Investment Pitches

Pitch Summary:
Eli Lilly was added after a pullback, providing an attractive entry point. We're encouraged and anticipate sustained revenue and earnings growth driven by its leading diabetes and obesity treatments, especially given increasing insurance coverage due to therapeutic validation in related comorbidities for its GLP-1 drugs. We expect ongoing dividend growth at a robust mid-teens rate or higher.

BSD Analysis:
Bristol Gate initiated a position in Eli Lilly following a market pullback that created an attractive entry valuation. The fund's thesis centers on the company's dominant position in the rapidly expanding diabetes and obesity treatment markets through its GLP-1 drug portfolio. Management expects sustained revenue and earnings growth driven by increasing insurance coverage as these treatments gain therapeutic validation for related comorbidities beyond diabetes. The expanding addressable market and improving reimbursement dynamics position Lilly for robust financial performance. Bristol Gate anticipates dividend growth in the mid-teens percentage range or higher, reflecting strong cash flow generation from these high-margin pharmaceutical products. The investment aligns with the fund's dividend growth strategy while capitalizing on secular healthcare trends.

Pitch Summary:
PAR Technology Corp (PAR) – PAR, our restaurant software business had a strong year with annual recurring revenue (ARR) and the number of customer doors both doubling or more during the year. This level of growth is unlikely to be repeated, but management has a high level of visibility into their pipeline, and the company has indicated that ~20% organic growth should continue in the near term. This is in part due to past M&A which has recently seen the company expand their TAM into convenience stores and international markets, and management has further indicated that the M&A pipeline is more full now than it is has ever been. Importantly, revenue has been growing significantly faster than expenses for some time now, and the operating leverage is becoming apparent.

BSD Analysis:
The manager highlights PAR's exceptional growth trajectory with both annual recurring revenue (ARR) and customer doors doubling during the year, demonstrating strong execution in the restaurant software market. While acknowledging this growth rate is unsustainable, management maintains high pipeline visibility and expects continued ~20% organic growth in the near term. The company has successfully expanded its total addressable market (TAM) through strategic M&A into convenience stores and international markets, with management indicating the M&A pipeline is fuller than ever. Most importantly, the company is demonstrating significant operating leverage as revenue growth substantially outpaces expense growth, suggesting the business model is reaching scale and profitability inflection points. The combination of strong organic growth prospects, TAM expansion opportunities, active M&A pipeline, and emerging operating leverage positions PAR well for continued value creation in the restaurant technology sector.

Pitch Summary:
Vistry Group PLC (VTY.L) - Vistry, our UK based homebuilder that is in the midst of becoming a pure play asset light "partnerships" business concluded a difficult year that was marred by accounting problems in their legacy business, which they are in the process of exiting. Quite frankly, there has not been much to like here of late. Capital returns have been slower than expected, the balance sheet remains weaker than expected, and sales rates have been uninspiring. That being said, these problems can be mostly linked to the aforementioned accounting problems which will fade into the background before long, and a gap in government financing for affordable homes in the UK as we have been in year 5 of a 5 year plan. However, the Labour government has committed to creating 1.5 million new homes, and recently announced plans for more than £2 billion in (unlevered) investments in affordable housing. In my view, the stock implies that recent cost overruns will last forever, which is demonstrably false, and that the UK housing market will never rebound, despite the government dedicating resources to ensure that it will. This has been a frustrating period, but I believe that while the timeline has shifted to the right, the thesis remains intact. With time, Vistry's intermediate term goal remains achievable, and even if they fall short, at current prices there should be plenty of upside. Insiders own a considerable amount of stock here, and the company continues to repurchase shares in the open market. Additionally, CEO Greg Fitzgerald made a large open market purchase of shares to start Q2. Notably, historically the Partnerships business has continued to grow through recessionary periods.

BSD Analysis:
The manager's thesis focuses on Vistry's transformation into a pure-play asset-light "partnerships" business, despite recent operational challenges. The company has faced accounting problems in its legacy business (which it's exiting), slower capital returns, weak balance sheet, and uninspiring sales rates. However, the manager attributes these issues to temporary factors including the accounting problems and a gap in UK government financing as the previous 5-year affordable housing plan concluded. The investment case centers on the new Labour government's commitment to build 1.5 million homes and over £2 billion in affordable housing investments. The manager believes the market is incorrectly pricing in permanent cost overruns and assumes no UK housing market recovery despite government support. Strong insider ownership, ongoing share repurchases, and CEO Greg Fitzgerald's recent large open market purchase demonstrate management confidence. The partnerships business model has historically shown resilience, continuing to grow through recessions, providing defensive characteristics during economic uncertainty.

