Investment Pitches

Pitch Summary:
Shares of Fidelity National Information Services continued a steady ascent since their recent bottom in October 2023, returning 24% in Q1. In February, FIS completed the sale of a majority stake in Worldpay to GTCR and began using the proceeds to pay down debt and buy back shares. The stock rallied after the company's most recent earnings report when management increased its buyback goal for 2024. Fidelity's self-help story is playing out nicely.

BSD Analysis:
Broyhill views FIS as a successful self-help story with management executing a clear value creation strategy through portfolio optimization and capital allocation. The sale of a majority stake in Worldpay to GTCR represents strategic focus, allowing FIS to monetize a non-core asset while reducing complexity. Management's disciplined use of proceeds for debt reduction and share buybacks demonstrates commitment to strengthening the balance sheet and returning capital to shareholders. The increased 2024 buyback target signals management confidence in the business trajectory and their ability to generate excess cash flow. The 24% quarterly return reflects market recognition of the turnaround progress since the October 2023 trough. FIS appears to be successfully navigating the transition from a sprawling conglomerate to a more focused, higher-quality financial technology provider. The combination of operational improvements and aggressive capital returns creates a compelling value proposition for shareholders.

Pitch Summary:
The GEO Group, Inc. designs, finances, and operates correctional and detention facilities, as well as electronic monitoring and community-based programs, in partnership with federal, state, and local agencies. We invested in GEO because we see value in its stable operating model, underpinned by multi-year government contracts and a consistent demand for outsourced correctional and detention services. The company's investments in electronic monitoring provide an additional avenue for growth, particularly through alternatives to large-scale detention programs. Notably, a recent 15-year agreement for a facility in New Jersey illustrates management's ability to secure incremental, long-term revenue streams and enhance cash flow visibility. We believe GEO is positioned to benefit from increased funding for Immigration and Customs Enforcement contracts, supported by expanded detention capacity and wider adoption of electronic monitoring. Furthermore, the company's ongoing deleveraging has improved its capital structure, providing flexibility to pursue new contract wins amid rising demand tied to evolving border security and monitoring priorities.

BSD Analysis:
The manager presents a bullish case for GEO based on its stable, government-contracted business model and improving financial position. The investment thesis relies on the consistent demand for outsourced correctional and detention services, backed by multi-year government contracts that provide revenue visibility. The recent 15-year New Jersey facility agreement demonstrates management's ability to secure long-term contracts that enhance cash flow predictability. Electronic monitoring represents a growth opportunity as governments seek alternatives to traditional detention, expanding GEO's addressable market. The manager expects GEO to benefit from increased ICE funding and evolving border security priorities under the current administration. The company's ongoing deleveraging efforts have strengthened the balance sheet, providing financial flexibility to pursue new opportunities. This combination of stable cash flows, growth optionality, and improved capital structure makes GEO an attractive value play in a niche market with high barriers to entry.

Pitch Summary:
U.S. Physical Therapy, Inc. (USPH) was one of the top detractors in the SMID Cap strategy in the second quarter. The company is a national operator of outpatient physical therapy clinics and a provider of industrial injury prevention services. Founded in 1990, they operate 683 outpatient physical therapy clinics in 43 states. Adjusted EBITDA was down in the most recent quarter due to lower reimbursements from Medicare, which represents approximately 30% of their revenue base. However, the company continues to offset the lower Medicare reimbursements with positive negotiations with commercial insurance payers, and they continue to make bolt-on acquisitions for new clinics and their industrial injury prevention business. We continue to have confidence in the management team and the long-term prospects for growth and improving financial performance in the business.

BSD Analysis:
SouthernSun maintains a bullish stance on U.S. Physical Therapy despite recent underperformance, demonstrating confidence in management's ability to navigate reimbursement headwinds. The fund acknowledges the near-term pressure from Medicare reimbursement cuts, which impact approximately 30% of the revenue base, but emphasizes management's proactive approach to offset these challenges through successful commercial payer negotiations. The company's scale advantage with 683 clinics across 43 states provides negotiating leverage with commercial insurers and operational efficiencies. Management's continued execution of bolt-on acquisitions for both physical therapy clinics and industrial injury prevention services demonstrates their commitment to growth despite reimbursement pressures. The industrial injury prevention business represents a diversification opportunity with potentially different reimbursement dynamics. SouthernSun's confidence in the management team suggests they believe the current challenges are manageable and that the long-term fundamentals of the physical therapy industry remain intact. The fund's expectation of improving financial performance indicates they view current headwinds as temporary, with the company's scale, diversification efforts, and management execution positioning it for recovery.

