Investment Pitches

Pitch Summary:
First, we remain committed to our positions in Google/Alphabet (NSQQ: GOOGL) and Amazon (NSQQ: AMZN). Even before all the market madness, we already had an affinity for capital-light businesses, which are relatively less vulnerable to tariffs than the heavy industrial portions of the economy. While Amazon and Google will face secondary impacts (e.g., weakening consumer demand in a recessionary environment), they operate under models that can squeeze out efficiency and reward innovations that can help lower prices for consumers. Everyone will be impacted, but we are comfortable with where Amazon and Google remain within a long-term framework.

BSD Analysis:
The manager maintains a bullish stance on Alphabet, emphasizing the company's capital-light business model as a defensive characteristic against tariff-induced economic headwinds. The thesis centers on Alphabet's operational efficiency and innovation capabilities that enable cost reduction for consumers during economic stress. While acknowledging potential secondary impacts from weakening consumer demand in a recessionary environment, the manager expresses confidence in the company's long-term positioning. The investment rationale focuses on structural advantages of technology platforms over heavy industrial businesses in the current tariff environment. The manager views Alphabet as well-positioned to weather economic uncertainty through its scalable business model. This represents a quality-focused approach during market volatility, betting on operational resilience over cyclical recovery. The position reflects conviction in technology leaders' ability to maintain competitive advantages through economic downturns.

Pitch Summary:
Our one new position is wine and beer maker Constellation Brands (NYQQ: STZ). They will get caught up in the tariffs, but it's an extremely well-run company that sells a product that has historically been recession resistant. In other words, they produce a consumer staple that traditionally goes up in times of uncertainty. Interestingly, Berkshire Hathaway disclosed—after our own acquisition—that they had also purchased over $1B of stock in Constellation, which we regard as validation of our own evaluation of the position.

BSD Analysis:
The manager initiates a new bullish position in Constellation Brands, emphasizing the company's recession-resistant consumer staple characteristics during economic uncertainty. The investment thesis centers on alcoholic beverages' historical tendency to perform well during uncertain times, positioning the company as a defensive play. While acknowledging potential tariff impacts, the manager highlights Constellation's exceptional management quality and operational excellence. The fund views alcoholic beverages as consumer staples that traditionally increase consumption during periods of uncertainty and stress. The manager notes significant validation from Berkshire Hathaway's subsequent $1 billion investment in the company, which occurred after their own acquisition. This endorsement from Warren Buffett's organization reinforces the manager's conviction in the investment thesis. The positioning reflects a defensive strategy targeting well-managed companies in recession-resistant sectors. The timing suggests opportunistic entry during market volatility when quality companies may be temporarily undervalued.

Pitch Summary:
It may also be worth noting our small, pre-existing position with electric vehicle maker Rivian Automotive Inc. (NSQQ: RIVN), given Tesla's (NSQQ: TSLA) plummeting value. Rivian offers an ideal scenario in which all production is domestic. The owner, R.J. Scaringe, is a shrewd leader who thinks long-term, and the company offers an attractive balance sheet. They also have a partnership with Volkswagen to develop "next generation software-defined vehicle (SDV) platforms" to be used in vehicles made by both companies. Rivian is well positioned here, offering a good tech-stack built internally. In fact, they are almost as much of a 'car operating system' company as they are a traditional auto manufacturer. They are in a great spot to pick up some of the customers Tesla seems to be bleeding. Certainly, Rivian has a customer base fanatical about its product and willing to sing its praises. They are not making money quite yet, but their upcoming 2026 R2 car model shows real promise. In fact, we suspect it may turn out to be a gamechanger, debuting at nearly half the price (starting around $45,000) as Rivian's other, high-end models and competitive with Tesla's lower tier models.

BSD Analysis:
The manager maintains a bullish position on Rivian, emphasizing the company's domestic production advantage amid tariff concerns and Tesla's declining market position. The investment thesis highlights CEO R.J. Scaringe's long-term strategic thinking and the company's attractive balance sheet as key strengths. The manager views Rivian's partnership with Volkswagen for software-defined vehicle platforms as a significant competitive advantage. The fund appreciates Rivian's internally-built technology stack, positioning the company as much a software platform as a traditional automaker. The thesis emphasizes Rivian's opportunity to capture market share from Tesla's declining customer base, supported by a fanatical customer following. While acknowledging current unprofitability, the manager expresses strong conviction in the upcoming 2026 R2 model as a potential gamechanger. The $45,000 price point represents nearly half the cost of Rivian's premium models while remaining competitive with Tesla's lower-tier offerings, suggesting significant market expansion potential.

