Investment Pitches

Pitch Summary:
Coca-Cola Consolidated, the largest independent bottler and distributor of Coca-Cola beverages in the U.S., trades near all-time highs after a multiyear run-up driven by aggressive pricing and margin expansion. EBIT margins have ballooned from ~4% in 2019 to ~13.5%, while EPS has risen from ~$10 to ~$70, primarily due to price hikes rather than sustainable volume growth. Volumes have stagnated for three years, suggesting elasticity limits are being reached. In a recessionary consumer environment, COKE’s pricing power may reverse as shoppers trade down and energy drink categories already show volume fatigue. Roughly 7–14% of soda purchases are SNAP-funded, and an RFK-backed proposal to remove sugary drinks from SNAP eligibility would materially reduce demand. The Texas Senate already passed similar legislation, signaling rising political risk to subsidized soda consumption. If COKE’s pricing normalizes and margins revert toward historical averages, EPS could fall to $40–$45—roughly half current levels. Applying its historical ~15× multiple implies a $600–$675 fair value, over 50% downside from current prices. With only ~1.5% short interest, this is a crowded “safe haven” consumer staple hiding cyclical risk. The stock’s perceived defensiveness masks peak fundamentals vulnerable to macro, policy, and elasticity shocks.

BSD Analysis:
Largest Coca-Cola bottler/distributor in the U.S., serving 14 states with concentrated exposure to soda and energy drinks. Set-up: Record-high margins and pricing despite stagnant volumes; investors view it as a defensive staple amid macro stress. Thesis: Peak pricing and margins (~13.5% vs. 4% historical) are unsustainable as consumer elasticity returns and recessionary pressure builds. Catalysts: SNAP restrictions on sugary drinks (supported by RFK and Texas precedent), potential soda taxes, and consumer downtrading. Valuation: Trading at 23× current and 35× forward EPS with potential earnings halving under normalized conditions. Risks: Strong insider ownership, solid balance sheet, and cash generation could delay repricing, but structural margin compression and policy headwinds argue for 50% downside.

Pitch Summary:
Rigetti Computing is a speculative quantum computing company trading at a $2.1B market cap on just $11M in sales, or 150× forward revenue—an unsustainable valuation. The company, founded by ex-IBM engineer Chad Rigetti, deSPAC’d in 2021 and has since burned through capital without achieving commercial-scale milestones. Management pivoted from qubit count to fidelity focus, but it remains years from meaningful commercialization (management admits 4–5 years). While the firm touts 99% fidelity on an 84-qubit processor, scaling to 1,000+ qubits at similar accuracy is exponentially more complex and capital intensive. Competition from IBM, Google, and Microsoft—along with Nvidia’s explicit skepticism—underscores the disadvantage of smaller public players like Rigetti. Recent hype around AI and quantum convergence drove shares up 30× from $0.71 to $21 before collapsing 50%, highlighting speculative excess. The company raised ~$100M during the frenzy and holds ~$217M cash, plus a potential $135M Quanta Computer deal, giving ~$2/share in cash value. With little revenue visibility and mounting dilution risk, intrinsic value is likely close to cash per share. RGTI remains a bubble relic—unprofitable, overhyped, and several decades from viable commercialization.

BSD Analysis:
Developer of superconducting quantum computers serving research and government customers; currently pre-commercial with minimal recurring revenue. Set-up: Post-SPAC speculative surge, followed by collapse as Nvidia, Microsoft, and Google advance their own platforms and public skepticism rises. Technology: Focus on fidelity improvement (99% on 84-qubit system) but scaling to thousands of qubits remains decades away; barriers include decoherence, crosstalk, and entanglement instability. Financials: ~$217M cash plus Quanta funding (~$350M total) vs. ~$11M revenue; cash ≈ $2/share sets downside floor. Valuation: Trading at >100× sales and >10× tangible book; unsustainable given no path to breakeven before 2030. Risks: Continued hype cycles or retail short squeezes could inflate shares, but downside dominates as revenue stagnates and investor focus shifts to profitable tech.

Pitch Summary:
Claims of massive contracts are unsubstantiated; Undisclosed related party transactions suggest that insiders are funneling money out of the company; Financials feature glaring discrepancies and inflated revenue figures, raising serious doubts about its internal controls.

BSD Analysis:
Gorilla Technology positions itself as a security and surveillance solutions provider but faces allegations of opaque financial reporting and weak contract visibility. Much of the reported backlog lacks transparency, and recurring revenue is limited. Shorts argue that GRRR’s valuation relies more on promotional activity than fundamentals. With limited liquidity and governance concerns, downside risk stems from contract disappointments or regulatory scrutiny.

Pitch Summary:
Flashy press releases mask poor business performance; Revenue from long-term deals pulled forward to inflate numbers; Revenue forecasts repeatedly fall short by over 50%; Claims of major government and industry deals don't match reality.

BSD Analysis:
KULR Technology promotes thermal management and battery safety solutions, often highlighting NASA and DoD relationships. The bear case is that commercial traction remains negligible despite years of promotional announcements. Revenue is lumpy, customer concentration is high, and gross margins are thin. With persistent cash burn, KULR has relied on serial equity raises. For investors, the setup resembles a speculative “story stock” where the narrative of battery safety outpaces financial reality, leaving dilution as the dominant theme.

