Investment Pitches

Pitch Summary:
We continue to hold a large position in Wise, our cross-border money transfer business. Like Medley, Wise is the cheapest, fastest, and most user-friendly service in its category – offering unmatched transparency in a market long plagued by hidden fees and poor UX. It is attacking a massive addressable market with durable competitive advantages yet has captured only low-single-digit share to date. At its April 3rd Investor Day, Wise laid out a bold vision to scale from £145 billion in FY25 cross-border volume to trillions of pounds over the next decade – positioning itself as the global infrastructure layer for moving money. As a reminder from our investment thesis (link), Wise serves three customer groups – individuals, SMBs, and corporations – while delivering the same core value proposition: speed, cost, and transparency. Among individuals, Wise now has 8.8 million active users (+18% y/y), moving £106 billion (+21%) and generating £1.2 billion in revenue (+16%). The service is incredibly efficient at new customer acquisition, given that two-thirds of new customers arrive via word of mouth. Furthermore, most customers begin with simple money transfer but then tend to quickly adopt additional services such as multi-currency accounts and debit cards, which add another layer of growth at minimal incremental cost to acquire or serve. This £3 trillion market remains deeply underpenetrated, with Wise holding just 5% share, a proportion that is growing capital efficiently with each passing year. Among SMBs, 453,000 customers (+15%) moved £38.9 billion LTM (+24%), generating £435 million in revenue (+11%). Once Wise Business was only a secondary FX solution, but it is now evolving to become many SMBs primary banking solution – handling payments, invoicing, payroll, and interest-earning balances. With integrations across accounting tools and local payment rails, Wise Business is the low-cost solution for global SMBs. This £14 trillion market remains largely untapped, with Wise under 1% share. Wise Platform – the enterprise segment – is the biggest long-term lever. It offers white-label FX infrastructure to large digital banks (e.g. Monzo, Nu Bank, N26), online platforms (e.g. Interactive Brokers, Brex, Ramp), and increasingly, global banks (e.g. Standard Chartered, Morgan Stanley, Itaú). This segment represents ~£15 trillion in annual cross-border volume. After years of investment in enterprise-grade capabilities, Wise has finally begun gaining meaningful traction. As larger institutions continue to migrate towards Wise Platform, the pressure mounts on others to follow suit, lest they fall behind on cost and UX. Importantly, Wise doesn't need to win every large bank in the world – its current partners already represent significant volume potential – but each additional win has the potential to expand its future volumes and revenues by many multiples of its existing size. To close the Investor Day, CEO Kristo Käärmann said the following: "We have every reason to be enthusiastic about this relentless expansion… But we are not in this position by accident, it is a result of over a decade of taking the hard options over the easy ones. It's building infrastructure over gimmicks. It's avoiding distractions, embracing local laws and regulations, financial prudence and steady prioritization of customer outcomes. And the success that we talked about today, it didn't really come overnight. It came over a long term. And it comes through us maintaining our focus on this mission. I think the next 10 years are not going to be easier than the last 14, and they will demand no less discipline in adhering to our principles. But you are in a company like no other in recent history, one that has set the foundations to eventually fix how money works across borders, across national borders for people and for businesses. And it's your support as owners we will keep our focus on becoming the network for the world's money. And this is the point at which both customer and shareholder value are at the greatest and the most aligned." Kristo and the team laid out a vision for a more than 10x increase in volume, yet the tone was anything but promotional. Words like "discipline," "financial prudence," and "shareholder value" were used deliberately. From transcripts, third-party research, and conversations with former employees, this appears to be a genuine part of the company's DNA – not just window dressing for the investment community. At ~30x underlying PBT, 15–17x reported PBT and with ~100% conversion of reported PBT to free cash flow, we're not betting on a binary outcome around Wise's long-term vision. Rather, we're buying a high-quality business with durable advantages, a long reinvestment runway, and attractive returns on incremental capital at a modest multiple relative to its growth. The upside is substantial and the downside appears limited: the company has no debt, and any valuation risk stems from fundamentals and market-assigned multiples. In the event of a global downturn and/or a shift towards global isolationism, Wise's cross-border volumes could be adversely affected, however they should continue to gain market share at a high clip thanks to its low-cost, customer-aligned model.

