Investment Pitches

Pitch Summary:
Winpak is a Canada-based manufacturer of packaging materials and machines, primarily serving the food, beverage, and healthcare industries across North America (sales: 79% US, 14% Canada, 7% Mexico). Major products include various specialty cups, plastic films (e.g. for wrapping fresh meat and cheese), pouches, and plastic liners. Generally, this is a business that looks similar to packagers Upslope has long followed – e.g. Amcor, Bemis, and Sealed Air. However, the company is highly unusual in a few respects: (1) Winpak is massively under-levered, carrying about 2.3x net cash (vs. typical leverage for packagers of ~2x net debt at the low end to ~6x for private packagers), and (2) the company has a majority shareholder (54%) that also owns a highly complementary business (Wipak – yes, the spelling is too close!). While this is interesting on its own, let's be clear: Winpak is not a "high-quality" business – it's a slow grower focused on defensive end markets (food) exposed to secular headwinds and change (single use plastics = bad). While the headwinds are very real, they aren't new and WPK isn't oblivious. The company is as well positioned as anyone to change course and move with the market. So, why bother with shares now? Three simple reasons: (1) earnings have likely stabilized and should inflect due to recent investments, (2) the balance sheet presents significant optionality – e.g. the company recently announced its first-ever major buyback program (up to 6.5% of float), and (3) shares are very cheap (13x NTM EPS, ~8% normalized FCFF yield).

BSD Analysis:
Upslope presents an opportunistic value play in Winpak, acknowledging the company's limitations while highlighting compelling risk-reward dynamics. The manager is transparent that this is not a high-quality business, describing it as a slow-growing packager facing secular headwinds from single-use plastic concerns. However, three key factors drive the investment thesis: earnings stabilization from recent investments, significant balance sheet optionality, and attractive valuation. The company's unusual capital structure stands out with 2.3x net cash versus typical industry leverage of 2-6x net debt, providing substantial financial flexibility. Management's first-ever major buyback program (up to 6.5% of float) signals capital allocation discipline and confidence. At 13x NTM EPS and an 8% normalized free cash flow yield, shares appear deeply discounted. The 54% controlling shareholder relationship with complementary business Wipak adds strategic optionality. While secular headwinds are real, the manager believes Winpak is well-positioned to adapt and the current valuation more than compensates for risks.

Pitch Summary:
DSM Firmenich is a leading global specialty ingredients and nutrition company. Upslope previously owned DSM (then known as "Royal DSM,") having exited almost three years ago. A lot has changed. The short version: valuation has gotten cheaper despite the business quality increasing very significantly. The long version: DSM has a long history of "active portfolio management" – acquiring and divesting business units with an eye towards improving business predictability, quality, and shareholder value. To that end, the past few years have been transformative, as DSM: (1) Sold its far more cyclical Materials unit for €3.9 bn, (2) Acquired Firmenich (largest private fragrance and taste ingredients co. in the world) for €14.0 bn, (3) Announced plans (recently) to divest its Animal Nutrition & Health unit (25%+ of 2023 sales), including much of DSM's more volatile (and often distracting) vitamin lines. What does "new" DSM look like today? DSM is now a leading consumer-focused specialty ingredients company with three segments focused on: perfumery & beauty, food & beverage taste/texture, and health & nutrition. Generally, DSM sells highly specialized products that are key contributors to a product's (e.g. perfume, yogurt) scent, texture, taste or nutritional value – a classic case of selling a relatively small, but essential piece of a finished product. This provides DSM with price and volume stability while serving end markets that are not particularly cyclical. Shares appear attractive today owing to a positive event path (expected Animal unit sale, vitamin headwinds abating, and continued success with Firmenich integration and balance sheet de-levering) and attractive valuation. On the latter point, despite the many segment changes at DSM – each of which clearly improves the quality and durability of DSM – shares now trade cheaper than when Upslope exited ~3 years ago (15x today vs. 17x NTM EBITDA). By comparison, existing pure play specialty ingredients companies such as Givaudan and Symrise currently trade for 25x and 17x EBITDA, respectively.

BSD Analysis:
Upslope presents a compelling transformation story for DSM-Firmenich, highlighting how strategic portfolio management has dramatically improved business quality while valuation has become more attractive. The manager emphasizes three key transformative actions: divesting the cyclical Materials unit for €3.9bn, acquiring Firmenich for €14.0bn, and planning to divest the volatile Animal Nutrition unit. This repositioning creates a focused specialty ingredients company serving stable, non-cyclical end markets in perfumery, food & beverage, and health & nutrition. The investment thesis centers on selling essential but small-value components of finished products, providing pricing power and volume stability. Multiple catalysts support the bull case including the pending Animal unit divestiture, abating vitamin headwinds, successful Firmenich integration, and balance sheet deleveraging. The valuation opportunity is compelling at 15x NTM EBITDA versus 17x when Upslope previously exited, while pure-play peers Givaudan and Symrise trade at 25x and 17x respectively.

Pitch Summary:
Remitly is my most recent purchase, only a few weeks ago. Let me preface this by saying I pride myself on inactivity. I don't want to be too frequent a market participant, because it can degrade the advantage of a long time horizon. I try to use that edge intentionally and only invest in situations where I have a differentiated view on what a company will look like, and what its future prospects will be, five or ten years out. Not if I think they will beat earnings next quarter or next year, but if I think the company's business model will be fundamentally better, and benefit from a more advantaged market position, way out in the future – and I don't think that view is reflected in the market's expectations. Back to Remitly. I've been following the company for around a year now and became interested when Mario Cibelli pitched it on the Yet Another Value Podcast. I work in payments, so remittance is a business model and market I am quite familiar with but hadn't really looked at for investment before. This year, however, the market soured on the company's narrative. This seemed to be at odds with a business that was firing on all cylinders, so I bought a small stake. Remitly was an instinctual purchase. The time seemed right; I had become more comfortable with the story, more positive on leadership, and had reason to argue with the prevailing view. The industry is in a secular transition, and Remitly is on the right side of the disruption. The source of the market's pessimism doesn't particularly concern me; the fact is expectations were lowered, and the investment equation had changed. I'm happy to have some skin in the game and look forward to learning more as an owner.