Pitch Summary:
Nike: is the iconic American sportswear brand and global leader in athletic footwear, apparel, and equipment. With unparalleled brand equity, Nike has built a dominant presence across international markets and continues to set industry standards through relentless innovation in product design and technology. The company's direct-to-consumer strategy, driven by its digital platforms and flagship stores, enhances customer engagement and profitability. While Nike faces short-term challenges, we believe its strong brand loyalty, continuous innovation, and ability to adapt to shifting consumer trends position it as a compelling long-term investment.

BSD Analysis:
Mayar Capital initiated a position in Nike, viewing the iconic sportswear giant as a compelling long-term value opportunity despite near-term headwinds. The manager emphasizes Nike's unparalleled brand equity and global market leadership in athletic footwear and apparel, highlighting the company's ability to consistently set industry standards through product innovation and technology advancement. The investment thesis centers on Nike's successful direct-to-consumer transformation, with digital platforms and flagship stores driving enhanced customer engagement and improved profitability margins. While acknowledging current short-term challenges likely related to inventory management, supply chain disruptions, or competitive pressures in key markets like China, Mayar maintains conviction in Nike's fundamental strengths. The fund views Nike's brand loyalty as a durable competitive moat, supported by continuous innovation capabilities and proven adaptability to evolving consumer preferences. The manager appears to be taking advantage of temporary weakness to establish a position in what they consider a high-quality franchise with sustainable long-term growth prospects in the global athletic wear market.

Pitch Summary:
Novo Nordisk: is a Danish pharmaceutical giant and the global leader in diabetes care and obesity treatments. The company is renowned for its groundbreaking GLP-1 drugs, including Ozempic (for diabetes) and Wegovy (for weight management), which have seen growing global demand. Beyond diabetes and obesity, Novo Nordisk also develops treatments for hemophilia, growth hormone disorders, and other chronic conditions. With a robust pipeline of innovative therapies and a strong focus on improving patient outcomes, Novo Nordisk is well-positioned for sustainable growth in addressing some of the world's most pressing health challenges.

BSD Analysis:
Mayar Capital initiated a position in Novo Nordisk, recognizing the Danish pharmaceutical giant's dominant position in the rapidly expanding GLP-1 market for diabetes and obesity treatments. The manager highlights Novo Nordisk's market-leading drugs Ozempic and Wegovy, which have experienced explosive global demand as obesity treatments gain mainstream acceptance. The investment thesis centers on the company's first-mover advantage and manufacturing scale in GLP-1 therapies, addressing massive and growing global health epidemics. Beyond the headline GLP-1 franchise, Mayar appreciates the company's diversified therapeutic portfolio spanning hemophilia, growth hormone disorders, and other chronic conditions. The fund views Novo Nordisk's robust pipeline and focus on patient outcomes as sustainable competitive advantages. With obesity affecting over 650 million adults globally and diabetes prevalence continuing to rise, Novo Nordisk appears well-positioned to benefit from secular tailwinds in metabolic health treatments. The company's strong R&D capabilities and established global distribution network provide additional moats in this high-barrier pharmaceutical market.

Pitch Summary:
Capgemini's journey began in 1967 in a modest two-room apartment in provincial Grenoble, France, thanks to the vision of Serge Kampf, a career salesman. Despite not having a background as an engineer or computing expert, Kampf astutely recognized the future need for businesses and institutions worldwide to seek guidance on emerging technologies and their practical application. Over fifty years later, this core insight remains central to the company's operations, though Capgemini has expanded significantly. It now boasts a presence in over 50 countries and employs more than 350,000 individuals globally. While its initial focus was on traditional IT and organizational consulting, Capgemini today offers a comprehensive suite of services, encompassing digital transformation, cloud infrastructure, software development, and engineering services. This broad portfolio enables the company to provide clients with end-to-end solutions, from initial strategic planning to final technical implementation. The company's operations are structured around three core areas: Strategy & Transformation, Applications & Technology, and Operations & Engineering. This diversified approach provides Capgemini with exposure across a wide range of sectors. However, its particular strength lies in application services, which includes critical areas such as systems integration, software engineering, and enterprise application management. Looking ahead, the development of generative AI applications across various industries presents a significant long-term tailwind for the company. In the final quarter of 2024, Capgemini reported that 5% of its bookings were related to generative AI, a notable increase from approximately 2% earlier in the year. For the full year, AI-related bookings accounted for around 4% of the total. This clearly indicates a growing area of focus, and management anticipates a substantial increase in demand over time as enterprises transition from initial exploration to practical implementation. Generative AI is considered a truly transformative technology with the potential to revolutionize every industry globally, akin to the impact of the first industrial revolution. As a large, well-established technology consulting firm, Capgemini is, in our view, exceptionally well-positioned to serve as industry's key technology partner in realizing the benefits of AI for businesses worldwide. Capgemini's global delivery model allows it to efficiently serve multinational clients through a strategic blend of onshore and offshore resources. The company has a particularly extensive delivery presence in India, which supports its margins and provides pricing flexibility. As more clients engage Capgemini across different geographies and service lines, the value of its integrated delivery model is amplified, fostering stronger client retention and facilitating effective cross-selling. This combination of scale and deep client integration contributes to consistently strong mid-teens returns on capital. Another compelling aspect of Capgemini's business is its strong cash generation. In 2024, the company generated over EUR 2 billion in organic free cash flow, comfortably covering its investment needs and enabling significant shareholder distributions through dividends and share buybacks. Its asset-light business model, coupled with a relatively predictable revenue stream, allows Capgemini to convert a high proportion of its accounting profit into free cash flow. However, the past year or two have seen a deceleration in Capgemini's business growth. The company reported a 2% revenue decline in 2024, reflecting a broader slowdown in client spending and decision-making delays. These pressures were most pronounced in Europe, particularly France, and within the manufacturing sector—both areas where Capgemini has historically had a strong presence. Manufacturing clients have been reducing their investment in transformation programs amid broader economic uncertainty, and European clients, in general, have adopted a more cautious approach. While this has dampened recent growth, there is reason to believe that these areas could transition from headwinds to tailwinds in the future. A structural shift towards reindustrialization, especially in continental Europe, may drive increased demand for digital supply chain transformation, smart factory initiatives, and cloud modernization—all areas where Capgemini possesses relevant and robust capabilities. Overall, Capgemini presents a stable and cash-generative business model with significant potential to capitalize on medium-term growth trends such as the proliferation of AI, continued digitalization across industries, and the evolving industrial landscape in Europe. While the near-term outlook is tempered by macroeconomic uncertainty and softer spending in key sectors, the company's structural positioning is strong, poised to benefit from a broader expansion of digital investment across various industries.

