Investment Pitches

Pitch Summary:
During the month of December, an investor group bid for the equity of Macy's Inc., an issuer the Fund holds in its high-yield bond portfolio. The two bond issues held by the Fund are subject to a 101 "change of control" covenant so that if the private equity investors are successful, the total return in the debt is likely to be in the low double-digit percent range over the next 12 months. If the investors are not successful and the company's equity remains publicly traded, we believe the credit profile has been de-risked with third-party validation of the company's underlying real estate asset value, which is our primary investment thesis for the Fund's positioning.

BSD Analysis:
The manager holds a constructive view on Macy's high-yield bonds, positioning the investment as an asymmetric opportunity with favorable outcomes under multiple scenarios. The core investment thesis centers on the significant underlying real estate asset value that provides fundamental downside protection for the debt holders. A private equity bid for the company creates a near-term catalyst, with change of control provisions in the bond covenants potentially triggering low double-digit returns if the acquisition succeeds. Even if the takeover fails, the manager views the third-party validation of asset values as de-risking the credit profile and confirming the investment thesis. The dual-outcome structure provides attractive risk-adjusted returns, with the real estate backing serving as a margin of safety. This represents a classic distressed credit opportunity where asset values exceed market pricing. The manager's confidence stems from the tangible asset backing and contractual protections embedded in the bond structure.

Pitch Summary:
This year, to date, there has been news on our DISH Networks holding (now known as Echostar after its merger and with a new stock symbol, SATS). The company has retained advisors, and some movement of assets between subsidiaries has positioned the company for financing using spectrum licenses as collateral. SATS common equity was up 32% in one day on the news. The convertible debt held in the Fund was also up 5% on the day while other debt in the SATS capital structure not held by the Fund traded materially lower because of the effect of the asset movements. We continue to view DISH/SATS convertible debt as a conviction position with high current yield, high total return potential and favourable risk/reward due to underlying asset value in its 5G wireless licenses and exponential growth in wireless data consumption.

BSD Analysis:
The manager maintains a bullish conviction on Echostar (formerly DISH Networks) convertible debt, viewing it as an asymmetric opportunity with multiple value drivers. The investment thesis centers on the company's valuable 5G wireless spectrum licenses serving as collateral for financing, which provides downside protection while offering upside participation through the convertible structure. Recent corporate restructuring and advisor retention suggest potential strategic alternatives or asset monetization, evidenced by the 32% single-day equity surge following the announcement. The manager emphasizes the favorable risk-reward profile, highlighting high current yield income generation alongside total return potential. The position benefits from secular tailwinds in wireless data consumption growth, which should enhance the underlying value of the spectrum assets. The convertible structure provides equity-like upside with bond-like downside protection, making it an attractive credit investment. The manager's confidence is reinforced by the instrument's outperformance relative to other debt securities in the capital structure during recent volatility.

Pitch Summary:
Short tweet: The quarterly sales will disappoint based on excess inventory across the industry; lots of value investors will try to get out of the illiquid name; Update 2/9 - Update on earnings: accumulating inventory; declined margins; slower volumes.

BSD Analysis:
Seneca is a private-label and branded canned/frozen vegetable producer. Margins are thin, working capital swings are large, and input volatility drives earnings. Demand is steady but low growth, leaving little pricing power. Inventory accounting adds lumpiness. Loss of a key contract or poor crop yields could pressure results.

Pitch Summary:
The company fully consolidated Harma and PBC Plasma without proper disclosure even though these companies are material to the company's financials; actual leverage is ~x12 vs. reported ~x6; manipulated debt & EBITDA numbers; materially deceptive financials; Update 2/20/24 - The short seller asked follow-up questions after management and board changes. Update 5/14/24 - Follow-up report: How PBC Plasma transferred funds. Update 7/30/24 - In relation to the potential takeover by Brookfield, the new auditor made a $500m adjustment to the accounting.

