Investment Pitches

Pitch Summary:
Take Progressive (PGR) for example. The stock is down 32% from its all-time high last June, for legitimate reasons. Its customer growth – policies in force (PIF) – grew much slower last year than it has for a few years. Its earnings are unsustainable, as it hasn't had to pay out as much in claims as it expected. Natural disasters, auto price inflation, or regulators demanding Progressive give back premiums or lower rates may all crimp that profitability, and meanwhile other auto insurers are doing well too, meaning more competition for new customers. Bigger picture, what happens to auto insurance if we stop owning cars and use self-driving cars? Instead of finding individual customers, insurers are likely to work with the manufacturers of cars. This shift to business to business would seem to negate PGR's advantages – pricing policies, brand name, and finding customers. This before we factor in that if self-driving cars are safer – and they will have to be to stay on the roads – it changes insurance economics. I think Progressive is a good bet despite that. The management team seems long-term oriented, even as the company publishes monthly results. Those results show incredible profitability since Progressive raised rates to deal with used car price inflation in 2022. Through February, Progressive has reaccelerated PIF growth and is still improving profitability (if barely). The stock trades at 10x earnings, which is its lowest since 2020, when nobody driving or getting into accidents inflated the company's earnings. I don't have a sure answer for what Progressive looks like in 2030 or 2040, though, if autonomous driving accounts for 10% or more of the cars on the road. I suspect, though, that cars will still need insurance. And given Progressive has done a better job dealing with challenges since I started investing in the company in 2019, and since the aforementioned Warren Buffett and his Berkshire Hathaway (BRK.B) colleagues have admitted Progressive beat GEICO in growth and building a modern insurance business, there's a good chance Progressive will have a meaningful part of that business. Time should work in the company's favor.

BSD Analysis:
The manager presents a balanced bull case for Progressive despite acknowledging significant headwinds. The stock has declined 32% from highs due to slowing customer growth and unsustainable earnings levels, while facing long-term disruption from autonomous vehicles. However, the manager emphasizes Progressive's proven management team and operational excellence, noting the company has successfully navigated challenges since 2019 and outperformed GEICO. At 10x earnings—the lowest valuation since 2020—the stock appears attractively priced. The manager believes Progressive's competitive advantages in pricing and customer acquisition will help it adapt to industry changes, including the shift to autonomous vehicles. Recent data shows reaccelerating policy growth and continued profitability improvements, supporting the investment thesis that time will favor this well-managed insurer.

Pitch Summary:
Axon Enterprise has established a robust infrastructure in public safety, offering a combination of hardware, software, and data services that form the backbone for law enforcement agencies worldwide. The company reported strong FY2025 results with significant revenue and bookings growth. However, the stock's current valuation at $393 reflects a fair price, requiring sustained high growth in bookings, successful cost management, and increased penetration of its AI Era Plan. The investment thesis hinges on Axon's ability to maintain its competitive edge and expand its ARPU through AI-driven services.

BSD Analysis:
Axon's business model benefits from high recurring revenue due to long-term contracts and a strong customer retention rate, evidenced by a 125% net revenue retention. The company's hardware products, particularly TASER devices, provide a significant moat due to regulatory and liability barriers. However, the stock's valuation is contingent on several factors, including the successful reduction of stock-based compensation as a percentage of revenue and the resolution of revenue recognition weaknesses. The company's expansion into AI-driven services offers substantial growth potential, but also introduces risks related to cost management and competitive pressures.

Pitch Summary:
We believe GSR IV Acquisition Corp. is representative of the type of opportunity currently available in the SPAC market. As of April 3, 2026, the shares currently trade at $10.03, compared to our estimate of trust value of $10.19. The SPAC has a contractual maturity of June 2027, providing a defined timeline and embedded yield. Importantly, we expect positive returns across all scenarios, with limited downside and meaningful upside optionality. In a downside case where the SPAC does not complete a transaction and instead liquidates at maturity, we estimate a terminal trust value of approximately $10.62. This implies a ~5.0% unlevered annualized yield to worst. If the SPAC instead completes a transaction by October 31, 2026, the shorter duration results in a higher annualized return of approximately 6.4% unlevered. On a levered basis (assuming 3x), this equates to roughly 7% in a downside scenario and ~13% if a transaction is completed on that timeline. Beyond these base case outcomes, there is additional upside potential. This sponsor has previously completed a transaction where shares traded above trust value during the SPAC process. Should a similar dynamic occur, returns could exceed the yields outlined above.

