Investment Pitches

Pitch Summary:
Atsugi was the second largest contributor over the month, adding +100bps to performance as its share price rose +19%. Atsugi is an apparel manufacturer primarily known for producing stockings, innerwear, and legwear for women. The company manufactures and retails under its own brands. The company announced its full-year FY24 ending March 2025 earnings, with revenue growing by +3% YoY, however, operating income remained negative. Guidance for FY25 ending March 2026 forecasts +5% revenue growth and a minor positive operating profit for the first time in eight years. Also included in the announcement was the disclosure of a 'restructuring cost' amounting to Y1.8bn, which was compensated for by the sale of cross-shareholdings. Added to the portfolio in July 2024, Atsugi accounted for 7.3% of AJOT's NAV at month-end as the fifth largest holding. We see significant upside to the current share price and to month-end, our investment has generated an ROI of +39% for an IRR of +85% (in JPY).

BSD Analysis:
Atsugi represents a compelling turnaround story in the Japanese apparel sector, with the company poised to achieve its first operating profit in eight years for FY25. The manager's thesis is built on the operational inflection point, with management forecasting +5% revenue growth and positive operating margins after years of losses. The ¥1.8bn restructuring cost signals meaningful operational changes, while the offsetting cross-shareholding sales demonstrate balance sheet optimization. AVI's timing appears astute, entering the position in July 2024 just ahead of the turnaround catalyst. The +39% ROI and +85% IRR in less than a year validates the investment thesis and suggests strong execution by management. At 7.3% of NAV as the fifth-largest holding, this represents a significant conviction bet on the operational recovery. The women's innerwear and legwear market provides stable demand characteristics, supporting the sustainability of the margin improvement. The manager's confidence in "significant upside" suggests further value creation potential as profitability normalizes.

Pitch Summary:
Kurabo Industries was the largest contributor over the month, adding +137bps to performance as its share price rose by +14%. Kurabo Industries, originally established as a textile manufacturer, has diversified its operations over the years to include chemicals, advanced technology, food and services, and real estate. Kurabo has a history of stable revenues and has doubled its operating margin in recent years. Much of our engagement with the company has focused on encouraging management to direct resources towards the high-quality chemicals and advanced technology segments, and away from the unprofitable textiles business. Pleasingly, in March, Kurabo Industries announced plans in line with our recommendations, to close down its largest and most unprofitable textile factory, the Anjo Plant, by June 30, 2025. During May, Kurabo implemented many of AVI's suggestions into its annual results and MTP. Highlights include introducing a 10% ROE target for 2027, a Y20bn buyback, a 4% DOE target, committing to reducing cross-shareholdings to 20% of net assets by 2027 and committing to sell underutilised real estate. Operating profit guidance for FY26 is down -22% YoY, partly due to the one-off cost associated with shutting down the unprofitable textile factory. Kurabo Industries was added to the portfolio in January 2024 and is now the largest holding, accounting for 12.8% of AJOT's NAV, with the investment already generating a +63% ROI, for an IRR of +86% to month-end (in JPY).

BSD Analysis:
AVI's engagement strategy with Kurabo Industries has proven highly successful, with the company implementing multiple shareholder-friendly initiatives including a 10% ROE target, ¥20bn buyback program, and 4% dividend on equity target. The manager's thesis centers on operational improvements through portfolio rationalization, specifically divesting unprofitable textile operations while focusing resources on higher-margin chemicals and advanced technology segments. The closure of the loss-making Anjo textile plant represents a key catalyst for margin expansion, despite near-term earnings headwinds from restructuring costs. Cross-shareholding reduction to 20% of net assets and real estate monetization should unlock significant balance sheet value. The position has delivered exceptional returns with +63% ROI and +86% IRR since initiation in January 2024, validating the engagement approach. At 12.8% of NAV, this represents AVI's highest conviction holding with continued upside potential as operational improvements materialize. The company's stable revenue base and doubled operating margins provide a solid foundation for value creation.

Pitch Summary:
SDCL Efficiency Income is focused on financing and managing energy efficiency projects. It has a portfolio of on-site energy solutions that reduce consumption and carbon emissions for commercial, industrial and public sector clients. The discount of nearly 50% seemed an outlier in the sector, especially as it had announced interest for one of its biggest holding, Onyx. Post period end, the board has announced it could not come to an agreement to sell Onyx but we are confident that there will be further interest in the portfolio holdings going forward. The trust has a continuation vote in 2026 so we are likely to see the board and management being active in managing the discount in order to win the vote.

