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Now, let’s get into this week’s selection of fund ideas 👇
Thesis:
Adobe is the leading provider of creative content software with a strong market position, diverse offerings, and the potential for solid fundamentals despite competition and AI disruption.
Source: https://drive.google.com/file/d/1HTi0NnyOuqTFi-qUkEXWtBY-jHh_eA4u/view?usp=drivesdk
Analysis:
Adobe is the market’s largest provider of creative content software and enjoys a sizeable moat. Design professionals in all verticals — graphic designers, video editors, web and mobile app creators, etc. — rely heavily on Adobe’s robust suite of tools. It also owns direct customer engagement software and the ubiquitous Adobe Acrobat platform, two assets we think are underappreciated by the market. Despite valid concerns about greater competition and AI disruption going forward, we think Adobe’s solution breadth and diversification, incumbency and strong positioning upmarket, as well as its ongoing willingness to innovate, should position it well to weather shifts in the competitive environment. We believe Adobe has the potential to generate solid fundamentals over the next several years relative to the share price at which we initiated a position.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Ag Growth International is a promising investment opportunity with a strong market position and a focus on growth, despite current soft commodity price challenges.
Source: https://drive.google.com/file/d/1WDYmJce0s08Bux5mHmWXxHbbCGC2wd1n/view?usp=drivesdk
Analysis:
We recently bought a position in Ag Growth International (AFN) and will be presenting the thesis at the Planet Microcap Conference in Toronto. Ag Growth is trading at 6.5x 2025E EBITDA and 9x 2025E EPS. It is a dominant supplier of portable and stationary grain handling, storage and conditioning equipment. Prices for soft commodities like corn, soybeans, and wheat have declined compared to a few years ago. As a result, many farmers are holding off on replacing essential equipment. We believe this cycle will eventually reverse. With a relatively new management team and board in place, the company is concentrating on what it can control - growing its international business, tightening operations, paying down debt, and executing on high ROIC opportunities.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Amazon.com is an attractively valued opportunity due to its potential as an AI beneficiary, strong balance sheet, and expected growth in free cash flow.
Source: https://drive.google.com/file/d/1lSUsPgRKkD5DMb1gmhy914aKaF2oO7xs/view?usp=drivesdk
Analysis:
One of the largest new positions during the quarter was online retailer, advertising and cloud services provider Amazon.com, in the consumer discretionary sector. We believe the company is trading at an absolute valuation discount given its positioning as a potential AI beneficiary. Given the company’s fortress-like balance sheet, likely expansion of its commercial presence in AI cloud, and expected acceleration in FCF generation despite AI investment, we believe that the company represents an attractively valued and compelling opportunity to get further exposure to strong secular AI tailwinds.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
APi Group is a leading provider of safety, specialty, and industrial services with strong growth potential due to its focus on fire protection and infrastructure services.
Source: https://drive.google.com/file/d/1CHXQ2r4KEfGfVa9HAWpxX62Gd-BuiCSU/view?usp=drivesdk
Analysis:
We also initiated a position in APi Group, in the industrials sector, which is a leading provider of safety, specialty, and industrial services. The company is executing well on organic growth initiatives and has demonstrated a strong ability to compound earnings through disciplined M&A. We believe APi’s exposure to secular growth areas such as fire protection and infrastructure services, combined with its scalable business model, offers attractive long-term upside.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
ATOSS Software offers a high-margin, founder-led cloud growth story with strong recurring revenue and AI tailwinds, making its recent pullback a compelling entry point for long-term upside.
Source: https://drive.google.com/file/d/1UfmBYLOs9h5NTDsXqgab3d3kiNlOEuTA/view?usp=drivesdk
Analysis:
AOF provides cloud-based enterprise software solutions in the HR and Workforce Management space, including time and attendance tracking, employee scheduling, and absence management. Its core market is the DACH region, though international exposure is steadily increasing. In addition, AOF offers Crewmeister, a cloud-based solution tailored to smaller companies.
The company is founder-led by CEO Andreas Obereder, who retains a significant ownership stake (c. 21.56%). Private equity firm General Atlantic holds a similar share and is actively involved in shaping the company’s strategic direction. We view this ownership structure as highly aligned with our interests, shaped by best-in-class partners.
AOF’s scalable and already high-margin business model fits squarely within our enterprise software investment framework. It delivers mission-critical services to its customers, benefits from strong network effects and pricing power, and manages substantial volumes of customer data. In 2024, AOF began rolling out its first AI-powered services – five are already live, with more in development. We also understand the company is actively working on agentic AI solutions, which could further enhance its product offering and competitive edge.
AOF’s growth strategy is focused on accelerating its cloud transformation, aiming to increase its share of recurring revenue from approximately 70% to 75% in the near term. This shift is expected to drive software revenue growth at a CAGR of 16%. Looking further ahead, the company targets more than doubling revenues to around EUR 400 million by 2030, with recurring revenues reaching 80%.
Assuming a 35% EBIT margin, this would translate into EUR 140 million in EBIT by 2030. Investing at today’s enterprise value of approximately EUR 1.6 billion would imply a forward-looking EV/EBIT multiple of around 11.4x. Factoring in a median expected free cash flow of EUR 64 million per annum, the forward EV/FCF multiple would compress to roughly 9.1x by 2030.
Taken together, these projections suggest the potential for annualized returns in the mid-teens to low-twenties percentage range, highlighting the attractive upside for investors entering at the current valuation and remaining invested through the company’s growth trajectory. The company’s strong net cash position provides additional upside potential through M&A and capital returns. Given the high resilience of the underlying business, I view this as a very compelling risk-reward opportunity.
In late 2024, I advised the fund to initiate a position in AOF at around EUR 114 per share, and we have since received EUR 2.13 in dividends. Following our initial purchases, the shares rallied to approximately EUR 145. However, the stock subsequently declined to EUR 99 per share after the Q2 results, which showed a slightly faster-than-expected contraction in the legacy licence software business, even as cloud sales continued at a strong pace. Additionally, several customer projects were delayed due to the macroeconomic headwinds previously discussed.
Despite this short-term volatility, I remain confident in the outlook. The company has clear strategic objectives, a strong execution track record, and key new hires expected in Q4 2025, all of which should support improved momentum heading into 2026 and beyond. Further reinforcing our conviction, the founder and CEO recently purchased EUR 6 million worth of AOF shares at EUR 100 per share. With the stock now trading around EUR 110 – very close to our initial entry point when factoring in the dividend received – I believe the risk-reward remains very compelling.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Berkshire Hathaway is a diversified holding company with strong performance, significant cash reserves for future acquisitions, and a strategic opportunity arising from Warren Buffett’s upcoming retirement.
Source: https://drive.google.com/file/d/1HTi0NnyOuqTFi-qUkEXWtBY-jHh_eA4u/view?usp=drivesdk
Analysis:
Diversified holding company Berkshire Hathaway has generated strong results across its portfolio of operating subsidiaries. It has built a significant cash position that provides stability and positive optionality in the event high valuations for both public and private companies return to more normal levels and allow it an opportunity to acquire new businesses. We capitalized on Warren Buffett’s announced retirement at the end of 2025, which pressured shares, to add the position to the portfolio.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Bio-Rad Laboratories is a leading global producer of clinical diagnostics and life sciences products, with a significant stake in Sartorius, suggesting an attractive valuation amidst recent market de-ratings.
Source: https://drive.google.com/file/d/1oDVZr2wUismOXa73oSnV6nK1A_RNu1oY/view?usp=drivesdk
Analysis:
Bio-Rad Laboratories (BIO) is a global producer of clinical diagnostic and life sciences products. The company is the market leader in a majority of its products and largely sells to hospital and other labs, as well as academic, government, and biopharma customers. Approximately 70% of sales are recurring/consumable in nature. Importantly, the company owns more than 35% of Germany-based Sartorius (SRT-DE). As a global leader in bioprocessing, Sartorius provides many of the vital tools, consumables, and equipment used by drug-makers to develop and manufacture biologic medicines. Tax-affected, BIO’s SRT stake represents almost 50% of BIO’s enterprise value today, which implies a well-below market and peer valuation for BIO’s core operating business. Like most healthcare stocks, both BIO and SRT have seen sharp valuation de-ratings in recent years, as they’ve worked through their own COVID era hangovers. Bio-Rad’s underlying valuation (9x 2026 EBITDA accounting for the SRT stake) seems particularly attractive today, especially considering the prospect of troughing fundamentals.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Booz Allen Hamilton is a leading technology consulting firm for the US government, poised for growth amid increasing demand despite recent negative headlines affecting its shares.
