Investment Pitches

Pitch Summary:
The other loser so far is Ondo Plc in the UK. The company's main product is called the LeakBot which they distribute through home insurers. The technology, which has a defensible patent, monitors the temperature of a residential main water line and the ambient air temperature surrounding the pipe. When no water is being used in the house for an extended period (like overnight), the water inside the pipe should naturally warm up and equalize with the room temperature. A slow leak, even one as small as five ml per minute, constantly draws in new water from the underground supply, which is colder than the indoor air. This constant flow prevents the pipe from ever warming up completely. The LeakBot uses algorithms that look for persistent, small temperature differences that repeat during "quiet" times. The company was started in the UK, where main water lines are actually inside the house due to the potential for freezing. The company is currently working on a version of the LeakBot that works with exterior water mains, but it should take about a year to commercialize. The incidence rate of a non-weather-related water claim for home insurance companies is between 1% and 1.5%, and the average cost associated with those claims is roughly $15,000. Using just 1%, the expected loss for the insurer is about $150 per year. In the US, for a single-family home, the average premium is about $2,500 per year, so these leaks represent about 6% of premiums in the home insurance industry. So when a home insurance company can pay $60 per year (the cost of LeakBot monitoring) to detect these leaks, the return on investment is quite significant. At a 1% incidence rate, you can see that the ROI is 150%. The break-even point, where it doesn't really make sense for the home insurer to use LeakBot, is an incidence rate of below 0.4%. But when you look at the data across many different states and many different insurers, the incidence rate is at least 1%, even when you exclude roof leaks and non-pipe-related leaks. Another key thing to point out is that the company is trying to build out its own plumber network. The NPS scores for the LeakBot from homeowners are in the high 80's because they can install the device on their main water line in five minutes and then a plumber can come fix any pressurized leaks they have in their house – all for free. And the home insurance companies can save a boatload on water-related claims. It's the ultimate win-win-win. However, to send the devices to homeowners for free and build out a plumber network in advance takes a lot of money! The company is currently burning cash and will likely need to do another large raise at some point. Almost every losing investment I've ever had has been a cash burning company. So why do I think this one will be different? Well, I've spent an insane amount of time understanding the granular unit economics and I think they work (hopefully the thesis is still on track next quarter and I can dive into the nitty gritty in the next letter). Further, it's one of those businesses that gets much stronger as it gets larger. As the plumber density grows, the cost per visit decreases and the ROI for the insurers improves as more visits means more tangible evidence the LeakBots are actually catching small leaks. You can envision a scenario where LeakBots are in 10 million homes across the US and Ondo has more than 1,000 plumbers on staff. That would be like 20% of the coverage compared to the plumbing giant, Roto-Rooter. The short term is very dependent on getting to more than 300,000 registered customers as that is the breakeven point my math suggests. If that takes longer than a year, I would be hesitant that insurers are really seeing a strong ROI. That would be highly dependent on how many plumbers are in the field but management also doesn't want to dilute shareholders too much. It's a tricky balance but reflexivity is important here as it could get into a doom loop where a low share price means too much dilution to hire plumbers and therefore they can't deliver high ROI to insurance partners which means depressed unit sales and the business can't cover its fixed costs. But there is also a clear scenario where 10 million homes means $600 million in revenue at 20% margins on a $28 million market cap.

BSD Analysis:
The manager presents a detailed bull case for Ondo despite recent losses, highlighting the compelling unit economics of the LeakBot water detection system. The technology offers insurance companies a 150% ROI by paying $60 annually to prevent $150 in expected water damage claims, with break-even at just 0.4% incident rates versus actual 1%+ rates across markets. The business model creates a three-way value proposition: homeowners get free leak detection and repairs, insurers reduce claims costs, and Ondo builds a scalable plumber network. Key risks include cash burn and execution challenges in scaling to 300,000 customers for breakeven within 12 months. The manager acknowledges the pattern of cash-burning losers but believes granular unit economics support the thesis. Network effects strengthen the business as plumber density grows, reducing costs and improving insurer ROI. The bull case envisions 10 million homes generating $600 million revenue at 20% margins against a $28 million market cap, representing significant upside if execution succeeds.

