Investment Pitches

Pitch Summary:
Neurones, French IT services company, reported sales growth of more than 10% and operating profit growth of 18%. With a net cash position of 30% of its capitalisation, it has also announced the establishment of a recurring dividend payment of €2 per share (a 5.6% dividend yield).

BSD Analysis:
Neurones’ moat is long-standing IT services relationships in France, built on reliability rather than scale dominance. Margins depend on utilization and talent retention. Growth follows client IT budgets closely. Pricing power is thin, negotiated deal by deal. Balance sheet conservatism provides resilience. Diversified service lines reduce single-client risk. Organic growth has historically outpaced many peers. The bull case is sustained digital transformation spend in Europe. Neurones compounds slowly—when execution stays consistent.

Pitch Summary:
Origin Enterprises, announced in March that it will initiate a €40m share buyback programme, representing 10% of its capitalisation. This company, which sells fertilisers, pesticides and seeds and provides advisory services to farmers, has good prospects because the rise in the prices of fertilisers and agricultural products is accompanied by the appreciation of the pound, the currency in which it makes most of its sales.

BSD Analysis:
Origin’s moat is agronomy expertise and farmer relationships in markets where trust drives repeat business. Distribution plus advisory creates stickiness beyond simple input sales. Earnings remain tied to crop cycles and weather variability. Pricing power is modest and often constrained by farm economics. Working capital management is critical given seasonal swings. Diversification across geographies smooths risk unevenly. Acquisitions add scale but require integration discipline. The bull case is stable crop pricing and favorable weather. Origin compounds when agriculture behaves—and stalls when it doesn’t.

Pitch Summary:
DFS Furniture, which has a market value of £480m, has announced a £80m capital return programme to shareholders in the form of a special dividend and the purchase of treasury shares, which together represent 16.6% of its capitalisation. The DFS business has emerged stronger from the pandemic and has delivered structural growth of 15% due to its ability to exploit the weakness of its competitors.

BSD Analysis:
DFS’s moat is brand plus in-house financing in a UK sofa market where big-ticket purchases need payment flexibility. Vertical integration into manufacturing and sourcing protects gross margin better than pure retailers. Demand is brutally cyclical, tied to housing turnover and consumer confidence. Promotional intensity defines the category, keeping pricing power fragile. Cost control and inventory discipline determine whether downturns are survivable. Online penetration helps reach, but doesn’t change economics. Lease liabilities add fixed-cost pressure in weak markets. The bull case is housing recovery and margin normalization. DFS survives cycles—rarely outruns them.

Pitch Summary:
Paywalled (The site mentioned: Roblox (NYSE: RBLX — $38.3 billion) is a platform for children generally between six and fourteen to play online. It is also the leading platform for pedophiles. Roblox ex-employees, Roblox developers, Roblox award winners, and Roblox users have been linked to a wide array of misconduct. Roblox’s former social media manager ran a pornographic blog while employed by the company. Roblox’s official Twitter account retweeted content made by a self-described pedophile.) Update 8/17 - Follow-up report: RBLX facilitated hundreds of known child abuse cases; Update 10/3/24 - Follow-up report; Update 10/17/24 - Follow-up report: The platform hosts school shooting games;

BSD Analysis:
Repeat entry — monetization challenges, high infrastructure costs, and reliance on speculative ad ramp create negative leverage. Shorts highlight sensitivity to rates as a long-duration asset. Catalysts: DAU/bookings, ad RPMs, infra opex, user penetration shifts. Counterpoints: marketplace/ads could drive upside, but shorts see Street as too optimistic.

Pitch Summary:
Cash burn; fake customers; technological flaws in products; competes against lithium-ion which has 99% market share. Update: Iceberg Research claimed on Jan 20, 2021 that EOSE admitted it lied about its contracts. Update 6/30 - Reinitiated the short again after 90% drop and then 400% up now. Update 7/27 - Follow-up: Fake backlog from a financially distressed party; Update 8/3 - EOSE sued for mispresenting the backlog. Update 1/18 - Twitter update. Update 10/17/24 - Follow-up report: the recent structured loan package is not beneficial to the company.l

BSD Analysis:
Eos Energy develops zinc-based grid batteries. Bears cite commercialization risk, high burn, and reliance on DOE loans/subsidies. Zinc chemistry is less proven than lithium at scale, delays persist, and equity raises recur. Catalysts: DOE loan progress, factory utilization, backlog conversion, margins. Counterpoints: storage is secular, but shorts see EOSE as structurally disadvantaged.

