Investment Pitches

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 appeared to be correct. For a refresher, Westaim is 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 extremely 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 an approximate 2.5-3x MoC, translating to roughly a 13% gross annualized return (IRR) in USD—or closer to 15% 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 a compelling bull case for Westaim, highlighting a transformational $250 million investment from CC Capital that validates their long-held thesis. The manager emphasizes Westaim's successful track record, including a 2.5-3x return on their Skyward exit and 2x returns since Langdon's 2022 investment. The pitch centers on a significant valuation disconnect, with the stock trading below net cash despite strong asset quality and management capabilities. CC Capital's involvement brings institutional validation, additional capital, and an insurance platform that positions Westaim to transition from NAV-based to earnings-based valuation. The structured deal terms provide downside protection while creating a multi-year runway for market revaluation. Langdon views the redomiciliation to Delaware and expected analyst coverage as additional catalysts for value recognition. The manager's decade-long conviction and intimate knowledge of the business, combined with the recent third-party validation, supports their optimistic outlook for the company's transformation into an insurance-led asset management firm.

Pitch Summary:
Craneware plc, a leading provider of healthcare financial management software in the US, benefits from network effects by offering solutions that become more valuable as more healthcare providers use them. It has developed its Trisus Cloud platform over recent years, from which it delivers its software services— helping nearly one in two US hospitals save money through the more efficient allocation of resources. Third party software providers are also being hosted on the Trisus platform. We anticipate network effects expanding further, as more companies are attracted towards this platform—further benefiting the end hospitals, as customers. As more hospitals and healthcare institutions adopt Craneware's software, the data generated helps improve its algorithms and analytics, providing more accurate insights. This, in turn, attracts new clients who benefit from enhanced data-driven decision-making. The growing user base increases the efficiency of the platform, creating a positive feedback loop that strengthens Craneware's competitive position.

BSD Analysis:
The manager highlights Craneware as a compelling healthcare technology investment benefiting from powerful network effects through its Trisus Cloud platform. With penetration in nearly 50% of US hospitals, Craneware has achieved significant market presence in healthcare financial management software. The platform's value proposition centers on helping hospitals optimize resource allocation and reduce costs through data-driven insights. The network effect strengthens as more hospitals join the platform, generating additional data that improves algorithmic accuracy and analytics capabilities for all users. Third-party software integration on the Trisus platform creates an ecosystem effect, attracting more providers and enhancing customer stickiness. The manager expects this positive feedback loop to accelerate as the platform's utility increases with scale, creating sustainable competitive advantages in the healthcare technology sector.

Pitch Summary:
Domino's Pizza Group benefits from network economies primarily through its franchise model. As the largest pizza delivery chain in the UK, Domino's gains significant advantages from its expansive network of franchisees, suppliers and customers. The more outlets it opens, the more efficient its operations become, especially in supply chain management, marketing and technology development. Each new franchise strengthens the value of the Domino's brand, attracting more customers and reinforcing the network effect, making it harder for competitors to enter the market or achieve similar scale and unit cost savings.

BSD Analysis:
The manager positions Domino's Pizza Group as a beneficiary of network economies through its dominant UK market position and franchise model. As the largest pizza delivery chain in the UK, Domino's leverages scale advantages across multiple operational areas including supply chain efficiency, marketing effectiveness, and technology development costs. The franchise expansion strategy creates a self-reinforcing cycle where each new outlet strengthens brand recognition and customer accessibility while spreading fixed costs across a larger base. This network effect creates significant barriers to entry for competitors who cannot achieve similar operational efficiencies or unit economics. The manager views the company's market leadership and operational scale as sustainable competitive advantages that become stronger with continued network expansion.