Pitch Summary:
The first one is Duolingo. We shared our initial thesis last quarter but the price has only plummeted. Essentially, there is a short term and a long term risk but I believe they are being conflated. The short term risk is that subscription bookings are decelerating as the company has pulled back on its unhinged marketing tactics and overmonetized its customer base while the long-term AI risk looms. It seems like investors are worried that AI is already slowing revenue but I'm making the bet this isn't the case. In fact, AI will enable better learning outcomes which the company is leaning into. User growth will be lumpy and I actually think it could dip and accelerate as more features like 'Explain My Answer' become free. Some companies aren't able to re-accelerate growth once it slows down whereas others have multiple S-curves they can stack on top of each other. The market seems to think Duolingo is the former but I think it's the latter as they harness the power of AI to improve their current courses and add other subject areas. If daily user growth dips below 20% and stays there for at least six months, I would have to seriously consider that my thesis is incorrect. In one year, if there are still no signs of re-acceleration, that new information would likely change my confidence in the long-term destination of the company. That 20% and 12 month period is somewhat arbitrary but it's based on the price we paid for the company and the timeline I think is reasonable based on how quickly AI is moving and what management has outlined. I like to put a financial metric tied to a qualitative thesis as it can be easy to have thesis drift and not be intellectually honest. If you're staring at the pre-committed numbers, it's hard to wiggle your way out of that. That's the tension between the short and long term. The long term is just a bunch of short terms strung together. If the short terms don't show any evidence your long term thesis is intact, it's likely the right decision is to move on. Now, this has nothing to do with the stock price -- it's all about the underlying fundamentals. The stock price may fool you that it "knows something" and other times, other investors actually do know something you don't. That's why I always say the key tension for investing is conviction and humility. Too much conviction and you won't survive in the long run. And too much humility and your returns likely won't be anything to write home about (I'm sort of using humility as a catch-all for paranoia and second-guessing your decision-making. True humility, I don't think you can have too much of). At the same time, I think there is a very real scenario where Duolingo delivers on its supertutor-in-your-pocket vision and 100 million global paid subs at $100/year and 30% FCF margins results in $3 billion in annual free cash flow vs. the current enterprise value of $3.2 billion.

BSD Analysis:
The manager maintains a bullish stance on Duolingo despite recent underperformance, arguing that short-term subscription deceleration concerns are being conflated with long-term AI disruption risks. The thesis centers on AI as an enabler rather than a threat, with the company leveraging artificial intelligence to improve learning outcomes and expand into new subject areas beyond language learning. The manager expects user growth to be lumpy but believes Duolingo can re-accelerate through multiple S-curves, distinguishing it from companies that struggle to regain momentum. Key risk parameters include daily user growth falling below 20% for six months or lack of re-acceleration within 12 months. The bull case envisions 100 million paid subscribers at $100 annually with 30% free cash flow margins, generating $3 billion in annual FCF against a current $3.2 billion enterprise value. The investment reflects conviction in the "supertutor-in-your-pocket" vision while acknowledging execution risks in a rapidly evolving AI landscape.

Pitch Summary:
Bumble has become my largest position after I added shares during a period of price weakness at around $3.48. The company showed significant recovery following its earnings report. Bumble's valuation is compelling based on its current operations. In 2025, the company achieved an Adjusted EBITDA of $313.6 million, representing 32.5% of revenue, up from 28.4% in 2024. This margin expansion is accelerating, with Q1 2026 guidance projecting $76 to $80 million in adjusted EBITDA, compared to $64.4 million in Q1 2025. I anticipate Bumble will generate at least $200 million in free cash flow in 2026, equating to a free cash flow yield of at least 32.6%, a level typically seen in distressed businesses, which Bumble is not.

BSD Analysis:
Bumble's financial performance indicates strong operational efficiency and growth potential. The company's ability to expand its EBITDA margins suggests effective cost management and revenue growth strategies. The projected free cash flow yield of 32.6% is particularly attractive, highlighting Bumble's potential for significant cash generation. This yield is usually associated with distressed companies, yet Bumble's operational metrics and market position do not align with such a categorization. The company's focus on empowering women in the dating space provides a unique market niche, potentially driving user engagement and monetization. Overall, Bumble's strategic positioning and financial health make it a compelling investment opportunity.

