Investment Pitches

Pitch Summary:
Finally, we have made an investment in the UK bowling sector. This is a niche sector controlled by two large operators (Hollywood Bowl and Ten Entertainment) which together hold a market share of over 50% and where the remaining operators are small independent companies without the financial strenth to be able to offer the level of service quality of the two leaders. On the other side, this sector has come out of the Covid crisis much stronger as demand has not only recovered to pre-pandemic levels but has also experienced significant growth with attendance levels at the centres 30% higher than in 2019. This is explained by the fact that bowling centres have been able to maintain prices compared to 2019 despite the inflationary situation and have become a very interesting entertainment option for the consumer compared to other options. This factor, together with the incorporation of other additional services (gaming machines, escape rooms, etc.) has allowed the companies to experience a very significant growth in results. On the other side, growth prospects for the coming years are encouraging as there is still an opportunity to continue to open new centres across the country. In the case of Hollywood Bowl, the company has started its expansion in Canada, a very fragmented market, with little professionalisation and no large operator with national scale, which should offer very good opportunities for consolidation. The share price of both companies was hit hard during the pandemic period and, despite current results being well above pre-pandemic levels and maintaining very good growth opportunities, the price has not recovered since then. This has allowed us to invest in this interesting sector at very attractive valuations (below 6x EBITDA in the case of Hollywood Bowl and 5x in the case of Ten Entertainment).

BSD Analysis:
Hollywood Bowl Group continues to dominate the experiential leisure market, reporting record-breaking full-year revenues and earnings that underscore the resilience of its "value-for-money" family entertainment model. The company is successfully leveraging a high-margin food and beverage mix to drive total spend per game, helping to offset inflationary wage pressures and higher utility costs. Strategic expansion into the Canadian market is beginning to provide a meaningful growth kicker, with initial performance in newly branded centers exceeding management’s internal return-on-investment targets. A newly authorized £10 million share buyback program and a consistent dividend policy highlight the firm's robust cash generation and shareholder-friendly capital allocation. With a strong pipeline of new openings and ongoing investments in estate quality, Hollywood Bowl remains a premier choice for exposure to the steady recovery in UK consumer discretionary spending.

Pitch Summary:
We have invested again in Restore, a British company dedicated to document management (storage, digitisation and destruction). Specifically, Restore provides document box storage services for law firms, universities, hospitals and other companies that need to retain documents for long periods. In addition to its core business of physical document storage, the company's other businesses include document scanning and shredding, recycling of electronic devices and business relocation services. In all these businesses, the company maintains a leading position in the UK market achieving significant economies of scale. Restore has a stable and predictable cash generation profile. Once a customer has placed their documents in storage they pay £3 per year per box. Because the maintenance cost is so low and the documents may be needed in the future, the boxes are kept for an average of 15 years. Despite the digitisation of many previously paper-based processes, document volumes continue to grow annually, so Restore's occupancy levels continue to rise and storage prices are increasing. The company has recently announced a reduction in estimates for this year due to lower activity in certain business lines, specifically the digital business (due to a reduction in discretionary spending by companies), document shredding (due to the fall in the price of paper) and technology (due to a fall in the use of recycling services after companies invested heavily in technology in the quarters following the pandemic). In addition, the company has announced a change of management team and the possibility of making some accounting impairments in some of its businesses. All this has caused a drop in the share price, which we have taken advantage of to invest because we remain confident in the resilience of the document management business, which accounts for more than 70% of the company's results, and in the recovery of the other businesses.

BSD Analysis:
Restore plc is entering 2026 as a lean, high-margin leader in the UK's information management sector, reporting a 15% advance in interim revenue to £160.1 million. The company is successfully executing on its medium-term strategy to achieve adjusted operating margins of 20% or higher, with current performance already climbing to 17.7%. While interim pretax profits faced temporary pressure from increased administrative and finance costs, the core Information Management and Datashred segments continue to deliver robust growth. Management's disciplined "bolt-on" acquisition strategy and a 10% hike in the interim dividend signal high confidence in the firm's recurring revenue model. As businesses increasingly prioritize secure data destruction and digital transformation, Restore’s integrated service suite provides a significant competitive moat in a fragmented market.

