Investment Pitches

Pitch Summary:
Capri Holdings is currently overvalued, with its stock price not reflecting the underlying challenges the company faces. The recent sale of Versace to Prada has not sufficiently strengthened Capri's financial position, as the company remains heavily reliant on the struggling Michael Kors brand. The declining pricing power and increased inventory issues of Michael Kors, coupled with the modest performance outlook for Jimmy Choo, suggest limited growth potential. The stock is a value trap, with persistent headwinds and a lack of compelling catalysts for a turnaround.

BSD Analysis:
Capri Holdings' financial outlook is precarious, with the company facing significant challenges in its core brands. Michael Kors, which constitutes the majority of Capri's revenue, is grappling with declining margins and inventory build-up, indicating weak consumer demand and pricing power. Despite the sale of Versace providing some debt relief, Capri's balance sheet remains strained, with a Net Debt/EBITDA ratio projected at 1x for FY2026. The luxury market's slowdown, particularly in China, further exacerbates Capri's struggles, as does the introduction of new tariffs affecting its production costs. While potential stock buybacks and future dividend issuances could offer short-term support, the long-term outlook remains bleak without a substantial strategic shift or market recovery. The company's valuation, based on a Levered Free Cash Flow to Equity model, suggests a fair value significantly below its current market price, reinforcing the bearish stance.

Pitch Summary:
Flywire is positioned as a leader in cross-border payments, with a strong foothold in education, travel, and healthcare. Despite recent setbacks, including a dilutive acquisition and macroeconomic challenges, the company is diversifying its revenue streams and expanding its software offerings. With a valuation significantly below its historical multiples and a robust growth trajectory, Flywire presents a compelling investment opportunity.

BSD Analysis:
Flywire's valuation has compressed to under 2x NTM sales, a stark contrast to its IPO valuation of over 20x. This decline is largely due to a disappointing Q4 2024 report and an expensive acquisition of Sertifi. However, Flywire's core business remains strong, with double-digit organic growth and expanding margins. The company's strategic expansion into the UK and other markets, coupled with its diversification beyond cross-border tuition payments, enhances its resilience against macroeconomic shocks. Flywire's healthcare segment is gaining traction, and the Sertifi acquisition, while initially criticized, is showing potential for synergies. With a strong balance sheet and consistent cash conversion, Flywire is well-positioned for a re-rating, especially if macro conditions stabilize. The company's unique relationships with universities and its global financial network make it an attractive acquisition target for larger fintech players or banks.

Pitch Summary:
Flywire is positioned as a structurally advantaged leader in the cross-border payments and software industry, despite recent market challenges. The company has expanded its revenue streams beyond its original niche of international student payments to include diverse sectors such as travel and healthcare. Flywire's superior technology and execution capabilities are expected to drive a strong rebound as macroeconomic conditions stabilize. The company's valuation has significantly decreased, presenting a compelling investment opportunity given its consistent growth and expanding margins.

BSD Analysis:
Flywire's current valuation at less than 2x sales and less than 10x 2026 free cash flow is attractive, especially given its high gross margins and strong cash conversion. The company's recent challenges, including a dilutive acquisition and macroeconomic headwinds in key markets like Australia and Canada, have been priced in, creating a potential upside. Flywire's strategic diversification into the UK market with larger, more stable contracts and its promising healthcare segment provide additional growth avenues. The Sertifi acquisition, initially met with skepticism, is showing potential for synergies and margin improvement. Flywire's robust financial position and unique market position make it an attractive acquisition target for larger fintech firms or private equity, offering further upside potential.

Pitch Summary:
RH is currently facing significant challenges that warrant a hold rating. The company has shifted towards deeper promotions, which could undermine its luxury brand positioning and compress margins. Elevated inventory levels and macroeconomic headwinds, such as tariffs and a potential housing market slowdown, add further risk. While the stock's valuation has reset to historical averages, the lack of clear catalysts for growth reacceleration suggests limited upside potential in the near term.

BSD Analysis:
RH's pivot to increased promotions raises concerns about its ability to maintain pricing power, a key component of its luxury brand strategy. The company's inventory growth outpacing sales suggests potential overstock issues, necessitating markdowns that could pressure margins. Additionally, RH's decision to delay a brand extension due to tariff uncertainties removes a potential growth driver. The stock's valuation, now at 14.5x forward EBIT, reflects these challenges, but any worsening of macro conditions could see it revert to lower multiples, as seen in early 2022. Investors should monitor tariff developments and housing market trends closely, as these factors will significantly influence RH's performance and investor sentiment in the coming quarters.