Pitch Summary:
As long-term shareholders in Toyota Industries, the global leading supplier of forklifts and auto air-con compressors, we have seen meaningful progress towards unlocking shareholder value, while also encountering the pitfalls associated with weak corporate governance. Since first investing in the business in 2020, we have flagged the unrealized value in the company's mix of businesses, alongside its heavily over-capitalized balance sheet. Indeed, at the time of initiation, the value of Toyota Industries' cross-shareholdings exceeded its market capitalization. We have made cautious assumptions around capital allocation in our modelling of the company. While acknowledging the Toyota Group's undue influence, the company's exceptional balance sheet value supported the skew of outcomes. Over several years, we have actively engaged with the company to encourage improvements in governance practices. It was encouraging to see recent steps in the right direction, including the reduction of group cross-shareholdings and the initiation of a multi-year program of share buybacks. However, there is still considerable progress to be made. In April 2025, media rumors first emerged that the Toyota Group wanted to privatize Toyota Industries for around ¥20,000 per share, a 40% premium to its market price at the time. The share price shot up on the news. We spoke to the company and flagged that we felt this offer undervalued the business. In June 2025, the formal announcement of a tender offer from the Toyota Group at ¥16,300 per share was released. While 23% above the undisturbed share price (and well above our purchase price), we believe this offer grossly undervalues Toyota Industries. On a simple, sum-of-the-parts valuation, the implied multiple for the strong underlying businesses of less than 4x EBIT is unjustifiably low, even without including the potentially significant real estate value (which remains undisclosed) or any control premium. We have not been alone in pointing this out to the company.

BSD Analysis:
Mondrian presents a compelling value thesis on Toyota Industries, highlighting significant undervaluation despite recent takeover interest from the Toyota Group. The manager's bull case centers on the company's exceptional balance sheet strength, with cross-shareholdings that historically exceeded market capitalization at initiation in 2020. The investment thesis is supported by the company's dominant market position as a global leader in forklifts and automotive air conditioning compressors, combined with meaningful progress in corporate governance reforms including cross-shareholding reductions and share buyback programs. The manager's rejection of the Toyota Group's ¥16,300 per share tender offer demonstrates conviction in their valuation methodology, arguing that the implied 4x EBIT multiple grossly undervalues the underlying businesses. The sum-of-the-parts analysis suggests significant upside potential, particularly when considering undisclosed real estate assets and control premiums. While corporate governance challenges persist within the Toyota Group structure, the manager views this as a catalyst for unlocking shareholder value as Japan's corporate reform momentum continues to build. The investment represents a classic value opportunity with strong downside protection from balance sheet strength and multiple expansion potential from governance improvements.

Pitch Summary:
Geron is a biotechnology company with a commercialized drug launching to treat blood cancer. Its product is newly entering a sizable market with broad applicability for patients who cycle through a variety of treatments throughout the course of the disease, allowing for a potentially larger revenue opportunity than currently appreciated by the market.

BSD Analysis:
ClearBridge initiated a position in Geron, viewing it as an undervalued biotechnology company with a newly commercialized blood cancer treatment. The investment thesis centers on the company's product entering a sizable addressable market with significant commercial potential. A key aspect of the opportunity is the broad applicability of Geron's treatment for patients who cycle through multiple therapies during their disease progression, creating multiple treatment opportunities per patient. The managers believe the market is underappreciating the revenue potential, suggesting the stock may be undervalued relative to the commercial opportunity. Blood cancer treatments often command premium pricing due to their life-saving nature and limited treatment options. The cycling nature of cancer treatments means patients may use Geron's product multiple times throughout their treatment journey, potentially creating recurring revenue streams. Given the specialized nature of oncology treatments and the regulatory barriers in biotechnology, Geron's commercialized product provides a competitive moat and significant revenue potential in the growing oncology market.

