Investment Pitches

Pitch Summary:
Old Dominion Freight Line also contributed to the quarter's performance. As in the fourth quarter of 2025, investors have grown more optimistic about a rebound in industrial activity, a core source of demand for Old Dominion's fleet, as U.S. manufacturing data suggests a nascent expansion is underway after more than three years of contraction. As usual, the Company has managed its capacity exceptionally well during this downturn, keeping costs under control and charging prices that reflect the longstanding, dependable service it provides its customers. Compared with peers, Old Dominion maintains a significant buffer of spare capacity, which helps capture more of the economics during an expansion. The Company has significant pent-up earnings growth ahead, which should attract new investors.

BSD Analysis:
Wedgewood presents a compelling cyclical recovery thesis for Old Dominion Freight Line, positioning the company to benefit from an emerging U.S. manufacturing expansion after three years of contraction. The manager highlights Old Dominion's superior capacity management during the downturn, maintaining cost discipline while preserving pricing power through consistent service quality. The company's strategic maintenance of spare capacity relative to peers creates a competitive advantage to capture disproportionate economics during the industrial recovery. This operational leverage should drive significant pent-up earnings growth as manufacturing activity normalizes. The manager views the current positioning as attractive for new investors seeking exposure to the industrial recovery cycle. Old Dominion's proven ability to manage through cycles while maintaining service standards supports the bullish outlook.

Pitch Summary:
Taiwan Semiconductor Manufacturing Company was a top contributor to portfolio performance in the first quarter. Revenues grew +25%, and the Company guided to accelerating revenue growth to +30% in 2026 as demand for compute accelerators for AI applications continues to ramp unabated. In addition, the Company recently reported that March revenue was up +45% year over year, +31% month over month, and +35% year to date. The semiconductor customer base has evolved to the point that the Company increasingly works directly with non-traditional end customers, particularly cloud service providers, to develop custom silicon. This helps the Company better match supply with demand, so despite strong revenue growth, the Company has kept capital expenditures relatively in line with revenue growth. In addition, the Company is raising prices as utilization rates at leading-edge nodes continue to climb. We trimmed positions because our holdings exceeded 10% of portfolios. Taiwan Semiconductor Manufacturing Company remains a top holding.

BSD Analysis:
Wedgewood maintains a strong bullish stance on Taiwan Semiconductor Manufacturing Company, highlighting exceptional revenue acceleration from 25% to a guided 30% in 2026 driven by AI compute demand. The manager emphasizes the company's strategic evolution toward direct partnerships with cloud service providers for custom silicon development, which enhances demand visibility and supply-demand matching. Despite robust revenue growth, TSMC has maintained disciplined capital allocation with capex growth in line with revenue expansion. The company is successfully implementing price increases as leading-edge node utilization rates climb, demonstrating strong pricing power. Recent monthly performance metrics show sustained momentum with March revenue up 45% year-over-year. The position trimming was purely due to portfolio concentration limits rather than fundamental concerns. TSMC remains a top holding reflecting the manager's conviction in the AI semiconductor thesis.

Pitch Summary:
Acacia Research has shown significant improvement over the past two years, with a strong performance in 2025. The company's Benchmark oil and gas segment has benefited from rising oil and natural gas prices, contributing to a 30% revenue growth for the year. The company's market cap stands at $482 million, with a stock price of $5.00, trading at a 16 PE TTM and 8x FCF. The company has maintained a strong cash position and has effectively managed its legacy assets and IP portfolio. The recent Deflecto purchase and growing free cash flow are expected to further enhance the company's financial performance.

BSD Analysis:
Acacia Research's strategic focus on its Benchmark segment, particularly in the oil and gas industry, positions it well for future growth amid high commodity prices. The company's ability to maintain a strong cash position while scaling its operations demonstrates effective financial management. The reduction in tariffs on products imported from China and Canada is likely to improve Deflecto's earnings, providing an additional boost to the company's overall performance. Despite being undercovered by analysts, Acacia Research's consistent revenue growth and strategic acquisitions suggest a promising outlook. The company's focus on monetizing its IP portfolio, particularly in the Wifi-6 space, remains a key strength.

