Investment Pitches

Pitch Summary:
One example of an attractive yielding asset is a bond fund Andvari has used for our clients who desire an income component to the equity strategy Andvari provides. This fund is the Western Asset Premier Bond Fund (WEA) managed by Western Asset Management, an advisor founded in 1971 in Pasadena, CA. We like the group for its value investment approach and its long-term track record in the fixed income arena. Furthermore, Western has an excellent reputation and a historical association with two extraordinary individuals: Lou Simpson and Ron Olson. Lou Simpson is best known for his long career as the person in charge of GEICO's investment portfolio. Warren Buffett's Berkshire Hathaway owned a large stake in GEICO until it fully acquired the business in 1996. With the GEICO acquisition, Buffett acquired both a great business and great people. In his 2004 letter to Berkshire shareholders, Buffett wrote, 'Lou is a cinch to be inducted into the investment Hall of Fame.' What few people remember is Simpson was CEO of Western Asset prior to GEICO luring him away. Although Simpson's tenure at Western was brief, he was attracted to the group for a reason. We believe at least a small part of his investment philosophy remains embedded within Western. Ron Olson is the other person of note. Olson has a long association with Charlie Munger and Berkshire Hathaway. In 1968, Olson joined the law firm founded by the late Munger, which is now named Munger, Tolles & Olson. He has been a director on the board of Berkshire Hathaway since 1997. Olson has also been a director at Western Asset since 2005. It's hard to imagine a better person to be a director on your board than Olson. Now, getting to some of the specifics on WEA. It is a bond fund with a closed-end format. This means it has a fixed number of shares as opposed to the open-end fund format, which issues new shares to each new buyer. A closed-end fund also means its market price can trade at a premium or a discount to the net asset value (NAV) per share of the fund. In other words, we are frequently able to pay $95 for WEA shares that have a NAV of $100. The converse is also true. We might be able to sell shares at prices greater than the NAV. Currently, the fund has a yield of 7.9% on its market price in addition to trading at a ~6% discount to NAV.

BSD Analysis:
Andvari presents Western Asset Premier Bond Fund as an attractive income investment based on management quality and structural advantages. The fund benefits from Western Asset's value-oriented approach and 50+ year track record in fixed income. The Berkshire Hathaway connections through Lou Simpson (former Western CEO and GEICO investment chief) and Ron Olson (Berkshire director since 1997) provide credibility and alignment with proven investment principles. The closed-end structure creates opportunities to purchase shares below net asset value, currently trading at a 6% discount. The 7.9% current yield on market price offers compelling income in the higher rate environment. The manager views this as a quality fixed income option that combines attractive yield with potential NAV convergence upside.

Pitch Summary:
CoStar Group is the second holding with significant news. As a reminder, CoStar is commercial real estate's leading provider of information, analytics, and online marketplaces. Sensing an opening to compete against Zillow, the leading residential real estate portal in the U.S., CoStar acquired Homes.com in 2021. CoStar is now planning to invest a cumulative $1 billion into this new business segment. Part of this investment will include the largest marketing campaign in the history of the residential real estate industry. If you watched the Super Bowl this year, you likely saw one of their four commercials. Homes.com will be a big advertiser at other major events in 2024. Thus far, these investments have resulted in Homes.com going from an insignificant player to the second-most trafficked homebuying portal. CoStar announced the Homes.com Residential Network reached more than 149 million unique visitors in February. Further, Homes.com itself had a 567% year-over-year increase in traffic. As it did with Apartments.com, CoStar believes it can grow the unaided awareness from the low single digits to more than 50%. CoStar then received news that could be a tailwind to its Homes.com business: the National Association of Realtors reached a $418 million settlement of claims that they and the industry conspired to keep real estate agent commissions high. The practice of two agents sharing a commission based on the value of a home is a big reason why commission rates in the U.S. are among the highest in the developed world. The practice also reduced the ability for the home buyer to negotiate on commissions. The commission sharing practice is also why many buyers' agents steered clients away from homes when the shared commission would be lower than the going rate. Thus, as part of the settlement, the NAR agreed to disallow upfront commission offers from sellers' agents to buyers' agents. The reason this settlement could provide a tailwind to Homes.com is because its business model is geared to the sellers' agent. This contrasts with the business models of portals like Zillow and Realtor.com, which are geared towards taking the listing data from the sellers' agents, generating leads, and then selling those leads to buyers' agents. Understandably, this practice has been hated by sellers' agents for a long time. Thus, if the commissions of buyers' agents decline because of the changes stemming from this settlement, Zillow could suffer and Homes.com could increase its market share.