Pitch Summary:
InterContinental Hotels Group (IHG) plc, one of our investee businesses, leverages network economies in five main ways, within its business model, to enhance its value and maintain a competitive advantage in the hospitality industry: 1. Loyalty Program (IHG One Rewards) IHG's loyalty program is a key driver of network economies. As more travellers join IHG One Rewards— and there are currently over 130 million members, they accumulate points and status benefits. This encourages them to remain loyal to the brand. The more people who are part of this program, the more attractive it becomes for other travellers to join, as they perceive increased value in participating in a well-established network. This leads to repeat business and brand loyalty, strengthening IHG's competitive position. 2. Global Brand Presence and Distribution: IHG has a vast portfolio of hotel brands - InterContinental, Crowne Plaza, Holiday Inn, to name a few, that operate in multiple markets globally. As its network of hotels expands, the value of this network increases for guests because they are more likely to find an IHG hotel wherever they travel. Their extensive presence not only attracts individual travellers but also corporate clients who prefer to partner with a global brand that offers consistency and brand awareness. 3. Direct Booking Channels and Partnerships: IHG encourages direct bookings through its website and mobile apps by offering exclusive deals or enhanced loyalty points. As more guests book directly through IHG, they reduce reliance on third-party booking platforms. The larger the number of direct bookings, the more data IHG can collect on guest preferences, which in turn allows them to provide more personalised services, further increasing the value of their network. 4. Partnerships with Other Brands and Services IHG partners with airlines, credit card companies and other service providers to increase the utility of their network for members. For example, 'IHG One Rewards points' can be transferred or redeemed for other services; and those in partnership networks can receive perks when staying at IHG hotels. This interconnectedness creates a broader network effect, as the perceived value of IHG increases the more touchpoints and benefits are available to customers. 5. Franchise Model IHG largely operates through a franchise model, which allows it to scale quickly by tapping into a wide network of hotel owners who want to operate under its brand umbrella. As more hotels join the IHG network, the brand's visibility and reputation grow, encouraging other property owners to franchise with IHG. This network expansion adds value to the entire system, as franchisees benefit from the global reach, brand recognition and loyalty network. All whilst IHG operates a very capital lights business model. So these interconnected networks create value for both IHG's customers and franchisees, reinforcing IHG's market position and enhancing its competitive edge.

BSD Analysis:
The manager presents IHG as a compelling example of network economies within their portfolio, highlighting five distinct competitive advantages that create value through scale. The loyalty program with 130 million members demonstrates significant customer retention and acquisition benefits through network effects. IHG's global brand portfolio spanning multiple market segments provides comprehensive coverage for both leisure and corporate travelers, creating switching costs and preference stickiness. The direct booking strategy reduces third-party platform dependency while generating valuable customer data for personalization. Strategic partnerships with airlines and credit card companies expand the network's utility and touchpoints for customers. The asset-light franchise model enables rapid scaling while benefiting from brand recognition and operational efficiencies, creating a self-reinforcing cycle of growth and market dominance.

Pitch Summary:
One recent example of maintenance research was a trip to Germany and Italy with ATS Corporation. ATS is a provider of automation solutions to manufacturers around the world. The business is driven by talented engineers who design and assemble automated assembly technology that is installed into manufacturers in the Life Science, Food and Beverage, Transportation, Packaging, and Energy sectors. An example of this would be production of an automated assembly line that manufactures inhalers for asthmatic patients or epi-pens for those who have anaphylaxis. We spent time with local operators at ATS Life Science Tooling, Comecer, and CFT Group. Two of these three businesses were acquired by ATS in the past five years, and we expect all of them to be meaningful drivers of growth and returns on capital in the years ahead. These trips give us the opportunity to observe operational changes post-acquisition, meet with local talent, gain a deeper understanding of growth and margin drivers, and experience first-hand the decentralized culture that management has fostered. The culture at ATS is similar to Langdon's, with both organizations driven by a shared focus on continuous improvement.

BSD Analysis:
Langdon maintains a bullish view on ATS Corporation based on their direct operational due diligence and cultural alignment with management. The manager emphasizes ATS's position as a global provider of automation solutions across diversified end markets including life sciences, food and beverage, transportation, packaging, and energy sectors. The investment thesis is strengthened by the company's successful acquisition strategy, with two of three recent European acquisitions (ATS Life Science Tooling, Comecer, and CFT Group) expected to drive meaningful growth and returns on capital. Langdon's on-site visits to Germany and Italy provided firsthand insight into post-acquisition integration and the company's decentralized culture focused on continuous improvement. The manager highlights ATS's engineering talent and specialized automation capabilities, citing examples like automated assembly lines for medical devices such as inhalers and epi-pens. The cultural similarity between ATS and Langdon, both focused on continuous improvement, suggests strong management alignment. The bullish stance reflects confidence in ATS's ability to execute its acquisition strategy while maintaining operational excellence across its global platform.