BSD Analysis:
RLH Capital presents GSR IV Acquisition Corp. as an exemplary SPAC arbitrage opportunity in the current market environment. The fund's analysis centers on the attractive risk-adjusted return profile, with shares trading at a discount to trust value ($10.03 vs. $10.19 estimated trust value). The investment thesis is built on multiple return scenarios that all generate positive outcomes. In the worst-case liquidation scenario, the fund projects a 5.0% annualized yield based on an estimated terminal trust value of $10.62 by June 2027 maturity. The upside case assumes transaction completion by October 2026, which would generate a 6.4% unlevered return or 13% on a 3x levered basis. The manager emphasizes the sponsor's track record of completing transactions where shares traded above trust value, providing additional upside optionality. This pitch exemplifies the fund's strategy of earning attractive yields with capital protection while maintaining transaction upside exposure.

Pitch Summary:
Grown Rogue is currently operating at only 42% of its total production capacity across five states, with significant room for growth as it expands operations. The company is guiding to a 75% return on incremental invested capital, projecting a more than threefold increase in revenue and a tenfold increase in adjusted EBITDA. The market is currently undervaluing the company by pricing it based on its current limited capacity. As Grown Rogue completes its expansion, particularly in New Jersey, Illinois, and Minnesota, it is expected to significantly increase its profitability.

BSD Analysis:
Grown Rogue's strategic expansion into underutilized states like Minnesota, which is expected to be supply-constrained, positions it well for future growth. The company's conservative pricing assumptions suggest that even under tough market conditions, it remains profitable. The completion of the New Jersey facility and active developments in Illinois and Minnesota are critical milestones that will drive future revenue and profitability. The current market valuation does not reflect the potential earnings at full capacity, presenting a significant investment opportunity as the company scales up its operations.

Pitch Summary:
Kinaxis delivered a strong quarter that underscored its leading position in supply chain orchestration and growing relevance in a world of increasing supply and demand volatility. Revenue growth accelerated to 16%, a 5-percentage point acceleration compared to the previous quarter. This was fuelled by a record number of new business wins and performance across all regions. To better capture the value of its evolving architecture and AI product offering, the company introduced a new usage-based pricing model on top of recurring subscription fees. The new pricing model creates potential for further revenue growth acceleration while keeping costs constant, which bodes well for the company's outlook on profitability. With a record pipeline and a win rate exceeding 60% against legacy competitors, Kinaxis remains well positioned to lead the transition toward agentic supply chain management.

BSD Analysis:
The fund manager presents a compelling bull case for Kinaxis based on accelerating revenue growth and strong competitive positioning. The 16% revenue growth represents a significant 5-percentage point acceleration, driven by record new business wins across all regions. The introduction of a usage-based pricing model alongside recurring subscriptions creates an attractive revenue expansion opportunity while maintaining cost discipline, potentially driving margin expansion. The company's 60%+ win rate against legacy competitors demonstrates clear competitive advantages in supply chain orchestration software. With supply chain volatility increasing globally, Kinaxis appears well-positioned to capitalize on growing demand for AI-powered supply chain management solutions. The record pipeline suggests sustained growth momentum ahead.

Pitch Summary:
Catapult provided a positive trading update ahead of its FY26 results in May, alongside an investor day that reinforced management's long-term ambitions, including a pathway to US$1 billion in ACV. FY26 ACV is expected to grow 27–28% to US$133–134 million on a constant currency basis, inclusive of the recently acquired IMPECT. Adjusting for acquisitions, underlying growth appears broadly consistent with prior periods, an encouraging sign that momentum in the core business remains intact. This strength is increasingly flowing through to profitability, with EBITDA expected to rise by ~50% year-on-year and the Rule of 40 improving sequentially from the 33% reported in the first half. Having recently inflected to free cash flow positive, the second half appears softer from a cash flow perspective, driven primarily by weaker collections following the integration of recent acquisitions. At the same time, share-based compensation has stepped up due to equity issued to IMPECT's founders as retained employees, complicating the near-term path to accounting profitability. Stepping back, we view these dynamics as temporary, with underlying fundamentals remaining intact and the business in a strong financial position, debt-free and with approximately US$50 million in cash.

BSD Analysis:
The manager remains bullish on Catapult following positive trading updates and management's ambitious long-term target of US$1 billion in Annual Contract Value. FY26 ACV growth of 27-28% to US$133-134 million demonstrates strong momentum, with underlying organic growth remaining consistent despite recent acquisitions. The company is showing impressive operational leverage with EBITDA expected to rise ~50% year-over-year and improving Rule of 40 metrics from 33% in the first half. While near-term cash flow dynamics appear softer due to acquisition integration and elevated share-based compensation from IMPECT founders, the manager views these as temporary headwinds. The company's debt-free balance sheet with approximately US$50 million in cash provides financial flexibility. The manager emphasizes that underlying business fundamentals remain strong despite short-term accounting complexities.

