Investment Pitches

Pitch Summary:
We recently sold just over half of our outsized position in Griffon Corp. for portfolio risk management purposes. In conjunction with stepping off the Board, the company bought 1.5 million shares from Voss, which we believe is a win/win for our investors and GFF shareholders. During our holding period and time engaging with the company, one non-core segment was sold at a high multiple, a thorough strategic review for the rest of the business was conducted, corporate governance improved at the margin, management bonus metrics were changed to incentivize ROI, and the company bought back over 14% of the shares outstanding while also paying $4 of special dividends. The total shareholder return has exceeded 200% since we first wrote a public letter in November 2021 while the Russell 2000 has had a negative return over that time. The market is waking up to the unmatched quality of GFF's garage door segment as it has become one of the highest EBITDA margin building products companies in the public market. We believe there remains substantial upside in the stock as any of the following play out: 1) the HBP segment garners an EBITDA multiple that is simply in line with much lower margin building product peers, in the 11.5-12.0x range 2) the CPP initiative to move to a more flexible contract manufacturing base bears fruit in 2025 and beyond, and 3) ongoing aggressive returns of capital to shareholders. As stated above, we remain as optimistic as ever on repair and remodeling spending, which includes garage doors.

BSD Analysis:
Voss Capital maintains a bullish stance on Griffon Corp despite reducing their position size for risk management purposes. The fund's activist engagement has driven significant value creation, including strategic divestitures, improved governance, and substantial capital returns totaling over $4 in special dividends plus 14% share buybacks. The 200%+ total return since November 2021 demonstrates successful execution of their thesis. The manager highlights GFF's garage door segment achieving best-in-class EBITDA margins within building products, suggesting quality recognition is emerging. Key catalysts include potential multiple expansion to 11.5-12x EBITDA for the HBP segment, operational improvements in the CPP division through flexible manufacturing, and continued aggressive capital allocation. The bullish view is supported by optimism around repair and remodeling spending trends, which should benefit garage door demand.

Pitch Summary:
Actual business economics is misrepresented; the company will significantly revise its long-term guidance; current projections are far too optimistic; Update 2/29 - The short seller mentioned a) downward revision and b) more questions based on the company's year-end results.

BSD Analysis:
The hardware-to-subscription pivot is the right idea, but unit economics still hinge on consumer hardware cycles and retail promotions. Competition is brutal—Amazon (Ring), Google (Nest), and low-cost Asian brands undercut at the shelf. Gross margin pressure is constant, and the model requires converting devices into paid cloud plans at high attach rates. While Arlo has brand recognition, mass-market buyers remain price sensitive. The story works only if subscription ARPU and retention steadily improve.

Pitch Summary:
We continue to own Colliers International Group (CIGI). We recognize commercial real estate as an asset class is in a precarious state. Obviously, there is a big difference between top-tier and lower-tier assets, so this discussion is a blanket generalization. The headwinds are as follows. Office vacancies remain elevated as leases expire. Some element of work from home appears here to stay and employers continue to shrink their office footprint. Expenses associated with property management are climbing with inflation, yet rents are decreasing due to less demand, decimating the unit economics. Exacerbating this squeeze is the amount of operating and financial leverage on these properties. Most importantly, rising interest rates are hitting this sector hard. Refinancings will take centre stage this year and lower appraisal values will require owners to put up more capital to maintain the same loan-to-value ratio and, on top of that, the new interest expense will likely be a lot higher going forward. The plethora of headwinds for commercial real estate are known knowns and many property owners will inevitably find themselves underwater when it comes time to refinance. The lucky ones will take some lumps and bruises but make it out the other side. Others will declare bankruptcy and let the lenders take possession of whatever assets were collateralizing the debt. But Colliers does not have this kind of direct exposure and the business is not as dependent on commercial real estate asset values as meets the eye. In fact, 59% of revenues and 73% of Adjusted EBITDA are considered recurring. Colliers financial performance appears to have troughed last year, and the company recently provided guidance for next year implying a return to strong growth.