Pitch Summary:
Shares of Avantor gained 12% in Q1. We initiated a position in Avantor, a life sciences and tools company, in November 2023. After the company's private equity-backed management team made a significant acquisition pre-COVID and increased leverage to 7-8x, the business hit a wall. Now, with each of these headwinds set to reverse, we expect the business to make a comeback, yet management and the Street have been hesitant to forecast a recovery. Several analysts on the company's most recent earnings call questioned whether the 2024 guide was too conservative. Their inquiries were met with the diplomatic: "Our initial guidance is based on a continuation of trends from the last several quarters, giving us upside if recovery does materialize within the year." We've invested across enough similar setups to know that waiting around for tangible evidence of a recovery is a sure way to miss the recovery. And while the market waited, we continued building our position in the stock.

BSD Analysis:
Broyhill presents a compelling turnaround thesis on Avantor, positioning it as a classic contrarian value opportunity in life sciences tools. The manager identifies the core issue as excessive leverage (7-8x) from a pre-COVID acquisition that created operational headwinds when market conditions deteriorated. With these headwinds now reversing, Broyhill sees significant upside potential that both management and Wall Street analysts are underestimating. The conservative 2024 guidance provides meaningful upside optionality if recovery materializes, creating an asymmetric risk-reward profile. Broyhill's experience with similar turnaround situations gives them confidence to build positions before tangible evidence emerges, capitalizing on market skepticism. The 12% quarterly gain suggests early validation of their thesis, though the manager continues accumulating shares while the broader market remains cautious. This represents a classic special situation where operational improvements and deleveraging could drive substantial returns.

Pitch Summary:
Visa, Inc. is a global leader in electronic payments, facilitating transactions across an extensive international network. We own Visa for its durable competitive advantages, including a globally recognized brand and vast merchant acceptance network, which together create substantial barriers to entry. We held the position steady during the period.

BSD Analysis:
The manager maintains a bullish stance on Visa based on its dominant market position and strong competitive moat. The investment thesis centers on Visa's durable competitive advantages, particularly its globally recognized brand and extensive merchant acceptance network. These assets create substantial barriers to entry that protect Visa's market-leading position in electronic payments. The company's network effects become stronger as more merchants and consumers join the platform, creating a virtuous cycle of growth. Visa benefits from the secular shift toward digital payments globally, with significant runway for growth in emerging markets. The business model generates high margins and strong cash flows with minimal capital requirements. The manager's decision to hold the position steady suggests confidence in the long-term thesis despite short-term market volatility.

Pitch Summary:
Darling Ingredients Inc (DAR) is the largest publicly traded company turning edible by-products and food waste into sustainable products and a leading producer of renewable energy. DAR was the top detractor in the SMID Cap strategy in the second quarter. The stock has struggled after a difficult reset period in the third quarter of last year, as fears regarding new industry supply of renewable diesel and the lack of government support have increased. Over time and through thoughtful leadership and capital allocation, the company has built a vertically integrated growth engine with attractive returns on capital while consolidating the industry and driving innovation. After a strong year of EBITDA growth in 2023, we expect 2024 to be an important year of transition before growth resumes over the next 2-3 years, as recent M&A and growth capex drive deleveraging and free cash flow. The company is currently constructing sustainable aviation fuel (SAF) capacity expected to come online in 4Q24 and is evaluating further SAF expansion for the future, as growth and incentives in that market provide significant margin expansion and return on investment. The valuation is compelling, in our opinion, based on multiple scenarios and valuation methodologies. We spent time with local leadership in Brazil during the second quarter – reviewing significant investments that have been made over recent years as well as touring important production facilities. Brazil is the most important international market for Darling where they have consolidated the industry and enjoy very strong market share. While these investments have put some strain on the balance sheet in the near term, we believe the growth in cash flow and return on invested capital will deliver improved stock performance in the years ahead.

