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Thesis:
Adobe is strategically positioned to thrive as a vital editing layer in the surge of AI-generated visual content, demonstrating strong financial performance and an expanding user base despite short-term market concerns.
Source: https://drive.google.com/file/d/12dSm70g76v67udcLzYGGbSu-7Mf6lKXR/view?usp=drivesdk
Analysis:
Shares of Adobe have struggled in 2025, as investors continue to worry about rising competition from user-friendly platforms such as Canva and the disruptive potential of AI-powered image and video-generation tools such as DALL-E and Sora. These fears overshadowed the company’s strong second-quarter results: Adobe beat expectations across the board, with revenue and adjusted earnings up 11% and 13% year over year, respectively, and better-than-estimated performance in key operating metrics such as annual recurring revenue from digital media, which rose 12% in constant-currency terms. Management modestly raised its full-year outlook, despite prevailing macroeconomic concerns. Nonetheless, the market remained unconvinced, and the stock fell after the earnings report. We took the opportunity to add to our holding.
The irony is that the very force investors worry will threaten Adobe’s dominance may instead become its greatest source of growth. To understand how, it helps to look back on the effect that another set of important technologies—smartphone cameras and social media—had on Adobe’s business. It’s estimated that since 2013, as smartphones became ubiquitous, the number of photos taken per year has tripled. Two decades ago, there were hardly any photos to be found on Google; now there are well over 100 billion indexed by the search engine. Adobe, the leader in photo-editing software, saw its revenue increase tenfold over those two decades.
AI models are very likely to lead to an even larger explosion in visual content, as more people are equipped to create art faster—simply by entering a series of prompts. As any design professional can attest, content creation is only the first step. Raw output needs to be edited (often again and again) to meet brand standards, and integrated into larger projects and a company’s creative workflows. That is where Adobe shines—not as a competitor to foundational AI models, but as the editing and workflow software that users use to create finished products. In fact, this strategic positioning is already bearing fruit. New subscribers to Firefly, Adobe’s proprietary generative-AI tool, grew 30% quarter over quarter, and Adobe Express—a lightweight, AI-native design tool—added 8,000 new customers, for a sixfold increase over last year’s total, including several key enterprise clients. With 700 million monthly active users across its products (up 8% in just two quarters), Adobe’s platform is deeply embedded in the workflows of creative professionals—and becoming more so with each new wave of AI-generated content.
Adobe’s AI strategy isn’t about one-off features; its secret sauce is building those features into customers’ existing tools in a way that’s easy to use and enhances productivity. By positioning itself alongside AI models, Adobe is ensuring it will remain the essential editing layer over the long run. This strategy aligns with its steady product enhancements, new Acrobat integrations, and efforts to ensure its products and content are commercially safe. For example, while some AI companies are getting sued by their would-be customers over stolen content, Firefly was designed to avoid infringing on intellectual-property rights. Financially, Adobe continues to impress: adjusted operating margins remain elite at 45.5%, and the company repurchased nearly US$12 billion of stock over the past 12 months—around 7% of its market cap. Its position as the trusted, professional-grade layer between generative AI and human creativity gives it a compelling long-term edge. As the volume of digital content surges and companies seek tools to shape it effectively, and legally, it is very likely that Adobe’s suite of tools becomes more—not less—attractive.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Applied Materials is poised for growth due to its dominant position in semiconductor manufacturing, favorable market trends, and strong insider support.
Source: https://drive.google.com/file/d/1J-5Gd58tC8dJTprHSX2SByIx7K5dAyf7/view?usp=drivesdk
Analysis:
Technology. During the quarter, we initiated a new position in Applied Materials, Inc. (AMAT), the largest and most diversified supplier of capital equipment, services, and solutions for semiconductor manufacturing. The company is a major supplier of wafer fabrication equipment (WFE), controlling 21% market share, which was built over decades of organic and inorganic growth. It is the world’s dominant player in deposition, a highly precise, mission-critical step in the fabrication process where a thin film imparts electrical characteristics to the wafer’s surface at the atomic level. We capitalized on the cyclical downturn in the semiconductor industry to purchase AMAT near our downside target. Our confidence in the company was further strengthened by insider buying, especially a $7mm stock purchase by CEO Gary Dickerson in early April. In our opinion, Applied Materials will enjoy several tailwinds, including increased demand for advanced packaging and complex manufacturing processes fueled by rising chip architecture complexity. That should boost WFE spending, positioning AMAT as a secular beneficiary. These tailwinds should lead to a re-rating of the stock as a premier analog semiconductor manufacturer along with Texas Instruments and Analog Devices, which command a multiple well above 25x earnings. At that multiple, AMAT shares could trade in the low $300 range based on mid-cycle EPS, up from its current price of around $170 a share.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Bancolombia is the leading bank in Colombia with a significant market share, a competitive funding cost advantage, and an upcoming US$300 million share buyback that is expected to support its share price.
Source: https://drive.google.com/file/d/1OSkPS4D1YO39mpTfQp9pVYAjO0PEcghH/view?usp=drivesdk
Analysis:
Bancolombia is the top bank in Colombia with 26% market share in deposits and 22% market share in loans. An extensive branch network coupled with a dominant position in payment transactions (Bancolombia handles more than a third of all credit and debit card transactions in the country) translates into a sizable funding cost advantage—the bank’s cost of funds recently has been two percentage points lower than its closest competitor. In May, Bancolombia completed a corporate reorganization, creating a new holding company called Grupo Cibest. This structure has several benefits, the most important of which is flexibility to implement share repurchases, from which conventional banks are precluded by regulation. Management has signaled its intention to undertake a US$300 million buyback program in June, which, coupled with attractive fundamentals, should support Bancolombia share price re-rating.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
BDX is undervalued at a 20% discount to healthcare peers, despite its strong position in the market and potential for growth amid recent challenges.
Source: https://drive.google.com/file/d/1J-5Gd58tC8dJTprHSX2SByIx7K5dAyf7/view?usp=drivesdk
Analysis:
Since the end of April, BDX shares have fallen nearly 20% after the company lowered its 2025 guidance to reflect the impact of the National Institute of Health funding cuts and an expected $0.25 EPS hit from tariffs. Even if growth fails to accelerate from the low single-digit rate implied for this year, we consider the multiple compression overblown for a business that has little risk of facing an earnings cliff. We think investors are underestimating the durability of BDX’s mission-critical position in healthcare settings and its ability to adapt. The company has a strong track record of navigating fluid circumstances, being among the first in its industry to surpass its pre–COVID-19 margins following the global pandemic. We believe BDX can reaccelerate organic growth and drive further margin expansion, despite being priced for neither to occur. The company has also reshaped its pipeline to target higher-growth markets that should align it with bellwether med-tech stocks that command premium multiples. At 12x earnings, there’s nothing premium about BDX’s current valuation. The stock currently trades at a 20% discount to Health Care sector peers and a 30% discount to the S&P 500 based on Enterprise Value/EBITDA, well below a thirty-year median premium of 5% and 10%, respectively.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Bioxyne is a rapidly emerging leader in the medical cannabis manufacturing sector, leveraging its regulatory expertise and advanced production capabilities to target significant international growth and project revenues nearing $100 million within the next few years.
Source: https://drive.google.com/file/d/1xF5oQeJzx2ePILUs6PmFE0kq7KooQTeW/view?usp=drivesdk
Analysis:
Bioxyne (ASX:BXN), a relatively young public company, is rewriting the playbook for medical cannabis manufacturing through a combination of strategic vision by its founder and CEO, Sam Watson, regulatory expertise, and operational efficiency.
Founded through a reverse takeover in May 2023, Bioxyne represents a transformation from a dormant shell company to a sophisticated medical cannabis and psychedelics manufacturing powerhouse. The company’s journey began when its current CEO identified an opportunity to consolidate a struggling public entity with his existing medical cannabis business, Breathe Life Sciences. From our discussions with Sam, he came across as a young but highly motivated founder with ambitious growth aspirations – exactly what we are looking for in our portfolio companies.
The company’s breakthrough came in February 2024 when it secured a comprehensive GMP (Good Manufacturing Practice) manufacturing license in Australia – a critical milestone that set it apart from competitors. Unlike most cannabis manufacturers who focused on limited product lines, Bioxyne obtained certification to produce an unprecedented range of products, including flower, oils, gummies, MDMA, and psilocybin.
Bioxyne’s core strength lies in its manufacturing capabilities. We like to think of the company as the “Foxconn” to the industry. With fully automated production lines capable of processing up to 6,000 kilos of product monthly, the company offers something rare in the medical cannabis industry: scale, efficiency, and versatility. Their current market share stands at approximately 10-15% of the Australian flower packing market (estimated TAM $250 million in a $1 billion sales market), with revenues approaching $30 million annually in FY25. They currently service over 100+ customers with each one generating in excess of $250k p.a.
