Investment Pitches

Pitch Summary:
We initiated a significant new investment in Spotify Technology, the global leader in streaming audio. We believe Spotify is well-positioned to grow earnings over many years, driven by a long runway of subscriber growth and latent pricing power. Consistent with many of our core holdings, Spotify is founder-led, conservatively financed with a net cash balance sheet, and generates strong free cash flow.

BSD Analysis:
Springview initiated a significant position in Spotify, viewing it as the global leader in streaming audio with substantial long-term earnings growth potential. The manager's thesis centers on two key drivers: a long runway for subscriber growth and untapped pricing power that can drive margin expansion over time. The investment aligns with Springview's preference for founder-led companies, which typically exhibit strong strategic vision and execution capabilities. Spotify's conservative financial structure with a net cash balance sheet provides financial flexibility and reduces execution risk. The company's ability to generate strong free cash flow demonstrates the underlying profitability of the streaming model and supports sustainable growth. This position represents a bet on the continued shift toward digital audio consumption and Spotify's ability to monetize its dominant market position. The investment fits Springview's long-term compounding strategy, targeting businesses with durable competitive advantages and multiple years of growth ahead.

Pitch Summary:
@blondesnmoney argues that Willis Lease Finance ($WLFC) is meaningfully undervalued once investors adjust for the real economic value of its jet engine assets. Although the stock screens as expensive at ~2× tangible book and ~9× earnings, he notes that skyrocketing engine market prices imply roughly $600M of fair-value uplift, translating to an additional ~$66 per share in book value. Including embedded gains in the future engine delivery pipeline, he estimates economic book value is closer to $150 per share. He also highlights that earnings are understated because WLFC depreciates engines faster than their actual wear profile and defers large amounts of “unearned maintenance revenue,” which will be recognized when leases eventually end. Today's industry-wide engine shortage delays that revenue recognition because customers extend leases, temporarily depressing reported earnings. He points to WLFC’s use of JOLCO structures to acquire engines at an effective tax-advantaged discount, boosting returns. Overall, he views $WLFC as materially more attractive in the $140–$150 range and believes risk-on markets could re-rate the stock.

BSD Analysis:
Willis Lease occupies a strategically advantaged niche in the aircraft engine leasing sector, a market benefiting from chronic supply shortages across CFM56, V2500, and certain newer engine families. The constrained OEM production environment gives leasing firms measurable pricing power, raising both fair values and utilization rates. WLFC’s balance sheet is structurally opaque, but economic earnings power is likely understated due to conservative depreciation schedules and deferred maintenance revenue, both of which can create large embedded value not captured in GAAP results. The company’s ability to arbitrage global tax structures via JOLCO financing materially enhances IRRs while preserving liquidity—an advantage not easily replicated by smaller competitors. However, concentration in a capital-intensive, cyclical asset class introduces financing and residual value risk if air travel slows or OEM supply catches up faster than expected. WLFC’s limited float and low investor awareness have historically led to persistent valuation discounts versus intrinsic value. Long-term upside depends on monetizing the fair-value gap in the engine portfolio and scaling high-ROIC financing structures. If engine scarcity persists into 2026–2027, actual earnings could inflect materially higher as deferred maintenance revenue is recognized.

Actual Post Content:
I tend to trade the same names almost like some type of twisted value market maker. I like $WLFC in the low 150s, certainly at 140. At first glance it may appear expensive at 2x Tangible Book and 9x earnings, but that's because the earnings and book value need to be adjusted. Jet engine prices have skyrocketed, and the fair market value of the engines is about $600 Million above book, which would translate into a $66 a share adjustment to book value, bringing it closer to $143. There is also some additional 'book value creation' because the pipeline of engines Willis has ordered has a higher fair market value than the original order price, and so I think you can spitball book value around $150. The earnings are understated for two reasons. First of all the engines are depreciated faster than they actually wear and tear, so EPS is typically understated. Willis also accrues 'unearned maintenance revenue' from its leasing customers, and it earns this revenue and records a gain on the engine once the lease expires. Since there is a shortage of engines, most of $WLFC clients are extending leases, which means this maintenance / restoration revenue isn't realized. Lastly, the company is pushing expansion, and is using some creative financing techniques to grow. They recently used some JOLCOs Japanese Operating Lease with Call Option to purchase some new engines. Essentially, a Japanese bank will purchase the engine for them, and lease it to them at a discounted rate as Japan's tax laws allow the lessor to bonus depreciate the asset, so the bank is essentially buying the asset at a discount, and passes some of that through to Willis. Upon termination of the lease, Willis has the option to buy the engine, so it is essentially just buying engines with a massive tax break by routing the 'lease' through to Japan. I own 600. I think if we go full risk on this is a name worth keeping an eye on. First quarter earnings reporting next week. When I blew out at 204 it seemed a bit overextended and expensive, now much more attractive.

URL: https://x.com/blondesnmoney/status/1918337379875651794

Pitch Summary:
UWM is the #1 wholesale mortgage originator (~44% channel share) positioned to benefit disproportionately if mortgage rates decline over the next 12–18 months. A policy tilt toward lower long-end yields plus cyclical pressures (weaker growth, tariff uncertainty) could ease 10Y rates and stoke refis/purchases, a powerful tailwind for originators. Non-banks have taken share as banks retrench, and brokers are regaining relevance—both structural trends favor UWM’s broker-only model. Management says current tech/AI investments let UWM handle 2–2.5× today’s volumes without adding headcount, implying substantial operating leverage. Wholesale channel share has recovered from ~7% (2011) to ~20% and UWM has grown share within it from ~7% (2014) to ~44% (2024). With ~$139B 2024 volume and capacity exceeding 2021’s $227B peak, even a modest rate-led rebound could lift EPS well above consensus. The author models 2026 adjusted EPS of ~$0.74 (vs. Street ~$0.53) on higher purchase and refi volumes. At a 12× P/E plus dividend, fair value is ~$9.24 (~+90% TSR in 12–18 months). Overhang from CEO Mat Ishbia’s share-backed margin loans has pressured sentiment but doesn’t alter earnings power. Key risks are “higher for longer,” home-price declines, and aggressive competition.

