Investment Pitches

Pitch Summary:
Our view is that Gränges was at the time of the IPO a company focused on a single niche: heat exchangers for vehicles. Since then, the company has broadened its offering into niche applications such as EV battery housing and specialty packaging. This reduces dependency on legacy automotive heat exchangers. This shift does not seem to be reflected in the valuation. Gränges now operates across multiple niches and avoids dependence on a single end market. In a world where tariffs trigger alarm bells, we believe Gränges finds itself on the right side of the equation, with a structural tailwind that in fact enhances Gränges' strategic position. Previously, most aluminum was rolled in Canada and transported across the border. Gränges offers regional rolling capacity, which has now become highly attractive. At the same time Gränges continues to gain market share across European automotive platforms despite industry skepticism. Expansion investments are ending in 2025 and capex is thus halving to SEK 650 million. Current pricing is attractive at ~11-12% FCF yield for 2025-2026. Heading into earnings season, foreign exchange effects might once again become a negative "surprise" line item. Discounted? Probably. But as every seasoned investor knows: a stock can rise or fall on the same piece of news multiple times. We are ready to see through the noise, as the stock offers compelling fundamental upside.

BSD Analysis:
The manager presents a comprehensive bull case for Gränges based on successful business diversification and favorable structural trends. The company has evolved from a single-niche heat exchanger supplier to a diversified aluminum specialist serving EV battery housing and specialty packaging markets, significantly reducing concentration risk. This transformation appears undervalued by the market, creating an opportunity. The tariff environment provides a structural tailwind, as Gränges' regional rolling capacity becomes increasingly valuable compared to cross-border aluminum transport. Continued market share gains in European automotive platforms demonstrate competitive strength despite industry headwinds. The completion of expansion investments in 2025 will halve capex to SEK 650 million, dramatically improving free cash flow generation. At 11-12% FCF yield for 2025-2026, the valuation appears attractive for a company with improving fundamentals and reduced capital intensity. The manager acknowledges potential FX volatility but views this as noise rather than fundamental concern, demonstrating conviction in the underlying investment thesis.

Pitch Summary:
We've also made Sinch one of our top positions. Sinch has shown encouraging trends in cash flow generation, cost control as well as early signs of a return to organic growth. We believe that a share buyback program will be initiated following the Q2 results later this month.

BSD Analysis:
The manager has elevated Sinch to a top position based on improving operational metrics and expected capital allocation actions. The company appears to be executing a successful turnaround with encouraging cash flow generation indicating improved business quality and financial discipline. Effective cost control measures suggest management is focused on profitability optimization rather than growth at any cost. Early signs of organic growth resumption are particularly positive for a cloud communications platform, indicating market share gains and customer retention. The anticipated share buyback program following Q2 results would demonstrate management confidence and provide additional shareholder returns. This combination of operational improvement and shareholder-friendly capital allocation creates a compelling investment case. The decision to make this a top position reflects high conviction in the company's transformation and future prospects. The timing appears opportune as the company transitions from restructuring to growth mode.

Pitch Summary:
Sentia is a Norwegian construction company, and the IPO was a sell-down from the Swedish investment firm Ratos, which is a holding of ours. Sentia's CEO Jan Jahren has been with the group since 1997 and subscribed for shares worth NOK100m in the listing. We were also positively surprised by the strength of the balance sheet. Sentia operates with a large net cash position, which should be default for an asset-light construction of this sort. They also have a very low amount of contract assets on the balance sheet. We remain holders.

BSD Analysis:
The manager presents a cautiously bullish view of Sentia based on strong management alignment and conservative financial structure. The CEO's NOK 100 million personal investment in the IPO demonstrates significant skin in the game and confidence in the company's prospects. His 27-year tenure with the organization provides deep operational expertise and continuity. The balance sheet strength is particularly noteworthy, with a large net cash position that provides financial flexibility and downside protection. The low contract assets suggest conservative accounting practices and reduced execution risk compared to typical construction companies. The connection through Ratos, an existing holding, likely provided additional due diligence insights. While construction is typically a cyclical and capital-intensive industry, Sentia's asset-light model and strong balance sheet appear to differentiate it from peers. The manager's decision to remain holders suggests satisfaction with the investment thesis despite the inherent sector challenges.

Pitch Summary:
Enity is a provider of mortgages in the Nordics. It doesn't compete head-on with the bigger banks. Instead, it provides mortgages for individuals that have issues getting a traditional mortgage. Despite this, Enity has a history of very low credit losses, averaging ca. 20 bps during the last five years. ROE is above 15%, growth ca. 10% p.a. and valuation remains attractive, despite a +20% gain since the listing.

BSD Analysis:
The manager presents a strong bull case for Enity based on its differentiated business model and impressive financial metrics. The company operates in a specialized niche, providing mortgages to underserved borrowers who cannot access traditional bank financing, creating a defensible market position. Despite serving higher-risk customers, Enity has demonstrated exceptional credit discipline with average losses of only 20 basis points over five years, well below industry norms. The combination of 15%+ ROE and 10% annual growth indicates strong profitability and sustainable expansion. The manager views the valuation as attractive even after a 20% post-IPO gain, suggesting further upside potential. This alternative lending model appears to have found a profitable sweet spot in the Nordic mortgage market. The strong risk management track record provides confidence in the company's underwriting capabilities and long-term sustainability.

Pitch Summary:
Ossdsign has been a holding since start in Protean Small Cap. Step by step, we have gotten more confidence in the growth trajectory of this Swedish medtech. Their product is a nanosynthetic bone graft for bone formation, currently mainly used for spinal fusion surgery. In late June, Ossdsign published one-year results from its PROPEL registry. These were highly encouraging. Fusion rates reached 88%, despite a complex patient cohort. While the share performed strongly on this announcement, we believe the market fail to fully discount the long-term potential in Catalyst. We increased our position on the back of the results.

BSD Analysis:
The manager presents a compelling bull case for Ossdsign based on strong clinical data and undervalued growth potential. The PROPEL registry results showing 88% fusion rates in a complex patient cohort represent significant clinical validation for their nanosynthetic bone graft technology. This data provides crucial evidence of product efficacy that should drive adoption in spinal fusion procedures. The manager's decision to increase the position following the results demonstrates conviction in the long-term opportunity. The assessment that the market has not fully recognized the potential in their Catalyst product suggests meaningful upside remains. As a medtech company with proven clinical outcomes, Ossdsign appears well-positioned to capture market share in the orthopedic bone graft market. The manager's multi-year holding period and growing confidence indicate this is a core conviction position with substantial growth runway ahead.

