Investment Pitches

Pitch Summary:
We have great respect for Autodesk, a pioneer and leader in design software over the last forty years. Autodesk is the global leader in design, engineering, and entertainment software solutions, with strong market leadership in its core markets of architecture, engineering, and construction. We believe Autodesk has continued runway for growth, with incredibly sticky solutions that are the industry standard and integral to how its customers work, as well as an opportunity to expand further into attractive new verticals, such as construction. We also believe Autodesk has an opportunity to create significant shareholder value by meaningfully improving its combination of growth and profitability through substantial margin improvement, as well as adopting more shareholder-friendly capital allocation policies and improving governance and oversight. Autodesk occupies an enviable position in the design software category, an attractive segment of the broader software market. As a result of its strong market position and attractive business model, Autodesk generates best-in-class gross margins. Despite a meaningful gross margin advantage, however, Autodesk's adjusted operating margins are subpar because the Company outspends its peers on operating expenses. We believe Autodesk can significantly reduce expenses in multiple cost centers and drive improved operating leverage to generate significant margin expansion. In addition, we believe Autodesk can adopt more shareholder-friendly capital allocation policies, increasing the amount of capital it returns to shareholders through share repurchases. We also believe Autodesk should refrain from any material acquisitions unless and until it can execute with excellence. Given the Company's current valuation and our belief in the value creation opportunity at Autodesk, we believe repurchasing its own shares represents the best use of capital for Autodesk today. By taking these actions, we believe Autodesk can drive significant growth in Adjusted EBITDA, free cash flow, and free cash flow per share over the next few years, which we believe will drive significant long-term shareholder value.

BSD Analysis:
Starboard Value presents a compelling activist thesis on Autodesk, recognizing the company's dominant market position in design software while identifying significant operational inefficiencies. The fund highlights Autodesk's best-in-class gross margins and sticky customer relationships as core strengths, but criticizes management's excessive operating expense structure that has led to subpar adjusted operating margins compared to peers. Starboard's value creation plan centers on substantial cost reduction across multiple expense categories to drive operating leverage and margin expansion. The activist also advocates for more shareholder-friendly capital allocation, specifically increased share repurchases over acquisitions given the company's current valuation discount. The pitch is strengthened by documented evidence of management's repeated failure to meet financial targets and concerning accounting practices that artificially inflated free cash flow metrics. Starboard's legal action to delay the annual meeting and reopen director nominations demonstrates their commitment to governance reform and board accountability.

Pitch Summary:
Barfresh is positioned to disrupt the school meal industry with its USDA-approved ready-to-drink smoothies, capturing a significant market share in a short time. Despite operational setbacks, including a bottling crisis and supply chain issues, the company is poised for a strong recovery and growth, with management guiding for record revenues and profitability in 2024. The company's unique product, Twist & Go, has no direct competition and has been well-received in schools, leading to increased breakfast participation rates. Barfresh's expansion strategy includes increasing its presence in schools, entering new markets, and potentially launching in retail channels. The company has a credible path to achieving $100M in revenue in the next 3-5 years, with significant upside potential.

BSD Analysis:
Barfresh's strategic collaboration with the USDA and its focus on healthy, tasty breakfast items position it uniquely in the school meals market. The company's ability to quickly adapt to challenges, such as the COVID-19 pandemic and supply chain disruptions, demonstrates resilience and operational agility. The expansion into new markets and products, coupled with a strong brokerage network and sales team, supports its growth trajectory. While operational execution remains a risk, recent hires and capacity expansions suggest management is addressing these issues. The potential for significant revenue growth in the education channel, along with opportunities in the military and entertainment sectors, provides multiple avenues for future growth.