BSD Analysis:
Andvari outlines a strategic transformation thesis for CoStar Group's expansion into residential real estate through Homes.com. The $1 billion investment commitment demonstrates management's conviction in competing with Zillow, supported by aggressive marketing including Super Bowl advertising. Early results validate the strategy with Homes.com achieving second-place traffic ranking and 567% year-over-year visitor growth to 149 million unique visitors. The NAR settlement creates a structural tailwind by disrupting traditional commission-sharing practices that favor buyers' agents. CoStar's seller-focused business model positions it advantageously versus Zillow's buyer-agent lead generation approach. The manager sees potential market share gains as commission structures evolve. CoStar's proven track record with Apartments.com supports confidence in replicating success in residential markets.

Pitch Summary:
First is Kelly Partners Group, the Australia-based accounting and financial services firm. The company continues on its long-term mission of helping small businesses be better off by the provision of high-quality accounting and tax services. We're pleased to share that Kelly has expanded into the United States. This is its first foray outside of its home country. After acquiring two accounting firms in the L.A. area, Kelly is now ranked 71 on Los Angeles Business Journal's Top 100 Accounting Firm list. Notably, L.A. is home to one of the largest populations of Australian expatriates in the world. There are 60,000 Australian businesses in L.A. and until Kelly Partners arrived on the scene, there was not a single Australian-owned accounting firm there. This is a logical place for Kelly to begin its international expansion. Another event, perhaps even more significant than its entry into the U.S., is its decision to eliminate its monthly dividend. This means Kelly can deploy more capital at much higher rates of return than Andvari can hope to provide. Given Kelly's large opportunity to acquire and improve accounting firms in English-speaking countries, Andvari applauds the decision to eliminate the dividend. Finally, as of February, the shares of Kelly Partners now trade in the U.S. via the OTCQX® Best Market. Although this is an over-the-counter market, Andvari believes this is a first step towards an aspirational—and perhaps eventual—up-listing to an exchange like the NASDAQ. At the minimum, Kelly can now garner more attention and support from a larger investor base. This will likely help its share price and Kelly will be better able to access capital if necessary.

BSD Analysis:
Andvari presents a compelling bull case for Kelly Partners Group based on strategic expansion and capital allocation improvements. The firm's entry into the U.S. market through L.A. acquisitions demonstrates execution capability, with the company already ranking 71st among L.A. accounting firms. The strategic rationale is sound given L.A.'s 60,000 Australian businesses and lack of Australian-owned accounting competition. The elimination of monthly dividends signals management's confidence in deploying capital at higher returns through acquisitions in English-speaking markets. The OTCQX listing provides improved access to U.S. capital markets and investor base expansion. Kelly's roll-up strategy in fragmented accounting markets offers significant runway for growth. The manager views this as a logical international expansion with strong fundamentals supporting the thesis.

Pitch Summary:
The company's all previous businesses failed and are now solely dependent on FlexTV; failed crypto business due to management incompetency; FlexTV is likely to fail again as the management has no experience in any entertainment business;

BSD Analysis:
Mega Matrix pivots frequently between gaming, digital assets, and crypto ventures. Short reports highlight a lack of consistent strategy, questionable governance, and reliance on retail speculation. The business model remains unclear, leaving the company highly exposed to sentiment-driven swings in crypto markets.

Pitch Summary:
Aggressive revenue recognition; accounting maneuvers to inflate profits; key profitability metrics are manipulated; shares are trading +25% over competitors; overvalued (x39 EBITDA, x57 EBIT); up to 50% downside;

BSD Analysis:
Dayforce (rebranded from Ceridian HCM) provides HCM and payroll software. Shorts argue growth is slowing as competition from Paycom, ADP, and Workday intensifies. The company is investing heavily in international expansion, but margins remain constrained. Any cracks in payroll volumes during a downturn would hit recurring revenue.

Pitch Summary:
Paywalled (We believe Marqeta is a financial platform in distress with its biggest customer, Block, and its biggest banking partner, Sutton Bank, both under the aggressively growing scrutiny of regulators. The Bear Cave further believes that Marqeta, through its partnership with Cash App, is facilitating criminal payments and becoming the preferred payment processor for child pornography.)

