Investment Pitches

Pitch Summary:
Kicking off the contributors this quarter was Boot Barn, the leader in a highly fragmented retail segment focused on western and work footwear, apparel, and accessories. Early in the quarter, Boot Barn’s revenues and earnings handily exceeded estimates, with greater transaction volumes and new store openings. Boot Barn increased its guidance for the next fiscal year—including the number of new stores—and expects no disruption from planned price increases in mid-2026. Though its shares gained 6%, the underlying volatility was meaningful as sentiment began to shift. We grew concerned that the next report from Boot might include slower growth and cautious near-term guidance, so we trimmed our position, ultimately exiting entirely in early January.

BSD Analysis:
Boot Barn sells functional apparel tied to work, lifestyle, and regional identity rather than fast fashion. Demand is more resilient than typical discretionary retail because products serve real use cases. Store economics remain attractive, with disciplined new-unit expansion. Investors lump Boot Barn into broad retail downturn fears. Yet trade-down dynamics and niche dominance protect traffic. Private-label penetration improves margins over time. Inventory execution is the swing factor. This is specialty retail with cultural stickiness. When sentiment clears, operating leverage shows fast.

Pitch Summary:
Applied Materials benefited from continued strength in semiconductor capital equipment during the quarter. Management emphasized a shift toward AI-related chip production across foundry logic, DRAM and high-bandwidth memory. The company expanded gross margins, citing some of the strongest margin levels seen in roughly 25 years. Demand reflected increased process complexity and advanced node investment. Shares responded positively to margin resilience and outlook commentary.

BSD Analysis:
Applied sits upstream of every serious semiconductor roadmap, monetizing complexity as nodes shrink. Process steps multiply, raising tool intensity per wafer. Capex cycles delay orders but don’t cancel physics. Customers rely on Applied across deposition and materials engineering. Margins reflect scale and IP breadth, not volume chasing. Investors trade timing instead of inevitability. AI and advanced packaging extend demand beyond logic nodes. When fabs spend, Applied prints. This is picks-and-shovels leverage to silicon reality.

Pitch Summary:
Axon Enterprise declined sharply after a slight beat to third-quarter projections and mixed fourth-quarter guidance. Investors reacted negatively after being conditioned to outsized beats and raises. We added to the position due to continued solid customer growth and strong retention. The company has multiple growth drivers, including Taser 10, Bodycam 4 and its artificial intelligence software bundle. Axon continues to expand its ecosystem across hardware and software.

BSD Analysis:
Axon owns a vertically integrated ecosystem spanning tasers, body cameras, and evidence management software. Switching costs are brutal once agencies standardize training, workflows, and data retention. Recurring software revenue is becoming the economic engine, not hardware sales. Public safety budgets favor incumbents with compliance and reliability. Investors debate valuation while contract visibility lengthens. International expansion adds runway without reinventing the model. AI-enabled evidence tools deepen lock-in. This is govtech infrastructure with network effects. Controversy doesn’t erase demand for accountability.

Pitch Summary:
Pinterest pulled back by roughly 20% during the quarter after reporting an inline quarter, with fourth-quarter revenue and profit guidance slightly below Street expectations. The company has been pleased with adoption of new functionality by advertisers as they seek higher returns on advertising spend. User engagement trends have remained solid, with monthly active user growth increasing, particularly in international markets. Management continues to invest in performance-driven ad tools and commerce features. The market reaction reflected near-term guidance caution rather than deterioration in fundamentals.

BSD Analysis:
Pinterest monetizes intent rather than attention, which gives it a different ad quality profile than social feeds. Users come to plan purchases, not argue, and advertisers pay for that context. Monetization still lags engagement, creating upside if execution improves. International ARPU remains underdeveloped. Investors fixate on user growth and miss monetization leverage. AI-driven discovery improves relevance without increasing content costs. The platform is less cyclical than pure brand advertising. This is a visual search engine disguised as social media. If monetization catches up, operating leverage is meaningful.