BSD Analysis:
Mayar Capital presents a compelling bull case for Capgemini, viewing the French IT consulting giant as exceptionally well-positioned to capitalize on the generative AI revolution. The manager highlights Capgemini's transformation from a modest startup to a global technology services powerhouse with over 350,000 employees across 50+ countries, emphasizing its comprehensive end-to-end solution capabilities. The investment thesis centers on AI as a transformative catalyst, with management noting AI-related bookings growing from 2% to 5% in Q4 2024, representing 4% of total annual bookings. Mayar views this as early evidence of substantial future demand as enterprises move from AI exploration to implementation. The fund appreciates Capgemini's global delivery model, particularly its extensive Indian operations that provide margin support and pricing flexibility, contributing to consistent mid-teens returns on capital. Strong cash generation of over EUR 2 billion in organic free cash flow demonstrates the asset-light model's effectiveness. While acknowledging near-term headwinds from European manufacturing sector weakness and reduced client spending, Mayar sees potential for these challenges to become tailwinds through European reindustrialization trends driving demand for digital transformation services.

Pitch Summary:
Alphabet was our sole mega-cap holding. I say 'was' because we have sold out of the position two days ago. The stock has been kind to us, appreciating over 50% since we bought. We still envision Alphabet is significantly undervalued and there is a good chance we will regret selling, especially so far from the recent top. Alas, we have our reasons. We are in a position that every stock in our portfolio makes sense, but whenever we identify a new undervalued stock, we need to make choices. Until now, we maintained our position due to Alphabet's attractive valuation relative to other Mag-7 stocks and Alphabet's strong positioning in the development of AI. Looking at autonomous drive, for instance, we see Waymo (part of Alphabet) clearly leading, rolling out to 6 new cities in 2025 while starting tests in 10 more. This indicates to me they are really getting close to reaching Full Autonomous Drive across the west. This by itself could be worth >200 bn Market Cap, especially since Ford has given up on their Cruise effort and Tesla seems to be going nowhere beyond driver assist. But even if we keep Chinese autonomous drive efforts out of the picture and price Waymo using only the rosiest scenario: 200 bn USD is only 1/10th of Alphabet's current market cap. By contrast, Alphabets value largely depends on Google Search. While its capabilities have taken another leap with the integration of Gemini, the sobering reality is that other LLM's are now viable alternatives. Gemini currently rules the leaderboard at www.lmarena.ai by some distance, but quality among all LLM's has gone up so much that in most cases it doesn't really matter which you use. And that is terrible for Alphabet, because that basically means people will choose based on convenience and price. That means Alphabet's 92% market share in search can easily be split in four, and the AI-market will remain a near-zero margin business. This matters a lot when 35% of our valuation of Alphabet depends on Google Search! Then lastly, there is quite a bit of new uncertainty with Trump. Software services are the biggest export product of the United States. This makes Alphabet (and others) an interesting option for retaliatory tariffs from the EU. Moreover, with the new attitude from the US regarding allies and partnership, it is not unrealistic to think the EU at some point will start to think more strategically regarding dependence on non-EU software. In short: while Alphabet remains an amazing company at a reasonable multiple, threats to its business have arisen. For us this put it on the chopping block when new opportunities arose. We wish the company all the best and maybe, when it is back at 100.00 a share, we will be buyers once more!

BSD Analysis:
The manager recently exited Alphabet after a 50% gain, acknowledging the company remains undervalued but facing new competitive and regulatory threats. While Waymo's autonomous driving leadership presents significant upside potential worth potentially $200 billion, this represents only 10% of Alphabet's current market cap. The core concern centers on Google Search, which comprises 35% of the manager's valuation model and faces unprecedented competitive pressure from improving LLMs that have reached quality parity with Gemini. This commoditization threatens Alphabet's 92% search market share and could fragment the market while maintaining near-zero margins in AI services. Additional risks include potential EU retaliatory tariffs on US software services and strategic moves by Europe to reduce dependence on non-EU technology platforms. Despite these headwinds, the manager maintains respect for the company's quality and suggests potential re-entry at $100 per share, indicating continued long-term value recognition.