BSD Analysis:
The manager views SDCL Efficiency Income as an attractive opportunity trading at an anomalous discount of nearly 50%, which appears excessive relative to sector peers. The trust operates in the attractive energy efficiency space, providing on-site solutions that reduce consumption and carbon emissions for diverse client sectors. While a potential sale of major holding Onyx did not materialize, the manager remains confident in ongoing interest for portfolio assets, indicating underlying value recognition. The upcoming 2026 continuation vote creates a powerful catalyst, as the board and management will be incentivized to actively address the discount to secure shareholder support. This structural pressure should drive value-enhancing actions over the next 18 months. The combination of an excessive discount, quality underlying assets in a growing sector, and a clear catalyst timeline makes this an compelling special situation investment.

Pitch Summary:
Another growth private equity trust that bounced over the month was Augmentum Fintech. Much like its peers in the sector the trust had fallen onto a discount of over 40%. Despite having some very good, profitable businesses, such as Tide and Zopa, there are still some concerns around valuations and exit strategy. The managers, however, have proved they are able to make profitable realisations, their sale of Cushon to Natwest in 2024 is a good example of this. Furthermore, the trust has a conservative valuation policy which has resulted in fewer right downs in comparison to peers who wrote up valuations during the 2021 growth private equity bull market. We are therefore unsurprised to see some buying pushing the share price up.

BSD Analysis:
The manager maintains a constructive view on Augmentum Fintech despite acknowledging valuation and exit concerns in the fintech sector. The trust had traded at a significant 40% discount, similar to growth private equity peers, but has since recovered. The investment case is supported by the trust's portfolio of profitable businesses including Tide and Zopa, demonstrating quality underlying assets. Management's track record is evidenced by successful exits like the 2024 sale of Cushon to NatWest, proving their ability to realize value. Importantly, the trust employed conservative valuation policies during the 2021 growth equity bubble, avoiding the aggressive mark-ups that plagued peers and subsequently requiring fewer write-downs. This conservative approach has positioned the trust better relative to peers and supports the manager's confidence in the recent share price recovery as investors recognize the relative value proposition.

Pitch Summary:
Seraphim Space's share price was up over 40% over the month as investors finally got excited by the trust's exposure to defence companies. The EU is planning on spending €800bn on defence in the coming years with around a 1/3 of this expenditure going to space related defence. Furthermore, companies such as SSIT's biggest holding, ICEYE, have been used prolifically in the Russia/Ukraine war which has helped to both hone the technology and also showcase the capabilities. The Polish government's new contract with ICEYE should also provide an uplift to the valuation.

BSD Analysis:
The manager is bullish on Seraphim Space due to its strategic exposure to defense-focused space technology companies. The investment thesis is underpinned by massive European defense spending plans totaling €800 billion, with approximately one-third allocated to space-related defense applications. The trust's largest holding, ICEYE, has gained significant real-world validation through extensive use in the Russia/Ukraine conflict, demonstrating both technological capabilities and market demand. This operational proof-of-concept has been further validated by new government contracts, including a recent Polish government agreement with ICEYE. The 40% monthly share price appreciation reflects growing investor recognition of the defense space technology theme. The manager sees this as a structural growth opportunity driven by geopolitical tensions and increased defense spending priorities across Europe.

Pitch Summary:
VH Global Energy Infrastructure was our best performer after announcing the trust had moved into formal winddown and would be selling assets and handing cash back to shareholders. The trust had been trading at a discount over 40+% but tightened considerably after investors digested the news. Although we think the wind-down is likely to take years rather than months as some assets are still in development, there should be some nearer term realisations and transaction evidence would suggest these would be close to net asset value.

BSD Analysis:
The manager views VH Global Energy Infrastructure favorably following the announcement of a formal winddown process. The trust had been trading at a significant discount of over 40%, which has since tightened as investors recognized the value unlocking opportunity. While the winddown process is expected to take years due to development-stage assets, the manager anticipates near-term asset realizations at or close to net asset value. This represents a classic discount-to-NAV arbitrage opportunity where the catalyst of asset sales should drive convergence between market price and underlying asset values. The manager's confidence is supported by transaction evidence suggesting assets will realize close to their stated valuations. The position benefits from a clear timeline and process for value extraction through the winddown mechanism.