Pitch Summary:
Turning to Fineos, which recently held an investor day that reaffirmed our conviction and outlook for the business. Management confirmed that their previously shared financial guidance remains firmly on track, with a solid pipeline of deals and an improving margin outlook. A key takeaway from the event was the need for insurance carriers to move off from fragmented legacy systems to leverage AI effectively, providing a nice demand tailwind for modern platforms like Fineos. The company's growth trajectory is particularly attractive because it is increasingly tied to the volume of insurance premiums managed on the platform. As existing clients migrate their legacy books of business to the cloud, Fineos captures a natural and predictable path of revenue expansion without the need for large wins to meet targets. While the company continues to win new clients, its ability to hit and exceed growth targets is increasingly supported by deepening relationships with system integrators. These partnerships have matured significantly, allowing Fineos to scale its implementation capacity and reach smaller to mid-sized deals efficiently while maintaining a clear focus on long term unit economics.

BSD Analysis:
The fund manager maintains strong conviction in Fineos following an investor day that confirmed the company's financial guidance trajectory. The investment thesis centers on the structural shift in insurance carriers moving from legacy systems to modern cloud platforms to effectively leverage AI capabilities. Fineos benefits from a particularly attractive revenue model tied to insurance premium volumes, creating predictable expansion as existing clients migrate their legacy business to the platform. The company's growth strategy has evolved beyond relying solely on large new client wins to include deepening relationships with system integrators. These partnerships enable Fineos to efficiently scale implementation capacity and target smaller to mid-sized deals while maintaining disciplined unit economics. The manager views this as a sustainable competitive advantage in the insurance technology space.

Pitch Summary:
During Q1, we initiated a position in Flowers Foods (Ticker: FLO 2.45%↑) at $8.50 per share. Flowers is a 107-year-old consumer staples company best known for its packaged bread portfolio, including Nature's Own, Wonder, and Dave's Killer Bread. More recently, the company expanded into better-for-you snacks through the $795M acquisition of Simple Mills in early 2025. The stock declined from roughly $30 in late 2022 to our purchase price—a 72% drawdown. The selloff has clear drivers: structural pressure in the bread category, intensifying private label competition, incremental leverage from the Simple Mills acquisition, and a $136M non-cash impairment charge that depressed reported earnings. These are real challenges. We believe, however, the market has overcorrected, creating a dislocation between price and underlying asset value. Flowers is the second-largest packaged bread manufacturer in the U.S., behind Grupo Bimbo, forming a functional duopoly in a category with meaningful barriers to entry. The most important of these is its direct-store-delivery (DSD) network: nearly 6,000 distributor territories where independent operators own exclusive rights to deliver and merchandise products. This infrastructure is difficult to replicate and costly to rebuild. Importantly, the DSD network has observable private market value. Approximately 4,784 routes have been sold to independent distributors, with transaction comps implying roughly 14.5x average weekly sales. Applying a conservative $65,000 per route yields approximately $311M of embedded value that we believe is underappreciated by the market. Our sum-of-the-parts analysis applies similarly conservative assumptions. Core branded bakery is valued at 8x EBITDA, a discount to both public peers and recent food M&A. Dave's Killer Bread is valued at $600M, below 1x sales despite significant growth since acquisition. Manufacturing is valued at $600M, below replacement cost and modestly below book value. Simple Mills is carried at $600M in our analysis, a deliberate discount to the $795M acquisition price. Aggregating these components—core bakery ($2.72B), Dave's ($600M), Simple Mills ($600M), manufacturing ($600M), and DSD network ($311M), less $1.73B in net debt—yields approximately $3.10B in equity value, or $14.71 per share. This implies 73% upside from our entry price based on asset value alone. The primary near-term risk is the October 2026 debt maturity, which management expects to address through refinancing. Importantly, the business has remained structurally profitable for nearly two decades and maintains a consistent dividend track record. From current levels, even modest operational improvement represents incremental upside to an already asset-backed valuation.