BSD Analysis:
Grifols is a Spanish plasma-derived medicines company. The BSD short thesis centers on high leverage (~€10B debt), opaque related-party transactions, and aggressive accounting treatments that have drawn regulatory scrutiny. Plasma collection is a capital-intensive business, and any slowdown in donor volumes pressures margins and cash flow. While the firm has valuable assets and global scale, equity risk stems from governance, questionable disclosures, and refinancing pressures. Sophisticated investors should monitor free cash flow after interest, regulatory investigations into financial reporting, and competitive dynamics in plasma pricing.

Pitch Summary:
Ten Pao is positioned as a compelling investment due to its strong value proposition, quality operations, and organic growth potential. The company trades at an attractive valuation of 4-5 times normalized earnings and offers a 6% dividend yield while maintaining double-digit growth. Its focus on R&D and customization differentiates it from typical commodity manufacturers, and it boasts a robust ROE above 20%. Despite short-term inventory challenges and market concerns about Chinese manufacturing, Ten Pao's strategic presence in Vietnam, Hungary, and Mexico mitigates these risks.

BSD Analysis:
Ten Pao's strategic emphasis on R&D and customization allows it to maintain a competitive edge in the power supply industry, which is crucial given the commoditized nature of the sector. The company's ability to sustain a high ROE without leverage underscores its operational efficiency and financial health. Market apprehensions about Chinese manufacturing are countered by Ten Pao's diversified production footprint, which includes facilities in Vietnam, Hungary, and Mexico, enabling it to support clients seeking to diversify their supply chains. Furthermore, the company's valuation at 4-5 times normalized earnings presents a significant discount relative to peers, offering a margin of safety for investors. The dividend yield of 6% provides an attractive income stream, enhancing the total return potential. As global demand for industrial tools and power solutions continues to grow, Ten Pao is well-positioned to capitalize on these trends, supported by its expanding client base and geographic reach.

Pitch Summary:
Two new additions included a starter position in wood products maker Boise Cascade (BCC) as well as the debt of Gray Television, a top operator of local television stations. We think Boise Cascade is a good business trading at a compelling valuation with a fortress balance sheet, while we believe markets are too pessimistic on Gray Television's staying power.

BSD Analysis:
Miller Value Partners initiated a new position in Boise Cascade, viewing it as an attractive entry point in the wood products sector. The managers characterize it as a "good business" suggesting solid operational fundamentals and market positioning within the forest products industry. The "compelling valuation" indicates the stock may be trading below intrinsic value, potentially due to cyclical headwinds in housing and construction markets. The reference to a "fortress balance sheet" suggests strong financial positioning with low debt levels and adequate liquidity to weather industry downturns. Wood products companies like Boise Cascade are typically cyclical, benefiting from housing demand and construction activity. The managers appear to be positioning for a recovery in these end markets while the stock trades at depressed levels. This represents a classic value investment approach of buying quality businesses during temporary weakness.

Pitch Summary:
Jackson Financial Inc (JXN) reported 3Q23 Adjusted Operating EPS of $3.80, -10.4% Y/Y, ahead of consensus of $3.53. Registered index-linked annuity (RILA) sales rose 43.5% Y/Y to $807MM in the quarter, while total annuity account value rose 10.1% Y/Y to $218B, primarily driven by higher equity markets over the TTM period, with capital ratios rising. During the quarter, management returned $123MM to shareholders (3.0% of market cap) via $71MM of share repurchases and $52MM in dividends, and remains on track to achieve its 2023 capital return target of $500MM at the midpoint, or 12.3% of the company's market cap.