Pitch Summary:
We are also holding onto a series of new oil and gas investments we discussed in our previous letter: Tidewater (NYQQ: TDW), Valaris (NYQQ: VAL), and Schlumberger NV (NYQQ: SLB). We see a capital cycle at in play with our new acquisitions positioned favorably compared to some of their chief competitors. Shell (NYSS: SHELL), for example, was a major threat in previous cycles but has since redirected capex that would have gone to offshore drilling into domestic production. Unfortunately, a lot of those domestic fields just aren't what they once were, leaving Shell looking like a depleting asset. Of our new acquisitions, two have gone through significant restructuring of their balance sheets, improving their competitive posture. They're in a typically deep downturn from a cyclical standpoint, but they are poised to do disproportionately well when the cycle returns.

BSD Analysis:
The manager presents a bullish cyclical thesis on Schlumberger, positioning the oilfield services company to benefit from an anticipated capital cycle recovery in the energy sector. The investment rationale emphasizes competitive advantages as major competitors like Shell have redirected capital away from offshore operations toward less productive domestic fields. While not explicitly mentioned as one of the two companies with balance sheet restructuring, Schlumberger is positioned favorably within the broader capital cycle framework. The manager views the current deep cyclical downturn as creating opportunity for disproportionate outperformance during recovery. The thesis centers on reduced competitive pressure and improved market positioning versus historical cycles. The fund's conviction reflects confidence in the energy services market's capital cycle dynamics and Schlumberger's ability to capitalize on the recovery. This contrarian value approach targets cyclical energy investments at trough valuations with enhanced competitive positioning.

Pitch Summary:
We are also holding onto a series of new oil and gas investments we discussed in our previous letter: Tidewater (NYQQ: TDW), Valaris (NYQQ: VAL), and Schlumberger NV (NYQQ: SLB). We see a capital cycle at in play with our new acquisitions positioned favorably compared to some of their chief competitors. Shell (NYSS: SHELL), for example, was a major threat in previous cycles but has since redirected capex that would have gone to offshore drilling into domestic production. Unfortunately, a lot of those domestic fields just aren't what they once were, leaving Shell looking like a depleting asset. Of our new acquisitions, two have gone through significant restructuring of their balance sheets, improving their competitive posture. They're in a typically deep downturn from a cyclical standpoint, but they are poised to do disproportionately well when the cycle returns.

BSD Analysis:
The manager maintains a bullish cyclical position on Valaris, emphasizing the company's advantageous positioning within an anticipated offshore drilling capital cycle recovery. The investment thesis highlights competitive improvements as major players like Shell have shifted capital allocation away from offshore operations toward less productive domestic fields. The manager specifically notes Valaris as one of two companies that underwent significant balance sheet restructuring, enhancing competitive positioning for the next cycle. The fund views the current deep cyclical downturn as creating opportunity for disproportionate outperformance during recovery. The thesis centers on reduced competitive pressure and improved financial structure positioning Valaris favorably versus historical cycles. The manager's conviction reflects confidence in the offshore drilling market's capital cycle dynamics. This contrarian value approach targets cyclical investments at trough valuations with improved competitive positioning.

Pitch Summary:
We are also holding onto a series of new oil and gas investments we discussed in our previous letter: Tidewater (NYQQ: TDW), Valaris (NYQQ: VAL), and Schlumberger NV (NYQQ: SLB). We see a capital cycle at in play with our new acquisitions positioned favorably compared to some of their chief competitors. Shell (NYSS: SHELL), for example, was a major threat in previous cycles but has since redirected capex that would have gone to offshore drilling into domestic production. Unfortunately, a lot of those domestic fields just aren't what they once were, leaving Shell looking like a depleting asset. Of our new acquisitions, two have gone through significant restructuring of their balance sheets, improving their competitive posture. They're in a typically deep downturn from a cyclical standpoint, but they are poised to do disproportionately well when the cycle returns.

BSD Analysis:
The manager presents a bullish cyclical thesis on Tidewater, positioning the company to benefit from an anticipated capital cycle recovery in offshore drilling. The investment rationale centers on competitive positioning advantages as major competitors like Shell have redirected capital away from offshore operations toward depleting domestic fields. The manager highlights Tidewater's balance sheet restructuring as a key competitive advantage that improves the company's positioning for the next cycle. The thesis acknowledges the current deep cyclical downturn but emphasizes the company's preparation for disproportionate outperformance during recovery. The fund views the offshore service vessel market as experiencing a capital cycle inflection point. The manager's confidence stems from reduced competition and improved financial structure positioning Tidewater favorably versus historical cycles. This contrarian positioning reflects the fund's value-oriented approach to cyclical investments at trough valuations.