Pitch Summary:
The company's flagship drug is mostly made up of two widely available generic drugs, with no special ingredient; undisclosed consignment deals for its drugs; ballooning receivables and sales outstanding (43% of the reported revenue was not paid); potential anti-kickback concerns; false claims;

BSD Analysis:
Axsome develops therapies for CNS disorders, with key products Auvelity (major depressive disorder) and Sunosi (narcolepsy/EDS). The BSD short thesis emphasizes execution risk in commercializing differentiated products, payer reimbursement hurdles, and ongoing cash burn. While Auvelity represents a mechanistically novel antidepressant, its adoption curve has been slower than bullish forecasts, reflecting entrenched generics and physician conservatism. Bears argue the pipeline (migraine, Alzheimer’s agitation) remains risky and that valuation already prices in blockbuster outcomes. Dilution risk remains if uptake underwhelms. Investors should track prescription growth, payer coverage breadth, and trial readouts.

Pitch Summary:
BQE Water Inc. is positioned to capitalize on its advanced selenium water treatment technology, which is gaining traction in the mining industry. Despite recent skepticism about its growth prospects, the company's recurring revenue has surged, and its involvement in significant projects like the KSM gold-copper project suggests substantial future earnings potential. The company's asset-light model and focus on high-margin services provide a strong foundation for long-term growth.

BSD Analysis:
BQE Water's current valuation appears attractive, trading at approximately 20x NTM earnings, which is low given its growth trajectory and the potential from its selenium treatment technology. The KSM project, one of the largest undeveloped gold projects globally, could significantly boost BQE's revenue, with an estimated CAD $9 million in annual recurring revenue from selenium treatment alone. This project, along with others in the pipeline, underscores BQE's strategic positioning in a niche market with high barriers to entry. The company's ability to secure long-term contracts and its focus on mission-critical services for mining operations enhance its revenue visibility. While the timing of revenue realization from these projects may extend into the next decade, the long-term prospects remain robust, supported by the company's strong technical expertise and growing demand for sustainable water management solutions in mining.

Pitch Summary:
Diageo (DEO) was likewise added to the portfolio this quarter. We don't believe we have any special insight into this well-known spirits maker, but believe DEO is capable of providing long-term attractive returns and became priced at a level where we felt we were taking less risk in the short term as well. Owner and marketer of the Johnnie Walker Scotch, Tanqueray gin, Smirnoff vodka, Guinness beer, and Baileys liqueur brands, plus a stable of emerging brands, Diageo is a fixture any time alcohol is being served. We believe we're paying a high-teens multiple of quite stable and growing earnings, and benefit from a healthy 3% dividend in the interim. We won't wow anyone with our analysis on this one, but when everyone else is rushing to buy NVIDIA, our exposure to alcohol should help with any hangovers in the rest of the market.

BSD Analysis:
The manager takes a straightforward value approach to Diageo, acknowledging no special insights but focusing on attractive risk-adjusted returns. The investment thesis is built on Diageo's portfolio of premium global alcohol brands including Johnnie Walker, Tanqueray, Smirnoff, Guinness, and Baileys that provide defensive characteristics and market presence. The valuation appears compelling at a high-teens earnings multiple for a business with stable and growing earnings profile. The 3% dividend yield provides attractive income while waiting for capital appreciation. The manager positions this as a defensive hedge against market volatility, contrasting with the speculative fervor around growth stocks like NVIDIA. While the analysis lacks deep fundamental insights, the focus on valuation discipline and risk management aligns with the fund's conservative approach. The global reach and brand strength of Diageo's portfolio provides diversification and recession-resistant characteristics that should deliver steady long-term returns with lower volatility than growth-oriented investments.

Pitch Summary:
While a small position, it is worth explaining what I find attractive about Tiendas BBB (TBBB). Started by a McKinsey consultant (not always a sign of an attractive investment), Tiendas BBB is a hard discounter a la Aldi or Lidl, retailers well-known in the United States. TBBB operates over 2,200 stores in Mexico, with visibility to 12,000 stores over the long-term, and I believe the potential for even more beyond that. As with Aldi, TBBB offers a limited number of primarily private label products, approx. 2,000-3,000, at less than 15% gross margins, in relatively small stores supplied by an efficient supply chain network. These metrics compare to competitors who stock tens of thousands of items, mostly third-party brands, and at gross margins >20%. What allows the hard discounter model to thrive is the low number of stock-keeping units (SKUs), which results in higher sales per SKU, which allows the hard discounter to negotiate competitively at even a small scale vs other retailers. As their scale grows, hard discounters can negotiate increasingly better prices with suppliers, placing greater pressure on competitors who already operate on thin margins. Also as a result of the low number of SKUs, hard discounters are able to negotiate attractive payment terms, and because their inventories remain low as a result of high inventory turnover, they have negative working capital and generate positive cash flow as basically a perpetual loan from their suppliers. This cash flow allows hard discounters to pay for their growth without incurring significant debt. As a result, we estimate TBBB's 2020-2023 growth was 33% per year, while long-term debt only grew at a 5% rate. Because of the characteristics discussed here, TBBB is capable of growing stores by 15% per year in addition to growing same-store sales at 5-10% per year going forward. It seems likely they can continue at this pace for the next 10-15 years and returns could approach or exceed 20% per year.