The company’s business model is elegantly simple. They primarily operate as a contract manufacturer for medical cannabis companies, charging per-unit fees for their sophisticated manufacturing services. This approach allows them to generate consistent revenue while minimizing the risks associated with brand development and direct patient sales. We think of BXN as a “Picks and Shovels” play to the sector, akin to Foxconn in China being the manufacturer for Apple products.
Bioxyne isn’t content with dominating the Australian market. The company has set its sights on international expansion, with particularly promising developments in Germany and the United Kingdom. In Germany, they’ve already secured a $5.6 million initial agreement to export cannabis flower products, tapping into a market that has recently seen significant deregulation and growth.
The UK presents another exciting frontier. Bioxyne is currently onboarding with nine of the top ten clinics and pharmacy businesses, positioning itself as a preferred manufacturing partner. Their ability to provide 12-18 months of product stability – compared to the typical 90-day limit for locally manufactured products – gives them a significant competitive edge. A recent $2.5 million contract win signals the start of an expanding opportunity.
The company’s financial projections are compelling. FY25 sales of $29.3 million were achieved following 3 upgrades during the year. With a current run rate of around $45 million as a base case for FY26 and gross margins near 50%, we estimate FY25 Ebitda of $8.5 million growing to over $14 million in FY26. We also estimate free cashflow generation of $8-$10 million next 12 months. Bioxyne is aspiring to potential revenue of $100 million within two to three years if their current execution in Europe bears fruit. Their cost structure remains lean, with a monthly operational expense of just $500-600k, suggesting robust profitability and margin expansion ahead. Blue sky potential in FY27 is $30 million Ebitda if all the “Weeds” align (pardon the Dad jokes).
The leadership team, led by a CEO who owns 29% of the company, appears committed to strategic, measured growth. Rather than pursuing rapid, potentially risky expansion, they’re focused on strategic acquisitions and market consolidation. The company ticks what we look for from a founder led business. We do expect M&A in Europe to consolidate BXN market position and enable pricing power in future as they grow.
Perhaps most intriguingly, Bioxyne is positioning itself at the forefront of the emerging psychedelics market. They’ve already signed their first commercial contract for MDMA capsules used in PTSD treatment, seeing significant potential in this nascent therapeutic space.
The medical cannabis sector remains volatile, with historical investor skepticism due to previous market failures. Bioxyne must continue to differentiate itself by emphasizing its unique regulatory advantages, manufacturing expertise, and clear strategic vision. Apart from regulatory risks, the market is growing fast, with Germany legalising in 2024 and already running over $1B in sales and eclipsing Australia.
What sets Bioxyne apart is its approach to medical cannabis manufacturing. Like Foxconn in electronics, they’re building a business model centered on becoming the go-to manufacturing partner in a complex, regulated industry.
Their competitive advantages are multifaceted:
- Comprehensive regulatory licenses
- Advanced manufacturing infrastructure
- Highly skilled operational team
- Ability to manufacture multiple product types
- Efficient, scalable production processes
As the medical cannabis and psychedelics markets continue to mature, Bioxyne appears well-positioned to capitalise on growing demand. Their strategy of focusing on manufacturing excellence, rather than direct consumer sales, provides a more stable and potentially more profitable approach to this emerging industry unlike many peers who are yet to turn profitable.
With projected revenues approaching $100 million in 2-3 years, a lean cost structure, and expanding international footprint, Bioxyne represents an intriguing opportunity for investors seeking exposure to the specialty pharmaceutical and medical cannabis sector.
BXN ticks all the boxes we look for in a company:
- Industry leader
- Founder led and alignment with shareholders
- High growth and profitable
- Strong cashed up balance sheet and free cashflow generation.
- Track record of under promising and over delivering.
- Significant room for growth in a large TAM
- Under the radar with no institutional ownership or broker research – yet!
- Large discount to our 8 cents valuation next year and potentially 15 cents if they can achieve $100 million of sales.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
CATL is a leading battery manufacturer pivotal to advancing EV adoption through innovative technologies and significant cost reductions.
Source: https://drive.google.com/file/d/1v3-3EXskWkNz-I1bqcYkSOQgOm7BvI1L/view?usp=drivesdk
Analysis:
The adoption of EV and renewable energy storage is dependent on advancements in battery technology to drive down costs and improve efficiency. For most EVs the battery is the most expensive component at about 40% of vehicle cost. Charging times and range are also major issues for converting consumers from gasoline to electric. I think it is just a matter of time before we see EVs outside of China with 1,000+ miles of range that can charge in 5 minutes, for less than the price of a mid-range gas car. CATL is helping to make this a reality for OEMs without the expertise and scale to do it themselves. Improvements in energy density, cost per kilowatt-hour, durability and charging speed are evolving quickly. As battery technology has improved, the price for a lithium-ion battery pack has fallen ~90% since 2010 and projected to fall by another 40% to 50% by 2026. Improving battery performance also reduces the cost of EV ownership. Last year McKinsey estimated that annual demand for batteries would exceed $200 billion per year if global EV penetration hit just 30%. Excluding China, fully electric + hybrid vehicle penetration in 2024 was estimated to be 12% to 15% of the ~50 million vehicles sold. Within China, the IEA estimates that a third of vehicle sales in 2025 will be fully electric, and 60% will be a combination of hybrids and fully electric, about 20 million vehicles. It is likely that nearly all of China’s 35+ million new cars sold annually will have an EV battery within 5 years.
Technology, Software & Scale
CATL is not only the largest fully integrated manufacturer of batteries but a leader in software and systems. New product examples from the 2025 Hong Kong listing prospectus include: Shenxing Superfast Charging Battery - a new LFP battery that charges up to 80% in 10 minutes on a high voltage charger. Qilin Battery (CTP 3.0 Platform) - CATL’s third-generation Cell-to-Pack architecture that integrates cells directly into the vehicle chassis maximizes energy density and simplifies pack integration reducing manufacturing complexity for automakers. EVOGO Battery Swap Solution - Modular battery swapping platform using “Choco-SEB” that standardizes packs design for infrastructure + software integration. Thermal Propagation Prevention Architecture - Multilayer safety system for thermal runaway prevention in large packs for isolating falling cells in high-energy systems. Battery Management System (BMS) Software - monitoring, diagnostics and OTA updates enabling adaptive learning, predictive maintenance, and vehicle-pack synchronization.
Rise of the Virtual Power Plant
As improvements in battery tech unlocks electrification we will also see the “batteries + software” stack not just replace fossil fuel utility generators, but lead to the growth of virtual power plants. Today 60% of global power generation comes coal and gas, 30% from all renewables and 10% from nuclear.
Virtual Power Plants (VPPs) are digital platforms that orchestrate decentralized energy assets such as home batteries, electric vehicles, rooftop solar, and industrial flexible loads to act like a traditional power plant. Managed by software, these groups of assets can be linked together virtually to replace centralized fossil fuel power stations.
Power grids have historically used natural gas-fired power stations or “peaker plants” to meet electricity demand during peak usage periods. These plants are expensive to build and operate at low utilization rates making them highly inefficient. Peaker plants are often idle 90%+ of the time and activated only during the hottest or energy-intensive hours. On the other hand, VPPs leverage unsecured distributed energy resources to achieve similar grid services at a fraction of the cost.
VPPs save money by reducing peaker capacity, deferring grid upgrades, and using AI to manage loads. In regulated markets, utilities can reduce consumer costs by tens of millions of dollars annually today. For example, Vermont’s Green Mountain Power reported $3 million saving in 2022 using a VPP strategy where power from home batteries like the Tesla Power Wall replaced gas plants during a flood. As VPPs grow over the next decade so will the amount of money they save.
Tesla, CATL’s primary competitor in energy storage outside of China, sells their Autobidder platform which connects distributed Powerwall batteries into VPPs in California, Texas, and Australia. Consumers are then able to supply power back to their local grid (virtual or not) which reduces their energy costs while managing peak loads. In South Australia, Tesla’s VPP manages over 4,000 homes and has plans to expand to 50,000 offering reliable peaking services during high-demand periods. In Texas, Tesla enrolled Powerwall users into ERCOT’s market in 2023, becoming one of the first VPPs in the U.S. to engage in real-time wholesale electricity dispatch.