Pitch Summary:
First, we remain committed to our positions in Google/Alphabet (NSQQ: GOOGL) and Amazon (NSQQ: AMZN). Even before all the market madness, we already had an affinity for capital-light businesses, which are relatively less vulnerable to tariffs than the heavy industrial portions of the economy. While Amazon and Google will face secondary impacts (e.g., weakening consumer demand in a recessionary environment), they operate under models that can squeeze out efficiency and reward innovations that can help lower prices for consumers. Everyone will be impacted, but we are comfortable with where Amazon and Google remain within a long-term framework.

BSD Analysis:
The manager maintains a bullish position on Amazon, highlighting the company's capital-light business characteristics as protection against tariff-related headwinds. The investment thesis emphasizes Amazon's operational efficiency and innovation capabilities that enable competitive pricing for consumers during economic stress. While acknowledging potential secondary impacts from reduced consumer spending in a recessionary environment, the manager expresses confidence in Amazon's long-term resilience. The fund views Amazon's business model as relatively insulated from direct tariff impacts compared to heavy industrial sectors. The manager's continued commitment suggests conviction in Amazon's ability to maintain market position through economic volatility. The emphasis on efficiency and innovation indicates appreciation for Amazon's operational leverage and technological advantages. This positioning reflects the fund's preference for scalable technology platforms that can adapt to challenging market conditions.

Pitch Summary:
First, we remain committed to our positions in Google/Alphabet (NSQQ: GOOGL) and Amazon (NSQQ: AMZN). Even before all the market madness, we already had an affinity for capital-light businesses, which are relatively less vulnerable to tariffs than the heavy industrial portions of the economy. While Amazon and Google will face secondary impacts (e.g., weakening consumer demand in a recessionary environment), they operate under models that can squeeze out efficiency and reward innovations that can help lower prices for consumers. Everyone will be impacted, but we are comfortable with where Amazon and Google remain within a long-term framework.

BSD Analysis:
The manager maintains a bullish stance on Alphabet, emphasizing the company's capital-light business model as a defensive characteristic against tariff impacts. The thesis centers on Alphabet's operational efficiency and innovation capabilities that enable cost reduction for consumers during economic uncertainty. The fund views the company as relatively insulated from direct tariff effects compared to heavy industrial businesses. While acknowledging potential secondary impacts from weakening consumer demand in a recessionary environment, the manager expresses confidence in Alphabet's long-term positioning. The investment rationale focuses on the company's ability to maintain competitive advantages through its scalable technology platform. The manager's commitment to the position suggests conviction in the company's resilience during economic volatility. This defensive positioning aligns with the fund's strategy of holding businesses that can adapt and thrive through challenging market conditions.

Pitch Summary:
Airbnb sold off ~19% in three days on tariff headlines, despite having no direct tariff exposure, creating a mispricing relative to its durable cash generation. Shares trade near ~20–22× 2024 FCF (post-tax, incl. SBC) net of cash, which is reasonable for a high-margin, asset-light marketplace with long runway and resilient demand. Marketplace flexibility and value positioning vs. hotels should cushion macro softness as hosts flex price/availability and guests trade down, while young-skewing users support continued penetration gains. Management proved crisis execution in 2020, pivoting rapidly to profit focus (FCF margins 10%→28% from 2021–2024) and now targets adjacent growth (e.g., Experiences) with potential to add $1B+ lines over time. At ~10% hotel TAM penetration and 83% gross / 28% FCF margins, operating leverage remains underappreciated. Indirect macro negatives (lower travel demand, higher compute costs) are partly offset by positives (lower SBC clearing price, possible lower RFR, tighter G&A). Founders own ~27% and CEO Brian Chesky (10%) signals long-term commitment and disciplined capital allocation. The recent selloff effectively prices out ~5 years of earnings, which is excessive for a business with recurring take-rate economics and net cash. Risk/reward skews favorable: downside buffered by cash, variable cost base, and supply elasticity; upside from category growth, mix, and new products. As tariff “fog” clears, a multiple and estimate reset should drive recovery.