BSD Analysis:
The manager presents Remitly as a contrarian investment in the digital remittance space, leveraging his payments industry expertise to identify an opportunity amid market pessimism. The investment represents a departure from his typical inactivity approach, driven by a disconnect between strong business fundamentals and negative market sentiment. Having followed the company for a year after learning about it through Mario Cibelli's podcast pitch, the manager became increasingly comfortable with the leadership and business story. The thesis centers on Remitly being positioned on the right side of secular industry disruption in cross-border payments. The manager emphasizes his long-term investment horizon, focusing on the company's prospects 5-10 years out rather than near-term earnings performance. His payments industry background provides differentiated insight into the remittance market dynamics and competitive positioning. The investment timing appears opportunistic, with lowered market expectations creating an attractive entry point for patient capital. The manager's approach of taking a small initial stake to learn as an owner demonstrates disciplined position sizing while maintaining upside optionality in a misunderstood situation.

Pitch Summary:
In the appendix of this letter, you will find our investment thesis on Grifols SA, a family-owned Spanish multinational and a leading player in the oligopolistic plasma-derived therapies market. Years of mismanagement and poor corporate governance, exacerbated by COVID-19 challenges and high debt, have weighed on its performance. However, we now see the business inflecting due to an operational improvement plan implemented by a new management team. Founded in 1909, Grifols is a family-owned Spanish multinational specializing in plasma-derived therapies. Operating in the arcane hemoderivatives industry, Grifols is a market leader and holds ~70% market share in the U.S. along with its two largest competitors: CSL and Takeda. The business generates ~80% of its revenue from its Biopharma segment which procures, researches, manufactures, and sells therapeutic products derived from plasma. The proteins in the plasma can be used to treat a variety of autoimmune and neurological diseases. Over the years, Grifols has built substantial infrastructure which is difficult to replicate: 1. Grifols operates 390 plasma donation centers, where they compensate donors for plasma, which constitutes ~35% of raw material costs. This raw material is frozen for two months before being transported to a fractionation site. 2. At their manufacturing facility - a fractionation plant - the plasma is isolated into the individual proteins. Here, they also conduct a variety of tests to meet strict regulations. 3. The proteins are then sent to one of their facilities (U.S., Spain, or Ireland), for final packaging and delivery to their customers which can be hospitals, pharmacies or physician offices. It is important to note that it takes 9 to 15 months to process a sample of plasma. The main proteins they process include Immunoglobulin (IG), Alpha-1, and albumin. IG accounts for ~60% of revenue and has the highest margins. The current investment opportunity arises from years of mismanagement and poor corporate governance, which have weighed on performance. The Grifols family, which holds a 38% stake (including 8% via its family office), has engaged in controversial governance practices that raise concerns about shareholder alignment. This includes related-party transactions, conflicts of interest on the board and questionable capital allocation decisions. During COVID-19, Grifols struggled as plasma procurement costs surged. The business was also highly leveraged and continued to take on more debt which just made the situation worse. In January of 2024, a short report on the company resulted in the stock falling by ~50% and Spanish authorities investigating Grifols. This investigation as well as pressure from activist investors finally led to the owners finally separating themselves from the management, bringing in a new CEO and CFO. This new management implemented an operational improvement plan which started showing positive results in the third quarter of 2024. Also in the fall of 2024, Grifols entertained discussions with Brookfield for a potential take-private which severely undervalued the business and seems to be squeezing out public investors. This offer was rejected by the board of directors and now Grifols, under new management and with less oversight from the family, is focused on executing on the operational improvement plan. Despite the market punishing Grifols for poor corporate governance and performance, Grifols remains a good business that commands a great position in its industry. We believe that this presents a buying opportunity as Grifols operates in an attractive oligopolistic industry with significant competitive advantages. The sector benefits from limited substitutes, strong pricing power, high barriers to entry (capital investment, regulatory approvals, and specialized expertise), and stable long-term demand for plasma-derived therapies. Key risks include (i) potential U.S. immigration policies under a Trump administration, which could restrict plasma donation supply and drive-up costs, and (ii) the emergence of recombinant protein substitutes, which could erode up to 20% of revenue by 2028. Grifols lies at an attractive entry point to own a great business. The company is severely undervalued, which reflects extremely negative investor sentiment. This is a result of the lack of trust in the owners, operations, and performance. However, this doesn't take away the fact that this business is the second-largest player in the space and that they have some of the finest manufacturing facilities that exceed regulatory requirements. The company has made genuine operational improvements and has competent people in the driver's seat who can steer the business in the right direction to gain market share. The new management launched an operational improvement plan which would help resurrect the business post-restructuring. This entailed cutting redundant positions and selling off non-performing assets like donor centers with low footfall and more. This plan of theirs spans the entirety of 2024 and falls into 2025 but its results have been evident through the very successful third quarter of the year. Record Revenues: Grifols achieved all-time high revenues of €7,212 million in 2024, growing +10.3% YoY. Q4 2024 revenue alone was €1,976 million (+13.6% cc) - EBITDA and Margins: Adjusted EBITDA reached €1,779 million for 2024, with a margin of 24.7%. This marks ~19% growth in EBITDA vs. 2023, driven by higher Biopharma volumes and efficiency gains. In Q4, adjusted EBITDA margin rose to 26.6%, highlighting ongoing cost improvements. Net Profit: Grifols' net profit nearly tripled YoY, coming in at €157 million for 2024. Free Cash Flow (FCF): 2024 free cash flow was €266 million (pre-M&A), a significant turnaround from negative FCF in 2023. The company exceeded its FCF guidance, with Q4 alone contributing €335 million in FCF through improved working capital management and higher earnings. Leverage & Liquidity: Net leverage ratio fell to ~4.6× EBITDA by year-end (down from 6.8× in Q1 2024). This improvement was driven by EBITDA growth, better cash generation, and a €1.6 billion cash inflow from the Shanghai RAAS stake divestment. Year-end liquidity was strong at ~€1.9 billion (cash plus undrawn facilities), bolstering financial flexibility. Management is confident about leverage going forward, see it under control, no refinancing needed till Q4 of 2027. Key Business Drivers: The Biopharma division led growth, with particularly robust demand for immunoglobulins. The IG franchise grew ~15% for the full year (Q4 +17.9% YoY), aided by strong volumes and favorable product mix. The plasma derivatives industry is very interesting when it comes to some distinct characteristics. We see that the market is oligopolistic with CSL, Takeda, and Grifols owning 70% market share. This does limit price wars and fosters competition when it comes to innovation and operational efficiency. The industry benefits from several tailwinds, including growing international adoption and an expanding plasma supply. Outside the Western markets, plasma-derived therapies remain relatively uncommon, but this is gradually changing. A prime example is China, which now accounts for a significant portion of CSL's albumin-based product sales. Additionally, autoimmune diseases are widely underdiagnosed due to diagnostic challenges. However, as awareness improves, demand for plasma-derived therapies is expected to rise accordingly. Finally, various experts anticipate that Europe will ease plasma donation restrictions as its supply deficit with the U.S. widens, allowing Grifols to optimize returns from its German collection centers. The threat of new entrants remains low due to the high capital requirements for manufacturing facilities and donor centers, stringent regulatory approvals from agencies such as the FDA (U.S.) and EMA (Europe), and the need for specialized expertise. Established players benefit from economies of scale and vertically integrated operations, which are difficult for new entrants to replicate. The barriers to entry are too high for a new player even with enough capital to just set up shop as it takes regulatory expertise, technical expertise, supplier connections, and much more. Even if a new entrant overcomes these barriers and develops a drug that demonstrates clinical superiority, patient dependability, and favorable unit economics, adoption remains a challenge due to high switching costs. Grifols' moat is multi-faceted and robust, with several key strengths: Cost Leader: As one of the largest plasma collectors globally, their economies of scale and vertical integration make them a cost leader. Barriers to Entry: We also see that they operate in a space with high barriers to entry. Through their decades of experience navigating stringent regulations, and employing top talent and expertise, they have gained a significant competitive advantage. Brand: Grifols has built a brand on trust and reliability; its reputation for quality and reliability is crucial in the healthcare industry. Currently, the business is underearning due to elevated costs from COVID-19, high debt levels, and restructuring expenses. In 2023, Grifols' ROE stood at 0.7%, significantly below its historical average of 9.6%. Meanwhile, ROIC was only 3.7%, lagging behind industry leaders like CSL, primarily due to financial leverage and substantial debt obligations. ROCE remained low at 3.8%, reflecting operational inefficiencies and underutilized assets. The financial model assumes 9% revenue growth, based on industry trends, competitor performance, and historical financial data from the past decade. Margins are projected to expand from 40% to approximately 45% over the next three years, driven by declining plasma costs and the new management's operational improvement plan, which aims to turn operations leaner. The DCF shows an upside of 103% with a price target of €17 through the terminal growth method and an upside of 109% with a price target of €19. Grifols presents a unique opportunity to purchase a fundamentally strong business at a significant discount, driven by historical mismanagement and inefficient capital allocation.