BSD Analysis:
The manager maintains a bullish stance on Colliers International Group despite acknowledging significant headwinds facing the commercial real estate sector. The investment thesis centers on the company's differentiated business model that provides insulation from direct real estate asset exposure. With 59% of revenues and 73% of Adjusted EBITDA classified as recurring, Colliers operates more as a services business than a traditional real estate play. The manager believes the company's financial performance has bottomed out, supported by recent management guidance indicating a return to strong growth. This contrarian position capitalizes on sector-wide pessimism while betting on Colliers' resilient business model. The pitch demonstrates confidence in the company's ability to navigate through the commercial real estate downturn and emerge stronger as market conditions normalize.

Pitch Summary:
Poorly capitalized; business growth challenged (retail per unit economics are worsening); ridiculously overvalued (42x EV/EBITDA); vehicle sales and revenue must grow at an unrealistic level to justify current price; Update 2/27 - The short seller sent a letter to CVNA's auditors at Grant Thornton.

BSD Analysis:
Carvana pulled off a survival act in 2023–2024, pushing out maturities and stabilizing liquidity, but the equity story is still highly reflexive. The unit economics don’t work in a normalized used-car market: volumes are tied to credit availability, securitization spreads are softening, and GPU gains were driven by temporary tailwinds. Debt remains a major overhang. Any deterioration in used-car pricing or credit performance could trigger another restructuring. Competition from omnichannel dealers limits long-term share.

Pitch Summary:
Multiple lawsuits and malpractices leading a patient to die; lied about medical credentials; advertising practices in violation of FTC; misleading technological claims; photoshopped patient images;

BSD Analysis:
AirSculpt markets itself as a minimally invasive body-contouring brand. The bear angle: it’s a small-cap elective procedure roll-up in a cyclical, cash-pay niche. Growth depends on clinic openings and heavy marketing spend, while patient demand is highly discretionary. Clinical differentiation vs. standard lipo is debatable, keeping acquisition costs high. Utilization dips hit margins quickly. Expansion requires more capex and marketing, limiting FCF.

Pitch Summary:
FEMSA had a very good year in 2023. Its core convenience store business, Oxxo (the dominant convenience store chain in Mexico), managed within the company's "Proximity Americas" segment, continues its powerhouse performance with double-digit comparable sales and profit growth. Management also delivered on its "FEMSA Forward" restructuring initiatives by divesting its stake in Heineken shares and selling its US distribution business for a great price. Following the divestitures, we estimate FEMSA has over $11 billion in excess capital, equal to roughly 25% of its current market cap. We'd expect FEMSA to be deliberate and conservative in returning this to shareholders (given local political sensitivities and other considerations), but we think the remains a great deal of value in the shares. The stock returned about +29%, including dividends, from our cost basis last year and remains a top holding.

BSD Analysis:
Springview maintains a bullish stance on FEMSA, which was their third-most profitable investment in 2023 with a 29% return including dividends. The investment thesis centers on the dominant market position of Oxxo, Mexico's leading convenience store chain, which continues delivering impressive double-digit comparable sales and profit growth within the Proximity Americas segment. Management's successful execution of the "FEMSA Forward" restructuring program, including strategic divestitures of Heineken shares and the US distribution business at attractive prices, demonstrates effective capital allocation. The most compelling aspect is the massive capital return opportunity, with an estimated $11 billion in excess capital representing approximately 25% of the current market capitalization. While acknowledging that management will likely be deliberate and conservative in returning capital due to local political sensitivities, Springview sees significant embedded value from this capital overhang. The combination of a dominant retail franchise generating strong organic growth, successful portfolio optimization, and substantial excess capital for shareholder returns creates multiple value drivers. FEMSA remains a top holding, reflecting continued confidence in both the operational performance and the capital return potential.

Pitch Summary:
We made two large new investments early in 2023: Fairfax Financial and FEMSA. Both were strong contributors to the fund's performance last year. Fairfax was our most profitable investment while FEMSA was our third-most profitable. We wrote about Fairfax in our 4Q22 quarterly letter, and we are pleased to report that Fairfax had a very solid year: insurance underwriting profit was a record $1.5 billion (up +38% Y/Y, mostly all organic) while interest and dividend income more than doubled to $1.6 billion. Fairfax's investment income benefited greatly from a growing float and, more importantly, management's astute allocation of the float in short-duration fixed income instruments that were reinvested at higher rates over the course of the year. More recently, Fairfax has attracted some controversy after a short seller published a negative report on the company's accounting of several balance sheet items. We believe the short seller's claims are incorrect and even misleading. Ironically, we have always thought of Fairfax as one of the safest and least controversial holdings in our portfolio. The company owns several very strong insurance and reinsurance franchises, invests the insurance float conservatively, and is managed by a CEO with a lot of skin in the game who has always treated shareholders fairly. While the various parts of the company can be complex to analyze, management's reporting is transparent and honest, even when things are not going well. The stock was up +59% in USD last year and remains one of the cheapest stocks in our portfolio. We think the company can earn $140 per share annually over the next three to four years, which puts the stock at around 7x earnings.

