Investment Pitches

Pitch Summary:
The company's main distribution arm is operating an aggressive multi-level marketing; up to 50% downside; potential allegations of a pyramid scheme; high sales pressure, cult-like behavior;

BSD Analysis:
Aegon is a multinational insurer with exposure to Europe and the U.S. The short thesis emphasizes earnings volatility from interest rate shifts, capital strain under Solvency II, and pressure on life insurance sales. Legacy books remain capital-intensive, while fee-based growth initiatives have yet to scale meaningfully. With restructuring ongoing, skeptics argue AEG lacks clear catalysts to re-rate and remains exposed to macro swings.

Pitch Summary:
No reported results on its original preclinical studies and altered the trials, which are not good models; the product is far from testing on humans; the founder has an alarming history of corruption; the management is full of insiders with no biotech backgrounds;

BSD Analysis:
Telomir Pharmaceuticals focuses on therapies tied to telomere biology. Bears highlight pre-clinical stage risk, unclear differentiation versus existing longevity biotech efforts, and ongoing cash burn. With no near-term revenue and heavy dependence on equity raises, the stock is highly speculative. Execution risk in translating early-stage science into clinical programs is substantial, and investor enthusiasm may fade without tangible milestones.

Pitch Summary:
Upcoming financial stress and liquidity issues; broken business model; overvalued investment fund with rapidly eroding NAV;

BSD Analysis:
Brookfield Infrastructure Partners owns global assets in transport, utilities, and telecom. The short thesis underscores high leverage, currency exposure, and reliance on continuous capital recycling. While assets are stable, distributions depend on aggressive growth underwriting and access to cheap financing. Rising interest rates and FX volatility could challenge cash flow coverage. Complexity in structure makes transparency a recurring concern.

Pitch Summary:
Further dividend cuts due to negative operating cash flow; accounting policy changes to mask operational difficulties; bad loan amount is accelerating; significant amount of potential loan loss; questionable acquisitions;

BSD Analysis:
Ready Capital focuses on commercial real estate and small business lending. The bear case stresses CRE credit risk, exposure to higher-for-longer rates, and dividend sustainability. With office and retail assets under pressure, credit losses could rise. Funding costs are climbing, squeezing net interest margins. While management highlights diversification, skeptics argue RC lacks scale compared to peers and remains highly exposed to refinancing stress.

Pitch Summary:
Pinduoduo has achieved a remarkable market capitalization of $100 billion in record time, with sales and profits doubling over the past two years. The company boasts strong financial metrics, including a return on invested capital (ROIC) of approximately 30% and an EBIT margin of around 30%. Despite its impressive growth and financial performance, Pinduoduo's valuation has significantly decreased, with its ex-cash GAAP PE dropping from over 20x last year to 6.5x today, and expected to fall further to 5x by 2026. This undervaluation is partly due to geopolitical concerns and its domestic roots, yet the company's international business, which has grown rapidly since its 2022 launch, presents significant upside potential. The international division is expected to become profitable within a year, offering a free option to investors at current valuations. Potential catalysts for re-rating include continued market share growth, improved financial disclosures, and potential buybacks or a spin-off of the international division.

BSD Analysis:
Pinduoduo's strategic positioning as a digital and AI-driven e-commerce platform allows it to capitalize on global market trends, particularly as it expands its international presence. The company's robust financial health, highlighted by a substantial net cash position and a commitment to growth, provides a solid foundation for future expansion. Despite current geopolitical risks, the low borrowing costs of its domestic government and ongoing stimulus efforts offer a supportive macroeconomic backdrop. The potential profitability of its international operations within the next year could significantly enhance its valuation, especially if the company improves transparency in financial disclosures. Additionally, aligning its capital allocation strategies with industry peers through buybacks or strategic spin-offs could unlock further shareholder value.