BSD Analysis:
Despite recent underperformance, SouthernSun maintains a bullish long-term view on Darling Ingredients, emphasizing the company's leadership position in converting food waste into sustainable products and renewable energy. The fund acknowledges near-term headwinds from renewable diesel supply concerns and reduced government support but views 2024 as a transitional year before resuming growth. Management's track record of building a vertically integrated platform with attractive returns on capital through industry consolidation and innovation provides confidence in the long-term strategy. The upcoming sustainable aviation fuel (SAF) capacity launch in Q4 2024 represents a significant catalyst, with SAF offering superior margins and returns compared to renewable diesel. SouthernSun's on-the-ground research in Brazil, including facility tours and management meetings, reinforces their conviction in the company's dominant market position and substantial investments in this key international market. The fund believes current valuations are compelling across multiple scenarios, with recent M&A and growth capex investments positioned to drive deleveraging and free cash flow generation. The combination of industry consolidation, innovation in higher-margin products like SAF, and strong international positions supports their thesis for improved performance over the next 2-3 years.

Pitch Summary:
Intercontinental Exchange, Inc. operates a global network of exchanges, clearing houses, and data services spanning major asset classes, including energy, equities, fixed income, and U.S. residential mortgages. We like the company for its diversified business model and leading position in energy markets, which continues to benefit from secular trends such as the global energy transition. We also see meaningful growth potential in the company's efforts to digitize mortgage workflows. A growing base of recurring revenue and free cash flow further support the fundamental stability of the business. During the quarter, heightened market volatility and geopolitical uncertainty drove expectations for strong growth in its exchanges segment, particularly within energy and interest-rate futures. While the mortgage technology segment continued to face cyclical headwinds, we believe signs of stabilization have emerged. We continue to hold our position.

BSD Analysis:
The manager presents a bullish thesis on ICE based on its diversified business model and strategic positioning in high-growth markets. The fund values ICE's leading position in energy markets, which benefits from secular trends like the global energy transition. The digitization of mortgage workflows represents a significant growth opportunity that could expand the company's addressable market. The recurring revenue model and strong free cash flow generation provide fundamental stability and predictable earnings. Recent market volatility has actually benefited ICE's exchanges segment, particularly in energy and interest-rate futures, demonstrating the defensive characteristics of the business during uncertain times. While the mortgage technology segment faces cyclical pressures, the manager sees early signs of stabilization. The combination of secular growth drivers, defensive characteristics, and multiple revenue streams makes ICE an attractive long-term holding.

Pitch Summary:
Shares of Fiserv gained 20% in Q1. This is the second quarter in a row where Fiserv has earned the title of top contributor. Clover volume continues to gain momentum, translating to operating leverage on the company's fixed cost base and robust free cash flow generation. Fiserv recently reported its fifth straight quarter of buybacks over $1 billion. We expect Fiserv to continue making smaller bolt-on acquisitions and returning excess cash to shareholders.

BSD Analysis:
Broyhill maintains a bullish stance on Fiserv, highlighting the company's strong operational momentum and capital allocation strategy. The manager emphasizes Fiserv's Clover payment platform as a key growth driver, with increasing volume translating to meaningful operating leverage given the company's fixed cost structure. The consistent $1+ billion quarterly share buyback program demonstrates management's commitment to returning capital to shareholders while maintaining financial flexibility. Fiserv's strategy of pursuing smaller bolt-on acquisitions suggests disciplined growth initiatives that can enhance their technology platform without overleveraging the balance sheet. The 20% quarterly gain reflects market recognition of the company's execution on both organic growth and capital returns. The manager's confidence in continued outperformance is supported by the sustainable nature of Fiserv's competitive advantages in payment processing. This represents a classic quality compounder with strong free cash flow generation and shareholder-friendly management.

