Investment Pitches

Pitch Summary:
Our airlines, United Airlines (UAL $58.77) and Delta (DAL $37.29), are the best positioned in the industry in our view. They are trading at 5-6x projected earnings, well below historical levels of 8-9x. We think they are better businesses than they've historically been. A recession could demonstrate that. Earnings would get hit in a recession, but we don't see a long-term impact on UAL or DAL's earnings power. In fact, a recession may cause additional bankruptcies of weaker players, leading to additional capacity reductions that put them in even stronger positions. If they just get back to 2025 estimated earnings power when entering the year and historical multiples in 5 years, you make 11% per year on DAL and 13% on UAL from current prices. We think those are conservative earnings estimates and multiples. Even with a recession, we think returns would be closer to 15-20% per year. United tripled from the lows in August to January, while Delta doubled. When people feel rosier about the economy and industry prospects, the names adjust quickly.

BSD Analysis:
Patient Capital Management positions Delta Air Lines as a top-tier airline investment alongside United, emphasizing the company's superior industry positioning and attractive valuation metrics. Trading at 5-6x projected earnings versus historical 8-9x multiples, DAL represents significant value in the manager's view. The investment thesis rests on structural industry improvements and potential competitive advantages from weaker player bankruptcies during economic stress. Management projects conservative 11% annual returns based on normalized 2025 earnings power and historical multiple expansion over five years. The fund believes actual returns could reach 15-20% annually, supported by DAL's recent doubling from August lows. The manager views current airline businesses as fundamentally stronger than historical precedents, with recession potentially accelerating industry consolidation. Delta's operational excellence and hub-based network provide defensive characteristics while maintaining upside leverage to economic recovery.

Pitch Summary:
Several airlines, including United Airlines Holdings (UAL) and American Airlines Group (AAL) hit JP Morgan's 30-in-30 buying rule (30% decline in 30 days) in March. The signal has a 100% track record of bouncing within 180 days (data goes back to early 90's well before industry improvement). 71% of the time these names gained 50% or more. Our airlines, United Airlines (UAL $58.77) and Delta (DAL $37.29), are the best positioned in the industry in our view. They are trading at 5-6x projected earnings, well below historical levels of 8-9x. We think they are better businesses than they've historically been. A recession could demonstrate that. Earnings would get hit in a recession, but we don't see a long-term impact on UAL or DAL's earnings power. In fact, a recession may cause additional bankruptcies of weaker players, leading to additional capacity reductions that put them in even stronger positions. If they just get back to 2025 estimated earnings power when entering the year and historical multiples in 5 years, you make 11% per year on DAL and 13% on UAL from current prices. We think those are conservative earnings estimates and multiples. Even with a recession, we think returns would be closer to 15-20% per year. United tripled from the lows in August to January, while Delta doubled. When people feel rosier about the economy and industry prospects, the names adjust quickly. We like to monetize volatility, adding to names on weakness and paring back on strength. We sold slightly more than a third of our airline holdings during strength. We've been buying again. This approach can enhance returns.

BSD Analysis:
Patient Capital Management presents a compelling contrarian case for United Airlines, viewing the recent 30% decline as a buying opportunity backed by JP Morgan's historically reliable 30-in-30 signal. The manager emphasizes UAL's superior positioning within the airline industry, trading at deeply discounted 5-6x earnings versus historical 8-9x multiples. The investment thesis centers on structural industry improvements and potential capacity rationalization through weaker competitor bankruptcies during economic downturns. Management projects conservative 13% annual returns based on normalized earnings recovery and historical multiples, with upside potential of 15-20% annually. The fund has tactically managed position sizing, selling during strength and adding on weakness to enhance returns. UAL's recent tripling from August lows to January highs demonstrates the stock's volatility and recovery potential. The manager views airlines as better businesses than historically, with recession potentially strengthening their competitive moats through industry consolidation.

Pitch Summary:
In February I went to Florida with a group of investors to visit Heico, which is one of our largest holdings in our Focused Equity Strategy. Heico is a unique Aerospace company that is the largest seller of Federal Aviation Administration (FAA) approved aircraft replacement parts. We began purchasing the stock in late 2019. Several months later Covid happened, airline traffic collapsed, and Heico's stock was down 50% from the high. Today, more people are flying than ever before, and we are up by over 100% from our purchase price in 2019. In 1990 the Mendelson family took a controlling interest in Heico which at that time sold 1 product, which was an engine combustion chamber. A Boeing 737 has over 300,000 parts. As Heico grew in size they realized that there was a market for selling replacement parts at a discount to the original equipment manufacturer (OEM) part. These replacement parts, which are called PMA parts must be approved by the FAA. Today Heico sells over 20,000 PMA parts and they are adding hundreds more to their catalog every year. These parts typically will cost an airline 30% less than a part from the OEM. Replacement parts for an airplane are incredibly expensive and airplanes can save a ton of money if they buy parts from Heico, which are of the same and sometimes better quality than the OEM. Below is a small bag of 4,000 Spring Seals that fits in the palm of my hand. Believe it or not GE sells this for $100,000! Alternatively, an airline can buy the same bag from Heico for about $70,000. Heico is the Costco of Aerospace companies. Their philosophy is to be a partner with their customers and provide them with great parts and services at a great price. In 2023 Heico acquired Wencor, which was their largest competitor in PMA parts. Today Heico is by far the #1 seller of PMA parts in the world. Airlines prefer to deal with Heico as they can buy all of their PMA parts from one company, and the more they buy the bigger the discount they get. The US Military buys virtually zero PMA parts. Unlike airlines that care about their profits, the US Military has no incentive to save money. Many Military aircraft are derivatives of commercial aircraft. For example, the KC-135 is similar to the Boeing 707. The P-8 Poseidon is similar to the 737. Heico has an abundance of PMA parts that they can today sell to the US Military and save them a significant amount of money. Heico has been trying to sell PMA parts to the Military for years, but they have not been interested as the OEMs have done an amazing job making sure the government pays the highest price. Heico is optimistic that things are changing in Washington, and that the door may be opening for them to sell PMA parts at a lower price to the government. This is potentially a significant long-term opportunity. Heico has said that tariffs will have a minimal impact on them. The cost of raw materials in their products is not significant. They think the added cost of tariffs would be in the single digits and that they would have no problem passing on that cost. Heico has been very acquisitive over the years. Wencor was their largest acquisition ever, but most of their deals tend to be smaller in size. Heico has an advantage in purchasing other companies in that the founders oftentimes want to sell to Heico. Heico typically lets the founder keep an ownership stake in his company, keep all the employees, and they let the founder continue to run their business. This philosophy is almost identical to Berkshire Hathaway's M&A philosophy and some investors think of Heico as the Berkshire Hathaway of Aerospace. Regarding Berkshire Hathaway, they began buying stock in Heico in Q2 of 2024. I'm sure Berkshire would love to buy all of Heico at the right price, but Heico has said that while they are flattered that Berkshire is a shareholder, they are not for sale. We think Heico can grow for a long time as airlines and hopefully the US Military use more PMA parts, as global air travel increases, and as the company continues to make savvy acquisitions. This is a stock we are planning on holding indefinitely, and we don't consider it for sale.

