Investment Pitches

Pitch Summary:
Mercado Libre (MELI) is a classic Survivor & Thriver business but that we rarely see on sale. MELI is the dominant e-commerce, fintech platform and logistics provider in Latin America, ahead of Amazon, Shopee and smaller regional competitors. MELI is run by founder-operators who are aggressively reinvesting in the business for the next decade. Similar to Amazon in the early 2000s, using a P/E ratio to assess MELI's earnings power is a bad idea. That said, at an equity valuation of $85 billion or $1,600 per share, we acquired our stake for less than 1x GMV and ~18x estimated 2026 earnings. Unlike US or European with a similar valuation and market position, MELI should be able to continue growing north of 25% annually for years ahead, making our entry price very attractive. MELI is currently in a significant macro-driven drawdown, made worse by Iran war and sell-off in emerging market stocks. Prior to the recent 40% decline, the stock had also not fully kept up with fundamental growth and geographic expansion in my opinion, especially in Mexico. MELI operates across 18 countries with large market share in Brazil (36%), Argentina (55%) and Mexico (27%). MELI is a remarkable success story with revenue having grown over 55,000% since its IPO in 2007. The company is still growing over 30% annually. The three things that jump off the page for me about MELI are (1) the durability and runway of its ecommerce growth, (2) the profitability trajectory of its fintech business built on top of its ecommerce business, and (3) management's willingness to continue reinvesting for growth years in advance and experiment with new products and offerings. For the full year 2025 MELI delivered its 28th consecutive quarter of 30%+ revenue growth demonstrating that its Amazon-like ecosystem strategy is accelerating at scale. GMV: $19.9B (+37% YoY), accelerating for three consecutive quarters. Items sold: 752M (+43% YoY), fastest growth since 2021 in Brazil and Mexico. Unique active buyers: 83.2M (+24% YoY), adding 16M buyers in a single year. NPS leadership: Record Net Promoter Scores in all major markets. Brazil GMV grew 35% YoY in Q4 yet fewer than one-third of Brazilian adults purchased on the platform. Monthly Active Users (MAU): 77.9M (+27% YoY), 10th consecutive quarter of ~30% growth. Assets Under Management (AUM): $18.8B (+78% YoY), up from ~$2B three years ago. Credit portfolio: $12.5B (+90% YoY), up from ~$3B three years ago. Total Payment Volume: $83.7B (+53% YoY). Credit cards: $5.7B (+114% YoY). Merchant credit: $2.0B (+67% YoY). Consumer credit: $4.6B (+76% YoY). Asset-backed: $284M (+106% YoY). Ecommerce penetration in Latin America is approximately half the level of the US, UK, and China. I see no reason why the region should not reach similar penetration levels over the next decade. MELI's market has ~650 million people and a median age in the late 20s to early 30s. As this young population moves more of its spending online, MELI is positioned to capture more share across ecommerce and banking. As we know from a past Brazilian investment, Latin America is generally under-banked and interest rates on credit can be north of 100%. Fewer than 20% of Mexicans and only about 40% of Argentines have a credit card; in Mexico only about half the population has a bank account. In Brazil, four legacy banks still control most of the credit issuance. Mercado Pago has already become one of the largest digital financial institutions in Latin America. Fintech is MELI's fastest-growing segment, compounding at over 40% with payment volume growing 30%+ annually. Assets under management in savings and investment products more than doubled in 2025 as users move deposits out of legacy bank accounts into Mercado Pago. MELI's credit business is less known but becoming the company's growth driver. The company uses its consumer database and payment transactions to underwrite risk. In Q4 2025 alone Mercado Pago issued 3 million credit cards. Credit is only one layer on a broader financial services stack. Mercado Pago offers QR payments at physical merchants, debit and credit cards, consumer and SME loans, buy-now-pay-later, insurance products, wealth management, and payroll tools. Each new product increases revenue per user and deepens engagement. A merchant who adopts MELI for acquiring often takes working capital loans. A consumer who pays with Mercado Pago is cross-sold credit cards, savings, and insurance. The resulting data flywheel feeds back into better underwriting and personalization. In summary MELI represents a proven compounder operating in a part of the world with strong demographic and economic tailwinds. Not only does the stock seem very oversold, but the company's exceptional quality could lead to it recovering much faster than other emerging market peers.

BSD Analysis:
The manager initiated a position in Mercado Libre during a macro-driven 40% drawdown, viewing it as a rare opportunity to acquire a dominant Latin American e-commerce and fintech platform at attractive valuations. MELI trades at less than 1x GMV and ~18x estimated 2026 earnings despite maintaining 30%+ revenue growth for 28 consecutive quarters. The investment thesis centers on three key drivers: durable e-commerce growth runway in an underpenetrated region, rapidly scaling fintech profitability, and aggressive reinvestment by founder-operators. With market leadership across 18 countries and a 650 million person addressable market with median age in late 20s/early 30s, MELI is positioned to benefit from structural shifts toward digital commerce and banking. The fintech segment is particularly compelling, growing 40%+ annually with expanding credit portfolios and cross-selling opportunities creating a powerful data flywheel. The manager views current weakness as temporary, driven by geopolitical concerns rather than fundamental deterioration.