BSD Analysis:
UWM originates agency-eligible loans via independent brokers and retains MSRs on most production, earning origination gains and servicing fees. Setup: Rates have capped housing for 3 years; if the 10Y drifts lower, MBA purchase/refi volumes could beat current conservative assumptions. Differentiator: Singular wholesale focus, deep broker relationships (~13k broker businesses / 55k LOs), and scaled tech create cost and speed advantages versus diversified peers. Earnings power: Management indicates two-thirds of costs are fixed and that current platforms can absorb 2–2.5× volumes—so small rate moves can drive outsized EPS gains. Valuation: At ~$4.88, shares are ~9× 2026E Street EPS but ~6–7× on a more normalized ~$0.74 scenario, with a dividend sweetener. Risks & variant: If rates stay high or home prices fall, volumes and gain-on-sale compress; conversely, a refi wave (negative MBS convexity) could accelerate volumes and support the bull case.

Pitch Summary:
Uber Technologies (UBER) – 5.0% of NAV. Transitioned from cash-burning startup to free cash flow machine with accelerating operating leverage. Emerging leader in mobility and delivery logistics with significant pricing power. Uber Freight and international expansion represent underappreciated growth drivers.

BSD Analysis:
Ashva Capital maintains a bullish stance on Uber Technologies, allocating 5% of NAV to the position as their third-largest holding. The manager emphasizes Uber's successful business model transformation from a cash-burning startup to a profitable, free cash flow generating enterprise with accelerating operating leverage. This operational inflection point demonstrates the scalability of Uber's platform economics and network effects. The investment thesis highlights Uber's emerging leadership position in both mobility and delivery logistics markets, supported by significant pricing power that reflects the company's market dominance and brand strength. The manager identifies underappreciated growth drivers in Uber Freight and international expansion opportunities, suggesting the market is not fully valuing these business segments. This positioning reflects confidence in Uber's ability to monetize its global platform and expand into adjacent markets. The manager appears to view Uber as a mature technology platform with multiple growth vectors rather than a speculative growth story.

Pitch Summary:
ICICI Bank (IBN) – 5.0% of NAV. One of the highest-quality private banks in India with improving asset quality and capital efficiency. Structural beneficiary of India's digital and credit expansion. Trades at a discount to intrinsic value despite 15–20% earnings growth.

BSD Analysis:
Ashva Capital holds a bullish view on ICICI Bank, representing 5% of portfolio NAV as their second-largest position. The manager emphasizes the bank's superior quality metrics among Indian private sector banks, specifically highlighting improvements in asset quality and capital efficiency ratios. The investment thesis is anchored on India's structural growth story, particularly the ongoing digital transformation and credit market expansion that should drive sustained demand for banking services. The manager identifies a compelling valuation opportunity, noting that IBN trades at a discount to intrinsic value despite delivering robust 15-20% earnings growth. This suggests the market is undervaluing the bank's fundamental improvements and growth trajectory. The positioning reflects confidence in India's long-term economic prospects and ICICI's ability to capitalize on the country's financial sector modernization. The manager appears to view the current discount as an attractive entry point for a high-quality financial institution in a rapidly growing market.

Pitch Summary:
Stride Inc. (LRN) – 12.5% of NAV. A direct beneficiary of the secular shift toward online and hybrid education models. Operates a high-margin, recurring revenue business with consistent enrolment growth. Significantly underappreciated optionality in its adult learning and career prep divisions.

BSD Analysis:
Ashva Capital maintains a bullish stance on Stride Inc., positioning it as their largest holding at 12.5% of NAV. The manager views LRN as a structural beneficiary of the ongoing transformation in education delivery models, particularly the accelerating adoption of online and hybrid learning formats. The investment thesis centers on Stride's high-margin, recurring revenue business model that generates predictable cash flows through consistent enrollment growth. The manager highlights significant underappreciated value in the company's adult learning and career preparation divisions, suggesting these segments represent untapped growth potential. This positioning reflects confidence in the durability of remote learning trends and Stride's competitive advantages in the digital education space. The substantial portfolio weighting indicates strong conviction in the company's long-term prospects despite broader market volatility. The manager appears to view current market conditions as creating attractive entry points for quality education technology companies.

Pitch Summary:
Valeura Energy (VLE.TO) is a $550M market cap Canadian oil producer with four producing assets in Thailand. The company has $259M in cash and no debt. It recently reorganized its operations to unlock $400M in tax losses. At the historic 50% tax rate, the tax losses represent ~$200M in incremental cash flow. Insiders own ~19% of the company, and VLE recently announced an NCIB to repurchase 7.4M shares (6.5% of the total). VLE outperformed the S&P 500 and Crude Oil during the quarter (see below). Then oil crashed 20%+ in the first few weeks of April. So, we took profits in VLE and are happy to sit on the sidelines, monitoring oil's price action before re-entering. This is one of those instances where we still love the business, management team, and valuation, but sold to protect capital and reduce portfolio risk. I like saying, "It's nothing personal, just risk management." Remember – no sacred cows. Does the company make money at $60/bbl oil? Sure. But that won't stop the algos and momentum traders from selling it into oblivion. And if you know that, or have a feeling that will happen, why hold if you can put money to work elsewhere? You can always get back in.

