Investment Pitches

Pitch Summary:
First Solar is the world’s largest thin-film PV manufacturer, selling CdTe modules that avoid China-centric polysilicon supply chains. Shares trade at ~10–11x LTM EPS and ~7–8x 2025 EPS guidance, with ~6–7x EV/EBITDA, offering an attractive entry versus secular growth. Capacity is set to reach ~25 GW by 2026, supported by a U.S.-heavy backlog and >80 GW of identified opportunities. Technology moats include superior high-temperature and low-light performance, CuRe degradation reduction, and a perovskite-tandem roadmap via the Evolar acquisition. U.S. tariffs on Chinese solar inputs and Section 45X manufacturing credits bolster domestic economics relative to crystalline silicon imports. Utility-scale solar now commands the majority of new U.S. generation additions, and rising data-center load tightens the demand backdrop. A strong balance sheet (net cash) and expanding gross margins provide resilience amid pricing cycles. Recycling and diversified tellurium sourcing help mitigate CdTe supply concerns. Policy risk is real, but many IRA tax credits are embedded and politically durable, while LCOE data already shows solar competitiveness ex-subsidy. Risk-reward skews favorable given valuation, manufacturing scale, and policy/tariff tailwinds.

BSD Analysis:
First Solar designs and manufactures CdTe thin-film modules for utility-scale projects, with vertically integrated, lower-energy manufacturing and U.S./Asia footprints focused on large power developers and IPPs. Strategy: Prioritize domestic content and scale economics, push core CdTe efficiency via CuRe, and pursue next-gen tandems (perovskite + CdTe) to widen the performance gap while expanding U.S. capacity to capture tariff- and IRA-supported demand. Durability: Advantages stem from non-polysilicon supply chains, proven field performance in heat/low light, high recycling recovery, and a U.S.-centric order book that aligns with grid-reliability and onshoring agendas. Growth: U.S. power additions are skewing to solar as data-center load and electrification rise; First Solar’s bookings pipeline and capacity roadmap underpin multi-year shipment visibility. Sensitivity: Earnings are exposed to module ASPs, policy/tax-credit changes (45X, ITC/PTC), and CdTe material availability; Chinese pricing actions can pressure margins despite tariff support. Downside/Valuation: Even with policy noise, current multiples imply limited growth credit versus secular share gains and tech progress; sustained net cash and margin expansion provide a buffer to cyclical volatility.

Pitch Summary:
In the appendix of this letter, you will find our investment thesis on Grifols SA, a family-owned Spanish multinational and a leading player in the oligopolistic plasma-derived therapies market. Years of mismanagement and poor corporate governance, exacerbated by COVID-19 challenges and high debt, have weighed on its performance. However, we now see the business inflecting due to an operational improvement plan implemented by a new management team. Founded in 1909, Grifols is a family-owned Spanish multinational specializing in plasma-derived therapies. Operating in the arcane hemoderivatives industry, Grifols is a market leader and holds ~70% market share in the U.S. along with its two largest competitors: CSL and Takeda. The business generates ~80% of its revenue from its Biopharma segment which procures, researches, manufactures, and sells therapeutic products derived from plasma. The proteins in the plasma can be used to treat a variety of autoimmune and neurological diseases. Over the years, Grifols has built substantial infrastructure which is difficult to replicate: 1. Grifols operates 390 plasma donation centers, where they compensate donors for plasma, which constitutes ~35% of raw material costs. This raw material is frozen for two months before being transported to a fractionation site. 2. At their manufacturing facility - a fractionation plant - the plasma is isolated into the individual proteins. Here, they also conduct a variety of tests to meet strict regulations. 3. The proteins are then sent to one of their facilities (U.S., Spain, or Ireland), for final packaging and delivery to their customers which can be hospitals, pharmacies or physician offices. It is important to note that it takes 9 to 15 months to process a sample of plasma. The main proteins they process include Immunoglobulin (IG), Alpha-1, and albumin. IG accounts for ~60% of revenue and has the highest margins. The current investment opportunity arises from years of mismanagement and poor corporate governance, which have weighed on performance. The Grifols family, which holds a 38% stake (including 8% via its family office), has engaged in controversial governance practices that raise concerns about shareholder alignment. This includes related-party transactions, conflicts of interest on the board and questionable capital allocation decisions. During COVID-19, Grifols struggled as plasma procurement costs surged. The business was also highly leveraged and continued to take on more debt which just made the situation worse. In January of 2024, a short report on the company resulted in the stock falling by ~50% and Spanish authorities investigating Grifols. This investigation as well as pressure from activist investors finally led to the owners finally separating themselves from the management, bringing in a new CEO and CFO. This new management implemented an operational improvement plan which started showing positive results in the third quarter of 2024. Also in the fall of 2024, Grifols entertained discussions with Brookfield for a potential take-private which severely undervalued the business and seems to be squeezing out public investors. This offer was rejected by the board of directors and now Grifols, under new management and with less oversight from the family, is focused on executing on the operational improvement plan. Despite the market punishing Grifols for poor corporate governance and performance, Grifols remains a good business that commands a great position in its industry. We believe that this presents a buying opportunity as Grifols operates in an attractive oligopolistic industry with significant competitive advantages. The sector benefits from limited substitutes, strong pricing power, high barriers to entry (capital investment, regulatory approvals, and specialized expertise), and stable long-term demand for plasma-derived therapies. Key risks include (i) potential U.S. immigration policies under a Trump administration, which could restrict plasma donation supply and drive-up costs, and (ii) the emergence of recombinant protein substitutes, which could erode up to 20% of revenue by 2028. Grifols lies at an attractive entry point to own a great business. The company is severely undervalued, which reflects extremely negative investor sentiment. This is a result of the lack of trust in the owners, operations, and performance. However, this doesn't take away the fact that this business is the second-largest player in the space and that they have some of the finest manufacturing facilities that exceed regulatory requirements. The company has made genuine operational improvements and has competent people in the driver's seat who can steer the business in the right direction to gain market share. The new management launched an operational improvement plan which would help resurrect the business post-restructuring. This entailed cutting redundant positions and selling off non-performing assets like donor centers with low footfall and more. This plan of theirs spans the entirety of 2024 and falls into 2025 but its results have been evident through the very successful third quarter of the year. Record Revenues: Grifols achieved all-time high revenues of €7,212 million in 2024, growing +10.3% YoY. Q4 2024 revenue alone was €1,976 million (+13.6% cc) - EBITDA and Margins: Adjusted EBITDA reached €1,779 million for 2024, with a margin of 24.7%. This marks ~19% growth in EBITDA vs. 2023, driven by higher Biopharma volumes and efficiency gains. In Q4, adjusted EBITDA margin rose to 26.6%, highlighting ongoing cost improvements. Net Profit: Grifols' net profit nearly tripled YoY, coming in at €157 million for 2024. Free Cash Flow (FCF): 2024 free cash flow was €266 million (pre-M&A), a significant turnaround from negative FCF in 2023. The company exceeded its FCF guidance, with Q4 alone contributing €335 million in FCF through improved working capital management and higher earnings. Leverage & Liquidity: Net leverage ratio fell to ~4.6× EBITDA by year-end (down from 6.8× in Q1 2024). This improvement was driven by EBITDA growth, better cash generation, and a €1.6 billion cash inflow from the Shanghai RAAS stake divestment. Year-end liquidity was strong at ~€1.9 billion (cash plus undrawn facilities), bolstering financial flexibility. Management is confident about leverage going forward, see it under control, no refinancing needed till Q4 of 2027. Key Business Drivers: The Biopharma division led growth, with particularly robust demand for immunoglobulins. The IG franchise grew ~15% for the full year (Q4 +17.9% YoY), aided by strong volumes and favorable product mix. The plasma derivatives industry is very interesting when it comes to some distinct characteristics. We see that the market is oligopolistic with CSL, Takeda, and Grifols owning 70% market share. This does limit price wars and fosters competition when it comes to innovation and operational efficiency. The industry benefits from several tailwinds, including growing international adoption and an expanding plasma supply. Outside the Western markets, plasma-derived therapies remain relatively uncommon, but this is gradually changing. A prime example is China, which now accounts for a significant portion of CSL's albumin-based product sales. Additionally, autoimmune diseases are widely underdiagnosed due to diagnostic challenges. However, as awareness improves, demand for plasma-derived therapies is expected to rise accordingly. Finally, various experts anticipate that Europe will ease plasma donation restrictions as its supply deficit with the U.S. widens, allowing Grifols to optimize returns from its German collection centers. The threat of new entrants remains low due to the high capital requirements for manufacturing facilities and donor centers, stringent regulatory approvals from agencies such as the FDA (U.S.) and EMA (Europe), and the need for specialized expertise. Established players benefit from economies of scale and vertically integrated operations, which are difficult for new entrants to replicate. The barriers to entry are too high for a new player even with enough capital to just set up shop as it takes regulatory expertise, technical expertise, supplier connections, and much more. Even if a new entrant overcomes these barriers and develops a drug that demonstrates clinical superiority, patient dependability, and favorable unit economics, adoption remains a challenge due to high switching costs. Grifols' moat is multi-faceted and robust, with several key strengths: Cost Leader: As one of the largest plasma collectors globally, their economies of scale and vertical integration make them a cost leader. Barriers to Entry: We also see that they operate in a space with high barriers to entry. Through their decades of experience navigating stringent regulations, and employing top talent and expertise, they have gained a significant competitive advantage. Brand: Grifols has built a brand on trust and reliability; its reputation for quality and reliability is crucial in the healthcare industry. Currently, the business is underearning due to elevated costs from COVID-19, high debt levels, and restructuring expenses. In 2023, Grifols' ROE stood at 0.7%, significantly below its historical average of 9.6%. Meanwhile, ROIC was only 3.7%, lagging behind industry leaders like CSL, primarily due to financial leverage and substantial debt obligations. ROCE remained low at 3.8%, reflecting operational inefficiencies and underutilized assets. The financial model assumes 9% revenue growth, based on industry trends, competitor performance, and historical financial data from the past decade. Margins are projected to expand from 40% to approximately 45% over the next three years, driven by declining plasma costs and the new management's operational improvement plan, which aims to turn operations leaner. The DCF shows an upside of 103% with a price target of €17 through the terminal growth method and an upside of 109% with a price target of €19. Grifols presents a unique opportunity to purchase a fundamentally strong business at a significant discount, driven by historical mismanagement and inefficient capital allocation.