Pitch Summary:
Our view is that Gränges was at the time of the IPO a company focused on a single niche: heat exchangers for vehicles. Since then, the company has broadened its offering into niche applications such as EV battery housing and specialty packaging. This reduces dependency on legacy automotive heat exchangers. This shift does not seem to be reflected in the valuation. Gränges now operates across multiple niches and avoids dependence on a single end market. In a world where tariffs trigger alarm bells, we believe Gränges finds itself on the right side of the equation, with a structural tailwind that in fact enhances Gränges' strategic position. Previously, most aluminum was rolled in Canada and transported across the border. Gränges offers regional rolling capacity, which has now become highly attractive. At the same time Gränges continues to gain market share across European automotive platforms despite industry skepticism. Expansion investments are ending in 2025 and capex is thus halving to SEK 650 million. Current pricing is attractive at ~11-12% FCF yield for 2025-2026. Heading into earnings season, foreign exchange effects might once again become a negative "surprise" line item. Discounted? Probably. But as every seasoned investor knows: a stock can rise or fall on the same piece of news multiple times. We are ready to see through the noise, as the stock offers compelling fundamental upside.

BSD Analysis:
Protean presents a compelling transformation story for Gränges, highlighting the company's successful evolution from a single-niche automotive heat exchanger supplier to a diversified aluminum rolling specialist. The expansion into EV battery housing and specialty packaging applications significantly reduces end-market concentration risk while positioning the company for secular growth trends. The valuation appears disconnected from this strategic transformation, creating an attractive entry point. Gränges benefits from structural tailwinds including tariff dynamics that favor regional aluminum rolling capacity over cross-border transportation from Canada. Despite industry skepticism, the company continues gaining European automotive market share, demonstrating competitive positioning. The investment case strengthens as expansion capex concludes in 2025, with capital expenditure halving to SEK 650 million and generating attractive 11-12% free cash flow yields for 2025-2026. While foreign exchange volatility may create near-term noise around earnings, the manager views this as temporary distraction from compelling fundamental value. The combination of business diversification, structural advantages, improving cash generation, and attractive valuation creates significant upside potential.

Pitch Summary:
We've also made Sinch one of our top positions. Sinch has shown encouraging trends in cash flow generation, cost control as well as early signs of a return to organic growth. We believe that a share buyback program will be initiated following the Q2 results later this month.

BSD Analysis:
Protean has elevated Sinch to a top position based on improving operational fundamentals across multiple key metrics. The Swedish cloud communications platform is demonstrating encouraging trends in cash flow generation, indicating improved operational efficiency and business model execution. Management's focus on cost control appears to be yielding results, suggesting better margin discipline and operational leverage. Early signs of a return to organic growth represent a significant positive inflection point for a company that has faced growth challenges. The manager anticipates a share buyback program following Q2 results, which would signal management confidence and provide additional shareholder value creation. This combination of improving cash generation, cost discipline, growth recovery, and potential capital returns creates a compelling investment case. The decision to make this a top position reflects high conviction in the turnaround story and the company's ability to capitalize on the large cloud communications market opportunity.

Pitch Summary:
Sentia is a Norwegian construction company, and the IPO was a sell-down from the Swedish investment firm Ratos, which is a holding of ours. Sentia's CEO Jan Jahren has been with the group since 1997 and subscribed for shares worth NOK100m in the listing. We were also positively surprised by the strength of the balance sheet. Sentia operates with a large net cash position, which should be default for an asset-light construction of this sort. They also have a very low amount of contract assets on the balance sheet. We remain holders.

BSD Analysis:
Protean maintains a bullish position in Sentia, a Norwegian construction company that came public through a sell-down by Swedish investment firm Ratos, which is also held in their portfolio. The investment case is strengthened by strong management alignment, with CEO Jan Jahren demonstrating significant skin in the game by subscribing for NOK 100 million worth of shares during the IPO after 27 years with the company. The balance sheet quality exceeded expectations, featuring a large net cash position that aligns with the asset-light construction business model. Additionally, Sentia maintains very low contract assets on the balance sheet, indicating conservative accounting practices and reduced execution risk. This financial strength provides downside protection and flexibility for growth investments or shareholder returns. The combination of experienced leadership with substantial personal investment, conservative balance sheet management, and appropriate capital structure for the business model supports the continued holding decision. The pitch suggests confidence in both the management team's execution capability and the company's financial positioning.

Pitch Summary:
Enity is a provider of mortgages in the Nordics. It doesn't compete head-on with the bigger banks. Instead, it provides mortgages for individuals that have issues getting a traditional mortgage. Despite this, Enity has a history of very low credit losses, averaging ca. 20 bps during the last five years. ROE is above 15%, growth ca. 10% p.a. and valuation remains attractive, despite a +20% gain since the listing.

BSD Analysis:
Protean presents a bullish case for Enity, a Nordic mortgage provider operating in a specialized niche market. The company differentiates itself by serving individuals who face challenges obtaining traditional bank mortgages, effectively addressing an underserved market segment. Despite this higher-risk customer profile, Enity has demonstrated exceptional credit risk management with remarkably low credit losses averaging only 20 basis points over the past five years. The company exhibits strong financial metrics with ROE exceeding 15% and consistent annual growth of approximately 10%. Even after a 20% gain since its IPO listing, management believes the valuation remains attractive, suggesting further upside potential. The investment thesis centers on Enity's ability to profitably serve a niche market while maintaining superior risk controls. This combination of market positioning, operational excellence, and attractive returns makes it a compelling investment opportunity in the Nordic financial services sector.

Pitch Summary:
Ossdsign has been a holding since start in Protean Small Cap. Step by step, we have gotten more confidence in the growth trajectory of this Swedish medtech. Their product is a nanosynthetic bone graft for bone formation, currently mainly used for spinal fusion surgery. In late June, Ossdsign published one-year results from its PROPEL registry. These were highly encouraging. Fusion rates reached 88%, despite a complex patient cohort. While the share performed strongly on this announcement, we believe the market fail to fully discount the long-term potential in Catalyst. We increased our position on the back of the results.