BSD Analysis:
Brasada Capital presents a compelling bull case for Heico Corporation, emphasizing the company's dominant position in the FAA-approved aircraft replacement parts market. The manager highlights Heico's impressive 100%+ return since their 2019 purchase, demonstrating resilience through the COVID crisis. The investment thesis centers on Heico's cost advantage, offering PMA parts at 30% discounts to OEM pricing while maintaining equivalent quality. The recent Wencor acquisition has solidified Heico's market leadership, creating a moat through scale and customer convenience. A significant catalyst lies in potential US Military adoption of PMA parts, representing an untapped market opportunity. The company's acquisition strategy mirrors Berkshire Hathaway's approach, allowing founders to retain stakes and operational control. Berkshire's recent investment validates the quality of the business model and management team.

Pitch Summary:
Arcos Dorados (“Arco”) is the exclusive McDonald’s franchisee for Latin America and the Caribbean, operating over 2,300 restaurants with a dominant market share and strong regional brand loyalty. Despite geopolitical noise, anti-American sentiment risk is minimal in LatAm, where McDonald’s is perceived as local. Operational execution remains robust, offsetting currency pressures and soft macro conditions, with 2024 EBITDA up 6% despite FX headwinds. A 20-year master franchise renewal with McDonald’s has removed a key overhang and provides structural visibility through 2045. Recent refinancing extended debt maturities from 2.9 to 5.9 years and earned Moody’s Ba1 investment-grade rating—the highest in ARCO’s history. Digital and loyalty adoption are key growth drivers: digital now represents ~70% of Brazil sales and loyalty membership rose to 16M, still <20% of total sales, offering a long runway for comp growth. With modernization (EOTF) capex largely complete, unit growth is set to accelerate toward +4–5% annually. Brazil (~50% of revenue) faces some inflation risk, but diversified exposure across NOLAD and SLAD mitigates volatility. At 9x forward P/E and 6x EV/EBIT, ARCO trades well below global QSR peers despite defensive cash flow and improving macro tailwinds. Valuation re-rating toward peer multiples (mid-teens P/E) implies substantial upside.

BSD Analysis:
Largest McDonald’s master franchisee globally, spanning 20+ LatAm markets with ~2,300 units and 85% company-operated. Set-up: Post-renewal franchise certainty, leverage reduction, and investment-grade status improve risk/reward. Operations: Digital mix (~70% Brazil sales) and loyalty program expansion underpin same-store growth and margin stability. Margins: Food cost pressures isolated in Brazil offset by lower costs elsewhere; commodity trends (corn, soy, oil) turning favorable. Financials: Net debt down, maturities extended, and Ba1 rating enhances liquidity; FCF yield near 10%. Valuation: Trades at ~9x ’25E EPS and 6x EV/EBIT vs peers 15–20x; sustained growth and margin defense justify multiple expansion. Risks: FX volatility, regional political shifts, and food inflation; mitigated by diversification, brand strength, and local adaptation.

Pitch Summary:
Kewaunee is the #1 U.S. maker of lab casework, fume hoods, and related furnishings, operating in a rational duopoly (with Mott) and benefiting from sticky, spec-driven demand. New management (Hull/Gardner) unwound loss-making subcontracting, modernized pricing/operations, and lifted margins/ROE to structurally higher levels. A record backlog (€222mm as of 1/31/25, +46% y/y; strong historical 95% R² to next-12-month sales) underpins FY25–26 revenue/EPS strength. The NuAire acquisition adds a high-quality biosafety cabinet franchise and expands the portfolio, with cash EPS accretion despite GAAP amortization. At ~7x TTM EPS and ~7x TEV/EBIT on the author’s numbers, shares discount cyclical and tariff fears despite improved fundamentals. International (India) provides diversification; domestic operations carry pricing power and labor-intensive cost mix that blunts raw-material spikes. Balance sheet is manageable (sale-leaseback and PIK seller note largely excluded from covenant leverage; <1x for bank covenant), and FCF conversion is solid. A potential Russell 2000 inclusion in June could unlock technical demand for a micro-cap with limited float. Risks include federal budget (DOGE) pressure on life sciences/academia, project timing in International, and tariff-driven input volatility. On normalized earnings and peer comp (~16x R2K Value), fair value approaches ~$97–$100 per share.

BSD Analysis:
Designs/manufactures lab casework, fume hoods, countertops; #1 in U.S., #2 competitor Mott (private). Set-up: Post-2019 turnaround replaced money-losing subcontracting with higher-margin manufactured mix, modern pricing, and process discipline; FY24 marked breakout (gross margin +800 bps vs. pre-COVID, ROE 27%). Backlog: $222mm record backlog with a 16-year 95% R² to next-12-month revenue offers unusually high near-term visibility; recent growth skewed to International given site delays. M&A: NuAire adds biosafety cabinets, cross-sell, and scale; cash accretive despite amortization; inventory optimization a near-term cash lever. Balance sheet/Capital return: Net debt ~$54m, covenant leverage well under 1x (ex S/LB & seller note), new 100k buyback (~3.5% of float). Valuation: ~7x TTM EPS and mid-single-digit TEV/EBIT vs. peers at 10–18x; applying ~16x forward to author’s ~$6 FY26 EPS implies ~$97–$100. Risks: DOGE funding cuts, tariff cost creep on fixed-price backlog, insider selling optics; mitigated by higher structural margins, pricing power, and diversified Intl.