BSD Analysis:
White Falcon presents a compelling turnaround thesis on Grifols, positioning it as a deeply undervalued leader in the oligopolistic plasma-derived therapies market. The fund's investment rationale centers on new management's operational improvement plan showing tangible results, with 2024 revenues hitting record highs of €7.2 billion (+10.3% YoY) and EBITDA growing 19% to €1.8 billion. The manager emphasizes Grifols' dominant market position alongside CSL and Takeda, controlling 70% of the U.S. market with substantial competitive moats including 390 plasma donation centers, regulatory expertise, and high barriers to entry. The investment case hinges on corporate governance improvements following activist pressure, with new CEO Nacho Abía and CFO Rahul Srinivasan replacing family management after a damaging short report. White Falcon highlights the company's deleveraging progress, with net leverage falling from 6.8x to 4.6x EBITDA, and strong free cash flow generation of €266 million in 2024. The DCF analysis suggests 103-109% upside potential with price targets of €17-19, trading at attractive 2.4x P/S versus peers at 4.1x average. Key risks include potential recombinant protein substitutes threatening up to 20% of revenue by 2028 and U.S. immigration policy impacts on plasma supply under Trump administration.

Pitch Summary:
Teledyne is a leading producer of specialty electronics, components, and technologies – primarily focused on imaging sensors and cameras. Segments include Digital Imaging (55% of FY 2024 sales), Instrumentation (24%), Aerospace & Defense Electronics (14%), and Engineered Systems (7%). End markets largely include industrial automation and aerospace/defense. 25% of sales are to U.S. government entities and half are to customers outside the U.S. The company was historically known as a reliable "compounder" – with a strong track record of disciplined acquisitions and an intense focus on growing free cash flow per share. However, in 2021 Teledyne stumbled following its transformative acquisition of FLIR (which Upslope previously owned). Shares have lagged indices and peers sharply ever since – and have de-rated significantly (now trading for a ~6% 2025 FCFE yield). While the FLIR acquisition was ill-timed, challenges seemed to mostly stem from exogenous factors (ramping inflation + supply chain woes), as opposed to poor strategic and/or financial merit. Yes, FLIR makes the company a bit more "cyclical"/less predictable. But that's okay if the reward is a strengthened competitive position, as appears to be the case. Regardless, expectations for the stock have clearly been reset. And importantly, a refreshed Teledyne – with FLIR fully integrated, a soon under-levered balance sheet, and a solid new CEO transitioning in – seems uniquely positioned to benefit from tailwinds in reshoring, automation, and rising defense spending.

BSD Analysis:
Upslope presents a compelling turnaround thesis for Teledyne, viewing the company as a fallen compounder trading at attractive valuations after years of underperformance. The manager argues that the 2021 FLIR acquisition, while poorly timed, was strategically sound and that integration challenges stemmed primarily from external factors rather than execution issues. With shares now trading at a 6% 2025 free cash flow yield compared to historical premium valuations, the risk-reward appears favorable. The thesis centers on multiple catalysts including FLIR integration completion, balance sheet deleveraging, new CEO leadership, and exposure to secular tailwinds in reshoring, automation, and defense spending. Teledyne's diversified end markets (55% digital imaging, 24% instrumentation, 14% aerospace/defense) provide multiple avenues for growth recovery. The manager acknowledges increased cyclicality from FLIR but views this as acceptable given the strengthened competitive position and reset expectations.