Pitch Summary:
Chewy, Inc. is poised for sustained growth driven by its strategic focus on enhancing customer acquisition and retention through its Autoship service, which now constitutes a significant portion of its revenue. The company's ability to attract high-quality customers who exhibit increased spending and reorder rates underscores its competitive advantage. Additionally, Chewy's recent expansion in hard goods and operational efficiencies further diversify its growth avenues, positioning it well for future revenue acceleration.

BSD Analysis:
Chewy's Autoship service, which accounts for over 82% of total sales, is a critical growth engine, providing predictable and recurring revenue streams. This service enhances customer loyalty and retention, creating a robust ecosystem that leverages customer data for further engagement through initiatives like Chewy+ membership. The recent 12.3% growth in hard goods sales, driven by an expanded product assortment and improved operational efficiency, indicates Chewy's capability to adapt and capture market demand. Despite a slight dip in gross margins, the company's strategic investments in logistics and fulfillment are expected to support long-term growth. With a forward revenue multiple of 1.2x, Chewy offers an attractive investment opportunity, contingent on its ability to maintain margin expansion alongside revenue growth. Investors should monitor the company's execution and macroeconomic conditions, as these factors will significantly influence its valuation trajectory.

Pitch Summary:
CAVA Group has demonstrated impressive growth since its inception, expanding to 382 locations and achieving strong same-store sales growth. The company benefits from rising consumer interest in Mediterranean cuisine and health-focused dining. Despite its operational success and ambitious expansion plans, the stock's current valuation appears stretched, with a forward P/E of 148. The investment thesis hinges on CAVA's ability to sustain its growth trajectory and achieve its long-term expansion goals, but the current stock price already reflects high growth expectations.

BSD Analysis:
CAVA's financial performance is robust, with a 25% restaurant-level operating margin, surpassing many peers such as Shake Shack and Sweetgreen. The company's strategy of owning its restaurants rather than franchising allows it to fully capitalize on its brand success. However, the valuation remains a concern, as the DCF model suggests a fair value of $76.10, which is 13% below the current stock price. The model assumes a significant expansion to 1000 locations by 2032 and a 15.9% revenue CAGR, which are ambitious targets. The cost of equity and WACC are both calculated at 8.57%, reflecting a relatively high-risk premium. Given these factors, while CAVA's growth story is compelling, the stock's valuation limits its attractiveness as an investment opportunity at present.

Pitch Summary:
SharkNinja is positioned as a leader in the consumer electronics space, leveraging its innovative product development and strong brand equity to drive growth. The company is expanding its direct-to-consumer sales, which is expected to enhance margins and profitability. With a robust pipeline of new products and strategic international expansion, SharkNinja is set to capitalize on its competitive advantages and deliver strong financial performance.

BSD Analysis:
SharkNinja's focus on innovation is evident in its significant R&D investment, which is more than double the industry average. This commitment supports the company's ability to launch successful products like the Ninja Swirl, which achieved substantial social media traction without traditional marketing costs. The company's strategic shift towards direct-to-consumer sales is expected to improve margins, as these sales typically offer higher profitability compared to traditional retail channels. Internationally, SharkNinja's growth in markets like France and Germany is projected to contribute significantly to its revenue, with these regions expected to reach full profitability by 2025. The company's proactive approach to mitigating tariff impacts through diversified sourcing and strategic pricing further strengthens its financial outlook. Additionally, the potential for index inclusion as a domestic issuer in 2026 could increase demand for its shares, providing an additional catalyst for stock appreciation.

Pitch Summary:
Royal Gold is strategically positioning itself to capitalize on future growth through acquisitions of Sandstorm Gold and Horizon Copper. These deals, while initially dilutive, provide a substantial pipeline of future royalty and streaming income, particularly as Sandstorm's and Horizon's assets mature. The company's focus on both gold and copper aligns with current market trends, offering a diversified exposure to two high-demand commodities. Despite the short-term market reaction, the long-term potential for Royal Gold to become a leader in passive mining interests is significant.