BSD Analysis:
Springview maintains a strong bullish stance on Fairfax Financial, which was their most profitable investment in 2023 with a 59% return. The investment thesis is supported by exceptional operational performance, with record underwriting profits of $1.5 billion (up 38% year-over-year) and investment income more than doubling to $1.6 billion. Management's astute capital allocation strategy of investing float in short-duration fixed income instruments and reinvesting at higher rates throughout the year demonstrates both skill and timing. Despite recent controversy from a short seller's report questioning accounting practices, Springview dismisses these claims as incorrect and misleading, emphasizing their view of Fairfax as one of their safest holdings. The manager highlights the company's strong insurance franchises, conservative investment approach, and CEO with significant skin in the game who has consistently treated shareholders fairly. The valuation remains compelling despite the strong performance, with Springview projecting $140 per share in annual earnings over the next 3-4 years, implying the stock trades at approximately 7x forward earnings. This combination of strong fundamentals, capable management, and attractive valuation supports their continued bullish conviction.

Pitch Summary:
We also exited our investment in Union Pacific, our sixth-largest position entering 2023. Union Pacific operates in a rational duopoly with BNSF in the western United States and owns an irreplaceable rail network. Railroads have gotten more efficient over the past several years, expanding margins and returns. When we invested in UNP in early 2022, our thesis was that earnings were poised to inflect as railroads were taking above-inflation price increases, helped by tight shipping capacity and a strong demand backdrop. Ultimately, poor execution and a softer-than-expected economy derailed the thesis. UNP missed volume expectations for much of 2023, and management could not control rising labor and other operating costs. We are hopeful that a new CEO, installed last August, can materially improve financial performance, but we are presently finding better uses for our capital. We sold with a slight gain over our 1.5-year holding period. As with Markel, we believe an attractive entry point helped us avoid a permanent capital loss despite things not working out in our favor.

BSD Analysis:
Springview adopted a neutral stance on Union Pacific before exiting the position, acknowledging both the company's structural advantages and execution challenges that derailed their investment thesis. The original bull case was built on UNP's duopoly position with BNSF in western rail transport, irreplaceable infrastructure assets, and industry-wide efficiency improvements that had been expanding margins. The thesis anticipated an earnings inflection driven by above-inflation pricing power amid tight shipping capacity and strong demand conditions. However, execution failures and macroeconomic headwinds undermined these expectations throughout 2023, with UNP consistently missing volume targets while failing to control rising labor and operating costs. Management's inability to capitalize on favorable industry dynamics led to disappointing operational performance despite the structural competitive position. While expressing cautious optimism about the new CEO installed in August, Springview concluded that capital could be better deployed elsewhere. The slight positive return over 1.5 years again demonstrates the importance of attractive entry valuations in limiting downside risk when investment theses don't materialize as expected.

Pitch Summary:
Markel is a different story. When we invested in Markel two years ago, we thought the stock was too cheap for a world-class specialty insurance franchise that was well-positioned to ride the ongoing hard insurance cycle. We also thought the company's private equity portfolio was a valuable source of potential excess capital that could be used to repurchase shares at an attractive price. We were wrong on both counts. Beginning around mid-2022, Markel started reporting erratic, below-peer underwriting results, even having to strengthen prior-year reserves on a couple of occasions. Because investment results were strong and we had confidence in the CEO, we chose to be patient and give management time to turn things around. Regrettably, as 2023 unfolded we became more concerned as underwriting profits continued to underwhelm. We were also increasingly frustrated by what we perceived as a lack of urgency on the part of management. With insurance results pressuring the capital base (and surely consuming management's attention), the excess capital angle was all but moot. By late 2023, we had sold out of most of our position and as of this writing have completely exited the investment. In hindsight, we were wrong to stay in this investment for so long. Perhaps as a testament to the margin of safety embedded in our original purchase price, this investment "mistake" made money (if only all our mistakes made money!), with +4.6% IRR over our two-year holding period. This feels like a small win all things considered.