BSD Analysis:
Miller Value Partners highlights Jackson Financial's strong execution in the annuity market, with the company exceeding earnings expectations at $3.80 versus $3.53 consensus. The standout performance comes from registered index-linked annuity (RILA) sales, which surged 43.5% year-over-year to $807MM, demonstrating strong product demand and market positioning. Total annuity account values grew 10.1% to $218B, benefiting from favorable equity market performance and indicating fee income stability. The company's capital position appears robust with rising capital ratios, providing financial flexibility. Management's aggressive capital return strategy is particularly attractive, with $123MM returned in the quarter representing 3.0% of market cap. The full-year capital return target of $500MM at midpoint equates to 12.3% of market cap, suggesting confidence in cash generation and commitment to shareholder returns. This combination of growth in key product lines and substantial capital returns supports the positive outlook.

Pitch Summary:
The Buckle (BKE) was another top performer during the quarter. The retailer reported 3Q23 net sales of $303.5MM, -8.7% Y/Y, slightly below consensus of $304.0MM, and EPS of $1.04, -16.1% Y/Y, ahead of consensus of $0.88. The company generated 3Q23 free cash flow (FCF) of $53.7MM, bringing trailing-twelve month (TTM) FCF to $216.6MM, or a FCF yield of 9.0%. Management maintained its quarterly dividend of $0.35/share and also declared a special cash dividend of $2.50/share, implying a twelve-month yield of ~8.2%.

BSD Analysis:
Miller Value Partners views The Buckle favorably despite modest revenue headwinds, emphasizing the retailer's strong cash generation capabilities. While Q3 sales declined 8.7% year-over-year to $303.5MM, the company exceeded earnings expectations with $1.04 EPS versus $0.88 consensus, demonstrating effective cost management. The standout metric is the robust free cash flow generation of $216.6MM on a trailing twelve-month basis, yielding an attractive 9.0%. Management's capital allocation strategy appears shareholder-friendly, maintaining the regular quarterly dividend while declaring a substantial $2.50 special dividend. The combined twelve-month yield of approximately 8.2% provides compelling income in the current environment. The Buckle's ability to generate strong cash flows despite revenue pressures suggests operational resilience and effective inventory management in a challenging retail landscape.

Pitch Summary:
Western Alliance Bancorp (WAL) was the top contributor during the quarter. The regional bank reported 3Q23 and Earnings per Share (EPS) of $1.97, -18.6% year-over-year (Y/Y) (+0.5% sequentially), ahead of consensus of $1.91. Total deposits rose 6.5% sequentially to $54.3B at the end of the quarter, with insured and collateralized deposits representing 82% of total deposits as of quarter-end, while the bank's common equity tier 1 (CET1) ratio expanded 50bps sequentially to 10.6% as of quarter-end. Tangible book value per share (TBV/share) came in at $43.66 (P/TBV of ~1.5x) as of quarter-end, +17.5% Y/Y, as TBV/share has now grown at a 19.2% compound annual growth rate (CAGR) since the end of 2013, with management highlighting that this is more than 6x the growth rate of its peers over the same period. Management is guiding for 4Q23 deposit growth of $250MM, loan growth of $150MM, net interest margin (NIM) of 3.65%, and net charge-offs of 10bps, at the respective midpoints, and also reiterated their expectation for a return to prior balance sheet guidance for loan and deposit growth of $500MM and $2B per quarter, respectively, in 2024.

BSD Analysis:
Miller Value Partners highlights Western Alliance Bancorp as a top performer, demonstrating the bank's resilience amid regional banking sector challenges. The bank exceeded earnings expectations with $1.97 EPS versus $1.91 consensus, while achieving sequential deposit growth of 6.5% to $54.3B. The strong capital position is evidenced by an improved CET1 ratio of 10.6% and 82% insured/collateralized deposits, providing stability during uncertain times. The bank's tangible book value growth of 19.2% CAGR since 2013 significantly outpaces peer performance by 6x, indicating superior management execution. Trading at 1.5x price-to-tangible book value appears reasonable given the growth trajectory. Management's guidance for resumed balance sheet expansion in 2024 suggests confidence in the operating environment. The combination of strong fundamentals, conservative positioning, and growth prospects supports the bullish stance.