Pitch Summary:
Aritzia, founded in 1984, is an everyday luxury fashion house focused on the female consumer. Aritzia and its halo of brands; Wilfred, Babaton, TNA, Super Puff, Sunday Best have been well known to Canadians for years. Revenues at Aritzia increased from $875MM pre-COVID to $2.2B for the fiscal year ending February 2023, driven by growth in eCommerce and the United States. We have spent time with several key leaders at Aritzia to better understand their store real estate and distribution strategies. It is clear that the company invests in talent as thoughtfully as it does in capital. For example, founder Brian Hill spent nearly a decade recruiting their Head of Real Estate before she joined. Similarly, Aritzia waits patiently for its target location to become available—whether in a mall or on a street—before committing to long-term leases. Over the past two years, the business navigated a major catch-up capital expenditure program that was needed after the business saw eCommerce revenues nearly quadruple through the pandemic. While the capital program was sensible, the front-loaded nature and its impact on cash generation surprised us. For us at Langdon—and for Aritzia's management team—this has been a valuable lesson in communication. With these distribution network investments now behind them, we have seen the business deliver on expected margin improvements while continuing to grow. We are excited for what lies ahead as they continue to invest in U.S. growth, which now represents over 55% of revenues, while patiently laying the foundation for international expansion in the years to come.

BSD Analysis:
Langdon presents a bullish case for Aritzia based on the company's successful transformation from a Canadian retailer to a North American growth story. The manager highlights impressive revenue growth from $875MM pre-COVID to $2.2B by February 2023, driven primarily by e-commerce expansion and U.S. market penetration. The investment thesis centers on management's disciplined approach to talent acquisition and real estate strategy, with the founder spending nearly a decade recruiting key executives and waiting patiently for optimal store locations. While the manager acknowledges being surprised by the front-loaded nature of recent capital expenditures and their impact on cash generation, they view the completion of distribution network investments as a positive inflection point. With the U.S. now representing over 55% of revenues and margin improvements materializing, Langdon sees Aritzia well-positioned for continued growth. The international expansion opportunity provides additional upside potential as the company leverages its proven North American playbook globally. The manager's bullish stance reflects confidence in both the business model and management team's execution capabilities.

Pitch Summary:
Esker is a French software company and one of our portfolio holdings. The business provides mid-to-large enterprises' finance departments with highly sticky software the digitizes business logic and automates workflows in areas of order-to-cash and source-to-pay. Notable customers include NVIDIA, Dairy Queen, Heineken, and the Trudeau International Airport. On September 18th, Esker Management announced a cash offer together with private equity firms Bridgepoint and General Atlantic. The €262 per share bid implies a valuation of 7.2x 2024 EV/Sales and 67.6x EV/EBIT, after expensing capitalized R&D which is roughly 2x on our cost and a 61% IRR. The company had been on our watchlist from Langdon's inception, and while SNCF strikes prevented us from visiting Esker's HQ during our 2022 trip to France, it did not stop us from organizing a three-hour demo of their solutions upon our return. This gave us a clear sense of the value-add and future growth prospects. We made our first investment in July 2023 after several months of diligence, and increased our weight in November, after gaining conviction in their ability to improve margins without sacrificing growth. This healthy tension between profitability and growth is even more pronounced for a company like Esker, given the length of sales cycles, lower implementation margins, and upfront sales bonuses. While the company continued to experience record bookings, management grew increasingly frustrated with the market's underappreciation of their success. To paraphrase the COO Emmanuel Olivier, they were drinking champagne to celebrate record contracts signed, while the market was concerned with the upfront costs it required. With new owners, Esker's Management believes they can focus on longer-term value creation. While Esker has delivered a solid return for clients, we regard it as only a satisfactory outcome relative to the time invested. We believe the company could have exceeded Bridgepoint's offer through compounded earnings growth over a 3–5-year horizon. On the other hand, there is no shortage of high-quality ideas we think we can redeploy our proceeds into if the deal goes through.