Outside the US and China, CATL has become a major player in Europe after winning large battery storage projects in Germany and Hungary in 2022. According to a recent Battery Chronicle article, CATL has leveraged its position in Europe with the launch of the TENER Stack in 2025. Quote: “This is the world’s first 9 MWh energy storage system (ESS) designed for mass production and marks CATL’s deepening push beyond the electric vehicle (EV) battery space into grid-scale infrastructure.” A few points from the article that I found interesting:
- CATL’s TENER configuration enhances energy density and land-use efficiency compared to traditional 20-foot container systems, while also reducing transport and installation costs. CATL claims the system can deliver five years of zero degradation, though its CTO, Hank Zhou, notes that longer durability is technically feasible but not cost-effective with current market prices.
- CATL shipped over 110 GWh of batteries for Energy Storage Systems (ESS) applications or about 38% of global market share, according to SNE Research. The European ESS sector is trending toward larger-scale storage systems and CATL’s 9 MWh solution now sets a new benchmark, outpacing rivals such as Fluence, Envision, and IPS.
- CATL’s supply chain strength in China is allowing the company to win business in Europe (price + leading tech). Many non-Chinese competitors like Panasonic have exited the ESS space altogether, and others like LG Energy Solution, are trying to compete by building production facilities in Europe. LG recently signed a 981 MWh supply agreement with Poland’s PGE, with manufacturing based in Wroclaw.
**Unconventional background, unconventional risks, unconventional upside**
Aside from all this bullish commentary there are obvious geopolitical risks to owning CATL. The company benefits from a partnership with the Chinese government allowing privileged access to China’s lithium, cobalt, nickel, manganese and graphite mines at home and in Africa. The US Department of Defense has also added CATL to its list of Chinese military companies which could limit its growth in the US and certain other countries.
CATL exists because of extraordinary financial and political subsidies for EV and battery manufacturers that began in the early 2000s when China decided to go all-in on the electrification of the country. Between 2009 and 2022 China invested over $57 billion in subsidies across its EV and battery supply chains. Much of this funding was channeled into a handful of homegrown champions like CATL led by entrepreneurs that could build mega businesses. China has now phased out many of the original direct EV-related subsidies leaving a handful of winners like CATL profitable and financially self-sustaining.
While CATL’s history and strategic advantages may seem unconventional from a Western perspective, the company has consistently demonstrated its ability to innovate and capture market share in battery technology.
Although the stock is up over 18x since IPO in 2018, its valuation on the ChiNext exchange (300750.SZ) of about $150 billion USD is still only 10x our estimate of 2026 operating earnings. Looking out to 2030, operating earnings could be closer to $25+ billion Y-Y with licensing driving higher margins and better returns on capital. CATL also has no net debt.
The stock’s low valuation is compelling even if a portion of current revenue in China may be at risk without ongoing EV subsidies. Given the trajectory of CATL’s battery technology and what it means for EV adoption, the stock could be a multibagger opportunity over the next several years.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Cementos Pacasmayo is the second largest cement producer in Peru, benefiting from a highly consolidated market and potential growth from increased government infrastructure spending.
Source: https://drive.google.com/file/d/1OSkPS4D1YO39mpTfQp9pVYAjO0PEcghH/view?usp=drivesdk
Analysis:
Cementos Pacasmayo is the second largest cement producer in Peru with approximately 5 million tons of installed cement capacity and 23% market share. The Peruvian cement industry is highly consolidated with the top three players controlling about 95% of total cement shipments in the country. Moreover, Peru’s mountainous topography, poor roads, and cement’s low value-to-weight ratio make it uneconomical to ship excess volumes from one region to another, limiting price competition. Cement volumes grew modestly in recent years as subdued economic growth and sluggish private investment hurt demand. Yet the company saw its volume growth rate pick up during the first quarter. We expect these positive dynamics to continue for the rest of the year and could accelerate if the Peruvian government increases infrastructure spending.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Commerzbank is a leading German bank undergoing a strategic transformation with a focus on profitability and digitalization, presenting an attractive turnaround opportunity amid a recovering economy.
Source: https://drive.google.com/file/d/1gHfbTcJh8VDsbBGDLpAe3g6YNXkXRDOn/view?usp=drivesdk
Analysis:
Commerzbank is a leading German bank with a strong presence in retail banking, corporate finance, and international trade services. After years of restructuring and underperformance, the bank is undergoing a strategic transformation with a renewed focus on profitability, digitalization, and efficiency. Supported by a robust recovery in the German economy and export sector, Commerzbank benefits from a resilient customer base and significant exposure to interest rate-sensitive assets. With improving earnings, cost discipline, and enhanced capital returns, the bank presents an attractive turnaround opportunity, especially as Germany begins to benefit from the relaxation of the fiscal debt brake and European monetary policy continues to normalize.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Dentsply Sirona, Inc. is a leading dental equipment supplier undergoing a management-led turnaround despite challenges in the global market, with recent Q1 results indicating early signs of improved performance.
Source: https://drive.google.com/file/d/1P0j8ORz_heFhIL_1CURxfsronB13k_fS/view?usp=drivesdk
Analysis:
Dentsply Sirona, Inc. (XRAY) is another small cap that happens to be an industry leader. It is one of the world’s biggest suppliers of dental equipment and supplies, including consumables, lab products, and orthodontics and implants. For more than two years, management has been laying the groundwork for a turnaround. Those efforts have yet to be reflected in the stock price, as the company continues to course correct from poor decisions made by prior leadership. XRAY’s efforts have been hampered by sluggish global economic growth, as the company’s largest geography, the European Union, has been stalled in a dental recession for the past three years. XRAY’s U.S. implant business, meanwhile, also continues to struggle, though there are some early signs of improved performance ahead. For example, Dentsply’s Q1 results — including its Orthodontic and Implant Solutions segment — beat analyst expectations for revenues and earnings. The company isn’t out of the woods, but this was a significant step forward for a stock that has been pricing in worst-case scenarios in recent months. We continue to support the CEO’s pragmatic, customer-focused approach to improving market share in key areas and implementing self-help strategies to improve XRAY’s operational and strategic efficiencies. In addition to meeting its commitments on earnings, margin, and free cash flow improvements, management has been accelerating new product launches and finding success in centralizing storage and access of patient data on its DS Core cloud-based platform. Yet the stock remains discounted, trading at just 7X estimated Enterprise Value/EBITDA.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Disco Corp is well-positioned to benefit from the growing demand for ultra-high-precision tools in the manufacturing of complex AI chips.
Source: https://drive.google.com/file/d/1IqKOw_mI3zqG_ePOqyn1WswDjkJTDFQx/view?usp=drivesdk
Analysis:
Founded almost 90 years ago in Japan, Disco Corp specializes in ultra-high-precision tools for dicing, grinding, and polishing semiconductors. Cutting-edge AI chips, such as NVIDIA’s Blackwell, have much more intricate structures than traditional semiconductors. Part of their immense power comes from the advanced packaging techniques that manufacturers such as TSMC are using to integrate multiple chiplets and memory stacks into a single package (hence, the reason NVIDIA calls Blackwell a superchip). These increasingly complex designs mean that more chiplets will need to be diced and polished with greater precision. It’s a trend that stands to greatly benefit Disco. Therefore, we believe we’ve taken advantage of the recent correction in its stock price.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
EDU Holdings is a growing tertiary education group focusing on international and domestic students, with significant potential for profit and stock value increase.
Source: https://drive.google.com/file/d/1xF5oQeJzx2ePILUs6PmFE0kq7KooQTeW/view?usp=drivesdk
Analysis:
EDU Holdings (ASX: EDU) is a tertiary education group operating two main segments: a vocational business targeting international students and a higher education business, Ikon Institute, serving both domestic and international students. With campuses in Sydney, Melbourne, Brisbane, and Adelaide, EDU has over 5,000 students, primarily international, recruited through education agents. The company’s strategy involves developing courses in high-demand fields like early childhood education, community services, and healthcare, with a focus on employability and migration pathways. EDU has experienced significant growth, particularly in its higher education segment, by offering three to four-year courses at around $17,000 per year. The business is expanding its offshore recruitment channels and considering strategic acquisitions to diversify its revenue streams and reduce regulatory risk. At $50m market cap the company should have $15m of net cash, and generate $12m NPAT so is currently trading on 3x profit. We expect dividends to be paid soon and Directors have been recently buying. We believe the stock could double this year.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Envista Holdings Corp. is a resilient dental equipment supplier showing better-than-expected demand and positive management initiatives despite recent economic concerns, trading at a significant discount to its historical earnings multiple.