Pitch Summary:
Dycom Industries, Inc. (DY), a leading provider of engineering and construction services to the telecommunications and utility industries, was a top contributor in the SMID Cap strategy in the second quarter as the company returned to organic growth and delivered continued margin expansion. The demand outlook for fiber construction in urban areas remains strong as carriers continue to generate good returns on their fiber investments. Public funding for fiber through the ARPA, RDOF, and BEAD programs is an additional source of significant demand. Notably, the $40 billion BEAD program is the largest federal broadband program ever in the U.S., and deployment is expected to start in 2025. According to management, the M&A environment has improved, and two small acquisitions were completed in the first half of 2024. With Net Debt/EBITDA at 1.6x, we believe DY has adequate financial flexibility to take advantage of additional opportunities. Steve Nielsen, CEO, will retire at the end of November, after 25 years leading the company. His successor, Dan Peyovich, was hired as COO in 2021 with succession in mind and has over 20 years of experience in engineering and construction. We plan to meet with Dan over the coming months to discuss his vision for the company. Overall, we believe DY is executing well and remains well positioned to capitalize on the strong tailwinds in the industry while maintaining a shareholder friendly capital allocation strategy.

BSD Analysis:
SouthernSun presents a compelling bull case for Dycom Industries, emphasizing the company's return to organic growth and margin expansion in a favorable industry environment. The fund highlights significant secular tailwinds from federal broadband programs, particularly the $40 billion BEAD program starting deployment in 2025, which represents the largest federal broadband initiative in U.S. history. The combination of strong private carrier demand for fiber construction and substantial public funding creates a multi-year growth runway. Management's successful completion of two acquisitions in 2024 demonstrates improved M&A execution, while the conservative 1.6x Net Debt/EBITDA ratio provides financial flexibility for additional opportunities. The upcoming CEO transition from Steve Nielsen to Dan Peyovich appears well-planned, with the successor having relevant experience and being groomed for the role since 2021. SouthernSun's confidence in management's shareholder-friendly capital allocation strategy and the company's positioning to capitalize on industry tailwinds supports their positive outlook. The convergence of organic growth, margin expansion, acquisition opportunities, and federal infrastructure spending creates multiple value drivers for the investment thesis.

Pitch Summary:
Boot Barn Holdings, Inc (BOOT) was the top contributor in the SMID Cap strategy for the second quarter. The company sells western and work-related footwear, clothing and accessories through more than 350 Boot Barn stores in the U.S. BOOT has plans to expand their store count to approximately 900 stores in the coming years, at the rate of an additional 10-15% new stores per year. In our opinion, management continues to execute the play book well – driving healthy operating margins and returning to positive same-store sales growth after several quarters of declining year over year figures – giving more confidence to future top-line growth. We continue to believe that the company has the ability to grow the top-line, improve margins, and execute their strategy with internally generated cash flows, while maintaining a conservatively levered balance sheet.

BSD Analysis:
SouthernSun maintains a bullish stance on Boot Barn, highlighting the company's successful execution of its expansion strategy and operational improvements. The fund emphasizes management's ability to drive healthy operating margins while returning to positive same-store sales growth after several quarters of declines. The expansion plan to grow from 350+ stores to approximately 900 stores represents significant growth potential, with a disciplined 10-15% annual store growth rate. The company's ability to fund this expansion through internally generated cash flows while maintaining conservative leverage demonstrates strong capital discipline. The return to positive same-store sales growth provides confidence in the underlying business momentum and management's execution capabilities. SouthernSun views the combination of unit growth, margin improvement, and conservative financial management as a compelling investment thesis. The fund's confidence in management's playbook execution suggests they expect continued operational excellence and market share gains in the western and work-related retail segment.

Pitch Summary:
Merit Medical Systems, Inc. designs and markets single-use medical devices globally, supporting a wide range of procedures from surgeries to biopsies. The company's renewed emphasis on margin improvement has yielded positive results, with high single-digit revenue growth translating into stronger earnings. Recent FDA approval of a new hemodialysis device further supports a positive growth outlook heading into 2026 and 2027. We reduced our position during the quarter due to valuation following recent share price appreciation.