BSD Analysis:
The manager presents a compelling growth story for Tiendas BBB based on the proven hard discount retail model. The investment thesis centers on TBBB's ability to replicate the Aldi/Lidl success formula in Mexico through limited SKUs (2,000-3,000 vs competitors' tens of thousands) and ultra-low gross margins under 15%. The business model creates powerful competitive advantages through higher sales per SKU, superior supplier negotiation power, and negative working capital from attractive payment terms and high inventory turnover. Historical performance validates the model with 33% annual revenue growth from 2020-2023 while debt grew only 5% annually. The runway for expansion is substantial with current 2,200 stores having visibility to 12,000 long-term stores. The manager projects sustainable 15% annual store growth plus 5-10% same-store sales growth for the next 10-15 years. The self-funding growth model through cash generation could deliver 20%+ annual returns, making this an attractive long-term compounding opportunity in the Mexican retail market.

Pitch Summary:
Going back to at least 2017 with research on Syntel that ultimately led to Syntel's acquisition by Atos, I have spent a lot of time understanding and investing in IT services. IT services generally earn extremely high returns on capital, and historically have augmented organic growth with acquisitions that build capabilities in other technical or geographical areas. Over time, IT services have evolved from relatively low-skilled IT infrastructure monitoring and troubleshooting, and now some companies are more focused on customer-facing activities. This new generation of IT services businesses is involved in custom application development, generating next generation experiences for customers. Admittedly, the buzzwords in this industry are annoying and it can be sometimes difficult to understand the scope of services companies offer, and how much overlap there is with the older generation of IT services businesses. The main differentiator is that most of their work is on a time-and-materials basis, whereas legacy providers were replacing a previously insourced cost and needed to offer fixed price contracts to win business by guaranteeing customers superior cost to insourcing. Finally, one of the main characteristics of Endava's business model is that its engagements are project-based and have single deliverables for completion. This makes the business more sensitive to the economic cycle relative to legacy IT providers who are, again, generally replacing an ongoing function previously performed by a company's internal team, i.e. is recurring in nature. Right now is an interesting time to add to our investment in DAVA because the company has experienced a hangover from the COVID pandemic surge in spending. The pandemic caused significant IT investments to accommodate work-from-home policies and an expectation of permanent changes to how business was conducted, from remote sales calls to social distancing in manufacturing operations and more. From fiscal 2019 through fiscal 2023, sales grew at a 28.9% compound growth rate (CAGR). This is a small decline from the 31.0% CAGR from 2017 to 2019, when the business was much smaller. To frame this more succinctly, in the last six years, the business has increased revenue by 5x. Unsurprisingly, at least to me, the business is going through a post-COVID hangover, and needs to lap some strong comparables before resuming double-digit growth. On top of the need to lap strong comps, the business over-invested in people, believing that the boom times would persist. The slowdown caught management by surprise and their worker utilization has fallen significantly. Fortunately, this can be fixed relatively quickly and margins should rebound towards 2019 levels. In addition to all of this, the advent of artificial intelligence (AI) has caused some people to question the value that Endava can provide if companies adopt AI. Who is going to help these companies adopt AI? Sure, Google and Amazon will have their own internal resources, but there are so many more companies who don't have a need for full-time software engineering talent who will need a company like Endava to help them adopt AI. AI seems like more of an opportunity than a threat for Endava. The business currently trades for 15x next year's still-depressed earnings, a multiple we believe is far too low for a business that should grow at double digits for at least the next five years. There is certainly a realistic scenario where DAVA can trade for a price approaching $80 in 2-3 years.

