Investment Pitches

Pitch Summary:
Dangerous side effects (cancer and cardiac problems, could even be fatal); unapproved facilities and test results; related to 'snake oil' salesman; incoming share dilution; thousands of unreported adverse events based on FDA inspection; business could be cut by 70%;

BSD Analysis:
biote distributes hormone replacement therapies through a practitioner network. The short thesis stresses limited clinical validation of its treatments, exposure to regulatory crackdowns on alternative medicine claims, and a fragile business model that depends on constant recruitment of practitioners rather than organic consumer pull. Financials remain pressured by negative cash flow and repeated equity raises, raising dilution risk. Bears argue the company lacks scale, with weak payer coverage limiting addressable market size.

Pitch Summary:
Even though the share is down over 60% YTD, there could be more downside due to: a) questionable history makes it difficult to make partnerships; b) multiple expensive but failed acquisitions; c) overreliance on MSFT and GOOGL;

BSD Analysis:
Perion Network generates revenue primarily through digital advertising and its search monetization deal with Microsoft Bing. The short thesis points to heavy concentration risk, as a renegotiation of the Bing contract could wipe out a significant share of earnings. Additionally, the rise of AI-driven search interfaces threatens the existing monetization model, while the cyclical nature of ad budgets adds volatility. Competitors like Google and Meta have broader ecosystems, leaving Perion strategically disadvantaged.

Pitch Summary:
As long-time partners know, the fund has been invested in CC off and on since our inception. We entered the year with a small position, anticipating a turn in the TiO2 cycle after a miserable two-year downcycle. In mid-February, the company delayed reporting as it needed time to rectify an internal control issue. Then in late February, on literally the same day SHC priced its block trade, CC's board of directors abruptly placed the CEO, CFO, and principal accounting officer on administrative leave due to accounting irregularities regarding working capital management, though the company did provide preliminary results and year-end cash balances. While I understand the "scary" appearance of these headlines, I have followed CC for nearly a decade. I know the business very well, and I am comfortable modeling and analyzing it with minimal management guidance. Further, it is not a particularly accounting-sensitive business, with minimal deferred revenue and most inventory bought and sold on typical industry settlement terms. CC is also not a business where perceptions of its accounting and internal controls are likely to have a significant impact on its operations, as might occur with a bank or investment fund. After reading the press release, my assumption was that shares might fall 15% in response, and I was interested in adding to our position should shares fall more than 20%. To my surprise, CC initially traded down almost 50% the morning after. As a rule, I tend to trade very gradually, building and exiting our positions over a period of days or weeks. However, if an opportunity suddenly presents itself in what I perceive to be a significant overreaction, I am willing to move quickly, and I increased our CC position to roughly 10% in the first hour of trading. I was prepared to increase our position further if shares had fallen significantly more. Instead, that morning marked a near-term bottom and CC shares steadily traded higher in the days after. One week later, CC put out a press release clarifying the issues, shares rose further, and we reduced our position. The result of the internal review is that CC's prior management misstated working capital to show ~$2/sh. in excess cash, or ~8% of CC's current market cap. Prior management has now been fired. While this hardly paints CC's management and board in a favorable light, I believe the issue has been resolved and we retain a position, as discussed below. As I have previously written on CC extensively, I will keep this section brief. I believe CC is entering a cyclical upcycle following two years of earnings downgrades due to a prolonged TiO2 bear market. For example, CC earned total-company EBITDA of $1.1B with the TiO2 segment generating $290MM in EBITDA in 2023, which compares to total-company EBITDA of $1.3B and TiO2 segment EBITDA of $809MM in 2021. The decline in TiO2 EBITDA is not specific to CC, as the entire industry has been in a downcycle since H1 2022, as shown in the following chart of key competitor KRO's EBITDA/ton: During Q1, CC's TiO2 peers reported strong results, as underlying volumes improved, raw material costs fell, and TiO2 pricing held or improved. As a result, KRO and TROX shares rallied 25% and 35%, respectively, while CC's shares were down almost 20% at quarter end. I attribute CC's underperformance to the displacement caused by CC's accounting issues. As the TiO2 cycle continues to recover and CC gains distance from the C-suite issues, I believe CC shares can catch up to their peers. I estimate CC can earn $1.5B in 2025 EBITDA, which yields ~$4.50 in FCF/sh. While CC's multiple is debatable due to leverage concerns and legal troubles, an 8-12x multiple yields 50-100% upside.

BSD Analysis:
McIntyre presents a compelling cyclical recovery thesis for Chemours, capitalizing on a severe market overreaction to management accounting irregularities. The manager demonstrates deep fundamental knowledge, having followed the company for nearly a decade, and views the TiO2 downcycle as nearing its end after two brutal years. The accounting issues, while concerning from a governance perspective, appear to be isolated working capital misstatements totaling ~$2 per share rather than operational problems. The manager's tactical execution was exceptional, increasing the position to 10% during the 50% selloff and subsequently reducing exposure as shares recovered. With TiO2 peers KRO and TROX rallying 25-35% on improving fundamentals while CC lagged due to the accounting overhang, a catch-up trade appears likely. The 2025 EBITDA estimate of $1.5B implies substantial earnings recovery from the current $1.1B, with FCF projections of $4.50 per share supporting meaningful upside potential. An 8-12x multiple on normalized earnings suggests 50-100% appreciation as the cycle turns and governance concerns fade.