Source: https://drive.google.com/file/d/1qj8VlRhj8Mt8qXIt5tqf-x2-tMhlmdtF/view?usp=drivesdk
Analysis:
Booz Allen Hamilton is a leading US government and military contractor that provides technology consulting, digital transformation, AI, cybersecurity, engineering and mission operations services to the US federal agencies in the defense, intelligence and civil sectors. Negative headlines amid the Department of Government Efficiency’s (DOGE) initiatives weighed on shares. However, we believe Booz Allen provides differentiated technology consulting services to the US government, whose demand we expect to increase over time. The depressed valuation provided us an attractive entry point.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Broadcom is positioned to be a leading player in AI and networking, benefiting from its custom AI chips, dominant software solutions, and strong market execution under CEO Hock Tan.
Source: https://drive.google.com/file/d/1t5Uq2mOkBo_8bZ5enpa-pmhWO-lWyVNb/view?usp=drivesdk
Analysis:
We added Broadcom to Equity Income in April; it has been our best year-to-date performer. A mega-cap semiconductor conglomerate, Broadcom sells primarily design and critical components for leading-edge chips as well as data-center infrastructure software. We believe the real fight in AI is between Nvidia and Broadcom. With a fresh inflection underway, Broadcom is positioned to be the #2—if not #1—winner over the next decade. Led by arguably one of the greatest CEOs of all-time in Hock Tan, Broadcom excels at game-changing M&A and has consistently executed for shareholders producing one of the most successful stocks in the past 2 decades. It competes with NVIDIA in AI and networking chips, while its sticky, non-cyclical software (92% gross margin) buffers cyclicality in semiconductors. Whereas NVIDIA delivers general-purpose “glove-fits-all” compute stacks, Broadcom dominates custom AI chips (ASICs) with Google as its anchor customer, designing application-specific computing chips for Google’s many applications (Search, YouTube, Cloud). Meta and OpenAI have also signed multi-billion-dollar deals to make their own chips. Custom-AI revenue rose 225% in 2024 to $8.6B and is expected to grow ~170%+ this year to $24B. In networking, what allows these chips to talk to one another and work in conjunction and an adjacent and hypergrowth category in AI compute, Broadcom leads with Ethernet—the standard technology across non-AI clouds/enterprise data centers—pressuring proprietary approaches; NVIDIA in response even announced its own Ethernet solution. Its data-center software (VMware) is the 800-lb gorilla in server virtualization, helping manage computing costs (including AI). This high-margin segment should grow teens this year as customers shift from licenses to subscriptions, then at least mid-single digits. Broadcom also holds a near-monopoly in iPhone connectivity (chips for cellular/Bluetooth/Wi-Fi/GPS). We bought our position after a >30% pullback in share prices on tariff fears that implied a 30% EPS cut over 2–3 years. We saw as severely oversold given (1) Broadcom’s lower China-tariff exposure, (2) Google’s rapid AI-chip progress driving demand for more chips from Broadcom and interest from other hyperscalers, (3) continued share gains/innovation in networking, and (4) upcoming recovery across Broadcom’s non-AI businesses. Broadcom sits in a duopoly behind NVIDIA across the AI stack—owning the Ethernet scale-out, custom AI chips for the biggest buyers, a high-margin software cash engine, and iPhone connectivity. 2026 should be another step-up year in AI and networking, with subscriptions fueling steady free cash flow.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Clarus Corp (CLAR) is undervalued compared to private market transactions and has insiders incentivized to maximize shareholder value, making it a strong investment thesis despite a recent earnings miss.
Source: https://drive.google.com/file/d/1x1ZScQ9MyBcNRSGtul9fHiN3ugmtSeMg/view?usp=drivesdk
Analysis:
Clarus Corp (CLAR) – Clarus, owner of Black Diamond climbing gear and Rhino Rack roof racks, was introduced in our H1’25 letter. The thesis is simple. These are strong brands that are valued by the market well below where private transactions for similar assets take place, and the Chairman and largest shareholder of Clarus is properly incentivized to realize full value, most likely through a sale of the business.
In Q3 multiple insiders bought stock on the open market, and when Clarus reported their Q2 earnings in July, they stated, “we have initiated an internal review to ensure we are evaluating all possible opportunities to create value for shareholders” and further indicated they are “committed to seeking to maximize long-term value.” Typically this sort of language is just a hair shy of hanging a “for sale” sign on the business.
In my view, if the thesis is that the stock trades well below private market value, and insiders are incentivized to realize full value, and then those insiders increase their own exposure and indicate that they have initiated an internal review to realize value, then the thesis is very clearly on track.
Nevertheless, Clarus declined ~21% from a few days before earnings to after earnings as they “missed” expectations for quarterly earnings. I suppose the miss is unfortunate, but when the real prize is realizing a private market value that should be multiples higher than the stock market would have you believe, it is completely inconsequential.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Colgate-Palmolive is a market leader in attractive sectors like household goods and personal care, and its strong position and product demand present a strategic investment opportunity following recent price declines.
Source: https://drive.google.com/file/d/1HTi0NnyOuqTFi-qUkEXWtBY-jHh_eA4u/view?usp=drivesdk
Analysis:
Colgate-Palmolive is the market leader in several categories across attractive end markets, such as household goods, personal care and pet nutrition. The company’s leading positions combined with the everyday-use nature of its products should benefit Colgate moving forward. Recent concerns around consumer weakness and inventory destocking weighed on the share price and allowed us the opportunity to initiate a position.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Cooper Companies is a medical devices company with strong growth potential in contact lenses and women’s health, supported by recent investments and favorable market trends.
Source: https://drive.google.com/file/d/1qj8VlRhj8Mt8qXIt5tqf-x2-tMhlmdtF/view?usp=drivesdk
Analysis:
Cooper Companies is a medical devices company operating CooperVision, a global leader in contact lenses, and CooperSurgical, a leader in women’s health and fertility care. We anticipate the contact lens industry will remain healthy and has an ample runway for growth as customers trade up for higher quality lenses. Further, Cooper Companies has an opportunity to take modest share in the contact lens business. CooperSurgical currently faces cyclical headwinds but operates in an end market that should benefit from several secular tailwinds. The company recently made heavy investments in manufacturing capacity.
Given the appealing outlook and our view that slower revenue growth in both CooperSurgical and CooperVision is transitory, we initiated a position at what we believe is an attractive valuation.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Datadog is a leading provider of monitoring and observability solutions for cloud applications, poised for strong revenue growth above 20% driven by increasing complexity in applications and the emerging market for large language model observability.
Source: https://drive.google.com/file/d/1FvtYBTK3e2cMBAUB9ASttkqwEc26UXp_/view?usp=drivesdk
Analysis:
Datadog operates a monitoring, observability and data security platform for cloud applications. Observability is a large and growing end market with penetration rising as use and complexity of applications grow, requiring more performance monitoring. Datadog is a leader in cloud application monitoring, offering ease of use, breadth and scalability superior to its competitors. We believe large language model (LLM) observability, a rapidly growing market due to the acceleration of Gen AI workloads, creates a new vector for growth not reflected in fundamental estimates. Datadog’s mission critical offering and rapid innovation should support attractive >20% revenue growth with an attractive valuation as the company further scales margin and cash flow.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Ferguson is the largest specialty distributor in North America for plumbing, HVAC, and waterworks, demonstrating resilience in revenue despite housing market weaknesses and showing potential for growth through strategic acquisitions and strong demand in non-residential sectors.
Source: https://drive.google.com/file/d/1t5Uq2mOkBo_8bZ5enpa-pmhWO-lWyVNb/view?usp=drivesdk
Analysis:
Ferguson is the largest scaled specialty distributor for North American plumbing/HVAC/waterworks. Its revenue is split ~51% residential, 49% non-residential; ~60% repair & replace (R&R) and 40% new housing builds. About 85% of revenue is finished goods; plumbing is ~50% of mix. ~95% of revenue is U.S., the rest Canada. Their customer base comprises of 22% waterworks, 17% residential trade plumbing, 14% residential build/remodel, 14% commercial/mechanical, 14% fire/fabrication/facility/industrial, 12% HVAC, 7% residential digital. When we began due diligence for Equity Income early in the year, sentiment was washed out: FERG shares traded down 16% post-earnings on fears of commodity deflation and weak outlook. Yet revenue held despite housing weakness. The market priced in zero new-home construction growth plus low-single-digit commodity price deflation. In our opinion, the stock selloff was overdone: (1) housing demand had been weak for over 2 years, (2) commodity products are only 25% of FERG’s mix, (3) specialty distributors had consistently shown pricing resilience. With residential (40% of revenue) in the 5th–6th inning of weakness and non-residential (waterworks/civil/infra) strong, the worst was past us. The overhang was uncertainty on timing: new-home recovery might lag while non-residential could slow first. FERG’s share price implied only low-single-digit earnings growth over the next two years, but our math suggested an easy path to beating expectations. So far, pricing power has held, and non-residential demand has been solid. Consistent with our playbook, we expect continued compounding organically and via accretive M&A. Management has consistently added 2 pts of growth from small bolt-on acquisitions at attractive valuations, with immediate profit uplift when plugged into Ferguson’s procurement, tech, and logistics rails. Scale drives a structural edge—better sourcing, working-capital efficiency, tech—and pricing has proven sticky through deflation scares. Diversification has helped Ferguson outperform smaller, concentrated peers while housing construction remains stalled. Multi-year tailwinds persist in waterworks, commercial, civil infrastructure, and industrial; data-center buildouts also help pull through demand for commercial plumbing/HVAC/pipes/valves/fittings.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Hexagon is a company well-positioned for long-term growth with its advanced sensor and software solutions, strengthened management, and an undervalued stock despite current market challenges.