BSD Analysis:
Royal Gold's acquisition strategy is focused on long-term growth, leveraging its high-margin business model to secure future revenue streams. The Sandstorm acquisition, though dilutive in the short term, is priced attractively relative to book value, suggesting limited downside risk. Sandstorm's projected increase in gold production from 72.8 thousand ounces in 2024 to over 170 thousand ounces by 2038 highlights the growth potential. Additionally, the Horizon Copper acquisition enhances Royal Gold's exposure to copper, a metal with strong demand prospects due to its critical role in electrification and renewable energy. The Solaris deal further strengthens this position, offering a lucrative royalty structure tied to copper production. Investors should monitor the completion of these deals and the development of underlying assets, as they will be key drivers of Royal Gold's future performance. The company's ability to navigate regulatory approvals and integrate these acquisitions will be crucial in realizing the anticipated synergies and growth.

Pitch Summary:
Canacol Energy has seen a dramatic decline in equity value due to production setbacks, reserve replacement issues, and strategic shifts. Despite these challenges, the company holds a substantial reserve base and benefits from high local natural gas prices. However, its financial leverage and upcoming debt maturities pose significant risks. While the stock trades at a fraction of its operational value, offering potential turnaround opportunities, the company's ability to stabilize production and replace reserves is crucial to avoid restructuring.

BSD Analysis:
Canacol's financial health is precarious, with a market cap of $66 million against an enterprise value of $712 million, largely due to its $646 million net debt. The company's 2028 bond, trading at 30 cents on the dollar, reflects market skepticism about its ability to meet future obligations. Canacol's leverage ratio stood at 2.3x in 2024, down from 2.9x in 2023, thanks to high natural gas prices, but production declines remain a concern. The company's ability to replace reserves and grow output is critical, particularly with a $200 million debt maturity looming in 2027. The NPV of its proven reserves exceeds total debt, providing some negotiating leverage, but consistent exploration success is essential to avoid restructuring. Investors may find the 2028 bond more attractive due to its higher recovery prospects compared to equity, especially if production stabilizes or exploration yields positive results.

Pitch Summary:
WK Kellogg is set to be acquired by Ferrero for $23 per share, valuing the company at an enterprise value of $3.1 billion. The acquisition will transform WK Kellogg into a wholly owned subsidiary of Ferrero, a private confectionery giant. The stock currently trades just below the acquisition price, offering limited arbitrage opportunities due to transaction costs and pending regulatory approval.

BSD Analysis:
The acquisition of WK Kellogg by Ferrero represents a strategic expansion into the breakfast cereals market for the Italian confectionery leader. Ferrero's history of successful M&A, including its $3.2 billion acquisition of Nestle's U.S. Confectionery, suggests it can effectively integrate WK Kellogg. With Ferrero's estimated EBITDA margin of 15% and a net income margin around 7%, the company is well-positioned to enhance Kellogg's profitability. The deal's cash-only nature underscores Ferrero's financial strength, allowing it to absorb Kellogg's $717 million debt without incurring additional liabilities. The combined commercial networks of Ferrero and Kellogg could drive sales growth, leveraging Ferrero's premium brand positioning and Kellogg's established market presence.

Pitch Summary:
MarketAxess Holdings Inc. is well-positioned to capitalize on the ongoing digitization of the fixed-income trading market. As a pioneer in electronic bond trading, MKTX has developed a robust platform that supports a wide range of fixed-income securities. Despite recent competitive pressures, the company's innovative products like X-Pro and Open Trading are gaining traction, suggesting a return to growth. With a strong balance sheet, consistent free cash flow, and a history of shareholder-friendly practices, MKTX is poised for long-term success.

BSD Analysis:
MarketAxess has demonstrated financial resilience with a decade-long streak of revenue growth, reaching $817 million in 2024. The company's focus on cost management is evident in its stable SG&A expenses and impressive free cash flow margins, which hit 50% recently. Despite a decline in Return on Capital due to competitive pressures, MKTX's new offerings should stabilize this metric. The stock's P/E ratio has compressed to 30.3x, presenting a potential value opportunity compared to peers like Tradeweb and Intercontinental Exchange. With expected EPS growth driven by product success and market share gains, MKTX shares could reach $264.00 by 2026, offering a compelling investment case given its innovative edge and market position.

Pitch Summary:
Taylor Morrison Home Corporation (TMHC) is positioned for a bullish breakout as it trades above its 200-day moving average, indicating strong momentum. The stock is on a trajectory to challenge its all-time high from November 2024, suggesting potential for significant upside. The current price/book ratio of around 1.0 suggests the stock is undervalued, typically a sign of recession pricing, yet the market's willingness to pay up to 1.3x book in recent years indicates room for growth.

