Investment Pitches

Pitch Summary:
For instance, a recent purchase is Nestle, a global consumer food and beverage company based in Switzerland. Price hikes from the COVID-era have dampened demand for many global food brands and Nestle has not been immune. As a result, its growth rate has fallen well below management's goals and the stock price has dropped. Having followed and owned this company for the past 30 years I do not recall a time when the price fell as far as it has, almost 40% from its peak. The stock now trades for roughly 16x earnings and sports a 4% dividend yield. More compelling, the stock is even cheaper than it appears because they own vast amounts of publicly traded companies such as L'Oreal and Nestle India. Adjusting Nestle's market cap for these companies suggests that an investor is purchasing this global powerhouse franchise for a low double digit P/E ratio.

BSD Analysis:
The manager presents a compelling contrarian value opportunity in Nestle, leveraging his 30-year experience with the company to identify an exceptional entry point. The 40% decline from peak levels represents the steepest drawdown the manager has witnessed, creating what appears to be a rare buying opportunity in this defensive consumer staples giant. At 16x earnings with a 4% dividend yield, the valuation metrics are attractive for a company of Nestle's quality and global reach. The manager's key insight centers on the hidden value within Nestle's investment portfolio, particularly stakes in L'Oreal and Nestle India, which effectively reduces the core operating business valuation to a low double-digit P/E multiple. While COVID-era price increases have temporarily dampened demand and growth rates, the manager's long-term perspective suggests this cyclical headwind will eventually normalize. The combination of defensive characteristics, dividend income, and compelling valuation creates an asymmetric risk-reward profile. This contrarian bet aligns with the manager's broader thesis that European markets offer superior value opportunities compared to expensive US equities.

Pitch Summary:
One company that we did add to in the quarter and has grown to a mid-sized position is Global-e. Global-e is an e-commerce logistics platform that helps online merchants sell and deliver goods cross-border. The company was founded in 2013 and headquartered in Israel. Global-e handles about $4.7bn in gross merchandise value which translates to ~$740MM in revenue with ~19% EBITDA margins and ~16% normalized PAT margins. Revenue has grown 44% (CAGR) since IPO in 2021 and is expected to grow 30% per year through 2027. The company services over 1,000 brands, across 200 markets (including Adidas, Disney, Givenchy, Hugo Boss and Burberry). Cross-border e-commerce is a rapidly growing segment, growing at almost double the pace of domestic e-commerce. The market is set to hit almost eight trillion in GMV by 2030 growing at a CAGR of 30.5%. However, it is a fragmented market as consumers are spread across the globe and have their own behaviours and preferences. Some of the biggest issues brands face with cross-border commerce include taxes/duties, additional fees and requirements to have a local presence. By becoming the merchant of record, Global-e can take care of end-to-end delivery and ensure returns are also handled smoothly. This allows for customer comfort when making a purchase. For example, Global-e worked with a Canadian ecommerce player who saw only a 20% checkout rate as international customers would bounce once they saw all fees. They adjusted the selection page to show prices, including all charges, in the local ccy, which caused checkout rates to triple. Global-e also helps its customers convert their online stores into local currency and offer local payment options (i.e. WeChat in China). Global-e is widely recognized by customers and competitors as the leading end-to-end ecommerce logistics service in the market. It has also made intelligent acquisitions of competitors to shore up market share and has an exclusive partnership with Shopify (who is Global-e largest shareholder). The biggest risk here is that the stock is not cheap. By my calculations it trades at around 30x 2027 EPS. For this valuation to hold we need to see topline growth of over 30% over the next few years. This is a tall order for any company, but I believe this to be quite doable for the likes of Global-e. Current Net Dollar Retention ratio is around 127% (2023), and the expectation is that this will likely fall to low ~120% when final 2024 numbers are announced (due to full integration of certain acquisitions). The Net Dollar Retention ratio is a bit like 'same-store sales'; it represents how much a company is growing just based on its current customer set. Given the Shopify relationship and new wins like Harrods, we think it is reasonable to assume 10% growth should be doable from new clients. To put numbers behind the thesis, I believe the Shopify business itself will grow to $1bn in GMV by 2027 (from $250mn in 2024) which would add about 5-6% a year to GMV. If you take additional new logos and the 20%+ from existing customer growth we should be able to see 30% growth the next few years. But this number must be watched, especially as the Trump administration will launch new tariffs. If growth slows, the valuation will correct accordingly.

BSD Analysis:
The manager presents a compelling bull case for Global-e, positioning it as the dominant player in the rapidly expanding cross-border e-commerce logistics market. The thesis centers on Global-e's ability to solve complex international commerce challenges by serving as merchant of record, handling taxes, duties, currency conversion, and local payment methods. The company demonstrates strong fundamentals with $740MM revenue, 19% EBITDA margins, and impressive 44% revenue CAGR since IPO. The manager highlights Global-e's competitive moat through its exclusive Shopify partnership and market-leading position serving premium brands like Adidas and Burberry across 200 markets. Key growth drivers include the cross-border e-commerce market expanding at 30.5% CAGR to $8 trillion GMV by 2030, plus a robust 127% net dollar retention rate indicating strong customer expansion. The investment case relies on maintaining 30%+ revenue growth through 2027, supported by Shopify GMV growth from $250MM to $1BN and continued new client acquisition. However, the manager acknowledges valuation risk at 30x 2027 EPS and potential headwinds from Trump administration tariffs that could impact growth assumptions.

Pitch Summary:
Boeing was the worst performer, falling by 16.5%. The company continues to struggle and recently raised cash through an equity offering to shore up its balance sheet. Now that there is a new CEO, Boeing's stock may have reached a bottom. They are very close to ending the workers' strike. The latest quarterly results were not impressive, but the stock has been holding around $150, roughly the price we bought it at in 2022. Boeing operates in a duopoly, with Airbus as its only true competitor. Boeing still has an order backlog valued at over $500 billion, which has also improved in recent quarters. I believe it will perform over time, and I see no need to exit the holding.

BSD Analysis:
The manager maintains a bullish long-term view on Boeing despite recent operational challenges and poor quarterly performance. The investment thesis centers on Boeing's duopoly position with Airbus in the commercial aviation market, providing significant competitive moats and pricing power. The manager highlights Boeing's substantial order backlog exceeding $500 billion, which has been improving and provides multi-year revenue visibility. Recent positive catalysts include new CEO leadership and the near-resolution of the workers' strike, which should improve operational efficiency. The manager views the current $150 price level as attractive, representing the original 2022 purchase price and potentially marking a bottom. While acknowledging recent struggles and disappointing earnings, the manager emphasizes the structural advantages of the duopoly and expects long-term outperformance as operational issues resolve.