Pitch Summary:
Apple represents a timely short opportunity given its heavy dependence on Chinese manufacturing, exposure to retaliatory tariffs, and lack of near-term product innovation. With iPhones assembled primarily in China and a large portion of revenue from Chinese and EU consumers, Apple is uniquely vulnerable in the escalating trade war. Tariffs could add nearly $300 per iPhone, compressing margins and weakening global demand just as consumer spending slows. Further, China and the EU may retaliate against Apple’s App Store commissions (30%/15%), undermining a high-margin profit center. Chinese consumers could also boycott Apple in favor of domestic brands such as Huawei or Xiaomi, as seen previously with Nike versus Anta and Li Ning. EPS could fall 30–50%, reducing 2025E EPS to ~$4.50 and pushing the stock’s 25× NTM P/E to a punitive 40–50×. Buffett’s sale of two-thirds of Berkshire’s Apple position adds negative sentiment to an already deteriorating narrative. Apple’s innovation drought—particularly in AI and new hardware—heightens the risk of multiple compression as investors rotate toward software peers with clearer growth stories. The stock’s vast market cap, limited AI exposure, and complex global supply chain make it an imperfect defensive play during macro uncertainty. A short Apple paired with a long basket of tech peers (GOOGL, META, MSFT, AMZN) isolates this idiosyncratic downside risk.

BSD Analysis:
Apple designs and sells iPhones, Macs, AirPods, and related services, including its high-margin App Store. Thesis: Tariffs, retaliation risk, consumer boycotts, and stagnating innovation create asymmetric downside to consensus estimates. Macro Linkage: Apple’s supply chain exposure to China and its reliance on global discretionary spending make it uniquely fragile in a trade-war environment. Valuation: At 25× NTM P/E on $4.50 2025E EPS, Apple trades near historical peaks despite deteriorating fundamentals; compression to ~17× implies ~$130/share. Catalysts: New tariffs, consumer weakness, attacks on App Store fees, or foreign backlash. Risks: Swift tariff reversal or new product success could unwind the short. Apple remains a symbol of American corporate strength—but also its global vulnerability.

Pitch Summary:
LENSAR was a recent name that we pitched long near the end of February, calling it deeply undervalued and having many characteristics that were ideal for an outsized return in the coming years. What we didn't anticipate was how well the market would digest their earnings release just a few days later, and the stock ended up returning ~80% in a month, not that we're complaining. The annoying part is that the company announced a buyout offer from Alcon (ALC) on March 24th for $14/share with a CVR attached. Annoying because the stock is worth >$20/share, but unfortunately, it looks like the odds are not in our favor to strike down the deal despite our call for one in our recent open letter. LNSR makes its money in two ways. 1. Selling the actual medical devices (or leases) and, 2. Charges for each procedure that is performed. The CVR attached to this transaction is a $2.75/share based on the company being able to achieve 614,000 cumulative procedures with LENSAR's products between January 1, 2026, and December 31, 2027. To put things into perspective, ending FY'24 the company was able to achieve nearly 170,000 procedures. While the goal might be farfetched, it might not necessarily be, and here's why. The company's number of procedures jumped by ~24% y/y between 2023 and 2024, and that was mainly from the drive domestically. Since getting additional clearances internationally in Q3'24, we should be seeing a meaningful uptick in system sales in FY'25, which should fuel additional growth in the international markets. In order for the condition to be met (614k procedures in FY'26 and '27), over the next 3 years, the number of procedures would need to compound at 26.5% p.a. While aggressive, you do need to factor in that the network effects from being under Alcon should help them break into new territories and utilize sales teams to penetrate further into existing ones. This is where the trade gets really interesting. We see no reason why the buyout offer wouldn't go through, so currently, the $14/share price is the floor that the stock should trade at, and anything above is considered the 'option price'. At the time of writing this letter, the 'option' is being priced at -$0.15 due to the transaction being priced under the takeout offer of $14. The deal is expected to close in Q3'25, and once that happens, you'll be entitled to the possible CVR that could pay out if the company meets the conditions by the end of FY'27. So at the current moment, ALC is effectively paying you $0.15/share (~2% annualized yield) with a $2.75/share payout if they meet their target. This means that your CVR call option is effectively free, and you get the upside benefit of the CVR coming to fruition. However, this is not without regulatory risk. Alcon, along with Johnson and Johnson Services, holds around 50% of the market share for cataract surgery devices. That is not an insignificant number, and though LNSR is very small at the moment, we shouldn't discount the probability that the FTC will move to block this deal. Given it is a new administration and not Lina Khan's old one, the jury is out on how they'd respond. The bright side, we think LNSR should be a standalone company, as the buyout price doesn't reflect the full value of the company, in our opinion. The trade-offs here are that you have the deal go through and you're paying very little for the option (mentioned above), or it doesn't, and the price slumps and arguably sets up net new investors for the upside that should materialize in the coming years.

BSD Analysis:
Cedar Grove Capital initiated a long position in LENSAR in late February, viewing it as deeply undervalued with significant upside potential. The position generated an impressive ~80% return within a month following strong earnings. However, Alcon's $14/share buyout offer with a $2.75 CVR represents a disappointing outcome, as the manager believes the company is worth over $20/share. The CVR requires achieving 614,000 cumulative procedures by end-2027, representing a 26.5% annual growth rate from the current ~170,000 procedures. LENSAR's dual revenue model from device sales/leases and per-procedure charges, combined with recent international clearances, supports this growth trajectory. The current trading dynamics create an asymmetric risk/reward profile where investors effectively receive a free CVR option while being paid to wait. Regulatory risk exists given Alcon and J&J's 50% market share in cataract surgery devices, though the new administration's stance remains unclear.