Pitch Summary:
Foot Locker is in the midst of a turnaround, led by former Ulta CEO Mary Dillon. The company is investing heavily in revamping its loyalty program, remodeling stores, and enhancing its digital presence. These strategic initiatives, coupled with increased emphasis on wholesale partnerships, position Foot Locker for a strong 2024. Despite challenges, such as Nike allocation concerns, the company's investments and industry tailwinds create opportunities for growth. The potential for improved customer engagement and operational efficiency supports a positive outlook.

BSD Analysis:
Foot Locker's strategic investments are aimed at revitalizing its brand and improving customer experience. The focus on loyalty programs and digital enhancements aligns with current retail trends, potentially driving customer retention and sales. The remodeling of stores and partnerships with brands enhance Foot Locker's market positioning. While Nike allocation remains a concern, the company's proactive strategies and industry tailwinds provide a favorable environment for growth. The turnaround efforts, if successful, could lead to significant value creation for shareholders.

Pitch Summary:
Trubar has shown impressive performance with significant revenue growth and improved profitability. The brand is expanding rapidly, entering 5,000 more retailers this year, which could surpass current revenue guidance. The ecommerce channel is performing well, and there are plans for SKU expansion. Despite recent dilution from a private placement, insider buying indicates confidence in the company's future. With sufficient cash and focus, Trubar is positioned to execute its strategy effectively throughout 2024.

BSD Analysis:
Trubar's recent private placement, while dilutive, was partially offset by insider buying, signaling confidence in the company's prospects. The expansion into additional retailers and the strong performance of the ecommerce channel highlight the brand's growth potential. The planned SKU expansion into protein powders and cookies could further enhance revenue streams. The bankruptcy of a competitor, PureKana, reduces market competition, potentially benefiting Trubar. The company's strategic focus and financial positioning suggest a promising outlook for continued growth.

Pitch Summary:
Sow Good has shown significant momentum in a rapidly growing market, with production quality and capacity far ahead of its competition. Despite a recent offering that led to a temporary drop in stock price, the company's fundamentals have improved. The company had a stellar earnings call, reiterating guidance and outlining future plans. If guidance holds, Sow Good could achieve a $25M EBITDA run rate by the end of 2024, making its current valuation attractive. The potential for multiple expansion could lead to the stock price doubling over the next year.

BSD Analysis:
The recent offering, while initially negative due to its impact on the stock price, provided an opportunity to increase the position at a lower price. Sow Good's strong earnings call and guidance suggest robust future growth, with the potential for significant EBITDA expansion. The company's leadership in production quality and capacity positions it well against competitors. The market's rapid growth and the company's strategic positioning could drive substantial returns. The valuation at 6x EV/EBITDA is compelling for a company with triple-digit annual growth.

Pitch Summary:
Regardless of the increasing revenue and higher guidance, the company allows spam bots and fraud on its platform, likely to face significant lawsuits and / or regulatory actions;

BSD Analysis:
Klaviyo offers marketing automation tools for e-commerce, focusing on email and SMS campaigns. While revenue growth has been rapid, bears argue it is unsustainable due to intensifying competition from Shopify-native tools, Salesforce, and Adobe. Customer concentration around Shopify is an additional vulnerability if platform integration economics shift. Growth expectations are high, with valuation embedding near-perfect execution, leaving little margin for error. Margins are strong today but could compress if customer acquisition costs rise or churn accelerates.

Pitch Summary:
Since our write-up of Dentalcorp in our Q3 2023 investor letter, the company's share price has traded in both directions with significant volatility. We have closely watched this volatility because in just a few months, the difference between the high and low price is a wide 40%. Observing such volatility, one might believe the share price is responding to information that impacts cash flows, and thus the company's intrinsic value. As a reminder, Dentalcorp is an owner/operator of Canadian dental practices. Since our Q3 2023 letter, there has been no significant disruption to dentistry. In fact, Dentalcorp's cash flows are highly predictable as the business is more inflation and recession-resilient than average, ~89% of Dentalcorp's patient visits are recurring, Canada has among the highest dental compliance rates in the world, and the company's interest expense is fixed. Given the utility-like predictability of Dentalcorp's cash flows, what could be driving the share price's volatility? Although we do not know the minds of other market participants with any degree of certainty, we think the market is focused on short-term oriented data points like quarter-by-quarter M&A volume and revenue growth. It makes sense to track these data points, but it would be a mistake to extrapolate changes in them from one quarter to the next without more context or study. Short-term oriented investors can miss the forest for the trees with an isolated focus on these quarterly figures. M&A volume is relevant for Dentalcorp because it is an M&A platform consolidating Canadian dentistry. The company guides to acquiring $20M of pro-forma EBITDA each year. It is relatively unimportant if the company acquires $7M or $3M of EBITDA (the company's run rate EBITDA is $250M+) in any given quarter so long as acquisitions occur at attractive prices and shortfalls in one quarter's M&A volume is recovered in future quarters. M&A is seasonal and often lumpy, and prior quarters prove this. In Q4 2023, Dentalcorp acquired ~$9M of pro-forma EBITDA, whereas in the prior quarter Q3 2023, the company acquired just ~$1M of pro-forma EBITDA. It is worth noting that although the company's current strategy is sector consolidation via M&A, they could equally, and we think very profitably, stop consolidating the sector, cut M&A related corporate costs, and efficiently operate or sell their current practices in a steady state. Dentalcorp shareholders have many ways to win. Quarterly revenue growth is important to monitor. In 2023, Dentalcorp's same practice revenue growth ("SPRG") was 6.5%. In the most recent quarter Q1 2024, the company's SPRG was a weaker 0.9%. Yet it would be a mistake to overextrapolate a quarterly SPRG deceleration. As it turns out, a new government dental subsidy is launching in Q2 2024 and eligible patients deferred their previously scheduled Q1 visits in order to qualify for the subsidy. We expect the new government subsidy to be positive for Dentalcorp as the addressable market of Canadian dental patients will go up. Taking a step back, Dentalcorp trades at a TEV/EBITDA of ~9x (2024E) and 11% FCF yield (2024E). The company has a clear line of sight to strong annual FCF growth over the next few years with minimal execution risk. These trading multiples are too low for a leading consolidator of an essential, resilient private cash-pay healthcare sector with predictable cash flows and aligned management. We believe Dentalcorp is worth more than $11 per share, 70%+ higher than the current share price.

