Investment Pitches

Pitch Summary:
USB has the lowest stated and adjusted capital ratio bank in the country; false narratives; fragile capital levels; the bank would need additional capital;

BSD Analysis:
U.S. Bancorp faces pressures from compressed net interest margins, rising funding costs, and growing credit risk in commercial real estate. Though historically a conservative lender, USB’s heavy exposure to rate-sensitive loans leaves earnings vulnerable. Regulatory scrutiny after regional bank failures adds uncertainty. Cost of deposits continues to climb as competition intensifies, undermining profitability. Bears also worry about slower loan growth amid economic cooling.

Pitch Summary:
WestEnd also gains exposure to AI via our holdings in Alphabet (Google), which has an entire AI division and recently announced the upcoming release of Bard, a competitor product to OpenAI’s (Microsoft) ChatGPT.

BSD Analysis:
Alphabet reported that annual revenues exceeded $400 billion for the first time in 2025, anchored by an 18% revenue increase in the fourth quarter to $113.8 billion. The company’s 2026 strategy is dominated by an unprecedented capital expenditure plan, with investments targeted between $175 billion and $185 billion to scale AI infrastructure. Google Cloud has reached a significant profitability milestone, ending 2025 with an annual run rate of $70 billion and a backlog that more than doubled to $240 billion. The launch of Gemini 3 marks a pivotal moment for the firm, as AI agents now generate approximately 50% of the company's internal code. Sundar Pichai highlighted that the Gemini App has grown to over 750 million monthly active users, driving more Search usage than ever before. To support these efforts, Alphabet issued $24.8 billion in senior unsecured notes late last year for general corporate purposes and data center construction. The company also continues to invest heavily in Other Bets, recently funding the majority of a $16.0 billion investment round for Waymo to maintain its lead in autonomous driving. Analysts view the 78% reduction in Gemini serving costs as a critical driver for future margin expansion in 2026.

Pitch Summary:
NVIDIA invented the graphics processing unit (GPU) in 1999, which essentially gives its products a monopoly on the GPUs needed to power AI solutions. Companies need GPUs to fold AI into their business models. • NVIDIA has a suite of products tailored specifically to the nascent AI industry. NVIDIA DGX-2 is the most powerful tool for AI training; NVIDIA DGX A100 is the most powerful system for AI workloads; NVIDIA TensorRT software allows ‘conversational AI’ like the ChatGPT system to work extremely fast; the list goes on.

BSD Analysis:
NVIDIA remains the definitive leader of the AI economy, heading into its highly anticipated Q4 fiscal 2026 earnings report scheduled for February 25. The company generated an astonishing $147.8 billion in revenue during the first three quarters of the fiscal year, with the data center segment alone accounting for roughly 89% of that total. Wall Street expects fourth-quarter revenue to reach approximately $65.5 billion, which would bring the annual total to over $213 billion. Management has indicated that gross margins should remain in the mid-70% range, reflecting incredible pricing power despite increased production costs for the Blackwell architecture. Strategic focus for 2026 involves the large-scale deployment of the NVIDIA DRIVE AV software for autonomous transportation and the digitalization of global manufacturing plants. With a market capitalization holding above $4 trillion, the stock’s forward P/E ratio has actually compressed to a historically attractive level near 22. Some analysts predict the stock could soar post-earnings if it maintains its current beat-and-raise cadence while easing supply constraints for its high-end GPUs. The primary risk factor remains a potential cooldown in hyperscaler spending, though current backlogs suggest demand still significantly outstrips supply.

Pitch Summary:
Artificial Intelligence (AI) requires chips to accelerate development in data centers and cloud providers, and also needs massive systems used for research. AMD provides both. • AMD has semiconductors ready to handle the processing needs of companies at the forefront of developing AI systems, including AMD’s highly anticipated MI300 coming later in 2023. • AMD CEO, Lisa Su, says that AI will be vital to the chipmaker’s future. “We believe that AI is a huge driver of compute growth,” she said on the Q4 2022 earnings call. “And given our portfolio, it should drive [AMD’s] growth as well.”