BSD Analysis:
Payment processor focused on small merchants and niche verticals. The short case cites elevated competition, slowing GPV growth, and pressure from Square, Stripe, and PayPal. Rising credit losses in BNPL partnerships and weak unit economics undermine the narrative of durable growth. Multiple expansion looks capped as investors rotate into scaled, profitable fintech platforms.

Pitch Summary:
Subsidiary listing in Shanghai attracted Chinese regulatory scrutiny; did not disclose that the IPO was blocked by Chinese regulators due to unfair related-party transactions; false data; tax evasion; improper storage of chemicals; sales dropped more than 50%;

BSD Analysis:
Producer of compound semiconductor substrates used in LEDs, lasers, and optoelectronics. Bears note cyclical demand, reliance on a few large customers, and exposure to Chinese supply chains. Margins are pressured by commoditization, and capex cycles in optoelectronics create lumpy earnings. Any slowdown in 5G or photonics adoption could weigh on growth.

Pitch Summary:
To the surprise of everyone, Topicus.com announced a €200 million special dividend paid to Topicus shareholders on March 28th, 2024, shaking things up for investors. While it might initially raise concerns about future returns, there's more to the story than meets the eye. Deja Vu with Acquisitions? Remember how Constellation Software, surprised everyone with special dividends and then went on a buying spree? This move by Topicus could be a similar precursor to exciting M&A activity on the horizon. Additionally, HEICO in late 2012 issued a special dividend of $2.14 per share due to impending tax increases that were to take place in 2013 and has went on to compound at a nice clip since then. Finding the Right Balance: Topicus is awash in cash, but achieving their ambitious acquisition goals requires careful planning. The true key to growth lies in how effectively they utilize their capital and how much they reinvest back into the business. However, continuously reinvesting everything isn't always the most strategic approach. Although Topicus is still very early in their journey, if we assume Topicus can reinvest 80% of capital at a 25% return over a number of years, the special dividend shouldn't hurt shareholders in the long-run. Refer to the capital allocation section below for different reinvestment rate scenarios. Cash Flow Conundrum: The strong start to the year might have left Topicus with more cash than anticipated, making immediate reinvestment of the entire sum challenging. Typically VMS businesses are flush with cash in Q1 as customers renew their annual software subscriptions. They receive the cash up front, but only recognize the revenue evenly over the year due to IFRS rules around revenue recognition. Cash Flow Optimization: Holding onto a massive cash reserve isn't necessarily beneficial. Topicus recognizes this and is committed to putting their money to work strategically. I've personally seen this at work as the market does not give any multiple premium to companies who hoard cash on their balance sheets, even if it does provide optionality and stability. Playing Devils Advocate: The other side of the coin is that Topicus couldn't find additional ways to deploy this capital ever or immediately, which could pose a risk on the valuation due to affects on future reinvestment rates. Although, I don't think this is the case, its something to keep on eye on and I'll be approaching this with a trust, but verify mentality. If I had to critique any of the Constellation family of companies, it would be a bit around communication. I like the fact that they don't do quarterly calls, give guidance or communicate with shareholders unless they feel there is something important to say. However, I do think they could strike a middle ground and provide some additional commentary around events like this or maybe even write a semi annual shareholder letter to address common questions. Maybe in the future. After my discussion with the CFO of Constellation and speaking with some other investors who hold the name, my conviction remains the same and as discussed above in the portfolio commentary, I added to my position in Q1 and continue to believe this will be long-term outperformer.

BSD Analysis:
The manager views Topicus's €200 million special dividend as a strategic capital allocation decision rather than a concerning signal about growth prospects. Drawing parallels to Constellation Software's historical pattern of special dividends preceding acquisition sprees, the manager interprets this as potentially bullish for future M&A activity. The analysis acknowledges the seasonal cash flow dynamics of VMS businesses, where Q1 subscription renewals create temporary cash surpluses that may challenge immediate reinvestment. The manager's framework assumes Topicus can reinvest 80% of capital at 25% returns, suggesting the special dividend won't impair long-term shareholder value creation. While noting communication deficiencies within the Constellation family of companies, the manager maintains conviction after discussions with Constellation's CFO and other investors. The position was increased during Q1, reflecting confidence in Topicus's ability to execute its European software acquisition strategy and deliver long-term outperformance despite near-term capital allocation questions.