Pitch Summary:
Devolver Digital is a unique player in the gaming industry, leveraging its punk-rock brand identity and strong relationships with independent developers to compete against both indie publishers and major gaming giants. The company has a robust revenue model, with income from a large back-catalogue and new game releases, supported by platform deals and subscription agreements. Despite a strong financial recovery in 2025, Devolver faces challenges such as the unpredictable nature of game launches and increased competition in the indie market. The company's strategic focus on vertical integration and disciplined project selection aims to improve commercial predictability and profitability.

BSD Analysis:
Devolver Digital's strategy of acquiring studios to integrate first-party IP is a significant move towards building long-term franchises and ensuring recurring revenue. The company's refined greenlighting process is expected to enhance the predictability of its game pipeline, which is crucial given the volatile nature of the gaming industry. While Devolver's balance sheet is strong, allowing for continued investment without external debt, the company must navigate the crowded indie market and manage player acquisition costs effectively. Success will depend on maintaining its cultural identity while delivering consistent profit improvements through disciplined project selection.

Pitch Summary:
Rightmove is the largest online real estate portal in the United Kingdom. It operates a digital marketplace connecting property buyers and renters with real estate agencies, developers, and landlords. The vast majority of residential property listings in the country are concentrated on its platform, making it a key place where people begin their search for housing. The business model is primarily based on fees that real estate agencies and developers pay for advertising and additional marketing services on the platform. Thanks to strong network effects – that is to say, a large number of listings and visitors – Rightmove holds a dominant position in the UK market. The company has low capital intensity, achieves very high margins, and generates significant free cash flow.

BSD Analysis:
The manager presents Rightmove as a dominant digital marketplace with exceptional network effects and capital efficiency in the UK real estate market. The investment thesis centers on the company's near-monopolistic position, with the vast majority of residential property listings concentrated on its platform. The fund emphasizes Rightmove's role as the primary starting point for property searches, creating powerful network effects where more listings attract more visitors, which in turn attracts more real estate agencies. The business model generates revenue through advertising and marketing fees paid by real estate agencies and developers, creating predictable income streams. The manager highlights the company's exceptional financial characteristics: low capital intensity, very high margins, and significant free cash flow generation. This combination of market dominance, network effects, and capital-light operations creates a highly attractive investment profile. The position represents a new portfolio addition, initiated when the share price reached compelling valuation levels after extended monitoring.

Pitch Summary:
AJ Bell is a British investment platform that enables individual investors to manage their savings and investments online. Through its services, AJ Bell provides clients access to a wide range of investment instruments, primarily stocks, funds, and retirement products. The company operates mainly in the United Kingdom and serves both retail investors and financial advisors. Its business model is founded primarily on fees for account management, trading, and administration. Thanks to its digital platform and low operating costs, AJ Bell can easily scale up by growing the number of its clients and volume of their assets under management. The company is benefiting from the long-term trend of shifting investments from traditional financial institutions to lower-cost online platforms and from households' growing interest in self-directed investing.

BSD Analysis:
The manager views AJ Bell as a beneficiary of the structural shift toward digital investment platforms and self-directed investing in the UK market. The investment thesis is built on the company's scalable, low-cost digital platform that serves both retail investors and financial advisors with fee-based revenue streams. The fund highlights AJ Bell's ability to capitalize on the disintermediation of traditional financial institutions as investors seek lower-cost alternatives. The business model generates revenue through account management, trading, and administration fees, creating predictable income streams that scale with assets under management. The manager emphasizes the company's operational leverage, where digital infrastructure allows for easy scaling without proportional cost increases. This position represents a new portfolio addition, initiated when valuation became attractive. The investment aligns with secular trends toward financial democratization and the growing preference for self-directed investment management among UK households.

Pitch Summary:
Booking Holdings probably needs little introduction. We know that many of you use its services regularly. Booking Holdings is a global online travel booking platform headquartered in the U.S. Through its websites and apps, it connects customers with providers of accommodations, airline tickets, car rentals, and other travel services. The group's best-known brand is Booking.com, one of the world's largest platforms for reserving hotels and short-term accommodations. The group also includes Priceline, Agoda, KAYAK, Rentalcars.com, and OpenTable. Its business model is primarily commission-based; the company collects a fee from every reservation made through its platforms. Thanks to a global network of millions of accommodation properties and a strong brand, the company benefits from significant network effects: the more accommodation options available on the platform, the more customers it attracts, and vice versa. Booking Holdings has long been among the most profitable firms in the travel industry and generates very high free cash flow.