Pitch Summary:
Hims & Hers is a health care IT services company providing a consumer telehealth platform across a variety of men's and women's health categories, including weight loss, dermatology and mental health. With an integrated experience, strong brand recognition and a convenient stigma-free value proposition to consumers, the company is seeing robust revenue growth while improving profitability.

BSD Analysis:
ClearBridge added Hims & Hers as a new position, attracted by the company's comprehensive telehealth platform serving both men's and women's health needs. The investment thesis is built on the company's integrated experience across multiple health categories including weight loss, dermatology, and mental health. Key competitive advantages include strong brand recognition and a convenient, stigma-free value proposition that appeals to consumers seeking discreet healthcare solutions. The managers highlight the company's robust revenue growth trajectory while simultaneously improving profitability, indicating strong unit economics and operational leverage. The telehealth market has experienced significant growth, particularly in areas where consumers prefer privacy and convenience over traditional healthcare delivery. Hims & Hers' focus on sensitive health categories creates a defensible market position, as patients value the discretion and accessibility of the platform. The combination of revenue growth and improving profitability suggests the company is successfully scaling its business model and capturing market share in the expanding telehealth sector.

Pitch Summary:
Archrock is a production-driven compression service provider supporting natural gas production. There are multiple catalysts driving a secularly positive trajectory for natural gas demand and Archrock operates in a consolidated, capacity-constrained market providing critical services supporting production.

BSD Analysis:
ClearBridge initiated a position in Archrock, viewing it as a beneficiary of secular growth in natural gas demand with multiple positive catalysts. The investment thesis centers on Archrock's role as a production-driven compression service provider that supports natural gas production infrastructure. The managers identify multiple catalysts driving a secularly positive trajectory for natural gas demand, likely including LNG exports, industrial demand, and power generation needs. A key competitive advantage is Archrock's position in a consolidated, capacity-constrained market where the company provides critical services essential to natural gas production. This market structure suggests pricing power and stable demand for Archrock's services. The capacity constraints in the compression services market create barriers to entry and support favorable industry dynamics. Given the essential nature of compression services in natural gas production and the secular growth drivers for natural gas demand, Archrock appears well-positioned to benefit from increased utilization and potentially higher pricing for its services.

Pitch Summary:
Rocket Lab USA is a manufacturer of spacecraft and satellite components as well as a service provider for satellite launch services, primarily focused today on smaller payloads. With an innovative founder-led management team competing in an enormous market with significant growth in commercial, government and classified applications, we see significant growth potential.

BSD Analysis:
ClearBridge added Rocket Lab USA as a new position, attracted by the company's dual business model as both a spacecraft manufacturer and satellite launch service provider. The investment thesis is built on the company's focus on smaller payloads in the rapidly expanding space economy. The managers highlight the innovative founder-led management team as a key competitive advantage, suggesting strong execution capabilities and vision. The addressable market is described as enormous with significant growth opportunities across commercial, government, and classified applications, indicating multiple revenue streams and end markets. The space industry is experiencing unprecedented growth driven by satellite constellation deployments, government space initiatives, and commercial space applications. Rocket Lab's positioning in the small payload segment allows it to capture market share in a less competitive niche compared to heavy-lift launch providers. The company's integrated approach of manufacturing spacecraft components while also providing launch services creates potential synergies and recurring revenue opportunities.

Pitch Summary:
Glaukos is a medical device company focused primarily on treating ophthalmological conditions such as glaucoma and corneal health. With several commercialized products and an innovative track record, the company is in the process of launching a potential blockbuster product, iDose, which is a drug-device combination with a variety of administration/efficacy advantages in treating glaucoma.

BSD Analysis:
ClearBridge initiated a position in Glaukos, viewing it as an innovative medical device company with strong commercial potential in ophthalmology. The investment thesis centers on the company's pipeline of commercialized products and its track record of innovation in treating glaucoma and corneal health conditions. The key catalyst is the launch of iDose, described as a potential blockbuster product that combines drug and device technology. This drug-device combination offers significant administration and efficacy advantages over existing glaucoma treatments, positioning Glaukos to capture meaningful market share. The managers appear confident in the company's ability to execute on this product launch and capitalize on the large addressable market for glaucoma treatments. Given the specialized nature of ophthalmological devices and the regulatory barriers to entry, Glaukos appears well-positioned to benefit from its innovative product portfolio.