Pitch Summary:
NextNav Inc. (NN) - NextNav, our next generation GPS / wireless spectrum investment is our largest position, and was the largest drag on our performance over the last few months. This is not overly surprising, as I mentioned in our YE'24 letter that I believed that two different venture capital funds that owned NextNav stock – one a 2005 vintage, and one a 2012 vintage – had reached the end of their fund lives, and were thus aggressively selling shares. Likely also contributing to the recent weakness is the fact that NextNav's GAAP financials give no indication of the value of the Company's spectrum licenses. In fact, the GAAP financials are a mess, and likely cause NextNav to appear on any quantitative screen meant to identify candidates for short selling. Given recent market turmoil, I suspect quite a few of those screens are being run. This type of selling – and the resulting stock price weakness – should not concern us. Rather, we should stay focused on NextNav's relationship with the Federal Communications Commission, and the Company's efforts to change the rules that govern the 900 MHz spectrum band. On that front, recent developments have been undeniably positive, and in my view, the odds that NextNav's petition for rule making is approved have gone up considerably. First, in early March newly appointed FCC Chairman Brendan Carr published a blog post called "Boosting GPS and 911 for the USA" that detailed plans to explore alternatives to GPS and improve the accuracy of the 911 system by strengthening the vertical location accuracy requirements. While Nextnav was not mentioned by name, Nextnav is the only company whose technology focuses on these two things. Carr also noted that there is bi-partisan support for these measures and indicated that a Notice of Inquiry (NOI) would be voted on in the March FCC meeting. Nextnav is mentioned specifically by name in that NOI, and support at the meeting from the FCC commissioners was unanimous, with each of them noting the need for a "system of systems" to address the United States' GPS problem. While not unique to NextNav, this is the same term that the company uses, and it clearly indicates that this is a problem without a sole source solution. In other words, NextNav does not have to "win" all alone at the expense of other options. They only need to be part of a solution that may also include other options. This increases the odds of success for NextNav. Importantly, following the meeting Chairman Carr posted on "X" / twitter that he intended to "move on Trump Time" to implement his agenda. In my view, the NOI and the reference to "Trump Time" are both extremely important, because historically the big risk when dealing with the FCC has been that perhaps your proposal winds up stuck in a drawer for five years. That is clearly not the case here. In fact, the timing of the NOI suggests that Carr put this process in motion during his first week on the job: this is a clear priority for him. My best guess going forward is that inclusive of the time required for the NOI process and drafting a Notice of Proposed Rule Making (NPRM), we could see a NPRM by early fall of this year. However, if we are really on Trump Time, it is possible that the NPRM process could run concurrent to the NOI process and accelerate the timeline significantly. I would not be surprised to see NextNav shares double or more on the filing of an NPRM, as this would be a clear sign that NextNav will be well positioned to monetize its spectrum in the not-too-distant future. There is reason to believe that this spectrum could be worth anywhere from 3-5x where NN stock is valued. Second, in mid-March NextNav announced they had re-financed their debt with a $190M 5% convertible note and related warrants that would allow them to repay their existing $70M 10% notes due in December of 2026. Quite frankly, I was surprised by the timing of this transaction as in theory an NPRM should drop with plenty of time to complete a refinancing before the maturity of the existing debt. At the same time, this extra capital provides NextNav with a war chest which can be used to deal with any opposition to their spectrum goals: effectively by paying the opposition to go away. This too theoretically accelerates the timeline. Additionally, the investors that participated – including insiders – are very strong strategic investors that bring more to this transaction than just capital. For example, consider M-Corp, Michael Milken's family office, which is led by Josh Lobel, who was recently named to Trump's National Intelligence Advisory Board. The national security and economic case for using NextNav's technology to improve the United States' GPS system is clear by itself, but it can only help to have someone in Trump's inner circle as part of the NextNav ecosystem. In sum, our investment in NextNav is responsible for a large portion of our year-to-date decline. However, the fundamental developments here have been undeniably positive, and have set us on an accelerated timeline toward success. It is also worth noting that this investment has very little attachment to the real economy, and over time should prove to be completely uncorrelated to the stock market. Those are attractive qualities during times of uncertainty.

BSD Analysis:
The manager's thesis centers on NextNav's valuable 900 MHz spectrum licenses and regulatory approval for rule changes that would unlock significant value. Recent stock weakness is attributed to VC fund liquidations and poor GAAP financials that don't reflect spectrum value, creating short-selling opportunities. However, regulatory developments have been "undeniably positive" with new FCC Chairman Brendan Carr prioritizing GPS alternatives and 911 system improvements - areas where NextNav is the only focused player. The unanimous FCC support for a "system of systems" approach increases NextNav's odds since they don't need to be the sole solution. Carr's "Trump Time" commitment suggests accelerated timelines, with a potential NPRM by early fall that could double the stock price. The $190M refinancing provides a war chest to eliminate opposition and includes strategic investors like Michael Milken's family office, whose leader Josh Lobel sits on Trump's National Intelligence Advisory Board. The manager believes the spectrum could be worth 3-5x current valuation and offers attractive uncorrelated returns during uncertain times.

Pitch Summary:
Lifecore Biomedical Inc (LFCR) - Lifecore, our fill-finish CDMO, remains an ugly duckling. However, new leadership has fixed up under-managed CDMOs in the past, and is making progress. The balance sheet has been strengthened, the sales force has been improved, and new customer wins are being announced. As management continues to execute, capacity utilization will improve, and with it will come tremendous operating leverage and ultimately free cash flow. A recent filing from the company indicates that internally they believe there is an 80% chance the business will be sold within the next 3 years. There is an argument that Lifecore deserves a higher multiple than what Avid Bioservices was recently purchased for, but if Lifecore were to trade at the same multiple as the Avid transaction, shares would be in the low to mid double digits today. Theoretically Lifecore should be a beneficiary of tariffs.