BSD Analysis:
Protean maintains a bullish stance on Ossdsign, a Swedish medtech company specializing in nanosynthetic bone grafts for spinal fusion surgery. The manager's confidence has grown progressively since inception, driven by the company's promising growth trajectory in the orthopedic medical device space. The key catalyst was the publication of highly encouraging one-year results from the PROPEL registry in late June, showing impressive 88% fusion rates despite treating a complex patient cohort. This clinical data validates the efficacy of Ossdsign's Catalyst product and supports the commercial potential in spinal fusion applications. Despite the stock's strong performance following the announcement, Protean believes the market has not fully recognized the long-term value creation potential. The manager increased the position following the positive results, indicating strong conviction in the investment thesis. The pitch suggests significant upside remains as the market gradually appreciates the clinical validation and commercial opportunity.

Pitch Summary:
Cameco is the 2nd largest uranium producer in the world with ~17% market share, preceded by Kazatomprom, which has ~20% market share. Cameco offers an attractive pure-play opportunity to invest in the high-demand for nuclear energy within the safe jurisdiction of Canada. It has a diversified uranium business due to its vertically integrated business model. It provides fuel products and services across the nuclear fuel cycle from exploration, mining, milling, refining and conversion. Cameco has some of the world's best grade and lowest cost mines in the world. It operates tier 1 mines that have a licensed capacity to annually produce over 30 million pounds of uranium, which can be used to power millions of homes each year. It is the world's third largest company based on reserves with over 457 million pounds of proven and probable uranium reserves. Two of its world-class production mines are located in northern Saskatchewan. McArthur River is the world's largest high-grade uranium mine and mill that has an expected mine life of until 2043. In 2024, Key Lake mill set a new world record for annual production. Cigar Lake is the world's second largest high-grade uranium mine that has an expected mine life of until 2036. Both mines have uranium grades (concentration of uranium) that significantly surpass that of its competitors. For instance, Cigar Lake has proven grades of 16.68% and McArthur River has proven grades of 6.81%, while its next largest competitor, Kazatomprom, has average grades of only 0.04% to 0.10%. This divergence in grades demonstrates the quality of Cameco's world-class assets. To further supplement its own home-grown uranium, Cameco has partnered with Kazatomprom on a joint venture, which gives Cameco uranium production from Kazakhstan. Cameco will build long-term contracts by layering in volumes over time. Its customer contracts have a mix of base-escalated pricing and market related pricing (floor and ceilings) that enables it to benefit from increasing uranium prices, while also having downside protection when the uranium price decreases. Cameco has a strong pipeline of long-term customer commitments which provides greater visibility and predictability of the business. For instance, Cameco has commitments to provide an average of 28 million pounds of uranium per year from 2025 to 2029, in addition to ongoing discussions with existing and prospective customers to grow its contract pipeline. Cameco complements its nuclear value chain with its Fuel Services and Westinghouse Electric businesses. Cameco is the world's largest commercial uranium refinery. Its commercial refinery has about 21% of the world's uranium primary conversion capacity. The Port Hope Conversion Facility is one of only four commercial suppliers of uranium hexafluoride, which is used in uranium enrichment, in the western world. In November 2023, Cameco entered into a strategic partnership with Brookfield Renewable Partners to acquire a 49% ownership of Westinghouse Electric. Westinghouse Electric develops nuclear reactor facilities and technology. It designs and fabricates highly engineered bespoke nuclear reactors. For instance, Westinghouse develops SMR technology that uses the same technology as its larger nuclear facilities. Complementing its nuclear asset business, Westinghouse has a nice recurring revenue business by offering aftermarket products and services, such as engineering and outage and maintenance services. This enables the company to have a predictable and consistent stream of revenue and cashflow from its long-term customer relationships. For instance, 1 in 2 of the nuclear fleet in the world receives services from Westinghouse. Warren Buffet once shared that the three criteria he uses for evaluating a management are integrity, intelligence and energy - all 3 of which are characterized by Cameco's management team. Cameco has a disciplined management team with a long-term mindset that has enabled the company to persevere through the doldrums of the nuclear industry's lost years. When uranium prices are high, management had the self-restraint to not flood the market with uranium and correspondingly drive down prices. Instead, the company has been focused on long-term value creation by preserving its high grade, low-cost production assets by waiting for attractive long-term pricing. This has enabled the company to become well-positioned to take advantage of the current nuclear energy boom. Amid rising global energy demand, Cameco is well-positioned to benefit from the growing need for nuclear energy for years to come. Since Rocklinc Partners Fund initiated its position in Cameco in February 2024, the stock has risen by over 45%. We plan to increase our stake as valuations become more attractive.

BSD Analysis:
The manager presents a compelling bull case for Cameco as a pure-play uranium investment positioned to benefit from the nuclear renaissance. The thesis centers on Cameco's dominant market position as the world's second-largest uranium producer with 17% market share and exceptional asset quality, including tier-1 mines with uranium grades of 16.68% at Cigar Lake and 6.81% at McArthur River—dramatically higher than competitors' 0.04-0.10% grades. The vertical integration strategy spanning exploration through conversion provides diversified revenue streams and competitive advantages. The Westinghouse Electric partnership adds nuclear reactor technology and recurring aftermarket services, with half the world's nuclear fleet receiving Westinghouse services. Management's disciplined approach during the uranium downturn, preserving high-grade assets rather than flooding markets, positions the company well for the current supply-demand imbalance. With 28 million pounds of annual uranium commitments through 2029 and flexible pricing contracts, Cameco offers both revenue visibility and upside participation in rising uranium prices. The 45% stock appreciation since February 2024 reflects growing recognition of the nuclear energy tailwinds driven by AI data center demand and climate policies.

