Investment Pitches

Pitch Summary:
Non-operational mines; significant dilution; the company's recent merger partner has lots of trouble: a) backed by promoters with legal trouble; b) the largest shareholder is an undisclosed related party; c) would have bankrupt if not acquired; d) related to stock promotion;

BSD Analysis:
Hut 8 is one of the larger North American Bitcoin miners, now merged with US Bitcoin Corp. The short case emphasizes commodity-like economics of mining, high energy costs, and reliance on Bitcoin price appreciation to sustain operations. The merged entity aims for diversification into hosting and high-performance computing, but execution risk is high, and balance sheet leverage limits flexibility. Post-halving, hashprice compression makes breakeven mining economics more challenging. Bulls argue about optionality in AI/HPC hosting, but skeptics note pivoting from mining to hosting requires customer contracts, capex, and credible infrastructure.

Pitch Summary:
The factory is missing numerous challenges; ongoing production pospones; lack of sales; balance sheet troubles (cash shortage is coming in the next few quarters, unable to repay the debt); Update 10/28/24 - Ongoing product issues; inconsistent production; shareholders are diluted due to recent financing; repeatedly missing goals;

BSD Analysis:
PureCycle develops polypropylene recycling tech. Bears argue the company is pre-revenue, capex-intensive, and reliant on unproven scaling. Plant ramp-ups delayed, cash burn high, and equity raises frequent. Competition from chemical majors adds risk. Catalysts: Ironton plant metrics, licensing deals, DOE plastics policy. Counterpoints: ESG/regulation may help, but economics look weak.

Pitch Summary:
Four main segments are under pressure due to commoditized solutions; client retention challenges; aggressive accounting decisions to mitigate revenue decline; 55% to 65% long-term downside risk;

BSD Analysis:
MSCI is a dominant provider of equity indexes, ESG ratings, and portfolio analytics. The short thesis focuses on valuation risk, slowing ESG momentum, and dependency on passive fund flows. Index licensing revenues have been robust, but incremental growth depends heavily on ETF AUM tied to MSCI benchmarks. ESG ratings, once a major growth engine, face pushback from regulators and investors questioning methodology. The Analytics segment has lower margins and more competition, diluting group profitability. With a premium multiple, bears argue any deceleration in fund flows or regulatory scrutiny on ESG could drive multiple compression.

Pitch Summary:
A large amount of commercial loan impairment for 2024 (Hyatt Regency missed $260 mil payment); financing shaky projects; Q4 numbers are likely to have an increase in impairments; potential covenant breach; Update 3/6/24 - Follow-up report based on YE earnings call: Asset impairment; higher realized losses; Update 8/28/24 - Follow-up report: More impairments; not-enough dividend cut; more write-offs; Update 2/10/25 - Follow-up report.

BSD Analysis:
Blackstone Mortgage Trust is a large commercial real estate lender. The short thesis stresses exposure to office and CRE refinancing risk, rising funding costs, and dividend sustainability concerns. With higher-for-longer interest rates, credit losses may rise as borrowers struggle to refinance. While backed by Blackstone, structural headwinds in commercial real estate make downside risk meaningful.

Pitch Summary:
Short tweet: The quarterly sales will disappoint based on excess inventory across the industry; lots of value investors will try to get out of the illiquid name; Update 2/9 - Update on earnings: accumulating inventory; declined margins; slower volumes.

BSD Analysis:
Seneca is a private-label and branded canned/frozen vegetable producer. Margins are thin, working capital swings are large, and input volatility drives earnings. Demand is steady but low growth, leaving little pricing power. Inventory accounting adds lumpiness. Loss of a key contract or poor crop yields could pressure results.

Pitch Summary:
The company fully consolidated Harma and PBC Plasma without proper disclosure even though these companies are material to the company's financials; actual leverage is ~x12 vs. reported ~x6; manipulated debt & EBITDA numbers; materially deceptive financials; Update 2/20/24 - The short seller asked follow-up questions after management and board changes. Update 5/14/24 - Follow-up report: How PBC Plasma transferred funds. Update 7/30/24 - In relation to the potential takeover by Brookfield, the new auditor made a $500m adjustment to the accounting.

