Investment Pitches

Pitch Summary:
Two years ago, I wrote about Perimeter Solutions (NYSE: PRM). I called Perimeter the fire monopoly because the company has a lock on providing the flame retardant that firefighters drop on fires from planes. Soon after I wrote about the company, struggles ensued. A new competitor emerged, California saw significant rain and fire activity soon vanished thanks to El Nino. The stock fell as much as 50%. However, the winds of change have started to shift in Perimeter's favor. The most important news is that the risk of an upstart competitor is no more. The competitor's contract with US Forest Service was not renewed in March after its fire-retardant product failed, causing corrosion in the air tankers. Then Perimeter announced in February it bought over 6 million shares back in 2023 and in May it bought another 3 million shares just in Q1. That is over 6% shares that the company bought back in a relatively short period. And with no competition, we return to fire and fighting fire. We are seeing a big increase from last year on acres burnt, but more importantly for Perimeter, California acres burned is now higher than any year in the last four years. And we know that Perimeter has delivered over 8 million gallons of fire retardant so far through July, which is almost 50% of what they delivered in 2021, and we are just now entering peak fire season. Revenue and earnings have been abnormally low the last two years due to the very low fire activity in California. And it's not just California that is burning, but Canada as well. By virtue of being the sole supplier of an input that accounts for only 2% to 3% of total fire spend, Perimeter has been able to consistently raise both its volume and the prices. So, Perimeter has been raising prices every year and this has been hidden by the abnormally low fire activity in California. Perimeter reminds me of Transdigm (NYSE: TDG) and I wrote about this two years ago: What made Transdigm such a great investment is they built a business around being the supplier of hundreds of thousands of small, highly engineered low-dollar aircraft parts that may represent a miniscule part of the aircraft or maintenance but are critical in nature. This has given Transdigm pricing power to the extent that the company has been able to realize EBITDA margins of approximately 50%. Nick Howley, the Chairman of Transdigm is also the co-Chairman of Perimeter. But there is another reason I think that Perimeter's long-term outlook has substantially improved, and it has to do with insurance. As many have experienced or read about, insurance costs have soared for properties, especially those in high-risk areas. And if they aren't soaring, it's because insurance companies are simply walking away and not renewing coverage. Why? Because as weather becomes more extreme and temperatures soar, so do losses when damage comes. Early estimates of insured losses from one catastrophic fire in Jasper, Alberta this year may exceed $700 million. One small town in Canada causing almost $1 billion in insured losses is eye-opening. In the absence of insurance or affordable insurance, states and countries will have to spend more money fighting and preventing fires. Here too Perimeter is well placed thanks to a smart acquisition of LaderaTech. Its product Fortify is a gel that can be applied to high-risk areas and can withstand one inch of rain or more. This is highly valuable especially for utility companies that face huge liabilities from potential fires they may cause, and are investing billions of dollars in fire prevention. This is a potential market north of $2 Billion a year, and a much more recurring revenue stream than a Fire-Retardant business which can be highly seasonal depending upon the severity of fires. While the company has already announced a few deals for Fortify, it has down played its immediate prospects. As I was working on this writeup, Perimeter announced blockbuster Q2 earnings. And the company highlighted a few very important things. First, the company announced that there is a much more aggressive response by agencies to fight fires. Then the company also mentioned that they have significantly invested in capacity and throughput at their airbases such as their Albuquerque, New Mexico base which produced 100k gallons of retardants in one day, where its previous annual output was 145k gallons. Perimeter also mentioned that their fire suppression business was also much stronger than expected and this immediately confirms our belief that insurance costs and the lack of insurance is a long-term tailwind to Perimeter's business. After struggling for a few years, Perimeter is now stronger than ever with pricing power and a market that needs its products like never before. And the longer-term outlook may be even better because if there is no insurance backstop, the only alternative is to aggressively spend to prevent fire and to fight every fire that erupts. Perimeter's fire retardant and prevention business could not be more valuable with a world on fire.

BSD Analysis:
The manager presents a compelling turnaround thesis for Perimeter Solutions, positioning it as a monopolistic supplier of fire retardant chemicals with renewed growth prospects. The elimination of competitive threats through the competitor's contract failure creates a clear path for market dominance, while aggressive share buybacks (6% of shares in a short period) demonstrate management's confidence and capital allocation discipline. The fundamental catalyst is the return of severe fire conditions in California and Canada after two years of abnormally low activity, with current fire retardant deliveries already approaching 50% of 2021 levels despite being early in fire season. The manager draws parallels to Transdigm's pricing power model, highlighting Perimeter's ability to consistently raise prices on a product representing only 2-3% of total fire spending but critical for operations. The insurance crisis creates a structural tailwind, as rising property insurance costs and carrier withdrawals force governments to increase fire prevention and suppression spending. The LaderaTech acquisition provides exposure to a $2 billion prevention market through the Fortify gel product, offering more recurring revenue streams. Recent capacity investments and strong Q2 earnings confirm the operational leverage as fire activity normalizes.

Pitch Summary:
Cipher Pharmaceuticals has transformed from a conservatively financed company into a growth-oriented entity following its acquisition of ParaPRO's Natroba assets. The acquisition, valued at $89.5 million, is expected to double the company's EBITDA, offering a significant return on investment. Natroba's lice treatment, although off-patent in the USA, presents growth opportunities in markets like Canada. More importantly, Natroba's scabies treatment is patent-protected until 2033, with no over-the-counter competition, positioning it as a defensive growth asset. The acquisition also includes a US-based salesforce, enabling Cipher to potentially bring its out-licensed product, Absorica, in-house, further boosting profitability.

BSD Analysis:
Cipher's acquisition of Natroba is strategically sound, offering both immediate and long-term growth prospects. The lice treatment, while facing patent expiration in the USA, can still capture market share in regions with fewer competitive options, such as Canada. The scabies treatment, with its patent protection and lack of OTC competition, is well-positioned to capitalize on the declining efficacy of current standard treatments like 5% permethrin. The acquisition also enhances Cipher's operational capabilities in the US, allowing for better control over product distribution and potential new licensing opportunities, such as MOB-015. Overall, Cipher's strategic moves suggest a promising growth trajectory, supported by a robust product pipeline and expanded market reach.