Source: https://drive.google.com/file/d/1955zeJpAP7lCV0QG9X9_YU3uJGKptNfm/view?usp=drivesdk
Analysis:
On paper, Envista Holdings Corp. (NVST), a leading supplier of dental equipment, consumables, and services, could be vulnerable when household budgets are tightening. Indeed, NVST’s core product, dental implants, can see associated procedures postponed as consumers prioritize more essential financial needs. Not surprisingly, NVST lost a third of its value from February 18 through April 8, when economic slowdown fears began to emerge. However, worries over demand destruction proved to be overblown. While NVST’s revenues declined 1.1% year over year in the first quarter, that was better than feared as demand remained solid across its product lines and management provided an upbeat outlook for the full year. Further fueling confidence: Management initiated the company’s first share buyback in history, purchasing $15 million worth of stock at around $17 per share. That was roughly the same price at which the CEO and CFO had purchased shares in the open market last year, another encouraging sign. The company has undertaken internal initiatives to mitigate tariff pressures and expand margins. Recently, Envista began shifting the manufacturing of its premium implants for the Chinese market from the U.S. to Sweden while adding additional suppliers to diversify its supply chain. Envista is a great illustration that even though tariff pressures remain real, many small businesses are nimble enough to change course and adjust quickly. Despite the positive attributes noted above, NVST is trading at a modest 8.5x EBITDA, while sporting around a 5% Free Cash Flow/Enterprise Value Yield and low leverage of just 0.6x Net Debt/EBITDA. This represents a material discount to Envista’s historic and recent earnings multiple.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Everest Group LTD is a Deep Value global insurer trading at a heavily discounted valuation due to previous management’s poor underwriting decisions, now being repositioned by new leadership through a shrink-to-grow strategy.
Source: https://drive.google.com/file/d/17RBB2KsDtWcHyerlY0CP8ALA7sOAK7pO/view?usp=drivesdk
Analysis:
During the quarter, we initiated a position in Everest Group LTD (EG), a Deep Value global insurer with a long history of operating in the property natural catastrophe (NatCat) reinsurance market. Property & casualty underwriters such as Allstate, Progressive, and GEICO purchase NatCat reinsurance to protect their balance sheets against major weather events including hurricanes and earthquakes. NatCat reinsurance is a commodity business where supply and demand dictate terms. When times are good, capacity enters the market, diminishing returns through competition. As a result, the return on equity (ROE) for the industry tends to be more volatile than for primary underwriters. In Everest’s case, prior management made some poor underwriting decisions, pushing a diversification strategy that expanded the company’s exposure to the U.S. casualty market, which protects individuals and businesses from financial obligations resulting from bodily injury or death in the event of an accident. Unfortunately, U.S. casualty losses have risen meaningfully over the past decade due to an aggressive plaintiff bar and “nuclear settlements” awarded to claimants. The company’s new CEO has been aggressively repricing this risk. When insurance companies write less risk, capital can be freed up for other purposes, such as buying back shares. In essence, new management has adopted a shrink-to-grow strategy. Meanwhile, the stock carries a heavily discounted valuation, trading at just 1x tangible book value, versus Everest’s 25-year average of around 1.15x tangible book value. Relative to its industry peers, the stock looks even cheaper, trading at a 40–50% discount to specialty P&C insurers and a 25–50% discount to property natural catastrophe insurers.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
F5, Inc. is an attractive defensive technology investment with strong multicloud partnerships, robust financials, and a critical role in global cloud infrastructure.
Source: https://drive.google.com/file/d/164RfnXKK0ZVypNnwoaXOryxhkNfufgtD/view?usp=drivesdk
Analysis:
F5, Inc. (NASDAQ: FFIV) has quietly established itself as a critical enabler of global cloud and communications infrastructure. Its suite of multicloud application security and delivery solutions enjoys strong partnerships with AWS, Microsoft Azure, and Google Cloud. This makes F5 a focused way to play the ongoing expansion of cloud services without being exposed to the slower-growing segments of the hyperscalers. Financially, the business is robust: EBITDA margins rose to 28% in FY25 with net income up 20% y-y. Its balance sheet remains pristine, with net cash of ~$1.2bn and debt-to-equity under 2%. While top-line growth has been modest at ~6%, upward earnings revisions across the sell side reflect both defensive characteristics and incremental upside from AI-driven cybersecurity products. Trading at ~20x NTM earnings, F5 is not cheap, but given its balance sheet strength, margin profile, and mission-critical role in the cloud stack, we view it as an attractive defensive technology holding.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Fever-Tree is an attractive business due to its asset-light model, strong brand recognition, and significant cash generation from both exclusive partnerships and higher-margin sales, leading to impressive growth and returns on invested capital.
Source: https://drive.google.com/file/d/1pM01Vh0Ys50_zBplBYzQMX7ZhhOTs6P9/view?usp=drivesdk
Analysis:
A lesser-known fact outside the beverage industry is that Coca-Cola is an asset-light business, owning minimal manufacturing and distribution infrastructure. Instead, the company uses a quasi-franchise system, granting exclusive territorial rights to bottlers who invest in infrastructure on Coca-Cola’s behalf. This structure enables Coca-Cola to generate high returns on equity consistently. Undoubtedly inspired by Coke’s success, Fever-Tree and many other beverage companies also adopt an asset-light approach, outsourcing production and distribution to third parties. However, unlike Coca-Cola, Fever-Tree doesn’t solely depend on exclusive partners who manage both manufacturing and distribution. Instead, Fever-Tree often works with independent bottlers and distributors, often without long-term contractual commitments. Outside the United States, Fever-Tree relies on this non-exclusive outsourced model. In this structure, the company orchestrates all aspects of its supply chain and then takes a hybrid approach alongside distributors to secure shelf space and menu placements with retailers, bars, and restaurants. Fever-Tree earns product margins from each unit sold directly to retailers or its distributors. In the United States, however, Fever-Tree experienced a watershed moment in January 2025 when it formed an exclusive strategic partnership with Molson Coors. Under this agreement, Molson Coors agreed to take over all manufacturing, distribution, marketing, and selling responsibilities for Fever-Tree in the United States. In exchange for these exclusive rights, Fever-Tree receives a percentage of Fever-Tree USA’s profits, resembling a royalty payment. I discuss the Molson Coors partnership in greater detail below. Fever-Tree management indicated interest in replicating similar exclusive partnerships in other regions outside the United States. Fever-Tree’s business model—earning either royalty payments through Molson Coors, or higher-margin, asset-light beverage sales—results in significant cash generation and enjoys notable competitive advantages from its strong brand recognition and established distribution networks. The strength of Fever-Tree’s business is evident in its financial results. From its IPO in 2014 through 2021, Fever-Tree delivered returns on invested capital between 25% and 45%, all while sales grew at a compound annual rate of 27%, expanding by 16 times over this period. From a customer perspective, Fever-Tree’s growth is also tied to the benefits its products provide to all parties involved—consumers enjoy higher-quality drinks, retailers and bars earn increased profits per sale, and distributors benefit from higher margins per case. Despite recent moderation in growth rates, Fever-Tree’s opportunities remain extensive, notably with continued U.S. growth of 9% in 2024, even though major spirit brands faced material revenue declines during this period.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Gates Industrial Corporation plc (GTES) is a well-positioned small-cap manufacturer benefiting from strong replacement demand and ongoing cost optimization, making it an attractive investment despite recent tariff concerns.
Source: https://drive.google.com/file/d/1955zeJpAP7lCV0QG9X9_YU3uJGKptNfm/view?usp=drivesdk
Analysis:
These are companies like Gates Industrial Corporation plc (GTES), a leading manufacturer of belts and hoses used in vehicles and industrial machines. Following President Trump’s “Liberation Day” tariff announcement, small-cap Industrials sold off on fears of potential demand destruction. Gates wasn’t immune. The stock tumbled more than 19% between April 2 and the market’s trough on April 8, compared with the 14% decline for the S&P 600 Industrial Index. We saw this as an opportunity because we believe Gates is well positioned relative to the average small cap Industrial.
Why? Gates mostly produces in North America for U.S. customers, meaning they do less importing and exporting from Asia than their peers. That’s not to say the company is without tariff exposure. But Gates enjoys pricing power, as most of its parts are mission critical to customers, who have no choice but to replace belts and hoses that break. The company’s customers are also purchasing fewer new machines while holding onto their existing equipment longer, increasing the odds of belts and hoses wearing out. That’s good news for GTES, since 68% of the company’s revenues come from replacement of parts.
Gates has been undergoing a continual cost reduction and footprint optimization program lately that we believe will help protect margins on the downside from a decline in volume. That view was confirmed in the first quarter, when Gates maintained its full-year guidance, signaling that tariffs would be neutral to management’s EBITDA projections. The company hopes to blunt the effect of tariffs through price increases and cost savings from its self-help efforts.