BSD Analysis:
The manager presents a detailed case study of Esker, a French enterprise software company specializing in finance department automation. The investment thesis centered on the company's highly sticky software solutions that digitize business logic and automate workflows for order-to-cash and source-to-pay processes. The manager conducted thorough due diligence including a three-hour product demo, which provided conviction in the value proposition and growth prospects. The investment was initiated in July 2023 and increased in November 2023 based on management's ability to balance margin improvement with growth. The takeover offer at €262 per share represents a 2x return and 61% IRR, validating the investment thesis. However, the manager views this as only a satisfactory outcome, believing the company could have delivered superior returns through organic growth over 3-5 years. The successful exit demonstrates the manager's ability to identify undervalued software companies with strong fundamentals and sticky customer relationships.

Pitch Summary:
Travel is usually anchored around 1-5 critical or "must-meet" situations, and then density is built out from there. For this trip, the anchors included Yeti, where Isaac requested more detail on their point of sale retail presence across Europe; Euronext, both at its global headquarters in La Defense and the recently integrated Borsa Italia Exchange in Milan; and a visit to the brewery recently acquired by Royal Unibrew in San Giogio di Nogaro, Italy. The Yeti work involved touring dozens of retail locations to get a better sense of the brand's presence across Western Europe. This research confirmed some concerns around their progress in Europe - which was highlighted as a priority several years ago - but also revealed the still untapped potential of the region once their product portfolio is better aligned with local preferences. In other words, that market is not interested in expensive hard coolers, given that ice is not commonly purchased in Europe, nor are 40oz drinking cups. We did revise lower our forward-looking assumptions for Europe, which today represents about 1-2% of the revenues overall.

BSD Analysis:
The manager conducted extensive field research across Western Europe to assess YETI's retail presence and market penetration. The analysis revealed mixed findings regarding YETI's European expansion strategy, which had been identified as a priority several years ago. While the research confirmed existing concerns about the company's progress in Europe, it also highlighted significant untapped potential in the region. The key insight was that YETI's current product portfolio is misaligned with European consumer preferences, particularly regarding hard coolers and large drinkware. European consumers don't commonly purchase ice and show little interest in 40oz drinking cups, which are core YETI products. As a result of this field research, the manager revised downward their forward-looking assumptions for YETI's European business, which currently represents only 1-2% of total revenues. The stance appears neutral as the manager sees both challenges and opportunities in the European market.

Pitch Summary:
Finally, early in the quarter we reduced our Alphabet position substantially, by almost half, and added a position in UnitedHealth. Health insurance in the US is a large, defensive growth industry and UnitedHealth is the market leader. Not only the largest, but also a business with incredibly consistent execution and the foresight to invest outside of their core business. From 2000 to 2023 they have grown their earnings at 18% per year. Much like McKesson and Cencora's investments in technology to better service their suppliers and customers, UnitedHealth has used the cash flows generated from their core business to fund a "services" business, called Optum. This side of the business now generates 50% of profits and is growing faster than the underlying health insurance given the value created for customers through partnerships. It's rare to see periods of share price weakness for this sector which has an incredible record of consistent delivery. However, the past year presented one such opportunity and we used this to further increase our allocation to US healthcare. Between these three we expect around 15% EPS and cash flow growth over the next five years. They trade at an average multiple of about 17x PE, cheaper than the market by some distance, and among the most attractive within our defensive growth universe.

BSD Analysis:
The manager presents UnitedHealth as a compelling defensive growth opportunity, highlighting the company's market leadership and exceptional long-term track record of 18% annual earnings growth from 2000-2023. The investment thesis centers on UnitedHealth's successful diversification beyond core health insurance through Optum, which now generates 50% of profits and grows faster than the base business. This services division creates additional value through customer partnerships and demonstrates management's strategic foresight in capital allocation. The manager emphasizes the rarity of weakness in this consistently performing sector, making the recent opportunity particularly attractive. With expected 15% EPS and cash flow growth over five years and a 17x PE multiple below market averages, UnitedHealth offers compelling value within the defensive growth universe. The position represents increased allocation to US healthcare, reflecting confidence in the sector's structural advantages.

