Investment Pitches

Pitch Summary:
CYG delivered a very strong 1HFY24 result, with the encouraging trends disclosed at the AGM in October accelerating into the end of the calendar year. 1HFY24 sales of $185.3 million was up ~5.4% on the prior corresponding period (pcp). More importantly, 1HFY24 EBITDA of $9.8 million was up ~18.1% on the pcp. The initiatives to grow EBITDA margin to 10% in the medium term that were implemented early in the financial year gained momentum in the December quarter with 2QFY24 EBITDA up almost 30% on the pcp. The company is starting to display strong positive operating leverage, with earnings now growing significantly faster than revenues. This has been a long time coming and is a function of: (i) the improved service proposition allowing the company to raise prices (sell side), and (ii) the increased size of the company allowing it to extract better prices and working capital terms from its suppliers (buy side). We expect CYG's EBITDA margins to improve from below 5% currently towards the company's 10% target over the next 3 years, assuming end markets remain accommodative. Demand continues to remain solid in the company's core end markets (mining and resources, infrastructure, commercial construction and industrial) and the Enterprise Resource Planning (ERP) upgrade continues to track to schedule and budget. CYG operates in large, fragmented markets and has very modest market shares. We expect the strong top line growth that has been demonstrated over the past 5-6 years to continue into the medium term, with operating leverage and margin expansion initiatives translating to significantly improved earnings growth.

BSD Analysis:
Sandon Capital presents a strong operational improvement story for Coventry Group, highlighting the company's impressive margin expansion with EBITDA growing 18.1% despite only 5.4% revenue growth in 1HFY24. The manager emphasizes the accelerating momentum, with Q2FY24 EBITDA up nearly 30% year-over-year, demonstrating significant positive operating leverage. Sandon Capital attributes this improvement to two key factors: enhanced service proposition enabling price increases and improved supplier terms due to increased scale. The fund is particularly bullish on CYG's path toward their 10% EBITDA margin target over the next three years, up from below 5% currently. Strong demand continues across CYG's core end markets including mining, resources, infrastructure, and commercial construction. The manager views the successful ERP upgrade as supporting operational efficiency gains. Sandon Capital sees significant runway for growth given CYG's modest market share in large, fragmented markets and expects the combination of continued top-line growth and margin expansion to drive substantial earnings growth. The investment thesis centers on operational leverage, market share gains, and margin expansion in favorable end markets.

Pitch Summary:
Despite pivoting to a value realisation strategy, GDC announced that its associate investment, Etix Everywhere (Etix), acquired five data centres in France in 1HFY24. The acquisition was funded by a combination of new equity issued to Eurazeo, a current shareholder in Etix, and debt. We consider transactions like this consistent with the Etix strategy to grow, increasing its relevance to potential acquirers, which in turn will assist GDC's mandate to sell its assets over time. There has been considerable speculation in the financial press that AirTrunk, in which GDC owns an ~1% stake, has commenced a process to sell itself for a mooted enterprise value of "$15 billion-plus". This implies a value of ~$90 million for GDC's stake and represents double the current carrying value in GDC's accounts. This gives us confidence that the realisation of GDC assets will achieve closer to $3 per unit, well above the current unit price ($2.28 per unit) and the Net Tangible Asset backing reported by GDC ($2.40 per unit). We expect GDC's value realisation strategy to gain steam in the next 6 months and take 12-18 months to complete.

BSD Analysis:
Sandon Capital presents a compelling value realization play in Global Data Centres, focusing on the significant upside potential from asset sales. The manager views Etix Everywhere's acquisition of five French data centers as strategically positive, as it increases Etix's scale and attractiveness to potential acquirers, ultimately benefiting GDC's exit strategy. The key catalyst is the potential sale of AirTrunk, where GDC holds approximately 1% stake, with media speculation suggesting a $15+ billion enterprise value. This would value GDC's AirTrunk stake at around $90 million, double its current book value. Sandon Capital believes this validates their target valuation of $3 per unit for GDC, representing significant upside from the current $2.28 unit price and above the $2.40 net tangible asset backing. The fund expects the value realization strategy to accelerate over the next 6 months, with completion anticipated within 12-18 months. The investment thesis is based on the substantial discount to intrinsic value and the catalysts driving asset monetization in the high-growth data center sector.