Pitch Summary:
Progressive is one of the largest car insurance companies in the US with an expanding home insurance segment. Serving both individuals and businesses, Progressive considers itself a data science company that services the insurance market. It uses data analysis to track driving habits and identify lower risk drivers, which in turn allows it to offer lower insurance rates, thus incentivising safer driving habits amongst its policyholders. We believe this is an attractive stock to hold as the company retains a strong competitive position and it still has scope to increase its market share.

BSD Analysis:
The manager presents a compelling investment thesis for Progressive, highlighting the company's transformation into a data-driven insurance provider that leverages analytics to create competitive advantages. Progressive's positioning as a "data science company" in the insurance market demonstrates its technological sophistication and ability to price risk more accurately than traditional competitors. The company's usage-based insurance model creates a virtuous cycle where safer driving behaviors are rewarded with lower premiums, improving both customer retention and loss ratios. The manager emphasizes Progressive's strong market position in auto insurance while noting the growth potential in home insurance, providing diversification and expansion opportunities. The data analytics capabilities enable Progressive to identify and attract lower-risk customers while maintaining pricing discipline, supporting sustainable profitability growth. The manager sees continued market share expansion potential, suggesting the company's competitive moats remain intact and strengthening. Progressive's direct-to-consumer model and technological capabilities position it well to capture market share from traditional insurers while maintaining operational efficiency.

Pitch Summary:
There was no company-specific news for McKesson and Progressive during the month. Both are relatively defensive stocks and so despite flat share price performance, in a risk-on environment they underperformed relative to the general market. We hold overweight positions in both. Longer-term, we believe McKesson has a leading position in a consolidated market with defensive growth characteristics. We think it is well placed to benefit from secular tailwinds in biosimilar, speciality services, and GLP1 products.

BSD Analysis:
The manager maintains strong conviction in McKesson despite recent relative underperformance, attributing the weakness to the stock's defensive characteristics in a risk-on market environment rather than fundamental deterioration. The manager emphasizes McKesson's leading market position within a highly consolidated pharmaceutical distribution industry, which provides pricing power and competitive moats. The company's defensive growth profile offers stability during economic uncertainty while still providing upside exposure to healthcare sector expansion. The manager identifies several secular growth drivers, including the increasing adoption of biosimilar drugs, expansion in specialty pharmaceutical services, and the growing GLP-1 diabetes and obesity treatment market. These trends should provide McKesson with sustained revenue growth opportunities given its distribution network and relationships with healthcare providers. The manager's overweight position reflects confidence in the company's ability to capitalize on these healthcare megatrends while maintaining its market-leading position. McKesson's essential role in pharmaceutical supply chains provides defensive characteristics while specialty services and emerging drug categories offer growth acceleration potential.

Pitch Summary:
Notable detractors at the stock level included holdings in clinical research organisation (CRO) ICON, drug wholesale distributor McKesson, and US insurance company Progressive. Shares in ICON fell at the start of the month as the company reported mixed first-quarter results, and due to broader weakness in the pharmaceutical industry. As one of the largest global CROs, Icon helps pharmaceutical and biotechnology companies manage the human clinical trial process as they move towards drug approvals. This helps accelerate the development of drugs and devices that save lives and improve quality of life. Icon has played a role in the development of 18 of the world's top 20 most popular drugs.

BSD Analysis:
Despite recent underperformance, the manager maintains a constructive long-term view on ICON, emphasizing the company's critical role in pharmaceutical development as one of the world's largest clinical research organizations. The manager acknowledges near-term headwinds from mixed quarterly results and broader pharmaceutical industry weakness but focuses on ICON's fundamental value proposition in accelerating drug development timelines. The company's impressive track record of contributing to 18 of the world's top 20 most popular drugs demonstrates its operational excellence and industry leadership position. ICON's services are essential for pharmaceutical and biotechnology companies navigating the complex clinical trial process toward regulatory approval, providing the company with defensive characteristics and recurring revenue streams. The manager views the current weakness as temporary, likely driven by industry cyclicality rather than structural challenges to ICON's business model. The company's global scale and expertise in managing human clinical trials positions it well to benefit from continued pharmaceutical innovation and the growing complexity of drug development processes.