Pitch Summary:
Finning (TSX:FTT) is the largest Caterpillar dealer globally with diversified revenue exposure by geography, customer base, product and sector. The company has been a strong contributor to LSF performance with the share price up ~56% over the calendar year-to-date. The primary catalyst has been Finning's impressive Q1 25 results, where the company delivered 18% EPS growth over the prior period and exceeded consensus estimates by about 15%. Despite the strong share price performance to date, we believe the company remains undervalued, with Finning trading on an FY26 P/E of only 13.2x for a double-digit p.a. EPS growth outlook over the next few years. Finning operates in three key regions: Western Canada (49% of EBIT), South America (43% of EBIT) and UK & Ireland (8% of EBIT). We have followed the company for several years as a key comparable to WesTrac, the leading Caterpillar dealer in the Australian market, which is owned by Seven Group Holdings (SGH). We view WesTrac as the highest quality business within SGH given the strength of its business model, its high ROIC and FCF generation, and the top tier management team driving operations. We have benefitted from WesTrac's strong performance (EBIT has tripled from 2018 to 2024) through being invested in SGH on several prior occasions in the Fund. We saw many of the same characteristics in our evaluation of Finning which led us to initiate a position earlier this year. However, we believe the market is yet to fully appreciate the transformation Finning has been through over the past 5 years which provides a much more stable and higher quality earnings base for continued growth going forward. There are 5 key areas that underpin our positive investment view: 1. South American growth: In our view this is the highest value part of the business and key growth engine. The division has grown EBIT at a 24% p.a. CAGR from 2019 to 2024 with its contribution to group earnings increasing from 27% in 2019 to 43% in 2024. We expect South America to overtake the Canadian business as the largest profit generator in the next few years. Chile is the key market for Finning in the region. The company's growth has been driven by two main factors, first, declining grades at major copper mines in Chile which requires more material to be moved to maintain current production levels and second, the success of Caterpillar's Electric Drive truck offering which was introduced to the market a few years ago and has grown to over 100 ultra class trucks. These factors provide high visibility for continued strong growth in the Chilean market for Finning. There also remains further upside in Argentina which is Finning's second largest market in the region. Argentina could see a step-change in mining investment in the coming 1-2 years as currency controls reduce and there is greater political and regulatory certainty. 2. Product Support revenue: Finning earns a large proportion of its revenue from aftermarket services related to the maintenance, repair and parts supply for Caterpillar equipment. This includes full equipment rebuilds and overhauls. Over the life of large mining equipment, the aftermarket costs are many multiples of the initial equipment purchase cost. This revenue stream tends to be a resilient and higher margin profit stream given the essential nature of the spend to appropriately maintain equipment and the large labour component involved in carrying out the work. Finning has grown its Product Support revenue base from C$3.8b in 2019 to ~C$5.5b at the end of 2024, with an expansion of its global technician headcount by 1,600 people over that time-period. More recently, Canadian product support revenue flat-lined as key oil sands customers curtailed spend. We have started to see that spend recover in 2025 and expect that to further support growth over the next 18 months. 3. Operational efficiency: While top-line growth has been strong in recent years, Finning has also been focused on reducing its cost base through restructuring, consolidating and simplifying its business model. The company has reduced executive headcount by 20% over the past 3 years and improved SG&A as a percentage of net revenue from 18.7% in 2019 to 16.3% at end of 2024. We believe there is further optimisation to go, and Finning can continue to drive this percentage lower and increase the operating leverage within the business. 4. New verticals: The growth of AI and data centres has exponentially increased demand for power systems and backup power generation. Caterpillar is a leading supplier of power solutions across several industry verticals which we do not think is fully appreciated by the market. Finning's power systems backlog in Q1 25 was up 56% versus the prior year period and now comprises about one third of the company's total equipment backlog. We think there are secular demand tailwinds that will see this demand continue to accelerate over the next 2-3 years. 5. Balance sheet strength: Finning has generated strong free cash flow over the last few years and has channelled most of this cash flow back to shareholders in the form of increased dividends and share buybacks. The company's share count has reduced by 13% since 2020, with current buyback authorisations set to see a further 5-6% of issued shares bought back in 2025. The company's balance sheet position remains strong with a net debt/EBITDA ratio around 1.5x and an investment grade credit rating. We see potential for further free cash flow growth through growth in the underlying business and continued working capital optimisation. Overall, we think Finning has multiple growth levers to continue driving double-digit annualised EPS growth going forward with further returns to shareholders as the company continues to generate strong free cash flow and buy back shares. Despite this outlook, Finning trades at a 30% discount to its key peer in the Canadian market – Toromont. We see the potential for this discount to close as the company continues to execute on its growth potential over the next 1-2 years.

BSD Analysis:
L1 Capital presents a compelling bull case for Finning International, the world's largest Caterpillar dealer, following strong Q1 2025 results that delivered 18% EPS growth and beat consensus by 15%. The manager's thesis centers on five key value drivers that position Finning for sustained double-digit EPS growth. The South American division stands out as the crown jewel, growing EBIT at 24% CAGR from 2019-2024 and now contributing 43% of group earnings, driven by declining copper ore grades in Chile requiring more equipment and Caterpillar's successful Electric Drive truck adoption. The company's aftermarket Product Support revenue provides a resilient, high-margin foundation, growing from C$3.8B to C$5.5B over five years with strong technician headcount expansion. Operational efficiency gains have reduced SG&A from 18.7% to 16.3% of revenue, while new AI/data center power demand has driven 56% growth in power systems backlog. Strong balance sheet management includes 13% share count reduction since 2020 and continued buyback authorization for another 5-6% reduction in 2025. Despite trading at only 13.2x FY26 P/E with double-digit growth prospects, Finning trades at a 30% discount to peer Toromont, suggesting significant valuation upside as execution continues.