Pitch Summary:
Tower companies own and operate telecommunication towers that they then lease to wireless service providers for the buildout and maintenance of their wireless networks. With long term (10+ year) contracts with blue chip customers supported by annual price escalators (3%), tower companies are among the highest quality businesses out there. The industry structure is attractive, with local politics making new builds difficult, and wireless service providers preferring to lease space on towers as opposed to owning towers themselves because sharing the fixed costs provides significant cost savings. Tower companies benefit from meaningful operating leverage manifested in the first tenant covering the tower build cost and the second tenant providing near complete revenue to margin conversion. With ten-year leases and annual price escalators, any equipment upgrades and incremental tenants directly adds to the earnings power. In the third quarter we invested in the tower companies at near historic low valuations. We believe that the reason for the compressed valuations; an inflation and interest rate spike coinciding with the cadence of the wireless carriers 5G buildout, is temporary. We see three main paths to value creation at the tower companies. One, the pullback in capital expenditures from the wireless carriers will reverse course and lead to high margin revenue growth for the tower companies. A perfect storm of an interest rate spike elevating financing costs, excess network capacity from the first phase of the 5G network rollout, and the lack of a "killer application" for 5G to act as a forcing function for subscriber and network competition gave the wireless carriers cover to pull back on their spending in favor of focusing on their balance sheets. Two years of curtailed capital expenditures are set to catch up to the wireless carriers as an accelerating treadmill of data consumption is set to force capital expenditures on the networks. This accelerating treadmill of data consumption is fed by both annual mobile data consumption growth of between twenty and thirty percent, and twelve million fixed wireless subscriber additions that use upwards of twenty times the bandwidth that typical wireless subscribers use. Coinciding with data usage growth acting as a forcing function on capital expenditure growth, wireless carriers have regulatory coverage requirements from past spectrum auctions. As wireless carriers are forced to add capacity through denser infrastructure build outs and expansion into rural areas not previously prioritized, tower companies benefit from high revenue to margin flow through from their ownership of the proverbial toll road on wireless network spending. Two, tower companies are set to accrue high margin revenue growth as the wireless service provider industry shifts from a four to three player transition to a three to four player transition. Following the TMobile- Sprint merger in April of 2020, duplicative tower footprints were rationalized, causing uncharacteristic tenant churn for the tower companies. Coinciding with the ending of T-Mobile-Sprint tower churn in early 2025, a September merger and restructuring of Dish and Echostar has created an increasingly positive industry structure. With Echostar as a newly viable fourth player with valuable high propagation spectrum, we see a base case for increasing tower co-tenancy, and the potential for this technologically enabled upstart to force real network competition with the big three wireless carriers. Three, the tower companies offer a free option on widespread adoption of artificial intelligence. Large technology companies are in the midst of an unprecedented amount of capital expenditures to enable artificial intelligence. While there has yet to be a "killer application" that causes widespread consumer and enterprise adoption of artificial intelligence, recent advancements have pushed the marginal cost of content creation near zero. As we have seen with past historical fact patterns from computing to the internet, when marginal costs go to zero, there is a creative explosion in use cases. Currently artificial intelligence is primarily expressed in text or photo mediums, which lack bandwidth intensity. As we have seen with social media, when applications shift from text or photo to real time video, data usage explodes upwards. We could theorize ad infinitum about artificial intelligence creating customized high quality real time video streams, runtime libraries of data built into every application at the consumer and enterprise level, and exploding data sets used to train models and inference in real time, but the common theme is that there is a step change in the amount of data that needs to be moved, stored, computed, and moved again. With the mobile phone (and possibly Apple Vision Pro or Meta Orion) acting as the avenue for expression of artificial intelligence given its role as the remote control for the physical world, it is hard to see how exploding data usage will not necessitate lower latency, higher bandwidth wireless infrastructure networks. With wireless service companies forced to compete based on their networks, the tower companies collect the toll from more equipment upgrades and increasing tower co-tenancies. Additionally, tower companies stand to benefit through their ability to use their secure, electrified, centralized land and space footprint to create their own latency sensitive artificial intelligence and cloud hubs for mobile edge computing. While this fact pattern remains firmly in our "free option" bucket, we are happy to own the tower companies for the two near term catalysts as we watch the third path to value creation unfold.

BSD Analysis:
Spree Capital presents a compelling bull case for tower companies, viewing them as high-quality infrastructure businesses with defensive characteristics and multiple growth catalysts. The manager emphasizes the attractive industry structure with long-term contracts (10+ years), annual price escalators (3%), and significant operating leverage where additional tenants provide near 100% revenue-to-margin conversion. The investment thesis centers on three key value drivers: a cyclical recovery in wireless carrier capex spending driven by accelerating data consumption (20-30% annual growth) and regulatory requirements, industry consolidation benefits as T-Mobile/Sprint churn ends and a fourth viable competitor emerges with Echostar, and a potential AI-driven data explosion requiring enhanced network infrastructure. The manager purchased these assets at historically low valuations during Q3 2024, attributing the discount to temporary headwinds from interest rate spikes and 5G buildout timing. The pitch demonstrates strong fundamental understanding of the tower business model and identifies both near-term catalysts and longer-term optionality from AI adoption.

Pitch Summary:
Tower companies own and operate telecommunication towers that they then lease to wireless service providers for the buildout and maintenance of their wireless networks. With long term (10+ year) contracts with blue chip customers supported by annual price escalators (3%), tower companies are among the highest quality businesses out there. The industry structure is attractive, with local politics making new builds difficult, and wireless service providers preferring to lease space on towers as opposed to owning towers themselves because sharing the fixed costs provides significant cost savings. Tower companies benefit from meaningful operating leverage manifested in the first tenant covering the tower build cost and the second tenant providing near complete revenue to margin conversion. With ten-year leases and annual price escalators, any equipment upgrades and incremental tenants directly adds to the earnings power. In the third quarter we invested in the tower companies at near historic low valuations. We believe that the reason for the compressed valuations; an inflation and interest rate spike coinciding with the cadence of the wireless carriers 5G buildout, is temporary. We see three main paths to value creation at the tower companies. One, the pullback in capital expenditures from the wireless carriers will reverse course and lead to high margin revenue growth for the tower companies. A perfect storm of an interest rate spike elevating financing costs, excess network capacity from the first phase of the 5G network rollout, and the lack of a "killer application" for 5G to act as a forcing function for subscriber and network competition gave the wireless carriers cover to pull back on their spending in favor of focusing on their balance sheets. Two years of curtailed capital expenditures are set to catch up to the wireless carriers as an accelerating treadmill of data consumption is set to force capital expenditures on the networks. This accelerating treadmill of data consumption is fed by both annual mobile data consumption growth of between twenty and thirty percent, and twelve million fixed wireless subscriber additions that use upwards of twenty times the bandwidth that typical wireless subscribers use. Coinciding with data usage growth acting as a forcing function on capital expenditure growth, wireless carriers have regulatory coverage requirements from past spectrum auctions. As wireless carriers are forced to add capacity through denser infrastructure build outs and expansion into rural areas not previously prioritized, tower companies benefit from high revenue to margin flow through from their ownership of the proverbial toll road on wireless network spending. Two, tower companies are set to accrue high margin revenue growth as the wireless service provider industry shifts from a four to three player transition to a three to four player transition. Following the TMobile- Sprint merger in April of 2020, duplicative tower footprints were rationalized, causing uncharacteristic tenant churn for the tower companies. Coinciding with the ending of T-Mobile-Sprint tower churn in early 2025, a September merger and restructuring of Dish and Echostar has created an increasingly positive industry structure. With Echostar as a newly viable fourth player with valuable high propagation spectrum, we see a base case for increasing tower co-tenancy, and the potential for this technologically enabled upstart to force real network competition with the big three wireless carriers. Three, the tower companies offer a free option on widespread adoption of artificial intelligence. Large technology companies are in the midst of an unprecedented amount of capital expenditures to enable artificial intelligence. While there has yet to be a "killer application" that causes widespread consumer and enterprise adoption of artificial intelligence, recent advancements have pushed the marginal cost of content creation near zero. As we have seen with past historical fact patterns from computing to the internet, when marginal costs go to zero, there is a creative explosion in use cases. Currently artificial intelligence is primarily expressed in text or photo mediums, which lack bandwidth intensity. As we have seen with social media, when applications shift from text or photo to real time video, data usage explodes upwards. We could theorize ad infinitum about artificial intelligence creating customized high quality real time video streams, runtime libraries of data built into every application at the consumer and enterprise level, and exploding data sets used to train models and inference in real time, but the common theme is that there is a step change in the amount of data that needs to be moved, stored, computed, and moved again. With the mobile phone (and possibly Apple Vision Pro or Meta Orion) acting as the avenue for expression of artificial intelligence given its role as the remote control for the physical world, it is hard to see how exploding data usage will not necessitate lower latency, higher bandwidth wireless infrastructure networks. With wireless service companies forced to compete based on their networks, the tower companies collect the toll from more equipment upgrades and increasing tower co-tenancies. Additionally, tower companies stand to benefit through their ability to use their secure, electrified, centralized land and space footprint to create their own latency sensitive artificial intelligence and cloud hubs for mobile edge computing. While this fact pattern remains firmly in our "free option" bucket, we are happy to own the tower companies for the two near term catalysts as we watch the third path to value creation unfold.