Source: https://drive.google.com/file/d/1J-uGb0Z6h-PrM3LX7QYXs3uvwLVBiZv_/view?usp=drivesdk
Analysis:
Hexagon provides advanced sensor and software solutions that help companies measure, analyze, and act on the physical world. Over the years, the company has strengthened its economic profile through strategic portfolio transformation and continuous innovation leading to a compelling set of value-added technologies today. The company has, in our view, upgraded its management team with the election of Bjorn Rosengren as Chairman and Anders Svensson as CEO — whose exceptional track records and operational expertise are well-suited to unlock further efficiencies across an already high-quality asset base. Despite solid fundamentals, we think the stock is undervalued due to a combination of end market weakness and company-specific shortfalls that should be addressed by the new, refocused, management team. This created the unique opportunity to invest in a company that we think is poised to see an inflection in return on capital employed (ROCE), cash flow, and share price over the long term.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Hydreight Technologies is a rapidly growing mobile health platform that integrates SaaS technology with telehealth and pharmacy services, projecting significant revenue growth leveraging its three complementary platforms: Hydreight App, VSHOpe, and Hydreight MD.
Source: https://drive.google.com/file/d/1r_5jafoumrUUaGAxY7XSgB0IIz_MkUE3/view?usp=drivesdk
Analysis:
Hydreight Technologies is a vertically integrated mobile health platform that combines SaaS-based technology with telehealth services, digital marketplace, pharmacy services, and prescription delivery. The company operates three distinct business pillars: VSHOpe, which partners with traditional distribution and branding; consumer diagnostics; Hydreight’s on-demand mobile healthcare professionals and patient brands to deliver compliance, on-demand medical care, wellness services, nurse (HCP) administration and logistical fulfillment. The company trades on the TSX Venture under a limited secondary basis, with all financial figures referenced below are presented in Canadian dollars (CAD).
In 2021, Hydreight went public through a reverse takeover and launched in December of 2022 via Victory Square Technologies, raising venture capital at first from its technology strategy team. Following the reverse merger, Victory Square created a new public entity, spun out of Hydreight into its own separate company, distributing VST’s shares to VST shareholders. VST currently still maintains a ~15% stake in the business.
Since going public, Hydreight has experienced exceptional growth, expanding revenues from approximately $3.2M in 2022 to a forecast of over $100 million in the next 12 months. The company has benefited from passive opportunities in the US healthcare market, building three complementary software platforms: Hydreight App, VSHOpe, and Hydreight MD. Each offers slightly different services but is fully integrated within both healthcare initiatives and retail prescription settings. Hydreight’s advanced custom and white-label branding software leverages its regulatory expertise and software across multiple verticals efficiently.
A key selling point for VSHOpe, VSHOpe has full other entity direct mail and has already demonstrated the cost savings these new models could produce for independent firms, contributing approximately 30% cheaper payment processes (ABM)-driven orders. Management believes its growth in the consumer (OTC) could ease through VSHOpe into B2B, and early imitation could have an advantage over the main brands.
Assuming an average gross revenue rate of distribution fees via Hydreight of $100 - $125 for 2023, this revenue growth forecast approximates $130-$216 million in gross revenue by 2025. If consumer collation readily achieves $100, 2021 beta revenues could reach $800M - $1B+ USD, setting the stage for a potential $1 billion in revenue within the next 2-3 years.
I believe Hydreight is capable of being a potential revenue acceleration plan that could be brilliantly competitive in the growing e-commerce space with both scale and strong profitability.
High quality business model
Hydreight operates a highly scalable, technology-driven business model built around three complementary platforms that serve nurses, information providers, and direct-to-consumer health networks. The companies use AI-powered data analytics, advanced recommendation engines, and fraud prevention tools concentrated in multiple complementary features.
Hydreight creates revenue from multiple sources across its ecosystem, including software licenses for SaaS offerings, a percentage of service fees for healthcare and e-commerce transactions, and margins on prescription and consumer health product sales. The company’s integrated approach is designed to increase revenues across these three core platform verticals outlined in the text below:
The Hydreight ecosystem: Through the Hydreight app, registered nurses (RNs) or advanced nurse assistant practitioners (including NAPs), physician assistants, and hormone specialists. Nurses are booked on-demand by health-conscious patients for mobile IV vitamin therapy, cosmetic care, and other medical services. Hydreight’s network of nurses allows it to operate with limited R&D expenses since the nurses are responsible for purchasing their own inventory, with Hydreight providing an operational and organizational platform, network and brand recognition.
Telemedicine & D2C brands: Hydreight’s VSHOpe platform lets consumer health brands launch nationwide telehealth offerings (”CLP”) of hedgehogs, anti-aging, personalized wellness, organic teas, and sexual wellness) in a matter of days. Hydreight provides the compliance and legal framework, as well as a 3rd-party pharmacy that conducts D2C B2A. Hydreight primarily leverages direct-to-consumer programs. This segment leverages Hydreight’s regulatory knowledge of the telehealth business, creating a scalable B2B revenue stream while driving regulation and fulfillment value through the pharmacy network, allowing companies like Helm & Heels to participate easily from home.
Hydreight MD. Clinical Infrastructure: Hydreight MD serves as the company’s regulatory, clinical, and operational backbone. Hydreight’s MG is the infrastructure that enables compliant healthcare delivery across all 50 U.S. states. Hydreight integrates healthcare digital commerce onto the app, but uses the Hydreight App for (nurses) and VSHOpe for the on&label brands. Hydreight MD connects licensed medical directors, prescribing physicians, and nurse practitioners with the company’s proprietary compliance infrastructure to partner platforms and retail brands.
In essence, Hydreight MD is the compliance and clinical engine that allows Hydreight’s other functions to scale effectively, giving the company a leg up on competitors without having to build out a supplier network or forge contracts.
Each of Hydreight’s platforms reinforces the others. The telehealth platform (VSHOpe) drives pharmacy and prescription volume, monetized through Hydreight’s distribution partners. The Hydreight app creates client/patient engagement and brand loyalty, adding demand back into the ecosystem. All these sites are on top of Hydreight MD infrastructure for compliance.
Together, these platforms form a self-reinforcing growth loop where more nurses attract more users and licensed platforms, which in turn generates more transactions and expands the network’s reach. This synergy gives Hydreight a scalable, defensible position at the intersection of software, healthcare delivery, and digital wellness.
Hydreight’s founder and current CEO, Shane Madden, launched the company in 2018. He likes to lead all hydropatched the 2021 post-transaction platform by Victory Square Technologies, serving as an advisor to further launch all of these new software platforms. VST has held the major board of the company and continues to provide it with guidance, including VST’s CEO prior, on how to move forwards as Hydreight’s brand chairman. Madden has the kind of experience and reputation that’s required to bring lifestyle and engineering from leisure directly into the speed of DPC healthcare is exploding. They seem to have gotten the timing exactly right on this, just as the consumer economy in the US has been shifting to patience-based over competition economy brands in the COVID liftoff of 2021. Medicinal products disrupt compressed hospital regulations faster in quality when not clinically logistics compliance directly impacts this bigger retail-healthcare forefront.
It cannot be ruled that anyone could make ARR from onboarding a few partners or industrial affinity transactions—meaning they are essentially launching VSHOpe and have stalled in getting to (as I model it) $1M by end of Jan 2025. Supposedly it hasn’t had enough first sale revenues before 2025 to exercise capital leverage from brands from the big brand push. On the growth transition front, spending on VSHOpe (20 Chapters? growth in users and leads usage compared to Q4-22) at Q6 already outflows preemium rules and are compared to Q2-23.
With $3.2M 2023 EBITDA Number 1 other than raising that nonprofits sequentially become cash positive this year based on having been hit with that adjusted 1M entry EBITDA is skinny, which would be an ENVYROTA 4.66+. These estimates are lower, but have an initial internally communicated EV/EBITDA of BML, without serious major bounce. Management believes the company can double its share of EPS by 2027 versus a current share price of $1.4 CAD for future 5-7 years.