Pitch Summary:
Five Below Inc. has shown resilience and adaptability in a challenging retail environment, evidenced by its strong Q3 2024 performance with a 15% sales increase and the opening of 82 new stores. The company differentiates itself from traditional dollar stores by targeting a younger demographic with a 'treasure hunt' shopping experience, which is difficult for online retailers to replicate. Despite recent setbacks, including a CEO departure and operational challenges, Five Below's unique market position and strategic initiatives suggest potential for long-term growth.

BSD Analysis:
Five Below's strategic positioning as a low-cost, high-experience retailer sets it apart from competitors like Dollar General and Dollar Tree. Its focus on discretionary spending by younger consumers creates a niche that is less vulnerable to e-commerce competition, as its low-price model is not easily matched by online giants due to shipping costs. The company's financial health is robust, with a P/E ratio of 23.3x, aligning more closely with off-price retailers like TJ Maxx and Ross, which suggests a more favorable valuation compared to traditional dollar stores. The aggressive store expansion strategy, coupled with a strong ROIC, indicates management's confidence in capturing market share. However, potential risks include tariff impacts and a slowdown in discretionary spending, which could pressure margins. Nonetheless, Five Below's ability to adapt its product mix and maintain a strong brand appeal provides a solid foundation for future growth, especially as it moderates store expansion to focus on operational efficiency.

Pitch Summary:
Takigami Steel Construction is significantly undervalued, with its market capitalization far below the intrinsic value of its assets. The company owns a substantial portfolio of securities and real estate, which are worth approximately three times its current market cap. The presence of activist investors with significant stakes suggests potential for shareholder value unlocking through strategic initiatives.

BSD Analysis:
Takigami Steel Construction's market cap is ¥13.3 billion, yet its net current asset value, investment securities, and rental properties collectively amount to ¥40.6 billion, indicating a 67% discount. The company's investment portfolio includes liquid securities like Mitsubishi UFJ Financial Group and Mitsubishi Corporation stocks, alongside various bonds and funds. The real estate holdings, appraised at ¥13.6 billion, further bolster its asset base. The involvement of activist investors, such as Black Clover and Evergreen Investment, who collectively own 28.83% of shares, increases the likelihood of strategic moves to unlock value. The company's strategy of converting former factory sites into rental properties demonstrates a proactive approach to asset management. However, the stock's illiquidity and its reliance on the Japanese equity market pose risks. The recent sale of shares by the founding family to Evergreen at a premium suggests potential shifts in governance or strategy, which could catalyze further value realization.

Pitch Summary:
Two failed blows that were not disclosed; a highly levered lead generator; potential litigation damage that could be equal to the total equity; the business will be hurt significantly by FCC rule change; highly risky industry;

BSD Analysis:
LendingTree operates an online loan marketplace. Shorts highlight cyclical sensitivity to mortgage origination, rising customer acquisition costs, and intensifying competition from banks and fintechs. Revenue mix shifts away from mortgages haven’t fully offset cyclicality. With profitability under pressure and marketing spend elevated, bears see structural downside if housing markets remain weak.

Pitch Summary:
Paywalled (The company has virtually no revenue and the stock is up ~450% this year with a lofty $10 million average daily trading volume. The Bear Cave believes POET’s rise is based more on hype than substance.);

BSD Analysis:
POET Technologies develops photonic integrated circuits for optical communications. The short thesis emphasizes commercialization risk, limited scale versus larger semiconductor players, and recurring capital needs. While its optical interposer technology is promising, adoption remains unproven and timelines uncertain. Bears argue the firm is more dependent on raising capital than delivering sustainable revenues.

Pitch Summary:
SUTL Enterprise is a compelling investment due to its dominant position in the high-end marina industry, particularly through its One°15 Marina on Sentosa Island. The company trades at an attractive 8x P/E ratio, with a significant portion of its market cap covered by net cash, offering a 7% dividend yield. The limited supply of suitable marina locations and regulatory constraints provide strong pricing power, while the growing number of ultra-high-net-worth individuals in Asia supports demand. Despite potential risks related to leasehold renewal and capital allocation, the current valuation provides a margin of safety, with investors not paying for the high-quality operating business.