Pitch Summary:
McKesson, the drug distribution business, was added into the portfolio in late 2022. This year we cut the position back following a 70% rise in the shares. Subsequently shares have fallen -15% on the back of a more accelerated generic roll out (with lower profit margins) for Humira, one of the drugs which they distribute. We used this weakness to increase our allocation to the drug distributors by adding Cencora, a direct peer of McKesson, which fell similarly on the news. One of the risks we have identified in the distribution model is the concentration of customers. Pharmacies and hospitals in the US are pretty concentrated, meaning customer churn can have an outsized impact on revenues. By reducing our exposure to McKesson and diversifying into Cencora we have marginally increased our allocation to the sector, which we continue to like for all the reasons from our initial note, while meaningfully reducing this concentration risk.

BSD Analysis:
The manager executed a tactical rebalancing within the drug distribution sector, using market weakness as an opportunity to optimize risk exposure. The 15% decline in Cencora shares following accelerated generic rollout for Humira created an attractive entry point for a direct peer to McKesson. This move demonstrates sophisticated portfolio construction by maintaining sector exposure while reducing single-name concentration risk. The manager acknowledges the inherent customer concentration risk in US drug distribution, where consolidated pharmacy and hospital customers can create revenue volatility through churn. By diversifying across two leading distributors rather than concentrating in McKesson alone, the strategy maintains conviction in the sector's fundamentals while mitigating company-specific risks. The approach reflects confidence in the drug distribution business model despite near-term margin pressures from generic competition.

Pitch Summary:
Ryanair is a business we have admired for years. From peak to trough this year the shares fell by -38% on the back of weaker short-term fare guidance. We saw this as an opportunity to add a full position to the portfolio. The business case may be well known to our readers but, in brief, they have by far the lowest cost structure in the incredibly competitive short-haul market in Europe. They have made decisive, counter-cyclical capital investments, buying planes at discounts when others stepped back. This has resulted in them having the lowest cost, fully owned, fleet with lower carbon emissions and longer useful life than competitors. They have achieved this while holding average fares flat for the past ten years, growing revenues through ancillaries such as early boarding or on-board food and drinks. The most important element of "service" for an airline is punctuality, and Ryanair consistently score top of this ranking in Europe. Market share has grown consistently from 5% twenty years ago to 20% today, and passenger numbers are estimated to grow a further 50% from here. Today Ryanair has a net cash balance sheet, while competitors have excessive leverage and impending capital expenditure programs to replace aged fleets. This leaves room for greater capital return over the coming years, which has already begun with a meaningful buy back this year as their 30% return on capital results in significant excess cash flow. Airlines are clearly risky investments which, like banks, have generally generated poor returns for shareholders. However, like banks, there are exceptions, and Ryanair is one of them.

BSD Analysis:
The manager presents a compelling bull case for Ryanair based on its structural competitive advantages and opportunistic entry timing. The 38% share price decline created an attractive entry point for a business with the lowest cost structure in European short-haul aviation. Ryanair's counter-cyclical fleet investments have resulted in a modern, fuel-efficient fleet with lower emissions and longer useful life than competitors. The company has demonstrated pricing discipline by keeping fares flat for a decade while growing revenues through ancillary services. Market share expansion from 5% to 20% over twenty years, combined with an estimated 50% passenger growth runway, supports the long-term growth thesis. The net cash balance sheet contrasts favorably with leveraged competitors facing costly fleet replacement cycles. With a 30% return on capital generating significant excess cash flow, the company has initiated meaningful capital returns through share buybacks.

Pitch Summary:
Portfolio holding Toyota Industries still has more than 100% of its market capitalization in cross-shareholdings but has recently made significant improvements in disclosure on capital allocation and in shareholder return policy, including a commitment to significantly reduce policy-held shares and its largest ever share buyback. We have long felt that the possible unwind of these substantial cross-shareholdings supported the skew of outcomes for the stock and have engaged with management on this topic for several years.