BSD Analysis:
White Falcon presents a compelling turnaround thesis on Grifols, positioning it as a deeply undervalued leader in the oligopolistic plasma-derived therapies market. The fund's investment rationale centers on new management's operational improvement plan showing tangible results, with 2024 revenues hitting record highs of €7.2 billion (+10.3% YoY) and EBITDA growing 19% to €1.8 billion. The manager emphasizes Grifols' dominant market position alongside CSL and Takeda, controlling 70% of the U.S. market with substantial competitive moats including 390 plasma donation centers, regulatory expertise, and high barriers to entry. The investment case hinges on corporate governance improvements following activist pressure, with new CEO Nacho Abía and CFO Rahul Srinivasan replacing family management after a damaging short report. White Falcon highlights the company's deleveraging progress, with net leverage falling from 6.8x to 4.6x EBITDA, and strong free cash flow generation of €266 million in 2024. The DCF analysis suggests 103-109% upside potential with price targets of €17-19, trading at attractive 2.4x P/S versus peers at 4.1x average. Key risks include potential recombinant protein substitutes threatening up to 20% of revenue by 2028 and U.S. immigration policy impacts on plasma supply under Trump administration.

Pitch Summary:
Applied Materials, the largest semiconductor equipment supplier, offers a compelling long-term compounding story at ~13x EV/EBIT and ~17x P/E, near the low end of its 10-year valuation range. The company commands roughly 21% of wafer fab equipment market share with deep process dominance across deposition, etch, and metrology tools. AMAT benefits from secular semiconductor complexity—gate-all-around, backside power, and advanced packaging all expand its served markets by double digits. Its recurring “Applied Global Services” business, now ~23% of revenue, drives high-margin subscription growth tied to an expanding installed base. Structural tailwinds from chip onshoring, AI compute buildouts, and automotive/industrial semis will sustain mid-to-high single-digit industry growth. Returns on invested capital exceed 50%, reflecting durable process moats, network effects, and efficient scale. Management, led by Gary Dickerson, has executed with discipline through cycles via R&D intensity, buybacks, and rising dividends. While geopolitical risk around China and Taiwan looms large, diversification of global fab capacity (U.S., Europe, India) and government subsidies mitigate long-term exposure. AMAT’s combination of scale, balance sheet strength, and technology leadership supports 11–19% EPS CAGR potential and 15–28% annual total returns over five years.

BSD Analysis:
AMAT designs and services semiconductor manufacturing equipment used in deposition, etch, metrology, and packaging, with ~21% WFE share and strong aftermarket service revenue. Strategy: Leverage leading materials engineering platforms to capitalize on new device architectures (gate-all-around, backside power, chiplets) and expand the high-margin services business. Durability: Decades of IP, deep customer integration, and feedback-driven co-development form high switching costs and process power moats, reinforced by scale and data network effects. Growth: AI, auto, and onshoring demand—plus $20B+ fab construction cycles globally—create sustained equipment investment visibility. Sensitivity: Exposure to China (37% of sales) and potential Taiwan conflict are key risks, though offset by CHIPS Act–driven Western fab buildouts. Valuation: Trading below historical medians, AMAT offers asymmetric upside through operating leverage, buybacks, and dividend growth, warranting 20–24x normalized P/E as cyclical earnings recover.

Pitch Summary:
TKO, formed by merging UFC and WWE in 2023, owns two of the world’s most valuable sports entertainment franchises. The company monetizes content through media rights, sponsorships, live events, and consumer products, with major catalysts ahead in rights renewals. UFC’s ESPN deal expires in 2025, opening the door to new structures or splits that could re-rate value in a fragmented streaming landscape. WWE’s rights renew in 2026, with platforms like Netflix expected to bid aggressively, potentially driving content revenue growth of ~15% and expanding total rights income toward $2.2B. Sponsorship, an underpenetrated revenue stream, offers high-margin upside as cross-brand selling and integration with On Location expand monetization. Live events—enhanced by site fees and hospitality—should grow ~17% annually, powered by international expansion and premium ticketing. Combined, these drivers can push EBITDA margins from ~46% to ~50% by 2026, producing ~$1.3B of free cash flow. At ~16–17x 2026E EBITDA, TKO trades below higher-growth comps like Formula 1 despite recurring cash flow and superior profitability. Risks center on rights negotiation outcomes and capital allocation discipline under Endeavor’s influence. TKO’s content scarcity, pricing power, and secular tailwinds in live sports streaming make it a compelling long-term compounder.

