Investment Pitches

Pitch Summary:
ITAB released a very strong Q1 report, benefitting from an improved mix where sales of technology solutions to prevent "shrinkage" (the euphemism used by retailers to describe in-store theft) is growing quickly. We initiated our position in ITAB post their Q4 report in February, and the share has more than doubled since, making it our best performer so far this year.

BSD Analysis:
Protean initiated a position in ITAB following strong Q4 results and has been rewarded with the fund's best performance year-to-date, with shares more than doubling. The investment thesis centers on ITAB's improved product mix, particularly the rapid growth in anti-theft technology solutions for retailers. The "shrinkage" prevention technology addresses a significant pain point for retailers facing increasing in-store theft. The Q1 results validated this thesis with very strong performance driven by this higher-margin technology segment. The timing of the February entry proved excellent, capturing substantial upside as the market recognized the value of ITAB's evolving business model toward higher-value technology solutions.

Pitch Summary:
Acast performed strongly after a Q1 report that underlined that this podcast ad company is approaching profitability. The strategic importance of the platform Acast has built remains underestimated in our view, and as the advertising potential of podcasts is still far from where it should be, we still see considerable upside ahead. Acast has organically grown to become our largest position.

BSD Analysis:
Protean views Acast as an undervalued podcast advertising platform approaching profitability with significant upside potential. The manager believes the strategic value of Acast's platform is underestimated by the market, particularly given the underdeveloped state of podcast advertising monetization. The Q1 results demonstrated progress toward profitability, validating the investment thesis. Acast has organically grown to become the fund's largest position at 5.0%, indicating high conviction. The manager sees considerable room for growth as podcast advertising matures and reaches its full potential. This represents a structural growth opportunity in digital media advertising with Acast well-positioned as a leading platform provider.

Pitch Summary:
International Workplace Group (IWG) is poised to capitalize on the growing demand for flexible office solutions as companies increasingly adopt hybrid work models. The company's strategic shift towards management contracts reduces capital intensity and operational risk, enhancing profitability. With a robust global presence and a diversified brand portfolio, IWG is well-positioned to benefit from the expanding flexible office market, projected to grow significantly by 2030.

BSD Analysis:
IWG's pivot to management contracts mirrors successful models in the hospitality industry, such as Marriott and Hilton, which have demonstrated strong shareholder returns. This strategy allows IWG to leverage its brand and operational expertise without the burden of capital expenditures, resulting in higher margins and reduced financial risk. The company's focus on suburban expansion and diverse pricing tiers positions it favorably against competitors like Wework, which is more concentrated in premium urban markets. IWG's ability to generate ancillary revenues and achieve cost efficiencies further strengthens its competitive advantage. The anticipated resumption of buybacks in 2025, coupled with a potential US re-listing, could enhance liquidity and investor interest, driving a re-rating of the stock. Despite macroeconomic risks, IWG's strategic initiatives and financial discipline suggest a compelling opportunity for long-term growth and value creation.

Pitch Summary:
Shift4 Payments (FOUR): Shift4 provides software and payment solutions in North America and Europe. The company was founded by Jared Issacman as a teenager in his parents' basement, and he remains the CEO to this day. The company has been EBITDA-positive since 2004 and has grown payment volume and revenue by double-digits in every single year since its inception 24 years ago. FOUR's business can be grouped into three main verticals – restaurant, hospitality, and sports & entertainment. An overview of each is below: - Restaurant: the company's flagship product is called SkyTab, a full suite of tools for modern restaurant management. It's a fully cloud-based platform with among the lowest total costs of ownership and the best reviews of any of its competitors. The segment is aiming for 30,000 system installs this year, and management recently commented that they're currently ahead of schedule in the first half of the year. FOUR recently broadened Skytab's POS capabilities by acquiring a smaller competitor named Revel for $250 M, the impact of which will begin to flow through the financials in the second half of the year (though no benefit from it is included in the company's guidance). - Hospitality: FOUR's hospitality segment tends to focus on resorts and casinos for which there are a wide variety of commercial activities on site (think dining, retail, entertainment, etc.). The complexity of handling these different use cases means that few players have the expertise required to manage the 500+ software integrations needed to effectively compete. - Sports & Entertainment (S&E): FOUR's ability to seamlessly handle a range of revenue streams has also made them a leader in the S&E space, for which POS, mobile ordering, ticketing, and parking payment solutions are all required. Recent signature wins include the NFL's Chiefs, Ravens, and Rams. This segment is now starting to expand internationally as well; FOUR recently signed its first two European stadiums, including FC Barcelona's Camp Nou. The combination of robust organic growth and thoughtful capital allocation has led to impressive financial performance. Since its unceremonious IPO during the throes of the pandemic, FOUR has deployed $2.1 B of capital to generate an incremental $570 M of EBITDA and $420 M of FCF. This dynamic of essentially paying a 3.6x EBITDA or 4.9x FCF multiple to expand the business while your stock trades far north of that has generated immense intrinsic value growth for shareholders. But despite these operational successes, FOUR stock remains well off its 2021 highs as its trading multiples have been compressed by more than half. While the stock likely got ahead of itself in the heady days of near-zero interest rates, we think it's now overcorrected given the business's quality, performance track record, and whitespace for future growth. FOUR has guided to about $575-610 M in true EBITDA for 2024 as they continue to execute their gateway sunset strategy. This puts the stock at 9.5-10x on this year's numbers – more than reasonable given the 25%+ organic growth and a deep pipeline of future M&A opportunities in the fragmented payments space. It's also a significant discount to other diversified software+payment peers. The range of future fair values is broader than usual here for two reasons. First, FOUR regularly does bolt-on acquisitions that make up a meaningful portion of total growth. This year, of their ~40% net revenue growth, 15% of it will come inorganically, a material amount. Second, payment peers have traded at a wide range of P/E multiples in recent years based on investor sentiment, and FOUR has not been public long enough to estimate true through-the-cycle median multiples; in the past four years, it's often traded north of 50x forward earnings, but I am not willing to underwrite that as anything more than a stretch upside case going forward. Rather, it's better to make our estimates based on just the existing business and apply a more conservative multiple based on organic growth and earnings durability, treating any additional M&A or investor euphoria as a bonus. We think fair value is somewhere between $95-105 per share discounted back to year-end, suggesting 35-50% upside from current prices. From the period between now and 2027, we assume material revenue deceleration, EBITDA margins and FCF conversion in line with current guidance, and a P/E ratio below the market and payment peers. This fair value range is where FOUR traded in 2021, when it was less than half the size by sales. Further revenue upside should be possible if the company continues with its roll-up strategy, but again, we prefer to project based solely on organic growth. Finally, while FOUR is a well-managed business trading at a more-than-fair price, the biggest appeal of this investment to us is the potential catalyst of a sale of the business in the relatively near future. CEO Isaacman has made it no secret that he has no interest in handing the reins to his children or stepping aside for someone else to take control – his eventual exit will be from a sale, and it is just a matter of when. There are certainly risks to having an investment in a company with a super-majority voting structure, but the founder is also the largest economic owner here (and was recently buying more) and has earned the benefit of the doubt over 20+ years. And payments are a competitive industry, but FOUR has proven in the last two decades that they can handle it. Considering the valuation discount alongside the potential catalyst and effective downside protection from prospective buyers signaling interest even at higher prices, we think the risk-reward and potential IRR here are very appealing.

