Investment Pitches

Pitch Summary:
Secularly declining business; stock gained 400% due to short covering; long history of investor dissappointment; announcing private deals to survive; AI hype;

BSD Analysis:
Lumen Technologies operates a legacy telecom and fiber network. The bear thesis stresses secular decline in legacy voice/data services, heavy debt load, and limited growth from fiber investments. With ~$20B in net debt, refinancing risk is acute in a higher-rate environment. Revenue erosion continues despite restructuring, leaving free cash flow negative. Catalysts/risk checks: fiber subscriber additions, debt maturity extensions, asset sales, and capex discipline. Counterpoints: fiber remains a valuable asset, but shorts argue LUMN’s capital structure leaves equity optionality minimal.

Pitch Summary:
Accounting red flags (rehired almost all top executives after SEC settlement over accounting violations); undisclosed related party transactions worth nearly $1bil; governance issue; sanctions and export control failures; customer issues; Update 8/28 - The company announced 10k filing delay

BSD Analysis:
Super Micro Computer manufactures high-performance servers optimized for AI and cloud workloads. The short case emphasizes valuation excess, cyclicality in server demand, and concentration risk in AI-related buildouts. While growth has surged with AI adoption, bears argue gross margins are thin, operating leverage is limited, and competition from Dell/HPE looms. With supply chain complexity and working capital swings, execution risk is high. Catalysts/risk checks: AI server order trends, margin expansion, inventory turnover, and competitive pricing dynamics. Counterpoints: secular AI demand is strong, but shorts see SMCI as a low-margin hardware vendor priced like a software company.

