Investment Pitches

Pitch Summary:
Olvi Oyj (OLVAS.HE): Founded in 1878, this Finnish beverage company specializes in the production and distribution of both alcoholic and non-alcoholic beverages throughout Finland and the Baltic countries. Currently, Olvi is trading at attractive multiples, adversely affected by the ongoing challenges arising from the Russia-Ukraine conflict, which led to a stock decline of over 40% at the outset of the war. Nonetheless, Olvi boasts a strong return on invested capital (ROIC) exceeding 15% and maintains a solid net cash position, reflecting its robust financial health.

BSD Analysis:
The manager identifies Olvi as an attractive opportunity created by geopolitical disruption rather than fundamental deterioration. The Finnish beverage company has been unfairly punished by the Russia-Ukraine conflict, declining over 40% despite maintaining strong operational metrics. With ROIC exceeding 15% and a net cash position, Olvi demonstrates robust financial health and capital efficiency. The company's 146-year operating history and geographic focus on Finland and the Baltics provide defensive characteristics. The manager appears to be capitalizing on market overreaction to geopolitical events, buying a quality business at depressed valuations. The strong balance sheet and consistent profitability suggest the company can weather current headwinds and benefit from eventual normalization.

Pitch Summary:
Orsero S.p.A. (ORS): This Italian small-cap company, with a market capitalization of €225 million, is controlled by Racaella Orsero (~33%). The company demonstrates very strong financial indicators and is currently undervalued, trading at a Price-to-Book (P/B) ratio of 0.84. This implies we are paying €0.84 for every €1 of liquidation value. Additionally, its Price-to-Earnings (P/E) ratio is 6x, significantly below the sector average of 16x. Utilizing a straightforward formula referenced by Warren Buffett, which multiplies the P/B ratio by the P/E ratio, we arrive at a result of 5.04—well below the threshold of 20, indicating potential undervaluation. A comprehensive valuation, based on discounted cash flow and multiple analysis, points to a target price of €29.34 per share, well above its current €12.54 level. Adjusted for a margin of error, the target is €26.40, signalling strong upside potential. After months of comprehensive analysis, I believe Orsero represents a compelling long-term investment opportunity, despite potential liquidity constraints due to its smaller size.

BSD Analysis:
The manager presents a compelling value investment case for Orsero, an Italian fresh produce distributor trading at deeply discounted multiples. With a P/B ratio of 0.84 and P/E of 6x versus sector average of 16x, the stock appears significantly undervalued by traditional metrics. The manager's application of Buffett's P/B × P/E formula yielding 5.04 (well below the 20 threshold) reinforces the undervaluation thesis. Strong insider ownership at 33% by Raffaella Orsero demonstrates management alignment with shareholders. The DCF-based target price of €29.34 versus current €12.54 implies substantial upside potential of over 130%. However, the manager acknowledges liquidity constraints typical of small-cap European stocks. The investment appears to fit the fund's value-oriented approach of buying quality businesses at discounted prices.

Pitch Summary:
SF REIT is positioned as a high-yielding bond proxy with a strong dividend yield of approximately 10%. The REIT benefits from stable cash flows, a high occupancy rate of 98%, and a strategic portfolio of logistics properties. The Hong Kong warehouse, which contributes significantly to net property income, is particularly valuable. Despite concerns about the broader Chinese real estate market, SF REIT's focus on logistics and its backing by SF Express provide a solid foundation for future growth.

BSD Analysis:
SF REIT's valuation appears attractive given its yield spread over the 10-year treasury rate, positioning it as a compelling income-generating asset. The REIT's portfolio is strategically located, with the Hong Kong warehouse being a key asset due to its proximity to major logistics hubs. While the mainland Chinese properties face potential rental reversions due to market oversupply, the REIT's financial structure, including its hedged gearing and potential benefits from future interest rate cuts, provides a buffer against these risks. The management's decision to decline overpriced acquisitions from SF Holdings and the potential for further asset acquisitions from its parent company suggest prudent governance. Additionally, SF Holdings' secondary listing plans indicate a focus on raising capital through equity markets rather than burdening SF REIT with overvalued asset purchases, which is a positive sign for minority shareholders.

Pitch Summary:
Recently on our website, I shared a public investment case for Western Union. You can read it here: https://frankfunds.com/western-union-investment-case/. The research largely talks about the inflection point in Western Union's business, but I think it would be helpful to show how stock picking adds value to portfolios. Below is a comparison between Western Union and Apple. Though the businesses have little in common, there are shareholder friendliness traits comparable across every publicly traded stock. Apple is about 6% of the S&P 500 and representative of the valuation in the index. Western Union is a 5% position for the Frank Value Fund and representative of our catalyst-focused strategy. Importantly, Western Union is 0% of the S&P 500 and 0.1% of the S&P 400 Mid Cap, so the opportunity is unavailable for indexers. I believe building a concentrated portfolio in extremely shareholder friendly opportunities like Western Union both lowers volatility and increases returns. These types of positions have driven us to the top of our category in the three-year period since implementation. Two vital quantitative components make Western Union an attractive opportunity: low valuation and shareholder friendliness. A business could be piling up cash, but if management is going to reward themselves through excessive stock-based compensation, or if they attempt to build an empire through overpriced acquisitions, this cash has little effect on shareholders and the stock price. Instead, Western Union's management recognizes that their stock price is far too low, and the best opportunity for everyone is to repurchase shares. In fact, repurchases have a dual bonus: reducing the share count and removing some of the 8% dividend obligation. Since Western Union's corporate debt trades at a yield to maturity below 6%, it makes more sense to repurchase shares with an 8% dividend cost than to buy back debt at 6%.