BSD Analysis:
Grifols is a Spanish plasma-derived medicines company. The BSD short thesis centers on high leverage (~€10B debt), opaque related-party transactions, and aggressive accounting treatments that have drawn regulatory scrutiny. Plasma collection is a capital-intensive business, and any slowdown in donor volumes pressures margins and cash flow. While the firm has valuable assets and global scale, equity risk stems from governance, questionable disclosures, and refinancing pressures. Sophisticated investors should monitor free cash flow after interest, regulatory investigations into financial reporting, and competitive dynamics in plasma pricing.

Pitch Summary:
Ten Pao is positioned as a compelling investment due to its strong value proposition, quality operations, and organic growth potential. The company trades at an attractive valuation of 4-5 times normalized earnings and offers a 6% dividend yield while maintaining double-digit growth. Its focus on R&D and customization differentiates it from typical commodity manufacturers, and it boasts a robust ROE above 20%. Despite short-term inventory challenges and market concerns about Chinese manufacturing, Ten Pao's strategic presence in Vietnam, Hungary, and Mexico mitigates these risks.

BSD Analysis:
Ten Pao's strategic emphasis on R&D and customization allows it to maintain a competitive edge in the power supply industry, which is crucial given the commoditized nature of the sector. The company's ability to sustain a high ROE without leverage underscores its operational efficiency and financial health. Market apprehensions about Chinese manufacturing are countered by Ten Pao's diversified production footprint, which includes facilities in Vietnam, Hungary, and Mexico, enabling it to support clients seeking to diversify their supply chains. Furthermore, the company's valuation at 4-5 times normalized earnings presents a significant discount relative to peers, offering a margin of safety for investors. The dividend yield of 6% provides an attractive income stream, enhancing the total return potential. As global demand for industrial tools and power solutions continues to grow, Ten Pao is well-positioned to capitalize on these trends, supported by its expanding client base and geographic reach.

Pitch Summary:
Potentially fraudulent billing practices; lawsuits related to forging signatures; billing for COVID tests that were not performed; editing patient reports to maximize profits; offering bribes to whistleblowers; leaders have a long history of fraud; no-name auditor; ongoing multiple government investigations;

BSD Analysis:
DocGo provides mobile medical services and patient transportation. The short case argues that rapid revenue growth has masked structural weaknesses in margins, cash conversion, and contract sustainability. Much of its pandemic-era growth came from COVID testing and vaccination contracts that are now rolling off. Municipal contracts carry political and renewal risk, and pricing pressure is visible. The labor-intensive model leaves limited scalability, with EMT turnover and wage inflation crimping profitability. While bulls highlight tech-enabled dispatch and telehealth integration, bears see a commoditized service business trading at a tech multiple.

Pitch Summary:
Two-thirds of their customer base is uninsured as its consumers are financially stretched; one of the major sales contracts - equal to 12% of the revenues and 15% of the pre-tax earnings was terminated;

BSD Analysis:
National Vision operates value optical chains such as America’s Best and Eyeglass World. The short thesis highlights margin pressure from labor shortages, mix shift, and competitive intensity. Optometrists are in short supply, raising costs and creating staffing bottlenecks. Digital-first competitors and large players like Warby Parker are eating into growth. Medicaid and managed-care exposure adds reimbursement risk, while higher-end consumers are trading up elsewhere. Unit growth is capital-intensive, and SG&A leverage is limited. With comps decelerating and limited pricing power, skeptics see growth and margin potential as capped.

Pitch Summary:
Paywalled (The site mentioned: The Bear Cave believes that rapidly growing new competition powered by AI is destroying Chegg’s key student market and the company is playing increasingly desperate games to stem a student exodus. In short, The Bear Cave concludes that Chegg is a billion-dollar company headed to zero.)

BSD Analysis:
Chegg’s core homework-help and tutoring model is under siege from AI disruption, student churn, and pricing pressure. Tools like ChatGPT erode the value proposition as students access free alternatives. Engagement has deteriorated, and while Chegg is attempting to build its own AI learning assistant, uptake is uncertain. International expansion has been slow, leaving growth tied to stagnant U.S. enrollment trends. Unless it can reposition quickly, Chegg faces secular decline with risks of negative operating leverage if subscriber erosion accelerates.