BSD Analysis:
The manager initiated Flowers Foods at $8.50 following a 72% decline from $30, viewing the selloff as an overcorrection that created a significant dislocation between price and asset value. The 107-year-old company operates as the second-largest packaged bread manufacturer in a functional US duopoly with meaningful barriers to entry through its direct-store-delivery network of nearly 6,000 distributor territories. The manager's sum-of-the-parts analysis values the DSD network at $311 million based on observable private market transactions, applying conservative assumptions across all business segments including core bakery at 8x EBITDA and recent acquisitions below purchase price. The analysis yields $14.71 per share in equity value, implying 73% upside from entry price based purely on asset value. While acknowledging real challenges including structural bread category pressure and leverage from the Simple Mills acquisition, the manager emphasizes the company's two-decade track record of structural profitability and consistent dividend payments. The October 2026 debt maturity represents the primary near-term risk, though management expects to address this through refinancing.

Pitch Summary:
We initiated a significant position in PayPal (Ticker: PYPL 0.17%↑) at $39.84 per share. We first looked at the company in late 2023, shortly after Alex Chriss became CEO, when shares were near $60. The business had most of what we look for, but the valuation did not meet our margin of safety threshold. The roughly 40% price decline since then created a price we found compelling. The market is pricing PayPal as a business in structural erosion. That conclusion is not supported by the fundamentals. The company generates $5.6 billion in annual free cash flow, earns returns on invested capital above 20%, and yields roughly 15% on free cash flow at our purchase price. Q4 2025 results triggered the sell-off: branded checkout growth decelerated from roughly 5% to 1%, and management withdrew its multi-year outlook. The stock fell more than 20%. The market read this as confirmation of structural decay. We looked closer and disagreed. Much of the slowdown was intentional. Management deliberately shed low-margin PSP volume that had been inflating Braintree's top-line growth while contributing little to profitability. Unbranded processing volume growth fell from roughly 29% in 2023 to about 2% in Q4 2025 as a direct result. That shift made the revenue picture look worse than the underlying economics. Transaction margin dollars grew 8% and the margin rate expanded 274 basis points to 47.7%. PayPal chose margin over volume. Investors punished the optics. The business improved. Branded checkout weakness added a separate layer: softer spending among lower- and middle-income consumers, European headwinds, and deceleration in certain Asian corridors driven by tariff uncertainty. These are real pressures, and cyclical ones. They do not change the fact that the core platform continues to generate significant cash while improving its unit economics. The prevailing bear case frames PayPal as a legacy platform being displaced by rising competition. This oversimplifies a more durable reality. Payments is not a winner-take-all market — it is fragmented, multi-modal, and large enough to support multiple scale players. PayPal's global footprint has compounded a dataset on fraud, behavior, and conversion over two decades that is genuinely difficult to replicate. The competitive threat from Apple Pay and Google Pay is frequently overstated. Both originated as NFC tools designed for in-person transactions, a fundamentally different use case than e-commerce checkout. PayPal has spent two decades embedding itself into merchant infrastructure that these platforms are still working to penetrate. What the bear case consistently omits is Venmo. The platform processes more than $250 billion in annual volume with monetization still well below its earnings power potential. A 10-basis-point improvement in effective take rate alone would generate roughly $250 million in incremental high-margin revenue. Current multiples assign it almost no credit. Our analysis across EPV, SOTP, and DCF methodologies converges on meaningful upside from current prices, with our base case suggesting intrinsic value meaningfully above $60 per share. Downside is protected by a net cash balance sheet and $5.6 billion in annual free cash flow. The business does not need to grow to generate attractive returns from these levels.

BSD Analysis:
The manager initiated PayPal at $39.84 after a 40% decline created compelling valuation, viewing the market's structural erosion thesis as fundamentally flawed. The company generates $5.6 billion in annual free cash flow with 20%+ ROIC and yields 15% on free cash flow at purchase price. Management's deliberate shedding of low-margin PSP volume improved unit economics despite creating poor revenue optics, with transaction margin dollars growing 8% and margin rates expanding 274 basis points to 47.7%. The manager argues PayPal's two-decade dataset on fraud and behavior creates durable competitive advantages that Apple Pay and Google Pay cannot easily replicate, as those platforms focus on different use cases. Venmo represents significant untapped monetization potential with $250 billion in annual volume, where a mere 10 basis point take rate improvement would generate $250 million in incremental revenue. The manager's valuation analysis across multiple methodologies suggests intrinsic value above $60 per share, representing 50%+ upside from entry price. Downside protection comes from the net cash balance sheet and substantial free cash flow generation.