Pitch Summary:
Meanwhile, we initiated positions in CVS, Inditex and TE Connectivity. Poor execution at Aetna, CVS's health insurance business, and declining retail profits precipitated a decline in the shares which created an attractive entry point. We anticipate that underwriting improvements for its Medicare Advantage program will yield considerable profit growth over the next few years, which should lead to a re-rating in the stock.

BSD Analysis:
The managers initiated a position in CVS Health following a significant decline driven by poor execution at Aetna and declining retail profits. They view this as an attractive entry point for a quality healthcare services company. The investment thesis centers on anticipated underwriting improvements in CVS's Medicare Advantage program, which they expect to drive considerable profit growth over the next few years. This operational improvement should lead to multiple expansion and stock re-rating. The position represents a contrarian bet on management's ability to fix execution issues at the health insurance business. The timing appears opportunistic, capitalizing on temporary operational challenges rather than structural problems. CVS offers exposure to the growing Medicare Advantage market with potential for margin expansion as underwriting discipline improves.

Pitch Summary:
With that as the backdrop, we did make a sale early this quarter as Axon's valuation had gotten ahead of itself. The stock's IRR for our day one investors was over 80% annually. A good chunk of that was due to multiple expansion so the valuation piece of the Infuse formula has been severely handicapped. The forward expected returns simply aren't good enough compared to some other opportunities so we trimmed significantly.

BSD Analysis:
The manager executed a disciplined sell decision on Axon after achieving exceptional returns of over 80% annually for day-one investors. The position was trimmed significantly due to valuation concerns, with much of the gains attributed to multiple expansion rather than fundamental improvement. The manager's decision reflects a systematic approach to portfolio management, prioritizing forward-looking expected returns over past performance. While Axon has clearly been a successful investment, the current valuation no longer meets the fund's risk-adjusted return requirements. The sale demonstrates the manager's commitment to the 'Infuse formula' which appears to emphasize attractive valuations as a key component. This disciplined approach to taking profits when valuations become stretched is consistent with long-term wealth preservation strategies. The decision also aligns with the manager's broader philosophy of optimizing after-tax returns while maintaining portfolio discipline.

Pitch Summary:
Headquartered in Mountain View, California and founded by Larry Page and Sergey Brin, Alphabet is one of the world's most dominant and innovative technology companies. Best known as the parent company of Google, Alphabet generates most of its revenue from digital advertising, particularly search. Google currently holds an estimated 87% market share in U.S. search and nearly 90% globally, underpinning a highly profitable ad business that accounts for roughly 75% of Alphabet's total revenue. While Google was founded in 1998 and became public in 2004, Alphabet was created in 2015 to provide greater transparency and operational independence across its varied business lines. Beyond its core, the company has increasingly diversified into accelerating products, including Google Cloud and YouTube's suite of subscription services (YouTube Premium, YouTube TV and YouTube Music). Today, Google Services (Search, YouTube, Chrome, Android and the Play Store) makes up ~87% of total revenue, while Google Cloud represents ~13%. Alphabet also invests in longer-term innovation through its Other Bets segment, which includes autonomous driving (Waymo), life sciences (Verily) and advanced AI research (DeepMind).

BSD Analysis:
Aristotle Capital views Alphabet as significantly undervalued at less than 12x normalized earnings, emphasizing the company's dominant market position with 87% U.S. search share and nearly 90% globally. The manager highlights Alphabet's integrated ecosystem across Search, YouTube, Android, Chrome, and Gmail that supports user retention and advertising efficiency. Key growth drivers include Google Cloud's emerging profitability and meaningful scaling, YouTube's $45+ billion revenue run-rate expanding through both ad-supported and subscription models, and sustained leadership in digital advertising. The investment thesis centers on three primary catalysts: continued dominance in search reinforced by unmatched first-party data, improving Google Cloud profitability and market share gains against AWS and Microsoft Azure, and YouTube TV's trajectory to become the largest U.S. pay-TV provider by 2026. The manager views Alphabet's AI expertise through the Gemini model family as a potential 'free option' that could enhance monetization across Ads, Search, and Cloud, though this upside is not explicitly included in valuation estimates.

