“There’s no question Tractor Supply has proven to be a fantastic long-term investment, with the stock price up ~25x over the past 15 years… As I think about a potential investment, it comes down to opportunity costs: is Tractor Supply likely to be a better long-term investment than Dollar General?”

While TSCO outperformed DG over the ensuing three years, it has been a difficult stretch for both companies. As you can see below, DG ran into trouble a few years ago, and has fought to regain ground since. TSCO, on the other hand, just recently fell into Mr. Market’s disfavor: the stock, which peaked at ~$64 per share in August 2025, is down >50% over the past ten months.

I view the primary role that DG and TSCO serve for core customers in a similar light, which I’d broadly define as rural consumables retailing. They win by providing a compelling balance between small box convenience and value - the right assortment, in-stock, and sold at competitive prices. But while Dollar General is primarily focused on selling consumables for people, Tractor Supply is primarily focused on selling consumables for animals and for pets (that isn’t to say it’s the only role they each serve, but it’s an important one).

I believe that DG’s lagging stock price has presented an attractive investment opportunity. Does the same idea apply to Tractor Supply, or is its recent stock price decline an appropriate reflection of evolving competitive dynamics?

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Chart Of The Week (from “A Tutor In Your Pocket”)

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Three Notable Items

“Amex to Acquire European Reservation Platform for $700 Million”

While Starboard argued for a price tag on TheFork of ~$1 billion, I discussed in the February 2026 Tripadvisor (TRIP) update why I believed management would be willing to accept an offer “meaningfully” below that level. We now have our answer, with American Express agreeing to acquire TheFork for $700 million. This is a significant development for TRIP, particularly given that the company has a market cap of roughly $1.5 billion (at ~$13 per share).

Tripadvisor CEO Matt Goldberg: “This agreement reflects two things we believe deeply: the tangible value across Tripadvisor’s portfolio and our ongoing focus on the opportunity we see ahead in Experiences.”

“Fox to Buy Roku Streaming Service in $25 Billion Deal”

An interesting deal in the media industry, particularly given that Fox previously owned ~5% of Roku, a stake they liquidated in March 2020 at an average price of ~$57 per share to help fund the Tubi deal. Six years later, they are now acquiring 100% of Roku at a valuation of ~$160 per share.

“Roku had been working with investment bankers to explore a potential sale over the past few months. It had approached a number of companies including Comcast, according to people familiar with the situation.”

“Conversations With the Dean - Jim Wright, CEO of Tractor Supply Co.”

I enjoyed this 2011 interview with former Tractor Supply CEO Jim Wright, particularly his perspective on why Kmart ceded a massive lead to Walmart throughout the 1980’s and 1990’s (Wright was a Kmart exec in the 1980’s).

“The fundamental difference between Kmart and Walmart was that Sam Walton valued the team member and he valued the customer. He felt that if he gave the customer an ever increasingly good deal, they would come back and his business would grow. Sam Walton was looking at the next decade, he was looking at the long-term. Kmart always looked at the quarter, and they changed strategy quarter by quarter, sometimes mid-quarter… As a result, from the store management up, they never knew the playbook, because it was constantly changing in response to trying to make the next quarter.”

TSOH Updates

Here’s the updated TSOH research list for the past six months:

Monday’s research report will be an update on Tractor Supply (TSCO).

Have a great weekend!

NOTE - This is not investment advice. Do your own due diligence.

I make no representation, warranty, or undertaking, express or implied, as to the accuracy, reliability, completeness, or reasonableness of the information presented in this report. Assumptions, opinions, and estimates expressed in this report constitute my judgment as of the date thereof and are subject to change without notice. Projections are based on a number of assumptions, and there is no guarantee that they will be achieved. TSOH Investment Research is not acting as your advisor or in any fiduciary capacity.

Duolingo’s mission is bold yet clear: “To develop the best education in the world and make it universally available”. Today, the scope of that education is primarily focused on language learning, delivered through short, bite sized lessons on their mobile app; beyond language learning, the company has expanded its course material to other subjects like chess, math, and music.

Over the past 15 years, the company made significant progress towards its long-term objective: as of Q1 FY26, Duolingo had nearly 140 million monthly active users (MAUs), up ~5x from pre-pandemic levels. This user base is inclusive of ~12.5 million paid subscribers, with that sub count up ~14x since Q4 FY19 (MAU penetration roughly tripled over that same period, to ~9%).