BSD Analysis:
Spree Capital presents a compelling bull case for tower companies, viewing them as high-quality infrastructure businesses with defensive characteristics and multiple growth catalysts. The manager emphasizes the attractive industry structure with long-term contracts (10+ years), annual price escalators (3%), and significant operating leverage where additional tenants provide near 100% revenue-to-margin conversion. The investment thesis centers on three key value drivers: a cyclical recovery in wireless carrier capex spending driven by accelerating data consumption (20-30% annual growth) and regulatory requirements, industry consolidation benefits as T-Mobile/Sprint churn ends and a fourth viable competitor emerges with Echostar, and a potential AI-driven data explosion requiring enhanced network infrastructure. The manager purchased these assets at historically low valuations during Q3 2024, attributing the discount to temporary headwinds from interest rate spikes and 5G buildout timing. The pitch demonstrates strong fundamental understanding of the tower business model and identifies both near-term catalysts and longer-term optionality from AI adoption.

Pitch Summary:
Tower companies own and operate telecommunication towers that they then lease to wireless service providers for the buildout and maintenance of their wireless networks. With long term (10+ year) contracts with blue chip customers supported by annual price escalators (3%), tower companies are among the highest quality businesses out there. The industry structure is attractive, with local politics making new builds difficult, and wireless service providers preferring to lease space on towers as opposed to owning towers themselves because sharing the fixed costs provides significant cost savings. Tower companies benefit from meaningful operating leverage manifested in the first tenant covering the tower build cost and the second tenant providing near complete revenue to margin conversion. With ten-year leases and annual price escalators, any equipment upgrades and incremental tenants directly adds to the earnings power. In the third quarter we invested in the tower companies at near historic low valuations. We believe that the reason for the compressed valuations; an inflation and interest rate spike coinciding with the cadence of the wireless carriers 5G buildout, is temporary. We see three main paths to value creation at the tower companies. One, the pullback in capital expenditures from the wireless carriers will reverse course and lead to high margin revenue growth for the tower companies. A perfect storm of an interest rate spike elevating financing costs, excess network capacity from the first phase of the 5G network rollout, and the lack of a "killer application" for 5G to act as a forcing function for subscriber and network competition gave the wireless carriers cover to pull back on their spending in favor of focusing on their balance sheets. Two years of curtailed capital expenditures are set to catch up to the wireless carriers as an accelerating treadmill of data consumption is set to force capital expenditures on the networks. This accelerating treadmill of data consumption is fed by both annual mobile data consumption growth of between twenty and thirty percent, and twelve million fixed wireless subscriber additions that use upwards of twenty times the bandwidth that typical wireless subscribers use. Coinciding with data usage growth acting as a forcing function on capital expenditure growth, wireless carriers have regulatory coverage requirements from past spectrum auctions. As wireless carriers are forced to add capacity through denser infrastructure build outs and expansion into rural areas not previously prioritized, tower companies benefit from high revenue to margin flow through from their ownership of the proverbial toll road on wireless network spending. Two, tower companies are set to accrue high margin revenue growth as the wireless service provider industry shifts from a four to three player transition to a three to four player transition. Following the TMobile- Sprint merger in April of 2020, duplicative tower footprints were rationalized, causing uncharacteristic tenant churn for the tower companies. Coinciding with the ending of T-Mobile-Sprint tower churn in early 2025, a September merger and restructuring of Dish and Echostar has created an increasingly positive industry structure. With Echostar as a newly viable fourth player with valuable high propagation spectrum, we see a base case for increasing tower co-tenancy, and the potential for this technologically enabled upstart to force real network competition with the big three wireless carriers. Three, the tower companies offer a free option on widespread adoption of artificial intelligence. Large technology companies are in the midst of an unprecedented amount of capital expenditures to enable artificial intelligence. While there has yet to be a "killer application" that causes widespread consumer and enterprise adoption of artificial intelligence, recent advancements have pushed the marginal cost of content creation near zero. As we have seen with past historical fact patterns from computing to the internet, when marginal costs go to zero, there is a creative explosion in use cases. Currently artificial intelligence is primarily expressed in text or photo mediums, which lack bandwidth intensity. As we have seen with social media, when applications shift from text or photo to real time video, data usage explodes upwards. We could theorize ad infinitum about artificial intelligence creating customized high quality real time video streams, runtime libraries of data built into every application at the consumer and enterprise level, and exploding data sets used to train models and inference in real time, but the common theme is that there is a step change in the amount of data that needs to be moved, stored, computed, and moved again. With the mobile phone (and possibly Apple Vision Pro or Meta Orion) acting as the avenue for expression of artificial intelligence given its role as the remote control for the physical world, it is hard to see how exploding data usage will not necessitate lower latency, higher bandwidth wireless infrastructure networks. With wireless service companies forced to compete based on their networks, the tower companies collect the toll from more equipment upgrades and increasing tower co-tenancies. Additionally, tower companies stand to benefit through their ability to use their secure, electrified, centralized land and space footprint to create their own latency sensitive artificial intelligence and cloud hubs for mobile edge computing. While this fact pattern remains firmly in our "free option" bucket, we are happy to own the tower companies for the two near term catalysts as we watch the third path to value creation unfold.

BSD Analysis:
Spree Capital presents a compelling bull case for tower companies, viewing them as high-quality infrastructure businesses with defensive characteristics and multiple growth catalysts. The manager emphasizes the attractive industry structure with long-term contracts (10+ years), annual price escalators (3%), and significant operating leverage where additional tenants provide near 100% revenue-to-margin conversion. The investment thesis centers on three key value drivers: a cyclical recovery in wireless carrier capex spending driven by accelerating data consumption (20-30% annual growth) and regulatory requirements, industry consolidation benefits as T-Mobile/Sprint churn ends and a fourth viable competitor emerges with Echostar, and a potential AI-driven data explosion requiring enhanced network infrastructure. The manager purchased these assets at historically low valuations during Q3 2024, attributing the discount to temporary headwinds from interest rate spikes and 5G buildout timing. The pitch demonstrates strong fundamental understanding of the tower business model and identifies both near-term catalysts and longer-term optionality from AI adoption.

Pitch Summary:
Hallador Energy is a legacy coal mining company in Indiana that is transitioning to a vertically integrated independent power producer (IPP). During the ESG craze a few years ago, Hallador acquired the grid interconnection rights from its customer Hoosier Energy to build a solar plant on the location of Hoosier's soon-to-be-closed coal plant. The idea was that coal was dead, and Hallador would reimagine itself as a more ESG-friendly solar company. However, when the power market tightened in 2022, the grid operator requested the plant remain in operation. Hoosier was forced to sell the plant at a discount to the only logical buyer – Hallador – who owned the grid interconnection rights. The plant is 40 years old and will be fully depreciated over the next 10 years, but management believes it can operate for at least another 15 years. Today, the power generation segment accounts for only about 45% of Hallador's revenue yet nearly all of its profit. Hallador's power plant sits in the MISO region which, according to the North American Electric Reliability Corporation's 2023 Long-Term Reliability Assessment, is one of the two regions designated as high risk for power shortages in the coming years. MISO has many old coal plants like Hallador's that are slated to be retired, and the replacement capacity is solely coming from intermittent power generation like wind and solar. Even with this backdrop, hyperscalers such as Amazon and Google continue to announce new data center projects in the area, in part drawn by the region's lower power prices compared to neighboring regions like PJM. While generation prices have yet to rise, the capacity market is already responding, as seen by the growth in Hallador's capacity revenue, which is expected to be approximately $65mm this year vs $10mm last year and $1.5mm just a few years ago. Hallador currently has an RFP out to data center operators and management and has said that it is in discussions over a 10-year PPA to contract for the majority of its capacity. It expects an announcement later this year or early next. While time will tell what the pricing from the data center PPA will be, simply using MISO forward pricing as a proxy, we believe that Hallador could generate over $2.50 in FCF per share in 2026. This would price Hallador shares at less than 4x P/FCF, compared to IPP peers that are all trading above 10x. As seen by Talen's Amazon deal, there is a good chance that the data center PPA will likely be priced significantly above forward prices.