BSD Analysis:
Silver Beech maintains conviction in Dentalcorp despite 40% share price volatility, attributing the swings to short-term focused investors rather than fundamental changes. The manager emphasizes the utility-like predictability of dental cash flows, with 89% recurring patient visits and Canada's high dental compliance rates providing stability. Dentalcorp operates as a consolidation platform in Canadian dentistry with $250M+ run-rate EBITDA and targets $20M annual acquisition EBITDA. The manager dismisses quarterly M&A volume fluctuations as noise, noting the seasonal and lumpy nature of acquisitions. A temporary Q1 2024 same-practice revenue growth slowdown to 0.9% (vs 6.5% in 2023) is explained by patients deferring visits to qualify for new government dental subsidies launching in Q2. At 9x TEV/EBITDA and 11% FCF yield, the manager views the valuation as too low for a leading consolidator in an essential healthcare sector. The $11+ price target represents 70%+ upside, reflecting confidence in predictable cash flow growth with minimal execution risk.

Pitch Summary:
We recently initiated a new position in WillScot Mobile Mini ("WillScot"). WillScot is the leading North American provider of portable and turnkey modular building units and storage space. WillScot's 156k modular units and 212k portable storage units are leased to a diverse 80k+ customer base across industrial, infrastructure, education, government, and natural resources users. WillScot's products are mission-critical and possess minimal technological or obsolescence risk. On a large construction site, project managers work in modular units where they update and store site-specific documents (work orders, safety reports, etc.). WillScot also offers customers an extensive array of value-added products and services ("VAPS"). These VAPS include unit furnishings, air conditioning, solar panels, restrooms, tech hardware, and many other add-ons. WillScot's extensive offerings help fulfill a structural shift in customer demand for flexible modular and reduced waste/lower carbon footprint solutions. We estimate that WillScot has over 50% market share in its core modular unit product offering. The company's strong position in an oligopolistic market, combined with leading customer satisfaction and extensive VAPS, drives exceptional pricing power. Between 2019 and 2023, average rent per unit for WillScot's modular fleet grew at a 16% CAGR, and this strong rent growth occurred as fleet utilization declined by 10% over the same period. It is exceedingly rare for a leased product to experience such exceptional pricing dynamics during a declining utilization environment. Furthermore, based on our interviews with customers, we estimate that WillScot's products average ~0.5% of total project costs. WillScot's market presence, strong historical pricing power, and small but essential place in the value chain, give us confidence that the company's favorable pricing dynamics are likely to continue. We believe WillScot Mobile Mini is an attractive investment because: High-quality business: Contracted, recurring revenues: WillScot's products are leased to customers with an average lease duration of three years. Leases provide contracted, recurring revenues that are more resistant to economic shocks than speculative revenues. Embedded pricing power: Due to strong historical rent growth, there is a ~30% spread between market rents and in-place rents on WillScot's modular fleet. Without any future market rent growth and by simply marking new leases to market rents, WillScot can raise revenues by about 10% per year over the next three years (assuming steady utilization rates). Leading market position: WillScot cemented its #1 market position via a strong track record of M&A. The company has 50%+ market share in the oligopolistic modular unit market. In addition, pending FTC approval, WillScot intends to acquire McGrath RentCorp, its largest competitor. If approved by the FTC, we believe the transaction will be very accretive. Small portion of value chain but mission critical: We estimate WillScot's products account for an average of 0.5% of total project costs for any given customer. High returns on capital: In 2023, WillScot achieved a 19% after-tax return on tangible capital. Looking forward, WillScot's capex-light VAPS penetration will continue to drive even stronger incremental returns. Manageable economic risk: The market has recently discounted WillScot's prospects as it fears a "higher for longer" interest rate environment will result in less construction activity and fewer housing starts. Indeed, these circumstances are negative for WillScot. However, we believe WillScot is relatively insulated from short-term economic weakness due to its three-year average lease duration contracted revenues. We find it more likely that utilization of WillScot's products has troughed than peaked, as housing starts and remodeling projects resume at an accelerated pace to fill shortages caused by a decline in recent activity, in addition to infrastructure policy tailwinds. Aligned management team: WillScot's management is incented via an ROTC driven compensation structure and ownership of $200M+ shares. We have been impressed by management's ability to "walk the talk." Here is the company's CEO on the recent earnings call: "We have internally generated cash flow and balance sheet capacity that we need to deploy as responsible stewards of shareholder capital. So, the share repurchase is absolutely a wonderful use of capital at these valuations, and we intend to continue that deployment." Since WillScot's IPO in 2017, this same management team has achieved a 24%+ total shareholder return CAGR. Attractive valuation: WillScot trades at a TEV/EBITDA of ~11x (2023E) / ~10x (2024E) and ~7% free cash flow ("FCF") yield (2024E). This valuation is too low for a dominant infrastructure services business with 40%+ EBITDA margins, predictably growing cash flows, and high returns. By comparison, the S&P 500's industrial sector trades at a TEV/EBITDA of ~15x (2024E). We think WillScot's intrinsic value per share is $60+, more than 50% higher than its current share price.