Pitch Summary:
Inherently broken business model (razor-thin margin during strong market, but big losses during down market); unable to increase the capital base - as more capital equals higher cost; losses are expected well into 2024 eroding the remaining equity; more than 75% downside;

BSD Analysis:
Opendoor pioneered the iBuyer model, using balance sheet capital to purchase and resell homes at scale. The short thesis points to cyclical housing exposure, razor-thin margins, and heavy reliance on favorable credit markets. Rising mortgage rates have slowed transaction volumes, while spreads remain tight. Inventory write-downs during the 2022 slowdown exposed fragility. Pivot to partnerships and marketplaces limits exposure, but skeptics argue the economics remain unproven. Leverage and cash burn remain concerns in higher-for-longer rates.

Pitch Summary:
LDC has all the characteristics we look for in our investments. A family-owned company with a strong competitive position (market share of over 40% in France and European leader) and a positive net cash position. The poultry meat market is a growth market favoured by the increased penetration of this type of product compared to other types of meat (beef and pork). The company's strong balance sheet has enabled it to take advantage of this situation and LDC has experienced significant growth in recent years (around 8% per year) through a combination of organic investments in its plants and a plan to acquire companies in France and other European countries. And despite the goodness of the business and the quality of the company, the share is trading at very low levels (3.1x Enterprise Value/EBITDA or 3.7x if we normalize the EBITDA margin of the last year, which has been extraordinarily high). This is just one example of the strong disparity in the valuations of our companies.

BSD Analysis:
LDC is currently executing a high-growth strategy in the European poultry market, reporting a 16 percent increase in revenue to nearly 1.74 billion euros for the first three quarters of fiscal 2026. The company is benefiting from the successful integration of recent acquisitions, such as the UK-based Green Label Group, which has expanded its reach into specialty poultry and premium branding. Management has raised its full-year revenue guidance to over 7 billion euros, supported by resilient demand for affordable protein and strong performances across its French, international, and catering divisions. While the broader agriculture sector faces fluctuating commodity costs, LDC’s scale and integrated production model—spanning over 100 sites—provide significant operational leverage. The firm’s focus on automation and technological integration is expected to drive EBITDA beyond the 560 million euro mark by year-end. For investors, LDC offers a unique play on the consolidation of the fragmented European food landscape with a clear path toward sustained volume growth.

Pitch Summary:
Taiwan Semiconductor Manufacturing Company, TSM US (Market cap: US$530bln) Company’s background: The company is the world’s largest semiconductors’ manufacturer/foundry, with factories predominantly located in Taiwan. Sustainable competitive advantages: Due to its constant emphasis on R&D over many years, the company has built a considerable technological advantage over its peers. It is now constantly ahead of its peers for the most sophisticated chips in the world, and because of its manufacturing abilities, it is also able to build a massive amount of these chips at a cheaper price than competitors. These two competitive advantages (Best in class product and price competitiveness) have allowed it to win valuable customers relationships with some of the world’s largest technological companies such as Apple, Nvidia, Qualcomm etc. These close relationships are strategic in nature too, it allows the company to be in the forefront of technological trends and concentrate its R&D efforts on the areas that most make commercial sense in the future. This creates a virtuous cycle of offering great products at a low price hence maintaining strong relationships with key customers. This results in a deepening of its economic moat. Our thoughts and investment thesis: Returns on capital have averaged >25% for the past 15 years period and it has steadily been able to deploy its surplus earnings to reinvest in the business for further growth. This has resulted in its revenue and net profits increasing 14.1% p.a. and 16.1% p.a respectively for the same period. We think it has the potential to be a long term earnings compounder and has purchased it at around 17x price to earnings ratio, a level we deemed reasonable for its current dominant position in this attractive industry. Risks: 1) The company operates in a highly capital intensive and cyclical industry. Due to the increasing usage of semiconductor chips across many industries (Healthcare, Industry automation, Automotive, consumer electronics etc.), we think the future cyclicality of the industry may be less pronounced than before. 2) Due to insufficient diversification of its production facilities, armed conflicts between China and Taiwan will trigger a mass loss of production.