BSD Analysis:
The manager maintains a strong bull thesis on Wise, emphasizing its position as the lowest-cost, fastest, and most transparent cross-border money transfer service in a market historically plagued by hidden fees and poor user experience. The investment case rests on Wise's massive addressable market opportunity across three customer segments totaling over £30 trillion in annual volume, while currently holding minimal market share. The individual segment shows strong momentum with 8.8 million active users growing 18% annually, moving £106 billion and generating £1.2 billion revenue, with efficient viral customer acquisition and expanding service adoption. The SMB segment represents significant untapped potential in a £14 trillion market where Wise holds under 1% share, evolving from secondary FX solution to primary banking infrastructure. The enterprise Wise Platform segment offers the greatest long-term leverage, providing white-label infrastructure to major financial institutions in a £15 trillion market with accelerating adoption creating competitive pressure. At 15-17x reported PBT with 100% free cash flow conversion, the manager views the valuation as modest relative to growth potential and reinvestment runway. The combination of durable competitive advantages, disciplined management, debt-free balance sheet, and substantial market share gains opportunity creates an attractive risk-reward profile despite potential macro headwinds.

Pitch Summary:
Medley is our largest position at cost. The company operates two high-quality businesses in Japan: a dominant online healthcare jobs marketplace (HR PF) and a growing software segment (Medical PF) that provides mission-critical software to hospitals, clinics, pharmacies, and dental offices. The HR PF segment generated ¥21 billion (~$150 million) of revenue last year at a 42% EBITDA margin. Thus far, HR PF has proven to be very difficult to compete with: the product is cheaper, easier to use, and more effective than alternatives, consistently delivering a higher volume of qualified candidates per listing. While Medley has just 5% market share of total healthcare job transitions, its high customer retention with increasingly larger customer cohorts suggests a long runway for continued industry consolidation. Medical PF operates in a more competitive landscape but offers similar potential. Medley's EMR software, in particular, has high switching costs, and the company is expanding both organically and via low-multiple acquisitions. Win rates are high, and earnings are beginning to inflect upward. The company is on pace to hit its 2029 mid-term targets of ¥100 billion in revenue and ¥20 billion in EBITDA, implying a 30% revenue CAGR and 36% EBITDA CAGR. Nearly all of EBITDA has historically converted to free cash flow. At ~17x NTM cash earnings, the current valuation is too low given the growth and profitability profile. If Medley reaches ¥20 billion of FCF and trades at 20x, it could be worth ¥400 billion (¥12,315 per share) – around 4x today's price – with further upside, as that would still reflect only 10–15% market share in its core verticals. Importantly, Medley is insulated from many of the macroeconomic risks facing global markets. Its services are mission-critical within a non-cyclical, domestically focused industry, positioning it to remain resilient across a wide range of global scenarios. Furthermore, Medley is led by its Founder, Kohei Takiguchi, who retains 18% ownership of the company and who, according to multiple calls with former Medley employees, is maniacally cost conscious, tracking every penny of expenses and requiring a high IRR to greenlight new initiatives; a rare trait among Japanese Executives.

BSD Analysis:
The manager presents a compelling bull case for Medley, positioning it as the largest holding at cost with a clear path to significant value creation. The investment thesis centers on two complementary business segments: a dominant healthcare jobs marketplace (HR PF) generating ¥21 billion revenue at 42% EBITDA margins, and a growing medical software platform (Medical PF) with high switching costs. The manager highlights Medley's competitive moat through superior product quality, cost advantage, and effectiveness in delivering qualified candidates, despite holding only 5% market share in healthcare job transitions. The company's ambitious 2029 targets of ¥100 billion revenue and ¥20 billion EBITDA imply exceptional growth rates of 30% and 36% respectively, with strong free cash flow conversion. At 17x NTM cash earnings, the manager sees significant undervaluation, projecting potential 4x upside to ¥12,315 per share if the company achieves 20x FCF multiple. The defensive characteristics include mission-critical services in non-cyclical healthcare, domestic focus insulating from global trade tensions, and founder-led management with 18% ownership and disciplined capital allocation. The combination of growth, profitability, competitive positioning, and valuation discount creates an attractive risk-adjusted opportunity.