BSD Analysis:
AMD enters 2026 coming off a record-breaking 2025, during which annual revenue reached $34.6 billion behind a massive 34% year-over-year surge. The company’s recent Q4 2025 report highlighted a record quarterly revenue of $10.3 billion, significantly exceeding consensus estimates due to high demand for Instinct GPUs and EPYC processors. For the first quarter of 2026, management has issued a revenue guidance of approximately $9.8 billion, which accounts for a seasonal decline but represents 32% growth over the prior year. A major narrative for the year is the continued scaling of the AI business toward a target of tens of billions in revenue by 2027. Investors are closely monitoring the second-half deployment of 6 gigawatts of compute capacity in partnership with OpenAI, a milestone expected to solidify AMD's position in the AI supercycle. However, the stock faced short-term pressure following the release as the market digested a projected non-GAAP gross margin of 55% for early 2026. Despite these fluctuations, the company maintains a "Strong Buy" sentiment with analysts raising price targets as high as $345. Ultimately, AMD's ability to navigate high-bandwidth memory supply bottlenecks will be critical to sustaining its growth trajectory through the remainder of the year.

Pitch Summary:
Pre-revenue biotech company with only one experimental drug; the Phase 2 results had lack of statistical significance but the company manipulated the results; Phase 3 study struggles to enroll patients; with the current design, the study will take 12 to 20 years; CEO uses the company as his personal piggybank; price target - $3.

BSD Analysis:
GLSI is an early-stage biotech focused on breast cancer therapies. The bear case is speculative valuation, single-asset dependency, and lack of late-stage trials. With no approved products and limited pipeline diversification, the company’s market cap rests on clinical outcomes that remain highly uncertain. Ongoing cash burn and reliance on equity raises compound dilution risk.

Pitch Summary:
A significant unrealized loss that could lead to a similar situation as SIVB; suffering balance sheet and bleeding deposits;

BSD Analysis:
Schwab has seen deposit flight and rising funding costs, compressing net interest income. The collapse of regional peers drew scrutiny to Schwab’s balance sheet, particularly its large held-to-maturity securities portfolio with significant unrealized losses. While client assets are sticky, bears argue higher rates will keep pressure on margins. The valuation assumes stability, leaving little cushion if outflows persist.

Pitch Summary:
Paywalled (An investigation by The Bear Cave has uncovered that amid numerous scandals and horror stories the Airbnb platform has shifted towards professionally managed properties, many of which are now gearing to directly compete against the company.)

BSD Analysis:
Airbnb faces regulatory restrictions, supply pressures, and leisure-travel cyclicality. Many cities are tightening short-term rental laws, limiting growth. Hotels and OTAs are regaining share post-COVID. While margins improved, increased marketing spend may erode profitability. Valuation assumes secular growth, leaving shares vulnerable if regulation or consumer habits shift.

Pitch Summary:
The SaaS industry has been weak; the company's average contract value is massively inflated; intense competition; company's technology is likely to be obsolete due to AI development; Update 4/10 - Follow-up report published.

BSD Analysis:
Sprout Social offers SaaS tools for social media management. Concerns include slowing customer growth, rising churn, and intensifying competition from Salesforce and smaller rivals. Margins remain pressured by heavy marketing spend, while valuation is lofty. Questions remain on whether the platform can sustain premium pricing in a crowded space.