Pitch Summary:
Canadian Pacific Kansas City operates a virtually unrivaled 20,000-mile tri-national rail network spanning Canada, the U.S., and Mexico. The rail industry is protected by NIMBY dynamics that make building new railroads nearly impossible; North American rail miles have collapsed from 250,000 to <100,000 and Class I operators from 180+ to just six today. Deregulation and consolidation turned rail pricing from decades of decline into 20 years of steady increases. Railroads enjoy massive cost advantages versus trucking (4.4¢/ton-mile vs. 17.9¢), enabling superior margins and long-haul dominance. CPKC offers higher growth vs. U.S. peers due to less coal exposure and long-term volume benefits from Canadian port share gains and Mexico-U.S.-Canada trade flows.

BSD Analysis:
YCG argues CPKC is a structurally advantaged oligopoly player with durable pricing power and volume growth drivers tied to North American industrial and consumer activity. The railroad’s tri-national footprint provides unique optionality, especially as reshoring and trade reconfiguration accelerate. High barriers, cost leadership, and operational leverage support long-term ROIC expansion. Risks include labor, fuel, and regulatory shifts, but the moat remains formidable.

Pitch Summary:
Republic Services is the second-largest waste management company in North America with 19% U.S. landfill market share and an extensive physical network: 206 landfills, 240 transfer stations, 73 landfill gas and renewable energy projects, 72 recycling centers, and millions of daily pickups. Like Waste Management, RSG benefits from insurmountable NIMBY barriers, long-term supply destruction, and steadily rising demand. Landfill scarcity and rising regulatory costs have driven tipping fees up dramatically for 40 years, well ahead of inflation. With consolidation accelerating and large players gaining share, Republic Services’ pricing, revenue, and profit growth should continue to outpace inflation for years. Management emphasizes operational efficiency and network densification, reinforcing durable competitive advantages.

BSD Analysis:
YCG presents Republic Services as a mission-critical infrastructure provider with enduring pricing power, structurally constrained supply, and stable through-cycle revenue. RSG’s consolidated network and long-lived landfill assets yield high incremental margins and significant ROIC durability. The company’s renewable natural gas initiatives add optional upside while enhancing sustainability positioning. With resilient cash flow, disciplined capital allocation, and strong inflation-hedging characteristics, RSG is positioned to compound steadily despite macro volatility.

Pitch Summary:
Waste Management is the largest waste management company in North America with 29% market share of U.S. landfill volume. Its unrivaled physical network—254 landfills, 337 transfer facilities, 135 landfill gas-to-energy facilities, 97 materials recovery facilities, 497 hauling operations, and over 15,200 collection routes—creates powerful physical network effects. The industry is protected by significant NIMBY (“not-in-my-backyard”) dynamics, making new landfills extremely difficult to permit and leading to U.S. landfill supply collapsing from 7,683 in 1986 to 1,733 today. Demand for waste services has steadily risen over decades while supply has shrunk, producing consistent and inflation-beating tipping-fee increases (5.2% annualized since 1982 vs. 2.7% inflation). WM’s scale, pricing power, and consolidation advantages position it to grow pricing, revenue, and profits faster than inflation for many years.

BSD Analysis:
YCG sees Waste Management as a dominant, high-moat toll collector benefiting from irreplaceable assets, regulatory barriers, and network effects that suppress new supply. Over decades, steady inflation-plus pricing has led to consistent margin expansion despite volume cyclicality. WM’s vertically integrated model yields high returns on invested capital, while landfill scarcity ensures ongoing pricing power. With structural demand tailwinds, conversions of landfill gas to renewable energy, and attractive free-cash-flow yields, WM is positioned for durable compounding. Key risks include fuel/labor inflation and recycling volatility, but the company’s moat is exceptionally resilient.

Pitch Summary:
In the second quarter we took a position in Sabine Royalty Trust (NYSE: SBR). Sabine owns royalty interests in over five thousand tracts of land containing over 2 million gross acres (over 200 thousand net acres) of producing and proved undeveloped oil and natural gas properties in Florida, Louisiana, Mississippi, New Mexico, Oklahoma, and Texas which include the Permian, Anadarko, Gulf Coast, East Texas, and Arkoma basins. Over many years and decades, we expect the oil and gas-producing properties owned by the Sabine Royalty Trust to deplete, however we believe that there is a good chance that this investment will earn a reasonable rate of return from the future distributions which are collected from this asset. As such, we emphasize the importance of not reinvesting the trust dividends back into the royalty trust as we expect the trust corpus itself to decline in value over a long time period. Royalty trusts have certain tax-advantages as the IRS permits unit-holders to deduct depletion expenses against the royalty income received. However, as tax filing and compliance costs can be onerous, we made these purchases solely in client accounts which are tax-advantaged (IRA, 401K, and other tax-deferred and tax-free accounts). If you have a taxable account with us and you want to own SBR and are willing the bear the administrative burden of filing multiple state tax returns please let us know.