BSD Analysis:
The manager presents Valeura Energy as an attractively positioned oil producer with exceptional balance sheet strength and significant tax optimization opportunities. The company's $259M cash position against zero debt provides substantial financial flexibility, while the $400M in unlocked tax losses represent approximately $200M in incremental cash flow at historical tax rates. Strong insider alignment at 19% ownership and aggressive capital allocation through a 6.5% share buyback program demonstrate management confidence. The Thailand-focused production profile offers geographic diversification from North American peers. Despite fundamental strength and quarterly outperformance versus both the S&P 500 and crude oil, the manager executed disciplined risk management by taking profits ahead of oil's 20%+ decline in April. The decision reflects sophisticated understanding of commodity cycle dynamics and algorithmic trading patterns that can drive oversold conditions regardless of company-specific fundamentals. The manager maintains conviction in the business quality while prioritizing capital preservation.

Pitch Summary:
I've written so much about IDR that I'm afraid it's becoming my "Sacred Cow." But that's why I write these reviews – so you can hold me accountable. No stock is too sacred to sell. Anyways, IDR returned 40.43% during the quarter, beating both the S&P 500 and the underlying gold commodity (see below). If you haven't yet, I encourage you to read my four latest IDR write-ups: IDR 2024 Earnings Recap Valuing IDR's Rare Earth Assets Valuing IDR's Gold Assets Knowing What You Own: Idaho Strategic (IDR) The big idea is that IDR has increased significantly since we first started buying – but it's still massively mispriced against its REE package, gold assets, and future production. The company has the four most essential assets in mining in spades: 1. Exceptional management team 2. Tier-1 jurisdiction 3. Fortress balance sheet 4. Long runway for organic production growth IDR's REE asset could be worth its entire market cap, and they have a pathway towards 60,000oz in annual production. They have a waiting list of people who want to work for them and enough treasury notes to cover total liabilities twice over. You get all of this for ~$250M. I spent a lot of time looking for new gold producers to add to our book. But none of them met IDR's standards. And that's a good thing. It means we've found a winner that we should add over time. The stock briefly reached new all-time highs around $19.70/share before retreating to its current price of $16.65/share. I expect IDR to pull back as it digests its run before breaking above $20/share. We haven't sold a share this year, and the stock accounts for approximately 12% of NAV. But as always, can instantly change our minds and exit the entire position in a full risk-off environment.

BSD Analysis:
The manager demonstrates deep conviction in Idaho Strategic Resources, viewing it as a rare combination of gold production and rare earth elements exposure at an attractive valuation. The investment thesis centers on four critical mining success factors: exceptional management, tier-1 jurisdiction (Idaho), fortress balance sheet, and organic growth runway toward 60,000oz annual production. The manager emphasizes the rare earth element asset alone could justify the entire $250M market cap, providing significant optionality beyond gold production. Strong operational metrics include a waiting list for employment and treasury coverage of total liabilities at 2x, indicating robust financial health. The 40.43% quarterly return outperformed both the S&P 500 and gold commodity, validating the manager's thesis. Despite acknowledging potential "sacred cow" bias, the manager maintains 12% portfolio allocation while remaining disciplined about risk management. The pullback from $19.70 to $16.65 is viewed as healthy consolidation before the next leg higher.

Pitch Summary:
We first bought RHM in January. My thesis at the time was (emphasis mine): "Trump will demand Germany/EU to spend more on their defense and military (i.e., rely less on the US) and that RHM is the best-positioned company to meet that future demand. Here's a simple way to frame it: In 2024, Europe spent ~2% of GDP on national defense. Trump wants them to spend at least 3%. A 1% increase would result in an additional EUR 100B in annual spending until 2028 (see the graph below from RHM Investor Day)." I outlined four reasons why I preferred RHM as the way to play this thesis: 1. They're the largest defense company in Germany and the fifth-largest in Europe. 2. They're quickly creating one of the largest military vehicle fleets globally. 3. They were one of the leading defense partners for Ukraine. 4. They have one of the most badass CEOs in the game (Russia/KGB tried to assassinate him at one point) There's a lesson here: If Russia/KGB tries to assassinate your company's CEO, you just buy the stock. Those are the rules. Assassination attempts are worth at least 3-5x EBITDA. In February, I wrote that: "RHM's operating profits should reach around EUR 3.6 billion by 2027, with EUR 1.4B in free cash flow. This puts the current valuation around 11x 2027 operating profits and 27x free cash flow. It's still not expensive, but it's not obviously cheap. That is the sweet spot for some of the best-performing stocks. It's the Trifecta Lens philosophy in action. Take Eli Lilly (LLY), for example. The stock never looked "cheap" – but it didn't matter. It had (arguably) the strongest secular tailwind you could imagine: Lots of people are fat, LLY makes a drug to make people less fat without any effort, and people will pay whatever price to get less fat without any effort." RHM is more expensive today than when I wrote about it in February. We took partial profits in early April (mainly as part of our broader portfolio risk management rules), but still hold a ~6-7% notional position. The stock trades at ~50x next year's earnings, so there's plenty of room to disappoint. But, if we've learned anything from Eli Lilly (LLY), it's that these big secular themes can go longer than we can stay sane. European defense spending should only increase from here. There are even discussions about EU countries expanding their deficits to allocate more funds for defense. We'll gladly hold the rest of our position while the trend continues, but won't hesitate to cut if the trend reverses.