BSD Analysis:
The manager views Lifecore as an "ugly duckling" turnaround story with new leadership that has a track record of fixing under-managed CDMOs. The company has made operational progress including strengthening the balance sheet, improving the sales force, and announcing new customer wins. The investment thesis centers on improving capacity utilization driving operating leverage and free cash flow generation as management executes. A recent company filing indicates management believes there's an 80% probability of a sale within three years. The manager believes Lifecore deserves a higher valuation multiple than Avid Bioservices' recent acquisition, but even at the same multiple, shares would trade in the low-to-mid double digits. The manager also notes Lifecore could theoretically benefit from tariff policies. The combination of operational improvements and potential sale optionality provides multiple paths to value realization.

Pitch Summary:
Avid Bioserves (CDMO) – We had owned shares in Avid at various sizes for most of the existence of LWC. Most recently, I bought a large amount of shares following management's disastrous refinancing of a convertible bond in March of 2024, which I detailed in our Q1'24 letter. In February, the acquisition of Avid by private equity buyers at $12.50 per share was completed. For a few years now the thesis had been that the company had invested heavily in capacity, but capacity had not yet been filled up. As additional revenue came online, it would come with tremendous operating leverage as capacity was utilized. Avid's proxy statement related to the acquisition contained a sensitivity analysis that projects that our thesis will play out exactly as envisioned. Specifically, the analysis shows revenue increasing by 47% and EBITDA by 100% for fiscal year 2026, which for them starts in May of 2025, and then EBITDA doubling again by fiscal 2029 (effectively calendar 2028). That would be a quadrupling of EBITDA well within our prospective investment horizon, and that EBITDA should convert to free cash flow at very high levels as the company would have been debt free (assuming conversion of convertible bonds), not have to pay much in the way of cash taxes due to the NOLs that were "earned" during our tenure, and not have much in the way of Cap Ex due to the virtually brand new facilities that were paid for during our tenure. There is of course no guarantee the company will hit these numbers; this business can be lumpy. However, pharmaceutical companies tend to have a fairly good idea of what their ordering needs will be well in advance, and recent commentary from industry suppliers has clearly indicated that demand is accelerating. Hitting these numbers is well within the realm of possibility. Thus in my opinion it looks like management and the board sold our company at the bottom of the cycle at a panic price. If the company executes anywhere near as well as the proxy suggests that they think they can, the private equity buyers have taken a home run out of our hands and claimed it as their own. A key part of my investment process is related to understanding the incentives of the people involved, and in this instance I got the people wrong. When we first invested years ago there were activists involved that were theoretically protecting our interests. Those activists exited long ago, and leading up to the sale neither management nor the board had enough skin in the game to protect the interests of small common shareholders like us. Making matters worse, this sale will come with short term taxable gains for us.

BSD Analysis:
The manager's thesis was based on Avid's significant capacity investments that had not yet been fully utilized, creating potential for tremendous operating leverage as revenue filled the excess capacity. The investment was made following a disastrous convertible bond refinancing in March 2024, which the manager viewed as a buying opportunity. The company was acquired by private equity at $12.50 per share in February 2025, which the manager believes was a "panic price" at the bottom of the cycle. Proxy statements revealed management's internal projections showing 47% revenue growth and 100% EBITDA growth by fiscal 2026, with EBITDA doubling again by 2029 - effectively quadrupling EBITDA within the investment horizon. The manager believes this EBITDA would convert to free cash flow at high rates due to the debt-free structure, NOLs, and minimal capex needs from recently built facilities. The manager admits to misjudging management and board incentives, as neither had sufficient skin in the game to protect minority shareholders.

Pitch Summary:
Xponential Fitness (XPOF) - Xponential fitness, a franchisor of boutique fitness concepts, was first introduced in our 1H'24 letter. The thesis was simple: Xponential's crown jewel, Club Pilates, was likely more valuable than the enterprise value of the entire company, essentially giving no value to the company's other fitness concepts. Shares were mispriced due to a short report – much of which was ill founded – that led to the removal of the company's founder and CEO, and a regulatory review. Future growth is very likely because several years' worth of franchise development agreements have already been sold. A new – and highly experienced – management team was brought in to right the ship, and with time the regulatory issues would be cleared, and business would return to "normal." Our investment started as a small position, and the thesis was playing out well as the new management team began to detail the changes that needed to be made (essentially professionalizing systems and processes) and the regulatory clouds began to clear, first with the California Department of Financial Protection and Innovation closing their inquiry with a slap on the wrist, and next with hints that an SEC investigation would resolve similarly. The stock had moved up in price quite a bit, but in my view the situation had also been de-risked materially, so I increased our position size considerably, and made XPOF a top 5 position in Q1. Status as a top 5 position however was very short lived as when XPOF reported earnings in mid-March they indicated store openings were below expectations and provided disappointing guidance going forward. Shares were quickly cut in half from where they were trading just a few weeks before. Despite these negatives, all is not lost. Club Pilates continues to execute well, and management has shown an increasing interest in disposing of subscale brands. Further, the company will be hosting an investor day in May, which rarely happens unless a company has good news to share, so it seems possible that this was a "kitchen sink" quarter for a new management team. Nevertheless, it was a mistake to aggressively upsize the position based on positive regulatory developments while not also seeing positive operational developments.