Pitch Summary:
The operating and financial improvement at FWD gathered momentum in 1HFY24. Despite revenue growth of only 3%, the company turned from a loss of $0.8 million in 1HFY23, to a solid profit of $3.9 million in 1HFY24. The turnaround in Building Solutions continues with a return to a profit of $3.2 million following a loss of $2.3 million in the prior corresponding period (pcp). With that business now focused on standardised, repeatable work and the benefits from the national procurement strategy starting to flow, we expect significantly improved results from the Building Solutions segment in FY24 and beyond. The Community Solutions business is benefiting from a strong demand environment and rising room rates, with earnings increasing 82% to $4.7 million in 1HFY24. The medium-term outlook is very strong following the ramp up of the five-year agreement with Rio Tinto in April 2024. There are a number of significant projects planned or under construction in the Northwest of Western Australia in the oil and gas, fertiliser and green energy sectors. Given the lack of accommodation in and around Karratha, FWD's Searipple accommodation village remains well placed to satisfy likely strong demand for accommodation over the medium term.

BSD Analysis:
Sandon Capital presents a strong turnaround story for Fleetwood, emphasizing the company's dramatic operational improvement from a $0.8 million loss to a $3.9 million profit in 1HFY24. The manager highlights the successful restructuring of the Building Solutions division, which returned to profitability through a focus on standardized, repeatable work and implementation of a national procurement strategy. The Community Solutions business is performing exceptionally well, with 82% earnings growth driven by strong demand and rising room rates. A key catalyst is the five-year agreement with Rio Tinto commencing in April 2024, providing significant revenue visibility. Sandon Capital is particularly bullish on the medium-term outlook, citing numerous planned projects in Western Australia's Northwest across oil and gas, fertilizer, and green energy sectors. The fund views FWD's Searipple accommodation village as strategically positioned to capitalize on the accommodation shortage in the Karratha region. The investment thesis centers on FWD's operational turnaround, strong demand fundamentals, and strategic positioning to benefit from the resource sector boom in Western Australia.

Pitch Summary:
COG's 1HFY24 result continued the solid growth trajectory seen over the past few years. Revenue growth against the prior corresponding period (pcp) of 45%, partly supported by acquisitions, was very strong and resulted in growth in earnings per share before amortisation (EPSA) of 12%. The strong results in the company's burgeoning Novated Leasing business more than offset the weaker result in the Asset Management & Lending business which is suffering some shorter-term margin compression, as interest rate increases work their way through the portfolio. This highlights the benefits of the increasingly diverse suite of products that COG brokers can offer their clients. COG looks set to further increase its customer offering by moving into financial advisory through the acquisition of a 19.9% stake in Centrepoint Financial Ltd (ASX:CAF). The company has highlighted Financial Advisory as its next growth vertical. This will add to its existing verticals: Broking & Aggregation, Novated Leasing and Asset Management & Lending. COG has demonstrated strong and consistent earnings growth for the past 5 years, both organically and through acquisition. Given their dominant position in the SME broking and aggregation market and the economies of scale that flow from this, we expect this attractive growth to continue for many years into the future. Given the capital light nature of the business, significant free cash flow will be generated, allowing for further organic and inorganic growth as well as continued growth in the dividend.

BSD Analysis:
Sandon Capital presents a compelling bull case for COG Financial Services, highlighting the company's impressive 45% revenue growth and 12% earnings per share growth in 1HFY24. The manager emphasizes COG's successful diversification strategy, with the strong performance of the Novated Leasing business offsetting temporary margin compression in Asset Management & Lending due to rising interest rates. The fund views COG's expansion into financial advisory services through a 19.9% stake in Centrepoint Financial as a strategic move to broaden their service offering. Sandon Capital is particularly bullish on COG's dominant market position in SME broking and aggregation, which provides significant economies of scale and competitive advantages. The manager expects this growth trajectory to continue for years, supported by the capital-light business model that generates substantial free cash flow. This cash generation capability enables both organic growth initiatives and strategic acquisitions while supporting dividend growth. The investment thesis centers on COG's ability to leverage its market leadership position and diversified revenue streams to deliver sustained long-term growth.