To answer the platform business model of any growth strategy, new investors presumes that I believe VSHOpe could make BML by Jan 2025 for multiple segments and synergy valuations (capacity in trade at 3.5x EV 15M), more near-term target for higher uplift would be to trade a margin forward line solely on regular cash flow from active liquidity EV. VSHOpe thought it would have $112Mish. But I could easily manifest an even higher multiple in the daily current marketplace.
Catalysts and risks
Potential catalysts for Hydreight shares include:
- VSHOpe Growth and Scaling: As noted, Hydreight’s strong execution and rapid growth would likely bring favorable attention to its stock. VSHOpe is already anticipated as be worth maybe as 2024 Canada varies the materialized, is capable of accelerating beyond foreseeable league developments to where it gets positioned to reaccelerate and become the seamlessly exceeded in both market and adjacent areas. Hydreight is excellently well isolated from becoming overrun from unnecessary trades for 2025.
- By 2025, Hydreight has signed over 400+ teams for its VSHOpe driven by lab-test telehealth sessions. By engaging in strategic, marbled partnerships with companies like Helm & ???? and those real Hines & Kres, with over 2.22 million subscribers, underscores the potential of featuring digital healthcare expansions. Like Hims, Hydreight’s long-term opportunity lies in expanding service breadth, deepening audience engagement, and leveraging all of its above attention and lifetime value through recurring core models and cross-selling.
Hydreight is also capitalizing on its bespoke CLP to health management trend. With the digital sub-verticals market projected to exceed $450 billion by 2028, the power of these affiliate brands drives Hydreight’s unlimited flexibility and call CP. Hydreight - they have partnered with Dr. Franklyn (epson). A leading UK obesity specialist, is to introduce a clinically proven weight loss program for US patients. This initiative dramatically empowers Hydreight’s distribution capabilities by reducing patient base losing administrally supervised, prescription-approved management solutions at a reduced cost compared to traditional pharmaceutical claims.
Business risks: Hydreight’s biggest risks—if it expands or broadens its service verticals. The company is selling out over diving in personalise primary wellness, ad-driven diagnostic marketing, and switching duties like NAD+. The pandemic saw someone resurrected 450 exclusive members as it self-project made exchange attending Hydreight’s for-Deemer addressable market across multiple wellness categories. VSHOpe’s 2025 forecast to $1.3m annual incremental revenue, leaving a release of first phase cycle thought by selling 1bn incremental businesses seems to have made plain.
Reasonable valuation
Hydreight’s valuation is unreasonably either, even despite the massive growth it has seen. Currently, its run rate is 300M ARR from onboarding a variety of partners, with aggregate annualized revenue—any seems nascently launch VSHOpe and have scaled in getting to (as I model it) $1M at the—by end of Jan 2025. Supposedly hasn’t had financially an achieved first sale revenue capitalization leverage thing the big brand push. On the growth transition front, expanding on VSHOpe (20 Chapters?? growth in users usage compared to Q4-22) at Q6 already exceeds preemium rules, as compared to Q2-23.
With a 3.2M 2023 EBITDA Number or other than that majorly enl ?????ré became overtly positive this year as management had been that adjusted 1M entry EBITDA is skinny, which would be an ENVYROTA of 1.5x. These estimates of serious low are. Management believes internally communicated of envy EBITDA / MLC with above bounce though.
Management believes the company can tabulate its share of EPS by 2027 versus a current share price stated at $4 CAD for future 5-7 years.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Kansai Paint is a leading Japanese paint and coatings company that has reinitiated investment due to improved value and management’s focus on niche markets and shareholder returns after a recent share price decline.
Source: https://drive.google.com/file/d/1C57VMFMTbk1veIYy3T7He8kR0i7-sWPB/view?usp=drivesdk
Analysis:
Kansai Paint is one of the two market leaders in paint and coatings in Japan. The company’s products are used primarily for automobiles, construction, and ships along with bridges and residential housing. We have owned Kansai on and off over the past 15 years. We most recently sold out of the company in early 2024 as the share price reached our estimate of intrinsic value. Since then, the share price has declined more than 20% due to weak auto production and a weak decorative market in India as well as a de-rating of most global paint companies. Since then, management has focused on shifting emphasis to niches within the paint market, such as construction chemicals and wood coating while focusing less on retail. With the shares priced at more attractive levels, we reinitiated a position in the company. After speaking with management, we continue to believe that there is ample opportunity to reduce costs and improve profitability. Additionally, we believe many of the negatives of the Indian decorative market are now priced into the shares. Finally, we think management continues to allocate capital well and plans to return 100% of free cash flow through dividends and share repurchases.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Kaspi is undervalued compared to peers but shows strong growth potential with its expansion in Turkey and upcoming acquisition of Robobank.
Source: https://drive.google.com/file/d/1sTOXDOEH8fNjdz6FIJXHdReWvtlYkrBx/view?usp=drivesdk
Analysis:
KSPI continues to lag peers despite improving fundamentals, trading at roughly 7x earnings, a substantial discount to other dominant regional e-commerce platforms. Although the company reported earnings above Street expectations, investor focus remains on Kaspi’s expansion into Turkey. Its Turkish subsidiary, Hepsiburada, delivered its first full quarterly results since the acquisition, posting 42% year-over-year EBITDA growth. In addition, the pending Robobank acquisition, expected to close in the second half of the year, should further strengthen Kaspi’s position in the digital lending ecosystem, following a similar playbook to its success in Kazakhstan. We remain confident in management’s ability to execute and scale its platform effectively in Turkey.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Lifecore Biomedical Inc (LFCR) is positioned to benefit from excess capacity in a high-demand CDMO market, supported by new customer wins and favorable regulatory developments, despite a recent stock decline due to misinterpretations of an S-3 filing.
Source: https://drive.google.com/file/d/1x1ZScQ9MyBcNRSGtul9fHiN3ugmtSeMg/view?usp=drivesdk
Analysis:
Lifecore Biomedical Inc (LFCR) – Lifecore is our fill-finish CDMO. Essentially they put liquid medicines into vials or syringes. The thesis is that Lifecore has excess capacity to sell in an industry where demand far outstrips supply, and it takes years for new supply to come online. High fixed costs and low variable costs means that additional revenue will come with tremendous operating leverage. In the quarter the company announced multiple new customer wins including a GLP-1 and a large international pharmaceutical company, and there were several signs that winning additional business should be getting easier. Notably, the Food and Drug Administration (FDA) announced that drugs that are manufactured domestically will receive priority review. Further, while the news here is fast-changing, Trump indicated that companies that manufacture their drugs abroad will face 100% tariffs unless they are in process of developing domestic capacity. Lastly, an industry rag published a piece noting that recently there has been a problem with CDMOs leading biotechs on and then backing out of any potential deal. The implications of this are not crystal clear, but I believe CDMOs have been bailing on biotechs (smaller customers) so that they can focus on the bigger and better opportunities that are surfacing due to regulatory pressures on international pharmaceutical companies to move production to the U.S. All of these developments seem to be very good for the thesis. On the flip side, the company filed an S-3 that included a shelf that could be used to raise equity capital, and the market seems to have interpreted this to mean that dilution would be forthcoming. However, the company has made clear that this is just good corporate housekeeping, and they have no intention to raise capital. Rather, as they only became current on their filings a year ago, this was the first time they were S-3 eligible, and a survey of other companies of similar size reveals that having a shelf in place is standard practice. The net of these clear long-term positives and meaningless short-term negatives is that the stock declined 22% from intra-quarter high to quarter end.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Medpace is a leading CRO that achieves consistent growth and exceptional margins by focusing on serving small and mid-sized biotech companies with a disciplined, full-service approach under the leadership of its founder-CEO.
Source: https://drive.google.com/file/d/1Loh8e4NB07KtJdwfk6vmzHEpI8Kb12TU/view?usp=drivesdk
Analysis:
Medpace is one of the leading contract research organizations (CROs) focused on small and mid-sized biotech companies. A CRO manages and executes clinical trials for pharmaceutical and biotech firms, helping them bring new drugs and treatments to market more efficiently and cost-effectively. Founded in the early 1990s by Dr. August Troendle—who still serves as CEO and owns roughly 20% of the company—Medpace has compounded organically at roughly 20% per year for over three decades, while maintaining best-in-class margins and exceptional free cash flow conversion. The company’s strategy is deceptively simple: recruit great people, operate with extreme focus and discipline, and own its niche—small and mid-cap biotech. Unlike peers that blend business models, Medpace operates exclusively on a full-service basis, meaning clients hire them to run entire clinical trial phases end-to-end. This structure enables higher quality control, tighter coordination, and more predictable outcomes for both clients and Medpace itself. The result is a business that scales through operational precision, not acquisition. Their relentless focus—both on what they do and what they intentionally don’t—has been a key driver of long-term success. Equally impressive is Medpace’s capital allocation discipline. Troendle has shown patience during expansion periods, allowing cash to build, and decisiveness when opportunities arise. On two separate occasions when the stock fell more than 30% amid temporary biotech slowdowns, Medpace repurchased ~10% or more of its shares—each time preceding sharp accelerations in earnings and share price. Even at a $15 billion market cap, Medpace holds only a single-digit share of its addressable market, which continues to grow at high single-digit rates. With significant growth runway, a deeply aligned founder-CEO, and a culture rooted in focus and capital efficiency, Medpace exemplifies the kind of underappreciated, inflecting compounder we seek to own.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
With strong momentum toward FCC approval, strategic leadership moves, and spectrum valuation comps suggesting massive upside, NextNav stands poised to unlock transformative value in an overlooked alternative GPS and 5G play.