BSD Analysis:
SUTL Enterprise's One°15 Marina benefits from a quasi-monopoly position due to the scarcity of suitable marina locations and regulatory hurdles in Singapore. The company's ability to consistently raise fees by 7-10% annually without impacting demand underscores its pricing power. The luxury yacht market's growth, driven by a 29% increase in superyachts over five years, further supports revenue expansion. Despite concerns about the leasehold expiring in 2034, the likelihood of renewal is high given the marina's global reputation and the government's preference for local operators. Additionally, management's recent shift towards shareholder-friendly capital allocation, including buybacks and increased dividends, reduces the risk of value-destructive acquisitions. Overall, the stock's low valuation, combined with its cash-rich balance sheet, positions it as an attractive investment with limited downside risk and potential for significant upside if growth initiatives succeed or capital returns increase.

Pitch Summary:
DOE loan, the only financial lifeline, is at risk due to false data; liquidity problems; stagnant expansion; major roadblocks to getting the loan approved; consistently overpromised; could be bankrupt in case the loan is not approved;

BSD Analysis:
Plug Power is a fuel cell and hydrogen solutions provider. Bears stress persistent cash burn, reliance on subsidies, and slow commercialization of the hydrogen economy. Despite partnerships, execution delays and margin pressures have led to repeated capital raises. Skeptics argue the business model depends more on external funding than proven economics, leaving investors exposed to dilution and policy shifts.

Pitch Summary:
Recently announced merger deal only enriches insiders; based on the guidance, only 3% of the robots were deployed; the largest investor is using competitors' robots as they are 90% cheap; failed partnership;

BSD Analysis:
ServiceMaster provides residential and commercial cleaning/restoration services. The short thesis points to cyclical demand, high labor costs, and competition from regional operators. Growth has relied heavily on franchising, but franchisee economics are pressured by wage inflation and customer churn. Limited differentiation makes pricing power weak, and valuation risk rises if housing activity slows further.

Pitch Summary:
Taboola is an undervalued player in the performance advertising sector, with a market cap over $1 billion but lacking significant sell-side coverage. The company has demonstrated strong financial metrics, including a 17.5% historic net revenue CAGR and a sustainable 20% growth guidance. Recent partnerships with Apple and Yahoo have reinvigorated growth, with net revenue growth accelerating over 30% this year. Taboola's operational leverage has led to a doubling of EBITDA and FCF, and the company is actively engaging in buybacks. The stock trades at a low FCF multiple, offering significant upside potential if the market recognizes its growth trajectory.

BSD Analysis:
Taboola shares attributes with successful peers like Applovin and The Trade Desk, such as being founder-led and capital-light, with AI-driven growth. Despite a lower top-line growth trajectory, Taboola's margin expansion and accretive buybacks position it for a faster FCF/share CAGR of 40% from 2025 to 2027. The company's valuation is depressed, trading at a single-digit FCF multiple, which could lead to substantial re-rating potential. Risks include the dynamic nature of the adtech industry, potential integration challenges with Yahoo, and regulatory hurdles for buybacks. An upcoming investor day in March 2025 could serve as a catalyst for re-rating.

Pitch Summary:
Looking ahead, 2025's gains will likely come from companies with qualities akin to Wise. This quality global winner continues to exceed expectations. Most recently, it added Morgan Stanley as an FX client, just months after Standard Chartered came aboard. This move to add wholesale volume at scale to a traditionally retail-only business is hugely impressive and three years ahead of our expectations. To put this into perspective, expected catalyst milestones typically only move by a few months. Accordingly, we are comfortable that Wise is now our largest position. We know the stock is prone to significant pullbacks, as it is hard for analysts to model costs correctly. So, it will be a difficult one to ride over the coming years. Given the balance of the rest of the portfolio, we are prepared for this. The biggest risk for the FX industry is the emergence of a global currency. That's at least 100 years away, so put that in the thought bin. Wise's biggest risk today is its peers. More precisely, how its competitors react to the prisoner's dilemma. If they all start adopting the same winning business model as Wise, then its returns will collapse. As it stands the incumbent FX price gougers are making too much money for little effort to change their practices. The other FX start-ups compete through service and have not focused on establishing the same low-cost infrastructure as Wise has. Hence, they cannot compete on price. Naturally, the competitive dynamics will evolve. We are closely watching them to try and disprove our investment thesis.