But one key issue, which helps to explain the nearly 80% stock price decline from the May 2025 highs, has been the material deceleration in DAU, paid sub, and bookings growth. As detailed in the Q4 FY25 letter, management believes the appropriate reaction for the long-term is to take a hit on FY26 bookings and earnings growth in order to accelerate top of funnel growth, with a goal of roughly doubling DAU counts over the next three years to ~100 million in FY28. (Note that MAU disclosures, which were previously reported on page one of the quarterly letter, have been relegated to the footnotes.)

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Each update features a Chart of the Week, along with a brief discussion on three news items relevant to companies in the TSOH investable universe.

Chart Of The Week (from “Dollar General: Miles and Margins”)

Three Notable Items

“2026 Reunion - Group Panel: Leadership at Markel Group”

As discussed in yesterday’s Markel update, the company posted a few event videos from the 2026 annual meeting, including this panel discussion with Simon Wilson (CEO of Markel Insurance), Ross DeBolt (CEO of Parkland Ventures), and Kyle Norton (President of Cottrell). I enjoy these annual panel discussions because they offer a glimpse into Markel’s various businesses.

Simon Wilson (30th minute): “We’re in a ~$750 billion global specialty insurance marketplace. Of that, we write ~$9 billion, so less than 2% market share... How do we get profitable growth? Well, there’s 98%+ of the market we’re not in at the moment; there’s plenty of profitable business there, and we need to go find it. The way you do that is you ask the 100 leaders within this decentralized structure at Markel Insurance, ‘How would you grow your business?’ If you have 100 people thinking about how to do that on the ground, you will get many more good ideas than if you just asked me.”

“Peloton Invests in the Future of Pilates”

On June 4th, Peloton announced the acquisition of Skōp, with co-founder Kim Clayton joining to lead Pilates Experience at Peloton. Platform Pilates usage increased 48% YoY in Q3 FY26, helped by the addition of three new Peloton instructors at the end of 2025 who are focused on yoga sculpt and Pilates. Expanding the range of fitness modalities is a fundamental piece of Peloton’s strategic evolution, supported by the launch of the Cross Training series.

Peloton CEO Peter Stern: “Pilates is a category which is ripe for the same kind of experiential reinvention that we brought to cardio… Skōp adds differentiated technology and specialized knowledge to our R&D team.”

“Nike can’t just do it any more”

This Economist article examines the interplay between Nike’s advertising, athlete endorsements, and social commentary, focusing on its connection to the sneaker giant’s recent business challenges. I’m not fully convinced by some of the arguments made, but I still think the article is a worthwhile read.

“The art of celebrity-wrangling has changed since Nike wrote the modern playbook in the 1980s. In our increasingly fractured culture, every superstar will alienate some consumers, and attempts to create a vibe that plays equally well across different echo-chambers can come across as inauthentic. This is particularly tricky territory for Nike. In Donald Trump’s first term the company came to be seen as excessively woke, particularly after a campaign celebrating Colin Kaepernick… Hill’s goal is to stay apolitical, insiders say.”

TSOH Updates

Here’s the updated TSOH research list for the past six months:

Monday’s research will be an initiation report on Duolingo (DUOL).

As always, it will include prior disclosure of any portfolio changes.

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Have a great weekend!

NOTE - This is not investment advice. Do your own due diligence.

I make no representation, warranty, or undertaking, express or implied, as to the accuracy, reliability, completeness, or reasonableness of the information presented in this report. Assumptions, opinions, and estimates expressed in this report constitute my judgment as of the date thereof and are subject to change without notice. Projections are based on a number of assumptions, and there is no guarantee that they will be achieved. TSOH Investment Research is not acting as your advisor or in any fiduciary capacity.

I’m not one to typically do this, but I sent Simon Wilson a message after completing the work on last June’s Markel update; I did so on this occasion because I felt that it was appropriate to communicate the following with him:

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“The past three years presented a slew of challenges for Dollar General, which led to material changes in their unit growth strategy, capital allocation priorities, and operational focus. What we’re left with on the back end is a company more effectively serving the needs of customers, as evidenced by traffic-driven comps growth. In addition, DG continues to narrow its product focus through SKU rationalization, optimizing the range to strike the balance between convenience and value… This is the right long-term strategy, one that positions DG to add value for customers, to simplify store / supply chain operations for employees, and to generate healthy returns for owners… I remain willing to increase my DG allocation if price action pushes my hand; [at] <$120, five-year return expectations would increase to ~15% per annum.”

While Dollar General reported its fourth consecutive quarter of traffic growth in Q1 FY26, at +1.4%, overall comps were relatively lackluster at +2.0%. Disappointingly, this result marked a reversal of the improved SSS results relative to Walmart that we’ve seen from DG over the prior 12 - 18 months.