Source: https://drive.google.com/file/d/1x1ZScQ9MyBcNRSGtul9fHiN3ugmtSeMg/view?usp=drivesdk
Analysis:
NextNav Inc (NN) – NextNav is our wireless spectrum and alternative GPS investment. The thesis is that since the United States desperately needs a terrestrial backup to the GPS system, the Federal Communications Commission (FCC) will allow NextNav to repurpose its existing spectrum for 5G wireless communications that will also bring a terrestrial backup GPS system to the masses. When greenlit for 5G, NextNav’s spectrum should be worth multiples of where NN stock currently trades.
During the quarter there were several positive developments for NextNav. First, Brendan Carr, Chairman of the FCC, again made a speech highlighting that the U.S. needs a backup to the current GPS system. Second, NextNav filed papers with the FCC documenting certain ex parte meetings that had taken place between NextNav management and the very members of the FCC that would be responsible for drafting a Notice of Proposed Rulemaking (NPRM), which would be the next step in the process to greenlight the spectrum for 5G. This is important because the risk with the FCC is that NextNav’s proposal just winds up lost in a drawer somewhere. That is clearly not the case. Third, NextNav moved long-term CFO Chris Gates out of the CFO role and into a corporate development role. Gates is not just a numbers guy. He is listed on NextNav’s patents and has deep knowledge of spectrum, which will be important when it comes to monetization. I believe the signal value of this move is high; why move the CFO into a business development role unless you thought you would imminently have approval from the FCC? Last, it was announced that AT&T (T) would be buying spectrum from EchoStar (DISH). The deal includes low-band (similar to NextNav’s spectrum) and mid-band spectrum so it is not possible to know how much was paid for the low-band spectrum with 100% accuracy, but my best guess is that the price was ~$2.50 per MHz/pop. This is not necessarily apples to apples with NextNav’s spectrum and there is still considerable uncertainty around what monetization of this spectrum will look like, but at $2.50 per MHz/pop that would imply a price for NN’s stock that approaches $60 per share.
In addition to these clear long-term positives, during the quarter there were some short-term negatives. Most notably, fears of a government shutdown – which of course have come to pass – weighed on the stock based on the (erroneous) assumption that closing the government would delay NextNav’s process with the FCC. Additionally, NextNav announced the successful closing of a previously announced transaction whereby the company purchased additional spectrum licenses. The seller of these licenses was paid in shares, and as the seller is the estate of deceased individuals, the thought is that this estate will be a forced seller of sorts.
The net of these clear longer-term positives and meaningless short-term negatives is that the stock declined approximately 20% from its intra-quarter highs to quarter end.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Oracle is expected to grow its market share and profitability in cloud infrastructure for AI workloads due to its competitive data center architecture.
Source: https://drive.google.com/file/d/1FvtYBTK3e2cMBAUB9ASttkqwEc26UXp_/view?usp=drivesdk
Analysis:
During the quarter, the Strategy initiated new positions in infrastructure software providers Oracle and Datadog and added to custom silicon developer Broadcom. Oracle, a leading provider of database software for large enterprises, has successfully expanded into cloud infrastructure as a platform to run generative AI workloads. Oracle is gaining share among hyperscalers due to its lower-cost data center architecture, which is well-suited for large-scale AI training workloads. We believe Oracle’s share of the market will continue to grow over the next few years with profitability of this growth underappreciated by the market.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Pacific Gas & Electric (PCG) is a California utility company that is expected to recover from recent wildfire-related challenges and close the valuation gap with its sector peers as legislative support for wildfire funding progresses.
Source: https://drive.google.com/file/d/1qYJjMB_osjpeckV493MYG9zcn-R-Oji4/view?usp=drivesdk
Analysis:
We established a medium-sized position in Pacific Gas & Electric (PCG) at an average price of $15.15 per share. PCG is a California-based regulated utility that transmits and distributes electricity and natural gas. In theory, regulated utilities operate as local monopolies that earn a guaranteed return on capital invested. This includes passing through costs from catastrophes such as the wildfires in California. In practice, these cost recoveries are sometimes complicated by politics, which can also lead to unexpected outcomes. As a result, California-based regulated utilities have a much higher cost of capital than non-California-based regulated utilities. This higher cost of capital directly passes through in higher prices to California residents. Affordability has become a hot-button political issue in California, and state officials are focused on solving this through reform.
In January, Los Angeles suffered a disastrous wildfire. While PCG was not involved, Edison International (EIX) was, and related claims are expected to consume most (or all) of PCG & EIX’s shared California Wildfire Fund, an important defense against wildfire-related damage claims. On the heels of this, PCG’s earnings multiple collapsed to a low of about 8x. We invested with the view that the legislature was likely to put in place funding support for the California Wildfire Fund and make further wildfire risk reform a priority. Since we invested, we’ve seen positive progress on each of these initiatives and believe that as tail risk recedes, PCG shares should close the discount to the nearly 18x average multiple for the sector. PCG ended the quarter at $15.08.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
PAR Technology Corp is a leading enterprise software provider for quick-serve restaurants with strong future prospects despite temporary revenue delays.
Source: https://drive.google.com/file/d/1x1ZScQ9MyBcNRSGtul9fHiN3ugmtSeMg/view?usp=drivesdk
Analysis:
PAR Technology Corp (PAR) is the leading player in enterprise software for enterprise scale quick serve restaurants. In the quarter, the company reported a record backlog, noted that customer win rates remain very high, observed that multi-product wins are accelerating, indicated that the second half of 2025 should be very strong, and mentioned they are pursuing three mega-tier one deals, two of which they hope to hear about by the end of 2025, and one that is likely in the first quarter of 2026. In addition to these clear positives, the company also provided cautious guidance around fiscal year 2025 revenue due to a combination of customers delaying the rollout of already contracted business due to macro uncertainty, alongside an internal decision to postpone some business to channel resources towards securing the previously mentioned mega-tier one customers. None of this business has been lost; it has only been delayed. However, the net effect has led to a stock decline of over 40%. In my view, if the thesis is that PAR has the best product suite in a world where restaurants are increasingly software-centric, an easily explained temporary revenue delay should not cause panic. No new competitor has emerged with a better product, and restaurant owners still recognize that software is the future. The thesis is still intact, and I expect that in the coming months, PAR will win at least one of the mega deals they are currently pursuing, further validating the thesis.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
PAR Technology Corporation is currently experiencing significant stock volatility, having dropped 44% recently, but its long-term potential remains promising due to strategic pauses in growth to pursue major contracts, such as potentially with McDonald’s, which could greatly enhance its future revenue.
Source: https://drive.google.com/file/d/1LMyAieS-O01KA48sOASWGe6_LIYTmWzS/view?usp=drivesdk
Analysis:
PAR Technology Corporation (PAR) has been a stock in the portfolio since the Fund’s inception. More recently, however, PAR has experienced a significant drawdown. The stock fell 44% in a span of two months, declining from $71 per share in late July to around $40 at the end of September. That precipitous decline has been damaging to the Fund’s returns, given that PAR was a top-five portfolio position. It is worth recounting what happened and why we still believe the future is bright for PAR.
PAR reported a Q2 2025 earnings result that disappointed investors, sending the stock down by 19% in the following trading session. The culprit was PAR abandoning its prior guidance of 20% organic annual recurring revenue (ARR) growth for FY25, instead guiding investors to “mid-teens” growth. There are two factors that explain this growth reset:
1. A softer restaurant spending backdrop led customers who have already signed deals with PAR to delay their point-of-sale (POS) rollouts.
2. PAR itself intentionally paused certain POS installations.
Impact from softer macroenvironment
Before the Q2 2025 result, PAR’s management team had consistently communicated that PAR was insulated from macroeconomic pressures, even signalling on the Q1 2025 call that the tougher macro backdrop would push restaurant concepts to upgrade their tech stack.
This appeared reasonable to us given the following points:
- PAR comprises a minor portion of a restaurant’s cost base;
- Restaurants chains are relatively durable businesses and unlikely to experience a level of financial downside that would force them to shelve their technology investment plans;
- A number of PAR’s value oriented casual restaurant customers benefit from trade down activity in a more difficult economic climate; and
- PAR has shifted their go-to-market motion to focus on communicating the ROI of PAR’s software suite, helping customers drive revenue during tougher economic periods.
