Investment Pitches

Pitch Summary:
We've purchased shares in Nubank. This is a Brazilian bank that competes against a comparatively sleepy incumbent. It's got a great cost advantage and a customer proposition, and it is attracting new customers hand over fist in Brazil and elsewhere in Latin America.

BSD Analysis:
Baillie Gifford initiated a position in Nubank, viewing it as a disruptive digital bank with significant competitive advantages in Latin America. The manager highlights Nubank's superior cost structure and customer value proposition compared to traditional incumbent banks in the region. The company is experiencing rapid customer acquisition across Brazil and expanding into other Latin American markets. This represents a classic disruptor play where a technology-enabled financial services company is gaining market share from established players. The investment thesis centers on Nubank's ability to leverage its digital-first approach to offer better services at lower costs. The manager sees this as an attractive opportunity to capitalize on the ongoing digital transformation of banking in emerging markets. Given the portfolio's focus on growth companies with unique competitive positions, Nubank fits well within their disruptor category.

Pitch Summary:
ISS A/S is a facility management company, specializing in services that are non-core to their customers. Its services include routine and specialized cleaning, food management and catering, building management, security, and other services. We like the company's scale, focus, geographic footprint, wide array of services, employee base, and sticky customer relationships. Its focus on services that are non-core to its customers allows for the company to benefit from the trend of outsourcing these types of services. The company executed well throughout the pandemic showing consistent progress towards its goals including growth, margins, free cash flow, and financial leverage. The company has improved margins and is entering a relatively more normalized operating environment, and it continues to trade at an attractive discount to our estimate of fair value.

BSD Analysis:
Vulcan presents a bullish case for ISS A/S, emphasizing the company's leadership position in the global facility management industry and its ability to capitalize on long-term outsourcing trends. The manager highlights ISS's comprehensive service offering, including cleaning, catering, security, and building management, which creates multiple touchpoints with customers and enhances relationship stickiness. Vulcan values the company's global scale and geographic diversification, which provides operational leverage and reduces regional concentration risk. The firm is particularly attracted to ISS's focus on non-core services for customers, positioning the company to benefit from the secular trend toward outsourcing as businesses focus on their core competencies. Management's execution during the pandemic demonstrated operational resilience and strategic focus, with consistent progress on key metrics including growth, margins, free cash flow generation, and balance sheet optimization. The manager notes that ISS has successfully improved margins while navigating challenging operating conditions and is now positioned to benefit from a more normalized business environment. Vulcan's investment thesis is supported by their assessment that the stock continues to trade at an attractive discount to intrinsic value, providing a favorable risk-reward profile. The combination of market leadership, secular tailwinds, operational improvements, and attractive valuation creates a compelling investment opportunity in the facility services sector.

Pitch Summary:
The biggest long detractor was Core Natural Resources (CNR), which declined 27.6% during the quarter. CNR was formerly CONSOL Energy (CEIX). It completed its merger with Arch Resources in January. The combined and renamed company has suffered from falling coal prices in 2025 and reduced production due to a fire in one of its mines. There is also a risk that the escalating trade war could harm CNR's exports. However, the combined company has a conservative balance sheet and has the capacity to repurchase a lot of stock this year. It is also likely to benefit from President Trump's executive orders supporting the coal industry.

BSD Analysis:
Despite significant near-term headwinds, Greenlight maintains conviction in Core Natural Resources following its merger with Arch Resources. The 27.6% quarterly decline reflects multiple temporary challenges including depressed coal pricing, production disruptions from a mine fire, and trade war concerns affecting export markets. However, the investment thesis centers on the merged entity's financial strength and capital allocation flexibility. The conservative balance sheet provides substantial capacity for aggressive share repurchases, which should support valuation recovery as operational issues resolve. Additionally, the Trump administration's pro-coal policy stance through executive orders creates a more favorable regulatory environment. The combination of financial engineering through buybacks and potential policy tailwinds positions CNR for recovery once commodity pricing stabilizes and production normalizes.

Pitch Summary:
The biggest long winner was Brighthouse Financial (BHF), which rose 20.7% during the quarter. According to media reports, the company has hired Goldman Sachs and Wells Fargo to sell itself. There appears to be a lot of interest from large asset managers that would like the opportunity to manage BHF's approximately $120 billion general account. While there is a risk the current market turbulence could derail a deal, absent that we expect the company will be successful in selling itself at a healthy premium.

BSD Analysis:
Greenlight Capital maintains a bullish stance on Brighthouse Financial, driven by a potential sale process that could unlock significant value. The company has engaged Goldman Sachs and Wells Fargo as advisors, signaling serious intent to monetize the business. The key attraction for potential acquirers is BHF's substantial $120 billion general account, which represents a valuable asset management opportunity for large institutional players. Multiple asset managers are reportedly interested, creating competitive dynamics that should support premium valuations. The main risk identified is market volatility potentially disrupting deal completion, but management appears confident in achieving a successful exit. The 20.7% quarterly gain reflects market anticipation of the transaction premium. This represents a classic special situation investment where corporate action drives returns independent of broader market conditions.

Pitch Summary:
CoStar Group is a premier information services provider to the commercial and residential real estate industries. It is founder led, sells access to mission critical data and information assets, and is supported by a largely recurring, subscription-based revenue model. While it is difficult to pinpoint the exact reason for the stock's underperformance over the last quarter, its operating results continue to impress us. Therefore, with a stable value, we followed our discipline and added to our position.