Pitch Summary:
Xometry recently blew earnings out of the water, and the stock jumped over 40% on the day. Volatility has been par for the course over the last three years, though not always to the upside. While I have no evidence to support this, I suspect the extreme price action reflects a constantly evolving view of the bigger picture; the market hasn't decided if it believes in it or not, but it recognizes something is there. The bigger picture, as I see it, is that Xometry is digitizing a massive industry. Buying custom parts is a tedious, analog process today. Not many companies are trying to solve the problem in the same way as Xometry, and of those players, it is by far the largest. Xometry's approach is particularly powerful because scale accrues to its advantage. From my view, it's a classic digital marketplace disruption story. Xometry's business is enabled by an AI instant quoting engine. This technology alone is not a competitive advantage; it's a foundational technology layer that allows them to pursue a new business model category and offer a "wow" customer experience. Xometry's primary competitive advantage is the scale and scope of its network, and as it continues to grow, I expect this advantage to deepen. It's classic network effects. I believe scale wins on the internet, and if you can remove the friction from a manual / analog sourcing process, people will choose digital every time. That's the crux of the thesis: millions of custom parts are transacted each year, and Xometry is going to steadily take share of that volume. I think this provides a long runway to grow whether or not they really excel in production (though I think they likely will). Production is no doubt an accelerant – an offensive move to drive further scale – but I think if Xometry were to simply dominate the prototyping market, it would still be a successful outcome for shareholders.

BSD Analysis:
The manager views Xometry as a classic digital marketplace disruption story targeting the massive custom manufacturing industry. The investment thesis centers on Xometry's position as the largest player digitizing the traditionally analog and tedious custom parts sourcing process. While the AI instant quoting engine enables the business model, the manager identifies network effects and scale as the primary competitive advantages, expecting these moats to deepen as the platform grows. The manager believes digital solutions will inevitably win over manual processes when friction is removed, positioning Xometry to capture increasing share of the millions of custom parts transacted annually. Recent strong earnings performance drove 40% single-day gains, though the manager notes persistent volatility reflects market uncertainty about the long-term opportunity. The thesis provides multiple paths to success, with production capabilities serving as a growth accelerant while prototyping market dominance alone could deliver satisfactory shareholder returns. The manager demonstrates confidence in the secular shift toward digital manufacturing platforms and Xometry's ability to capitalize on this transformation through superior scale and network effects.

Pitch Summary:
RDFN - In December 2022 the fund took a small position in the real estate brokerage firm Redfin at a cost of $4.5 per share. In April 2025 Redfin announced it was being acquired by the leading brokerage firm Rocket Companies (RKT) for $12.50 per share in stock. The transaction makes a lot of sense because RDFN will be stronger and more profitable as a customer acquisition service for a much larger and well capitalized national mortgage player. After the transaction closes in 2Q we plan to keep our RKT stock as the business is better positioned than Redfin to benefit from even a slight recovery in the housing market.

BSD Analysis:
The manager executed a successful value investment in Redfin, generating a 178% return from the $4.50 entry price to the $12.50 acquisition price by Rocket Companies. The December 2022 purchase timing proved prescient, capturing the stock during a depressed housing market cycle. The strategic rationale for the Rocket acquisition is compelling, as Redfin's customer acquisition capabilities will be enhanced by integration with a larger, better-capitalized mortgage origination platform. The manager views the combination as creating a stronger competitive position in the housing ecosystem, with Rocket better positioned to capitalize on any housing market recovery. Rather than taking profits, the decision to hold the RKT stock post-transaction reflects confidence in the combined entity's prospects. This successful investment demonstrates the manager's ability to identify undervalued assets in cyclical industries and benefit from strategic consolidation. The transaction validates the thesis that Redfin's technology and customer acquisition assets were undervalued by the market.

Pitch Summary:
Turning to Spire Global. I sold a sizable chunk of my position early this year, so it's worth unpacking the decision. I think every investment thesis exists on a continuum between people-led and business model-led; you need both, but I find it typically leans one way. With Spire, the business model is what drew me in (it is quite Planet-esque), but Peter Platzer seemed to be the relentless driving force behind its success. He sold a clear vision, and he seemed committed to building a generational business. Then he stepped down as CEO, and I lost the people-led story. If you repeatedly outline a vision for the business measured in decades, why move to a non-operational role in the early innings? Was it a board-led move? Did he not believe in the company anymore? And why is his wife now the CEO? These are questions to which I don't have good answers, and while I still think Spire is a unique asset, I became uncomfortable owning the company in size. Do I still believe its prospects skew positively? Yes. Am I confused about what's going on at the top? Yes. Did I want to reduce some uncertainty and wait for the fog to clear? Yes. Do I think there is a chance I will be a buyer again in the future? Again, yes.

BSD Analysis:
The manager presents a nuanced view of Spire Global, acknowledging both the company's attractive business model and his concerns about recent leadership changes. Initially drawn to Spire's Planet-like satellite constellation business model, the manager was particularly impressed by founder Peter Platzer's vision and commitment to building a generational business. However, Platzer's unexpected transition from CEO to a non-operational role created significant uncertainty, especially given his previous emphasis on long-term value creation measured in decades. The manager finds the leadership transition suspicious, questioning whether it was board-driven and expressing concern about the founder's wife becoming CEO. Despite maintaining belief in Spire's positive prospects and unique asset base, the manager reduced his position size due to uncertainty around the leadership situation. The stance reflects a wait-and-see approach, with the manager keeping the door open for future re-investment once leadership clarity emerges. This demonstrates disciplined risk management when investment thesis components become unclear.

Pitch Summary:
SPOT - Spotify remains our largest position. In the fourth quarter the company's free cash flow was up 123% over last year resulting from strong operating leverage that the market had not priced in the valuation. Spotify ended 2024 with 675 million subscribers between paid and ad supported. Spotify and YouTube are the primary beneficiaries of the mega trend shift from linear media to podcasting. One area of disappointment, and an area for possible concern, is the company's challenges to grow advertising revenue and profitability. Advetising is an important component to the next leg of the company's profitability inflection and ability to achieve management's goal of €20 billion in future operating profit. The market has thus far been willing to ignore lagging advertising revenue because of continued growth in paid subscriptions and ability to sustain price hikes. In 2024 advertising only grew 7% representing about 12% of total revenue. Spotify is still struggling with targeting and performance advertising metrics that can compete with other scaled players like YouTube or Instagram. Although not yet alarming to the investment thesis, the lack of advertising revenue growth is something we are watching closely as the economy softens. The stock was up about 20% in the first quarter.