As we think about this comparison, note the increasing importance of Walmart’s e-commerce business, and in particular delivery: e-commerce contributed >500 basis points to Walmart U.S. comps in the past two quarters, or ~2x the contribution of 2 - 3 years ago. In FY26, eCommerce was a ~$100 billion business for Walmart U.S., accounting for ~21% of revenues; for context, those figures were ~$18 billion and ~5%, respectively, in FY19.

Here’s another way to frame the data, which provides a clearer perspective on how e-commerce is driving Walmart’s outperformance relative to DG:

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Chart Of The Week (from “Dollar Tree: Through The Noise”)

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Three Notable Items

“Golf Is Now Cooler and Younger. The Stock Market Has Noticed.”

Following a difficult stretch for the industry in the 2010’s, the golf business is running hot again; as discussed in this WSJ article, golf is benefiting from sustained pandemic-related participation tailwinds, along with off-course formats that have made the game accessible to newer players. (For more on this topic, revisit the Acushnet Holdings initiation published in August 2025.)

“The sport gained a lot of new participants in 2020 because it was the perfect socially distanced activity. Unlike other pandemic fads, interest has kept growing. Rounds played in the U.S. rose 14% in 2020 and have increased almost every year since. Through April, rounds played in 2026 were up 5.3%… The number of commercial golf simulator locations has roughly doubled in the past three years… As a result, golf participation off the course has surged 63% compared with 2019, according to the National Golf Foundation… About 19 million Americans have only played golf off-course, about 40% of all golfers. On-course annual participation is high by historical standards at ~29.1 million, but still not as high as during the Tiger boom.”

“An Interview with Satya Nadella About Finding Core Competencies”

Following Microsoft’s annual developer conference, CEO Satya Nadella was interviewed by Ben Thompson of Stratechery. As competitors like Anthropic and OpenAI encroach further on their turf, much of the conversation focused on Microsoft’s evolving strategic vision and long-term investment priorities.

Satya Nadella: “Hyperscale businesses are about having a few big customers, but also a massive long tail. You can’t have a book of business that is just a few model companies - in fact, one model company [OpenAI]. That was the fundamental decision… Over time, Anthropic or OpenAI will build their own; it makes sense. To me, it was clear that what I didn’t want to do was to allocate all my compute to one player [OpenAI], so that was the adjustment. Once you make that adjustment, you can’t build ten gigawatts in Texas and say, ‘that’s it’. You’ve got to build a plant spread around the U.S., around the world; that adjustment is what we want to do on hyperscale.”

“Costco Reports Q3 FY26 Results”

As discussed in last week’s BJ’s Wholesale update, the company faces a formidable competitor in Costco (to put it kindly). That was evident in the quarterly results Costco reported on May 28th, with U.S. merchandise comps up 6.8% in Q3 FY26 – outpacing BJ’s results in the most recent quarter by more than five percentage points. The glass half full take is that BJ’s is well positioned to be a fast follower; if they effectively learn from and copy Costco, that will go a long way towards strong returns for BJ’s in the decade ahead.

Costco CEO Ron Vachris: “Against the backdrop of ongoing macro uncertainty, our focus on providing quality goods and services at the lowest possible price continues to resonate strongly with our members. Nowhere has this been more apparent than our gas business… Each month of the quarter set successive all-time company volume sales records, with the final five weeks becoming our top five volume weeks ever. Our gas team performed exceptionally well to manage this unprecedented demand, which requires multiple daily gas deliveries to many locations. The high consumer price sensitivity, which fueled these record volumes, also drove many members to use our gas stations for the very first time in the third quarter. We believe this will drive even greater loyalty with these members in the future as members who use our gas stations typically spend more in the warehouse.”

TSOH Updates

Here’s the updated TSOH research list for the past six months:

Monday’s research report will be an update on Dollar General (DG).

Have a great weekend!

NOTE - This is not investment advice. Do your own due diligence.

I make no representation, warranty, or undertaking, express or implied, as to the accuracy, reliability, completeness, or reasonableness of the information presented in this report. Assumptions, opinions, and estimates expressed in this report constitute my judgment as of the date thereof and are subject to change without notice. Projections are based on a number of assumptions, and there is no guarantee that they will be achieved. TSOH Investment Research is not acting as your advisor or in any fiduciary capacity.

“An impending Family Dollar decision is a key reason why Dollar Tree (DLTR) quickly became a top holding in my portfolio; after a decade watching from the sidelines, I believe DLTR is a very compelling opportunity… I think Dollar Tree is one of the most unique and attractive U.S. retail concepts.”