BSD Analysis:
TKO operates global combat sports and sports entertainment IP through UFC and WWE, leveraging media, live events, and licensing for recurring revenue. Strategy: Monetize premium live content across platforms via multi-year rights deals, expand sponsorship penetration, and scale site-fee–driven events worldwide. Durability: Strong brand IP, exclusive athlete and storyline ecosystems, and multi-decade fan loyalty create durable barriers versus commoditized media peers. Growth: Near-term catalysts include UFC’s 2025 media renewal and WWE’s 2026 cycle, which can drive double-digit top-line growth and high flow-through margin expansion. Sensitivity: Negotiation outcomes and management’s capital deployment pose execution risk, while cyclical ad and consumer spending could temper sponsorship growth. Valuation: At ~17x 2026E EBITDA, TKO trades near Live Nation but below Formula 1; sustained mid-teens EBITDA growth and 70% FCF conversion justify multiple expansion to 18–20x.

Pitch Summary:
Structurally under-capitalized micro-cap; value entirely based on a single, high-risk asset; cash-burn over 90% today’s level.

BSD Analysis:
Inmune Bio develops therapies targeting the innate immune system, including NK cell therapies and neuroinflammation approaches. Bears argue the company is early-stage with limited late-clinical data, leaving valuation speculative. Funding is a key risk, as recurring dilution is almost certain before any commercial milestones. Competition in immuno-oncology and neurodegenerative disease research is fierce, with larger firms better positioned to capture market share. For investors, INMB illustrates the binary risk profile of small-cap biotech — where trial outcomes and financing windows dictate equity value more than current fundamentals.

Pitch Summary:
Optex Systems is positioned to benefit from multi-year U.S. defense modernization programs, providing critical optical components for armored vehicles. With a strong backlog and expanding margins, the company is set to capitalize on increased defense spending and streamlined procurement processes. The stock is undervalued at ~8x 2025E NOPAT, offering significant upside potential.

BSD Analysis:
Optex Systems operates in a niche market with high barriers to entry, such as ITAR registration and government-approved accounting systems, which protect its competitive position. The company's sole-source status for many U.S. periscope systems and its partnerships with major defense primes like BAE Systems and General Dynamics enhance its defensibility. Optex's financials are robust, with a rising ROIC and aggressive reinvestment strategy, suggesting sustainable growth. The defense sector's budgetary trends, including the proposed $1 trillion defense budget, provide a favorable backdrop for Optex's continued success. The company's strategic alignment with prime contractors ensures a steady flow of subcontracts, reinforcing its growth trajectory.

Pitch Summary:
Hertz’s equity has surged >150% on retail enthusiasm and a high-profile bull, while its unsecured 2026 notes still trade in the 80s—classic equity/credit divergence. Looming 2026 maturities and an ~$18B net debt load imply costly refinancing in a high-rate regime, compressing already thin cash generation. Operationally, the EV misstep (Tesla price cuts) crystallized residual-value losses and elevated depreciation that won’t disappear overnight. Post-pandemic demand normalization, rideshare substitution, and softer pricing reduce the odds of a quick RPU/UTIL snapback. Bulls cite oligopoly “discipline,” but Enterprise’s advantages are structural and not easily copyable by a leveraged public peer. Near-term, Q1/Q2 prints risk disappointing as fleet rotation, labor inflation, and insurance/maintenance outlays flow through P&L. The bond market’s caution plus potential rebalancing by celebrity longs create asymmetric downside if sentiment fades. Even with site-fee/tariff narratives, higher used-car prints help the balance sheet only if realized in disposals, not mark-to-mood. Credit spreads and ABS capacity, not tweets, will set Hertz’s cost of capital for 2026–2029. We see a retrace toward $6 as hype normalizes and fundamentals reassert.

BSD Analysis:
Hertz rents and sells vehicles through a capital-intensive fleet funded largely by ABS/unsecured debt; earnings are highly sensitive to utilization, rate per day, maintenance, and residual values at disposal. Strategy: Management is rotating out loss-making EVs and targeting higher RPU and lower DPU, but execution competes with macro headwinds (rates, insurance, parts/labor) and industry mix shifts toward rideshare/urban mobility. Durability: While the U.S. market is concentrated, the moat is limited—fleet, locations, and brand are replicable with capital, and Enterprise’s private, local-market focus underscores structural advantages Hertz cannot easily match. Financial: Credit still prices risk (’26 notes ~80s), leverage is elevated, and a 2026–2029 maturity wall creates refinancing and covenant sensitivity if EBITDA underdelivers. Timing: A near-dated earnings catalyst, fading social-media flows, and potential de-risking by prominent holders raise downside skew from current levels. Variant view: Tariff/used-car upside is transitory and balance-sheet-dependent; absent realized gains and sustained pricing power, equity remains a weak claim behind a large debt stack.

Pitch Summary:
Frequentis AG has demonstrated robust financial performance with a significant increase in revenues and profitability for FY 2024. The company benefits from a strong order intake and a substantial backlog, indicating sustained demand for its products and services. With a diversified customer base predominantly comprising government entities, Frequentis is well-positioned to capitalize on increased global defense spending. The ongoing transition from hardware to software solutions is expected to enhance margins and drive future growth.

BSD Analysis:
Frequentis AG's strategic focus on software solutions is a critical driver of its future growth prospects, as software typically offers higher margins compared to hardware. The company's strong presence in the defense sector, accounting for approximately 20% of its revenues, positions it to benefit from increased global defense budgets. Despite potential risks from new tariffs and protectionist measures, Frequentis's extensive experience with international regulations and its significant local value-added content in key markets like the USA and Australia mitigate these risks. The company's record order intake and substantial orders on hand underscore its competitive positioning and the trust of its governmental clients. As global geopolitical tensions rise, Frequentis is likely to see continued demand for its air traffic management and defense solutions, although the long procurement cycles in these sectors may delay revenue realization. Overall, Frequentis's solid financial performance, strategic initiatives, and market positioning support a bullish outlook.

Pitch Summary:
BlueLinx Holdings Inc. ('BlueLinx'), is a distribution business, acting as an intermediary between the manufacturers of finished residential and commercial building products - such as siding, millwork, and specialty lumber panels - and product retailers and professional contractors in local markets. The company's key assets enabling its distribution capabilities are a nationwide footprint of 65 warehouses, storage facilities, and logistics assets. The company has seen its stock decline meaningfully in recent quarters in anticipation of a perceived slowdown in U.S. housing and potential disruptions to the supply of imported building products. Although the company has narrow operating margins typical of many distribution businesses, BlueLinx has a strong track record of generating attractive free cash flow as a public company. Further, the company maintains a net cash balance sheet that puts it in the enviable position of having substantial financial wherewithal and flexibility, potentially enabling the company to identify value enhancing opportunities in a tumultuous environment. Fund management was able to build a position in BlueLinx at prices near tangible book value as housing sentiment continues to be depressed. We see multiple paths for BlueLinx to return significant value to shareholders. In particular, the company has an opportunity to enhance operating margins closer to those of industry peers through internal initiatives that have been laid out and which seem attainable. The business is also one that embeds fixed cost leverage that can yield a dramatic amplification of return on invested capital during periods of higher distribution volumes or ones in which lumber prices are upward sloping. Should BlueLinx successfully execute its growth initiatives, the company could garner the attention of numerous industry consolidators. The recently announced acquisition of Beacon Roofing by QXO is one example within the industry. There are also many private equity sponsors who are presently active in the industry improving the probabilities of a transaction and at a favorable price.