BSD Analysis:
The manager presents a compelling bull case for Shift4 Payments based on strong fundamentals and an attractive valuation. The company demonstrates exceptional operational consistency with 24 consecutive years of double-digit growth and EBITDA positivity since 2004. FOUR's diversified business model across restaurants, hospitality, and sports & entertainment provides multiple growth vectors, with the SkyTab platform showing particular strength in the restaurant vertical. The manager highlights impressive capital allocation efficiency, with $2.1B deployed generating $570M in incremental EBITDA at attractive 3.6x multiples. At 9.5-10x 2024 EBITDA despite 25%+ organic growth, the stock trades at a significant discount to payment peers. The investment thesis is further strengthened by a potential near-term catalyst, as CEO Isaacman has signaled his intention to eventually sell the business rather than transition leadership. The manager's $95-105 price target implies 35-50% upside, supported by conservative assumptions that exclude potential M&A benefits.

Pitch Summary:
When we came across CRH plc a little over a year ago in our research process, it was a company we and likely many other U.S. investors had little familiarity with. The company is headquartered in Ireland, was listed through a sponsored ADR, had no direct U.S. analyst coverage, and was not included in any relevant indices. This was despite the fact that CRH is one of the largest building materials companies in North America with unrivaled size and scale, generated over 75% of its total EBITDA in the region, and had a $40bn market cap. As we dug in further our excitement quicky built as we learned how the current management team had repositioned the portfolio to less cyclical, faster growing markets all while driving EBITDA margins higher (over 350bps since 2018) and balance sheet leverage down to the best level in its 50-year history. CRH's consistent free cash flow generation coupled with its prudent capital structure has allowed the company to allocate an increasing amount of its excess capital back to shareholders through dividends and buybacks in recent years. From a sustainability perspective, CRH would have been an easy name to dismiss under a traditional "exclusionary" approach given the legacy of its industry. Yet in our opinion, CRH's Sustainable Cash Flow Advantage centers around its leading position among its peers in terms of circularity, emissions, and innovation. CRH is the largest recycler of any material in North America (44m tons last year) and generates over 50% of its revenues from products with enhanced sustainability attributes. One of every four miles of road that CRH paves in North America is made with fully recycled content. This has helped CRH not only lower its overall cost structure but also win share in the market as more customers seek out more sustainable solutions from their supplier base. Finally, with an absolute valuation at a substantial discount to its closest U.S. peers, we initiated our position. Since that time, CRH has moved its primary stock listing to the U.S. which we think will help it to get on more U.S. investors radars over time. CRH remains a core position within the strategy today.

BSD Analysis:
Brown Advisory presents a compelling bull case for CRH plc, emphasizing the company's transformation from an overlooked Irish-listed ADR to a recognized North American building materials leader. The manager highlights CRH's impressive operational improvements, including 350+ basis points of EBITDA margin expansion since 2018 and balance sheet leverage at 50-year lows. The investment thesis centers on CRH's 'Sustainable Cash Flow Advantage' through industry-leading recycling capabilities, processing 44 million tons annually and generating over 50% of revenues from sustainable products. This sustainability focus has enabled cost structure improvements and market share gains as customers increasingly demand environmentally conscious solutions. The manager views CRH's recent U.S. primary listing as a catalyst for increased institutional recognition. With consistent free cash flow generation, disciplined capital allocation through dividends and buybacks, and a valuation discount to U.S. peers, Brown Advisory positions CRH as a core holding that exemplifies their value-sustainability intersection strategy.

