Investment Pitches

Pitch Summary:
Sanuwave Health is a medical device company in the wound care space. They help patients who have open wounds — such as ulcers — to speed up the process by using a non-contact ultrasound device called 'UltraMist.' The procedure is largely covered by insurance but has historically operated in an industry where plenty of Medicare fraud occurs (skin grafts). In Q3'25, CMS dropped the hammer on the skin graft fraud by limiting how much could be covered under the old way of doing things. This put pressure on the stock, given the uncertainty on reimbursement rates or changes to CPT coverage codes could affect the business. SNWV got the clarity needed and is now able to take advantage of the changing landscape in its favor going forward. This is on the heels of a highly successful debt refinancing in September of last year, along with a better-than-feared Q4'25, in which other competitors saw deteriorating results. SNWV is small, but has a proven product, a long runway in the wound care space now that CMS guidance has been officially updated, and the CEO looks open to potentially a buyer coming in at some point as an additional call option.

BSD Analysis:
Cedar Grove presents a compelling turnaround story for Sanuwave Health, positioning the company to benefit from regulatory changes that initially created uncertainty but ultimately favor SNWV's business model. The manager highlights how CMS's crackdown on Medicare fraud in the skin graft space in Q3'25 initially pressured the stock due to reimbursement concerns, but SNWV has since received favorable clarity that positions it advantageously versus competitors. The company's UltraMist non-contact ultrasound technology for wound care represents a proven product with insurance coverage in a large addressable market. SNWV's financial position has been strengthened through a successful debt refinancing in September, and the company delivered better-than-expected Q4'25 results while competitors struggled. The manager views the updated CMS guidance as providing a long runway for growth in the wound care space. Additionally, the CEO's openness to potential acquisition provides an attractive call option for investors. The combination of regulatory tailwinds, proven technology, improved balance sheet, and potential strategic value creates a compelling risk-adjusted opportunity in the small-cap medical device space.

Pitch Summary:
Mass shootings are unfortunately becoming more commonplace in the U.S. these days, with the number through the end of March 31st already up 35% y/y. EVLV aims to help with that by providing various customers (arenas, government buildings, hospitals, educational centers, etc) with AI-integrated hardware that can detect different forms of firearms and knives before they can become a threat. EVLV has >1,000 customers and deployed >8,000 systems to-date. The company operates via hardware + software (SaaS) while allowing customers to either buy the hardware outright with a lower subscription contract or a lower hardware price with a higher subscription contract. This mix shift has led the company to end FY'25 with >$120 million in ARR (+21.3% y/y), inflecting positive on a cash flow basis and sitting on a net cash pile (~$40 million). Once again, we are bullish companies with strong tailwinds, and while, unfortunately, the tailwinds here are mass shootings, they don't seem to be coming down anytime soon, which allows EVLV to continue compounding.

BSD Analysis:
Cedar Grove presents a compelling but sobering bull case for Evolv Technologies, driven by the unfortunate reality of increasing mass shooting incidents in the U.S., which rose 35% year-over-year through March 31st. The manager views EVLV's AI-integrated security screening technology as addressing a critical and growing market need across diverse venues including schools, hospitals, and government buildings. The company has achieved meaningful scale with over 1,000 customers and 8,000 deployed systems, demonstrating market validation and adoption. EVLV's flexible business model offering both hardware purchase and subscription options has driven strong recurring revenue growth, with ARR reaching $120 million (+21.3% y/y) by FY'25 end. The company has reached an important inflection point with positive cash flow generation and maintains a strong balance sheet with approximately $40 million in net cash. The manager acknowledges the unfortunate nature of the tailwinds but views the persistent security threat environment as providing sustained demand for EVLV's solutions. EVLV was noted as one of the quarter's biggest contributors to performance.

Pitch Summary:
The RealReal is a domestic omnichannel luxury resale retailer that is capitalizing on the second-hand fashion movement that is taking the U.S. by storm. While many investors are worried about traditional luxury retailers facing various headwinds (LVMH just had their worst year since the GFC), and the value-oriented consumer getting squeezed from the opposite end, REAL gets misunderstood as falling into one or both of those categories. We feel like this understanding is incorrect, and REAL operates in its own unique category (second-hand luxury) that is growing almost twice as fast as regular luxury (11.6% vs 5.2%). Even though REAL operates in its own category, the company's business model only works if it's able to expand its supply in order to drive more demand. A delicate balance between the two. REAL has already done well to unlock further supply from customers across the country (tariff-free), which has driven higher gross merchandise value (GMV), revenue, and adjusted EBITDA. With the help of AI being able to increase throughout for product authentications and listings, operating leverage has started to show. The company is once again guiding for a double-digit topline growth year with ~200bps of adjusted EBITDA margin expansion in FY'26. With strong tailwinds, growth in GMV, and margin expansion, REAL should be able to capitalize on the massive consumer shift to second-hand merchandise and the benefits of AI.