BSD Analysis:
The fund maintains a positive outlook on Merit Medical despite reducing the position due to valuation concerns following strong performance. The company has successfully executed on margin improvement initiatives, demonstrating operational discipline by converting high single-digit revenue growth into stronger earnings growth. This suggests effective cost management and operational leverage in the business model. The recent FDA approval of a new hemodialysis device represents a significant catalyst that should drive growth acceleration in 2026 and 2027, expanding the company's addressable market in renal care. The company's broad portfolio of single-use medical devices across multiple specialties provides diversification and steady demand from healthcare procedures. However, the position reduction reflects valuation discipline, as share price appreciation likely brought the stock to levels where risk-reward became less attractive. The investment thesis centers on operational improvement and new product launches driving earnings growth in the medical device market.

Pitch Summary:
RB Global, Inc. operates a global marketplace for salvage vehicles through its IAA subsidiary and for used industrial equipment via its Ritchie Bros. division. With a strong international network and scale advantages, we believe the company is well-positioned to gain additional market share. The stock appreciated during the quarter, supported by better-than-expected results and healthy incremental EBITDA margins in the mid-50% range. Progress on integrating the IAA acquisition continues ahead of expectations, reinforcing the outlook for improved performance. We reduced our position during the quarter following share price strength.

BSD Analysis:
The fund maintains a bullish view on RB Global's market position while taking profits following strong performance. The company operates dual marketplaces for salvage vehicles (IAA) and industrial equipment (Ritchie Bros.), creating diversified revenue streams in asset disposition markets. The manager emphasizes the company's strong international network and scale advantages, which should drive continued market share gains in fragmented markets. Operational execution appears strong, with better-than-expected results and impressive incremental EBITDA margins in the mid-50% range, indicating excellent operational leverage. The IAA acquisition integration is progressing ahead of schedule, suggesting successful execution of the strategic combination. However, the position reduction following share price appreciation demonstrates disciplined profit-taking when valuation becomes stretched. The investment thesis centers on market share gains in asset disposition markets through scale advantages and successful acquisition integration.

Pitch Summary:
LegalZoom.com Inc. provides legal, compliance, and tax services to small businesses through its online platform. The stock rebounded during the quarter on better-than-expected earnings and improving gross margins, reversing a series of disappointing quarters. While we remain constructive on the company's long-term potential, particularly due to its sharpened focus on core businesses and the embrace of a subscription-based model, we reduced the position during the period based on our valuation discipline.

BSD Analysis:
The fund maintains a constructive long-term view on LegalZoom while exercising valuation discipline through position reduction following strong performance. The company appears to have turned a corner operationally, with better-than-expected earnings and improving gross margins reversing previous disappointing results. The manager highlights two key strategic improvements: sharpened focus on core businesses and adoption of a subscription-based model, both of which should drive more predictable revenue streams and improved unit economics. However, the decision to reduce the position despite positive fundamentals reflects the fund's disciplined approach to valuation management. The stock's rebound likely brought valuation metrics to levels where risk-reward became less attractive. This demonstrates the manager's commitment to buying low and selling high, even when maintaining positive long-term conviction. The investment thesis centers on the digital transformation of legal services for small businesses through a subscription model.

Pitch Summary:
Veracyte, Inc. is a diagnostics company that helps clinicians make more accurate diagnostic, prognostic, and treatment decisions for certain cancers. Its flagship commercial tests, Afirma and Decipher, continue to drive solid revenue growth and improving profitability. Although the company exceeded expectations on both the top and bottom line, shares declined following news that it may discontinue funding for its French subsidiary, which currently operates at an annual loss of approximately $20 million. We view the potential loss of revenue and minor delays in the pipeline as manageable, especially in light of improved profitability and strategic focus, and added to our position during the period.

BSD Analysis:
The fund increased its position in Veracyte despite share price weakness, viewing the market reaction as an overreaction to operational restructuring news. The manager emphasizes that the company's core commercial tests, Afirma and Decipher, continue delivering solid revenue growth and improving profitability, indicating strong underlying business momentum. The potential discontinuation of the French subsidiary, which loses approximately $20 million annually, is viewed as a strategic focus move that should actually improve overall profitability. While this may result in some revenue loss and minor pipeline delays, the manager considers these impacts manageable relative to the improved operational efficiency. The decision to add to the position during share price weakness demonstrates conviction in the long-term value proposition. The investment thesis centers on the company's leading position in cancer diagnostics with strong commercial execution and improving margins through strategic focus.