Pitch Summary:
Metro Bank reported a profit of £30.5m and expanded its cost-cutting plans to £80m in annualised savings. Most importantly, despite last year's anxiety around the recap deal in October, it increased deposits by 1% to £15.6bn in the second half of 2023. By February 2024, these had further increased to c.£16.5bn. However, this deposit drive has pushed back its 10% ROE target to 2027.

BSD Analysis:
Metro Bank is showing operational recovery with a return to profitability at £30.5m and aggressive cost management targeting £80m in annual savings. Despite concerns following the October recapitalization, the bank has demonstrated deposit growth resilience, increasing deposits 1% to £15.6bn in H2 2023 and further to £16.5bn by February 2024. This deposit momentum validates the franchise strength and customer confidence post-restructuring. However, the intensive deposit gathering has delayed the 10% ROE target to 2027, indicating near-term margin pressure from competitive pricing. The manager appears constructive on the turnaround story, viewing the deposit growth as evidence of operational stability. The cost reduction program should support profitability as the bank rebuilds its capital position and market confidence.

BSD Analysis:
The manager expresses concern about Mondi's proposed acquisition of DS Smith, viewing the target as a lower-quality asset that poses digestion risks and could dilute shareholder returns. They prefer Mondi to avoid this transaction, believing it would be value-destructive rather than accretive. The manager was pleased by International Paper's competing higher bid, hoping it would cause Mondi to abandon its proposal. This suggests the manager values Mondi as a standalone entity but questions management's M&A strategy and capital allocation decisions. The opposition to the deal reflects concerns about integration complexity and potential negative impact on returns. The manager appears to favor Mondi's core business but wants disciplined capital deployment.

Pitch Summary:
Our largest and highest conviction position, Hiscox, posted record profits with a return on equity of 21.8%. The company reiterated its positive outlook. The cherry on top was a new US$150m (c.£120m) share buy-back, further cementing our conviction in the trade thesis.

BSD Analysis:
Hiscox represents the manager's largest and highest conviction position, delivering exceptional financial performance with record profits and an impressive 21.8% return on equity. The company's strong fundamentals are complemented by management's positive forward guidance, indicating sustained operational momentum. The announcement of a substantial US$150m share buyback program demonstrates management's confidence in the business and commitment to shareholder returns. This capital allocation decision reinforces the manager's investment thesis and validates their high conviction stance. The combination of record profitability, strong ROE metrics, and shareholder-friendly capital deployment creates a compelling investment case. The manager views this as confirmation of their analytical framework and positioning in the specialty insurance sector.

Pitch Summary:
In the portfolio, ITV stood out this month, announcing the sale of its 50% holding in digital subscription streaming service BritBox for £255m. Pleasingly, the traditionally sleepy company will return £235m of this to shareholders via a share buy-back scheme (10% of its market capitalisation). An increasing number of UK companies are now engaging in substantial share buy-backs. This welcome step shows intelligent management teams are pursuing smart capital allocation decisions amid compelling company valuations.

BSD Analysis:
The manager views ITV favorably following its strategic divestiture of BritBox for £255m, with the company demonstrating shareholder-friendly capital allocation by returning £235m (10% of market cap) through share buybacks. This transaction highlights management's intelligent approach to capital deployment in a market where UK equities appear undervalued. The manager appreciates the shift from ITV's historically passive approach to more active capital management. The substantial buyback program signals management confidence in the business while providing immediate value to shareholders. This positions ITV as part of a broader trend of UK companies engaging in value-accretive capital allocation strategies. The manager sees this as validation of compelling UK equity valuations and smart management execution.