BSD Analysis:
Cedar Grove presents a differentiated bull thesis for The RealReal, arguing that the market misunderstands the company's positioning within the luxury ecosystem. The manager emphasizes that REAL operates in the second-hand luxury category, which is growing at 11.6% versus 5.2% for traditional luxury, insulating it from broader luxury retail headwinds. The investment case centers on REAL's ability to balance supply and demand dynamics, having successfully expanded its supply base nationwide while driving higher GMV and revenue. The integration of AI for product authentication and listings is creating meaningful operating leverage, evidenced by the company's guidance for double-digit revenue growth and 200 basis points of adjusted EBITDA margin expansion in FY'26. The manager views the secular shift toward second-hand merchandise as a powerful tailwind that REAL is well-positioned to capture. However, REAL was identified as one of the quarter's biggest detractors, suggesting near-term execution challenges despite the compelling long-term secular trends.

Pitch Summary:
KITS is a vertically integrated Canadian-based DTC contact and eyeglass company that does business in both Canada and the U.S. The CEO is having his "second act" with KITS after selling his first optical company (Coastal Contacts) in 2014 for ~$430 million CAD. Unlike other DTC-native companies like Warby Parker (WRBY), KITS started its business by selling low-margin, but high-retention contacts instead of eyeglasses. This allowed them to create a sticky business while slowly building out the higher-margin eyeglass business, all while avoiding building out a capital-intensive retail presence. This has allowed them to grow to $200M CAD in LTM sales in just eight years. With a net cash position, positive adjusted EBITDA, and good capital allocation, we feel that KITS will be able to compound its business for years to come.

BSD Analysis:
Cedar Grove presents a compelling bull case for KITS Eyewear based on its differentiated business model and strong financial position. The manager highlights the CEO's proven track record, having previously sold Coastal Contacts for $430 million CAD, which provides credibility to the current venture. KITS' strategic approach of starting with low-margin but high-retention contact lenses creates customer stickiness while gradually expanding into higher-margin eyeglasses, avoiding the capital-intensive retail buildout that competitors like Warby Parker required. The company has achieved impressive scale with $200 million CAD in LTM sales within eight years of operation. The investment thesis is strengthened by KITS' strong balance sheet featuring a net cash position, positive adjusted EBITDA generation, and disciplined capital allocation. The manager views this combination of factors as positioning KITS for sustained long-term compounding. However, KITS was noted as one of the quarter's biggest detractors, suggesting near-term execution challenges despite the long-term thesis.

Pitch Summary:
Last year we invested in CoStar with a simple thesis: value in the company's core commercial business could be unlocked by improving a deficient board that for years had blessed large investments in a failing venture, Homes.com. Despite our efforts, CEO Andy Florance has continued what can only be seen as a reckless drain on a majority of the company's operating income into Homes.com and related acquisitions even as the share price has continued to plummet. It appears to us that Mr. Florance's obsession with Homes.com has diverted attention from core business areas, calling into question management's ability to maintain a competitive edge in Apartments.com and the CoStar Suite in a rapidly changing market and with no apparent plan for a world increasingly shaped by AI. When we suggested earlier this year that additional change was needed at the Board level, the Company responded by further entrenching Mr. Florance with a "golden parachute," changing its reporting structure to seemingly obscure Homes.com's woeful financial performance within a newly created segment, and engaging in an aggressive PR campaign against certain of its own concerned owners. We no longer believe that our original thesis holds true today and have disposed of our position in its entirety.

BSD Analysis:
Third Point's exit from CoStar represents a failed activist investment where management refused to address value-destructive capital allocation. The original thesis focused on unlocking value in CoStar's profitable commercial real estate business by curtailing losses from the struggling Homes.com venture. However, CEO Andy Florance continued investing heavily in Homes.com despite mounting losses and shareholder pressure. Third Point argues this obsession has diverted management attention from core businesses like Apartments.com and CoStar Suite, potentially compromising competitive positioning in an AI-disrupted market. The company's defensive response included entrenching Florance with enhanced compensation, restructuring reporting to obscure Homes.com losses, and launching PR campaigns against concerned shareholders. This governance breakdown and continued value destruction led Third Point to abandon their activist approach and exit entirely. The case highlights risks when management teams resist shareholder input on capital allocation, particularly when pursuing pet projects that drain resources from profitable core operations.

Pitch Summary:
We initiated a position in Indra Sistemas, an emerging national defense champion in Spain, in 2025. While Spain still consistently underspends on defense compared to NATO targets, it has committed to increasing defense spend as a percentage of GDP from ~1.4% to ~2% and to allocating most of this to local companies. Indra has, in our assessment, emerged as the national champion thanks to its unparalleled deep technical expertise in radar systems, counter-drone systems, military simulators, cyber and space while also acting as a systems integrator on major European programs. The company reported stellar Fourth Quarter earnings at the end of February and showed a defense backlog that nearly quadrupled year-over-year. Of the 31 special modernization projects (PEMs) the Spanish government allocated in the back half of 2025, Indra won allocations on 29. Management commented that they expect a similar level of PEMs in 2026, implying Indra could exit the year with a backlog approaching €20 billion, up from just €3 billion exiting 2024. The company is also performing well outside of its defense business, with Minsait (IT Services/AI/Cyber) growing double digits on the back of double-digit backlog growth, and major recent wins in Air Traffic Management and Mobility with the FAA and London Underground, respectively. Indra is scheduled to host an analyst day during 2Q, and we would not be surprised to see the management team bring forward 2030 financial targets to 2029. While a recent standoff between the Spanish government and Indra's former Executive Chairman – who was considering the sale of his family's privately owned defense business to Indra – created boardroom drama and volatility in the stock, we see a path to a constructive resolution and remain confident in the Company's trajectory towards market consolidation and continued consistent execution. We believe this will benefit shareholders, employees and the Spanish state. Indra remains in our analysis one of the fastest growing defense companies in Europe, yet trades at half the multiple of peers. We see substantial upside ahead.