BSD Analysis:
Mondrian's investment in Toyota Industries represents a compelling value unlock opportunity driven by the unwinding of Japan's cross-shareholding system. The company holds cross-shareholdings worth more than 100% of its market capitalization, creating a unique asymmetric return profile as these holdings are monetized. Management has recently demonstrated commitment to shareholder value creation through improved capital allocation disclosure and the largest share buyback program in company history. The manager's multi-year engagement with management on cross-shareholding reduction appears to be yielding results, with the company now committed to significantly reducing policy-held shares. This structural change should improve return on equity and increase management accountability to shareholders. The investment thesis hinges on the substantial value that can be unlocked as Toyota Industries transitions from a cross-shareholding structure to a more shareholder-focused model. Mondrian views the recent policy changes as validation of their long-term engagement strategy and expects continued progress in value realization.

Pitch Summary:
Portfolio holding Mitsubishi Electric, for example, has taken all these steps and is moving closer to global governance best practices which should allow the industrial conglomerate to realize more of the value in its strong and growing core businesses and net cash balance sheet. It was encouraging to see the company proactively announce an additional mid-quarter share buyback in response to recent market volatility.

BSD Analysis:
Mondrian views Mitsubishi Electric as a beneficiary of Japan's ongoing corporate governance reforms, highlighting the company's proactive adoption of shareholder-friendly practices. The manager emphasizes that Mitsubishi Electric has implemented comprehensive governance improvements including large share buybacks, dividend increases, addition of independent directors, better management compensation alignment, and divestiture of non-core assets. The company's strong net cash position provides financial flexibility during market downturns while supporting continued shareholder returns. The recent mid-quarter share buyback announcement demonstrates management's responsiveness to market conditions and commitment to capital allocation discipline. Mondrian believes these governance enhancements will help unlock value in the company's core industrial businesses. The investment thesis centers on the structural transformation of Japanese corporate practices creating a favorable environment for value realization. The manager's confidence appears reinforced by the company's balance sheet strength and operational focus on higher-return core segments.

Pitch Summary:
Our one new position is wine and beer maker Constellation Brands (NYQQ: STZ). They will get caught up in the tariffs, but it's an extremely well-run company that sells a product that has historically been recession resistant. In other words, they produce a consumer staple that traditionally goes up in times of uncertainty. Interestingly, Berkshire Hathaway disclosed—after our own acquisition—that they had also purchased over $1B of stock in Constellation, which we regard as validation of our own evaluation of the position.

BSD Analysis:
The manager initiates a new bullish position in Constellation Brands, emphasizing the company's recession-resistant consumer staple characteristics during economic uncertainty. The investment thesis centers on alcoholic beverages' historical tendency to perform well during uncertain times, positioning the company as a defensive play. While acknowledging potential tariff impacts, the manager highlights Constellation's exceptional management quality and operational excellence. The fund views alcoholic beverages as consumer staples that traditionally increase consumption during periods of uncertainty and stress. The manager notes significant validation from Berkshire Hathaway's subsequent $1 billion investment in the company, which occurred after their own acquisition. This endorsement from Warren Buffett's organization reinforces the manager's conviction in the investment thesis. The positioning reflects a defensive strategy targeting well-managed companies in recession-resistant sectors. The timing suggests opportunistic entry during market volatility when quality companies may be temporarily undervalued.

Pitch Summary:
It may also be worth noting our small, pre-existing position with electric vehicle maker Rivian Automotive Inc. (NSQQ: RIVN), given Tesla's (NSQQ: TSLA) plummeting value. Rivian offers an ideal scenario in which all production is domestic. The owner, R.J. Scaringe, is a shrewd leader who thinks long-term, and the company offers an attractive balance sheet. They also have a partnership with Volkswagen to develop "next generation software-defined vehicle (SDV) platforms" to be used in vehicles made by both companies. Rivian is well positioned here, offering a good tech-stack built internally. In fact, they are almost as much of a 'car operating system' company as they are a traditional auto manufacturer. They are in a great spot to pick up some of the customers Tesla seems to be bleeding. Certainly, Rivian has a customer base fanatical about its product and willing to sing its praises. They are not making money quite yet, but their upcoming 2026 R2 car model shows real promise. In fact, we suspect it may turn out to be a gamechanger, debuting at nearly half the price (starting around $45,000) as Rivian's other, high-end models and competitive with Tesla's lower tier models.