Pitch Summary:
Our biggest star last two months as Jiayin Group again. While its rise before February was mostly due to Chinese sentiment, it is now bolstered by Jiayin's latest earnings release: Revenues are growing again, rising 38% year-on-year and guiding for next quarter at another 26% on top of that. Meanwhile, profits are set to explode, with income from operations rising 26% quarter-on-quarter (69% year-on-year) and guided to be a whopping 87% higher than a year ago! This seems to indicate the 'secular growth' story for Jiayin is still reasonable and last year's earnings- and revenue slump was either cyclical or a temporary bump in the road. If Jiayin's guidance for 2025Q1 can be extrapolated for the year, the stock is (still) trading at 2.5 forward earnings even after doubling in price. And that for a company that continues to be able to grow at a solid pace!

BSD Analysis:
The manager expresses strong conviction in Jiayin Group, which has been the fund's top performer with an 80% gain following the previous letter. The investment thesis is supported by robust fundamental improvements, with revenues growing 38% year-over-year and management guiding for an additional 26% growth next quarter. Operating income growth is even more impressive at 69% year-over-year, with guidance suggesting 87% growth ahead. Despite the stock doubling, valuation remains compelling at just 2.5x forward earnings if current guidance can be extrapolated. The manager believes last year's earnings decline was cyclical rather than structural, and the recent results validate the secular growth story for this Chinese fintech platform. The combination of strong execution, attractive valuation, and significant operating leverage makes this a high-conviction position despite geopolitical risks in Chinese markets.

Pitch Summary:
Post-earnings declines in Basic Fit and Jackson Financial limited further outperformance. We believe these declines were not fully justified by their reports and we are under the impression much of it was based on large parties using the liquidity on earnings day to get rid of their positions.

BSD Analysis:
The manager views Jackson Financial's post-earnings decline as an overreaction not justified by the company's fundamentals. The stock represents the fund's largest holding at 15.1% of the portfolio, trading at attractive valuations with a 5.6x trailing P/E and 5.1x forward P/E. The manager believes the earnings-day selling was driven by institutional liquidation rather than fundamental concerns, creating an opportunity for value-oriented investors. Jackson Financial operates in the retirement services sector, which benefits from demographic tailwinds as baby boomers enter retirement. The company's strong market position in annuities and the manager's conviction in maintaining it as the top holding suggests confidence in the long-term value proposition despite short-term market volatility.

Pitch Summary:
Basic Fit's earnings deserve extra attention as it coincided with a significant decline. To us, it had a bit of everything. It featured the usual costs disappointments (which follows the disappointments regarding their pricing strategy in which management chose not to follow inflation, damaging their margins significantly). The big surprise this time was the change in capital allocation. Instead of opening 175 clubs per year (at a ~200 mn EUR capex), they decided to limit new club openings to 100 clubs per year going forward, and use 40 mn EUR for buying back stock. It's a bit of a Rorschach what this means: Either the new CFO thinks the stock is very undervalued, or they believe the new club locations are not that promising anymore so capital is better deployed elsewhere. We believe it is a bit of both, but would like to highlight the increased attention to efficient capital allocation. Last year was fairly disappointing with regards to member growth. The after-COVID vintages of clubs' membership growth after opening has not kept pace with pre-COVID opened clubs. Moreover, it seems the 'terminal' number of club members is lower than previously thought. However, this already became apparent in previous quarter's numbers. Another negative item was that they have chosen to spend 35 mn EUR extra per year to keep part of the French clubs open 24/7. This will undoubtedly hurt the bottom-line. We will have to see how this develops. On the other hand, they also released very promising membership growth for January/February. In spite of far fewer club openings, they were able to add 202.000 new memberships while opening 19 fewer clubs than during the same period last year. It is a positive surprise of well over 50.000 by my estimates. Our estimated fair value for Basic Fit decreased significantly last year but remains at a large distance from current market prices.

BSD Analysis:
The manager maintains a bullish stance on Basic Fit despite recent earnings disappointments and margin pressures from management's decision not to follow inflation in pricing. The key positive development is management's shift toward more efficient capital allocation, reducing new club openings from 175 to 100 per year while implementing a 40 million EUR share buyback program. While post-COVID membership growth has been disappointing and terminal membership numbers appear lower than expected, the company delivered strong membership growth in early 2025, adding 202,000 new members with significantly fewer club openings. The manager acknowledges concerns about the 35 million EUR annual investment to keep French clubs open 24/7, which will pressure margins. Despite these headwinds and a reduced fair value estimate, the manager believes the stock trades at a significant discount to intrinsic value. The investment thesis centers on the company's market-leading position in European fitness and management's newfound focus on capital efficiency over pure growth.

Pitch Summary:
SmartStop is a newly public, fast-growing self-storage REIT trading at a 7% implied cap rate versus peers like CUBE and PSA in the mid-5s, implying 20%+ upside. The company’s same-store performance has been resilient, with Q4 2024 same-store revenue/NOI up +2.4%/+1.0%, beating peers who posted negative comps. About 15% of SMA’s portfolio is in the high-growth Toronto market, while the rest is concentrated in strong U.S. MSAs with favorable supply-demand dynamics. The company has meaningful internal upside: NOI and EBITDA margins run ~600bps and ~1,200bps below peers, providing leverage as the platform scales. Management has already built out G&A infrastructure to support expansion, setting up operating margin improvement as assets grow. Sector fundamentals appear to have bottomed, with improving occupancy, ECRIs, and stabilizing rents since late 2024. Self-storage supply growth is expected to hit a decade low through 2027, supporting pricing and occupancy recovery. SMA’s smaller size (~200 properties vs. peers’ 4,000) allows accretive M&A to materially move the needle. Despite external management and higher SG&A costs, the stock trades far too wide of peers on cap rate and NAV. As storage demand recovers and the company scales, multiple convergence toward a 5.7% peer cap rate could drive 20–25% upside.