Pitch Summary:
ARM Holdings is a dominant player in the semiconductor IP market, controlling over 40% of the global market share. Its business model, which focuses on licensing processor designs and IP, allows it to maintain a capital-light structure with high gross margins. ARM's technology is widely adopted, powering 99% of the world's smartphones and being integral to major tech companies like Apple, Microsoft, and Nvidia. The company's recent strategic shift to produce its own data center chip, the AGI CPU, marks a significant expansion of its addressable market, potentially capturing a larger share of the CPU market valued at $60-70 billion today. This move is expected to drive substantial revenue growth, with management projecting $25 billion in revenue and $9 in EPS by 2031.

BSD Analysis:
ARM's decision to enter the data center CPU market with its AGI CPU leverages its existing strengths in energy-efficient design, a critical factor as data centers prioritize performance per watt. The AGI CPU's superior performance metrics, such as delivering more compute on 40% less electricity compared to competitors, position ARM well against traditional x86 architectures from Intel and AMD. The company's extensive ecosystem and partnerships with major tech players provide a strong foundation for its new product line. While ARM's stock has historically been expensive, the recent valuation disconnect following the AGI CPU announcement presents a potential entry point for long-term investors. The company's robust financial health, with strong cash flow and minimal debt, further supports its growth trajectory.

Pitch Summary:
BYD is strategically positioned to benefit from China's prioritization of electrification as a national security measure. With over 70% of China's oil being imported through vulnerable seaborne chokepoints, the shift to electric vehicles (EVs) is seen as a critical move to reduce dependency on foreign oil. BYD, as a leading EV manufacturer with a robust supply chain, is well-placed to capitalize on this transition. The recent geopolitical tensions and oil price surges underscore the importance of energy security, further accelerating the adoption of EVs in China and across Asia.

BSD Analysis:
The geopolitical conflict involving the US and Iran has highlighted the vulnerabilities of oil-dependent economies, reinforcing the strategic importance of EVs. BYD's vertically integrated supply chain, which includes in-house battery and chip production, provides a significant competitive advantage, insulating it from Middle Eastern disruptions. The rapid increase in EV adoption in Asia, evidenced by surging sales and increased showroom activity, suggests a strong demand trajectory for BYD's products. This scenario mirrors historical shifts in the automotive industry, where external shocks have accelerated technological adoption, positioning BYD for sustained growth.

Pitch Summary:
The decision to sell Adobe was driven by concerns over transparency and changes in executive compensation metrics. Adobe's shift from reporting net new ARR to ending ARR growth in its Digital Media segment raised red flags. This change, coupled with the cessation of reporting certain growth metrics, suggests potential deceleration in growth. The company's actions to obscure these metrics indicate a lack of honesty, which could lead to a value trap scenario similar to IBM. Despite Adobe's wide moat, these governance issues prompted a reevaluation of its investment viability.

BSD Analysis:
Adobe's decision to alter its executive compensation metrics and reporting practices suggests a strategic pivot to mask underlying performance issues. This aligns with a broader trend where companies adjust metrics to present a more favorable outlook, potentially misleading investors. The comparison to IBM highlights the risk of investing in companies with strong fundamentals but questionable management practices. The reference to Warren Buffett's Tesco experience underscores the importance of forensic analysis over emotional investment decisions. Adobe's declining moat score further supports the decision to divest, as it indicates weakening competitive advantages.

Pitch Summary:
Crocs, Inc. has faced challenges with its acquisition of HEYDUDE, which has underperformed, leading to a significant impairment. Despite this, Crocs has shown resilience with a 14% revenue increase since 2022 and maintained its gross margin. The company's ability to generate free cash flow and its strategy of share buybacks have been positive. The current share price reflects market skepticism, but the company's fundamentals suggest potential upside. A fair value estimate of $105 per share indicates a 20% upside from the current price of $84. The company is sensitive to positive news, which could drive the share price higher if performance improves.