Pitch Summary:
There are usually a few trades in an investor's career that really stay with them, and it can be for a number of reasons, both good and bad. While still early in my career, I think one of them will forever be cemented as the short position we initiated with Hims and Hers Health (HIMS). I think, without a doubt, getting squeezed for nearly a month on the name has to be one of the hardest financial and psychological trades I've ever been a part of. Not because I was wrong, I wasn't, but rather because I had never anticipated a delay in the catalyst coming to fruition that would result in a short squeeze. Just look at the chart below to see how much of a face ripper the name was in Q1. The most annoying part of this trade is that we weren't wrong and still had to deal with the pain and manage risk without blowing out the position. Just like we were able to do in Q4 of last year, we needed to get creative towards the top (without knowing it was the top at the time) to salvage the trade and buy time until what we all knew was inevitable. We ended up sizing up our short position through the rise (via shares) and shorted long-dated options that paid out very attractive premiums — more on this in the position commentary section. The takeaway from this trade is that while we did all the work to prove that our expected outcome was correct, there are always those external factors that can blindside you despite being right. Shorting is hard, but our track record continues to show that not only do we pick good opportunities to bet against, but even during the toughest times, managing risk and rightsizing opportunities in our favor is a skill we've been able to excel at thus far.

BSD Analysis:
Cedar Grove Capital maintained a short position in Hims & Hers Health despite experiencing significant pain during a month-long short squeeze in Q1 2025. The manager emphasizes they were not wrong on their fundamental thesis but were caught off-guard by timing delays in their expected catalyst. They managed risk by increasing their short position through shares and shorting long-dated options for attractive premiums. The position demonstrates the psychological and financial challenges of short selling, even when the underlying thesis proves correct. The manager's confidence in their eventual vindication suggests they expect negative catalysts to materialize later in 2025. Their risk management approach of creative hedging and position sizing appears to have prevented a complete blowout. The trade reinforces their track record of identifying good short opportunities while highlighting the unpredictable timing of market reactions.

Pitch Summary:
@InvestSpecial argues that Lee Enterprises has reached a digital inflection point with over 50% of sales now digital, which should support future FCF acceleration. The stock has been volatile, particularly after a February 2025 cyberattack, but the core digital thesis remains intact. Major shareholders including Hoffman Trust, Quint Digital, and Gabelli Funds are accumulating positions, signaling increasing takeover likelihood despite management resistance via a poison pill. The author sees management as weak but views activist pressure and strategic interest as potential catalysts. The biggest concern is poor EBITDA-to-FCF conversion, keeping the author in wait-and-see mode.

BSD Analysis:
LEE remains a complex turnaround story where operational execution and governance dynamics intersect. The digital revenue mix shift is strategically valuable, but weak cash conversion suggests underlying structural inefficiencies or temporary friction in the transition. The growing activist presence increases the probability of a sale or forced restructuring, especially given the depressed valuation and management entrenchment. A cyberattack-related revenue dip may create transient noise but does not impair the long-term trajectory if digital growth persists. Overall, the setup resembles a classic undervalued special situation with binary outcomes tied to M&A pressure and management's willingness to cede control.

Actual Post Content:
$LEE has been on a wild roller-coaster ride over the past 12 months. First, the stock nearly doubled in value as the company successfully reached its long-awaited digital transition milestones, with 50% of total sales now coming from digital sources. If the theory behind this inflection point holds, we should expect accelerated FCF generation from LEE. After peaking toward the end of 2024, the stock gradually gave up some of those gains before dropping significantly following a cyberattack in February 2025. The full financial impact of the attack remains unclear, but what we do know is that the company continues to grow its digital revenue, and the inflection thesis is still intact. On the negative side, this also reinforces the view that management is subpar. However, one of the largest shareholders, who has expressed interest in acquiring the company, continues to accumulate a sizable stake. Currently, the Hoffman Trust owns nearly 10% of the stock, with significant purchases even at the end of last year at $16+/share vs the stock trading below $10 today. At the end of March 2025, Hoffman publicly announced his intent to buy out the company. In response, management extended the poison pill, originally adopted to guard against another potential buyer, Quint Digital, which owns 12% of the stock. Gabelli Funds also holds a 10% stake, alongside multiple smaller activist funds on the board. Management will certainly try to maintain its grip on power, but I am increasingly convinced that this could end in a takeover soon. The only issue I have with LEE is that it still hasn’t started converting its EBITDA into cash flow, so I’d be curious to hear your thoughts on that. For now, I remain in wait-and-see mode.

URL: https://x.com/InvestSpecial/status/1908086791715823658

Pitch Summary:
The Born Korea is a leading Korean multi-brand F&B franchisor (25 concepts) founded by celebrity operator Paik Jong-won, with ~3,900 outlets and an asset-light royalty mix driving resilient cash flow. Roughly half of operating profit is recurring franchise royalties, and forward growth is anchored by Paik’s Coffee, a value coffee chain (>1,700 stores) comping and opening strongly. Shares sold off ~40% post-IPO on controversy headlines (franchise dispute, labeling/quality issues) that appear transient versus steady unit openings and franchisee pipeline. Core demand and franchise interest have held up, with Paik’s Coffee store growth running high-teens to 20% and early overseas traction (SEA). Balance sheet is net-cash (~₩200bn+) giving strategic flexibility and downside protection. At <4x forward EBITDA, valuation is a deep discount to domestic and global franchise comps despite higher royalty mix and growth. Modernization and brand testing provide a funnel for future concepts while legacy banners (Hansin Pocha, Saemaeul) remain cash generators. Macro sensitivity skews defensive given value positioning—consumers trade down to cheap coffee and affordable casual formats. Re-rating plus continued unit growth can plausibly double equity over 2–3 years. Near-term catalysts include reputational normalization, sustained franchise openings, and international master-franchise announcements.