Pitch Summary:
Travel & leisure stocks remain deeply out of favor and, outside of cruise operators, remain well below their pre-covid valuation levels. Headlines such as the WSJ's recent article titled "Americans Are Skipping Theme Parks This Summer" offer a glimpse of the current lousy sentiment. We think the misleading headlines along with dour vibes surrounding the US consumer are offering up an opportunity in United Parks & Resorts (PRKS), f/k/a SeaWorld, which contrary to headlines had positive year-over-year attendance growth in Q2. As veterans of concentrated small cap equity investing, we feel like we know a good roller coaster when we see one. A Brief History The origin of this storied company starts with Adolfus Busch (of Anheuser-Busch fame) and his desire to develop beautiful gardens across the country. For decades these parks, adjacent to his breweries, were used as a marketing tool to build the Anheuser-Busch brand. Over the years, animals and rides were added to the attractions. Busch Gardens Tampa Bay (opened in 1959) and Busch Gardens Williamsburg (opened in 1975) still operate and are among PRKS largest venues. In 1989, Busch Entertainment acquired the theme park division of Harcourt Brace Jovanovich and with it, SeaWorld. Two decades later InBev acquired Busch Entertainment as a part of Anheuser-Busch in mid-2008. Being the pragmatic operators they are, AB Inbev began a non-core asset divestiture program to de-lever the business. Blackstone saw this as an opportunity and made a timely acquisition of Busch Entertainment in 2009. Blackstone surely did their homework and took comfort that this was a resilient business even as the United States was barreling into the worst economic outlook in a generation. The economic storm blew over and operational improvements were made leading to an IPO of the newly named SeaWorld Entertainment in 2013. The current chapter of the saga began around 2017 when Scott Ross of Hill Path Capital was added to the Board (soon to become Chairman). Hill Path began to drive further operational improvements and took bold capital allocation actions, creating the current attractive set up. The Business PRKS now owns and operates 12 theme parks under seven different banners across five states: SeaWorld (in Orlando, San Antonio, San Diego, Abu Dhabi (licensed)), Busch Gardens (Tampa Bay, Williamsburg, VA), Discovery Cove (Orlando), Sesame Place (San Diego, Philadelphia suburb), Adventure Island (Tampa Bay), Aquatica (Orlando, San Antonio). Many of the company's parks are located in geographic locations where they can operate on a year-round basis. About 60% revenue is generated in Florida, 16% in California, and 13% in Virgina. Their key markets with the exception of San Diego have shown employment growth well above the national average over the last two years and have positive demographic outlooks. PRKS is a relatively straight forward business. About 55% of PRKS revenue comes from selling admission tickets, and about 40% of attendance comes from season ticket holders. The remaining ~45% of revenue comes from in-park spending, which include merchandise sales at their retail shops, food & beverage purchases at their restaurants, customized photos, reserved seating at shows, cabana rentals, lockers, games, and other ancillary income. As referenced, Hill Path has been very focused on driving revenue while at the same time being maniacal about removing unnecessary costs from the business, evidenced by EBITDA margins improving from 29.2% in 2018 to 41.3% on a TTM basis. The Current Opportunity As mentioned, Theme Park operators are being misconstrued currently and are a popular way to express a bearish view of the US consumer—PRKS has over 18% of its float sold short, after all. We take a different view as they have historically held EBITDA flattish through even the nastiest of recessions. In 2002, EBITDA decreased 1.2% before rebounding to a new high in 2003. In 2010, EBITDA bottomed out at 8.2% lower than the 2008 highwater mark before quickly rebounding to a new record high in 2011. This relative strength in weak economic periods is in large part because PRKS provides a compelling value proposition in lean times compared to many alternative family entertainment options (see chart below). In addition, as a regional theme park, PRKS' attendance is much more driven by local residents than Disney or Universal, which can make it more economically resilient as its visitors don't have to pony up for airline tickets and hotels on top of park passes. Both Disney and Universal have hiked ticket prices more aggressively than PRKS post Covid, making PRKS even more of a relative bargain now versus five years ago. We think PRKS offers a differentiated theme park experience from the fantasy, media content driven experiences of either Disney or Universal Studios, as PRKS is oriented around animal content and educational shows. Busch Gardens Williamsburg has been named America's most beautiful park 33 years in a row by the National Amusement Park Historical Association, and SeaWorld Orlando is routinely voted as Best Theme Park in America by various reader's choice awards (including USA Today and Theme Park Magazine). This distinct experience also means PRKS can be a compliment to a Disney/Universal vacation from out of state or international visitors. Historically, Universal or Disney's promotional activities had much more impact on each other than on PRKS attendance numbers. One of the most overt fears and competitive threats is due to a massive expansion forthcoming at Universal Orlando called Epic Universe that is opening in early 2025. New parks and expansions are nothing new over PRKS's multi-decade history. One pertinent case study is the 2013-2014 timeframe when Universal opened a new Harry Potter Diagon Alley to much fanfare. Bears point to the decline in Universal Orlando attendance as evidence of competitive pressure – but we would contend that this was more related to idiosyncratic issues surrounding the damaging Black Fish documentary release. SeaWorld Orlando attendance declines were much less severe than SeaWorld San Diego, showing that the issues at that time were more tied to the negative publicity as opposed to Universal's expansion. PRKS has long since reduced the importance of orcas to the guest experience by investing heavily in new attractions and roller coasters. Orlando is an important market for PRKS to be sure, as it accounts for ~35% of EBITDA. Nonetheless, assuming a 10% decrease from the Epic Universe opening would only amount to a 3.5% headwind to overall EBITDA. The remaining parks would have to grow at ~5.5% to keep overall EBITDA flat. For what it's worth, PRKS management has the clear expectation to grow overall EBITDA in 2025 even in the face of Epic Universe's opening. It's worth pointing out a couple of other underappreciated dynamics at the company. PRKS owns all the real estate underlying their parks (apart from the San Diego SeaWorld location), which totals about 2,000 acres. This includes 400 acres of unutilized excess land adjacent to the parks that are currently under review on how to best to drive value. To wit, from their Q4 2023 earnings call: "First, let me be clear that we believe there is a great opportunity for hotels in our parks. We own approximately 400 acres of developable land adjacent to our parks. We know there is significant vacation hotel demand from guests in our markets and we see an obvious opportunity to generate significant incremental EBITDA and value from hotels in our parks. Second, we have not decided to spend any capital actually constructing hotels and, in any event, we will not spend any capital to construct a hotel without high confidence in achieving 20%-plus ROI unlevered cash-on-cash returns." An additional possible future growth avenue is their highly attractive licensing model. The sole licensed SeaWorld location in Abu Dhabi provides the company with around $10M of high margin revenue with no capital outlay and this model could certainly be replicated in the future. Perhaps the cornerstone of our thesis is that the company has a bold board led by Hill Path's Scott Ross & James Chambers who are likely to execute some form of significant strategic corporate action over the coming years. Ross has made his investment career as a private equity executive with a focus on location-based entertainment and theme park investments. Theme parks can require major capex investments, so a bold board is only a positive if it is married with sound capital allocation – which we believe PRKS has proven it has. The company is not shy in expressing its opinion on the current valuation of the business: "The Board and company believe our shares are materially undervalued. We have significant confidence in our business and our prospects. And as we shared with you last quarter, any reasonable way you look at it, we feel we are materially undervalued and that there is significant upside opportunity in our current share price." Such corporate jawboning is cheap, but this team puts their money where their mouth is as PRKS has been an insatiable share cannibal in recent years, while keeping leverage stable. So, what do we think the likely paths forward could be? With the large and growing Hill Path ownership stake, which will be nearing 60% (including positions controlled through swaps) when the company soon exhausts the current $500 million share repurchase authorization, we think there is an elevated chance of one of the following events happening in the coming years: Take private by private equity Take private by Hill Path Transformative acquisition It's no secret that private equity has long had an affinity for buying cash generative theme park operators and Ross is certainly well connected within the industry. With net debt/EBITDA at a conservate 2.7x, a potential PRKS buyer has plenty of room to juice leverage judging from Blackstone's comfort taking leverage on stable theme park assets above 5.0x in the past. Alternatively, Hill Path has the wherewithal to take the company private itself, and fortunately a deal would have to be approved by a majority of the minority shareholders. Behind door number three is a potential acquisition. Hill Path has shown they have an appetite to do a large M&A deal, such as when PRKS made an (unsuccessful) offer for Cedar Fair in 2022. In such an undertaking there would likely be significant operating synergies, and with Hill Path at the helm, we believe any acquired business would likely exhibit improved baseline margins separate from the operating synergies. We think previous owner Blackstone buying PRKS and combining it with their current portfolio company Merlin Entertainment would make the most strategic sense due to their geographic overlap in key markets and a like-minded operating playbook. Aside from cost synergies, the two could implement attendance driving co-marketing agreements with initiatives such as multi-park passes. Merlin's recent press release highlighting the acquisition of the "Orlando Eye" Ferris wheel cited the company's "strategic focus in building major attraction clusters in key cities, including Orlando." Merlin was purchased (for the second time) by Blackstone in 2019 and is held in its long dated "Core Private Equity Strategy" fund with a stated life of "10-15 or more years," so they are more apt to plan their next phase of growth than seek exit liquidity. Heraclitus said no man ever steps in the same river twice, but he didn't say anything about wave pools. To Jon Gray we say, come on in, the water is warm. Valuation Despite tremendous operational improvements over the recent years, the shares remain stuck at the loading platform. At ~6.8x '25 EBITDA, current valuation is a far cry from theme park stocks' 5-year pre-Covid average multiple of double-digit EBITDA multiples. Furthermore, when we look at transaction comps, the median theme park transaction multiple over the last couple of decades is ~11.0x EBITDA. Aside from the sole acquisition of Busch Entertainment by Blackstone done at 8.0x in the depths of the 2009 financial crisis, no other significant acquisition that we could find data on was completed below 9.9x EBITDA. With shares currently trading at a 2025 P/E ratio of ~10x, we feel like valuation would likely re-rate eventually in the public markets even if none of the strategic paths noted above come to fruition. Shares traded at an average of ~21x forward earnings between 2014-2019. We think PRKS valuation is compelling almost any way you slice it. Our base case price target of $88/share gives the stock +80% upside over the next two years, using a conservative EBITDA multiple of 8.7x (15.0x P/E). This would still represent a discount to its own trading history and to precedent transaction comps.