Pitch Summary:
The only significant addition, which is actually a repurchase, was Capri Holdings (CPRI). We've been reestablishing our position, and as of the end of the quarter our average entry price was $32.13 per share. As you may recall, we owned CPRI when the company announced it would be sold to Tapestry for $57 per share, and we rapidly exited our position at that time. Subsequently, the merger has been challenged by the Federal Trade Commission (FTC), which is suing to block the deal. The shares now trade at a substantial discount to the deal price. Upon review of the FTC complaint and the responses from CPRI and Tapestry, we believe the challenge is likely to be defeated in court later this year. Should the FTC prevail, however, we believe there is downside risk given CPRI's dreadful results since the deal was announced. CPRI ended the quarter at $33.08.

BSD Analysis:
Greenlight Capital is making a calculated merger arbitrage play on Capri Holdings, betting that the FTC challenge to Tapestry's $57 per share acquisition will ultimately fail. The fund is reestablishing its position at an average cost of $32.13, representing a significant discount to the deal price due to regulatory uncertainty. After reviewing the FTC complaint and company responses, Greenlight believes the antitrust challenge lacks merit and expects the courts to rule in favor of the merger later this year. This creates an attractive risk-reward opportunity with approximately 72% upside if the deal closes at $57. However, Greenlight acknowledges meaningful downside risk if the FTC prevails, given Capri's deteriorating operational performance since the merger announcement. The luxury goods company's recent results have been disappointing, making the standalone valuation vulnerable. This represents a classic event-driven investment where regulatory resolution will determine outcomes.

Pitch Summary:
Solvay (Belgium: SOLB) advanced from €25.30 to €32.87. While market participants 'knew' that soda ash prices would fall in 2024, the ramifications of falling prices don't appear as dire as bearish analysts predicted. The company exceeded quarterly expectations and maintained its full-year outlook. Given the pervasive bearishness going into the announcement, perhaps that was good enough.

BSD Analysis:
Greenlight Capital's bullish thesis on Solvay centers on the market's overly pessimistic expectations regarding soda ash price declines. The stock delivered a strong 30% gain from €25.30 to €32.87 as quarterly results demonstrated that falling soda ash prices were not as damaging as bearish analysts had predicted. Despite widespread market knowledge of impending price pressure, the actual impact proved more manageable than feared. Solvay exceeded quarterly expectations across key metrics and maintained its full-year guidance, suggesting operational resilience despite commodity headwinds. The pervasive bearishness heading into earnings created a low bar that the company successfully cleared. This dynamic suggests the market had over-discounted the soda ash price decline risk. Solvay's diversified specialty chemicals portfolio and operational efficiency initiatives appear to be providing adequate cushion against commodity price volatility.

Pitch Summary:
Kyndryl Holdings (KD) rose from $21.76 to $26.31. The company had another good report, with results and guidance exceeding expectations on all key metrics. KD also pulled forward its target to achieve constant currency revenue growth, now starting in the fourth quarter of the current fiscal year.

BSD Analysis:
Greenlight Capital maintains a bullish view on Kyndryl Holdings based on consistent operational execution and accelerating growth trajectory. The company delivered a strong 21% gain from $21.76 to $26.31 following another quarter where results and guidance exceeded expectations across all key metrics. This represents continued momentum in Kyndryl's transformation from IBM's legacy infrastructure services business into an independent technology services provider. The acceleration of revenue growth targets, with constant currency growth now expected to begin in Q4 rather than later, demonstrates management's increasing confidence in the business trajectory. Kyndryl's focus on modernizing mission-critical IT infrastructure positions it well in the current technology upgrade cycle. The consistent beat-and-raise pattern suggests the company is successfully executing its strategic transformation. Strong operational metrics across the board indicate the spin-off from IBM is progressing ahead of schedule.

Pitch Summary:
HP Inc. (HPQ) jumped from $30.22 to $35.02. After seven quarters of declines, PC sales turned marginally positive during the quarter. The industry appears to be in the early stages of an upcycle, perhaps to be enhanced by recently launched AI-enabled PCs that are expected to ramp up over the next several quarters.

BSD Analysis:
Greenlight Capital identifies HP Inc. as positioned for a cyclical recovery in the PC market after an extended downturn. The company delivered a 16% gain from $30.22 to $35.02 as PC sales finally turned positive after seven consecutive quarters of declines. This marks an inflection point suggesting the industry has reached a cyclical trough and is entering the early stages of an upcycle. The emergence of AI-enabled PCs represents a potential catalyst that could accelerate the recovery over the coming quarters. HP's positioning in both consumer and enterprise PC markets should benefit from this technological refresh cycle. The timing appears favorable as inventory destocking has likely concluded and replacement demand is emerging. Greenlight's inclusion of HP among its largest disclosed positions indicates confidence in the sustainability of this PC market recovery.

Pitch Summary:
CONSOL Energy (CEIX) recovered from $83.76 to $102.03. In the first quarter, CEIX was hindered by the Baltimore bridge collapse, which blocked the company's exports for a few months. The harbor has now reopened and the market appears to have largely moved past the issue.

BSD Analysis:
Greenlight Capital maintains a bullish stance on CONSOL Energy following the resolution of temporary export disruptions. The Baltimore bridge collapse created a short-term headwind that blocked coal exports for several months, pressuring the stock in Q1. With the harbor now reopened, the company has resumed normal export operations and the market has moved past this transitory issue. The 22% recovery from $83.76 to $102.03 reflects the market's recognition that the export disruption was temporary rather than structural. CONSOL's position as one of Greenlight's largest disclosed holdings suggests continued confidence in the coal producer's fundamentals. The recovery validates the thesis that the bridge collapse impact was a temporary operational challenge rather than a fundamental business impairment. Coal export demand appears intact with normal operations restored.

Pitch Summary:
Stagnant business with degrading market share; the technological upgrade is outsourced, which resulted in failure; company's 5G roll-out is either ludicrously hopeful or intentionally deceptive; During the Q1 call, the company said that 5G roll-out will be much delayed; Starlink is challenging the company's viability;

BSD Analysis:
Gogo provides inflight internet services. The bear case centers on limited competitive moat vs. satellite operators, declining ARPU from airlines pushing lower pricing, and high leverage. Growth depends on 5G air-to-ground upgrades, but adoption has been slow. Bears argue free cash flow is overstated due to capitalized costs. Catalysts/risk checks: 5G ATG rollout, airline contract wins/losses, and debt refinancing. Counterpoints: niche monopoly in ATG provides some durability, but shorts argue new entrants in LEO/MEO satellite internet threaten long-term economics.