BSD Analysis:
The manager presents a compelling bull case for Endava based on cyclical recovery and AI opportunity. The thesis centers on the company being in a temporary post-COVID hangover after experiencing explosive 28.9% revenue CAGR from 2019-2023, with revenue growing 5x over six years. The manager views current challenges as transitory, including over-hiring during the boom and reduced worker utilization that can be quickly corrected. A key insight is positioning AI as an opportunity rather than threat, arguing that most companies lack internal AI expertise and will need Endava's services for AI adoption. The valuation argument is compelling at 15x depressed forward earnings for a business expected to resume double-digit growth. The manager's deep sector expertise since 2017 and understanding of IT services evolution from infrastructure monitoring to custom application development adds credibility. Target price of $80 implies significant upside potential over 2-3 years.

Pitch Summary:
Laird Superfood has undergone a significant transformation under the leadership of CEO Jason Vieth, shifting from a struggling DTC brand to a breakeven, rapidly growing CPG company. The company has improved its gross margins and reduced marketing expenses, while expanding its wholesale channels. With a focus on high-margin products and a strong brand presence, Laird Superfood is positioned to achieve profitability by 2025 and potentially increase its market cap tenfold over the next five years. The company's strategic marketing, product innovation, and industry growth are expected to drive substantial revenue growth, making it an attractive investment opportunity.

BSD Analysis:
Laird Superfood's restructuring efforts have resulted in a more efficient business model with improved margins and reduced operational costs. The company's focus on expanding its wholesale channels and leveraging its celebrity founders for marketing has strengthened its brand presence. With a projected revenue growth rate of 15% and a potential EV/Sales multiple of 1.5x, Laird Superfood offers significant upside potential. The company's commitment to clean, plant-based products aligns with industry trends, providing additional growth opportunities. However, risks such as reliance on celebrity endorsements and potential management challenges should be considered.

Pitch Summary:
Paywalled (Numerous allegations of fraudulent policies and practices by Globe Life including insurance policies, claims from GL of being unable to locate policies that it collects premiums on, and 3) improperly delayed or denied insurance payouts)

BSD Analysis:
Globe Life sells life and supplemental health insurance products, primarily through captive agents targeting middle-income households. The BSD short thesis emphasizes aggressive accounting assumptions, reliance on agent recruitment for growth, and persistency risk. Critics argue policyholder growth is heavily tied to expanding the sales force rather than sustainable consumer demand. Questions around reserve adequacy and policy lapse rates add to skepticism. With rising regulatory scrutiny over sales practices, Globe may face headline and valuation risk. Investors should track agent retention, lapse ratios, and reserve developments as key stress points.

Pitch Summary:
Never produced positive cash flow; excessive management compensation; series of dilutions (18% dilution just in April);

BSD Analysis:
Riot is one of the largest Bitcoin miners in the U.S., operating large facilities in Texas with access to subsidized energy contracts. The BSD short thesis highlights dependence on Bitcoin’s price and difficulty adjustments, capital intensity of continuous expansion, and political scrutiny over energy usage. While Riot benefits from ERCOT demand-response programs, critics argue much of its profitability stems from subsidies rather than sustainable mining economics. Heavy dilution risk remains as capex is financed with equity offerings. Investors should track break-even BTC price, hashrate expansion relative to competitors, and regulatory developments in Texas and federally.

Pitch Summary:
Overvalued (trading with 35% premium to peers); exposed to riskiest asset classes with loose underwriting standards (37% of the CRE loan is in NY); loan book is filled with glaring problems; significant asset quality stress is incoming; Update 6/4/24 - The company published a statement stating the report has a series of inaccurate info.