BSD Analysis:
The manager presents a compelling value thesis for Western Union centered on exceptional shareholder returns and attractive valuation metrics. With a 7.9% dividend yield and 7.5% annual repurchase rate, Western Union delivers 15.4% total annual returns to shareholders, dramatically outpacing Apple's 1.1% despite both companies generating strong free cash flow. The manager emphasizes Western Union's management discipline in recognizing the stock's undervaluation and prioritizing share buybacks over empire-building acquisitions. The company's 8.1% free cash flow yield to enterprise value provides sustainable funding for these shareholder-friendly policies. Western Union represents a 5% position in the fund and exemplifies the manager's catalyst-focused strategy targeting overlooked opportunities unavailable to index investors. The manager views this as an inflection point opportunity with recession-resistant characteristics. The dual benefit of share repurchases reducing both share count and dividend obligations creates a compounding effect for remaining shareholders.

Pitch Summary:
Paramount is an ENP (exploration and production) in the energy space. It has net cash and securities of $630MM (20% of the mkt cap). Management is fully aligned with us as they own 46% of the Company. 2024 FCF will likely be ~3% yield which at its face doesn't scream cheap. Management is reinvesting in near-term attractive growth opportunities. Absent this reinvestment, Paramount would generate a 12-14% unlevered free cash flow yield. This is a business that should benefit if there is overall weakness in the energy sector as they have an abundance of cash/securities on hand and cash-generating assets.

BSD Analysis:
The manager's thesis on Paramount Resources centers on exceptional balance sheet strength and aligned management in a cyclical energy sector. With $630 million in net cash and securities representing 20% of market capitalization, Paramount offers significant downside protection and optionality during energy sector volatility. Management alignment is exceptional with 46% ownership, ensuring interests are closely aligned with shareholders. While the current 3% free cash flow yield appears modest, the manager highlights that absent growth reinvestment, the company would generate a compelling 12-14% unlevered FCF yield, indicating substantial underlying cash generation capability. The investment thesis anticipates potential energy sector weakness, where Paramount's fortress balance sheet and cash-generating assets would provide competitive advantages for opportunistic investments or acquisitions. The combination of strong financial position, aligned management, and defensive characteristics in a cyclical sector creates an asymmetric risk-reward profile. Management's reinvestment in attractive near-term growth opportunities suggests confidence in returns while maintaining financial flexibility.

Pitch Summary:
BLDR is a manufacturer and supplier of building materials with a focus on residential construction. Historically this business was cyclical with minimal pricing power as the primary products sold were lumber and other non-value-add housing materials. Since the GFC, BLDR has focused on growing their value-add business that is now 50%+ of the topline. The company has modest leverage and has been using their abundant free-cash-flow to buy in over 41% of the stock in the last ~3 years. While mortgage rates are higher, they are not unusual versus history. The low rates of the last 5-10 years are the outlier. We have a structural shortage of housing in the USA. With existing homeowners locked into low-rate mortgages, the aspiring homeowner may increasingly need to find a home from a homebuilder. Normalized free cash flow per share looks to be in the range of $13-$16 per year. Margins are structurally higher given their increased shift into value-add products. At quarter end pricing of ~$194 that implies a free-cash-flow yield of 7-8% which does not reflect the long-term housing needs or their pricing power.

BSD Analysis:
The manager presents a compelling transformation story for Builders FirstSource, highlighting the company's evolution from a cyclical, low-margin lumber supplier to a value-added building products manufacturer with enhanced pricing power. The key thesis centers on BLDR's strategic shift since the GFC, with value-add products now comprising over 50% of revenue, resulting in structurally higher margins and reduced cyclicality. The company's capital allocation has been exemplary, repurchasing over 41% of shares in three years using abundant free cash flow while maintaining modest leverage. The manager identifies a structural housing shortage in the U.S., with existing homeowners locked into low mortgage rates, forcing new buyers toward homebuilders and benefiting BLDR's customer base. At $194 per share, the stock trades at a 7-8% free cash flow yield based on normalized FCF of $13-16 per share, which the manager views as undervaluing the company's improved business model and long-term housing demand tailwinds. The combination of business transformation, strong capital allocation, and structural housing dynamics creates an attractive risk-adjusted opportunity.