BSD Analysis:
TMHC's recent breakout above its 200DMA is a positive technical signal, suggesting renewed investor confidence. The stock's price/book ratio, while higher than its historical lows, remains attractive compared to its recent peak, indicating potential undervaluation. The broader housing market's sensitivity to interest rates could play a pivotal role; with mortgage rates showing signs of peaking, TMHC may benefit from improved affordability. Additionally, the company's ability to capitalize on a potential housing market recovery could drive further gains. However, investors should remain cautious of macroeconomic factors such as fiscal policy and interest rate changes that could impact housing demand.

Pitch Summary:
LGI Homes is currently undervalued, trading significantly below its tangible book value, which includes land, lot improvements, and real estate inventory. The company's forward P/E ratio is notably low compared to peers, suggesting potential for substantial upside if the housing market recovers. The company's strategy of owning and developing new communities from scratch gives it a competitive edge. Despite recession fears, technical indicators suggest a potential turnaround, and the high short interest could lead to a short squeeze, further boosting the stock price.

BSD Analysis:
LGI Homes is trading at a price-to-tangible book value of 0.62x, compared to a peer average of 1.5x, highlighting its undervaluation. The company's forward P/E ratio of 6.1x is the lowest among its peers, suggesting it is priced for a downturn that may not materialize. The technical momentum has shown signs of reversal, with the stock price moving above its 50-day moving average, indicating potential for a rally. The high short interest, at 18.7% of float, could lead to a short squeeze, amplifying gains if the market sentiment shifts. Additionally, the absence of insider selling suggests confidence in the company's prospects. While risks such as rising labor costs and tariffs exist, these are industry-wide challenges. If interest rates decline, the housing market could see renewed strength, benefiting LGI Homes significantly.

Pitch Summary:
Celestica has successfully pivoted from a traditional EMS assembler to a key player in AI hardware design, embedded within the hyperscaler ecosystem. Despite a significant stock price increase, the market still undervalues its potential, particularly as it continues to expand its 800G and 1.6T product lines. The company's ability to maintain high margins and consistent earnings beats suggests a strong operating leverage that could drive further valuation rerating. Investors should consider accumulating shares during market pullbacks, as Celestica's strategic positioning in AI infrastructure offers a compelling growth opportunity without the high multiples associated with larger tech firms.

BSD Analysis:
Celestica's forward P/E ratio is compressing as earnings expand, indicating that the market has yet to fully price in its growth potential. The company's consistent earnings beats and positive EPS revisions highlight its operational strength and market confidence. With a net debt/EBITDA ratio of approximately 1.1x, Celestica maintains a strong balance sheet, providing flexibility to navigate potential market fluctuations. The company's focus on high-margin, design-intensive programs is evident in its reduced cash cycle days and lower customer deposits, signaling increased trust from hyperscalers. However, risks such as customer concentration and potential supply chain disruptions could impact future performance. Overall, Celestica's strategic shift and robust financial metrics position it well for continued growth, making it an attractive investment for those seeking exposure to AI infrastructure development.

Pitch Summary:
Seagate Technology Holdings is positioned to capitalize on the growing demand for data storage driven by AI, big data, and cloud services. The company has a first-mover advantage with its Heat-Assisted Magnetic Recording (HAMR) technology, offering higher capacity drives that reduce total cost of ownership for customers. This innovation is expected to enhance Seagate's margins and maintain its competitive edge over rivals like Western Digital and Toshiba. Despite a recent stock rally, Seagate's valuation remains attractive, supported by earnings growth rather than multiple expansion. The company's strong free cash flow and shareholder returns, including a significant buyback program, further bolster its investment appeal.

BSD Analysis:
Seagate's strategic deployment of HAMR technology positions it ahead of competitors in the nearline HDD market, which is crucial as data storage needs continue to expand. The company's gross margins are projected to improve to 40% with the adoption of HAMR, driven by increased efficiency and cost optimization. Despite a 100% share price increase from April lows, Seagate's EV/EBITDA ratio remains reasonable at approximately 11.73x, indicating room for further valuation expansion if earnings continue to rise. The company's robust free cash flow, projected to double, supports ongoing buybacks and potential reinvestments, enhancing shareholder value. Risks include production scalability and reliance on hyperscaler clients, but Seagate's first-mover advantage and R&D investments mitigate these concerns. Overall, Seagate's focus on technological innovation and operational efficiency makes it a compelling buy, with potential for significant upside as the data storage market grows.