Pitch Summary:
An investment opportunity that did enter the portfolio is Stellantis, ranked as the fourth largest global carmaker. While the name Stellantis often doesn't ring a bell, its large stable of car brands do: Peugeot, Citroen, Fiat, Opel, Alfa Romeo, Maserati, Jeep, Dodge, Chrysler, and a handful of other smaller brands. Despite being a mass-market manufacturer, the company has demonstrated strong profitability with an EBIT margin of 10 to 12% from 2021 to 2023. More importantly, management emphasises cash generation, despite high capital requirements for the transition to emission free vehicles. Early in 2023, Citadel acquired shares in Stellantis at an exceptional valuation. At the time of purchase, Stellantis' free cash flow of €14bn equalled its entire enterprise value. The company offered a dividend yield of 10% and additionally repurchased 5% of its outstanding shares. Stellantis' balance sheet is extremely robust, with €34bn net cash out of a €48bn market capitalisation. This financial strength ensures Stellantis remains resilient regardless of market conditions. One might ask: how can Stellantis be so attractively priced? We do anticipate several years of lower profitability after peak year 2023, and this scenario is currently unfolding. However, we factored this into our valuation analysis when the stock was purchased, and we still believe the intrinsic value is at least three times Citadel's purchase price. The auto industry is grappling with a prolonged shift from internal combustion engine (ICE) vehicles to electric cars, presenting significant challenges. Carmakers must maintain both technologies, which is costly, and investments in electric vehicles and related infrastructure (like batteries and semiconductors) will yield lower returns in the near term. Betting solely on electric or ICE vehicles would carry considerable risk. Following the merger of Fiat-Chrysler and Peugeot-Citroen that established Stellantis, management swiftly implemented a future-proof strategy with two key decisions. Firstly, among its inherited brands, Stellantis is consolidating to four main vehicle platforms for the majority of its cars. This consolidation achieves substantial efficiency gains, enhancing cost competitiveness even against Chinese competitors. Secondly, these platforms are designed to accommodate any powertrain – electric, hybrid, ICE, or even hydrogen fuel cell – allowing flexibility to adjust production based on market demand and government regulations. This intelligent engineering approach enables Stellantis to respond swiftly to market dynamics, minimizing the risk of obsolescence in a rapidly developing market. Financial markets tend to react negatively when short-term earnings face pressure. Consequently, Stellantis shares have retreated somewhat this year, following significant gains last year. Nonetheless, we maintain our conviction that the intrinsic value of Stellantis is nearly triple the current share price. As steadfast holders, we anticipate solid long-term returns.

BSD Analysis:
Citadel's Stellantis investment represents a classic value opportunity in the automotive sector, acquired at an extraordinary valuation where €14bn free cash flow equaled the entire enterprise value. The company's financial fortress includes €34bn net cash against a €48bn market cap, providing exceptional downside protection and enabling a 10% dividend yield plus 5% share buybacks. Management's strategic response to industry transition challenges demonstrates operational excellence through platform consolidation to four main architectures, driving cost competitiveness against Chinese rivals. The flexible powertrain design accommodating electric, hybrid, ICE, and hydrogen technologies positions Stellantis to adapt rapidly to regulatory and market shifts without obsolescence risk. Despite anticipating near-term profitability pressure post-2023 peak, Citadel maintains conviction that intrinsic value exceeds three times the purchase price. The combination of exceptional balance sheet strength, strategic positioning for industry transformation, and compelling valuation creates an asymmetric risk-reward profile with substantial upside potential.

Pitch Summary:
The most significant change in the portfolio was the addition of Sumco Corp, a leading producer of semiconductor wafers based in Japan. Among the pure players, Sumco holds the largest market share globally of 25% for silicon wafer production, and even around 50% for high-end wafers. These high-end wafers are crucial for the manufacturing of logic processors (including AI processors) and high-speed memory chips. With the highest number of technology patents in the wafer industry, Sumco focuses on the high-end semiconductor market, providing it with an above average growth profile and lower cyclicality compared to its peers. Demand for Sumco's wafers is strong, with customers typically agreeing to 5-year purchase agreements that include annual price increases. Moreover, Sumco is well managed and has a solid balance sheet. Citadel acquired its position at a very attractive valuation, with a normalised free cash flow yield of 14%.

BSD Analysis:
Citadel initiated a position in Sumco Corp, recognizing the company's dominant market position in the semiconductor wafer industry with 25% global market share and 50% share in high-end wafers. The investment thesis centers on Sumco's technological moat, evidenced by the highest patent count in the industry, which enables focus on premium segments with superior growth and reduced cyclicality. The company benefits from strong demand visibility through 5-year customer contracts with built-in annual price escalations, providing revenue predictability. Management quality and balance sheet strength further support the investment case. At a 14% normalized free cash flow yield, Citadel secured the position at an attractive valuation, particularly compelling given the company's exposure to AI processor and high-speed memory chip manufacturing trends. The combination of market leadership, technological differentiation, and contractual revenue stability positions Sumco as a quality compounder in the semiconductor supply chain.

Pitch Summary:
Paywalled (The company’s restaurant concept has struggled, the company’s NFT project has sputtered, the core business has faced rougher regulation, and shares have fallen ~20%.)

BSD Analysis:
RCI operates adult entertainment clubs and Bombshells sports bars, using a roll-up strategy to expand its portfolio. The BSD short thesis highlights regulatory/licensing risk, reputational overhang, and capital allocation concerns. While the clubs generate high-margin cash flow, the model depends on acquiring venues in tightly regulated markets, where licenses are scarce and subject to political pressure. Cultural shifts and social stigma could erode long-term demand, while the Bombshells chain faces competitive restaurant dynamics. Bears also flag related-party transactions and governance as areas of concern. Investors should watch acquisition multiples, regulatory challenges, and balance sheet leverage.

Pitch Summary:
Despite a seemingly negative Q1 report, BQE Water's underlying performance is strong, with a significant increase in recurring revenue driven by new selenium projects in the US. The decline in Technical Services revenue is attributed to the early stages of projects, which are expected to recover. The company's operational leverage and strategic focus on high-value water treatment projects position it well for future growth.

BSD Analysis:
BQE Water's Q1 results highlight the company's strategic shift towards high-margin selenium treatment projects, which are expected to drive substantial revenue growth. The seasonal impact on Canadian operations is temporary, and the expansion in the US market mitigates this risk. The company's ability to command premium pricing for selenium treatment underscores its competitive advantage. Management's confidence in recovering Technical Services revenue and the growing contribution from Operational Services suggest a robust growth trajectory. The recent decline in accounts receivable and improved cash balance further strengthen the financial position, while the potential for 'company-maker' projects could significantly enhance shareholder value.

