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 “Celsius: The Pepsi Put”)

Three Notable Items

“Meta Settled Its Child Safety Lawsuit. Now Comes The Hard Part.”

Following the settlement announced two weeks ago, this CNBC video examines the specific changes that Meta will implement for young users to live up to the terms of the deal with nearly every U.S. state (daily time limits, time based default blocks, muted notifications during school hours, etc.).

California Attorney General Rob Bonta: “We’re suing TikTok now, and we’re looking to ensure that they adopt similar practices and commitments to what Meta did. We are very interested in Snap and YouTube as well. We want everyone in the industry to take the steps like Meta is required to now.”

“Markel Chairman Steve Markel to Retire”

Not a surprising development given that Steve Markel is in his late 70’s, but with the notable change that Tom Gayner will now be CEO and Chairman. In addition to Gayner’s additional role, Simon Wilson and Andrew Crowley were promoted to the roles of Co-Presidents of Markel.

“The Board announced the establishment of a Leadership Council, consisting of the Lead Independent Director, Chairman and CEO, and Co-Presidents. The Council is designed to facilitate regular coordination among independent Board leadership and senior management, and enhance the Board and management’s review of strategy, performance, and capital allocation.”

“Peloton’s push into gyms: CEO Peter Stern’s big bet”

An interview with Peter Stern, which covers his career experience prior to joining Peloton, along with his long-term strategy to evolve the business from a connected fitness company to a connected wellness ecosystem.

“I believe so deeply in what Peloton does its members, and what it can do for many more people… When I heard there was an opening at Peloton, I quickly found out who the recruiter was; I called him and said, ‘I’m your guy.’… This was a dream job… Over time, I believe the definition of the company became too narrow compared to the potential of our impact.”

TSOH Updates

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

Monday’s research report will be an initiation on Alarm.com (ALRM).

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.

From “Celsius: A Global Opportunity?” (published June 2025): “While their relationship hasn’t always been perfect, Coca-Cola and Monster have generally worked towards the same long-term objectives. It’s less clear to me that will be true for PepsiCo and Celsius, particularly outside of the United States. What I find disheartening about this is that there’s a pretty clear opportunity for a more cohesive strategy: between Rockstar, Sting, and Celsius / Alani Nu, you’d have a collection of brands to serve a broad range of energy drink consumers, in terms of age and gender, as well as value and premium brands (similar to Monster’s Strategic Brands). Instead, they are set to compete with each other as they each look to build their global presence.”

In an industry with a seemingly endless barrage of new entrants over the past two decades, Celsius has managed to achieve the impressive feat of building a portfolio that captures about 20% of the U.S. energy drink market – and with it, they’ve become a real competitor to behemoths Red Bull and Monster.

This was achieved with one hand tied behind their back: only competing in sugar free, which accounts for about half of the ~$29 billion U.S. energy drink retail market (put differently, they account for ~40% of the ~$15 billion sugar free subcategory). It is a uniquely positioned brand competing well against the sugar free varieties from Red Bull and Monster, while fending off direct (more narrow) competition from energy drink brands like Bang and Reign.

A straightforward strategy that was focused on expanding the Celsius brand throughout the U.S. and around the world was then muddied by the ~$1.65 billion Alani acquisition. As I explained, I was of two minds about that deal:

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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 Tree: Weathering The Storm”)

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Three Notable Items

“The cult $4.99 rotisserie chicken defying inflation”

In the July 2021 Costco initiation, I opened with the story of Jim Sinegal and the $1.50 hot dog: “If you raise the f-ing hot dog price, I’ll kill you. Figure it out.” While it doesn’t rival the lore around the hot dog, Costco is also well known for its $4.99 rotisserie chickens, with ~157 million sold globally in FY25. This Financial Times article details the investments Costco has made in recent years which have helped them to maintain the $4.99 price point.

“Costco has devised ways to mitigate losses on rotisserie sales. One was to construct the $500 million slaughterhouse, which has reshaped a rural corner of the US Midwest since it started operations in 2019. Building the plant gave Costco negotiating leverage with third-party poultry suppliers, according to Walt Shafer, who was COO at Lincoln Premium Poultry, the Costco subsidiary that runs the Nebraska chicken business… Birds killed at the Nebraska slaughterhouse meet about a third of chicken sales at the retailer’s hundreds of US stores… Costco’s decision to open the Lincoln plant was aimed at vertical integration. Far from the chicken heartland of the US South, Costco has recruited ~100 farms to raise chickens under 15-year contracts.”

“How Celsius Became the King of Normie Energy Drinks”

More on Celsius in Monday’s update, but this Bloomberg article details the company’s rise over the past 10-15 years, from near extinction to a brand portfolio accounting for ~20% of the U.S. energy drink market (MULO+ W/C).

“From 2000 to 2013, says beverage industry consultant Mike Sweeney, more than 1,600 energy drinks tried to get in on the action. Celsius managed not only to outlast most of its competition but also to find itself near the top of the category long dominated by Red Bull and Monster.”

“PG&E, Edison Fall on California Wildfire Liability Worries”

An update relevant to the discussion on Berkshire Hathaway Energy (BHE) and PacifiCorp in “Berkshire Hathaway: Transition” (March 2026). As Warren Buffett bluntly stated at the 2025 annual meeting, “BHE is worth considerably less than it was two years ago based on societal factors. The public utility business is not as good a business as it was a few years ago.”