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Chart Of The Week (from “BJ’s Wholesale: Mind The Gap”)

Three Notable Items

“VALUExBRK 2026”

Guy Spier and the team at VALUExBRK were kind enough to post the full recording from their event in Omaha, with commentary from Bill Ackman, Tom Gayner, Tom Russo, and others. (Personally, the two presentations I found most interesting were from Eric Markowitz and Adam Mead.) Note that the video is five hours long; if you are unfamiliar with YouTube’s “Ask” feature, I’d recommend using it to find sections or topics that are of interest to you.

Adam Mead (43rd minute): “The theme through Berkshire’s history is a willingness to bet big when it makes sense to; big acquisitions and large positions in stocks / bonds.”

“Meta launches Instagram, Facebook, and WhatsApp Subscriptions”

While Meta’s sizable and growing AI investments will largely be monetized through improved core FOA business outcomes (increasing time spent, improving ROAS, etc.), they’ve also demonstrated interest in subscriptions. I’ll be curious to see how these various offerings evolve in the years ahead.

“Consumers subscribing to Instagram Plus ($3.99 per month), Facebook Plus ($3.99 per month), or WhatsApp Plus ($2.99 per month) will gain access to extra features, like profile customization, super reactions, and story insights. Meta’s head of product Naomi Gleit noted that ‘more fun features’ will be added in the future… New plans don’t replace its existing offering, Verified, which is focused on verification, impersonation protection, and extra support.”

“How Barnes & Noble Became PE’s Most Radical Retail Experiment”

An article about the resurgence of Barnes & Noble, which sheds some insight on how brick-and-mortar retailers can add value for customers in the modern world. While price is clearly an important component, there’s more to the consumer value proposition than minimizing the cost of the contents inside a cardboard box on your doorstep (some examples: experiential, treasure hunt, etc.). Finding the retailers who can thread that needle, particularly if Mr. Market is somewhat unconvinced that their competitive position will prove sustainable over time, is likely to be a path to attractive investment returns.

“Before James Daunt took over in 2019, the company was beholden to a far more rigid display shape: the block. The setup was an emblem of Barnes & Noble’s transactional practice of making sweetheart store-placement deals with major publishers, in which books were stacked with the contractual precision of real estate developers maximizing air rights. Among the many drawbacks of this one-size-fits-all arrangement was that it failed to sell books effectively. The unsold books had to be returned to publishers, which meant fewer sales of other, more attractive books, wasted store space, lost employee time and eroded margins… Barnes & Noble’s return rate to publishers has dropped from more than 25% to ~8%. The merchandising shift is an example of Daunt’s idiosyncratic approach to corporate bookselling: Behave less like a big-box behemoth and more like a book lover.”

TSOH Updates

Here’s the updated TSOH research list for the past six months:

Monday’s research report will be an update on Dollar Tree (DLTR).

Subscribe now

Have a great weekend!

NOTE - This is not investment advice. Do your own due diligence.

I make no representation, warranty, or undertaking, express or implied, as to the accuracy, reliability, completeness, or reasonableness of the information presented in this report. Assumptions, opinions, and estimates expressed in this report constitute my judgment as of the date thereof and are subject to change without notice. Projections are based on a number of assumptions, and there is no guarantee that they will be achieved. TSOH Investment Research is not acting as your advisor nor in any fiduciary capacity.

“My sense is management changed their tune a bit over time (in a good way). Maybe that is attributable to more experience in the public markets, along with positive results that provide early indication the strategy is working… With that said, there is work left to do, both in terms of the strength of their financial results (closing the comp gap with Costco U.S. and Sam’s Club), along with how they communicate to owners (start directly disclosing certain quarterly KPI’s like paid memberships)… I am not ready to make a move, but I’ve become more encouraged by recent developments at BJ’s Wholesale.”

In the period since the latest update, the results have been a mixed bag.

One issue is the lingering merchandise comp gap relative to their two largest wholesale competitors, with an average spread of ~400 basis points to Costco’s U.S. comps over the past 18 months. (Costco will report Q3 FY26 results this afternoon, which corresponds to calendar Q1 ’26 in the chart.)

As we dig into this divergence, one clear issue is business mix: non-food categories account for ~33% of Costco’s merchandise sales (excluding gasoline, pharmacy, optical, etc.), while non-grocery categories account for ~13% of BJ’s merchandise sales. The Costco treasure hunt experience in general merchandise categories has resonated with customers in a way BJ’s hasn’t yet been able to replicate; this has been a focus for years, but the gap remains. (March 2022: “We will place renewed focus on increasing the mix of general merchandise. We need a better and more relevant assortment.”)