BSD Analysis:
The manager's thesis centers on Xponential's crown jewel Club Pilates being undervalued relative to the entire enterprise value, creating a sum-of-the-parts opportunity. The investment was initially driven by regulatory overhang from a short report and management turnover, which the manager viewed as temporary headwinds. New experienced management was brought in to professionalize operations, and regulatory issues began clearing with California's inquiry closing with minimal penalties. However, the manager admits to a timing error by aggressively increasing position size based on regulatory progress without corresponding operational improvements. Recent earnings disappointed with lower store openings and weak guidance, causing shares to halve. Despite setbacks, the manager remains cautiously optimistic citing Club Pilates' continued execution, management's focus on divesting subscale brands, and an upcoming investor day in May which typically signals positive developments.

Pitch Summary:
Nabors Industries, the world’s largest land-based driller, trades at distressed levels across its capital structure despite manageable leverage and improving fundamentals. The company operates 159 active rigs globally (75 U.S., 83 international) and benefits from long-term contracts, diversified geographies, and exposure to Saudi Aramco via its SANAD JV. With $688mm in liquidity and no maturities until 2027, Nabors can comfortably execute on its international expansion and technology initiatives. The 9.125% 2030 Senior Priority Guaranteed Notes at 92 offer the best risk/reward, yielding ~11% with strong collateral coverage. The 8.875% 2031s and 1.75% 2029 converts also offer double-digit yields (15–17% YTW) for higher-beta investors. Recent all-equity acquisition of Parker Wellbore adds scale, tubular rentals, and ~$35mm in synergies, supporting midterm deleveraging. International growth—especially in Saudi Arabia, Kuwait, and Argentina—should offset flat U.S. activity, driving incremental free cash flow from late 2025 onward. With a $12.7B asset base (even after a 50% PP&E haircut, 2.4x debt coverage remains), downside appears cushioned while upside comes from credit tightening and commodity recovery. Rating agencies maintain a stable outlook as debt is reduced (~17% YoY) and FCF rises toward $180mm (ex-SANAD) in 2025. If oil stabilizes above $60–65/bbl, Nabors’ bonds could re-rate sharply, offering 20%+ IRRs and 30–50% price upside on normalization.

BSD Analysis:
Nabors operates the largest global land rig fleet with leading presence in U.S. shale, MENA, and Latin America. The company is diversifying into high-margin drilling solutions and technology-enabled services, reducing reliance on U.S. cyclicality. Balance sheet: ~$2.6B total debt, 2.45x net leverage, $688mm liquidity, no maturities until 2027, and stable interest coverage (4.2x). Credit setup: Parker Wellbore acquisition (all-equity) enhances scale and cash generation while avoiding incremental leverage; management targets IG-like metrics longer term. Valuation: Long-dated Nabors bonds trade 600bps wide to fair value, implying distressed risk despite tangible assets exceeding liabilities even under conservative assumptions. Catalysts: OPEC+ production rebound, tariff reprieve, and visible 2025–26 FCF could drive a bond rally. Risks: Prolonged WTI weakness (<$60) or delayed Saudi rig activations could strain cash flow, though international diversification and SANAD JV provide offsets.

Pitch Summary:
Warner Bros. Discovery (WBD) is a diversified global media conglomerate with premium IP across networks, film, and streaming. After the 2022 merger with WarnerMedia, the company suffered from disappointing integration, cord-cutting, and strike-related disruptions, leaving the stock trading at just ~6.4x 2025E EBITDA and a 15% FCF yield. The Networks division, though in secular decline, remains highly cash-generative with $6B in EBITDA and cost-cutting tailwinds from exiting NBA rights. Direct-to-Consumer (Max) has 117M subs, is profitable, and could double EBITDA by 2026 as ARPU rises and content spend rationalizes. The Studio segment—home to Harry Potter, DC, and HBO franchises—should rebound post-strikes with a blockbuster 2025 slate. Deleveraging is the key catalyst: $4B+ in annual FCF can cut net debt to ~3x EBITDA by 2026, unlocking equity value per share with each turn of debt reduction. Sum-of-the-parts math suggests $18/share intrinsic value, while a modest 7x multiple implies $14/share (~75% upside). WBD’s premium IP makes it a strategic M&A target once leverage normalizes. Markets are overly fixated on linear decline and missing the DTC inflection, Studio recovery, and optionality for a breakup or sale. At <8x normalized FCF and half peer multiples, WBD offers a compelling asymmetric long.

BSD Analysis:
WBD’s portfolio includes HBO, Discovery, Warner Bros. studios, and the Max streaming platform—spanning content from prestige drama to reality TV. Investment Case: The market over-discounts cord-cutting pain while underestimating the structural cash flow and leverage-driven equity accretion. Networks: Despite secular decline, cost savings post-NBA rights loss and stable carriage deals sustain multi-billion EBITDA. DTC: Profit inflection underway—117M subs with rising ARPU and disciplined content spend yield a scalable streaming asset. Studios: Rebounds with 2025 blockbusters (Minecraft, Superman: Legacy) and licensing upside from IP sharing. Valuation: At 6.4x EV/EBITDA and a 15% FCF yield, WBD trades well below peers (Fox 9x, Paramount 7.4x). Optionality: Deleveraging, a future Networks spin, or an M&A bid could all catalyze rerating. Risks: Accelerated cord-cutting or DTC execution missteps, but cash generation and IP strength provide downside support.