BSD Analysis:
Silver Beech initiated a position in WillScot Mobile Mini, viewing it as a dominant infrastructure services business trading at an attractive valuation. The manager highlights WillScot's exceptional pricing power, with average rent per unit growing 16% annually from 2019-2023 despite declining utilization, demonstrating the mission-critical nature of their modular units. The company commands over 50% market share in an oligopolistic market and benefits from embedded pricing power with a 30% spread between market and in-place rents. WillScot's business model features contracted recurring revenues with three-year average lease terms, providing stability during economic downturns. The manager appreciates the company's high returns on capital (19% after-tax ROTC in 2023) and aligned management team with significant equity ownership. At 11x TEV/EBITDA and 7% FCF yield, the manager believes the valuation is too low for a business with 40%+ EBITDA margins and predictable cash flows. The $60+ price target represents over 50% upside from current levels.

Pitch Summary:
Paywalled (The site mentioned: The Bear Cave explores the recent resurgence of “meme stocks,” the players involved, and why AMC is the worst positioned among the hype. In short, The Bear Cave believes AMC is a dead company walking and its promoters are a disgrace for the U.S. public markets.)

BSD Analysis:
AMC is the largest U.S. movie theater chain but faces secular decline in cinema attendance as streaming adoption accelerates. Despite occasional box office hits, revenues remain inconsistent and the balance sheet is overleveraged. The company has repeatedly diluted shareholders to refinance debt, yet free cash flow remains inadequate to cover maturities. Bears argue the equity value depends on speculative trading rather than improving fundamentals.

Pitch Summary:
WBD is one of the most hated companies out there. I haven't met many people familiar with it who haven't mentioned something negative about the business or the CEO. The negative sentiment isn't unwarranted. The company did a large deal and promptly missed profitability targets. The secular pressure on its core cable networks business has been greater than anticipated and its fledgling streaming operation is far from reaching its long-term goals. In short, perhaps people feel badly about WBD because things are bad. However, my experience has taught me that whenever you have an important business with unique and difficult to replicate assets, it's important to not let pessimism overwhelm cold-blooded analysis. I have missed several opportunities in the past because I was too focused on legitimate negatives affecting the company and didn't give enough weight to the parts of the business giving these companies value in excess of the market price. WBD's business is not uniformly impacted by the challenges it is currently facing. Let me draw you a picture. Imagine a "value stack": a stack of intrinsic values of the different pieces of the business. At the bottom of the stack is the business that has the least uncertainty about its intrinsic value and at the top is the one that is most challenged and whose value is most uncertain. Now imagine a line intersecting this value stack representing the market price. If the market price line intersects the value stack near the top, at one of the more uncertain businesses, then there are a lot of questions to answer. If it intersects near the bottom, then there is a good chance that this is one of the investing patterns that I described earlier – high uncertainty/low risk. WBD has four main businesses: Warner Studio, HBO, legacy Discovery cable networks (e.g. Discovery, Food, HGTV, Travel) and legacy Turner cable networks (e.g. TNT, TBS, CNN). Notice that I didn't list streaming, as I view it not as a business but as a channel to market similarly to how a branded apparel manufacturer might sell its products directly through its own stores as well as through wholesale partners. I listed the businesses in order in which I view their quality. Warner Studios is the leading studio with an amazing library and would be a crown jewel in any media portfolio. HBO is a close second with a great brand and library. We don't know HBO's stand-alone economics anymore since it has been bundled with streaming in company reporting, but it used to be a very consistent cash flow generator and I don't believe the magnitude of the erosion has been that great, although I can't be sure. The legacy Discovery cable networks are vertically integrated, dominate their niches and have very strong brand loyalty from their viewers. They are certainly not immune to consumers leaving the pay-TV ecosystem, but they have substantial value regardless of how they will be eventually distributed. Finally, the legacy Turner networks are by far the weakest, since they don't control their own content, rely heavily on rented sports rights subject to competition and in general could disappear with few people really caring that much given the availability of alternatives for the kind of programming that they provide. The analysis I did below is a very rough estimate of quantifying the value stack that I described earlier. I tried to err on the conservative side especially with respect to the less attractive businesses. I also fully admit that there is certain information that I just don't have, such as what would the stand-alone profitability of HBO business be if it weren't commingled with the money-losing streaming operation. While the above analysis is very approximate and suffers from incomplete information, I think it shows clearly that it's very hard to get the company's value to the single digits per share where the stock currently trades. Furthermore, the company's debt is structured in such a way that it should have plenty of financial flexibility under almost any circumstances its businesses face. The most likely scenario in my view is that within the next few years WBD will get acquired. Not only that, but if a sale were to happen it's highly likely that there would be multiple bidders given the uniqueness of its assets resulting in an auction and a large premium. Comcast is the most logical acquirer, but there are others such as Netflix, Amazon and Apple. I restored WBD to a small position size by buying its stock. The reason it's not a larger position is that it is a company with secular pressures where the thesis, both management's and mine, hasn't been working out thus far. I would much rather add to the position, even at a higher price, if the company begins to execute well and the secular pressures abate, consistent with my approach with how I invest in turnarounds.

