Investment Pitches

Pitch Summary:
Last year was a tale of two halves for Sony, particularly for its entertainment business where management had lowered expectations heading into the second half. By the end of its fiscal year in late March, it had sold over 50 million PlayStation 5s, yet we think they can easily sell five times this number of units if it is anywhere near as popular as the PS4. Next year Rockstar will release the latest instalment of Grand Theft Auto, one of the most valuable media assets on planet Earth. The last iteration of this franchise has sold over 180 million copies since its release in 2013. The boon for Sony is the razor blade model of growing an installed base of hardware and then selling users multiple games and services over time. The company is guided toward “gradually increasing the ratio of digital sales of full games and add-on content” which should support margins. As the console cycle matures, gamers tend to buy more content, subscribe to online services and generate higher profitability for the platform owner. In Sony’s case the upside is further enhanced by its ownership of valuable IP in both gaming and film/TV, which can be leveraged across platforms. When you account for the value of Sony’s semiconductor business, particularly in image sensors, alongside the entertainment and hardware segments, we think the sum of the parts still looks attractively priced. Overall, we see Sony as a unique hybrid of content, hardware and components with multiple self-reinforcing growth drivers and significant optionality.

BSD Analysis:
Sony is a diversified entertainment and technology platform benefiting from scale in gaming, music, pictures and image sensors. The PlayStation ecosystem continues to grow a large installed base, and recurring digital content and subscription revenue should support margin expansion and more stable cash flows. At roughly low-20s P/E and a mid-teens EV/EBITDA multiple for businesses growing earnings high single-digit, valuation is reasonable given the quality of Sony’s IP and the secular growth in gaming and image sensors. The balance sheet is strong, enabling steady buybacks and selective M&A to deepen the content and semiconductor franchises. Catalysts include the next GTA release, continued shift to digital sales, and monetisation of under-appreciated assets such as the music catalog and sensor business.

Pitch Summary:
The only new US holding for the Fund in the last 12 months has been WEC Energy Group, a US Midwestern regulated utility. Their main markets include Wisconsin, where they can trace their predecessor roots back 200 years. WEC is an excellent example of a well-run utility company which is being slightly underappreciated due to a broader view that the utility sector is not an exciting place to invest. While we agree that the overall sector can be unexciting, there are some wonderful businesses here. We assess whether regulated utilities offer inflation-protection & provide defensive, bond-like characteristics, whilst private valuations add to the case. Private equity have been hungry for regulated critical infrastructure assets in the past few years, because of their reliable, long-term, and inflation protected cash flows. WEC’s regulatory regime allows it to earn a fair return on its rate base (which is the amount of capital invested in its infrastructure) as long as it is making efficient investments and providing reliable service to its customers. Further, the global objective of achieving net-zero carbon emissions, creates a significant opportunity for a company like WEC. The policy and regulatory aspects of making a clean energy transition will favour companies that can navigate the complexities of the energy and regulatory landscape efficiently. Utilities can come in many different flavours, some have nuclear assets, some own gas networks. Their returns are a function of the structure of the particular regulation regime in each geography. The backdrop for utilities is that regulators are looking for investing partners with strong balance sheets, and the cheap access to capital to finance the future energy grid in their respective territories. This will require enormous investment, in many countries. We like companies, like WEC, that are positioned to support this during a period where utilities are increasingly being recognized as a critical infrastructure growth sector. For example, renewables, especially wind generated are intermittent and transmission is becoming more important: there is no point building solar farms when the grid connections aren’t ready. WEC has a more advanced and constructive relationship with regulators than many other utility companies. As such, we believe that they will be granted a higher regulated return on capital than their peers, which will allow them to invest more in their infrastructure and grow their rate base faster. For shareholders we expect market-beating compounded equity returns (~10%) through a combination of long-term 6-7% earnings growth and an attractive 4% dividend.