BSD Analysis:
Global two-sided marketplace connecting ~5M hosts with travelers; monetizes via service fees on ~$82B GBV (2024). Setup: Tariff panic knocked ~19% off market cap although ABNB is only indirectly affected; valuation now ~20–22× FCF net of cash vs. teens CAGR and best-in-class margins. Durability: Variable supply and value positioning help in downturns; hosts monetize spare space, guests trade down from hotels, preserving take-rate dollars. Execution: 2020 playbook showed ruthless cost control and profit focus; FCF margin expanded to 28% while investing in core. Growth: Penetration runway (young cohort, multi-category use cases), product expansion (Experiences/time monetization), and operating leverage support mid-teens EPS/FCF CAGR through cycle. Risks: Macro travel slump, regulatory frictions, compute cost inflation, mix shift to lower-priced stays; mitigated by marketplace flexibility, strong balance sheet (net cash), and founder alignment.

Pitch Summary:
Intel (INTC) represents a deep-value turnaround opportunity as the market over-discounts its recent struggles and underappreciates the potential of its 18A process node, which could restore manufacturing leadership in 2025. Trading at just ~0.9× book value and near multi-year lows, Intel’s valuation implies permanent decline despite strong assets and strategic importance. Under new leadership and an aggressive roadmap (“5 nodes in 4 years”), Intel is positioned to regain competitiveness vs. TSMC and AMD, while its foundry ambitions (notably a multi-billion AWS contract) provide a large optional upside. The 18A node introduces advanced RibbonFET and PowerVia technologies that may outperform TSMC’s 2nm process, potentially enabling Intel to reclaim CPU market share and attract high-value third-party manufacturing. Intel’s financial rebound could be substantial — normalized EPS of $3–4 by 2027 appears realistic, implying a re-rating from 6× to 12–15× earnings, or 80–100% upside to the mid-$40s. The foundry spin-out, cost cuts, and government-backed CHIPS Act funding further de-risk the capital cycle. Importantly, sentiment is near capitulation levels — a few quarters of margin recovery or successful 18A execution could dramatically shift perception. Intel’s book value (~$23/share) and irreplaceable domestic fabs provide downside protection. Even partial success in its turnaround could drive a doubling of the stock within two years. This is a contrarian bet that Intel’s technological and financial “bottom” is behind it.

BSD Analysis:
Intel designs and manufactures CPUs, GPUs, and semiconductor products, while expanding into contract chip manufacturing (IFS). Thesis: The company’s 18A node, launching in 2025, may restore process leadership and unlock foundry-scale earnings power. Catalyst: Launch of 18A-based chips (Panther Lake, Clearwater Forest), AWS and DoD foundry ramp, margin recovery, and potential IFS spin/IPO. Valuation: At ~$19, Intel trades at 1× book and ~2× sales — implying distress-level pricing. A DCF/SOTP suggests $40–50 intrinsic value as EPS normalizes and margins rise to 25%. Risk/reward: Execution risk is high, but the downside is cushioned by tangible assets, subsidies, and strategic national importance; the upside could be 2–3× on a successful turnaround. Intel is a contrarian, asset-backed, asymmetric bet on the reindustrialization of U.S. semiconductors.

Pitch Summary:
This is a short thesis on Alibaba, based not on company fundamentals but on event-driven geopolitical risk tied to escalating U.S.–China trade tensions. The author argues the Trump administration’s new 2025 tariff regime is not random but a strategic and premeditated plan to reduce U.S. dependence on China, making Alibaba a likely casualty. Recent remarks by Treasury Secretary Bessent that “everything is on the table,” including delisting Chinese ADRs, highlight that the probability of sanctions or trading restrictions is the highest in the company’s history. Despite trading at only 11× forward P/E and holding $60B in net cash, Alibaba remains the most visible symbol of Chinese exposure in Western portfolios, leaving it highly vulnerable to forced divestment. The author believes Trump’s approach is intentionally methodical yet unpredictable, leveraging tariffs and sanctions to accelerate deglobalization ahead of possible 2027 Taiwan tensions. If delisting, sanctions, or investment bans emerge, Alibaba could lose 30–50% of its value as liquidity and investor confidence evaporate. Even without formal sanctions, heightened risk aversion toward Chinese equities could drive multiple compression and capital outflows. Fundamentally, Alibaba’s e-commerce and cloud businesses remain strong, but fundamentals are irrelevant in the face of political isolation risk. The short offers asymmetric payoff: limited loss if tensions ease, large upside if geopolitical escalation continues. This makes BABA a compelling portfolio hedge against further deterioration in U.S.–China relations.