Pitch Summary:
ARCH Resources (ARCH) / CONSOL Energy (CEIX)/ Warrior Met Coal (HCC) ARCH and Warrior are 2 of the leading U.S. producers of high-quality metallurgical coal ("met coal"). This is the kind of coal used for steelmaking. ARCH also has a small thermal coal business that contributes ~20% of their earnings. CONSOL is a leading producer of thermal coal. During the 3rd quarter ARCH and CONSOL announced a merger which should close in the first half of 2025. I am generally constructive on the merger as the Companies should be able to realize some modest synergies. My sense is more mergers will be coming to this sector given the depressed prices of the securities. Met coal demand is projected to climb for the next 25 years, driven by the economic development and urbanization in India and the rest of Southeast Asia. ~60% of the world's population lives in Asia, where met coal demand is centered and where local sources are limited. Over the coming years demand will likely outstrip supply, leading to higher prices. There has been a severe lack of investment in met coal due to ESG concerns with investment peaking in 2014.

BSD Analysis:
The manager's investment thesis on Warrior Met Coal mirrors the broader metallurgical coal opportunity, positioning the company as one of the two leading U.S. producers of high-quality met coal alongside ARCH Resources. The investment case rests on a compelling 25-year demand growth outlook driven by Asian urbanization and economic development, particularly in India and Southeast Asia where local met coal sources are limited. Warrior benefits from the same structural supply constraints affecting the sector, with investment peaking in 2014 due to ESG concerns creating a favorable supply-demand imbalance. As a pure-play met coal producer, Warrior is well-positioned to capitalize on the anticipated demand growth from steelmaking in rapidly developing Asian markets. The manager expects sector consolidation given depressed valuations, which could benefit Warrior either as a consolidator or potential target. The combination of rising Asian demand, supply constraints from underinvestment, and potential consolidation creates multiple value drivers for this leading met coal producer.

Pitch Summary:
ARCH Resources (ARCH) / CONSOL Energy (CEIX)/ Warrior Met Coal (HCC) ARCH and Warrior are 2 of the leading U.S. producers of high-quality metallurgical coal ("met coal"). This is the kind of coal used for steelmaking. ARCH also has a small thermal coal business that contributes ~20% of their earnings. CONSOL is a leading producer of thermal coal. During the 3rd quarter ARCH and CONSOL announced a merger which should close in the first half of 2025. I am generally constructive on the merger as the Companies should be able to realize some modest synergies. My sense is more mergers will be coming to this sector given the depressed prices of the securities. Met coal demand is projected to climb for the next 25 years, driven by the economic development and urbanization in India and the rest of Southeast Asia. ~60% of the world's population lives in Asia, where met coal demand is centered and where local sources are limited. Over the coming years demand will likely outstrip supply, leading to higher prices. There has been a severe lack of investment in met coal due to ESG concerns with investment peaking in 2014.

BSD Analysis:
The manager's thesis on CONSOL Energy is intertwined with the broader coal sector consolidation story, highlighted by the announced merger with ARCH Resources expected to close in H1 2025. As a leading thermal coal producer, CONSOL benefits from the same structural supply constraints affecting the broader coal industry, where investment peaked in 2014 due to ESG concerns. The manager views the merger constructively, expecting modest synergies and anticipating further sector consolidation given depressed security prices. While CONSOL focuses on thermal rather than metallurgical coal, it still benefits from the supply-demand imbalance and underinvestment trends. The merger creates a more diversified coal platform combining CONSOL's thermal coal expertise with ARCH's met coal leadership. The manager's positive stance reflects confidence in both the strategic rationale of the combination and the broader sector dynamics favoring existing producers. The depressed valuations across coal securities suggest potential for multiple expansion as consolidation proceeds.

Pitch Summary:
ARCH Resources (ARCH) / CONSOL Energy (CEIX)/ Warrior Met Coal (HCC) ARCH and Warrior are 2 of the leading U.S. producers of high-quality metallurgical coal ("met coal"). This is the kind of coal used for steelmaking. ARCH also has a small thermal coal business that contributes ~20% of their earnings. CONSOL is a leading producer of thermal coal. During the 3rd quarter ARCH and CONSOL announced a merger which should close in the first half of 2025. I am generally constructive on the merger as the Companies should be able to realize some modest synergies. My sense is more mergers will be coming to this sector given the depressed prices of the securities. Met coal demand is projected to climb for the next 25 years, driven by the economic development and urbanization in India and the rest of Southeast Asia. ~60% of the world's population lives in Asia, where met coal demand is centered and where local sources are limited. Over the coming years demand will likely outstrip supply, leading to higher prices. There has been a severe lack of investment in met coal due to ESG concerns with investment peaking in 2014.

BSD Analysis:
The manager presents a compelling long-term thesis on ARCH Resources based on structural supply-demand dynamics in metallurgical coal. The investment case centers on rising Asian demand driven by urbanization and economic development, particularly in India and Southeast Asia, where 60% of global population resides but local met coal sources are limited. The manager views the pending ARCH-CONSOL merger positively, expecting modest synergies and anticipating further sector consolidation given depressed valuations. A critical supply constraint exists due to underinvestment since 2014, largely attributed to ESG concerns, creating a favorable setup for existing producers. The thesis suggests demand will outstrip supply over the coming years, driving higher prices for this essential steelmaking input. The manager's confidence in sector consolidation and long-term demand growth positions ARCH as a beneficiary of both operational improvements and commodity price appreciation.