Pitch Summary:
In late March we exited Caesars Entertainment (CZR) after reports that the company is in talks to sell itself to Tilman Fertitta or Carl Icahn for a fire-sale price. Over our fund's history we have had several positions taken from us via buyouts at valuations far below a reasonable valuation. In the case of Caesars, I was especially disappointed after reading that CEO Tom Reeg is reported to be part of the buyout. Reeg is someone I had grown to admire and respect. I had believed he could stick out the stock's drawdown without taking advantage of minority investors. It is not uncommon to see cheap stocks get taken private especially after long drawdown periods. Late last year a smaller Vegas casino operator stock called Golden Entertainment announced a buyout by its controlling shareholder family. The deal was so egregious it sounds nearly unbelievable if explained out loud. Andrew Walker from the podcast YAV did an episode on the Golden Entertainment buyout titled Shining a Light on Golden Entertainment's Wealth Transfer that is worth a listen for anyone curious how these things can happen. The Golden buyout set a precedent for an absurdly low Caesars bid that could be accepted by public stockholders. We kept a <1% position in out of the money calls just in case the bid improves before a deal is approved by gaming regulators.

BSD Analysis:
The manager exited Caesars Entertainment due to disappointing buyout talks at fire-sale prices with Tilman Fertitta or Carl Icahn. The fund manager expressed particular disappointment that CEO Tom Reeg, whom he previously respected, is reportedly participating in the buyout that disadvantages minority shareholders. The exit was driven by concerns about management taking advantage of the stock's drawdown period to execute a low-ball privatization. The manager draws parallels to Golden Entertainment's egregious buyout precedent, suggesting similar wealth transfer dynamics at play. Despite the exit, the fund retained a small options position as a hedge against potential bid improvements. This represents a classic case of value destruction through management-led buyouts during market weakness. The decision reflects the manager's commitment to protecting against situations where management interests diverge from minority shareholders.

Pitch Summary:
Edwards Lifesciences is a genuinely high-quality business. Its clinical moat in transcatheter heart valves is real and its procedure data is unrivalled. Its management has demonstrated sustained execution over a long cycle. So, we do not dispute the quality of the franchise. However, the question of how we allocate capital within our fund, asks a different question: at what price does quality become a risk in itself? At a current multiple of approximately 30x trailing earnings — double the average rating of the broader Castlebay portfolio — we believe the market is pricing Edwards for near-perfection; and at precisely the moment the business has voluntarily concentrated its earnings stream into a single product category. That comes after it sold its Critical Care division in late 2024, meaning that its Transcatheter Aortic Valve Replacement (TAVR) business now accounts for over three quarters of revenues. Therefore, a combination of the valuation, the evolution of the business structure allied to the growing opportunities in the UK equity market, all contributed towards the decision to sell our position in the second week of March.

BSD Analysis:
The manager acknowledges Edwards Lifesciences as a high-quality business with a genuine clinical moat in transcatheter heart valves and unrivalled procedure data, but expresses concern about valuation risk. The bear case centers on the 30x trailing earnings multiple - double the portfolio average - pricing the company for near-perfection at an inopportune time. The manager highlights increased business concentration risk following the 2024 Critical Care division sale, with TAVR now representing over 75% of revenues. This creates a single-product dependency that amplifies execution risk precisely when valuations demand flawless performance. The decision to exit reflects capital allocation discipline, choosing to redeploy into more attractively valued UK opportunities rather than holding an expensive, albeit quality, position. The timing suggests the manager views the risk-reward as unfavorable despite acknowledging the franchise quality and management execution track record.

Pitch Summary:
Intertek's testing and certification business derives its Process Power from accumulated regulatory accreditation and the depth of expertise that sits behind it. A testing laboratory is not merely a room with equipment. It is an organisation that has earned, through years of demonstrated competence, the right to issue certificates that regulators and customers in over 100 countries accept as definitive. The accreditations — to ISO standards, to national regulatory bodies, to sector-specific schemes — take years to obtain and must be continuously maintained. The knowledge required to perform the testing at the frontier of new materials, new electronics and new chemical compounds is not documented anywhere a competitor could simply read. It lives in Intertek's scientific staff and their accumulated experience. This is Process Power in physical form.

BSD Analysis:
The manager positions Intertek as demonstrating Process Power through accumulated regulatory accreditations and deep scientific expertise that creates significant barriers to entry. The investment thesis emphasizes that testing laboratories represent more than physical assets - they are organizations with hard-earned regulatory credibility across over 100 countries that took years to establish. The competitive advantage lies in continuous accreditation maintenance requirements and undocumented knowledge residing in scientific staff rather than accessible documentation. The manager highlights expertise at the frontier of new materials, electronics, and chemical compounds as particularly valuable and difficult to replicate. This creates a defensive moat in an increasingly regulated global economy where quality assurance becomes more critical. The global reach and regulatory acceptance provide pricing power and recurring revenue characteristics. The pitch suggests strong defensive qualities with exposure to innovation trends across multiple industries.

Pitch Summary:
Avon Technologies represents a particularly instructive variation on Process Power — one that illuminates how the advantage can be actively deepened rather than merely inherited. The ten-year technology lead in some of its respiratory protection products, that competitors themselves have acknowledged, is the product of decades of iterative design. It's a combination of materials science expertise and accumulated knowledge of how protection systems perform under the most demanding real-world conditions. A competitor can study the finished product. However, it cannot reverse-engineer the organisational knowledge — the failure modes tested and resolved, the material combinations evaluated and discarded and the human insight embedded in every design generation that produced it. The product is, in effect, the visible tip of a process iceberg. We anticipate seeing this manifested in a rising inventory turnover rate, which should in term drive a rising return on capital profile. The market believes Avon Technologies to be a margin story, when in effect it is a capital efficiency one.