BSD Analysis:
SmartStop owns and operates ~200 self-storage facilities across the U.S. and Canada, with 15% exposure to the high-growth Toronto market. Set-up: Recently public, underfollowed REIT trading at a 7% cap rate vs. peers at ~5.5%; strong same-store growth despite sector softness. Earnings drivers: Margin expansion potential (NOI +600bps, EBITDA +1,200bps vs peers), operating leverage from SG&A scale, and external growth via M&A. Cycle position: Fundamentals bottoming—occupancy rising, rents stabilizing, new supply decelerating through 2027. Valuation: At 7% implied cap, the market overstates cost drag and underappreciates operational upside; a re-rating to peer cap rates implies 20–25% NAV upside. Risks: Higher SG&A burden, external management optics, potential post-IPO selling from NTR shareholders, and AFFO yield (~5.3%) only in line with peers despite discount optics.

Pitch Summary:
Alight administers employee benefits for over 5,000 corporate clients and 35 million participants globally, with $2.4B in annual revenue. The stock has declined sharply due to execution issues, insider selling, and macro pressures, but 2025 marks an operational inflection following its multi-year cloud transformation and business simplification. Recent divestitures, a new CEO from Aon, and board refresh under Starboard Value have repositioned Alight as a focused benefits administrator. Organic growth slowed from prior client attrition but is rebounding as renewal rates recover to 96–98% and new business wins return to target. The company expects 4–6% organic growth and operating margins expanding from 25% in 2024 to 27% in 2025 and 30% by 2027. Completed cost programs, cloud migration, and automation initiatives are driving margin leverage and capital efficiency. Free cash flow is forecast to rise from $132M in 2025 to $298M by 2027, implying a double-digit FCF yield. Trading at just 8.7× 2027E earnings and a 10% FCF yield, valuation is compelling versus peers. With the turnaround progressing, management is now returning capital via a new dividend and expanded buyback authorization. Improved execution, margin expansion, and re-rating potential offer attractive risk-reward from a depressed base.

BSD Analysis:
Alight provides cloud-based employee benefits administration and HR outsourcing for Fortune 500 clients; recently refocused after selling non-core payroll and services segments. Set-up: Shares have been punished for past execution missteps, but operational reset under Starboard-backed leadership creates a clear turnaround narrative. Margins: Cost savings from cloud transition and automation expand adjusted EBITDA margins toward 30% by 2027. Growth: Organic growth expected to re-accelerate to 4–6% by late 2025 as client renewals normalize and cross-sell momentum builds. Financials: FCF projected to more than double by 2027; leverage manageable at ~1.5× EBITDA. Valuation: ~10× P/E on 2027 earnings with a new dividend and $281M buyback authorization suggests re-rating potential; low expectations provide margin of safety.

Pitch Summary:
Paywalled (The Bear Cave finds that toddlers escape from the KinderCare daycares onto busy roads, are left alone locked inside KinderCare buildings and buses, and are physically, verbally, and sexually abused, with many cases going unreported until bystanders raise alarm or video evidence circulates.). Update 5/11/25 - Florida Rep. is "writing to House leadership and DOGE to address this disgusting report”. 35% of its revenue (~$930 million) comes from federal program. Update 6/5/25 - Paywalled (concerns are entering the mainstream, allegations against the company are growing, lawmakers are demanding accountability, and The Bear Cave is surfacing additional complaints of billing fraud against the company)

BSD Analysis:
The Bear Cave highlights recurring governance and compliance failures at KinderCare, including licensing violations, safety lapses, and fines across multiple states. Short thesis frames KLC as structurally vulnerable given reliance on government-subsidized childcare funding and fragile parent trust. Rising wage pressures compound margin risk. Equity downside is driven more by reputational and operational fragility than by pure financials.

Pitch Summary:
Aflac is a compelling investment due to its strong financial position, characterized by a robust share buyback program and a steady dividend yield of about 2%. Despite fluctuations in the Yen-to-Dollar exchange rate, Aflac has maintained its commitment to returning value to shareholders. The company's low P/E ratio enhances the effectiveness of its buybacks, making it an attractive option during market downturns.

BSD Analysis:
Aflac's strategic focus on share buybacks and dividends is supported by its substantial cash reserves of $6.2 billion, against relatively low annual operating expenses of $200 million. This financial prudence allows Aflac to reward shareholders without undermining its operational stability. The company's exposure to the Japanese market, which accounts for 70% of its revenue, presents both a risk and an opportunity, particularly if the Yen strengthens against the Dollar. Aflac's ability to increase buybacks even as the Yen weakened demonstrates management's confidence in its long-term strategy. The insurance sector's low capital intensity compared to industries like mining further supports Aflac's shareholder-friendly policies. Investors should monitor currency fluctuations and macroeconomic conditions in Japan, as these factors could significantly impact Aflac's financial performance and stock valuation.