Pitch Summary:
Potentially fraudulent billing practices; lawsuits related to forging signatures; billing for COVID tests that were not performed; editing patient reports to maximize profits; offering bribes to whistleblowers; leaders have a long history of fraud; no-name auditor; ongoing multiple government investigations;

BSD Analysis:
DocGo provides mobile medical services and patient transportation. The short case argues that rapid revenue growth has masked structural weaknesses in margins, cash conversion, and contract sustainability. Much of its pandemic-era growth came from COVID testing and vaccination contracts that are now rolling off. Municipal contracts carry political and renewal risk, and pricing pressure is visible. The labor-intensive model leaves limited scalability, with EMT turnover and wage inflation crimping profitability. While bulls highlight tech-enabled dispatch and telehealth integration, bears see a commoditized service business trading at a tech multiple.

Pitch Summary:
Two-thirds of their customer base is uninsured as its consumers are financially stretched; one of the major sales contracts - equal to 12% of the revenues and 15% of the pre-tax earnings was terminated;

BSD Analysis:
National Vision operates value optical chains such as America’s Best and Eyeglass World. The short thesis highlights margin pressure from labor shortages, mix shift, and competitive intensity. Optometrists are in short supply, raising costs and creating staffing bottlenecks. Digital-first competitors and large players like Warby Parker are eating into growth. Medicaid and managed-care exposure adds reimbursement risk, while higher-end consumers are trading up elsewhere. Unit growth is capital-intensive, and SG&A leverage is limited. With comps decelerating and limited pricing power, skeptics see growth and margin potential as capped.

Pitch Summary:
There are multiple aspects to this thesis. Broadly, there is a structural shortage in housing inventory in the US. Most mortgages are not portable and home owners are reluctant to move from a low mortgage rate to a high mortgage rate, meaning that recently they have tended to remain in their current houses and so secondary supply does not come on the market. This means that demand must be met with new build, favouring housebuilders and suppliers of building materials. In addition, household formation (couples choosing to live together and possibly have children) is also picking up because of shifts in demographics. Our holding in Builders FirstSource (a distributor of homebuilding products) forms part of this exposure and was a top contributor over the quarter.

BSD Analysis:
The manager presents a compelling structural bull case for Builders FirstSource rooted in US housing market dynamics. The investment thesis is built on a structural housing inventory shortage exacerbated by mortgage rate dynamics that discourage existing homeowners from selling. With homeowners reluctant to trade low mortgage rates for higher ones, secondary housing supply remains constrained, forcing demand to be met through new construction. This structural imbalance directly benefits building materials distributors like Builders FirstSource. The manager also identifies demographic tailwinds through increasing household formation rates. The position was a top contributor during the quarter, validating the thesis. This represents a well-reasoned structural play on housing supply-demand imbalances with multiple supporting factors including interest rate dynamics and demographic trends.

Pitch Summary:
Our overweight position in Amazon was our top contributor during the period. As the third quarter reporting season commenced, we were looking for expanded profitability in Amazon's retail business as well as a recovery from trough revenue growth within its cloud business, AWS. It was therefore encouraging to see overall profits significantly beating expectations with the margins of North American retail, international retail, and AWS showing significant improvement. Our conviction in the company remains strong with the expectation that AWS growth should accelerate into 2024.

BSD Analysis:
The manager maintains a bullish stance on Amazon, highlighting the company as the top contributor to portfolio performance during Q4 2023. The investment thesis centers on margin expansion across Amazon's key business segments and AWS recovery from trough growth rates. The fund saw encouraging results with profits significantly beating expectations and meaningful margin improvements in North American retail, international retail, and AWS divisions. The manager's conviction remains strong based on expectations for AWS growth acceleration in 2024. This represents a classic turnaround story where the manager anticipated operational improvements that materialized in the quarterly results. The overweight position suggests high conviction in the company's ability to continue expanding profitability across its diversified business model.