BSD Analysis:
Third Avenue initiated a position in BlueLinx Holdings, a building products distributor, at attractive valuations near tangible book value amid depressed housing sentiment and tariff concerns. The company operates a strategic nationwide network of 65 warehouses and logistics facilities, serving as a critical intermediary between manufacturers and local retailers/contractors. Despite narrow operating margins typical of distribution businesses, BlueLinx generates attractive free cash flow and maintains a net cash balance sheet, providing financial flexibility during uncertain times. The managers identify multiple value creation paths, including margin expansion through internal initiatives to reach industry peer levels and operational leverage benefits during periods of higher volumes or rising lumber prices. The investment thesis is supported by potential M&A activity, with active private equity interest and recent industry consolidation examples like QXO's acquisition of Beacon Roofing. The combination of defensive balance sheet strength, operational improvement potential, and M&A optionality creates an asymmetric risk-reward profile at current depressed valuations.

Pitch Summary:
Tidewater represents an interesting case study. In recent quarters, the company has been a poor performer and one of the larger drags on Fund performance. As recently as a year ago, the company had been a star performer for the Fund and was benefiting from a strong tightening of the supply and demand balance for global offshore support vessels. In that environment, with a favorable outlook and far higher share prices, the Fund sold a material portion of its Tidewater shares. It is notable that several growth-oriented funds filed as significant new shareholders around the time of the Fund's sales. As an investment approach, we tend to buy grey clouds and sell sunshine and that period was starting to look like sunshine in the sense that the share price was increasingly reflective of the very positive near-term outlook. However, outlooks change and, to the extent one has purchased an investment at prices reflective of a very favorable outlook, a deterioration of that outlook can be very painful. Since the second half of 2024, several large offshore projects have been temporarily delayed, limiting the immediate demand for more offshore service assets. While the current consensus forecast for Tidewater's 2025 operating performance is roughly flat compared to 2024, the share price has seen a considerable decline. We continue to believe that the long-term industry dynamics - marked by virtually no new supply of offshore service vessels for the foreseeable future, gradually declining supply of the existing global vessel fleet through aging and attrition, along with increasing long-term demand - are very much intact. Our job, as we see it, is to estimate the value of businesses, across a range of scenarios, and with a good bit of conservatism baked in, and then try to seize opportunities to buy them at significant discounts to those estimated values. Our view is that Tidewater's share price decline represents a large overreaction to the softening of its near-term outlook and the Fund has once again begun to grow its Tidewater holdings.

BSD Analysis:
Third Avenue presents Tidewater as a compelling contrarian opportunity following a significant share price decline driven by temporary project delays in the offshore energy sector. The managers maintain conviction in the long-term structural dynamics favoring offshore support vessel operators, specifically citing virtually no new vessel supply, an aging global fleet experiencing natural attrition, and increasing long-term demand. They view the current weakness as cyclical rather than structural, emphasizing that consensus 2025 operating performance is expected to remain flat compared to 2024 despite the share price decline. The fund previously sold shares when the outlook appeared overly optimistic and prices reflected 'sunshine,' consistent with their contrarian approach of buying 'grey clouds.' They believe the market has overreacted to near-term headwinds, creating an attractive entry point at a significant discount to intrinsic value. The managers are actively rebuilding their position, viewing current prices as offering asymmetric risk-reward given the favorable long-term industry structure.

Pitch Summary:
@catapultcap argues that the online-dating sector is undergoing a cyclical correction, with total MAUs falling back to 2018 levels. Despite this pullback, he believes the long-term adoption curve remains intact because online dating has become the dominant method by which people meet. The thesis assumes that usage declines reflect temporary fatigue rather than structural abandonment. He expects MAUs to bottom and reaccelerate in the coming years. Within the category, he anticipates share gains for more intentional dating apps such as Bumble and Hinge while Tinder and other “spammier” platforms struggle. He views Bumble as attractively valued at under 7× unlevered earnings and has initiated a long position. Overall, the pitch frames BMBL as a value opportunity with improving competitive dynamics.

BSD Analysis:
The online dating category still benefits from powerful secular adoption drivers, including increased digital socialization and declining rates of in-person meetups. However, the industry is exhibiting signs of maturity, with MAU stagnation and rising consumer dissatisfaction around monetization and user experience. Bumble is relatively well positioned due to its perceived brand quality, female-friendly onboarding, and lower spam content than Tinder. Match Group’s portfolio faces mixed dynamics: Hinge continues to grow, but Tinder’s decline poses a drag. A key question is whether MAU recovery is cyclical or whether the industry is reaching structural saturation. Regulatory scrutiny, subscription fatigue, and AI-driven dating alternatives also represent emerging risks. Valuation under 7× unlevered earnings does screen inexpensive, but the durability of engagement trends remains the central variable. A rebound in MAUs would create strong operating leverage, yet downside remains if user growth fails to reaccelerate.

Actual Post Content:
$BMBL $MTCH - Online dating is in correction with aggregate MAUs across the major apps having slid back to 2018 levels. While online dating has lost the hype and novelty it had in its first decade post-Tinder launch, and while people have become more aware of online dating drawbacks, the fact is that the format makes tremendous intuitive sense and has worked for millions of people. More people meet online now than through friends, at bars or at work. You just don't put that genie all the way back in the bottle, and I therefore expect industry MAUs to bottom and return to growth in the next few years. I think the more "serious" apps like Bumble and Hinge will be the market share gainers at the expense of spammier apps like Tinder. I bought some $BMBL which I see as <7x unlevered earnings.

URL: https://x.com/catapultcap/status/1913771451582161234

Pitch Summary:
Civeo is a deeply undervalued provider of workforce accommodation and hospitality services in Australia and Canada, trading at just ~3.7x 2025E EBITDA. The company generates strong free cash flow (~$43M annually, pro forma for its Australian acquisition) with limited capex needs and multiple self-help levers to drive shareholder value. Its Australian operations—anchored in the Bowen Basin metallurgical coal region—are high-margin, supply-constrained, and now expanding with four newly acquired villages expected to add ~$17M EBITDA by 2025. The Canadian segment has stabilized around oil sands production work and offers upside if its idle mobile fleet is reactivated for new construction projects. Activist investor Engine Capital is pushing for aggressive capital allocation reform, including a major tender offer to repurchase up to 25% of shares and a sustained buyback program targeting a 1.75x leverage ratio. Eliminating the costly $30M Houston corporate overhead and abandoning M&A could further enhance returns and lift margins. Even absent a sale, a “public LBO” strategy could shrink the share count by nearly 50% and double the per-share equity value by 2027. On conservative assumptions of $107M EBITDA and 4.5x multiple, fair value reaches ~$40/share—nearly 100% upside. A strategic sale could unlock similar value sooner, with synergized multiples suggesting >$40/share potential if corporate costs are removed. Q1 results or a formal capital allocation update could catalyze the re-rating.