Pitch Summary:
Icon Plc (Nasdaq:ICLR) is a contract research organization ("CRO"). In the Q3 2024 letter, I highlighted our investment in Medpace (Nasdaq:MEDP) another CRO that directly competes with Icon. I became interested in Icon because we liked the CRO business model (after learning about Medpace) and felt that the industry would benefit from long-term tailwinds. However, Icon has taken a different approach than Medpace. Medpace is focused on serving small biotech companies with full service CRO work (read our detailed Medpace write-up for more context). On the other hand, Icon is more focused on serving larger pharma companies and has pursued an aggressive M&A strategy to roll-up the industry. For example, Icon acquired PRA Health Sciences for $12 billion in 2021. Therefore, we felt that Icon and Medpace were sufficiently different bets that were worth making. We purchased shares of Icon in March 2024 for ~$323.00 per share. Initially we were quite impressed with Icon's financial track record. From 2014 to 2022, Icon grew revenue by 17.8% per year and grew EBITDA by 18.5% per year. Furthermore, the stock was available at a mid-teens EBIT multiple, which we felt was attractive. However, we found some cracks in the story as we dug deeper into our research. The biggest issue we encountered was a lack of evidence supporting the synergies claimed from Icon's M&A activity. Our conversations with industry experts and CRO customers revealed that M&A actually hurt Icon because it resulted in disruptions in customer projects due to excessive staff turnover and corporate reorganization. Icon had also racked up a lot of debt which it had to work through during a period of rising interest rates. Ultimately, our research on Medpace revealed that serving small biotech companies was simply a better model than working with large pharma as a CRO. We ultimately decided to sell our shares in Icon in July 2024 for ~$334.53 per share (taking a small profit) and used the proceeds to double down on our investment in Medpace. The sale of Icon's stock was well-timed. Icon's stock has since declined by over 40%. Our investment in Medpace has not been a home run (yet) but has fared much better. The bottom line is that when our research reveals flaws in an investment thesis, we will quickly sell our position and move on. And because we don't always get it right with our initial thesis, we must extensively research and validate our beliefs to avoid costly mistakes.

BSD Analysis:
The manager initially found Icon attractive based on strong historical growth metrics (17.8% revenue CAGR, 18.5% EBITDA CAGR from 2014-2022) and reasonable mid-teens EBIT multiple valuation. The investment was positioned as a complementary bet to Medpace, targeting different market segments within the CRO industry. However, deeper research revealed fundamental flaws in Icon's aggressive M&A strategy, particularly the $12 billion PRA Health Sciences acquisition in 2021. Industry expert feedback indicated that M&A integration actually damaged customer relationships through staff turnover and operational disruptions, contradicting management's synergy claims. The company's elevated debt burden became problematic during the rising interest rate environment. Comparative analysis revealed that Medpace's focus on small biotech clients offered superior business model characteristics versus Icon's large pharma strategy. The manager's disciplined exit at $334.53 proved prescient, avoiding a subsequent 40% decline while reallocating capital to the higher-conviction Medpace position.

Pitch Summary:
Howard Hughes Corp (NYSE:HHH) is a real estate holding company that owns several master planned communities ("MPCs") across the United States. Master planned communities are large-scale residential developments designed to integrate commercial spaces (stores, offices) and recreational facilities (parks, golf courses). In other words, MPCs are mini-cities within cities that cater to upper-middle class families. The flagship MPC in Howard Hughes's portfolio is The Woodlands located in Houston, Texas. I became interested in Howard Hughes last summer after the company divested the South Street Seaport. The Seaport had been a disaster project for the company, incinerating cash, and made the rest of the business difficult for analysts to value. After conducting research on the remaining assets, we learned that the MPC portfolio consisted of high-quality real estate assets and we believed that the stock implied a significant discount to the net asset value. Furthermore, the stock was poised to be re-valued higher as the financials improve post-Seaport spin-off. We purchased shares of Howard Hughes in August 2024 for ~$74.55 per share. Around the same time we became Howard Hughes shareholders, Bill Ackman announced his interest in potentially acquiring the rest of the company he didn't own. I viewed Ackman's involvement as win/win. If Ackman wanted to pay fair value for the company, we could earn a quick 30%+ return. If Ackman withdrew his offer, we would be left with a discounted stock that could still be catalyzed higher by the Seaport spin-off. After several months of radio silence, Ackman came back with an offer in January 2025 to buy a minority interest in the company and then take control of the management team and board, making himself the Chairman and CEO. The puzzling thing about the offer was that not only would Howard Hughes stay public but Ackman's hedge fund would charge 1.5% management fees based on the size of the market cap as compensation for reinvesting the company's cash. I viewed this as a non-starter that would surely get rejected by the Board and potentially the starting point towards negotiating a full take private. Unfortunately, Ackman came back in February 2025 with an even worse offer. Instead of buying out some minority shareholders at a premium, he was now offering to infuse cash directly into the company, take control of the board and management, and pay his hedge fund the 1.5% management fee based on the market cap. What really broke my resolve to hold on for a better offer was that Ackman was now threatening to force this deal upon the company without a shareholder vote. Given Ackman's outsized ownership in the stock and history of activism, it now started to feel like Ackman would get his way even if it was to the detriment of the rest of the investor base. We sold our shares of Howard Hughes in February 2025 for ~$76.80 per share for a slight profit over what we initially paid. It is quite possible that Bill Ackman will transform Howard Hughes into a successful investment firm that gets diversified beyond real estate. However, this was not what we signed up for when we bought the stock. Furthermore, Ackman is not ingratiating himself by taking control of the company without a vote or paying existing shareholders. Clearly, he is only looking out for himself. The bottom line is that when our thesis changes or we can no longer trust the leadership of the company, we will immediately sell our position and move on.