Pitch Summary:
We initiated a new position this past quarter in a small-cap U.K. listed company Kitwave Group. For those who are not yet familiar, Kitwave is a U.K.-based food distributor that delivers a full spectrum of food and beverage goods to over 42,000 food retail locations across the country, primarily to convenience stores and restaurants. Kitwave is one of the U.K.'s largest food distributors that specializes in the niche of food distribution specifically to "independent" shops, or mom and pop stores and small chains, within the convenience store and restaurant segments. Kitwave was founded in 1987 and over that time has grown into a £600+ million revenue business and the U.K.'s 15th-largest food distributor. There are a lot of elements that we like about Kitwave. To mention a few, the company possesses what we perceive as a structural competitive advantage over its peers in the form of scale economies shared thanks to its scale-based bargaining power advantage with suppliers. We also find that Kitwave is in the highly capable hands of its top management. Its CEO and CFO both have a strong 13-year track record at Kitwave of growing company profits, appear ambitious for the company's future, seem to live and breathe their business, and have significant skin in the game. In addition, we appreciate the largely recession-proof nature of the industry, which should allow Kitwave to deliver consistent profits throughout the economic cycle. Over the past seven years, Kitwave grew its EPS at a +22% CAGR. With a £10 billion fragmented TAM available, we see a clear path to Kitwave continuing to execute upon its roll-up strategy and growing its profits per share at a +10-20% CAGR over the medium-term. Shares are currently priced at a trailing P/E multiple of 13.5x, which we believe provides a sufficient margin of safety considering the company's durability of free cash flows and its expected future growth. This valuation also represents a material discount to industry peers, especially considering Kitwave's industry-leading growth and returns on capital. From today's prices, we underwrite a +15-20% CAGR on our investment, driven almost entirely by our expected growth in per-share profits, as well as the potential for upside in market valuation. We view our investment in Kitwave as carrying a low probability of permanent capital loss given our confidence in the durability of Kitwave's future free cash flows.

BSD Analysis:
The manager presents Kitwave as an attractive roll-up opportunity in the fragmented UK food distribution market, targeting independent retailers and convenience stores. The investment thesis centers on the company's structural competitive advantages through scale-based supplier bargaining power and its focus on the defensive independent retail niche. With £600+ million in revenue and 22% historical EPS CAGR over seven years, Kitwave has demonstrated consistent execution under experienced management with significant skin in the game. The £10 billion total addressable market provides ample runway for continued consolidation through the company's proven roll-up strategy. At 13.5x trailing P/E, the valuation appears compelling relative to industry peers, particularly given Kitwave's superior growth profile and returns on capital. The manager underwrites 15-20% annual returns driven primarily by earnings growth, with potential valuation multiple expansion providing additional upside. The defensive nature of food distribution to independent retailers should provide recession-resistant cash flows, reducing downside risk in the investment.

Pitch Summary:
As mentioned, shares of Duratec this year have declined by -25% through March 31, and by -30% year-to-date as of this writing. The large majority of this year's share price decline took place following the company's 1H FY24 results that were reported in late February. When our holdings incur significant share price declines, we like to try and understand as best as possible exactly why other investors are fearful at the moment. In that spirit, we spoke with local brokers, local investors, and management to understand the reasons behind the market's poor reaction to Duratec's results. It appeared to be because of Duratec's lower-than-expected order book figure, which was also reported alongside strong tender activity and strong MSA revenue, and because of a decrease in net working capital, which was due largely to one Department of Defense project that required Duratec to provide capital upfront before receiving the cash at project's end from a virtually risk-free counterparty. Then, as February turned into April, negative sentiment seemed to extend further with every week that went by without an update from the company announcing an upgrade to guidance, which many market participants have evidently become accustomed to over the past couple of years. Finally, last week, Duratec released an update re-affirming that its FY24 EBITDA is expected to fall within the company's previously guided range and implying EBITDA growth of +19-24% YoY. The company also announced an all-time high tender book value of $1.47 billion, or a +44% increase from its tender book figure just 3 months ago, which suggests further revenue and profit growth for FY25. Despite this most recent update, shares have responded largely flat, perhaps because a number of Duratec's large tender wins are likely to occur in 1H FY25 and will not fully reflect in the company's results until 2H FY25. If this all sounds like short-sighted thinking from the market, that is because it appears to be so, at least in our view anyway. We understand the market's view that the lighter-than-expected order book number will in turn result in lighter-than-expected 2H FY24 and 1H FY25 project revenue. However, where we believe the market's view is incomplete is that the order book is only one of four key variables when assessing Duratec's forward-looking revenues and profits. In order to form a complete view, one should also consider tender activity, MSA revenue and profit, and EBITDA contributions from subsidiaries DDR and RCC. Tender activity is important because of its conversion into the order book, which directly converts into revenue. Historically, Duratec has communicated that it wins roughly 1-in-3 to 1-in-4 of its tenders. Duratec also performs ECI work through MEnD Consulting for a greater percentage of its tenders today than it ever has, which results in higher win rates and conversions to order book. We therefore assign a 30% tender win rate. As evident in the above graph, considering tender activity is important when evaluating order book. Duratec's order book plus an assumed 30% win rate of its tenders book is currently at an all-time high. MSA revenue is also important to consider because it is not included in the order book and is a significant and growing component of the overall business. MSA revenues most recently comprised 24% of Duratec's 1H FY24 revenues. MSA gross profits comprise an even greater portion of Duratec's business given the majority of MSA business is derived from the mining and energy segments which carry gross margins of 22% and 35%, respectively, or greater than the company-wide gross margin of 16.2%. Lastly, profit contributions from DDR and RCC are significant, and we believe their impacts to total company profits in FY25 will be materially greater than in FY24. Following a drop-off in DDR results in FY23 and 1H FY24, Duratec has communicated that DDR's activity has picked up meaningfully and should deliver a strong FY25. RCC, DDR's recent acquisition, is also estimated by Duratec to contribute at least $5MM of EBITDA in FY25. RCC has benefitted greatly from its integration with DDR's Supply Nation accreditation to win projects exclusively designated for Australia's Indigenous-owned businesses. Altogether, our view for Duratec's results in FY25, and far beyond, remain positive. From a valuation perspective, at $1.06/share today, Duratec's shares trade at 11.7x our estimate of FY24 earnings ending June 30, 2024. Despite project award delays which have likely pushed out some revenues and profits by a number of months, we believe Duratec is in a position to grow FY25 earnings by +15% or more based on order book, tender activity, MSA activity, and DDR/RCC profit contributions. At today's valuation levels, it seems to us the key question looking ahead is whether Duratec is an ex-growth company or whether its future growth trajectory will look remotely like the past. Our conviction falls in the latter camp, for myriad reasons as we've discussed in previous communications. Though we don't expect Duratec to grow revenues at its historical 34% CAGR since its 2010 inception, and though we also don't expect Duratec's profits to grow in a straight line given the nature of its business, we believe there are many rights to win in large addressable markets from here that should result in Duratec delivering a double-digit average growth rate in profits for the foreseeable future. We view the recent share price decline as a classic case of the market taking a short-sighted view of the company's fundamentals, and remain confident in Duratec's future.