BSD Analysis:
Third Point presents a compelling bull case for Indra Sistemas as Spain's emerging defense champion positioned to benefit from increased NATO defense spending commitments. The investment thesis centers on Spain's commitment to raise defense spending from 1.4% to 2% of GDP, with most allocation directed to domestic companies like Indra. The company's technical expertise across radar systems, counter-drone technology, military simulators, cyber, and space capabilities positions it as a systems integrator on major European defense programs. Fourth quarter results demonstrated exceptional execution with defense backlog nearly quadrupling year-over-year, winning 29 of 31 Spanish government modernization projects. Management expects similar project allocation in 2026, potentially driving backlog from €3 billion to €20 billion. Beyond defense, the Minsait division shows strong double-digit growth in IT services and AI, with notable wins including FAA and London Underground contracts. Despite recent boardroom drama involving the former Executive Chairman, Third Point sees a path to resolution and views the valuation as attractive at half the multiple of European defense peers.

Pitch Summary:
The decision to hold Duolingo is based on the belief in the founder's vision and the company's long-term growth potential, despite recent slower revenue growth. The founder's commitment to not selling shares is seen as a positive signal of confidence in the company's future. The focus on user growth over immediate monetization is viewed as a strategic move for long-term health. The company's moat and quality scores indicate strong operational excellence and cash efficiency, although there are concerns about growth efficiency. The investment thesis emphasizes the potential for Duolingo to become a 'harvester' in the future, rather than a 'hamster-wheel' company.

BSD Analysis:
The investment thesis for Duolingo is rooted in the belief that the company's strategic focus on user growth will eventually lead to significant shareholder value. The founder's decision to retain shares is interpreted as a strong vote of confidence, suggesting that the company is on a path to sustainable growth. Despite a moderate moat score, Duolingo's quality score reflects its operational strengths, particularly in cash efficiency and pricing power. The decision to hold is also influenced by the idea that setting rigid revenue growth targets could lead to premature selling of potentially valuable long-term investments. The comparison to other long-term holding strategies, like the Voya Corporate Leaders fund, underscores the belief in the potential benefits of a patient investment approach.

Pitch Summary:
Proceeds were reinvested in areas that offer better value, such as the shares of Intact Financial. The team has been increasing its position in Intact as concerns of a tougher auto insurance cycle in the U.S. have weighed on its valuation, despite it not having material exposure in U.S. auto insurance. Intact remains a globally diversified and best-in-class P&C insurer. Its current valuation presents another opportunity for mispriced quality.

BSD Analysis:
QV is increasing its position in Intact Financial, viewing recent weakness as a mispricing opportunity. The stock has been pressured by concerns about a challenging U.S. auto insurance cycle, despite the company having minimal exposure to this segment. This market misunderstanding has created an attractive entry point for a best-in-class property and casualty insurer. Intact's global diversification and strong operational track record position it as a high-quality franchise trading at a discount. The team's conviction in adding to the position reflects their confidence in the company's fundamentals and their ability to identify quality businesses that are temporarily mispriced due to sector-wide concerns. The valuation disconnect presents compelling risk-adjusted return potential.

Pitch Summary:
A side beneficiary of the AI boom has been Toromont Industries, an Eastern-based heavy equipment dealer in the Canadian equity strategy. The promise of strong end market demand for its refrigerant cooling business (CIMCO) from overheated AI centers lifted its shares to a level that warranted a trim to manage valuation risk. Proceeds were reinvested in areas that offer better value, such as the shares of Intact Financial.

BSD Analysis:
QV took profits on Toromont Industries after the stock appreciated significantly due to AI-related demand for its CIMCO refrigeration business. The company benefited from expectations of strong demand for cooling systems from AI data centers, which drove shares to levels that exceeded the team's valuation targets. This prompted a disciplined trimming of the position to manage valuation risk, demonstrating the team's commitment to selling when prices become stretched. The proceeds were redeployed into more attractively valued opportunities, reflecting active portfolio management and adherence to valuation discipline. While Toromont remains a quality business, the AI-driven premium warranted profit-taking to optimize risk-adjusted returns.

Pitch Summary:
The global small cap team purchased a business that was caught up in the AI displacement scare during the quarter. Rightmove PLC is a market share leading digital platform that facilitates 80%+ real estate activity in the United Kingdom. At its core, Rightmove is a data business in the UK real estate market with decades of proprietary data and sufficient scale to innovate and maintain its lead position. AI fears have pressured its shares lower, opening up an attractive entry point as the team believes its data integrity and AI innovations are likely to unlock greater value add, rather than being restrictive to its growth outlook.