BSD Analysis:
Civeo runs remote lodging, catering, and integrated facility services for resource-sector workforces in Australia and Canada, with a growing asset-light segment providing housekeeping and foodservice at client-owned sites. Geography: Australia now contributes ~80% of EBITDA and is supported by favorable regulation and strong met coal demand, while Canada provides stable base earnings tied to oil sands production and maintenance. Capital allocation: Engine Capital’s activist plan emphasizes large-scale buybacks, balance-sheet optimization, and cost rationalization to surface value from an underlevered, cash-generative business. Valuation: At <4x EV/EBITDA, CVEO trades below global lodging, camp services, and industrial outsourcing peers (typically 6–8x), reflecting governance and U.S. listing inefficiencies. Optionality: A sale to an Australian or Canadian strategic could eliminate overhead duplication and re-rate the business toward regional peer multiples. Catalysts: Near-term catalysts include Q1 2025 results, potential tender announcement, and progress on share repurchases or strategic review.

Pitch Summary:
Following interactions at the Davy conference and during our long, in-depth dinner discussion with the PTSB team (CEO Eamonn Crowley, new CFO Barry D'Arcy and Head of Investor Relations Scott Rankin), we would like to make a few quick observations: • PTSB is certainly presenting a more bullish tone, particularly regarding the density review and PTSB's ability to achieve loan growth • PTSB is presenting better to investors and, importantly, is taking a more professional approach to meeting new investors • Barry D'Arcy is a substantial upgrade over the former CFO • There is a noticeably better working relationship/camaraderie with the three executives versus the prior team • There is a potential complementary tuck-in acquisition opportunity with one of the non-bank lenders; we extensively warned on the need for price discipline As noted in prior updates, density relief is the biggest catalyst for PTSB, and we have discussed this at length in prior updates. Interactions with The Central Bank of Ireland (CBI) continue to progress well and PTSB expects a favorable outcome prior to year-end. Meanwhile, PTSB is forecasting annual loan growth of 4-5% from 2025-2027. This is underpinned by growth in aggregate mortgage volume and by PTSB maintaining/expanding its recent ~20 percent market share as well as 15-20% annual growth from the bank's small-and-medium sized (SME) book. Importantly, both BOI and AIB are also talking about healthy loan growth, and both banks have noted a pickup in SME loan demand. Housing policy came up in nearly every conversation I had in Ireland – with cab drivers, bartenders (field research!), bank CEOs and DOF officials. Unfortunately, Ireland continues to face a chronic shortage of homes as progress has been far slower than anticipated/required. The problem is not on the demand side but instead on the supply side where home building needs to at least double from current levels to meet years of pent-up demand and future population growth. In a nation of ~5.4 million, there are fewer than 10,000 secondary homes across the country, and owning is ~40% cheaper than renting. Regardless of the macro environment, the current government will throw substantial resources into building more houses and this should offer support for Ireland's economy and PTSB's loan book. PTSB might have another opportunity to provide loans to housing developments and government agencies if the government decides to provide guarantees to banks versus direct lending support to housing associations and private developers. PTSB does have a potential acquisition opportunity. Non-bank finance companies have struggled to regain the market share held when interest rates were near zero. Currently, the securitization funding costs of these companies vastly exceed the three banks' deposit funding costs. PTSB has an interest in the SME business of one of the largest non-bank companies (Finance Ireland), but it is also possible PTSB may acquire Finance Ireland's mortgage book as well. We believe that PTSB is the only logical buyer for Finance Ireland, given the larger market shares of Ireland's two larger banks. Finance Ireland would provide enhanced scale to PTSB's SME business, and PTSB's lower cost of funding would provide a meaningful synergy. PTSB agrees that timing and price are critical, especially considering PTSB's bombed-out valuation level. Therefore any deal would have to be done at a discount to book value (including loan loss provisions) to make economic sense. It is frustrating that recent signs of progress at PTSB have now been engulfed by global tariff uncertainty. That said, PTSB is an incredibly defensive investment with a strong balance sheet and no problematic assets. Additionally, PTSB has a hard catalyst to return capital once the density review is completed and strong loan growth prospects driven by a near biblical need for housing across Ireland. The recent 2025 outperformance of European markets may or may not prove sustainable, but we would argue that strong capital levels, non-zero and upward-sloping yield curves and low absolute and relative valuation levels all provide a strong backdrop for European financial names. In a better performing sector, PTSB's low valuation will be particularly noteworthy (albeit frustrating for existing investors) to the increasing number of eyeballs that may peer towards European investment opportunities. We continue to believe that the combination of density relief, government sales and operational execution provide a fantastic opportunity to rerate shares, but PTSB must execute. We emphasized this "seize the day" message in all our meetings with the PTSB team.

BSD Analysis:
Brennan presents a compelling bull case for PTSB centered on multiple catalysts converging to drive significant revaluation. The manager highlights improved management execution under new CFO Barry D'Arcy and better investor relations, suggesting operational improvements are taking hold. The key catalyst remains density relief from the Central Bank of Ireland, expected by year-end, which would unlock capital return capabilities. PTSB is positioned to benefit from Ireland's severe housing shortage, with loan growth forecasts of 4-5% annually through 2027 supported by maintaining 20% mortgage market share and 15-20% SME growth. The bank trades at bombed-out valuations despite strong fundamentals including a clean balance sheet, defensive characteristics, and potential acquisition synergies with Finance Ireland. Brennan emphasizes the structural tailwinds from Ireland's housing crisis and government infrastructure spending, creating a multi-year growth runway for mortgage lending in a market where owning is 40% cheaper than renting.

Pitch Summary:
Within the portfolio, we continue to favor our longstanding Indian holding in HDFC Bank, and during the selloff, we added its very capable competitor, ICICI Bank, Ltd. In both cases, we believe these are among the highest quality banks in India, and in both cases, the shares can be purchased near historically low valuation multiples. We believe both HDFC and ICICI continue to be well run from a credit standpoint, as well as possessing the advanced digital technologies through mobile devices that Indian's prefer. In both cases, these are full-service financial institutions offering not only traditional retail and commercial banking but also services including wealth management, insurance, investment banking, etc. However, ICICI provides additional exposure to investment banking and capital markets, where HDFC has a smaller presence. Given India's significant growth, but still very low base (e.g., $2,698 per capita income), we believe the country's dynamics carry material implications for many industries, including banks. For instance, India's current penetration of basic consumer goods in its population remains very low, with cars at 2%, credit cards at 4%, washing machines at 16%, air conditioning at 8%, and the internet at 46%. Finally, based on current projections, India's population continues to expand (unlike many other large economies) and is expected to reach 1.5 billion in the year 2050. Based on the growth opportunities described above, we see a long growth runway for financial institutions to participate in lending, wealth management, insurance, and issuance into the capital markets.

BSD Analysis:
The managers added ICICI Bank as a new position during the recent market selloff, viewing it as a high-quality competitor to their existing HDFC Bank holding. They emphasize ICICI's strong credit management and digital banking capabilities that cater to Indian consumer preferences. The investment thesis mirrors their HDFC rationale, centered on India's structural growth opportunity with GDP per capita of only $2,698 and extremely low financial services penetration. ICICI offers a differentiated angle with stronger investment banking and capital markets exposure compared to HDFC's smaller presence in these areas. The managers see this as advantageous given India's capital formation needs as the economy grows. With credit card penetration at only 4% and population expected to reach 1.5 billion by 2050, ICICI is positioned to benefit from massive expansion in lending, wealth management, and capital markets services. The purchase at historically low valuation multiples during market volatility exemplifies their contrarian approach to acquiring quality assets during periods of investor pessimism. This represents opportunistic entry into India's banking sector growth story through a complementary franchise to their existing HDFC position.