Pitch Summary:
Take-Two Interactive Software Inc. delivered solid fiscal second-quarter results, with 20% year-over-year growth in recurring consumer spending. Net bookings projections were increased as engagement across its core franchises remained strong. Overshadowing earnings was an announcement that its subsidiary, Rockstar Games, will delay the launch of Grand Theft Auto 6 from May to November 2026 to allow for a higher level of polish. GTA 6 is the most anticipated game launch in the company’s history. Shares fell sharply following the report, and we added to our position on weakness. Take-Two’s price subsequently rebounded and ended the quarter down approximately 1%, far outperforming the benchmark sector decline.

BSD Analysis:
Take-Two is a hit-driven business that owns some of the most valuable IP in entertainment. Franchise depth matters more than release cadence, and Take-Two’s catalog delivers both. GTA alone distorts financial optics because launches are infrequent but enormous. Investors struggle with lumpy earnings and poor timing visibility. Yet engagement and monetization extend far beyond launch windows. Digital distribution and recurring spending smooth the curve more than skeptics admit. Balance sheet strength allows patience. This is IP leverage, not content churn. When hits land, they land hard.

Pitch Summary:
Guidewire is a market leader in next-generation property and casualty insurance software. The company has delivered a strong profit cycle for several years, driven by insurance carrier modernization, and this quarter was consistent with that trend. After outperforming a lagging software sector in the first three quarters, the stock lost some momentum in Q4. We trimmed the position into strength during the year, in line with our valuation discipline, and continue to hold a medium-sized CropSM position as valuation assumptions have become more reasonable.

BSD Analysis:
Guidewire runs the core systems of record for property and casualty insurers, making it painfully hard to replace once installed. The cloud transition created temporary growth noise but permanently improved revenue quality. Insurers don’t experiment with billing and claims systems — they standardize and stick. Regulatory complexity strengthens Guidewire’s moat every year. Investors confuse implementation cycles with competitive weakness. As migrations complete, subscription revenue scales cleanly. AI and analytics monetize best inside trusted workflows. This is insurance plumbing, not discretionary SaaS. Slow adoption, permanent relevance.

Pitch Summary:
Parsons is a technology-driven engineering firm serving the defense, intelligence and infrastructure markets, with strengths in cybersecurity, missile defense and infrastructure protection. Shares fell in Q4 after losing out on winning a $12.5 billion Federal Aviation Administration (FAA) air traffic control modernization contract, interrupting a recovery from earlier cost-cutting pressures tied to the Department of Government Efficiency initiatives. Despite not being selected as the prime integrator, we remain invested, as Parsons’ long-standing relationship with the FAA positions it to capture meaningful portions of the program. We also believe Parsons is well positioned to win multiple large-scale awards across federal, state and global institutions.

BSD Analysis:
Parsons is a government-focused engineering and services firm positioned squarely in defense, intelligence, and critical infrastructure. Revenue visibility is strong because programs are funded by policy urgency, not consumer confidence. Cyber, missile defense, and infrastructure resilience are no longer optional budget items. Margins aren’t flashy, but contract durability is. Investors treat Parsons like a generic contractor and miss how embedded it is in mission-critical programs. Scale and security clearances create real barriers to entry. Cash flow supports steady reinvestment rather than leverage. This is national-priority spending with private-sector discipline. Boring work, paid first.

Pitch Summary:
Stevanato is a leading provider of specialty glass and plastic packaging to the health care industry, as well as the leading machinery supplier to glass vial makers and fill and finish facilities. The stock was weak this quarter as the market tried to sort out the implications of Eli Lilly’s pending launch of an oral GLP-1, Orforglipron, for Stevanato’s profit cycle with respect to its vial and syringe production. We remain invested in the stock as we believe not only in the continued penetration of GLP-1 in liquid form, where titration benefits remain, but more importantly in the future increases in liquid-based biological drugs. Additionally, Medicare- and Medicaid-based coverage of GLP-1s should increase overall drug volume, regardless of average selling price pressures on GLP-1 manufacturers themselves.

BSD Analysis:
Stevanato sits at a quiet choke point in global pharmaceuticals by supplying drug containment systems that regulators and manufacturers cannot compromise on. Vials, syringes, and cartridges look commoditized until contamination risk makes switching suppliers unthinkable. COVID distorted demand optics, but biologics and injectables keep expanding structurally. High validation and qualification requirements create brutal switching costs. Investors fixate on volume normalization and miss long-cycle embedment. Capacity investments depress near-term returns but extend relevance for years. Margins reflect process control and quality, not glass pricing. This is healthcare infrastructure hiding inside packaging. Boring containers, existential importance.