BSD Analysis:
QV's global small cap team opportunistically acquired Rightmove during AI-related market fears, viewing the selloff as creating an attractive entry point. The company's dominant market position, facilitating over 80% of UK real estate activity, provides significant competitive advantages and network effects. The investment thesis centers on Rightmove's extensive proprietary data accumulated over decades, which creates substantial barriers to entry and switching costs. Rather than viewing AI as a threat, the team believes the company's data integrity and scale position it to leverage AI innovations for enhanced value creation. The market's overreaction to AI displacement concerns has created a compelling valuation opportunity for a high-quality digital platform with strong fundamentals and growth prospects.

Pitch Summary:
Fortunately, our global equity team established a position in oilfield services provider Haliburton in early January. The investment thesis was centered on a low valuation and strong free cash flow generation, despite what was expected then to be sluggish end market demand for its services. Management's capital allocation discipline was a decisive factor as the team planned for efficiencies to free up additional cash flow for improved shareholder return activity. The shares have benefited from the higher energy price backdrop since then, but the thesis was not reliant on the supply shock.

BSD Analysis:
QV's global equity team initiated a position in Halliburton based on attractive valuation metrics and strong free cash flow generation capabilities. The investment thesis was contrarian, established when end market demand was expected to be weak, demonstrating the team's value-oriented approach. Management's disciplined capital allocation strategy was a key factor, with plans to improve operational efficiencies and enhance shareholder returns through increased cash flow generation. While the position has benefited from the subsequent energy price surge due to geopolitical tensions, the original thesis was fundamentally driven rather than dependent on commodity price movements. This bottom-up approach has proven successful as the shares appreciated following the supply shock, validating the team's fundamental analysis and timing.

Pitch Summary:
One of these existing positions is Cargojet Inc., with shares that have incrementally cheapened as its international transport services have underperformed expectations recently. Its domestic air cargo franchise remains robust and continues to hold a 90%+ market share in Canada. The majority of its flight services are under contract, providing inflation passthrough protection, earnings stability and growth in shareholder distributions. Its lower valuation provides a margin of safety should cyclical headwinds become a larger factor. At the same time, the current share price offers an attractive valuation for this growing air cargo transport business.

BSD Analysis:
QV Investors maintains a bullish stance on Cargojet despite recent underperformance in international operations. The investment thesis centers on the company's dominant domestic franchise with over 90% market share in Canadian air cargo, providing significant competitive moats. The contracted nature of most flight services offers inflation protection and earnings stability, which is particularly valuable in the current inflationary environment. Management's focus on shareholder distributions adds to the investment appeal. The recent valuation compression creates an attractive entry point with a margin of safety, while the long-term growth prospects for air cargo transport remain intact. The team views current weakness as a buying opportunity rather than a fundamental deterioration.

Pitch Summary:
Last year we invested in CoStar with a simple thesis: value in the company's core commercial business could be unlocked by improving a deficient board that for years had blessed large investments in a failing venture, Homes.com. Despite our efforts, CEO Andy Florance has continued what can only be seen as a reckless drain on a majority of the company's operating income into Homes.com and related acquisitions even as the share price has continued to plummet. It appears to us that Mr. Florance's obsession with Homes.com has diverted attention from core business areas, calling into question management's ability to maintain a competitive edge in Apartments.com and the CoStar Suite in a rapidly changing market and with no apparent plan for a world increasingly shaped by AI. When we suggested earlier this year that additional change was needed at the Board level, the Company responded by further entrenching Mr. Florance with a "golden parachute," changing its reporting structure to seemingly obscure Homes.com's woeful financial performance within a newly created segment, and engaging in an aggressive PR campaign against certain of its own concerned owners. We no longer believe that our original thesis holds true today and have disposed of our position in its entirety.

BSD Analysis:
Third Point's exit from CoStar represents a failed activist campaign where management entrenchment ultimately prevailed over shareholder concerns. The original thesis focused on unlocking value in CoStar's profitable commercial real estate business by curtailing losses from the struggling Homes.com venture. However, CEO Andy Florance continued aggressive investment in Homes.com despite poor performance, draining operating income from core businesses. Third Point argues this misallocation has compromised CoStar's competitive position in Apartments.com and CoStar Suite, particularly concerning given the lack of AI strategy in a rapidly evolving market. Management's defensive response included implementing a golden parachute for Florance, restructuring reporting to obscure Homes.com losses, and launching PR campaigns against concerned shareholders. The complete position exit signals Third Point's conclusion that the governance issues are intractable and value creation unlikely under current leadership.