BSD Analysis:
Voss Capital presents a compelling contrarian thesis on United Parks & Resorts, arguing that negative sentiment around theme parks and the US consumer has created an attractive entry point. The fund highlights PRKS's operational resilience during recessions, with EBITDA remaining relatively stable even during economic downturns, and notes the company's impressive margin expansion from 29.2% to 41.3% under Hill Path Capital's leadership. The investment case centers on multiple potential catalysts including strategic alternatives (private equity buyout, Hill Path taking the company private, or transformative M&A), significant share repurchases with Hill Path approaching 60% ownership, and underutilized real estate assets including 400 acres of developable land. At 6.8x 2025 EBITDA and 10x forward P/E, the valuation appears deeply discounted compared to historical trading multiples and transaction comps. The fund's $88 price target implies 80% upside, supported by the company's differentiated animal-focused experience, regional attendance base providing recession resilience, and potential for margin expansion and strategic value creation. Key risks include increased competition from Universal's Epic Universe opening and broader industry capacity expansion, though management expects EBITDA growth despite these headwinds.

Pitch Summary:
Mohnish Pabrai's interest in CONSOL Energy was sparked by David Einhorn's significant investment in the company. Pabrai's extensive research into the coal industry led him to divest from other U.S. holdings and focus on coal stocks, indicating a strong conviction in the sector's potential.

BSD Analysis:
Pabrai's investment in CONSOL Energy reflects a strategic bet on the coal industry, which has seen fluctuating demand due to global energy transitions. Despite environmental concerns, coal remains a critical energy source in many regions, providing a hedge against energy shortages. CONSOL Energy, with its established operations and market presence, stands to benefit from any resurgence in coal demand. Investors should consider the regulatory and environmental risks associated with coal, but the company's operational efficiency and market positioning could offer substantial returns if coal prices stabilize or increase. Pabrai's move also highlights the importance of thorough due diligence, as he conducted extensive research, including site visits, before committing to this sector.

Pitch Summary:
The business is at its peak; SYM will be short of revenue expectations; overvalued (EV/EBITDA 52x vs. peer of 14x); the business model is simply a 'contract manufacturer' vs. the claimed AI-powered robotic technology;

BSD Analysis:
(Repeat entry — Symbotic). Shorts emphasize valuation risk, customer concentration (Walmart), and lumpy revenue recognition. While automation demand is secular, execution hinges on scaling beyond Walmart and stabilizing margins. With stock priced for hypergrowth, any slowdown could compress multiples. Catalysts/risk checks: backlog conversion, new large-customer wins, and gross margin trajectory.