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“While this capacity expansion is necessary to reach their ~$2 billion FY30 revenue target, I think there’s a decent chance we’ll look back and conclude this wasn’t an opportune moment for a meaningful ramp in egg capacity and farmer supply, particularly if Vital Farms sees more price elasticity as they pursue volume growth outside of the core (i.e. a family who considers eggs from Costco, Trader Joe’s, or a local grocer a substitute at a large price gap).”

On May 7th, Vital Farms reported a disastrous first quarter, which included weaker than expected revenue growth and ~1,000 basis points of YoY gross margin compression. This softness is expected to hold at least throughout the remainder of the year, with management taking a hatchet to their revenue and profit guidance: on EBITDA, the business is now expected to roughly breakeven for the year, compared to prior expectations – set 90 days ago – for FY26e EBITDA of ~$110 million. (Their EBITDA guidance excludes roughly $30 million of D&A and stock-based compensation expense.)

As explained by CEO Russell Diez-Canseco, the main concern that I focused on in “Fragility” – price competition in the subcategory – is heavily weighing on Vital Farms: “Our Q1 performance fell short of expectations, as anticipated changes in industry pricing and promotional dynamics in the outdoor access egg subcategory had a much greater impact on our velocities than we expected. We are acting with urgency to restore volume growth by narrowing price gaps versus other outdoor access eggs, which we believe will help reaccelerate our velocities. We are streamlining our cost structure and reducing CapEx this year to better align our operating model with the current environment… Price gaps reached levels our brand could not sustain.”

I am not surprised by cyclicality in the company’s results, a reality of supply / demand imbalances and commodity (egg) price volatility, a condition the subcategory isn’t immune to. At the same time, the duration and severity of exposure to commodity cyclicality gets at a critical question on management’s long-term strategy - and by extension, the quality of the underlying business.

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Chart Of The Week (from “Airbnb: Room To Breathe”)

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Three Notable Items

“Roblox Announces Inaugural Share Repurchase Program”

While the numbers are relatively small – a $3 billion authorization, with the intent to buy back up to $1 billion over the next year – this is a noteworthy development. My view is that Roblox management has been more extreme than most public companies in their indifference to short-term P&L volatility, which helps to explain why shareholders have been on a roller coaster ride over the past five years (and with the stock falling ~40% over that period).

Roblox CFO Naveen Chopra: “Today’s authorization of Roblox’s first-ever share repurchase program is a testament to our confidence in the long-term opportunity ahead. Investing in continued growth will always be our highest priority, but the strength of our balance sheet and FCF generation allows us to support industry leading innovation while simultaneously reducing dilution.”

“CNBC’s Full Interview With Amazon Founder Jeff Bezos”

A wide-ranging interview with Jeff Bezos, including his views on wealth distribution and U.S. tax policy, the AI revolution, and data centers in space.

Bezos (38th minute): “I think so many people are afraid AI is going to take their job. I think there is going to be a labor shortage… It’s going to elevate people. Let’s say you’re a software engineer. The analogy I use is you’ve been digging out a basement for your house with a shovel, and somebody is about to hand you a bulldozer… We are going to have so much productivity in our economy… The root of civilizational wealth is invention.”

“Berkshire Hathaway Rekindles Its Tortured Love Affair With Airlines”

For the next sign of change at Berkshire post-Buffett, see the latest 13-F, which included a large increase to their stake in Alphabet and a new position in Delta (as a reminder, Buffett sold his U.S. airline basket in April 2020, which he discussed at the annual meeting). I’ve been uncertain on the role that (new) large equity investments were likely to play at Berkshire in the years ahead; it appears they will still be part of the capital allocation toolkit.

“Warren Buffett has had a tortured relationship with airline investments… His successor, Greg Abel, is showing an early fondness for them, too, with Berkshire taking a $2.6 billion position in Delta (DAL). Buffett told The Wall Street Journal that he wasn’t involved in Berkshire’s new Delta position.”

TSOH Updates

Here’s the updated TSOH research list for the past six months:

Monday’s research report will be an update on Vital Farms (VITL).

While the stock price has plummeted ~70% over the past year, ten different insiders have bought VITL shares on the open market in the past two weeks.

Have a great weekend!

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NOTE - This is not investment advice. Do your own due diligence.