Pitch Summary:
We initiated a position in Indra Sistemas, an emerging national defense champion in Spain, in 2025. While Spain still consistently underspends on defense compared to NATO targets, it has committed to increasing defense spend as a percentage of GDP from ~1.4% to ~2% and to allocating most of this to local companies. Indra has, in our assessment, emerged as the national champion thanks to its unparalleled deep technical expertise in radar systems, counter-drone systems, military simulators, cyber and space while also acting as a systems integrator on major European programs. The company reported stellar Fourth Quarter earnings at the end of February and showed a defense backlog that nearly quadrupled year-over-year. Of the 31 special modernization projects (PEMs) the Spanish government allocated in the back half of 2025, Indra won allocations on 29. Management commented that they expect a similar level of PEMs in 2026, implying Indra could exit the year with a backlog approaching €20 billion, up from just €3 billion exiting 2024. The company is also performing well outside of its defense business, with Minsait (IT Services/AI/Cyber) growing double digits on the back of double-digit backlog growth, and major recent wins in Air Traffic Management and Mobility with the FAA and London Underground, respectively. Indra is scheduled to host an analyst day during 2Q, and we would not be surprised to see the management team bring forward 2030 financial targets to 2029. While a recent standoff between the Spanish government and Indra's former Executive Chairman – who was considering the sale of his family's privately owned defense business to Indra – created boardroom drama and volatility in the stock, we see a path to a constructive resolution and remain confident in the Company's trajectory towards market consolidation and continued consistent execution. We believe this will benefit shareholders, employees and the Spanish state. Indra remains in our analysis one of the fastest growing defense companies in Europe, yet trades at half the multiple of peers. We see substantial upside ahead.

BSD Analysis:
Third Point presents a compelling bull case for Indra Sistemas as Spain's emerging defense champion positioned to benefit from increased NATO defense spending commitments. The investment thesis centers on Spain's commitment to raise defense spending from 1.4% to 2% of GDP, with most allocated to domestic companies like Indra. The company's technical expertise across radar systems, counter-drone technology, military simulators, cyber, and space capabilities positions it as the clear national champion. Fourth quarter results demonstrated exceptional execution with defense backlog nearly quadrupling year-over-year, winning 29 of 31 government modernization projects. Management expects similar project allocations in 2026, potentially driving backlog to €20 billion from €3 billion in 2024. Beyond defense, the Minsait division is delivering double-digit growth with major international wins including FAA and London Underground contracts. Despite recent boardroom drama, Third Point sees a path to resolution and views the valuation as attractive at half the multiple of European defense peers.