Pitch Summary:
In the "oddball" bucket, we bought shares in ECC Capital (ECRO) during Q3. This funny little shell acquired a coal mine in Wyoming back in April, which upon further digging revealed an operation that historically has generated healthy margins from sales to a local power plant. Based on public data, we think this mine might still be generating close to $20m of annual cash flow, despite ECRO trading below a $10m market cap. The local power plant has announced plans to convert from coal to natural gas by 2026, which introduces terminal value questions for the coal mine. However, there are two local initiatives, a cosmetics plant and an ammonia plant, which could provide ongoing offtake to protect the mining jobs and maintain margins. Given the valuation, we're willing to come along for the ride. An ownership limitation exists preventing us from going over 2.5% ownership, or we would have invested more.

BSD Analysis:
Kingdom Capital has identified an unusual special situation in ECC Capital, a shell company that acquired a Wyoming coal mine with compelling valuation metrics. The investment represents a classic deep value opportunity, with the manager estimating approximately $20 million in annual cash flow from a company trading below a $10 million market cap, suggesting a potential 2x price-to-cash-flow multiple. The coal mine historically generated healthy margins through sales to a local power plant, providing a stable cash flow base. While the power plant's planned conversion to natural gas by 2026 creates terminal value concerns, potential alternative offtake agreements with local cosmetics and ammonia plants could extend the mine's operational life. The manager's willingness to invest more capital, constrained only by ownership limitations at 2.5%, demonstrates strong conviction in the risk-reward profile. This "oddball" investment exemplifies the fund's strategy of finding overlooked opportunities in small, illiquid situations where fundamental value significantly exceeds market pricing. The combination of immediate cash flow generation and potential alternative revenue streams creates an asymmetric investment opportunity.

Pitch Summary:
We established a new position in United Natural Foods (UNFI) during Q3. This stock is new to the fund; however, it was a substantial winner for me in 2019/2020 as the demand for grocery into Covid shutdowns significantly accelerated their earnings. I have watched this stock waiting for a good re-entry, and I believe they are turning a corner after several quarters of disappointing results. The company validated our trust on the first day of Q4, posting improved margins, rebounding sales volumes, and providing a roadmap to further bolster their balance sheet. We particularly like the new CFO and his focus on cash flow generation, a theme we expect to play out in the coming quarters.

BSD Analysis:
Kingdom Capital has re-entered United Natural Foods after previously achieving substantial gains during the 2019-2020 period when COVID-driven grocery demand accelerated earnings. The manager demonstrates patience and market timing, having monitored the stock through several quarters of disappointing results before identifying a turnaround opportunity. Early validation came immediately in Q4 with improved margins, rebounding sales volumes, and management's clear roadmap for balance sheet strengthening. The new CFO's focus on cash flow generation represents a strategic shift that aligns with the manager's investment criteria and suggests operational improvements ahead. The manager's familiarity with the company's business model and previous success provides confidence in the investment thesis. UNFI's position in the natural and organic food distribution market offers exposure to secular growth trends in healthy eating. The combination of operational improvements, new leadership focus on cash generation, and the manager's proven track record with the stock creates an attractive risk-reward profile for the turnaround story.

Pitch Summary:
Warrior Met Coal (HCC) finished the quarter mostly unchanged despite significant volatility due to fear in Chinese steel markets. We invested in Warrior, and smaller peer Corsa Coal, on the premise that the premium metallurgical coal market is undersupplied. While you could certainly take our word for it, I think there were three events in Q3 that really drove home how acute the shortage will be: • Nippon Steel and JFE Steel, the two largest Japanese producers, participated in a 30% buydown of the Blackwater mine from Whitehaven for $1.08B. This mine produces approximately 12m tons of coal per year, valuing the production at ~$300m per million tons of annual production. In their first quarter of ownership, Whitehaven generated about $58/ton in margins from this asset, about 10% lower than what Warrior generated in the same quarter. Warrior's margins are set to expand further post-Blue Creek, and this transaction suggests significant upside potential for their valuation without adjusting for the expected improvement. • India's JSW Steel invested in the recent $1.65B takeover of South32's Illawarra coal mines, which produce about 5m tons of coal annually at higher costs than the new Whitehaven assets. This purchase again shows a multinational steel producer valuing a million tons of annual metallurgical coal production above $300m. • In case you thought we were finished, Chinese-controlled Yancoal abruptly suspended their dividend in Q3, with the expressed goal of bidding on Anglo American's met coal portfolio. This sale is complicated by a fire that took one of their mines offline indefinitely this summer, but is still expected to result in $3-4B of proceeds for about 12m tons of unaffected production, with production margins once again worse than Warrior in the first half of the year, before the fire impacts. The largest steel producers in the world are telling you that now is the time to secure access to premium coking coal, at prices that exceed the valuation currently attributed to Warrior, on mines which generate similar or inferior margins. The good news is the market is allowing us to invest in the low-cost, high-quality US producer at an extremely attractive valuation, and we are taking that opportunity. It's also allowing us to invest in Corsa's 1m tons of annual production for about a tenth of the above valuations, which we hope will be bolstered after recent operational adjustments reduce Corsa's cost profile to match other Appalachian producers.