BSD Analysis:
The manager identifies Hallador Energy as an opportunistic play on the coal-to-data center power transition, benefiting from unique circumstances that created an undervalued asset. The company's acquisition of grid interconnection rights during the ESG movement positioned it perfectly when power market dynamics shifted, allowing Hallador to purchase the coal plant at a discount when reliability concerns emerged. The MISO region's designation as high-risk for power shortages creates a favorable supply-demand imbalance, with coal plant retirements being replaced only by intermittent renewables while hyperscalers continue building data centers attracted by lower regional power costs. Capacity revenue growth from $1.5mm to an expected $65mm demonstrates the market's recognition of scarcity value. At less than 4x projected 2026 free cash flow versus 10x+ for IPP peers, Hallador offers compelling relative value with significant re-rating potential upon securing a data center power purchase agreement. The fully depreciated 40-year-old plant provides a low-cost baseload generation asset with 15+ years of remaining operational life. Management's active pursuit of a 10-year PPA with data center operators could unlock substantial value given the premium pricing precedent set by similar deals.

Pitch Summary:
Talen is an independent power producer (IPP) that serves the Pennsylvania-Jersey-Maryland (PJM) market. It owns 10.7 GW of generation capacity, with the Susquehanna nuclear plant accounting for 2.2 GW, while the remaining assets are various natural gas "peaking" plants that operate at 25-65% utilization. The company went public in 2015 as a combination of Pennsylvania Power & Light's unregulated energy business and the power generation portfolio of a PE shop, Riverstone Holdings. Riverstone took the business private in 2016. Overleveraged following the take-private and poor hedges eventually forced Talen to file for bankruptcy in 2022, and it reemerged as a public company in 2023 on the OTC market with a new board, management, and cleaned-up balance sheet. In July, shares were uplisted to the Nasdaq and will likely be added to several indexes over the coming months. The Susquehanna plant is Talen's prize asset. It is the 6th largest nuclear plant in the country, and while it accounts for only 20% of Talen's overall capacity, it is responsible for nearly 50% of Talen's annual power generation. The IRA legislation passed in 2022 made nuclear plants particularly attractive assets by introducing a production tax credit (PTC) mechanism that effectively sets an approximate $40/MWh floor on power prices generated from nuclear. Compare this to Susquehanna's operating costs of about $23/MWh, and you get a floor of around $300mm in operating cash flow to Talen from Susquehanna alone. Talen is already a beneficiary of the ballooning demand from data centers. As previously mentioned, Talen signed a PPA with Amazon in March to deliver power to its new data center campus, which will continue to be built over the next decade. The pricing implied in the PPA is over $70/MWH, a 50% premium to current PJM prices. There is no contribution from this to the financials currently, but it should help drive double-digit EBITDA growth for Talen over the next decade. We also don't believe Talen is done signing data center PPAs, and it has about 1.2GW of uncontracted capacity from Susquehanna that could be made available for a similar deal. Talen's stock doesn't appear cheap on current year multiples, but at the midpoint of its recently announced 2026 targets, it is trading at 8x EV/EBITDA and 12x FCF, and we believe there is upside to these targets. Constellation Energy (CEG), Talen's closest peer by asset mix and growth profile, trades at 22x EV/EBITDA and 30x P/FCF. Given Talen's superior growth runway, it should arguably deserve a premium. On the downside, we believe that the replacement cost of the Susquehanna plant alone supports a floor valuation much higher than the stock price today. Recent estimates suggest that it costs north of $8,000/KW to construct a new nuclear power plant in the U.S., which, if applied to Susquehanna, would support a value 80% higher than the current market. Even still, this might be too conservative. The last nuclear plant built in the U.S. was the twin 1.25 GW units in Vogtle, Georgia. The project took 14 years to complete, cost $34bn, and bankrupted Westinghouse Electric. Management recognizes the valuation gap and has been buying back shares as aggressively as it can. Since October 2023, Talen has repurchased 14% of its shares, with another $1.25bn remaining on its authorization that would account for another 15% of shares at current prices. If Talen completed this authorization tomorrow, it would still be under its leverage target and could repurchase even more shares with the free cash flow it is set to generate.

BSD Analysis:
The manager presents a compelling bull case for Talen Energy, positioning it as a prime beneficiary of surging AI data center power demand. The investment thesis centers on Talen's crown jewel Susquehanna nuclear plant, which provides baseload power with significant regulatory tailwinds from the Inflation Reduction Act's production tax credits that establish a $40/MWh floor versus $23/MWh operating costs. The Amazon power purchase agreement at $70/MWh represents a 50% premium to current PJM prices and validates the premium pricing power for reliable nuclear generation. At 8x EV/EBITDA on 2026 targets, Talen trades at a significant discount to peer Constellation Energy's 22x multiple despite superior growth prospects from additional data center contracts. The replacement value argument is particularly compelling, with new nuclear construction costs exceeding $8,000/KW suggesting 80% upside to current valuations. Management's aggressive 14% share repurchase program with $1.25bn remaining authorization demonstrates capital allocation discipline and confidence in the undervaluation. The combination of structural demand growth, regulatory support, and attractive valuation creates a multi-year compounding opportunity in the energy transition.

Pitch Summary:
Nebius (NBIS) is a direct AI datacenter play, based in the Netherlands. It follows a model similar to Coreweave in the U.S., providing global AI producers with essential resources, including an AI-centric cloud platform, large-scale GPU (graphic processing unit) clusters, cloud services, and developer tools, while also supporting areas like data for AI development, education and re-skilling for tech careers, and autonomous driving technology. After initiating a position in the business, we were pleased to see Nvidia invest in early December, further reinforcing our thesis and validating the company's promising trajectory.

BSD Analysis:
Hood River positions Nebius as a compelling direct play on the artificial intelligence infrastructure theme, comparing its business model to the successful U.S. company Coreweave. The manager highlights the company's comprehensive AI ecosystem, which includes critical infrastructure components such as GPU clusters, cloud platforms, and developer tools that serve global AI producers. The investment thesis is strengthened by the company's diversified approach beyond just data centers, extending into AI development, education, and autonomous driving technology. A significant validation of the investment came when Nvidia made an investment in Nebius in early December, which the manager views as external confirmation of their thesis and the company's promising trajectory. This endorsement from a leading AI chip company adds credibility to Nebius's positioning in the AI infrastructure space. The timing appears strategic as AI infrastructure demand continues to accelerate globally, and Nebius's Netherlands base provides European market access. The manager's confidence is evident in their satisfaction with the Nvidia validation, suggesting strong conviction in the company's competitive positioning and growth prospects.

Pitch Summary:
Just Group PLC (JUST LN) is one such opportunity, a UK-based life insurance company specializing in the retirement income market and catering to both retail and corporate clientele. The company has carved out a strong presence in the lower to mid-tier segments, addressing specific market needs with tailored solutions. By continuing to win new business and expand its asset base, Just Group drives robust revenue growth and profitability, solidifying its position as a key player in this specialized market.