BSD Analysis:
TSMC is the single most important manufacturing company in the global economy, whether markets want to admit it or not. It doesn’t design chips — it enables everyone else’s ambition, from Apple to NVIDIA. Leading-edge nodes are brutally complex and capital-intensive, and TSMC executes better than anyone. Customers are concentrated, but switching is practically impossible at the frontier. AI demand has structurally lifted utilization and pricing power. Cyclicality still exists, but the floor rises with every new node. Geopolitical risk is real and permanently embedded in the discount. This is not just a semiconductor stock. It’s the foundry backbone of modern computing with scale no rival can replicate.

Pitch Summary:
JFE Systems is in the systems integration business. JFE reported EPS growth of 21% for FY22 and EPS is up another 16% by 3QFY23. While the stock rose 58% in 2023, it still trades at 11x TTM EPS and increased dividend per share by 22%.

BSD Analysis:
JFE Systems enters 2026 as a key beneficiary of the Japanese steel industry’s digital transformation, leveraging its deep ties to JFE Steel to drive high-margin enterprise solutions. The company’s Q3 2026 results demonstrated its resilience, with a net profit margin edging up to 8.1% as it shifts toward a more consulting-heavy, value-added service mix. While current earnings growth of 5.6% marks a consolidation phase compared to its five-year double-digit average, the firm maintains a robust return on equity and a stable dividend yield near 2.9%. Management is increasingly focusing on green manufacturing software and carbon-neutral tracking systems, aligning with the broader industrial shift toward ESG compliance. Technical indicators show the stock resting in a strong rising trend, supported by both short and long-term moving averages. For investors, the stock offers a defensive and cash-generative entry into Japan's mission-critical IT infrastructure space.

Pitch Summary:
Finally, we’ve held Alphabet since inception, and it had another strong year. The company continues to dominate global internet search, monetising intent-driven queries through highly profitable advertising formats. YouTube and Google Cloud are now meaningful contributors, with Cloud having reached profitability and still growing revenues well above the group average. Despite regulatory scrutiny and periodic fines, Alphabet retains enormous strategic advantages from data, distribution and infrastructure, which are hard for competitors to replicate. Management has begun to show more cost discipline, trimming headcount and focusing investment on the highest-return AI and cloud opportunities. We note that the shares still trade at a reasonable multiple relative to other large-cap technology names given Alphabet’s balance of growth, profitability and cash generation. In our view Alphabet remains one of the most compelling long-term compounders in global equities.

BSD Analysis:
The long-term bull case on Alphabet is that it is a dominant, cash-rich AI and internet infrastructure platform. Core Search remains a mid-teens ROIC engine, while YouTube and Cloud provide additional high-growth, high-margin legs to the story. Recent results show double-digit revenue growth with expanding operating margins, and the stock trades around the mid-20s P/E range, a modest premium to the market but reasonable given its growth, balance sheet and competitive moat. Alphabet is also increasingly returning capital via sizeable buybacks while still investing heavily in AI, custom chips and data centres. Key risks remain regulatory actions and AI-related disruption to the search model, but so far Alphabet appears to be adapting well and leveraging its distribution advantage. We view pullbacks driven by macro or regulatory headlines as attractive entry points into a structurally advantaged business.

Pitch Summary:
Air Liquide has been a quiet but powerful contributor to the Fund, compounding steadily over time. The business sits at the heart of industrial gases, providing oxygen, nitrogen, hydrogen and other gases under long-term contracts to customers across chemicals, steel, healthcare and electronics. Its contracts are typically 10–20 years in length, with take-or-pay structures and inflation-linked pricing, underpinning highly visible cash flows and high returns on capital. Over the last decade management has steadily improved margins and capital efficiency through operational excellence and portfolio optimisation. Looking ahead, we see significant opportunity from the global energy transition, particularly in low-carbon hydrogen, carbon capture and storage and the decarbonisation of heavy industry. Air Liquide’s engineering expertise and global asset base position it as a key partner for customers and governments looking to build out hydrogen and CO₂ infrastructure. Despite these structural growth drivers, the shares trade on a high-20s earnings multiple, which we think is reasonable given the combination of defensive cash flows and secular growth.