Pitch Summary:
Alfa is our largest investment, and I wanted to provide an overview of the investment thesis to help you understand why that is the case. The quick synopsis is that it is a good business that is going through a corporate simplification process that is likely to serve as a catalyst for value realization, and which is trading at close to my Worst case value estimate and at less than half of my Base case value. In my Base case, Alfa is trading at 5x earnings or a ~ 20% Free Cash Flow (FCF) yield post-spin. Alfa has two businesses, which is down from four that it had a few years ago. The main business, Sigma, is a branded food business focused on meats and dairy and is the intended sole future business of the company. The second business, Alpek, is a commodity chemical producer with global scale in its markets. It is publicly traded and is 82% owned by Alfa. The stated intent towards which Alfa's management has been working is to spin off Alpek just as it has done in the past with its other non-core businesses. The gating factor for that event is that management wants the remaining company to be at less than 2.5x Debt/EBITDA leverage post-spin to maintain strong investment grade credit rating. Currently, excluding Alpek it would be closer to 3.5x levered. Therefore, the timing of the spin is going to be mainly determined by when leverage can be reduced to 2.5x. There are four drivers for that leverage to come down: Cash flow generated by Sigma, Growth in Sigma's EBITDA, Cash flow generated by Alpek and sent to Alfa in the form of a dividend, Sale of non-core assets that the company is pursuing, such as corporate real estate. Some of these factors are within management's control while others depend primarily on the external environment. For example, as I will discuss in a moment, Alpek's business is going through a cyclical downturn, which is depressing its profitability and the amount of cash flow it is generating. Also, to sell non-core assets there needs to be a buyer willing to pay an appropriate price. So, while there is some uncertainty as to when the spin-off of Alpek will happen, over the last several quarters I have detected an increased sense of urgency on the part of the management, both with respect to their words, and with respect to their actions. I can't pinpoint the timing of the catalyst with precision but would be surprised if it took more than two years to accomplish the deleverage and spin-off process. Let's examine Sigma, which is the whole of the intended future company, as a business. It sells branded meats (e.g. cold-cuts, sausages, etc) and milk-based products (e.g. yogurts) in four main markets: Mexico, U.S., Latin America and EU. Of these, Mexico is the largest and the most profitable. This is due to structural reasons – the company's brands are strong and its customers, such as the small local bodegas, are small and fragmented. This contrasts with the company's most challenged business in the EU where it distributes its products through large chains with much greater bargaining power. Sigma's financial characteristics support my conclusion that it is a good, growing business. It grew revenues approximately 4% per year over the last decade, and operating income at an approximately 6% rate. In the recession year of 2020 its organic sales dropped less than 2%. While that probably understates how much sales would drop in a normal recession without the COVID benefit of consumption shifting from eating out to eating at home, this is still a sign of a resilient business. Margins have been in a relatively tight range over the last ten years. Over the last three years the segment averaged an after-tax Return on Net Assets of around 35%. No, this is not a hyper-growth business, but all indications are that it is a business growing at a moderate rate with attractive financial characteristics. Qualitatively, consumers form habits for the brands of food that they eat, and so change happens slowly in the family kitchen. If you want to test this and you have kids, try to get them to eat a different brand of sausage or Ketchup! The flip side of this not being a rapidly growing business is that there is a high chance of its key characteristics remaining very similar in 10 or 20 years to what they are today. That's a good thing, as it allows us to be more confident about predicting future cash flows. The above table shows my model of Alfa once it becomes just Sigma and absorbs corporate costs. I estimate that Net Income/equity FCF will range between USD $250M and $400M with a Base Case of ~ $350M. Alpek, of which Alfa owns 82%, is its own publicly traded company that focuses on chemicals such as PET and Styrenics. It has important global positions and good scale. It is a very cyclical and capital intensive business, which also currently happens to be near its trough profitability. However, it has generated strong cash flow over the full economic cycle, and with appropriate competitive position it isn't a bad business. Nobody knows when the cycle will turn, but in recent quarters the key measure of industry profitability, reference margins per pound, has shown signs of increasing off the bottom. Importantly, Alpek has been a very cash-generative business, even in tough times. Combined with moderate financial leverage, this is not a business whose survival depends on how quickly the cycle will turn. Looking at full-cycle average levels of profitability, I estimate that Alpek is capable of generating between ~ USD $200M and $300M of annual cycle-average equity FCF. Valuing this at between 7x and 13x equity FCF with a Base case of 10x, I estimate that Alfa's 82% stake in Alpek is worth between USD $1.2B and $3.2B with a Base case of $2.1B. For reference, Alpek is currently trading at a market capitalization of $1.26B, or just above my Worst case value. This isn't unusual for a cyclical near the trough of the cycle and represents an extra source of upside once the cycle turns. Returning to Alfa, the corporate owner of both Sigma and Alpek, we get the following picture. We have a company with a market capitalization of USD $2.7B. If we were to subtract even the worst case value of Alpek, consistent with the current depressed market price, and account for the free cash flow that needs to be used to reduce debt to target levels, that would result in Sigma trading at 7x my Base case earnings/FCF. If we were to use my Base case value for Alpek, that ratio would decline to under 5x. We don't need to squint through a magnifying glass to see that the stock is very cheap almost any way that you look at it. No investment is without risk. Yes, it's a Mexican company, although one that sells its products in many countries. Yes, it's a smaller company compared to a larger peer like Hormel which is in a similar business to Sigma and trades at 20x earnings. However, we have the key ingredients for a successful investment: a good business, honest people trying to do the right thing, a catalyst on the horizon that is likely to help with unlocking value, and a very low price.

BSD Analysis:
The manager presents Alfa as the fund's largest position, emphasizing the compelling valuation at 5x earnings post-spin with a 20% free cash flow yield. The investment thesis centers on a corporate simplification catalyst, with management working to spin off the cyclical Alpek chemicals business to focus on the stable Sigma food operations. Sigma demonstrates attractive defensive characteristics with 4% annual revenue growth over the past decade, less than 2% sales decline during 2020 recession, and 35% return on net assets. The business benefits from strong brand loyalty in fragmented Mexican markets, contrasting with more challenging EU operations facing large retail chains. The manager expects the spin-off within two years as leverage reduces to target levels. At current prices, investors essentially receive Sigma at 5-7x earnings after accounting for Alpek's value, compared to peer Hormel trading at 20x earnings.