Pitch Summary:
APi Group is a recent new addition to the strategy. APi Group is a premier life safety, security, monitoring, and specialty services business. It operates in segments like fire detection, energy retrofits, specialised industrial services, and infrastructure installations, thus contributes to sustainable development. The company reported good results with revenues beating analysts' expectations. APi also hosted an investor day in May where the management team gave positive longer-term financial guidance.

BSD Analysis:
The manager presents APi Group as a compelling new addition to the portfolio, highlighting the company's diversified service offerings across life safety, security, and specialty industrial services. The recent strong financial performance, with revenues exceeding analyst expectations, demonstrates the company's operational execution and market positioning. The manager values APi's contribution to sustainable development through its energy retrofit services and infrastructure installation capabilities, which align with the fund's ESG mandate. The positive longer-term financial guidance provided at the May investor day suggests management confidence in the business trajectory and growth prospects. APi's positioning in essential services like fire detection and security monitoring provides defensive characteristics while the energy retrofit and infrastructure segments offer exposure to sustainability trends. The company's diversified end markets and service offerings provide resilience against economic cycles while maintaining growth potential. The manager's decision to add this position reflects confidence in the company's ability to capitalize on infrastructure modernization and sustainability upgrade cycles.

Pitch Summary:
Prysmian is a cables company offering products and solutions for the energy, industrial, and telecom sectors. Prysmian reported strong first-quarter results including earnings that were notably ahead of the first quarter last year, strong cash flow generation, and 5% organic growth. The business also benefited from the general market switch back to growth stocks, which boosted shares of AI-related companies. The company reported good progress on its ESG and net zero targets. About half of the company's revenues are derived from low-carbon-enabling products. Cables are essential for the further proliferation of renewables, including wind and solar, as well as data centres.

BSD Analysis:
The manager expresses strong conviction in Prysmian, emphasizing the company's robust financial performance with earnings significantly outpacing prior year results and healthy 5% organic growth. The strong cash flow generation demonstrates the company's operational efficiency and capital allocation discipline. The manager highlights Prysmian's strategic positioning at the intersection of multiple growth themes, including renewable energy infrastructure, AI-driven data center expansion, and telecommunications upgrades. With approximately 50% of revenues derived from low-carbon-enabling products, the company is well-aligned with the global energy transition while maintaining exposure to traditional industrial and telecom markets. The essential nature of cables for wind, solar, and data center infrastructure provides Prysmian with durable competitive advantages and multiple growth vectors. The company's progress on ESG and net zero targets further strengthens its positioning within sustainable investment mandates. The manager views the AI-related market rotation as providing additional tailwinds for the stock, reflecting investor recognition of Prysmian's critical role in enabling digital infrastructure.

Pitch Summary:
At the stock level, the largest positive contributors were solar panel software solutions provider Nextracker, cables company Prysmian, and security services business APi Group. Nextracker reported results during the month that beat expectations on several metrics, including earnings and new business volumes. The company also announced that it was expanding its solar technology offering by acquiring a business that manufactures electrical infrastructure used in solar power plants. The acquisition strengthens Nextracker's US supply-chain position. Nextracker produces solar tracker and software solutions for solar panels both in the US and globally. Its solutions feed into the broader artificial intelligence (AI) value chain, and we think the business has strong potential to harness returns from AI applications and innovation.

BSD Analysis:
The manager presents a bullish view on Nextracker, highlighting the company's strong operational performance with earnings and new business volumes beating expectations. The strategic acquisition of electrical infrastructure manufacturing capabilities is viewed positively as it strengthens the company's US supply chain positioning, which is critical given ongoing trade tensions and domestic manufacturing preferences. The manager sees significant value in Nextracker's dual exposure to both the renewable energy transition and AI infrastructure buildout, as solar trackers and software solutions are essential components for utility-scale solar installations that power data centers. The company's global reach combined with strengthened US manufacturing capabilities positions it well to capitalize on the accelerating solar deployment trends. The AI value chain connection provides additional upside potential as data center power demands continue to surge. The manager's confidence appears well-founded given the company's execution on both organic growth and strategic acquisitions. This positioning aligns with the fund's sustainable investment mandate while offering exposure to high-growth technology trends.