BSD Analysis:
Hood River presents Just Group as an attractive opportunity in the UK life insurance sector, specifically targeting the retirement income market. The manager emphasizes the company's strategic positioning in the lower to mid-tier market segments, which appears to be a differentiated approach that allows for tailored solutions to specific customer needs. The investment thesis centers on the company's ability to consistently win new business and expand its asset base, which the manager believes drives robust revenue growth and profitability. This growth strategy appears sustainable given the demographic trends toward retirement planning and the specialized nature of Just Group's market focus. The manager views the company as having solidified its position as a key player in this specialized market, suggesting competitive advantages and market share gains. The pitch aligns with Hood River's strategy of identifying opportunities through rigorous bottom-up analysis in niche markets. The timing appears favorable given the manager's positive outlook on selective opportunities in the UK market despite broader economic challenges.

Pitch Summary:
In the Half Year Letter, I wrote about Caesars (CZR)'s long-term growth opportunity in digital gaming and near-term opportunity to buy back its own stock at a single-digit multiple of 2025 free cash flow. Although CZR trades just above our cost basis of $41 per share and the investment has been a drag on performance so far this year, there have been several recent bullish developments that led us to add to the position. Beneficiary of lower interest rates. Caesars is an example of a smaller US business primed to be an outsized beneficiary of lower US interest rates. Lower rates reduce the interest expense on Caesars debt and boosts cash flow used for buybacks. Declining interest rates also stimulates consumer demand for travel, hotel, gaming, restaurant. Additionally, the "bazooka" Chinese stimulus package mentioned should help jumpstart pan-Asian travel to Vegas for business and pleasure. Rapidly growing online gaming US market value. The recent Flutter Entertainment investor day presentation (parent company of market leading online sports betting app FanDuel) was bullish for the US online gaming market. Although we do not own Flutter, the presentation is confirmation of the broader opportunity for large players like Caesars. On page 58 of the Flutter presentation the company revised its 2022 estimate of the US online gaming market from $40 billion $70 billion by 2023. What percent of the pie will Caesars get as the largest US land casino footprint and rewards program? My guess is that the market value estimate will continue to go higher with online revenue ultimately surpassing brick-and-mortar as states continue rolling out legalization. In our opinion Caesars's online growth is not taken seriously by investors and is not priced in the stock today despite CEO Tom Reeg reconfirming $400 to $500 million EBITDA run rate from online by 2024 yearend. Surprise early new buyback program. On October 2, 2024 CZR surprised the market with a quiet SEC filing disclosing it had just bought $150 million of stock at $36.38 per share and authorized a new $500 million buyback (5% to 6% of outstanding shares). In the same disclosure the company said it had completed the sale of the World Series of Poker IP rights for $250 million in upfront cash and $250 million in future consideration. As an example of what I like about CEO Tom Reeg is, the ink is barely dry on this transaction, and he is allocating nearly every penny to buy up as much stock as possible at fire sale prices. We still expect a larger buyback once new hotel construction spend winds down late this year and/or larger asset sales are announced.

BSD Analysis:
The manager presents a compelling turnaround thesis for Caesars Entertainment, trading near his $41 cost basis but with multiple catalysts emerging. The company benefits significantly from declining interest rates through reduced debt service costs and increased consumer discretionary spending on travel and gaming. Caesars dominates the US land-based casino market with the largest footprint and rewards program, positioning it to capture substantial market share in the rapidly expanding online gaming sector. The US online gaming market has been revised upward from $40 billion to $70 billion, with CEO Tom Reeg targeting $400-500 million EBITDA from online operations by year-end 2024. Recent aggressive capital allocation includes a surprise $500 million buyback program (5-6% of shares) funded by asset sales, demonstrating management's confidence in the stock's undervaluation at single-digit free cash flow multiples.

Pitch Summary:
The most noteworthy development in the last quarter has been the rally in Chinese equities sparked by a major government economic stimulus package to help the country pull out of its financial crisis. We did not invest with the expectation of government stimulus, or any catalyst other than the most important businesses in the Chinese economy were selling for distressed valuations. Until last month the basket had been a drag on our performance. After the recent rally our China basket has become over 15% of assets and is comprised of Tencent, Alibaba and Ping An Insurance. Each company dominates large and important consumer-facing segments of the Chinese economy, is growing key areas at double the rate of Chinese GDP and was purchased for single digit multiples of after-tax earnings. Each also has enormous amounts of cash and liquid investments including stock portfolios worth tens of billions of dollars, and large stock buyback programs. Even after the recent rally, Chinese equities are still down by about 77% compared to the S&P 500 over the last 10 years.

BSD Analysis:
The manager's Ping An Insurance position forms part of a strategic China basket representing over 15% of assets, purchased during distressed market conditions. Ping An dominates consumer-facing financial services segments in China while growing key business areas at double the rate of Chinese GDP, acquired at single-digit earnings multiples. The insurance giant maintains substantial cash reserves and liquid investment portfolios worth tens of billions, supported by active share repurchase programs. Despite recent government stimulus-driven rallies, Chinese equities including Ping An remain 77% below S&P 500 performance over the past decade. The manager views this as a compelling value opportunity with significant recovery potential as China's financial sector benefits from economic stabilization measures.

Pitch Summary:
The most noteworthy development in the last quarter has been the rally in Chinese equities sparked by a major government economic stimulus package to help the country pull out of its financial crisis. We did not invest with the expectation of government stimulus, or any catalyst other than the most important businesses in the Chinese economy were selling for distressed valuations. Until last month the basket had been a drag on our performance. After the recent rally our China basket has become over 15% of assets and is comprised of Tencent, Alibaba and Ping An Insurance. Each company dominates large and important consumer-facing segments of the Chinese economy, is growing key areas at double the rate of Chinese GDP and was purchased for single digit multiples of after-tax earnings. Each also has enormous amounts of cash and liquid investments including stock portfolios worth tens of billions of dollars, and large stock buyback programs. Even after the recent rally, Chinese equities are still down by about 77% compared to the S&P 500 over the last 10 years.

BSD Analysis:
The manager's Alibaba position represents part of a concentrated China recovery play, purchased at distressed valuations without relying on government stimulus expectations. Alibaba dominates critical consumer-facing segments of the Chinese economy while achieving growth rates double that of Chinese GDP, acquired at single-digit earnings multiples. The company maintains massive cash reserves and liquid investment portfolios worth tens of billions, complemented by aggressive share buyback programs. Despite recent government stimulus-driven rallies, Chinese equities including Alibaba remain 77% below S&P 500 performance over the past decade. The manager positions this as a long-term value opportunity with significant upside potential as Chinese markets recover from their extended downturn.

Pitch Summary:
The most noteworthy development in the last quarter has been the rally in Chinese equities sparked by a major government economic stimulus package to help the country pull out of its financial crisis. We did not invest with the expectation of government stimulus, or any catalyst other than the most important businesses in the Chinese economy were selling for distressed valuations. Until last month the basket had been a drag on our performance. After the recent rally our China basket has become over 15% of assets and is comprised of Tencent, Alibaba and Ping An Insurance. Each company dominates large and important consumer-facing segments of the Chinese economy, is growing key areas at double the rate of Chinese GDP and was purchased for single digit multiples of after-tax earnings. Each also has enormous amounts of cash and liquid investments including stock portfolios worth tens of billions of dollars, and large stock buyback programs. Even after the recent rally, Chinese equities are still down by about 77% compared to the S&P 500 over the last 10 years.