BSD Analysis:
The manager presents Avon Technologies as an exemplar of actively deepened Process Power, highlighting a ten-year technology lead in respiratory protection that competitors have acknowledged. The investment thesis centers on decades of accumulated materials science expertise and real-world testing knowledge that creates an irreplicable competitive advantage. The manager emphasizes that while competitors can study finished products, they cannot reverse-engineer the organizational knowledge of failure modes, material combinations, and design insights embedded over generations. The pitch anticipates improved capital efficiency through rising inventory turnover rather than just margin expansion. The manager contrasts market perception of a margin story with the reality of a capital efficiency opportunity. This suggests a misunderstood value proposition with potential for multiple expansion as operational improvements become apparent. The defense/protection focus provides defensive characteristics in an uncertain geopolitical environment.

Pitch Summary:
Craneware represents Process Power in its purest software form. Its revenue cycle management platform is not merely installed in US hospital finance departments — it is woven into the daily workflows of the billing teams that depend on it. The implementation process takes months; the institutional knowledge embedded in how each hospital uses the system is years in the making. The switching cost is not the cost of a new software licence. It is the cost of retraining an entire finance function, reintegrating with clinical systems and rebuilding the institutional memory of every billing edge case the team has ever resolved. That is a profound moat and explains the large difference between their high gross profit margins and their operating margins. Their team work with nearly one in two US hospitals integrating the systems to save the hospitals money. Interests are aligned. When the hospital wins by using its resources more efficiently, Craneware also wins through being an agent, a facilitator of this value creation.

BSD Analysis:
The manager positions Craneware as the purest example of Process Power in software, emphasizing how its revenue cycle management platform becomes deeply embedded in hospital workflows rather than just being installed software. The investment thesis highlights extremely high switching costs due to months-long implementations and years of accumulated institutional knowledge that create prohibitive barriers to competitor displacement. The manager notes the significant margin differential between gross and operating profits, suggesting high customer acquisition costs but strong retention economics. With penetration in nearly 50% of US hospitals, Craneware benefits from aligned incentives where hospital efficiency gains drive company revenues. The pitch emphasizes the profound competitive moat created by workflow integration and institutional memory that competitors cannot easily replicate. This represents a classic software moat story with strong defensive characteristics and recurring revenue potential.

Pitch Summary:
Compass Group is, in our view, the clearest manifestation of Process Power within the fund. Its industry-leading client contract retention rate of over 96% annually is not primarily a function of its scale, its brand, or its contractual exclusivity — though all three contribute. It is a function of operational excellence so consistently delivered, across thousands of institutional environments from hospitals to schools to corporate campuses, that the switching cost for the client has become effectively prohibitive. The processes by which Compass manages procurement, staffing, nutrition compliance and allergen management in a large hospital kitchen cannot be lifted from the organisation. They are embedded in the people and the systems over years of iteration. A competitor can win a tender on price. It cannot, in practice, replicate what Compass does when the contract begins.

BSD Analysis:
The manager presents Compass Group as a prime example of 'Process Power,' highlighting its exceptional 96% client retention rate driven by operational excellence rather than just scale or contracts. The thesis centers on the company's deeply embedded operational processes across diverse institutional environments that create prohibitive switching costs for clients. The manager emphasizes that Compass's competitive advantage lies in complex, refined workflows for procurement, staffing, and compliance that competitors cannot replicate within meaningful timeframes. This operational moat is reinforced by the combination of multiple competitive advantages including exclusive contracts, switching costs, and process power. The pitch suggests strong pricing power and defensive characteristics in an uncertain market environment. The manager views this as a durable compounder with overlapping competitive moats that the market currently undervalues.

Pitch Summary:
One of the most interesting companies in Kazakhstan is Kazatomprom, which is not only the world's largest uranium producer, but also by far the lowest-cost producer. Its stock returned 44% as energy prices rose and interest in nuclear power picked up again. Having recently met with the Chief Executive Officer and the Chairman of the Board, it is clear that the company is ramping up its efforts to raise market awareness of both the uranium / nuclear story and the company itself, which is currently trading at a significant discount to its US-listed peer, Cameco. We increased our exposure during the quarter to reflect the improved outlook for uranium.

BSD Analysis:
East Capital presents a compelling bull case for Kazatomprom based on its dominant market position and structural advantages in the uranium sector. The fund highlights the company's dual competitive moats: being both the world's largest uranium producer and the lowest-cost producer, which provides significant operational leverage in a rising commodity price environment. The 44% stock return during Q1 2026 reflects growing investor recognition of the nuclear power renaissance and uranium supply dynamics. Management's increased efforts to raise market awareness suggest potential for multiple expansion, particularly given the significant valuation discount to US peer Cameco. The fund's decision to increase exposure during the quarter demonstrates conviction in the uranium thesis and the company's ability to capitalize on the improving sector outlook. The combination of operational excellence, cost leadership, and favorable sector tailwinds positions Kazatomprom as a key beneficiary of the global shift toward nuclear energy.