Pitch Summary:
Constellation's 2023 results paint a compelling picture of a company firing on multiple cylinders. Here's a breakdown of the key takeaways, going beyond the headline figures: Sustainable Growth Engine Revenue growth continues to be a hallmark of Constellation, with a robust 27% increase in 2023. Notably, even excluding the recent acquisition of Optimal Blue, organic growth is flourishing – a positive sign for the company's long-term health. This shift towards organic growth, which was 6% for the recurring revenue stream, indicates a less volatile and more sustainable business model compared to relying solely on acquisitions. Beyond the Net Income Dip A significant year-over-year decline in net income might raise initial concerns. However, a closer look reveals a more nuanced picture. Acquisitions like Altera initially impacted Constellation's overall growth rate. However, recent quarters show promising signs of recovery for Altera, with improvements in revenue, profitability, and cash flow generation. This highlights Constellation's ability to not only identify promising acquisition targets but also successfully integrate and stabilize them, ultimately unlocking their full potential. Understanding certain accounting adjustments is crucial for a complete financial picture. Foreign exchange fluctuations and a specific liability related to Topicus shares also known as the IRGA/TSS Membership liability revaluation charge, amortization of intangibles and interest related to operating lease payments need to be adjusted for to calculate a more accurate NOPAT. Cash Flow: The True Measure of Success Focusing solely on net income can be misleading. A clearer picture of Constellation's financial health emerges when examining cash flow metrics. Operating cash flow surged by an impressive 39% in 2023, and free cash flow available to shareholders witnessed an even more significant jump of 48%. These strong cash flow metrics demonstrate the company's ability to generate consistent profits that can be reinvested in growth initiatives or returned to shareholders. Management's focus on cash flow is another positive indicator for Constellation's long-term health. The company has aggressively deployed capital into acquisitions, exceeding $2.3 billion ($2.17 billion on a standalone basis) in 2023. Notably, they've managed to keep debt levels under control (1.4x leverage) despite this increased investment activity and willingness to lever up the balance sheet a bit. This balance between growth and financial prudence suggests a well-defined strategy that prioritizes sustainable long-term value creation. A Robust Acquisition Pipeline Fuels the Future Constellation's future appears bright based on their robust acquisition pipeline. The company has already deployed a significant amount ($654 million) in the first two months of 2024, signifying continued deal flow and growth opportunities. Additionally, if you take into account the upcoming Lumine conversion and Black Knight deals, reported FCFA2S is set to increase by 13-15% alone in FY24 before taking into account acquisition growth. In summary while Constellation's financial statements might present a complex picture at first glance, a deeper analysis reveals a company with impressive and sustainable growth, a focus on cash flow generation, and a well-defined acquisition strategy. These factors all contribute to a positive outlook for Constellation's future and its ability to deliver long-term value to its stakeholders and I'm happy to hold this as my largest position.

BSD Analysis:
The manager presents a comprehensive bull case for Constellation Software, emphasizing the company's evolution from pure acquisition-driven growth to a more balanced model incorporating organic expansion. The 27% revenue growth in 2023, with 6% organic growth in recurring revenue streams, demonstrates the sustainability of the business model beyond M&A activity. The manager astutely focuses on cash flow metrics rather than net income, highlighting the 39% surge in operating cash flow and 48% increase in free cash flow available to shareholders as more meaningful indicators of financial health. The successful integration and turnaround of the Altera acquisition showcases management's operational capabilities. With $654 million already deployed in early 2024 and upcoming Lumine conversion and Black Knight deals expected to boost FCFA2S by 13-15%, the acquisition pipeline remains robust. The controlled leverage at 1.4x despite aggressive capital deployment reflects disciplined financial management. This represents the manager's largest position, reflecting high conviction in Constellation's ability to compound capital through its proven acquisition and integration playbook.

Pitch Summary:
The company's e-commerce business has collapsed because of Amazon; products can't be used in the state due to recycling and labeling bills; organic growth has collapsed; facing existential challenges;

BSD Analysis:
Packaging company exposed to cyclical demand in food and industrial end-markets. Bears focus on rising input costs, FX headwinds, and customer destocking trends. While management is restructuring, execution risk remains, and leverage is elevated. ESG scrutiny around plastics could dampen long-term multiples.