BSD Analysis:
The manager presents Booking Holdings as a dominant platform business with compelling network effects and capital-light characteristics. The investment thesis centers on the company's commission-based model that generates high free cash flow without requiring ownership of underlying assets like hotels. The fund emphasizes Booking's competitive moat through its global network of millions of accommodation properties and strong brand recognition across multiple travel verticals. Network effects create a virtuous cycle where more accommodation options attract more customers, which in turn attracts more suppliers. The manager highlights the company's consistent profitability and cash generation capabilities within the travel industry. This position represents a new addition to the portfolio, initiated when the share price reached attractive valuation levels after a period of monitoring. The investment aligns with the fund's preference for asset-light, high-margin platform businesses with dominant market positions.

Pitch Summary:
We exited PayPal and Equinix during the quarter. When we invest in businesses like PayPal executing upon turnarounds, we regularly weigh the positive outcome of improved execution with downside risks, including the opportunity cost of longer than expected paths to improvement. While there are some signs of improvement in PayPal's business, the turnaround has proved more challenging than expected, leading us to exit the position.

BSD Analysis:
The manager exited PayPal after the turnaround story failed to materialize as anticipated. The investment was originally predicated on successful business transformation, but execution challenges proved more persistent than expected. While acknowledging some positive signs in the business, the manager determined that the opportunity cost of waiting for improvement outweighed potential benefits. The extended timeline for meaningful progress created an unfavorable risk-reward profile. This exit reflects disciplined portfolio management, recognizing when turnaround investments are taking longer than anticipated and may not justify continued capital allocation. The decision prioritizes capital efficiency over hope-based investing in challenged business models.

Pitch Summary:
We completed an exit from Salesforce this quarter after trimming the position as part of our actions to reduce software exposure over the past year. Since 2022, Salesforce has experienced slowing growth in its core business across its sales and service cloud segments and, more recently, marketing cloud. While Salesforce is executing on several product strategies to accelerate growth, we think these initiatives are not substantial enough to bend the curve on overall revenue growth. Product execution on innovation strategies has also been mixed. We believe Salesforce will continue to face rising competitive and model transition pressures as the software-as-a-service ecosystem moves from seat-based to usage-based pricing.

BSD Analysis:
The manager completed a full exit from Salesforce after gradually reducing exposure over the past year as part of broader software sector derisking. The bear thesis is grounded in persistent growth deceleration across core business segments including sales cloud, service cloud, and marketing cloud since 2022. While management is pursuing various product strategies to reignite growth, the manager believes these initiatives lack the scale necessary to meaningfully improve overall revenue trajectory. Execution on innovation has been inconsistent, creating additional uncertainty. The manager expects continued pressure from intensifying competition and the industry-wide transition from seat-based to usage-based pricing models, which threatens traditional SaaS economics and Salesforce's established business model.

Pitch Summary:
Alnylam has pioneered RNAi drugs that work to "silence" certain proteins created by the body that can malfunction and cause disease. The company's key product, Amvuttra, treats a condition that leads to protein misfolding in the heart and, eventually, heart failure (cardiomyopathy). While Amvuttra entered the cardiomyopathy market to strong early success in 2025, missed expectations heading into 2026 provided a chance to buy the stock at valuation levels we think incorporate conservative assumptions for its commercial opportunity and very little value for any other pipeline drugs. Alnylam also reached free cash flow breakeven in 2025, a milestone that we seek in biotech investments to derisk some downside potential.

BSD Analysis:
The manager initiated a position in Alnylam following a valuation reset that created an attractive entry point. The investment thesis centers on the company's pioneering RNAi technology platform that silences disease-causing proteins. The key commercial asset Amvuttra treats cardiomyopathy caused by protein misfolding, having achieved strong early market penetration in 2025 before missing expectations in early 2026. The manager views current valuation as incorporating overly conservative assumptions for Amvuttra's commercial potential while assigning minimal value to the broader pipeline. Critically, Alnylam achieved free cash flow breakeven in 2025, meeting the manager's risk management criteria for biotech investments by reducing downside exposure.