It surprised us, as well as the market, when PAR CEO Savneet Singh called out macroeconomic pressures on the Q2 2025 earnings call as a reason for customers delaying the rollout of contracted deals, as well as deal signings of larger deals being delayed. Savneet reiterated that these contracted deals have been pushed out by a month or two, but have not been lost. Regardless, this growth blip contributed to greater uncertainty around PAR’s growth trajectory going forward, which no doubt fed into the steep price decline.
In September 2025, at the Morgan Stanley Laguna Industrials Conference, Savneet commented that Q2 was an unexpectedly weak quarter with two-thirds of PAR’s customers experiencing negative same store sales and negative traffic, a phenomenon the company has not witnessed outside of the COVID period. However, and somewhat reassuringly, Savneet also mentioned that while it took a few months for the restaurant industry to return to some form of normalcy following Q2, he believes that the industry has moved beyond that weak period.
Pausing rollouts to go after mega deals
As for the paused rollouts that contributed to the ARR growth downgrade, there are two parts. The first is the pause of the Burger King (BK) POS rollout, which was well-telegraphed before the Q2 2025 result. PAR re-sequenced its rollout after BK opted to add an additional PAR package. We view this as a positive sign that speaks to PAR’s “better together” value proposition – that is, customers derive greater value from using multiple products on PAR’s unified platform. The BK rollout has resumed and the feedback we’ve heard suggests that the rollout is proceeding well.
PAR also paused some Taco Taks POS deployments in the quarter, which was a surprise and meant that the incremental ARR dollars from those deals would be pushed into later quarters. This had the effect of depressing the organic ARR growth rate for FY25. The reason for this pause was to focus on requests-for-proposal (RFPs) from several mega tier 1 quick-service restaurant (QSR) brands (two of them are global top-10 brands and the third is a top-20 brand).
In other words, Savneet made a decision to sacrifice short-term performance for long-term value creation. While the optics of a short-term ARR growth air pocket are negative, we applaud Savneet for having the courage and discipline to prioritise these transformative contracts that could unlock far greater long-term value.
One of these RFPs is widely believed to be McDonald’s, and it would potentially be for a global contract across McDonald’s more than 44,000 units. This deal alone could represent more than $100 million of incremental ARR at 50% incremental margins. And this compares to PAR’s current circa $280 million in ARR. In other words, winning McDonald’s would be a transformational deal for PAR’s business.
That magnitude of ARR would be rolled out over a multi-year period, providing good coverage and visibility of PAR’s ARR growth for years to come. Winning McDonald’s, particularly as the QSR giant has been the posterchild for a homegrown POS solution, would also be a powerful stamp of approval for PAR’s platform. No doubt other restaurant brands would seriously consider PAR’s solution if it was good enough for McDonald’s to abandon its own inhouse POS software.
Handicapping the odds of winning McDonald’s or any number of the three mega tier-1 deals is very difficult. However, if each deal has a 30% chance of success, the odds of winning at least one of the three deals is around 66%. At a 50% chance of success per deal, the odds of winning at least one of the deals is approximately 88%. We believe there is a strong tail event odds that PAR manages to close at least one of the three mega deals. Any of these mega deals would be a needle mover and bring in an organic ARR growth multiple of PAR’s current growth rate.
Despite the potential to win one or multiple of these mega tier-1 RFPs, PAR’s stock has continued to drift lower following the post-result sell off. We think there’s now a materially higher chance that a private equity outfit is running the rule over PAR as an acquisition target. Notably, private equity giant Thoma Bravo acquired PAR’s competitor, Olo, earlier this year, outbidding who we suspect was PAR for that asset. It would make strategic sense to combine these assets, and we believe that Thoma Bravo has been given an opportunistic window to launch a takeover of PAR – that is, PAR is trading cheaply and any announcement of a mega tier-1 deal by PAR would likely foreclose the opportunity for Thoma Bravo to pick up this asset on the cheap.
PAR has been an example of some of the volatility that can occur when investing in a good business that is in the process of becoming a great business. PAR is a complex story with financials that are messy due to a major divestiture, acquisitions, and periodic heavy investments. It takes a bit of digging and analysis to build conviction in the story for PAR. The problem is if others don’t do the deep work to understand the story, then they are less likely to stay the course when doubt is cast over the growth potential. The complexity makes it harder for others to see the value.
While we believe the underlying economics associated with incremental ARR dollars are very attractive, the company is not yet free cash flow positive and current profitability is muted. There was a reliance on continued execution to prove out the financial potential of PAR. Things were previously heading in the right direction and our thesis was playing out, but the Q2 result prompted investors to second guess the sort of financial performance the company is capable of achieving.
We think at the current price level, there is an enormous upside asymmetry, particularly in the event that PAR wins McDonald’s or another mega tier-1 restaurant brand. We are comfortable bearing some of this near-term volatility to remain exposed to this upside.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Progressive is a leading auto insurer that leverages data and analytics to offer competitive rates and consistently profitable underwriting, positioning itself for continued growth in the market.
Source: https://drive.google.com/file/d/1RbNzVte28CzsUmB3Zap4A8oOD2uYUcXB/view?usp=drivesdk
Analysis:
During the quarter, we made a new investment in Progressive (PGR), which I believe is a great example of sharing economies of scale with customers. Progressive is currently the second largest auto insurer in the United States, and additionally has small lines of business writing homeowners, renters, and commercial insurance. Since the 1960’s, Progressive has been a leader in using data and analytics to profitably underwrite its policies and has had a cheaply available direct to consumer channel that lowers operating costs for the insurer. This reliance on data and analytics and leaner cost structure leads to Progressive being able to offer highly competitive rates on its policies that competitors struggle to match.
Since 1971, Progressive has targeted a 96 combined ratio, which means that for every S100 dollars in premiums that they collect, they aim to keep $4 in profit after paying out all claims and underwriting expenses. By sticking to a standard 4% underwriting margin, Progressive has been able to share all its scale efficiencies with its policyholders. Any savings that Progressive generates from better underwriting results in lower premiums paid by its customers, which attracts more customers, and subsequently lowers costs through better data and more policies over which to spread fixed expenses.
Most other insurers do not operate this way. In fact, the only other auto insurer who is known for pursuing a similar strategy is Berkshire Hathaway’s GEICO, and is still instead known for impressive expense management rather than their loss ratios. Instead, many other insurers let the marketplace influence their pricing strategies, choosing to lower their premiums during soft markets to attract more customers, which results in losing money on those policies once the cycle turns, and then losing those customers on the other side once they are forced to ratchet up their premiums. As the low-cost option, Progressive takes share when competitor policyholders begin to shop around once their premiums rise.
Admirably, Progressive aims to make money from writing insurance policies. As funny as that may sound, this is in stark contrast to the rest of the industry, which has an average combined ratio of 100 (no underwriting profits) and attempts to make up for it by investing the floated premiums. This focus on being profitable on the aggregate, but not individually, leads to a more relaxed attitude towards expense management. Progressive is different. The company was an early adopter of direct-to-consumer, which reduces agent commissions, and has also automated large components of underwriting and claims processing, which results in a lower cost structure. And again, crucially, these savings are passed on to the customer in the form of lower premiums.
Insurance pricing is somewhat of a black box; what I get quoted may be very different than what you are quoted from each carrier. Each insurer can also have a wildly different policy mix, whether by customer segment or by policy type (liability or full coverage, for example). Thus, comparing average rates can be difficult. However, we know the following: (1) customers will almost always go with the cheapest policy that meets their needs, and (2) Progressive has grown policies-in-force by nearly 10% per year over the last ten years. Data from industry and consumer surveys paint a similar picture and often show that Progressive offers rates that are anywhere from 10-20% lower than the national average, and typically far below other major carriers like State Farm and Allstate. Most notably, this implies that if Progressive were to price their policies at the national average rate, their targeted 96 combined ratio would actually be in the low to mid 80s.
I believe that Progressive still has a long runway for growth despite their current ~16% market share. State Farm peaked at just under a quarter of the market in the 1990s, and it does not seem unreasonable to assume that Progressive could also reach this size. The total number of registered vehicles in the United States grows between 1-2% per year, and Progressive should be able to continue to take share from large and small competitors alike. Progressive could grow their policies-in-force by an average 6% per year over the next decade before running into the 25% ceiling, and it is not clear to me that this should be the theoretical maximum. An additional 4-5% in annual rate increases implies 10% normalized growth over the next ten years, to which the market does not seem to be charging very much for.