Pitch Summary:
Virtu Financial is one of a small number of US based technology-driven market makers with a significant execution services business. It is the only publicly listed pure liquidity provider domiciled in the US, with the only other such global public company being the Amsterdam based, Netherland listed Flow Traders. We last wrote in detail about Virtu in September 2023, when the shares were $17.27 and utterly out of favour, with volatilities in US equities having fallen away to their lowest realised level in two years and equities volumes tracking at some 10.4 billion shares per day in that quarter. Since then, realised volatility – whilst variable – has improved significantly, but US equities volumes have recently been averaging over 20 billion shares per day in March 2026. Consequently, the shares have advanced 155% to $43.98 and paid $2.40 in dividends for a total return of 169% in two and a half years. Before turning to the specifics of why we are still own Virtu as a significant position and a beneficial pivoting at the company, it's necessary to assess what has changed about market environments in the past thirty months and understand the "plumbing" underpinning US equities markets. We accept that some of this is (beneficially) cyclical but much is also structural, perhaps driven by the permissive nature of financial markets under the present US administration. However, we argue that the evolving nature of Virtu's business and capital allocation importantly provides a counter-balance to a cycle-peak argument. Virtu's publicly traded market capitalisation of $3.8 billion at end March, and fully diluted capitalisation of $6.8 billion, is well below other beneficiaries of the structural trends we outline below. Our analysis is framed exclusively on US equities markets, whilst acknowledging Virtu's role in crypto and other non-US equity market making. We do so since US equities represent Virtu's most transparent marketplace, with extensive data, and show the way forward for selected trends to be replicated elsewhere. Strategic improvements from changes in capital management practices. Without disputing that buying the shares at cyclical low points should be advantageous, as has been the case with global mining companies in recent years, there is scope for a re-rating based around strategic changes to make the business more profitable. In Virtu's case, the strategic change potentially revolves around the commitment of more capital to the business, rather than the typical Wall Street obsession of consistently returning capital to shareholders. As greater competition has entered the liquidity provider market, Virtu's share of US equities traded has fallen away. To a degree, that hasn't mattered, since trade reporting facility shares of US equities transactions have risen from c.40% to 50% share over the past six years, and total volumes have expanded dramatically. Part of the reason for this decline is the growth in capital at Citadel (and especially at Jane Street) as well as the interplay between option and physical markets where Virtu is not as well represented together with the higher shares of ETF creation/arbitrage/pricing by Jane Street. Despite being (intensely) private businesses, both Citadel and Jane Street have grown their capital basies at a significantly higher rate than Virtu over the past few years. In January 2022, Citadel Securities (not the hedge fund) sold 5% of its business to Sequia/Paradigm for $1.15 billion (effective valuation $23 billion THEN). We are aware that Citadel has trading capital of some $16 billion – far outstripping Virtu – having raised bonds of $1.2 billion in June 2025 and a further $1.25 billion – roughly half of which was a refinancing in February 2026. With extreme profitability, and capital retention, media reports suggest Jane Street grew its equity base from $3.8 billion to $29.9 billion in the six years between 2019 – 2025 implying retention of over $4 billion per annum. In addition, the business has been able to supplement this with $10.7 billion of debt; the same media sources suggest "trading revenue" (undefined) was $21 billion globally for Jane Street in 2025. This has been a real issue for Virtu, because at the same time as its competitors have been raising and retaining capital, Virtu has been handing its capital back. With $1.4 billion of buybacks since 2020 and an estimated $2.63 billion in dividends (set at $0.24/quarter) plus minority interest payments because of the hybrid structure, Virtu has paid away over $4 billion since 2017 which it has had to supplement with debt. In our opinion, whatever the laudable reason behind that capital strategy when it was originated, circumstances have now changed. Competition is more intense and has massive capital resources. Additionally, as was noted on the earnings conference call for Q42025 by COO Joe Molluso: "If you look at historical returns on capital, I don't expect them to be 100%. But if they're in the, you know, 50%, 60%, 70% range, you, you can do the math and figure out that we would expect to be able to deploy more capital than we have today. And we will achieve that through organic growth, and we'll achieve it through, you know, incremental borrowings to the extent they make sense and, and they're prudent, right?" Allying these comments with the virtual absence of buybacks in the Q3 and Q4 periods (admittedly the share price was higher) strongly suggests that Virtu are moving towards a strategy of husbanding more capital to compete, since their returns on that capital are extremely high. Having utilised trading capita and debt combined averaging around $3.7-$3.9billion in the four years between 2020-2024, this rose sharply from Q2 2025 – perhaps related to the new CEO Aaron Simons – and had achieved ~$5.1billion by year end 2025. When the beneficial environment of Q1 2026 is considered, this has been an excellent move and should enable Virtu to have further supplemented capital in the past three months (so will every other liquidity provider). A simple equation for the near term which analyst estimates are not solving. In its life as a public company, Virtu has earned an average annual ANTI/total capital return of some 43.5%; because of the differing nature of financing the two major acquisitions of KCG and ITG, the composition of total capital between trading capital and debt has fluctuated through time but debt/total capital has averaged in the low to mid 40's percent. In our view that can be pushed harder, which with the increase in trading capital – see prior table from earnings retention at high rates – will act to boost available capital significantly. There are roughly 252 trading days in a year; let's call it 250 to simplify the arithmetic. If Virtu deploys $5.1billion of total capital on which it earns a 50% annualised return, that equates to just over $10million per trading day of adjusted net trading income – significantly above historic levels ($6.6million), but only just above the Q42025 level of $9.7billion. Virtu has noted a medium-term aspiration of ANTI/day of $10million (reiterated in its Q3 2025 earnings call, which represented the disclosure of the "pivot" to greater growth). In our view, sustained $10 million per day's ANTI may only be the start if additional capital continues to be deployed, and if the opportunity set exists, including in new arenas. At $10 million per day, or 50% return on end 2025 capital, ANTI should equate to some $2.55 billion per annum. Allowing for increased cash overhead – employees will garner a greater dollar compensation – suggests EBITDA (on our basis) would be around $1.55bn - $1.6 billion. Allowing for a full year of higher debt, at around 7.1% blended interest, we view adjusted pre-tax income would be in the order of $1.275bn - $1.3 billion, or a notional net profit of (mid-point) $1.05 billion. On the existing fully diluted capital base pf ~155 million shares, EPS would be in the vicinity of $6.75/share. At the 31 March 2026 level of $43.98, the shares would be priced at an adjusted P/E of 6.5x. That multiple is suggesting investors believe this to be a cyclical peak in profitability and that the initiatives unveiled in Q32025 and underscored at the end of last quarter as unlikely to bear lasting fruit. We fundamentally disagree. We clearly acknowledge the Q12026 environment has been especially favourable. But what is bizarre, is that with one exception (Piper Sandler) sell-side brokerages have been very slow to recalibrate their earnings forecasts, even for known events. Whilst optimistic, we don't believe it is unrealistic to assume that Virtu has made upwards of $2/share in net earnings in Q12026; the current mid-point consensus estimate is $1.25. For CY2026, the consensus analyst expects a flat EPS outturn on CY2025 of around $5.30/share. At the very least, that suggest the average analyst believes the higher level of capital deployment will NOT result in any incremental earnings. Neither does this cohort believe the CY2027 year will improve. Therein lies the opportunity for what we believe is a chronically under-covered security, beset by cynicism from analysts employed by competitor firms.

BSD Analysis:
East 72 Dynasty Trust presents a compelling bull case for Virtu Financial, arguing the market maker is undergoing a strategic pivot that analysts are failing to recognize. The manager highlights Virtu's shift from aggressive capital returns to capital retention and deployment, positioning the company to better compete against well-capitalized rivals like Citadel Securities and Jane Street. With trading volumes reaching record levels of 20+ billion shares daily and structural market changes favoring off-exchange trading (now >50% of volume), Virtu operates in an increasingly favorable environment. The fund calculates that with $5.1 billion in deployed capital earning 50% returns, Virtu could achieve $10 million daily in adjusted net trading income, translating to ~$6.75 EPS versus current consensus of $5.30. At 6.5x forward P/E, the manager argues the market is pricing in a cyclical peak while missing the structural improvements from enhanced capital deployment and market share opportunities in ETF market making.