Pitch Summary:
The company is not a 'zero-carbon miner'; no record of the company purchasing renewable energy credits; the cost would increase 60% in case of REC purchase; complicated commitment to 'sustainability'; CEO is channeling large amount of money to his companies; the CEO cashing out;

BSD Analysis:
TeraWulf is a Bitcoin mining company leveraging nuclear and hydro power to brand itself as an ESG-friendly miner. The BSD bear case highlights that despite cheaper power sources, mining economics are commodity-like and entirely dependent on Bitcoin’s price and network difficulty. The balance sheet is stretched by expansion capex, and dilution risk remains elevated. The “green mining” angle may provide investor appeal but does not change the fundamental volatility of hash rate economics. Rising competition, regulatory scrutiny around energy usage, and the BTC halving cycle all create downside optionality. Sophisticated investors will focus on break-even BTC price, leverage metrics, and liquidity runway.

Pitch Summary:
Netflix, Inc. Originally founded as a U.S.-focused DVD-rental-by-mail service in 1997, Netflix has evolved into the preeminent streaming entertainment services company in the world serving approximately 278 million members in over 190 countries. Netflix offers its members unlimited engagement with an extensive selection of both original and licensed TV shows, films and mobile games across a wide variety of genres and languages anytime, anywhere on any internet-connected screen. Netflix's business is firing on all cylinders. The company grew its global membership by 8.0 million in the second quarter of 2024, up from the 5.9 million members it added in the second quarter of 2023 and the 969,000 members it lost in the second quarter of 2022. The 8.0 million members Netflix added in the second quarter brought total member additions for the 12 months ended June 30th to 39.3 million, resulting in 16.3% growth in global membership year-over-year. Revenue grew 16.8% year-over-year in the second quarter due to the growth in members. Leverage on every operating expense line item drove 491 basis points of operating margin expansion; operating income grew a whopping 42.5%. For most companies, achieving such rapid profit growth would come at the expense of cash generation. Not Netflix. For the 12 months ended June 30th, Netflix generated $6.8 billion in free cash flow. That represented just over 90% of its net income for the same period excluding the benefit to cash flow from stock-based compensation. Netflix pointed that gushing cash spigot at its share count, repurchasing $8.6 billion of its shares. You'll struggle to find companies achieving financial performance much better than that. Although Netflix won't be able to grow its earnings at the heady rate it did in the second quarter indefinitely, it continues to have abundant growth opportunities. There are roughly 1.5 billion households in Netflix's serviced markets around the world. 800 million of those households subscribe to some form of pay television. 700 million have at least basic fixed broadband service today, and more than 1 billion will at some point over the coming decade. Even in Netflix's most established markets, it accounts for a small share of total television viewing time. According to Nielsen, more than 80% of television viewing time in the U.S. goes to services other than Netflix and YouTube. The figure is at least as high in virtually all of Netflix's markets. That engagement share is up for grabs as legacy, linear television ecosystems crumble and subscale, unprofitable streaming services rationalize, restructure or shutter their offerings. Netflix has a long runway to improve the quality of its service, increase the value current and prospective members derive from it, and capture some portion of that growing willingness-to-pay through pricing optimization and other forms of monetization. Thought of another way, Netflix estimates its serviceable addressable market — consumer spending on the types of entertainment it currently offers plus branded advertising in its serviced markets — exceeds $600 billion today and is poised for continued growth. With $36 billion in revenue for the 12 months ended June 30th, Netflix has penetrated less than 6% of its market from that perspective. When we initiated our investment in Netflix in the first half of 2022, I framed it as perfectly fitting Warren Buffett's model for a great investment. It has certainly lived up to that billing thus far. Through the end of the second quarter, our investment in NFLX has delivered a 57.4% IRR and a 2.8x MOIC. Although the prospective annualized return on our investment in NFLX from this point pales in comparison to the stellar IRR the position has delivered to date, it remains attractive. Netflix aims for sustained double digit revenue growth, operating margin expansion and growing free cash flow, most — if not all — of which it will dedicate to share repurchases. Even a conservative interpretation of that open-ended guidance results in an outlook for annual earnings growth in the mid-to-high teens, all while converting nearly all those earnings to free cash flow and buying back stock hand-over-fist. Given the combination of mid-to-high teens annual earnings growth, a low single-digit cash generation yield and value accretion from share repurchases, NFLX would need to trade at a much higher valuation multiple than it currently does to bring the prospective return down to anywhere near a market level.

BSD Analysis:
The manager presents a compelling bull case for Netflix based on exceptional operational performance and significant growth runway. Netflix delivered outstanding Q2 2024 results with 8.0 million net subscriber additions (vs. 969,000 losses in Q2 2022), 16.8% revenue growth, and 42.5% operating income growth driven by operating leverage. The company's cash generation is particularly impressive, converting over 90% of net income to free cash flow ($6.8 billion annually) while aggressively repurchasing shares ($8.6 billion). The investment thesis centers on Netflix's massive addressable market opportunity, with only 6% penetration of a $600+ billion serviceable market and significant room to capture viewing share from declining linear TV. The manager's position, initiated in H1 2022, has already delivered exceptional returns (57.4% IRR, 2.8x MOIC). Despite strong performance to date, the manager believes prospective returns remain attractive given Netflix's guidance for sustained double-digit revenue growth, margin expansion, and continued aggressive share buybacks, suggesting mid-to-high teens earnings growth ahead.

Pitch Summary:
Tianjin Development Holdings Limited is a company that invests in other companies. Most importantly, it owns 16.5% of Otis China. The elevator business is great. They make little money from selling the elevator but a lot of money from maintaining them. A few big companies rule the elevator industry. That's because companies have to spend a lot of money to start; must follow strict safety rules; need a wide service network; and must buy in large quantities to save money. As a result, Otis earns high returns on capital and earns predictable profits from recurring maintenance services. This is why Otis Worldwide is valued at 28 times earnings on the New York Stock Exchange. In the USA, most Otis customers purchase long-term elevator maintenance, while in China, most don't. Otis is succeeding at changing this which is making their business more valuable. Half of Tianjin Development's profits come from Otis China. Around $40M a year. This business is probably worth more than $500M. Add to that $500M in net cash and $300M of shares in other companies. We're getting all this for $250M. People don't seem to trust the Chinese government. But when we look at the facts, we think this distrust is too high compared to the price we're paying. It's currently selling for 3 times earnings, and at 1/6th of its tangible book value. If Tianjin's discount to tangible book value narrows down to 60% (which is still cheap!), we double our money. While we wait, we're earning a 7% yearly return from its dividends.