BSD Analysis:
Atherean presents SBR as a low-cost, low-capex toll-collector on U.S. oil and gas production with diversified acreage and long-lived reserves. The trust structure eliminates operating expenses and passes nearly all royalty income directly to unitholders, creating attractive yield characteristics. The manager highlights that tax-deferred accounts maximize after-tax returns due to state withholding and multi-state filing requirements. SBR fundamentals show stable distributable income tied to commodity prices, no leverage, and declining but diversified reserves, which historically support mid-single-digit long-term returns. While depletion risk is inherent, the trust’s vast acreage increases the probability of additional reserves and ongoing production. The investment is positioned as a yield vehicle with commodity-linked upside and minimal operating risk.

Pitch Summary:
Toyota is referenced as a beneficiary of Japan’s governance reforms, improving capital allocation, and stronger shareholder return policies. The company continues to recover production volumes as semiconductor shortages ease and maintains leadership in hybrid powertrains. Management has demonstrated increasing willingness to improve transparency and engage on cross-shareholdings, which historically depressed valuations. Toyota’s product breadth provides resilience across demand cycles, while balance sheet strength underpins continued investment in electrification and autonomous technologies.

BSD Analysis:
Toyota is emerging as one of the clearest beneficiaries of Japan’s ongoing governance reforms, with management demonstrating greater discipline around capital allocation, transparency, and the unwinding of cross-shareholdings that historically weighed on valuation. As semiconductor constraints ease, the company is steadily restoring production volumes across its global footprint, reinforcing earnings momentum. Toyota’s leadership in hybrid powertrains remains a major competitive advantage, allowing it to meet tightening emissions standards while maintaining profitability in segments where pure EV economics are still challenging. Its exceptionally broad product lineup provides resilience across consumer demand cycles, giving Toyota stability that most automakers cannot match. A pristine balance sheet allows the company to continue investing heavily in electrification, solid-state battery development, and autonomous technologies without stretching capital. These strengths, combined with improving shareholder return policies, position Toyota for a sustained rerating as governance quality continues to improve. Overall, the company offers a compelling blend of cyclical recovery, structural technological leadership, and emerging capital-allocation tailwinds.

Pitch Summary:
TSMC is noted as an attractive AI beneficiary given its unrivaled leadership in advanced process nodes, essential for both training and inference chips. Demand for 3nm and forthcoming 2nm nodes is expected to remain extremely strong, driven by hyperscaler investment in AI. Despite significant capex commitments, TSMC continues to deliver high ROIC and maintain pricing power due to its technological lead. Geopolitical tensions are acknowledged but are incorporated into scenario analysis.

BSD Analysis:
TSMC is the dominant enabler of global AI compute, holding an unchallenged lead in advanced process nodes that are essential for both training chips and inference accelerators. Demand for its 3nm platforms and the upcoming 2nm generation remains exceptionally strong, driven by hyperscalers racing to expand AI capacity and shift workloads onto the most energy-efficient silicon available. This technological edge gives TSMC meaningful pricing power, allowing it to sustain high returns on invested capital even while executing one of the largest capex programs in corporate history. The firm’s scale advantage is self-reinforcing: no other foundry can match its yield learning, manufacturing precision, or cadence of node advancement. While geopolitical tensions are a real consideration, they are already incorporated into valuation frameworks, and the company continues to diversify manufacturing with new capacity in the US, Japan, and Europe. TSMC’s balance sheet strength and deep customer partnerships further enhance visibility and reduce volume risk. For investors seeking long-term AI exposure, TSMC remains the most critical and hardest-to-replicate link in the semiconductor supply chain.

Pitch Summary:
Mondrian highlights Samsung as an emerging-market AI beneficiary due to improving memory-market dynamics, with supply discipline and rising AI-server demand driving DRAM and HBM pricing inflection. The fund views Samsung as cyclically depressed but structurally advantaged, with operating leverage to a memory super-cycle supported by AI adoption. The company’s large net-cash balance sheet provides resilience and optionality for shareholder returns.