BSD Analysis:
The manager presents a compelling contrarian thesis on Duratec, arguing that the 25-30% share price decline represents a market overreaction to temporary headwinds. The fund's analysis goes beyond the headline order book weakness to examine four key revenue drivers: tender activity, MSA revenue, and contributions from subsidiaries DDR and RCC. With tender book value hitting an all-time high of $1.47 billion (+44% in three months) and management reaffirming 19-24% EBITDA growth guidance, the fundamental outlook appears robust. The manager highlights that MSA revenue (24% of sales) carries superior margins of 22-35% versus the company average of 16.2%, providing quality earnings growth. At 11.7x estimated FY24 earnings and trading at $1.06, the valuation appears attractive for a business with historical 34% revenue CAGR since 2010. The thesis centers on Duratec maintaining double-digit profit growth despite near-term project timing delays, supported by a large addressable market and strong competitive positioning. The manager's confidence stems from direct engagement with local brokers, investors, and management to understand the disconnect between fundamentals and market sentiment.

Pitch Summary:
Contrary to its claim, the website has only 50 visits per month; the company is operating a complex web of undisclosed related parties via shell companies; fake shell companies account for most of the revenue; accounting misclassification of costs;

BSD Analysis:
GigaCloud runs a B2B e-commerce platform for large-parcel goods like furniture and appliances. The BSD short thesis emphasizes thin disclosure, governance concerns, and heavy reliance on cross-border logistics. Revenue growth has been rapid since IPO, but critics question its sustainability and transparency, especially given China-linked corporate governance risks. Margin durability is uncertain given logistics intensity and competition from larger players like Alibaba or JD. Bears also flag risk of U.S.-China regulatory friction disrupting operations. Investors should focus on revenue quality, customer diversification, and audit/regulatory scrutiny.

Pitch Summary:
China Sanjiang Fine Chemicals. I encourage you to re-read the 2023 First Letter to Shareholders, where the rationale for investing in a bad business at a bad moment of the cycle was outlined. I did, to make sure that thesis creep did not take over: when the original thesis is adapted to new information, instead of being challenged by it. With the possible exception of the definition of "verge" - it was more than a year ago when I wrote that the company was "on the verge of a huge increase in earnings" -, things have been evolving reasonably in line with expectations. After more than 3 years of construction, to a total cost of multiple times its market cap, the new plant is finally up and running: 2H23 volumes were 60% higher than 1H23's, at much better margins - higher in fact than peers' like Braskem, Chandra Asri, Lotte Chemical, LyondellBasell EAI and SCGC, even in China's fiercer competitive environment. The sector is still in the doldrums, with plenty of players breaking even at best. However, there are signs that the supply and demand balance is improving. More and more, companies are being vocal about the confidence in the normalization of the cycle, and that after a transition of 12 to 18 months, industry margins should be far superior. Has the climbing out of the trough of the cycle started? Time will tell. The stock price reacted well to these developments: it was up 61% year-to-date, until the end of April. After all, the market should in theory be forward-looking. It is hardly a bull market, though: it is still 37% down from the end of 2021, at a time when the start up of the transformational new plant was more than a year away. Increased conviction might be taken not only from the upbeat tone in the Chairlady's statement in 2023 results, but most importantly from the aggressiveness that the controlling family is buying shares in the open market: it bought more than 40% of the total volume traded in the month of April - after the stock price went up 70% in March. As the saying goes, there are many reasons for insiders to sell, but only one reason to buy.

BSD Analysis:
The manager maintains conviction in this cyclical chemicals play despite acknowledging it as a "bad business at a bad moment." The investment thesis centers on a transformational new plant that cost multiple times the company's market cap and is now operational, driving 60% volume growth in 2H23 with superior margins versus global peers. The timing appears strategic as the chemical sector shows early signs of cycle normalization after an extended downturn, with industry participants expressing confidence in margin recovery over 12-18 months. Strong insider buying provides additional conviction, with the controlling family purchasing 40% of April trading volume even after significant price appreciation. Despite a 61% YTD gain, the stock remains 37% below 2021 levels, suggesting the market hasn't fully recognized the plant's transformational impact. The manager views this as a classic contrarian bet on cyclical recovery with substantial operational leverage.