BSD Analysis:
WEC is a high-quality regulated utility geared to the long-duration investment cycle in U.S. grid modernization and decarbonization. The company operates under supportive regulatory regimes, targets a 65–70% payout ratio and currently offers a dividend yield around the low-to mid-3% range with a multi-decade record of annual dividend growth. Its allowed returns on equity and expanding rate base imply high-single-digit EPS growth, and ongoing capital programmes in transmission and renewables provide clear visibility on invested capital. On valuation, WEC trades roughly in line with quality regulated peers on P/E and EV/EBITDA despite superior execution and balance-sheet strength, leaving room for modest multiple expansion. We see it as an attractive “bond-proxy” compounder offering a low-risk path to around 10% annual total returns via growth plus dividend.

Pitch Summary:
One position however that had a disappointing year was Diageo. As a reminder Diageo has always been viewed as a high quality oligopolistic business that provides exposure to a wide range of leading spirits brands. The economics of the industry are very favourable, given pricing power and the aspirational status of the products. People always love to feel they’re getting a deal on life’s necessities – rice and beans, toothpaste, healthcare etc. However, when it comes to the nice things in life – their treats – they love to feel that they’ve bought the best they can possibly afford. Spirits most definitely fall into that second category. The problem with the core business however, and why we have long hung back from owning this, is that volume growth has been consistently slightly disappointing and the capital employed a bit too intensive for our liking. So why did we invest? The opportunity was that the industry had enjoyed one of the best depletions cycles in its history in the recession-busting period after COVID, especially for super premium products. The industry and especially Diageo, was blindsided by the combination of the very level of that growth and a dramatic slowdown in depletions, with US distributors unwinding inventory to historical levels. The result was Diageo’s worst share price performance in a generation, down nearly 25%. For UK names this is a wonderful opportunity – yet another case of overseas earnings, priced in a cheaper than cheap market; it is wonderful to be part of the very small cohort of investors not obsessing about the FTSE’s lack of sex appeal and just quietly picking up these bargains. The UK stock market remains extremely cheap, unfairly beaten down. One contributing factor to this is that the UK is the home market for oil and mining, both of which have had a tough time relative to the index given people’s concerns about emissions, ESG and long term investing. There is also a persistent lack of self-belief in the UK, as its best companies often focus on global though mainly US and Asian, expansion opportunities. As an aside, we always remind people that when they see the headlines constantly deriding the UK stock market, that the FTSE All Share, in total return terms, has not been that bad and has grown your money at 7-8% per annum. For Diageo specifically this seems a near term instantiation of our basic cycle of good companies; the short term news and fundamentals are worse than their long-term potential. By definition you do not get the best value when the sun is shining relentlessly, we think this likely to be a stock that grows earnings high single digit for many years, yet is currently trading at a mid-teens multiple. That is a recipe for high teens potential returns from here.

BSD Analysis:
Diageo is a high-quality global spirits franchise temporarily oversold on de-stocking and Latin American weakness. The company retains strong pricing power, high margins and cash generation, and trades around a mid-teens forward P/E and low- to mid-teens EV/EBITDA, a discount to its own history and premium beverages peers. As U.S. distributor inventories normalize and mix headwinds from super-premium moderate, we expect a return to mid-single-digit volume growth and high-single-digit EPS growth. Capital allocation remains shareholder-friendly, with a progressive dividend and ongoing buybacks supported by robust free cash flow. We regard current fears about category stagnation as overdone given long-term premiumization, emerging-market demand and strong brand equity, setting up attractive risk-reward.

Pitch Summary:
Tesco returned +35% in 2023. Principally this was a much overdue reflection of the improved quality of the business, as the turnaround is complete, and the business is back on its throne as market leader. Compounding this strength, is the continued weakness of the competition. Most notably Asda and Morrisons are struggling, having faced a double whammy of high leverage when interest rates rose and escalating price competition which squeezed their margins. Indeed, for the first time in many years Tesco has been underinflating the market, thus compounding its position as the best value for money. This reinvestment of potential profits into the proposition is exactly the type of behaviour we extoled last year – you always want a company to lean back when it is winning to stretch out that victory. Their market share, which had been falling for a decade, has since levelled out. Given the high fixed cost nature of the supermarket business this foundation of top line resilient growth quickly becomes very accretive to margins and returns on both capital and equity. Other points to note are the likely sale of Tesco Bank, which should unlock value and give flexibility to increase shareholder returns in due course, and the continued success of Tesco’s subscription model “ClubCard Plus” which along with penetration now over 80% for the standard card, allows Tesco to rapidly ween itself off the unsustainable practice of high/low promotions which makes people feel like they are constantly being ripped-off and is operationally inefficient. At 12x PE (compared to international peers such as Walmart which trade on 24x) the stock remains an undiscovered jewel in the FTSE’s crown.