BSD Analysis:
Springview has turned bearish on Markel and completely exited the position after a disappointing two-year investment period marked by deteriorating fundamentals. The original bull thesis centered on Markel being undervalued as a world-class specialty insurer positioned to benefit from hard market conditions, with additional value from its private equity portfolio for potential share repurchases. However, the investment thesis unraveled as Markel began reporting erratic, below-peer underwriting results starting in mid-2022, including multiple reserve strengthening episodes that indicated prior underwriting mistakes. Management's perceived lack of urgency in addressing these operational issues further eroded confidence, while poor insurance results consumed capital and management attention, negating the excess capital return opportunity. Despite the operational disappointments, Springview managed to generate a positive 4.6% IRR over the holding period, attributing this to the margin of safety from their attractive entry valuation. The manager acknowledges staying too long in a deteriorating situation, representing a lesson in cutting losses more decisively when fundamental thesis breaks down.

Pitch Summary:
Our three large property/casualty (P/C) insurers, W.R. Berkley, White Mountains, and Markel – our second, third, and fourth largest positions to start the year – were only up 0.2%, 6.5%, and 7.8%, respectively. These stocks performed quite well in 2022 in a risk-off market but mostly treaded water last year in a more risk-seeking one. We attribute the disappointing results from our P/C investments to one macro consideration and one company-specific factor in the unique case of Markel. On the macro front, investors last year generally rotated out of companies that benefit from rising short-term interest rates and into companies that benefit from falling short-term rates. Insurers like Berkley and Markel with large fixed-income portfolios typically generate half or more of their total earnings from interest earned on their large float; this has been an important tailwind over the last couple of years. As the market began to discount the end of the Fed tightening cycle, the consensus emerged that P/C earnings were peaking. While there is some obvious truth to this, we counter that excellent underwriters like Berkley have earned solid returns on equity in all sorts of interest rate regimes and are highly adaptable to changing circumstances. While Berkley's shares belly flopped last year, we think the company got more valuable as operating earnings per share grew +12% and tangible book value increased +14%. Consensus has earnings per share growing another 20% in 2024, and the stock trades at under 14x forward earnings. And although last year was disappointing, the stock has been a big winner for us overall, having appreciated about +60% including dividends since we bought our first shares two years ago.

BSD Analysis:
Springview maintains a bullish stance on W.R. Berkley despite the stock's poor 2023 performance, viewing it as a temporary market rotation issue rather than fundamental deterioration. The manager emphasizes Berkley's quality as an excellent underwriter that has historically generated solid returns across various interest rate environments. Key fundamental metrics support this view, with operating earnings per share growing 12% and tangible book value increasing 14% in 2023, demonstrating underlying business strength despite stock price weakness. The valuation appears attractive at under 14x forward earnings with consensus expecting 20% EPS growth in 2024. Springview's long-term conviction is reinforced by the stock's cumulative 60% appreciation since their initial purchase two years ago. The manager views the current weakness as an opportunity, attributing underperformance to macro headwinds from anticipated Fed policy changes rather than company-specific issues. This represents a classic value investor's approach of focusing on business fundamentals over short-term market sentiment.

Pitch Summary:
The largest shareholder and corporate parent, Siemens, filed a lawsuit for design failures, false representation and fraud; Siemens cut its sizable purchases; starting selling down its 33% ownership; potential litigation related to fire and flood that caused tens of millions of dollars in damage; Update 2/22 - FLNC responded via its website, stating that the short seller report is misleading.

BSD Analysis:
Fluence plays in grid-scale battery storage, a market with explosive TAM but brutal execution risk. The company has struggled with supply chain hiccups, warranty provisions, and cost overruns. Margins are razor-thin, and commoditization risk is rising as utilities press down pricing. The software platform is promising but unproven as a moat. Working capital swings and cash burn keep the balance sheet in focus. Backlog conversion and warranty reserve trends are critical.