Pitch Summary:
Tianjin Development Holdings: as you may recall, its most significant asset is a 16.5% stake in Otis China. Last February, Otis Worldwide presented its Investor Day, which has been happening every two years since it came back to the markets as a stand-alone company (it was part of a conglomerate, United Technologies, for decades). According to its CEO Judy Marks: "… I always repeat the most important metric to look at for Otis is how is the portfolio growing?". Portfolio consists of the amount of elevator units under maintenance service contracts. These are sticky, recurring, long-term, high-margin contracts: the soul of the business. The first time we invested in TianjinDev, Otis China's portfolio contained 210k units. At the end of 1Q24, it had grown to 400k units; more than 50% of Otis' global portfolio growth in this period came from China. With the upcoming decades-long modernization needs of elevators installed more than 15 years ago, that number is bound to keep growing as far as the eye can see. It is hard, and useless, to imagine how large it could grow to; after all, there are currently 9mm units installed in China, which means that Otis has a nimble 4% market share, in terms of units maintained. In the rest of the world, it holds a portfolio of 1.9mm out of an installed base of 11mm, or a 17% market share. Globally, almost 60% of Otis' revenue comes from services which, given its higher margins, makes its importance to profits overwhelming - close to 85%. In China, since the growth in urbanization is still in place, the new equipment segment is still relevant, even though growth lies in the higher margin service business. It is a much healthier growth path, with very little capex needs and much higher visibility. According to the CEO, "(...) in China, explicitly, we see it moving to becoming more of a mature market and reflecting that, especially in Service." Otis targets a global service portfolio of 2.8mm units in 2028, an increase of 500k units in 5 years. A significant portion of that is expected to come from China, whose portfolio should continue to grow at double-digit rates. While the outlook for construction is bleak, the most important part of the business should keep getting stronger. All that within a company whose net cash represents more than 2x (not a typo) its market cap, and other unrelated listed stakes, at market prices, are worth more than its market cap. The consolidated P/E multiple? Around 3x, with Otis China representing almost half of total profits. It requires leaps of imagination to lose money in this situation, on a permanent basis. But it is still possible, let us not be mistaken. It is easy to remain patient while holding a growing high-quality business.

BSD Analysis:
The manager presents a compelling value play centered on Tianjin Development's 16.5% stake in Otis China, which operates in the elevator maintenance business. The investment thesis hinges on Otis China's dramatic portfolio growth from 210k to 400k maintenance units, representing sticky, high-margin recurring revenue streams. With only 4% market share in China versus 17% globally, significant expansion potential exists as urbanization continues and older elevators require modernization. The service business generates 60% of revenue but 85% of profits globally, indicating exceptional margin quality. The valuation appears extraordinarily attractive at 3x consolidated P/E with net cash exceeding 2x market cap, creating substantial downside protection. The manager emphasizes the predictable, capital-light growth trajectory as China transitions to a mature elevator market focused on higher-margin services rather than new equipment sales.

Pitch Summary:
In our Q3 2023 commentary, we featured a section on our investment in Danaher entitled "Purity in the Crown Jewel of Bioprocessing." Specifically, we were speaking to Cytiva, Danaher's bioprocessing business formed by the merger of Pall Corp and GE's bioprocessing division. We will not repeat the features that attract us to bioprocessing in general, nor the elements of timeliness, though we will emphasize that our confidence in timeliness has actually increased since writing that piece. While Danaher has performed admirably ever since, its peer Sartorius, which was referenced by labeling bioprocessing "an oligopolistic market, with a small number of critical players and extremely high barriers to entry." Although Danaher owns the crown jewel of the industry, only Sartorious amongst these peers is what can be described as a "pure play." At Sartorius and its Sartorius Stedim (publicly listed in France as a stub company) subsidiary, bioprocessing is essentially the business. Sartorius boasts a comprehensive portfolio for bioprocessing, covering the upstream, downstream and media; however, its largest and most lucrative business is in the "upstream" flow. Upstream is where a small a cell line is taken, scaled from very small quantities to much larger ones and then harvested, before they are purified, separated and isolated into the "end product" downstream. Sartorius is a world leader in single-use bioreactors. These are smaller-scale bioreactors than the traditional steel ones that use replaceable plastic bags, within which the scaling takes place. Sartorius dominates single-use from the research phase through the commercial phase. For example, the AMBR is an industry-leading offering at the smaller end of the spectrum, which helps Sartorius gain critical share in the research stages and in Cell and Gene Therapy applications. This dominance in research phases helps secure spec'd in placements come time for commercialization, while the CGT placement supports the more demanding, but smaller scale needs of the next frontier of the biotech industry. Beyond the share capture of single-use, we want to highlight a few unique qualitative traits. We have spoken to numerous customers who have emphasized Sartorius' unique relationship with their customers. Several even went as far as using the word "partner" as a result of the level of service Sartorius' field team delivers. They have an "Innovative Differentiated Solutions" team who help customers from process design and equipment placement to clean room designs. These services are offered in pursuit of equipment sales and go above and beyond any peer in the industry who customers view favorably, though in a more mercenarial way. Moreover, even during the tight supply chain environment of COVID, Sartorius was viewed as the most reliably on-time and consistent solutions provider. While others in the industry have tried to copy Sartorius' service-first mentality, none have come close to delivering on it or fostering the kind of relationship that Sartorius has with their customers. We think this mentality, beyond the share gains of single-use generally, has resulted in impressive share gains over the past decade and provides the right to win further share (and grow faster than this fast-growth industry) over the next decade. Typically Sartorius trades at a decent premium to Danaher due to its pure play status in the highest growth area of the industry and its relatively higher growth rate given the share single use bioreactors are taking from stainless steel. Despite relative growth remaining favorable during the downturn and looking to continue so on the way out, Danaher's meaningful outperformance has created a unique valuation spread: We started buying Sartorius in the first quarter and will note that we purchased even more recently as Sartorius' valuation dropped beneath that of Danaher's (equal valuation would be 1.0x in the chart above, with any number above 1.0 representing Sartorius' boasting a higher valuation and less than 1.0x representing Danaher with a higher valuation). Sartorius trades at a mid-teens EBITDA multiple on our 2025 estimate and our now average price.