BSD Analysis:
Bilbel Capital presents Tianjin Development as a deeply discounted holding company offering exposure to high-quality assets at a fraction of their intrinsic value. The crown jewel is a 16.5% stake in Otis China, which generates $40M annually and benefits from the elevator industry's attractive economics - high barriers to entry, recurring maintenance revenues, and strong returns on capital. The manager notes that Otis is successfully transitioning Chinese customers to long-term maintenance contracts, mirroring the profitable US model where Otis Worldwide trades at 28x earnings. Beyond the Otis stake worth over $500M, the company holds $500M in net cash and $300M in other investments, totaling over $1.3B in assets for a $250M market cap. At 3x earnings and 1/6th of tangible book value, the investment offers substantial upside even if the discount only narrows to 60% of book value, while providing a 7% dividend yield during the holding period.

Pitch Summary:
Dream International makes toys. The company is listed in Hong Kong, but most of its factories are in Vietnam. Manufacturers reduce costs by producing large quantities of the same item. But most toy makers have small customers that place small orders. This is why the industry is fragmented. To make more money than their competitors, companies must receive larger orders for the same type of toy. But they can only get that from having larger customers. What is a challenge for most companies is an advantage for Dream International. They have been working with Disney for over 20 years (and other large companies), allowing them to get recurring orders of large volumes. This explains why Dream has had very high and consistent margins, despite being in a cyclical industry. The management team is great at running the business and making good decisions. Over the past 10 years, the company has tripled its sales and increased its profits nearly sevenfold. At $385M, Dream International trades at just 3.5 times earnings, and gives a 12% dividend yield. The value of its cash and property is worth as much as the company's market cap.

BSD Analysis:
Bilbel Capital identifies Dream International as an undervalued toy manufacturer with significant competitive advantages in a fragmented industry. The company's 20+ year relationship with Disney and other major clients provides recurring large-volume orders that enable superior economies of scale and consistent high margins despite operating in a cyclical sector. Management has demonstrated exceptional capital allocation skills, tripling sales and increasing profits sevenfold over the past decade. The valuation appears extremely attractive at 3.5x earnings with a substantial 12% dividend yield, while the company's cash and property holdings alone equal its entire market capitalization. The Vietnam manufacturing base likely provides cost advantages compared to China-based competitors. The combination of strong client relationships, operational excellence, and deep value characteristics makes this an compelling investment opportunity in the consumer discretionary space.

Pitch Summary:
Intellego Technologies makes cards that change colour in ultraviolet light, called UV-C dosimeters. The colour change on dosimeters shows if there was enough UV-C light to inactivate harmful bacteria or viruses. This technology looks simple, but designing it is hard. Making them consistently, and in large quantities, is even harder. We think our investment results from Intellego Technologies mostly depend on 2 factors: 1. UV-C disinfection vs chemical disinfection. 2. Digital radiometers vs Intellego's dosimeters. We don't need to predict the magnitude of these factors. Knowing their direction is enough. Currently, most disinfection procedures are done with chemicals. Each year, over 4 million patients in hospitals in the EEA (European Economic Area) are affected by healthcare-associated infections (HAI's). Many more are infected across the globe. "Healthcare-associated infections pose a significant challenge to patient safety in hospitals throughout Europe. These recent numbers highlight the urgent need for further actions to mitigate this threat. By prioritising infection prevention and control policies and practices, as well as antimicrobial stewardship and improving surveillance, we can effectively combat the spread of these infections and protect the health of patients across the EU/EEA," ~ Dr Andrea Ammon, Director of European Centre for Disease Prevention and Control. This isn't just a problem in Europe. On any given day, about 1 in 31 U.S. hospital patients gets at least one HAI; and on average, 1 in 10 of those patients will die from it. Clearly, the current safety procedures are failing to prevent infections effectively. Until recently, UV-C disinfection was only done by lamps or robots that didn't move. They aren't very good at disinfecting because light only travels straight and can't go through solid objects. Light from one fixed spot can't reach every area that needs disinfecting. Now, companies are making autonomous robots that effectively disinfect all areas. They're proven to be more effective than static robots; and in most cases, more effective than chemical disinfection. The reasons are as follows. The important factors for effective disinfection are: 1. Kill rate (Log Reduction) - How many bacteria & viruses are killed. 2. Regrowth - How fast bacteria & viruses grow back over time. 3. Speed - How fast bacteria & viruses are killed. 4. Cost - How much disinfection costs. To make a fair comparison, we'll assume that chemical disinfection will be done by autonomous robots too. Kill Rate: If used right, both procedures have very high kill rates. Regrowth: Chemicals leave residue, which looks like a good thing. But, bacteria and viruses are good at adapting to their environment. This means they can get used to the chemical over time, making re-growth more likely to happen. UV-C inactivates bacteria and viruses by damaging their DNA/RNA, making them unable to reproduce. Speed: At a distance of 10cm away, UV-C deactivates the average bacteria/virus in 15-20 seconds. Chemicals typically need 2-10 minutes of contact time to kill most germs. Currently, a full autonomous UV-C disinfection procedure takes 10-20 minutes. In contrast, A full chemical disinfection takes around 30-60 minutes. For quick disinfection between patients, aren't chemicals better? Not really. With chemical disinfection, the relationship between contact time and kill rate (log reduction) is exponential. For example, you might only kill 20% of germs 5 minutes after applying the chemical, and the remaining 80% in the last 2 minutes. Applying chemicals and wiping indeed feels like it's working. But not given enough time, it's nothing but a false sense of safety. We can't reduce chemical disinfection time without significantly reducing its effectiveness. In contrast, with UV-C disinfection, the relationship between contact time and kill rate is linear. Even though a full cycle is optimal, a short UV-C exposure can still provide strong disinfection. Due