Investment Pitches

Pitch Summary:
Paywalled (The site mentioned: Roblox (NYSE: RBLX — $38.3 billion) is a platform for children generally between six and fourteen to play online. It is also the leading platform for pedophiles. Roblox ex-employees, Roblox developers, Roblox award winners, and Roblox users have been linked to a wide array of misconduct. Roblox’s former social media manager ran a pornographic blog while employed by the company. Roblox’s official Twitter account retweeted content made by a self-described pedophile.) Update 8/17 - Follow-up report: RBLX facilitated hundreds of known child abuse cases; Update 10/3/24 - Follow-up report; Update 10/17/24 - Follow-up report: The platform hosts school shooting games;

BSD Analysis:
Repeat entry — monetization challenges, high infrastructure costs, and reliance on speculative ad ramp create negative leverage. Shorts highlight sensitivity to rates as a long-duration asset. Catalysts: DAU/bookings, ad RPMs, infra opex, user penetration shifts. Counterpoints: marketplace/ads could drive upside, but shorts see Street as too optimistic.

Pitch Summary:
Cash burn; fake customers; technological flaws in products; competes against lithium-ion which has 99% market share. Update: Iceberg Research claimed on Jan 20, 2021 that EOSE admitted it lied about its contracts. Update 6/30 - Reinitiated the short again after 90% drop and then 400% up now. Update 7/27 - Follow-up: Fake backlog from a financially distressed party; Update 8/3 - EOSE sued for mispresenting the backlog. Update 1/18 - Twitter update. Update 10/17/24 - Follow-up report: the recent structured loan package is not beneficial to the company.l

BSD Analysis:
Eos Energy develops zinc-based grid batteries. Bears cite commercialization risk, high burn, and reliance on DOE loans/subsidies. Zinc chemistry is less proven than lithium at scale, delays persist, and equity raises recur. Catalysts: DOE loan progress, factory utilization, backlog conversion, margins. Counterpoints: storage is secular, but shorts see EOSE as structurally disadvantaged.

Pitch Summary:
Kinaxis delivered a strong quarter that underscored its leading position in supply chain orchestration and growing relevance in a world of increasing supply and demand volatility. Revenue growth accelerated to 16%, a 5-percentage point acceleration compared to the previous quarter. This was fuelled by a record number of new business wins and performance across all regions. To better capture the value of its evolving architecture and AI product offering, the company introduced a new usage-based pricing model on top of recurring subscription fees. The new pricing model creates potential for further revenue growth acceleration while keeping costs constant, which bodes well for the company's outlook on profitability. With a record pipeline and a win rate exceeding 60% against legacy competitors, Kinaxis remains well positioned to lead the transition toward agentic supply chain management.

BSD Analysis:
The fund manager presents a compelling bull case for Kinaxis based on accelerating revenue growth and strong competitive positioning. The 16% revenue growth represents a significant 5-percentage point acceleration, driven by record new business wins across all regions. The introduction of a usage-based pricing model alongside recurring subscriptions creates an attractive revenue expansion opportunity while maintaining cost discipline, potentially driving margin expansion. The company's 60%+ win rate against legacy competitors demonstrates clear competitive advantages in supply chain orchestration software. With supply chain volatility increasing globally, Kinaxis appears well-positioned to capitalize on growing demand for AI-powered supply chain management solutions. The record pipeline suggests sustained growth momentum ahead.

Pitch Summary:
Catapult provided a positive trading update ahead of its FY26 results in May, alongside an investor day that reinforced management's long-term ambitions, including a pathway to US$1 billion in ACV. FY26 ACV is expected to grow 27–28% to US$133–134 million on a constant currency basis, inclusive of the recently acquired IMPECT. Adjusting for acquisitions, underlying growth appears broadly consistent with prior periods, an encouraging sign that momentum in the core business remains intact. This strength is increasingly flowing through to profitability, with EBITDA expected to rise by ~50% year-on-year and the Rule of 40 improving sequentially from the 33% reported in the first half. Having recently inflected to free cash flow positive, the second half appears softer from a cash flow perspective, driven primarily by weaker collections following the integration of recent acquisitions. At the same time, share-based compensation has stepped up due to equity issued to IMPECT's founders as retained employees, complicating the near-term path to accounting profitability. Stepping back, we view these dynamics as temporary, with underlying fundamentals remaining intact and the business in a strong financial position, debt-free and with approximately US$50 million in cash.

