its cash quickly owing to poor inventory management. Management had decided to invest in first-party brands alongside the company's marketplace, which used even more of the available capital. As the luxury market slowed, the cost of holding inventory burned cash quickly. The market lost confidence in management and eventually the creditors took control of the business. Coupang, the dominant ecommerce marketplace of Korea, came in and injected US$500 million of capital into the business. Coupang saw value in the company's brand and customer base, seeing an opportunity to enter the luxury marketplace with Farfetch. Coupang found value off the balance sheet in non-tangible assets ultimately worth over a half-billion dollars, further adding to our margin of safety. Although our insight around the FPS business increasing earnings didn't play out in the end, we were able to exit our investment with a pleasing return. In this case, we were wrong about our insight on Farfetch improving its ability to repay us during our holding period, but our analysis of the margin of safety ultimately protected our capital and allowed us to achieve a positive outcome.

BSD Analysis:
EdgePoint's Farfetch investment exemplifies their credit-focused approach prioritizing capital protection through structural advantages. The fund initially avoided the equity due to cash burn concerns and luxury market bubble risks, but found the senior secured term loan attractive given the substantial margin of safety. With $1 billion cash, $400 million inventory, and $500 million receivables providing downside protection, EdgePoint felt comfortable lending despite operational concerns. Their thesis centered on Farfetch Platform Services (FPS), a high-margin software business serving luxury brands with 15-20% take rates, which would benefit from the Richemont partnership. However, poor inventory management and first-party brand investments accelerated cash burn as luxury demand softened. Despite the failed operational thesis, EdgePoint achieved a 13.7% IRR versus 7.6% for high-yield bonds, demonstrating how credit structure and margin of safety can generate positive returns even when fundamental insights prove incorrect. The Coupang acquisition provided additional asset value, validating EdgePoint's conservative underwriting approach.

Pitch Summary:
O-I Glass, Inc., one of our credit holdings in the EdgePoint Portfolios. O-I Glass is one of the world's largest manufacturers of glass containers. It's been in operation since 1903 and was founded by Michael J. Owens, inventor of the automatic bottle-making machine. With O-I Glass' management team improving the business' cost structure and efficiency, we believe this will help drive new business wins and improve its profitability.

BSD Analysis:
EdgePoint holds O-I Glass as a credit investment, viewing the company's operational improvements favorably. The fund manager highlights management's focus on enhancing cost structure and operational efficiency as key drivers for future performance. This operational optimization is expected to translate into competitive advantages that will help secure new business contracts and expand market share. The improved efficiency should also directly impact profitability margins, making the company a more attractive borrower from a credit perspective. O-I Glass's long operating history since 1903 and position as a global leader in glass container manufacturing provides stability and market presence. The company's foundational innovation in automatic bottle-making technology demonstrates its historical role in industry advancement. EdgePoint's bullish stance reflects confidence that these operational improvements will strengthen the company's ability to service its debt obligations while generating superior returns for credit investors.

Pitch Summary:
Upslope has owned FTI Consulting (leader in restructuring and dispute advisory) and Evercore (top independent M&A advisor) in the past. The Fund recently re-initiated positions in each of these companies. While they are bets on polar opposite outcomes (Evercore is very pro-cyclical, while FTI is the most counter-cyclical publicly traded company I follow), expectations for each appear modest. This was and remains especially true of FTI – although it's more understandable as the company is going through some turmoil (employee turnover/retention challenges) in one of its non-core segments. Nonetheless, the unique macro environment – on/off trade war, the very pro-cyclical "One Big Beautiful Bill," lingering inflation, massive regulatory and technological (e.g. AI) uncertainty and change – should ultimately provide significant opportunities for both businesses ahead.

BSD Analysis:
Upslope's re-entry into Evercore represents a pro-cyclical bet on the leading independent M&A advisory firm, positioned as the polar opposite of their FTI Consulting investment. The manager notes that expectations for Evercore have become relatively modest following several lackluster years, creating an attractive risk-reward setup. The investment thesis is predicated on signs of pent-up demand for M&A advisory services and a potential resurgence in corporate transaction activity. The current macro environment, characterized by policy uncertainty, regulatory changes, and technological disruption, should ultimately drive increased strategic activity as companies adapt to new conditions. Evercore's position as a top-tier independent advisor gives it significant operating leverage to any upturn in M&A volumes. The combination of depressed expectations, the firm's market-leading position, and potential catalysts from the evolving macro environment creates an asymmetric opportunity where modest improvements in transaction activity could drive outsized returns.

Pitch Summary:
Upslope has owned FTI Consulting (leader in restructuring and dispute advisory) and Evercore (top independent M&A advisor) in the past. The Fund recently re-initiated positions in each of these companies. While they are bets on polar opposite outcomes (Evercore is very pro-cyclical, while FTI is the most counter-cyclical publicly traded company I follow), expectations for each appear modest. This was and remains especially true of FTI – although it's more understandable as the company is going through some turmoil (employee turnover/retention challenges) in one of its non-core segments. Nonetheless, the unique macro environment – on/off trade war, the very pro-cyclical "One Big Beautiful Bill," lingering inflation, massive regulatory and technological (e.g. AI) uncertainty and change – should ultimately provide significant opportunities for both businesses ahead.

BSD Analysis:
Upslope's re-initiation of FTI Consulting represents a contrarian bet on the most counter-cyclical public company in the manager's coverage universe. The investment thesis centers on the current macro environment creating significant tailwinds for restructuring and dispute advisory services, driven by trade war volatility, regulatory uncertainty, and technological disruption from AI. While the company faces near-term headwinds from employee retention challenges in non-core segments, these issues have depressed expectations and created an attractive entry point. The manager emphasizes FTI's leadership position in restructuring advisory, a business that typically thrives during periods of economic stress and corporate distress. Given the current mix of policy uncertainty, inflation pressures, and potential economic volatility, FTI appears well-positioned to benefit from increased demand for its specialized advisory services. The modest expectations embedded in the current valuation provide downside protection while offering significant upside as macro conditions potentially deteriorate.