Pitch Summary:
We also added two new positions in the health care sector with the additions of Roche and Alnylam Pharmaceuticals. These moves brought the portfolio's health care exposure back to a slight overweight versus the benchmark and continued our efforts to improve quality of our health care holdings. We believe Roche has an attractive growth runway with multiple positive Phase III readouts in early-stage breast cancer and multiple sclerosis. These should enable Roche to grow revenues through the loss of exclusivity period for several of its current cancer and multiple sclerosis drugs and secure its place among pharmaceutical companies that can grow revenue for the next decade.

BSD Analysis:
The manager added Roche as part of a strategic effort to upgrade the quality of health care holdings and restore sector exposure to an overweight position. The investment thesis is built on Roche's robust pipeline with multiple positive Phase III trial readouts in early-stage breast cancer and multiple sclerosis. These pipeline assets are expected to drive revenue growth even as the company faces patent expirations on current cancer and MS drugs, providing a bridge through the loss of exclusivity period. The manager positions Roche among a select group of pharmaceutical companies capable of sustained revenue growth over the next decade. This represents a quality-focused approach to biotech investing, emphasizing proven clinical success and revenue durability.

Pitch Summary:
We continue to be optimistic on trends in the semiconductor sector and added a new position during the quarter in Texas Instruments, a company focused on analog semiconductor devices and embedded processing. The company sells products with long life cycles to a diversified customer base and has a unique free cash flow story. While the company's cash flow has been depressed by sluggish demand and elevated capex, we believe cash flow can inflect meaningfully as both of those trends reverse. We also view Texas Instruments as well positioned for an improving manufacturing outlook as 30%–40% of its customer base is in industrials.

BSD Analysis:
The manager initiated a new position in Texas Instruments based on optimism about semiconductor sector trends and the company's unique positioning. The investment thesis centers on TXN's focus on analog semiconductors and embedded processing, which offer long product life cycles and serve a diversified customer base. The manager acknowledges current headwinds including depressed cash flow due to weak demand and elevated capital expenditures, but expects a meaningful inflection as these trends reverse. The company's significant exposure to industrial customers (30-40% of base) positions it well for an anticipated manufacturing recovery. This represents a contrarian bet on cyclical improvement in both semiconductor demand and broader industrial activity.

Pitch Summary:
Unilever is in deal-making mode, and the market doesn't like it, at a time when it would prefer stability. March performance has been dire, but the stock appears to be severely undervalued. I stand by quality stocks as a good place to remain invested in this period of uncertainty.

BSD Analysis:
The manager maintains a bullish stance on Unilever despite recent poor performance, viewing the stock as severely undervalued. The investment thesis is based on Unilever's classification as a quality stock suitable for uncertain market conditions. The manager acknowledges market concerns about the company's deal-making activities during a period when investors prefer stability, which has contributed to the stock's underperformance in March. However, the manager sees this as creating an attractive entry point rather than a fundamental concern. The position reflects a contrarian value approach, betting that the market is overreacting to near-term execution concerns while the underlying business quality remains intact. This aligns with the manager's broader strategy of holding quality stocks during periods of market stress.

Pitch Summary:
Diageo's woes are not so much down to reduced alcohol consumption, which has been exaggerated, but due to premiumisation. They are effectively a luxury goods company, and that sector has been dragged down as consumer spending shifts from the high end and, most importantly, as the marginal buyer tightens their belt.

BSD Analysis:
The manager views Diageo as facing headwinds primarily from premiumization challenges rather than declining alcohol consumption. The thesis centers on Diageo's positioning as a luxury goods company that is vulnerable to shifts in consumer spending patterns. As economic pressures mount, consumers are pulling back from high-end purchases, particularly affecting the marginal buyer segment that drives premium spirits sales. The manager acknowledges the stock's disappointing performance but maintains it as part of a quality stock strategy. This suggests a defensive positioning during market uncertainty, though the manager doesn't express strong conviction about near-term recovery. The analysis reflects broader concerns about luxury goods exposure during economic stress periods.