Pitch Summary:
First Advantage is the leading provider of employment background checks. In 2024, it acquired Sterling Check, the second-largest player, creating a market leader with ~25% share—twice the size of the next competitor. We believe this is a good business in a steady-growth industry, with three compelling idiosyncratic drivers which make it an unusually attractive investment: 1. Cyclical Recovery Ahead The industry has been in a downturn tied to reduced hiring volumes for 2 years. As hiring trends normalize and eventually return to growth, First Advantage will begin to experience multi-year tailwinds. We believe we're near a cyclical trough meaning we have minimal downside and disproportionate upside. 2. Underappreciated Synergies Management initially guided to $50M in synergies from the Sterling deal, which has since been revised upward to $60–70M. We believe the cost synergy opportunity exceeds $100M, representing an incremental 10%+ EPS uplift. The logic of combining both businesses to unlock material synergies is sound and we believe will drive more shareholder value than the market currently expects. 3. Material EPS Growth via Deleveraging FA funded the acquisition with $2.2B of debt (current leverage: ~5x net debt to EBITDA) and 27M new shares. With roughly half the debt floating at 7.5%, deleveraging to 3x over the next few years will significantly increase EPS. Today, First Advantage trades at just 10x our estimate of 2026 EPS. We believe the business can grow earnings over 20% annually without any incremental M&A or share buybacks, which should lead to multiple expansion. Our 5-year target of ~$75 implies a ~400% return from current levels and is based on a 25x multiple on 2030 EPS of $3.00.

BSD Analysis:
The manager presents a compelling multi-factor thesis for First Advantage centered on the transformational Sterling Check acquisition creating a dominant market leader with 25% share. The investment case rests on three key drivers: cyclical recovery from a two-year hiring downturn, underappreciated cost synergies exceeding $100 million, and significant EPS growth through deleveraging from 5x to 3x debt-to-EBITDA. The manager believes the market underestimates synergy potential, with management guidance already revised upward from $50 million to $60-70 million. The deleveraging story provides additional EPS uplift as floating rate debt at 7.5% gets paid down. At 10x estimated 2026 EPS, the valuation appears attractive for a market-leading business in a steady-growth industry. The 5-year price target of $75 implies a 400% return based on 25x 2030 EPS of $3.00, suggesting significant multiple expansion potential as the integration story unfolds.

Pitch Summary:
Wayfair – Wayfair's Q4 revenue was flat year-over-year, and its Q1 outlook called for modest improvement, which was slightly below expectations, reflecting continued softness in the home goods market. Despite near-term headwinds, we remain confident in Wayfair's long-term potential and see significant upside as the category gradually normalizes.

BSD Analysis:
The manager maintains a bullish long-term view on Wayfair despite acknowledging current challenges in the home goods market. Flat Q4 revenue and modest Q1 improvement guidance reflect broader category weakness rather than company-specific issues. The manager's confidence stems from Wayfair's market-leading position in online home goods retail and expectation of category normalization. The thesis appears to be based on cyclical recovery potential as the home goods market eventually rebounds from current softness. While near-term performance may remain challenged, the manager sees significant upside once market conditions improve. This represents a contrarian bet on Wayfair's ability to benefit disproportionately from category recovery given its scale and market position. The investment appears predicated on timing the cyclical bottom in home goods demand.