I make no representation, warranty, or undertaking, express or implied, as to the accuracy, reliability, completeness, or reasonableness of the information presented in this report. Assumptions, opinions, and estimates expressed in this report constitute my judgment as of the date thereof and are subject to change without notice. Projections are based on a number of assumptions, and there is no guarantee that they will be achieved. TSOH Investment Research is not acting as your advisor or in any fiduciary capacity.

“I see a few long-term opportunities that will help Airbnb to achieve the growth required to justify its mid-20’s EV/EBIT multiple [at ~$117 per share]… With that said, I also get the sense management is navigating the public market challenge of focusing on the long-term while living in the short-term [slowing revenue growth and EBITDA margin pressure from certain investments].”

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Chart Of The Week

From the conclusion of the Planet Fitness (PLNT) initiation (April 2026):

“While management set optimistic growth targets at the Investor Day, most notably a mid-teens adjusted EBITDA CAGR over the next three years (through FY28), they then guided to ~10% FY26 EBITDA growth in February. I find that to be a good summation of my early takeaways on Planet Fitness: they have pulled a number of levers over the past 10-15 years to drive better financials, but I suspect there’s less low hanging fruit left to be picked. The road ahead will likely feature heightened HVLP gym competition and less room to take price. If that proves accurate, I’ll be interested to see how Mr. Market responds as the financials start lagging management’s targets.”

Planet Fitness reported soft Q1 FY26 results last week, with a cut to FY26e EBITDA (from +10% to +6%) that suggests much slower growth than the aforementioned medium-term targets set at Investor Day. In response, Mr. Market continued to pressure the stock, which has declined by >50% YTD.

Three Notable Items

“Can Tinder Win Back Women?”

While my investment in Match Group was a relatively brief one, I remain interested in trying to understand what is happening in the online dating industry, most notably at Match and Bumble. This FT article focuses on CEO Spencer Rascoff’s plan to stem years of MAU and Payers pressure at Tinder.

“Rascoff said the issues at Tinder stemmed from its failure to listen to customers and to innovate after its initial success with swipe-based matching. ‘The company took off and it became so big and so profitable so quickly that Tinder didn’t build an innovation muscle that stayed attuned to consumer tastes. Meanwhile, consumer tastes changed quite a bit over the last five years, in particular among female users who no longer appreciated the kind of quick-twitch gamified swipe mechanic of Tinder,’ Rascoff added.”

“Vital Farms Falls on Plan to Wind Down Butter Business”

While management just took a hatchet to FY26 guidance, I’m personally encouraged by their decision to exit the butter business and to greatly slow their CapEx spend / volume expansion. The caution expressed in “Vital Farms: Fragility” has proven appropriate in the near term, with the stock down another >50% since it was published in early March. At this time, the conclusions I shared in that update remains an accurate summation of my views on the stock. (Note that management did start the buyback, with ~$20 million repurchased in Q1 FY26… but at an average cost of $20.0 per share.)

CEO Russell Diez-Canseco: “The anticipated changes in industry pricing and promotional dynamics in the outdoor access egg subcategory had a much greater impact on our velocities than we expected. We are acting with urgency to restore volume growth by narrowing price gaps versus other outdoor access eggs... We are streamlining our cost structure and reducing our CapEx this year to better align our operating model with the current environment. To be clear: this is a reset of the year, not a reset of ambition… We believe the core fundamentals of the Vital Farms business remain intact.”

“How AB InBev Stopped Its Three-Year Slide”

While ABI isn’t a company that I’ve initiated coverage on at TSOH, this brief article touches on the industry volume pressures and changing consumer preferences also impacting companies like Boston Beer and Brown-Forman.

“Anheuser-Busch InBev reported organic volume growth of 0.8% in Q1 FY26, the first such increase since early 2023, defying downward trends in alcohol consumption… Michelob Ultra has benefited from AB InBev’s consistent positioning of the brand as part of a healthy, active lifestyle. The company spends more marketing Michelob Ultra in the U.S. than any other product.”

TSOH Updates

Here’s the updated TSOH research list for the past six months:

Monday’s research report will be an update on Airbnb (ABNB).

Have a great weekend!

NOTE - This is not investment advice. Do your own due diligence.

I make no representation, warranty, or undertaking, express or implied, as to the accuracy, reliability, completeness, or reasonableness of the information presented in this report. Assumptions, opinions, and estimates expressed in this report constitute my judgment as of the date thereof and are subject to change without notice. Projections are based on a number of assumptions, and there is no guarantee that they will be achieved. TSOH Investment Research is not acting as your advisor or in any fiduciary capacity.