BSD Analysis:
Asset-light franchisor across 25 brands; ~3,900 outlets; royalties, onboarding fees, and system supply drive cash economics; Paik’s Coffee is the flagship growth engine. Structure & quality: ~50% of operating profit from high-margin recurring royalties; diversified banners reduce concept risk; value price points bolster traffic resilience. Growth algorithm: Paik’s Coffee offers compelling franchisee ROI (low capex, high volume), sustaining double-digit unit growth domestically with early SEA expansion; additional white space from new concepts (chicken, pizza) and revivals. Financials: Net-cash balance sheet supports brand incubation and potential buybacks while cushioning shocks; operating leverage from scale procurement and standardized supply. Valuation: Trades at <4x FWD EBITDA, a steep discount to local peers (5–8x) and global franchise comps (high single/low double-digit EV/EBITDA), unjustified given growth/royalty mix. Risks: Reputation/regulatory scrutiny, coffee competition (Mega/Compose), Korean consumer softness; mitigants include Paik’s public remediation, multi-brand diversification, value positioning, and international optionality.

Pitch Summary:
MGM Resorts International is positioned as a compelling investment due to its strategic focus on share buybacks and its robust operational performance during economic downturns. Despite the recent market sell-off, MGM's decision to eliminate its dividend in favor of aggressive share repurchases, alongside its low price-to-earnings ratio, suggests a strong commitment to enhancing shareholder value. The company's significant presence on the Las Vegas Strip and its expansion into international markets, such as Japan, further bolster its growth prospects.

BSD Analysis:
MGM's strategic sale-leaseback agreement with Vici Properties has unlocked capital for reinvestment into its core operations, allowing the company to focus on its primary business as a casino resort operator. This move mitigates real estate risks and provides financial flexibility, as evidenced by the cap on rent increases tied to inflation. The company's decision to prioritize buybacks over dividends reflects a disciplined capital allocation strategy, particularly given its current P/E ratio of 11, which is attractive relative to industry peers. MGM's strong brand recognition and control over prime real estate on the Las Vegas Strip provide a competitive moat, while its operational resilience during past economic crises underscores its ability to weather market volatility. The ongoing share repurchase program, which accounted for 17.5% of its market cap last year, is likely to enhance earnings per share and drive long-term value creation for investors.

Pitch Summary:
Bird Construction is a compelling investment due to its disciplined capital allocation and ability to generate stable returns in a capital-intensive industry. Despite operating in a low-margin sector, Bird has consistently demonstrated its capacity to compound capital effectively through strategic bidding and operating leverage.

BSD Analysis:
Bird Construction's ability to maintain a ROIC of 20-25% with incremental ROIC exceeding 30% highlights its efficient capital deployment. The company's strategic acquisitions and disciplined reinvestment approach, with a reinvestment ratio of approximately 70%, support a sustainable growth rate of around 14%. Bird's management has also mitigated potential tariff impacts through robust cost pass-through terms, enhancing its investment appeal. The company's backlog with higher embedded margins suggests that NOPAT is compounding faster than revenue, indicating strong operational leverage. Despite these strengths, the market may not fully recognize Bird's value, presenting a potential opportunity for investors.

Pitch Summary:
Bird Construction is undervalued by the market, which fails to recognize its transformation into a capital-efficient compounding business. With a projected ROIC of 20-25% and a reinvestment rate of 70%, Bird is positioned for sustainable growth of 14-17%. Despite these strong fundamentals, the market prices Bird as if it will only grow at 5%, presenting a significant investment opportunity.

BSD Analysis:
Bird Construction's valuation, with an EV/NOPAT of 8.1x, suggests the market is underestimating its growth potential. The company's high ROIC and disciplined reinvestment strategy indicate a robust capacity for value creation. Bird's strategic focus on infrastructure and defense sectors, coupled with its strong backlog and margin improvements, supports a bullish outlook. The market's implied growth rate of 5% is conservative, given Bird's historical performance and future prospects. Investors should consider Bird's potential for continued high ROIC and growth, which could lead to a re-rating as the market recognizes its true value.

Pitch Summary:
@Lordshipstrade argues Nagarro’s roll-up strategy is compromised by poor financial controls and deeply questionable audit outcomes, particularly with its Techmill acquisition. He highlights multiple years of qualified or refused audit opinions, unverifiable receivables, and missing basic documentation that raise concerns about the reliability of Nagarro’s financial statements. Rising leverage and opaque acquisition disclosures deepen the risk. ShadowFall views this as a potential systemic governance issue, not an isolated problem, and calls for BaFin oversight. The thesis positions Nagarro as potentially overstating growth and asset values, with material downside if impairments or regulatory actions occur.

BSD Analysis:
Nagarro exhibits classic roll-up risks: elevated leverage, goodwill buildup, and limited transparency around acquired entities. The inability of multiple auditors to verify basic financial information suggests possible structural control failures. In IT consulting, revenue recognition and receivables management are critical, making these issues particularly dangerous. Sustained inorganic growth without strong post-merger controls often leads to impairments and restatements. If Techmill reflects broader acquisition practices, future write-downs and regulatory scrutiny are probable. Nagarro may still have a competitive position in digital engineering, but governance and financial-quality risks currently dominate the equity debate.

Actual Post Content:
ShadowFall is short Nagarro, $NA9 As highlighted in @DIEZEIT, we believe that Nagarro faces many questions (see below) regarding its acquisitions, financial record keeping, controls and governance. https://zeit.de/2025/14/matthew-earl-wirecard-shortselling-nagarro Nagarro has been very acquisitive since it listed in 2020 while its debt balance has substantially risen. Most of the time there is little financial data available for those acquisitions. But when there is, it is not pretty. For example, in 2022 Nagarro bought a business, reportedly with operations in Singapore, Australia and India, Techmill. In 2021, Techmill’s auditor could not verify significant account receivable balances and qualified the audit. In 2022, Techmill’s auditor could not verify an even greater amount of account receivables, accrued receivables and also other payables and qualified the audit. In 2023, AFTER Nagarro had acquired the business, a new auditor was appointed to Techmill. This new auditor also wouldn’t express an opinion on the audit, highlighting: “The Company does not keep any service reports or deliverables for service rendered...”. In 2023, the purchasing entity of Techmill, Nagarro Global Services Asia, had its auditor highlight that it couldn’t even satisfy the purchase was worth what Nagarro paid. ... In the light of the above, we believe it would be helpful for all stakeholders including BaFin to understand: 1. due-diligence performed; 2. why purchase a business with qualified audits; 3. why post-acquisition audits are still not clean; 4. governance structure; 5. why purchase a business with receivables the auditor could not confirm; 6. recoverability of related-party receivables; 7. revenue attribution to Temenos; 8. goodwill impairment considerations; 9. whether prior-year audit statements for all acquisitions will be released. Vielen Dank