BSD Analysis:
RGA views Sartorius as the premier pure-play opportunity in bioprocessing, an oligopolistic industry with high barriers to entry. The fund emphasizes Sartorius's dominant position in single-use bioreactors, which are displacing traditional stainless steel systems across the upstream bioprocessing workflow. The company's AMBR platform leads in research applications and cell/gene therapy, creating a pathway to secure commercial placements through early-stage customer relationships. RGA highlights Sartorius's differentiated customer service model, with clients describing the relationship as a "partnership" due to their comprehensive support from process design to clean room implementation. This service-first approach has driven consistent market share gains and maintained reliable supply chain performance even during COVID disruptions. The investment thesis centers on a rare valuation opportunity, as Sartorius now trades below Danaher's multiple despite its pure-play premium and superior growth profile in the fastest-growing segment of bioprocessing.

Pitch Summary:
We first purchased shares of Maravai early in Q3 of 2023. Much like our experience with META in 2022, almost immediately following our first purchases, the stock's price tumbled. Given Maravai is a small cap, with a fairly illiquid float and volatile shares, we started our position on the smaller side. As the stock continued to stay weak, we used this as an opportunity to meaningfully increase our holding, much as we had done with META. Maravai first hit public markets in late 2020 on the heels of its phenomenal success in helping the Pfizer/BioNTech mRNA vaccine approach commercial launch. Maravai was formed as a holding company backed by private equity firm GTCR. Its two key subsidiaries are TriLink Biotechnologies and Cygnus Technologies, in the Nucleic Acid Production (NAP) and Biologics Safety Testing (BST) segments respectively. TriLink is the subsidiary whose capabilities formed a critical piece of the Pfizer/BioNTech vaccine, while Cygnus is one of the most important quality control companies for the manufacturing of biologics. Each is an incredibly unique asset. TriLink is the primary asset in the NAP segment, holding critical patents and capabilities for the research, development and commercialization of mRNA. CleanCap is the company's flagship product line that made the BioNTech vaccine possible. Prior to TriLink's development of CleanCap, researchers had to use a process called enzymatic capping. Enzymatic capping remains in use; however, it is far less efficacious than CleanCap and in terms of all-in cost it is significantly more expensive to deploy. Capping is critical for mRNA in both nature and in vaccine or therapeutic applications. The cap is the piece that protects the mRNA itself, helps signal the cells that it is ready to make a protein, and facilitates the mRNA's movement within the cell. CleanCap is a patented reagent for capping mRNA in a way that most closely mimics nature itself, allowing for a much simpler manufacturing process (one step vs multiple) and superior protein expression. Over time, via acquisition and development the company has broadened its capabilities around CleanCap to add a portfolio of enzymes and reagents, as well as a full-suite CDMO that can take a biotech customer from preclinical all the way through cGMP manufacturing. Maravai's new CEO, William "Trey" Martin (a hire from our portfolio holding Danaher), has been expanding the vision beyond mRNA applications itself to "programmable medicines," which includes CRISPR gene editing. NAP revenues soared with the rapid deployment of COVID vaccines around the world and then collapsed as the pandemic shifted farther into the rearview mirror. Importantly, the core business of TriLink continued to grow and the vaccine itself served as critical validation of what had formerly been largely theoretical and experimental applications. This opened the path to an accelerating rate of study and entry into clinical stage experimentation across the biotech industry. Although there is some negative public opinion about the COVID vaccines themselves, the science is now provably validated and applications for mRNA technology range well beyond COVID and then flu or RSV vaccines, to potential curative treatments for some of the most deadly forms of cancer. Cancer "vaccines" of this kind would be a gamechanger for humanity and an important propellant for Maravai's business prospects, considering they would use considerably more Maravai content per treatment than does the COVID vaccine. Cygnus, within Maravai, is a hidden gem. At peak COVID revenues it was a fairly insignificant portion of the business and to the average person looking at the stock, appeared a mere afterthought. With COVID vaccine-related revenues collapsing, its revenue contribution on a quarterly basis rose to around a quarter of the business towards the end of 2023 (and 22% for the full year). Yet, the focus remains far higher on TriLink due partly to its world-changing potential as well as its continued greater contribution to the business itself. We think Cygnus alone is the kind of asset that could conceivably fetch more than the company's entire market cap at the stock's lows in the past year. Cygnus is the industry-leading quality control testing kit that simplified and disrupted quality control for the development of monoclonal antibodies and is spec'd into all 21 of the FDA-approved CAR-T therapies. Cygnus led the BST segment to $64.2 million in sales in 2023, generating $46.9 million in EBITDA, a whopping 73% margin. Cygnus was built over years with little incremental capital or opex required and given this revenue scale, margin structure and dominant spec'd in position would generate considerable interest were it ever to hit the auction block. As for Maravai as a whole, the company's margin structure is perhaps the best we have ever seen. At peak COVID revenues, the company reported EBITDA margins upward of 70%. Despite losing about 2/3rds of their revenues from 2022 to 2023, the company still delivered 22.6% adjusted EBITDA margins. Maravai did this in an environment where COVID winners turned losers were fighting just for a chance to become profitable within the next few years. Meanwhile, towards the end of the year, the TriLink business stabilized and the path to regaining a robust growth trajectory and recouping lost margin emerged. At our average price between our Q4 2023 and Q1 2024 buys, we paid a low-teens multiple for what we think the company will deliver in 2026 EBITDA. Importantly, 2025 to 2026 are the years where the aforementioned progress of pushing mRNA treatments into the clinic should manifest in graduating more vaccines and therapies through the FDA process. This means that our low teens EBITDA multiple at prices paid should come with growth rates upwards of 20%. Although we never underwrite to multiple appreciation, we think this is a situation where it is far more likely to happen than not for two elite assets, with other-worldly margins wrapped in one company.