BSD Analysis:
Vulcan maintains a bullish stance on CoStar Group despite recent stock underperformance, emphasizing the company's strong business model fundamentals and competitive positioning. The manager highlights CoStar's leadership position as a premier information services provider to both commercial and residential real estate industries, operating in a mission-critical capacity for its customers. Vulcan values the founder-led management structure, which typically aligns leadership incentives with long-term value creation and strategic vision. The firm is particularly attracted to CoStar's subscription-based revenue model, which provides recurring revenue streams and high customer retention due to the mission-critical nature of the data and analytics services provided. Despite acknowledging difficulty in identifying specific reasons for recent stock underperformance, Vulcan's confidence in the investment thesis remains strong based on continued impressive operating results. The manager's decision to add to the position during the stock's weakness demonstrates their conviction in the company's intrinsic value and their disciplined approach to value investing. CoStar's combination of market-leading data assets, recurring revenue model, and founder leadership creates a compelling investment profile that Vulcan believes will drive long-term value creation despite short-term market volatility.

Pitch Summary:
During the first quarter, Alphabet's revenue growth accelerated and margins expanded. The company continues to introduce new search pathways with advanced models and algorithms that are 100 times more efficient than they were 18 months ago. Disruption risks to core search from generative AI have not completely abated, but Alphabet's technical prowess and historical investments in leading technologies are becoming more apparent.

BSD Analysis:
Vulcan expresses a cautiously bullish view on Alphabet, highlighting the company's strong operational performance and technological advancement while acknowledging ongoing competitive risks. The manager emphasizes Alphabet's impressive financial momentum with accelerating revenue growth and margin expansion, demonstrating the company's ability to monetize its dominant market position effectively. Vulcan is particularly impressed by the company's technological innovation, noting that new search algorithms are 100 times more efficient than those deployed just 18 months ago, showcasing rapid advancement in AI capabilities. While the manager acknowledges that disruption risks from generative AI to Alphabet's core search business haven't been completely eliminated, they believe the company's technical expertise and historical technology investments are providing competitive advantages. The firm's assessment suggests that Alphabet's deep AI research capabilities and substantial infrastructure investments position the company well to adapt to and potentially benefit from the generative AI revolution. Vulcan's bullish stance appears to be based on their belief that Alphabet's technological moats and innovation capacity will enable the company to maintain its dominant position in search while potentially expanding into new AI-driven revenue opportunities. The combination of strong current financial performance and technological leadership supports their positive outlook despite acknowledging competitive uncertainties.

Pitch Summary:
Sdiptech acquires and develops niche infrastructure companies that contribute to more sustainable, efficient, and safe societies. Today, Sdiptech is a collection of approximately 40 operating businesses. We believe these businesses are positioned well to compete and possess a natural ability to grow their competitive moats. Sdiptech's management team has appropriately navigated the varied markets over the past few years and has consistently operated with the long-term in mind. Over the last two years, the stock price has traded at a substantial discount to our estimate of fair value. We followed our discipline and added to the position accordingly. The recent share price increase could be attributed to the company's consistently strong operating performance.

BSD Analysis:
Vulcan maintains a bullish stance on Sdiptech, viewing the company as a well-managed collection of niche infrastructure businesses with strong competitive positioning and growth potential. The manager emphasizes the quality of Sdiptech's portfolio of approximately 40 operating companies, which are focused on sustainable infrastructure solutions that align with long-term societal trends. Vulcan particularly values management's long-term orientation and their demonstrated ability to navigate varied market conditions while maintaining operational focus. The firm's investment thesis is supported by their belief that the underlying businesses possess natural competitive moats that can be expanded over time through strategic development and operational improvements. The manager's confidence in the investment is demonstrated by their decision to add to the position when the stock traded at what they viewed as a substantial discount to intrinsic value over the past two years. Recent share price appreciation is attributed to consistently strong operating performance, validating Vulcan's assessment of the company's fundamental quality. The combination of niche market positioning, experienced management, and exposure to sustainable infrastructure themes positions Sdiptech well for continued value creation. Vulcan's disciplined approach to position sizing based on price-to-value ratios reflects their conviction in the long-term prospects of this diversified infrastructure platform.

Pitch Summary:
Watches of Switzerland is a retailer and partner to Rolex and other luxury watch brands. We believe most of the company's value lies in its relationship with Rolex, which only sells through authorized retailers like WOSG who act as gatekeepers to the Rolex universe. That relationship gives WOSG far superior economics to a typical retailer, a result of lengthy customer waiting lists, no online competition, and no inventory risk. WOSG's management are competent, experienced, and well incentivized, with CEO Brian Duffy owning nearly £30mm worth of stock. We first bought shares around £3.5 last year, it peaked at £6.0 late last year and now trades around £3.5 again and on 9x this year's FCF. We think intrinsic value in three years will be more than double today's price and you can view our 35-page report on the company here. When we initially invested in WOSG the stock had sold down heavily after Rolex acquired another retailer and the prices of watches on the secondhand market began declining after the luxury watch bubble burst in early 2022. Our thesis was that WOSG's relationship with Rolex would continue to strengthen and that declines in the secondhand market had very little effect as WOSG primarily sold new watches. We believe the market eventually agreed with our thesis as the stock appreciated from £3.5 to £6.0 late last year. The stock has declined heavily since then on fears that declining demand for luxury watches will hurt WOSG sales. These concerns were then exacerbated by the US placing a surprisingly high 31% tariff on Swiss imports, despite Switzerland having almost no tariffs on the US. We believe that these new fears are also overdone. While declining demand and a now reduced 10% tariff will undoubtedly hurt WOSG's earnings, we think the impact will be far less than what the stock is pricing in. Around 75% of WOSG's profits by our estimates come from Rolex and Patek Philippe sales. Sales in those brands are mostly driven by supply rather than demand because customers often have to register their interest in a watch months or even years before they are offered a chance to buy it. That means Rolex and Patek effectively sell as many watches as they want to make. The effect of lower demand is likely to be a reduced wait time rather than fewer sales. Our customer data suggests that waitlists in the US in particular remain strong and WOSG's trading update in February (before tariffs were announced) reiterated guidance for continued momentum in the US and stabilization in the UK. We attended the industry's biggest trade show, held in Switzerland, shortly after tariffs were announced to better understand the impact on brands and WOSG. Our conclusion is that Rolex has substantial pricing power and that a 31% tariff reduces WOSG's US profits by around 30% and a 10% tariff reduces it by around 10%. Since the US is half of the company's business that translates to a reduction at the group level of 15% and 5% respectively. While these reductions are certainly a headwind, we believe Rolex and WOSG will manage through them effectively and that the long-term growth of the companies remains largely unchanged. Any downturn would likely also result in WOSG acquiring mom & pop competitors and therefore gaining market share permanently. We continue to believe that WOSG's economics are closer to a subsidiary of Rolex than a retailer and that the company is a structural winner trading at a very attractive price. We added to our position recently and after tariffs were announced.