Pitch Summary:
International Money Express, Inc. is a financial technology company offering global money transfer services and related solutions. The company had previously initiated a strategic review, including a potential sale, but ultimately did not receive satisfactory bids and will remain a public entity. This outcome disappointed some short-term investors who had anticipated a near-term monetization event. Additionally, continued investment in its digital platform—while promising, with projected annual growth of ~80%—is expected to weigh on margins in the near term. Despite these short-term pressures, we are encouraged by the company's strong balance sheet and attractive double-digit free cash flow yield, and we modestly increased our position during the period.

BSD Analysis:
The fund maintains conviction in International Money Express despite recent disappointments around the failed strategic review process. While some investors expected a near-term sale, the manager views the company's decision to remain independent as potentially beneficial long-term. The significant investment in digital platform capabilities, projected to grow ~80% annually, represents a strategic pivot that should enhance competitive positioning despite near-term margin pressure. The fund's decision to increase the position reflects confidence in the underlying fundamentals, particularly the strong balance sheet and attractive double-digit free cash flow yield. This financial strength provides flexibility to invest in growth initiatives while returning capital to shareholders. The manager appears to be taking advantage of short-term disappointment to add to a position with solid cash generation characteristics. The investment thesis centers on digital transformation driving long-term growth in the money transfer market.

Pitch Summary:
Tandem Diabetes Care, Inc. provides technology solutions for individuals living with diabetes in the U.S. and internationally. The company's automated insulin delivery systems are positioned to gain market share within a large and growing addressable market, where more than half of Type 1 diabetes patients still administer insulin manually. During the quarter, Tandem reported top-line growth that exceeded expectations, driven by strong performance in its international division. However, U.S. results were weaker than anticipated due to muted seasonality and shipping delays. Despite these near-term challenges, we believe Tandem's platform remains well-positioned for long-term growth across both the Type 1 and emerging Type 2 diabetes markets, with further opportunities for incremental share gains. We slightly reduced our position during the period based on a reassessment of the company's risk/reward profile.

BSD Analysis:
The fund maintains a bullish stance on Tandem Diabetes Care despite near-term headwinds in the U.S. market. The manager highlights the significant market opportunity, noting that over half of Type 1 diabetes patients still use manual insulin administration, creating substantial room for automated delivery system adoption. International performance exceeded expectations, demonstrating the global appeal of Tandem's technology platform. While U.S. results disappointed due to seasonality and shipping issues, these appear to be temporary operational challenges rather than fundamental problems. The manager sees long-term growth potential extending beyond Type 1 diabetes into the larger Type 2 market. However, the position reduction suggests some caution about near-term execution risks and valuation considerations. The investment thesis centers on market share gains in a large, growing addressable market with significant unmet medical need.