Pitch Summary:
Before going further, please refer to our Q3 2023 letter, which outlines much of our thinking that underlies the decision to sell Elastic. This letter's discussion around "narrow and wide aperture ideas" highlights our concern regarding Elastic. Like many other software companies, Elastic's weakness lies in its inability to change despite operating in a rapidly changing industry. In other words, for an investment in Elastic to be successful, the future must look like today. Although we understood this risk when we initially invested, I relied on pattern recognition that helped me rationalize the belief that Elastic would likely retain its current market position. For example, Elastic enjoys the same long-lived network effects as other leading open-source projects, and there are multiple historical precedents of enduring database software. However, now that I better understand the fragility associated with "narrow" path investments, the risk-reward for Elastic is no longer as attractive as I initially observed. For example, the recent push into artificial intelligence (AI) is a stark reminder of how quickly the landscape for search technologies can change. Although Elastic presently stands to benefit from the shift to AI, it easily could have gone the other way. Will the next wave of search technology be more efficient than Elastic? It's hard to know, and I don't want to have to guess correctly for this investment to pan out. As with our investment in Nagarro, some companies naturally adapt to whatever technologies win in the marketplace, while others, like Elastic, cannot. Elastic is less adaptable to whichever version of the future unfolds and, therefore, has a narrower pathway for the investment to work in our favor. Since our appetite for "narrow aperture" investments significantly declined, we removed Elastic from the portfolio. The hardest thing to mentally process in this situation was moving forward with selling even though our original thesis remained intact and potentially looked stronger than when we first invested. However, given how our philosophy evolved, I knew I had to make this change regardless. I decided to opportunistically sell around one-third of our Elastic position early in the fourth quarter and sold the remainder when Elastic's shares appreciated after its quarterly results in early December. Usually, when I realize I'm wrong, I pay a hefty price to fix the problem. However, in the case of Elastic, I was fortunate to encounter a positive outcome from an investment that no longer served us. Although I remain optimistic about Elastic's prospects, it is not the right fit for us anymore, and we are happy to deploy your capital elsewhere.

BSD Analysis:
Bonsai Partners sold their entire Elastic position despite the original investment thesis remaining intact, citing a fundamental shift in their investment philosophy away from "narrow aperture" investments. The manager identified Elastic's core weakness as its inability to adapt to rapid technological changes in the search industry, requiring the future to essentially mirror today for the investment to succeed. While Elastic benefits from network effects typical of leading open-source projects and has historical precedents of durable database software, the manager became concerned about the company's limited adaptability compared to more flexible competitors like Nagarro. The recent AI revolution highlighted this vulnerability, as technological shifts could easily disrupt Elastic's market position. The manager executed a disciplined exit strategy, selling one-third of the position early in Q4 and the remainder after strong quarterly results in December. This represents a rare instance where the manager profited from exiting an investment that no longer aligned with their evolved risk framework, demonstrating sophisticated portfolio management discipline.

Pitch Summary:
The company's recently launched product is a total failure: the number of users topped last summer; safety profiles misrepresented; more and more patients not using the product; usage discontinuations due to insurance requirements; competing treatments are much better;

BSD Analysis:
ACADIA depends on Nuplazid and Daybue. Bears stress concentration risk, slow Nuplazid uptake, payer pushback, and safety debates. Daybue offers new revenue but requires costly sales buildout for a small market. Pipeline is early-stage. Valuation assumes strong uptake across narrow indications, leaving little room for error. Key: script growth, reimbursement, and pipeline diversification.

Pitch Summary:
Minimal R&D; no capital to pivot into AI regardless of the management's claims; upcoming equity dilution due to cash needs; stock pump using AI - most employees are incompetent in software development; mediocre cloud services;

BSD Analysis:
Innodata pitches itself as an AI data-enablement company, but much of its revenue still comes from low-margin outsourcing and content services. The gap between the AI narrative and actual delivery is wide. Margins are thin, revenue concentration is high, and credibility risk is elevated. Stock moves have tracked AI hype cycles more than fundamentals. The story only works if major hyperscaler contracts land at scale.