BSD Analysis:
The manager initially viewed Howard Hughes as an attractive value play trading at a discount to net asset value following the divestiture of the problematic South Street Seaport project. The investment thesis centered on high-quality master planned community assets, particularly The Woodlands in Houston, with expected revaluation catalysts post-Seaport spin-off. Bill Ackman's initial takeover interest was seen as providing asymmetric upside potential with limited downside risk. However, Ackman's subsequent proposals became increasingly unfavorable to minority shareholders, involving management control without fair compensation and threatening to bypass shareholder votes. The manager's decision to exit reflects disciplined risk management when faced with deteriorating governance dynamics and activist overreach. The sale at $76.80 versus the $74.55 purchase price preserved capital while avoiding subsequent value destruction from Ackman's self-serving proposals. This case demonstrates the importance of monitoring management changes and activist situations that can fundamentally alter investment dynamics.

Pitch Summary:
Icon Plc (Nasdaq:ICLR) is a contract research organization ("CRO"). In the Q3 2024 letter, I highlighted our investment in Medpace (Nasdaq:MEDP) another CRO that directly competes with Icon. I became interested in Icon because we liked the CRO business model (after learning about Medpace) and felt that the industry would benefit from long-term tailwinds. However, Icon has taken a different approach than Medpace. Medpace is focused on serving small biotech companies with full service CRO work (read our detailed Medpace write-up for more context). On the other hand, Icon is more focused on serving larger pharma companies and has pursued an aggressive M&A strategy to roll-up the industry. For example, Icon acquired PRA Health Sciences for $12 billion in 2021. Therefore, we felt that Icon and Medpace were sufficiently different bets that were worth making. We purchased shares of Icon in March 2024 for ~$323.00 per share. Initially we were quite impressed with Icon's financial track record. From 2014 to 2022, Icon grew revenue by 17.8% per year and grew EBITDA by 18.5% per year. Furthermore, the stock was available at a mid-teens EBIT multiple, which we felt was attractive. However, we found some cracks in the story as we dug deeper into our research. The biggest issue we encountered was a lack of evidence supporting the synergies claimed from Icon's M&A activity. Our conversations with industry experts and CRO customers revealed that M&A actually hurt Icon because it resulted in disruptions in customer projects due to excessive staff turnover and corporate reorganization. Icon had also racked up a lot of debt which it had to work through during a period of rising interest rates. Ultimately, our research on Medpace revealed that serving small biotech companies was simply a better model than working with large pharma as a CRO. We ultimately decided to sell our shares in Icon in July 2024 for ~$334.53 per share (taking a small profit) and used the proceeds to double down on our investment in Medpace. The sale of Icon's stock was well-timed. Icon's stock has since declined by over 40%. Our investment in Medpace has not been a home run (yet) but has fared much better. The bottom line is that when our research reveals flaws in an investment thesis, we will quickly sell our position and move on. And because we don't always get it right with our initial thesis, we must extensively research and validate our beliefs to avoid costly mistakes.

BSD Analysis:
The manager initially found Icon attractive based on strong historical financials showing 17.8% annual revenue growth and 18.5% EBITDA growth from 2014-2022, trading at a reasonable mid-teens EBIT multiple. The investment thesis was predicated on CRO industry tailwinds and Icon's differentiated approach serving large pharma clients through aggressive M&A consolidation, exemplified by the $12 billion PRA Health Sciences acquisition in 2021. However, deeper research revealed fundamental flaws in Icon's roll-up strategy, with industry experts indicating that M&A activity actually harmed operations through customer project disruptions, staff turnover, and organizational chaos. The company's debt burden became problematic during rising interest rate environments, further constraining operational flexibility. Comparative analysis with Medpace demonstrated that serving small biotech clients offered superior business model characteristics versus large pharma relationships. The manager's disciplined exit at $334.53 proved prescient, as Icon subsequently declined over 40%, validating the thesis revision and capital reallocation to the higher-conviction Medpace position.

Pitch Summary:
Howard Hughes Corp (NYSE:HHH) is a real estate holding company that owns several master planned communities ("MPCs") across the United States. Master planned communities are large-scale residential developments designed to integrate commercial spaces (stores, offices) and recreational facilities (parks, golf courses). In other words, MPCs are mini-cities within cities that cater to upper-middle class families. The flagship MPC in Howard Hughes's portfolio is The Woodlands located in Houston, Texas. I became interested in Howard Hughes last summer after the company divested the South Street Seaport. The Seaport had been a disaster project for the company, incinerating cash, and made the rest of the business difficult for analysts to value. After conducting research on the remaining assets, we learned that the MPC portfolio consisted of high-quality real estate assets and we believed that the stock implied a significant discount to the net asset value. Furthermore, the stock was poised to be re-valued higher as the financials improve post-Seaport spin-off. We purchased shares of Howard Hughes in August 2024 for ~$74.55 per share. Around the same time we became Howard Hughes shareholders, Bill Ackman announced his interest in potentially acquiring the rest of the company he didn't own. I viewed Ackman's involvement as win/win. If Ackman wanted to pay fair value for the company, we could earn a quick 30%+ return. If Ackman withdrew his offer, we would be left with a discounted stock that could still be catalyzed higher by the Seaport spin-off. After several months of radio silence, Ackman came back with an offer in January 2025 to buy a minority interest in the company and then take control of the management team and board, making himself the Chairman and CEO. The puzzling thing about the offer was that not only would Howard Hughes stay public but Ackman's hedge fund would charge 1.5% management fees based on the size of the market cap as compensation for reinvesting the company's cash. I viewed this as a non-starter that would surely get rejected by the Board and potentially the starting point towards negotiating a full take private. Unfortunately, Ackman came back in February 2025 with an even worse offer. Instead of buying out some minority shareholders at a premium, he was now offering to infuse cash directly into the company, take control of the board and management, and pay his hedge fund the 1.5% management fee based on the market cap. What really broke my resolve to hold on for a better offer was that Ackman was now threatening to force this deal upon the company without a shareholder vote. Given Ackman's outsized ownership in the stock and history of activism, it now started to feel like Ackman would get his way even if it was to the detriment of the rest of the investor base. We sold our shares of Howard Hughes in February 2025 for ~$76.80 per share for a slight profit over what we initially paid. It is quite possible that Bill Ackman will transform Howard Hughes into a successful investment firm that gets diversified beyond real estate. However, this was not what we signed up for when we bought the stock. Furthermore, Ackman is not ingratiating himself by taking control of the company without a vote or paying existing shareholders. Clearly, he is only looking out for himself. The bottom line is that when our thesis changes or we can no longer trust the leadership of the company, we will immediately sell our position and move on.