Pitch Summary:
Within the portfolio, we continue to favor our longstanding Indian holding in HDFC Bank, and during the selloff, we added its very capable competitor, ICICI Bank, Ltd. In both cases, we believe these are among the highest quality banks in India, and in both cases, the shares can be purchased near historically low valuation multiples. We believe both HDFC and ICICI continue to be well run from a credit standpoint, as well as possessing the advanced digital technologies through mobile devices that Indian's prefer. In both cases, these are full-service financial institutions offering not only traditional retail and commercial banking but also services including wealth management, insurance, investment banking, etc. However, ICICI provides additional exposure to investment banking and capital markets, where HDFC has a smaller presence. Given India's significant growth, but still very low base (e.g., $2,698 per capita income), we believe the country's dynamics carry material implications for many industries, including banks. For instance, India's current penetration of basic consumer goods in its population remains very low, with cars at 2%, credit cards at 4%, washing machines at 16%, air conditioning at 8%, and the internet at 46%. Finally, based on current projections, India's population continues to expand (unlike many other large economies) and is expected to reach 1.5 billion in the year 2050. Based on the growth opportunities described above, we see a long growth runway for financial institutions to participate in lending, wealth management, insurance, and issuance into the capital markets.

BSD Analysis:
The managers maintain a bullish stance on HDFC Bank as a core Indian banking holding, emphasizing the bank's high quality and attractive valuation at historically low multiples. They highlight HDFC's strong credit management and advanced digital banking capabilities that align with Indian consumer preferences. The investment thesis centers on India's massive structural growth opportunity, with GDP per capita of only $2,698 compared to China's $12,969, creating a long runway for financial services expansion. The managers note extremely low penetration rates for basic consumer goods and financial services, with credit cards at only 4% penetration, suggesting significant room for banking sector growth. India's expanding population trajectory to 1.5 billion by 2050 contrasts favorably with China's expected decline to 770 million. The firm sees HDFC well-positioned to capitalize on lending, wealth management, insurance, and capital markets growth as India's economy continues its pro-business transformation under Modi's reforms. This represents a classic emerging market growth play in a high-quality financial institution trading at compelling valuations.

Pitch Summary:
Let me tell you about BYD, one of our new investments. Just as America's growth engine shifted following the GFC from Real Estate and Finance to Tech, China's has moved from Real Estate to Advanced Manufacturing. No company better embodies this than BYD, the vertically integrated automotive and electronics conglomerate that has gone from industrial curiosity to national champion. When Warren Buffett bought a 10% stake in BYD for USD230 million in 2008, it was more akin to a venture capital bet than a value investment. ("That was Charlie's idea, not mine," Buffett later admitted.) At the time, BYD was a battery OEM with a sideline in electric buses and clunky electric vehicles ("EVs"). Seventeen years later, BYD is China's largest carmaker and the world's top EV producer by volume, capturing 34 per cent of China's NEV market. ('New Energy Vehicles' is a broader term used in China which also includes hybrid vehicles, some of BYD's best-sellers). One by one, every reason not to buy an EV has been overcome: range, safety, aesthetic, price, charging infrastructure and – as of last month, thanks to BYD – charging speed. EVs now offer more features, better performance, and a lower total cost of ownership than traditional internal combustion vehicles. In China, the market has already passed the tipping point: NEVs comprised the majority of all passenger cars sold in the second half of last year. As the category leader, BYD's scale, cost structure, speed and willingness to pass value on to consumers make it a juggernaut no one should want to compete against. BYD was founded in Shenzhen in 1995 by Wang Chuanfu, a chemist from rural Anhui who had come to the booming city for work. Scraping together money from family and friends, he founded BYD to produce cheap rechargeable lithium batteries for mobile phones, offering an alternative to the dominant Japanese suppliers. Unable to afford robotics, BYD innovated around constraints, building low-cost, high-volume production lines with modified hand tools and a young, technical workforce. This 'shanzhai innovation' became core to its cultural DNA. Wang is a visionary with the risk tolerance to match. From the outset, BYD's mission was nothing short of China's energy independence, which he believed could be achieved through electrification. The move into autos in 2003 was motivated by that goal, as transport was a major consumer of imported oil and a large potential market for BYD batteries. However, heavy investment across a sprawling range of businesses left the company's finances in a parlous state. After another new car flopped in 2012, a colleague of mine at CLSA infamously issued a target price of zero dollars. Government subsidies and procurement kept BYD and its peers afloat but these were cut sharply in 2017, just as the market was cooling. Instead of retrenching during the 'three dark years' which followed (as they are known in company lore), Wang and his colleagues doubled down on long-term investment and their full-stack model of vertical integration. They ramped up R&D, consolidated BYD's battery, motor and semiconductor divisions, and began work on the Blade Battery, a breakthrough product. BYD's superpower is its vertical integration. It makes batteries, motors, inverters, e-axles, semiconductors, domain controllers, vehicle software, infotainment systems, seat foams, HVAC, lighting, and wiring harnesses. It owns its own ships, sources lithium from its own mines in China and Africa, and is building refining and cathode production capacity. This wasn't dogma; it was necessity. Global suppliers ignored BYD early on or couldn't match its cost targets. So, BYD built its own stack, giving it control over cost, quality, and timelines. The result? It can roll out new features, like its GodsEye ADAS suite, or switch inverter chemistries without coordination delays. The Blade Battery exemplifies this. BYD chose early on to pursue Lithium Iron Phosphate ("LFP") batteries because they are cheaper and safer than Nickel-cadmium alternatives, even though the latter offers more range for its weight. The Blade overcame this by packaging LFP cells into long, thin pouches, which can be tightly packed to improve the density of the battery itself. The Blade is then integrated into the chassis to improve cooling, further reduce weight and make large-format batteries viable for passenger cars. Presto, energy density and range problem solved. This was a bold bet, but it is now widely emulated. In fact, BYD even supplies Blade batteries to competitors like Tesla and Toyota to gain additional economies of scale. The Blade became the foundation of BYD's e-platform 3.0, an integrated vehicle architecture that consolidated battery, drive units, domain controllers, thermal management and operating systems. The platform supports both full and partial-hybrid EVs and allows for rapid iteration. Common interfaces, software layers, and modular components make it easier to deploy updates, reuse parts, and scale production. Every new BYD model now runs on a variant of this stack, allowing for unparalleled product development. BYD can roll out facelifts, model updates, and new features in cycles measured in quarters, not years. The Seagull sub-compact car exemplifies what BYD can achieve: launched in 2023, it offers 300-400km range and sells for less than USD10,000. It sold sold 280,000 units in its first year and - most importantly - did so profitably. That shouldn't be possible at that price, but BYD's scale makes it so. Check out Wheelsboy on YouTube for a glowing review (link). The price of vertical integration is capital intensity. BYD owns its factories, fabs, and foundries. It runs 11 production bases in China and is developing five more overseas. It must maintain high utilisation to preserve margins. But the operating leverage this model creates funds increased investment, more R&D and the scope to add features or cut prices while preserving margins. BYD's 2024 Auto revenue hit RMB 602 billion (up 42%), with 20.7% gross margins despite a price war it started with the slogan "EVs are Cheaper than ICE!" In February this year, BYD announced it would introduce a full-stack L2+ ADAS suite (highway pilot, auto lane change, and city driving assist) to all future models at no additional cost. Then last month, it announced its revolutionary Megawatt Flash Charging, capable of delivering a 400 km range in five minutes. Peers are scrambling to keep up, but it's not clear how they can do so profitably without BYD's scale and cost advantage. BYD cars used to reflect the company's engineering culture: they weren't much to look at. But since former Audi designer Wolfgang Egger was hired in 2016, they have developed their own distinct aesthetic. Egger introduced coherence across the range. The Dynasty series became crisp and assured. The Ocean series offers youthful, modern forms. Interiors improved dramatically: materials, displays, UI and tactile quality are now competitive with anything in the mid-market. BYD's signature 'Dragon Face' front grill has become iconic. Today, BYD's product range spans from RMB 70,000 to over RMB 1 million. The core BYD brand offers BEVs and PHEVs from Seagull to Seal U. Denza, once a joint venture with Mercedes-Benz, now sits in the premium MPV and SUV space with models like the D9 and N7. Yangwang, launched in 2023, is the halo brand: the U8 is a quad-motor off-road SUV that can float, spin in place, and deliver over 1,000 hp. Fang Cheng Bao targets the luxury adventure segment with ruggedised electric crossovers. All brands share common platforms and components. Differentiation is handled via tuning, feature sets and experience layers. This approach minimises complexity, maximises reuse, and allows BYD to cover the entire market efficiently. Geely is BYD's most credible domestic peer. Both are founder-led, private, and vertically capable. But the strategies diverge. Geely has grown through M&A: Volvo, Lotus, Polestar, Proton, Smart, London Taxi. Its SEA platform underpins multiple brands. It has invested in software through ECARX and chips through SiEngine. But Geely's structure is complex. Brands overlap. Platforms fragment. Management bandwidth is stretched. The company's 2024 "Taizhou Declaration" acknowledged the problem and began consolidating assets under two umbrellas: Geely Auto and Zeekr. Progress is ongoing. There are reasons to be cautious about investing in a highly competitive industry with massive fixed costs. But history suggests that winners can create outsized value at times of secular change. Henry Ford pioneered mass production to bring down costs and grow his market, dominating American industry for more than half a century. Toyota did similarly well after the oil shocks of the 1970s made fuel-efficiency paramount. Today, we are in the earliest innings of the Auto industry's shift from mechanical to electrical architectures governed by software. Cars are now consumer electronics and companies like BYD are poised to dominate. Incumbents face a vicious cycle of shrinking market share, falling volumes and higher average unit costs. The trend is clear; the outcome a matter of time. BYD has plenty of market share left to take from legacy OEMs in China and already leads EV sales in Thailand, Vietnam, Brazil and Australia where it is free to compete. A new plant in Hungary will open the European market. The new American tariffs will have minimal effect. Ironically, BYD held back from America because of the political risk. BYD is not without its challenges. Its vertical model creates pressure to maintain full utilisation. Its ADAS systems, though improving, still trail leaders like Huawei. Its brand is growing in popularity overseas but scepticism remains. However, BYD is proceeding from a position of strength. BYD's R&D spend is rising fast and portends even more innovation. And it is building a platform that extends well beyond passenger vehicles to the electrification of the broader industrial economy. It is becoming harder and harder to compete against BYD and I expect many firms will not be viable. I saw the 'innovator's dilemma' up close as a Director of a Mercedes-Benz dealership group near London. Mercedes prioritised market share over profits, and was unwilling or unable to prepare for an electric future. Instead, it planned to retreat into a smaller but higher-price niche where it could trade on its brand legacy and reputation for mechanical excellence. Tellingly, one of our group's final moves before selling to a strategic buyer was to explore a partnership with BYD. BYD is already highly profitable: even with a net cash balance sheet, it raised its return on equity from five per cent in 2021 to twenty-four per cent last year, all while investing heavily in capacity and R&D. It is no longer a venture play but a mispriced opportunity with a clear path to continued success. At a mid-teens multiple of this year's earnings, it is a compelling idea.