BSD Analysis:
Plural Investing views Watches of Switzerland as a unique luxury retail play with economics more akin to a Rolex subsidiary than a traditional retailer. The investment thesis centers on WOSG's exclusive authorized dealer relationship with Rolex and Patek Philippe, which generates 75% of profits through supply-constrained brands with lengthy waiting lists and no inventory risk. The manager believes recent tariff concerns are overblown, estimating a 10% tariff reduces group profits by only 5% given Rolex's substantial pricing power and supply-driven sales model. Trading at 9x free cash flow with CEO Brian Duffy owning £30 million in stock, the company offers compelling alignment and valuation. The manager conducted primary research at Switzerland's largest trade show to validate the tariff impact and believes any downturn will enable WOSG to acquire smaller competitors and gain permanent market share. With strong US waitlists persisting and UK operations stabilizing, the structural advantages of the Rolex partnership should drive long-term outperformance despite near-term headwinds.

Pitch Summary:
We had a similar paper loss in value after buying IGB Berhad in 2017. IGB is a Malaysian property developer and operator that specialises in malls, offices and hotels. This is a good example of an out of favour, dog investment which has come good, thanks to the market latterly focusing on its fundamentals, driven by value-unlocking corporate exercises. Despite this, in our view, IGB's shares continue to trade at a massive discount, especially when relative to the true value of its assets. We first bought IGB shares in November 2017 at a price of RM1.90. By September 2021, the stock had fallen to RM1.25. The shares ended June at RM2.92. IGB is still hidden from the investment radar as investors like to focus on the more liquid IGB REIT (53% owned) rather than where the real money is made, which is at the parent level. In IGB's case, the money is made from developing the properties and, once matured, selling them to its REITs, as has just been announced for their crown jewel asset, Southkey Megamall in Johor Bahru, Malaysia. We think IGB is worth at least USD3 billion vs. the current market capitalisation of USD900 million, partly due to no broker coverage and little investor relations. Patient investing pays off.

BSD Analysis:
The manager showcases IGB as a successful turnaround story and continued value opportunity, demonstrating the benefits of patient capital allocation. After purchasing at RM1.90 in 2017 and enduring a decline to RM1.25 by 2021, shares have recovered to RM2.92, validating the long-term thesis. The investment case centers on the parent company's property development model, where value is created by developing assets and selling them to the 53%-owned IGB REIT at maturity. Recent value-unlocking through the announced sale of crown jewel Southkey Megamall to the REIT exemplifies this strategy. Market focus on the more liquid REIT structure obscures the parent company's value creation engine. The manager estimates intrinsic value at USD3 billion versus current market cap of USD900 million, representing significant upside potential. Limited broker coverage and minimal investor relations contribute to the valuation discount. This case study reinforces the fund's patient investment approach and ability to capitalize on market inefficiencies in overlooked assets.

Pitch Summary:
CarMax is the largest used car retailer in the United States. The company has the third largest wholesale business in the U.S. and a large captive finance business. We believe that CarMax's omnichannel approach is a competitive advantage that will enable the company to continue taking market share in a highly fragmented market. This strategy enables the company to generate higher and more stable levels of profit per used vehicle sold and generate solid returns on capital. A significant portion of the used car market is made up of small independent dealerships without resources to invest in digital infrastructure. Another significant portion of the market is made up of digital-only retailers, who are now focused on profitability at the expense of volume. CarMax continues to invest in its digital infrastructure which has improved its customer experience. These investments have made it easier to buy, sell and finance vehicles. Over the last two years, management has focused on de-leveraging the company's balance sheet and right sizing the firm, which has significantly de-risked the business and positioned CarMax well for when volumes normalize. We believe that the combination of a leaner cost structure and an improved competitive position will strengthen the company's prospects.

BSD Analysis:
Vulcan presents a compelling bull case for CarMax, emphasizing the company's dominant market position and strategic advantages in the highly fragmented used car retail market. The manager highlights CarMax's leadership as the largest used car retailer in the U.S., complemented by the third-largest wholesale business and a substantial captive finance operation, creating multiple revenue streams and customer touchpoints. Vulcan views the company's omnichannel approach as a key differentiator, enabling market share gains against both traditional independent dealers lacking digital capabilities and digital-only competitors now prioritizing profitability over growth. The firm's continued investment in digital infrastructure has enhanced the customer experience across buying, selling, and financing processes, strengthening competitive positioning. Management's recent focus on balance sheet deleveraging and operational right-sizing has significantly reduced business risk and improved the cost structure during a challenging volume environment. Vulcan believes this strategic repositioning positions CarMax to benefit disproportionately when used car volumes normalize, with the combination of a leaner operating model and enhanced competitive advantages expected to drive stronger profitability. The manager sees the company well-positioned to continue gaining market share in the fragmented used car market through superior customer experience and operational efficiency.