Pitch Summary:
America’s Car-Mart (CRMT) is the largest publicly traded “buy-here-pay-here” (BHPH) used auto retailer, serving deep subprime customers across the South-Central U.S. The business model—selling and financing used cars in-house—creates a durable moat through underwriting expertise, localized servicing, and long-standing customer relationships. Shares have collapsed on post-COVID credit normalization and leverage concerns, now trading near 0.7x book despite a clear path to recovery as weak 2022–23 loan vintages roll off. Roughly 27% of the portfolio remains from those problematic vintages, meaning credit costs should continue falling through FY26. New originations already yield higher expected returns net of funding costs, driving sequential improvement in blended cash-on-cash performance. The new CEO, Doug Campbell, is overhauling legacy systems—modernizing underwriting, reconditioning, inventory management, and marketing—to lift unit economics and margins. Historically, CRMT generated ~8% ROA and 14% ROE, outperforming both prime and subprime auto lenders. Liquidity has stabilized after equity issuance and covenant relief; deleveraging and diversified funding are underway. While tariffs or recession could dampen volumes, higher new-car prices could expand the subprime customer base, and CRMT’s local relationships help manage credit through cycles. With normalized high-teens ROE potential and 0.7x book value, shares could double as earnings recover and operational improvements take hold.

BSD Analysis:
CRMT operates 154 dealerships in small Southern and Midwestern towns, selling and financing used cars to deep subprime buyers—half of whom are repeat customers. Advantage: Scale, proprietary credit data, and in-person collections allow superior servicing and underwriting vs. fragmented mom-and-pop peers. Problem: COVID-era stimulus and inflated used-car prices led to bad vintages and leverage buildup, crushing near-term earnings. Improvement: Portfolio mix is rapidly shifting—problem vintages now just 27% of loans—and new originations carry stronger yields even after higher funding costs. Management: New CEO is digitizing and professionalizing legacy systems (POS, underwriting, reconditioning), which could structurally lift ROE. Financials: Historically 8% ROA and 14% ROE, implying strong normalized profitability; current valuation (0.7x book) prices in permanent impairment. Risks: Tariffs or recession may tighten affordability but could expand the subprime market; liquidity management remains key. Conclusion: As vintages season and operations modernize, CRMT should regain normalized returns and rerate toward 1.3–1.5x book (~100% upside).

Pitch Summary:
Lottomatica is Italy’s largest integrated gaming operator, leading across online betting, digital casinos, and physical slot networks with a 30%+ market share. Shares have doubled since 2024 yet still trade at only ~7x forward EBITDA and ~13x earnings—cheap for a >20% growth, asset-light franchise. Its online division (46% of EBITDA) benefits from structural tailwinds: rising internet penetration, accelerating igaming adoption, and a regulatory moat from the 2018 “Dignity Decree” banning gambling ads, which entrenched incumbents. Upcoming online licensing reforms lifting entry fees from €200K to €6M will likely force out undercapitalized operators, accelerating consolidation in Lottomatica’s favor. Physical gaming (38% of EBITDA) is slowly declining, but mix shift toward higher-margin online (EBITDA margin 53%) offsets this drag. Regulatory fears are overstated—Italy’s government prefers tight control and tax collection over disruption, and nine-year concessions provide visibility. Historical data show gaming spend rose through the GFC, confirming resilience even in recessions. With new digital share gains, bolt-on M&A (Betflag, SKS365), and scale-driven efficiency, EPS could compound >20% through FY27. A 13x EBITDA multiple for the online segment implies the offline business is valued near zero, offering asymmetric upside. Investors are being paid to own Italy’s entrenched gaming leader underpinned by predictable cash flows, durable brands, and an expanding digital moat.

BSD Analysis:
Lottomatica dominates Italy’s €20B gaming market with omnichannel strength—online betting (Lottomatica, GoldBet, Betflag, SKS365), retail franchises, and 80K+ gaming machines. Thesis: Structural regulation (ad bans, costly licenses) protects incumbents, while consolidation and internet adoption drive online penetration toward UK/Nordic levels. Economics: Online margins >50% vs. ~24% offline; asset-light franchise model yields high ROE (~20%) with modest leverage (2.4x). Valuation: Trades at a 30–70% discount to global peers (Flutter, Entain), even though Italy’s gaming market is Europe’s largest and least cyclical. Resilience: GGR rose 14.5% through the 2008–09 crisis; taxation changes can be offset by payout-rate adjustments. Outlook: As online scales past 50% of EBITDA, margins and FCF inflect higher—yet market still prices in structural decline. Risk/reward: Even assuming offline EBITDA declines 5% annually, current valuation prices in little for the legacy business; regulatory or macro shocks appear already discounted.

Pitch Summary:
EMCOR is a leading U.S. mechanical/electrical contractor whose shares have surged on perceived “AI/data center + reshoring + IIJA” supercycle tailwinds. The short case argues investors are extrapolating peak unit economics: margins have expanded ~400 bps since 2019 and cash gross profit per employee is >50% above 2022. Non-residential leading indicators are rolling—Dodge square-footage starts are back near 2019 and manufacturing starts are down >30% YoY; ABI sits sub-50. Backlog growth skews long-dated while <12-month RPO growth decelerated from ~27% to ~7% through 2024. High-tech manufacturing backlog is down ~30% YoY, with “Networks/Comm” (data centers) offsetting—but that spend is front-loaded and could normalize as hyperscalers shift capex from shells to compute. Fixed-price exposure plus potential tariff/cost headwinds and a 63% union workforce add risk to peak margins. Peer margin lifts (APG, FIX) suggest industry-wide overearning that should draw competition and pressure pricing. Consensus bakes in mid/high-single digit growth and sustained double-digit construction margins; author models revenue slowing and construction EBIT margins reverting toward ~7%. On ~10x EBITA (still above LT average), downside is ~40% over 18–24 months as growth cools and margins mean-revert.