BSD Analysis:
The manager restored a small position in Warner Bros. Discovery despite widespread negative sentiment and operational challenges. The investment thesis relies on a "value stack" analysis, arguing that the market price intersects near the bottom of WBD's asset quality spectrum, creating a high uncertainty/low risk opportunity. The manager ranks the business units by quality: Warner Studios (crown jewel with irreplaceable library), HBO (strong brand and content), Discovery networks (niche dominance with viewer loyalty), and Turner networks (weakest with rented content). Even conservative valuations suggest the stock trades well below intrinsic value in the single digits. The debt structure provides financial flexibility across scenarios. The primary catalyst is a potential acquisition within the next few years, with multiple logical bidders including Comcast, Netflix, Amazon, and Apple likely creating an auction dynamic. The manager sized this conservatively as a small position given the secular headwinds and execution challenges, preferring to add at higher prices if the turnaround thesis gains traction.

Pitch Summary:
Phinia was a spin-off from BorgWarner (BWA) and consists of that company's fuel systems and after-market businesses. What attracted me to do further work was the language that management used on their calls. For example, here is what the CEO said on a recent call about executive compensation: "... we are managing the business with a laser focus on generating economic value, or EV, and free cash flow. The 2024 annual cash incentive will be based on the company's achievement of two equally weighted performance metrics; EV and free cash flow. This program sends a clear message throughout our organization that investment decisions are made through the lens of earning an adequate return on capital. Our 2024 long-term equity incentive will be solely based on the company's relative total shareholder returns compared to that of a peer group company." Early in my career I used to think that incentives at public companies primarily serve to drive behavior. While that might still be true to a degree, my experience has led me to believe that they primarily reflect management's values and integrity. In theory the Board is independent and sets incentives. In practice, often-times it's the CEO who chooses how he or she will get compensated with a rubber stamp from the usual compensation consultants and the Board. To have a CEO choose to be compensated on Economic Value Added and free cash flow reflects that this person is thinking about capital allocation in a way that aligns with my views. Since EVA is reduced by the cost of capital used, someone choosing to get paid this way is putting his wallet on the line that he thinks he will deploy shareholders' capital wisely rather than throw it away on exciting but uneconomical acquisitions. Further work led me to realize that half of the company's profits come from the aftermarket business which is much less impacted by the transition from internal combustion engine (ICE) vehicles to EVs. Of the other half, a minority of profits is from commercial vehicles which are much less impacted by the EV transition for the time being. While the fuel systems business is under secular pressure, the industry has consolidated as many suppliers have exited the business. So, it's possible that Phinia can gain some share, albeit in a declining market. Putting all of this together, I think the business is being priced as a declining business whereas I view it as a company capable of low single-digit growth. Furthermore, it was reassuring to hear from multiple sources that the CEO has an excellent reputation in the industry, and that the economics of the aftermarket business are attractive and represent an area where the company can do value-accretive small acquisitions. While anecdotal, having several industry sources provide positive feedback in conjunction with the above positive initial impression of the way that the CEO is thinking supports my favorable initial opinion of the management. Finally, the balance sheet is very safe, with Net Debt/EBITDA below 1x. The company is using its free cash flow to return capital to shareholders, both in the form of dividends and share buybacks. I sourced a portion of the funds to purchase Phinia from cash and the rest via reducing our Garrett Motion (GTX) investment. While I still think that GTX is undervalued, PHIN has a much higher weighting in the better after-market business, has a less levered balance sheet and is less likely to pursue larger deals which GTX might choose to do in the EV-related space. Since both companies are automotive suppliers and are exposed to the secular risk of ICE vehicles declining faster than expected, I wanted to cap the combined position size at 10%, and so I believe that two ~ 5% positions is a good way to do that at these prices.