BSD Analysis:
Air Liquide is considered one of the highest-quality industrials in Europe, combining infrastructure-like contracts with attractive long-term growth optionality. The company typically earns mid-teens returns on capital and has delivered steady dividend growth alongside disciplined capex into hydrogen, electronics and healthcare gases. Its industrial gas contracts often feature pass-through mechanisms that protect margins against energy and input price volatility, making earnings more resilient across cycles. At roughly high-20s P/E and a mid- to high-teens EV/EBITDA multiple, valuation is not cheap but justified by visibility, balance-sheet strength and structural growth from decarbonisation projects. We expect Air Liquide to continue compounding at mid-single-digit sales growth and high-single-digit EPS growth, with further upside if hydrogen and clean-energy investments accelerate.

Pitch Summary:
AutoZone continued to deliver strong performance for the Fund in 2023. The company benefits from a resilient do-it-yourself and professional auto parts market, where ageing vehicle fleets and high replacement costs support steady demand. Management has executed well on pricing, inventory management and growth in the commercial (professional) channel, which now represents a growing share of sales. The business generates high returns on capital and significant free cash flow, much of which is returned to shareholders via large, consistent share repurchases. We contrast this with a poorly run competitor, Advance Auto Parts, which has struggled operationally and financially and has been a significant detractor for other investors. The divergence in execution and capital allocation between AutoZone and weaker peers highlights the importance of quality in what might seem like a commoditised retail category. We expect AutoZone to continue compounding shareholder value through disciplined store expansion, share gains and ongoing buybacks.

BSD Analysis:
AutoZone is one of the best-in-class aftermarket auto parts retailer with a long record of high-teens ROIC, disciplined capital allocation and consistent share repurchases. The company trades on a mid-20s trailing P/E and a premium to weaker peers, which we believe is justified by superior execution, scale and cash-flow visibility. Structural tailwinds from an ageing car parc, higher new-car prices and more complex vehicles should keep demand for parts and maintenance resilient even in slower macro environments. Management has sensibly pivoted to expand its commercial business and international footprint, supporting additional growth avenues. While near-term comps can be volatile and competitive intensity remains high, we see AutoZone as a durable compounder with attractive risk-adjusted returns.

Pitch Summary:
McKesson has been a very strong performer for us and delivered another great year, appreciating c.40% in share price. The company now trades on a high-teens earnings multiple despite mid-teens earnings growth. The core distribution business operates on thin margins but extremely high volumes, which gives McKesson significant scale advantages over smaller competitors. Over time, management has shifted the portfolio toward higher-margin specialty distribution and oncology-related services, which should support further margin expansion. Execution on cost control and working capital has translated into strong free cash flow, much of which is being returned to shareholders via buybacks. We continue to view McKesson as a high-quality compounder in U.S. healthcare with a long runway to grow earnings ahead of the broader market.

BSD Analysis:
McKesson is a scale winner in U.S. drug distribution with durable moats from logistics expertise, technology integration and purchasing power. Despite operating on low stated margins, the company converts a high proportion of earnings to free cash flow and has consistently reduced share count through aggressive buybacks, supporting double-digit EPS growth. Current valuation in the high-teens forward P/E range and mid-teens EV/EBITDA looks fair for a business expected to grow earnings at low- to mid-teens, with upside from continued shift into oncology, specialty and biosimilars. Litigation overhang around opioids has largely been addressed with provisions and settlements, reducing headline risk. We see McKesson as a resilient, cash-generative healthcare infrastructure asset well placed to benefit from rising prescription volumes and ageing demographics.