BSD Analysis:
Crocs has been expanding its store count, which should contribute to revenue growth, although recent guidance suggests modest expectations. The market's low multiples reflect perceived risks, particularly with the HEYDUDE acquisition. However, Crocs' loyal customer base and stable demand, as indicated by alternative data sources, provide a foundation for future growth. The company's focus on brand investment and cost savings could enhance profitability. While the market remains cautious, any positive developments could lead to a re-rating of the stock. Investors should watch for stabilization in HEYDUDE's performance and overall revenue growth as key catalysts.

Pitch Summary:
Shift4 Payments is currently undervalued, trading at a significant discount from its 52-week high. The company is a dominant player in the payments sector, particularly in hospitality, sports, and entertainment. Despite a recent acquisition and a slightly soft outlook for free cash flow conversion, Shift4's strong growth in Adjusted EBITDA and free cash flow generation highlight its potential. Founder Jared Isaacman's recent stock purchase underscores confidence in the company's future. The current stock price offers an asymmetric return potential, making it an attractive investment opportunity.

BSD Analysis:
Shift4 Payments exemplifies a misunderstood business with strong fundamentals obscured by complex financials and market transitions. The company's strategic acquisitions and robust growth in payment volume position it well for continued success. Its leadership in the hospitality and entertainment sectors provides a stable revenue base, while its low valuation relative to peers suggests significant upside potential. The recent insider buying by the founder indicates strong internal confidence in the company's trajectory. Investors should consider the potential risks associated with the integration of Global Blue, but the overall outlook remains positive.

Pitch Summary:
One such example is Western Investment Company of Canada (WI), which serves as a useful case study as it embodies many of the characteristics we seek. WI is an investment holding company currently undergoing a transformation into an insurance holding company. Its goal is to serve as a platform for small, niche insurers in Western Canada through a buy-and-build strategy led by a seasoned industry veteran. While the underlying insurance operations have grown rapidly in recent years, the value proposition remained obscured, as WI previously held only a minority stake and therefore did not consolidate the business. This changed in late 2024, when the company acquired full ownership of the insurance operation through a rights offering conducted at CAD 0.40 per share. We purchased shares shortly after the rights offering in November 2024 at approximately CAD 0.43 per share. In return, we effectively received: - CAD 0.32 per share in net cash - CAD 0.04 per share in tangible book value from the insurance operation, which has been growing profitably at over 100% annually and, in my view, can generate CAD 0.05 per share in underwriting profit by 2028 - CAD 0.04 per share in non-listed stakes across three businesses that appeared materially undervalued, validated by the subsequent sale of one stake at a 130% premium (CAD 0.06 per share) to its carrying value In aggregate, we effectively covered our upfront investment through cash and undervalued business stakes, while receiving the crown jewel, the insurance operation, essentially for free. This opportunity existed because valuing the post-transaction business required a degree of analytical work that was not immediately apparent from the company's financial statements alone. It did not take long for the market to begin recognizing this value. The stock appreciated materially during Q4 of last year and into Q1 of this year, reaching a high of CAD 0.96 per share. While we remain confident in the long-term potential of both the business and its management team, we took advantage of this appreciation to sell half our position. The proceeds were redeployed into a new holding that appears materially undervalued, while we retained the remaining position to participate in the long-term upside as the company deploys its excess capital to grow the business.

BSD Analysis:
Diranko Capital presents a compelling deep value opportunity in Western Investment Company of Canada, highlighting a classic sum-of-the-parts investment thesis. The manager acquired shares at CAD 0.43 following a rights offering, effectively receiving CAD 0.32 in net cash, CAD 0.04 in tangible book value from rapidly growing insurance operations, and CAD 0.04 in undervalued non-listed stakes. The insurance operation has demonstrated exceptional growth at over 100% annually, with projected underwriting profits of CAD 0.05 per share by 2028. The investment thesis was validated when one non-listed stake sold at a 130% premium to carrying value, and the stock appreciated to CAD 0.96 per share. The manager prudently took profits by selling half the position while retaining exposure to participate in long-term value creation as management deploys excess capital. This case study exemplifies the fund's approach of identifying obscure, underfollowed companies where analytical work reveals hidden value not apparent from financial statements alone.