BSD Analysis:
The manager presents a compelling value thesis for Tencent as part of a concentrated China basket representing over 15% of assets. The investment was initiated based on distressed valuations rather than anticipating government stimulus, demonstrating disciplined contrarian investing. Tencent dominates consumer-facing segments of the Chinese economy while growing key areas at double the GDP rate, purchased at single-digit earnings multiples. The company maintains substantial cash reserves and liquid investments worth tens of billions, plus active share buyback programs. Despite recent rallies, Chinese equities remain 77% below S&P 500 performance over the past decade, suggesting significant upside potential. The manager views this as a long-term recovery play with outsized impact potential on portfolio performance.

Pitch Summary:
WildBrain is the largest owner of children's intellectual property (IP) outside of the major Hollywood studios, managing nearly 500 properties. The company produces children's content and distributes it across broadcast platforms, streaming services, and on its AVOD network and FAST channels. In addition to content distribution, WildBrain generates significant revenue through consumer products licensing, creating a substantial secondary income stream. WildBrain has been a challenging stock to own, testing our patience and at times prompting us to ask, "What are we missing?" As value investors, we recognize that cheap stocks can remain undervalued for extended periods, and we have no interest in owning a perpetually cheap stock. However, in the case of WildBrain, we believe that management has performed well, particularly during a time when the entertainment industry has faced some of the most significant disruptions ever seen with the WGA and SAG strikes shutting down much of Hollywood. Along with these industry-wide issues, company-specific factors—such as leadership changes, high leverage, limited analyst coverage, and an illiquid stock—have weighed on the company's stock price. Despite these headwinds, WildBrain's fundamentals have steadily improved, and in the past five months, two major catalysts have taken place that we believe will soon unlock WildBrain's intrinsic value. First, in July 2024, WildBrain announced the successful refinancing of its debt, extending all maturities to 2029 and fully funding its short-term obligations. Second, in December, the company sold a majority stake in its television broadcast business. This move not only divested a low-growth, low-margin business but also removed a significant asset that had prevented an outright sale due to Canadian ownership laws. WildBrain is now positioned as a pure-play content and IP company, setting the stage for potential acquisition interest from major studios, brand owners, or consumer products companies. As a result, the stock price has seen a sharp rise in recent weeks as the market begins to recognize the underlying value we've long seen in this business. One of WildBrain's most valuable assets is its majority stake in Peanuts, one of the most iconic and enduring franchises in family entertainment. This quote highlights the value of owning timeless kids and family IP, and Peanuts is a prime example of such an asset. The enduring popularity of characters like Snoopy and Charlie Brown have helped make WILD one of the last invaluable independent media entities in the entertainment space, and as a top 3-character brand at retail, Peanuts generates over $2.5 billion annually in consumer product sales. Today, the 'Peanuts' franchise is as strong as ever as it continues to grow in its partnership with Apple and expand globally to a new generation of kids and families. Apple TV+ is the home for all Peanuts content, and since forging the partnership in 2020, WildBrain has created many hours of new content, making Peanuts more relevant than ever and the anchor property of Apple TV's streaming efforts into kids' and family entertainment. To date, WildBrain has produced three TV series: Snoopy in Space (two seasons), The Snoopy Show (three seasons), and Camp Snoopy (season one streaming now), six Peanuts specials and documentaries, complimenting the holiday classics, and a feature film scheduled to premiere in 2026. Beyond content, Apple has integrated the Peanuts brand into other business segments, such as the Apple iWatch. This new content and Apple branding has reinvigorated the brand and led to multiple new licensing partnerships worldwide, such as a direct-to-retail agreement with fast-growing Chinese retailer, MINISO, in each of its 6k+ stores. These newer licensing deals add to the brand's deep licensing portfolio of over 1,000 partnerships with collaborators like Hallmark, NASA, Pottery Barn, J.Crew and William Sonoma, and attractions at 42 Six Flags / Cedar Fair theme parks across Noth America. Few franchises successfully navigate every stage of brand extension—from content creation to distribution, audience engagement, and ultimately consumer products, and Peanuts excels in all these areas, creating immense value for stakeholders. The opportunity to work on the iconic Peanuts property for Apple has drawn top talent to WildBrain's studio, creating a virtuous cycle that has sparked renewed interest in other key IPs from WildBrain's extensive portfolio. Management has strategically concentrated on brands with nostalgic appeal and a strong legacy of high-margin consumer product sales. This approach has led to the successful reactivation of franchises like Strawberry Shortcake, Teletubbies, and Yo Gabba Gabba, all of which have seen early successes through fresh content and strategic licensing partnerships. Strawberry Shortcake: Once a retail powerhouse with over $5 billion in sales during the 1990s, Strawberry Shortcake was bought by WildBrain in 2017 and revitalized in 2021 with the YouTube series Berry in the Big City. WildBrain's expansive YouTube network, the largest kids and family AVOD platform with over 200 million subscribers across 800+ channels, reaches approximately 40% of children under 13 globally every 90 days. This broad reach has fueled Strawberry Shortcake's resurgence, leading to Netflix specials and collaborations with Roblox, while also making it the top channel for girls on FAST platforms like Pluto TV and Tubi. On social media, engagement continues to climb on Instagram, TikTok, and Facebook. Over the past year, these efforts have driven a 50% increase in licensee growth and an 80% surge in retail sales, securing shelf space at major retailers like Walmart. Teletubbies: A popular preschool brand and $1 billion retail juggernaut in the early 2000s, Teletubbies had largely gone dormant with less than $1 million in retail sales the year before WildBrain bought the property in 2013. The brand was reactivated with WildBrain's 2021 release of new music videos and a full-length album on YouTube. In 2022, a new Netflix series marked the brand's first content launch in two decades, supported by global marketing and social media campaigns. This effort drove over 147 million TikTok views and 217 million Instagram impressions, attracting partnerships with brands like American Eagle, citizenM hotels, and Marc Jacobs. Yo Gabba Gabba: The beloved children's musical series, which once boasted over 3 million weekly viewers and sold-out live tours, returned in 2024 with a new original series on Apple TV, further expanding WildBrain's relationship with the streaming giant. This collaboration has reenergized the franchise and sparked promising discussions with licensing partners, setting the stage for its continued growth. With the recent launch of Gabba, WildBrain now has four key brands in various stages of their growth curve. Gabba is at the beginning of its relaunch, Strawberry and Teletubbies are in the early innings and Peanuts is the most established. WildBrain or its future acquiror can continue to harness the power of its platform to reactivate other nostalgic franchises in the WildBrain IP vault like Inspector Gadget, Caillou, Degrassi, Carmen Sandiego, In the Night Garden, and many others. Finally, WildBrain is increasingly sought after as a partner for third-party IP owners. The company's 360-degree offering—spanning content production, distribution, and licensing representation—has made it the go-to partner for numerous global brands, including Sega, Lego, Minecraft, The Pokémon Company, Hasbro, Mattel, Dr. Seuss Enterprises, Playmobil, and many others. WildBrain's reputation as an industry leader in maximizing IP value has opened doors to lucrative revenue-sharing partnerships, further diversifying the company's income streams. With the resolution of industry-wide strikes, successful debt refinancing, and the strategic divestiture of its broadcast assets, WildBrain is positioned for a transformative phase that will unlock substantial shareholder value. These developments set the stage for a potential sale of the company, offering an opportunity for the market to recognize the intrinsic value of its assets, which have long been overlooked. Currently trading at under 8x EBITDA with a double-digit free cash flow yield, we believe WildBrain's valuation does not fully reflect the value of its intellectual property portfolio, particularly its majority stake in the iconic Peanuts franchise. Comparable transactions in the character driven IP space—such as Hasbro's acquisition of Peppa Pig and Candle Media's purchase of Cocomelon at 25–30x multiples highlight the premium that proven brands can command. We conservatively estimate WildBrain's intrinsic value to be several multiples more than the current stock price. This projected valuation reflects a huge discount compared to recent deals involving less-established IP. The evergreen appeal of Peanuts, combined with the company's strategy to reactivate key assets from its vast content library, positions WildBrain for significantly more upside. In summary, WildBrain is at an exciting inflection point with multiple catalysts poised to drive considerable upside for shareholders.