Pitch Summary:
Bioventix, one of our long standing portfolio positions, is one such company, delivering organic revenue growth annually of 17% over the last decade. It is an AIM listed company that develops and markets Sheep Monoclonal Antibodies, otherwise known as SMAs. These antibodies which can take several years to develop and gain regulatory approval, are used in diagnostic blood testing procedures. The investment case centres on persistency of revenues and exposure to a global diagnostics market which is growing at around 5-10% each year. A small operation based in Farnham, Surrey, growth comes from the adoption of new antibodies for blood tests, as the diagnostics market develops. The vast majority of Bioventix's revenues come from the 2% royalty they receive from the Blood Testing companies (Roche, Siemens, Abbott Diagnostics & Beckman Coulter) every time someone's blood is tested for diagnostic purposes. Such tests include ones for Vitamin D deficiency as well as a test for Troponin—the protein found in the blood stream after a myocardial infarction, more commonly known as a heart attack. There are 60,000 things that can go wrong with the human body and we currently only have around 6,000 drugs to treat these ailments. In many ways, Bioventix is selling the spades in the 'gold-rush' of drug development in the pharmaceutical industry. As new drugs are developed the demand for diagnostic blood testing is likely to increase. Yet, whilst the time to develop and approve new antibodies can take several years—helping to develop a moat to protect their revenues, the cost and therefore the risk of development compared to manufacturing drugs is very low. The business also has good cost flexibility and no debt with a rising net cash posi­tion. They can afford to be patient as new antibodies are developed and given regulatory approval to deliver long term value creation for patients and investors alike. Bioventix has never seen one of its antibodies taken out of the testing system once it has been deployed. In other words, once their antibodies are judged to have worked, the switching costs increase and therefore so do the barriers to entry. We like businesses where the product or service is a small but vital part of the supply chain cost. This aspect helps maintain persistency of revenues and feeds into our analysis of Bioventix's position in its business life cycle—which given its high returns profile and new product development we would classify as still in the first stage of 'High innovation.'

BSD Analysis:
Castlebay presents a compelling bull case for Bioventix, emphasizing the company's exceptional 17% annual organic revenue growth over the past decade. The investment thesis centers on the company's unique position in the diagnostic testing ecosystem, where it earns 2% royalties from major diagnostic companies like Roche, Siemens, Abbott, and Beckman Coulter every time their sheep monoclonal antibodies are used in blood tests. The manager highlights the defensive nature of the business model, noting that once deployed, Bioventix's antibodies have never been removed from testing systems, creating high switching costs and barriers to entry. The company benefits from exposure to a growing global diagnostics market (5-10% annually) while maintaining low development costs compared to drug manufacturing. Castlebay particularly values the company's debt-free balance sheet with rising net cash, providing financial flexibility during the multi-year antibody development process. The fund views Bioventix as still in the 'high innovation' phase of its business lifecycle, suggesting continued growth potential. The 'selling spades in a gold rush' analogy effectively captures how Bioventix benefits from pharmaceutical industry growth without bearing the high risks of drug development.

Pitch Summary:
Actual business economics is misrepresented; the company will significantly revise its long-term guidance; current projections are far too optimistic; Update 2/29 - The short seller mentioned a) downward revision and b) more questions based on the company's year-end results.

BSD Analysis:
The hardware-to-subscription pivot is the right idea, but unit economics still hinge on consumer hardware cycles and retail promotions. Competition is brutal—Amazon (Ring), Google (Nest), and low-cost Asian brands undercut at the shelf. Gross margin pressure is constant, and the model requires converting devices into paid cloud plans at high attach rates. While Arlo has brand recognition, mass-market buyers remain price sensitive. The story works only if subscription ARPU and retention steadily improve.

Pitch Summary:
Poorly capitalized; business growth challenged (retail per unit economics are worsening); ridiculously overvalued (42x EV/EBITDA); vehicle sales and revenue must grow at an unrealistic level to justify current price; Update 2/27 - The short seller sent a letter to CVNA's auditors at Grant Thornton.