Pitch Summary:
Portfolio holding Magnite is worth a deeper dive given the impressive list of customer wins the company has been announcing of late. Streaming players like Roku, Telus, Media Ocean and, most importantly, Netflix have all chosen Magnite to serve as their sole SSP (Supply Side Platform) to sell their ad inventory programmatically. The recent wins (which add to existing relationships with the likes of AMC Networks, DISH Media, Disney Advertising, FOX Corporation, FuboTV, LG Ads Solutions, VIZIO, and Warner Bros. Discovery) highlight the strength of Magnite's offering within the Connected TV (CTV) value chain as the largest independent – and unbiased – supply side ad exchange in the world. Though the wins have come in bunches lately, establishing this advantaged competitive position was not something that happened overnight, as CEO Michael Barrett has employed savvy, strategic acquisitions of CTV supply side peers Telaria (2020), SpotX (2021) and SpringServe (2021) to bolster this position. The timing of the wins, all announced just this year, also highlights the pace of adoption of the ad-paid model in streaming TV. With the average American household subscribing to four streaming services per month, too many people have too many streaming subscriptions. As consumers grow tired of subscribing to four (or more) platforms and paying four sets of monthly subscription fees to four different service providers, many are increasingly opting out of the subscription model and opting in to a streaming model subsidized by paid ads. As a result, ads are coming to streaming and look likely to emerge as the dominant means of monetization for television of the future, much in the way ads have been the primary driver of economics in linear television for decades. Only in the case of CTV, particularly where user data can be leveraged to match more specific ads to various users' likely interests, ads can be targeted and their impacts better measured than in the linear channels of old suggesting one day down the road the CTV ad market could meaningfully exceed what was once a mammoth sized linear TV ad market. According to Nielsen, streaming today is the most dominant form of content consumption, commanding nearly 40% share across all channels including broadcast, cable and other means. And though over 80% of Americans consume some TV through a streaming service, Advertising Video On Demand (AVOD) share today remains only ~25%. As nearly three-quarters of CTV advertising for digitally native FAST (Free Advertising Supported TV) or OEM players (like Roku, or Samsung, respectively) is done programmatically, this suggests dollars are likely to flow steadily to programmatic and support a high teens CAGR of market growth in CTV ad spending growth for years to come. As for Netflix, that Magnite could win the Netflix business to function as its sole SSP in CTV is impressive. That they have done so by displacing Xander, a Microsoft owned company, who Netflix just hired a little more than a year ago to provide the same service, speaks volumes to the Magnite value proposition and its ability to drive improved returns on ad spend through their superior technological offering. As promising as the Netflix win and the Good Housekeeping seal that goes along with it are, the financial implications to MGNI's future profitability are more exciting. Today, Netflix has 278M paid subscribers, with 53M opting for some level of the ad-based subscription package, up from just 15M just this past November. Industry estimates suggest Netflix is likely to earn $4B in ad revenue on a run-rate basis on their platform this year, likely growing to $5-6B+ in a few years. If half of this is transacted programmatically, some ~$2.5B to $3B of ad revenues is likely to soon pass through MGNI pipes. Anticipated take rates are subject to some debate, but our checks indicate the take rate is likely to match the full-service nature of the offering provided, suggesting the Netflix relationship alone can more than double Magnite's current CTV annual profit pool in coming years. Magnite's focus on becoming the only independent, scaled SSP player in CTV now looks set to pay off. After stalling out around 2% last year while digesting some new customer onboarding lumpiness and investing for the growth that has produced these new customer wins, CTV segment revenue growth looks likely to accelerate to 30% or better next year. All in, Magnite looks set to benefit as a winner in CTV with accelerating revenues and margin expansion as the ad-based streaming business now begins to accelerate in earnest.

BSD Analysis:
The manager presents a compelling bull case for Magnite based on its dominant position as the largest independent supply-side platform in connected TV advertising. The thesis centers on Magnite's impressive customer wins, particularly Netflix choosing them as their sole SSP, displacing Microsoft's Xander platform. This validates Magnite's superior technology and value proposition in programmatic advertising. The manager highlights the structural shift from subscription-based streaming to ad-supported models, with streaming now commanding 40% of content consumption but AVOD representing only 25% of the market, suggesting significant growth runway. The Netflix relationship alone could more than double Magnite's current CTV profit pool, with $2.5-3B in ad revenues potentially flowing through their platform. Strategic acquisitions of Telaria, SpotX, and SpringServe have strengthened their competitive moat. The manager expects CTV segment revenue growth to accelerate to 30%+ next year after a period of customer onboarding investments. The investment thesis relies on Magnite capturing disproportionate share of the high-teens CAGR growth in CTV advertising spending as the industry consolidates around fewer, scaled platforms.

Pitch Summary:
Timberland and mill company PotlatchDeltic was a detractor for the quarter. Despite sentiment shifting from the company being a tariff winner in Q1 to now being the victim of a sluggish housing market, the underlying business continues to see growth. Consequently, our position evolved, and we became net buyers during the quarter after trimming in the first quarter. The company continues to stand out as an undervalued, reliable dividend payer with a disciplined management team, despite some considering it a boring company.

BSD Analysis:
The manager demonstrates conviction in PotlatchDeltic by becoming net buyers during the quarter despite volatile market sentiment. The investment thesis centers on underlying business growth that continues despite shifting external narratives, from tariff beneficiary to housing market victim. This sentiment volatility appears to create opportunity rather than concern for the manager, who increased the position after previously trimming. The company's appeal lies in its combination of reliable dividend payments and disciplined management execution, characteristics that may be undervalued in current markets. The manager acknowledges the company may be perceived as boring, but views this as potentially advantageous for patient value investors. The timber REIT structure provides exposure to both land appreciation and operational cash flows, creating multiple value drivers over time.