Pitch Summary:
Founded in 1940 and with headquarters in Pennsylvania, Air Products and Chemicals is a leading global supplier of industrial gases, including oxygen, nitrogen, helium, hydrogen and others. These essential gases serve critical roles across a wide range of industries, such as refining, chemicals, metals, electronics, manufacturing, healthcare, and food manufacturing and packaging. Air Products is the leading global supplier of hydrogen, with a robust distribution network across North America. Roughly 50% of the company's revenue is generated through onsite delivery. This method usually entails 15- to 20-year contracts where Air Products builds a facility at the customer's site or nearby (or delivers the gases through pipeline systems). These long-term contracts tend to include pass-through and take-or-pay provisions, which provide stability and predictability of cash flows. The company's merchant gases (roughly 35% of revenue) are delivered in bulk by tanker in either liquid or gas form, usually under five-year contracts, providing a steady but more variable revenue stream. Smaller quantities can also be delivered to customers, usually packaged in cylinders. (This business represents less than 15% of revenue.) Over the last several years, Air Products has pursued opportunities in clean hydrogen, including the construction of two megaprojects in Saudi Arabia (NEOM) and Louisiana. Unlike its traditional model, these projects were started without offtake agreements, a shift that raised concerns. Amid delays and rising costs, activist investor Mantle Ridge took a stake in the company, advocating for a more disciplined approach to capital allocation and succession planning. In response, Eduardo Menezes joined as CEO from Linde, where he led the company's EMEA operations. Mr. Menezes quickly refocused the company by divesting non-core assets and exiting three projects outside its industrial gases and hydrogen expertise. We view these changes positively, as they enhance strategic focus and align the company with its core strengths.

BSD Analysis:
Aristotle Capital initiated a position in Air Products following significant operational improvements under new CEO Eduardo Menezes, who joined from competitor Linde. The manager views the company as an attractive oligopoly with high barriers to entry, benefiting from mission-critical products and long-term contracts (15-20 years for onsite delivery with take-or-pay provisions). The investment thesis centers on Air Products' leading position in hydrogen supply and its robust North American distribution network, with 50% of revenue from stable onsite delivery contracts. Key catalysts include portfolio optimization through divestiture of non-core assets, refocused strategy on industrial gases and clean hydrogen, and completion of megaprojects in Saudi Arabia (NEOM) and Louisiana that should significantly enhance earnings. The manager estimates normalized capital expenditures at 18% of sales and projects 12% returns on contracted projects, purchasing shares at an attractive discount to intrinsic value. The 43-year dividend growth history demonstrates consistent cash flow generation capabilities.

Pitch Summary:
Sony, the global leader in video games, image sensors, music and movies, was the top contributor for the period. The company delivered strong quarterly results, driven primarily by its gaming and music businesses, and announced a new executive leadership structure. In gaming, Sony reported a record-high 129 million monthly active users, a 20% year-over-year increase in PlayStation Plus revenue and an expanding user base, as 40% of new PS5 console buyers were new to the platform. The Music segment also continued to benefit from global streaming tailwinds, delivering double-digit profit growth. In a significant leadership transition, Sony announced that, effective April 1, 2025, Hiroki Totoki, currently COO and CFO, would succeed Kenichiro Yoshida as CEO. Our original investment in Sony was grounded in the strategic transformation led by Yoshida-san, where Totoki-san was an instrumental partner in driving Sony's pivot away from commoditized businesses while spearheading investments in content IP and semiconductors. Looking ahead, we continue to see opportunity for Sony to capitalize on its unique position as both a content creator and platform owner. The company's ability to integrate gaming, music, anime and film and leverage IP across platforms (e.g., Crunchyroll and its recent partnership with Kadokawa) should position it well for long-term value creation.