Pitch Summary:
Net Lease Office Properties (NLOP): I spent most of 2023 adamant that I was going to avoid the Office Real Estate Investment Trust ("REIT") trade. I still don't feel great about the space over the long-term, but that's of little relevance for this trade. NLOP represents the remainder of W. P. Carey's former office holdings. After Covid, most REITs rushed to divest this out-of-favor sector, and after selling some locations, W. P. Carey spun the rest into this new NLOP entity. Given the spin was small, taxable, and generally undesired, the price of the shares tanked after it was completed. I pulled up their lease portfolio and started running through the holdings, and soon realized that you could probably justify the current valuation if they never leased a new space again and sold vacant locations at fire-sale prices. But the locations aren't as bad as you would expect – their second largest property is a 16-year lease with FedEx. The locations were 97% occupied at the time of the spin, with most tenants being investment grade. Their highest-profile vacancy is in the process of being rezoned as a liquor distribution center, and they got the prior tenant to extend two other leases for 10 years as part of the vacating process. I think investors will be pleasantly surprised as locations are liquidated in the coming months.

BSD Analysis:
Kingdom Capital's investment in NLOP represents a classic spinoff opportunity where market mechanics created a significant mispricing. The fund manager identified that the small, taxable nature of the spinoff led to forced selling and investor disinterest, driving shares below intrinsic value. The thesis centers on asset quality being better than perceived, with 97% occupancy at spin and investment-grade tenants including a 16-year FedEx lease as the second-largest property. The manager's detailed portfolio analysis suggests the current valuation could be justified even under pessimistic scenarios of no new leasing and fire-sale dispositions. The investment appears to be a liquidation play, with the manager expecting positive surprises as properties are sold over time. This represents a contrarian bet on an unloved sector where fundamental analysis reveals hidden value beneath market sentiment. The 10-year lease extensions secured during tenant departures demonstrate management's ability to extract value even from challenging situations.