Pitch Summary:
XPEL Inc: XPEL US Dominant compounder in niche oligopoly at an attractive price Management targeting ~40% EPS CAGR through FY28 3/31/26 Share Price: $40 FY28 Base Case Target Price: $84 Target Price % Upside: 110% Implied Share Price from Mgmt FY28 Targets: $140 [Alta Fox Bull Case] Alta Fox believes: 1. XPEL is a high-quality share gainer in the secularly growing Paint Protection Film ("PPF") market. 2. PPF demand trends are poised for improvement as affordability headwinds ease and awareness rises. 3. After an elevated investment period from 2022-2025, XPEL is positioned for operating leverage while sustaining high-single-digit revenue growth. 4. CEO, Ryan Pape, is a proven value creator, well aligned, and recently outlined a credible plan to drive EBIT margins from 13% in FY25 to 26% by FY28. 5. Underwriting conservative assumptions (below management targets), we forecast FY28 EPS to roughly double from FY25 levels, supporting 100% upside in the equity. 6. An upside case with management delivering on their targets implies materially higher earnings power and 250% upside. Paint protection film ("PPF") is sold primarily through independent aftermarket installers and, increasingly, through auto dealers. PPF is cut from rolls of film using pre-cut patterns stored in highly specialized software, applied to a vehicle's exterior panels, and helps protect paint from chips, scratches, stains, and wear. PPF helps to preserve vehicle condition and perceived value at resale. Consumer awareness and adoption of PPF continues to increase. We estimate US PPF penetration is only in the mid-single-digits, implying substantial room for adoption to increase from current levels. Google Trends indicates rising search interest in "PPF," consistent with increasing category awareness. XPEL has built a consumer-facing brand, while competitors rely solely on installers and dealers to push their products. This allows XPEL to command a price premium in the market and drive more sales for their partners. The PPF industry is niche, consolidated, and underpenetrated. We estimate the US wholesale market value to be <$500M in value in the US. XPEL is the only public pure-play company focused on PPF and continues to win share from less focused industrial conglomerate competitors. We estimate that 850bps while operating margins remained relatively flat due to deliberate investment. We believe XPEL has already absorbed much of the overhead required to support vertical integration. As a result, we are comfortable underwriting management's targets for a slower pace of SG&A growth in the coming years as the business scales. We believe XPEL should be able to grow revenues high-single-digits plus per year over the medium-term. Revenue growth should continue to drive gross margin expansion. Modest SG&A growth should drive high-teens EBIT growth. If capital is deployed toward repurchases, share count could decline ~5% per year, supporting low-20% EPS CAGR in a steady-state case. We believe that even without vertical integration, XPEL could compound EPS at a low-20% rate through FY28 in this framework. Management has outlined a plan targeting substantially higher margin expansion by FY28, which would, in our view, imply materially faster EPS growth. XPEL appears to be on the cusp of an earnings inflection at an attractive starting valuation, creating an asymmetric risk/reward profile. XPEL's profitability appears to be inflecting higher while valuation is ~40% cheaper than historical averages (18x today vs 30x average). As margins expand and earnings visibility improves, the market should place greater confidence in forward earnings power, allowing valuation to normalize toward historical levels. XPEL is already cheap relative to its organic growth profile, now investors are getting a call option on explosive EPS growth from successful vertical integration for free. XPEL is a bite-sized bolt-on (~$1.1B EV) that gives major coatings players instant entry into the high-growth PPF market with a clear path to faster organic growth and likely significant synergies.

BSD Analysis:
Alta Fox presents a compelling bull case for XPEL, positioning it as a dominant player in the niche but growing paint protection film market with significant operating leverage ahead. The fund highlights XPEL's competitive moats including proprietary DAP software that creates installer switching costs, strong brand recognition allowing 20% pricing premiums, and market leadership in an underpenetrated industry with mid-single-digit US adoption rates. Management's credible plan to expand EBIT margins from 13% to 26% by FY28 through vertical integration represents a key catalyst, with CEO Ryan Pape's proven 47% annualized returns since 2009 lending credibility to execution. The investment thesis centers on XPEL emerging from a multi-year investment cycle positioned for substantial operating leverage, with the fund forecasting EPS to double by FY28 even under conservative assumptions. At 18x forward P/E versus historical 30x averages, the valuation appears attractive for a company targeting 40% EPS CAGR through FY28. Alta Fox sees asymmetric risk/reward with 110% base case upside to $84 and 250% bull case upside to $140, supported by secular PPF adoption trends and potential strategic acquisition interest from larger coatings companies. The combination of defensive market position, margin expansion opportunity, and compressed valuation creates a compelling investment opportunity in Alta Fox's view.