Pitch Summary:
We also initiated a position in Bloomin Brands (BLMN), a company in the midst of a multi-year transformation. The company has $4B in revenue focused on the casual dining portion of the restaurant market. Bloomin Brands' two largest banners – Outback and Carrabbas – are leading brands in the large steakhouse and Italian segments of the market. The company's smaller growing brands are Bonefish Grille and Flemings. Two years ago, Starboard Value took a 9%+ equity stake, highlighting the parallels to their previous successful turnaround in a casual dining space. Darden Restaurants has a very similar portfolio of brands as Bloomin Brands (Longhorn Steakhouse, Olive Garden and Capital Grille). Darden's former successful Chief Operating Officer has been a recent addition to the Bloomin Brands board. The company also hired a new CEO who has embraced Starboards turnaround plan focusing on improving the Outback banner, enhancing the company balance sheet, and reinvesting back into the asset base. The company has been investing in new systems and guest-facing technology to reduce check-out time and gather consumer feedback. Late last year, management rolled out a new steak line-up at Outback and is reporting better consumer feedback and an inflection in restaurant traffic. During the upcoming year, management is using productivity savings to reinvest back into the business with a focus on improving food quality, enhancing server experience, and rolling out new marketing. In addition, management is undertaking a remodel program focused on refreshing all Outback stores by the end of 2028. Success of the transformation plan could help to drive the restaurant banners back to consistent positive comps and lead to margin improvements over time. Today Bloomin Brands' share price is 80% below their all-time high, as the company is near historical low EBITDA margins versus industry peers in the low to mid-teens. Near-term risk is ongoing revenue and margins headwinds from adverse weather and rising beef costs. Bloomin Brands low valuation appears to reflect these concerns and limited expectations on the success of the turnaround plan; forward EV/EBITDA is below 4x and price to earnings (FY2) is below 6x based on trough earnings expectations. Success on the transformation suggests normalized EBITDA at >$500M and, with only $60M of long-term maintenance capex, our view of normalized annual free cash flow is near the company current market cap. Bloomin Brands' long-term potential upside could be multiples of the current share price.

BSD Analysis:
Miller Value Partners presents Bloomin' Brands as a compelling turnaround opportunity backed by activist investor Starboard Value and experienced management from successful casual dining transformations. The investment thesis centers on operational improvements at flagship Outback Steakhouse, including new steak offerings that have generated positive consumer feedback and traffic inflection. The manager highlights the addition of Darden's former COO to the board and a new CEO committed to Starboard's turnaround plan, providing credible execution capability. Key value drivers include technology investments to improve guest experience, comprehensive store remodeling through 2028, and reinvestment of productivity savings into food quality and service enhancements. With the stock trading 80% below all-time highs at forward EV/EBITDA below 4x and P/E below 6x on trough earnings, the valuation appears deeply discounted. The manager projects normalized EBITDA above $500M, which with minimal maintenance capex of $60M, suggests normalized free cash flow approximating the current market cap, implying significant upside potential if the transformation succeeds.

Pitch Summary:
Early in the quarter, we initiated a position in Crescent Energy (CRGY), a top 10 domestic Energy and Exploration (E&P) company. While a small market cap at time of purchase, Crescent's significant asset base/free cash flow power should support a mid-cap market cap over time. Crescent's share price was down 50% over the past year due to weak commodity prices and the completion of Vital Energy acquisition which brought debt leverage to the higher end of the company's historical range (1.5x). Management has a successful track record of buying assets at a significant discount to their long-term value, improving acquired company operations, removing excess costs, driving down development costs, and enhancing well productivity. Vital brings Crescent into the Permian basin with low decline production 10+ year inventory. The company also recently hired an experienced operator who successfully built out Pioneer Natural Resources Permian Assets. Crescent's asset base has significant flexibility to move within liquids (oil, gas, and NGL), focusing on best capital return potential and maximizing free cash flow over the cycle. Management has also successfully built a mineral asset and royalty business that generates $160M of EBITDA; current private and public transactions have been at 7-11x EBITDA multiples which in our view suggests significant $1-1.5B of underlying value. With acquisitions as a core part of the long-term strategy, there will always be risk of integration challenges. However, the company has been very successful in acquiring assets over the past 10 years and their underwriting is done with conservatism focusing on quick payback and accretion to free cash flow and NAV. With the recent increase in commodity prices and Vital merger synergies, the company may be positioned to deliver $1B+ in annual free cash flow over the next couple of years, although actual results may differ materially. In addition, any unexpected return to lower commodity price environment is an ongoing risk however we believe this is low given the ongoing industry supply challenges. In our view, Crescent shares remain very attractive near 2x cash flow and what we estimate to be a normalized earnings and free cash flow yield near 30%.

BSD Analysis:
Miller Value Partners initiated a position in Crescent Energy following a 50% share price decline, viewing it as an attractive entry point into a top-10 domestic E&P company. The investment thesis centers on management's proven acquisition and operational improvement track record, highlighted by the recent Vital Energy acquisition that provides Permian Basin exposure with 10+ years of low-decline inventory. The manager emphasizes the hiring of an experienced operator from Pioneer Natural Resources and the company's operational flexibility across oil, gas, and NGL production to optimize capital returns. A key value driver is the mineral and royalty business generating $160M EBITDA, which the manager values at $1-1.5B based on recent transaction multiples of 7-11x. With debt leverage at 1.5x following the Vital acquisition and improving commodity prices, the manager projects potential annual free cash flow of $1B+ as synergies materialize. At current valuations of 2x cash flow and an estimated 30% normalized free cash flow yield, the manager sees significant upside potential despite commodity price and integration risks.