“While I believe the stock is attractively priced at current levels, and is likely to deliver strong returns over the next five years, I think that conclusion is reasonably accounted for at its current portfolio weighting - admittedly, an answer partly informed by the pain incurred owning Disney over the past 5+ years. There are two scenarios where that conclusion may change: if the stock price faces continued near term pressure, or if we receive encouraging details on early adoption of ESPN flagship… While this remains a messy story, I see reason to believe today’s setup is favorable for patient investors.”

The messiness cited above applies to Disney in a few ways: they operate in an industry that is undergoing significant change; they have a new CEO who may aspire to put his own stamp on Disney’s strategy, particularly in gaming / interactive; and the company recently restructured its segment financials - again - with less granular reporting, most notably within DTC and at ESPN.

And yet, I think that the Q2 FY26 call – CEO Josh D’Amaro’s first – was unambiguous and focused. It was a step in the right direction for Disney that reflects some fresh perspective as the company begins the post-Iger era.

Disney’s strategy is focused on four key areas:

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While there is a growing list of notable positive developments at Peloton, which I’ll discuss momentarily, they lie lower in the pecking order than the one big issue for the thesis: unsustainable connected fitness (CF) subscriber losses. The number of paid CF subscribers is on track to fall ~9% in FY26, to ~2.6 million; while this still reflects impressive long-term gains, with ~5x sub growth since YE FY19 (~26% CAGR), the recent declines need to be halted.

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Chart Of The Week

As discussed in Monday’s update, Roblox is seeing a quick reversal from the impressive 2H FY25 bookings reacceleration - and with it, their stock has fallen ~70% from where it traded in September 2025 (seven months ago).

Three Notable Items

“2026 Berkshire Hathaway Annual Meeting”

This past weekend, Warren Buffett took a seat on the floor of the CHI Health Center in Omaha, Nebraska, joining tens of thousands of fellow Berkshire Hathaway shareholders as CEO Greg Abel presided over his first annual meeting. My main takeaway from the meeting is that Greg has developed a thorough and detailed understanding of Berkshire’s key businesses, including their current shortcomings and their future opportunities. As I wrote in “Berkshire Hathaway: Transition”, I suspect the coming months and years will reveal why Warren and Charlie concluded Greg was the man for the job.

Greg Abel (58th minute): “We have a lot of work we need to do at BNSF… We have to get better operationally. We’re working hard to become more efficient and more effective, but we have to recognize where we are versus industry peers… Last year, we came in fifth out of the six Class I railroads [ranked on operating margins]. That’s a reality of where we are – but we are getting better and we’ll continue to get better. This performance leaves a lot of room for improvement… To achieve what Union Pacific has achieved [with operating margins that are ~500 basis points higher than BNSF] requires a step change in how we operate and in how we approach our operations.”

“Brown-Forman and Pernod Ricard Terminate Discussions”

One month after discussion with Pernod Ricard were publicly acknowledged, deal talks have now been terminated. There was also the reported ~$15 billion (~$32 per share) offer from Sazerac, but there hasn’t been much chatter about that deal in the ensuing weeks either. As a reminder, Brown-Forman was also the subject of a takeout target nine years ago; at the time, the company had a market cap of ~$22 billion. Any decisions will ultimately be judged through the lens of the interests and desires of the Brown family.

“Brown-Forman today announced that the company and Pernod Ricard have terminated discussions, as the companies were unable to reach mutually agreeable terms… We intend to create long-term value for all stakeholders by focusing on our strategic and operational priorities. This includes unlocking future growth by expanding our geographic footprint, continuing to build brands that resonate with consumers, and enhancing operational efficiency.”

“Brian Chesky’s Playbook: Scaling, Hiring, and New Founder Mode”

Chesky has appeared on plenty of podcasts in recent years, but this discussion with Patrick O’Shaughnessy touched on some new ground. In particular, it was interesting to hear Chesky discuss the need to balance Airbnb’s long-term growth ambitions against the near term financial demands of the business – something that I sensed was becoming a bigger focus for management as GBV growth and margin expansion started to level off.

Brian Chesky (57th minute): “I have all of these visions – but when you’re a public company, and you’re giving guidance, where the difference between hitting or missing guidance… you have to be careful. But being really careful isn’t an environment for mass innovation. So, I am also exploring little sandboxes, almost like a separate app – what is a radically different Airbnb?”

TSOH Updates

Here’s the updated TSOH research list for the past six months:

Monday’s research report will be an update on Peloton (PTON).

Have a great weekend!

NOTE - This is not investment advice. Do your own due diligence.