Pitch Summary:
Seaport Entertainment was spun out of Howard Hughes in July 2024 and is a complex group of loss-making properties primarily in Lower Manhattan that Howard Hughes invested $1.5bn into. Seaport trades for a market cap of $230mm and has net cash. Our thesis is that a couple of the stabilized properties are worth the market cap, while the new and aligned management team will be able to turn around several of the other key buildings. We first bought shares in the company at $27, the stock trades at $18 today having declined 31% this year, and we believe intrinsic value in three years will be around $50. We published our 35-page thesis on the company in November here and discussed our latest thesis on a podcast here. Seaport published Q4 results in March that showed the company continued to be heavily loss making. The stock sold off because of that and then declined with the broader market on the announcement of tariffs despite tariffs having no material impact in our view. We thought significant losses in Q4 were unsurprising given the substantial changes new management have made took place after the quarter ended and this was a seasonally slow period for the company. We think investors are missing the big picture by focusing on short term losses. Seaport owns prime real estate in New York that suffered from a misplaced strategy by its former owner Howard Hughes, and its future success will depend on how well new management are able to turn key buildings in the neighborhood into consumer concepts with mass market appeal. We have been very impressed with how quickly new management have made major changes at those key buildings. At Pier 17, in our opinion by far Seaport's most valuable asset, management announced at results that it had signed a 20-year lease for most of the previously unused office space. The lease is with Meow Wolf, an immersive art installation that has been a success at all five other locations in the US. The locations of a similar size to the New York space have each attracted over one million visitors annually. We wrote in our initial investment thesis that the most important factor to a turnaround at Seaport succeeding was whether management could put a consumer concept in the empty space at Pier 17 that attracts over one million visitors per year, and it seems like they have successfully done so. These visitors will likely spend at the surrounding restaurants, retail stores, and entertainment venues that Seaport owns, thereby improving the company's economics far beyond Meow Wolf's lease payments. Management have also made other changes that are yet to kick in, such as: • Expanding rooftop concerts at Pier 17 throughout the year • Leasing out the unproductive restaurant space at Pier 17 to a new concept • Substantially cutting costs and shutting unsuccessful concepts at the Tin Building • Putting 250 Water St up for sale • Provisionally winning a bid to take over a successful restaurant in Bryant Park None of the benefits from these changes were felt during Q4 and most will take several quarters to become clear. But our confidence that management will successfully realize the value in Seaport's properties has significantly increased and so we added to our position in the quarter.

BSD Analysis:
Plural Investing presents a compelling turnaround thesis for Seaport Entertainment, a Manhattan real estate company spun out of Howard Hughes in July 2024. The manager believes the market is overly focused on near-term losses while missing the transformational changes new management is implementing. The key catalyst is the 20-year lease signed with Meow Wolf for Pier 17's previously vacant office space, an immersive art installation that attracts over one million visitors annually at similar locations. This visitor traffic should drive meaningful spillover revenue to Seaport's surrounding restaurants, retail, and entertainment venues. Management is also expanding rooftop concerts, optimizing restaurant concepts, cutting costs at the Tin Building, and monetizing non-core assets like 250 Water Street. Trading at a $230 million market cap with net cash, the manager sees intrinsic value reaching $50 per share within three years versus the current $18 price. The investment represents a classic value play on prime Manhattan real estate with new management executing a consumer-focused repositioning strategy.

Pitch Summary:
An example of a share price going in the opposite direction to the underlying business is Indonesia's MAP Active (MAPA), which we've owned for over two years. MAPA sells sporting style leisurewear (athleisure wear) across ASEAN and is particularly strong in Indonesia and the Philippines. Rapid expansion, including opening in six countries over the last few years, led to a 2.5% drop in profits in 2024, despite a 27% increase in sales. The costs of rapid expansion eating into margins is no surprise, but we expect the company to lever on this expansion in the future. Year to date, MAPA's share price has declined by 39%, yet we're expecting 15% profit growth in 2025. MAPA gives us exposure to the tastes of ASEAN's expanding young population and their increasing spending power. As is the case for most of our portfolio companies, MAPA has a net cash balance sheet. It generates a return on capital employed in excess of 35%, yet it trades on a current year PE of just 11x. Another measure we like to look at is the longer-term value creation, in this case a company's growth in net assets plus dividends received. In MAPA's case, these have compounded at 19% since listing, versus the share price's 11% (dividends included). This underperformance is repeated across the portfolio, as share prices cheapen in the face of rising profits and economies. If the recent investor interest we're seeing in the fund and the region is sustained, we should expect a sharp convergence as share prices rerate to better reflect the reality.

BSD Analysis:
The manager presents a compelling value opportunity in MAPA, highlighting a stark disconnect between operational performance and share price. Despite 39% YTD decline, the company demonstrates strong fundamentals with 27% revenue growth and expected 15% profit growth in 2025. The temporary margin compression from rapid six-country expansion is viewed as an investment phase that will drive future leverage and profitability. MAPA's exceptional 35% return on capital employed combined with an 11x PE multiple presents attractive risk-adjusted returns. The company benefits from demographic tailwinds through exposure to ASEAN's young, increasingly affluent population with growing athleisure preferences. Net cash balance sheet provides financial flexibility and downside protection. Long-term value creation metrics show 19% asset growth compounding versus 11% share price appreciation, indicating significant valuation gap. The manager expects share price convergence as regional investor interest increases and fundamentals are recognized.