BSD Analysis:
Kingdom Capital presents a compelling bull case for Warrior Met Coal based on acute supply shortages in the premium metallurgical coal market. The manager provides three concrete examples of major steel producers paying premium valuations for coal assets, with transactions valuing production at approximately $300 million per million tons annually. Warrior's superior margins of $58+ per ton compared to recently acquired assets, combined with expected margin expansion post-Blue Creek development, suggest significant undervaluation at current levels. The investment thesis is reinforced by global steel producers' aggressive acquisition activity, demonstrating their willingness to pay substantial premiums to secure coking coal supply. Warrior's position as a low-cost, high-quality US producer provides competitive advantages in a supply-constrained market. The manager's confidence extends to smaller peer Corsa Coal, acquired at approximately one-tenth the valuation multiples seen in recent transactions. Recent operational improvements at Corsa are expected to reduce costs to match other Appalachian producers, potentially unlocking significant value. The combination of supply fundamentals, superior margins, and attractive relative valuations creates a compelling investment opportunity in the metallurgical coal space.

Pitch Summary:
Our largest position remains Net Lease Office Properties (NLOP). The company continues to sell properties and extend leases, executing on the orderly liquidation they promised. We invested in NLOP confident the stock was undervalued, EVEN IF leases were not extended and the current properties were only worth the present value of their remaining rent payments. Yet, NLOP extended four leases in Q2 alone, and their most recent property sale (a CVS campus in Arizona) sold for less than a 6% cap rate - far above our estimate of value. NLOP appears very close to paying off their remaining debt and returning cash via dividends, which we expect will be the next catalyst to move the stock higher. I had the opportunity to present the idea at the annual MicroCapClub conference, a private investors forum where I first profiled the stock before the initial sales announcements.

BSD Analysis:
Kingdom Capital maintains a bullish stance on NLOP, viewing it as their largest position with significant upside potential. The manager's thesis centers on an orderly liquidation strategy that has exceeded expectations, with the company successfully extending four leases in Q2 and achieving property sales at attractive cap rates below 6%. The investment was structured conservatively, assuming no lease extensions and valuing properties only at present value of remaining rent payments, providing substantial downside protection. Recent property sales, including a CVS campus in Arizona, have validated management's value estimates and demonstrated the quality of the underlying assets. The approaching debt payoff and anticipated dividend distributions represent clear catalysts for stock appreciation. The manager's confidence is reinforced by their public presentation of the thesis at the MicroCapClub conference, demonstrating conviction in the investment case. The combination of conservative underwriting, successful execution of the liquidation plan, and upcoming capital returns creates a compelling risk-adjusted opportunity.

Pitch Summary:
Dave & Busters is an entertainment attraction, offering games and food. It's recently been pressured by low-end consumer weakness. It bought its prime competitor Main Event in 2022 with Main Event's CEO, Chris Morris, assuming leadership. Morris's strategic plan includes improvements in pricing, remodeling, cost savings, events and more. It estimates changes will improve EBITDA by $680-915M, a significant amount relative to the current 2024 estimated base of $528M. Early results are promising. Dave & Busters has solid unit economics and attractive returns on capital. The company has been aggressively buying back stock, shrinking shares outstanding by 19% since the beginning of 2023. We see solid growth prospects and strong cash generation as the company exits its current investment cycle. We think Dave & Busters can earn $8-9 per share in free cash flow in 3 years. At a 10x multiple, we believe the stock would be worth mid-$80s, which implies a compound rate of ~35% per year.

BSD Analysis:
Patient Capital sees Dave & Buster's as a compelling turnaround story trading at attractive valuations due to temporary consumer weakness. The 2022 acquisition of competitor Main Event brought proven CEO Chris Morris, whose strategic initiatives target $680-915M in EBITDA improvements against a $528M 2024 base—representing potential 130-170% EBITDA growth. The company demonstrates strong capital allocation through aggressive share buybacks, reducing share count 19% since early 2023. Management projects $8-9 per share in free cash flow within three years, which at a 10x multiple would value shares in the mid-$80s versus current levels around $34. This implies approximately 35% annual compound returns. The investment thesis relies on solid unit economics, attractive returns on capital, and the company emerging from its current investment cycle with enhanced cash generation capabilities.

Pitch Summary:
QXO ended the quarter as our largest position, an unusual circumstance for a new holding. We purchased QXO in a PIPE transaction during the quarter. The stock is off to a good start ending the quarter at $15.77, 73% above the $9.14 deal price, which took the position size to our top slot. We follow proven money-makers, and paid attention when Brad Jacobs took over QXO. Jacobs had a successful track record driving results at numerous companies including United Rentals, United Waste, XPO Logistics, GXO and RXO. He's best known for XPO, which went from $3 prior to his takeover in 2011 to the current $108, 36x as high, a compound rate above 30% per year! His strategy at all his companies was to use technology to improve the customer value proposition. He plans to do the same again, this time in the building products space. Jacobs' objective is to grow partner capital at 25% per year, or 10x over the next decade. Jacobs wanted long-term oriented partners. We never anticipated being "Patient Capital" could help with deal access, but it did. We are very early but see significant long-term compounding potential in QXO.