to these hard limits; as autonomous robots get more efficient, the difference in speed will only move more in favour of UV-C disinfection. Cost: As autonomous robots do the work, the price of manual labour goes to zero. That means that total cost will roughly equal the raw material costs. Currently, UV-C is more expensive due to the high upfront cost. However, over time, we expect the cost difference to decrease to the point where it becomes negligible. All things considered, UV-C disinfection is better in many areas, especially hospitals and clinics. We can understand why the UV-C disinfection industry is growing fast. The most likely scenario is that both chemical and UV-C disinfection are used together. But it is clear that, at the very least, UV-C disinfection needs to be added to current hospital procedures. Now comes the important question. "Since UV-C disinfection is invisible, how do we know when it is working properly?" There are 2 tools for testing UV-C disinfection effectiveness. Digital radiometers, and Intellego's dosimeters. To know which is better, there are 5 important ways of comparing them: Accuracy & Consistency: Digital radiometers are very accurate when used correctly, but their accuracy can be influenced by several factors. The 2 most important ones are: - Inverse square law: UV light intensity decreases with the square of the distance. - Lambert's Cosine Law: The intensity of light from a surface is directly proportional to the cosine of the angle between the light direction and the normal to the surface. (Accuracy also decreases with solarisation, differences in temperature, and reflective surfaces) Digital radiometers have a high margin of error. They must be placed at the correct distance, at the correct angle, and must be regularly calibrated and maintained. In contrast, Intellego's dosimeters require no skill to use, and are just as accurate as a perfectly calibrated, and perfectly used digital radiometer. There is little to no margin of error. Cost: Digital radiometers cost around $4-10 thousand, but can be used for 2-5 years. Dosimeters cost $1, but can only be used once. For radiometers to be worth the cost difference, they must be used 2000 times a year, or 6 times a day. That is without including maintenance expenses. Sure, using radiometers in labs that run regular experiments might be cost-effective. But for most cases, it's reasonable to see the costs not matching up. (This is without considering the compromises you pay in addition) Speed: Both give results almost immediately. Use cases: Digital radiometers are bulky. Dosimeters are thin, and can fit anywhere. There are many markets where dosimeters will be the only option for validation. All things considered, digital radiometers certainly have their place, especially in controlled environments like testing labs. But for many real world applications, dosimeters are more practical. Intellego has 3 patents on their technologies, which prevent other companies from making similar products. 1. UV Radiation Response Indicator: This patent covers materials that change colour in UV-A and UV-B light, mainly used in wearable devices to monitor sun exposure. This patent will expire on December 18, 2029 2. App System for Quantifying Color Changes: This patent covers a system that captures an image of the dosimeter and processes this image to accurately quantify the results in numerical format. This data can then be stored and tracked over time. This patent will expire in 2041. 3. Photochromic Ink Technology*: This patent covers photochromic ink that changes colour under different wavelengths of UV-C light. This is the core feature of Intellego's dosimeters. *While not yet official, Intellego Technologies has been informed by the patent offices that their application for this patent has been approved and will be officially granted. This patent would expire in 2042. We also expect Intellego Technologies to come out with more patents in the future. The best way to predict outcomes is to predict incentives. Since static lamps and robots don't work well, the companies that make them avoid advertising tools that highlight their flaws. On the other hand, companies that make autonomous robots are promoting UV-C validation to show how effective their robots really are. High-risk industries have stricter regulations and are less responsive to change. Approvals to make and sell these products take at least 6-12 months. This adds a time advantage for Intellego after their patents expire. Regulated industries also tend to get more regulated over time. We're seeing this right now. Global regulators are putting proposals to regulate the use of UV-C Sterilisation equipment. And regulators have more reason to push dosimeters since their use leaves less room for error. Lastly, risk and reward for changing standard testing procedures that are working well, will be skewed against switching. It is a low cost relative to total hospital expenses, with a large risk of damaging the hospital's reputation if the switch does not work out as expected. If Intellego's products work well, churn is likely to be very low. Bonus note Branding is a deliberate pairing of things through an outcome. The goal of branding is to: Change customer behaviour -> In your favour -> When they see your product/service. For healthcare facilities, it's hard to think of factors that can change customer behaviour more than trust in their safety. And what can be more indicative of safety than regular and accurate disinfection validation? Validation will become an essential part of a healthcare facility's brand. Intellego's shares are selling at around 5 times the estimated annual earnings based on the first quarter. The assumptions behind this valuation are: 1) Intellego's business will not grow, ever. 2) Intellego's business will vanish after 6 years. If the future exceeds any of these assumptions, we'll make money from our investment in Intellego Technologies. We already have some margin of safety from 2 of their long term contracts. 1. Partnership with a leading German company: $50M over 3 years. 2. Partnership with Zhongyou Medical (Likang) in China: $16M over 3 years A total of 66M revenue, $50-60M yet to be earned. This will produce around $25-30M in cash flow over the next 3 years. If we assume the cash flow won't be destroyed: at a $70M market cap, our risk of losing money depends on the probability of Intellego not producing another $30-40M of cash flow during the businesses' lifetime. We think that probability is low. For some context: Intellego's growth has been exceptional. Comparing Q1 2024 to Q1 2023, revenue grew by 85% and profits by 150%. More recently, from Q4 2023 to Q1 2024 (most recent quarter), revenue grew by 37% and profits by 65%. Having said all this, we expect this thesis to lose relevance quickly. The company will look very different in a few years. At this stage, our goal is focusing on understanding the available information and, with minimal assumptions, understanding the direction of the few variables that will most impact future outcomes.