Pitch Summary:
AZO is an oligopolist in a simple and understandable industry with high barriers to entry. It has a predictable high free cash flow-generative business. It has forecastable long-term growth. It has rational competition. It has pricing power. It has a consistent operating history of double-digit EPS growth. It has high returns on capital. It has a management team that is honest and focused on maximizing shareholder value. It has a reasonable valuation. AZO is a leading retailer of aftermarket automotive parts in the USA. It has 6,400 stores serving the Do-It-Yourself (DIY) and Commercial/Do-It-For-Me (DIFM) segments. It also has 900 stores outside the USA. Simple and understandable business with predictable demand: 298.7 million vehicles in the US increasing 1%–2% per year. Older cars need more parts. The average vehicle age has increased from 11.4 years in 2014 to 12.8 years in 2025. We see it continually increasing due to improving quality of cars, as well as the potential impact of rising rates and tariffs which will make buying a new car more costly: It costs $2,000 annually to maintain a car with 50,000 miles on average and rises to $4,000 per year for a car with 100,000 miles driven. Although Electric Vehicles (EV), which need fewer parts, are a factor in reducing demand, their impact is much less over the next five years. Only 3% of the total vehicle fleet in the US are EVs. This is projected to increase to 11% by 2030. However, since AZO's sweet spot is cars older than 7 years (which need more parts), the proportion of EV vehicles 7+ years old will be much less than 11% by 2030. Long Runway for Growth via the following opportunities: Increase in DIY market share: AZO has consistently grown market share over the last ten years in the DIY market at the expense of the smaller Mom & Pop auto parts retailers but still only has mid-teens market share. We see this trend continuing. Increase in Commercial (DIFM) market share: AZO has grown its commercial business at a CAGR of 13% over the last 15 years but still has only a 5% market share. This is an area of continued focus for AZO as the DIFM segment continues to outgrow the DIY segment. Opening New US-based Stores: AZO is targeting 500 new stores annually by 2028. This is more than double the 213 new stores opened in 2024. Increase in International Stores: AutoZone plans to open more than 200 international stores annually by 2028, more than double the 81 new stores opened in 2024. AutoZone's international stores have demonstrated strong performance, with double-digit same-store sales growth in prior quarters. International is only 13% of total revenue. Cost Advantage resulting from being the largest USA auto parts firm: AZO's scale in auto parts retailing allows it to extract greater discounts and more favorable payment terms from parts suppliers than smaller players, giving AZO a cost and cash flow advantage over smaller players. This advantage will only increase as AZO increases market share. Given its negotiating leverage with the fragmented supplier base, AZO is able to operate its business with negative working capital resulting in positive cash flow: AZO instituted a vendor financing program 20 years ago where AZO pays its suppliers on very delayed terms but guarantees those payments. AZO in effect maintains lower capital levels deployed, as working capital is a source and not a use of cash. Better customer service and speed of delivery: Efficient supply chain and distribution leads to wider selection, greater availability of parts, and speed of delivery to customers. This is especially important for commercial customers who need to finish car repairs quickly. AutoZone differentiates itself through its knowledgeable and trained staff who assist customers with diagnosing problems, selecting parts, and even provide free services like battery testing and installation, or loaning out specialized tools to customers so that they can complete a parts installation at home. Superior capital allocation amplifying AZO's compounding engine: AZO has been able to compound topline growth at 6.9% annually over the past 10 years via: Same-store-growth of 3–4% driven by growth of total automobiles (1%–2%), miles driven growth (~1%), and pricing (~1%–2%) on average. New store growth has historically contributed another 2–3% to topline growth. Management has been able to deliver approximately 9.5% compound annual growth in net income by leveraging its 7% topline growth on the SG&A line. However, given that management have almost exclusively used their FCF (that is, after funding all their internal growth expansion plans in stores, hubs/megahubs, and DCs) to repurchase their shares, they have been able to deliver 17% compound growth on the EPS line over that same time as the company shrunk its share count by 47%. AZO is currently trading at 22.6X NTM P/E and 1.07X NTM relative P/E to the market, somewhat richer to its historical ranges in absolute and relative terms to the market. We believe the company's sustainable growth supports its slight premium to the market's multiple. Its FCF yield (3.6% on FY2025 estimates) plus our 3-year forecast FCF growth (10–15%) suggest an expected total annualized return of 13.6% to 18.6% per year over the next three years.

BSD Analysis:
Qualivian presents AutoZone as a compelling quality compounder with multiple growth drivers and defensive characteristics. The manager's thesis centers on AZO's oligopolistic position in the automotive aftermarket parts industry, benefiting from an aging U.S. vehicle fleet (average age of 12.8 years) that requires increasing maintenance. The company operates 6,400 U.S. stores and 900 international locations, serving both DIY and commercial customers. Key growth catalysts include market share expansion in both segments, aggressive store expansion (targeting 500 new U.S. stores annually by 2028), and international growth opportunities. AZO's competitive advantages include scale-driven cost benefits, negative working capital through vendor financing programs, and superior customer service capabilities. The company has demonstrated exceptional capital allocation, delivering 17% compound EPS growth over the past decade through consistent share repurchases while funding organic growth. Management projects 13.6-18.6% annual returns based on current valuation metrics and growth expectations. The defensive nature of automotive maintenance spending provides downside protection during economic uncertainty.

Pitch Summary:
Provides specialist engineering services to the energy, defence, renewables and marine markets. 175-year-old business, 2367 employees, 18 countries. '24 Sales £438m, Ebitda £51m, underlying EBIT £29.5m, ROCE 8.2%. Net margin low (c.6.7%) vs history (>10%) due to loss of operational oversight and some (temporary) external issues. Became over-leveraged due to poorly executed acquisition strategy. Recovery opportunities (company target 10% margin, 15% ROCE): Defence business 2.3% margin '24. New Chairman, CEO and CFO high quality, CEO already re-organised to 3 divisions and appointed new Heads of each (2 external). Net Debt was elevated (£150m), now materially addressed by recent disposals (£56m). Valuation: Target recovery £75m Ebitda. Current depressed multiples est. '25 4x Ebitda, 0.5x EV/Sales. Upside = >200%. Thesis: New management to deliver margin/return recovery and stronger balance sheet driving on-market re-rating to historical avg (>10x Ebitda).

BSD Analysis:
James Fisher & Sons presents a compelling recovery story for a 175-year-old engineering services business serving critical energy, defense, renewables, and marine markets across 18 countries. The investment thesis centers on new management's ability to restore operational margins from the current depressed 6.7% level back to historical norms above 10%, while improving return on capital employed from 8.2% to the targeted 15%. Key catalysts include the recent appointment of a new Chairman, CEO, and CFO who have already initiated a comprehensive restructuring into three focused divisions with new external leadership. The balance sheet has been significantly strengthened through £56 million of asset disposals, reducing net debt from an elevated £150 million position. With the defense business currently operating at just 2.3% margins despite strong market fundamentals, there is substantial scope for operational improvement. The current valuation of 4x EBITDA and 0.5x EV/Sales represents a significant discount to historical multiples, offering upside potential exceeding 200% as margins normalize and the company re-rates to its historical average of over 10x EBITDA.