Pitch Summary:
The company's audit engagement partner left the company prior to the 10k filing; the company's $210mil loan to Brian Kahn is double pledged; the auditor is seeking counsel on regulatory matters due to concerns related to RILY;

BSD Analysis:
Second round of short coverage emphasized valuation opacity and funding fragility. B. Riley effectively marks its own paper, and relies on confidence to keep funding open. Baby bonds and debt fund assets that could mark down quickly in stress. Management’s related-party dealings are a red flag. Setup is asymmetric: buoyant markets make numbers look fine, stress could collapse capital base.

Pitch Summary:
The co-founder, who was a magician and faked his entire academic history, was charged by the DOJ with murder and imprisoned; the CEO ignored many red flags related to the co-founder; merged with a 2-month-old 'AI company' to pump the stock; the company is a shameless scam;

BSD Analysis:
Renovaro has a history of pivots, reverse mergers, and equity raises. Pipeline is early-stage with limited clinical data. Investor communications lean promotional, raising governance questions. Bears argue it’s structurally a capital markets story, not a drug development story. Without Phase 2/3 validation, the stock is vulnerable.

Pitch Summary:
The company's leading weight-loss drug candidate has no chance of competing against other drugs; several other drugs proved superior weight loss; phase-3 trial is unlikely to be successful;

BSD Analysis:
Altimmune’s valuation is tied almost entirely to its GLP-1 candidate pemvidutide. Bears see it as undifferentiated in a market dominated by Novo and Lilly. Without clear clinical or commercial edge, financing risk looms. Limited pipeline depth leaves binary risk tied to trial outcomes. GLP-1 enthusiasm inflates valuation, but execution hurdles and dilution are significant.

Pitch Summary:
This quarter’s portfolio update covers our position in Interactive Brokers Group, Inc. class A common stock (NASDAQ: IBKR), a compounder investment. We have held IBKR since inception with a few trims and additions along the way. Through the end of 2023, our position in IBKR has delivered a 13.7% internal rate of return. Interactive Brokers is a highly automated global securities firm that specializes in routing orders and processing trades in securities, futures, foreign exchange instruments, bonds and mutual funds on more than 150 electronic exchanges and market centers around the world. Interactive Brokers custodies and services accounts for hedge and mutual funds, registered investment advisors, proprietary trading groups, introducing brokers and individual investors. More than two-thirds of IB’s customers are based in Europe and Asia and an even greater share of its new customers come from those regions. Conditions in financial markets affect the financial results Interactive Brokers delivers in any given year. Generally speaking, Interactive Brokers generates more net interest income and commission revenue when interest rates and equity market volatility are high and less when those variables are low. The interest rate environment was a tailwind for IB’s results in 2023. Due to the Fed’s historically aggressive tightening campaign from early 2022 through mid-2023, the daily average effective federal funds rate increased from 1.69% in 2022 to 5.03% in 2023. That helped IB’s net interest margin expand from 1.53% in 2022 to 2.36% in 2023. Combined with 8.2% growth in IB’s average interest-earning assets in 2023, that increase in net interest margin helped IB’s net interest income grow a whopping 67.5% to $2.8 billion in 2023 from $1.7 billion the prior year. In contrast, trading conditions were a headwind. Equity market volatility in 2023 was below historical averages, which weighed on commission growth. The impact of changes in financial market conditions on IB’s revenue and earnings in a given year can obscure the degree to which Interactive Brokers is making progress growing its normalized earning power and intrinsic value. A helpful way to cut through that noise is to focus on growth in IB’s total customer equity. IB’s total customer equity ended 2023 at $426.0 billion, up 38.9% from $306.7 billion at the end of 2022. That growth came from the combination of a 22.5% increase in the number of customer accounts and an increase in the average value of customer accounts due to the rebound in global equity markets. Although Interactive Brokers has delivered strong operating results over the past several years, IBKR has only slightly outperformed the S&P 500 since the end of 2019. The increase in the market price of IBKR since the end of 2019 has not even kept up with the increase in the company’s intrinsic value. Two main factors have weighed on market sentiment: uncertainty around normalized earnings due to volatile macro conditions and fear that IBKR will underperform as the Fed cuts rates. The good news is that both of these concerns should fade over the next few years as the economy, financial markets and monetary policy settle into a new, post-pandemic normal. As those clouds dissipate, the light of Interactive Brokers rapidly growing intrinsic value should increasingly shine through to its stock price.