BSD Analysis:
The manager presents a compelling bull case for BYD as China's dominant electric vehicle manufacturer and a beneficiary of the country's shift from real estate to advanced manufacturing. BYD has evolved from a battery OEM to China's largest carmaker and the world's top EV producer by volume, capturing 34% of China's NEV market. The company's competitive advantage lies in its vertical integration model, manufacturing everything from batteries to semiconductors in-house, which provides cost control and rapid innovation cycles. The breakthrough Blade Battery technology and e-platform 3.0 architecture enable BYD to launch new models and features in quarters rather than years, exemplified by the profitable sub-$10,000 Seagull model. With 2024 auto revenue of RMB 602 billion (up 42%) and 20.7% gross margins despite aggressive pricing, BYD demonstrates strong operational leverage. The company trades at a mid-teens earnings multiple while generating 24% ROE, presenting what the manager views as a mispriced opportunity in the early innings of automotive electrification. International expansion through new facilities in Hungary and existing leadership in markets like Thailand and Brazil provide additional growth vectors beyond the saturated Chinese market.

Pitch Summary:
Olin Corporation is a cyclical U.S. chemicals and ammunition manufacturer trading at trough valuations that already discount a deep recession. Its core Chlor-Alkali Products (CAP) segment benefits from a structurally improved industry following consolidation and Olin’s “value over volume” discipline, which curtailed capacity and enhanced pricing power. At ~6.6x EV/EBITDA on “recession case” earnings and a 10% FCF yield, Olin is priced below historical trough multiples despite stronger fundamentals and no debt maturities until 2029. The company’s Winchester ammunition business, representing ~40% of EV on peer comps, adds a defensive, cash-generative component anchored by long-term military contracts. Meanwhile, the troubled epoxy segment appears to be bottoming after anti-dumping rulings in the U.S. and EU stabilized pricing, and a key Dow contract renegotiation in 2026 will materially lower costs. Balance sheet leverage (~3x recession EBITDA) is manageable, and the 4% dividend is well-covered. The market’s pessimism ignores Olin’s demonstrated ability to flex capacity, reduce shares outstanding by >25% since 2019, and sustain FCF through cycles. On normalized earnings, shares could deliver 3–4x upside, or 25%+ annualized returns including dividends over five years. The setup resembles a classic industrial deep value play—patient capital can own essential assets at distressed pricing. Tariff risk is minimal given domestic cost advantages and limited global trade exposure.

BSD Analysis:
Olin operates across Chlor-Alkali chemicals, Winchester ammunition, and Epoxy resins. The CAP segment’s oligopolistic structure and production discipline have structurally raised through-cycle margins. Balance sheet: With $2.5B net debt and no maturities until 2029, Olin’s leverage (~2–3x EBITDA) is conservative for a cyclical. Resilience: The Winchester business offsets CAP cyclicality and benefits from multi-year government contracts and high market share. Recovery drivers: Anti-dumping actions should stabilize epoxy, while cost savings from 2026 contract resets will lift profitability. Valuation: The stock’s EV/EBITDA and FCF multiples imply a trough worse than 2020 despite improved industry conditions—offering asymmetric upside. Risk: Near-term volatility from industrial slowdown or prolonged housing weakness, but strong FCF and dividend coverage mitigate downside.