Pitch Summary:
Qorvo is a leader in radio frequency (RF) systems and power management solutions for mobile devices, wireless infrastructure, aerospace and defense, the Internet of Things, and various other applications. Qorvo's chipsets are a small cost but are critical components in modern mobile devices. As data needs increase and telecommunications technology continues to evolve and become more complex, more RF content is needed in each device. The complexity and barriers to entry intensify as content requirements increase and space constraints become more pronounced. Qorvo operates in an oligopoly with only a small number of companies capable of producing these increasingly complex chipsets at scale. Qorvo should also benefit as growth accelerates in adjacent markets and these markets eventually become a larger piece of the business through the adoption of the Internet of Things, satellite, Wi-Fi, and other markets. The company has faced headwinds over the past few years including lower demand in China, excess inventory in the channel, and factory underutilization; but secular tailwinds should drive growth and, in turn, margin expansion.

BSD Analysis:
Vulcan presents a bullish thesis on Qorvo based on the company's leadership position in the critical RF semiconductor market and favorable long-term secular trends. The manager emphasizes that while Qorvo's chipsets represent a small cost component in mobile devices, they are mission-critical for functionality, providing pricing power and customer stickiness. The increasing complexity of telecommunications technology and growing data demands are driving higher RF content per device, creating a structural growth tailwind for the industry. Vulcan highlights the oligopolistic nature of the RF semiconductor market, where only a few companies possess the technical capabilities and scale to produce increasingly complex chipsets, providing Qorvo with significant competitive moats. The manager sees substantial opportunity in adjacent growth markets including Internet of Things, satellite communications, and Wi-Fi applications, which should diversify revenue streams and reduce mobile device dependence over time. While acknowledging recent headwinds including China demand weakness, channel inventory issues, and factory underutilization, Vulcan believes these are cyclical challenges that will resolve as secular growth drivers reassert themselves. The combination of oligopolistic market structure, increasing RF content per device, and expansion into high-growth adjacent markets positions Qorvo for margin expansion and sustained growth as industry conditions normalize.

Pitch Summary:
Bermaz Auto has the franchises for Mazda, Kia and Xpeng - the latter being a Chinese car manufacturer. Following on from Bermaz's success with Mazda, we were expecting great things when the company secured the Kia franchise a couple of years ago. Unfortunately, PRC manufacturers are dumping vehicles everywhere, including Malaysia. The company has a very good and longstanding association with Mazda but the relationship with Kia is facing some teething problems, with disagreements about pricing etc. So, whereas owning Bermaz twelve months ago looked like an inspired bit of investing, it doesn't look so clever now. And to make matters worse, because I included it in some of my investor presentations, many of you know we own it and keep reminding me! So, why do we still own it? I hear you ask. Why not cut it and move on? The good thing about Bermaz is that it throws off cash, paying four dividends a year. Even in difficult times, such as now, it remains a net cash business, on a single digit PE and with a dividend yield of around 8.6%. So, while I might wish I'd sold at the top of the cycle, and it is important to remember that selling cars is a cyclical industry, Bermaz is likely to generate substantial profits in future years with little capital outlay. The dividend payout ratio is expected to remain at a minimum of 70%, generating substantial cash for the fund. Bermaz's management have proven that they are among the best car distributors in Malaysia. One can expect that the car market will settle down at some point, that the differences with Kia will be resolved and that Bermaz will pick up additional brands. If we hold Bermaz for another ten years, the company is likely to have generated substantial profits for the fund (and cash). Of course, over the next decade, at times it might well look clever or dumb to still own the company, but today it looks to me like an 8.6% bond with more upside than downside. Our faith is in Bermaz's management. Chiew Sia's forecast (more bearish than the company's) has Bermaz on a PE 8x current year's earnings with a dividend yield of 8.6%. As a long-term owner, that gives us an earnings yield of 12.5%. If we assume the company's future will be worse, then we should look to sell. Bermaz themselves think that they are at the nadir. Recently, both the company and the major shareholders have been buying back shares. As stated above, Bermaz's share price decline has impacted the fund's NAV by around 4% this year. But we believe the current share price doesn't fully reflect Bermaz's future earnings power and future industry economics. What I've tried to do here is to explain the difference in thinking between those with a longer-term ownership mindset and share trading. Over time, I believe Bermaz's contribution to the fund's economics will remain sound. There is, nearly always, a divergence between a company's underlying business and its share price performance. In the case of Bermaz, the company's recent performance has disappointed, and the share price has reacted unfavourably. I believe that Bermaz will contribute to the value of the fund. It is the nature of the business that the earnings don't come in a succession of smoothly increasing amounts, but in uneven lumps. As long as they come, we can live with that. With strong cashflows, high dividends and long-term earnings power, and although the market has punished the stock, we continue to see Bermaz as undervalued, resilient and well managed.

BSD Analysis:
The manager maintains a bullish long-term view on Bermaz Auto despite significant near-term headwinds and a 64% decline in share price from cost basis. The investment thesis centers on the company's strong cash generation capabilities, trading at 8x PE with an 8.6% dividend yield and 70% payout ratio. Management's proven track record in vehicle distribution and the cyclical nature of the automotive industry support the contrarian position. Key challenges include pricing disputes with Kia and competitive pressure from Chinese manufacturers dumping vehicles in Malaysia. The manager emphasizes an ownership mentality over trading, noting that despite paper losses, the company has generated RM22 million in dividends since purchase. Recent share buybacks by both management and major shareholders signal confidence at current valuations. The long-term thesis relies on market normalization, resolution of Kia franchise issues, and potential acquisition of additional brands.