Pitch Summary:
Vimeo (VMEO) – Vimeo is a video streaming and production service. It has been a terrible stock ever since coming public, spun out from Interactive Corp (IAC). I have followed it a little over the years – I like companies that aren't quite profitable but have positive free cash flow and don't need to raise money, as they tend to see their stocks go higher as they cross to profitability. But Vimeo has stopped growing, which kept the stock on a downward path. I bought shares on reporting it was considering a sale to Bending Spoons. Those talks fell apart in the last week of the quarter, and the stock dropped a lot. The rule with special situations is only buy if you're prepared to own the stock afterwards (or get out quickly). I feel ok with a small position in Vimeo at such a low price, though I don't plan to buy much more.

BSD Analysis:
The manager's VMEO position represents a failed special situation play that has evolved into a small opportunistic holding. Originally attracted to potential M&A with Bending Spoons, he now owns the stock at depressed levels following deal collapse. While VMEO fits his preferred profile of companies with positive free cash flow approaching profitability, the critical flaw is stagnant growth that undermines the investment thesis. The manager acknowledges VMEO's poor post-spinoff performance from IAC and appears cautious about expanding the position. His neutral stance reflects uncertainty about the company's ability to reignite growth in the competitive video streaming market, making this more of a lottery ticket than a conviction holding.

Pitch Summary:
TD Synnex (SNX) – TD Synnex is a technology distributor. Classically, that means it buys computers and phones from Apple and Hewlett Packard and Dell and so on, and then re-sells them to small businesses and other companies. SNX is focused on adding more software customization and value-added IT support to its customers, as a way to improve margins. The company is the combination of Tech Data and Synnex. I owned Tech Data for a stretch in 2019-2020, at which point a private equity company bought it out (beating an offer from Berkshire Hathaway). I've been curious in buying shares since, and we got a better price than we would have at the Synnex/Tech Data deal's close in 2021. On its latest earnings call, the company said PC buying is starting to grow again after working off a covid hangover. AI-enabled technology and software is very buzzwordy, but SNX may benefit on the margin for that. This sort of company tends to trade cheaply – its margins are very thin as a reseller – but if its business is accelerating, this will work out well. We bought shares at around 10x 2023 or 2024 free cash flow, and SNX's medium-term target is to grow free cash flow 25%.

BSD Analysis:
The manager sees value in SNX as a technology distributor positioned for a PC market recovery after pandemic-driven inventory corrections. The investment leverages his previous successful experience with Tech Data, one of SNX's predecessor companies that was acquired by private equity above Berkshire Hathaway's bid. The thesis centers on margin expansion through value-added services and software customization, moving beyond traditional low-margin hardware reselling. At 10x free cash flow, the valuation appears attractive given management's 25% FCF growth target and early signs of PC demand recovery. While acknowledging the inherently thin margins in distribution, the manager believes accelerating business momentum and potential AI-related technology refresh cycles could drive outperformance from current depressed levels.

Pitch Summary:
Archers-Daniels-Midland (ADM) – I like buying companies with long track records of success who go on sale for short-term reasons. Charles Schwab a year ago is an example. Archers-Daniels-Midland is one of the biggest grain traders in the world – part of the ABCD group along with Bunge, Cargill, and Louis Dreyfus, that controls 90% of the global grain trade. The short-term reason for its drop is that the company suspended its CFO and announced that it had accounting problems. This is never a good sign. It became clear quickly, however, that the problems were localized to the company's nutrition segment, its smallest, and that the problems involved how its different segments valued sales from one unit to the other, meaning it had no effect on the company's overall financials. This is not good news, but it's not "24% stock drop" bad. Everything ADM has said since the news broke has suggested the accounting issue is not material to the business, and earnings have been in line with expectations. Since then, reports have come out about the government investigating other parts of ADM's business. It's possible there are more cockroaches here, but I think the likeliest impact is on the executive team's employment. ADM's longer-term business prospects is my bigger concern. The company is cyclical, meaning it's not easy to expect steady, consistent earnings growth. ADM peaked in 2022 as the Russia invasion of Ukraine caused grain prices to go up; we are now closer to the bottom of a cycle. That said, buying a company with a strong balance sheet at less than 10x bottom earnings usually works out well. ADM is paying a 3%+ dividend and buying back a lot of shares, both signs of confidence in the business.

BSD Analysis:
The manager presents a contrarian value play on ADM, viewing the 24% stock decline as an overreaction to localized accounting issues in the nutrition segment. He emphasizes ADM's dominant position in global grain trading as part of the ABCD oligopoly controlling 90% of the market. The investment thesis centers on buying a cyclical company with strong fundamentals at the bottom of its cycle, trading at less than 10x trough earnings. While acknowledging the cyclical nature creates earnings volatility, the manager finds comfort in ADM's strong balance sheet, 3%+ dividend yield, and active share buyback program. The accounting irregularities appear contained and non-material to overall financials, making the current valuation attractive for a patient investor willing to ride through commodity cycles.