Pitch Summary:
Watches of Switzerland Group (WOSG) presents a compelling investment opportunity due to its strategic expansion in the US market, robust partnerships with luxury brands, and innovative programs like the Rolex Certified Pre-Owned initiative. Despite recent margin pressures from US tariffs, the company's diversified revenue streams and strong management team position it well for future growth. The acquisition of Roberto Coin Inc. further diversifies its offerings into luxury jewelry, enhancing its market presence.

BSD Analysis:
WOSG's financial performance in FY25 was marked by a 7.4% revenue increase to £1.65 billion, driven by strategic acquisitions and showroom expansions. The company's US sales reached $1 billion, highlighting its successful penetration into the world's largest luxury watch market. Despite challenges like tariff-induced margin compression, WOSG maintains a strong balance sheet with a net debt to EBITDA ratio comfortably below 3x, ensuring financial flexibility. The company's focus on high-return showroom projects and digital expansion through platforms like Hodinkee positions it to capitalize on the growing demand for luxury timepieces. With a forward P/E ratio significantly below its historical average and a free cash flow yield of 13%, WOSG appears undervalued, offering a potential annual return of 16% over the next decade. However, investors should remain vigilant of external risks such as potential changes in US tariffs and the competitive landscape following Rolex's acquisition of Bucherer.

Pitch Summary:
Cellnex Telecom is the other recent investment in our portfolio where a shift in ownership prompted our entry. The company operates independent mobile tower networks across European markets including Italy, France, the UK, Spain, and Poland. These assets have infrastructure-like characteristics: high upfront fixed costs, low marginal costs, and very sticky customers operating on long-term contracts. Mobile network operators (MNOs) depend on tower access to deliver reliable service, and co-locating on shared infrastructure is the most efficient solution – making the economics attractive for both towercos and their customers. After years of debt-fuelled expansion, the company's strategy began to unravel in 2022 as interest rates rose. The portfolio was a patchwork of dominant and subscale positions, the balance sheet was stretched, capital commitments were heavy, and central functions needed streamlining. The share price fell 57% from peak as investors reappraised the business under a new cost-of-capital regime. The turning point came in March 2023, when TCI disclosed a significant stake and then secured board representation a few weeks later. A new CEO was appointed in June and, with TCI's backing, Cellnex undertook a thorough strategic reset. The company has since pivoted from aggressive growth to rationalisation – selling assets such as Austria and Ireland, scaling back capital commitments, cutting operating expenses, and improving capital discipline. Cellnex may be slimming down, but shareholders wallets should be getting fatter in future. With the balance sheet stabilised, Cellnex has begun returning capital to shareholders, buying back a little over 3% of the company in the first half of 2025. We expect a sharp inflection in free cash flow over the next three years. In 2024, the company generated around EUR 2bn in operating cash flow but spent EUR 1.3bn on its Build-to-Suit (BTS) programme – network expansion projects built in partnership with major customers – which after other maintenance and expansion capex left little for shareholders. By 2028, we expect BTS spend to fall to EUR 200–300m p.a. whilst operating cash flow rises to c. EUR 2.5bn. Net of required reinvestment, we forecast free cash flow of around EUR 2bn. With a current market cap of EUR 23bn, and allowing for further buy backs in the interim, that implies a 2028 free cash flow yield of c. 10% — a compelling valuation given the tower industry's structural strengths and predictability, and ongoing prospects for high single digit growth in free cash flow from that point. Private market benchmarks also point to undervaluation. Tower assets have recently transacted at EV/EBITDA multiples in the low-to-mid 20s, whereas Cellnex trades at 16–17x 2025 EBITDA. On an EV-per-site basis, Cellnex trades at a ~30% discount to peers such as INWIT and Vantage Towers. We see Cellnex as a classic controlledco inflection: a high-quality infrastructure asset mismanaged during an era of cheap capital, now undergoing a disciplined transformation under aligned, long-term ownership.