BSD Analysis:
The manager remains bullish on Catapult following positive trading updates and management's ambitious long-term target of US$1 billion in Annual Contract Value. FY26 ACV growth of 27-28% to US$133-134 million demonstrates strong momentum, with underlying organic growth remaining consistent despite recent acquisitions. The company is showing impressive operational leverage with EBITDA expected to rise ~50% year-over-year and improving Rule of 40 metrics from 33% in the first half. While near-term cash flow dynamics appear softer due to acquisition integration and elevated share-based compensation from IMPECT founders, the manager views these as temporary headwinds. The company's debt-free balance sheet with approximately US$50 million in cash provides financial flexibility. The manager emphasizes that underlying business fundamentals remain strong despite short-term accounting complexities.

Pitch Summary:
Turning to Fineos, which recently held an investor day that reaffirmed our conviction and outlook for the business. Management confirmed that their previously shared financial guidance remains firmly on track, with a solid pipeline of deals and an improving margin outlook. A key takeaway from the event was the need for insurance carriers to move off from fragmented legacy systems to leverage AI effectively, providing a nice demand tailwind for modern platforms like Fineos. The company's growth trajectory is particularly attractive because it is increasingly tied to the volume of insurance premiums managed on the platform. As existing clients migrate their legacy books of business to the cloud, Fineos captures a natural and predictable path of revenue expansion without the need for large wins to meet targets. While the company continues to win new clients, its ability to hit and exceed growth targets is increasingly supported by deepening relationships with system integrators. These partnerships have matured significantly, allowing Fineos to scale its implementation capacity and reach smaller to mid-sized deals efficiently while maintaining a clear focus on long term unit economics.

BSD Analysis:
The fund manager maintains strong conviction in Fineos following an investor day that confirmed the company's financial guidance trajectory. The investment thesis centers on the structural shift in insurance carriers moving from legacy systems to modern cloud platforms to effectively leverage AI capabilities. Fineos benefits from a particularly attractive revenue model tied to insurance premium volumes, creating predictable expansion as existing clients migrate their legacy business to the platform. The company's growth strategy has evolved beyond relying solely on large new client wins to include deepening relationships with system integrators. These partnerships enable Fineos to efficiently scale implementation capacity and target smaller to mid-sized deals while maintaining disciplined unit economics. The manager views this as a sustainable competitive advantage in the insurance technology space.

Pitch Summary:
During Q1, we initiated a position in Flowers Foods (Ticker: FLO 2.45%↑) at $8.50 per share. Flowers is a 107-year-old consumer staples company best known for its packaged bread portfolio, including Nature's Own, Wonder, and Dave's Killer Bread. More recently, the company expanded into better-for-you snacks through the $795M acquisition of Simple Mills in early 2025. The stock declined from roughly $30 in late 2022 to our purchase price—a 72% drawdown. The selloff has clear drivers: structural pressure in the bread category, intensifying private label competition, incremental leverage from the Simple Mills acquisition, and a $136M non-cash impairment charge that depressed reported earnings. These are real challenges. We believe, however, the market has overcorrected, creating a dislocation between price and underlying asset value. Flowers is the second-largest packaged bread manufacturer in the U.S., behind Grupo Bimbo, forming a functional duopoly in a category with meaningful barriers to entry. The most important of these is its direct-store-delivery (DSD) network: nearly 6,000 distributor territories where independent operators own exclusive rights to deliver and merchandise products. This infrastructure is difficult to replicate and costly to rebuild. Importantly, the DSD network has observable private market value. Approximately 4,784 routes have been sold to independent distributors, with transaction comps implying roughly 14.5x average weekly sales. Applying a conservative $65,000 per route yields approximately $311M of embedded value that we believe is underappreciated by the market. Our sum-of-the-parts analysis applies similarly conservative assumptions. Core branded bakery is valued at 8x EBITDA, a discount to both public peers and recent food M&A. Dave's Killer Bread is valued at $600M, below 1x sales despite significant growth since acquisition. Manufacturing is valued at $600M, below replacement cost and modestly below book value. Simple Mills is carried at $600M in our analysis, a deliberate discount to the $795M acquisition price. Aggregating these components—core bakery ($2.72B), Dave's ($600M), Simple Mills ($600M), manufacturing ($600M), and DSD network ($311M), less $1.73B in net debt—yields approximately $3.10B in equity value, or $14.71 per share. This implies 73% upside from our entry price based on asset value alone. The primary near-term risk is the October 2026 debt maturity, which management expects to address through refinancing. Importantly, the business has remained structurally profitable for nearly two decades and maintains a consistent dividend track record. From current levels, even modest operational improvement represents incremental upside to an already asset-backed valuation.