BSD Analysis:
RGA presents a compelling bull case for Maravai LifeSciences, viewing it as a unique play on the expanding mRNA therapeutics market through two distinct high-margin businesses. The fund emphasizes TriLink's proprietary CleanCap technology, which was critical to the Pfizer/BioNTech vaccine and offers superior efficacy and cost advantages over traditional enzymatic capping methods. With new leadership from Danaher expanding the vision to "programmable medicines" including CRISPR applications, the company is positioned for the next wave of mRNA innovation beyond COVID vaccines. The hidden gem Cygnus division generates exceptional 73% EBITDA margins and is spec'd into all FDA-approved CAR-T therapies, potentially worth more than the entire market cap alone. Despite revenue declining two-thirds from peak COVID levels, Maravai maintained 22.6% EBITDA margins while competitors struggled for profitability. RGA acquired shares at a low-teens 2026 EBITDA multiple, expecting 20%+ growth as mRNA treatments advance through clinical trials in 2025-2026.

Pitch Summary:
We believe this section is crucial for highlighting some of the key lessons we have learned since 2022. At the outset, let us clarify that Meta remains one of our three largest positions, fluctuating based on daily market movements. As you read this, it might in fact be our largest holding. In the closing remarks of our Q4 2022 commentary, we noted that we had "made…META substantially larger" during the quarter. Never did we expect the stock to generate such substantial returns in a short period of time. Between Mark Zuckerberg's "Year of Efficiency," a recovery in the digital ad market and an improving macro backdrop, META's key multiples recovered to a comfortable level within their long-term ranges: Although these multiples are now back to "normal" levels, they are hardly expensive for a company whose top line growth re-accelerated into the double digits, with operating leverage and despite ongoing heavy investments in the Reality Labs segment. These are the reasons why we continue to hold a large position in META. As for why we did some selling, we want to emphasize a few key points: 1. META had earned its way to a substantially outsized position and we felt it appropriate to pullback the sizing to more appropriate levels. 2. The pendulum between risk and reward swung back in such a way that the skew is no longer as favorable and the opportunity is far more balanced. Capital intensity is rising and growth will likely recede (albeit modestly) over the course of the year as comps get more challenging. 3. Opportunity cost–we are especially excited about certain opportunities and large positions become the most logical place to raise cash in order to reallocate into areas where we feel returns can be significantly better.

BSD Analysis:
RGA maintains a bullish stance on Meta despite trimming their position for portfolio management reasons. The fund highlights Meta's successful "Year of Efficiency" initiative, recovery in digital advertising markets, and strong operational leverage that drove double-digit revenue growth. While valuation multiples have normalized to historical ranges, the managers view them as reasonable given the company's growth acceleration and continued heavy investment in Reality Labs. The partial sale was driven by position sizing discipline rather than fundamental concerns, as Meta had grown to become an outsized holding. The fund acknowledges rising capital intensity and moderating growth comparisons ahead, but continues to view Meta as a core long-term holding with attractive fundamentals.

Pitch Summary:
The mine is grossly uneconomic (NPV of zero even at above average lithium prices); the mine is a clay deposit mine - no similar operational mine in the world; lots of technical challenges to mine at scale; underfunded and shareholders are 33% diluted; further dilution from GM investment;

BSD Analysis:
Lithium Americas is developing two major projects: Cauchari-Olaroz (Argentina) and Thacker Pass (U.S.). The BSD short thesis emphasizes execution risk on greenfield projects, environmental and permitting challenges, and lithium price volatility. Thacker Pass faces lawsuits and strong local opposition, creating uncertainty over timelines. Meanwhile, Argentina adds geopolitical risk, including capital controls and inflation. Bears argue consensus assumes sustained high lithium prices despite evidence of oversupply from Chinese converters and Australian mines. With heavy upfront capex and long lead times, funding needs could lead to dilution. Investors should track permitting outcomes, realized pricing vs. costs, and project financing.

Pitch Summary:
Aggressive sales recognition; upcoming shortage in cash flow; operating margins are inflated by 35%; accounting irregularities; the company is phased out of Home Depot, accounting 10% of its revenue; high-interest burden as EBITDA decreases; executives are leaving the company;

BSD Analysis:
Toro manufactures turf, landscaping, and irrigation equipment, as well as snow removal machinery. The BSD short thesis highlights exposure to cyclical housing/municipal capex, pandemic-era demand pull-forward, and intensifying competition. Dealer inventories are elevated, suggesting pressure on future sales. While Toro has brand strength and some pricing power, margins face headwinds from input costs and slowing demand. Bears argue that valuation embeds unrealistic assumptions of post-pandemic demand strength. Investors should track channel inventories, municipal budgets, and product mix shifts (residential vs. commercial).

Pitch Summary:
Misled investors about every critical aspect of its business; unreliable SEC disclosure; lots of red flags in financials; dishonest marketing tactics & non-cancellable plans; undisclosed 'brick-and-mortar' operation is used to inflate earnings; insiders cashing out (~$400 mil); Update 5/27/24 - Provided a twitter update. Update 6/6/24 - Twitter update. Update 6/21/24 - Twitter update.

BSD Analysis:
Oddity Tech is a digital-first beauty platform (brands include Il Makiage, SpoiledChild) that leverages AI for personalization. The BSD short thesis emphasizes rising customer acquisition costs, limited brand durability vs. entrenched beauty incumbents, and questions over scalability of its tech-driven differentiation. Bears argue the company is still fundamentally a consumer products firm, where valuations tied to “tech multiples” are misleading. Growth is highly dependent on marketing spend, and competitive entry barriers are lower than management suggests. Investors should track repeat purchase rates, CAC/LTV ratios, and gross margin trajectory.