BSD Analysis:
The manager maintains Spotify as the fund's largest position, driven by impressive operational improvements and secular tailwinds. The company delivered exceptional 123% free cash flow growth in Q4, demonstrating the operating leverage inherent in the streaming model that the market had undervalued. With 675 million total subscribers, Spotify is well-positioned to benefit from the structural shift from linear media to podcasting alongside YouTube. The manager acknowledges a key risk in the lagging advertising business, which grew only 7% in 2024 and represents 12% of revenue, falling short of management's €20 billion operating profit target requirements. While Spotify struggles with ad targeting and performance metrics compared to YouTube and Instagram, the market continues to reward strong subscription growth and pricing power. The manager views the advertising weakness as a monitoring point rather than a thesis-breaking concern, particularly as the economy potentially softens. The 20% first-quarter gain reflects growing market recognition of the company's improving fundamentals and dominant position in the audio streaming revolution.

Pitch Summary:
Let's now talk about a different name: Thryv. Very basic business model, nothing too differentiated about it. I'm invested in the company, and recently increased the size of my investment, for one main reason: the leadership. It's a jockey bet. Joe Walsh successfully executed the same print to SaaS business model transition Thryv is currently undergoing at a prior company. At that company, shareholders earned a ~20x return. History doesn't repeat, but it rhymes, and great operators tend to remain great operators. Thryv participates in a massive market with countless permutations of competitors, but I think the greenfield aspect of the opportunity is often overlooked. There is ample growth to be had by simply growing into evolving demand, not necessarily stealing share from competitors. I believe that distinction is important and commonly not given enough weight. Thryv's core advantage is its ability to leverage longstanding relationships with small business owners across the country to sell locally at scale. This model allows them to more effectively capitalize on the natural evolution of SMB demand towards SaaS while maintaining a profitable business model (that is, not overspending on customer acquisition). I think it will just take solid execution for shareholders to reach a good outcome, and Joe Walsh is the guy to do it. One last note on Thryv: I highly recommend listening – not just reading the transcript – to every earnings call. The CEO and CFO have a great rapport, having worked together for something like two decades, and sometimes I think Joe Walsh doesn't prepare any notes and just talks off the top of his head; the candor is truly refreshing and appreciated.

BSD Analysis:
The manager presents Thryv as a pure management quality play, acknowledging the business model lacks differentiation but betting on CEO Joe Walsh's proven track record. The investment thesis centers on Walsh's previous success executing an identical print-to-SaaS transition that generated 20x returns for shareholders, with the manager believing great operators consistently deliver results. Thryv operates in a massive SMB market where the manager sees greenfield growth opportunities through natural demand evolution rather than competitive share gains. The company's key advantage lies in leveraging established relationships with small business owners to sell SaaS solutions at scale while maintaining profitable unit economics. The manager recently increased his position size, demonstrating conviction in Walsh's execution capabilities during the ongoing business model transition. The investment appears to rely heavily on management quality, with the manager praising the leadership team's two-decade working relationship and candid communication style. The thesis suggests patient capital can be rewarded through solid execution in a large addressable market with favorable secular trends toward SaaS adoption.

Pitch Summary:
CZR - In terms of upside it is not hard to see $80 or $90 per share for CZR in present value using a simple breakup value analysis (200% to 300%+ upside) from today's $25 price. Although Vegas and regional brick and mortar casino revenue declined by 1% in 2024, we are invested in CZR for the unrecognized earnings power of the high margin, high return on capital online gaming business. As the largest and arguably most investor-friendly gaming and hotel business in the US, CZR is benefiting from state-by-state legalization of online gaming. In 2024 CZR's online gaming business (Caesars Palace and Horseshoe Apps) grew 20% to 1.2 billion with EBITDA up 207% to $117 million over 2023. In 4Q 2024, iGaming revenue grew 65% on top of 54% growth in 2023. Helping to fuel 2025 online gaming growth, Caesars is launching a live, iCasino in-app product in Michigan and New Jersey following legalization in those states. CEO Tom Reeg is confident that the online gaming business is on track to achieve $500 million in EBITDA as planned. Once achieved, the online business would be worth well in excess of the entire company current market cap of $5 billion. Setting aside this potential, CZR should earn over $1 billion in after-tax free cash flow in 2025 implying a 20%+ equity yield on the stock today. Caesars recently expanded its board to include two Carl Ichan-appointed members. The stock was down over 25% in the first quarter.

BSD Analysis:
The manager presents a compelling sum-of-the-parts thesis for Caesars Entertainment, projecting 200-300% upside to $80-90 per share from the current $25 price. The key investment driver is the rapidly growing online gaming segment, which generated explosive 207% EBITDA growth in 2024 despite representing a small portion of total revenue. The online business achieved 65% revenue growth in Q4 2024, building on 54% growth in 2023, demonstrating accelerating momentum as state-by-state legalization expands. Management's target of $500 million in online EBITDA would alone exceed the company's entire $5 billion market cap, highlighting the market's failure to recognize this high-margin, high-ROIC business. Even excluding the online gaming upside, the manager calculates CZR should generate over $1 billion in free cash flow in 2025, implying a 20%+ equity yield. The addition of Carl Icahn-appointed board members suggests potential activist involvement to unlock value. The 25% first-quarter decline creates an attractive entry point for this multi-faceted value opportunity.

Pitch Summary:
The overarching theme of AI in consumer credit brings another portfolio name, Upstart, into the discussion. Each company approaches the problem slightly differently, but with a similarly thoughtful business model backed by focused execution. In general, I think the problem of consumer credit is a massive opportunity, AI is a perfectly matched solution, and as a result, the industry is likely to evolve significantly over time. I expect Pagaya and Upstart to be major winners from this reshuffling.