Pitch Summary:
Looking ahead, we've launched a separate corner and envelope on "Serial Acquisitions" and for Q2, you can expect an in-depth report on Indurcish and Diploma. Our introductory write-up on Diploma's philosophy and larger MBA transactions (illustrating how some of them have outperformed with high-taxes percent un-levened 50th before considering a potential unit value for these acquired company) became our 45th more-road article. This caught us by complete surprise. Apparently, there's a considerable interest in Diploma's investment thesis: it's not a serial acquirer that reaches the headlined and there's not a lot of coverage on hahnach. Considering Diploma became a 4% position in our equity portfolio, it's very useful to present the full thesis - there's a lot more to talk about, especially on its deliberate organic growth focus.

BSD Analysis:
The manager has established a 4% position in Diploma PLC, viewing it as an underappreciated serial acquirer with limited analyst coverage. The investment thesis centers on Diploma's disciplined acquisition strategy and deliberate focus on organic growth, distinguishing it from typical headline-grabbing serial acquirers. The manager emphasizes that Diploma's acquisition philosophy has generated strong returns, with some transactions delivering significant outperformance. The position represents a meaningful allocation in their concentrated portfolio, suggesting high conviction in the investment case. The manager plans to publish detailed analysis on the company's acquisition strategy and organic growth initiatives. The lack of widespread coverage appears to create an information asymmetry opportunity. This appears to be a value-oriented play on a well-managed industrial distributor with a proven capital allocation track record.

Pitch Summary:
The UK banking sector is a great example, which sold off very hard. It could be argued that higher interest rates would lead to better bank profits, provided we avoid a hard recession which we see as unlikely. We have therefore added to our banking allocation, as we feel that there is a significant opportunity for growth from here. For example, the UK banking sector is now trading on a 20% discount to where it was only one month ago. The chart below illustrates this well, looking at the share price movements of Barclays, one of our biggest UK equity holdings, against our low risk portfolio, which demonstrates the benefits of running a diverse portfolio. You can see that despite holding that stock, the portfolio has shown remarkable resilience. Particularly if the war is not prolonged, and/or a deep recession is avoided, then we expect to see a significant benefit from an increase in Barclays share price, and hence we now want more exposure. In fact, already since midday yesterday the stock is up 7%.

BSD Analysis:
The manager presents a contrarian bullish thesis on Barclays and the UK banking sector following a sharp selloff in March 2026. The core investment rationale centers on the potential for higher interest rates to improve bank profitability, assuming a hard recession is avoided. The manager views the 20% sector discount as creating significant value opportunities and has increased banking allocations accordingly. Barclays represents one of their largest UK equity holdings, demonstrating conviction in the position. The analysis suggests that resolution of geopolitical tensions or avoidance of deep recession could drive substantial share price appreciation. Recent momentum appears supportive, with the stock already recovering 7% from recent lows. The manager's diversified portfolio approach has provided downside protection during the volatility while maintaining upside exposure to the banking recovery thesis.

Pitch Summary:
Protasco is one of 3 companies that maintain roads under federal contracts in Peninsular Malaysia. The stock is down 21% from its 2026-high. The decline is likely caused by the uncertainty of its most important "Roadcare" contract. Protasco owns 51% of the contract, which accounts for 60% of revenues. The contract is currently in a 1-year bridge agreement, so it is uncertain as to whether the contract will be extended past February 2027 (expiry of bridge agreement). The odds appear overwhelmingly in favor of an extension. First, history is on the side of shareholders. No federal road maintenance incumbent has ever been displaced through competitive tender in Peninsular Malaysia. Roadcare has also operated for 25 years with no performance-related termination or public criticism of service quality. The second-largest owner of Roadcare after Protasco is KOP Mantap, wholly owned by the Royal Malaysia Police Cooperative. The contract benefits the police union directly and may face political friction if not extended. The smallest owner is Muhibbah Engineering, which is a public company 3x the size of Protasco with a 50+ year track record and no history of government contract cancellation. All three partners have been aligned for 25 years. Second, switching costs are significant. A new entrant would need to replicate Roadcare's depot network, road inventory data, monitoring system integration, relationships with JKR district offices across four states, and the supervisory capacity of ~380 sub-contractors. The only road maintenance incumbent to be nearly displaced is CMS. CMS was awarded a 15-year maintenance contract concession in 2003. But the renewal in 2019 came with reduced scope and ownership. However, the outcome may be deserved because it belonged to the Taib dynasty, which was the subject of massive international corruption allegations. If politically-toxic CMS that's most deserving of displacement was only punished with reduced scope, it's very unlikely that a functioning private-public consortium will be met with displacement. But the market appears sure that Protasco will be displaced by punishing its stock to the point of 1.3x trailing earnings (not a typo) and 0.2x book value. This is not all. Net cash is now roughly 2.5x market cap. And Protasco has land on the balance sheet that was last appraised in 2002 and likely worth substantially more at current market values. The downside appears well-protected with potential for significant upside after the uncertainty of the concession is cleared.