BSD Analysis:
Alibaba operates China’s leading e-commerce, logistics, and cloud computing platforms including Taobao, Tmall, and AliCloud. Thesis: The U.S.–China trade war is entering a sustained escalation phase, with Alibaba directly exposed as both a symbolic and functional target. Catalyst: Trade sanctions, ADR delisting, investment restrictions, or capital flight from Chinese equities. Valuation: At 11× 2025E P/E and $60B net cash, BABA appears cheap, but investors underprice the tail risk of delisting or sanctions that could erase 30–50% of equity value. Event setup: U.S. political rhetoric has shifted from tactical tariffs to full strategic decoupling; Treasury officials now discuss Chinese sanctions publicly, increasing credibility of the threat. Risk/reward: Asymmetric downside hedge—fundamentals are solid, but macro risk dominates; potential portfolio insurance for systemic China-related volatility.

Pitch Summary:
Grocery Outlet (“GO”) operates ~425 discount grocery stores primarily on the U.S. West Coast, selling brand-name products at deep discounts through an “owner-operator” model. Unlike traditional grocers that depend on predictable supply chains, GO buys opportunistic close-out inventory—excess or discontinued goods—from major CPG brands, offering 30–40% savings to consumers. This model makes the business highly counter-cyclical, thriving when consumers are pressured by inflation or economic downturns. Despite this defensive profile, the stock trades at only 5.8× EBITDA, a steep discount to peers like Kroger (8×), Ollie’s (15×), and Sprouts (17×). The company’s valuation has compressed due to a poorly executed ERP system rollout that disrupted inventory planning and caused repeated quarterly misses. That system issue is now largely resolved, and new CEO Jason Potter (ex–The Fresh Market) has reset expectations and lowered growth targets, setting a low bar for recovery. With insider buying and normalized operations, comps should accelerate as consumers trade down amid inflation and tariff-related price pressures. GO’s merchandise mix is less tariff-sensitive than peers, providing another competitive edge in the current macro environment. As comps improve and investor confidence returns, the stock could re-rate toward peer multiples of ~15× EV/EBITDA, implying a ~$40 share price—a 3× upside from current levels.

BSD Analysis:
Grocery Outlet is a value grocer combining the “treasure hunt” appeal of TJX with a food retail base, offering branded grocery goods at steep discounts through an independent operator model. Thesis: Counter-cyclical and inflation-resilient, GO is positioned to outperform as tariffs and cost pressures drive consumers down-market. Catalysts: ERP stabilization, renewed traffic, insider buying, and same-store sales acceleration under a credible new CEO. Valuation: Trades at 5.8× EBITDA versus peer range of 8–17×, implying 2–3× potential re-rating once execution normalizes. Management: New leadership has reset growth guidance conservatively; improved inventory control should drive margin recovery and rebuild trust with investors. Risks: Execution missteps, weak consumer confidence, and slower unit growth could delay a full recovery, but downside is limited by defensiveness of the model and low valuation.

Pitch Summary:
Lever Style is an asset-light apparel supplier redefining Asia’s garment manufacturing landscape through a flexible network of 90+ third-party factories across six countries. Unlike traditional peers owning capital-heavy facilities, Lever Style outsources production while retaining the high-value design, sourcing, and technical functions that ensure quality and brand loyalty. This “platform model” enables it to scale across product categories and reallocate output quickly between Vietnam, China, and other low-cost regions as trade policies or tariffs shift. Since its 2019 IPO, EPS has compounded >20% annually, ROE exceeds 25%, and management has distributed 50% of FCF as dividends while building a net cash balance equal to 34% of market cap. The stock trades at just 3–4× P/E ex-cash, far below both peers (8×) and what an asset-light, high-ROIC compounder deserves. Chairman Stanley Szeto (54% owner) and senior management have consistently bought shares on the open market, signaling strong alignment. Growth should continue via both organic (~10%) and M&A (~20%) expansion, leveraging acquisitions of legacy producers where factories are divested for quick payback. Longer-term, Lever Style plans a digital order-matching platform, akin to “Xometry for apparel,” which could create a scalable, tech-driven marketplace for global brands. Near-term macro softness (tariff uncertainty and apparel demand slowdown) may temporarily slow growth but should expand its acquisition pipeline. Even assuming modest growth, a 10× multiple on 2026 EPS implies >200% upside, while a 20× fair multiple gives 8–9× potential return.