Pitch Summary:
As the largest position in the fund (50%) we need to discuss Alibaba's latest earnings, which left us genuinely conflicted. On the one hand, the earnings demonstrated the company's strength in Cloud, which grew 36% year-over-year, accelerating from 29% last quarter. In tandem, Alibaba is moving towards aggressive monetization of its AI portfolio by shifting from open-source to a proprietary paid enterprise model for its high-end tools: Owen3.6-Plus. All of this is good news as it reflects significant momentum in cloud computing and monetization potential for AI products. However, Alibaba's foray into the quick commerce price war with Meituan and JD.com is proving to be extremely costly without any indication of financial return to date. China e-commerce adjusted EBITA declined 43% year-over-year, with sales and marketing expenses jumping from 15.2% to 25.3% of consolidated revenue. While management has repeatedly framed quick commerce losses as strategic and temporary, there was no quantifiable framework for evaluating the progress of the initiative. Per-order economics were not disclosed. Contribution margin trajectory was not provided. The 1% growth in customer management revenue against double-digit MAU growth implies subsidy-driven user acquisition rather than genuine ecosystem engagement. We also found management's commentary during the earnings call to be unsatisfactory. In our 2024 article, Selling StoneCo Ltd. (STNE), we discussed how besides considering financial operations, we also closely monitor the way management communicates with shareholders as an indication of credibility and high-quality leadership. In business communication, jargon and euphemism are often used to present reality in the most favorable light. There are times, however, that what is unsaid is more revealing than what is, and it takes a certain qualitative instinct to read that subtext. This quarter, that instinct was triggered. We identified four specific red flags: The $100 billion self-contradiction. Management guided $100 billion in combined cloud and AI revenue over the next five years while simultaneously arguing the AI industry evolves too rapidly to forecast. When an analyst pressed for a CAGR to anchor the target, CEO Eddie Wu responded: "use your calculator." A five-year target with no interim milestones and no underlying growth framework is a marketing statement, not a financial commitment. Ten quarters of growth, zero numbers disclosed. Management has cited triple-digit AI revenue growth for ten consecutive quarters yet has never disclosed an absolute figure. The term "AI-related products" is not an industry-standard definition, leaving investors unable to independently verify what is even being measured. After more than two years of explosive growth, the continued absence of a dollar figure is a choice, not an oversight. It is one we intend to scrutinize closely in the quarters ahead. Free cash flow turned negative. Nine-month free cash flow reached negative $4.2 billion, against positive $10.0 billion in the same period last year — a swing of over $14 billion in a single year. Buybacks are now being funded from the balance sheet rather than from earnings. While the balance sheet provides ample runway ($42.5 billion in net cash), this signals a fundamentally different capital allocation posture than the one we underwrote initially. Where is Joseph Tsai? Chairman Tsai was listed as a call participant and said nothing. In prior quarters he served as the primary voice on capital allocation, buybacks, and shareholder returns. This quarter, the entirety of shareholder return commentary was reduced to a single line: "we are reinvesting our cash flow." For Western minority shareholders holding ADSs in a VIE structure, management's voluntary commitment to capital return is our primary governance mechanism. Its complete absence at the precise moment free cash flow turned negative was the most concerning signal of the quarter. One meaningful post-earnings development: Chinese regulators have reportedly intervened to end the food delivery price war, a catalyst that should accelerate quick commerce profitability. In China, we note that government risk is not an outlier event, it is a permanent condition requiring ongoing analytical judgment. We remain committed to the cloud thesis and ecosystem optionality, while closely tracking the concerns outlined above. Disclosure: We actively traded Alibaba shares during the quarter, selling at ~$155 per share and repurchasing heavily under $130 per share. Alibaba remains our largest position in the fund to date.

BSD Analysis:
The manager presents a conflicted view on Alibaba, acknowledging strong cloud growth of 36% year-over-year and AI monetization progress while expressing serious concerns about management credibility and capital allocation. The fund's largest position (50%) faces headwinds from costly quick commerce price wars that drove e-commerce EBITA down 43% and sales/marketing expenses from 15.2% to 25.3% of revenue. Management's communication raised red flags including vague $100 billion AI/cloud guidance without interim milestones, failure to disclose absolute AI revenue figures despite claiming triple-digit growth for ten quarters, and negative free cash flow of $4.2 billion versus positive $10 billion previously. The absence of Chairman Joseph Tsai from capital allocation discussions coinciding with negative free cash flow particularly concerned the manager. Despite these issues, regulatory intervention to end the food delivery price war provides a potential catalyst for profitability improvement. The manager remains committed to the cloud thesis while actively trading around the position, selling at $155 and repurchasing below $130.