BSD Analysis:
Samsung is one of the clearest emerging-market beneficiaries of the AI boom, with its memory business positioned at the center of accelerating demand for DRAM and high-bandwidth memory used in AI servers. After a deep cyclical downturn, supply discipline across the industry and surging AI-server orders are driving a powerful pricing inflection that directly benefits Samsung’s scale-advantaged manufacturing base. The company remains structurally advantaged as one of only a few players capable of producing leading-edge memory at competitive yields, giving it strong operating leverage as the cycle turns. Rising HBM penetration in AI workloads provides a multi-year tailwind, and Samsung’s roadmap positions it well to capture share as customers diversify sourcing beyond a single supplier. Despite near-term earnings pressure from the trough, the business retains a massive net-cash balance sheet, which provides resilience and optionality for future buybacks, capex, or strategic investment. With fundamentals improving and the AI-driven memory super-cycle still early, Samsung offers an attractive mix of cyclical recovery and long-term structural upside.

Pitch Summary:
Sony is highlighted as a Japanese beneficiary of AI-related demand, particularly in image sensors for smartphones and emerging applications like autonomous systems and robotics. The company continues to strengthen its content ecosystem through gaming and streaming, supporting recurring revenue streams. Sony’s capital allocation strategy has shifted toward shareholder returns, including buybacks, enabled by robust free cash flow and strong balance sheet health. Exposure to multiple structurally growing end markets gives Sony resilience despite cyclical consumer-electronics softness.

BSD Analysis:
Sony is well positioned as a key Japanese beneficiary of AI-driven demand, particularly through its world-leading image sensor business, which is central to smartphones, autonomous systems, and emerging robotics applications. As these markets scale, Sony’s technological lead in high-resolution, low-power CMOS sensors gives it a durable competitive edge and strong pricing power. Beyond semiconductors, the company continues to deepen its content ecosystem across gaming, music, and streaming, adding more recurring and subscription-based revenue to what was once a cyclical portfolio. PlayStation remains one of the strongest global gaming platforms, and ongoing investments in first-party content further lock in user engagement. Sony’s balance sheet strength and robust free cash flow have enabled a shift toward more shareholder-friendly capital allocation, including consistent buybacks. With exposure to multiple structurally growing end markets, Sony is far more resilient than a traditional consumer electronics manufacturer. The combination of AI-linked sensor demand, content-driven recurring revenue, and increasing shareholder returns creates a compelling long-term setup.

Pitch Summary:
Dell is identified as a beneficiary of surging AI-related infrastructure demand, particularly in high-performance servers and GPU-dense architectures. The firm has gained share in selected enterprise segments due to its supply-chain capabilities and strong relationships with hyperscalers. Recent earnings surprised positively, with AI-server backlog building meaningfully. Mondrian views Dell as an attractively valued beneficiary of early-stage AI hardware deployment, even if mainstream AI monetization remains uncertain.

BSD Analysis:
Dell is emerging as a meaningful beneficiary of the first wave of AI infrastructure build-out, with demand surging for its high-performance servers and GPU-dense architectures. Its supply-chain strengths and long-standing enterprise relationships have helped it gain share in key segments where reliability and rapid delivery are critical. Recent earnings confirmed this momentum, with AI-server backlog expanding sharply as hyperscalers and large enterprises ramp capacity. While the broader monetization of AI remains early and uneven, Dell is already capturing the hardware spend that must occur before any downstream value is realized. The company’s integrated design, manufacturing, and logistics model gives it an edge in navigating component constraints and meeting short lead-time requirements for complex AI systems. Valuation remains attractive relative to the scale of the infrastructure cycle underway, with the market still discounting AI demand as potentially transient. As deployments expand and backlog converts into revenue, Dell stands to be one of the clearer early-stage winners in AI hardware.

Pitch Summary:
Mondrian highlights Meta as a beneficiary of AI investments that materially enhance engagement, content personalization, and advertiser ROI. The company has driven a significant recovery in profitability following cost discipline initiatives and a focus on improving the efficiency of its data-center and model-training infrastructure. Meta’s scale advantages in AI-driven recommendation systems underpin accelerating time-spent metrics across Facebook and Instagram. With a strong balance sheet and improving free cash flow, Meta remains well positioned to compound earnings as AI application monetization broadens across ad formats and messaging.