Gates shares have bounced back more than 45% since April 8, versus around a 28% gain for its S&P 600 Industrial peers. Still, the stock trades at just 14 times earnings and 10 times EBITDA, which is relatively low compared to other Industrial businesses with a similar margin profile.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Hitachi Ltd. is a major industrial group streamlining its portfolio to focus on high-return segments, capitalizing on energy transition and nuclear fleet restarts, while leveraging a growing software and AI strategy.
Source: https://drive.google.com/file/d/1gHfbTcJh8VDsbBGDLpAe3g6YNXkXRDOn/view?usp=drivesdk
Analysis:
Additionally, we initiated a position in Hitachi Ltd., one of Japan’s largest industrial groups, which has been streamlining its vast portfolio of businesses to focus on the highest return segments. Its energy segment is the largest grid equipment player globally and is benefiting from the energy transition and replacement demand from an aging infrastructure. The company is also one of Japan’s leading nuclear players, benefiting from a restart of its nuclear fleet. A common thread among Hitachi’s core businesses is the company’s software and AI strategy, called Lumada, where margins and growth are higher. Currently, it accounts for 30% of sales and mid-teen margins, but longer-term targets are 50% with margins in the high teens.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Hubbell Inc is a leading electrical component manufacturer now attractively priced after a strategic shift towards utility markets, benefiting from ongoing demand for infrastructure upgrades.
Source: https://drive.google.com/file/d/17RBB2KsDtWcHyerlY0CP8ALA7sOAK7pO/view?usp=drivesdk
Analysis:
Industrials. A new Quality Value position initiated during the quarter was Hubbell Inc (HUBB), a leading electrical component manufacturer. Over the past decade, Hubbell implemented self-help actions to shift its portfolio away from traditional commercial construction end markets and toward the power grid/utility end market, which now represents more than two-thirds of sales, thereby reducing exposure to construction spending cycles. At the same time, Hubbell has simplified its product offerings and consolidated 15% of its footprint, rationalizing underutilized assets and creating flexible capacity for faster-growing markets.
During the pandemic-related supply chain disruptions, many of Hubbell’s utility customers over-ordered products to ensure availability in the field. By 2024, as lead times normalized, destocking efforts accelerated and organic revenue turned negative. The stock came under further pressure in early 2025, as investor sentiment toward power generation demand took a hit.
As a result, the stock is now attractively priced in our opinion. After trading at a median 15% premium to its peers over the past 5 years and a 5% premium over the past decade, HUBB fell to a 10% discount in April and is now roughly in line with other Industrial companies on an EV/EBITDA basis. We also expect the company to benefit from continued demand for transmission and distribution infrastructure owing to the country’s aged electrical grid, and Q1-25 earnings confirmed our view that customer destocking has generally ceased.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
ICICI Bank is a compelling long-term investment due to its strong balance sheet, improved asset quality, and market-leading profitability in India’s expanding financial services sector.
Source: https://drive.google.com/file/d/1gHfbTcJh8VDsbBGDLpAe3g6YNXkXRDOn/view?usp=drivesdk
Analysis:
Finally, we initiated a position in ICICI Bank, as a pullback in share price during the quarter presented an opportunity to establish a position in the company at a reasonable valuation. ICICI is India’s second largest private sector bank and is a key player in the country’s retail and corporate banking ecosystem. Following a decade of restructuring, the bank has emerged with a stronger balance sheet, improved asset quality, and market leading profitability. Its improving return ratios, low non-performing asset ratio, and consistent market share gains make it a compelling long-term investment in India’s rapidly expanding financial services sector.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Leonardo is a promising investment due to increased defense spending in Italy and NATO’s structural growth, coupled with a new CEO focused on operational improvements.
Source: https://drive.google.com/file/d/1wd0Y2vy4b9jjrgDGGv7kBYiZUWWpQxec/view?usp=drivesdk
Analysis:
We also initiated a position in Leonardo, Italy’s national defense champion formed after decades of consolidation. Italy has lagged in terms of defense spending and should see an increase in spending after the recent 5% GDP target was confirmed at the June 2025 NATO Summit. While Italy accounts for 20% of sales, the company is still well-exposed to NATO’s structural increase in defense spend, given Leonardo’s diversified defense exposure. The company also has stock-specific drivers given its historical complexity, and the new CEO is focused on simplifying and fixing certain segments including the aerostructures business.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Lojas Renner is a Brazilian retailer that has successfully improved its profitability and operational efficiency after investing in online customization and supply chain enhancements, positioning itself for margin recovery despite ongoing competition.
Source: https://drive.google.com/file/d/19pcK8Xl3OwounGUwZ26lAnGMnnYoyKu5/view?usp=drivesdk
Analysis:
Then there is Lojas Renner, a Brazilian retailer that has been pressured by both outside competition and the COVID-19 pandemic but has finally put itself back into a position of strength. The company was used to outside competitors in the clothing market, especially the overseas “fast-fashion” companies such as China’s Shein. Its response was to invest in its own operations. It improved its online experience through customization: its website, for instance, appears differently to people in different regions. A customer in a northern heat wave sees something different from a customer in a southern winter. Also, the company launched a large-scale investment plan in 2019, including opening a major distribution center in Cabreúva, near São Paulo. When the pandemic hit, Renner was one of the first large companies in Brazil to close all its stores, but the overlapping costs of building new infrastructure while running legacy fulfillment systems and closing its physical locations left it at a disadvantage versus leaner e-commerce rivals. Today, though, those investments are starting to pay off. Profit margins are improving thanks to more efficient supply chains, better stock management, and faster response to fashion trends—leading to fewer markdowns and stock-outs. As online operations grow, cost pressures are easing through better integration with the offline business. Despite continued competition from Shein and other cross-border retailers—now subject to at least some import duties—Renner has entered a harvesting phase of margin recovery and improvement in return on invested capital, potentially exceeding pre-COVID levels.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Mama’s Creations is a promising investment opportunity due to its strong management team, solid financial position, and potential for significant organic and inorganic growth in the prepared foods market.
Source: https://drive.google.com/file/d/1XLlq1Sz-BYbhyWjaVdeXtSDFwfYTIlWI/view?usp=drivesdk
Analysis:
Mama’s Creations (MAMA – Doubted Champion)
Occasionally you run across an executive who is so outlandishly passionate about their job and the brand they represent, you can’t help but take notice. We first met Adam Michaels (CEO of MAMA) more than a year ago at an investor conference. Clad in mulberry shoes and sport coat, the exact brand colors of MAMA, he told us how he would take what was historically a subscale meatball manufacturer in suburban New Jersey and make it into one of the largest prepared foods and deli brands in the world. Frankly, we thought he had too many screws loose. Nonetheless, we were intrigued by the business and the category. Fresh and prepared foods in grocery stores has been a growing category, catalyzed by consumer demand for healthier, fast, and affordable food options. Grocery stores have been increasingly dedicating more food space to the category. Today, it is one of only a couple of categories that are seeing volume growth.
We spent the next several months meeting with Michaels before realizing that he was the real deal. He is smart, dedicated, and the right kind of passionate. More importantly, he has spent the last two and a half years (he was appointed CEO in September 2022) building a world-class team. Michaels himself is no lightweight. He spent nearly a decade in a variety of roles at Mondelez from data analytics to leading M&A in its smaller brand venture portfolio. Since Michaels joined MAMA, he has hired Lauren Sella (former Chief Marketing Officer of Tate’s Bake Shop) as CMO, Skip Tappan (former Chief Supply Chain Officer at Gordon Food Service) as COO, and Chris Darling (former Executive Vice President Sales at Boar’s Head) as Chief Commercial Officer. CFO Anthony Gruber was appointed around the same time as Michaels, but our understanding is that Michael’s was working unofficially behind the scenes at MAMA to help with senior hires up to nine months before his official start date.
Mama’s Creations is an easy business to understand. It sells pre-prepared foods to most major grocery and club chains (Walmart, Whole Foods, Publix, Costco, etc.), and has a growing presence in convenience stores. Its packaged product consists of a variety of proteins (meatballs, chicken, etc.), salads, pasta, olives, and sandwiches. The products are manufactured in two facilities in East Rutherford, NJ, and Farmingdale, NY. Today, Mama’s Creations seems like a run-of-the-mill subscale food manufacturer - $133 million in trailing twelve-month revenue, $32 million gross profit, and $11 million adjusted EBITDA. However, we believe they have several distinct advantages that make the stock a compelling investment. The first, as we discussed, is people. Michaels is fond of saying to us that if he were hit by a bus, the company would continue to execute without his intervention. To be certain, this is a suboptimal outcome, however, we do tend to agree that this is a team built to lead a billion-dollar business. Every member of management has significant credibility with customers and industry suppliers. Chris Darling is much more likely to be successful selling you a premade meatball or sausage than a random person who bought a beef processing machine and packaging line, especially when food safety is of paramount importance to your customer and you need to work with people you can trust.