Pitch Summary:
Vita Coco is the world’s leading coconut water brand. It has been benefiting from strong volume growth across North America and select European markets as awareness and availability grow. Earlier challenges from the loss of a private label relationships a year ago and an aisle reset at a major retail customer are easing as new private label partnerships are established and aisle resets conclude. Additionally, coconut water is exempt from tariff-related headwinds as it is a naturally occurring product that cannot be produced in the US.

BSD Analysis:
Vita Coco owns the coconut water category in a way competitors struggle to disrupt. Brand recognition converts directly into shelf dominance and pricing power. Input cost volatility creates margin noise but not demand risk. Expansion into adjacent hydration products extends the runway. Investors fear beverage fads reflexively. Yet coconut water has proven staying power across cycles. Asset-light manufacturing improves flexibility and cash generation. As costs normalize, margins expand quickly. This is category leadership trading like a niche drink play.

Pitch Summary:
Insmed is a biotechnology company focused on pulmonary diseases. We exited our position during the quarter due to market cap considerations, though the stock remained a top performer. Its strength was driven by the successful launch of Brinsupri™ (brensocatib), the first approved therapy for non-cystic fibrosis bronchiectasis, which generated $28 million in initial sales from roughly 2,500 patients and 1,700 prescribers, along with a robust pipeline of additional potential therapies.

BSD Analysis:
Insmed is a rare-disease biotech built around deep specialization rather than pipeline sprawl. Its lead franchise generates cash that reduces dependence on capital markets. Expansion into adjacent indications increases lifetime value without reinventing the model. Clinical execution, not science, is now the main swing factor. Investors worry about concentration risk and miss operating leverage. Regulatory clarity supports steady adoption. Pipeline optionality exists without existential burn risk. This is biotech behaving like an operator. Progress compounds slowly, then suddenly.

Pitch Summary:
MACOM designs and manufactures high-performance semiconductors. Last quarter, the stock was among our bottom three contributors, but we believed pressures on the profit cycle were temporary and added capital to the position. Those issues proved to be transitory, and the company continues to execute on its strategy of expanding margins through differentiated compound semiconductor solutions and product cycles. We have since trimmed the position in line with our valuation discipline.

BSD Analysis:
MACOM supplies high-performance analog semiconductors into defense, aerospace, and data infrastructure where reliability is non-negotiable. Products are deeply engineered and qualified, making switching slow and costly. Demand is lumpy due to program timing, not consumer cycles. Investors treat MACOM like a generic chip name and miss its specialty nature. Margins reflect customization and IP depth. Defense exposure adds durability through cycles. When programs ramp, earnings leverage is meaningful. This is niche silicon with real barriers. Complexity quietly pays.

Pitch Summary:
The fund's allocations to semiconductor equipment companies Teradyne and Applied Materials contributed positively to performance during the quarter, following a strong overall period for semiconductor capital equipment companies. Teradyne's strong price appreciation was led by an increased demand for semiconductor testing equipment, fueled by booming demand for AI accelerators and memory. Its management team also reported strong results for the third quarter of 2025 and issued optimistic guidance for future business with significant revenue growth year over year. Applied Materials' management team emphasized the continued shift toward AI-related chip production, including foundry logic, dynamic random-access memory (DRAM) and high-bandwidth memory - all areas in which the company holds strong positioning. Applied Materials also expanded their gross margins during the quarter, citing some of the strongest margins it has seen in approximately 25 years.

BSD Analysis:
Applied Materials is the largest supplier of semiconductor manufacturing equipment, sitting upstream of every serious chip roadmap. As nodes shrink, process steps multiply, increasing tool intensity. Capex cycles create volatility, not irrelevance. Customers rely on Applied across deposition, etch, and materials engineering. Margins reflect scale and IP breadth. Investors trade timing rather than inevitability. AI and advanced packaging extend demand beyond logic nodes. When fabs spend, Applied prints. This is picks-and-shovels leverage to silicon complexity.