URL: https://x.com/lordshipstrade/status/1907691213156958503

Pitch Summary:
Occidental Petroleum (“Oxy”) remains a high-quality U.S. E&P operator with unmatched scale and technical depth in the Permian Basin, now trading at depressed valuations following a 37% share price decline. The recent completion of the CrownRock acquisition strengthens its acreage position, enhances efficiency, and further cements Oxy’s Permian leadership. Berkshire Hathaway has increased its stake to ~30%, reinforcing long-term confidence and providing strategic optionality. Operationally, Oxy continues to outperform peers—2024 Delaware wells averaged 178 Mbo in 6-month oil production, 39% above industry averages, while other basins also show superior recovery rates. The stock’s weakness is primarily due to a 25–30% drop in crude prices rather than company-specific deterioration. Management remains focused on debt reduction, having already repaid $4.5B in 2024, and targets $15B net debt by 2027, down from $25B today. Assuming $75/bbl mid-cycle oil and steady execution, Oxy can generate ~$8 EPS and over $7B in EBITDA annually. Once deleveraging goals are met, investors should benefit from buybacks and repayment of Berkshire’s preferreds. With normalized commodity prices and balance sheet repair, the stock could reasonably re-rate to $100 per share, offering substantial upside from current levels.

BSD Analysis:
Integrated U.S. E&P with leading Permian exposure and a growing low-carbon solutions segment. Set-up: Share price down 37% on oil price decline, not operational weakness; recent CrownRock acquisition enhances scale and efficiency. Operations: Top-tier well performance (Delaware, DJ, Powder River) demonstrates superior geology, recovery, and technology. Financials: ~$25B long-term debt trending to $15B by 2027 via FCF; $4.5B repaid in 2024. Valuation: At mid-cycle $75/bbl oil, ~$8 EPS supports $100/share fair value (12× earnings). Risks: Commodity volatility, balance sheet leverage, and execution on deleveraging; mitigated by Oxy’s asset quality, Berkshire’s support, and disciplined capital returns.

Pitch Summary:
Thermador Groupe – French distributor of fluid circulation (1.1% position size)
Thermador Groupe is a French distributor of fluid circulation, water management, and HVAC equipment with a market capitalization of circa EUR 600m. The company operates through 18 subsidiaries with strong market positions in niche end markets. The most mature of these subsidiaries have market shares above 30% and mid-cycle operating margins in the mid 20s. While 2024 was a difficult year for the business, the group had delivered consistently strong performance for a number of years in the run up to the most recent downturn. Organic revenue growth was nearly 7% per annum between 2015-2023, with additional growth from value-accretive M&A taking total revenue growth to 13% per annum over that period. Recent cyclical weakness in structurally growing end markets has resulted in a fall in the share price which we believe now offers an attractive entry at an enterprise value of around eleven times 2026 net operating profit after tax.

Thermador sells into residential, industrial, and commercial end markets. Of the EUR 504m 2024 turnover, 82% was derived from France with the remainder coming from other European countries. In terms of end markets, the largest exposure for the company was to residential fluid circulation (43% of sales), followed by industrial fluid circulation (26%), and thirdly residential pumps (17%). The company has a well-diversified supplier base, with approximately 800 suppliers, while the largest accounted for 7% of purchases. The customer base is even more fragmented, with over 33k customers, the largest of which accounted for 6% of sales. This fragmentation in suppliers and customers contributes to Thermador's competitive advantage since the lower-volume orders are difficult for original equipment manufacturers to service directly without Thermador's distribution network. That scale, and associated breadth of product offering, would be difficult for a new entrant to replicate. Additionally, Thermador leverages the benefits of scale across its comparatively small, independent operating subsidiaries, through a centralised logistics centre near Lyon.

Thermador has historically been a resilient business, with revenues only declining 5% in 2009 during the financial crisis and growing each year since, up until 2024. Operating profit margins have also been stable over time, ranging from 13% to 15% between 2014 and 2023, and translating into an attractive average post-tax return on invested capital in the mid teens.

The markets in which Thermador operates have experienced a cyclical downturn over the last 18 months with year-over-year sales declines since the second half of 2023 and a full year decline of 13% for the group as a whole in 2024, and operating margins reached their lowest point since the global financial crisis at 11.9%, two full points below the 13.9% reported in 2023. We believe there are a number of reasons for this. Firstly, the French energy renovation market has seen a slowdown due to delays in implementing the new process for awarding subsidies provided by the "MaPrimeRenov" programme. MaPrimeRenov is a French government grant designed to help homeowners finance energy renovation projects that improve the efficiency of energy consumption in their homes. Due to changes in the process of awarding this subsidy that increased administrative complexity and the number of eligibility criteria at the beginning of 2024, the number of applications and approvals fell sharply. Many of these changes have since been reversed and there is still significant Government support for the programme, evidenced by total funding for MaPrimeRenov continuing to grow over the last 2 years. Additionally, there has been cyclical weakness in French housing starts, a destocking cycle for wholesalers and retailers in the DIY market, deflationary pressure impacting pricing, as well as some subsidiary-specific issues relating to excessive rainfall reducing demand for irrigation products from the Jetly and Odrea subsidiaries.

While we acknowledge that the length of this downturn is difficult to forecast, we see the above issues as temporary rather than structural setbacks, and over the medium to long-term the company is well positioned to benefit from a number of tailwinds. Firstly, the increasing demand from homeowners and landlords to improve the energy and water efficiency of their homes as well as the government incentives in place to help prop up that demand should help drive volume growth. Secondly, the recent cyclical weakness should benefit Thermador given its strong competitive positioning and sound balance sheet, with a net cash position of approximately EUR 30m, as the company is well-positioned to take share from some of its smaller and less financially secure peers. Additionally, market weakness should also give the company a good opportunity to make value-accretive acquisitions at attractive prices. The company has a good M&A track record having made 15 acquisitions in the last 10 years, at an average price to sales multiple of 0.8 times. We estimate, on average, these acquired subsidiaries have low double digit operating margins. This level of valuation alongside tighter working capital controls and operational efficiency improvements post-acquisition mean inorganic growth tends to be value accretive for the group. The solid cash flow generation of the group doesn't only allow for these attractive acquisitions, but also supports an estimated current dividend yield or around 3%.