BSD Analysis:
Ennismore's Cellnex investment represents a classic turnaround story driven by activist involvement from TCI, which secured board representation and installed new management in 2023. The thesis centers on a strategic pivot from debt-fueled expansion to disciplined capital allocation and shareholder returns. Cellnex operates high-quality tower infrastructure with attractive economics: high fixed costs, low marginal costs, and sticky long-term customer contracts. The transformation is already underway, with asset sales, reduced capital commitments, and active share buybacks (3% in H1 2025). The key catalyst is a dramatic free cash flow inflection, with Build-to-Suit spending expected to decline from EUR 1.3bn to EUR 200-300m annually by 2028, while operating cash flow rises to EUR 2.5bn. This implies a compelling 10% free cash flow yield by 2028 on the current EUR 23bn market cap. Valuation appears attractive versus private market benchmarks, with Cellnex trading at 16-17x EBITDA compared to low-to-mid 20s for recent tower transactions, and at a 30% discount to peers on an EV-per-site basis.

Pitch Summary:
In February we initiated a position in Asseco Poland ("Asseco"), a leading Polish vertical market software (VMS) company with a market capitalisation of EUR 4.5bn. Founded in 1991 by Adam Goral – who remains CEO and the largest shareholder – Asseco has grown revenue and operating profit by 158x and 103x respectively since its 2004 IPO, partly through the execution of more than 150 acquisitions. The company now employs over 34,000 people across 60 countries. Asseco builds and operates highly specialised software for niche or regulated sectors. VMS, unlike horizontal tools such as Microsoft Office, is tailored to the workflows of a specific industry or function. VMS for a hotel might manage guest reservations, staff schedules and maintenance/repairs, for instance. In Asseco's case, ZUS, the largest IT system in Poland — covers social insurance payments for 2.8 million people and processes over 11% of the country's GDP across its 230 modules. We've long admired the VMS model for its economic defensibility: high switching costs, mission-critical functionality, and relatively limited market size — characteristics that deter new entrants (especially given that much of the market is already served by incumbents) and enable pricing power. These qualities are evident in Asseco's metrics: 78% of revenues come from proprietary software and services; nearly 60% of revenue is recurring; and customer retention exceeds 90%. Our interest in Asseco was catalysed by the acquisition in January of a substantial stake by Topicus, a listed subsidiary of Constellation Software — arguably the most successful capital allocator in software over the last three decades. Constellation's long-standing strategy is to acquire and hold VMS businesses. It has executed this with remarkable success, compounding value at 35%+ annualised rates since its IPO in 2006. We believe Topicus's involvement will drive a material shift in Asseco's strategy and financial profile – with greater pricing discipline, higher operating margins, and an even more ambitious, higher-return M&A strategy. We confirmed this during a recent visit to Warsaw where we spent the day with Asseco's management team. With mid-single-digit organic growth, rising margins, and increased capital productivity, we believe Asseco could be materially undervalued. The shares have appreciated substantially since we built the position, and currently trade at 33x 2024 earnings – a headline multiple that may appear full, but one that fails to capture the magnitude of the transition underway. This multiple reflects trailing margins and underutilised capital. If Topicus succeeds in driving Asseco toward the 25%+ EBITDA margins and reinvestment performance seen elsewhere in the Constellation network, the embedded value creation could be substantial.

BSD Analysis:
Ennismore's investment in Asseco Poland represents a compelling transformation story driven by new ownership from Topicus, a Constellation Software subsidiary. The thesis centers on Constellation's proven ability to optimize vertical market software businesses, having compounded value at 35%+ annually since 2006. Asseco's defensive VMS model features high switching costs, mission-critical functionality, and strong recurring revenue (60% of total), with customer retention exceeding 90%. The catalyst is Topicus's involvement, which should drive margin expansion from current 15% EBITDA to 25%+ levels, matching Constellation's typical transformation playbook. The company's scale is impressive, processing over 11% of Poland's GDP through its ZUS system and operating across 60 countries with 34,000 employees. While shares trade at 33x earnings, this multiple reflects trailing margins and underutilized capital rather than the transformed business model. The combination of Constellation's disciplined capital allocation framework, higher hurdle rates, and proven margin expansion capabilities creates significant embedded value creation potential.