BSD Analysis:
Bilbel Capital presents a compelling thesis for Intellego Technologies, a specialized healthcare technology company developing UV-C dosimeters for disinfection validation. The manager argues that UV-C disinfection is superior to chemical methods across multiple dimensions including kill rate, regrowth prevention, speed, and long-term cost effectiveness. Intellego's dosimeters offer significant advantages over digital radiometers in terms of ease of use, cost per application ($1 vs $4-10k), and versatility in deployment scenarios. The company benefits from strong patent protection with three key patents expiring between 2029-2042, providing substantial competitive moats. At 5x estimated earnings and a $70M market cap, the valuation appears attractive given secured contracts worth $66M over three years and exceptional recent growth (85% revenue growth, 150% profit growth Q1 2024 vs Q1 2023). The regulatory tailwinds and increasing focus on healthcare-associated infection prevention create a favorable operating environment for sustained growth.

Pitch Summary:
In my first quarter 2024 letter, I indicated that we had purchased shares of a company, making it our sixth largest position. This company is now firmly in our top five. It will be familiar to long-time partners and readers of these letters: Turning Point Brands ("TPB"). Turning Point Brands is comprised of Zig Zag rolling papers and a portfolio of non-combustible nicotine products, including Stoker's (oral tobacco) and—spoiler alert—a non-tobacco nicotine pouch product called FRE. Zig Zag benefits from the tailwind of cannabis legalization currently underway in the U.S., and Stokers continues to take share and benefit from an industry pricing umbrella. There are times when stocks get ahead of themselves; when a thesis breaks; when fundamentals weaken; or management makes mistakes. We must always attempt to be rational in the face of change, and when faced with certain situations, to sell and move on. Just as importantly, when we know a name well, it makes sense to continue to track it as the set-up may improve and create opportunities down the line. I have followed TPB since its IPO in 2016. We owned it as a core position from the first quarter of 2017 through the third quarter of 2018, and then again from the second quarter of 2020 (following its merger with its parent holding company, Standard Diversified) through the third quarter of 2021. Despite its solid core in Zig Zag and Stoker's, Turning Point had a tumultuous 2022 and 2023 as investments it made in vaping faltered, among other challenges. I continued to monitor the company during this period, though, doing checks on the brands, business, and team. While investors fled the stock, the company was making numerous beneficial changes: it transitioned its senior management team (new CEO, CFO, and Chief Revenue Officer), de-emphasized the vaping segment, optimized inventory, generated cash (as always), paid down debt (including buying some of its converts at a discount), and incubated FRE. As a result, I think the TPB story is as exciting as ever, but it is only just starting to get back on investor radars. TPB has a ~$650 million market cap and $225 million of net debt, bringing its enterprise value to approximately $875 million. It should generate approximately $100 million of EBITDA and $50-$60 million of free cash flow this year. TPB is trading at a high single-digit free cash flow yield (low teens on our cost basis). Its core brands (Zig Zag and Stokers) should drive mid-single-digit growth in EBITDA. If the stock re-rates from just over 10 times free cash flow to the mid-teens over the next three years, that would add over 10 percentage points per year to the expected return. These components (high single-digit starting yield, mid-single-digit growth, 10%+ from multiple expansion) should therefore drive an expected mid-20% return profile (the "three-year double" for which I like to underwrite). If this were the whole thesis, it would be sufficient. But there is an additional source of meaningful upside that I believe the market does not yet appreciate. This is the company's nicotine pouch product called FRE. Nicotine pouches deliver nicotine without tobacco. ZYN, owned by Philip Morris International (PM), is the market leader in this category, and will almost certainly remain in that position. That said, Turning Point has an excellent playbook for capturing market share and growing brands under the umbrella of larger competitors. It has grown Stokers to a high single-digit market share against entrenched competitors, for example. Nicotine pouches are riding a huge wave of global growth—one which could continue to build for decades. The U.S. nicotine pouch market is $2.5-$3 billion and will likely double in the next few years. To give a sense of the growth rates, PM's ZYN has grown from 13 million cans sold in the U.S. in 2018 to 174 million in 2021 to 385 million in 2023. It will likely top 550 million cans this year if production can keep up (there have been numerous recent reports of ZYN out-of-stock issues). Despite FRE's small market share, it has a number of competitive advantages and moats. First of all, it has PMTAs (premarket tobacco product applications) for each of 3, 6, 9, 12, and 15mg pouches, and is already in market with the latter four dosages. Most of its competitors are only in market with 3mg and 6mg versions, and don't even have PMTAs for higher dosages (which means it could take them several years to launch them, if they chose to try). While FRE capacity is a fraction of ZYN's, FRE has established a robust supply chain. It has expanded capacity and is positioned to continue to do so. This should drive trials and conversion while ZYN faces capacity limitations. FRE has been a fun one to research. I still think it is very early days and that not many investors are paying attention to it. The company has kept disclosure regarding FRE close to the vest, so independent research has been rewarding. Based on both top-down and bottom-up assumptions, I believe FRE has a chance of growing to a $100 million revenue brand in the next few years. If things go very well, it could even take 5% share of a $5 billion (and still growing) market over time (i.e., $250+ million of revenue). What is a high-growth, high-margin consumer brand in an emerging category worth? PM paid over seven times revenue for Swedish Match (the prior owner of ZYN). Even four times revenue (which implies a low double-digit multiple of EBITDA) would mean that FRE could attain a value of $400+ million in the next few years (and the blue-sky scenario is that FRE could eventually be worth $1 billion or more). These are very meaningful numbers relative to TPB's current market cap of ~$650 million. In my interactions with the TPB board and management team, there seems to be a renewed energy and determination, kindled in part by FRE. They appreciate the magnitude of the current opportunity and want to take advantage of it. These insiders are putting their money where their mouths are. Several executives, including the Chief Revenue Officer and Chief Strategy Officer, have recently purchased TPB shares in the open market. Additionally, TPB's newest board member purchased over 2% of the company, a position worth over $15 million. Capital allocation remains a further lever for value creation. After paying off its convert with cash on hand this summer, TPB restarted its buyback. TPB could comfortably repurchase up to one million shares per year (on a base of 17.6 million), even while continuing to invest in FRE. Compared to legacy tobacco companies, which generally have no—or negative—growth and pay high dividends, TPB is unique: a growth nicotine and cannabis-adjacent company that can be a share buyback machine. We already own the "NVR of the U.K." in Vistry; I'm hoping TPB, this time around, can become the "Autozone of nicotine and rolling papers." TPB should generate $3.50-4.00 of normalized free cash flow per share next year, and over $5.00 by 2027. If it trades at a 15-18x multiple, that would put its value at $75-90 per share in a few years, and there is no reason to think that TPB can't continue to compound from there (that is, if it isn't bought out by one of the tobacco majors first). It just needs to avoid distracting M&A, execute on the brands it owns, and shrink the share count while maintaining appropriate leverage—and I believe, under the current management team, that it will. The profile of our investment in TPB is similar to many of my prior favorites. I believe that we have limited risk of permanent capital loss; a core business that can drive excellent performance on its own; and an additional asymmetric source of potentially meaningful upside. If FRE disappoints, our investment in TPB should still be solid. If FRE is a real winner, though, then watch out.

BSD Analysis:
The manager presents a comprehensive bull thesis for Turning Point Brands centered on a compelling asymmetric risk-reward profile. The core investment case rests on TPB's established brands (Zig Zag rolling papers and Stoker's oral tobacco) trading at attractive valuations with high single-digit free cash flow yields and mid-single-digit EBITDA growth potential. The key catalyst is FRE, TPB's nicotine pouch product, which operates in a rapidly expanding $2.5-3 billion U.S. market expected to double in coming years. FRE's competitive advantages include regulatory PMTAs for higher dosage pouches (9-15mg) that competitors lack, positioning it to capitalize on ZYN's capacity constraints. With potential for FRE to reach $100-250 million in revenue and command 4-7x revenue multiples, this could represent $400 million to $1+ billion in value against TPB's $650 million market cap. Strong insider buying, aggressive share buybacks, and new management execution provide additional confidence in the turnaround story.