Pitch Summary:
Revolve – Revolve Group delivered a strong Q4 2024, with net sales up 14% year-over-year to $293.7 million and net income more than tripling to $11.8 million, driven by improved marketing and logistics efficiency, lower return rates, and expanded gross margins. While Q1 guidance was slightly below expectations due to a temporary marketing pause related to wildfires in its core LA market, our long-term thesis remains intact.

BSD Analysis:
The manager maintains confidence in Revolve despite short-term headwinds, emphasizing strong Q4 2024 fundamentals with 14% net sales growth to $293.7 million. The tripling of net income to $11.8 million demonstrates significant operational improvements and margin expansion. Key operational metrics including improved marketing efficiency, logistics optimization, lower return rates, and expanded gross margins indicate a maturing business model. The temporary marketing pause due to LA wildfires is viewed as a one-time event rather than a structural issue. The manager's emphasis on the intact long-term thesis suggests confidence in Revolve's competitive positioning in online fashion retail. The combination of revenue growth and dramatic profit improvement validates the company's operational leverage. This represents a conviction hold through temporary market volatility based on strong underlying business fundamentals.

Pitch Summary:
HelloFresh – HelloFresh reported FY 2024 adjusted EBITDA of €399 million on €7.7 billion in revenue, highlighting the strong early results of its strategic pivot toward efficiency, higher-value customers, and disciplined marketing. In Q4, revenue grew modestly in constant currency (+0.9%) as the company intentionally moved away from low-quality volume growth, leading to notable Adjusted EBITDA margin expansion—especially in the Meal Kit segment. For 2025, HelloFresh is guiding to a ~65% increase in adjusted EBIT, even as revenue is expected to decline by 5%, reflecting a continued focus on long-term profitability over top-line growth. The increased revenue decline was not taken positively by the market, but we believe this disciplined approach is positioning HelloFresh for sustained value creation and makes it a compelling long-term investment.

BSD Analysis:
The manager views HelloFresh's strategic pivot toward profitability over growth as a positive long-term development, despite market skepticism. The company's FY 2024 performance with €399 million adjusted EBITDA on €7.7 billion revenue demonstrates improving unit economics. Management's intentional shift away from low-quality volume growth toward higher-value customers is driving notable EBITDA margin expansion. The guidance for 65% adjusted EBIT growth in 2025, despite a 5% revenue decline, showcases the company's operational leverage and margin improvement potential. While the market reacted negatively to revenue guidance, the manager believes this disciplined approach positions HelloFresh for sustainable value creation. The focus on efficiency and customer quality over pure growth metrics aligns with long-term shareholder value maximization. This represents a contrarian bet on HelloFresh's transformation into a more profitable, sustainable business model.

Pitch Summary:
Uber – Uber posted its strongest quarter yet, with gross bookings rising 18% year-over-year to $44.2 billion and revenue growing 20% to $12.0 billion. Adjusted EBITDA jumped 44% to $1.8 billion, fueled by record demand across both Mobility and Delivery, while free cash flow reached $1.7 billion. Exceeding its three-year financial targets, the company heads into 2025 with accelerating momentum and emerging upside from autonomous vehicles. Uber's growing free cash flow profile is attracting broader investor attention—including a recent investment from renowned value investor Bill Ackman. Our investment thesis remains intact.

BSD Analysis:
The manager maintains strong conviction in Uber, citing the company's strongest quarterly performance with impressive scale metrics including $44.2 billion in gross bookings and $12.0 billion in revenue. The 44% jump in adjusted EBITDA to $1.8 billion demonstrates significant operational leverage and margin expansion. Strong free cash flow generation of $1.7 billion validates the business model's cash conversion capabilities. The company's ability to exceed three-year financial targets ahead of schedule indicates management's execution prowess and conservative guidance approach. Emerging autonomous vehicle opportunities provide additional upside optionality beyond the core business. The recent investment from Bill Ackman serves as third-party validation of the investment thesis. The manager views Uber's transformation into a profitable, cash-generative platform as attracting broader institutional interest and supporting multiple expansion.