We don't expect much of a recovery in Thermador's end markets this year. However, we anticipate a modest recovery for 2026, where we expect sales growth of around 7-8%, some of which will be driven by a recovery in the Jetly, Isocel, and most importantly, Thermador subsidiaries, the last of which experienced a year-on-year revenue decline of 32% (the largest across the group) in 2024. All of these subsidiaries have materially higher margins than the group average and, as a result, we expect some operating margin recovery too.

Overall, we believe Thermador represents a compelling investment in a temporarily weakened sector and our ability to look through short-term volatility means we can take advantage from the recent weakness in the share price. With a strong capital allocation track record, an attractive returns profile, and long-term structural tailwinds, we believe the company should be able to grow profitably for many years to come. Valuing the business at 16 times net operating profit after tax gives us 65% upside to the end to 2026.

BSD Analysis:
Ennismore presents a compelling contrarian investment thesis on Thermador Groupe, a French HVAC and fluid circulation distributor trading at an attractive 11x 2026 NOPAT multiple. The manager emphasizes the company's defensive moat through its fragmented customer base (33k customers) and supplier network (800 suppliers), making it difficult for OEMs to bypass their distribution network. Despite 2024's challenging performance with 13% revenue decline and compressed margins to 11.9%, the fund views current weakness as cyclical rather than structural. The investment case centers on recovery catalysts including normalized French energy renovation subsidies (MaPrimeRenov program), housing market stabilization, and inventory restocking cycles. Thermador's strong balance sheet with EUR 30m net cash positions it well for market share gains and value-accretive M&A opportunities during the downturn. The manager projects 7-8% sales growth for 2026 with margin recovery, targeting 65% upside potential. Historical resilience (only 5% revenue decline in 2009) and consistent 13-15% operating margins from 2014-2023 support the quality thesis.

Pitch Summary:
Nike is a global athletic footwear and apparel giant founded in 1964 as Blue Ribbon Sports before rebranding to Nike in 1971. The company has built its dominance through innovative product design, aggressive marketing strategies featuring high-profile athlete endorsements, and a powerful brand identity. The company operates through a diversified business model that includes direct-to-consumer (DTC) sales via its retail stores and digital platforms, as well as wholesale distribution to retailers in 190+ countries. While Nike has successfully expanded beyond its initial running shoe focus to encompass athletic apparel and accessories, footwear accounts for 2/3 of overall sales. Footwear is a simple product to understand, made typically of leather, rubber, foam, and synthetic materials. However, simple does not mean insignificant. There are more nerve endings per square centimeter in the foot than any other part of the body. Our feet constantly supply us with vital information, without our being consciously aware of it. As such, comfortable footwear is deeply connected to the limbic system, regulating emotions, memory, motivation, and social behavior. Being that the product is simple to reverse engineer, it is highly unlikely that a new entrant will create a more comfortable running sneaker that Nike couldn't simply copy. This is good news. The deep reality of Nike's business model is that it relies heavily on building and maintaining mindshare (brand equity) among consumers (~$4.5B on marketing per year). The transcendental nature of Nike's branding ties it to an ideal that deeply resonates with the human spirit; the drive to succeed, to accomplish, to win etc. The "Just do it" slogan is a celebration of decisive action vs. nervous hesitation, a message that travels across demographics and culture, again speaking directly to the human spirit. As the dominant leader in global sportswear (~18% vs 9% for Adidas), Nike can lead the sports advertising market through simply outspending competitors or through brand momentum. Who else can afford lifetime deals with Cristiano Ronaldo, Lebron James, Kevin Durant while at the same time paying to be the uniform provider of the NFL, NBA, and MLB? With structural profitability (6B FCF per year), and very little net debt, we don't see this advantage changing anytime soon. As evidence of its competitive edge, Nike's adjusted ROIC, including goodwill, have averaged 36% over the past 5 fiscal years — well above any reasonable estimate for cost of capital. So why are shares so cheap today, relative to historical levels? Three main reasons: 1. Strategic Misstep: Nike's attempt to shift sales from retail partners to DTC (where they have better margins) backfired as they underestimated the stickiness of consumer habits. Instead, what occurred was that Nike gave up valuable shelf space to competitors and sales have fallen by nearly double digits. 2. Tariffs: Nike doesn't manufacture any of their products. The company uses third-party contract manufacturers in Vietnam, Indonesia and China (50%, 27% and 18% respectively). Fun fact: Approximately 99% of footwear that is sold in the US is imported, primarily from Asia. 3. Increasing recession risk (partly from tariffs) puts pressure on Nike's sales globally. Similar to our discussion on Hershey, we find that these issues are temporary in nature and are immaterial in comparison to the competitive positioning of the company and the structural profitability of their operations.

BSD Analysis:
The manager presents a contrarian bull case for Nike, emphasizing the company's dominant global sportswear position (18% market share vs. 9% for Adidas) and exceptional 36% average ROIC over five years, demonstrating superior capital efficiency and competitive moats. The investment thesis centers on Nike's unassailable brand equity built through $4.5 billion annual marketing spend and exclusive athlete partnerships that competitors cannot replicate. The manager argues current weakness stems from temporary factors: a strategic misstep in direct-to-consumer transition that sacrificed retail shelf space, tariff exposure from Asian manufacturing, and recession concerns. With $6 billion annual free cash flow and minimal debt, Nike maintains financial flexibility to navigate headwinds. The psychological connection between footwear and human performance creates deep brand loyalty that transcends product commoditization. Current valuation reflects excessive pessimism about structural challenges, creating opportunity as operational issues prove temporary relative to Nike's enduring competitive advantages.