BSD Analysis:
Old West presents a compelling turnaround thesis for WildBrain, emphasizing the company's transformation into a pure-play intellectual property powerhouse following strategic divestitures and debt refinancing. The manager highlights WildBrain's crown jewel asset - its majority stake in the iconic Peanuts franchise, which generates over $2.5 billion annually in consumer product sales and benefits from a strategic partnership with Apple TV+. The investment case centers on the successful reactivation of nostalgic brands like Strawberry Shortcake, Teletubbies, and Yo Gabba Gabba, demonstrating management's ability to monetize dormant IP assets. WildBrain's platform reaches 40% of children under 13 globally through its YouTube network, providing significant distribution leverage for content monetization. The company trades at an attractive 8x EBITDA multiple with double-digit free cash flow yield, representing a substantial discount to comparable IP transactions that have commanded 25-30x multiples. Recent catalysts include successful debt refinancing extending maturities to 2029 and the divestiture of low-margin broadcast assets, positioning the company as an acquisition target for major studios or consumer product companies. The manager conservatively estimates intrinsic value at several multiples above the current stock price, supported by the evergreen appeal of the Peanuts franchise and the company's proven ability to revitalize dormant IP assets.

Pitch Summary:
By a wide margin, the most impactful item to discuss is the transaction announced on October 9th. CC Capital, a private equity firm in New York run by one of Blackstone's most senior retired dealmakers, will invest $250 million USD into Westaim. This will provide a ~40% stake and a path to control the Board over time, subject to certain stock and business milestones. Longtime supporters will recall that we have owned shares in this company since the inception of our firm (and even before establishing Langdon). We have always had deep respect for the quality of its assets and the capabilities of its leadership team. This transaction, along with the highly successful IPO of Skyward Specialty Insurance, serves as third-party validation that our initial assertions appear to be correct. For a refresher, Westaim is a holding in both our Global and Canadian Portfolios. They are an investment holding company, specializing in acquiring and developing or restructuring businesses operating primarily within the global services financial industry. While we have been fortunate at Langdon to enjoy strong returns from our investment in Westaim it has very much been an "overnight success" a decade in the making. Since Langdon's first purchase in August 2022, we've earned 2x Multiple of Capital (MoC). Since 2014, Westaim's management team has worked tirelessly to build a private credit manager (Arena Investors) from scratch and to turn around a U.S. specialty insurance company (Skyward). In 2024, they successfully exited their investment in Skyward, which has nearly tripled since its IPO in Q1 2023. Skyward, also held in our portfolio, has contributed meaningfully to returns. The exit delivered approximately 2.5-3x MoC, translating to roughly a 13% gross annualized return (IRR) in USD—or closer to 15% in CAD. As shown below, their only other exit was a shorter hold, generating a 2x MoC and a 33% gross IRR in CAD. You must be asking: "How could this company still be trading below net cash on its balance sheet?" That is the very question we've been asking for most of the past decade—and it remains valid today! The successful monetization of Skyward above where Westaim had it marked on its balance sheet at the end of 2022 attracted more investor interest in the material dislocation between price and value. It also brought in a highly experienced and successful investment firm (CC Capital), which will become Westaim's largest owner once the deal closes in Q1 2025. We were wall crossed on this transaction and voted in support of it. We believe it positions Westaim and Arena well to transition from a NAV-based valuation model to one that will eventually trade on earnings. Regarding alignment between CC Capital and Westaim, there are conditions to be met before a full take private could be executed. CC Capital is not allowed to make a bid for the remainder of the company for 3 years post transaction close. In addition, CC Capital cannot elect a 6th board member, of the 11-person board, until the stock price goes above $48.00 CAD ($8.00 pre-share consolidation). These terms create a multi-year runway for the public market to sensibly value this company. Beyond injecting capital into Westaim above market price, CC Capital is also contributing talent and an insurance platform. This platform will serve as the foundation for an insurance-led asset management firm, a model that has become a valuable driver of asset growth among alternative asset managers. Examples include Apollo/Athene, Ares/Aspida, Blackstone/F&G Annuities, and Brookfield/BIS. Westaim has already redomiciled to Delaware from Alberta, making it no longer a Canadian company (a reality we have argued for years). We expect several analysts to begin covering this company in its new incarnation in 2025. There is much more to this transaction than we can cover in this letter. However, after several meetings with the incoming management team, we feel very optimistic about the company's future prospects. We also see low downside risk, with the stock still trading below cash value.

BSD Analysis:
Langdon presents Westaim as a classic value realization story, highlighting the transformative $250 million investment from CC Capital that validates their long-held thesis. The fund has generated a 2x return since 2022, demonstrating patience in a decade-long value creation process. Westaim's successful exit from Skyward Specialty Insurance at 2.5-3x returns and 15% CAD IRR showcases management's capital allocation capabilities. The company trades below net cash despite owning Arena Investors, a private credit manager built from scratch, creating a significant valuation disconnect. CC Capital's involvement brings institutional credibility and an insurance platform that positions Westaim to adopt the successful insurance-led asset management model used by Apollo, Ares, and Blackstone. The structured deal terms provide downside protection while allowing time for public market revaluation. Redomiciliation to Delaware and expected analyst coverage should improve liquidity and institutional accessibility. The combination of trading below cash value with transformational strategic partnership creates an asymmetric risk-reward profile.

Pitch Summary:
A&W, which many will know for its iconic Burger Family, traces its roots back to 1923 in California. The Canadian arm of the business opened its first location in Winnipeg in 1956. Soon after, A&W Canada pursued independence from the U.S. business, and by 1972, the business was acquired by Unilever. However, operational challenges prompted management to launch a buyout, creating the A&W we know today. Since 1991, A&W Canada has had only three CEOs, with the current CEO joining in 1992. Remarkably, the founders still own ~35% of the business 35 years later. This long-term ownership reflects a culture that not only attracts and retains talent but also fosters a shared commitment to sustainable, long-term success. A&W's culture permeates every aspect of its decision-making. For instance, a decade ago, the company undertook what we believe to be a thoughtful, five-year rebranding effort—the first in its history—to appeal to a new generation. This strategic focus on high-quality, sustainable ingredients rejuvenated the brand and positioned it as a leader in ethical sourcing. It was also a key factor in A&W winning the license to bring the UK-based Pret-A-Manger brand to Canada. Our conviction in A&W's potential was solidified through firsthand experiences. During our 2024 Tour du Canada, we added A&W to our watchlist and began engaging with management to understand Torquest's vision for the business. This culminated in a visit to A&W's Vancouver headquarters, where we spent three hours with the senior strategy team. Their depth of talent, cultural alignment, and hunger for growth left a lasting impression. Today, A&W is Canada's second-largest burger chain and has merged its operating business with its publicly listed royalty company, creating a pure-play multi-brand Quick Service Restaurant (QSR). The company boasts a strong track record of profitable growth, reinvesting in new restaurants at attractive returns and generating substantial cash flow. The recent Pret-A-Manger rollout and a valuation disconnect relative to North American QSR peers position A&W for significant value creation in the years ahead. A&W's culture and long-term focus are reflected in the tenure of its senior leadership. On average, members of the senior management team have been with the company for over 20 years (as seen in the graphic below), with several starting as cooks in A&W restaurants. This depth of experience and alignment is a testament to a culture that prioritizes growth, sustainability, and long-term success. Culture attracts talent, which we can see with the depth within the organization – there are multiple layers of high caliber talent at A&W. This culture also permeates decision making and strategy at A&W, leading to a focus on strategy that delivers long-term sustainable success for the business. Heightened conviction in our variant perception came from experiencing this culture first-hand and spending time with the team on their home turf.