Pitch Summary:
IGT is a new small investment in the "Undervalued with a Catalyst" category. The company is comprised of two businesses: a lottery operator and a designer of new slot machine games plus related products. The former is a good, stable business with low cyclicality, high barriers to entry and switching costs but modest growth. The latter can be a good business, but is highly cyclical, very competitive and susceptible to product cycle hits and misses. IGT was already in the process of spinning off its non-lottery businesses and merging them with Everi Holdings (EVRI), when the private equity firm Apollo announced that it will be buying the combined post-spin entity. This new deal results in a much higher all-cash payment to IGT than was contemplated under the spin-off. The deal is expected to close in about a year. Following the transaction, the remaining IGT will be a pure play lottery operator with a lot of extra cash that it can use, in part, to buy back shares. The lottery business is only mildly cyclical and has withstood the introduction of new forms of online gambling. The company operates in two primary geographies, U.S., where contracts are awarded at the state level, and in Italy, where it is done nationally. My research suggests that the incumbent lottery operator is very hard to replace due to both perceived and real switching costs. No bureaucrat is going to be very excited to take on the massive career risk of something going wrong unless there is a compelling reason to do so. My understanding is that in the past decade only one major U.S. state contract has changed hands for this reason. Furthermore, this business is built around long-term contracts that expire at different times, which further mitigates the risk of something going wrong. The company's largest contract, in Italy, is coming up for renewal in 2025, which is a risk. The chances of them losing the contract are small, but there is a risk that Italy will attempt to extract additional concessions (e.g. a larger upfront payment) on the terms. This is a risk that I am monitoring, but I believe it to be manageable both in terms of magnitude and likelihood. In about a year's time, I expect us to have gotten a durable, modestly growing lottery business for under 10x earnings. That is substantially below the intrinsic value of the cash flow stream or comparable private market transactions in the industry. The downside to the Worst case scenario in which Italy's contract is lost and the U.S. business does not grow is less than 25%. This results in attractive risk/reward for a good business with a clear catalyst. While today the company is neglected due to its complexity, once it is a simple monoline business with good economic characteristics the gap between price and intrinsic value is more likely to close. If it doesn't, the company should have ample capital to buy back a meaningful portion of its shares, further increasing the intrinsic value per share for the remaining owners. In the meantime, we get to collect a 3.5%+ dividend yield while we wait.

BSD Analysis:
The manager presents a compelling catalyst-driven investment in IGT, focusing on the upcoming spin-off and Apollo acquisition that will transform the company into a pure-play lottery operator. The thesis centers on the defensive characteristics of lottery operations, including high switching costs and long-term government contracts that create significant barriers to entry. The manager's research indicates only one major U.S. state contract has changed hands in the past decade, demonstrating the stickiness of these relationships. The valuation appears attractive at under 10x earnings post-transaction for a stable, cash-generative business. Key risks include the 2025 Italy contract renewal, though the manager views this as manageable. The investment offers asymmetric risk/reward with less than 25% downside in a worst-case scenario while providing a 3.5%+ dividend yield and potential for significant share buybacks with excess cash.

Pitch Summary:
Cipher Pharmaceuticals has undergone a significant transformation with the acquisition of Natroba, a dermatology product for lice and scabies. This acquisition has doubled Cipher's EBITDA and positioned the company as a growth stock with multiple avenues for expansion, including increasing Natroba's market share in the U.S. and expanding into Canada and Europe. The company's strategic moves, including leveraging new U.S. infrastructure and potential in-house production of Absorica, suggest a strong growth trajectory.

BSD Analysis:
Cipher's acquisition of Natroba at a transaction multiple of ~7.5x EBITDA is a strategic move that has already resulted in a significant market response, with shares up 70% post-announcement. The company's pro forma EBITDA multiple has expanded to ~14x, reflecting the market's recognition of the value created. With Natroba's potential market share growth, particularly given the increasing resistance to permethrin, Cipher is well-positioned to capture significant upside. The company's strategic use of its new U.S. headquarters and sales team further enhances its growth prospects. Additionally, Cipher's improved capital structure, with a mix of cash and debt financing, supports its growth initiatives while maintaining manageable leverage. The company's focus on dermatology and potential for further acquisitions, coupled with a strong management team, positions it as a compelling investment opportunity in the pharmaceutical sector.

Pitch Summary:
Argent Industrial has been repositioning itself from a low-margin South African steel trading and commodity manufacturing business to a higher-margin, specialized niche industrial supplier internationally, primarily in the UK. The company has compounded EPS at 31.7% per annum over the past decade and FCF at 24%, while trading at 5x earnings. Despite this performance, multiples have compressed. The company has adopted an active M&A strategy, acquiring international businesses and decentralizing operations, which has allowed them to maintain cost discipline and improve purchasing. The internationalization strategy is driven by the unstable business environment in South Africa, and the company has been diversifying its operations overseas since 2017.

BSD Analysis:
Argent's management has demonstrated strong capital allocation skills, having bought back approximately 40% of shares since 2017, which has driven much of the EPS CAGR. The company maintains a strong balance sheet with minimal debt and a significant cash pile, which positions it well for future acquisitions. Risks include the potential impact of Rand depreciation on international earnings growth and the inherent risks of acquisitions, especially if the company moves into non-steel areas. However, the company's focus on becoming a purer-play light industrial manufacturing company and potential relisting to LSE/AIM could act as catalysts for a rerating.

Pitch Summary:
The company is a house of cards fueled by crypto hype; the CEO's private company provides critical items and controls the entire operations of WULF; the CEO and the second & third largest shareholders are involved in crypto scandals and fraud; missing performance estimates by 80% to 90%; the team is full of 'history of failures'; unsustainable balance sheet;

BSD Analysis:
TeraWulf focuses on Bitcoin mining using nuclear and hydro-powered facilities. The bear thesis highlights commodity-like economics of mining, dependence on BTC price, and high energy intensity despite green branding. While power sourcing is cleaner than peers, profitability is still highly leveraged to BTC price volatility and halving cycles. Debt-funded expansion and dilution risks are also present. Catalysts/risk checks: BTC price movements, mining difficulty, hash rate share, and energy input costs. Counterpoints: ESG-friendly mining narrative resonates, but shorts argue economics remain unfavorable without sustained BTC bull cycles.