BSD Analysis:
The manager initiated Flowers Foods at $8.50 following a 72% decline from $30, viewing the selloff as an overcorrection that created a significant dislocation between price and asset value. The 107-year-old company operates as the second-largest packaged bread manufacturer in a functional US duopoly with meaningful barriers to entry through its direct-store-delivery network of nearly 6,000 distributor territories. The manager's sum-of-the-parts analysis values the DSD network at $311 million based on observable private market transactions, applying conservative assumptions across all business segments including core bakery at 8x EBITDA and recent acquisitions below purchase price. The analysis yields $14.71 per share in equity value, implying 73% upside from entry price based purely on asset value. While acknowledging real challenges including structural bread category pressure and leverage from the Simple Mills acquisition, the manager emphasizes the company's two-decade track record of structural profitability and consistent dividend payments. The October 2026 debt maturity represents the primary near-term risk, though management expects to address this through refinancing.

Pitch Summary:
We initiated a significant position in PayPal (Ticker: PYPL 0.17%↑) at $39.84 per share. We first looked at the company in late 2023, shortly after Alex Chriss became CEO, when shares were near $60. The business had most of what we look for, but the valuation did not meet our margin of safety threshold. The roughly 40% price decline since then created a price we found compelling. The market is pricing PayPal as a business in structural erosion. That conclusion is not supported by the fundamentals. The company generates $5.6 billion in annual free cash flow, earns returns on invested capital above 20%, and yields roughly 15% on free cash flow at our purchase price. Q4 2025 results triggered the sell-off: branded checkout growth decelerated from roughly 5% to 1%, and management withdrew its multi-year outlook. The stock fell more than 20%. The market read this as confirmation of structural decay. We looked closer and disagreed. Much of the slowdown was intentional. Management deliberately shed low-margin PSP volume that had been inflating Braintree's top-line growth while contributing little to profitability. Unbranded processing volume growth fell from roughly 29% in 2023 to about 2% in Q4 2025 as a direct result. That shift made the revenue picture look worse than the underlying economics. Transaction margin dollars grew 8% and the margin rate expanded 274 basis points to 47.7%. PayPal chose margin over volume. Investors punished the optics. The business improved. Branded checkout weakness added a separate layer: softer spending among lower- and middle-income consumers, European headwinds, and deceleration in certain Asian corridors driven by tariff uncertainty. These are real pressures, and cyclical ones. They do not change the fact that the core platform continues to generate significant cash while improving its unit economics. The prevailing bear case frames PayPal as a legacy platform being displaced by rising competition. This oversimplifies a more durable reality. Payments is not a winner-take-all market — it is fragmented, multi-modal, and large enough to support multiple scale players. PayPal's global footprint has compounded a dataset on fraud, behavior, and conversion over two decades that is genuinely difficult to replicate. The competitive threat from Apple Pay and Google Pay is frequently overstated. Both originated as NFC tools designed for in-person transactions, a fundamentally different use case than e-commerce checkout. PayPal has spent two decades embedding itself into merchant infrastructure that these platforms are still working to penetrate. What the bear case consistently omits is Venmo. The platform processes more than $250 billion in annual volume with monetization still well below its earnings power potential. A 10-basis-point improvement in effective take rate alone would generate roughly $250 million in incremental high-margin revenue. Current multiples assign it almost no credit. Our analysis across EPV, SOTP, and DCF methodologies converges on meaningful upside from current prices, with our base case suggesting intrinsic value meaningfully above $60 per share. Downside is protected by a net cash balance sheet and $5.6 billion in annual free cash flow. The business does not need to grow to generate attractive returns from these levels.

BSD Analysis:
The manager initiated PayPal at $39.84 after a 40% decline created compelling valuation, viewing the market's structural erosion thesis as fundamentally flawed. The company generates $5.6 billion in annual free cash flow with 20%+ ROIC and yields 15% on free cash flow at purchase price. Management's deliberate shedding of low-margin PSP volume improved unit economics despite creating poor revenue optics, with transaction margin dollars growing 8% and margin rates expanding 274 basis points to 47.7%. The manager argues PayPal's two-decade dataset on fraud and behavior creates durable competitive advantages that Apple Pay and Google Pay cannot easily replicate, as those platforms focus on different use cases. Venmo represents significant untapped monetization potential with $250 billion in annual volume, where a mere 10 basis point take rate improvement would generate $250 million in incremental revenue. The manager's valuation analysis across multiple methodologies suggests intrinsic value above $60 per share, representing 50%+ upside from entry price. Downside protection comes from the net cash balance sheet and substantial free cash flow generation.