BSD Analysis:
The manager presents a compelling thesis centered on European defense spending acceleration driven by geopolitical pressures. The investment case rests on Rheinmetall's dominant position as Germany's largest defense contractor and Europe's fifth-largest, positioning it to capture disproportionate share of increased military budgets. The manager projects European defense spending to rise from 2% to 3% of GDP, translating to EUR 100B in additional annual spending through 2028. Financial projections show operating profits reaching EUR 3.6B by 2027 with EUR 1.4B in free cash flow, though current valuation at 50x forward earnings suggests limited margin of safety. The secular defense spending tailwind mirrors successful thematic investments like Eli Lilly's obesity franchise. Risk management is evident through partial profit-taking while maintaining conviction in the long-term trend. The manager acknowledges valuation risk but emphasizes the durability of the defense spending cycle.

Pitch Summary:
GSL is a pure-play lessor of containerships with no newbuild orderbook, leaving it highly contracted and capital-disciplined versus carrier owners. At ~$22, it trades near 0.5× book despite ~30% ROE over the past three years and ~$1.9B NAV, implying a large discount to second-hand market values evidenced by recent peer sales. Charter cover is deep: ~$1.88B of contracted revenue with ~2.3-year W.A. life; at ~60% EBITDA margin that equates to ~$1.1B of cash earnings through the book even before option value on re-charters. Unit economics are simple: ~$9–10k/day cash opex + ~$4k/day D&A + ~$7k/day “economic” profit target imply ~$21–22k/day breakeven vs. realized rates around ~$30k/day. Balance sheet is conservative (net debt ~$0–$0.5B range historically; SOFR caps keep interest low into 2026), supporting dividends of ~$2.10/share (with a “base” and supplemental component). Unlike peers (e.g., DAC), GSL focuses on second-hand ships typically acquired against charters, avoiding newbuild timing risk and dry bulk exposure. Even if returns normalize to cost of equity, a 0.8–1.0× P/B makes sense for a contracted rental business; today’s multiple prices in a sharp asset value collapse. Management could extend charters at lower rates for longer tenure, smoothing earnings beyond 2026. Main risks: post-2025 supply bulge, trade/tariff shocks hitting lease demand, asset values falling, and limited buybacks despite the clear discount.

BSD Analysis:
Time-charter lessor (~1% of global container fleet capacity) with high forward visibility; ~80–85% of next-12-month days typically fixed. Setup: Post-COVID, carriers locked in multi-year charters at elevated rates; Red Sea disruptions extended tightness, and carriers remain well-capitalized (default risk low). Differentiation: No newbuilds and a second-hand, charter-backed acquisition model limits cycle timing risk versus peers adding tonnage; no dry-bulk side bets. Economics: With ~$1.88B contracted and ~60% EBITDA margin, back-book cash generation covers a large share of EV; per-vessel breakevens in the low-20s $k/day vs. ~$30k/day fixtures imply robust cushion. Valuation: Trades at ~2.3× 2025E P/E and ~0.5× P/B; a cost-of-capital business should not persist below ~0.8× P/B, particularly with contracted earnings and dividend yield (~9–10%) funding BVPS compounding. Risks: 2025–27 supply deliveries, tariff-driven trade contraction (hits leased tonnage first), asset value downdrafts, and a capital allocation bias to cash build/M&A over buybacks that could prolong the discount.

Pitch Summary:
Kinki Sharyo presents a compelling investment opportunity due to its undervaluation relative to its net current asset value and investment securities. Despite a challenging core business environment, the company's assets, including valuable rental real estate, suggest significant upside potential. The stock is trading at a substantial discount, and the potential for a parent-child takeover by Kintetsu Group adds a speculative element to the investment thesis.

BSD Analysis:
Kinki Sharyo's valuation is attractive, with its net current asset value and investment securities significantly exceeding its market capitalization. The company's rental real estate, conservatively valued at ¥7 billion, further enhances its asset base. Despite historical challenges, including a significant loss in Q2 2016, the company has shown resilience, with book value recovering over time. The recent contract win for assembling heavy rail vehicles for Hyundai Rotem in Los Angeles could provide a revenue boost, though the market has yet to recognize this potential. The company's strategic position could improve if geopolitical tensions limit Chinese competition in international markets. With a dividend yield of 3.5% and a potential takeover by Kintetsu Group, Kinki Sharyo offers a mix of value and speculative upside, making it a noteworthy addition to a diversified portfolio of undervalued Japanese stocks.