Pitch Summary:
We continue to hold a large position in Wise, our cross-border money transfer business. Like Medley, Wise is the cheapest, fastest, and most user-friendly service in its category – offering unmatched transparency in a market long plagued by hidden fees and poor UX. It is attacking a massive addressable market with durable competitive advantages yet has captured only low-single-digit share to date. At its April 3rd Investor Day, Wise laid out a bold vision to scale from £145 billion in FY25 cross-border volume to trillions of pounds over the next decade – positioning itself as the global infrastructure layer for moving money. As a reminder from our investment thesis (link), Wise serves three customer groups – individuals, SMBs, and corporations – while delivering the same core value proposition: speed, cost, and transparency. Among individuals, Wise now has 8.8 million active users (+18% y/y), moving £106 billion (+21%) and generating £1.2 billion in revenue (+16%). The service is incredibly efficient at new customer acquisition, given that two-thirds of new customers arrive via word of mouth. Furthermore, most customers begin with simple money transfer but then tend to quickly adopt additional services such as multi-currency accounts and debit cards, which add another layer of growth at minimal incremental cost to acquire or serve. This £3 trillion market remains deeply underpenetrated, with Wise holding just 5% share, a proportion that is growing capital efficiently with each passing year. Among SMBs, 453,000 customers (+15%) moved £38.9 billion LTM (+24%), generating £435 million in revenue (+11%). Once Wise Business was only a secondary FX solution, but it is now evolving to become many SMBs primary banking solution – handling payments, invoicing, payroll, and interest-earning balances. With integrations across accounting tools and local payment rails, Wise Business is the low-cost solution for global SMBs. This £14 trillion market remains largely untapped, with Wise under 1% share. Wise Platform – the enterprise segment – is the biggest long-term lever. It offers white-label FX infrastructure to large digital banks (e.g. Monzo, Nu Bank, N26), online platforms (e.g. Interactive Brokers, Brex, Ramp), and increasingly, global banks (e.g. Standard Chartered, Morgan Stanley, Itaú). This segment represents ~£15 trillion in annual cross-border volume. After years of investment in enterprise-grade capabilities, Wise has finally begun gaining meaningful traction. As larger institutions continue to migrate towards Wise Platform, the pressure mounts on others to follow suit, lest they fall behind on cost and UX. Importantly, Wise doesn't need to win every large bank in the world – its current partners already represent significant volume potential – but each additional win has the potential to expand its future volumes and revenues by many multiples of its existing size. To close the Investor Day, CEO Kristo Käärmann said the following: "We have every reason to be enthusiastic about this relentless expansion… But we are not in this position by accident, it is a result of over a decade of taking the hard options over the easy ones. It's building infrastructure over gimmicks. It's avoiding distractions, embracing local laws and regulations, financial prudence and steady prioritization of customer outcomes. And the success that we talked about today, it didn't really come overnight. It came over a long term. And it comes through us maintaining our focus on this mission. I think the next 10 years are not going to be easier than the last 14, and they will demand no less discipline in adhering to our principles. But you are in a company like no other in recent history, one that has set the foundations to eventually fix how money works across borders, across national borders for people and for businesses. And it's your support as owners we will keep our focus on becoming the network for the world's money. And this is the point at which both customer and shareholder value are at the greatest and the most aligned." Kristo and the team laid out a vision for a more than 10x increase in volume, yet the tone was anything but promotional. Words like "discipline," "financial prudence," and "shareholder value" were used deliberately. From transcripts, third-party research, and conversations with former employees, this appears to be a genuine part of the company's DNA – not just window dressing for the investment community. At ~30x underlying PBT, 15–17x reported PBT and with ~100% conversion of reported PBT to free cash flow, we're not betting on a binary outcome around Wise's long-term vision. Rather, we're buying a high-quality business with durable advantages, a long reinvestment runway, and attractive returns on incremental capital at a modest multiple relative to its growth. The upside is substantial and the downside appears limited: the company has no debt, and any valuation risk stems from fundamentals and market-assigned multiples. In the event of a global downturn and/or a shift towards global isolationism, Wise's cross-border volumes could be adversely affected, however they should continue to gain market share at a high clip thanks to its low-cost, customer-aligned model.

BSD Analysis:
The manager maintains a strong bull thesis on Wise, emphasizing its position as the lowest-cost, fastest, and most transparent cross-border money transfer service in a market historically plagued by hidden fees and poor user experience. The investment case rests on Wise's massive addressable market opportunity across three customer segments totaling over £30 trillion in annual volume, while currently holding minimal market share. The individual segment shows strong momentum with 8.8 million active users growing 18% annually, moving £106 billion and generating £1.2 billion revenue, with efficient viral customer acquisition and expanding service adoption. The SMB segment represents significant untapped potential in a £14 trillion market where Wise holds under 1% share, evolving from secondary FX solution to primary banking infrastructure. The enterprise Wise Platform segment offers the greatest long-term leverage, providing white-label infrastructure to major financial institutions in a £15 trillion market with accelerating adoption creating competitive pressure. At 15-17x reported PBT with 100% free cash flow conversion, the manager views the valuation as modest relative to growth potential and reinvestment runway. The combination of durable competitive advantages, disciplined management, debt-free balance sheet, and substantial market share gains opportunity creates an attractive risk-reward profile despite potential macro headwinds.