Pitch Summary:
Conduent delivers digital business solutions and services to 50% of Fortune 100 clients and 46 of 50 states. The company is in the midst of a multi-year transformation. During Q1, the company announced a new CEO, Harsha Agadi, with historical transformation success. Harsha plans on accelerating cost reductions, enhancing core client economics and new business pipeline conversion. He is looking for structural changes to enhance company free cash flow generation, using non-core asset sales and better cash generation to further accelerate future debt reduction. We also believe his incentives are aligned with the transformation plan with 1M shares that fully vest in three years subject to a share price in excess of $5/share. Success on the transformation supports Conduent revenues >$3B and double-digit EBITDA margins over time. Conduent has a sizable government business which could experience near-term disruption from additional government closings. In addition, with the recent management change there are some near-term risks that transformation plan changes will take some time to scale which could cause some short-term headwinds for profitability. However, we believe that current share price discounts this market fear. Conduent shares look significantly mispriced, less than 2x normalized EV/EBITDA, versus publicly traded peers at 8 to 10x.

BSD Analysis:
Miller Value Partners identifies Conduent as a compelling turnaround opportunity under new leadership with significant valuation upside. The manager emphasizes the company's strong market position serving 50% of Fortune 100 clients and 46 states, providing a stable revenue base of over $3B annually. The investment thesis centers on new CEO Harsha Agadi's proven transformation track record and aligned incentives through equity compensation tied to achieving $5+ share price targets. Key value drivers include accelerated cost reduction, improved client economics, enhanced pipeline conversion, and strategic asset monetization to reduce debt. The manager projects double-digit EBITDA margins as transformation initiatives take hold, supported by the company's scale and market position. While acknowledging near-term risks from government business disruption and execution challenges, the current valuation of less than 2x EV/EBITDA appears deeply discounted versus peers trading at 8-10x multiples. The significant valuation gap suggests substantial upside potential if management successfully executes the transformation plan.

Pitch Summary:
JELD-WEN, is a leading North American and European manufacturer and distributor of interior and exterior doors and windows, undertaking a multi-year transformation. Their plan has similarities to Masonite's successful transformation ten years ago. Late last year JELD-WEN hired a senior operational executive who was previously at Masonite that will help enhance the transformation plan. The company is undertaking a significant cost reduction program, reducing their North American headcount by more than 10%. In addition, management is phasing in price increases during the second quarter that should help offset inflation and tariff pressures and improve margins later in the year. The company has an extensive asset base (e.g., large real estate portfolio) which provides ongoing monetization opportunities and a margin of safety to the transformation plan. In addition, JELD-WEN North American distribution business is currently under review. Last year, Lowes paid 1.35x revenue to acquire distributor Foundation Building Materials, which in our view suggests the market may be undervaluing JELD-WEN's distribution business relative to the current market cap. JELD-WEN also has leading market share positions in their European operation, which generates more than $1B in annual revenue. Their European business provides additional operational leverage to a housing recovery and potential monetization proceeds over time. We believe JELD-WEN current share price may reflect a fraction of its long-term fundamental value, with current market cap near $100M versus annual revenues >$3B, under 1x normalized free cash flow yield. With the housing and R&R (repair and restoration) market at an extended trough, near-term revenue headwinds may persist. However, we believe management is making the right enhancements to the business and believe further success on their multi-year transformation plan has the potential to unlock significant equity value over time.

BSD Analysis:
Miller Value Partners presents a deep value turnaround thesis for JELD-WEN, drawing parallels to Masonite's successful transformation a decade ago. The manager highlights the hiring of a former Masonite executive to lead operational improvements, including a 10%+ headcount reduction and strategic price increases to offset inflationary pressures. The investment case centers on significant asset monetization opportunities, including a large real estate portfolio and a distribution business that may be undervalued relative to recent industry transactions. With JELD-WEN's distribution business potentially worth 1.35x revenue based on comparable transactions, and European operations generating over $1B annually, the manager sees substantial hidden value. At a market cap of approximately $100M against $3B+ in revenues, the valuation appears deeply discounted at less than 1x normalized free cash flow yield. While housing market headwinds present near-term challenges, the manager believes the transformation plan positions the company for significant value creation as markets recover.

Pitch Summary:
During the quarter, the largest positive contributor was Nabors Industries (NBR), which was up 58%. Nabors successfully completed the sale of their Quail Tools business segment, which significantly improved the company balance sheet. Nabors net debt leverage ended the year near 1.8x. Over the past 12 months the company has reduced total debt by more than $350M, eliminating all debt maturities before 2029. Nabors looks well positioned to benefit over the coming years from higher commodity prices, an eventual pick-up in North America rig demand, expansion of their low capital-intensive and higher margin drilling solutions and scaling their 50-rig program with SANAD. The company is also well positioned for any incremental global drilling. Nabors has been a long-term partner with leading Integrated Energy companies, historically having more than 10 rigs working in Venezuela. While Nabors has a sizable Middle East presence which poses some risk with the ongoing Iran conflict, to our knowledge the company has not reported material disruption to date. Near-term risks would also be unexpected return to lower commodity price environment which we believe is low given the ongoing industry supply challenges and a slower than expected recovery in N.A. rig market. Our view of Nabors' long-term upside potential is still multiples of the current share price if the company executes on the factors discussed above, with the shares are still trading near 2x cash flow and more than 40% normalized free cash flow yield.