BSD Analysis:
Patient Capital Management has made QXO their largest position following a PIPE transaction at $9.14, with the stock appreciating 73% to $15.77 by quarter-end. The investment thesis centers on proven CEO Brad Jacobs, who has an exceptional track record of value creation across multiple companies, most notably transforming XPO from $3 to $108 (36x return) at over 30% annual compound growth. Jacobs consistently employs technology to enhance customer value propositions across his portfolio companies. His ambitious goal for QXO is 25% annual partner capital growth, targeting 10x returns over the next decade in the building products distribution space. The manager views this as an early-stage opportunity with significant long-term compounding potential, benefiting from their patient capital approach which provided deal access. The position represents a bet on proven management execution in a technology-enabled transformation of a traditional industry.

Pitch Summary:
We purchased a stake in Keysight Technologies. Keysight is a leading electronic test and measurement company with a reputation for manufacturing highly reliable oscilloscopes, network analyzers, signal generators, and spectrum analyzers. Keysight serves a wide range of customers across telecommunication, data centers, semiconductors, and industrial markets. Its instruments are absolutely mission critical for the research and development as well as deployment of just about anything with sophisticated electronic componentry or signals. For instance, without Keysight's instruments, telecommunication carriers couldn't deploy 5G networks and semiconductor manufacturers couldn't test the performance of their circuitry. Customers are very sticky and brand loyal as it takes years to establish a good reputation among engineers. This means that Keysight primarily competes on the quality of its products rather than price. Over the long term, the global economy will continue to digitize, which means that the accompanying need to precisely measure electronic signals will only increase. As a result, we believe that Keysight's end markets will grow in excess of GDP. However, Keysight is currently experiencing an air pocket in demand. The initial rush of spending to deploy 5G networks has coincided with softening demand across automotive, general electronics, and semiconductor end markets. While we don't precisely know how long the soft environment will last, we are confident that Keysight's sales and profits will return to an attractive growth rate. The poor sentiment from the currently depressed demand environment presented the opportunity to purchase shares at a discount to our appraisal of intrinsic value.

BSD Analysis:
Madison initiated a position in Keysight Technologies, viewing the electronic test and measurement leader as a compelling value opportunity amid cyclical weakness. The managers emphasize Keysight's mission-critical role in enabling 5G deployment and semiconductor testing, creating high customer switching costs and pricing power. They highlight the company's competitive moat through engineering reputation and product quality rather than price competition. The investment thesis centers on long-term digitization trends driving above-GDP growth in electronic measurement needs. While acknowledging current demand softness across automotive, electronics, and semiconductor markets, Madison believes the cyclical downturn has created an attractive entry point below intrinsic value. The managers express confidence in Keysight's ability to return to attractive growth rates once end-market conditions normalize.

Pitch Summary:
We love to meet with companies and in October of 2022 we walked 15 minutes from our office to the headquarters of Camden Property Trust to meet with one of the founders of the company, Keith Oden, and several other members of the management team. Camden is one of the largest owners of apartments in the United States, with 58,000 units in 15 major markets: After our meeting with management, we concluded that Camden had a solid strategy, but it was likely that tough times were ahead. Zero interest rates led to an unusually high number of apartments that began construction in 2021 and 2022, which would in turn likely lead to several years of oversupply and downward pressure on rents. We believed that we could be patient and wait for a better entry point. Flash forward, as rates rose rapidly in 2022 it became almost impossible to make the math work on developing a new apartment project. These higher rates led to a lack of starts which flipped the prior narrative and would mean strong rent growth for apartments from about 2026 to 2028. In December 2023, we decided that the time was right to buy Camden. We had more visibility into apartment starts, and the risk reward was very attractive at a price below $100 and a dividend yield above 4% both of which we believe reflected an overly skeptical outlook on the business. Given favorable longer-term demographic trends within Camden's core markets, our confidence in the management team's growth strategy, and the continued national shift toward renting over owning, all together created a very attractive entry point. The stock traded significantly below both its historical multiple and comparable private market value When we bought Camden, we didn't know when the stock would rebound, but we knew we were buying a great portfolio of apartments, operated by a great management team, and at a great price. Camden and the REIT sector have rallied this year due to prospects of interest rates coming down. Camden's total return for us this year is approaching 30%. We don't believe the fundamentals have begun to rebound yet, just that the supply of new apartments coming online has peaked. We still think there is a long way to go for the stock price as the fundamentals improve over the next two to three years.

BSD Analysis:
Brasada Capital presents a compelling contrarian investment thesis on Camden Property Trust, demonstrating patient capital allocation and cycle timing expertise. The fund identified an attractive entry point in December 2023 at below $100 per share with a 4%+ dividend yield, capitalizing on market pessimism around apartment oversupply concerns. Their analysis correctly anticipated that rising interest rates would halt new construction starts, creating a supply shortage that should drive strong rent growth from 2026-2028. The investment benefits from favorable demographic trends in Camden's 15 major markets, a shift toward renting over homeownership, and experienced management led by founder Keith Oden. With the stock already delivering nearly 30% returns as interest rate cut expectations materialized, Brasada believes significant upside remains as apartment fundamentals improve over the next 2-3 years. The thesis combines cyclical timing with structural tailwinds in the residential rental market.