BSD Analysis:
The manager initiated a new position in Phinia, a BorgWarner spinoff focused on fuel systems and aftermarket automotive parts. The investment thesis centers on management quality, with the CEO's compensation structure tied to Economic Value Added and free cash flow generation, signaling disciplined capital allocation. The manager views the market as overly pessimistic, pricing Phinia as a declining business when it's actually positioned for low single-digit growth. Half of profits derive from the resilient aftermarket business, which is less exposed to the EV transition and offers acquisition opportunities. The remaining exposure to commercial vehicles provides some insulation from passenger car electrification trends. With Net Debt/EBITDA below 1x and active capital returns through dividends and buybacks, the balance sheet provides downside protection. The manager sized this as a 5% position, paired with a reduced Garrett Motion stake to limit automotive supplier exposure to 10% of the portfolio.

Pitch Summary:
The court ruled against the company's key monopolistic protection and it was not disclosed to investors; the company concealed this material information and now it will compete against others;

BSD Analysis:
Insulet develops the Omnipod, a tubeless insulin pump. While adoption continues, the short thesis highlights a stretched valuation given intensifying competition from Medtronic, Tandem, and Dexcom’s integrated systems. Margins face pressure from reimbursement dynamics and heavy R&D spending required to maintain differentiation. International expansion adds execution risk, with regulators scrutinizing device safety and pricing. The stock trades at a premium that leaves little room for missteps.

Pitch Summary:
Alphabet is the holding company for Google, one of the preeminent businesses in the world, as well as a collection of other, smaller companies, such as Access (broadband internet), Calico (life sciences), Verily (life sciences), and Waymo (autonomous vehicles), among others. Google has numerous core products that are used on a regular basis by more than a billion users around the world, including Google Search, Android, Chrome, Gmail, Google Maps, Google Play Store, Google Photos and YouTube. Google accounts for more than 99% of Alphabet's revenue and profits. Google experienced a binge of growth in the immediate aftermath of the pandemic due to abrupt and favorable changes in user behaviors. Its revenue growth accelerated from 17.9% for fiscal 2019 to a peak of 62.4% for the second quarter of 2021 and 41.3% for all of 2021. Profits exploded as well. For fiscal 2021, Google's operating income grew a whopping 81.1%. Then came the inevitable hangover. User behaviors began to revert back toward pre-pandemic norms just as Google started to lap its pandemic-juiced results. From the second quarter of 2021 through the fourth quarter of 2022, Google's year-over-year revenue growth steadily slowed from 62.4% to just 0.3%. At the same time, Google's expense budgets and hiring plans were based on the flawed premise that the abnormally strong revenue trends it experienced in late 2020 and early 2021 were sustainable. The combination of flagging revenue growth and ballooning costs dealt a blow to profits and cash flow. Google's operating income declined roughly 20% year-over-year for the second half of 2022. That is a relatively modest setback in the grand scheme of things, but it was far from Google's usual form. Since late 2022, Google has been hard at work to shake off its hangover and regain its stride. The fruits of those efforts are abundantly clear in Google's results for the first quarter of 2024. After hitting a nadir of 0.3% in the fourth quarter of 2022, Google's year-over-year revenue growth accelerated for five straight quarters, reaching 15.2% in the first quarter of 2024. Most of that improvement came from Google's core services businesses, such as Google Search and YouTube. Google's efforts to "durably reengineer [its] cost base" in the words of its Chief Financial Officer, Ruth Porat, are bearing fruit as well. Notwithstanding the healthy revenue increase for the first quarter of 2024, total Alphabet headcount was down roughly 5.2% year-over-year to 180,895. The combination of strong revenue growth and cost reductions drove adjusted operating income for the Google segment up 31.3% year-over-year in the first quarter of 2024. Google's pandemic hangover is unequivocally a thing of the past. One of the first lines in Alphabet's press release announcing its results for the first quarter of 2024 was the following quote from CEO Sundar Pichai: "Our leadership in AI research and infrastructure, and our global product footprint, position us well for the next wave of AI innovation." For those familiar with Google's business, that quote provides a succinct yet poignant case for Google being one of the main beneficiaries of innovation in artificial intelligence over the coming years and decades. While advances in AI come with some risks to Google's business, those risks are far outweighed by the opportunities and Google's inherent advantages in realizing those opportunities. Through the end of April, our position in GOOG has delivered a 21.1% internal rate of return over our nearly seven year holding period. That is well above Hinde Group's 15% investment hurdle rate. Notwithstanding the strong returns our investment in GOOG has already delivered, prospective returns continue to be bright.

BSD Analysis:
Hinde Group presents a compelling bull case for Alphabet, emphasizing the company's successful recovery from pandemic-induced volatility and positioning for AI leadership. The manager highlights Google's dominant market position with over a billion users across core products and its 99% contribution to Alphabet's revenue and profits. The investment thesis centers on operational efficiency improvements, with headcount reduced 5.2% year-over-year while revenue growth accelerated to 15.2% in Q1 2024, driving 31.3% operating income growth. The fund views Google's AI capabilities and infrastructure as key competitive advantages for capturing future innovation waves. With a 21.1% IRR over nearly seven years, the position has significantly exceeded the fund's 15% hurdle rate. The manager expresses confidence in continued strong performance, viewing the pandemic hangover as definitively resolved. The combination of cost discipline, revenue acceleration, and AI positioning supports the bullish outlook for sustained value creation.