Pitch Summary:
IWG plc is positioned for significant growth due to its accelerating EBITDA, robust earnings momentum, and strategic buyback program. The company is expected to outperform consensus EBITDA forecasts for 2025, driven by growth in managed and franchised revenues and a substantial buyback initiative. Trading at a low multiple of 6-7x 2025 FCF, the stock offers a compelling value proposition with potential for a substantial re-rating.

BSD Analysis:
IWG's strategic focus on managed and franchised (M&F) operations is enhancing its growth trajectory, with new locations maturing and a strong pipeline of openings. The company's EBITDA is projected to grow by 10% in 2024 and 20% in 2025, supported by a significant buyback program that could drive a re-rating from 6-7x to 15x FCF over four years. This re-rating could result in a 4-5x return, or a 55% compounded annual return. Even without a re-rating, the free cash flow per share growth, bolstered by buybacks, suggests an IRR exceeding 30%. The company's leverage strategy, targeting 1x, with potential to increase to 1.5x, aligns with industry peers like Marriott and Hilton, further enhancing shareholder returns. The potential acquisition of Wework could unlock additional synergies and growth opportunities, positioning IWG as a dominant player in the flexible workspace market. Overall, IWG's combination of value, growth, and strategic initiatives presents a compelling investment opportunity.

Pitch Summary:
Hawaiian Electric Industries is nearing a resolution for its liabilities related to the Lahaina fire, agreeing to a $1.77 billion settlement. Despite this progress, the company's shares have declined following a 'going concern' warning in its recent 10-Q. While the need for financing is clear, the risk of bankruptcy appears minimal. The utility sector's risk-return profile suggests that as existential risks are quantified and mitigated, equity value can increase. Investors should focus on the company's ability to secure necessary financing and the implications for its capital structure.

BSD Analysis:
The utility sector, akin to banking, often faces limited upside due to regulatory constraints, but significant downside risks. Hawaiian Electric's current situation underscores this dynamic, with the Lahaina fire liabilities posing a substantial challenge. However, the company's proactive approach in addressing these liabilities and the potential for financing solutions could stabilize its financial position. Investors should consider the various components of Hawaiian Electric's capital structure, including common shares, preferreds, and debt, to identify the best risk-reward opportunities. The resolution of these liabilities and successful financing could lead to a revaluation of the company's equity.

Pitch Summary:
United Bancorporation of Alabama is poised to significantly enhance its book value and earnings by repurchasing its ECIP preferred shares at a steep discount. The Treasury's potential move to allow banks to buy back these shares at a fraction of their face value presents a lucrative opportunity for UBAB. With a tangible book value of $128.4 million, repurchasing $123.75 million in preferred shares at 20% of par could result in an after-tax gain of approximately $74 million, boosting the tangible book value per share to $57.20. This accretive transaction is contingent on meeting certain lending thresholds, but UBAB's strong financial position suggests it is well-placed to capitalize on this opportunity.

BSD Analysis:
The ECIP program, initially designed to support low-income communities, has inadvertently created a windfall for participating banks like United Bancorporation of Alabama. The Treasury's discomfort with the program and its potential wind-down could accelerate the repurchase process. UBAB's ability to meet the 'deep impact' and 'qualified' lending criteria will be crucial in executing this strategy. The bank's robust capitalization and successful track record in community lending enhance its prospects of achieving these thresholds. As more banks look to extinguish their preferreds at a discount, UBAB's proactive approach could set a precedent, potentially leading to a re-rating of its stock as the market recognizes the value accretion.

Pitch Summary:
Cronos Group is positioned as a high-growth cannabis company with significant competitive advantages, including a strong brand presence with its Spinach brand and strategic backing from Altria. Despite a challenging industry environment characterized by price deflation and high excise taxes, Cronos has demonstrated impressive revenue growth and market share gains. The company's substantial cash reserves provide a margin of safety and optionality for future investments, positioning it well for long-term success as the industry matures and rationalizes.

BSD Analysis:
Cronos Group's recent performance highlights its ability to capture market share and improve operational efficiency, as evidenced by a 46% year-over-year increase in net revenue and a significant reduction in operating expenses. The company's strategic investments in GrowCo and its focus on brand development have contributed to its competitive positioning. With a robust balance sheet featuring approximately $800 million in cash, Cronos has the financial flexibility to pursue growth opportunities and withstand industry volatility. The potential for regulatory changes, such as excise tax reform, could further enhance profitability. As the global cannabis market expands, Cronos is well-positioned to leverage its early mover advantages and partnerships with major tobacco companies to capture significant market share, particularly in emerging international markets.