BSD Analysis:
Miller Value Partners presents a compelling bull case for Nabors Industries following strong Q1 performance and significant balance sheet improvements. The manager highlights the successful divestiture of Quail Tools, which reduced net debt leverage to 1.8x and eliminated near-term debt maturities through 2029. The investment thesis centers on multiple value drivers including commodity price recovery, North American rig demand normalization, expansion of higher-margin drilling solutions, and the scaling of their SANAD partnership in the Middle East. The manager emphasizes Nabors' established relationships with major integrated energy companies and global drilling exposure as competitive advantages. Key risks include geopolitical exposure in the Middle East and potential commodity price volatility, though the manager views supply constraints as supportive of pricing. At current valuations of 2x cash flow and 40%+ normalized free cash flow yield, the manager sees significant upside potential if operational improvements materialize.

Pitch Summary:
We also re-purchased WuXi AppTec, a leading Chinese contract research, development, and manufacturing organization (CRDMO) providing R&D and manufacturing services to the pharmaceutical and biotech industries. Our decision to exit the stock in early 2024 amid concerns around the BIOSECURE Act proved costly in the short term, with the shares outperforming the MSCI EM Index by about 35%. At the time, we saw the legislation as a potential existential threat, given its intent to restrict federally funded US biotech firms from working with "foreign adversary" companies, explicitly including WuXi AppTec—placing a significant portion of its business at risk. While the Act passed out of committee with bipartisan support, the immediate threat diminished: it was initially not included as an amendment to the National Defense Authorization Act (NDAA), then when it was re-added to the NDAA that passed in December 2025, the final language of the BIOSECURE Act was materially softened, notably omitting CRDMOs such as WuXi AppTec. This outcome likely reflects lobbying from US biotech firms, which rely heavily on Chinese CRDMOs in their supply chains. While some geopolitical risk persists, the probability of abrupt disruption has declined. WuXi AppTec's business has also shown resilience and renewed momentum. The company's scale, quality, and speed remain critical to efficient drug development. Its 2025 results highlighted US revenue growth of 34% year-on-year, boosted in part by its TIDES (peptides) segment, benefiting from strong demand for GLP-1 therapies. We now expect durable annual growth of about 10% over the next 5-7 years, and with the shares trading at about 17 times forward earnings, the risk-adjusted valuation is compelling.

BSD Analysis:
The manager presents a compelling re-entry case for WuXi AppTec following the resolution of BIOSECURE Act concerns that drove their earlier exit. The legislation, initially viewed as an existential threat to the company's US business, was materially softened in its final form and notably excluded CRDMOs like WuXi AppTec, likely due to lobbying from US biotech firms dependent on Chinese suppliers. The company demonstrated remarkable business resilience with 34% US revenue growth in 2025, particularly benefiting from strong GLP-1 therapy demand through its TIDES peptides segment. WuXi AppTec's competitive advantages in scale, quality, and speed remain intact and critical for efficient drug development. The manager's 10% annual growth expectation over 5-7 years appears conservative given the company's market position and the expanding biotech outsourcing trend. At 17x forward earnings, the valuation appears attractive for a market-leading CRDMO with renewed growth momentum and significantly reduced regulatory overhang.

Pitch Summary:
One of our re-purchases was Mercadolibre (MELI), Latin America's leading ecommerce platform. In September 2025, we sold the stock due to a spike in political risk in Argentina and intensifying industry competition in Brazil—an uncomfortable mix given the stock's relatively high valuation at the time. The political risk, which arose when President Milei's party received a drubbing in the Buenos Aires provincial elections, proved temporary as his La Libertad Avanza party secured a surprisingly decisive victory a month later in the mid-term national elections. However, competitive pressures in Brazil have escalated—perhaps even more than we expected. MELI's main competitors in Brazil, Amazon and Shopee, have accelerated investment in the country, offering aggressive promotions and faster shipping while detailing ambitious plans to expand their logistics networks. MELI has responded with a deliberate and rational strategy prioritizing scale in the short term to maximize profitability in the long term. The company has been increasing incentives for merchants and consumers while recently reiterating a plan to open 14 new fulfillment centers this year (taking the total to 42) to ensure it maintains its logistics advantage. These actions have sustained strong growth: MELI's gross merchandise value (GMV) grew 35% in Brazil year-on-year in fourth quarter 2025. But they have also caused recent margin pressure, hurting the stock. We re-invested in the company with shares trading well below our previous exit price and offering attractive upside even on modest margin recovery.

BSD Analysis:
The manager presents a tactical re-entry into MercadoLibre after previously exiting due to political risk in Argentina and competitive pressures in Brazil. The political concerns proved temporary with President Milei's party securing a decisive mid-term victory, removing a key overhang. While competitive intensity in Brazil has indeed escalated with Amazon and Shopee increasing investments, MELI has responded strategically by prioritizing scale over short-term margins. The company's plan to expand from 28 to 42 fulfillment centers demonstrates commitment to maintaining its logistics advantage, a key competitive moat in Latin American e-commerce. Despite margin pressure from increased merchant and consumer incentives, MELI sustained robust 35% GMV growth in Brazil during Q4 2025. The manager's re-entry at a significantly lower valuation than the previous exit price suggests an attractive risk-adjusted opportunity, particularly if the company can achieve even modest margin recovery while maintaining market leadership.