BSD Analysis:
Lever Style supplies 150+ global fashion brands through a distributed network of outsourced factories, combining flexibility, multi-category reach, and high-margin technical know-how. Model: Asset-light “platform” model with scalable economics and limited capital intensity; can shift production geographically, mitigating trade/tariff risks. Thesis: Mispriced as a commodity manufacturer rather than a SaaS-like coordinator; trades at 3–4× P/E (ex-cash) despite 20%+ EPS CAGR, 29–59% ROE (adj.), and strong FCF conversion. Management: Chairman Szeto and team are highly aligned, owning >55%, disciplined in M&A, and maintaining a 50% FCF dividend policy. Valuation: Base-case 10% organic EPS growth and rising margins imply HK$4–5/share fair value (4–5× upside), with further optionality from digital platform rollout or dual listing. Risks: Cyclical apparel demand, customer concentration (top five = 42%), currency exposure, and potential copycats—but scale, relationships, and network effects provide durable moat.

Pitch Summary:
CTT—the Portuguese postal and logistics group—is evolving from a legacy mail operator into a fast-growing Iberian e-commerce logistics platform. Despite mild declines in traditional mail (–6% volumes, still modestly profitable), management is offsetting this with strong growth in Express & Parcels (E&P), now the key value driver. Two December 2024 deals—acquiring customs-clearing firm Cacesa and forming a strategic partnership with DHL—are transformational, doubling E&P EBIT within two years. Cacesa expands cross-border reach, integrates customs and last-mile delivery for Chinese e-commerce clients like Temu, and is 15–20% EPS-accretive at just 5.5× EBIT. The DHL swap gives CTT 25% of DHL’s B2B Spain business and full ownership of DHL Portugal, instantly lifting Spanish share from 7% to 15% and diversifying exposure beyond Asia. Banco CTT, its fast-growing digital bank, adds stability and value, reaching 789k clients and 13% ROTE with continued momentum. Financial Services & Retail, while cyclical, remains solid with dominant 80% share in Portuguese public-debt placement. CTT has a disciplined capital-return policy—52% payout ratio and three buybacks totaling ~10% of shares retired. Pro forma, E&P contributes ~70%+ of group value, and a sum-of-parts implies ~€13/share vs. €6.8 today. With minimal net leverage and 9× FCF multiple, CTT offers compounder-like upside driven by e-commerce penetration and operating leverage in Iberia’s last-mile network.

BSD Analysis:
CTT operates Portugal’s postal, parcel, financial services, and digital banking franchises, now pivoting toward Iberian e-commerce logistics. Catalyst: 2024’s Cacesa and DHL deals expand reach and margin profile, integrating customs, cross-border, and last-mile capabilities for high-growth online retail flows. Thesis: Legacy mail remains mildly profitable; parcels (E&P) now the growth engine with 40%+ revenue growth, 80% EBIT growth, and structural e-commerce tailwinds (Portugal/Spain at just 8–11% penetration vs. 28% in US/UK). Financials: Net debt ~€130m, strong FCF (~€94m 2025E, 9× P/FCF), and active capital returns through 50%+ payout and buybacks. Valuation: SOTP = €1.75B (E&P €750m, Bank €300m, Mail/FS €400m, Real Estate €200m) → €13/share fair value. Risks: Economic slowdown reducing parcel volumes, execution on DHL integration, and dependency on Chinese e-commerce flows—but diversification and scale mitigate these medium-term.

Pitch Summary:
Visional is a founder-led Japanese SaaS company best known for its core platform Bizreach, a two-sided job-matching network with ~90% gross margins and ~40% operating margins. It enables HR departments and headhunters to “scout” mid-career professionals directly at a 15% success fee, undercutting the legacy 35% recruitment model. The company benefits from two secular trends: rising labor mobility in Japan and growing demand for digital (“DX”) talent. Despite tripling earnings since its 2021 IPO, the stock trades at only ~16× ex-cash P/E versus 50× at listing, as the multiple compressed while execution remained solid. Founder/CEO Soichiro Minami (35% owner) continues to run the company with strong alignment and operational discipline. The network’s scale (~2.8M candidates, ~10% market share) gives it a durable two-sided advantage that is hard for incumbents like Recruit or Persol to attack without destroying their own economics. Adjacent businesses such as HRMOS (Workday-like HR SaaS) are growing >30% and nearing breakeven, with optionality from new tools like internal “scouting” software that helps companies retain staff. Cash-rich with negative working capital, Visional generates FCF above earnings and has no debt. At 15× normalized earnings for a high-ROIC, mid-teens grower, the risk/reward looks asymmetric, particularly as margins should expand once non-core investments mature. The biggest cyclical risk is a Japan recession or labor slowdown, but structurally, Visional remains the clear disruptor in mid-career recruitment.