Pitch Summary:
We held the proverbial presses on this letter so that I could share the fantastic news that Scott's Liquid Gold's ("Scott's") merger with Horizon Kinetics ("Horizon") has closed. Horizon is an asset management firm run by a renowned team led by contrarian value investor Murray Stahl. He is joined by his partners Steven Bregman and Peter Doyle and a capable operating and investment team in managing Horizon's nearly $8 billion of assets under management (AUM) and the $250 of million Net Tangible Assets on its balance sheet. Horizon's public market debut coincides with the 30th anniversary of its founding in 1994 and the fifth anniversary of Maran Capital's involvement in Scott's. Maran first invested in Scott's in the fall of 2019 (though we strategically and opportunistically added to our position over time). I joined the board of Scott's in January 2021 and became its chairman in April 2021. Over the subsequent few years, we cut costs, sold eight brands in five separate transactions, and repaid all debt, taking the company to a net cash balance sheet. It was from this position of strength that Scott's negotiated and entered into, in December 2023, the merger agreement with Horizon. I would like to thank Murray Stahl and the entire Horizon team for their partnership and collaboration as we executed this transaction. I would also like to thank Tisha Pedrazzini (board member, President), David Arndt (CFO, President), and John McAnnar (board member) for their tireless efforts in transforming Scott's and assisting in the execution of the transaction with Horizon. I would especially like to thank Rimmy Malhotra, whose title of board member of Scott's doesn't begin to do justice to the role he played in this successful outcome for Scott's shareholders. He was a true partner in this endeavor and his strategic advice and skill at execution were instrumental in the outcome. Thanks again, Rimmy. Horizon remains a core position in our fund, and I intend to continue to serve on its board of directors. As such, the information and analysis that I share in these letters regarding this position may continue to be limited. I am excited about the future of the company and look forward to sharing more as appropriate.

BSD Analysis:
The manager presents a compelling bull case for Horizon Kinetics following the successful completion of its merger with Scott's Liquid Gold. The investment thesis centers on the quality of Horizon's management team, led by renowned contrarian value investor Murray Stahl, and the firm's substantial $8 billion in assets under management. The manager's deep involvement as chairman of Scott's board and his role in orchestrating the merger demonstrates intimate knowledge of the transaction and strategic positioning. The transformation of Scott's from a debt-laden entity to a net cash position through cost-cutting and asset sales created a strong foundation for the merger. With Horizon's 30-year track record and the manager's continued board involvement, this represents a high-conviction position with significant insider alignment and operational expertise.

Pitch Summary:
RSSS has reached the one-year anniversary of the first of its two major acquisitions, Resolute ai from July '23, soon followed by the anniversary of the Scite acquisition from Nov '23. The lack of earn-out at Resolute indicates a failure to achieve expectations. Fortunately, it was the smaller of the two acquisitions ($3M purchase price). In contrast, early evidence suggests that Scite, purchased for $21M and with an earnout recently revised upwards, is performing ahead of expectations. Scite has the ingredients to translate into long term value accretion, including complimentary strength in the traditionally weaker academic markets, a complimentary pricing model with exposure to B2C customers and an energetic founder with industry "rizz" (as the kids say). A former manager lauded his addition as a big win for the company. Scite is the second startup in the research reference management space for founder, Josh Nicholson, who is now Chief Strategy Officer of RSSS. Nicholson, was a microbiologist who encountered the same problems faced by RSSS customers with respect to references and citations. He started his first business, the Winnower, to better cull research material. The Winnower was acquired by Authorea, now a subsidiary of the publisher, Wiley. After leaving Wiley, Nicholson founded Scite. He has recently begun to join senior management in investor meetings and is actively promoting Research Solutions' solutions on social media. Beyond these acquisitions, operating results since new management took over continue to impress. The stock however lags, part of the inevitable "randomness" or noise that plagues stocks in the short term. In this case, I think the stock is burdened by the overhang of the bitter split between the company, and the founder and his brother in law, both large shareholders who enriched themselves through dilutive self-dealing (one can observe a product of this enrichment here). I'm told both are selling spitefully into the market, which sadly tracks what is known about them. If the company can continue its (impressive) operating performance it should translate into higher returns to shareholders over time.

BSD Analysis:
The manager presents a bull case for RSSS centered on successful M&A integration and strong operational performance under new management. The key catalyst is the Scite acquisition ($21M), which is performing ahead of expectations with an upwardly revised earnout, while the smaller Resolute AI deal ($3M) failed to meet targets. Scite brings complementary strengths in academic markets, B2C exposure, and an experienced founder Josh Nicholson as Chief Strategy Officer, who has a proven track record in research reference management. The manager emphasizes that operating results have been impressive since the management transition, with improving gross profit and EBITDA metrics. However, the stock performance lags due to technical selling pressure from disgruntled former insiders who are "selling spitefully into the market" following a bitter corporate split. This creates a temporary disconnect between strong fundamentals and weak stock performance. The manager views this as a classic case of short-term noise obscuring long-term value creation, expecting the strong operating performance to eventually translate into higher returns as the selling overhang dissipates.

Pitch Summary:
Investing is a "what you have done for me lately" business and just about everything MTRX has done "lately" is unappealing, with five years of declines in revenues and gross profit and until a year ago, a material slide in backlog. It's easy to understand why the market isn't interested in this company. Things are changing, however, leading to what I think is a variant view. The charts below show the history of MTRX under the current management team (ie since 2011). One can observe that backlog, now at historic highs, tends to correspond with both revenues and "billings in excess of costs" (BEC), the latter a form of float ie cash collected ahead of work. Though backlog and excess billings have dramatically improved, revenue has recently lagged. This divergence is unusual: Is it a new normal or should we expect some trend reversion and therefore meaningful growth in revenues? A few factors could explain the divergence (higher interest rates leading to project deferrals, Chevron's pending move to Texas), but management remains adamant that timing and seasonality are the primary issues. These are not unusual in the construction industry, especially on larger projects. If these projects move ahead into the seasonally strong spring, summer and fall construction seasons, it will lead to a rebound in revenues, gross margin, earnings and cash flow. From 2011 until 2020, the company surpassed $30M in adj EBITDA eight years, with exceptions in '17 and '18. Given backlog and historical precedent, it seems highly reasonable that the company can re-achieve these levels. At $9 / share it trades for 5x this threshold. The company is on a June fiscal year so we will know more when it reports 4Q / year-end results in early September. If I am right it would be meaningfully additive to the portfolio.

BSD Analysis:
The manager presents a contrarian bull case for MTRX based on a variant perception regarding the disconnect between record-high backlog and lagging revenues. The thesis centers on the historical correlation between backlog levels and subsequent revenue generation, suggesting current revenue weakness is temporary due to project timing and seasonality rather than fundamental deterioration. The manager highlights that backlog has reached historic highs while "billings in excess of costs" (customer prepayments) have also improved dramatically, indicating strong underlying demand. Historical performance shows the company achieved over $30M in adjusted EBITDA in eight of ten years from 2011-2020, providing a reasonable earnings power baseline. At $9 per share, the stock trades at only 5x this historical EBITDA threshold, suggesting significant upside if the revenue conversion materializes. The upcoming September earnings report will be a key catalyst to validate the thesis. The investment appears to offer asymmetric risk-reward given the depressed valuation and strong leading indicators.