Pitch Summary:
Celebrus is a UK based, GBP 85m market capitalised software company we wrote about back in November 2019 when the company was called D4t4 and the shares were priced at around 190p. Since then, the share price has more than doubled reaching a 400p peak in summer 2021 and then almost halved again back to the current price of 215p, which we believe is once again a very attractive level. We have taken advantage of these share price moves to adjust the size of our position over the past 4 years, with our most recent purchase about two months ago. In the same time frame, we believe the company has delivered good operational performance, with annual recurring revenues (ARR) increasing from GBP 9.6m at the end of their fiscal 2020 (year end in March) to GBP 17.4m as of September 2023. But what we are most excited about is the transformation that has been happening at Celebrus in those years: the increase in the share of recurring revenues, a direct sale channel that is less reliant on big partners, the launch of new applications and increased functionality of the core Celebrus software product. They also have a relatively new, internally promoted CEO with strong ambitions which has further strengthened our belief that there is an interesting, profitable growth path ahead for the company and that the shares, back at not far from 2019 levels, are undervalued. As Peter Kear retired in 2022, the new CEO Bill Bruno, who joined the company in 2018 as the Vice President of North America, took over and continued steering the business in the direction highlighted by his predecessor. In fact, the core product Celebrus, a data capture software that automatically captures, contextualises, and activates user-based behavioural data in real-time across digital channels, has been continuously updated and improved, while new exciting applications have been developed. The one we are most excited about is Fraud Detection and Prevention launched in June 2021, which builds on the power of the Celebrus platform to provide real time data to reduce fraud losses (also helped by the recently launched bot detection function) and capitalises on a huge, multi-billion dollar market. Other new applications that the company has released include web analytics Celebrus Digital Analytics, advanced data infrastructure management Celebrus Cloud, cookie-less solution CX Vault and a customer data integration product for Salesforce, and we believe the strategy of offering these functionalities as part of one Celebrus platform, where customers decide which ones to use and pay for, will help the company upsell these products to their customer base. The business has continued its transition towards recurring revenues, with ARR increasing from GBP 4.8m in 2017 to about GBP 17m today and on track to reach the company's goal of ARR representing 75% of total revenues, which increases visibility of earnings and, we believe, the overall quality of the business. On top of that, CEO Bruno has been refocussing the sales approach from a partner-led model to a direct sales model, in which Celebrus's own salesforce engage with clients directly to discuss the sale of the solutions the company offers. We are convinced combining a direct sales approach with the historical partner-led model makes strong strategic sense: it allows Celebrus on the one hand to work with clients who prefer to continue using the partner sales channel, and on the other hand to have more flexibility, a better understanding of the clients' needs and stronger brand recognition, helped by the recent company name change, when it directly engages with other customers. To facilitate this, a Customer Success team has been built out, with the goal of stimulating retention and growth for existing customers while freeing up sales resources to focus on winning new clients. While it's still early days, we can already see significant progress on this, as we understand direct deals today account for about 80% of the sales pipeline. This remains well diversified in terms of clients and sector exposure, with a focus on consumer facing sectors such as financial services, healthcare, insurance, retail, travel and telecoms. We expect customer diversification to expand further going forward, as an increasing number of Celebrus applications and a stronger direct sales channel will allow the company to work with new customers in existing but also new sectors. Celebrus has recently reported what we think were good half year results, with high margin software revenues up 18% to GBP 7.3m and lower margin third-party hardware sales at GBP 5.7m, which is significantly higher than the GBP 1.9m reported in the first half of the last fiscal year and was boosted by a sizeable hardware contract that was previously delayed. After total revenues for the first six months of GBP 13m and breakeven operating profits, we expect the business to deliver around GBP 19m in revenues and GBP 4.3m of operating profits adjusted for amortisation of acquired intangibles and share-based payments in the second half of this fiscal year. This second half weighting has been common for Celebrus in the past, and we believe it is something that the market should be more comfortable with, given it is the natural consequence of annual contract payment dates often falling in the second half as both partners and some key banking and insurance clients have key budget deadlines in December. We are fond of Celebrus's strong balance sheet with its net cash position, excluding lease liabilities, of GBP 14.7m which management may employ for acquisitions that we understand will be technology driven in order to expand the Celebrus platform and add new capabilities to the company's software offering. The business generates strong post-tax returns on capital of more than 20%, and produces healthy cash flows, helped by its negative working capital position on average. The company adopts a progressive dividend policy, and we expect a total dividend for their year ending March 2025 of 3.4p per share, equivalent to a pay-out ratio of about 30%. As management focuses on growing the business, our estimates point to the top line increasing by around 10% per year for the next two fiscal years, which we believe is well supported by a solid and growing pipeline, closely monitored by management. Overall, not only do we reiterate our 2019 view that Celebrus is an undiscovered, high return business with strong growth opportunities and an industry-leading piece of software, but we argue that the strategic changes the company has been going through in the past 4 years make it an even higher quality business today. We believe this should be reflected in a valuation of 20 times enterprise value to adjusted net operating profit after tax, higher than the current 15 times, which would suggest an upside to the shares of around 45% to March 2026.

BSD Analysis:
Ennismore presents a compelling bull case for Celebrus Technologies, a UK software company they've held since 2019 when it traded at 190p. The manager views the current 215p price as attractive following a volatile journey that saw shares peak at 400p in 2021. The investment thesis centers on Celebrus's successful transformation from a partner-dependent model to a direct sales approach, with 80% of the pipeline now coming from direct deals. Annual recurring revenue has nearly doubled from £9.6m in fiscal 2020 to £17.4m as of September 2023, approaching management's target of 75% recurring revenue mix. The company has expanded its platform with new applications including fraud detection, web analytics, and Salesforce integration, positioning it to capitalize on cross-selling opportunities. With a strong balance sheet holding £14.7m net cash, post-tax returns exceeding 20%, and management forecasting 10% annual revenue growth, Ennismore values the business at 20x EV/NOPAT versus the current 15x multiple, implying 45% upside potential to March 2026.