Pitch Summary:
The author is long SOC at $23 based purely on a short-term legal catalyst rather than long-term fundamentals. They argue that if current legal disputes are resolved favorably, SOC could trade above $30, implying meaningful upside, but they disagree with bulls who claim the stock is worth $50–$100. The author highlights that they previously exited in the low $20s after observing significant legal uncertainty and concerns about operational risk. They note that SOC’s pipelines were originally built in the early 1980s, surpassing their intended lifespan, and last produced oil in 2015, which presents operational and regulatory challenges. They also warn that SOC faces persistent ideological opposition that will continue to scrutinize and challenge operations even if the company wins the current legal case. Despite these risks, they believe a total collapse is unlikely and estimate downside in the $15–$20 range if legal outcomes turn unfavorable.

BSD Analysis:
SOC is fundamentally a high-volatility, binary-outcome situation centered on legal rulings, regulatory approvals, and aging offshore infrastructure. The company’s asset base requires substantial reinvestment or redesign to resume operations, and the age of the pipelines raises material concerns around safety, maintenance costs, and environmental reliability. Activist and regulatory scrutiny represent structural headwinds that could slow or prevent project restart even if initial legal decisions go SOC’s way. Operational timelines are uncertain, and delays could pressure liquidity and force additional capital raises. While a favorable legal outcome could unlock a valuation re-rate, the risk profile remains asymmetric, with dependence on external decision-makers outside the company’s control. Investors must weigh the potential short-term legal catalyst against long-term operational complexity, political opposition, and uncertain capital requirements. Overall, this resembles more of a speculative event-driven trade than a stable energy investment.

Actual Post Content:
At $23, I'm long $SOC again. Unlike most bulls, this is a short-term legal play, not a long-term fundamental play. I don't think $SOC is worth $50, $70 or $100 as many bulls take the mgt ppt narrative to drive a sky-high valuation. But if the current legal noise settles (which i think is likely/shortly), the stock is worth $30+, that's 30%+ upside. Now KC is the "poking $SOC bulls" specialist... 😀 I have no pos (exit in low 20s), and I wish it works out for $SOC shareholders as I watched 10H+ hours of various hearings, and was disgusted by how ironically arbitrary the entire process is (all under the name of legal procedures). But i have 2 primary concerns (hence exit my pos). I think collectively, $SOC bulls are over-optimistic: put legal aside, I think it underestimates the challenges of running pipelines (1st prod in Y81) that are beyond their designed lifespans (35-40Y) and last production was 2015. The other thing is that SOC faces the worst type of opposition, as CBD is ideology-driven, insensitive to economics, and will never walk away even if it loses the current battle. It will surely watch the operation like a hawk, and report issues every other day. It's challenging to predict the downside risk given the legal uncertainty, but I don't see judicial outcomes leading to anywhere near 0.... (prob $15-20 range?)

URL: https://x.com/siyul/status/1930286155041263874

Pitch Summary:
HAMR leader set to ride AI data boom: 30TB shipping now, 40TB in ’26 drives step-function GM/FCF; duopoly structure, tight supply, LT agreements; stock at ~12x ’26 EPS despite multi-year margin expansion + cash returns.

BSD Analysis:
Seagate derives 80%+ rev from high-cap nearline HDDs for hyperscalers/enterprise. HAMR re-accelerates areal density, lowers $/TB and power/TB; 30TB qualified at 3 hyperscalers with volume ramp 2H25; 40TB in mid-’26 should lift unit economics materially (higher capacity, flat/lower BoM). WD lags (first HAMR not till ~’27), Toshiba behind—supporting pricing discipline. HDDs remain ~6x cheaper/TB than SSDs and ~9x more capex-efficient to manufacture; IDC sees HDD share ~80% of cloud storage through ’28. Mgmt targets sustained GM expansion; FCF could top ~$8B over next 3 FYs enabling dividend raise and buybacks. Market still models a 2026–27 downcycle; if AI super-cycle extends, numbers and multiple re-rate. Catalysts: June Q print (HAMR qual/ramp detail, video/imaging recovery), FY26 guide, progressive GM/FCF beats each quarter, Oct dividend hike, late-’25 unveil of 40TB HAMR + customer quals, buyback resumption in 1H26.