BSD Analysis:
The manager initially viewed Howard Hughes as an attractive value play trading at a discount to net asset value following the divestiture of the problematic South Street Seaport project. The thesis centered on high-quality master planned community assets, particularly The Woodlands in Houston, with potential revaluation catalysts from improved post-divestiture financials. Bill Ackman's initial acquisition interest was seen as providing asymmetric upside through either a takeover premium or continued discount realization. However, Ackman's subsequent proposals became increasingly unfavorable to minority shareholders, involving management control without fair compensation and extractive fee structures. The manager's decision to exit reflects disciplined risk management when faced with deteriorating governance dynamics and activist overreach. The sale at $76.80 versus the $74.55 purchase price preserved capital while avoiding further exposure to Ackman's self-serving restructuring plans. This case demonstrates the importance of monitoring management changes and activist situations that can fundamentally alter investment dynamics.

Pitch Summary:
Our largest Hong Kong listed investment is currently DPC Dash (1405 HK), who owns the exclusive rights to operate Domino's Pizza franchises in China, Hong Kong and Macau. We met with their management and 2 board members at the ICR conference in Orlando this January. When I briefly lived in Beijing in 2008, the most popular Western pizza joint was Pizza Hut (owned by Yum China). At the time, Domino's was largely absent in the Chinese market. This was because unlike Yum, Domino's Pizza had never wanted to invest equity in its Chinese growth, preferring to rely fully on the franchise model. Therefore, Domino's lacked the funding to hit critical mass and brand awareness. This changed around 2017 when a new, local management team was hired and the parent Domino's Pizza provided capital for expansion. DPC Dash has since grown to 1,000 stores. Importantly, since they exceeded the critical level of ~500 stores in 2021, they seem to have critical mass which results in the required brand awareness. Store count is currently growing 30 to 35% per year. The new management has localized the food offering (Durian Pizza) and to put it simply: Domino's is hot in China. Several of the new stores have queues of up to 4 hours during their grand opening. New stores are often so overwhelmed by demand that they don't do pizza deliveries in the first couple of months. Let's look at some simple math. A store costs roughly $200k to open. The average store does $100k in operating profit, meaning the payback is 2 years on average. However, when entering new cities, DPC has reported payback periods of less than a year. Companies that can reinvest capital at 50-100% ROIC are rare. We believe there is even some upside to the per-store profitability as DPC continues to grow and they will reap more scale benefits. We bought our shares at a valuation of roughly $1.2m per store, or 12x store-level EBIT if we ignore corporate overhead. There are 5 other publicly traded Domino's franchises. The worst performers (Poland, Saudi Arabia) trade at a valuation of $750k per store, but these geographies show no profitability (Poland) or negative growth (Saudi). The highest valuations are seen in India, where the valuation is $1.7m per store, even though Indian stores do half as much in revenue as Chinese stores and growth is significantly less. More importantly, we see a realistic pathway for DPC Dash to grow from 1,000 stores in 2024 to 2,000 stores in 2027 and 3,000 stores in 2029, all organically funded. We believe 3,000 stores is achievable given that Pizza Hut owns roughly 3,600 stores and is still growing at 10%. This would bring the valuation down to $400k / store if we are willing to look out 5 years. By this simple math, DPC Dash has 3x to 5x potential if it continues to execute.

BSD Analysis:
Night Watch presents a compelling growth story for DPC Dash, the exclusive Domino's franchisee across China, Hong Kong, and Macau. The manager's thesis centers on the company achieving critical mass with over 1,000 stores and demonstrating exceptional unit economics with 2-year payback periods and 50-100% ROIC on new store investments. The localization strategy, including offerings like Durian Pizza, has generated significant consumer demand evidenced by 4-hour queues at grand openings. At the current valuation of $1.2 million per store (12x store-level EBIT), DPC trades at a reasonable multiple compared to other Domino's franchises globally, particularly given superior revenue per store versus Indian operations. The growth trajectory from 1,000 to 3,000 stores by 2029 appears achievable given Pizza Hut's 3,600-store footprint and continued 10% growth. With 30-35% annual store count growth and improving scale economics, the manager sees 3-5x upside potential. The investment benefits from China's economic stimulus measures and recovering consumer confidence, positioning DPC to capitalize on the expanding quick-service restaurant market.