BSD Analysis:
EMCOR provides MEP construction and facilities services via ~100 subs across diversified end-markets; ~45% of construction revenue is from >$10m projects, with “significant” fixed-price mix and 63% unionized labor. Set-up: Stock compounded ~50% annually for three years as manufacturing/data center spend more than tripled in the macro, driving EBITA margins from ~5.6% (2019) to ~9.8% (2024). Demand signals: Dodge starts and ABI have weakened; Census put-in-place growth is decelerating; 10%) appear aided by scarce labor, favorable mix, and disinflation; competition, union bargaining, tariffs/costs, and fixed-price exposure create asymmetry to the downside. Valuation: Shares trade ~10.4x 2025 EBITA (~2 turns above LT avg); author underwrites ~4% revenue CAGR ’24–’27, construction EBIT margin to ~7%, and 10x EBITA—yielding ~40% downside. Risks: Data center wave persists longer; IIJA/CHIPS projects surprise to upside; execution remains best-in-class and backlog converts at higher margins than modeled.

Pitch Summary:
HDFC Bank is India’s largest private bank, with ~11% deposit and ~15% loan market share, and remains the country’s premier retail lender post-merger with its parent, HDFC Ltd. The merger temporarily pressured funding ratios and margins but creates a structurally stronger, fully integrated retail and mortgage powerhouse. HDFC’s deposit franchise continues to grow ~15% YoY, with loan-to-deposit ratio already normalizing from 110% post-merger to <100%. Its non-performing loans remain <2%, well below peers, demonstrating best-in-class underwriting discipline. Cross-selling potential is immense—~70% of former HDFC Ltd customers lack an existing HDFC Bank relationship, offering a multi-year growth lever. The bank’s net interest margin (3.53%) remains below its historical 4%+, providing upside as funding mix improves and wholesale borrowings roll off. HDFC’s superior ROE (~18–20% long term) and conservative credit culture make it the safest large-cap compounder in India’s underpenetrated financial system. Despite leading profitability, it trades at ~2.5x P/B—near GFC trough levels and below weaker peers like ICICI (~3.2x). As NIMs and ROEs revert, a rerating toward 3.0–3.3x P/B implies 20–30% upside plus sustained double-digit EPS growth. HDFC’s scale, asset quality, and structural advantages position it to dominate India’s next leg of credit expansion.

BSD Analysis:
HDFC Bank serves 93M customers across 9,000 locations, spanning retail, SME, wholesale, and treasury operations. The July 2023 merger with HDFC Ltd created India’s first universal retail bank integrating deposits and long-term housing finance. Quality: Over a decade, HDFC has delivered near-20% ROEs and sub-2% NPLs—unmatched among Indian banks. Post-merger normalization: Initial funding strain (LDR 110%, NIM compression) is easing—LDR now <100%, NIM up 8 bps sequentially, setting up a steady return to 3.8–4.0% range. Macro backdrop: India remains underbanked (credit/GDP ~50% vs 200%+ in developed markets), providing long runway for compounding loan and fee growth. Valuation: Trading near crisis-level multiples despite best-in-class quality and scale, HDFC’s rerating toward historical 3–3.5x P/B is likely as margins recover. Risks: Deposit growth lag, policy tightening, or execution delays in merger synergies, but strong retail funding and regulatory backing mitigate downside.

Pitch Summary:
Reliance is a global plumbing components maker best known for SharkBite push-to-connect (PTC) fittings, dominating a repair-driven niche with ~70% U.S. share and strong brand preference among plumbers. About 70% of revenue is U.S.-based and largely tied to resilient repair & remodel, yet the stock trades in Australia and is valued like cyclical building products, not U.S. plumbing peers. Manufacturing onshoring (Cullman, AL) and footprint rationalization (Croydon closure) have improved supply resilience and unit economics; new SharkBite MAX tooling lifts output per cycle ~4x. Management is leveraging distribution to extend into PEX-A and adjacent brands (HoldRite, Eastman, EZ-Flo) and to scale the Holman acquisition bought at ~7x pre-synergy EBITDA. Despite these strengths, shares trade around 11x FY25E EPS and ~9–10x TEV/EBIT—30–40% below U.S. comps like Zurn Elkay and Watts. Tariff risk looks manageable: ~70% of goods are made in-region, China COGS into the U.S. has fallen to ~$120m with line-of-sight for more, and RWC has pricing power in inelastic repair SKUs. Capital deployment is balanced across buybacks, dividends, and tuck-in M&A (assumed ~8x post-synergy), supporting mid-teens EPS CAGR through FY29. A U.S. dual-listing or redomicile could catalyze a peer multiple re-rate; absent that, continued FCF compounding should still close part of the gap. Base case implies ~$0.37 FY29E EPS (USD) and ~22x peer multiple plus dividends → ~$8.40 (USD) / ~A$13.20, >3x from ~$2.44 (USD). Key risks are EMEA/APAC cyclicality and renewed private-label attempts, mitigated by brand loyalty, distribution depth, and diversified manufacturing.