Pitch Summary:
Carvana – Carvana posted an outstanding fourth quarter, with retail cars sold up 50% year-over-year and revenue rising 46%, making it the company's second-best quarter ever for sales. Profitability reached record levels, with net income of $159 million and an adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization) margin of 10.1%—capping off 2024 as Carvana's first year of consistent quarterly net income. While some investors remain cautious due to its leveraged balance sheet, we believe those concerns will diminish as profitability continues to scale. In our view, Carvana is well on its way to becoming a widely recognized, high-quality business with meaningful long-term upside.

BSD Analysis:
The manager presents a compelling turnaround story for Carvana, highlighting exceptional Q4 performance with 50% growth in retail cars sold and 46% revenue growth. The achievement of consistent quarterly profitability throughout 2024 marks a significant inflection point for the company. Record net income of $159 million and 10.1% adjusted EBITDA margin demonstrate operational leverage and improving unit economics. While acknowledging balance sheet concerns from cautious investors, the manager believes scaling profitability will alleviate these worries over time. The thesis centers on Carvana's transformation from a growth-at-all-costs model to a profitable, sustainable business. The manager views current skepticism as an opportunity, expecting broader market recognition as the company continues to demonstrate consistent profitability. This represents a high-conviction bet on the online used car market's long-term potential.

Pitch Summary:
ThredUp – As highlighted in our Q4 letter, ThredUp preannounced strong results in January, pointing to a meaningful acceleration in both revenue growth and margin expansion. In March, the company issued conservative 2025 guidance, which we believe positions it well to continue to outperform market expectations. Due to having a market cap of just $400 million, ThredUp remains largely under the radar—but we expect that to change over the next 12–18 months as its improving fundamentals attract broader investor attention. It's currently a top three position in the portfolio, and we believe its best days remain ahead.

BSD Analysis:
The manager maintains a strong bullish stance on ThredUp, emphasizing the company's accelerating revenue growth and margin expansion as key drivers. With a modest $400 million market cap, the fund views ThredUp as an undervalued opportunity that remains under institutional radar. The conservative 2025 guidance is seen as a strategic positioning that allows for consistent outperformance of expectations. The manager expects broader investor recognition over the next 12-18 months as fundamentals continue to improve. As a top three portfolio position, this represents a high-conviction bet on the online resale market's growth potential. The thesis centers on ThredUp's operational improvements translating into sustained financial outperformance. The manager's confidence is reinforced by the company's recent strong preannouncement and improving operational metrics.