Pitch Summary:
Duolingo is a language app. Download it on your phone and take gamified lessons in dozens of languages, as well as math, music, and chess. I am a power user for Duolingo and have been for the past 3-4 years, and I've also followed the company since IPO. Not investing in it in late 2022 was one of my biggest regrets. I believe we are close to a similar opportunity. The stock has become reasonably priced after soaring to ridiculous levels. The headline reason it has dropped is that, with the LLMs, people feel less of a need to learn a language. Why bother when you can just do this through your phone and your air Pods? I think this misunderstands why people learn a language – as self-development, to have fun, and because they want to actually be able to do something themselves. If this were purely a bet on whether AI will obviate demand for Duolingo, I would make this a bigger bet. The company is slowing down dramatically this year, though. They say it's because they want to recalibrate their app to be a little more free and less freemium, so they can gain more users. The company plans to continue to spend heavily, and it makes the future earnings numbers less attractive as a result. But I have been impressed both as a user and as an investor following the company with how thoughtfully it is run, and how engaging the app is. It does not teach you everything you need to know for a language, but it is getting better. For a motivated language learner, Duolingo can play a valuable part in the process, at a relatively low price (or having to deal with ads on the free product). We'll see how the user growth evolves this year and whether management delivers on its goals over the next few years.

BSD Analysis:
The manager presents a bull case for Duolingo based on personal experience as both a power user and long-term follower since IPO, expressing regret over missing the 2022 opportunity. While acknowledging AI translation tools as a perceived threat that has pressured the stock, the manager argues this misunderstands user motivation for language learning, which centers on self-development and personal achievement rather than pure utility. The investment thesis faces near-term headwinds from management's strategic shift toward a more freemium model to drive user growth, which will pressure profitability in the short term. However, the manager emphasizes confidence in management's thoughtful execution and the app's improving engagement and educational effectiveness. At current reasonable valuations following the decline from previous highs, the manager sees a similar opportunity to the missed 2022 entry point. Success depends on management delivering on user growth targets while maintaining the platform's educational quality and engagement.

Pitch Summary:
Standard Aero is one of our three new positions, and maybe the one I am most excited about, even though for now the position is small. Aerospace has been a winning sector – as seen in our Astronics position – as the major players, Boeing and Airbus, ramp up production to catch up with gaps from COVID era issues as well as safety problems, such as Boeing's 737 Max. As our other position AerCap reminds us, there is still a years-long backlog in demand for new planes. Standard Aero's business is to repair and maintain planes. As long as there is demand for planes, the value of currently flying planes will remain high, and thus keeping them working will remain high. On top of that, Standard Aero is certified to work on LEAP engines, a new type of plane engine that should help grow Standard Aero's revenues. Those revenues have grown by an average 15% the last two years. The growth is forecast to slow this year due to an accounting change, but one which should lead to improved profitability. The shares trade for less than 15x EV/EBITDA, which is significantly cheaper than aerospace peers. As Astronics shares have gotten pricey, we have sold a decent part of our position, and Standard Aero is a way to keep exposure to the long-term aerospace cycle, but at a better price.

BSD Analysis:
The manager expresses strong enthusiasm for Standard Aero as a new position, viewing it as an attractive way to maintain aerospace exposure at reasonable valuations. The investment thesis centers on the structural demand for aircraft maintenance and repair services driven by Boeing and Airbus production ramp-ups to address COVID-era backlogs and safety issues. Standard Aero benefits from the years-long aircraft delivery backlog, as airlines must maintain existing fleets longer, increasing aftermarket service demand. The company's certification to service LEAP engines provides a growth catalyst, while historical revenue growth of 15% annually demonstrates execution capability. At less than 15x EV/EBITDA, Standard Aero trades at a significant discount to aerospace peers, offering better value than the manager's previous holding Astronics, which became overvalued. The manager views this as an opportunistic way to maintain sector exposure while improving the risk-reward profile through better pricing and positioning in the defensive aftermarket segment.

Pitch Summary:
F&G usually trades based on its liabilities – i.e. how attractive its annuities and life insurance policies look to customers, and how much pricing leeway that leaves the company to make money on. Where interest rates are set becomes a driving factor. But more recently, investors are worried about the company's assets. It partners with Blackstone to invest in 'alternatives', and included in alternatives is private credit. There is fear that F&G's considerable book value – $33.26/share, or $44.48/share if you include accumulated losses that will not reflect if F&G holds its positions to close – is inflated by bad underwriting. Even if not inflated, the returns on alternatives have been less than F&G expected initially, and it has finally adjusted its expectations. It's hard to know what's on the company's books as an outside investor. We can see that the company has announced a new, increased buyback program, including a programmatic buying plan, and that its CEO has bought shares (again) recently.

BSD Analysis:
The manager acknowledges significant uncertainty around F&G's asset quality, particularly its private credit investments through Blackstone partnerships that have raised investor concerns about inflated book values. While traditional liability-driven trading patterns focused on interest rate sensitivity, current fears center on potential asset impairments from poor underwriting in the alternatives portfolio. The manager notes that alternative investment returns have underperformed initial expectations, forcing the company to adjust projections. Despite these asset quality concerns, the manager finds encouragement in management's confidence signals, including an increased share buyback program with programmatic purchases and recent CEO share purchases. With book value ranging from $33.26 to $44.48 per share depending on accounting treatment, the manager appears to view current levels as potentially attractive if asset concerns prove overblown. The investment reflects a bet on management's insider knowledge and capital allocation discipline.