Pitch Summary:
Distribution, services and engineering solutions business into the Fluidpower industry: 16 locations 500+ employees, 75k products in stock, +10k customers, 2,300 global suppliers. 70% UK, rest Ireland/Benelux. Sales '24 £112m, GPM 38.2% (+142bps), Ebitda £15.9m, Net Debt £15m. Operating metrics have considerable scope for improvement, Ebit margin 2.5%. Target "mid-teens". £29.3m stock. Digital development shambles now being addressed. Chairman Roger McDowell (Augean) and NED Jamie Brooke (Rockwood IAG). New CEO Mike England outstanding operating credentials. Significant change programme almost complete. Clear strategy for value creation. End markets challenging (but not structural), enabling opportunistic acquisitions. Harwood & associated shareholders stake 29.5%. Valuation: '25 EV/Sales 0.4x, EV/Ebitda 6.2x (4.2% opm). Recovery Ebitda est. >£18m = >300% upside. Target EV/Sales 1.3x (minimum) i.e. £150mcap+. Book Value £41.6m. Thesis: Improved profitability will drive re-rating and would then allow strategic acceleration of bolt-on acquisitions (driving scale synergies).

BSD Analysis:
Flowtech Fluidpower represents a classic operational turnaround opportunity in the industrial distribution sector, with new CEO Mike England leading a comprehensive transformation program to unlock significant margin expansion potential. The company's extensive infrastructure of 16 locations serving over 10,000 customers with 75,000 products provides a strong market position, but current EBIT margins of just 2.5% are well below management's mid-teens target and industry standards. Key value drivers include addressing digital system deficiencies, optimizing the £29.3 million inventory position, and implementing operational improvements across the distribution network. With Harwood and associated shareholders controlling a 29.5% stake, the fund has significant influence to drive strategic initiatives. The depressed valuation of 0.4x EV/Sales and 6.2x EV/EBITDA offers substantial upside as margins normalize, with management targeting over £18 million in EBITDA recovery that could support a market capitalization exceeding £150 million. The challenging end markets also create acquisition opportunities to accelerate scale benefits and market consolidation.

Pitch Summary:
Leading provider of credit to ' financially stretched ' people (est. 20m in UK). Two main products: credit card and vehicle finance + smaller personal loans and growth area of 2nd charge mortgages. Primary risk relates to execution of turnaround and any historic motor finance commissions related liability, unclear what/if redress needed. 1.7m customers. No.1 UK 15% market share. Regulated Bank. Former FTSE 100 Provident Financial and 100-year provider of 'door-step lending' now ceased. FY '24: Loans £2.3bn, retail deposits £2.4bn, Tier 1 ratio 18.8%. Net Interest margin (NIM) 18.4%, Cost Income ratio 66%. Funded by deposits (Banking licence). Net Income £267.5m, costs £302m. Loss before tax £34.8m. Recent negative cost impact from dealing with profit-seeking/opportunistic complaints management companies (£47m cost '24). Now falling. New team also cleaned up accounting/provisions etc. Material opportunity to cut costs. Management target of £60m, upgraded by £15m and further £20m+ expected in '26 post new tech system deployment. Underserved market, with mainstream banks avoiding and competitors without banking licenses (no deposit finding) and removal of rapacious pay-day lenders. New Chair, CEO, CFO and highly experienced senior hires. ROTE loss in 2024, target "mid-teens" '27 onwards. Huge profit and re-rating recovery opportunity. Upside = >200%. Valuation: Current P/B 0.5x, target >1x P/B (minimum). Recovery DY >10%. Thesis: New team deliver major profit turnaround justifying re-rating.

BSD Analysis:
Rockwood Strategic presents a compelling turnaround thesis for Vanquis Banking Group, a specialized lender serving the underbanked UK population of approximately 20 million financially stretched consumers. The investment case centers on new management's ability to execute a comprehensive cost reduction program targeting £60-80 million in savings through operational improvements and technology deployment. With a dominant 15% market share in the subprime credit card segment and a regulated banking license providing deposit funding advantages, Vanquis operates in a structurally attractive niche with limited competition from mainstream banks. The company's current distressed valuation of 0.5x price-to-book reflects temporary profitability challenges from elevated complaint handling costs and management transition expenses. Management's target of achieving mid-teens return on tangible equity by 2027, combined with the potential for multiple expansion to 1x book value, suggests significant upside potential exceeding 200% as operational leverage materializes.