BSD Analysis:
Axos Financial is a digital-first regional bank with consumer, mortgage, and commercial lending operations. The BSD short thesis highlights rapid loan growth in niche markets, exposure to CRE stress, and reliance on wholesale deposits to fund expansion. While the bank’s asset-sensitive balance sheet benefits from higher rates, credit quality is vulnerable if CRE values deteriorate further. Bears also stress governance and regulatory risk tied to Axos’s aggressive growth style. Compared to peers, Axos trades at a premium despite similar funding and credit risks. Investors should monitor deposit costs, net charge-off trends, and exposure to riskier lending categories.

Pitch Summary:
We have also entered a medium-term call-spread in Swedish heat pump manufacturer Nibe. A controversial name of late, as the hangover from ESG love bombing, the bolus from the 2022 energy crisis and a bloated valuation has caused a sharp contraction in the share price in recent months. When the starting point is an eye-watering valuation, and you face increasing competition, excess inventories, and a (temporarily?) slower end-market, it's not a mystery the stock has dropped 52% in the last 12 months. In an interview about a year ago, we disclosed a short position in Nibe for the above reasons. But now we sense these concerns are in the price, and the tables might be turning. The fundamental backdrop is that the energy efficiency of the current housing stock in Europe is terrible. Heating (and cooling) is currently very CO2-intense. Installing a heat pump makes total and utter sense and will likely see structural tailwinds for years to come. As inventories normalize, incentive schemes are instated, and the theory that Nibe has a potential competitive advantage with its long-standing distributor and installer network gets proven (or disproven), the stock could get its mojo back. We choose exposure via derivatives as valuation remains challenging, just as calling the timing of this potentially benign outcome. If competition takes a bigger slice of the pie, or markets take longer to normalise, we have a defined and tolerable downside and have not tied up substantial capital in an underperforming name. But still stand to gain if our thinking is right in the coming 6 months.

BSD Analysis:
The manager has shifted from short to long on Nibe through call spreads, believing the 52% decline has priced in near-term headwinds including valuation compression, competition, and inventory issues. The long-term thesis remains compelling given Europe's poor housing energy efficiency and the structural shift toward heat pumps for decarbonization. Key catalysts include inventory normalization, government incentive schemes, and validation of Nibe's distributor network competitive advantage. The manager uses derivatives to limit capital at risk while maintaining upside exposure, acknowledging valuation and timing challenges. This represents a contrarian turnaround play on a quality industrial company benefiting from long-term energy transition trends. The structured approach reflects disciplined risk management while positioning for potential recovery as cyclical headwinds normalize and structural drivers reassert themselves.

Pitch Summary:
During May we initiated a position in Swedish online gambling supplier Evolution. Similar to the situation in Swedish Match (RIP), domestic funds shun it because gambling is considered a vice we should be without. This moral frowning is causing the valuation to be out of whack. The company continues to post unbelievable results, as it has done continuously for the past decade, but there isn't a single domestic fund with an overweight position in the stock (but us). Our view is that companies that comply with local laws and regulations, regardless of industry, are potentially worthy of investment. A fund is a very poor way to express moral views. Heck, the only likely impact from funds collectively deciding gambling - one of the oldest past-times of humanity - should be excluded, is a lower return for its investors. It certainly won't change the demand for world-class gambling services. If exclusion causes the stock to become too cheap, it will be bought by someone more rational. Evolution trades on low teens EV/EBIT, grows organically at 15-20%, with EBIT margins in the 70s, and has a net cash balance sheet. It rides on a global structural growth trend of offline to online migration. It keeps investing in capacity and innovation to maintain and hopefully expand the gap to its smaller competitors. The management team has repeatedly shown astute capital allocation skills with the timing of buybacks, and it would not surprise us if a new program were launched shortly. The stock has continued its southward journey since we bought our starting position and added. Analyzing the potential reasons for the underperformance, be it the political situation in Georgia adding uncertainty, the significant investments in new capacity weighing on short-term margin expectations, the negative FX-impact, a large institutional shareholder selling part (or all) of their shares, or chatter about Asian crypto exposure, there is nothing that changes the fundamental and long-term picture for us.