Pitch Summary:
The fund's allocations to semiconductor equipment companies Teradyne and Applied Materials contributed positively to performance during the quarter, following a strong overall period for semiconductor capital equipment companies. Teradyne's strong price appreciation was led by an increased demand for semiconductor testing equipment, fueled by booming demand for AI accelerators and memory. Its management team also reported strong results for the third quarter of 2025 and issued optimistic guidance for future business with significant revenue growth year over year. Applied Materials' management team emphasized the continued shift toward AI-related chip production, including foundry logic, dynamic random-access memory (DRAM) and high-bandwidth memory - all areas in which the company holds strong positioning. Applied Materials also expanded their gross margins during the quarter, citing some of the strongest margins it has seen in approximately 25 years.

BSD Analysis:
Teradyne sits at the chokepoint of semiconductor quality, supplying test equipment chips cannot ship without. As complexity rises, test intensity increases even when unit volumes wobble. Cycles delay orders, but roadmaps don’t get canceled. Customer concentration looks risky until you realize switching test platforms is operational suicide. Margins reflect IP depth and mission-critical status, not commoditized hardware. Investors trade capex sentiment too aggressively. AI and advanced packaging expand testing requirements per device. Teradyne gets paid for complexity. Bottlenecks don’t negotiate.

Pitch Summary:
The fund maintained an overweight position in technology hardware, storage & peripherals company Western Digital. Early in 2025, the company announced a strategic spin-off separating its flash division as SanDisk, while Western Digital focused primarily on the hard disk drive (HDD) market, allowing the company to be valued as a standalone HDD leader. The continued surge in AI infrastructure demand massively boosted the demand for high-capacity HDDs, and Western Digital benefited from an increase in purchase orders from major hyperscalers extending into 2026 and even 2027.

BSD Analysis:
Western Digital is memory and storage cyclicality concentrated into one volatile equity. Pricing swings dominate sentiment more than long-term demand. Data growth never reverses, but timing always punishes impatience. Industry consolidation improves supply discipline, slowly and painfully. Investors anchor to past downturns and underestimate recovery torque. AI and cloud workloads increase storage intensity, not reduce it. Capital structure amplifies both upside and downside. This is not secular decay — it’s cycle math. Getting the timing right matters more than the story.

Pitch Summary:
The fund continued to hold an out-of-benchmark position in Bloom Energy, which manufactures and markets solid-oxide fuel cells that produce electricity and can provide an alternative source of energy compared with traditional supply. Our thesis on Bloom has been that it has the technology to provide a solution to the electricity shortage that overhangs new AI-data-center builds in the U.S. and around the world. Bloom's fuel cells plug into a natural gas line that can fit on a data center's campus without taking up much real estate, and the company has informed customers that it can ramp up power delivery quicker than other energy providers. Bloom's stock price did pull back at times during the quarter, especially as a group of higher-beta stocks faced heightened volatility behind the fear of an overspend on AI buildouts. We continue to hold high conviction in Bloom Energy, especially with the clear shortage in reliable power solutions to power AI data centers going forward. Jensen Huang, NVIDIA's CEO, has said multiple times that power is the largest constraint on AI; as a result, there has been a clear demand for power solutions that can be scaled up quickly and efficiently.

BSD Analysis:
Bloom Energy sells distributed power solutions that appeal most when grids become unreliable. The technology is differentiated, but economics remain under pressure. Customer adoption depends as much on policy and incentives as on performance. Investors oscillate between energy transition hype and cash-flow reality. Execution and cost reduction are the gating factors, not demand narratives. Balance-sheet risk remains a central concern. If scale improves, operating leverage is meaningful. This is clean-energy optionality, not a proven compounder. The tech works; the math is still under debate.

Pitch Summary:
The portfolio's holding in semiconductor equipment manufacturer Lam Research contributed significantly to positive performance, as the stock performed exceptionally well during the quarter and the fund maintained a significant relative overweight. Lam continued to be an AI beneficiary from a company perspective, as AI workloads require more advanced chips, which drove demand for Lam's deposition and etch solutions. The market has shown potential for a memory "supercycle," which has led to significant investments in high-bandwidth memory and AI chips and is fueling demand for Lam's wafer fabrication equipment.