BSD Analysis:
Visional operates Japan’s leading direct-hire recruiting network (Bizreach) and growing HR SaaS platform (HRMOS), serving employers, headhunters, and professionals. Thesis: A highly profitable disruptor with ~40% core margins and 17% revenue growth, priced as a mature cyclical despite stable double-digit expansion and expanding addressable market. Management: Founder-CEO Minami (35% stake) combines entrepreneurial culture with disciplined capital allocation, reinvesting into HRMOS and new internal-mobility SaaS. Financials: Negative working capital and net cash (~¥60B) make growth self-funding; ex-cash P/E ~16×, EV/EBIT mid-teens for 30–40% ROIC. Valuation: DCF supports ~¥10,200/share (≈+40%) assuming decelerating growth and stable margins; current pricing implies steep contraction unlikely to materialize. Risks: Japan recession, hiring freeze, or aggressive response from Recruit/Persol could slow growth, but Visional’s scale advantage and network effects should preserve share and profitability.

Pitch Summary:
During the quarter, two new positions were added. The fist new company added was CBIZ ("CBZ"), a provider of accounting, tax and advisory services to small and midsize businesses. The addition of CBIZ was funded with proceeds from the partial sale of BRO, which had grown to be the largest position in the portfolio. When looking at CBZ, I see a lot of similarities to BRO 4 years ago. Similar to BRO's P&C brokerage services, accounting and tax services are essential and required in any economic environment. High customer retention, ongoing new business wins and moderate pricing increases provide visibility into future revenue growth. CBZ also generates strong free cash flow, which will be utilized for M&A that can contribute more materially to results than for BRO. Valuation was also attractive with the stock trading down to a level not seen since July of 2019. CBZ's multiple compression was driven by a soft earnings report at the end of February when the company forecast lower revenue than expected from Marcum, its most recent acquisition. The sell-off was exacerbated by broader equity market weakness the following week, creating a temporary dislocation that HCM capitalized on. Speaking with management after the earnings call, I gained comfort in the outlook for the acquired Marcum business and increased conviction that the expense synergies associated with the deal are likely to exceed street expectations. Assuming the stock recovers back to its 14x EBITDA multiple, my price target of $114 on 2027 estimates represents +72% upside from our purchase price, or a +22% IRR.

BSD Analysis:
The manager sees CBIZ as an attractive opportunity similar to Brown & Brown four years ago, offering essential accounting and tax services with defensive characteristics. The business model features high customer retention, steady new business wins, and pricing power, providing revenue visibility in any economic environment. Strong free cash flow generation enables accretive M&A that can contribute more meaningfully to growth than larger competitors. The manager capitalized on temporary weakness following disappointing Marcum acquisition results and broader market volatility, with the stock trading at July 2019 levels. Management discussions provided comfort on the Marcum integration and potential for expense synergies to exceed expectations. With a $114 price target based on a 14x EBITDA multiple recovery, the position offers 72% upside and 22% IRR potential, representing compelling risk-adjusted returns for a defensive, cash-generative business.

Pitch Summary:
Top Detractor: Transcat ("TRNS") – 30%. TRNS delivered a disappointing quarter as results from their 2021 Nexa acquisition materially missed expectations. As a reminder, TRNS provides inspection and calibration services for test and measurement instruments in the life sciences and industrial industries. These calibration and testing services are highly regulated by governing bodies (FDA, etc) and are required to be performed on a regular schedule. NEXA provides more project-based consulting services and this part of NEXA's business saw a material decline in performance. Management appears to have ring fenced the issue and more importantly, the core calibration business for TRNS continues to perform well. Given the critical nature of Transcat's services, the continued trend toward outsourcing these services and ample M&A opportunities, I continue to believe in the long-term thesis for TRNS.

BSD Analysis:
Despite a disappointing quarter with the stock declining 30%, the manager maintains conviction in Transcat's long-term thesis. The underperformance was driven by weakness in the project-based consulting services from the 2021 Nexa acquisition, while the core calibration business continues performing well. The manager emphasizes the defensive characteristics of the business model - calibration services are highly regulated by the FDA and other bodies, creating recurring revenue streams that are essential and non-discretionary. The secular trend toward outsourcing these specialized services provides a tailwind, while the fragmented market offers ample M&A opportunities for growth. Management appears to have isolated the Nexa issues, suggesting the core business remains intact. This represents a classic value opportunity where temporary execution issues have created an attractive entry point in a quality, mission-critical business.