Pitch Summary:
Taiwan Semiconductor Manufacturing Company (TSM US, 2330 TT) We remain optimistic about the company's long-term prospects and envision ourselves holding shares for an extended period. As we've previously discussed, we believe the company's two key competitive advantages - consistently manufacturing cutting-edge semiconductor chips while offering highly competitive pricing - will drive robust profits for years to come. These advantages position the company for sustained success, and we're confident in its ability to maintain its leadership in the industry. The past two years have seen the company coming off a difficult semi-con downcycle period, as the industry worked off the excess inventories manufactured during the Covid-19 years. We believe TSMC is now in a good position to experience a combination of both cyclical recovery and structural growth in an increasingly high computing era. We view the company as the “Toll Road” of the semi-con industry, particularly for Artificial Intelligence (AI) computing. This perspective is succinctly captured by TSMC's CEO, Mr. C.C. Wei, when he was asked by an analyst during a result briefing, 'Which company will win the AI race?' He answered, “No matter who wins, most of them are already all our customers.” In 2024, TSMC anticipates that revenue from AI-related revenue will comprise a modest percentage of their overall earnings, falling in the low-teens range. However, their projections for the subsequent five years paint a more dynamic picture, with an anticipated CAGR of 50%. This trajectory points towards AI-related revenue contributing to over 20% of TSMC's total revenue by 2028. Such growth is underpinned by substantial capital investments, notably from tech giants like Microsoft, Google, Meta, and Amazon. These companies are intensifying their efforts to design and produce bespoke AI processors, tailored to meet their burgeoning computational demands. TSMC, boasting a dominant 90% share in manufacturing leading-edge nodes, stands poised to capitalize significantly as the preferred and reliable manufacturing partner for these hyperscalers. We are closely monitoring Intel's efforts to reenter the foundry market, an area of concern for some. From a manufacturing expertise perspective, we believe it's unlikely that Intel can challenge TSMC's current dominance. The capital expenditure requirements to sustain R&D and manufacturing leadership are enormous (TSMC will spend approximately US$30B in capex this year, twice Intel's projected EBITDA). Furthermore, Intel's internal systems and manufacturing processes, shaped by its narrow product focus over the past few decades, are not well-suited for the foundry business. In contrast, TSMC has been a pure-play foundry since its inception in 1987, serving external clients and their diverse products. This has enabled TSMC to assemble over 70,000 design systems related IP solutions in its Open Innovation Platform. This provides a vast library of knowledge, offering a comprehensive design technology infrastructure, that streamlines chip design, reduces barriers, and increases first-time silicon success rates for its partners. This capability is a significant advantage that Intel currently lacks, and catching up will likely require substantial time and effort. Nonetheless, we will continue to closely monitor Intel's progress, as well as Samsung's developments, in this area.

BSD Analysis:
TSMC enters 2026 with an unprecedented revenue growth forecast of nearly thirty percent, fueled by insatiable global demand for advanced AI and high-performance computing chips. As the sole manufacturer of the world’s most sophisticated logic chips for Apple and NVIDIA, the company holds a near-monopoly position at the leading edge of the 2-nanometer and 3-nanometer nodes. Management’s revised long-term guidance points to a 25 percent compound annual growth rate through 2029, a remarkable feat for a company of its massive scale. Despite geopolitical tensions, TSMC’s expansion of manufacturing capacity in the United States and Japan is diversifying its operational risk and securing its role in the global supply chain. Trading at a discount to many of its big tech customers, the stock remains one of the most compelling value propositions in the technology sector.

Pitch Summary:
CEO's degree claims are misleading; the company's executives and directors are associated with financial scandals; false claims that the company is expanding its physical stores; up to 50% downside;

BSD Analysis:
Boot Barn specializes in western and workwear apparel. Bears argue the company is overextending store growth in a niche category that may not support national scale. Same-store sales have slowed, suggesting demand saturation in core regions. Gross margins are vulnerable to discounting, while inventory expansion raises working capital risk. In a discretionary downturn, expansion plans could amplify downside.

Pitch Summary:
Hindenburg's Nate tweeted: We’ve had a flood of 15+ inbounds in the past week asking us to look at potential accounting fraud at $CVNA. More than I've ever seen in so short a span of time, many that describe granular red flags.

BSD Analysis:
Carvana operates an online used car marketplace with a capital-intensive logistics network. The short case emphasizes extremely high leverage, reliance on securitizing subprime loans, and exposure to volatile used car pricing. Operational improvements have reduced losses, but the company remains highly dependent on favorable credit conditions. A downturn in auto credit markets or consumer demand could rapidly destabilize liquidity, making equity value fragile.