Pitch Summary:
We have been shareholders of Amazon for quite a few years now. In fact, it is the only mega cap tech business that we own. Not that companies like Microsoft, Google or Meta aren't remarkable businesses with loads of market power and high incremental returns, but in none of them we have been able to find the distinct set of behaviors that we here at Zeno came to call Founders Mindset. Back in 2017, one of us wrote an email to the rest of the team postulating a hypothesis of why Amazon was different. A few paragraphs from that email are worth highlighting today: "Amazon is coming from a much "harder" low margin, low return business and has amassed a huge audience to whom it is adding incredible value. Everyone who experiences Amazon loves it and saves money from using it, both consumers and businesses. Which other of these companies can claim that? One final comment is that Bezos seems a much stronger founder than Zuckerberg or Page and Brin. Maybe Amazon ends up buying Facebook. Can you imagine what it could do with WhatsApp? I think ultimately, all these guys will prosper and eat the cake of the old generation incumbents or provide the tools for the long tail to do that. But Amazon seems to be one that stands taller." It's been 8 years since this email was written and for the most part, it still rings true to us even if some of the "predictions" haven't turned out to be true. While we didn't know Amazon all that well back then, we could see certain traits that resonated deeply with us in terms of how they approached business. Mr. Jassy's letter brings these traits to the surface in a very effective way. In our letter about the Discontinuities of Capitalism we describe a Founders Mindset as an obsession with enhancing long-term value, even if at the expense of short-term profits and margins. Amazon has consistently demonstrated their willingness to not engage in profit maximization in the short term, particularly if it comes at the expense of customers. This in turn, has allowed it to continue to find new opportunities to deploy capital at very high incremental returns. We believe this behavior is unique among its peers. From the day Amazon was founded 30 years ago, an obsessive focus on customers has been a priority over anything else. In 2002, Amazon introduced free shipping on orders over $99 long before it was cheap to do so. Amazon lowered the threshold to $49 and $25 within months, cutting shipping revenue and margin in the process, but removing a large online-shopping pain point. AWS has reduced prices at least 151 times since it started in 2006. Amazon cannibalized its own profitable book business with Kindle, as it thought digital reading was easier, more instant and cheaper for customers. The company has always shown the good and the bad reviews, while other scaled e-commerce players only showed glowing testimonials or no reviews at all. Why is this customer obsession relevant for us as shareholders? Because consistently forgoing short-term gains for long-term loyalty and trust earned is very hard to do, but they are investments whose return is deferred in the form of greater future free cash flow or an insurance against future competitive assault. It also turns size into an asset instead of a liability, as scale can be used to further reduce prices, adding more value to customers and further benefitting the long-term. Andy Jassy famously started AWS from a 6-page memo. He was allocated 57 engineers and access to Amazon's existing data resources to run AWS as a start-up inside Amazon. It was difficult to foresee this $115bn run-rate revenue business when Amazon started as an online book retailer. In our experience, companies with Founders Mindset often give you positive rather than negative surprises. Collaboration and frequently questioning the status quo fosters such optionality, creating value for the long-term. Like everything else in life, Amazon is subject to the laws of entropy and the world may one day conspire against it, but with a culture like this, at the very least, the probabilities of success remain very much in our favor as shareholders.

BSD Analysis:
Zeno presents a compelling long-term bull case for Amazon centered on the company's "Founders Mindset" - a culture of prioritizing customer value over short-term profits. The fund highlights Amazon's consistent willingness to sacrifice margins for customer benefit, citing examples like progressive shipping threshold reductions and AWS's 151 price cuts since 2006. This customer obsession has enabled Amazon to maintain high incremental returns on capital while building competitive moats through scale advantages. The manager emphasizes Amazon's collaborative innovation process and anti-bureaucratic culture as key differentiators from other mega-cap tech peers. AWS's evolution from a 6-page memo to a $115 billion revenue business exemplifies the optionality created by this approach. Zeno views Amazon's ownership mentality and speed-focused decision-making as sustainable competitive advantages. The fund positions Amazon as their only mega-cap tech holding, suggesting high conviction in the investment thesis despite acknowledging entropy risks.

Pitch Summary:
During the quarter we initiated two new investments: Amphenol (described above) and a small position in Ashtead, the second largest operator in the equipment rental sector via its Sunbelt Rentals brand. Ashtead's business model is simple: "we purchase an asset, we rent it to customers through our platform and generate a revenue stream each year we own it (on average, seven years) and then we sell it in the second-hand market and receive a proportion of the original purchase price in disposal proceeds. Assuming we purchase an asset for $100, generate revenue of $60 each year (equivalent to 60% dollar utilization) and receive 35% of the original purchase price as disposal proceeds, we generate a return of $455 on an initial outlay of $100 over a seven-year useful life. We incur costs in providing this service, principally employee, maintenance, property and transportation costs and fleet depreciation." For an end user, choosing to rent equipment not only shifts fixed costs to variable ones, it simplifies day-to-day operations. Instead of financing, purchasing, maintaining, storing, transporting, and eventually reselling an in-house fleet, the rental company bears this cost—typically for about 2% of a project's total cost. If the equipment breaks or is no longer needed Sunbelt is a click or call away from solving the issue. Sunbelt and its largest competitor United Rentals comprise 11% and 15% of the U.S. market, respectively, while nearly half of the industry is served by small players with one to five rental locations. Scale allows for materially better fleet economics—across new purchases, maintenance, and the resale of used equipment. Both Sunbelt and United Rentals have pressed this advantage to grow store counts materially over the past handful of years, via both new greenfield sites and M&A. We see a long runway for market share to consistently tick higher as incremental capital is invested behind a proven playbook. We are drawn to the entrepreneurial culture at Sunbelt and believe recent investments will scale with future growth. As such, we expect margins and returns on capital, which are attractive today, to improve as more nodes are added to the company's densifying network. Given the economic sensitivity of the business we've opted to move slowly in building our position, particularly as it's considered in the context of the broader portfolio.