Pitch Summary:
The Hershey Company is one of America's most iconic chocolate manufacturers. Founded in 1894 by Milton Hershey, the company began with caramels before focusing on chocolate production. Their first and most famous product was the Hershey's Milk Chocolate Bar, which helped democratize chocolate in the U.S. by making it affordable for average consumers. Today, Hershey is a global confectionery leader with a diverse portfolio including Reese's, Kit Kat, Twizzlers, and many other beloved brands. Hershey's brand power and cost advantages have given the company a wide economic moat — underpinned by its 36% market share position in the U.S. The business has generated a ROIC averaging over 20% for the past decade, well above any reasonable estimate for Hershey's cost of capital. High ROIC (relative to WACC) alongside market share stability indicate a dominant firm's ability to fund growth internally. The company's shares have been under pressure more recently due to a combination of factors including high cocoa prices and the popularization of GLP-1 weight loss drugs (Ozempic and the like), which artificially curb appetite. Our investment thesis is founded in the temporary nature of these concerns; Cocoa prices have been distorted through supply shocks and non-physical market factors such as: 1. Disease outbreak in West Africa 2. Bad weather conditions 3. Speculative activity in the cocoa futures market in New York (ICE)- Link While these factors will put temporary pressure on forward earnings (25'-26'), we believe that the business has cost advantages that will help it mitigate the impact better relative to competitors. The narrative of GLP-1 drugs hampering demand has been priced into the confectionery market. We also believe that Hershey's long history demonstrates strategic capabilities to adapt to changing consumer habits. We estimate that the business is currently trading around EPV value and with a dividend yield of ~3.5% — we don't mind waiting for Hershey's operating environment to normalize.

BSD Analysis:
The manager presents a contrarian bull case for Hershey, emphasizing the company's dominant 36% U.S. market share and exceptional 20% average ROIC over the past decade, indicating strong competitive positioning and capital efficiency. The investment thesis centers on temporary headwinds being overpriced, specifically elevated cocoa costs from West African supply disruptions and GLP-1 drug concerns affecting confectionery demand. The manager argues Hershey's cost advantages and brand moat will enable better navigation of commodity pressures versus competitors. With shares trading near earnings power value and offering a 3.5% dividend yield, the risk-reward appears attractive for patient investors. The company's century-plus operating history demonstrates adaptability to changing consumer preferences. Current valuation reflects pessimistic assumptions about structural demand destruction, creating an opportunity as operating conditions normalize.

Pitch Summary:
As the largest position in the fund, Alibaba's shares play a leading role in our performance quarter to quarter. The company reported positive earnings during the quarter, surpassing analysts' expectations for both top and bottom line, sending shares higher by 16% since the announcement. The company has returned to a more normalized growth rate in their core business (Taobao and Tmall Group) while re-accelerating growth in their international retail and cloud computing business units. Management attributed this growth to investments in user experience and higher monetization methods through software service and payment processing fees. Growth at Alibaba Cloud has been backed by triple-digit growth of A.I. related product revenue for the sixth consecutive quarter. We find that this is indicative of the growing adoption of A.I. in China and the leadership of Alibaba's cloud business. (~36% Market Share as of Q4 2024) It is our opinion that the 60% increase in Alibaba's shares in Q1 are the result of a reflexive shift in narrative for both the company and Chinese tech stocks as a group. While we are comfortable with our current allocation, we have trimmed the position and used the proceeds to purchase shares in two new positions.

BSD Analysis:
The manager maintains a bullish stance on Alibaba as the fund's largest position, highlighting strong quarterly earnings that beat analyst expectations on both revenue and profit. The investment thesis centers on normalized growth in core e-commerce operations (Taobao and Tmall) while accelerating expansion in international retail and cloud computing segments. Alibaba Cloud demonstrates particular strength with triple-digit AI product revenue growth for six consecutive quarters, reinforcing the company's dominant 36% market share position in China's cloud market. The manager attributes recent outperformance to a reflexive narrative shift benefiting Chinese tech stocks broadly. Despite trimming the position after a 60% Q1 gain, the manager remains confident in the long-term investment case. The combination of diversified revenue streams, AI leadership, and improving sentiment toward Chinese equities supports continued outperformance potential.

Pitch Summary:
Thryv is a misclassified small-cap SaaS company obscured by its declining yellow pages (Marketing Services) legacy, which depresses its valuation and investor perception. The company’s small-business software platform (CRM, marketing, payments, and communications) has reached a key inflection—now exceeding 20% organic growth, ~100% NRR, and ~19% EBITDA margins in late 2024. SaaS revenue is expected to surpass 50% of total sales in 2025, triggering GICS reclassification from “publishing” to “software,” unlocking passive inflows and multiple expansion. The legacy print directory business, though shrinking, continues to generate meaningful FCF ($250–$300M through 2030) that funds debt reduction and software growth. Leverage has dropped to ~1.7× EBITDA after $300M debt repayment in three years, with refinancing at 175bps lower rates improving flexibility. Thryv’s acquisition of Keap adds cross-sell potential, a channel partner network, and tax savings through NOLs. SaaS unit growth is driven by migrating ~200K legacy clients (“Zoo”) with far lower CAC and expanding ARPU via multi-center adoption (up from 2% to 12%). Management targets $1B SaaS revenue and 20% EBITDA margins in five years, implying >5× upside from current levels. At just ~1.7× 2025E SaaS revenue and ~11.5× EBITDA, the market ascribes little value to the high-quality recurring business.

BSD Analysis:
Small-business SaaS provider offering CRM, marketing, payments, and communications tools; legacy yellow pages ads in runoff. Set-up: Mispriced hybrid—screens as a declining publisher despite SaaS now driving >50% of revenue and hitting “rule of 40.” Growth Drivers: Multi-center adoption, low-CAC conversion of legacy “Zoo” clients, and Keap cross-sell/channel expansion. Financials: Net debt $279M (~1.7× EBITDA), refinancing improves cash flow; legacy runoff adds $250–300M FCF by 2030. Valuation: Trades at ~1.7× revenue vs peers at 5–8×; reclassification as “software” could re-rate valuation. Risks: SMB cyclicality, execution on SaaS migration, temporary leverage uptick in 1H25. Upside from structural re-rating, deleveraging, and software-led growth remains compelling.