Pitch Summary:
Karnov is a high-quality, subscription-led business operating in a niche of legal and regulatory information services where customer retention is high, pricing power is strong, and barriers to entry are meaningful. In its core Nordic markets, it commands dominant market positions and 40%+ operating margins. The recent adoption of Karnov's AI tools – priced at a 30% premium to standard licences – is accelerating revenue growth, as legal professionals see clear ROI from improved efficiency; the cost of a licence is a fraction of a junior associate's salary. This makes Karnov one of the most compelling, tangible AI beneficiaries we have seen in public markets today. The company is also mid-way through integrating acquisitions in southern Europe that came with lower margins and slower growth. However, with clear synergy targets and group-wide cost savings, Karnov is on track to lift margins materially from 22% to 30%+. Product innovation, which had lagged in the new markets during integration, is set to accelerate over the next 12 months – supporting a recovery in revenue growth. Despite its stable cash flows and enjoying similar structural tailwinds, the shares trade at a steep discount to peers like Thomson Reuters – both on earnings and sales multiples – offering valuation upside as the benefits of AI monetisation and margin expansion become more visible.

BSD Analysis:
Ennismore presents a compelling bull case for Karnov Group, positioning it as a high-quality subscription business with dominant market positions in Nordic legal information services. The investment thesis centers on AI monetization, with the company's AI tools commanding 30% pricing premiums and delivering clear ROI to legal professionals. The manager highlights significant margin expansion potential from 22% to 30%+ as the company integrates Southern European acquisitions and realizes synergies. Karnov's defensive characteristics include high customer retention, strong pricing power, and meaningful barriers to entry in specialized legal markets. The valuation argument is particularly attractive, with shares trading at a steep discount to peers like Thomson Reuters despite similar structural tailwinds. The combination of AI-driven revenue acceleration, margin expansion from operational improvements, and valuation re-rating potential creates multiple drivers for outperformance. This represents a classic quality growth story with tangible AI benefits and clear operational leverage.

Pitch Summary:
Siemens Energy is a German power equipment and electrical equipment company. The company provides power generation equipment for the gas, wind and nuclear markets, and grid equipment including transformers and storage for the electricity transmission and distribution sector. These products are becoming increasingly critical in the US and Western Europe where there is insufficient power generation supply, and aging sub-scale electrical infrastructure. This robust demand dynamic is increasingly showing up in Siemens Energy's results with the company growing its orders at over 50% year on year at its latest earnings. Given the momentum in the end markets, we expect the company to formally lift its medium-term earnings growth guidance at its Capital Markets Day in November this year. We also note that with the financial health of the company improving (after difficulties with fixed priced contracts during Covid) it should be able to resume dividend payments in the medium term. In terms of the longer-term backdrop, we expect demand to remain robust. According to the International Energy Agency, less than 30% of global energy use is electrified. Yet we know that to decarbonise things like transport (via electric vehicles), and heating and cooling, we need to power them with low carbon electricity. So, the high voltage electrical equipment from companies like Siemens Energy has an increasingly important role, especially when the overall electricity demand has also increased through artificial intelligence usage. One issue the company needs to continue to work through is its wind segment, which has been challenged for many years. Despite ongoing global efforts to decarbonise electricity generation through adding renewables, equipment manufacturers have struggled to maintain profitability due to the unprecedented input cost inflation and supply chain issues absorbed throughout 2022-2023, which rendered many fixed price equipment and installation contracts unprofitable. Nonetheless, Siemens Energy (and peers) have since rationalised their pricing strategy and are targeting a return to profitability as this unprofitable component of the backlog is worked down. We are confident the industry has now consolidated and rationalised and that Siemens Energy and its major peers are through the worst of the problems.

BSD Analysis:
Munro Partners presents a strong bull case for Siemens Energy based on critical infrastructure demand drivers and improving operational fundamentals. The fund emphasizes the company's strategic positioning in power generation and grid equipment markets, particularly benefiting from insufficient power supply and aging infrastructure in the US and Western Europe. With orders growing over 50% year-over-year, Siemens Energy is capitalizing on robust demand dynamics driven by electrification trends and AI-related power consumption increases. The investment thesis highlights the massive opportunity ahead, noting that less than 30% of global energy use is currently electrified, creating substantial runway for growth as transport and heating systems transition to electric power. Munro expects the company to raise medium-term earnings guidance at its November Capital Markets Day and anticipates dividend resumption as financial health improves post-COVID contract difficulties. While acknowledging ongoing challenges in the wind segment due to historical fixed-price contract issues, the fund believes the industry has consolidated and rationalized pricing, positioning Siemens Energy to benefit from the global electrification and decarbonization megatrend.