Pitch Summary:
Boeing continues to encounter problems with its 737 MAX plane, and we decided to exit our position the next trading day following the door plug incident. Since our sale, Boeing’s stock has plummeted roughly -25%. The incident remains under investigation, and we believe Boeing will need to undergo a pivot in process to focus on safety and quality, which will mean adding additional costs and time to manufacturing each plane. This is good for passenger safety and the company’s reputation long-term, but also serves as a headwinds for earnings in the short- to medium-term, in our view.

BSD Analysis:
Boeing enters 2026 at a historic pivot point, with CFO Jay Malave issuing a definitive guidance of $1 billion to $3 billion in positive free cash flow—marking the first sustainably positive cash year since the pre-MAX crisis era. The company is targeting a 737 MAX production rate of 47 aircraft per month this year, assuming continued FAA satisfaction with quality metrics. Key catalysts for 2026 include the anticipated FAA certification of the 737 MAX 7 and MAX 10, as well as continued progress on the 777X toward a 2027 entry into service. While the integration of Spirit AeroSystems introduces a roughly $1 billion headwind this year, management maintains that a $10 billion free cash flow target remains "very attainable" in the near term. The 2026 roadmap focuses on "re-baselined" values and inventory liquidation, positioning the firm for a more aggressive production ramp in 2027.

Pitch Summary:
American Express is a company we’ve liked for a long time, and we think could benefit from stronger-than-expected economic growth in 2024. Q4-2023 U.S. GDP was 3.4%, attributed largely to strong consumer spending and business investment. The jobs market remains stable, with March payrolls showing a 303,000 increase and the unemployment rate ticking lower to 3.8%. A healthy jobs market and rising real wages continue to support the U.S. consumer—the lifeblood of the U.S. economy and an earnings driver for American Express.

BSD Analysis:
American Express enters 2026 with an "upbeat" outlook, issuing full-year EPS guidance of $17.30 to $17.90, which sits above the market consensus of $17.41. The company continues to benefit from the resilient spending of its young and affluent customer base, with Gen Z and Millennial spending now representing the largest segment of its U.S. consumer business. Management recently confirmed a 16% increase in the quarterly dividend to $0.95, supported by 9%–10% projected revenue growth for the year. However, investors are closely monitoring potential regulatory headwinds, specifically the proposed 10% cap on credit card interest rates which has pressured the stock in early 2026. Despite a slight holiday-quarter profit miss due to high marketing expenses and a "Platinum refresh," AXP's premium brand positioning and solid billed-business growth of 9% remain key pillars for its 2026 valuation.

Pitch Summary:
Taiwan Semiconductor. All of AI’s promise and potential relies heavily on Taiwan’s advanced semiconductors. According to a recent analysis by the U.S. International Trade Commission, 90% of advanced chips designed by Nvidia, Apple, and Broadcom are reportedly made by one company: Taiwan Semiconductor.

BSD Analysis:
TSMC has officially maintained its "Guardian Mountain" status in 2026, recently raising its 2026 capital expenditure guidance to a range of $52 billion to $56 billion (up as much as 40% from 2025). The company is a primary beneficiary of the AI "megatrend," reporting a 37% revenue jump in January 2026 and forecasting full-year revenue growth of nearly 30%. Management has confirmed that 2nm (N2) mass production is ahead of schedule, with volume production of the AI-focused A16 process expected to commence in the second half of 2026. Strategic geographic diversification is also accelerating, with tool installation at its second Arizona fab planned for this year. While 2026 supply remains tight, TSMC is aggressively ramping its CoWoS capacity toward a target of 120,000–130,000 wafers per month by year-end to meet insatiable demand from hyperscalers.

Pitch Summary:
Nvidia, our largest position, is a prime example. The stock rose 200+% in 2023, and in Q1 2024 it jumped +82.5% and was responsible for more than one-fifth of the S&P 500’s total return for the quarter. We understand it may seem crazy to think Nvidia can continue performing well. But the earnings are telling a different story. Goldman Sachs notes that its valuation (next-twelve-months P/E ratio) is still below its five-year average. Its earnings growth has actually outpaced its price gains.