Pitch Summary:
Top Contributor: Brown and Brown ("BRO") +22%. BRO was a stand-out performer during the quarter and is a perfect example of the market rotation that occurred in Q1. Fundamental results remained strong, but were largely in line with expectations. However, the stock was a beneficiary of multiple expansion as investors viewed BRO's P&C brokerage business as a safe haven in a tumultuous market. BRO's multiple expanded from 18x EBITDA at the beginning of the quarter to 21x by the end of the quarter. While I continue to expect BRO to post strong results from a combination of pricing, volume and M&A, the stock is trading at a peak multiple on what is likely near peak P&C rates given the prolonged strong pricing environment over the last 4 years. Given the significant outperformance during the quarter and elevated valuation, I significantly reduced the position size as I saw better opportunities in other parts of the market.

BSD Analysis:
The manager views Brown & Brown as a quality business that benefited from a flight-to-safety trade during Q1's market volatility. While fundamentals remain strong with continued growth from pricing, volume, and M&A, the manager is concerned about valuation expansion. The stock's EBITDA multiple expanded from 18x to 21x during the quarter, reaching peak levels. The manager believes P&C insurance rates are near cyclical highs after four years of strong pricing, suggesting limited upside from current levels. Despite expecting continued strong operational performance, the elevated valuation prompted significant position reduction to redeploy capital into more attractive opportunities. This represents a disciplined approach to portfolio management, taking profits on a successful long-term holding when risk-reward becomes less favorable.

Pitch Summary:
We made one new purchase in the quarter: Icon PLC (ICLR). ICLR is a leading contract research organization (CRO) based in Ireland that manages clinical trials for pharmaceutical and biotechnology companies worldwide. Despite some uncertainty driven by recent personnel changes at the Food and Drug Administration (FDA) and the Centers for Disease Control and Prevention (CDC), we believe that new drugs and medical devices will continue to be developed, and scientific progress will continue. New drugs require rigorous clinical testing before reaching the market. As a leading CRO, ICLR will capture its fair share of clinical trials once the dust settles.

BSD Analysis:
GreensKeeper initiated a new position in Icon PLC, demonstrating confidence in the long-term fundamentals of the clinical research organization sector despite near-term regulatory uncertainty. The manager acknowledges headwinds from FDA and CDC personnel changes but maintains conviction that drug development and scientific progress are unstoppable secular trends. Icon's position as a leading global CRO provides exposure to the essential clinical trial infrastructure required for pharmaceutical innovation. The manager views current uncertainty as creating an attractive entry point for a company with durable competitive advantages in a growing market. Icon's Ireland-based operations and global reach position it well to serve multinational pharmaceutical and biotech clients. GreensKeeper appears to value the company's recurring revenue model and essential role in the drug development process. The timing of this purchase during market volatility suggests the manager found compelling value in a high-quality business temporarily impacted by regulatory concerns. The secular growth in drug development spending and outsourcing trends support long-term demand for Icon's services.

Pitch Summary:
Our biggest laggard in the first quarter was Alphabet Inc. (GOOG) -18.3%. Shares sold off following the company's year-end earnings release in February, where it announced plans to increase capital expenditures by a substantial $23 billion in 2025. Recently, GOOG also announced its intention to acquire cybersecurity firm Wiz Inc. for $32 billion, aiming to strengthen its position in the cloud computing market. The scale of these investments is substantial, but we note that GOOG generated $116 billion in operating profits during 2024 and ended the year with $93 billion of excess cash on its balance sheet. In our opinion, the increased capital expenditures are necessary to maintain GOOG's position in its core search market. Beyond search, GOOG continues to build value across YouTube, Google Cloud, Waymo, and DeepMind, all of which leverage GOOG's enviable infrastructure.

BSD Analysis:
Despite Alphabet's 18.3% decline, GreensKeeper maintains a bullish stance, viewing the selloff as an overreaction to necessary strategic investments. The manager emphasizes Alphabet's exceptional financial strength with $116 billion in operating profits and $93 billion in excess cash, providing ample resources for the $23 billion capex increase and $32 billion Wiz acquisition. GreensKeeper frames these investments as defensive moves to protect Alphabet's search dominance and offensive plays to capture cloud market share. The manager highlights the company's diversified value creation across YouTube, Google Cloud, Waymo, and DeepMind, all benefiting from shared infrastructure advantages. The Wiz acquisition specifically targets cybersecurity capabilities to strengthen Google Cloud's competitive position against AWS and Microsoft Azure. GreensKeeper appears to view the market's negative reaction as creating an attractive entry point for a company with dominant market positions and significant growth optionality. The manager's confidence reflects belief in Alphabet's ability to generate returns on these substantial capital investments while maintaining its competitive moats.