BSD Analysis:
Tesco is a structurally improved UK food retailer with regained pricing power and recovering returns on capital. The company is compounding share in a rational market while peers struggle under leverage, and trading on a low-teens P/E and modest EV/EBITDA discount to global staples despite a cleaner balance sheet and improving free-cash-flow conversion. Potential sale of Tesco Bank and ongoing growth of Clubcard-driven loyalty economics should both support higher margins and growing capital returns via dividends and buybacks. With inflation easing but volumes resilient, incremental margin from operating leverage on a largely fixed-cost store base should drive mid-single-digit earnings growth. We see scope for both earnings upgrades and multiple re-rating as investors re-rate UK domestic defensives and activist pressure continues across the FTSE.

Pitch Summary:
The letter presents Samsung as the portfolio’s key technology holding, with its most valuable franchise in memory chips rather than smartphones or displays. Management emphasises that the memory industry has consolidated around a few scale players as capex and R&D costs have surged, leaving Samsung in a leading position. The company is poised to benefit from the launch of next-generation high-bandwidth memory aimed at AI processors, and it also holds the number-two position in contract manufacturing of logic chips, providing an additional long-term profit driver. 2023 marked a cyclical trough for the memory market, pressuring reported earnings and the share price, which allowed Citadel to add to its position at what it sees as a very attractive valuation. With a net cash position of roughly €100bn and an entry valuation of about 4x through-the-cycle operating earnings for a business that has historically generated returns on capital above 20%, the managers argue that the ingredients for a highly profitable long-term investment are in place.

BSD Analysis:
Samsung’s most valuable franchise is its memory semiconductor business, not its consumer hardware, and that distinction is crucial to understanding its long-term economics. The memory industry has consolidated into a tight oligopoly as capex and R&D requirements have surged, leaving only a handful of scale players capable of competing — and Samsung sits at the top of that hierarchy. The company is poised to be a major beneficiary of next-generation high-bandwidth memory, which is now essential for AI processors and represents one of the fastest-growing categories in semiconductors. Beyond memory, Samsung holds the number-two position in contract chip manufacturing, giving it an additional secular growth engine as demand for leading-edge logic production expands. The firm moved through a deep cyclical trough in 2023, which depressed earnings and sentiment but also created an attractive entry point as memory fundamentals began to turn upward. With a net cash balance of roughly €100 billion, Samsung has the financial strength to invest aggressively through cycles without diluting shareholders. At roughly four times through-the-cycle operating earnings for a business that has historically delivered returns on capital north of twenty percent, Samsung’s risk-reward profile is exceptionally compelling for long-term investors.

Pitch Summary:
Unexplainable revenue surprise; uncollectible accounts receivable is hidden using 'accounts receivable insurance'; one of the directors has had +90% decline in share price for 15 companies; $0.5m value subsidiary is having 5x revenue growth to $60mil; zero R&D expense; effectively a broke company;

BSD Analysis:
Direct Digital runs programmatic ad platforms targeting multicultural and underserved audiences. The short thesis stresses scale disadvantages, customer concentration, and margin compression. Larger DSPs/SSPs benefit from network effects that DRCT cannot match. Much revenue is low-margin reselling rather than proprietary tech. Ad spend is cyclical, with small players hit hardest in downturns. Skeptics flag working capital swings and reliance on credit facilities to fund receivables.

Pitch Summary:
Share price pump due to WSJ's rare earth story; the mine would be unprofitable to operate; high processing cost; insiders and investors are cashing out; failed venture; Update 1/9 - Tweeted that METC's CEO is pumping the stock on media.

BSD Analysis:
Ramaco produces metallurgical coal used in steelmaking. The bear case focuses on cyclical exposure, limited diversification, and environmental overhangs. Earnings are highly sensitive to met coal pricing, which can swing sharply based on Chinese imports, Indian steel demand, and global supply disruptions. Smaller scale compared to peers means higher cost volatility. Long-term offtake contracts provide some visibility, but global decarbonization trends and investor aversion weigh. Expansion into carbon-based products (e.g., advanced materials) is speculative and unlikely to offset core commodity risks.