Pitch Summary:
As the largest position in the fund (50%) we need to discuss Alibaba's latest earnings, which left us genuinely conflicted. On the one hand, the earnings demonstrated the company's strength in Cloud, which grew 36% year-over-year, accelerating from 29% last quarter. In tandem, Alibaba is moving towards aggressive monetization of its AI portfolio by shifting from open-source to a proprietary paid enterprise model for its high-end tools: Owen3.6-Plus. All of this is good news as it reflects significant momentum in cloud computing and monetization potential for AI products. However, Alibaba's foray into the quick commerce price war with Meituan and JD.com is proving to be extremely costly without any indication of financial return to date. China e-commerce adjusted EBITA declined 43% year-over-year, with sales and marketing expenses jumping from 15.2% to 25.3% of consolidated revenue. While management has repeatedly framed quick commerce losses as strategic and temporary, there was no quantifiable framework for evaluating the progress of the initiative. Per-order economics were not disclosed. Contribution margin trajectory was not provided. The 1% growth in customer management revenue against double-digit MAU growth implies subsidy-driven user acquisition rather than genuine ecosystem engagement. We also found management's commentary during the earnings call to be unsatisfactory. In our 2024 article, Selling StoneCo Ltd. (STNE), we discussed how besides considering financial operations, we also closely monitor the way management communicates with shareholders as an indication of credibility and high-quality leadership. In business communication, jargon and euphemism are often used to present reality in the most favorable light. There are times, however, that what is unsaid is more revealing than what is, and it takes a certain qualitative instinct to read that subtext. This quarter, that instinct was triggered. We identified four specific red flags: The $100 billion self-contradiction. Management guided $100 billion in combined cloud and AI revenue over the next five years while simultaneously arguing the AI industry evolves too rapidly to forecast. When an analyst pressed for a CAGR to anchor the target, CEO Eddie Wu responded: "use your calculator." A five-year target with no interim milestones and no underlying growth framework is a marketing statement, not a financial commitment. Ten quarters of growth, zero numbers disclosed. Management has cited triple-digit AI revenue growth for ten consecutive quarters yet has never disclosed an absolute figure. The term "AI-related products" is not an industry-standard definition, leaving investors unable to independently verify what is even being measured. After more than two years of explosive growth, the continued absence of a dollar figure is a choice, not an oversight. It is one we intend to scrutinize closely in the quarters ahead. Free cash flow turned negative. Nine-month free cash flow reached negative $4.2 billion, against positive $10.0 billion in the same period last year — a swing of over $14 billion in a single year. Buybacks are now being funded from the balance sheet rather than from earnings. While the balance sheet provides ample runway ($42.5 billion in net cash), this signals a fundamentally different capital allocation posture than the one we underwrote initially. Where is Joseph Tsai? Chairman Tsai was listed as a call participant and said nothing. In prior quarters he served as the primary voice on capital allocation, buybacks, and shareholder returns. This quarter, the entirety of shareholder return commentary was reduced to a single line: "we are reinvesting our cash flow." For Western minority shareholders holding ADSs in a VIE structure, management's voluntary commitment to capital return is our primary governance mechanism. Its complete absence at the precise moment free cash flow turned negative was the most concerning signal of the quarter. One meaningful post-earnings development: Chinese regulators have reportedly intervened to end the food delivery price war, a catalyst that should accelerate quick commerce profitability. In China, we note that government risk is not an outlier event, it is a permanent condition requiring ongoing analytical judgment. We remain committed to the cloud thesis and ecosystem optionality, while closely tracking the concerns outlined above. Disclosure: We actively traded Alibaba shares during the quarter, selling at ~$155 per share and repurchasing heavily under $130 per share. Alibaba remains our largest position in the fund to date.

BSD Analysis:
The manager presents a conflicted view on Alibaba, acknowledging strong cloud growth of 36% year-over-year and AI monetization progress while expressing serious concerns about management credibility and capital allocation. The fund's largest position (50%) faces headwinds from costly quick commerce price wars that drove e-commerce EBITA down 43% and sales/marketing expenses from 15.2% to 25.3% of revenue. Management's communication raised red flags including vague $100 billion AI/cloud guidance without interim milestones, failure to disclose absolute AI revenue figures despite claiming triple-digit growth for ten quarters, and negative free cash flow of $4.2 billion versus positive $10 billion previously. The absence of Chairman Joseph Tsai from capital allocation discussions coinciding with negative free cash flow particularly concerned the manager. Despite these issues, regulatory intervention to end the food delivery price war provides a potential catalyst for profitability improvement. The manager remains committed to the cloud thesis while actively trading around the position, selling at $155 and repurchasing below $130.