BSD Analysis:
Carvana pulled off a survival act in 2023–2024, pushing out maturities and stabilizing liquidity, but the equity story is still highly reflexive. The unit economics don’t work in a normalized used-car market: volumes are tied to credit availability, securitization spreads are softening, and GPU gains were driven by temporary tailwinds. Debt remains a major overhang. Any deterioration in used-car pricing or credit performance could trigger another restructuring. Competition from omnichannel dealers limits long-term share.

Pitch Summary:
Multiple lawsuits and malpractices leading a patient to die; lied about medical credentials; advertising practices in violation of FTC; misleading technological claims; photoshopped patient images;

BSD Analysis:
AirSculpt markets itself as a minimally invasive body-contouring brand. The bear angle: it’s a small-cap elective procedure roll-up in a cyclical, cash-pay niche. Growth depends on clinic openings and heavy marketing spend, while patient demand is highly discretionary. Clinical differentiation vs. standard lipo is debatable, keeping acquisition costs high. Utilization dips hit margins quickly. Expansion requires more capex and marketing, limiting FCF.

Pitch Summary:
The largest shareholder and corporate parent, Siemens, filed a lawsuit for design failures, false representation and fraud; Siemens cut its sizable purchases; starting selling down its 33% ownership; potential litigation related to fire and flood that caused tens of millions of dollars in damage; Update 2/22 - FLNC responded via its website, stating that the short seller report is misleading.

BSD Analysis:
Fluence plays in grid-scale battery storage, a market with explosive TAM but brutal execution risk. The company has struggled with supply chain hiccups, warranty provisions, and cost overruns. Margins are razor-thin, and commoditization risk is rising as utilities press down pricing. The software platform is promising but unproven as a moat. Working capital swings and cash burn keep the balance sheet in focus. Backlog conversion and warranty reserve trends are critical.

Pitch Summary:
The company's recently launched product is a total failure: the number of users topped last summer; safety profiles misrepresented; more and more patients not using the product; usage discontinuations due to insurance requirements; competing treatments are much better;

BSD Analysis:
ACADIA depends on Nuplazid and Daybue. Bears stress concentration risk, slow Nuplazid uptake, payer pushback, and safety debates. Daybue offers new revenue but requires costly sales buildout for a small market. Pipeline is early-stage. Valuation assumes strong uptake across narrow indications, leaving little room for error. Key: script growth, reimbursement, and pipeline diversification.

Pitch Summary:
Minimal R&D; no capital to pivot into AI regardless of the management's claims; upcoming equity dilution due to cash needs; stock pump using AI - most employees are incompetent in software development; mediocre cloud services;

BSD Analysis:
Innodata pitches itself as an AI data-enablement company, but much of its revenue still comes from low-margin outsourcing and content services. The gap between the AI narrative and actual delivery is wide. Margins are thin, revenue concentration is high, and credibility risk is elevated. Stock moves have tracked AI hype cycles more than fundamentals. The story only works if major hyperscaler contracts land at scale.

Pitch Summary:
The company's audit engagement partner left the company prior to the 10k filing; the company's $210mil loan to Brian Kahn is double pledged; the auditor is seeking counsel on regulatory matters due to concerns related to RILY;

BSD Analysis:
Second round of short coverage emphasized valuation opacity and funding fragility. B. Riley effectively marks its own paper, and relies on confidence to keep funding open. Baby bonds and debt fund assets that could mark down quickly in stress. Management’s related-party dealings are a red flag. Setup is asymmetric: buoyant markets make numbers look fine, stress could collapse capital base.

Pitch Summary:
The co-founder, who was a magician and faked his entire academic history, was charged by the DOJ with murder and imprisoned; the CEO ignored many red flags related to the co-founder; merged with a 2-month-old 'AI company' to pump the stock; the company is a shameless scam;

BSD Analysis:
Renovaro has a history of pivots, reverse mergers, and equity raises. Pipeline is early-stage with limited clinical data. Investor communications lean promotional, raising governance questions. Bears argue it’s structurally a capital markets story, not a drug development story. Without Phase 2/3 validation, the stock is vulnerable.