Pitch Summary:
Planet Fitness pioneered the "high value, low price" (HVLP) gym model and operates over 2,500 gyms globally with 18.7 million members. Their straightforward, no-frills approach offers excellent value, appealing to a diverse and casual fitness demographic. Members enjoy a clean environment, regularly updated equipment, and accessible pricing starting at $10 per month, with their premium "Black Card" membership providing extensive benefits and access to all locations. Planet Fitness captured roughly 90% of U.S. gym membership growth from 2011-2019. The company's dominant scale coupled with high advertising spend drives powerful growth, and the company plans to double its number of U.S. locations. Planet Fitness demonstrates robust same-store sales growth, high EBIT margins, strong returns on capital, and excellent free cash flow conversion.

BSD Analysis:
Vulcan presents a compelling bull case for Planet Fitness, highlighting the company's successful disruption of the traditional gym industry through its innovative "high value, low price" model. The manager emphasizes Planet Fitness's remarkable market share capture, noting the company secured approximately 90% of U.S. gym membership growth during the 2011-2019 period, demonstrating the effectiveness of its differentiated positioning. With over 18.7 million members across 2,500+ locations globally, the company has achieved significant scale advantages that support its growth strategy and operational efficiency. The accessible $10 monthly pricing model appeals to a broad demographic of casual fitness users, creating a large addressable market beyond traditional gym-goers. Vulcan is particularly attracted to the company's strong unit economics, including robust same-store sales growth, high EBIT margins, and excellent free cash flow conversion. The ambitious expansion plan to double U.S. locations suggests substantial growth runway, supported by the company's proven franchise model and strong brand recognition. The combination of scale advantages, differentiated positioning, and strong financial metrics positions Planet Fitness well for continued market share gains in the fragmented fitness industry.

Pitch Summary:
Medley is our largest position at cost. The company operates two high-quality businesses in Japan: a dominant online healthcare jobs marketplace (HR PF) and a growing software segment (Medical PF) that provides mission-critical software to hospitals, clinics, pharmacies, and dental offices. The HR PF segment generated ¥21 billion (~$150 million) of revenue last year at a 42% EBITDA margin. Thus far, HR PF has proven to be very difficult to compete with: the product is cheaper, easier to use, and more effective than alternatives, consistently delivering a higher volume of qualified candidates per listing. While Medley has just 5% market share of total healthcare job transitions, its high customer retention with increasingly larger customer cohorts suggests a long runway for continued industry consolidation. Medical PF operates in a more competitive landscape but offers similar potential. Medley's EMR software, in particular, has high switching costs, and the company is expanding both organically and via low-multiple acquisitions. Win rates are high, and earnings are beginning to inflect upward. The company is on pace to hit its 2029 mid-term targets of ¥100 billion in revenue and ¥20 billion in EBITDA, implying a 30% revenue CAGR and 36% EBITDA CAGR. Nearly all of EBITDA has historically converted to free cash flow. At ~17x NTM cash earnings, the current valuation is too low given the growth and profitability profile. If Medley reaches ¥20 billion of FCF and trades at 20x, it could be worth ¥400 billion (¥12,315 per share) – around 4x today's price – with further upside, as that would still reflect only 10–15% market share in its core verticals. Importantly, Medley is insulated from many of the macroeconomic risks facing global markets. Its services are mission-critical within a non-cyclical, domestically focused industry, positioning it to remain resilient across a wide range of global scenarios. Furthermore, Medley is led by its Founder, Kohei Takiguchi, who retains 18% ownership of the company and who, according to multiple calls with former Medley employees, is maniacally cost conscious, tracking every penny of expenses and requiring a high IRR to greenlight new initiatives; a rare trait among Japanese Executives.

BSD Analysis:
The manager presents a compelling bull case for Medley, positioning it as the largest holding at cost with a clear path to significant value creation. The investment thesis centers on two complementary business segments: a dominant healthcare jobs marketplace (HR PF) generating ¥21 billion revenue at 42% EBITDA margins, and a growing medical software platform (Medical PF) with high switching costs. The manager highlights Medley's competitive moat through superior product quality, cost advantage, and effectiveness in delivering qualified candidates, despite holding only 5% market share in healthcare job transitions. The company's ambitious 2029 targets of ¥100 billion revenue and ¥20 billion EBITDA imply exceptional growth rates of 30% and 36% respectively, with strong free cash flow conversion. At 17x NTM cash earnings, the manager sees significant undervaluation, projecting potential 4x upside to ¥12,315 per share if the company achieves 20x FCF multiple. The defensive characteristics include mission-critical services in non-cyclical healthcare, domestic focus insulating from global trade tensions, and founder-led management with 18% ownership and disciplined capital allocation. The combination of growth, profitability, competitive positioning, and valuation discount creates an attractive risk-adjusted opportunity.

Pitch Summary:
NICE is a global enterprise software company that provides mission-critical contact center software. NICE was a material contributor last quarter. As we said last quarter, the company continues to perform well, and fundamentals are strong. Cloud revenue has grown in line with our expectations. We believe that generative AI will continue to drive cloud adoption and that AI is an opportunity rather than a threat to NICE's business. As the leading platform in the space, the company has many competitive advantages that position them well to win. Cloud penetration is in the low 20% range today and AI will likely accelerate cloud adoption, which should benefit NICE. We believe that this growth will more than offset any seat count attrition due to automation. Furthermore, data and customer examples show AI is driving higher levels of revenue per customer and that AI specific product adoption is increasing rapidly. We followed our discipline and added to our position during the quarter.