BSD Analysis:
RWC sells mission-critical, low-ticket plumbing parts where failure costs dwarf part price, creating brand- and quality-driven selection in pros’ baskets. Strategy: Protect core PTC leadership, extend the SharkBite halo into adjacent categories (PEX-A, valves, water control), and use broad retail/pro trade distribution to scale acquired SKUs (e.g., Holman) across regions. Durability: Category leadership, shelf space at Home Depot/Lowe’s, and repeat professional preference underpin high mid-cycle ROIC (25%+). Economics: Repair-skewed demand supports steady cash conversion; onshoring and modern tooling raise throughput, cut transit inventory, and support margins (path from ~23% EBITDA margin toward 24–25%). Valuation: At ~11x EPS / ~9–10x TEV/EBIT, RWC trades well below U.S. plumbing comps (often mid-teens EV/EBIT); a U.S. listing could narrow this gap. Risks/mitigants: Tariffs (manageable via pricing and re-sourcing), regional macro in EMEA/APAC (U.S. mix and R&R help), and retailer private label (brand trust/history favors SharkBite).

Pitch Summary:
Sterling rode an extraordinary, AI/data-center and public-spend super-cycle to record growth and margins, but that purple patch looks set to normalize. Mix has pivoted toward data-center site work (now 60%+ of E-Infra backlog), a customer set that increasingly optimizes for cost as schedules stabilize. Backlog growth has slowed and bookings decelerated sequentially, while management is redeploying highway crews to chase higher-margin E-Infra work—evidence of fungible capacity that invites competition and margin mean reversion. Transportation margins have expanded from ~3% (2021) to ~9% (2024) on tight industry capacity; that tailwind fades as IIJA-fueled bid discipline eases. E-Infra EBIT margins hit ~22% in 2024 as hyperscalers prioritized speed over price; that is unlikely to be a steady state. Consensus bakes in MSD/HSD organic growth and another ~300 bps EBIT expansion through 2026—an extrapolation the author views as unrealistic. With total backlog up just ~1% y/y and down q/q, top-line should slow toward LSD growth. As growth cools, owners will press unit costs and contractors’ fees; Sterling’s move to add electrical/mechanical scope may crowd it into tougher head-to-head competition. Shares trade ~10.5x ’25E EBITDA vs a long-term ~6x average, leaving ample multiple risk if margins plateau or slip. Risk/reward skews negative: a re-rate to 7–8x on lower-throughput assumptions implies meaningful downside.

BSD Analysis:
Sterling provides earthwork/site development, heavy-highway, and residential/commercial concrete across three segments—E-Infrastructure (data centers, manufacturing), Transportation, and Building. Set-up: The stock is up >3x since 2022 on AI/CHIPS/IIJA demand; margins and mix are at cyclical highs with E-Infra the key profit engine. Demand: Data-center revenues grew ~90–100% y/y earlier in 2024 but slowed to “50%+” in Q4; backlog rose just ~1% y/y and declined q/q, signaling normalization. Margins: E-Infra EBIT ~22% and Transportation ~9% reflect scarcity and speed premiums that are unlikely to persist as capacity and competitors pivot in; management’s crew mobility underscores that barriers are limited. Consensus risk: Street models MSD/HSD organic growth and further margin expansion; even flat margins could drive misses and a multiple de-rating from ~10.5x toward history (6–8x). Bear case: Normalizing data-center urgency, tougher bidding, and scope expansion into electrical/mechanical compress returns; STRL’s premium multiple leaves little cushion if project timing/quality of backlog disappoints.

Pitch Summary:
Mining revenue & crypto custody flows through an insolvent related party; potential money-laundering; key subsidiaries are insolvent or unaudited; group auditor was fined for quality failures; CEO’s history of alleged fraud and governance coups. Update 5/28/25 - Balance sheet inflated by over $100 million by acquiring private companies and assigning fake, massive valuations to their intangible assets.

BSD Analysis:
Short thesis focuses on opaque disclosures, capex intensity, and power-cost sensitivity across sites (incl. Bhutan/Texas). Cash flows are highly levered to Bitcoin price and halving cycles; expansion plans require sizable capital with uncertain ROI. Watch electricity contracts, self-mining vs. hosting mix, and related-party/sovereign counterparties.

Pitch Summary:
Simon Property Group (SPG) is an attractive investment due to its robust financial health, consistent dividend growth, and strategic positioning in the luxury retail market. The company avoids common REIT pitfalls like excessive shareholder dilution and maintains a manageable debt level. SPG's unique ventures, such as owning stakes in retail brands and offering a branded credit card, further differentiate it from competitors. The stock is considered fairly valued at a P/E of 20 or lower, making it a compelling buy during market uncertainties.

BSD Analysis:
Simon Property Group's financial stability is underscored by its substantial free cash flow and prudent debt management, with the ability to cover debt obligations through cash flow and tangible assets. The company's focus on high-income shoppers and luxury brands insulates it from economic downturns and trade tensions, as these consumers are less price-sensitive. SPG's strategic acquisitions, such as the joint purchase of J.C. Penney, enhance its retail footprint and create synergies within its properties. Despite a current ratio below one, SPG's resilience during the COVID-19 pandemic demonstrates its ability to weather financial stress. The company's diversified income streams, including its eCommerce platform and branded credit card, provide additional growth avenues while maintaining its REIT status. Overall, SPG's combination of strong fundamentals, strategic initiatives, and market positioning make it a solid long-term investment opportunity.