Pitch Summary:
Last year was a tale of two halves for Sony, particularly for its entertainment business where management had lowered expectations heading into the second half. By the end of its fiscal year in late March, it had sold over 50 million PlayStation 5s, yet we think they can easily sell five times this number of units if it is anywhere near as popular as the PS4. Next year Rockstar will release the latest instalment of Grand Theft Auto, one of the most valuable media assets on planet Earth. The last iteration of this franchise has sold over 180 million copies since its release in 2013. The boon for Sony is the razor blade model of growing an installed base of hardware and then selling users multiple games and services over time. The company is guided toward “gradually increasing the ratio of digital sales of full games and add-on content” which should support margins. As the console cycle matures, gamers tend to buy more content, subscribe to online services and generate higher profitability for the platform owner. In Sony’s case the upside is further enhanced by its ownership of valuable IP in both gaming and film/TV, which can be leveraged across platforms. When you account for the value of Sony’s semiconductor business, particularly in image sensors, alongside the entertainment and hardware segments, we think the sum of the parts still looks attractively priced. Overall, we see Sony as a unique hybrid of content, hardware and components with multiple self-reinforcing growth drivers and significant optionality.

BSD Analysis:
Sony is a diversified entertainment and technology platform benefiting from scale in gaming, music, pictures and image sensors. The PlayStation ecosystem continues to grow a large installed base, and recurring digital content and subscription revenue should support margin expansion and more stable cash flows. At roughly low-20s P/E and a mid-teens EV/EBITDA multiple for businesses growing earnings high single-digit, valuation is reasonable given the quality of Sony’s IP and the secular growth in gaming and image sensors. The balance sheet is strong, enabling steady buybacks and selective M&A to deepen the content and semiconductor franchises. Catalysts include the next GTA release, continued shift to digital sales, and monetisation of under-appreciated assets such as the music catalog and sensor business.

Pitch Summary:
The only new US holding for the Fund in the last 12 months has been WEC Energy Group, a US Midwestern regulated utility. Their main markets include Wisconsin, where they can trace their predecessor roots back 200 years. WEC is an excellent example of a well-run utility company which is being slightly underappreciated due to a broader view that the utility sector is not an exciting place to invest. While we agree that the overall sector can be unexciting, there are some wonderful businesses here. We assess whether regulated utilities offer inflation-protection & provide defensive, bond-like characteristics, whilst private valuations add to the case. Private equity have been hungry for regulated critical infrastructure assets in the past few years, because of their reliable, long-term, and inflation protected cash flows. WEC’s regulatory regime allows it to earn a fair return on its rate base (which is the amount of capital invested in its infrastructure) as long as it is making efficient investments and providing reliable service to its customers. Further, the global objective of achieving net-zero carbon emissions, creates a significant opportunity for a company like WEC. The policy and regulatory aspects of making a clean energy transition will favour companies that can navigate the complexities of the energy and regulatory landscape efficiently. Utilities can come in many different flavours, some have nuclear assets, some own gas networks. Their returns are a function of the structure of the particular regulation regime in each geography. The backdrop for utilities is that regulators are looking for investing partners with strong balance sheets, and the cheap access to capital to finance the future energy grid in their respective territories. This will require enormous investment, in many countries. We like companies, like WEC, that are positioned to support this during a period where utilities are increasingly being recognized as a critical infrastructure growth sector. For example, renewables, especially wind generated are intermittent and transmission is becoming more important: there is no point building solar farms when the grid connections aren’t ready. WEC has a more advanced and constructive relationship with regulators than many other utility companies. As such, we believe that they will be granted a higher regulated return on capital than their peers, which will allow them to invest more in their infrastructure and grow their rate base faster. For shareholders we expect market-beating compounded equity returns (~10%) through a combination of long-term 6-7% earnings growth and an attractive 4% dividend.

BSD Analysis:
WEC is a high-quality regulated utility geared to the long-duration investment cycle in U.S. grid modernization and decarbonization. The company operates under supportive regulatory regimes, targets a 65–70% payout ratio and currently offers a dividend yield around the low-to mid-3% range with a multi-decade record of annual dividend growth. Its allowed returns on equity and expanding rate base imply high-single-digit EPS growth, and ongoing capital programmes in transmission and renewables provide clear visibility on invested capital. On valuation, WEC trades roughly in line with quality regulated peers on P/E and EV/EBITDA despite superior execution and balance-sheet strength, leaving room for modest multiple expansion. We see it as an attractive “bond-proxy” compounder offering a low-risk path to around 10% annual total returns via growth plus dividend.