BSD Analysis:
NVIDIA enters 2026 as the undisputed architect of the generative AI era, having recently reported a record-breaking Q3 fiscal 2026 revenue of $57.0 billion (up 62% year-over-year). Data Center revenue alone hit a milestone $51.2 billion, fueled by "off the charts" demand for the Blackwell platform and the sovereign AI movement. For the current quarter (Q4 FY26), management has issued a robust revenue guidance of $65.0 billion (±2%), signaling that supply-chain bottlenecks are beginning to ease. The company has returned $37.0 billion to shareholders in the first nine months of the fiscal year, with over $62 billion remaining in its buyback authorization. For 2026, the primary catalyst is the commercial introduction of the Vera Rubin architecture, which is projected to deliver a 3.3x performance leap over Blackwell, solidifying NVIDIA's pricing power in the "virtuous cycle" of AI infrastructure.

Pitch Summary:
The company's current business practice could be deemed as fraudulent; false claim to homebuyers; taking advantage of both homebuyers as well as mortgage brokers;

BSD Analysis:
Mortgage originator highly exposed to U.S. housing cycles. Short reports stress heavy reliance on refinancing volumes, which have collapsed with rising rates. Market share gains are possible, but at the cost of thin margins. With high leverage and cyclical headwinds, downside risk is substantial if rates remain elevated.

Pitch Summary:
One timely position to discuss is Bassett Furniture ("BSET"). BSET is a 120-year-old manufacturer, wholesaler, and retailer of upper-middle / upper-end furniture. This is an asset heavy company. On the back-end they own and operate 2 wood manufacturing facilities in Virginia, 2 upholstery facilities in North Carolina and Alabama, and 3 warehouses. They own and operate 8 retail locations that cover more than 200k sq feet of retail space; and they operate another 49 owned stores that are leased. Additional distribution comes from 31 Bassett branded retail stores operated by 3rd parties, as well as wholesale sales into other retailers. Up until 2022 BSET had an internal distribution (trucking) company; this was sold to J.B. Hunt for $87mm with part of the proceeds used for a special dividend. BSET has historically generated a 4-5% EBIT margin across its wholesale and retail business. Right now they are slightly loss making as the industry works through a glut in supply. LTM revenue is at $390mm which is right around where the company used to run pre-covid. Of course sales could dip further as retailers de-stock and demand lags given higher interest rates and slower home sales. But long-term I think it is fair to assume that this company could generate something like $20mm of EBIT. The current situation is not lost on management. In their most recent quarterly press release, BSET discussed plans the impetus to return to profitability and specifically noted a plan to reduce warehouse and delivery costs by 2% points. This will be accomplished through the consolidation of retail distribution facilities and improved capacity utilization. For each 1% increase to margins, the company would generate an incremental $4mm of EBIT. They also have a plan in place to improve their wholesale sales by showcasing their best products (custom upholstered furniture) with a slimmed down version of their store-in-store presence. The risk-reward here seems compelling. From a downside protection perspective, BSET is currently trading at a price of $13.50 but has tangible book value of over $19. Cash accounts for a large part of their book ($70mm or $8/share) and their real estate is not properly marked. For instance, the reported value of their 8 owned retail stores is just $24mm or $119/sq foot. My review of listings near these storefronts shows that most are offered at over $300/sqft. Assuming this low-end price, their retail properties are worth $36mm more than they are recorded at on the books (+4.19/share). Should BSET achieve $25mm of EBIT, a 5x multiple would put their enterprise value at $125mm and market value at $195mm or over $22/share (66% upside). This stock truly flies under the radar as it has just $120mm market capitalization and does not host conference calls.

BSD Analysis:
The manager presents Bassett Furniture as a compelling turnaround opportunity trading below tangible book value with significant real estate upside. BSET is currently unprofitable due to industry supply glut but historically generated 4-5% EBIT margins on $390mm revenue. Management has outlined specific cost reduction plans targeting 2% margin improvement through distribution consolidation and capacity utilization. The company trades at $13.50 versus $19+ tangible book value, with $70mm cash ($8/share) providing downside protection. Real estate appears significantly undervalued at $119/sq ft versus comparable market rates of $300+/sq ft, suggesting $4+ per share of hidden value. The manager calculates 66% upside potential if BSET achieves $25mm EBIT at a 5x multiple. The small $120mm market cap and lack of conference calls suggest limited institutional coverage, creating an under-the-radar opportunity.