BSD Analysis:
Langdon presents a compelling cultural thesis for A&W, emphasizing the company's exceptional management stability and founder ownership retention. The fund's investment rationale centers on A&W's transformation into a pure-play multi-brand QSR following the merger of its operating business with the royalty company. Management's 20+ year average tenure and the fact that several executives started as restaurant cooks demonstrates deep operational knowledge and cultural alignment. The successful rebranding effort and ethical sourcing positioning has differentiated A&W in the competitive Canadian QSR market. The Pret-A-Manger licensing deal represents a significant growth catalyst and validates management's strategic capabilities. Langdon's conviction was strengthened through direct management engagement and on-site visits, suggesting strong due diligence. The valuation disconnect relative to North American QSR peers implies potential multiple expansion opportunity as the company executes its multi-brand strategy.

Pitch Summary:
Among the top five detractors for the fourth quarter were two holdings from the Consumer sector: Royal Unibrew and FeverTree. Royal Unibrew, a leading European beverage producer, declined 8%, returning to our historical cost basis. FeverTree, a premium mixer company known for its tonic waters, experienced an 18% drop, ending 2024 approximately 20% below our average cost for the investment. These performance levels are far from what we would consider impairments. Both companies operate within the everyday purchase category, which we believe is less economically sensitive than large-ticket discretionary spending. Importantly, we believe FeverTree and Royal Unibrew maintain strong balance sheets and have significant potential to restore margins to historical levels. This gives us confidence that, with patience, the investments we have in these companies will yield meaningful rewards over the long term. As evidenced above, both companies are currently trading at their lowest earnings multiples in a decade, based on both 2024 and projected 2025 earnings. This is despite delivering impressive revenue growth over the same period—20% annualized for FeverTree and 10% for Royal Unibrew. From our assessment, the primary driver of this valuation compression has been margin pressures, which remain a critical determinant of their future value creation. This dynamic was evident at the time of our initial investment and continues to hold true today. With margins improving by 30% at FeverTree and remaining stable for Royal Unibrew, both companies have performed in line with our expectations. We believe it is only a matter of time before their stock prices reflect their strong underlying fundamentals.

BSD Analysis:
Langdon presents a patient bull case for Royal Unibrew, viewing the 8% Q4 decline as a temporary return to cost basis rather than fundamental deterioration. The manager emphasizes the company's position as a leading European beverage producer operating in the defensive everyday purchase category. The investment thesis is anchored on attractive valuation metrics, with Royal Unibrew trading at decade-low earnings multiples despite consistent 10% annualized revenue growth. Langdon highlights the company's strong balance sheet and stable margin profile as key strengths during the current challenging environment. The manager's conviction stems from their belief that margin pressures are temporary and that the market has overreacted to near-term headwinds. Their patient approach reflects confidence in Royal Unibrew's ability to restore historical margin levels and deliver meaningful long-term returns. The combination of defensive business characteristics, solid fundamentals, and compelling valuation supports Langdon's optimistic outlook for the European beverage producer.

Pitch Summary:
Among the top five detractors for the fourth quarter were two holdings from the Consumer sector: Royal Unibrew and FeverTree. Royal Unibrew, a leading European beverage producer, declined 8%, returning to our historical cost basis. FeverTree, a premium mixer company known for its tonic waters, experienced an 18% drop, ending 2024 approximately 20% below our average cost for the investment. These performance levels are far from what we would consider impairments. Both companies operate within the everyday purchase category, which we believe is less economically sensitive than large-ticket discretionary spending. Importantly, we believe FeverTree and Royal Unibrew maintain strong balance sheets and have significant potential to restore margins to historical levels. This gives us confidence that, with patience, the investments we have in these companies will yield meaningful rewards over the long term. As evidenced above, both companies are currently trading at their lowest earnings multiples in a decade, based on both 2024 and projected 2025 earnings. This is despite delivering impressive revenue growth over the same period—20% annualized for FeverTree and 10% for Royal Unibrew. From our assessment, the primary driver of this valuation compression has been margin pressures, which remain a critical determinant of their future value creation. This dynamic was evident at the time of our initial investment and continues to hold true today. With margins improving by 30% at FeverTree and remaining stable for Royal Unibrew, both companies have performed in line with our expectations. We believe it is only a matter of time before their stock prices reflect their strong underlying fundamentals.

BSD Analysis:
Langdon maintains a bullish stance on FeverTree despite recent underperformance, viewing the 18% Q4 decline as a temporary setback rather than fundamental impairment. The manager emphasizes FeverTree's position in the everyday purchase category, which provides defensive characteristics during economic uncertainty. The investment thesis centers on a compelling valuation opportunity, with the stock trading at decade-low earnings multiples despite impressive 20% annualized revenue growth. Langdon highlights margin recovery as the key value driver, noting 30% margin improvement that aligns with their original investment expectations. The manager's confidence stems from FeverTree's strong balance sheet and the belief that current margin pressures are temporary rather than structural. Their patient approach reflects conviction that the market will eventually recognize the company's strong fundamentals and margin restoration potential. The defensive nature of the premium mixer business, combined with attractive valuation metrics, supports Langdon's long-term optimism for meaningful returns.

Pitch Summary:
One of our investments that best represents this focus is AutoZone, which is an aftermarket automotive retailer based in Memphis, Tennessee. When doing our initial research on AutoZone we concluded it was a stable business with a long track record of earning high returns on capital. AutoZone has stable demand for their products which is largely dependent on annual vehicle miles driven in the United States and the average age of used cars. They have a dominant position in their market, and they sell products that are essential for their customers day-to-day lives. They also have a strong brand loyalty and a very disciplined approach to capital allocation. The combination of all these characteristics led us to believe we were investing in a high-quality business. We purchased our investment for $1,120 in November 2020 and at the time the company had earned $73.62 per share over the previous year. We thus purchased our investment at 15x earnings. In the 4 years since our initial investment the company has earned a cumulative $15.8 billion in profits. $3.6 billion has been reinvested back into the business through capital expenditures, while $13.6 billion has been used to repurchase shares which benefits long term investors. The growth in profits per share from $73.62 to $153.82 over the past 4 years has been possible because of the characteristics of the business and because of the ongoing reinvestment they have made in their business. When a company such as AutoZone earns high returns on capital, we cheer on their reinvestment of profits back into the business. In this case we would prefer to not receive a dividend because each dollar of reinvested earnings has the potential to generate high returns through their reinvestment. What is remarkable about their results is how consistently high their return on capital has been over the past 20 years.

BSD Analysis:
Avenue Investment Management presents AutoZone as a compelling example of their quality investing philosophy, emphasizing the company's exceptional capital efficiency and market positioning. The manager highlights AutoZone's dominant market position in aftermarket automotive retail, supported by stable demand drivers including vehicle miles driven and aging car fleets. The investment thesis centers on the company's consistent high returns on capital over a 20-year period, demonstrating remarkable operational excellence. Avenue's entry at 15x earnings in November 2020 at $1,120 per share has proven successful, with earnings per share growing from $73.62 to $153.82 over four years. The manager particularly values AutoZone's disciplined capital allocation, noting that $13.6 billion of the $15.8 billion in cumulative profits was returned to shareholders through share repurchases rather than dividends. This approach aligns with Avenue's preference for reinvestment when companies can generate high returns on incremental capital. The pitch emphasizes AutoZone's essential product offerings and strong brand loyalty as sustainable competitive advantages in the automotive aftermarket space.