BSD Analysis:
Kernow Asset Management maintains a strong bullish stance on Wise, making it their largest position at 10.9% of NAV. The manager highlights Wise's exceptional execution in expanding beyond retail to wholesale FX services, securing major institutional clients like Morgan Stanley and Standard Chartered three years ahead of expectations. This strategic pivot demonstrates the company's ability to scale its low-cost infrastructure advantage into higher-volume, institutional markets. The manager acknowledges key risks including the stock's volatility due to analyst difficulty in modeling costs and potential competitive threats from incumbents adopting similar business models. However, they view current competitive dynamics as favorable, with traditional FX providers reluctant to cannibalize high-margin businesses and fintech competitors lacking Wise's cost infrastructure. The thesis centers on Wise's sustainable competitive moat through its low-cost payment rails and expanding market opportunity in both retail and institutional segments.

Pitch Summary:
The real estate company Intea refused to follow the PR consultants' playbook during the IPO process. Instead of showing up everywhere to tell us all about how great they are, about its rosy outlook and tempting financial targets, they chose to keep a low profile with few media appearances. After spending the last 15 years at Sweden's business daily Dagens Industri, covering numerous IPOs, there is one conclusion: like with any pushy salesperson, it's not the ones most eager to see their names in print that represent the best business opportunities. And it's always better to let the numbers do the talking, rather than talking about numbers that never materialize. Intea kept a low profile because they could. Instead of squeezing the last penny out of the most price-insensitive investors (looking at you AMF), the owners accepted a somewhat lower price to smoothly inject 2 billion SEK of new equity into the business. The capital will generate more than enough to offset the dilution. Intea's portfolio consists of high-quality specialized properties, primarily leased to public tenants on long-term leases. These include police stations, college facilities, and prisons. The operational risk is as low as it gets, with low vacancy rates and longstanding, stable counterparties. So far, it sounds like a reasonable defensive option in a sector where office owners are struggling due to both a weak economic cycle and structural factors. Meanwhile, perceived low-risk apartment companies don't generate enough cash flow to impress anyone with their low-yielding asset base. Stable cash flow isn't much fun if it's stable at a low level. Intea offers higher yields than the office segment, but without the headwinds. And it's more than just a reasonable defensive option due to its high project activity, with 3.7 billion SEK in ongoing developments. This gives our company a clear growth trajectory, with the project developments serving as the value driver. Based on company guidance, the 2 billion SEK will be deployed at a yield on cost of about 6.5 percent, in a business that values its properties at 5.2 percent. That gap translates into profits. And there is more to come. The Swedish Prison and Probation Service expects to increase the number of places in detention centers and prisons from 9000 in 2024 to 27,000 by 2033. "Such rapid and intense expansion will be challenging," as the Swedish Prison and Probation Service states in its capacity report. State-owned Specialfastigheter is the number one player when it comes to prisons, and apart from Intea, Erik Selin's Skandrenting is the only private prison owner. For property owners in general, the glory days of the sub-zero interest rate era are gone. The Swedish 10-year yield is now a tad higher than when the Riksbank started lowering interest rates back in May. The US 10-year yield is up close to 100 basis points since the Fed's first cut in September. This means you shouldn't expect yield compression to do the trick - real estate companies must take the value creation into their own hands. Just as it should be. Over the coming three years, Intea will be among the few listed Swedish real estate companies posting double-digit compound annual growth rates in both NAV and cash earnings, adjusted for dividends. IPOs are tightly managed spectacles, but despite the highly orchestrated nature of these events, there hasn't been much daylight for those who subscribed to the previous two real estate IPOs. Sveafastigheter, SBB's rental apartment business, has yet to close above the issue price and is down 9 percent to date. Prisma Properties, a company with a focus on discount retailers and fast-food restaurants, stayed afloat on its first day in June but is down 12 percent since then. After two broken IPOs in the sector, the investment banks got a happy ending. Intea has gained a healthy, but not overwhelming, 10 percent since its IPO in mid-December. The shares still trade with a discount to NAV and an implicit yield of 5,3 percent based on next year's numbers. Both the CEO and CFO have bought more shares after the IPO. They know that Intea's growth trajectory relative to its price bodes well relative to the sector.