Pitch Summary:
Salesforce's recent Q1 FY26 results, despite a mixed market reaction, demonstrate the company's resilience and potential for long-term growth. The stock has dropped to $265, below the target buying range of $270, presenting an attractive entry point. Salesforce's strategic acquisition of Informatica for $8 billion is expected to enhance its AI and data management capabilities, crucial for future growth. The company's strong position in the CRM market, coupled with its innovative AI products like Agentforce, positions it well for sustained growth into the next decade.

BSD Analysis:
Salesforce's acquisition of Informatica is a strategic move to bolster its data management and AI capabilities, crucial in an era where data quality is paramount for AI success. The deal, valued at $8 billion, is financed through cash reserves and debt, avoiding shareholder dilution, and is expected to be accretive to margins, EPS, and FCF by year two post-closing. Salesforce's financial health remains robust, with a strong balance sheet and significant free cash flow generation. The company's focus on AI, particularly through its Agentforce product, is anticipated to drive the next growth phase, although adoption is currently slower than expected due to macroeconomic conditions. Salesforce's valuation, at 24x earnings and an EV/EBITDA of 16x, appears attractive compared to historical averages and industry peers, suggesting potential for significant upside. The company's strategic initiatives and financial discipline provide a solid foundation for future growth, making it a compelling investment opportunity.

Pitch Summary:
Sun Hung Kai & Co. presents a mixed investment case. The company offers a high dividend yield of approximately 9% and is trading at a significant discount to its book value. However, its historical return on equity (ROE) performance has been lackluster, and there is uncertainty about its ability to shift towards higher ROE activities. The company's recent shift from unsecured to secured lending could reduce impairment losses, potentially improving profitability.

BSD Analysis:
Sun Hung Kai & Co. is trading at a price-to-book ratio of less than 0.30x, with a market capitalization of HKD 6 billion against a book value of HKD 21 billion. This substantial discount suggests potential upside if the company can improve its ROE. The firm's dividend policy has remained stable despite past investment-related losses, indicating a commitment to shareholder returns. The company's shift towards secured lending and investment fund distribution platforms could enhance margins and reduce capital intensity. However, the company's ability to achieve a sustainable ROE of around 5% remains uncertain, and its performance lags behind peers in Eastern Europe and Central Asia, which consistently achieve ROEs above 20%. Investors should weigh the potential for re-rating against the availability of other attractive opportunities in the Hong Kong market.

Pitch Summary:
I have watched Femsa (FMX) for years, and saw an opportunity to purchase the stock when it fell below $90 earlier this year. The company is a mini-conglomerate with operations in Central and South America. ~60% of FMX's earnings are derived from its 47% ownership of Coca-Cola FEMSA, 45% from their Proximity Americas segment which includes their OXXO convenience brand, 10% from other divisions, and -15% from corporate costs. OXXO is their growth engine, with over 24,000 stores, growing by 1,000 stores in 2024, and contributing 10% sales growth. What is interesting about this combined business is that the opening of each OXXO store likely also increases consumption of Coca-Cola FEMSA's products, so their business units do complement one another very well. FMX again trades for a low-20's multiple of earnings, earnings which we expect to grow low double-digits over time.

BSD Analysis:
The manager identifies a compelling conglomerate opportunity in FEMSA, capitalizing on a price decline below $90. The investment thesis highlights the synergistic relationship between OXXO convenience stores and Coca-Cola FEMSA operations, where new store openings drive beverage consumption. With 24,000 OXXO stores growing by 1,000 annually and generating 10% sales growth, the retail segment provides a powerful growth engine. The 47% stake in Coca-Cola FEMSA contributes 60% of earnings, providing stable cash flows. Trading at a low-20s earnings multiple with expected low double-digit earnings growth, the manager sees attractive risk-adjusted returns. The geographic diversification across Central and South America adds defensive characteristics while the operational synergies between business segments create competitive advantages.