Pitch Summary:
The other loser so far is Ondo Plc in the UK. The company's main product is called the LeakBot which they distribute through home insurers. The technology, which has a defensible patent, monitors the temperature of a residential main water line and the ambient air temperature surrounding the pipe. When no water is being used in the house for an extended period (like overnight), the water inside the pipe should naturally warm up and equalize with the room temperature. A slow leak, even one as small as five ml per minute, constantly draws in new water from the underground supply, which is colder than the indoor air. This constant flow prevents the pipe from ever warming up completely. The LeakBot uses algorithms that look for persistent, small temperature differences that repeat during "quiet" times. The company was started in the UK, where main water lines are actually inside the house due to the potential for freezing. The company is currently working on a version of the LeakBot that works with exterior water mains, but it should take about a year to commercialize. The incidence rate of a non-weather-related water claim for home insurance companies is between 1% and 1.5%, and the average cost associated with those claims is roughly $15,000. Using just 1%, the expected loss for the insurer is about $150 per year. In the US, for a single-family home, the average premium is about $2,500 per year, so these leaks represent about 6% of premiums in the home insurance industry. So when a home insurance company can pay $60 per year (the cost of LeakBot monitoring) to detect these leaks, the return on investment is quite significant. At a 1% incidence rate, you can see that the ROI is 150%. The break-even point, where it doesn't really make sense for the home insurer to use LeakBot, is an incidence rate of below 0.4%. But when you look at the data across many different states and many different insurers, the incidence rate is at least 1%, even when you exclude roof leaks and non-pipe-related leaks. Another key thing to point out is that the company is trying to build out its own plumber network. The NPS scores for the LeakBot from homeowners are in the high 80's because they can install the device on their main water line in five minutes and then a plumber can come fix any pressurized leaks they have in their house – all for free. And the home insurance companies can save a boatload on water-related claims. It's the ultimate win-win-win. However, to send the devices to homeowners for free and build out a plumber network in advance takes a lot of money! The company is currently burning cash and will likely need to do another large raise at some point. Almost every losing investment I've ever had has been a cash burning company. So why do I think this one will be different? Well, I've spent an insane amount of time understanding the granular unit economics and I think they work (hopefully the thesis is still on track next quarter and I can dive into the nitty gritty in the next letter). Further, it's one of those businesses that gets much stronger as it gets larger. As the plumber density grows, the cost per visit decreases and the ROI for the insurers improves as more visits means more tangible evidence the LeakBots are actually catching small leaks. You can envision a scenario where LeakBots are in 10 million homes across the US and Ondo has more than 1,000 plumbers on staff. That would be like 20% of the coverage compared to the plumbing giant, Roto-Rooter. The short term is very dependent on getting to more than 300,000 registered customers as that is the breakeven point my math suggests. If that takes longer than a year, I would be hesitant that insurers are really seeing a strong ROI. That would be highly dependent on how many plumbers are in the field but management also doesn't want to dilute shareholders too much. It's a tricky balance but reflexivity is important here as it could get into a doom loop where a low share price means too much dilution to hire plumbers and therefore they can't deliver high ROI to insurance partners which means depressed unit sales and the business can't cover its fixed costs. But there is also a clear scenario where 10 million homes means $600 million in revenue at 20% margins on a $28 million market cap.

BSD Analysis:
The manager presents a detailed bull case for Ondo despite recent losses, highlighting the compelling unit economics of the LeakBot water detection system. The technology offers insurance companies a 150% ROI by paying $60 annually to prevent $150 in expected water damage claims, with break-even at just 0.4% incident rates versus actual 1%+ rates across markets. The business model creates a three-way value proposition: homeowners get free leak detection and repairs, insurers reduce claims costs, and Ondo builds a scalable plumber network. Key risks include cash burn and execution challenges in scaling to 300,000 customers for breakeven within 12 months. The manager acknowledges the pattern of cash-burning losers but believes granular unit economics support the thesis. Network effects strengthen the business as plumber density grows, reducing costs and improving insurer ROI. The bull case envisions 10 million homes generating $600 million revenue at 20% margins against a $28 million market cap, representing significant upside if execution succeeds.

Pitch Summary:
The first one is Duolingo. We shared our initial thesis last quarter but the price has only plummeted. Essentially, there is a short term and a long term risk but I believe they are being conflated. The short term risk is that subscription bookings are decelerating as the company has pulled back on its unhinged marketing tactics and overmonetized its customer base while the long-term AI risk looms. It seems like investors are worried that AI is already slowing revenue but I'm making the bet this isn't the case. In fact, AI will enable better learning outcomes which the company is leaning into. User growth will be lumpy and I actually think it could dip and accelerate as more features like 'Explain My Answer' become free. Some companies aren't able to re-accelerate growth once it slows down whereas others have multiple S-curves they can stack on top of each other. The market seems to think Duolingo is the former but I think it's the latter as they harness the power of AI to improve their current courses and add other subject areas. If daily user growth dips below 20% and stays there for at least six months, I would have to seriously consider that my thesis is incorrect. In one year, if there are still no signs of re-acceleration, that new information would likely change my confidence in the long-term destination of the company. That 20% and 12 month period is somewhat arbitrary but it's based on the price we paid for the company and the timeline I think is reasonable based on how quickly AI is moving and what management has outlined. I like to put a financial metric tied to a qualitative thesis as it can be easy to have thesis drift and not be intellectually honest. If you're staring at the pre-committed numbers, it's hard to wiggle your way out of that. That's the tension between the short and long term. The long term is just a bunch of short terms strung together. If the short terms don't show any evidence your long term thesis is intact, it's likely the right decision is to move on. Now, this has nothing to do with the stock price -- it's all about the underlying fundamentals. The stock price may fool you that it "knows something" and other times, other investors actually do know something you don't. That's why I always say the key tension for investing is conviction and humility. Too much conviction and you won't survive in the long run. And too much humility and your returns likely won't be anything to write home about (I'm sort of using humility as a catch-all for paranoia and second-guessing your decision-making. True humility, I don't think you can have too much of). At the same time, I think there is a very real scenario where Duolingo delivers on its supertutor-in-your-pocket vision and 100 million global paid subs at $100/year and 30% FCF margins results in $3 billion in annual free cash flow vs. the current enterprise value of $3.2 billion.