Pitch Summary:
Deutsche Wohnen SE – German real estate company (1.8% NAV) Founded in 1998, Deutsche Wohnen is the dominant residential landlord in Berlin with around 100,000 apartments and an additional 40,000 units located across Frankfurt, Leipzig, Dresden and Hannover with a current market capitalisation of circa EUR 10bn. We last wrote about the company in the August 2022 Newsletter. The company currently trades on around a 40% discount to Net Asset Value with a lowly leveraged (30% loan to value) balance sheet and a high-quality residential investment portfolio. Vonovia SE - capitalised at EUR 27bn currently - bought out most of the company (87%) in 2021 but have now agreed to discuss a domination agreement. Under the agreement minority shareholders will be able to either accept new Vonovia shares at a to-be defined ratio or keep Deutsche Wohnen shares and receive an ongoing annual compensation payment instead. This news gives us more confidence that there will be a final buyout of all shares in the next few years at a price significantly higher than current levels. Since we last wrote on the business the share price has increased by 12%, recently buoyed by the domination agreement announcement. However, the share price has been held back by bond yields increasing in this period leading to the net asset value falling 20%, although we believe that these are now on a downward trajectory and may also explain the timing of the recent news. Fundamentally we still really like the shape of its investment portfolio with its strong exposure to the tight residential market in Berlin. Back in 2021, Vonovia was willing to give large concessions to make the takeover a success. Therefore, they agreed to increase rents by only 1% for three years followed by another two years by a maximum of inflation, but this has been changed by a new agreement with the city of Berlin. This enables Deutsche Wohnen and Vonovia to increase rents by a maximum of 11% or rather 15% within 3 years. The 11% was initially offered given the outlook that a federal rent cap limit will become even tighter, but this has not happened and therefore Vonovia is committed to the existing cap limit. Deutsche Wohnen's average rent sits at around half of market rents, continuing to be very affordable. We calculate that rents at current levels equate to only 30% of an individual's post tax income if only being paid the minimum wage i.e. a pretty conservative assumption. Due to the price of land and build costs we do not see the risk of increasing supply impacting the tightness of the market either. Additionally, we are less concerned about the political risk with the conservative CDU party being elected in Berlin last year. Deutsche Wohnen are currently generating net rental income of around EUR 720m, a 3% yield on its investment portfolio balance sheet valuation of EUR 24.1bn. Reported funds from operations of EUR 522m translates into a current yield of 5.2% based on its market capitalisation. Vonovia recently announced further progress to divest Deutsche Wohnen's nursing home business which will provide further liquidity to a very de-risked balance sheet and focus on its core residential business. When we initially invested in July 2022, we argued that Vonovia may find a way to avoid paying real estate transfer taxes and referred to recent tax law changes. Apparently Vonovia has found a solution that minimises the potential of additional taxes by setting up a new holding company which will hold 20% of Deutsche Wohnen's share capital and will sell 51% for EUR 1bn to third party investors. Having spoken to Vonovia recently we believe it is better to judge them by what they do rather than what they say. We expect further details, including the exchange ratio and the amount of fixed annual compensation payment by the end of this year. Given that the reported NAV has come down due to the increased interest yield environment, Vonovia could make a fair offer reflecting the current NAV of EUR 42 offering a premium of 70% and still paying 20% less than in 2021. We would prefer an attractive offer now but are prepared to get paid waiting as we still think that eventually Vonovia will need to pay a fair value for a trophy asset like Deutsche Wohnen.

BSD Analysis:
Ennismore presents a compelling special situation investment in Deutsche Wohnen, a dominant Berlin residential landlord trading at a 40% discount to NAV. The investment thesis centers on an anticipated buyout by majority owner Vonovia SE, which owns 87% of the company and has agreed to discuss a domination agreement that would provide minority shareholders with either new Vonovia shares or ongoing compensation payments. The manager expects a final buyout within the next few years at significantly higher prices than current levels. Deutsche Wohnen operates in Berlin's tight residential market with 100,000 apartments, generating EUR 720m in net rental income with a conservative 30% loan-to-value ratio. Recent regulatory changes allow rent increases of up to 11-15% over three years, providing meaningful upside potential given current rents sit at half of market rates. The company trades at 5.2% funds from operations yield with a de-risked balance sheet, while Vonovia has structured the transaction to minimize transfer taxes through a new holding company arrangement. The manager views this as a trophy asset that Vonovia will ultimately need to acquire at fair value, making it an attractive risk-adjusted opportunity with defined catalysts.

Pitch Summary:
Net losses every single quarter after its IPO in 2004; overvalued (trading at x8.6 sales, 57% premium to its peers); insider cash-out; inflated key metrics (by up to 100%); the actual number of users are 30% less (bot accounts are accounted as Daily Active Users); extensive 'botting' problems; massive child safety & sexually abusive games; 'growth at all costs' approach;

BSD Analysis:
Roblox faces short pressure around slower monetization vs. user growth, reliance on unproven ad platform ramp, and rising infrastructure spend creating negative operating leverage. Concerns include developer payout tension and DAU skew to low-value geographies. Bears argue Street models assume too-optimistic ARPU inflection. Catalysts/risk checks: bookings per DAU, ad RPMs, cloud spend per user, and teen/adult adoption metrics. Counterpoints: platform network effects are powerful, but skeptics stress Roblox remains a long-duration story highly sensitive to capital costs and execution.