Pitch Summary:
In addition to this rotation into stocks with higher potential, we have added Norma Group AG to the fund's portfolio, a company in which we invested in 2016 and which now offers a new investment opportunity. Norma manufactures clamps and pipe connection systems for automotive, water transport and general use. In some niches it holds market shares of 90% and has good growth opportunities. In recent years margins have been squeezed by overcapacity problems, exacerbated by the automotive crisis. Last year, margins suffered even more from the increase in production costs (stainless steel, energy, etc.) and although they have managed to raise prices to compensate for this increase in costs, the delay in their implementation has reduced gross margins by an additional 2%. The share price has continued to fall and is now 70% below the highs of 5 years ago. We believe that this weak situation represents a good opportunity. From a business point of view, already in 2022 the company has managed to increase selling prices by 9% and sales have grown by 14% (partly due to the dollar currency effect). In the United States, where the company has almost half of the business, sales have grown by 26%, and although in Europe and Asia growth has been lower, due to the impact of the war in Ukraine and China's "zero-covid" policy, it is also positive. In addition to price increases, the company has completed an operational restructuring to move production from Frankfurt to a modern factory in the Czech Republic, which will reduce unit costs. In this way, the company has started the process of margin recovery, which we expect in the coming years to return to the level of 12% - 14% from 8% in 2022. The margin prior to the automotive crisis and the inflation period was around 18%. From a financial&valuation point of view, Norma has a reasonable debt level of 2.2x EBITDA at current EBITDA levels. Valuing the company at 11x EBIT and assuming the margin recovery mentioned in the previous paragraph, Norma has a revaluation potential of between 70% and 100%.

BSD Analysis:
NORMA Group has successfully pivoted toward its "NewNORMA" strategy in 2026, following the strategic €650 million divestment of its Water Management business unit. This transaction has fundamentally strengthened the balance sheet, allowing the company to reduce debt by €300 million and return up to €260 million to shareholders through aggressive buybacks. The firm is now a specialized industrial powerhouse focused on high-precision connection technology, particularly within the evolving electric vehicle and industrial application sectors. Management is delivering on its efficiency initiatives, which have already yielded millions in structural savings, providing a solid buffer against ongoing market softness in the automotive sector. Analysts maintain a "Buy" rating with a fair value target above €20, reflecting a belief in the company’s improved margin profile and focused capital allocation.

Pitch Summary:
It has been seven years since we have talked about Admiral as one of our stocks in focus. Since that time it has been an ever constant presence in the fund. It is actually one of our ‘originals’, as one of the stocks owned from the day the fund launched in January 2015. It’s worth revisiting the story as both Admiral and the insurance industry don’t have their challenges to seek at the moment. Admiral's results show that even it is not immune to these industry issues. They include, increased claims frequency post Covid, supply chain challenges, adverse weather and high levels of inflation - all of which had a very big impact on the industry. There has also been the impact of the Financial Conduct Authority’s insurance pricing reforms, with which Admiral and its peers have had to compete. Subsequently, Admiral’s pre-tax profits saw a decline from £769m to £469m. The group’s insurance loss ratio (claims paid out/earned insurance premium) rose 14 percentage points to 72% - due to a rise in claims inflation; with the group’s expense ratio (underwriting expenses/earned premium) rising 3 percentage points to 30%. The cumulative 17 points rise led to an underwriting loss for the first time in recent decades, reflected in a Combined ratio of 101.7%. However, this should be seen in the context of the industry, which will likely produce a Combined ratio of 115%. Admiral will also reprice risk to reflect these industry pressures, over the coming months. Given the reduction in profits, Return on Equity has also declined from 52% to 35%. Yet, Admiral still maintains industry leading returns due to their strong capital allocation discipline. The sector has recently produced an average Return on Equity (excluding Admiral) of only 2%! Covid and its after-effects have distorted the marketplace over the last couple of years, but we anticipate Admiral’s Return on Equity getting back to previous levels soon. Admiral maintains this ‘returns’ advantage by taking risk off its balance sheet through its relationships with Reinsurers, such as Munich Re. It has also historically been a very good allocator of capital, which means it doesn’t chase growth in the insurance sector for the sake of it. It often takes a step back from the insurance premium cycle when competitors are going for growth. This has created a lot of value for shareholders over the years. Interestingly more recently, following its investment in technology and the development of its loans business, Admiral appears to be getting better at setting the right insurance premia for the right customers, helping it manage the industry cycle even better. Given the resilience of their business model, we anticipate that Admiral will emerge from recent issues and continue to take market share whilst creating good value for shareholders over the long term. The signs are there already with their strong customer growth in the Household, Loans and Travel businesses, all of which enhance their core car insurance business.