Pitch Summary:
Celsius Holdings (CELH) is an energy drink brand I had purchased with a tracker position in a personal account ~6 years ago, and have tracked since then. The company has executed as well or better than anyone's wildest expectations, and the company was rewarded with a partnership with Pepsi to expand distribution in mid-2022. The company then experienced explosive growth and improved gross margins as Pepsi's distribution reach gave CELH instant access to many more slots in many more points of sale. For a brand that always had seen extremely high sell-through on its distribution, Pepsi stretched the brand's ability to push volume to the limit, to the point that the brand has had to take price cuts in recent months to move the inventory Pepsi accumulated. There remains significant momentum for the brand despite this hiccup, which provided the opportunity to purchase the stock below $30 after the stock price exceeded $90 per share in early 2024, after sales had increased 10x since from 2020 to 2024. The other catalyst for purchasing now was Celsius' announced acquisition of Alani Nu, a fast-growing competitor in the better-for-you (BFY) energy drink category with a significant skew towards female consumers. This acquisition consolidated Celsius' position in BFY energy drinks and brought the only brand with similar messaging/branding under its umbrella. I think the combination of these two brands will power future growth for Celsius, and that potential was all purchased at 21x 2026 consensus estimates. This is not an extremely cheap multiple, but it fits in the growth-at-a-reasonable price (GARP) mold quite well.

BSD Analysis:
The manager presents a compelling growth story for Celsius, leveraging his six-year tracking history and deep brand knowledge. The investment thesis centers on temporary inventory issues creating a buying opportunity after the stock declined from $90 to below $30. The Pepsi partnership provided explosive distribution growth but led to over-inventory, creating short-term pricing pressure that the manager views as transitory. The strategic acquisition of Alani Nu consolidates the better-for-you energy drink category and adds female consumer exposure. With 10x sales growth from 2020-2024 and trading at 21x 2026 estimates, the manager sees this as a classic GARP opportunity. The combination of brand momentum, distribution advantages, and category consolidation supports the growth thesis despite recent operational hiccups.

Pitch Summary:
We also purchased shares in Hovnanian Enterprises (HOV), a homebuilder with a checkered history going back to the Great Financial Crisis, when the business almost went bankrupt. HOV's debt load stood at $2.2B in 2008, and through a combination of dilutive equity offerings in 2008 and 2011-12 plus cash from operations, the debt load has been reduced to ~$0.9B. With a still-high $91MM interest and a ~10% interest rate, which is a 200-300bps premium to similar peers, there is still opportunity for improvement. In other words, this represents a $14MM ($2.00 per share) after-tax opportunity without any further improvement in the business. I purchased HOV for 3.2x last-twelve-months earnings, and believe that HOV could trade at a 10x multiple on a through-the-cycle earnings. Based on the price volatility in the stock, the market is not currently giving HOV credit for its balance sheet improvement, which could be a trigger for the valuation multiple to improve.

BSD Analysis:
The manager identifies a classic turnaround opportunity in Hovnanian, focusing on the company's dramatic balance sheet improvement since the 2008 financial crisis. The investment thesis hinges on debt reduction from $2.2B to $0.9B and the potential for further refinancing at lower rates, representing $2.00 per share in value. At 3.2x LTM earnings, the manager sees significant upside to a normalized 10x through-cycle multiple. The high interest rate premium (200-300bps above peers) creates an immediate catalyst for value realization through refinancing. The manager believes market volatility reflects lack of recognition for balance sheet improvements rather than fundamental business issues. This represents a deep value play on financial engineering and multiple expansion potential.

Pitch Summary:
Wayfair (W) might seem like an unusual purchase to make if one is searching for value, since Wayfair trades at 50x this year's earnings. However, I believe Wayfair is a dominant online furniture retailer that continues to take share of the furniture market. W trades at such a high multiple of earnings because they continue to invest in their business, so using long-term reasonable margin assumptions, they are trading at approximately 70% of our estimate of fair value. Additionally, I believe W is capable of growing revenue ~10% annually through the cycle, noting that the current furniture market is experiencing a hangover from COVID as well as the current high interest rates limiting existing home sales.

BSD Analysis:
The manager presents a contrarian value thesis on Wayfair despite its elevated 50x earnings multiple. The investment rationale centers on Wayfair's dominant position in online furniture retail and continued market share gains. The manager believes the high multiple is justified by ongoing business investments and calculates the stock trades at 70% of fair value using normalized margin assumptions. The thesis anticipates 10% annual revenue growth through cycles, with current headwinds from post-COVID furniture market normalization and high interest rates creating a temporary buying opportunity. The manager views the current market dislocation as masking the company's long-term competitive advantages and growth potential.