BSD Analysis:
Aristotle Capital views Sony as a compelling investment driven by its unique position as both a content creator and platform owner across multiple entertainment verticals. The manager highlights strong operational momentum with record-high gaming metrics including 129 million monthly active users and 20% YoY PlayStation Plus revenue growth, while 40% of new PS5 buyers represent platform expansion. The music segment benefits from global streaming trends with double-digit profit growth. The upcoming CEO transition from Kenichiro Yoshida to Hiroki Totoki is viewed positively, as Totoki was instrumental in Sony's strategic transformation away from commoditized businesses toward content IP and semiconductors. Key catalysts include Sony's ability to leverage intellectual property across integrated platforms, including gaming, music, anime, and film. The manager emphasizes Sony's strategic partnerships with Crunchyroll and Kadokawa as examples of cross-platform IP monetization that should drive long-term value creation.

Pitch Summary:
Adobe, the leading provider of content creation and publishing software, was a notable detractor during the quarter. This came despite the company reporting record revenue of over $5.7 billion in the first quarter—a 10% year-over-year increase, with double-digit increases across both its Digital Media and Digital Experience segments. The disconnect between strong fundamentals and share price weakness reflects ongoing market concerns around intensifying competitive threats from generative AI and lower-cost design platforms. Market sentiment has remained cautious around the perceived disruption risk posed by new AI-driven entrants, including OpenAI's Sora for video generation and platforms like Canva, which cater to the broader prosumer and small and medium-sized business segment. However, we continue to view these as largely non-overlapping with Adobe's core base of creative professionals, enterprises and agencies—audiences that demand precision, control and integration within larger workflows. Canva, while expanding its feature set, remains limited in its enterprise readiness and depth. Sora, meanwhile, remains early-stage and experimental, with limited commercial application at this point. Crucially, Adobe is not standing still. The company is actively embedding generative AI across its ecosystem through Firefly, which is commercially safe (i.e., free of copyrighted sources to train its models) and integrated natively into Creative Cloud applications like Photoshop and Illustrator. Firefly has shown strong early traction, generating $125 million in annualized recurring revenue, with management expecting that figure to double by year-end. While modest in size relative to Adobe's total revenue, Firefly's monetization strategy is still in its early innings, with further potential through upselling, usage-based pricing and expanded use cases. Beyond monetization, AI integration enhances Adobe's long-term competitive moat through product functionality, stronger customer engagement and increased switching costs. Adobe's unique access to proprietary data, content workflows and creative content allows it to fine-tune models that serve the high-end needs of professionals—capabilities that generic AI models lack. Strategic partnerships with Microsoft (e.g., Firefly in Microsoft 365 Copilot) and ongoing momentum in Adobe Express further extend its reach into new user segments. Ultimately, we believe Adobe has a durable competitive advantage, underpinned by a large installed base, subscription-led business model, strong brand equity and a long track record of innovation. While short-term concerns over AI disruption have weighed on the stock price, we believe Adobe is well-positioned to harness AI as a driver of value rather than being displaced by it.

BSD Analysis:
Aristotle Capital maintains a bullish stance on Adobe despite recent share price weakness, viewing the disconnect between strong fundamentals and market concerns as a compelling opportunity. The manager emphasizes Adobe's record Q1 revenue of $5.7 billion (10% YoY growth) and dismisses competitive threats from AI-driven platforms like Canva and OpenAI's Sora as largely non-overlapping with Adobe's enterprise-focused customer base. The investment thesis centers on Adobe's successful AI integration through Firefly, which has generated $125 million in annualized recurring revenue and is expected to double by year-end. The manager highlights Adobe's competitive moat through proprietary data access, enterprise-grade workflows, and strategic partnerships with Microsoft. Key catalysts include AI monetization through upselling and usage-based pricing, enhanced customer engagement, and increased switching costs. The fund views Adobe's subscription model, large installed base, and innovation track record as durable competitive advantages that position the company to benefit from rather than be disrupted by AI trends.