Pitch Summary:
Legal finance is a niche alternative asset class that typically involves an investor funding expenses associated with a legal claim (litigation or arbitration) in exchange for a portion of any ultimate award (settlement or judgement for damages). Burford Capital ("Burford") is a leading global legal finance company dual listed on NYSE and LSE with over fifty lawyer-investment professionals, a $7 billion legal finance portfolio, and experience working with every major corporate law firm to source investment opportunities. In its 15 years since inception, Burford has achieved an elite 27% gross IRR / 1.8x gross return on invested capital ("ROIC") track record on realized investments. Importantly, Burford funds commercial litigation, and does not fund consumer litigation. Consumer litigation, such as personal injury, usually involves inexperienced consumers and attracts more scrutiny from politicians, regulators, and consumer protection law. Burford relies on two sources of capital to fund its legal finance investments: (1) Burford's own balance sheet and (2) third-party capital from Burford's private funds managed for institutions. The second is easier to value because there are several asset managers with similar asset-light business models that generate attractive recurring and high-margin cash flows. But third-party asset management is a small part of Burford's value relative to its balance sheet finance segment. Burford's balance sheet funds most of its investment opportunities and is the company's major growth and profit center. Compared to an asset-light asset manager, evaluating a balance sheet finance company that specializes in legal finance is more difficult due to few comparable companies, complex accounting, lumpy cash flows, and a constant stream of news related to obscure legal cases that may or may not be important. Given its niche investment category, funding mix, and irregular cash flow profile, Burford is one of the more misunderstood companies we have studied. We believe Burford is an attractive investment opportunity because: High-quality business: Legal finance's attractive risk-adjusted returns: Burford has been able to generate attractive risk-adjusted returns in legal finance (15-year since inception track record realizing a 27% gross IRR / 1.8x gross ROIC on realized investments). These returns are strong and unlevered. Returns are also acyclical because legal finance outcomes are significantly less sensitive to economic and interest rate volatility than other assets. Long investment runway: the global legal market is large and growing. Legal finance's share of legal market spend should continue to grow due to strong customer value proposition. Corporate plaintiffs dislike typical legal compensation models that charge by hour irrespective of the case outcome; legal finance helps solve this problem by funding case costs. Law firms are attracted to legal finance providers as they reduce the number of contingency cases and enable plaintiffs to pursue litigation seen as too expensive. Intellectual property: intellectual property is a competitive advantage in legal finance. Approximately 70% of Burford's investments result in settlement. The details of a settlement are almost always private. This prevents competitors from learning about the profitability of the case and matching such profitability to its unique counterparties and legal jurisdiction. Arbitrations are also generally private. Burford's intellectual property is its deep catalog of proprietary case data that enables it to compete more effectively. Indeed, we believe this competitive advantage is slowly materializing as a greater portion of Burford's recent investments resulted favorably in settlement. High returns on equity: Burford's legal finance has produced enviable returns, but this performance requires a team of highly trained and well-compensated lawyer-investors. Compensation, administrative platform expenses, and taxes dilute Burford's strong case-level unlevered returns. However, Burford does use debt to accretively fund investment opportunities. When normalizing for the company's lumpy case profits, compensation, and accretive leverage, we believe Burford generates 25% returns on equity and has margin of safety even if go-forward returns on equity are lower. Aligned management team: Burford's management team own ~9% of outstanding shares worth $250M+. The bulk of senior management's compensation is deferred and linked to the realized performance of the company's legal finance portfolio and private funds. Asymmetric upside: in addition to its high-quality business, Burford offers asymmetric upside. Burford's largest, most profitable holding is a $16 billion judgement in U.S. courts against Argentina named the "YPF case." Burford's pro-rata share of the YPF case is $6 billion and accrues post-judgement interest at ~5% per year. The precise outcome of this highly litigated and extraordinary case is unknown given the difficulty of enforcing a judgement against Argentina. Burford will likely settle for a lower amount rather than collect the full judgement. How much lower? In our view, even a nominal settlement would be met favorably as we believe the current stock price gives the company close to zero credit for the YPF case. Argentina's new pro-capitalism leader, President Milei, understands the importance of the YPF case for attracting new investment in Argentina and publicly stated in a TV interview about the YPF case that "we have the willingness to pay." Regardless, we expect Argentina will take the YPF case to the U.S. Supreme Court to limit the Argentine presidential administration's legal liability. Milei needs to publicly demonstrate that his administration has exhausted all legal options, especially given the long history in Argentina of presidential administrations suing prior ones for their actions. Attractive valuation: we have argued that Burford is a high-quality company that generates 25% returns on equity in a normalized environment with a long runway of investment opportunities. Excluding the YPF case, we believe Burford is worth $14+ per share. The YPF case introduces uncertainty into the overall fair value estimate, so we've created a table below that sensitizes the YPF case judgement recovery against investment upside. In our view, the significant YPF case uncertainty presents a massive opportunity for long-term-oriented Burford investors. Burford investors are getting paid to wait for the ultimate YPF recovery outcome and stand to benefit from the significant interim compounding of the company's balance sheet legal finance portfolio.

BSD Analysis:
Silver Beech presents a compelling bull case for Burford Capital, emphasizing the company's dominant position in the niche legal finance market with an impressive 15-year track record of 27% gross IRR and 1.8x ROIC on realized investments. The manager highlights Burford's sustainable competitive advantages, including proprietary case data from 70% settlement rates and deep relationships with major law firms, which create barriers to entry in this specialized field. The investment thesis centers on normalized 25% returns on equity driven by the company's balance sheet legal finance operations, supported by management's significant 9% ownership stake and performance-linked compensation structure. The asymmetric upside opportunity stems from the $16 billion YPF case against Argentina, where Burford holds a $6 billion pro-rata share that the market appears to value at near zero. With Argentina's new pro-business President Milei expressing willingness to pay and the base business valued at $14+ per share excluding YPF, the manager sees substantial upside potential across various settlement scenarios. The acyclical nature of legal finance returns and the large, growing addressable market provide additional support for the long-term investment case. Silver Beech's valuation analysis suggests 7-133% upside depending on YPF case recovery rates, making this a high-conviction position with significant optionality.

Pitch Summary:
Cooper-Standard is positioned to benefit from pent-up demand in the automotive sector, leveraging its strong operating capabilities and a currently undervalued stock price. The company has shown resilience through improved earnings, better pricing strategies, and cost reductions, despite high leverage. With Moody's upgrading its debt rating, the risk of default is perceived to be lower, supporting the potential for a turnaround.