BSD Analysis:
Ironvine's investment in Ashtead represents a play on equipment rental market consolidation and the secular shift from ownership to rental models. The manager highlights the attractive unit economics of the business model, generating $455 in returns over seven years on a $100 asset investment through rental income and residual value recovery. The value proposition for customers is compelling, converting fixed costs to variable while outsourcing equipment management for approximately 2% of total project costs. Ashtead's Sunbelt Rentals brand holds an 11% U.S. market share in a highly fragmented industry where nearly half the market consists of small operators with 1-5 locations. The manager emphasizes scale advantages in purchasing, maintenance, and resale that enable market share gains through both organic growth and M&A. Ironvine expects improving margins and returns on capital as the company's network densifies and recent investments scale. However, the manager acknowledges the cyclical nature of the business and is building the position gradually given current economic uncertainties and portfolio construction considerations.

Pitch Summary:
These included Amphenol, described in detail above, as well as Honeywell International. Trapped inside Honeywell is a jewel of an aerospace business that is arguably worth as much as Honeywell's total market cap today ($124 billion). The aerospace aftermarket sector is one we've spent considerable time studying over the past two decades. Like HEICO (our third largest investment), Honeywell's aerospace business sells a range of products to airplane manufacturers and owners that are specified into designs with stringent Federal Aviation Administration controls. This lock in has resulted in just a few players with the engineering and regulatory know-how necessary to supply equipment across several key aircraft components. The multi-decade nature of the design, build, and operation of an airplane creates one of the longest product life cycles in industry generally, resulting in predictable demand patterns. The mission critical nature of these components results in pricing power which has enabled strong margins and returns on invested capital. In short, the handful of businesses that fit this description are among the best we know of. Not surprisingly, it's rare to find a high-quality aerospace business trading at a discounted price. Last November, Elliott Investment Management sent a letter to Honeywell's board of directors urging it to separate its aerospace and automation businesses into two standalone companies. The letter lays out a compelling case for the quality of Honeywell's assets and makes a convincing argument that, as independent entities, Honeywell's Aerospace and Automation businesses would benefit from focused management, improved capital allocation, better operational performance, and enhanced oversight. Elliot's letter goes on to argue that Honeywell's shares are woefully undervalued due to complexities endemic to the conglomerate operating model and that by liberating the companies, the conglomerate discount would be remedied. Since then, Honeywell has announced it will follow Elliott's recommendations and is set to spin off its advanced materials business later this year, followed by separating Aero and Automation into two publicly traded companies in 2026. Surprised by Honeywell's willingness to listen to a major shareholder and embrace change, we dove into research to verify the quality of the underlying assets with an emphasis on the opportunity set for the separated aerospace business. After applying conservative estimates to a range of operating and valuation scenarios, we concluded that Honeywell shares carried relatively low risk, leaving a call option on improved performance from the standalone businesses post-spin. On that score, from our research to date, all the evidence suggests that there are several opportunities for just that.