BSD Analysis:
Interactive Brokers starts 2026 on the heels of a record-breaking 2025 where its clients on average outperformed the S&P 500 Index. The company has introduced significant technological catalysts for the current year, including 24/7 account funding with stablecoins and expanded access to the Brazilian B3 exchange to capture emerging market demand. For 2026, the investment case is bolstered by an "economic reacceleration" theme, where IBKR’s low-cost structure is expected to attract high-frequency and institutional hedge fund accounts in a diversifying market. Management is prioritizing 24/7 availability across 170 global markets, positioning the platform as the primary beneficiary of the "retail-plus" shift in global trading volumes. With a fortress balance sheet and industry-leading execution quality, IBKR remains the top-tier play for investors seeking exposure to global capital flow rebalancing.

Pitch Summary:
Most positively impacting Fund performance among these holdings was Natural Gas Services (NGS), our biggest Fund purchase during the year. Natural Gas Services was highlighted in our 2023 First Half Manager's Letter. We bought our position in the Texas-focused oil & gas logistics company that fabricates, rents and maintains gas compression equipment while shares were trading at discounts of up to 45 percent of tangible book value, reportedly due to a large shareholder exiting its position. While rising debt loads, executive turnover and declining natural gas prices were negatively impacting sentiment toward the small company, we believed investors were misreading the fundamentals. We concluded that the company was in experienced hands, and realized that debt was being incurred to support significantly increased levels of profitably contracted compression business, which would soon begin to impact the income statement as the newly fabricated compression equipment was placed into service. Shares increased by approximately 55 percent in the second half of the year as investor sentiment brightened amid substantial improvements in reported financial results. Despite the recent gains, we believe shares remain undervalued, and currently intend to maintain our holdings. At year-end, NGS shares represented 3.65 percent of Fund assets.

BSD Analysis:
The manager maintains a bullish stance on Natural Gas Services despite the 55% appreciation in the second half of 2023. The initial investment thesis was based on a significant valuation discount of up to 45% to tangible book value, created by a large shareholder exit rather than fundamental deterioration. The manager correctly identified that rising debt levels were being used to fund profitable compression equipment expansion rather than indicating financial distress. The company's experienced management team and contracted compression business model provided confidence in the turnaround story. As newly fabricated equipment was placed into service, financial results improved substantially, validating the investment thesis. Despite the strong performance, the manager believes shares remain undervalued given the company's market position in natural gas compression services and the quality of its contracted revenue base.

Pitch Summary:
Most positively impacting Fund performance was the Fund's position in Bank of Cyprus Holdings (BOCH-L), the largest bank on the Island of Cyprus. In 2023, investment gains on the Fund's position bolstered Fund returns by 2.15 percentage points as shares nearly doubled in price. Having spent several years cleaning up its balance sheet and successfully reducing non-performing asset exposures, the company was well positioned entering 2023 with significant levels of short-duration assets. When interest rates soared higher in the Eurozone, the bank's net interest margin nearly tripled from 1.32 percent in the fourth quarter of 2022 to 3.63 percent in the most recent quarter. The soaring banking margins pushed return on equity well into the mid-20 percent range. Even following the strong 2023 gains, Bank of Cyprus still trades at a 25 percent discount to tangible book value, which we still consider undervalued given the bank's earnings profile and strong deposit franchise on the Island. Not surprisingly, we continue to hold our position in Bank of Cyprus, which represented 3.27 percent of Fund assets at year-end.

BSD Analysis:
The manager maintains a strong bullish stance on Bank of Cyprus despite shares nearly doubling in 2023. The bank's successful balance sheet cleanup and reduction of non-performing assets positioned it perfectly for the rising interest rate environment. Net interest margins expanded dramatically from 1.32% to 3.63% as Eurozone rates increased, driving return on equity into the mid-20% range. The bank's asset-liability structure with significant short-duration assets allowed it to quickly benefit from higher rates without corresponding increases in funding costs. Despite the strong performance, the manager believes the bank remains undervalued at a 25% discount to tangible book value. The bank's dominant market position in Cyprus provides a strong deposit franchise and pricing power. The combination of improved asset quality, expanding margins, and attractive valuation metrics supports continued outperformance potential.