Pitch Summary:
Olin Corporation is a cyclical U.S. chemicals and ammunition manufacturer trading at trough valuations that already discount a deep recession. Its core Chlor-Alkali Products (CAP) segment benefits from a structurally improved industry following consolidation and Olin’s “value over volume” discipline, which curtailed capacity and enhanced pricing power. At ~6.6x EV/EBITDA on “recession case” earnings and a 10% FCF yield, Olin is priced below historical trough multiples despite stronger fundamentals and no debt maturities until 2029. The company’s Winchester ammunition business, representing ~40% of EV on peer comps, adds a defensive, cash-generative component anchored by long-term military contracts. Meanwhile, the troubled epoxy segment appears to be bottoming after anti-dumping rulings in the U.S. and EU stabilized pricing, and a key Dow contract renegotiation in 2026 will materially lower costs. Balance sheet leverage (~3x recession EBITDA) is manageable, and the 4% dividend is well-covered. The market’s pessimism ignores Olin’s demonstrated ability to flex capacity, reduce shares outstanding by >25% since 2019, and sustain FCF through cycles. On normalized earnings, shares could deliver 3–4x upside, or 25%+ annualized returns including dividends over five years. The setup resembles a classic industrial deep value play—patient capital can own essential assets at distressed pricing. Tariff risk is minimal given domestic cost advantages and limited global trade exposure.

BSD Analysis:
Olin operates across Chlor-Alkali chemicals, Winchester ammunition, and Epoxy resins. The CAP segment’s oligopolistic structure and production discipline have structurally raised through-cycle margins. Balance sheet: With $2.5B net debt and no maturities until 2029, Olin’s leverage (~2–3x EBITDA) is conservative for a cyclical. Resilience: The Winchester business offsets CAP cyclicality and benefits from multi-year government contracts and high market share. Recovery drivers: Anti-dumping actions should stabilize epoxy, while cost savings from 2026 contract resets will lift profitability. Valuation: The stock’s EV/EBITDA and FCF multiples imply a trough worse than 2020 despite improved industry conditions—offering asymmetric upside. Risk: Near-term volatility from industrial slowdown or prolonged housing weakness, but strong FCF and dividend coverage mitigate downside.

Pitch Summary:
In previous letters, we discussed McCoy Global, an energy sector name that has performed very well. McCoy is a business that has largely de-linked from direct oil price dependence, thanks to its suite of technologies—such as Case Running Tools and integrated data capture and analysis systems. Historically, we've avoided pure oil or energy plays, and given the current economic uncertainty, this might seem like poor timing to reconsider that stance. However, the exception may prove the rule: it's hard to overlook the deep value in a company like Valeura Energy Inc. (TSX: VLE). This is a company we've recently begun to look at and are now monitoring closely, alongside developments in the oil price. Previously focused on operations in Turkey, Valeura expanded in 2022 by acquiring two of KrisEnergy's Thai offshore licenses: G10/48 (which includes the Wassana oil field) and G6/48 (containing the Rossukon oilfield). The initial purchase price was $3.1 million, with potential additional payments of up to $7 million tied to future development milestones. This was a strikingly low entry price for producing offshore assets, reflecting both the distressed nature of the seller and a broader lack of competition for Southeast Asian energy assets at the time. Fast-forward to 2024, and the company has restructured its operations, consolidating its assets into a single subsidiary. This streamlining not only improves efficiency but also enables the company to make full use of previously accumulated tax losses—something the CEO estimates could contribute an additional $200 million in annual cash flow. Valeura has also initiated a share buyback program for 7.5 million shares and has already repurchased nearly 1 million shares, or about 1% of its outstanding stock, in Q1 2025. The company holds $238 million in cash, carries no debt, and has a market capitalization of $543 million. Production increased by 12% in 2024, accompanied by a 2P reserves replacement ratio of 245%, meaning the company replaced more than double the volume of oil it produced over the year. Revenues for 2024 totaled $679 million. Additional exploration drilling is planned for 2025, which should further increase reserves. We'll revisit this as results come in, but based on assets, earnings, and cash flow, the set-up appears highly compelling.

BSD Analysis:
The manager identifies Valeura Energy as an exceptional deep value opportunity in the energy sector, despite historically avoiding pure oil plays. The investment thesis centers on the company's transformational 2022 acquisition of Thai offshore assets for just $3.1 million, representing a remarkably low entry price for producing offshore fields. Valeura's operational restructuring has unlocked significant value through tax loss utilization, with management estimating $200 million in additional annual cash flow benefits. The company's financial position is exceptionally strong with $238 million cash, zero debt, and a $543 million market cap, while generating $679 million in 2024 revenues. Production growth of 12% combined with a 245% reserves replacement ratio demonstrates both operational excellence and resource expansion. The active share buyback program, having repurchased 1% of shares in Q1 alone, signals management confidence and shareholder-friendly capital allocation. With additional exploration drilling planned for 2025, the setup offers compelling value based on assets, earnings, and cash flow generation.

Pitch Summary:
A driver of our returns for the first quarter was again our junior gold mining stocks: Monument Mining Limited and Serabi Gold plc, as well as another smaller undisclosed position. These appreciated by 60.7% and 43.3%, respectively, during the quarter. These businesses have obviously benefited from the increasing gold prices, with the price per ounce of gold now standing at $3,341 versus $2,629 from the prior quarter. But they also have tailwinds from increased production, improvements in production efficiency, and higher gold ore grades. We have discussed in posts elsewhere our model for looking at these types of business (see our Substack articles for more details). In essence these are businesses that sell at a price tied to the commodity price and have total pre-tax income statement expenses approximated by the All-In Sustaining Cost per ounce. The variability and increases in the gold price gives these types of business enormous optionality on future price movements. And at current gold prices there is a very large margin of safety built into these stocks. Monument has not specified how it plans to deploy its excess cash flow, but it is likely to support growth and expansion at its Murchison project in Western Australia. As part of this effort, the company has already begun leasing access to its Burnakura mill to third-party miners, including Odyssey Gold and Great Boulder Resources, which could help accelerate the eventual restart of mining operations at the site. The site is not currently operational due to a combination of prior capital constraints and a strategic decision to defer restart until more favorable economic or partnership conditions are in place.

BSD Analysis:
The manager presents Monument Mining as a compelling junior gold play that delivered exceptional 60.7% quarterly returns driven by both rising gold prices and operational improvements. The investment thesis centers on the company's significant optionality to gold price movements, with current prices providing substantial margin of safety relative to all-in sustaining costs. Monument's strategic approach to its Murchison project in Western Australia demonstrates capital discipline, having deferred restart until favorable conditions emerge while generating interim revenue by leasing mill access to third parties like Odyssey Gold and Great Boulder Resources. This asset-light approach to monetizing infrastructure while building partnerships positions the company well for eventual restart. The manager emphasizes the business model's inherent leverage to commodity prices, where revenue is tied to gold prices while costs remain relatively fixed. With gold prices rising from $2,629 to $3,341 per ounce, Monument benefits from substantial operating leverage and cash flow generation that will likely fund future growth initiatives.