Pitch Summary:
We also have invested in China's CATL, the world's largest EV battery maker and a top-10 holding by weight. The company has been instrumental in developing energy storage systems (ESS), a product that is becoming a lynchpin of renewable energy development and a key cog in global energy infrastructure. ESS solves the challenge of scaling up wind and solar to serve entire municipalities and industries by conquering the problem of intermittency. Sun and wind don't shine or blow all the time, which has made more-reliable forms of "base load" energy—coal, gas, and nuclear—essential to take up the slack. Batteries had long been too expensive, too puny, and too dangerous for storing large amounts of energy. CATL has been at the forefront of solving the industrial battery storage problem by improving EV batteries. The company has grown to hold a roughly 40% market share in these batteries. Now they have become sufficiently dense, safe, and cheap to stack together and create ESS that make storing power viable even for large utilities. The global ESS battery market is dominated by companies based in China and South Korea. Five manufacturers account for approximately 70% of global shipments. CATL is the market leader with a nearly 30% share, more than twice the size of its nearest rival, fellow Chinese maker Hithium. Automakers, due to their concentration and purchasing volumes, have historically enjoyed strong bargaining power over EV battery suppliers. By contrast, ESS battery suppliers enjoy decent pricing power because the customer base is a more fragmented mix of local utilities, power merchants, system integrators, commercial and industrial businesses, and individuals. Pricing power for top-quality producers is further strengthened by ESS customers' concern over battery longevity and safety. A single cell fire can easily spread to destroy an entire facility and put lives at risk. CATL enjoys greater bargaining power over buyers and higher margins than many competitors thanks to multiple competitive advantages, including economies of scale from its massive operations, its R&D leadership, and its vertical integration (encompassing battery materials, cells, packs, system integration, and recycling). CATL has been expanding margins from batteries by selling more advanced models and by increasingly selling its own systems—using its own optimized battery management software—rather than just supplying batteries to high-volume buyers such as Tesla that then integrate them into ESS. Today, ESS represents roughly 20% of CATL's battery shipments, but it is expected to grow faster than its EV battery business and potentially become over half of its sales. CATL has already built a leading 40% share of the ESS market in the US, despite various government incentives favoring domestic, non-Chinese producers. ESS buyers in the US include not only utilities but also independent "merchant" ESS operators that set up facilities to arbitrage power on the grid, storing it when it's cheap and selling it when it's expensive. CATL's reliable and cost-efficient batteries allow power merchants to generate better returns than with competing products. Ironically, CATL does not have a leading market share in China's ESS market, the world's largest. Most ESS buyers in China have been utilities forced by policy mandates to build storage to accompany each new solar or wind project. Unsurprisingly, those buyers favored the cheapest batteries, since they could not make a profit selling stored power into the grid with government-fixed pricing. In 2025, however, China deregulated power prices for new solar and wind projects, so ESS buyers now have real commercial incentives to buy the most reliable, longest-lived batteries—a new growth opportunity for CATL. Another growing source of ESS demand is AI computing. Data centers have already been running into constraints in their primary power supplies, driving up electricity prices for many other users and leading to widespread shortages of power equipment. To avoid delays in connecting to grid power and answer complaints from communities about driving up power costs, many data center operations have begun setting up their own "behind-the-meter" power generation, usually from natural gas. But with gas equipment shortages now rampant and the Middle East conflict offering a stark lesson in the risks of fossil-fuel dependence, renewables paired with ESS could become more attractive—and far more scalable—options for powering AI data centers. Other growth opportunities include utilities increasingly deploying ESS for "peak shaving"—using onsite renewable energy sources to reduce peak loads on power grids to optimize energy cost and maintain grid stability. And there is evidence of some power plant developers abandoning fossil-fuel-based projects in favor of renewables. In Vietnam, a developer has reportedly sought government permission to change the energy source for a large planned power plant from LNG to solar and wind power combined with battery storage. CATL has been taking few chances on its own supply of energy, a major cost in the production of batteries. It sources three-quarters of the energy it needs from solar, wind, hydropower, and nuclear, rather than fossil fuels. That makes it more likely that CATL can continue supporting the delivery of consistent and low-cost power in an unpredictable world.

BSD Analysis:
The manager presents a compelling bull case for CATL centered on the company's dominant position in the rapidly growing energy storage systems (ESS) market. CATL holds approximately 40% market share in EV batteries and nearly 30% in ESS globally, benefiting from superior pricing power compared to the fragmented EV market due to ESS customers' focus on safety and longevity. The company's competitive advantages include massive scale, R&D leadership, and vertical integration across the entire battery value chain. ESS currently represents 20% of shipments but is expected to grow faster than EV batteries and potentially exceed 50% of sales, driven by renewable energy adoption, AI data center demand, and grid stabilization needs. China's 2025 deregulation of power prices for new renewable projects creates additional growth opportunities as utilities can now prioritize quality over cost. The manager highlights CATL's strategic energy sourcing, with 75% from renewables, positioning the company well for sustained low-cost production amid global energy volatility.

Pitch Summary:
Rayonier is a timber REIT and is the country's second largest landowner with just over 4 million acres. The stock is down sharply from highs as a moribund housing market has weighed on demand for lumber. At this price, we think depressed demand for wood products is adequately discounted and view a housing recovery as a free call option. RYN now trades at an implied valuation of roughly $1,900 per acre. This is a steep discount to private market values as recent timberland transactions have taken place closer to $3,000/acre. Looking at it differently, one could buy over two acres of timberland for less than the price of an ounce of gold. Moreover, RYN has been selling HBU real estate (generally for development) and realizing 5-15x valuation uplifts compared to its current per acre valuation. We also note timber has historically been a very good store of value and inflation hedge. Right now, we are paying a deeply depressed price for a hard asset and essentially zero for the company's wood products business. Meanwhile, we are being paid a 5% dividend yield while we wait.