BSD Analysis:
The manager initiated a position in Evolution, viewing ESG-driven domestic fund avoidance as creating a compelling valuation opportunity. The investment thesis centers on exceptional fundamentals: low teens EV/EBIT multiple, 15-20% organic growth, 70%+ EBIT margins, and a net cash balance sheet. Evolution benefits from the structural shift from offline to online gambling globally while maintaining competitive advantages through continuous capacity and innovation investments. Management demonstrates strong capital allocation through well-timed buybacks, with potential for new programs. Despite recent underperformance attributed to Georgia political uncertainty, capacity investment margin pressure, FX headwinds, and institutional selling, the manager maintains conviction in the long-term fundamentals. This represents a contrarian value play on a high-quality growth company trading at a discount due to ESG exclusions rather than fundamental deterioration.

Pitch Summary:
If you mention Boule Diagnostics to a fellow Swedish portfolio manager, you're likely to get a tired look. It has disappointed a lot of people during the last decade. A lot of things have gone wrong for this Swedish maker of hematology instruments. They are several years late in bringing a new 5-part instrument to the market (spoiler: the device has more than five parts, so it's harder to build that what the name suggests). They have invested heavily in this instrument, which means that they have large amounts of capitalized R&D on the balance sheet (which might lead to a write-down). Boule had also just finished a new factory in Russia, leading to a loss of sales post the start of the war in Ukraine. There are bright spots, however. Boule has a US-based OEM business for reagents. This has doubled in size during the past five years and now accounts for 20 percent of their overall business. The veterinarian business grew by 60 percent last year, almost reaching 10 percent of sales. There is an installed base of circa 32,000 instruments, on which 152m tests are made each year. And don't forget, the company is making good money: SEK19m during Q1 alone, which can be compared to the EV of close to 400m. A new CEO – Torben Nielsen – joined a month ago, and while there's a slight risk of a kitchen sinking exercise in the near term, there's a good chance that his track record from Danaher-owned companies such as Radiometer could do wonders for Boule. We have bought a starting position in Boule Diagnostics.

BSD Analysis:
The manager acknowledges Boule Diagnostics' troubled history but sees a compelling turnaround opportunity at an attractive valuation. Despite past disappointments including delayed product launches, capitalized R&D risks, and Russian factory losses, the company shows strong underlying fundamentals with SEK19m Q1 earnings against a ~400m EV. Key growth drivers include a US OEM reagents business that doubled over five years to 20% of revenue and veterinary segment growth of 60% last year. The installed base of 32,000 instruments generating 152m annual tests provides recurring revenue visibility. The appointment of new CEO Torben Nielsen from Danaher/Radiometer represents a significant catalyst, bringing proven medtech operational expertise. While acknowledging near-term kitchen-sinking risks, the manager believes Nielsen's track record could transform the business. This represents a classic value play on a beaten-down medtech company with new leadership and attractive fundamentals.

Pitch Summary:
We added Embellence post its strong report for the quarter. This one has flown under the radar for us until now, but as a wallpaper company with a large Nordic footprint, it has shown impressive resilience. Being able to post organic growth during the last three years with a big consumer footprint in a high-interest environment is impressive. Makes you wonder how it will perform when we enter a low medium-interest environment in the coming years, no? To be fair, this is an international company with strong brands in several large markets, and mainly caters to high-end consumers, and the hospitality sector. We attended their recent CMD and were struck by the engagement and involvement from new CoB Magnus Welander (former CEO of Thule). His energy and enthusiasm are likely to propel the company to new heights, as well as increase interest in the company. The Embellence PnL might suffer a bit from increased product investments but will benefit from their organic growth á la Thule. Valuation remains low despite strong recent performance.

BSD Analysis:
The manager initiated a position in Embellence following a strong quarterly report, impressed by the company's resilience during challenging market conditions. The investment thesis highlights Embellence's ability to achieve organic growth over three years despite high interest rates and consumer pressure, suggesting strong underlying business quality. The company operates internationally with strong brands targeting high-end consumers and hospitality sectors, providing some defensive characteristics. A key catalyst is the appointment of Magnus Welander (former Thule CEO) as Chairman, whose track record and energy could drive operational improvements and increased market attention. The manager expects the Thule playbook of increased product investment driving organic growth, while valuation remains attractive despite recent performance. This represents a quality consumer discretionary play with defensive end-markets and experienced leadership.