The consensus is that Progressive is currently overearning, and that a softening property & casualty market will depress earnings in the near term. That is true to some extent. However, over penalizing the company for short-term headwinds overlooks the long-term value that they will create. Progressive is an outstanding business that will strengthen as a result of the insurance cycle, and their 10-to-20-point underwriting advantage is set to grow even larger over time as they pass savings on to their customers.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Roblox is experiencing a re-acceleration in growth driven by improved algorithms, AI advancements, and expanding market opportunities, positioning it for strong revenue growth and margin expansion.
Source: https://drive.google.com/file/d/1CHXQ2r4KEfGfVa9HAWpxX62Gd-BuiCSU/view?usp=drivesdk
Analysis:
We added communication services company Roblox, the leading user-generated gaming platform. Roblox is experiencing a fundamental re-acceleration in growth due to improved discovery algorithms and AI driving faster game development and growing opportunities in advertising. With a dominant position from its network effects, a plethora of creator tools and the ability to grow its virtual economy, we believe that Roblox will continue to drive strong top-line revenue growth. Secular tailwinds such as expansion into older age demographics and internationally, as well as margin expansion opportunities as existing user engagement continues to grow, also position the company well.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
SailPoint is well-positioned to capitalize on the expanding market for identity governance as AI agents become increasingly prevalent, creating significant opportunities for growth in managing both human and machine identities.
Source: https://drive.google.com/file/d/1ccpasXI--Uoio0OEBiZRI691L7AD2KUx/view?usp=drivesdk
Analysis:
Earlier this year, researchers discovered a zero-click vulnerability, “EchoLeak”, in Microsoft 365 Copilot, which represented the first known zero-click attack on an AI agent. In this vulnerability, an attacker could send a seemingly normal email containing hidden instructions that the AI assistant would process when the user later asked Copilot a question about said email, resulting in the user unknowingly exfiltrating sensitive data to the attacker’s server. Thus began the AI era of cybersecurity, where AI agents are just as vulnerable to attacks as workplace employees.
SailPoint is a pioneer in identity governance and administration (IGA), which involves managing and securing dynamic access to critical applications and data for every enterprise identity. This capability requires deep, broad controls for proper access authorization, automating functions like account provisioning, and access certification across all identities. Identity governance is essential for operationalizing zero-trust security by helping companies achieve dynamic real-time security and prevent people from maintaining permanent, exploitable, high-level permissions and access.
The NZS team has had a long history investing in all aspects of the zero-trust security landscape – from Secure Access Service Edge (SASE), to end-point management and security, and identity security (e.g., IGA, privileged access management [PAM], and identity and access management [IAM]) – and we were investors in SailPoint until the company was taken private by Thoma Bravo in 2022. We were pleased to see SailPoint relaunch as a public entity this year. Many enterprises are still shifting away from the old “castle and moat” security of the last decade to zero-trust security, and the emergence of agentic AI is dramatically expanding the total addressable market for identity, especially IGA. The trend may not be isolated to security software, as AI agents may expand the overall software market rather than shrink it (in contrast to the market consensus). This view, in part, informs the addition of several software stocks to the portfolio, as referenced in Portfolio Positioning above.
Up until recently when discussing identity, we were almost exclusively talking about human identities – employees in sales, IT, finance, etc., as well as the non-employee workforce of contractors, consultants, and third-party suppliers/vendors who have access to systems/data – who are vulnerable to attacks like phishing, malware, and ransomware. In the new world of AI, however, data and systems are also being accessed and manipulated by digital entities. As the zero-click attack above highlights, they are no less vulnerable to exploitation. Thus, in terms of security, these non-human entities should be treated as equivalent to their human counterparts.
We own SailPoint as an optionality position because this new TAM of machine identities and complex AI agents is both massive and incredibly difficult to manage. In companies that have begun to adopt AI, we are already seeing non-human accounts outnumber their human counterparts. In some cases, these machine identities outnumber human identities 10 or even 20 to 1, meaning that the TAM for IGA is multiples larger in the world of AI. Additionally, these non-human identities tend to be very task specific, making them short lived and constantly being provisioned up and down each and every second of the day. These dynamics make governance incredibly difficult and important in the grand scheme of security.
With SailPoint only recently developing their monetization framework for non-human identities, we see an ample runway for top-line growth coupled with continued margin expansion as this new vertical scales. Based on our research, we believe that these conditions could enable SailPoint to continue their strong growth while possibly improving their non-GAAP operating margins from approximately 17% today to a figure closer to best-in-class software peers that can have margins >30%.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
STERIS is a leading player in infection prevention and sterilization with strong organic growth, a reasonable valuation, and favorable long-term industry trends.
Source: https://drive.google.com/file/d/1oDVZr2wUismOXa73oSnV6nK1A_RNu1oY/view?usp=drivesdk
Analysis:
STERIS (STE) – leader in infection prevention, sterilization, and procedural solutions for healthcare providers, hospitals, pharmaceutical & bioprocess customers, and medical-device makers. Despite an overall economically defensive model with ~75% of sales from service and consumables, Steris has historically delivered high single-digit % organic growth and been active in M&A. Valuation is reasonable at 22x 2026 EPS (in line with medium-term history) and the balance sheet is strong at 1x net leverage (low end of historical range and an opportunity for capital deployment). Long-term secular tailwinds from an aging global population and continued innovation in healthcare procedures and devices/technology should be continued drivers of growth going forward.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Taiwan Semiconductor is a leading chip manufacturer with a strong market position and growth potential, despite geopolitical risks affecting its operations.
Source: https://drive.google.com/file/d/1HzBqfFxjXB5uvXdrjfal5fXgmwqb2Fwg/view?usp=drivesdk
Analysis:
During the quarter, we initiated a 3.5% position in Taiwan Semiconductor, the world’s foremost semiconductor manufacturer. Since its founding by former Texas Instruments executive Morris Chang in 1987, Taiwan Semi has operated as a foundry, making chips designed by others. This was a different model from Intel, which both designed and manufactured its own chips. Intel has been a great company for decades, but eventually it fell behind on the implementation of EUV lithography, which has become table stakes technology for chip manufacturers. Meanwhile, chips are becoming more complicated to manufacture as designers pack more transistors onto tiny slivers of silicon. In 2023, the newest generation of Nvidia chips was carrying electric signals separated by three nanometers on a chip. For reference, the width of a human hair is 50,000 nanometers. Samsung and Intel, the best competitors to TSMC, struggled to make chips at this specification and TSMC began to look like a monopoly at the leading edge. Two years later, TSMC is making chips at two nanometers and is working on 1.4 nanometer chips. Intel and Samsung continue to struggle with yields at three nanometers. Again, the smaller the distance between transistors, the more signal a chip can carry. More signal equals more processing power. Demand for the most powerful chips is booming. The CEO of Advanced Micro Devices forecast recently that the market for high performance chips should grow 60% annually through 2030. TSMC may be the only foundry that can produce such chips. Yet while Nvidia and Broadcom, two leading chip designers, trade for prices in the neighborhood of 40x next year’s earnings, their sole manufacturer of finished product trades for half that multiple. If you look at the top 10 stocks in the S&P 500, four of them are directly dependent on TSMC as their sole source of chips: Nvidia, Broadcom, Apple and Tesla. The market is rightfully concerned about the risk of conflict between China and Taiwan, and the possibility that TSMC could be shut down during a military action. In my opinion, which could be wrong, this risk is no less threatening to Apple and Nvidia as to their manufacturing partner. Plus, TSMC is investing some $165 billion dollars in manufacturing capacity in the US and should have 30% of high-end capacity here by 2028. In sum, this is an investment John and I believe offers the potential of high earnings growth at an attractive price, a “fat pitch” that rarely gets thrown across the plate. We know why the pitch has come our way: geopolitical risk. John and I think the market is wrong to view the US-based chip designers as somehow insulated from the risk of military conflict in Taiwan so long as they are dependent on TSMC for supply. Until evidence emerges that Intel, Samsung or someone else is making significant progress at the leading edge of manufacturing, TSMC appears to have enormous pricing power and volume growth for years to come.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
With a dominant position in Canada, a fast-growing U.S. retail footprint, and a conservative risk culture that ensures stability across cycles, TD Bank offers a rare blend of defensive strength and long-term growth potential.
Source: https://drive.google.com/file/d/1XXgxRunCs2LK6lPhFTh5cdT1aibWAtf6/view?usp=drivesdk
Analysis:
The Toronto-Dominion Bank, commonly known as TD, stands as one of North America’s premier financial institutions. Headquartered in Toronto, it is a pillar of the highly stable Canadian banking oligopoly, a market structure that provides significant and durable competitive advantages. While deeply rooted in its home country, TD has successfully executed a long-term growth strategy focused on establishing a substantial and growing presence in the attractive U.S. retail banking market. The bank’s core philosophy is anchored in a conservative risk culture and a primary focus on traditional retail and commercial banking, which generates consistent and predictable earnings throughout economic cycles.