Pitch Summary:
I am not going to explain the business model, because there's plenty of writeups around. Suffice to know that the stock has performed poorly due to a regulatory (hackers might be government agents too?) crackdown on their black markets activity (which is the most profitable). In Q1 they reported negative EBITDA YoY growth for the first time, margin compression and signaled that Q2 would be bad, but recovery would come in the second half (I know, the second half thing). I personally think that only revenue in developed markets is worth a normal multiple (the EBITDA margin here is way lower, and loss making in the US probably) and black market revenue is worth a low single digits multiple on cash earnings. You are paying around 10 times sales for the white markets if you give a multiple of 4 to the black/grey market earnings. I guess the key is how big and profitable the US operations can get. In this chart, you can see when big (a few million dollars) purchases were made by the CEO: I would think they are not about to put out terrible news.

BSD Analysis:
The manager presents a contrarian bull case for Evolution Gaming despite recent regulatory headwinds affecting their higher-margin black market operations. The thesis acknowledges significant near-term challenges including first-time negative EBITDA growth and margin compression in Q1, with management guiding for continued weakness in Q2. The valuation framework separates legitimate developed market revenue (deserving normal multiples) from black/grey market revenue (warranting low single-digit multiples), suggesting the white market business trades at approximately 10x sales. The investment rationale hinges on the potential scale and profitability of US operations as a key value driver. Insider buying activity by the CEO, involving several million dollars in purchases, provides additional conviction that management doesn't anticipate further negative developments. The manager views the current dislocation as a buying opportunity, betting on regulatory stabilization and US market expansion. However, the thesis carries significant regulatory and execution risks given the company's exposure to uncertain gaming markets.