Pitch Summary:
During the quarter we entered into a new position in KITS Eyecare, an e-commerce optical retailer which I've followed since their IPO in 2021. The investment thesis for KITS is simple; earnings power should grow significantly during the next 3-5 years. The company is operating a disruptive, low-cost business model, currently at an inflection point, growing 30-35% organically in a huge category with a large TAM, has strong operating leverage, positive cash flow, excellent management, and a net cash balance sheet. We paid less than 18x EBITDA for the above attributes, which I believe will look very cheap in the coming years. Like most of the companies in your portfolio, the best starting point for understanding the attractiveness of our investment is with the management team, particularly KITS Founder, Chairman and CEO Roger Hardy. Roger built a very similar business in the early 2000s called Coastal Contacts, which was ultimately sold to Essilor Luxottica for $430mm in 2014. Coastal was an early pioneer of e-commerce eyecare which helped reveal a strong product market fit that Roger and his co-founders set out to improve upon with KITS. I like to screen for CEOs on their 'second act', where past learnings, mistakes and successes can be applied for our benefit. Roger, COO Joe Thompson and the team check many of our boxes, not only as owner-operators but as a group spearheading a strong corporate and financial culture that would be very difficult to replicate. As you'll see below, KITS is unlike most businesses in the optical industry, where a focus on the customer typically comes second (or third), not first. Along with the favorable culture, KITS management team has engineered this business in a differentiated way as compared to most optical retailers, and in just seven years, have built a better mousetrap for e-commerce eyecare, lending itself to recurring revenue, a strong moat, a significant growth runway, and more. KITS competitive advantages should widen over time. KITS is an e-commerce retailer of contacts, glasses and accessories. The company offers a wide selection of contacts and prescription eyewear with low prices and fast shipping, along with online vision tests and prescription renewals, enabling a superior value proposition for customers versus legacy retailers. This value proposition is made possible in part by KITS ability to take cost out of the value chain by owning their own automated optical labs and selling direct to consumer. Years of investment have enabled KITS to manufacture eyeglasses in-house (as opposed to the traditional model of outsourcing to a third party), made to order in as fast as 30 minutes, while controlling quality and cost, allowing KITS to eschew traditional markups for frames and lenses typically seen throughout the industry. Despite the low price point, you won't find KITS glasses at the checkout line at the drug store. KITS quality and selection are no different than what customers would find at their optometrist office, or similar e-commerce incumbent Warby Parker, not skimping on materials and using prescription polycarbonate lenses, acetate frames, European sourced hinges, and modern designs. Customers can purchase a pair of prescription glasses for as low as $28 and receive them within 1-3 business days, leading to high customer satisfaction and repeat visits. KITS convenient, scalable and limited inventory model has been perfected during the past 7 years, and exceeds all legacy players, who burden customers with long wait times, mandatory eye exams, 1–2-week shipping, and unnecessarily high prices, in some cases between $300-$1,000 dollars for a single pair. In the optical industry, the sale of eyeglasses and lenses specifically drives the majority of industry profits. Despite the apparent simplicity, eyeglasses are complex pieces of technology that require advanced machinery and expertise to manufacture. For most brands, a lack of expertise in manufacturing requires the outsourcing of production to a concentrated group of suppliers, meaning manufacturers can charge significantly higher prices than their costs would suggest is necessary. Industry giant, EssilorLuxottica controls nearly 50% of the industry by owning many parts of the value chain, including retailers, e-commerce players and manufacturing in the form of optical labs. Because of this ownership position built decades ago, Essilor has typically been able to extract rent seeking prices for eyeglasses, despite their low cost of production, given opaque industry pricing and control of the supply chain. As a result, the historical price to value equation has been to the detriment of the consumer. This would make any industry ripe for disruption with optical care being no different. Decades ago, KITS management saw an opportunity to 'make eyecare easy' via a large gap in the market among younger consumers that were both comfortable shopping online for eyecare and would prefer a better consumer experience and more affordable price point, without skimping on quality. In other words, competitor's margins were KITS opportunity. The KITS model works in large part by choosing to make their own products, building quality relationships with suppliers, refusing to build a brick-and-mortar presence, avoiding traditional and costly marketing channels, and keeping prices low. As mentioned, KITS can manufacture a pair of prescription glasses within 30 minutes and have them out the door to a customer that same day. The cost savings that stem from this model are passed along to customers, resulting in a better customer experience via low prices and fast shipping. Although KITS gross margins lag below peers such as Essilor (65%) and Warby Parker (54%), the model requires much lower fulfillment, marketing and G&A expenses. This is a structural moat that would be difficult to breach as it would require a complete overhaul of competitors' cost structure and operating footprint along with a willingness to accept lower prices. The model has been attempted by others with limited success. Early e-commerce players such as Warby Parker focused on selling glasses first by cutting out the middleman (brick and mortar) and offering lower prices. However, selling eyeglasses first is a difficult undertaking given the lack of repeat purchases, upfront cost of acquiring customers and the challenge of retaining them. This path requires significant marketing spend and scale before dollars start rolling in, which is why most e-commerce players have yet to find the formula for profitability. KITS bucked this trend in a major way by selling contacts first. Despite the unattractive financial profile as a commoditized, lower-margin product, this was a great chess move, as contacts drive recurring purchases, meaning these early efforts resulted in customer stickiness and repeat business. Today, nearly 70% of KITS revenue comes from repeat customers, providing the perfect segway to sell eyeglasses, which is a segment of KITS business growing 40% per year. Furthermore, KITS in-house automated manufacturing capabilities took years to build and cost tens of millions of dollars, with the only capital raise to date coming from their 2021 IPO. This is not a business or industry you can attack by throwing money around. Despite a first-mover advantage, and raising hundreds of millions in venture capital, Warby Parker has lost money every year since going public. Aiding KITS execution is the $70B US optical industry, a recession resistant space which has exhibited consistent, stable growth across most economic cycles. The category is also shifting online. Since 2005, online penetration for contacts has grown from 5% to 40%, while sales of eyeglasses grew from 1% to 18%. This shift accelerated rapidly post-COVID, as the online mix for glasses was 6-8% pre-pandemic, and sits above 18% today, while 15% of contacts purchases were made online pre-COVID, increasing to over 40% today. Given global growth in myopia, further online penetration, younger consumer trends and increasing brand awareness, KITS has an enormous runway for growth. Given the above, it's no surprise that KITS has grown tremendously since its founding. Sales have grown at an average rate of 35% since 2019, with no signs of slowing down. In fact, I believe the business is at an inflection point, both company specific and industry wide, allowing growth to persist for the next decade plus. Importantly, this growth has not come at the expense of profitability, with EBITDA margins for FY25 estimated to be in the 6-8% range and growing. Free cash flow margins will remain close to that, as KITS has no debt and limited capex requirements. KITS currently trades for 1.5x sales and 22x my estimate for FY25 EBITDA. Although this does not screen headline cheap, unit economics for eyeglasses are phenomenal. I estimate that KITS has an industry-leading CAC/LTV, by acquiring customers for around $25 who then go on to spend an incremental hundreds of dollars on KITS.com within 6-12 months. Additionally, there are opportunities to improve on nearly every line item of the P&L, and this model should show strong operating leverage over time. Despite nine straight quarters of 30% or more revenue growth, KITS fulfillment costs, G&A, and sales and marketing have all trended downward as a percentage of revenue. Furthermore, this is not a post-COVID explosion in the category, as much of this growth is from incremental spending from repeat customers, while new customer growth has been modest at 7-8% per year. Therefore, I do not believe KITS is experiencing abnormal growth trends. Over time, KITS can capture an ever-bigger share of the industry by following a repeatable and effective playbook. Management believes the business can scale to CAD $250mm in revenues within 2 years, up from CAD $159mm at the end of 2024. Within five years, KITS is aiming for CAD $500mm in sales, at which point 10-15% EBITDA margins are within reach. At that scale, assuming the low-end margin range and no change in multiple, KITS stock would be worth CAD $35/share versus our average cost of around CAD $9/share. Importantly, these targets are not formal guidance, and in my view are conservative. Despite their progress, KITS brand awareness remains low, which provides further room for upside. Should I be wrong about my assumptions, I trust management, as owners, to steer the business in the right direction. An unprofitable, slower-growing Coastal was sold for 2x revenues in 2014, and I believe it's only a matter of time before KITS receives some offers from a larger optical industry player. Let's hope it's further down the road this time.