BSD Analysis:
Admiral is a structurally advantaged U.K. personal-lines insurer with industry-leading profitability, even after the recent margin compression. Despite a temporary dip, ROE remains vastly superior to peers, supported by its capital-light model, extensive reinsurance partnerships, disciplined underwriting, and strong cost control. The company’s long-term fundamentals—high customer loyalty, underwriting prudence, and improving pricing sophistication—suggest underwriting margins should normalize as claims inflation stabilizes. Shares trade at a modest earnings multiple relative to the company’s historical quality, offering potential rerating as profitability rebounds. Key catalysts include improved pricing cycles, stabilizing claims inflation, and continued customer growth across product lines.

Pitch Summary:
We own JPMorgan and Bank of America shares (and Goldman Sachs, for which the recent events are far less impactful given its business mix). Bank balance sheet assets are cash, loans, and investments, with funding liabilities in the form of deposits and debt / bonds. Banks are allowed to designate their investment assets in two ways: Available for Sale (AFS) or Held to Maturity (HTM). AFS securities are held at fair value, with any moves between reporting dates reflected in mark-to-market changes, meaning their value fluctuates with interest rate and credit risk changes. HTM assets are held at cost as they are not intended to be sold. The expectation from regulators is that assets designated HTM won’t be reclassified, however, they do acknowledge circumstances can change. Should this happen, a mark-to-market revaluation is triggered, impacting their book value and regulatory capital. Reclassification of HTM assets to AFS therefore only really happens if banks are in such a tight liquidity position (due to deposit flight) that they cannot cover these outflows from their cash on hand, or even by selling their AFS assets, forcing them to eat into their nest egg of HTM securities. In SVB’s case, deposit flight occurred incredibly fast with 25% of depositors withdrawing their cash in a single day.5 This is a feature of digital banking that clearly causes greater fragility in the event of a loss of confidence. Clearly, this issue is not a risk for JPMorgan although, at first glance, it appears concerning for Bank of America. The questions one needs to ask is what needs to happen to necessitate breaking into the HTM portfolio piggy bank, and what else is happening within the bank to offset these risks. Please ask if you would like to see more detail on this working but, in summary, Bank of America would need to suffer c.50% deposit outflows to force a mark to market on their HTM assets. There are several reasons we think this is unlikely. The first is size. With $1.9 trillion of deposits (vs. SVBs c$200bn) Bank of America is a systemic part of the depositary base in the US, and system deposits would need to meaningfully contract for them to be impacted. The second is diversity. Bank of America is a broad-based bank with an array of depositors (not narrowly focused on the tech companies in Silicon Valley as SVB was). The third is support from the Fed. The new “BTFP” facility allows banks to borrow up to 100% of the par value of their HTM assets, removing the need for an outright sale.6 As of December 2022, the rise in interest rates has generated an unrealised $100bn loss on Bank of America’s HTM assets. The most likely outcome is that these bonds mature at par and no loss is suffered, although an opportunity to earn a higher return in today’s interest rate environment is of course forgone. If these bonds were bought above par, then some portion of this loss may have to be realised from 2033 onwards as this is the earliest maturity within the portfolio. The flip side is that the recent move in interest rates has also driven an $8bn realised annual increase in profits today7. In both banks, solid management decisions have avoided the duration risk trap which others have fallen into. Why Own a Stock Today? This is an evergreen question that we ask ourselves about all our portfolio holdings. With banks, as with all cyclicals, our thought process goes as follows: 1. Do we believe in structural growth? 2. Is the business less cyclical than prior cycles? 3. Could the company emerge stronger when it passes through the eye of an inevitable downcycle? We believe in the structural returns from our holdings. They have generated an average 15% return on capital in a very tricky decade, and the next cycle should present further consolidation opportunities (c.f. Credit Suisse finally retiring their investment bank). Both banks have around a third of the leverage they had prior to the 2008 crisis, and three times the liquidity. Capital-light fee-based businesses are a larger contributor to their bottom lines, and credit risk within trading has been vastly reduced due to proprietary trading regulation. Asset quality is significantly higher, with mortgages at lower loan-to-value ratios made to homeowners with higher average FICO scores. All told, the cyclicality in the businesses through asset exposure, credit risk, and balance sheet leverage are lower than any point in the recent past, and revenues are more diverse. Finally, to the inevitable down cycle. We will see in a few days the impact of the recent malaise as they report Q1 earnings, and we expect solid deposit figures following depositor flight to safety from regional banks in the US. Given the tightening of financial conditions within the regional banks, we also expect loans to migrate to the money centre banks, creating long-term customer relationships with high franchise value. Trading at 9x normalised earnings the stocks are cheap and, while we don’t have a particular view on when they might re-rate, the strength shown through this difficult period (which is likely not over) will shine through in above-average intrinsic value growth, as well as potentially higher valuations, as we move through the next five years.