Pitch Summary:
Niagen Biosciences is a global bioscience company with a focus on nicotinamide adenine dinucleotide (NAD) research and healthy aging science. Founded in 1999 by Frank Jaksch, NAGE began as a standards company serving the natural products industry and gradually expanded its reach by acquiring licensed university patents focused on cellular health and longevity. In 2017, it acquired the assets of a company called HealthSpan Research Inc., from which it obtained the rights to its flagship NAD+1 product, which it sells under the brand name Niagen. So, what is NAD? To simplify a bit, we can think of it as a helper molecule that assists in the production of cellular energy (ATP), which is then used for things like cellular repair (such as healing skin from a cut or sunburn) and maintaining circadian rhythm (for sleep cadence and quality). Preclinical studies suggest increased levels of the molecule lead to a wide range of benefits, including improvements in metabolism and insulin resistance. Unfortunately, NAD concentrations begin declining as we age, and they can only be replenished in trace amounts via consumption of certain foods. This, along with its variable methods of delivery, rareness of side effects, and affordability on a per-unit basis, all contribute in making it an ideal candidate for a dietary supplement. Today, NAGE offers NAD+ through two primary product lines targeting different market segments. The better known of the two is probably Tru Niagen, a consumer-grade oral supplement that represents the company's flagship direct-to-consumer product. NAGE also markets a pharmaceutical-grade product line called Niagen Plus that comprises its intravenous (IV) and injectable formulations available through healthcare providers with a prescription. The company has expanded this clinical offering to nearly 600 clinics nationwide, with the Niagen IV demonstrating superior tolerability, 75% shorter infusion times, and 20% higher NAD+ increases compared to traditional NAD+ IV therapies. Growing NAD Market Awareness and Demand. Interest in NAD supplements has expanded materially in recent years, driven by both functional and cosmetic aims, as interest in healthy aging and longevity has emerged as one of the strongest trends in the $1.8 T wellness market. Going forward, a generally aging populace will continue to be a tailwind given that older adults are quite logically the most likely to have interest in anti-aging products. This combination of greater general awareness, increased longevity emphasis in the wellness space, and a growing core demographic bodes well for further industry growth in the years ahead; one recent study projects a 24% CAGR out to 2028. Peer-leading brand awareness and reviews. The company's flagship product, Tru Niagen, is one of the best-selling supplements on Amazon. The tens of thousands of reviews across multiple sites have generally been very positive, frequently citing energy levels and sleep patterns as being notably improved. The habit of taking supplements as part of a daily routine tends to engender brand loyalty and drive repeat purchases; the company further incentivizes this by offering discounts to customers that sign up for its "subscribe and save" option. Thus, while perhaps not as sticky as other types of subscriptions, there are recurring revenue streams here. Recent inflections in both profitability and awareness. In Q3 of last year, NAGE finally reached sufficient scale to generate the operating leverage needed for GAAP profitability, and with a strong Q4 managed to report net income for the full year a few months later. As the next two quarters of losses roll off on an LTM basis, valuation multiples and profitability metrics will become more attractive to casual screeners. In March, the company also changed its name and ticker symbol from ChromaDex (CDXC) to the current Niagen Biosciences (NAGE) to more cleanly reflect its NAD+ focus and core product lines. Analyst estimates are too low and will likely need to be raised. NAGE's 2025 guidance provided alongside their Q1 earnings does not appear to be fully appreciated by the sell-side. In the release, management projected 20-25% sales growth, with S&M leverage partially offset by increased G&A. We assume gross margins in line with Q1, and modest taxes thanks to the company's significant NOLs, and incremental share dilution in line with recent history. Putting it all together produces about 18 cents in earnings per share this year, over 20% above the current consensus estimate of $0.15. While there are plenty of puts and takes in these projections, we think the delta is sufficient to make further upside revisions more likely than not. Tracking well for further upside earnings revisions this year. Part of our confidence in eventual estimate revisions comes from our channel checks for the current quarter. Daily SKU trends suggest robust sales in the current quarter, especially with its higher-dosage, higher cost Pro products. Furthermore, Amazon price tracking software suggests the company appears to feel confident enough about demand to begin experimenting with price increases. These factors, combined with their Q1 results, lead us to believe there's a reasonable chance that we see the beat-and-raise cadence continuing for at least the next few quarters. This becomes even more likely when one considers that the company has a history of conservative guidance, having beaten earnings estimates in each of the last 11 quarters. DCF suggests continued undervaluation as standalone entity; math is even more attractive to a potential acquirer. Since NAGE is still in its high-growth phase and only recently profitable, applying a traditional multiple to its near-term earnings is a suboptimal valuation method. We instead utilize a discounted cash flow analysis, acknowledging that the range of potential outcomes is far wider than our base-case projections. Our earnings growth estimates assume the company continues to gradually increase its operating leverage until it eventually reaches a low-20s net margin. We think this is reasonable given projected market growth, mature comp profitability levels, and NAGE's debt-free status. Using our own estimates for upcoming years, we think that NAGE is worth at least $16/share now as a stand-alone entity, assuming no incremental product introductions or market acceleration in upcoming years. This 20% delta from our target to the current share price suggests reasonable upside that could very well materialize within the next quarter or two. However, the valuation math above remains even more attractive if viewed through the lens of a potential acquirer. NAGE is a fairly straightforward business that only operates in one small niche of the wellness market and would be an attractive portfolio addition to a wide variety of healthy product companies. Under a larger umbrella, NAGE would likely yield significant synergies with shared S&M and G&A spend. Furthermore, the company's clean balance sheet (no debt) and relatively small market capitalization make it feasible for a range of strategic acquirers. About a third of NAGE's equity is owned by insiders and profit-driven strategic investors, which helps ensure management is aligned with minority shareholders and will be held accountable to them should any offer materialize.

BSD Analysis:
The manager presents a compelling bull case for Niagen Bioscience, a NAD+ supplement company that recently achieved profitability and operates in the rapidly growing healthy aging market. The thesis centers on multiple catalysts including expanding market awareness (24% projected CAGR through 2028), strong brand positioning on Amazon with positive customer reviews, and recent operational inflection points including GAAP profitability and a strategic rebrand. The manager's DCF analysis suggests 20% upside to a $16 target price, supported by conservative sell-side estimates that appear 20% below their 18-cent EPS projection for 2025. Channel checks indicate robust current quarter performance, particularly in higher-margin Pro products, while the company's 11-quarter streak of earnings beats suggests conservative guidance practices. The investment case is further strengthened by potential M&A appeal given the company's debt-free balance sheet, niche market position, and significant insider ownership alignment. The manager views NAGE as an undervalued play on the secular aging demographic trend with multiple paths to value realization.

Pitch Summary:
During the second quarter we made an investment in the Belgian company Kinepolis, one of the world's leading cinema operators. Kinepolis operates 110 cinemas with a total of 1,141 screens in Europe, the United States and Canada. The company is the most efficient operator in the market with an implemented system of continuous improvement through the introduction of best practices around all its cinemas. In addition, the company owns the real estate assets of 50 of the cinemas it operates which gives it great flexibility and greater stability to its business. Cinema attendance fell sharply in the wake of the Covid pandemic and after almost five years attendance is still 15% down. In fact, the organic evolution of viewers has been declining over the last two decades. Despite this, Kinepolis' revenues have been growing consistently due to a constant increase in ticket prices, an increase in cinema product sales and a process of premium product development (larger seats, 3D cinemas, etc...). As a result, the company achieved all-time record sales and operating results in 2023 despite the lower attendance in 2019. However, in 2024 this recovery that had been underway since 2022 was interrupted due to the actors' strike in the US during the latter part of 2023, which led to a significant slowdown in the number of films, especially impacting blockbusters which have the most significant impact on the number of viewers. In addition, the cinema market is still highly fragmented, which offers a significant opportunity for consolidation and inorganic growth. In this context, Kinepolis is much better positioned to execute acquisitions as it has a much stronger balance sheet than the other major operators as it has a lower level of debt than its competitors and owns the real estate of more than 50% of the cinemas it operates. In other words, this is the most efficient company in the sector, with the strongest balance sheet and, due to its significant operating leverage, we believe it will benefit greatly from the recovery in audience numbers expected in the coming quarters as the number of Hollywood blockbusters increases, which will allow it to achieve a substantial improvement in its profits. In addition, the company still has room to develop its premium offering in its cinemas and is in a very good position to resume the inorganic growth successfully developed in the years prior to the pandemic. Despite these good prospects we have been able to buy shares in the company at a very attractive double-digit FCF yield valuation. Even though the company's financial results in 2023 already exceeded those achieved in 2019, the company is trading at a 40% discount to the levels it was trading at in the years prior to the pandemic.