BSD Analysis:
The manager maintains a bullish position on Rivian, emphasizing the company's domestic production advantage amid tariff concerns and Tesla's declining market position. The investment thesis highlights CEO R.J. Scaringe's long-term strategic thinking and the company's attractive balance sheet as key strengths. The manager views Rivian's partnership with Volkswagen for software-defined vehicle platforms as a significant competitive advantage. The fund appreciates Rivian's internally-built technology stack, positioning the company as much a software platform as a traditional automaker. The thesis emphasizes Rivian's opportunity to capture market share from Tesla's declining customer base, supported by a fanatical customer following. While acknowledging current unprofitability, the manager expresses strong conviction in the upcoming 2026 R2 model as a potential gamechanger. The $45,000 price point represents nearly half the cost of Rivian's premium models while remaining competitive with Tesla's lower-tier offerings, suggesting significant market expansion potential.

Pitch Summary:
We are also holding onto a series of new oil and gas investments we discussed in our previous letter: Tidewater (NYQQ: TDW), Valaris (NYQQ: VAL), and Schlumberger NV (NYQQ: SLB). We see a capital cycle at in play with our new acquisitions positioned favorably compared to some of their chief competitors. Shell (NYSS: SHELL), for example, was a major threat in previous cycles but has since redirected capex that would have gone to offshore drilling into domestic production. Unfortunately, a lot of those domestic fields just aren't what they once were, leaving Shell looking like a depleting asset. Of our new acquisitions, two have gone through significant restructuring of their balance sheets, improving their competitive posture. They're in a typically deep downturn from a cyclical standpoint, but they are poised to do disproportionately well when the cycle returns.

BSD Analysis:
The manager presents a bullish cyclical thesis on Schlumberger, positioning the oilfield services company to benefit from an anticipated capital cycle recovery in the energy sector. The investment rationale emphasizes competitive advantages as major competitors like Shell have redirected capital away from offshore operations toward less productive domestic fields. While not explicitly mentioned as one of the two companies with balance sheet restructuring, Schlumberger is positioned favorably within the broader capital cycle framework. The manager views the current deep cyclical downturn as creating opportunity for disproportionate outperformance during recovery. The thesis centers on reduced competitive pressure and improved market positioning versus historical cycles. The fund's conviction reflects confidence in the energy services market's capital cycle dynamics and Schlumberger's ability to capitalize on the recovery. This contrarian value approach targets cyclical energy investments at trough valuations with enhanced competitive positioning.

Pitch Summary:
We are also holding onto a series of new oil and gas investments we discussed in our previous letter: Tidewater (NYQQ: TDW), Valaris (NYQQ: VAL), and Schlumberger NV (NYQQ: SLB). We see a capital cycle at in play with our new acquisitions positioned favorably compared to some of their chief competitors. Shell (NYSS: SHELL), for example, was a major threat in previous cycles but has since redirected capex that would have gone to offshore drilling into domestic production. Unfortunately, a lot of those domestic fields just aren't what they once were, leaving Shell looking like a depleting asset. Of our new acquisitions, two have gone through significant restructuring of their balance sheets, improving their competitive posture. They're in a typically deep downturn from a cyclical standpoint, but they are poised to do disproportionately well when the cycle returns.

BSD Analysis:
The manager maintains a bullish cyclical position on Valaris, emphasizing the company's advantageous positioning within an anticipated offshore drilling capital cycle recovery. The investment thesis highlights competitive improvements as major players like Shell have shifted capital allocation away from offshore operations toward less productive domestic fields. The manager specifically notes Valaris as one of two companies that underwent significant balance sheet restructuring, enhancing competitive positioning for the next cycle. The fund views the current deep cyclical downturn as creating opportunity for disproportionate outperformance during recovery. The thesis centers on reduced competitive pressure and improved financial structure positioning Valaris favorably versus historical cycles. The manager's conviction reflects confidence in the offshore drilling market's capital cycle dynamics. This contrarian value approach targets cyclical investments at trough valuations with improved competitive positioning.