Pitch Summary:
Paywalled (The site mentioned: The Bear Cave believes Flywire is a commoditized product trading for a nosebleed multiple, with growing competition slowly eating away at the company’s client base.)

BSD Analysis:
Flywire provides cross-border payment and receivables solutions, especially in education, healthcare, and travel. The short case highlights valuation risk, reliance on tuition flows, and margin sensitivity to FX and take-rates. Education is the largest vertical, tied to international student enrollment, which is policy-driven and cyclical. Competition from fintechs and banks threatens take-rates. Travel adds seasonality and macro risk. Healthcare is early and carries integration risk. With a premium multiple, skeptics argue Flywire is more transaction-driven and cyclical than credited.

Pitch Summary:
No meaningful commercial traction since its 16 years of existence; almost bankrupt two years ago and saved by SPAC; dependent on Google and Apple allowing its sensor to be placed on their devices; another project requires $1 bil investment; interest expense x2 the revenue;

BSD Analysis:
NN makes precision components for automotive, medical, and industrial end markets. The short thesis highlights leverage, cyclical demand, and execution risk. A history of acquisitions left a leveraged balance sheet and complexity. Auto/industrial exposure is slowing globally. Management is pivoting to higher-margin medical, but execution has been mixed. Weak free cash flow leaves leverage stretched. Small scale vs. peers limits pricing power.

Pitch Summary:
H2 2024 dividend could be significantly cut; large number of borrowers unable to refinance and repay the company; upcoming liquidity crisis; significant amount of loans to be wiped out;

BSD Analysis:
BXMT originates and invests in senior commercial real estate loans, mainly floating-rate. The short case revolves around CRE credit risk, office exposure, and refinancing headwinds. Floating-rate assets benefit from rate hikes, but funding costs and reserves have climbed. Office exposure is a major overhang, with defaults rising. Liquidity is manageable, but the high dividend payout strains flexibility. Bears argue true credit losses are deferred via amendments, with NAV erosion likely if collateral values reset lower.

Pitch Summary:
Insider enrichment scheme (overpayments to the chairman's related factory); significant amount of supply is fabricated; over 30% sales is made by undisclosed related party; the CEO is accused of drug law; cash depletion; potential price manipulation;

BSD Analysis:
Ispire sells vaping devices with exposure to cannabis and nicotine markets. The short case emphasizes regulatory overhang, competitive intensity, and distributor dependence. U.S. vaping hardware is under shifting FDA scrutiny; cannabis exposure carries federal risk. International markets are crowded with low-cost competitors. Gross margins modest, scaling requires compliance investment. Bulls tout cannabis optionality, but governance concerns and regulatory risk loom.

Pitch Summary:
The leadership has ties to a firm with legal disputes and pump & dump schemes; founders have faced financial troubles, lawsuits, shady dealings, unpaid debt; regulatory intervention due to fraudulent claims to avoid FDA; excessive stock promotion; unfulfilled promises; Update 12/6 - Follow-up report by tweets.

BSD Analysis:
Safety Shot markets a beverage claiming to accelerate alcohol metabolism. The short case stresses speculative science, aggressive promotion, and weak commercial model. Clinical validation is thin, regulatory approvals lacking, and resources inadequate for trials or distribution. The stock is prone to retail-driven spikes with little traction. Without strong clinical data, partnerships, and regulatory clarity, the equity lacks support.

Pitch Summary:
China hustle; the majority of the sales are fake; the Chinese factory has no activity; ~$670mil of questionable backlog; a failed Chinese EV business; no procurement from China since 2017; the company's battery technology is abandoned by the industry due to inefficiencies and safety reasons; the business saved by a SPAC, which was originally looking for a cannabis asset.

BSD Analysis:
Microvast develops lithium-ion battery systems for EVs and storage. The short thesis highlights execution risk, capital intensity, and geopolitical exposure. Scaling has lagged better-capitalized peers. U.S. expansion was hit when federal funding was rescinded over China ties. Margins negative, backlog conversion slow, liquidity pressured by capex. Bulls cite EV demand, but skeptics see inadequate scale, funding, and differentiation.