Pitch Summary:
Paywalled (The site mentioned: The Bear Cave believes that rapidly growing new competition powered by AI is destroying Chegg’s key student market and the company is playing increasingly desperate games to stem a student exodus. In short, The Bear Cave concludes that Chegg is a billion-dollar company headed to zero.)

BSD Analysis:
Chegg’s core homework-help and tutoring model is under siege from AI disruption, student churn, and pricing pressure. Tools like ChatGPT erode the value proposition as students access free alternatives. Engagement has deteriorated, and while Chegg is attempting to build its own AI learning assistant, uptake is uncertain. International expansion has been slow, leaving growth tied to stagnant U.S. enrollment trends. Unless it can reposition quickly, Chegg faces secular decline with risks of negative operating leverage if subscriber erosion accelerates.

Pitch Summary:
Ignore the journey, and Axcelis had a great year. The company's revenue so far this year is up 25%, its operating income is up 20%, and its earnings per share is up 40%. It sells tools to semiconductor companies like Taiwan Semiconductor to help those companies produce semiconductors. While much of the industry has been in a slump, Axcelis's sales have grown: its machines are useful for building out plants that can develop less sophisticated semiconductors used in, for example, cars. Shares of Axcelis were rewarded, up 63% for the year. But the journey was bumpy. Axcelis soared as much as 150% (300% from its October 2022 low) through July 31st. It then dropped 35%. Which is how it's been our biggest loser two consecutive quarters and our second biggest winner for the year. I sold 30% of our shares at various stops on the way up. The move was too much, and a big leg of ACLS's share price jump came from AI related hype. ACLS doesn't directly benefit from that sort of investment, not the way it does electric vehicles. We are close to the point where I think it's worth buying again. The valuation is reasonable, and the company should have at least a couple years of growth ahead of it. There are risks – will the growth sustain after all the new chip plants ACLS sells to are built up? What happens if things get worse between the U.S. and China? What if ACLS wastes its cash pile on a bad acquisition? At less than 16x my conservative estimate of next year's earnings, adjusting for ACLS's cash, those risks are reasonable to take on. I have started to put out buy orders a bit below the current price.

BSD Analysis:
The manager presents Axcelis as a semiconductor equipment company with strong fundamentals despite volatile share price performance. Revenue growth of 25%, operating income expansion of 20%, and EPS growth of 40% demonstrate robust operational execution in a challenging industry environment. The company benefits from automotive semiconductor buildout rather than AI hype, providing more sustainable demand drivers through electric vehicle adoption. Management's disciplined approach of selling 30% of shares during the AI-driven rally shows prudent risk management. Current valuation at 16x forward earnings (adjusted for cash) appears reasonable given multi-year growth visibility from chip plant construction cycles. Key risks include demand sustainability post-buildout, US-China trade tensions, and potential capital allocation mistakes. However, the company's specialized position in automotive semiconductor manufacturing equipment and strong balance sheet provide competitive advantages. The investment thesis relies on continued automotive electrification and semiconductor content growth.

Pitch Summary:
I mentioned Discover has resolved some of its issues. The credit card company hired a new CEO; it avoided a fine from the FDIC for one of its outstanding compliance issues; it announced plans to sell the department that was the source of another outstanding compliance issue; and its earnings were ok. The last major event is for the company to resume its share buyback. There's still worries of bad credit on its books that it needs to work through, but the company's messaging has been that the problem peaks in 2024. If that's right, it remains a cheap, growing company.

BSD Analysis:
The manager views Discover as a turnaround story with multiple positive catalysts materializing simultaneously. New CEO leadership provides fresh strategic direction while recent regulatory progress demonstrates improving compliance culture. The decision to divest the problematic department that caused compliance issues shows management's commitment to operational excellence and risk reduction. Avoiding FDIC fines removes a significant overhang while preserving capital for growth initiatives. The anticipated resumption of share buybacks would provide additional shareholder returns and signal management confidence. Credit quality concerns remain the primary risk, but management's guidance that problems peak in 2024 suggests a clear timeline for normalization. The valuation appears attractive for a growing financial services company once these temporary headwinds resolve. The investment thesis centers on operational improvements, regulatory resolution, and credit cycle normalization driving multiple expansion.