Pitch Summary:
Blue Label Telecoms (BLU) continues its path of self-healing. BLU announced that it received approval from the Competition Commission to take control of Cell C. This is a subtle but essential development to unlock shareholder value. The remaining impediment is the telecoms regulator. Despite BLU trading at single-digit multiples of its core business earnings, investor interest has been subdued. A significant reason for this hesitancy is the complexity associated with Cell C—an overhang that has muddled BLU's financials and made the business difficult for investors to understand. For many, this places BLU in the 'too hard' pile, leading to its neglect. Gaining "control" of Cell C should simplify matters considerably. Once Cell C is consolidated into BLU's accounts, the financial statements will become less complex and feature a manageable external debt balance. The transformation under the new management at Cell C cannot be understated. They have shifted the business from a seemingly hopeless situation to one where merely achieving a break-even point would be sufficient for BLU to prosper. Additionally, Cell C's management has renegotiated their roaming agreement with MTN on very favourable terms, reducing cash burn and positioning Cell C for growth as a wholesaler of mobile communications. The consolidated external debt position is the last remaining piece of the puzzle that must fall into place. During the Cell C recapitalisation, lenders leveraged BLU's robust core business as credit enhancement to offset their risk. This strategy, while necessary, imposed a substantial debt load on BLU, a point that continues to be a significant concern in the market. However, what seems underappreciated by the market is the expected repayment of this debt by the third quarter of this year. This repayment milestone is crucial as it would improve BLU's balance sheet and restore management's capacity to undertake shareholder-friendly actions, such as share buybacks or dividend distributions. Assuming Cell C reaches a point where it no longer has a negative operating cash flow, BLU stands to generate significant excess free cash flow (FCF). Given the current stock valuation multiples, BLU could aggressively repurchase shares, potentially reducing its share count by a substantial margin within 3-4 years. This scenario would demonstrate a solid financial turnaround and enhance future profitability, making BLU an increasingly attractive investment for current and potential new investors. Such an event could recalibrate market perceptions and spotlight BLU as a compelling comeback story in the telecom sector.

BSD Analysis:
SaltLight Capital presents Blue Label Telecoms as a compelling turnaround story centered on gaining control of Cell C and simplifying the business structure. The manager identifies BLU as trading at single-digit multiples due to investor confusion over Cell C's complex financials, creating a 'too hard pile' situation. The key catalyst is regulatory approval to consolidate Cell C, which would simplify financial statements and unlock value. Cell C's transformation under new management has been remarkable, moving from a hopeless situation to near break-even, with favorable MTN roaming agreements positioning it for growth as a mobile wholesaler. The critical inflection point is the expected Q3 debt repayment, which would restore BLU's financial flexibility for shareholder returns. Once Cell C achieves positive operating cash flow, BLU could generate substantial excess free cash flow and aggressively repurchase shares, potentially reducing share count significantly over 3-4 years. This represents a classic 'self-healing' investment where operational improvements and capital allocation could drive substantial returns as market perceptions recalibrate.

Pitch Summary:
Transaction Capital (TCP) completed its spin-off of WeBuyCars (WBC) during the quarter – an event we've written about many times. We've previously expressed our belief that WBC has ample room to grow over the next few years. The market often misunderstands the dynamics of "aggregators" and, as a result, underestimates WBC's potential value. Through economies of scale, aggregators tend to capture significant portions of the "industry pools of profit." Our research of other aggregators across various industries bolsters our confidence in maintaining our position in WBC. The forthcoming year presents a particularly intriguing opportunity with the remaining TCP 'rump', which includes Nutun and the troubled SA Taxi. In our fourth-quarter 2023 letter, we posed a critical question post-unbundling: "What becomes of the remaining TCP business? Lenders no longer have leverage over the holding company through HoldCo debt cross-default clauses. Theoretically, if SA Taxi lenders choose not to support debt-rollover relief, TCP could simply put SA Taxi into business rescue in an orderly process rather than the voluntary workout process they're following at the date of writing. We'll know in two months how things will look post-unbundling." We hypothesised that a contingent of investors (retail and wealth managers) would likely want to own the 'clean' and 'exhilarating' WeBuyCars business over TCP's complex, troubled remains (likely to avoid the complications of explaining a potential credit event to their clients). True to expectations, we observed a rapid sell-off of TCP shares post-spin-off. This is a classic spin-off special situation, so we increased our holdings. Over the years, engaging in such spin-off opportunities has yielded excellent, non-correlated returns for us. While the timing of these developments can vary, often taking 6-12 months to unfold, each situation is unique. The next significant catalyst will be clarity around the SA Taxi debt situation.

BSD Analysis:
SaltLight Capital identifies Transaction Capital as a classic spin-off special situation following the separation of WeBuyCars. The manager's thesis centers on the market's preference for the 'clean' WeBuyCars business over TCP's remaining complex operations, creating a temporary valuation disconnect. The remaining TCP entity includes Nutun (unsecured lending) and the troubled SA Taxi division, with the key catalyst being resolution of SA Taxi's debt situation. The manager notes that post-spin-off, lenders no longer have cross-default leverage over the holding company, providing TCP with more flexibility in handling SA Taxi's issues, including potential business rescue proceedings. This structural change removes a significant overhang that previously constrained the holding company. SaltLight has increased their position following the predictable post-spin-off sell-off, viewing this as a non-correlated opportunity with 6-12 month catalysts. The investment relies on the manager's successful track record in spin-off situations and the eventual clarity around SA Taxi's debt resolution.