BSD Analysis:
The manager views Upstart as a complementary holding to Pagaya in the AI-driven consumer credit transformation theme. While the commentary is brief, the manager positions Upstart as having a thoughtful business model with focused execution, approaching consumer credit differently than Pagaya but with similar strategic advantages. The investment thesis centers on AI being a perfectly matched solution for the massive consumer credit opportunity, with the industry poised for significant evolution. The manager expects both Pagaya and Upstart to be major beneficiaries of this industry reshuffling, suggesting he sees substantial long-term value creation potential. The positioning indicates confidence in Upstart's ability to capitalize on AI-powered credit underwriting disruption. However, the limited detail suggests this may be a smaller position compared to Pagaya, or the manager may be grouping these AI credit plays together thematically rather than providing detailed individual analysis.

Pitch Summary:
When I started buying Pagaya in early 2024, I had no idea it would turn into my largest position today. I simply saw a disconnect between what I viewed as a founder-led company with a uniquely powerful business model and a consistent track record of growth – even through a major credit cycle – and what the market viewed as a questionable second-look loan originator. I spent a lot of effort trying to understand what I was missing or where I might be wrong but came away each time thinking if it looked and smelled like a good business, it just might be. I invested a lot of time and money into Pagaya, and it's paid off much faster than I would have guessed, though the process was accelerated by multiple expansion. In other words, more people have come around to the view it is a viable business with lots of potential, but there is still a lot of work to be done. I expect future returns to be much more closely tied to the fundamental progression of the business, but I'm in it for the long run. The overarching theme of AI in consumer credit brings another portfolio name, Upstart, into the discussion. Each company approaches the problem slightly differently, but with a similarly thoughtful business model backed by focused execution. In general, I think the problem of consumer credit is a massive opportunity, AI is a perfectly matched solution, and as a result, the industry is likely to evolve significantly over time. I expect Pagaya and Upstart to be major winners from this reshuffling.

BSD Analysis:
The manager identifies Pagaya as a misunderstood AI-powered consumer credit platform that has become his largest position. The investment thesis centers on a valuation disconnect where the market viewed Pagaya as a questionable loan originator while the manager saw a founder-led company with a differentiated business model and consistent growth through credit cycles. The manager conducted extensive due diligence to identify potential risks but concluded the fundamentals supported his bullish view. Recent outperformance has been driven by multiple expansion as market sentiment improved, though the manager expects future returns to depend more on business fundamentals. The broader thesis encompasses AI disruption in consumer credit, positioning both Pagaya and Upstart as beneficiaries of industry transformation. The manager views consumer credit as a massive addressable market where AI provides a natural solution, creating significant long-term opportunities. His conviction is demonstrated through substantial capital allocation and a long-term investment horizon despite the stock's recent appreciation.

Pitch Summary:
ENDI - On April 6, 2025, Endi Corp announced the sale of a 25% stake in its bond fund subsidiary CrossingBridge for $25.6 million. This implies a non-control valuation of over $100 million for CrossingBridge compared to the entire company's pre-deal valuation of about $60 million. The reason for the 25% sale is unclear but my guess is that founder David Sherman wanted to raise growth capital without diluting ENDI stock. According to the company's website, CrossingBridge's assets under management were $3.8 billion as of March 31, 2025, up from $3.6 billion in February, the previous month. CrossingBridge is growing like a weed and benefiting from strong demand for its global credit products from institutions seeking yield. Prior to the sale ENDI had $20 million in shareholder equity comprised of mostly cash and investments as of December 31, 2024. Although ENDI is up over 30% YTD the stock remains undervalued based on earnings power with EBIT that could reach $20 million within three years and a fortress-like balance sheet to fund growth.

BSD Analysis:
The manager presents a compelling value opportunity in ENDI Corp, highlighting a significant catalyst in the CrossingBridge subsidiary sale that reveals hidden value. The transaction implies the subsidiary alone is worth more than the entire company's previous market valuation, creating an immediate revaluation opportunity. CrossingBridge's rapid AUM growth from $3.6B to $3.8B in just one month demonstrates strong momentum in the institutional credit market. The manager projects EBIT could reach $20 million within three years, suggesting substantial earnings growth potential from current levels. With a fortress balance sheet of mostly cash and investments, ENDI has the financial flexibility to fund this growth without dilution. Despite already gaining 30% year-to-date, the manager believes the stock remains undervalued relative to its earnings power. The combination of hidden asset value, growing AUM, and strong balance sheet positioning makes this an attractive asymmetric opportunity.

Pitch Summary:
Bank of N.T. Butterfield (NTB) is an offshore bank and trust company operating in Bermuda, the Cayman Islands, the Bahamas, and the United Kingdom. With a strong presence in Bermuda and the Cayman Islands, holding over 30% of the deposit market share, Butterfield provides a range of banking services to a diverse clientele, ranging from high-net-worth individuals to reinsurance companies and hedge funds. Not surprisingly, one of NTB's key strengths lies in its well-established trust and asset management business, which offers wealth management services to high-net-worth individuals, family offices, and institutional/corporate clients. The company's trust business has over $132 billion in assets under administration, while the custody business has another $30 billion in assets – both of which generate highly attractive economics. The trust business requires minimal capital to grow assets under management and generates higher margins and returns on equity than traditional banking activities. Unlike a traditional retail bank, approximately 40% of the company's revenues are generated from fees – which are largely uncorrelated to interest rates. This creates recurring, interest rate agnostic revenue and provides Butterfield with a greater degree of operating leverage than standard banking models. As a wealth management bank with limited competition in Bermuda, its deposit base is sticky, providing a relatively low cost of funds. The unique attributes of the business, combined with Bermuda's corporate tax-free status, have created a bank that generates high returns on equity throughout the economic cycle. NTB has a long history of acquiring smaller trust and wealth management units of larger banks in the Bahamas and Cayman Islands, the most recent being the acquisition of trust assets from Credit Suisse. Larger banks often view trust and wealth management operations in so-called 'tax havens' as subscale and potentially risky for their reputation. The increased compliance costs make it challenging for these smaller businesses to generate attractive economics. However, Butterfield specializes in trust and wealth management within markets where it has established scale, making it an ideal acquirer for local competitors that are smaller in size. Butterfield takes a conservative approach to managing its liquidity and overall balance sheet. The company holds roughly 21% of its assets in cash and cash equivalents, compared to 3% for the average U.S. bank. When interest rates spiked in early 2023, resulting in the failure of Silicon Valley Bank and scores of other banks with mismatched assets/liabilities, NTB sailed through unfazed and even generated record profits. Butterfield also has minimal commercial real estate exposure, with a loan-to-deposit ratio of roughly 38% (compared to 70% for the U.S. peer median). The company has conservative lending standards, with a loan book that mostly consists of underwritten mortgages in Bermuda with a loan-to-value profile below 60%. While the company's loan book generates significant net interest income, the company also maintains a high quality fixed-income portfolio that is 100% comprised of AA or higher rated securities, that are primarily U.S. government guaranteed, which helps create a capital buffer well in excess of regulatory requirements. NTB currently trades around $34 per share (just slightly above our purchase price), with a tangible book value of $20. Over the last five years, the company has earned an average return on equity of 23% – and this return has actually increased with higher interest rates (the return on equity was 27% in 2023). Longer term, NTB has consistently delivered top quartile returns relative to U.S. regional banks, achieving these returns with a highly liquid balance sheet that mitigates risk through the cycle. At our purchase price, NTB traded at approximately six times earnings. We aren't alone in viewing NTB equity as undervalued. The folks running the bank agree, as the company has been repurchasing shares, reducing the outstanding share count by 6% over the last twelve months. Furthermore, Butterfield has historically targeted a 50% dividend payout, but has not raised its dividend in five years despite substantially growing its core earnings power. We suspect that the company has chosen to maintain flexibility to potentially manage any bond losses from increased interest rates in its held-to-maturity bond portfolio. As this portfolio seasons over the next two years, we think Butterfield could easily raise its dividend from $1.76 to more than $2.80 per share. At that point, we believe its shares would reprice substantially, as we know of no other banks generating returns on equity in excess of 20% and offering a 9% dividend yield.