Pitch Summary:
Philip Morris International is a multinational tobacco company focused on smoke-free products like heated tobacco and nicotine pouches to create a smoke-free future by transitioning away from traditional cigarettes. The company's shares gained 12% during the quarter and tacked on another 14% in July. Well-publicized supply shortages, increasing competition from unauthorized products, grandstanding politicians, and a temporary halt to online sales did little to slow PM's smoke-free momentum, as sales of reduced-risk products grew to nearly 40% of total company revenues. In fact, management expects an acceleration across its smoke-free business in the second half as supply constraints ease, driving substantial upward revisions to guidance and estimates. Notably, Zyn volume guidance (nicotine pouches) for FY24 has increased from 520 million units at the start of the year to 560–580 million units today, with capacity for 900 million cans next year. After three years of sideways trading, investors are finally waking up to the strength and resilience of PM's earnings power and transition from a manufacturer of traditional tobacco to a faster-growing and significantly more profitable business. The stock's rally over the last quarter was enough to put it ahead of both the S&P and the Nasdaq for the past three years. But at a now "inflated" 14.5x FY25 consensus estimates (which are likely too low), we think today's valuation is a long way from discounting the transformation to a smoke-free Philip Morris.

BSD Analysis:
Broyhill maintains strong conviction in Philip Morris International's transformation story, emphasizing the company's successful transition from traditional tobacco to smoke-free products. Despite regulatory headwinds, supply constraints, and political pressure, reduced-risk products now represent nearly 40% of total revenues with accelerating momentum expected. Zyn nicotine pouch guidance has increased significantly from 520 million to 560-580 million units for 2024, with 900 million unit capacity next year demonstrating substantial growth runway. The manager views the recent 26% rally as overdue recognition of earnings power and business model transformation after three years of sideways trading. While acknowledging the stock now trades at 14.5x FY25 estimates, Broyhill believes consensus numbers are too conservative given the acceleration in smoke-free adoption. The investment thesis centers on a legacy tobacco company successfully pivoting to faster-growing, higher-margin products while maintaining strong cash generation. This represents a classic transformation play with significant re-rating potential as the market recognizes the new business model.

Pitch Summary:
Fresenius Medical Care is the global leader in dialysis services and products, providing life-sustaining treatment and equipment for patients with chronic kidney failure. The company's shares were little changed during the quarter, despite reporting continued weak treatment growth, which led to a reduction in full-year guidance. Blaming the shortfall on higher-than-expected mortality rates (compliments of a longer flu season) and bad weather across its footprint (one of our personal favorites) didn't exactly inspire confidence, particularly given management's sub-par reputation. That said, we think investors may be too short-sighted and too quick to judge CEO Helen Giza, who has been in the top seat for all of eighteen months. Installing the right leadership team and transforming organizational culture does not happen overnight. These things take time. Time to change the organizational structure and upgrade the board and the senior management team. Time to divest non-core businesses and to initiate a material turnaround with a new operating model. Time is our most precious resource. It's also the single trait in the shortest supply in the investment industry. Hence the opportunity. With most investors unable or unwilling to look through the near-term lull in volumes, they are prone to overlook the longer-term earnings potential of the Fresenius model as volumes normalize, driving higher revenue across a largely fixed cost base. With shares of Fresenius currently trading at less than 12x depressed earnings estimates, we believe the risk/reward is extremely asymmetric for investors willing to stomach a little short-term volatility.

BSD Analysis:
Broyhill presents a contrarian turnaround thesis on Fresenius Medical Care, the global dialysis leader, emphasizing patience with new CEO Helen Giza's transformation efforts. While acknowledging weak treatment growth and reduced guidance blamed on mortality rates and weather, the manager views current pessimism as creating opportunity. The fund argues investors are too short-sighted in judging Giza after only 18 months, noting that organizational transformation, leadership upgrades, and operational model changes require time. The investment thesis centers on the company's largely fixed cost base providing significant operating leverage as volumes normalize. Trading at less than 12x depressed earnings, the manager sees extremely asymmetric risk/reward for patient investors. The position reflects classic value investing principles: buying a quality franchise during temporary difficulties with new management implementing necessary changes. Time arbitrage represents the key competitive advantage, as most investors lack patience for multi-year turnarounds in the current environment.

Pitch Summary:
Fiserv is the premier provider of financial technology services, supporting banks, credit unions, and financial institutions with innovative banking solutions, payment processing, and data analytics to streamline and secure financial transactions. The company's shares slid 7% during the quarter before rallying 10% in July to fresh all-time highs. Clover remains the company's crown jewel, generating over $300 billion in annualized GPV (Gross Payment Volume) with better monetization, driving 28% revenue growth in the recently reported quarter, and three new hardware products plus pilot programs in Mexico and Brazil going live in the coming months. Simply put, there are few businesses in this industry executing even close to the same level, and fewer still with Fiserv's scale, distribution, and collection of assets. In our initial write-up, we highlighted the embedded distribution advantages often enjoyed by incumbents, noting that "Fiserv can cross-sell products through its large, engrained distribution channels, driving faster growth than even its most rapidly growing peers. And with Clover and Square accounting for less than 10% of a fragmented market, we think there is plenty of room for both to run." Notably, Jack Dorsey, Chief Block Head, Square Head, Chairman, and Cofounder, recently came to the same conclusion, admitting as much on the company's most recent earnings call: "I would state that our product quality is far above the majority of our competitors. Where we have been weaker in the past is how we mirror that with our go-to-market strategy and just updating our approach there, especially given what our competitors have done." We wonder which competitors come to mind.

BSD Analysis:
Broyhill maintains strong conviction in Fiserv as the premier financial technology services provider, highlighting the company's dominant competitive position and execution capabilities. The Clover platform serves as the crown jewel, generating over $300 billion in annualized gross payment volume with improving monetization driving 28% revenue growth. New hardware products and international expansion into Mexico and Brazil provide additional growth catalysts. The manager emphasizes Fiserv's unmatched scale, distribution advantages, and asset collection in a fragmented market where Clover and Square combined represent less than 10% market share. Embedded distribution channels enable superior cross-selling capabilities versus rapidly growing peers. Recent comments from Square's Jack Dorsey acknowledging competitive disadvantages in go-to-market strategy validate Fiserv's positioning. The stock's recovery to all-time highs reflects growing recognition of the company's execution superiority. This represents a quality growth story with significant runway in a large, fragmented addressable market.