BSD Analysis:
Vulcan maintains a bullish stance on NICE, viewing the company as a dominant player in the mission-critical contact center software market with strong competitive positioning. The manager emphasizes that NICE's fundamentals remain robust, with cloud revenue growth meeting expectations and the company well-positioned to capitalize on AI-driven trends. Vulcan sees generative AI as an accelerant rather than a threat, believing it will drive faster cloud adoption and increase revenue per customer. With cloud penetration currently in the low 20% range, the manager sees significant runway for growth as AI adoption accelerates the migration from on-premise to cloud solutions. The firm's confidence is demonstrated by their decision to add to the position during a period of stock underperformance, following their value discipline. NICE's leadership position and competitive moats are expected to enable the company to capture disproportionate value from the AI transformation in customer engagement software. The manager believes AI-specific product adoption is accelerating and will drive higher customer lifetime values despite potential seat count reductions from automation.

Pitch Summary:
Havas is a French company that spun out of Vivendi in December 2024. Overall, I see it as a decent business that should continue to grow over time, with a stock price that is far too cheap. Havas is a multinational advertising and public relations company that provides a range of marketing services from ad creation to media buying to multimedia interactive communications. It earns decent returns on capital and uses its free cash flow to acquire smaller competitors and to pay a dividend. Looking at its financial history, the business is surprisingly resilient – for example, in the 2008—2009 crisis, its sales and earnings declined for one year before recovering to new highs in 2010. And during COVID, Havas's earnings declined for one year before rebounding in 2021. Overall, I estimate that we paid less than 7x trailing cash earnings, and Havas's shares have gotten even cheaper in the recent stock market selloff. In market downturns, sometimes recent spinoffs are sold aggressively, and I think that this dynamic has made Havas especially attractive now. I used the cash that we had to buy it, and if we had more cash I would buy us more Havas.

BSD Analysis:
Curreen Capital initiated a 6% position in Havas at €1.533 per share, viewing it as an undervalued spinoff opportunity. The manager highlights Havas's resilient business model, noting the company recovered quickly from both the 2008-2009 financial crisis and COVID-19 disruptions. The investment thesis centers on attractive valuation at less than 7x trailing cash earnings for a business that generates decent returns on capital. Havas operates across the advertising value chain from creative services to media buying, providing diversified revenue streams. The company maintains disciplined capital allocation, using free cash flow for strategic acquisitions and dividend payments. The manager believes recent spinoff selling pressure has created an exceptional entry point, expressing confidence by stating he would purchase more shares if additional capital were available. This represents a classic value play on a quality business trading at a significant discount to intrinsic value.

Pitch Summary:
JEOL is a Japanese company that produces semiconductor production equipment, electron microscopes, mass spectrometers, and other devices with high technology content. Of note, JEOL has important exposure to globally growing investment in leading-edge extreme ultraviolet (EUV) lithography equipment. JEOL is one of two dominant companies making multi-beam mask writers, which are used to draw circuit patterns on photomasks in EUV lithography. Founded in 1949 by Kenji Kazato, JEOL began operations as Japan Electron Optics Laboratory Co. with a mission to promote basic science in post war Japan. The company began producing electron microscopes and eventually expanded into other business lines, including semiconductor and medical equipment. Over the last ten years, the company has generated mid-to-high teens income growth, expanded EBITDA margins by more than 1,200 basis points, and generated respectable returns on invested capital. Going forward, JEOL has substantial room for further improvement as the company is still operating at profitability and capital efficiency levels well below global peers. Moreover, management is due to publish a new medium-term management plan for fiscal years 2025 to 2027, which is expected to include updated growth targets, higher capital efficiency hurdles, and greater capital return commitments. Fund Management became interested in JEOL Common after a sizable derating associated with expectations for slower near-term adoption of EUV lithography equipment for advanced nodes and general apathy towards Japanese equity markets. While we acknowledge that the near-term outlook appears clouded, we believe the longer-term growth outlook for multi-beam mask writers and other business lines is attractive. To this point, while semiconductor capital equipment may be the main event, JEOL's electron microscope business is also a very attractive business in its own right. As one of the makers of extremely sophisticated scientific microscopes, JEOL has end market exposure to a wide array of applications, such as drug discovery, food safety, and contaminant analysis, putting it in competition with extremely well-regarded companies like Thermo Fisher and Carl Zeiss. We find further comfort in the company's net cash balance sheet, which provides staying power, operational flexibility, and optionality. Furthermore, an activist investor has amassed a significant stake in the company, which could put pressure on management to continue to improve operations and capital efficiency, return capital to shareholders, or even consider strategic alternatives. Fund Management believes that the Fund acquired shares at a discount to estimated NAV, with a double-digit free cash flow yield and prospects for double-digit free cash flow growth. In addition, prospective returns could be amplified by value-accretive share repurchases as well as other corporate developments designed to surface shareholder value.

BSD Analysis:
Third Avenue initiated a new position in JEOL, a Japanese semiconductor equipment and scientific instruments manufacturer, following a significant valuation decline. The manager's thesis centers on JEOL's dominant position in multi-beam mask writers for EUV lithography, where it competes with only one other company globally. The investment case is strengthened by the company's impressive operational improvements over the past decade, including mid-to-high teens income growth and 1,200+ basis point EBITDA margin expansion. JEOL trades at attractive valuations with double-digit free cash flow yields despite operating below peer profitability levels, suggesting significant operational leverage potential. The company's diversified revenue streams beyond semiconductors, including electron microscopes for drug discovery and scientific research, provide defensive characteristics. An activist investor presence adds a catalyst for improved capital allocation and potential strategic alternatives. The net cash balance sheet provides financial flexibility during uncertain market conditions, aligning with Third Avenue's preference for strongly capitalized companies during volatile periods.