I make no representation, warranty, or undertaking, express or implied, as to the accuracy, reliability, completeness, or reasonableness of the information presented in this report. Assumptions, opinions, and estimates expressed in this report constitute my judgment as of the date thereof and are subject to change without notice. Projections are based on a number of assumptions, and there is no guarantee that they will be achieved. TSOH Investment Research is not acting as your advisor or in any fiduciary capacity.

In October 2025, following Roblox’s Q3 FY25 results, one prominent Wall Street analyst published a note that included the following glowing comment: “Roblox printed arguably its strongest quarter ever.” While it was hard to quibble with that framing given the daily active user (DAU), engagement, and booking trends Roblox reported at the time, it struck me as reason to be cautious on the stock, at least in the short-term. In recent years, Roblox has seen sizable swings on user / engagement growth, followed by a muted response from management on its pace of expense growth; said differently, the stellar 2H 2025 growth would likely give way to an eventual period of relatively lackluster DAU / bookings growth, with outsized pressure on profitability and FCF generation. When that day arrived, near term bookings and margin estimates would be cut, and short-term optimism would fade.

Jumping to the present, we can see that this is what has happened: when Roblox reported Q1 FY26 results last week, management reduced FY26e bookings growth from +24% to +10% (midpoint), but with little indication this will result in any material change to FY26e spending. As a result, they now expect FY26e FCF of ~$1.2 billion, down ~30% from earlier expectations.

The stock, which eclipsed $140 per share in September 2025 (seven months ago), has since fallen ~70% to ~$45 per share. As a result, the stock trades about 40% lower than where it did after the March 2021 direct listing – and that’s over a period where TTM bookings more than tripled to ~$7.5 billion.

I think the long-term Roblox thesis comes down to two key issues:

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Chart Of The Week

One revealing chart following a big week for mega cap tech earnings.

Three Notable Items

“QVC Lost the Home Shoppers to Social Media Influencers”

I haven’t talked about Qurate in nearly five years, but here’s what I wrote when I liquidated the position in May 2021: “I no longer feel comfortable with the bet that I’m being asked to make. When I first invested in QRTEA in September 2020, at an average cost of ~$7 per share, I felt that I had a straightforward understanding of what needed to happen for the investment to be a success. Today, at ~$13 per share, I feel a bit behind the eight ball - and when financial leverage is involved, that’s not the place to be.” Qurate was different from the typical TSOH investment, one where the position was held on a tight leash; what happened subsequently to QRTEA shows why.

“The stuck-at-home population has long been QVC’s most reliable source of sales; its best year ever came in 2020, when it pulled in more than $14 billion in revenue. In the years since, that figure has dropped more than a third.”

“Roblox’s David Baszucki Built the Biggest Playground on Earth”

Roblox doesn’t fit the mold of a traditional gaming company, with recent engagement and DAU trends that have left industry peers in the dust. In this interview with David Senra, co-founder and CEO Dave Baszucki discusses his path to Roblox, along with his long-term vision for the platform. (Note that the stock price is down about 15% this morning following Q1 FY26 results.)

“Roblox and YouTube are both content platforms, but the content in a video platform is typically solo engagement. The content in Roblox is a scaffold for communication and being together… In Roblox, the viral loops are the quality of the content and the users being together / social connection.”

“Spotify Premium Now Includes Peloton Classes, Marking Push Into Fitness Content”

I have long viewed Peloton’s standalone digital efforts with skepticism, a conclusion subsequently supported by lackluster digital app paid subscriber trends. I’ll have more to say on this topic following Peloton’s Q3 FY26 results, but I view this global partnership as an intelligent attempt to find an answer to that question, which may also support improved CF Subscriber trends. In my view, it speaks to the unique and valuable position Peloton holds in fitness.

“Spotify is offering workout classes from Peloton to premium subscribers, marking the music streaming pioneer’s first major foray into fitness content [Spotify has ~293 million global premium subs]. The partnership will bring curated playlists and access to a catalog of more than 1,400 ad-free, on-demand content from some of Peloton’s most popular wellness instructors.”

TSOH Updates

Here’s the updated TSOH research list for the past six months:

Have a great weekend!

NOTE - This is not investment advice. Do your own due diligence.

I make no representation, warranty, or undertaking, express or implied, as to the accuracy, reliability, completeness, or reasonableness of the information presented in this report. Assumptions, opinions, and estimates expressed in this report constitute my judgment as of the date thereof and are subject to change without notice. Projections are based on a number of assumptions, and there is no guarantee that they will be achieved. TSOH Investment Research is not acting as your advisor or in any fiduciary capacity.

I’ve decided to make a portfolio change, which will be completed during today’s market session. This was the allocation as of yesterday’s close:

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