BSD Analysis:
The manager presents an exceptionally detailed bull case for KITS Eyecare, emphasizing the company's disruptive e-commerce model in the $70 billion optical industry. The investment thesis centers on proven management led by CEO Roger Hardy, who previously built and sold Coastal Contacts to EssilorLuxottica for $430 million. KITS has engineered a superior business model through vertical integration, owning automated optical labs that can manufacture prescription glasses in 30 minutes while maintaining quality comparable to traditional retailers at significantly lower prices ($28 vs $300-1,000). The company's strategic focus on contacts first created recurring revenue streams (70% repeat customers) before expanding into higher-margin eyeglasses growing 40% annually. With 30-35% organic growth, positive cash flow, net cash balance sheet, and trading at less than 18x EBITDA, the manager sees significant operating leverage potential as online penetration accelerates post-COVID. Management targets CAD $500 million in sales within five years with 10-15% EBITDA margins, potentially driving shares to CAD $35 versus the current CAD $9 cost basis.

Pitch Summary:
Within Bel Fuse's operating footprint, around 13% of total revenues are directly exposed to tariffs via China and Mexico. Bel has shown the ability to pass cost increases through to customers, which they anticipate will continue, with minimal impact to Bel's financials. Localized manufacturing will also help offset any further impact. During the past few years, management has proven adept at navigating both internal business issues along with the difficult post-COVID economic environment that has plagued a few of their business segments. A recession would not be ideal for Bel Fuse, and following the acquisition of Enercon, they are leveraged 2.8x. however, management has always shown conservatism and Bel has a cash generative business model that provides a decent margin of safety. My estimate of intrinsic value is between $120-135/share, versus a current price of $67/share.

BSD Analysis:
The manager presents a measured bull case for Bel Fuse despite acknowledging some near-term challenges. With only 13% of revenues exposed to tariffs through China and Mexico operations, the company appears relatively insulated from trade disruptions. Management's demonstrated ability to pass through cost increases to customers should help maintain margins, while localized manufacturing provides additional protection. The investment thesis is supported by management's proven track record of navigating both internal restructuring and post-COVID economic headwinds across various business segments. While the 2.8x leverage following the Enercon acquisition and potential recession risks present concerns, the manager emphasizes management's conservative approach and the company's cash-generative business model as providing adequate downside protection. At $67 per share versus estimated intrinsic value of $120-135, the position offers potential upside of 79-101%, suggesting the market has not fully recognized the company's resilience and value creation potential.

Pitch Summary:
For Leon's Furniture, only a small portion of their business will be directly affected by tariffs. As a Canadian based retailer, Leon's sources goods from countries outside of the US but does derive a small portion of revenues from the US (sub-10%). In addition, they are the largest importer in the country of containers from China, giving them tremendous negotiating leverage and the ability to weather any supply chain storms, as evidenced by their margin profile during and post-COVID when container rates skyrocketed by 5x. This is not a luxury their competitors have, and I would expect Leon's to take incremental market share in an adverse economic scenario, with the window for M&A also opening. Despite Leon's strong performance through all cycles, I believe shares remain priced as if bad news is on the horizon. I peg intrinsic value at CAD $50-60/share versus today's price of CAD $22/share.

BSD Analysis:
The manager's bull thesis for Leon's Furniture emphasizes the company's competitive advantages and resilient business model in the face of potential tariff headwinds. With minimal US revenue exposure (sub-10%) and sourcing primarily from non-US countries, Leon's appears well-positioned to navigate trade disruptions. The company's status as Canada's largest container importer from China provides significant negotiating leverage and supply chain resilience, as demonstrated during COVID when container rates increased 5x yet margins remained stable. This competitive moat should enable market share gains during economic stress while competitors struggle with supply chain challenges. The manager also sees potential M&A opportunities emerging in adverse conditions. Despite the company's consistent performance across cycles, shares appear to be pricing in negative scenarios. At CAD $22 per share, the manager sees substantial upside to intrinsic value of CAD $50-60, representing potential returns of 127-173%.