Pitch Summary:
ITAB released a very strong Q1 report, benefitting from an improved mix where sales of technology solutions to prevent "shrinkage" (the euphemism used by retailers to describe in-store theft) is growing quickly. We initiated our position in ITAB post their Q4 report in February, and the share has more than doubled since, making it our best performer so far this year.

BSD Analysis:
The manager initiated a position in ITAB following their Q4 report in February and has seen exceptional returns with the stock more than doubling to become the fund's best performer year-to-date. The investment thesis focuses on ITAB's improved product mix, particularly the rapid growth in anti-theft technology solutions for retailers. The strong Q1 results validate the manager's timing and thesis around the growing demand for retail loss prevention technology. This represents a successful turnaround story where the company has shifted toward higher-value technology solutions addressing a persistent retail industry problem. The significant outperformance demonstrates the manager's ability to identify operational inflection points in undervalued industrial technology companies.

Pitch Summary:
Acast performed strongly after a Q1 report that underlined that this podcast ad company is approaching profitability. The strategic importance of the platform Acast has built remains underestimated in our view, and as the advertising potential of podcasts is still far from where it should be, we still see considerable upside ahead. Acast has organically grown to become our largest position.

BSD Analysis:
The manager maintains a bullish stance on Acast, emphasizing the company's progress toward profitability following a strong Q1 report. The investment thesis centers on the undervalued strategic importance of Acast's podcast platform and the significant untapped advertising potential in the podcast market. The position has grown organically to become the fund's largest holding at 5.0%, demonstrating strong conviction and performance. The manager believes the market underestimates the platform's strategic value and sees substantial upside as podcast advertising matures. This represents a growth play on the structural shift toward digital audio content and programmatic advertising in an emerging medium with significant monetization runway.

Pitch Summary:
We have also entered a medium-term call-spread in Swedish heat pump manufacturer Nibe. A controversial name of late, as the hangover from ESG love bombing, the bolus from the 2022 energy crisis and a bloated valuation has caused a sharp contraction in the share price in recent months. When the starting point is an eye-watering valuation, and you face increasing competition, excess inventories, and a (temporarily?) slower end-market, it's not a mystery the stock has dropped 52% in the last 12 months. In an interview about a year ago, we disclosed a short position in Nibe for the above reasons. But now we sense these concerns are in the price, and the tables might be turning. The fundamental backdrop is that the energy efficiency of the current housing stock in Europe is terrible. Heating (and cooling) is currently very CO2-intense. Installing a heat pump makes total and utter sense and will likely see structural tailwinds for years to come. As inventories normalize, incentive schemes are instated, and the theory that Nibe has a potential competitive advantage with its long-standing distributor and installer network gets proven (or disproven), the stock could get its mojo back. We choose exposure via derivatives as valuation remains challenging, just as calling the timing of this potentially benign outcome. If competition takes a bigger slice of the pie, or markets take longer to normalise, we have a defined and tolerable downside and have not tied up substantial capital in an underperforming name. But still stand to gain if our thinking is right in the coming 6 months.

BSD Analysis:
Protean has shifted from short to long on Nibe through call spreads, believing the 52% decline has priced in near-term challenges while the long-term structural opportunity remains intact. The manager previously shorted the stock due to excessive valuation, increased competition, and inventory issues, but now sees these concerns reflected in the price. The fundamental thesis centers on Europe's poor housing energy efficiency and the structural shift toward heat pumps for decarbonization. Nibe's established distributor and installer network could provide competitive advantages as markets normalize and government incentive schemes are implemented. The derivative structure limits downside while providing upside exposure, acknowledging valuation and timing uncertainties. This represents a tactical shift from bear to bull as risk/reward has improved significantly following the sharp correction.