BSD Analysis:
Ironvine's investment in Honeywell is driven by an activist-driven value unlock opportunity centered on the company's high-quality aerospace business. The manager believes HON's aerospace division alone is worth the company's entire $124 billion market cap, representing significant embedded value. The aerospace aftermarket benefits from exceptional competitive dynamics including FAA regulatory barriers, multi-decade product lifecycles, and mission-critical component specifications that create substantial pricing power and predictable demand patterns. Following Elliott Management's activist campaign, Honeywell committed to spinning off its advanced materials business in 2025 and separating aerospace and automation into standalone entities in 2026. Ironvine views this corporate restructuring as a catalyst to eliminate the conglomerate discount and unlock focused management benefits including improved capital allocation and operational performance. The manager's conservative valuation analysis suggests limited downside risk while providing significant upside optionality from the spin-off execution. This represents a classic sum-of-the-parts value play where the market is undervaluing high-quality industrial assets due to conglomerate complexity.

Pitch Summary:
Amphenol has demonstrated a unique ability to adapt and thrive over multiple decades amidst significant shifts in technology, establishing itself as one of the largest and most trusted suppliers of interconnect solutions to the global electronics industry. The interconnect market is a great example of a "picks and shovels" beneficiary of technological innovation. What makes Amphenol a great business, however, is not just the market it sits in but the unique way in which it serves that market through a strategy predicated on diversification and decentralization. If semiconductors are the brain of an electronic system, and power supply the heart, then Amphenol's products are the veins and nerves carrying the signals / power from the brain and heart to the rest of the body. These are typically forgettable products with low selling prices but are mission critical to the performance of systems ranging from laptops, smartphones, and datacenters to aircraft, industrial equipment, cars, and cell towers. While competitors often attempt to align themselves with specific trends in any of these given end markets, Amphenol has positioned itself to benefit from electronics adoption generally, selling hundreds of thousands of different products to tens of thousands of customers across the globe, with no single end market making up more than 25% of its revenue. This diversification results in steadier overall growth, allowing the company to remain focused on the long-term and allocate capital opportunistically during a downturn in any individual segment. Organizationally, Amphenol's structure flies in the face of generally accepted business logic which states that the optimal way to run a manufacturing company is to pursue economies of scale through integration that minimizes footprint and maximizes synergies across corporate functions. Instead, Amphenol is organized around over 130 different business units, each operating independently under a General Manager that has complete authority and accountability over his individual operation. It operates nearly three times the number of factories compared to its largest, more integrated peer, and is present in 15 more countries. This structure comes with short-term costs that are easily identifiable and all too tempting to cut for most managers. On the other hand, the benefits are harder to measure, which makes them less likely to be pursued. Increased agility from localized decision making is difficult to put in a spreadsheet. One cannot calculate the return on investments that were not made due to management's constrained bandwidth for capital allocation. Over the long term though, it is clear the benefits of decentralization have far outweighed the costs. Amphenol has handily outgrown the interconnect market organically and further accelerated that growth with intelligent acquisitions. The result is profit margins that have consistently exceeded the peak rates of its largest peer, even during downturns. One of the few predictions we are comfortable making in the technology sector is that over time humans will use more of it. To accomplish this, the world will need an increasing quantity and complexity of interconnect solutions. In the meantime, we happily rely on Amphenol's General Managers to navigate near-term uncertainty as they always have—at the individual market, product, and customer level—to shareholders' long-term benefit.

BSD Analysis:
Ironvine presents a compelling bull case for Amphenol based on its unique market positioning and organizational structure. The manager views APH as a "picks and shovels" play on technological innovation, benefiting from the secular trend of increasing electronics adoption across diverse end markets. The company's diversification strategy is particularly attractive, with no single end market exceeding 25% of revenue and exposure to tens of thousands of customers globally. Ironvine highlights Amphenol's contrarian decentralized structure of 130+ independent business units as a key competitive advantage, despite higher short-term costs. This organizational model enables superior agility and localized decision-making that has historically driven outperformance versus more integrated peers. The manager notes that APH has consistently achieved profit margins exceeding competitors' peak rates, even during downturns, while maintaining organic growth above market rates supplemented by intelligent acquisitions. The investment thesis centers on the inevitable increase in electronics usage driving demand for more complex interconnect solutions, positioning Amphenol to benefit from this long-term secular tailwind.

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.