BSD Analysis:
Latitude’s thesis on Bank of America is that the market is overstating its interest-rate and liquidity risk: they estimate it would take roughly a 50% deposit outflow to force sales of HTM securities, a scenario they view as unlikely given its size, diversified deposit base and access to the Fed’s BTFP facility. They emphasize that unrealised losses on HTM bonds are largely a timing issue and that rising rates have simultaneously boosted current profits, while the bank has lower leverage, higher liquidity and better asset quality than pre-crisis. At about 14x trailing and low-teens forward earnings—only modestly above its 10-year average P/E—BAC offers a reasonable valuation for a scaled franchise with improving returns and operating leverage. Earnings growth should be driven by deposit repricing normalisation, fee income and potential share buybacks as capital builds, though a deeper recession could pressure credit costs and delay capital return. Relative to regional banks, BAC also stands to gain share in both deposits and lending as customers migrate toward perceived safety, reinforcing the medium-term compounding story.

Pitch Summary:
We own JPMorgan and Bank of America shares (and Goldman Sachs, for which the recent events are far less impactful given its business mix). Bank balance sheet assets are cash, loans, and investments, with funding liabilities in the form of deposits and debt / bonds. Banks are allowed to designate their investment assets in two ways: Available for Sale (AFS) or Held to Maturity (HTM). AFS securities are held at fair value, with any moves between reporting dates reflected in mark-to-market changes, meaning their value fluctuates with interest rate and credit risk changes. HTM assets are held at cost as they are not intended to be sold. The expectation from regulators is that assets designated HTM won’t be reclassified, however, they do acknowledge circumstances can change. Should this happen, a mark-to-market revaluation is triggered, impacting their book value and regulatory capital. Reclassification of HTM assets to AFS therefore only really happens if banks are in such a tight liquidity position (due to deposit flight) that they cannot cover these outflows from their cash on hand, or even by selling their AFS assets, forcing them to eat into their nest egg of HTM securities. In SVB’s case, deposit flight occurred incredibly fast with 25% of depositors withdrawing their cash in a single day.5 This is a feature of digital banking that clearly causes greater fragility in the event of a loss of confidence. Clearly, this issue is not a risk for JPMorgan although, at first glance, it appears concerning for Bank of America. The questions one needs to ask is what needs to happen to necessitate breaking into the HTM portfolio piggy bank, and what else is happening within the bank to offset these risks. Please ask if you would like to see more detail on this working but, in summary, Bank of America would need to suffer c.50% deposit outflows to force a mark to market on their HTM assets. There are several reasons we think this is unlikely. The first is size. With $1.9 trillion of deposits (vs. SVBs c$200bn) Bank of America is a systemic part of the depositary base in the US, and system deposits would need to meaningfully contract for them to be impacted. The second is diversity. Bank of America is a broad-based bank with an array of depositors (not narrowly focused on the tech companies in Silicon Valley as SVB was). The third is support from the Fed. The new “BTFP” facility allows banks to borrow up to 100% of the par value of their HTM assets, removing the need for an outright sale.6 As of December 2022, the rise in interest rates has generated an unrealised $100bn loss on Bank of America’s HTM assets. The most likely outcome is that these bonds mature at par and no loss is suffered, although an opportunity to earn a higher return in today’s interest rate environment is of course forgone. If these bonds were bought above par, then some portion of this loss may have to be realised from 2033 onwards as this is the earliest maturity within the portfolio. The flip side is that the recent move in interest rates has also driven an $8bn realised annual increase in profits today7. In both banks, solid management decisions have avoided the duration risk trap which others have fallen into. Why Own a Stock Today? This is an evergreen question that we ask ourselves about all our portfolio holdings. With banks, as with all cyclicals, our thought process goes as follows: 1. Do we believe in structural growth? 