BSD Analysis:
The manager maintains a bullish stance on Duolingo despite recent underperformance, arguing that short-term subscription deceleration concerns are being conflated with long-term AI disruption risks. The thesis centers on AI as an enabler rather than a threat, with the company leveraging artificial intelligence to improve learning outcomes and expand into new subject areas beyond language learning. The manager expects user growth to be lumpy but believes Duolingo can re-accelerate through multiple S-curves, distinguishing it from companies that struggle to regain momentum. Key risk parameters include daily user growth falling below 20% for six months or lack of re-acceleration within 12 months. The bull case envisions 100 million paid subscribers at $100 annually with 30% free cash flow margins, generating $3 billion in annual FCF against a current $3.2 billion enterprise value. The investment reflects conviction in the "supertutor-in-your-pocket" vision while acknowledging execution risks in a rapidly evolving AI landscape.

Pitch Summary:
Rightmove is the largest online real estate portal in the United Kingdom. It operates a digital marketplace connecting property buyers and renters with real estate agencies, developers, and landlords. The vast majority of residential property listings in the country are concentrated on its platform, making it a key place where people begin their search for housing. The business model is primarily based on fees that real estate agencies and developers pay for advertising and additional marketing services on the platform. Thanks to strong network effects – that is to say, a large number of listings and visitors – Rightmove holds a dominant position in the UK market. The company has low capital intensity, achieves very high margins, and generates significant free cash flow.

BSD Analysis:
The manager presents Rightmove as a dominant digital marketplace with exceptional network effects and capital efficiency in the UK real estate market. The investment thesis centers on the company's near-monopolistic position, with the vast majority of residential property listings concentrated on its platform. The fund emphasizes Rightmove's role as the primary starting point for property searches, creating powerful network effects where more listings attract more visitors, which in turn attracts more real estate agencies. The business model generates revenue through advertising and marketing fees paid by real estate agencies and developers, creating predictable income streams. The manager highlights the company's exceptional financial characteristics: low capital intensity, very high margins, and significant free cash flow generation. This combination of market dominance, network effects, and capital-light operations creates a highly attractive investment profile. The position represents a new portfolio addition, initiated when the share price reached compelling valuation levels after extended monitoring.

Pitch Summary:
AJ Bell is a British investment platform that enables individual investors to manage their savings and investments online. Through its services, AJ Bell provides clients access to a wide range of investment instruments, primarily stocks, funds, and retirement products. The company operates mainly in the United Kingdom and serves both retail investors and financial advisors. Its business model is founded primarily on fees for account management, trading, and administration. Thanks to its digital platform and low operating costs, AJ Bell can easily scale up by growing the number of its clients and volume of their assets under management. The company is benefiting from the long-term trend of shifting investments from traditional financial institutions to lower-cost online platforms and from households' growing interest in self-directed investing.

BSD Analysis:
The manager views AJ Bell as a beneficiary of the structural shift toward digital investment platforms and self-directed investing in the UK market. The investment thesis is built on the company's scalable, low-cost digital platform that serves both retail investors and financial advisors with fee-based revenue streams. The fund highlights AJ Bell's ability to capitalize on the disintermediation of traditional financial institutions as investors seek lower-cost alternatives. The business model generates revenue through account management, trading, and administration fees, creating predictable income streams that scale with assets under management. The manager emphasizes the company's operational leverage, where digital infrastructure allows for easy scaling without proportional cost increases. This position represents a new portfolio addition, initiated when valuation became attractive. The investment aligns with secular trends toward financial democratization and the growing preference for self-directed investment management among UK households.