Pitch Summary:
We are also holding onto a series of new oil and gas investments we discussed in our previous letter: Tidewater (NYQQ: TDW), Valaris (NYQQ: VAL), and Schlumberger NV (NYQQ: SLB). We see a capital cycle at in play with our new acquisitions positioned favorably compared to some of their chief competitors. Shell (NYSS: SHELL), for example, was a major threat in previous cycles but has since redirected capex that would have gone to offshore drilling into domestic production. Unfortunately, a lot of those domestic fields just aren't what they once were, leaving Shell looking like a depleting asset. Of our new acquisitions, two have gone through significant restructuring of their balance sheets, improving their competitive posture. They're in a typically deep downturn from a cyclical standpoint, but they are poised to do disproportionately well when the cycle returns.

BSD Analysis:
The manager presents a bullish cyclical thesis on Tidewater, positioning the company to benefit from an anticipated capital cycle recovery in offshore drilling. The investment rationale centers on competitive positioning advantages as major competitors like Shell have redirected capital away from offshore operations toward depleting domestic fields. The manager highlights Tidewater's balance sheet restructuring as a key competitive advantage that improves the company's positioning for the next cycle. The thesis acknowledges the current deep cyclical downturn but emphasizes the company's preparation for disproportionate outperformance during recovery. The fund views the offshore service vessel market as experiencing a capital cycle inflection point. The manager's confidence stems from reduced competition and improved financial structure positioning Tidewater favorably versus historical cycles. This contrarian positioning reflects the fund's value-oriented approach to cyclical investments at trough valuations.

Pitch Summary:
First, we remain committed to our positions in Google/Alphabet (NSQQ: GOOGL) and Amazon (NSQQ: AMZN). Even before all the market madness, we already had an affinity for capital-light businesses, which are relatively less vulnerable to tariffs than the heavy industrial portions of the economy. While Amazon and Google will face secondary impacts (e.g., weakening consumer demand in a recessionary environment), they operate under models that can squeeze out efficiency and reward innovations that can help lower prices for consumers. Everyone will be impacted, but we are comfortable with where Amazon and Google remain within a long-term framework.

BSD Analysis:
The manager maintains a bullish position on Amazon, highlighting the company's capital-light business characteristics as protection against tariff-related headwinds. The investment thesis emphasizes Amazon's operational efficiency and innovation capabilities that enable competitive pricing for consumers during economic stress. While acknowledging potential secondary impacts from reduced consumer spending in a recessionary environment, the manager expresses confidence in Amazon's long-term resilience. The fund views Amazon's business model as relatively insulated from direct tariff impacts compared to heavy industrial sectors. The manager's continued commitment suggests conviction in Amazon's ability to maintain market position through economic volatility. The emphasis on efficiency and innovation indicates appreciation for Amazon's operational leverage and technological advantages. This positioning reflects the fund's preference for scalable technology platforms that can adapt to challenging market conditions.

Pitch Summary:
First, we remain committed to our positions in Google/Alphabet (NSQQ: GOOGL) and Amazon (NSQQ: AMZN). Even before all the market madness, we already had an affinity for capital-light businesses, which are relatively less vulnerable to tariffs than the heavy industrial portions of the economy. While Amazon and Google will face secondary impacts (e.g., weakening consumer demand in a recessionary environment), they operate under models that can squeeze out efficiency and reward innovations that can help lower prices for consumers. Everyone will be impacted, but we are comfortable with where Amazon and Google remain within a long-term framework.

BSD Analysis:
The manager maintains a bullish stance on Alphabet, emphasizing the company's capital-light business model as a defensive characteristic against tariff impacts. The thesis centers on Alphabet's operational efficiency and innovation capabilities that enable cost reduction for consumers during economic uncertainty. The fund views the company as relatively insulated from direct tariff effects compared to heavy industrial businesses. While acknowledging potential secondary impacts from weakening consumer demand in a recessionary environment, the manager expresses confidence in Alphabet's long-term positioning. The investment rationale focuses on the company's ability to maintain competitive advantages through its scalable technology platform. The manager's commitment to the position suggests conviction in the company's resilience during economic volatility. This defensive positioning aligns with the fund's strategy of holding businesses that can adapt and thrive through challenging market conditions.