2. Is the business less cyclical than prior cycles? 3. Could the company emerge stronger when it passes through the eye of an inevitable downcycle? We believe in the structural returns from our holdings. They have generated an average 15% return on capital in a very tricky decade, and the next cycle should present further consolidation opportunities (c.f. Credit Suisse finally retiring their investment bank). Both banks have around a third of the leverage they had prior to the 2008 crisis, and three times the liquidity. Capital-light fee-based businesses are a larger contributor to their bottom lines, and credit risk within trading has been vastly reduced due to proprietary trading regulation. Asset quality is significantly higher, with mortgages at lower loan-to-value ratios made to homeowners with higher average FICO scores. All told, the cyclicality in the businesses through asset exposure, credit risk, and balance sheet leverage are lower than any point in the recent past, and revenues are more diverse. Finally, to the inevitable down cycle. We will see in a few days the impact of the recent malaise as they report Q1 earnings, and we expect solid deposit figures following depositor flight to safety from regional banks in the US. Given the tightening of financial conditions within the regional banks, we also expect loans to migrate to the money centre banks, creating long-term customer relationships with high franchise value. Trading at 9x normalised earnings the stocks are cheap and, while we don’t have a particular view on when they might re-rate, the strength shown through this difficult period (which is likely not over) will shine through in above-average intrinsic value growth, as well as potentially higher valuations, as we move through the next five years.

BSD Analysis:
Latitude frames JPMorgan as a structurally advantaged money-centre bank that has avoided the duration-risk mistakes seen at regional peers and is positioned to capture deposit inflows and loan migration as smaller banks retrench. They highlight strong capital and liquidity, improved asset quality and diversified fee income, arguing that cyclicality is materially lower than pre-2008 while returns on equity have averaged around the mid-teens through a difficult decade. At roughly 15x trailing earnings and a mid-teens ROE, JPM trades at only a modest premium to its long-run P/E yet still offers an attractive risk-adjusted earnings yield for a franchise of this quality.:contentReference[oaicite:1]{index=1} Rising rates have expanded net interest income and should continue to support earnings as long as credit costs remain contained. The key upside catalyst is continued market-share gain in deposits and corporate lending as weaker competitors retrench, while risks include a sharper credit cycle or regulatory tightening that crimps returns.

Pitch Summary:
The company has $200m debt yielding 6%, which is equal to all the profits the company could make in its glory period; equity is overvalued; the company is only riding the AI wave;

BSD Analysis:
BigBear.ai markets AI and analytics to U.S. government clients. Bears cite overpromising, ongoing losses, and reliance on government contracts. Revenue growth has lagged amid execution issues and balance sheet strain. Competition from larger AI players threatens positioning. Equity dilution remains a recurring risk.

Pitch Summary:
The company will fail within 12 months without additional financing; expected to lean into an AI hype to raise cash from unsuspecting retail investors;

BSD Analysis:
Presto’s AI ordering tools face weak adoption, poor unit economics, and scalability concerns. Despite labor-saving claims, conversions to scale have lagged. Cash burn and reliance on financing add dilution risk. Larger players like Toast and NCR pose competitive threats.