BSD Analysis:
Protean invested in Intea's IPO, attracted by the company's low-key approach and focus on specialized government properties with long-term leases to stable public sector tenants. The manager appreciates Intea's defensive characteristics, including low vacancy rates and stable counterparties like police stations, colleges, and prisons, while offering higher yields than struggling office properties. The investment thesis centers on significant growth potential, with 3.7 billion SEK in ongoing developments and the ability to deploy 2 billion SEK in new capital at a 6.5% yield on cost versus 5.2% property valuations. A major catalyst is Sweden's prison expansion plans, targeting an increase from 9,000 to 27,000 detention places by 2033, with limited private competition. Unlike recent failed real estate IPOs, Intea trades at a discount to NAV with a 5.3% yield, and management's post-IPO share purchases demonstrate confidence in the growth trajectory.

Pitch Summary:
December was undoubtedly the much awaited read out of Novo Nordisk's phase III-study on Cagrisema. If we printed out and laid all the emails and research reports generated by the investment banks side by side, they would easily reach across the English Channel. When markets are navel gazing to this extent, and positioning is extended to the Nth degree thanks to Novo being a multi-year winner, normal rules don't apply. Our gut feeling going into the event was simply that it was not worth playing. We are not in the business of trying to outguess those with the most intimate knowledge of trial designs, biological mechanisms and statistical analysis. Hence, we decided to sit out the read-out. Part luck, part experience meant we avoided the 20% drop in the biggest stock in Scandinavia in December. It might look myopic and like an overreaction for Novo to drop 20% on what looks like a slight miss to expectations in one study but remember that pharma stocks trade differently than others. They are priced on growth potential 5+ years out in the future, as development times are long and visibility is reasonable. Therefore, Novo's flagship next-generation product not exceeding its closest competitor is a big event. Naturally, there are tons of details to be debated. Was the study design flawed? Why didn't more than 57% of participants proceed to maximum dosage? Would the results look different (better) if more had done so? Is this study really that important? Etc etc. We are still enamored by Novo's valuation and cash-flows, and history of innovation and execution combined with shareholder-friendliness in the form of buybacks and dividends. We have actively traded the stock in this volatility and considering it was almost -15% on the year and -40% from the intra-year highs, we are ok with "only" ending up losing a net 0.5% on the stock for the full year.

BSD Analysis:
Protean took a cautious approach to Novo Nordisk's highly anticipated Cagrisema Phase III trial readout, choosing to sit out the event due to excessive market positioning and speculation. The manager avoided the subsequent 20% decline following disappointing trial results, where the next-generation obesity drug failed to significantly outperform competitors. While acknowledging the stock's 20% drop may appear to be an overreaction, the manager recognizes that pharmaceutical stocks trade on long-term growth potential rather than current fundamentals. Despite the setback, Protean remains attracted to Novo's attractive valuation, strong cash flows, innovation track record, and shareholder-friendly capital allocation through buybacks and dividends. The fund actively traded around the volatility and limited losses to just 0.5% for the full year despite the stock's significant decline from highs.