Pitch Summary:
During FY24, Natural Resource Partners generated $250mm in free cash flow, despite met and thermal coal prices significantly lower than those of the past few years. This is the beauty of the royalty business model, with no ongoing capital requirements and minimal operating expenses. To be clear, free cash flow generated during 2025 will be lower than 2024, but within the next year or so, NRP will have the flexibility to both repurchase units and significantly increase their distributions to unitholders, amounting to a 15-20% yield on the current price. A shutdown of China as a coal export market for the US would not be good for either country, especially as the current administration aims to reinvigorate the coal industry. As a result, it's likely that cooler heads prevail. If not, NRP is nowhere near priced for perfection as intrinsic value lies between $200-250/share versus the current price of $100/share.

BSD Analysis:
The manager presents a compelling bull case for Natural Resource Partners based on its asset-light royalty business model that generated $250 million in free cash flow during FY24 despite depressed coal prices. The thesis centers on NRP's minimal capital requirements and operating expenses, which provide significant cash generation flexibility. While 2025 cash flows are expected to decline, the manager anticipates substantial capital returns to unitholders within a year, potentially yielding 15-20% at current prices. The investment appears positioned to benefit from potential coal industry revitalization under current administration policies. Despite tariff-related trade concerns with China, the manager believes geopolitical pragmatism will prevail. At current levels around $100 per share, the manager sees significant upside to intrinsic value of $200-250, suggesting the market has not fully recognized the company's cash generation potential and distribution capacity.

Pitch Summary:
Unlike Sprouts, Zengame hasn't performed well in terms of share price. From our initial purchase price of HK$1.15/share several years ago, the price reached an all-time high of HK$5.88/share in December 2023 before coming back down to HK$2.26/share today. Despite the depressed stock price, we still think Zengame remains an attractive opportunity. However, the investment thesis has changed, and we are certainly cognizant of that. Zengame continues to have hit games in its portfolio that generate revenue from in-game item purchases and ads. The current flagship game is Fingertip Sichuan Mahjong, and it consistently ranks in the Top 5 in its category on the iOS bestsellers list. Also, Fishing Master is a game that's rising in popularity. The game has broken into the Top 20 lately and may break the Top 10 if the game continues its current growth trajectory. The deep-value valuation multiples are what really make Zengame a compelling investment. Depending on how cash and short-term investments are accounted for, Zengame trades for less than 2x EV/EBIT and the pretax return on invested capital is between 29% and 48%. The company is also currently trading for ~5X earnings and FCF, 0.84x tangible book, and 1.07x NCAV. There's also a 6.6% dividend yield. In other words, the company has all the key metrics stacked in its favor. The company is being priced as if it was in permanent decline. We've seen much worse companies trading at these multiples. So the question then becomes whether or not Zengame can recapture its previous growth in terms of revenues, earnings, and KPIs. For the base case, we would view Zengame as a no-growth company going forward. This is a pessimistic view, but it's best to go with this conservative scenario. Even in a no-growth situation, there's enough delta between the base case and the market's perception of the company for us to make money on the stock. The floor valuation has already been established. If the company does in fact continue to grow, there likely will be significant upside in the share price. Continued growth from Mahjong isn't out of the question, and it seems like there will be more growth from Fishing Master going forward. All the other games in Zengame's gaming portfolio are also free options. Any of their existing games could explode in popularity. Overseas revenue is another way the company could grow. At current prices, it pays to be invested to see what Zengame can do over the next two to three years. All high-growth companies go through bad quarters and years at some point. Regardless of whether or not the slowdown is temporary or permanent, our downside is protected going forward. If the stock price goes any lower, it would qualify as a Graham net-net. Even in that scenario, we would be happy to own the company. Zengame would certainly be one of the highest quality net-nets globally.

BSD Analysis:
RF Capital maintains a contrarian bullish position in Zengame Technology despite significant share price volatility, with the stock declining from HK$5.88 to HK$2.26 after their initial purchase at HK$1.15. The manager acknowledges the investment thesis has evolved but remains attracted to the company's deep-value metrics including sub-2x EV/EBIT, 29-48% pretax ROIC, 5x P/E and FCF multiples, 0.84x tangible book, 1.07x NCAV, and 6.6% dividend yield. The gaming portfolio shows promise with Fingertip Sichuan Mahjong consistently ranking Top 5 in its iOS category and Fishing Master gaining traction in the Top 20. The manager adopts a conservative base case assuming no growth, yet believes significant upside exists if the company can recapture previous momentum through existing games, new releases, or overseas expansion. The investment represents a classic deep-value opportunity where downside protection is substantial given the extreme valuation discount, while multiple catalysts could drive meaningful appreciation. RF Capital views the current pricing as overly pessimistic and sees asymmetric risk-reward favoring patient value investors over the next 2-3 years.

Pitch Summary:
Sprouts continues to perform well and has posted strong Q1 2025 results. QoQ, SFM's net sales, comp store sales, and diluted EPS growth increased by 18.7%, 11.7%, and 61.6%, respectively. The high EPS growth rate may or may not be sustainable over the long term. However, SFM is currently executing at a high level. The gross and EBIT margin profile continues to improve. SFM also continues to open new stores. For FY2025, management is projecting at least 35 new stores. This is certainly doable and is actually shy of their target store count growth rate of 10%. We would like to see them hit that target, but it's best to be prudent going forward in the current environment. Comparable store sales growth also looks great and comes at a time when other retailers are struggling. E-commerce sales has been growing at a high rate as well. The addition of Uber Eats as a partner has certainly helped. Going forward, Sprouts will continue to benefit from tailwinds based on current healthy living and wellness and longevity trends. The company's upside potential also remains strong given a potential store count of 1,200 stores in the US. Currently, there are 443 stores in 24 states. As long as they keep opening new stores and maintain decent comp store sales going forward, SFM still has a long runway for growth. Additionally, the customer loyalty program that is currently being rolled out will be a comp driver for 2026 and beyond. Our only concern with SFM is the elevated valuation multiples. As value investors, we prefer to own companies that are optically cheap. However, SFM's current valuation is certainly justified given the growth in sales and earnings. For that reason, we continue to hold SFM. The valuation isn't egregious, and we are perfectly content with maintaining our position. From our initial purchase price of $15-$16/share to the current share price of ~$172, it's been quite the ride. SFM is the perfect case study for why it pays to hold investments for the long term - even if it feels boring to hear about and see the same company in the portfolio year after year.