Pitch Summary:
Paywalled (The site mentioned: The Bear Cave believes risks in the firm’s culture, loan portfolio, and crypto ventures are not fully appreciated by the market. With the exception of Tesla, perhaps no company has endured as much criticism from short-sellers as Axos Financial.)

BSD Analysis:
e.l.f. has gained share via affordability, social media virality, and shelf-space expansion. The short thesis stresses valuation stretch, reliance on trends, and margin pressure as rivals respond. Sustaining buzz repeatedly is difficult, and incumbents are reinvesting in digital marketing. Margins benefited from pricing, but promotions are returning. At a premium multiple, any slowdown risks repricing.

Pitch Summary:
Misleading shareholders; undisclosed patent infringement with over $41mil in damages; the company goalpost moved 10 times; still no approval by FAA; not a superior technology; Update 1/6/24 - Tweeted that ASLE filed its second secondary in a month. Update 4/24/24 - Shortseller closed the position after more than 50% decline in price.

BSD Analysis:
AerSale focuses on aftermarket aircraft services and trading retired planes. Bears stress that profitability is highly opportunistic, depending on volatile trading gains from aircraft part-outs rather than predictable recurring revenues. Exposure to cyclical airline capex makes earnings lumpy, while higher interest rates and financing costs limit returns. Visibility is low, and valuation is difficult to justify on normalized earnings.

Pitch Summary:
The loan book is distressed in its entirety; underlying collateral is vastly overstated; the loans can't be refinanced anywhere; most of the loans are maturing in 18 months; Update 12/5/23 - Whistleblowers provided evidence on certain syndicated portfolios. Update 12/22/23 - Follow-up report: Delinquencies on the rise. Update 1/8/24 - The short-seller sent a letter to ABR's auditor EY. Update 1/22/24 - Delinquencies grew 50%, according to January CLO. Update 6/6/24 - Viceroy's concerns were validated by whistleblowers and multiple industry sources. Update 7/11/24 - The short seller sent its third letter to ABR's auditor - EY. Update 3/24/25 - Closed 2 CLOs in a month, performance has continued to rapidly deteriorate. Update 4/24/25 - Viceroy alleges that the Company's claim to have moved loans to a “considerably cheaper” repo line is a lie. Update 5/21/25 - Net interest spreads have plunged. Massive reporting errors in delinquencies, total debt and servicing costs remain uncorrected. No operational fixes, no viable refinancing or buyers at mark prices for loans. Update 7/24/25 - Reporting errors in debt servicing costs, total debt, and delinquencies going back 18 months; collapsing net spreads point to a steep Q2 2025 revenue decline.

BSD Analysis:
Viceroy’s short thesis is that Arbor’s loan book is broadly distressed, with non-performing multifamily loans masked by aggressive accounting. The report highlights high exposure to rent-controlled housing and floating-rate borrowers at risk under tighter credit conditions. Arbor’s dividend yield attracts retail investors, but sustainability is questionable given the mismatch between reported earnings and cash flow. As refinancing challenges mount, downside risk lies in dividend cuts or dilutive equity raises.

Pitch Summary:
CRH has been identified as a top investment due to its strong position in the construction materials industry, particularly in North America. The company recently relisted on the NYSE, which is expected to catalyze a re-rating towards US peer valuations. CRH's vertical integration and extensive mineral reserves provide a competitive edge, while its exposure to significant US infrastructure spending programs like the IIJA and CHIPS Act offers substantial growth opportunities. The company has a proven track record of disciplined capital allocation and M&A success, contributing to its robust earnings growth visibility. CRH's current valuation presents a compelling opportunity, trading at a discount to peers despite its best-in-class operations.

BSD Analysis:
CRH's strategic relisting on the NYSE positions it to attract more US-based investors and potentially be included in major indices like the S&P 500, enhancing its visibility and appeal. The company's vertical integration allows it to offer end-to-end solutions, reducing project costs and timelines for clients, which is a significant competitive advantage. CRH's exposure to the US infrastructure boom, driven by unprecedented government spending, provides a clear runway for growth. The company's financial guidance indicates strong cash generation potential, with plans to leverage its balance sheet to enhance shareholder returns. CRH's valuation is attractive, with significant upside potential as the market recognizes its stability and growth prospects.