Pitch Summary:
International Housewares Retail is poised for growth due to the recovery of tourism and decreasing rental costs in Hong Kong, which are expected to enhance its profit margins. The company is seen as a better investment compared to Tai Hing Group, which was sold after a significant price increase.

BSD Analysis:
International Housewares Retail benefits from strategic positioning in the retail sector, particularly in Hong Kong, where tourism is rebounding. The reduction in rental expenses further supports margin expansion. The company's focus on household products aligns with consumer trends favoring home improvement and lifestyle upgrades. While the retail sector faces challenges, such as competition and economic fluctuations, International Housewares Retail's operational efficiencies and market positioning provide a competitive edge. The decision to reinvest proceeds from Tai Hing Group into this company underscores confidence in its growth trajectory and potential for shareholder returns.

Pitch Summary:
At the end of the quarter, we established a position in Builders FirstSource, a building products distributor. We bought stock around $126 per share, while Wall Street analysts believe the company should earn nearly $10 per share this year. That feels like a good price for a company of this caliber. Builders is a key support system for the nation's homebuilders. It carries a wide range of products like lumber, millwork, windows and prefabricated components. Increasingly, it provides homebuilders with value-added services that help them build homes with less labor. For example, Builders can frame walls of a home at a central location and deliver panels to a job site for quick assembly. This reduces both labor and lumber waste on the job site and improves the home's structural integrity. The US is likely to have long-term shortages of construction labor, so this off-site assembly creates considerable value and should become a common way to fabricate homes. Builders is by far the largest value-added distributor with 590 branches around the country. It has procurement clout with lumber mills and others, and the sprawling branch network means it usually has lower freight costs to deliver materials to a job site. For good measure, the management team has allocated capital very well over time. Since 2021, Builders has reduced its share count from 204 million to 116 million, while maintaining modest amounts of debt. There is considerable pent-up demand for new homes in the US, but also considerable obstacles to building more homes. These include high interest rates, rising costs of zoning, permitting, labor and construction materials, and political reluctance to incentivize construction of affordable housing in cities. I am not especially confident new home starts are going to spike upwards any time soon. But I am confident that when building does pick up, Builders' earnings power is far beyond the current $10 per share. It earned nearly $17 per share as recently as 2022.

BSD Analysis:
The manager established a position in Builders FirstSource at $126 per share, representing attractive valuation at roughly 12.6x current year earnings estimates of $10 per share. The investment thesis centers on Builders' dominant position as the largest value-added building products distributor with 590 branches nationwide, providing procurement leverage and freight cost advantages. A key differentiator is the company's evolution toward value-added services like off-site wall framing and panel assembly, which addresses chronic U.S. construction labor shortages while reducing waste and improving structural integrity. Management's exceptional capital allocation is evident through aggressive share buybacks, reducing the count from 204 million to 116 million shares since 2021 while maintaining conservative debt levels. The manager acknowledges near-term headwinds including high interest rates and regulatory obstacles but emphasizes the significant earnings leverage when housing construction eventually recovers, pointing to $17 per share earnings achieved as recently as 2022 versus current $10 estimates.

Pitch Summary:
In March, we built a position Aaon Inc., an Oklahoma-based manufacturer of semi-custom heating, ventilation and air conditioning (HVAC) systems for commercial buildings. We've been following Aaon for some time, and pounced after an earnings miss caused the stock to plunge. Aaon's HVAC solutions are popular with schools, shopping centers and other commercial customers with demanding air conditioning needs. Aaon equipment is configurable, whereas most of the giant HVAC brands like Carrier, Lennox and Trane mass-produce units. Historically, Aaon's semi-custom units cost about 20% more than mass-produced units, but deliver lower energy bills over their lifetime. A significant regulatory change mandating the use of more energy-efficient refrigerant came into effect at the end of 2024. Aaon says it benefited from the rule changes and can now produce HVAC systems for only 5%-10% more than standard units. Narrowing the price gap for new equipment should help it accelerate growth from already high levels: earnings per share tripled from 2019 through 2024. Aaon also has a large division that supplies specialized liquid cooling solutions to data centers, where millions of dollars of computer chips cannot overheat for even a minute. This division, BASX, has an enormous backlog and should grow for years. Our basis in the stock is a little over $79 per share.

BSD Analysis:
The manager executed an opportunistic purchase of AAON following an earnings miss that created an attractive entry point around $79 per share. The investment thesis centers on AAON's differentiated semi-custom HVAC approach versus mass-produced competitors like Carrier, Lennox, and Trane. A key catalyst emerged from 2024 regulatory changes mandating energy-efficient refrigerants, which narrowed AAON's historical 20% price premium to just 5-10% while maintaining superior energy efficiency. This competitive advantage should accelerate growth from an already impressive base, with EPS tripling from 2019-2024. The manager also highlights AAON's BASX division serving data center liquid cooling, which carries an enormous backlog driven by critical infrastructure needs where chip overheating cannot be tolerated. The combination of regulatory tailwinds, narrowing price gaps, and data center exposure positions AAON for sustained growth acceleration.