Second, the company has a pristine balance sheet and strong cash generation. MAMA is a rare commodity amongst microcap food manufacturers in this respect, with $12 million in cash on the balance sheet, consistent $10+ million in annual cash generation, and effectively zero long-term debt. We believe that MAMA’s strong financial position and its public company cost of capital combined with category tailwinds make them a logical platform to acquire food service companies. The prepared foods category is $40 billion but most companies in the space command less than a 1% market share. We believe there are hundreds of businesses that MAMA could rationally and safely acquire. We see a parallel between MAMA today and consolidators like J&J Snack Foods thirty years ago that achieved significant success by acquiring niche food service providers.
And, third, easily achievable organic growth. MAMA’s primary distribution strategy is improving items per customer. We believe that the typical customer carries 2-to-3 units. MAMA rarely loses a customer and tends to grow over time. The most mature customers carry 8 to 10 items. We think this is a reasonable hurdle and could more than double MAMA’s organic sales over the next five years. Importantly, MAMA is looking to grow through a branded product portfolio and is turning down private label business to avoid commoditization. Lastly, the company has had a very strong introduction into its first major convenience store customer, Sheetz, which has launched with its branded ready-to-eat panini. The C-store channel, due to the success of prepared foods offerings in brands like Buc-ee’s and Sheetz, is looking to invest heavily in the category. Sheetz is a logical winner in the space should it execute on its early wins. Today, in both C-store and grocery, stores have to rely on multiple vendors and multiple trucks coming to a location every day, creating greater complexity and cost. As a consolidator within the deli/prepared foods category, MAMA is looking to become the one-stop-shop solution for its customers. This strategy is a win-win. Even if they pay higher prices, customers save significant amounts on administrative costs. Lastly, we believe MAMA’s gross margin profile can inflect into the mid-30s (from mid-20s today). The mix benefit from MAMA’s product launches and facility investments should yield material benefits over the next twelve-to-twenty-four months. This compares favorably to muted
analyst expectations, which do not see gross margins exceeding 30% through fiscal 2027. This dynamic sets us up for a long series of beat and raises, which should benefit the stock price.
Supporting MAMA’s growth is significant production capacity in its Farmingdale and East Rutherford facilities. Farmingdale doubled its grilled chicken trimming capacity (a project completed in late 2024) and East Rutherford is in the middle of an expansion to increase its space from 24,000 square feet to 43,000 square feet. The facility improvements, along with additional machinery and people investments, can allow the business to more than double in volume organically, without the need for significant capital expenditure.
We were given an excellent opportunity to start purchasing stock in mid-December after the company missed earnings estimates, attributable to construction complications and delays at the Farmingdale facility. They missed the street’s EBITDA estimate by 47% but the first bullet point in the press release stated, “Following completion of the strategic CapEx projects in September 2024, the company achieved a sequential step change in the preliminary unaudited gross margin profile in November 2024, which indicates a full reversal of the ~400 basis points of construction headwinds with significant room for further improvement.” Regardless, the shares fell hard. Following this ‘miss’, the stock proceeded to drift down towards $6 over the next several months, which we felt was a completely absurd overreaction to verifiable short-term issues.
An investment in Mama’s Creations can most accurately be described as a “Jockey bet”. The business is rather simple. Buy a handful of ingredients, make a product, sell the product, and ship the product. The secret to success lies in day-to-day execution and category tailwinds, both of which we have here. Over the next several years, we believe that revenue and gross profit can almost triple in size due to a combination of organic and inorganic growth, with minimal dilution to shareholders. Specifically, we are underwriting to $225 million in organic sales and $100 million of acquired sales. The gross margin should be substantially higher than it is today, due to the aforementioned gross profit benefit from higher branded product mix and the implied efficiency lift of selling more products into the same customers. We estimate 32% in fiscal 2027 vs. mid-20s today. To support that growth, the business will likely grow its general and administrative expenses to $50 million vs. $30 million today. This gets us to $50 of adjusted EBITDA, which gives us significant upside vs. an enterprise value of $350 million today. Growing food companies can achieve very large multiples in the public markets, anywhere from 15-to-30x EBITDA. Assigning just a 12x multiple to MAMA, gets us to nearly a $20 stock price compared to $9.50 at the time of this writing. The risk to our investment is the usual macro changes that affect customers’ taste or pocketbook. On the company specific side, should Michaels or any senior member of management exit the company, this would raise the alarm bell for us and cause us to reevaluate our investments. There is another risk in the timing of the investment. Because the category is strong, and the company has a decent-sized book of business with significant manufacturing capacity, MAMA is very valuable to a strategic or financial buyer which could cause them to sell before their growth plans are fully executed.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
MercadoLibre is a leading Brazilian e-commerce platform leveraging strong user engagement, innovative services, and a robust logistics network to maintain its competitive edge against emerging rivals like Shopee.
Source: https://drive.google.com/file/d/19pcK8Xl3OwounGUwZ26lAnGMnnYoyKu5/view?usp=drivesdk
Analysis:
MercadoLibre, Brazil’s e-commerce champion, has been in the portfolio since early last year due to its increasingly dominant scale advantages and vital user engagement as well as a reasonable valuation given its strong growth prospects. MercadoLibre has taken the best of what other online retailers do, tailored it for its own local markets, and added innovative new services. For instance, in a region with many “unbanked” customers, it built its own payments service and became a leader in digital payments. It then built up a credit business by offering services to customers when banks wouldn’t extend them credit; the retailer has been able to assess borrower risks using both payments and sales data it collects from customers. Another advantage is more physical. In the US, retailers can rely on well-established independent carriers such as FedEx or UPS for deliveries. Not only do those services not exist in large swaths of Latin America, in many places paved roads don’t even exist. MercadoLibre’s solution was to invest billions in its own distribution networks, including physical delivery to the most remote locations. Its own managed logistics network handles 95% of its shipments, and half of those parcels arrive the same or the next day after an order is placed. Much like Amazon’s Prime, it has created its own loyalty program, Meli+, that bundles all these services and offerings to create a compelling user experience.
MercadoLibre is both a reflection of changing competitive forces and a cause of them, because it isn’t a Brazilian company at all. It was founded in 1999 in Argentina and today operates in 18 countries across Latin America. It launched in Brazil in 2001 when it bought the Brazilian subsidiary of European online auction site iBazar. Over the last decade, since Trump’s trade wars started, the company has stepped up its presence in Brazil. It opened a spacious, modern, sleek Brazilian headquarters in São Paulo in 2016. It opened its first distribution center in Brazil in 2017. In 2021, it approved a US$1.8 billion capital investment in its operations there.
But Shopee, the e-commerce arm of Singapore-based Sea, is aggressively expanding in Brazil and emerging as a serious challenger. Shopee’s Brazilian operations became profitable last year and the company has announced further investment in distribution centers to challenge MercadoLibre. Shopee’s logistics footprint rivals MercadoLibre’s in São Paulo and the northeast, and while Shopee’s gross merchandise value lags (due to lower average selling prices, about one-third those of MercadoLibre), its order volume is now higher, having captured a wider swath of younger and smaller-ticket shoppers.
The threat posed by Shopee spurred a strong response from MercadoLibre. This quarter, MercadoLibre slashed its free-shipping threshold from R$79 to R$19—matching Shopee’s—and cut seller shipping fees by nearly half, which will be especially valuable in Brazil’s north and northeast, where Shopee has been more aggressive in its logistics buildout. Early results from these moves are promising; shipping volumes jumped 131% in the north and 109% in the northeast after the new pricing took effect. These moves will likely pressure MercadoLibre’s near-term commerce margins, but management expects the resulting volume increases will ultimately outweigh the cost. While the competitive landscape is evolving rapidly, MercadoLibre’s deep knowledge of its local customer base, integrated ecosystem, and focus on innovation are its long-term competitive advantages.
E-commerce penetration is still low in Brazil, less than 20%. The increased competition between MercadoLibre and Shopee could lead to an increase in adoption, which could help those two and hurt smaller platforms and retailers.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Mindray is leveraging AI in its medical devices to enhance diagnostic accuracy and efficiency, positioning itself as a strong competitor in the high-end ultrasound market and achieving significant growth in international markets.