Pitch Summary:
This company sells intraocular lenses (IOLs). When you get eye surgery to fix your vision, normally you get your cornea sliced to adjust your dioptres and compensate for the crystalline deformation. When it comes to IOLs (widely used in cataracts as slicing the cornea won't help) they get your natural lens out and put in a new artificial one. You won't believe me, but cataracts were being treated in the early antiquity. Back then, the only solution was to push the crystalline down into the eye, basically getting rid of the cloudy lens and allowing some kind of vision (the lens is there for a reason, a lot myopia is the normal outcome, and many times, zero vision). Of course, the intervention was only considered when the cataract was very very advanced, basically making those people as good as blind. Anyhow, come modernity, we now replace the lens. Thanks innovation, we have plenty to choose from as the replacement: Conventional (monofocal IOL): Our natural lens is partly the tool that allows us to focus so we can see things that are 1 meter away as well as things that are 20 meters away, despite the light having a different angle. With monofocal IOL, that ability is "lost" and you rely on glasses to adjust to short and long term ranges. These lenses don't correct presbyopia or astigmatism. These are the cheaper ones. Multifocal IOLs: These are more advanced lenses implanted during cataract or refractive surgery that provide vision at multiple distances, reducing or eliminating the need for glasses. Your ability to "focus" is still lost, but the lenses use concentric rings or segmented zones with different focal powers to allow the brain to adapt and select the appropriate focus depending on the visual task. While many patients achieve good spectacle independence, some may experience halos, glare, or reduced contrast sensitivity, especially at night. Astigmatism-Correcting or Toric Intraocular Lenses (IOLs): Toric IOLs are specially designed to correct pre-existing corneal astigmatism. Unlike standard monofocal lenses, toric IOLs have different optical powers in different meridians of the lens to neutralize the uneven curvature of the cornea. They must be precisely aligned during surgery to be effective. By correcting astigmatism at the time of lens implantation, they often reduce or eliminate the need for glasses or contact lenses for distance vision. Patients would still require glasses unless combined with multifocal technology. The last two, fix different problems, multifocal IOLs allow for a reduced or nil use of glasses, but sometimes create halos and need replacement (yes another surgery) and the Toric lenses fix an existing vision problem, these technologies can be combined. That gets us to what we can call the "premium IOL" market, of which RxSight has 10% share with their solution, the Light Adjustable Lens (LAL), from the 10K: RxSight's LAL system enables precise, non-invasive post-surgical customization of the intraocular lens (IOL) using UV light. The LAL is made from a proprietary silicone polymer containing photo-reactive macromers that can be reshaped after implantation. Following cataract surgery, a doctor uses the Light Delivery Device (LDD) to project UV light patterns that adjust lens shape and power in-office, based on the patient's visual preferences. This iterative process allows up to three adjustments for optimal vision without additional surgery. The LAL offers superior accuracy in correcting refractive errors, including astigmatism, with minimal glare or halos—common drawbacks of multifocal IOLs. For surgeons, it reduces reliance on preoperative measurements and enhances practice profitability. For patients, it delivers customized, high-quality visual outcomes with broad distance coverage and high satisfaction. Clinical studies show LALs outperform conventional IOLs in uncorrected vision, making RxSight a disruptive solution in premium cataract care. The LALs offer two advantages over other premium IOLs. First, you don't rely on a previous measurement of a vision problem to correct it, you can adjust post implantation and most importantly, can adjust further if the vision problem evolves without a new surgery, basically buying insurance in case your vision changes. Second, the halo effect and glare typical of the multifocal IOLs is less prevalent. The LALs work as a plain monofocal, it has no rings that split light and cause halos. What makes it special is the silicone matrix that can be reshaped with the LDD weeks after the eye has healed. Adjustments with the LDD replace the "extra focal points" of multifocals: instead of sending part of the light to near, the lens refocuses all of the light where the patient wants it. Some patients still need glasses for long night drives or really small print. All that text wall just to justify the belief that they have a premium product, that it is probably the best option in the market, but the extra cost might not be worth it for everyone. What I mean is that this product is worth something. Maybe the final penetration rate is today's 10%, maybe it goes up to 20% or higher. I don't know, but the uniqueness of the product is there. We can see someone got excited in 2024 and the company raised $110mm at $53 per share in may 2024. The company has almost $230mm in cash for a $530mm market cap. I know that the savvy readers are pointing at that Q1 revenue drop and asking, what's going on. Let me tell you, it's not only that Q1 revenues dropped, a metric that shows the health of the product, which is LALs installed per LDD machine dropped YoY (I like to think of that metric as the LFL for retail companies, it's good to grow opening new stores, but the sales per store going down is a sign of trouble. Thank god RXST fixed costs don't depend on the number of LDDs around though). I want to turn you off a bit more, showing you how the company approached the missed Q1 guidance. 25th of February they reaffirm guidance, then just after the end of the quarter they pull this: How bad was March that they had to cut guidance by 15%? Why did that decel in March happen? Those are the questions the thesis boils down to. The company says that the macro uncertainty made their clients pull out of the market, as well as launches by two competitors of premium IOLs (not LALs) that went aggressively to market in a non economical way that, according to management, is not sustainable. The company has been to several Conferences after the Q1 earnings call and they don't sound upbeat about Q2. In fact, they are pointing out at the second half and are "hopeful". This company is however barely burning cash (the losses are mostly SBC) and they do have a premium product with 10% of the high end IOL market while trading at less than 2 times revenues. My bet is that this company is not going away, that growth might pick up (if fact, macro has gotten quite better since April), that the shareholders have stopped liquidating their holdings and the stock might go up again. The bear case is that Q2 is bad, they guide down the year and you start wondering whether the 2023 and 2024 growth was due to some other reason than the goodness of the product. Then the time to reevaluate will come and probably sell. Despite that, I own shares and I think at this valuation the risk reward is good. I am also short puts 12.5 strikes that I think given the cash pile makes them a nice bet. I have found that puts are not efficiently priced when companies have a big to huge percentage of the market cap in cash and no debt.

BSD Analysis:
The manager presents a detailed bull case for RxSight based on their proprietary Light Adjustable Lens technology, which holds a 10% market share in the premium IOL segment. The thesis centers on the LAL's superior post-surgical adjustability using UV light, eliminating the need for additional surgeries and reducing common side effects like halos compared to multifocal IOLs. Despite acknowledging recent Q1 revenue declines and guidance cuts attributed to macro uncertainty and aggressive competitor pricing, the manager views the current valuation as attractive at less than 2x revenues with $230mm cash against a $530mm market cap. The investment rationale emphasizes the product's technical superiority and defensive cash position, while acknowledging execution risks around sustained growth momentum. The manager maintains conviction despite recent underperformance, betting on a second-half recovery and improved market conditions. Risk management includes short put positions at $12.50 strikes, leveraging the company's strong balance sheet. The thesis balances product quality conviction against near-term operational headwinds.