BSD Analysis:
Lam Research sells the tools that enable semiconductor complexity to keep increasing. As nodes shrink, deposition and etch steps multiply, raising Lam’s relevance per wafer. Capex cycles delay orders but don’t remove the need for process control. Customer switching costs are technical and operational, not contractual. Margins reflect IP depth rather than volume scale. Investors trade Lam like a cyclical hardware vendor and miss the bottleneck economics. AI and advanced packaging increase tool intensity further. Lam gets paid when physics gets harder. Complexity is the business model.

Pitch Summary:
The fund maintained an underweight position in NVIDIA relative to the MSCI World Information Technology Index. The chip manufacturing company still maintained a large allocation in the benchmark, at an average weight of over 8.4% during the quarter. The fund's underweight position contributed to performance relative to the benchmark. NVIDIA continued to deliver strong results, including an earnings beat during the quarter and an upbeat outlook. However, the market reacted cautiously following the earnings report, as investors digested margin compression and whether the future upward guidance had already been priced into the strong run the stock has had since 2023.

BSD Analysis:
NVIDIA is the clear choke point in AI compute, with demand driven by necessity rather than enthusiasm. Its hardware sits at the center of every serious AI deployment, creating pricing power few tech companies ever achieve. Supply constraints reinforce margins instead of capping growth. Investors debate valuation while customers design roadmaps around NVIDIA availability. Software, ecosystems, and developer lock-in deepen the moat beyond silicon. Competition exists, but alternatives lag in performance and maturity. Capital intensity is high, but returns justify it. This is infrastructure dominance masquerading as a growth stock. When compute matters, NVIDIA sets the terms.

Pitch Summary:
Community Banks We noted in our last letter that the fund has been building up a basket of what it sees as attractively priced community banks. At year end, 20% of the fund was in bank stocks. This included First IC mentioned above, which was just over 6% of the fund, as well as a few ECIP banks we re-entered into in Q4 as prices fell, Skyline Bankshares (otc: SLBK) which we profiled in our Q1 2025 letter, and the basket of smaller banks we have been building. The basket is mainly modestly growing community banks trading at less than six times earnings, which we believe should trade at higher valuations, and would be attractive acquisition candidates. While the ECIP banks have underperformed in the recent year or so, we think they will screen better once they can repurchase the outstanding preferred stock at a deep discount. Some will be trading at half of book value and around six times earnings. If they do not make acquisitions or improve their valuations via increased dividends or share repurchases, they will likely become targets for acquisition.

BSD Analysis:
Skyline is a small regional bank whose value is defined by local deposit relationships and balance-sheet conservatism. Growth is modest, but funding stability matters more than loan velocity in this environment. Credit quality and underwriting discipline are the real differentiators, not market share. Investors tend to ignore banks of this size until stress exposes who funded responsibly. Net interest margins benefit from rate normalization, even as growth stays contained. The franchise is simple, not engineered. This is banking as utility, not ambition. Returns come from patience and capital preservation.