Source: https://drive.google.com/file/d/1IqKOw_mI3zqG_ePOqyn1WswDjkJTDFQx/view?usp=drivesdk
Analysis:
In a very different industry, Mindray, a Chinese maker of medical devices, has been using AI in its hematology machines to conduct morphology analysis and classify blood cells, significantly reducing the time required to manually review images. Its latest ultrasound diagnostic system, Nuewa A20, also uses AI to estimate the volume of a fetal skull as well as to capture images of the fetal spine structure—crucial screenings to assess fetal development. The way that AI automatically optimizes the images means that even less-experienced sonographers can capture high-quality scans. With these new capabilities, Mindray’s latest machines are poised to challenge the dominance of General Electric, Philips, and Siemens in the high-end ultrasound market.
Another promising tool Mindray developed is Qi Yuan, an AI system designed to assist doctors in intensive-care units (ICUs) with clinical decision making. It is a natural extension of Mindray’s patient-monitoring machines, which are stationed at ICU beds. Qi Yuan processes and summarizes the large volume of data generated by these monitors, then presents the insights in a way that supports complex, multi-disciplinary decisions—for example, determining when it is safe to take a patient off an ECMO, or life support, machine following heart surgery. Qi Yuan also reduces the administrative burden on doctors by automating medical documentation, allowing them more time to focus on patient care. These innovations reinforce Mindray’s primary value proposition, which is to help provide better outcomes for patients and higher efficiency for healthcare providers. As a result, Mindray’s premium products have been able to quickly gain market share in Europe and developing countries, with the annualized growth rate of its overseas business exceeding 15% over the past two years.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
As AI accelerates the creation of digital and machine identities, CyberArk stands out as a crucial cybersecurity provider with specialized tools and a strong financial foundation to protect and manage this expanding digital frontier.
Source: https://drive.google.com/file/d/1s97gvEDYbAacyNZ43ZAWtCzw99RgIQ_w/view?usp=drivesdk
Analysis:
With the rising trust in AI for data management, security risks escalate, particularly in identity and access management, a niche CyberArk specializes in. Digital identities are assigned to humans accessing systems, which include login credentials and system access permissions. Additionally, machines have their own identities that need safeguarding. CyberArk’s platform assists organizations in managing these identities and monitoring for unauthorized activities. The emergence of AI creates a new class of machine identities represented by AI agents, significantly increasing their number. Currently, the ratio of machine identities to human identities is roughly 80:1, according to CyberArk. The increase in the use of containers and microservices by AI developers also offers CyberArk opportunities. It has introduced CORA AI, a suite of AI tools that enhance its platform by analyzing user behavior and identifying risks, demonstrating effective capital management and strategic positioning for future security challenges.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Photronics, Inc. (PLAB) is undervalued at $18 per share, trading at less than 10x 2026 earnings forecasts, with strong growth potential in semiconductor manufacturing amid a market recovery.
Source: https://drive.google.com/file/d/1P0j8ORz_heFhIL_1CURxfsronB13k_fS/view?usp=drivesdk
Analysis:
Photronics, Inc. (PLAB) is a perfect example of common misconceptions surrounding small stocks. PLAB makes photomasks used to transfer circuit patterns onto semiconductor wafers during the fabrication process, operating manufacturing facilities globally. The company’s modest $1.1 billion market capitalization belies the fact that it is the largest merchant photomask manufacturer in the world. Plus their solid balance sheet, over $550 million in cash and cash equivalents, with minimal debt provides a strong ballast.
PLAB’s work with leading-edge applications, driven largely by artificial intelligence, remains strong. On the other hand, trailing-edge technologies tied to consumer electronics, industrial, and autos have been mired in a downcycle, though those end markets are showing some early signs of a recovery. As that segment rebounds while new semiconductor design activity continues to be robust, Photronics is well-positioned to reap the benefits of several years of growth investments in China, Taiwan, Europe, and the U.S. Giving us added confidence: Management recently implemented a $100 million share repurchase program, $72 million of which was executed earlier this year.
Yet at $18 a share, the company is trading at less than 10x 2026 earnings forecasts. That represents a significant discount to peers like Cohu and Kulicke & Soffa, which are each trading at P/E multiples in excess of 25x. We believe the stock is worth $28 a share, which is 1.7x our 2026 sales estimate for PLAB and 5x 2026 EBITDA.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Pinterest is a unique visual discovery platform with strong commercial intent and significant growth potential in advertising, bolstered by recent CEO leadership and innovative tools that enhance monetization strategies.
Source: https://drive.google.com/file/d/1jSxnOZPgOLId_yjiaBYnzFvonnF90KWh/view?usp=drivesdk
Analysis:
Lastly, we’ll provide a brief introduction to the most recent addition to the Fund, Pinterest. Pinterest is a visual search and discovery platform where users explore interests, seek inspiration, and browse items they may want to buy. The platform has 578 million monthly active users (MAUs), of which 67% are female and over 40% are Gen-Z. Compared to other social media platforms, Pinterest is unique as it’s geared towards discovery, organisation and direct shopping. Roughly half of its US users visit the platform to “find or shop for products”, which is greater than two times any other social media platform. Hence, it’s more akin to a utility that translates into less frequent usage but has much more commercial intent. This commercial intent is valuable as it provides strong signals to advertisers. Historically, Pinterest has struggled to fully monetise this commercial intent, however we believe this is changing. In 2022 Bill Ready – formerly President of Commerce, Payments & Next Billion Users at Google – took over as CEO with a mandate of improving the “shopability” and monetisation of the platform. Since then, the company has made significant progress with the development of more sophisticated ad tools and an overall push towards performance-based ad formats (i.e. direct response ad formats that optimise for an advertiser’s objectives, as opposed to brand awareness advertising). These initiatives are key to improving return on ad spend (ROAS), which in turn, unlocks a greater share of ad budgets. Importantly, an advertisers’ budget for performance ads is typically much larger and more consistent than experimental (brand awareness) ads. Over the last few quarters, management has noted some of the largest, most sophisticated advertisers on the platform are spending 5% to 10% of their advertising budgets on Pinterest as they lean into their lower-funnel tools. This is a very encouraging sign, especially in the context of Pinterest only currently capturing 1% share of the overall digital advertising market. Their new Performance+ product suite, released in October 2024, has also been well received. Performance+ is a suite of AI-powered tools which help automate and streamline budgeting, bidding and targeting functionalities. It has cut campaign creation time in half and meaningfully lowered cost per action. Management noted that the adoption cycle for Performance+ is likely to be a multi-year event and that they will continue to innovate and improve the product overtime. Zooming out, we view Pinterest as a differentiated, scaled platform with significant commercial intent that is well placed to capture incremental share of advertising budgets in the years ahead. Coupled with a relatively undemanding valuation of 18x earnings and over 10% of its market capitalisation in cash, we think the risk/reward is attractive.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Quaker Chemical Corp. is a resilient investment with strong free cash flow potential and a current undervaluation, poised for growth as industrial production improves.
Source: https://drive.google.com/file/d/1P0j8ORz_heFhIL_1CURxfsronB13k_fS/view?usp=drivesdk
Analysis:
Quaker Chemical Corp. (KWR), a leading supplier of fluids used in metal production and metalworking, is a good example. The key end markets for KWR are the steel industry, industrial manufacturers, and vehicle OEMs — all areas where tariff concerns remain elevated. Quaker Houghton’s exposure, though, is relatively low as the company manufactures in the U.S. and a significant portion of its revenues are derived domestically.
Quaker’s products represent a low-cost part of their customers’ production process while being mission critical. The company also enjoys more pricing power than other commodity chemical companies because it often works under a service model where its employees are brought on site to help customers ensure that KWR’s chemicals are applied properly.
Over the past three years, global industrial production has been depressed, impacting Quaker’s volumes, which are down 15% vs. pre–COVID-19 levels. Management has taken advantage of this backdrop to focus on making the business leaner, cutting $20 million of costs mostly from selling, general, and administrative expenses. While Quaker’s margins are roughly in–line with the S&P 600 Chemical Index, it enjoys higher free cash flow margins as its business model is less capital intensive than many of its chemical industry peers.
KWR’s high free cash flow generation has historically afforded it a premium valuation, with an average P/E ratio of 24 over the past 10 years, based on next–12–month profits. Today, however, the stock is trading at a P/E of 16, which we view to be depressed. When industrial production levels improve, we see upside from higher earnings and potential for a re–rating closer to its historic multiple.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Reply is leveraging its diversified business model and decentralized structure to rapidly develop customized AI tools and services across multiple industries, partnering with OpenAI to enhance its offerings.