TD operates through three main segments. The largest and most mature is Canadian Retail, which serves millions of customers across Canada. This segment encompasses a complete suite of financial products and services, including personal and commercial banking, credit cards, wealth management, and insurance. TD’s extensive network of branches and automated banking machines, combined with a leading digital platform, has solidified its powerful brand recognition and a top-tier market share in nearly every product category. The stability of this segment provides a low-cost funding base and a reliable foundation of earnings that supports the company’s strategic initiatives.
The second key segment is U.S. Retail, which has been the company’s primary growth engine. Operating under the brand “America’s Most Convenient Bank,” TD has built a significant presence along the U.S. East Coast, from Maine to Florida. The strategy is centered on providing superior customer service, longer branch hours, and a user-friendly banking experience to attract and retain a loyal customer base. This U.S. franchise has been built through a combination of organic growth and disciplined, strategic acquisitions. Furthermore, the bank’s substantial ownership stake in Charles Schwab provides significant exposure to the U.S. brokerage and asset management industry, adding a high-quality source of equity income.
The third segment, Wholesale Banking, operates under the TD Securities brand. This division provides a range of capital markets, investment banking, and corporate banking services to corporate, government, and institutional clients. Importantly, the wholesale business is managed to complement the broader enterprise and is not the primary driver of risk or profitability. Management maintains a disciplined approach, avoiding the excessive risk-taking that can be characteristic of stand-alone investment banks. This ensures that the stability of the core retail operations is not jeopardized by volatility in the capital markets.
TD’s enduring competitive advantage, or moat, is derived from its immense scale, the entrenched customer relationships inherent in retail banking, and its conservative management culture. In Canada, the oligopolistic market structure creates formidable barriers to entry for new competitors. Customers face high switching costs when moving their primary banking relationship, leading to a sticky and low-cost deposit base that is difficult to replicate. This stable funding source allows the bank to lend profitably and consistently. The bank’s management team has a long track record of prudent capital allocation, disciplined underwriting, and a focus on long-term shareholder value creation. This approach has allowed TD to navigate periods of economic stress with resilience while continuing to invest for future growth.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Thryv offers a compelling opportunity in SMB software, where its fast-growing, cash-generating SaaS business is deeply undervalued due to legacy accounting noise—setting the stage for significant upside as the market catches on.
Source: https://drive.google.com/file/d/1x1ZScQ9MyBcNRSGtul9fHiN3ugmtSeMg/view?usp=drivesdk
Analysis:
Thryv Holdings Inc (THRY) – Thryv is our small and medium business software company. The bottoms up thesis is that a declining business (that is spitting off a ton of cash) has been masking the growth in the software business. From the top down, there are millions of small businesses in the U.S. and other geographies that are run on excel and sticky notes. As the baby boomer generation moves on, the next generation of business owners is investing in software that increases their revenue and decreases their costs. Thryv’s SAAS business is a rule of 40 company (Q2: 25% organic YoY organic revenue growth, 20% adj. EBITDA margin) with rising ARPU, net revenue retention of ~100%, that has been rapidly paying down debt. As a result, now for the first time the company has some flexibility on how it will allocate their capital going forward. Insiders appear excited about the future, as 4 of them have bought shares in the open market this year, and the company recently raised guidance.
However, the GAAP financials remain messy due to the declining Marketing Services business, which will have been completely exited by 2028, and the company still “screens” as a “Media / Advertising” business, despite the fact that the SAAS business has eclipsed the legacy business. Additionally, recent growth has been tied to upselling existing customers rather than growing total customer count, which causes some to question the growth model. This has been a deliberate decision made by management; the return on SG&A dollars is simply higher when they are focused on the upsell rather than new customers. To me, trying to maximize your return on spend is completely logical and management has indicated that in 2026 they will once again shift focus toward increasing customer count rather than upselling. But for now, it seems as if the market disagrees.
At present THRY stock trades at ~9x my estimate of FY’26 EBITDA from the SaaS business, giving no credit for the cash they expect to receive over the next few years from the runoff of their legacy business. This despite the fact that the company expects this cash to be more than half of the company’s current market cap. If we do a present value calculation of this cash, aggressively discounting it at 20%, at present THRY trades at ~1.1x my estimate of next year’s SAAS revenue and ~6.2x my estimate of next year’s SAAS EBITDA. I acknowledge there are some concerns around the health of the consumer these days, but the valuation here has entered the realm of absurdity… unless you think that small businesses will forever eschew the benefits of software in favor of the artistic appeal that comes from a wall full of colorful sticky notes.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Topgolf Callaway Brands (MODG) is an undervalued company with strong legacy businesses and potential for significant value creation through a possible Topgolf sale and share repurchases post-separation.
Source: https://drive.google.com/file/d/1yjopDb6XUe6RvEDkyWB0Pzu1hQi9b4jo/view?usp=drivesdk
Analysis:
Topgolf Callaway Brands (MODG) – We have followed MODG for years; it is a straightforward business in a domain where we have real familiarity. Since acquiring Topgolf in 2021, near the peak of the pandemic-stimulus era, Topgolf venues have underperformed, and the stock fell from ~$30 at closing to $9-10, where we initiated. The legacy clubs, balls, and apparel business continues to perform well. A planned spin-off of Topgolf was delayed after Topgolf CEO Artie Starrs departed to lead Harley-Davidson; we believe this raises the probability of an outright sale. With the market assigning little value to Topgolf, selling it at a reasonable price could be accretive. That said, leverage and balance-sheet complexity warrant caution.
Our Thesis (full write-up found here) centers around:
Post separation, the standalone Clubs/Balls, Apparel, and Toptracer business would trade near ~6x EPS, a valuation far too cheap for a growing, premium brand, where transactions have occurred at multiples significantly higher.
Toptracer, though small, could add meaningful earnings as installed bays expand and pricing increases.
A cleaner, less leveraged business could broaden the investor base; golf equipment sales are relatively resilient to mild downturns.
If Topgolf is sold, proceeds and existing cash could support significant share repurchases.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Vistry Group PLC is a leading U.K. affordable housing builder poised for growth due to a new £39B funding program, despite past accounting issues and current undervaluation.
Source: https://drive.google.com/file/d/1x1ZScQ9MyBcNRSGtul9fHiN3ugmtSeMg/view?usp=drivesdk
Analysis:
Vistry Group PLC (VTY.L) – Vistry, is our U.K. based home builder that is focused on lower income customers. The U.K. has a massive shortage of affordable housing, and Vistry is the largest provider of affordable housing in the U.K by a factor of 5. Their Partnerships approach to building homes is capital light, and historically has proven resilient through cycles. Admittedly the thesis was knocked off track a year ago when the company disclosed that during the wind-down of their legacy, more capital intensive, Housebuilding business they discovered accounting irregularities. The stock has been in the penalty box since that time, and remains ~50% below where it was when the news was announced. This despite the fact that the issues were unrelated to Vistry’s core business, and have since been remediated. Additionally, the sunsetting of the U.K.’s prior funding program for affordable housing led to a decline in business. However, the U.K. has since announced a new ten year, £39B funding program that dwarfs the previous program in both size and duration. Management recently announced they expect to grow EBIT in the high teens in H2’25, more than 20% in 2026, and that “the real step-up” will come in 2027 as the recently announced funding flows through the market. This trajectory seems to match comments from the U.K. housing Secretary, who recently stated “We are doubling down on our plans to unleash one of the biggest eras of building in our country’s history and we are backing the builders all the way.” Further, Vistry CEO Greg Fitzgerald seems to be a believer as he has purchased ~£1M of stock in the open market this year. Despite all this, Vistry shares still trade at ~4.5x 2026 EBIT, while transaction comps indicate a low double digit multiple would be more appropriate.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
West Pharmaceutical Services is a leading producer of injectable drug delivery components, poised for continued growth due to advancements in drug development and reshoring trends, with a valuation that appears reasonable despite its historical premium.
Source: https://drive.google.com/file/d/1oDVZr2wUismOXa73oSnV6nK1A_RNu1oY/view?usp=drivesdk
Analysis:
West Pharmaceutical Services (WST) is a leading producer of packaging and components for injectable drug delivery devices (e.g. seals, elastomer stoppers, syringe components). Close readers of Upslope’s letters over the years will recognize the West name as the larger, more dominant competitor of Aptar’s (former long) Pharma segment. In addition to tailwinds from growing GLP-1 usage (rapidly growing, but a small minority of sales), West should benefit from continued advancements in drug development and a push to reshore drug manufacturing. While WST has historically (and still does) traded at a premium, shares de-rated to a more reasonable valuation in recent years (~23x 2026 EBITDA). Although not “cheap,” valuation seems reasonable enough given WST’s solid, consistent growth, deep regulatory-driven competitive advantages, and the prospect of accelerated growth in the years ahead.
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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