Pitch Summary:
ENDI Corp (otc: ENDI) – we profiled ENDI in our 2024 first quarter letter when the share price was around $6.50 per share. The share price declined during the fourth quarter from $17.55 per share to $16.75 per share. ENDI owns CrossingBridge Advisors which manages fixed income mutual funds and a few managed accounts. Assets under management (AUM) for CrossingBridge grew over 30% in 2024, from $2.6 billion at the beginning of 2024, adjusted for the acquisition of the RiverPark Short Term High Yield Fund, to $3.4 billion at the end of 2024. According to their website, as of the end of December 2025, AUM was in excess of $4.1 billion, an increase of over 19% in 2025, despite a modest decrease in Q4. While not a central component of our thesis, with short term rates falling, we think investors may move into the short-term bond category to gain higher yield than money markets. ENDI’s reported earnings and operating margins do not reflect what is happening at the company. The first issue is the accounting treatment for the change in warrant liability. The company issued warrants as part of the CrossingBridge acquisition. Under accounting rules, the change in value is run through the income statement, such that when the company’s price increases they are hit with a charge, and vice versa. We think it is one of the dumber accounting rules since it makes earnings improve when their stock price decreases and decline when their stock price increases. Thankfully, right before yearend, ENDI reached an agreement for an early cashless exercise. The second issue is amortization of purchased management contracts. ENDI purchased management contracts on some of the funds it advises for, which created intangible amortization. These are non-cash charges and only reflect reality if the value of the management contract was declining at the amortization rate, which is not the case. The value, in our opinion, is actually increasing. Regardless, it hurts operating income and reported earnings. The Company helps investors understand this by reporting adjusted operating margins and adjusted EBITDA. Adjusted operating margins are in excess of 50%, which is excellent. A third issue, is the presence of non-controlling interest which is how accounting rules treat ENDI’s decision to sell 25% of CrossingBridge in 2025 for $25.9 million. The sale involved cash coming to the company in exchange for what is essentially a revenue royalty to the minority investors (CBE LLC). The fund, and other entities affiliated with the fund manager, including Solitron, participated in the transaction. We think it is a win-win deal. It shows the value of CrossingBridge and provides additional capital to good capital allocators to grow assets under management. We discussed that transaction in our second quarter letter. The end result is that we have to make a number of accounting adjustments to arrive at what we think is a clearer picture of true economic reality for ENDI. After the warrant exercise, ENDI has approximately 6.65 million shares outstanding, resulting in a market cap of ~$105 million. Cash and investments were $55 million as of September 2025, and the only debt was a $10 million note. Adjusted EBITDA was $3.1 million in the September quarter, or $12.5 million annualized. We expect them to introduce some additional products in the next year which should help AUM growth to continue. Our fair value estimate keeps rising as the company continues to execute, which is what you ideally want in all your equity investments. We look forward to what 2026 will bring.

BSD Analysis:
ENDI is a deeply speculative microcap where outcomes are driven more by balance-sheet events and execution credibility than operating momentum. The company’s relevance hinges on its ability to stabilize operations and access capital on survivable terms. Investors should assume dilution, restructuring risk, or asset sales are part of the path. Any upside is asymmetric but entirely conditional on management delivery. Liquidity constraints matter more than market opportunity at this stage. The stock trades on optionality, not fundamentals. This is not a compounding story. It’s a high-risk turnaround lottery ticket. Size accordingly or not at all.

Pitch Summary:
Solitron Devices (otc: SODI) - the bid price for shares increased from $16.40 per share to $18.69 per share during the fourth quarter. As a reminder, the fund manager is CEO and a board member of Solitron. The fund owns 11.2% of Solitron’s outstanding shares and the fund manager and his family own 3.0%. Solitron’s earnings have been disappointing the last year and a half due to lower revenues owing to the timing of receipt of orders. Solitron started seeing a material uptick in orders (bookings) beginning in the November 2024 quarter. That quarter included a large order for HIMARS (High Mobility Artillery Rocket System) components from L3Harris – Solitron’s second largest defense customer. In the fiscal fourth quarter ending February 28, 2025, bookings were $8.9 million, and included over $5 million from Solitron’s largest defense customer, RTX (formerly Raytheon) for AMRAAM (Advanced Medium-Range Air-to-Air Missile) components. The May and August quarters bookings exceeded sales despite no orders related to HIMARS or AMRAAM. Solitron’s November 2025 bookings were its highest ever, at $13.9 million, which included the next AMRAAM order. Sales in the November 2025 quarter reflect the higher backlog of the previous quarters. With a backlog of over $27 million, Solitron is well positioned to begin reporting improved revenue and earnings. Due to being an insider we only restate what has been publicly released in our SEC filings or press releases. We also do not provide any valuation estimates for Solitron.

BSD Analysis:
Solitron is a niche semiconductor supplier focused on defense and aerospace applications where qualification matters more than scale. Its products are small-ticket but mission-critical, creating switching costs that look invisible until something fails. Revenue can be lumpy due to contract timing, which scares off growth investors. Margins reflect specialization, not volume. The balance sheet is unusually clean for a microcap. Investors overlook Solitron because it lives outside hype cycles. Defense demand provides durability even when commercial semis slump. This is obscure silicon with real barriers, hiding in plain sight.