BSD Analysis:
Moon Capital presents a compelling value thesis for Bank of N.T. Butterfield, emphasizing its unique positioning as a dominant offshore wealth management bank with exceptional returns on equity. The manager highlights NTB's differentiated business model, where 40% of revenues come from fee-based trust and wealth management services that are largely interest rate agnostic, providing more stable earnings than traditional banking. The bank's conservative balance sheet management, with 21% cash holdings versus 3% for average U.S. banks, demonstrated resilience during the 2023 banking crisis while peers failed. Trading at 6x earnings with a 23% average ROE over five years, the valuation appears attractive relative to the quality of the franchise. The manager sees significant upside potential from dividend normalization, projecting an increase from $1.76 to $2.80 per share as the held-to-maturity bond portfolio matures. The combination of share buybacks, market dominance in Bermuda/Cayman Islands, and acquisition opportunities from larger banks exiting the offshore wealth management space supports the investment thesis. At current levels, NTB offers the rare combination of high-quality banking franchise with exceptional returns and meaningful dividend yield upside.

Pitch Summary:
Planet Labs was probably the first stock I bought in significant size. I started buying in early 2023 at almost $5 per share, and for the next 18 months, the stock marched steadily lower. I bought the whole way down. Today, my average cost basis is $3.12, but the way I think about the future of the business, it shouldn't matter too much if my cost basis is $2, $5, or anything in between. If that view turns out to be reasonably accurate, I should do alright. What drew me to Planet is it being a true "one-of-one" business. Differentiation is a function of doing something differently, and Planet is very different from competitors. It designs, builds, and operates the largest fleet of earth observation satellites and has been the only company to image the entire Earth every day for eight years now. This dataset is a core, daily compounding advantage. I own the company because I believe the data it produces is immensely valuable, extremely difficult to replicate, yet still poorly monetized. Over the next decade, I expect the economic value of this data to increase non-linearly, and the gap between the value Planet creates and captures to narrow. Scaling up new constellations, increasing fusion of multiple sensors and data types, and moving further up the value chain into delivering solutions to customers, not raw data, will support this value unlock. It is much easier to sell answers than data, and AI is an accelerant to this endgame.

BSD Analysis:
The manager presents a compelling thesis on Planet Labs as a unique satellite imaging monopoly with significant untapped monetization potential. The investment centers on Planet's differentiated position as the only company providing daily global Earth imagery through the world's largest satellite constellation, creating a defensible data moat that compounds daily. The manager believes the company is undermonetizing its valuable dataset and expects non-linear value creation as Planet transitions from selling raw data to delivering actionable solutions. Key catalysts include constellation expansion, multi-sensor data fusion, and AI-powered analytics moving the company up the value chain. The manager demonstrates conviction through dollar-cost averaging during an 18-month decline, maintaining a $3.12 average cost basis. The thesis relies on the premise that Planet's unique dataset will become increasingly valuable as AI capabilities enhance data interpretation and solution delivery. The long-term value proposition appears strong given the high barriers to replicating Planet's global imaging infrastructure.

Pitch Summary:
We previously divested from Meta during a period of stagnant advertising growth and the company's initial, significant investment in the metaverse project. At that time, investors appeared complacent to the risks associated to an increasingly competitive landscape, and the Street's robust financial expectations as the company transitioned towards monetizing short-format video (Reels). The subsequent decline in Meta's stock price during 2022 reflected these concerns. Since then, Meta has demonstrably shifted its strategic focus. The company has prioritized operational efficiency, implemented strategies to monetize Reels effectively, and initiated a robust artificial intelligence (AI) development program. We believe the focus on AI represents a more prudent capital allocation strategy compared to the earlier metaverse initiative. Meta AI holds significant potential to unlock substantial monetization opportunities and enhance user engagement, while maintaining tight controls on operating costs. Meta's unparalleled global reach, fostered by its extensive suite of applications, translates to a dominant position within digital advertising. This competitive advantage is further bolstered by the difficulty of replicating Meta's user base. We anticipate that the company's ability to expand its global advertising market share and leverage AI for innovative business ventures should translate into 13-15% intrinsic value growth per annum. Undoubtedly, Meta faces ongoing challenges regarding user data privacy and content control. While regulatory scrutiny is likely to persist, we believe the long-term impact on intrinsic value should be minimal. Although increased legal costs are a consequence, greater data and content supervision could strengthen Meta's competitive moat.