Pitch Summary:
If AI tools like Claude can write code for software developers, what use paying for expensive software? That's been the market's essential thesis, sending software stocks down by 25% as a sector (represented by the IGV ETF) and worse in some cases, like Gitlab. A friend pitched this to me, but the idea and us being early so far is my own responsibility. Gitlab has not been a good stock since its IPO during the bubbly 2021 market. It has specifically struggled as two forces combine: the fear that use of Claude and other AI bots will render Gitlab's business – software that enables tech teams to coordinate their development processes – less necessary or reduce the number of developers using the product; and a slowdown in Gitlab's growth for idiosyncratic reasons (the fading effect of a former price increase, management turnover, government shutdowns, etc.). The stock is not exactly cheap, but is reasonably valued if it continues to grow and or clamps down on share-based compensation. And the use of AI bots means developers are writing more code than ever, even if the software itself is not necessarily better (due to a lot of half-baked code). GitLab should be able to maintain its growth as developers try to harness the bot code, and as businesses switch to the new ultimate tier, or to the Duo Agent platform, which enables more usage of the platform. Gitlab's value has also dropped to the point where it may be an attractive takeover target for a major player. That said, we're not adding as much as we might when a stock drops 33% after we first buy it, as we'd like to see how the growth story develops this year.

BSD Analysis:
The manager presents a contrarian bull case for GitLab amid widespread AI disruption fears that have hammered software stocks. While acknowledging the stock's poor performance since its 2021 IPO and recent 33% decline after initial purchase, the manager argues that AI tools are actually increasing code volume rather than reducing developer tool demand. The thesis centers on developers writing more code than ever using AI bots, creating greater need for GitLab's coordination and development process management tools. The manager sees potential catalysts in new product tiers and the Duo Agent platform driving increased platform usage. At current depressed valuations, GitLab could also become an attractive acquisition target. However, the manager maintains a cautious position size given execution risks and plans to monitor growth trajectory before adding significantly. The investment reflects a bet that AI will complement rather than replace developer collaboration tools.

Pitch Summary:
We've owned Booking shares since 2018. It was one of the first stocks I bought at a full price for what I considered a great company. It took the pandemic sell-off and then revenge travel theme for Booking to deliver market-beating returns, but we got there. And as it reached those higher levels in 2024 and 2025, I did a little trimming, because anything could happen. A number of things have and haven't happened to the stock. Any economic fears tend to affect travel companies through the view that travel is discretionary. The ascendance of LLMs presented a new middleman for online travel agents to deal with, and a potential existential threat to its business. There have been a number of geopolitical events that disrupt the travel environment. The dollar has weakened, and the U.S. has become less welcoming and less attractive to foreign visitors at just the time where they might take advantage of that weaker dollar. Booking's share price dropped as much as 32% from its highs of last year, and 25% from the start of this year. But while that did happen, the business has shown no signs of any effect from any of these threats. It is growing faster than its peers (Expedia and AirBnB), it has bought back 27% of its shares outstanding since early 2019, and its guidance for the year ahead is quite good. There are fundamental advantages to the business. AirBnB is a stand-in for overtourism and housing market pressure, while Booking has taken less heat, even as it has grown its 'alternative accomodation' business to be comparable to AirBnB's. While Booking is a U.S. company (Priceline is the original company), the Booking.com business is based in the Netherlands, making Booking less likely to be picked on in other countries' regulatory backlash. The business is much more exposed to non U.S. markets – good when the dollar is weak – but also growing share in the U.S. – good if the dollar strengthens. And I found CEO Glenn Fogel's commentary on why the AI companies won't compete with or replace Booking to be quite compelling. Essentially, it seems unlikely that OpenAI, Anthropic and others would want to be responsible for customer service and being the 'merchant of record', any more than Alphabet/Google (GOOG) has wanted to. Reports that OpenAI was abandoning plans to offer a checkout in ChatGPT put in a near-term bottom for the travel agencies, validating Fogel's comments. But Booking is similar to Progressive for me. Management has proven to be capable, to adjust to new environments (the pandemic) or competitors (AirBnB) well, and focused on the right things. The environment ahead will change. Booking – which boasted on its most recent call that it is actually saving money thanks to AI, one of the rare companies to be able to show a bottom line effect so far – seems like a good bet to me to adapt to those changes.

BSD Analysis:
The manager maintains a bullish stance on Booking Holdings despite a 32% decline from recent highs, viewing the selloff as creating an attractive entry point. While acknowledging multiple headwinds including AI disruption fears, geopolitical tensions, and economic concerns about discretionary travel spending, the manager emphasizes that the business fundamentals remain strong. Booking continues to outgrow peers like Expedia and Airbnb while executing aggressive share buybacks, having repurchased 27% of shares since 2019. The manager highlights Booking's competitive advantages, including its international diversification, regulatory positioning, and management's proven ability to adapt to disruption. Notably, CEO Glenn Fogel's commentary on AI companies' reluctance to handle customer service and merchant responsibilities provides confidence that AI won't disintermediate the platform. The manager views Booking as well-positioned to benefit from AI cost savings while maintaining its market leadership in online travel.