Pitch Summary:
During the quarter I uncharacteristically built a position from nothing into our top holding. Clean Harbors ("CLH") is the largest US hazardous waste management company. Before digging into CLH I would like to diverge with a bit of personal history. In my early 20's I worked at Macquarie Bank where our team was responsible for acquiring investments on behalf of our managed infrastructure funds and the bank's balance sheets. One of my first assignments was the acquisition of a publicly traded municipal solid waste (MSW) management company (Waste Industries). While not technically infrastructure per-se, MSW has similar characteristics like being an essential service, operating regional monopolies, and controlling scarce assets. In any case we paid something like 8-9x EBITDA which was a premium to the then trading multiple. Waste Industries is now a small part of GFL Environmental which trades at 12x EBITDA. And GFL is actually at a notable discount to its peers of Waste Management, Republic Services, and Waste Connections that are at 15x. While hindsight is 20/20, buying into this asset class 15 years ago would have been a home-run given their strong cashflow and multiple expansion. While hazardous waste is not entirely comparable to their MSW brethren, CLH has many attractive attributes. They own and operate scarce assets including nine incinerators and eight landfills where new supply is limited by a complex permitting process and significant construction cost. They maintain vertically integrated operations that allow it to control waste from collection through transportation and disposal; this activity similarly requires specialized permits for which the company maintains over 500. As the largest player in the space, CLH has a proven history of managing waste properly – a key consideration amongst customers given environmental ramifications. They also have scale benefits that include route-based efficiencies, capacity utilization, and the deepest breadth of service offering. I view their business in broadly two segments, Environmental Services and Safety-Kleen Oil. Environmental Services provides waste remediation and cleaning services for various industries with particular concentration in chemical, manufacturing, refining, and auto service. Though many of these end-markets are individually cyclical, the diversification of their product offering and customer base will somewhat offset this. Additionally, these sectors should benefit from the ongoing shift to reshoring and increased regulatory / environmental scrutiny. Safety-Kleen Oil provides used motor oil collection and recycling; it is the most volatile part of CLH as profitability is largely determined by commodity prices. This business is currently depressed and accounts for just 13% of their consolidated EBITDA. CLH is taking steps to structurally improve these operations. For instance, by separating their feedstock during collections they can offer Group III base oils that receive a meaningful premium to Group II. CLH has historically operated the Environmental Services business at a low to mid-20's EBITDA margin. This is noticeably lower than the 30% range that most MSW operate in; this differential is even more jarring on an EBIT basis as CLH is less capital intensive than MSW. In early 2022 Republic Services acquired hazardous waste competitor US Ecology. A key part of their thesis was that they viewed the hazardous waste sector equivalent to the MSW sector 20 years go. Republic has said that they see 10 percentage points of margin expansion, to be achieved through further consolidation and a more rational approach to pricing. Since the acquisition, Republic has taken two double digit pricing increases and witnessed expanding margins. This approach is benefiting the industry as a whole, with CLH margins up 1.6% in 2023 to reach 24.5%. CLH is currently trading at 10.6x consensus EBITDA for 2025, a meaningful discount to their MSW peers. Assuming the base oil business is worth just 3.0x EBITDA, the remaining business is trading at 10.8x. This is entirely too low given their market positioning, essential service offering, and meaningful barriers to entry. Furthermore, this discounted multiple gives no optionality to further margin improvement. If margins were to increase another 500bps (obviously over the long-term), consolidated EBITDA would be 20% above consensus and the multiple would fall to <9x. Keep in mind that Republic acquired US Ecology at almost 14x trailing EBITDA.

BSD Analysis:
The manager built Clean Harbors into their top holding, viewing it as an undervalued essential services business with significant barriers to entry. CLH operates scarce assets including nine incinerators and eight landfills, with new supply constrained by complex permitting and high construction costs. The company maintains over 500 specialized permits and benefits from scale advantages in route efficiency and service breadth. The manager sees margin expansion potential driven by industry consolidation and rational pricing, similar to the municipal solid waste sector's evolution 20 years ago. Republic Services' acquisition of competitor US Ecology at 14x EBITDA and subsequent double-digit price increases validates this thesis. CLH trades at 10.6x 2025 EBITDA versus MSW peers at 15x, despite similar business characteristics. The manager believes further margin improvement could drive EBITDA 20% above consensus, creating significant upside potential.