Pitch Summary:
Booking Holdings probably needs little introduction. We know that many of you use its services regularly. Booking Holdings is a global online travel booking platform headquartered in the U.S. Through its websites and apps, it connects customers with providers of accommodations, airline tickets, car rentals, and other travel services. The group's best-known brand is Booking.com, one of the world's largest platforms for reserving hotels and short-term accommodations. The group also includes Priceline, Agoda, KAYAK, Rentalcars.com, and OpenTable. Its business model is primarily commission-based; the company collects a fee from every reservation made through its platforms. Thanks to a global network of millions of accommodation properties and a strong brand, the company benefits from significant network effects: the more accommodation options available on the platform, the more customers it attracts, and vice versa. Booking Holdings has long been among the most profitable firms in the travel industry and generates very high free cash flow.

BSD Analysis:
The manager presents Booking Holdings as a dominant platform business with compelling network effects and capital-light characteristics. The investment thesis centers on the company's commission-based model that generates high free cash flow without requiring ownership of underlying assets like hotels. The fund emphasizes Booking's competitive moat through its global network of millions of accommodation properties and strong brand recognition across multiple travel verticals. Network effects create a virtuous cycle where more accommodation options attract more customers, which in turn attracts more suppliers. The manager highlights the company's consistent profitability and cash generation capabilities within the travel industry. This position represents a new addition to the portfolio, initiated when the share price reached attractive valuation levels after a period of monitoring. The investment aligns with the fund's preference for asset-light, high-margin platform businesses with dominant market positions.

Pitch Summary:
Chord Energy is an exploration and production (E&P) company focused on the Williston Basin. Like many in the industry, its shares moved higher in March alongside rising oil prices. Operationally, the company continues to perform well, with production and cash flow exceeding expectations for most of 2025. Chord has also improved its cost structure by extending drilling laterals, which has lowered its oil break-even price and improved its competitiveness relative to other basins. With a conservative balance sheet (debt-to-EBITDA of approximately 0.6x) and another year of solid free cash flow expected, we believe Chord is well positioned to continue returning capital to shareholders through above-average dividends (current yield 3.7%) and ongoing share repurchases. While we're optimistic about Chord's future, we trimmed our position during the quarter as the stock price approached our estimated value of its oil reserves.

BSD Analysis:
The manager highlights Chord Energy's strong operational performance in the Williston Basin, with production and cash flow consistently exceeding expectations. The company has enhanced competitiveness through operational improvements, particularly extending drilling laterals to lower break-even costs. The conservative balance sheet with only 0.6x debt-to-EBITDA provides financial flexibility and supports sustainable capital returns. The 3.7% dividend yield and ongoing share repurchases demonstrate management's commitment to shareholder returns. However, the manager trimmed the position as shares approached fair value estimates, suggesting disciplined valuation-based selling. The combination of operational excellence, financial conservatism, and attractive shareholder returns makes this a quality energy holding, though position sizing reflects current valuation levels.

Pitch Summary:
During the quarter, we purchased Rayonier (ticker: RYN). Founded in 1926, Rayonier is the second largest publicly traded timberland real estate investment trust (REIT) in the United States. Following its January 2026 merger with PotlatchDeltic, the company owns approximately 4.1 million acres of timberland and six sawmills. Rayonier's value is backed by its diversified timberland portfolio, which generates cash flow through timber harvesting, land sales, and alternative uses such as carbon capture and solar leases. While the timberland industry can be cyclical, we think long-term trends support our view that Rayonier's timberland assets can serve as an effective hedge against inflation. We believe Rayonier's shares trade at an attractive discount to the market value of its timberland assets. Management is working to close this gap by gradually selling land for higher and better use (HBU) at prices well above traditional timberland valuations and is using the proceeds to buy back stock. As management recently noted, they believe the best way to buy timberland today is to buy Rayonier stock. We agree and view our investment as an opportunity to acquire high-quality timberland at a discount through the public market. After recently selling our gold and silver positions, we were pleased to reallocate capital into an asset-heavy business trading below our estimated value.

BSD Analysis:
The manager initiated a new position in Rayonier following its merger with PotlatchDeltic, creating the second-largest public timberland REIT with 4.1 million acres. The investment thesis centers on acquiring timberland assets at a discount through public markets, with shares trading below estimated asset values. The company's diversified revenue streams include timber harvesting, land sales, and emerging alternative uses like carbon capture and solar leases. Management's strategy of selling higher-and-better-use land at premium valuations and using proceeds for share buybacks should help close the valuation gap. The manager views timberland as an effective inflation hedge and appreciates the asset-heavy nature of the business. This represents a strategic shift from precious metals into real assets trading at attractive discounts.