BSD Analysis:
The managers initiated a position in Rayonier, attracted to the significant valuation disconnect between public and private timberland markets. As the country's second-largest landowner with over 4 million acres, Rayonier trades at approximately $1,900 per acre versus recent private transactions near $3,000 per acre, representing a substantial discount to intrinsic value. The depressed housing market has weighed heavily on lumber demand, but the managers view this as adequately reflected in the current price, with housing recovery providing upside optionality. The value proposition is compelling - investors can purchase over two acres of timberland for less than an ounce of gold. The company's highest and best use (HBU) real estate sales demonstrate the underlying value, generating 5-15x uplifts versus current per-acre valuations. Timber's historical role as an inflation hedge and store of value adds defensive characteristics. The managers emphasize they're paying a deeply depressed price for hard assets while essentially getting the wood products business for free, all while collecting a 5% dividend yield during the recovery period.

Pitch Summary:
We continued to roll with the punches during the volatile first quarter, responding to volatility by trimming and adding to positions in opportunistic fashion. Following the severe drawdown mentioned above, we added to our position in Verra Mobility Corp (VRRM). Outside of this activity, we initiated a few new positions that might bore the average day-trader, but are quite exciting to us at current levels. These are Cohen and Steers, Inc. (CNS) and Rayonier, Inc. (RYN). Each are tied to the Real Estate Investment Trust (REIT) space, which has undergone weakness alongside cyclical fears and adverse interest rate movements. From a big picture perspective, we are attracted to the massive disparity between public and private market valuations across the sector. Further, in a world fraught with concerns around AI disruption and rapid change, we like the durability and tangibility of real assets – a feature we believe investors will increasingly come to appreciate. Cohen and Steers is the leading asset manager in the REIT space. The company has a fortress balance sheet, leading fund performance and should exhibit meaningful operating leverage if and when investors view public REITS more favorably.

BSD Analysis:
The managers initiated a position in Cohen & Steers, viewing it as a compelling play on the eventual recovery in REIT valuations and investor sentiment. The investment thesis is built on Cohen & Steers' position as the leading asset manager in the REIT space, with a "fortress balance sheet" and strong fund performance track record. The managers are attracted to the significant valuation disparity between public and private real estate markets, suggesting substantial upside potential when sentiment normalizes. The company should benefit from meaningful operating leverage as assets under management grow with improving REIT performance and investor flows. In an environment of AI disruption concerns, the managers value the durability and tangibility of real assets, believing investors will increasingly appreciate these characteristics. The current weakness in REITs due to cyclical fears and interest rate headwinds creates an attractive entry point for a high-quality asset manager with dominant market position. The timing appears opportunistic, positioning for recovery in a sector where Cohen & Steers maintains clear competitive advantages.

Pitch Summary:
In this vein, we established two new positions in the live events space, Liberty Formula One Group (FWONK) and TKO Group Holdings, Inc. (TKO). Liberty is an asset-backed company focused on global motorsports and is primarily comprised of its 100% ownership of Formula One (F1) and -86% ownership in recently acquired MotoGP. TKO is a premium combat sports entertainment company primarily consisting of World Wrestling Entertainment (WWE) and Ultimate Fighting Championship (UFC), as well as a recently formed boxing promotion, Zuffa Boxing. Both of these companies derive the majority of revenue by selling media rights, payments from event venues/ municipalities for the right to host the live events, and from selling sponsorship/advertising space. All of these revenue streams are contractual in nature and feature multi-year deals with annual price increases, resulting in high visibility and embedded growth. Furthermore, renewals of these deals are very competitive given the scarcity of live sporting events - providing another tailwind to growth. Both of these businesses generate strong returns on capital, are cash generative and are trading at attractive valuations. Further, though theoretically possible, we don't think people are going to show up to watch robots zoom around at 200 miles an hour or tune into an AI simulation of UFC any time soon. Between these two purchases and our existing position in Live Nation Entertainment, Inc. (LYV), our "live events" exposure is approaching 9% of the Fund. We are attracted to the growth and resilience this theme offers.

BSD Analysis:
The managers initiated a position in TKO Group Holdings as part of their live events investment theme, attracted to its premium combat sports entertainment portfolio including WWE, UFC, and Zuffa Boxing. The investment case centers on TKO's highly predictable revenue model built on contractual streams from media rights, venue hosting fees, and sponsorship deals with multi-year terms and annual price escalations. This structure provides exceptional revenue visibility and embedded growth characteristics. The competitive renewal dynamics are particularly favorable given the scarcity value of premium live sporting content, creating significant pricing power over time. The managers highlight strong returns on capital and cash generation capabilities at what they view as attractive valuations. The AI-disruption resistance is a key differentiator - unlike many businesses facing technology threats, live combat sports cannot be meaningfully replicated by artificial intelligence. Combined with Formula One and Live Nation positions, this thematic allocation approaches 9% of the fund, demonstrating strong conviction in the durability and growth potential of live entertainment properties in an increasingly digital world.