BSD Analysis:
Mar Vista re-established a position in Meta after previously divesting during the metaverse investment period, reflecting confidence in the company's strategic pivot toward operational efficiency and AI development. The fund acknowledges their earlier concerns about stagnant advertising growth, competitive pressures, and metaverse capital allocation, which were validated by the 2022 stock decline. However, the investment thesis now centers on Meta's successful strategic refocus, including effective Reels monetization and robust AI development programs. Mar Vista views AI as a more prudent capital allocation strategy compared to metaverse investments, with significant potential to unlock monetization opportunities and enhance user engagement while maintaining cost discipline. The fund emphasizes Meta's unparalleled global reach and dominant digital advertising position, supported by an irreplaceable user base across its application suite. Management projects 13-15% annual intrinsic value growth, driven by advertising market share expansion and AI-leveraged business ventures. While acknowledging ongoing regulatory and privacy challenges, the fund believes long-term intrinsic value impact will be minimal, with increased oversight potentially strengthening competitive moats.

Pitch Summary:
We initiated a position in Broadcom in Q2. As a skilled aggregator, Broadcom acquires firms, streamlines their operations, and invests R&D dollars in mission critical products that generate industry leading profit margins, robust cash flows and high returns on invested capital. Its primary markets include AI accelerators targeting generative AI applications, networking & wireless semiconductors, and mission-critical infrastructure software solutions. Broadcom is well-positioned to benefit from the rapidly expanding demand for custom AI accelerator chips that support the evolution of the generative AI market. The company is the second-largest producer of AI accelerator chips behind Nvidia and leads the market in custom AI ASIC chips. Its customers include leading hyper scalers like Alphabet and Meta who are turning to Broadcom for custom silicon due to its performance and cost advantages. We believe the company is a direct beneficiary of a multi-year capital cycle driven by hyper scalers building out next-generation AI factories. Broadcom recently acquired VMware, the leader in virtualization software targeting the enterprise market. The integration of VMware is tracking ahead of plan as management has simplified its product bundles, transitioned to a subscription revenue model, and reduced operating costs. We believe this simplified go-to-market structure will result in strong top-line revenue growth and expanding operating margins. We believe Broadcom will compound intrinsic value per share in the mid-20% range over the intermediate term as it benefits from the AI-infrastructure build-out, a cyclical recovery in its legacy semiconductor business, and modestly accelerating growth from its infrastructure software business as VMware is successfully integrated.

BSD Analysis:
Mar Vista initiated a new position in Broadcom, expressing strong conviction in the company's multi-faceted AI and infrastructure software strategy. The fund emphasizes Broadcom's skilled aggregation model, highlighting management's ability to acquire companies, streamline operations, and generate industry-leading margins through focused R&D investment in mission-critical products. The investment thesis centers on Broadcom's strategic positioning as the second-largest AI accelerator chip producer and market leader in custom AI ASIC chips, serving hyperscalers like Alphabet and Meta seeking performance and cost advantages. Mar Vista views the company as a direct beneficiary of the multi-year AI infrastructure buildout cycle. The recent VMware acquisition adds a significant software component, with integration tracking ahead of plan through simplified product bundles, subscription model transition, and cost reduction. The fund projects mid-20% intrinsic value compounding over the intermediate term, driven by AI infrastructure demand, legacy semiconductor recovery, and accelerating VMware integration. This aggressive growth projection reflects high conviction in Broadcom's execution capabilities across both semiconductor and software segments.

Pitch Summary:
Salesforce's stock came under pressure in Q2 as the company modestly missed Street expectations for software bookings and reduced its FY2025 subscription revenue guidance to "around 10%" year-to-year growth from "greater than 10%." We believe Salesforce is experiencing cyclical pressures as software demand across the industry is pressured at the margin. This has led to longer sales cycles; smaller deal sizes and budgets being allocated away from enterprise software to emerging areas like generative AI. We continue to believe that Salesforce will see a tailwind to demand from its generative AI offerings as many AI use cases are found in front office software like customer relationship management. This, coupled with Salesforce's treasure trove of customer data, positions it well to exploit the evolution of next-generation AI offerings.

BSD Analysis:
Mar Vista maintains a bullish long-term perspective on Salesforce despite acknowledging near-term cyclical headwinds affecting the enterprise software sector. The fund recognizes the company's modest guidance miss and revenue growth reduction to "around 10%" as reflective of broader industry pressures including longer sales cycles, smaller deal sizes, and budget reallocation toward AI initiatives. However, the investment thesis emphasizes Salesforce's strategic positioning to benefit from generative AI adoption, particularly given the natural fit between AI use cases and customer relationship management software. Mar Vista highlights Salesforce's competitive advantage through its extensive customer data repository, which positions the company to capitalize on next-generation AI offerings evolution. The fund views current pressures as cyclical rather than structural, expecting AI-driven demand tailwinds to emerge as generative AI solutions mature. Salesforce was among the portfolio's biggest detractors during Q2, declining 14.6%, but the fund appears to view this as a temporary setback rather than a fundamental deterioration.

Pitch Summary:
Disney's shares declined after its earnings release, even though the company exceeded recently upgraded financial forecasts. While Disney+ and Hulu reached a milestone by turning their first quarterly profit, the company cautioned about theme park attendance returning to pre-pandemic norms. This signals a deceleration following a period of exceptional growth, impacting the stock as theme parks and experiences account for roughly 60% of Disney's earnings. Despite broader consumer worries, Disney's stock is still trading with a significant discount to fair value. We expect the gap between Disney's market price and its intrinsic value to shrink as its streaming division evolves and increases profitability over time.

BSD Analysis:
Mar Vista maintains a bullish long-term view on Disney despite near-term headwinds, emphasizing the significant valuation discount to fair value. The fund highlights a key inflection point with Disney+ and Hulu achieving their first quarterly profit, marking a crucial milestone in the streaming division's evolution toward sustained profitability. While acknowledging theme park normalization concerns, which impact 60% of earnings, the investment thesis focuses on the streaming business transformation as a primary value driver. The fund recognizes broader consumer spending pressures but views current market pricing as creating an attractive entry point relative to intrinsic value. Mar Vista's conviction centers on the expectation that Disney's streaming division will continue evolving and expanding profitability over time, ultimately closing the valuation gap. The fund modestly reduced its Disney position during Q2, likely managing position size after the stock's 18.8% decline. The pitch reflects confidence in Disney's long-term content and streaming monetization capabilities despite cyclical theme park challenges.