BSD Analysis:
The manager presents a compelling turnaround thesis for Kinepolis, positioning it as the most efficient cinema operator with superior operational capabilities and balance sheet strength. The investment rationale centers on the company's ability to grow revenues despite declining attendance through pricing power and premium offerings, having achieved record results in 2023. The manager highlights significant operating leverage that should amplify benefits from the expected recovery in blockbuster releases following the 2023 Hollywood strikes. Kinepolis' ownership of real estate assets for over 50% of its cinemas provides both stability and acquisition financing flexibility in a fragmented market ripe for consolidation. The valuation appears attractive at a double-digit free cash flow yield and 40% discount to pre-pandemic levels, despite superior financial performance. The thesis relies on cyclical recovery in cinema attendance and the company's ability to execute consolidation opportunities. Key risks include structural decline in cinema attendance and execution challenges in the fragmented acquisition environment.

Pitch Summary:
During the second quarter we made an investment in the Belgian company Kinepolis, one of the world's leading cinema operators. Kinepolis operates 110 cinemas with a total of 1,141 screens in Europe, the United States and Canada. The company is the most efficient operator in the market with an implemented system of continuous improvement through the introduction of best practices around all its cinemas. In addition, the company owns the real estate assets of 50 of the cinemas it operates which gives it great flexibility and greater stability to its business. Cinema attendance fell sharply in the wake of the Covid pandemic and after almost five years attendance is still 15% down. In fact, the organic evolution of viewers has been declining over the last two decades. Despite this, Kinepolis' revenues have been growing consistently due to a constant increase in ticket prices, an increase in cinema product sales and a process of premium product development (larger seats, 3D cinemas, etc...). As a result, the company achieved all-time record sales and operating results in 2023 despite the lower attendance in 2019. However, in 2024 this recovery that had been underway since 2022 was interrupted due to the actors' strike in the US during the latter part of 2023, which led to a significant slowdown in the number of films, especially impacting blockbusters which have the most significant impact on the number of viewers. In addition, the cinema market is still highly fragmented, which offers a significant opportunity for consolidation and inorganic growth. In this context, Kinepolis is much better positioned to execute acquisitions as it has a much stronger balance sheet than the other major operators as it has a lower level of debt than its competitors and owns the real estate of more than 50% of the cinemas it operates. In other words, this is the most efficient company in the sector, with the strongest balance sheet and, due to its significant operating leverage, we believe it will benefit greatly from the recovery in audience numbers expected in the coming quarters as the number of Hollywood blockbusters increases, which will allow it to achieve a substantial improvement in its profits. In addition, the company still has room to develop its premium offering in its cinemas and is in a very good position to resume the inorganic growth successfully developed in the years prior to the pandemic. Despite these good prospects we have been able to buy shares in the company at a very attractive double-digit FCF yield valuation. Even though the company's financial results in 2023 already exceeded those achieved in 2019, the company is trading at a 40% discount to the levels it was trading at in the years prior to the pandemic.

BSD Analysis:
The manager presents a compelling turnaround thesis for Kinepolis, positioning it as the most efficient cinema operator with superior competitive advantages. The investment rationale centers on the company's operational excellence, strong balance sheet with low debt levels, and significant real estate ownership providing stability and flexibility. The manager highlights that despite achieving record financial results in 2023 that exceeded pre-pandemic levels, the stock trades at a 40% discount to historical valuations, creating an attractive entry point. The thesis relies on a recovery in cinema attendance driven by increased Hollywood blockbuster releases following the 2023 actors' strike disruption. Key catalysts include the company's significant operating leverage that should amplify profit improvements as attendance normalizes, continued premium product development opportunities, and potential for consolidation in the fragmented cinema market where Kinepolis is well-positioned given its strong balance sheet. The manager emphasizes the attractive valuation with double-digit free cash flow yields despite the company's market-leading position and growth prospects.

Pitch Summary:
Rohto Pharmaceutical ("Rohto") was the largest detractor, reducing performance by -131bps as its share price fell -15%. Rohto is the largest skincare and eye-drop manufacturing company in Japan, yet trades at a significant discount to peers. AVI believes that Rohto's undervaluation can be explained by the lack of focus on its core businesses, misleading IR communication, and lower allocation to shareholder returns than its peers. Specifically, management needs to reallocate its R&D spending from low-profit business areas such as the prescription drug business and regenerative medicine business, towards its high-value, high market share product lines, such as skin care products. During the month, Rohto announced its full-year FY24 ending March 2025 earnings, and despite strong Q4 headline numbers of revenue growing +19% YoY and EBIT growing +39% YoY, the company failed to meet its original annual guidance. Pleasingly, in line with our suggestions, Rohto announced its first mid-term plan, which indicated management now views the core skincare and eye-drops businesses as long-term growth drivers. Added to the portfolio in September 2024, Rohto Pharmaceutical accounted for 6.4% of AJOT's NAV at month-end as a top 10 holding. We see significant upside to the current share price, and to month-end, our investment has returned an ROI of -18% for an IRR of -48% (in JPY).

BSD Analysis:
Despite near-term underperformance, AVI maintains a bullish thesis on Rohto Pharmaceutical based on significant valuation discount to peers and strategic repositioning potential. The manager identifies clear value drivers through R&D reallocation from low-margin prescription drugs and regenerative medicine toward high-value skincare and eye-drop franchises where Rohto holds dominant market positions. Strong Q4 operational momentum with +19% revenue growth and +39% EBIT growth demonstrates underlying business strength, though guidance miss reflects management conservatism. The introduction of Rohto's first medium-term plan represents a positive catalyst, aligning with AVI's engagement objectives to focus on core growth drivers. The company's market-leading position in Japanese skincare and eye-drops provides defensive characteristics and pricing power. Current valuation discount appears unjustified given the quality of core assets and improving capital allocation focus. While the -18% ROI since September 2024 reflects short-term volatility, AVI's conviction in "significant upside" suggests the fundamental thesis remains intact as operational improvements materialize.