Pitch Summary:
Altus Group ("ASGTF") Class A Trophy Asset Trading at Depressed Valuation: Tenant Improvements Drive Margin Expansion and Valuation Re-Rating

Summary Thesis
1. Industry Standard Property Valuation Software for Complex Commercial Real Estate Assets with an Expanding Data and Analytics Offering
2. Sale of Cyclical and Low Multiple Property Tax Business Will Lead to Management and Investor Focus on Trophy Software Asset
3. Margin Improvement Opportunity in the Analytics Business from Self-Help and Cyclical Valuation Services Recovery
4. Significant Cash Balance Post Property Tax Sale Funds Share Repurchases and/or M&A
5. Aligned Management Team and Board

Business Overview – Altus Analytics
Altus Group ("Altus," "Company," "AIF"), listed in Toronto under the ticker AIF, is a collection of commercial real estate software and services businesses assembled through a series of acquisitions dating back to 2011 when the company converted from an income trust to a corporation. The core software asset, ARGUS Enterprise ("AE") is the leading global solution for CRE valuation and portfolio management and is widely recognized as the industry standard for complex property valuations. The ARGUS valuation model is based on a discounted cash flow ("DCF") methodology and its capabilities range from property and portfolio valuation analysis to financial modelling, scenario analysis, and reporting. With over 30 years of industry presence, AE has robust data on over one million commercial properties and the AE valuation methodology is taught in over 200 academic institutions worldwide. Beyond the AE valuation model, ARGUS is a comprehensive CRE portfolio management platform that helps clients streamline and optimize various aspects of investment analysis, valuation and property management. ARGUS is used by investors, brokers, and other real estate capital markets professionals who own, transact or monitor commercial real estate properties. Similar to other software companies, AE has undergone a transition from a license to SaaS model and subscriptions are sold on a per user basis. Recent investments in the software platform are designed to leverage the tremendous data inside the ARGUS platform in order to deliver increased functionality via enhanced analytics, modeling, benchmarking and forecasting.

Altus also has a Valuation Management Services ("VMS") business where key clients include many of the largest real estate funds. Investors in these funds require independent verification of property level values and Altus' VMS segment prepares valuation reports for assets in these funds on a regular cadence, typically quarterly or annually. Altus outsources the retrieval of property level data to local valuation experts and then consolidates this information (using AE models) into a valuation report for asset owners. Argus charges for these services on a per asset basis and, as a result, revenues are correlated to fundraising and capital deployment, both of which have been depressed over the last two years.

Property Tax Sale - "Tenant Improvement" Catalyst for the Business and Stock
The investment opportunity for AIF revolves around the pending sale of its legacy property tax business as it will focus both management and investors on the crown jewel Analytics business, which is currently under-appreciated by the market due to multiple overhangs (obscured by Property Tax, cyclical pressures, small cap listed in Canada). Altus' Property Tax business manages property taxes and appeals for clients, primarily in Canada and the UK and accounted for 39% of segment level EBITDA for Altus in 2023. This was historically viewed as a low multiple business given cyclicality and the opaqueness associated with the contingency fees that comprised the majority of this segment's revenues. In June of 2024, Altus announced a sale of this business that is expected to close in 1H 2025.

The sale of this business should be a catalyst for AIF's stock for a number of reasons. First, management will be able to focus its attention on the Analytics business, which should give investors' confidence that the revenue and margin targets for this segment are achievable. Second, proceeds from the sale of this business will leave the company with CAD$400MM of net cash and CAD$700mm of capital available for M&A/share repurchases (assumes a 2.0x gross leverage ratio based on management's comments). Finally, the streamlined business will be significantly more attractive to investors as the crown jewel Analytics business will no longer be obscured by the property tax business. As management executes on the growth and margin targets for the Analytics segment, this should result in a higher multiple as investors recognize the similarities that this business has to other vertical market software and data provider peers (see valuation discussion below). A potential US listing for the stock could also be supportive of a multiple re-rating as this would enable access to a larger pool of investors.

BSD Analysis:
Headwaters Capital presents a compelling turnaround story in Altus Group, a dominant commercial real estate software provider trading at a significant discount. The core thesis centers on the pending divestiture of the cyclical property tax business, which will unlock the value of ARGUS Enterprise - the industry-standard valuation software with over 30 years of market presence and data on one million+ properties. The company is positioned to benefit from multiple catalysts: margin expansion as the SaaS transition completes, revenue acceleration from a substantial VMS backlog converting as CRE transaction volumes recover, and significant capital deployment opportunities with CAD$700mm available post-divestiture. Management targets appear achievable with 8% revenue growth and 700bps of margin improvement by 2026, supported by operating leverage and cost optimization initiatives. The valuation opportunity is compelling, with the streamlined analytics business warranting at least 20x EBITDA as a standalone entity, implying 38% upside, while strategic acquisition interest could drive multiples to 26x-40x EBITDA based on comparable transactions.