BSD Analysis:
Meta is becoming one of the clearest AI winners in the consumer internet space, using large-scale model investments to materially improve engagement, content ranking, and advertiser ROI across its platforms. Advances in recommendation systems are driving meaningful gains in time spent on Facebook and Instagram, reinforcing Meta’s unmatched scale advantage in data and model training. After several years of elevated spending, the company has executed a sharp profitability recovery through disciplined cost management and more efficient data-center buildouts. These improvements have restored operating leverage at a time when AI-enhanced ad formats are gaining traction and lifting monetization. Meta’s balance sheet remains exceptionally strong, and rising free cash flow gives the company ample capacity for continued buybacks and long-term AI investment. As AI applications broaden into messaging, business tools, and more immersive ad experiences, Meta has multiple avenues to compound earnings. The company’s combination of scale, model sophistication, and financial strength keeps it positioned as a durable long-term compounder in the AI-enabled ad ecosystem.

Pitch Summary:
In this past quarter we have made one portfolio trade, swapping Equinor for Shell which, on our estimates, enhances the portfolio’s long-term earnings power significantly. We currently have two stocks in the energy sector and, as explained in previous notes, our investment thesis is one rooted in the capital cycle. We continue to track the reinvestment rates of global energy companies which, having fallen to a multi-decade low, are clearly not rising as they have in previous cycles. Oil prices are set by the intersection of supply and demand and have been shown to have a very tight correlation to global commercial inventories. This chart shows that logical effect in action (note inventories are shown inverted on the y-axis – lower inventories driving higher prices). On this basis, the current $80 oil price is to be expected given the levels of inventories in the system. Predicting the oil price is notoriously difficult, although the above framework provides a sense of asymmetry to our oil price expectations. With this macro context in mind, the portfolio trade this quarter was not a result of a bearish view on oil prices per se, but primarily a result of us not having a strong view on European gas prices returning to their 2022 highs (which drive Equinor’s earnings significantly). As a reminder, Equinor is a high-quality European gas producer generating 90% of its operating income from the Norwegian continental shelf (a high quality, geopolitically important energy source), with 50% of its production being gas. It has an incredible asset in Johan Sverdrup, and in May this year it was announced that production could increase to 755,000 b/d, which is about 7% of the total daily European oil consumption.6 We do not doubt its asset quality. European gas prices reached unprecedented levels in 2022 because of Putin’s invasion. This was a result of a confluence of factors. Namely, the Nord Stream (Russian) gas pipeline being shut off, a lack of a reliable energy source to replace Russian gas (there has been a scramble to build LNG terminals) and low gas storage before what could have been a cold European winter. Equinor has profited handsomely from this, generating 40% of its market cap in free cashflow since 2022.7 On a prospective basis, European gas prices have less visible upside than oil prices, and no clear asymmetry. Shell has been on our shelf of ideas for some time and is a large integrated European energy company with a greater liquids business than Equinor. Like BP, it remains diversified with an oil & gas, chemicals, and marketing business, and is also building out a renewables business, but at a pace which reflects the economic returns available across its assets. Similarly to BP, Shell trades at almost a 50% discount to the US integrated oil companies due to its UK primary listing, despite their similar structures and exposures. Growth rates look comparable over the next five years, and we would rather a starting earnings yield of 15% to one of 9%, giving us a meaningful margin of safety as well as incrementally more upside should the shares rerate in line with global peers.

BSD Analysis:
Latitude’s Shell thesis is a classic capital-cycle trade: they see a disciplined integrated major with a greater liquids mix than Equinor, benefiting from structurally constrained upstream investment and an oil price supported by tight inventories. They highlight Shell’s diversified portfolio across upstream, LNG, chemicals, marketing and measured renewables, arguing that management is allocating capital based on economic returns rather than chasing volume or politics. At the same time, Shell trades at a large discount to U.S. supermajors, with a mid-single-digit dividend yield, high-single-digit earnings yield and EV/EBITDA around the mid-single digits, leaving ample scope for both cash returns and re-rating. Strong free cash flow supports a mix of dividends and buybacks, and if management maintains capex discipline while continuing to simplify the portfolio, the stock can compound at double-digit total returns even on flat oil prices. Main risks are a sharp cyclical downturn in energy demand, political pressure on fossil fuels and execution missteps in its transition and chemicals businesses.