Pitch Summary:
In the first quarter, the Fund's leading detractor was Amdocs (ticker: DOX), a software company and our largest position. We believe Amdocs is far less exposed to AI-driven disruption than many SaaS companies because it is deeply embedded in systems of record and mission-critical infrastructure for its tier-1 telecommunications customers. The company operates billing engines, subscriber databases, network provisioning, and revenue recognition systems that are tightly integrated into carrier operations and carry high switching costs, which helps explain Amdocs' extremely strong customer retention. Replacing this infrastructure layer would require significant operational disruption, limiting the near-term risk from AI. Unlike seat-based SaaS models, Amdocs generates revenue through long-term managed services contracts involving substantial customization and integration, often embedded within carrier IT environments for decades. While AI may compress portions of services revenue by reducing manual coding and testing, Amdocs has been proactive in incorporating automation and AI into its offerings. More broadly, while AI threatens software that automates knowledge workers, Amdocs is focused on automating infrastructure complexity within highly regulated telecom ecosystems. The valuation, at approximately 10x free cash flow, hasn't been this cheap in years.

BSD Analysis:
The manager presents a compelling defense of Amdocs amid AI-driven software sector volatility, emphasizing the company's defensive positioning within telecommunications infrastructure. The thesis centers on Amdocs' deep integration into mission-critical telecom systems with high switching costs and strong customer retention. At 10x free cash flow, the valuation appears attractive for a company with embedded competitive advantages. The manager acknowledges AI risks but argues Amdocs is better positioned than typical SaaS companies due to its focus on complex, regulated infrastructure rather than knowledge worker automation. The long-term managed services model with decades-long customer relationships provides revenue stability. However, the position was the fund's largest detractor in Q1, suggesting market skepticism about the AI resilience thesis.

Pitch Summary:
We exited PayPal and Equinix during the quarter. When we invest in businesses like PayPal executing upon turnarounds, we regularly weigh the positive outcome of improved execution with downside risks, including the opportunity cost of longer than expected paths to improvement. While there are some signs of improvement in PayPal's business, the turnaround has proved more challenging than expected, leading us to exit the position.

BSD Analysis:
The manager exited PayPal after the turnaround story failed to materialize as anticipated. The investment was originally predicated on successful business transformation, but execution challenges proved more persistent than expected. While acknowledging some positive signs in the business, the manager determined that the opportunity cost of waiting for improvement outweighed potential benefits. The extended timeline for meaningful progress created an unfavorable risk-reward profile. This exit reflects disciplined portfolio management, recognizing when turnaround investments are taking longer than anticipated and may not justify continued capital allocation. The decision prioritizes capital efficiency over hope-based investing in challenged business models.

Pitch Summary:
We completed an exit from Salesforce this quarter after trimming the position as part of our actions to reduce software exposure over the past year. Since 2022, Salesforce has experienced slowing growth in its core business across its sales and service cloud segments and, more recently, marketing cloud. While Salesforce is executing on several product strategies to accelerate growth, we think these initiatives are not substantial enough to bend the curve on overall revenue growth. Product execution on innovation strategies has also been mixed. We believe Salesforce will continue to face rising competitive and model transition pressures as the software-as-a-service ecosystem moves from seat-based to usage-based pricing.

BSD Analysis:
The manager completed a full exit from Salesforce after gradually reducing exposure over the past year as part of broader software sector derisking. The bear thesis is grounded in persistent growth deceleration across core business segments including sales cloud, service cloud, and marketing cloud since 2022. While management is pursuing various product strategies to reignite growth, the manager believes these initiatives lack the scale necessary to meaningfully improve overall revenue trajectory. Execution on innovation has been inconsistent, creating additional uncertainty. The manager expects continued pressure from intensifying competition and the industry-wide transition from seat-based to usage-based pricing models, which threatens traditional SaaS economics and Salesforce's established business model.

Pitch Summary:
Alnylam has pioneered RNAi drugs that work to "silence" certain proteins created by the body that can malfunction and cause disease. The company's key product, Amvuttra, treats a condition that leads to protein misfolding in the heart and, eventually, heart failure (cardiomyopathy). While Amvuttra entered the cardiomyopathy market to strong early success in 2025, missed expectations heading into 2026 provided a chance to buy the stock at valuation levels we think incorporate conservative assumptions for its commercial opportunity and very little value for any other pipeline drugs. Alnylam also reached free cash flow breakeven in 2025, a milestone that we seek in biotech investments to derisk some downside potential.

BSD Analysis:
The manager initiated a position in Alnylam following a valuation reset that created an attractive entry point. The investment thesis centers on the company's pioneering RNAi technology platform that silences disease-causing proteins. The key commercial asset Amvuttra treats cardiomyopathy caused by protein misfolding, having achieved strong early market penetration in 2025 before missing expectations in early 2026. The manager views current valuation as incorporating overly conservative assumptions for Amvuttra's commercial potential while assigning minimal value to the broader pipeline. Critically, Alnylam achieved free cash flow breakeven in 2025, meeting the manager's risk management criteria for biotech investments by reducing downside exposure.