Pitch Summary:
US beverage company Boston Beer detracted in the quarter. The stock price has continued to be under pressure due to macro concerns around declining alcohol consumption trends noted above. The company did report a solid operational quarter and is focused on what is within its control by growing margins. The company still has a strong net cash balance sheet to protect the downside, and it is continuing to execute substantial share repurchase at accretive prices. It feels way in the past at this stock price, but it was just a year ago that Boston Beer was the subject of takeover rumors.

BSD Analysis:
The manager maintains a bullish stance on Boston Beer despite recent underperformance driven by macro headwinds in alcohol consumption. The investment thesis emphasizes strong operational execution with the company delivering solid quarterly results while focusing on margin expansion within management's control. The balance sheet strength provides significant downside protection through a strong net cash position, reducing financial risk during challenging market conditions. Management's substantial share repurchase program at current prices demonstrates confidence and creates value for remaining shareholders. The manager notes the dramatic sentiment shift, referencing takeover speculation just one year ago, suggesting current valuation may not reflect intrinsic value. The combination of operational improvements, financial strength, and aggressive capital allocation at depressed valuations supports the bull case despite cyclical industry challenges.

Pitch Summary:
Alta Fox is one of the largest shareholders of Humble Group². The stock is down ~15% YTD, as it has been weighed down by the Swedish First North index, which is also down on the year. Despite share price weakness, Humble's fundamentals have been very strong—its sales are up over 10% organically in the first half of this year while adjusted EBITA has risen 20% as gross margins have improved. In our opinion, the combination of share price weakness and strong fundamentals has brought the consensus forward multiple of EBITDA to ~7x, significantly below both its long-term average and relevant peers with similar growth and margin opportunities. We remain very excited about Humble's future and confident in its growth prospects. It is rare to invest in a company at what we estimate is a double-digit free cash flow yield, growing earnings power/share at mid-teens per year organically, in an industry known for consolidation. After a disappointing 1H of shareholder returns that do not reflect underlying fundamentals, we believe the 2H outlook for HUMBLE's market performance looks much brighter. The company plans to uplist to the highest tier stock exchange in Sweden (Nasdaq Stockholm) in the next few months, which we believe could be a catalyst for additional institutional ownership. After studying all uplistings in Sweden from the First North to the Nasdaq Stockholm exchange over the last 10 years, the average uplisting has outperformed the OMX Index by ~19% from 2 months prior to uplist through 12 months post uplist. Companies with a >$300M USD market cap (like Humble) perform even better, outperforming the OMX by over 24% over the same time period. Additionally, Humble is planning to host a capital markets day in late September (around the same time as the uplist) to re-engage with the institutional investor community in earnest. We expect the capital markets day to be the first step in closing the gap between the current price and our estimate of intrinsic value. Management and the Board collectively own >30% of the company and seem equally frustrated as outside shareholders by Mr. Market's lack of appreciation for their strong fundamental performance. We believe Humble will either re-rate post-uplisting, or there will be growing pressure to seek a sale of the entire business at a material premium.

BSD Analysis:
Alta Fox holds a significant position in Humble Group, viewing the 15% YTD decline as disconnected from strong underlying fundamentals. The company delivered impressive first-half results with 10% organic sales growth and 20% adjusted EBITDA growth driven by margin expansion. Trading at 7x forward EBITDA with double-digit free cash flow yields and mid-teens organic earnings growth, the valuation appears attractive relative to consolidating industry peers. The upcoming uplisting to Nasdaq Stockholm represents a key catalyst, with historical data showing uplistings outperform the OMX Index by 19% on average, and companies above $300M market cap performing even better at 24% outperformance. The planned capital markets day in September should help close the valuation gap and attract institutional investors. With management and board ownership exceeding 30%, there's strong alignment and potential pressure for strategic alternatives if the market continues to undervalue the business. Alta Fox views this as a rare opportunity to invest in a quality growth company at an attractive valuation in a consolidating industry.