Pitch Summary:
I mentioned the Mexican airport stocks, Central Norte (OMAB) and Pacifico (PAC). I was just starting to buy new shares in those companies when the news broke about the Mexican government unilaterally changing terms of the companies' airport concessions. This was bad both for the changes themselves and what they implied about the government's appetite to intervene. Those companies' earnings calls in late October suggested that most of the changes were either not that big a deal or would be compensated for in the next negotiation of a master development plan (MDP). And when the third Mexican airport's MDP came out in December, apparently proving this point, the stocks bounced up to where they started October, basically. We added a decent chunk of OMAB shares and a smaller chunk of PAC. I later sold some PAC shares on the December news. I took this whole event as an opportunity to revisit both companies closely. PAC's balance sheet, low free cash flow, and policy of paying out more in dividend than it had cash flow to cover had been bothering me, and its passenger growth has basically slowed to 0, burning off all the post-pandemic recovery. We still own PAC as it has an attractive business overall, but I am more confident in OMAB's prospects and valuation proposition.

BSD Analysis:
The manager demonstrates opportunistic investing by using regulatory uncertainty as an entry point into Mexican airport infrastructure. Initial government intervention in concession terms created temporary selling pressure, but subsequent earnings calls revealed the changes were manageable and would be addressed in future master development plan negotiations. The December validation through a third airport's MDP confirmed this thesis, driving share price recovery to pre-crisis levels. OMAB emerges as the preferred holding due to superior financial metrics and growth prospects compared to PAC. The manager's comparative analysis reveals PAC's concerning dividend coverage ratio and stagnant passenger growth, while OMAB maintains stronger fundamentals. This represents a classic value opportunity where temporary regulatory fears created attractive entry points in monopolistic infrastructure assets. The investment thesis relies on Mexico's long-term aviation growth and OMAB's operational excellence within the concession framework.

Pitch Summary:
I bought shares in Worthington Industries before it split into two companies – Worthington Enterprises (WOR) and Worthington Steel (WS). Unfortunately, unlike Eventbrite, I did not push to buy enough shares, and so this is a tiny position so far. Worthington Enterprises makes products out of steel for consumers – building frames, helium gas tanks, water well tanks, camping fuel canisters. Worthington Steel takes raw steel and processes it into steel used for cars, construction, and electrical equipment. I'm interested in adding well run industrial companies that don't share the same opportunities or risks as other companies in our portfolio. Though in Worthington Steel's case, it benefits from similar growth drivers to Atkore (upgrading our electrical grid, green energy initiatives) and Axcelis (electric vehicles). Worthington Enterprises is more expensive and viewed as the 'higher-quality' company, as its prospects are not as directly tied to the price of steel; Worthington Steel, as the spin-off, may see the more volatile trading and thus, perhaps, the more interesting opportunity.

BSD Analysis:
The manager views Worthington Enterprises as a diversification play within the industrial sector, offering exposure to consumer-oriented steel products with less commodity price sensitivity than traditional steel processors. The recent spin-off from Worthington Industries creates a pure-play opportunity in specialized steel fabrication for building materials, gas storage, and consumer applications. Management's decision to separate the businesses suggests strategic focus and potential value unlock for shareholders. The company benefits from infrastructure spending trends and green energy initiatives while maintaining more stable margins than commodity-exposed peers. Worthington Enterprises commands a premium valuation due to its perceived higher quality and reduced steel price correlation. The position sizing reflects cautious optimism, with the manager acknowledging missed opportunity to build a larger stake. The investment thesis centers on portfolio diversification and exposure to infrastructure modernization themes.