Pitch Summary:
The majority of customers are female and the company is likely to have brand name damage; revenue growth is highly dependent on other retail channels;

BSD Analysis:
Apellis develops complement therapies, led by Syfovre for GA. The short case highlights safety concerns, uptake risk, and single-product dependence. Safety signals around retinal vasculitis have hurt adoption. Payers and physicians cautious as competition builds. With high R&D spend and reliance on Syfovre, execution risk is high. If safety overhang persists, Apellis risks being a one-drug story.

Pitch Summary:
This quarter’s portfolio update covers our investment in Amazon.com, Inc. common stock (NASDAQ: AMZN), a compounder investment. We have been shareholders of Amazon since the inception of Hinde Group’s portfolio, although the size of our position has varied over time. Amazon was riding high when the company announced in early February 2021 that Andy Jassy, head of Amazon Web Services at the time, would replace Jeff Bezos as CEO. The pandemic provided a meaningful boost to Amazon’s business as people around the world stayed at home and shopped online. Revenue growth for Amazon’s core online stores business exploded to 39.7% in 2020, up from growth rates in the teens for the preceding several years. Although Amazon experienced meaningful operational challenges related to the pandemic that added billions of dollars in costs, its profitability nonetheless also lurched higher in 2020. Amazon recorded operating income of $22.9 billion in 2020, up $8.4 billion or 57% over the prior year. But by the time Andy Jassy officially took the reins six months later in July 2021, the picture had changed dramatically. Growth in most of Amazon’s businesses slowed sharply, and the company found itself significantly overextended on costs after accelerating capacity expansion to meet pandemic-driven demand. Profitability deteriorated meaningfully through 2021 and 2022, with operating losses emerging in both the North American and International consumer segments. Amazon’s pandemic hangover caused its stock to plummet, ending 2022 at $84.00, less than half its prior peak. In response, Jassy and his team moved aggressively to realign costs with demand, eliminating roughly 27,000 corporate jobs, exiting unprofitable businesses, restructuring fulfillment into regional networks, and improving pricing and efficiency across the platform. These initiatives are already bearing fruit, with Amazon’s North American consumer business delivering a record $4.3 billion operating profit in Q3 2023 and margins rebounding sharply. We believe Amazon’s underlying earning power has long been masked by heavy reinvestment, and Jassy’s willingness to allow more profits to flow through to the bottom line could drive sustained margin expansion and upside surprises over time.

BSD Analysis:
Amazon enters 2026 at a historic scale, having surpassed $700 billion in annual revenue for the first time in 2025. Management has issued a blockbuster $200 billion CapEx guidance for 2026 to fund its "seminal opportunities" in AI, chips, and robotics, as well as its low-earth-orbit satellite constellation, Project Kuiper. AWS remains the primary profit engine, growing 24% year-over-year—its fastest growth in 13 quarters—with operating income reaching a record $45.6 billion. Advertising revenue also remains a high-margin standout, growing 22% as the company leverages AI to sharpen ad-targeting and price execution in its North American and International stores. For 2026, the primary investment narrative centers on a potential "multiple re-rating" as AWS and advertising account for an increasing share of total operating profit.

Pitch Summary:
Generated net losses since inception; overvalued (TBV x50 vs. competitors' x4.1 and x5.0); outmatched by competitors in key metrics; minimal R&D expense; running out of cash compared to competitors; undisclosed major restrictions on its recent certifications; the largest deal is dead; photoshopped its logo onto a rented jet; no insider stock purchases since inception; Update 11/17 - EH CEO says Hindenburg report contains untrue statements.

BSD Analysis:
Axos is a digital-first regional bank. The short case points to asset quality risk, niche loan reliance, and governance issues. Aggressive growth in multifamily CRE and specialty lending leaves it exposed to higher losses. Funding is diversified, but deposit competition is rising. While marketed as fintech-like, skeptics say economics resemble a traditional bank. Past governance questions linger.