Pitch Summary:
The company's leading weight-loss drug candidate has no chance of competing against other drugs; several other drugs proved superior weight loss; phase-3 trial is unlikely to be successful;

BSD Analysis:
Altimmune’s valuation is tied almost entirely to its GLP-1 candidate pemvidutide. Bears see it as undifferentiated in a market dominated by Novo and Lilly. Without clear clinical or commercial edge, financing risk looms. Limited pipeline depth leaves binary risk tied to trial outcomes. GLP-1 enthusiasm inflates valuation, but execution hurdles and dilution are significant.

Pitch Summary:
This quarter’s portfolio update covers our position in Interactive Brokers Group, Inc. class A common stock (NASDAQ: IBKR), a compounder investment. We have held IBKR since inception with a few trims and additions along the way. Through the end of 2023, our position in IBKR has delivered a 13.7% internal rate of return. Interactive Brokers is a highly automated global securities firm that specializes in routing orders and processing trades in securities, futures, foreign exchange instruments, bonds and mutual funds on more than 150 electronic exchanges and market centers around the world. Interactive Brokers custodies and services accounts for hedge and mutual funds, registered investment advisors, proprietary trading groups, introducing brokers and individual investors. More than two-thirds of IB’s customers are based in Europe and Asia and an even greater share of its new customers come from those regions. Conditions in financial markets affect the financial results Interactive Brokers delivers in any given year. Generally speaking, Interactive Brokers generates more net interest income and commission revenue when interest rates and equity market volatility are high and less when those variables are low. The interest rate environment was a tailwind for IB’s results in 2023. Due to the Fed’s historically aggressive tightening campaign from early 2022 through mid-2023, the daily average effective federal funds rate increased from 1.69% in 2022 to 5.03% in 2023. That helped IB’s net interest margin expand from 1.53% in 2022 to 2.36% in 2023. Combined with 8.2% growth in IB’s average interest-earning assets in 2023, that increase in net interest margin helped IB’s net interest income grow a whopping 67.5% to $2.8 billion in 2023 from $1.7 billion the prior year. In contrast, trading conditions were a headwind. Equity market volatility in 2023 was below historical averages, which weighed on commission growth. The impact of changes in financial market conditions on IB’s revenue and earnings in a given year can obscure the degree to which Interactive Brokers is making progress growing its normalized earning power and intrinsic value. A helpful way to cut through that noise is to focus on growth in IB’s total customer equity. IB’s total customer equity ended 2023 at $426.0 billion, up 38.9% from $306.7 billion at the end of 2022. That growth came from the combination of a 22.5% increase in the number of customer accounts and an increase in the average value of customer accounts due to the rebound in global equity markets. Although Interactive Brokers has delivered strong operating results over the past several years, IBKR has only slightly outperformed the S&P 500 since the end of 2019. The increase in the market price of IBKR since the end of 2019 has not even kept up with the increase in the company’s intrinsic value. Two main factors have weighed on market sentiment: uncertainty around normalized earnings due to volatile macro conditions and fear that IBKR will underperform as the Fed cuts rates. The good news is that both of these concerns should fade over the next few years as the economy, financial markets and monetary policy settle into a new, post-pandemic normal. As those clouds dissipate, the light of Interactive Brokers rapidly growing intrinsic value should increasingly shine through to its stock price.

BSD Analysis:
Interactive Brokers starts 2026 on the heels of a record-breaking 2025 where its clients on average outperformed the S&P 500 Index. The company has introduced significant technological catalysts for the current year, including 24/7 account funding with stablecoins and expanded access to the Brazilian B3 exchange to capture emerging market demand. For 2026, the investment case is bolstered by an "economic reacceleration" theme, where IBKR’s low-cost structure is expected to attract high-frequency and institutional hedge fund accounts in a diversifying market. Management is prioritizing 24/7 availability across 170 global markets, positioning the platform as the primary beneficiary of the "retail-plus" shift in global trading volumes. With a fortress balance sheet and industry-leading execution quality, IBKR remains the top-tier play for investors seeking exposure to global capital flow rebalancing.