BSD Analysis:
The manager identifies an extreme value opportunity in Protasco, trading at an absurd 1.3x trailing earnings and 0.2x book value due to contract renewal uncertainty. The investment thesis rests on the historical precedent that no federal road maintenance incumbent has ever been displaced in Peninsular Malaysia over 25 years of operations. The Roadcare consortium benefits from significant switching costs including depot networks, data systems, and relationships with 380 sub-contractors across four states. Political alignment appears strong with the Royal Malaysia Police Cooperative as a key partner, creating potential friction if the contract isn't renewed. The balance sheet provides exceptional downside protection with net cash at 2.5x market cap and undervalued land assets last appraised in 2002. Even the worst-case scenario of CMS, tainted by corruption allegations, only faced scope reduction rather than displacement. The market's extreme pessimism creates asymmetric risk-reward with minimal downside and substantial upside once contract uncertainty resolves.

Pitch Summary:
Ascentech is the Japanese operator of Citrix, one of two leading global VDI (virtual desktop infrastructure) providers. The stock declined about 30% from its 2026-high because of fears of AI disruption and weak guidance. The "SaaS is dead" narrative concerns AI displacing software incumbents by favoring AI-native software or making software so cheap to build that customers build their own. But the narrative is about application-layer disruption. Ascentech operates at the infrastructure layer — the plumbing that sits beneath all of these applications. Whether a company uses Salesforce or an AI-native CRM alternative, they still need what Ascentech sells — secure remote access for their employees, zero trust security for their data, and VDI or thin client infrastructure for their endpoints. If anything, the AI-disruption thesis increases demand for Ascentech products. As organizations adopt AI-native alternatives, they're adding complexity to their IT environments with more applications and cloud services. That complexity drives demand for Ascentech's products from VDI to DLP (Data Loss Prevention for protecting data as it moves between more applications) and hardware necessary to run AI securely on-premise. As for guidance, next-year guidance looks weak because the company guided for flat revenues and lower margins (~16% in 2026 to ~11% in 2027). These seem alarming on the surface but aren't so because revenues and margins were inflated in 2026. A surge of customers in 2026 from a convergence of industry drivers (Windows 10 EOL, VMware migration, financial institution hardening) led to large upfront payments for deployment that are typical for Citrix contracts. The upfront payments will not be repeated and customers are responsible only for license fees after deployment. The high-margin nature of the upfront payments inflated margins as well. Ascentech earns 20-25% ROE, and trades at 12x 2027 earnings and 8.4x 2028 earnings from guidance, supported by 46% insider ownership including founders, the CEO, and a SoftBank-affiliated PE fund that bought its stake at a price roughly 40% higher. Dividend payout has been raised twice in the past year, and roughly 76% of its market cap sits in cash. Management has never missed guidance and usually beat-and-raise. Guidance should hence be treated as the baseline.

BSD Analysis:
The manager presents a compelling contrarian thesis on Ascentech, arguing that AI disruption fears are misplaced for infrastructure-layer providers. The core investment thesis centers on Ascentech's defensive positioning as essential IT plumbing that becomes more valuable as organizations adopt AI-native applications, creating additional complexity requiring VDI and security solutions. The valuation appears attractive at 12x 2027 earnings with strong insider ownership at 46% and a fortress balance sheet holding 76% of market cap in cash. The temporary margin compression from 16% to 11% reflects the normalization of one-time deployment revenues rather than fundamental deterioration. Management's consistent track record of beating guidance, combined with recent dividend increases and strong ROE of 20-25%, suggests operational excellence. The 30% stock decline creates an asymmetric opportunity where the market has overreacted to temporary headwinds while ignoring the structural demand drivers from digital transformation and AI adoption.