Pitch Summary:
During May we initiated a position in Swedish online gambling supplier Evolution. Similar to the situation in Swedish Match (RIP), domestic funds shun it because gambling is considered a vice we should be without. This moral frowning is causing the valuation to be out of whack. The company continues to post unbelievable results, as it has done continuously for the past decade, but there isn't a single domestic fund with an overweight position in the stock (but us). Our view is that companies that comply with local laws and regulations, regardless of industry, are potentially worthy of investment. A fund is a very poor way to express moral views. Heck, the only likely impact from funds collectively deciding gambling - one of the oldest past-times of humanity - should be excluded, is a lower return for its investors. It certainly won't change the demand for world-class gambling services. If exclusion causes the stock to become too cheap, it will be bought by someone more rational. Evolution trades on low teens EV/EBIT, grows organically at 15-20%, with EBIT margins in the 70s, and has a net cash balance sheet. It rides on a global structural growth trend of offline to online migration. It keeps investing in capacity and innovation to maintain and hopefully expand the gap to its smaller competitors. The management team has repeatedly shown astute capital allocation skills with the timing of buybacks, and it would not surprise us if a new program were launched shortly. The stock has continued its southward journey since we bought our starting position and added. Analyzing the potential reasons for the underperformance, be it the political situation in Georgia adding uncertainty, the significant investments in new capacity weighing on short-term margin expectations, the negative FX-impact, a large institutional shareholder selling part (or all) of their shares, or chatter about Asian crypto exposure, there is nothing that changes the fundamental and long-term picture for us.

BSD Analysis:
Protean initiated a contrarian position in Evolution, viewing ESG-driven domestic fund avoidance as creating a significant valuation opportunity. The manager argues that moral exclusions by Swedish funds have artificially depressed the stock price despite exceptional fundamentals. Evolution trades at low-teens EV/EBIT despite 15-20% organic growth, 70%+ EBIT margins, and a net cash balance sheet. The company benefits from structural offline-to-online gambling migration globally and maintains competitive advantages through continuous capacity and innovation investments. Management has demonstrated excellent capital allocation through well-timed buybacks. Despite recent underperformance due to various short-term factors including Georgia political uncertainty, capacity investment margin pressure, and potential institutional selling, the manager believes the long-term fundamental picture remains intact. This represents a classic value opportunity created by ESG exclusions rather than fundamental deterioration.

Pitch Summary:
If you mention Boule Diagnostics to a fellow Swedish portfolio manager, you're likely to get a tired look. It has disappointed a lot of people during the last decade. A lot of things have gone wrong for this Swedish maker of hematology instruments. They are several years late in bringing a new 5-part instrument to the market (spoiler: the device has more than five parts, so it's harder to build that what the name suggests). They have invested heavily in this instrument, which means that they have large amounts of capitalized R&D on the balance sheet (which might lead to a write-down). Boule had also just finished a new factory in Russia, leading to a loss of sales post the start of the war in Ukraine. There are bright spots, however. Boule has a US-based OEM business for reagents. This has doubled in size during the past five years and now accounts for 20 percent of their overall business. The veterinarian business grew by 60 percent last year, almost reaching 10 percent of sales. There is an installed base of circa 32,000 instruments, on which 152m tests are made each year. And don't forget, the company is making good money: SEK19m during Q1 alone, which can be compared to the EV of close to 400m. A new CEO – Torben Nielsen – joined a month ago, and while there's a slight risk of a kitchen sinking exercise in the near term, there's a good chance that his track record from Danaher-owned companies such as Radiometer could do wonders for Boule. We have bought a starting position in Boule Diagnostics.

BSD Analysis:
Protean initiated a contrarian position in Boule Diagnostics, a widely disliked Swedish hematology instrument maker with a troubled recent history. Despite significant challenges including delayed product launches, capitalized R&D risks, and Russian factory losses, the manager identifies compelling value drivers. The US OEM reagents business has doubled over five years to 20% of revenue, while the veterinary segment grew 60% last year to nearly 10% of sales. With 32,000 installed instruments generating 152 million annual tests, Boule has a substantial recurring revenue base. The company generated SEK19m in Q1 profits against a ~400m enterprise value, suggesting attractive valuation. The appointment of new CEO Torben Nielsen, with experience at Danaher-owned Radiometer, provides potential operational improvement catalyst. This represents a classic turnaround opportunity with new management and undervalued assets.