BSD Analysis:
RF Capital maintains a bullish stance on Sprouts Farmers Market, highlighting exceptional operational execution with Q1 2025 results showing 18.7% net sales growth, 11.7% comp store sales growth, and 61.6% EPS growth. The manager emphasizes SFM's strong fundamentals including improving gross and EBIT margins, continued store expansion with 35 new locations planned for FY2025, and robust e-commerce growth enhanced by the Uber Eats partnership. The investment thesis centers on secular tailwinds from health and wellness trends, significant expansion runway (443 current stores vs. 1,200 potential), and upcoming customer loyalty program benefits. While acknowledging elevated valuation multiples as a concern, the manager justifies the premium based on strong growth metrics and views the current valuation as reasonable rather than egregious. The position represents a massive winner, appreciating from an initial cost basis of $15-16 per share to approximately $172, demonstrating the power of long-term compounding in quality growth stories. RF Capital continues holding despite valuation concerns, confident in the company's execution and long-term growth trajectory.

Pitch Summary:
We initiated a new investment in Dollar Tree during the first quarter, as the company's announced divestiture of Family Dollar put shares back on our radar. We continue to see significant upside potential from the roll-out of higher price points, which should be much clearer to the market without the noise of a decade-long restructuring in the background. Subsequent to quarter-end, and 48 hours after "Liberation Day," we aggressively increased our position, as shares plummeted ~ 20% in the two days following the announcement.

BSD Analysis:
Broyhill initiated a position in Dollar Tree following the announced Family Dollar divestiture, viewing this as a catalyst to unlock value in the core business. The fund believes the separation will eliminate the "noise" from Family Dollar's decade-long restructuring, allowing investors to focus on Dollar Tree's fundamental strengths. The rollout of higher price points represents a significant growth opportunity that should become more visible without the distraction of underperforming assets. Management's decision to divest Family Dollar suggests a strategic focus on optimizing the core Dollar Tree format and operational efficiency. The fund's aggressive position increase following a 20% post-"Liberation Day" decline demonstrates strong conviction in the investment thesis and opportunistic capital deployment. Higher price points should drive margin expansion and revenue growth while maintaining the value proposition that attracts price-conscious consumers. The simplified business structure and strategic focus create a clearer path to improved financial performance and valuation re-rating.

Pitch Summary:
We initiated a new investment in Uber, the largest ride-share and food delivery provider globally. With investors increasingly focused on the threat from driverless technology, which we believe is at least years away from having any material impact on Uber's business, we think the market is overlooking the incredible benefits of scale currently driving (pun intended) outsized growth in profitability and surging free cash flow. We expect CEO Dara Khosrowshahi to follow a similar playbook to the one he developed at Expedia, where he was a consistent buyer of stock, ultimately repurchasing nearly a third of the company's shares outstanding during his tenure.

BSD Analysis:
Broyhill initiated a new position in Uber, viewing autonomous vehicle concerns as premature while the company benefits from powerful scale advantages. The fund believes driverless technology threats are "years away" from meaningful impact, allowing Uber to capitalize on its dominant market position in ride-sharing and food delivery. Current scale benefits are driving "outsized growth in profitability and surging free cash flow," indicating the business model is reaching maturity and generating substantial returns. CEO Dara Khosrowshahi's track record at Expedia, where he repurchased nearly one-third of shares outstanding, suggests a shareholder-friendly capital allocation approach. The market's focus on long-term disruption risks appears to be overshadowing near-term fundamental improvements and cash generation capabilities. Uber's global leadership position in multiple transportation and delivery markets provides defensive moats and growth optionality. The combination of improving profitability, strong free cash flow generation, and experienced management creates an attractive investment proposition.

Pitch Summary:
Shares of Six Flags declined 26% during the quarter, as investors became increasingly concerned about the potential for reduced discretionary spending amidst slowing economic growth. We think these fears are misplaced, as regional theme park attendance has historically proven remarkably resilient throughout previous recessions. And following its recent combination with Cedar Fair, the combined company has several levers at its disposal to drive operational improvements and optimize its balance sheet.

BSD Analysis:
Broyhill maintains a contrarian bullish view on Six Flags despite market concerns about discretionary spending pressures. The fund's investment thesis rests on the historical resilience of regional theme park attendance during economic downturns, suggesting the business model has defensive characteristics that the market is overlooking. The recent merger with Cedar Fair creates significant operational synergy opportunities and balance sheet optimization potential. Management now has multiple levers to drive performance improvements, including cost synergies, revenue optimization, and capital allocation efficiency. The 26% decline appears to reflect excessive pessimism about consumer discretionary spending, creating an attractive entry point for a business with proven recession resilience. Broyhill's confidence in the defensive nature of regional theme parks contrasts with market fears, positioning the investment as a potential beneficiary when economic concerns prove overblown. The combination creates a larger, more diversified platform with enhanced operational flexibility.