Source: https://drive.google.com/file/d/1s97gvEDYbAacyNZ43ZAWtCzw99RgIQ_w/view?usp=drivesdk
Analysis:
On the other hand, AI presents new opportunities for the most agile consulting firms. For example, Reply’s diversified business model and decentralized structure have allowed it to move quickly in developing customized AI tools and services for specific industries. Not only is the Italian company less reliant on T&M contracts (about 30% of revenue) than its peers, but it is also further ahead in its AI integration. Its efforts have included partnering with OpenAI to come up with new uses of its technology, such as design tools that combine traditional manufacturing processes with machine-generated art, which can be used to create, for example, ceramic flooring that mimics natural marble. Reply has developed an AI-powered warehouse management solution and other industry-specific AI tools for clients in the automotive, publishing, retail, manufacturing, insurance, and media industries.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Rohto Pharmaceutical is a leader in health and beauty with a smart factory utilizing AI for innovative ophthalmology and regenerative medicine solutions.
Source: https://drive.google.com/file/d/1s97gvEDYbAacyNZ43ZAWtCzw99RgIQ_w/view?usp=drivesdk
Analysis:
Iga City is the home to Rohto Pharmaceutical’s “cyber-physical system”—a smart factory, where sensors and cameras monitor automated and semi-automated production equipment, then send the data they collect to the cloud for AI to analyze. The company, a new addition to the portfolio, is a leader in health and beauty, with a strong franchise in eye care, as well as a portfolio of skin- and lip-care products, acne treatments, deodorants, and antiseptic lotions. At a recent trade show in Osaka, Rohto showcased a pipeline of innovations in ophthalmology and regenerative medicine enabled by AI, such as a compact automated cell-culture system. It is also collaborating with Osaka University and SAI—a company that uses optical sensing technology to turn information from the physical world into digital data—on ways to use AI to predict diseases based on diagnostic eye-health readings.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Ryanair is a leading Irish airline that enhances middle-class travel affordability in Europe, aiming to transport 300 million passengers by 2034 with a fuel-efficient fleet and low operating costs.
Source: https://drive.google.com/file/d/1XAvRjuOCDPzpE2X84eMC_dcwwS8IXZ85/view?usp=drivesdk
Analysis:
We also purchased shares in the Irish airline Ryanair which has helped expand middle-class travel by making it more affordable to Europeans. In 2024, Ryanair was the first EU carrier to transport 200 million passengers, with a goal of 300 by 2034, and owns more than 600 aircraft on an investment grade balance sheet. Its fleet relies on fuel-efficient engines from Safran to support its cost advantage over its European rivals and will phase in the 20% more fuel efficient turbofan LEAP-1B engine in its 737 MAX aircraft beginning in 2027. Thanks to relentless cost discipline on all fronts resulting in operating costs of just 36 euros per passenger ex-fuel, versus 85 euros for EasyJet and 170 euros for Lufthansa, Ryanair can offer far lower fares in Europe while delivering superior profitability.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Safran is a French industrial leader in commercial aerospace, primarily benefiting from its joint venture with General Electric and promising growth in global air traffic.
Source: https://drive.google.com/file/d/1XAvRjuOCDPzpE2X84eMC_dcwwS8IXZ85/view?usp=drivesdk
Analysis:
Take French industrial champion Safran, which we purchased this quarter, as an example. Safran garners roughly 80% of its revenues from commercial aerospace, underpinned by CFM International, its 50/50 joint venture with General Electric, which commands roughly 40% of the global commercial jet-engine market, profiting from both new sales and servicing active engines. After rebounding from the pandemic slump, global air passenger volumes finally topped 2019 levels last year, with secular growth resuming. Boeing anticipates global commercial air traffic growth of 4.2% annually from 2025 to 2044 while Airbus forecasts a 3.6% growth rate over the same span fueled by global economic growth and an expected 1.5 billion person increase in the global middle class. This trend should support growth in CFM International’s engine business, which is gaining share in the world’s commercial air fleet. Beyond engines, Safran is the world’s leading supplier of landing gear and helicopter turbines, provides the engines for the Rafale fighter jet, and develops ultra-reliable positioning, navigation, and timing solutions for military and civilian applications. These core strengths have resulted in returns on invested capital consistently above that of the broader European aerospace and defense peer group. With about 20% sales being defense-related, Safran stands to benefit if European defense outlays rise as promised. But its commercial aerospace franchise offers more stable and predictable growth.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Silicon Motion Technology Corp. is a promising investment due to its transition toward higher-margin data center products and potential undervaluation despite recent market fluctuations.
Source: https://drive.google.com/file/d/1955zeJpAP7lCV0QG9X9_YU3uJGKptNfm/view?usp=drivesdk
Analysis:
Silicon Motion Technology Corp. (SIMO) — a leading maker of memory components used in PCs, smartphones, data centers, and industrial applications — also took a hit earlier this year, on tariff concerns and as investors questioned the capex needs of large-scale cloud service providers known as hyperscalers. SIMO shares sank more than 30% from March 24 to April 21, on fears that further weakness in consumer spending could impact PC and smartphone sales. Since then, however, hyperscalers have confirmed robust datacenter capex growth, as consumer sentiment has rebounded somewhat. Since April 21, SIMO shares have surged more than 70%.
We continue to hold SIMO because we believe it is in the early days of a re-rating from its upcoming growth and margin expansion as data center products evolve to become a larger percentage of the company’s total revenue mix. Silicon Motion has historically leaned more to the consumer electronics side of the business, which is marked by trailing edge technology and lower margins. However, throughout the recent downcycle the company made a push into higher-margin, leading-edge applications driven by hyperscaler demand. On its last earnings call, management announced it was partnering with Nvidia on memory storage banks.
Due to the longer-than-usual down cycle for consumer electronics companies, though, our analysis indicates that SIMO remains meaningfully undervalued. The stock currently trades at $75.17 a share, but we believe the company should be valued at $90. That’s based on a 13X EBITDA multiple plus an anticipated $160 million cash settlement from SIMO’s ongoing arbitration with MaxLinear surrounding the termination of a proposed merger agreement two years ago.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Spotify is poised to enhance its earnings potential by enabling direct billing for purchases within its app, thereby reducing churn and expanding into a marketplace for various content creators while significantly increasing its revenue opportunities.
Source: https://drive.google.com/file/d/1v3-3EXskWkNz-I1bqcYkSOQgOm7BvI1L/view?usp=drivesdk
Analysis:
As of June 4th, Spotify’s ~145M U.S. users will be able to directly purchase anything Spotify wants to sell using a one-click link within the app, including upgrading to the Premium subscription and audiobook credits while not paying the App Store a 15% commission. The first benefit will be lower churn from a reduction in friction to sign up and maintain Premium subscribers. Direct billing on Apple will also allow Spotify to seamlessly sell credits for audio books and access to third party services like Skillshare, BBC Maestro, PLAYvirtuoso, Duolingo and Thinkific on its new educational services business (coming to the US soon). Spotify can now evolve faster into a grown-up marketplace platform allowing artists, authors, podcast creators, and content owners of all walks of life to directly monetize their audiences with products and services. Currently, advertising and related revenues represent only ~10% of Spotify’s total revenue, or approximately €2 billion, versus $25+ billion for YouTube and $180+ billion for Meta. With Spotify’s user base projected to surpass 1 billion within the next 18 months, the runway for scaled advertising monetization is substantial. At roughly 30x our estimate of 2026 EBITDA Spotify’s valuation is optically expensive, as it has been the entire time we’ve owned it. However, looking out over the next few years, SPOT’s $145 billion valuation today will look cheap if management can even get close to achieving their goal of €20 billion of operating earnings with minimal incremental capital invested.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
UnitedHealth Group is a defensive investment that was exited due to rising uncertainty from increased medical loss ratios, lowered guidance, and regulatory risks.
Source: https://drive.google.com/file/d/1gHfbTcJh8VDsbBGDLpAe3g6YNXkXRDOn/view?usp=drivesdk
Analysis:
We initiated a position in UnitedHealth Group early in the second quarter. With a rise in concerns around tariffs and with most favored nation drug pricing gaining momentum, United Health was seen as a safe haven. They are focused only on the US, have relatively low recession risk, have historically been an excellent underwriter and executer, and the diverse nature of the company, with both insurance and data/informatics, made it appear more defensive and attractive. However, UnitedHealth reported Q1 earnings with a significant increase in medical loss ratio, and they sharply lowered 2025 guidance. Given the extent of the uncertainty in forward guidance and risk of continued mis-execution in insurance pricing, we decided to exit the position. Subsequently, there was a change in CEO, removal of 2025 guidance, and a potential Department of Justice criminal investigation into UnitedHealth’s Medicare Advantage business.
Check here for the latest results, quarterly call and analysts' estimates.
Everything you read here is for information purposes only and is not an investment recommendation.
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