BSD Analysis:
Cooper-Standard's recent developments indicate a strategic focus on deleveraging and improving operational efficiency. The company's EBITDA margins have shown improvement, suggesting that management's efforts to streamline operations are bearing fruit. Despite a challenging macroeconomic environment, including potential softening in auto production volumes, Cooper-Standard's market share gains and margin expansion are promising. The automotive sector's dynamics, such as the aging vehicle fleet and rising dealer incentives, could drive higher production volumes, benefiting Cooper-Standard. However, high financing costs remain a barrier to new vehicle purchases, although potential interest rate cuts by the Federal Reserve could alleviate this issue. Investors should monitor macroeconomic indicators and production volume trends closely, as these will significantly impact Cooper-Standard's financial performance and stock valuation.

Pitch Summary:
Lumine Group, a spin-off from Constellation Software, reported a challenging quarter with a 25% revenue growth but a -12% organic growth. Despite the negative headline numbers, the company is strategically improving the quality of its acquired businesses. The decrease in cash flows from operations is attributed to non-cash changes, and when adjusted, shows a significant year-over-year increase. The focus on maintenance and recurring revenues, which remained stable, indicates a deliberate shift towards higher quality revenue streams. The use of contingent consideration suggests that acquired businesses are performing as expected, reinforcing the notion that the negative organic growth is part of a strategic plan.

BSD Analysis:
Lumine Group's management appears to be intentionally focusing on enhancing the quality of its acquisitions, even at the expense of short-term organic growth. The stability in maintenance and recurring revenues, despite declines in less reliable sales, supports this strategy. The company's ability to manage large acquisitions effectively is evident from the normalized cash flow growth. Shareholders' reluctance to sell and the quick buying of any dips indicate strong confidence in the company's long-term value creation. While the current allocation in the portfolio is significant, the strategic moves by Lumine suggest potential for sustained growth, aligning with shareholder expectations.

Pitch Summary:
Stagnant business growth (the main business grew 1.3% between 2019 and 23); leverage acquisitions ($2.1 bil for 8 deals, doubling Net Debt/EBITDA from 1.5x to 2.7x); disengaged CEO with little skin in the game; difficult to justify multiples, up to 80% downside;

BSD Analysis:
Zebra Technologies builds barcode scanners, RFID systems, and related software. Shorts emphasize cyclical headwinds in enterprise hardware spending, slowing replacement cycles, and margin pressure from competition. With a history of strong execution, the main bear angle is valuation vs. slowing growth trajectory and customer pushouts in cyclical verticals like retail/logistics. Catalysts/risk checks: order book trends, inventory digestion, gross margin shifts, and new product ramp (e.g., RFID). Counterpoints: Zebra has niche dominance, but shorts argue current multiples overstate durability of growth.

Pitch Summary:
However fun it is to speculate on Federal Reform, our focus remains on fundamental research and on our portfolio investments. Our largest position continues to be Grown Rogue (OTC: GRUSF). The company's focus is on craft cannabis cultivation with emphasis on quality and hyper-efficiency. Grown Rogue is profitable in Oregon at $800 to $900 a pound and even more profitable in Michigan at $900-$1000 a pound. Very shortly, Grown Rogue will turn on its new New Jersey facility that will produce Oregon quality cannabis, but New Jersey wholesale prices are $3500 a pound. And with limited competition, the quality in New Jersey is far lower than exists in Oregon or Michigan. Grown Rogue's cash flow should explode. To be conservative, let's assume instead of costs at $600 a pound to cultivate flower, Grown Rogue's costs soar to $1000 a pound in NJ. With 9,600 pounds of annualized production and assuming a lower wholesale price of $3000 a pound, Grown Rogue should produce over $19 million in EBITDA from New Jersey alone. Then after New Jersey, they are turning on Illinois in 2025, where wholesale prices are $2500 a pound. With no sell-side coverage, and only one independent analyst following it, few are running any kind of forward estimates or analysis. I think the company could hit a run rate of approximately $40 million annualized EBITDA with operating margins above 50% while growing at triple digits. As of the writing of this letter, the company has a fully diluted market cap unlevered of $170 million. I'm not sure what the right valuation is, but the fastest growing company with the highest margins and one of the cleanest balance sheets should not be trading at one of the lowest valuations or anywhere near four times EBITDA. And this is exactly why we have continued to grow our position in Grown Rogue. We converted our remaining convertible debt into shares in June. You can see the filing of our updated ownership in this SEC filing. Please note that on a fully diluted basis, we own 14.43% of the company. The SEC uses basic share count, which doesn't include all options and warrants.

BSD Analysis:
The manager presents a compelling geographic arbitrage opportunity in cannabis cultivation, with Grown Rogue positioned to capitalize on significant pricing disparities across state markets. The company demonstrates operational excellence with profitability in competitive markets like Oregon ($800-900/lb) and Michigan ($900-1000/lb), providing confidence in their ability to execute in higher-priced markets. The New Jersey facility represents a transformational catalyst, with wholesale prices of $3500/lb versus production costs estimated conservatively at $1000/lb, generating potential EBITDA of $19 million from 9,600 pounds annually. The Illinois expansion in 2025 adds another high-margin market at $2500/lb wholesale prices. The manager projects $40 million annualized EBITDA with 50%+ operating margins and triple-digit growth, yet the company trades at only 4x EBITDA on a $170 million market cap. The lack of sell-side coverage and limited analyst following creates an information inefficiency, while the manager's 14.43% ownership and recent convertible debt conversion demonstrates strong conviction and alignment.