“California lawmakers introduced a bill that would update the state’s wildfire response, but would not move liability away from publicly traded utilities… PG&E said the bill ‘does not adequately address the financing risks created by California’s current wildfire liability framework’.”

TSOH Updates

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

Monday’s research report will be an update on Celsius (CELH).

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.

From “Walmart: Full Steam Ahead” (November 2024): “From where we stand today, there’s no question Mr. Market has greatly changed his odds on these bets relative to three and a half years ago: at that time, the forward EPS multiples were ~23x and ~21x for Walmart and Dollar General, respectively. Today, I have those numbers at ~32x and ~12x, respectively. That is an understandable change directionally given what has taken place; what’s less clear to me is whether the magnitude of the swing is justified.”

On an absolute and a relative basis, the latest quarter presented reason for celebration for Dollar General: the company’s +3.5% comp for Q2 FY26, attributable to ~2% growth in traffic and ~1.5% growth in ticket, bested the result at Walmart’s U.S. business for the first time in more than five years.

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From “The Dollar Store Downturn” (September 2024):

“Once Family Dollar is sold, I think Dollar Tree (DLTR) has a clear path forward at the core banner. The combination of the low opening price point ($1.25) and the inclusion of some multi-price SKU’s (~15% of the product mix) presents the opportunity for a better customer experience and a better business… At ~$66 per share, Dollar Tree has a market cap of ~$14 billion [adjusted for FDO]… Mr. Market’s asking price for the core banner - less than 10x EV/EBIT - is simply too low… I believed DLTR was priced to generate attractive long-term returns at ~$85 per share, and that remains true at current prices. I have decided to buy more DLTR (to a ~13% weighting).”

Shortly after that update was penned, the investment thesis was thrown a curveball as a result of significant changes to U.S. tariff policies. The past two years presented a number of twists and turns, and few retailers were more impacted than Dollar Tree. Despite this, as we now approach the (hopeful) end of these external developments, the company has managed to navigate its way through as a result of its unique value proposition in U.S. retail. While Mr. Market is looking more favorably on Dollar Tree’s long-term prospect, with the stock price nearly doubling over the past 24 months to ~$128 per share, I believe the company’s strategic transformation remains in its early innings.

In Q2 FY26, Dollar Tree reported +3.7% same store sales (comps) growth, with traffic returning to positive territory. In combination with the strong +6.5% comp in Q2 FY25, that brings the two-year stacked comps growth to +10% (as a point of comparison, that’s ~300 basis points higher than Walmart U.S.).

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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 “Portillo’s: Strategic Reset”)

Three Notable Items

“TSOH + Masters In Business”

I recently joined the “Masters In Business” podcast at Bloomberg HQ in NYC to discuss “Buffett & Munger Unscripted” and TSOH Investment Research. A big thank you to Barry Ritholtz and Bloomberg for having me on the podcast, and I hope that you enjoy our discussion.

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“Dick’s Sporting Goods Bet Big on Sneakers With Foot Locker. It Backfired.”

As I discussed in “A Position Of Strength”, success for Dick’s Sporting Goods over the past five years has largely been attributable to a much improved position in the footwear category. That development surely informed management’s decision to take on a challenging hand with Foot Locker, and they have quickly been presented with the realities of that difficult position.

I wrote the following at that time, and it seems fitting to repeat this week:

“The primary takeaway from my DKS research has been the company’s success in the Footwear category, along with the clarity of their strategy and capital allocation priorities; in many ways, it mirrors Home Depot’s experience in the 2010’s. The market views this deal as an impediment to that roadmap, and I think that’s directionally correct… While I view [the FL deal] skeptically, it isn’t something that, for me, disqualifies DKS as a potential investment.”

“On Tuesday, the company warned of lower profits for the year, saying consumers weren’t spending on footwear - which accounts for most of Foot Locker’s sales. Dick’s shares tanked, falling more than 30%, their biggest decrease on record. Ed Stack, Dick’s executive chairman, said the sneaker market is awash with inventory and rivals slapping on discounts, which has pressured Foot Locker to keep pace.”

“Heirs to the Jack Daniel’s Fortune Are Fending Off a Takeover - and a Rogue Cousin”

A topic I’ve discussed on a few occasions, with the interesting update that CEO Lawson Whiting was pushing hard for the family to consider Pernod’s offer (per WSJ reporting). Combined with the oddly worded board statement from July - “Sazerac’s proposal is not actionable” – I suspect Brown-Forman’s continued independence is currently subject to much internal debate.

“Earlier this year, CEO Lawson Whiting and George Garvin Brown IV, a former Brown-Forman chairman, explored a potential merger with Pernod Ricard, maker of Absolut vodka and Jameson Irish whiskey. Garvin Brown, who grew up in Canada, serves on the board of Wolf Pen Branch, a family investment entity that controls 60% of the voting power in Brown-Forman… When other members of the family caught wind of the talks with Pernod, some weren’t happy. Whiting pushed them to support a merger in a video call with family members... The CEO told the family that the deal with Pernod was the best thing for them and for the company.”

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).

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.

“The company’s new units, particularly those opened in Texas over the past 12-18 months, have underwhelmed… Non-comp restaurants, most of which are in Texas, are at run rate AUV’s of roughly $4.5 million – well below expectations… Financial results by region reveal an important consideration for their model: Portillo’s doesn’t just have high AUVs - they need high AUVs.”

Much has changed over the past year for Portillo’s.

First, in September 2025, CEO Michael Osanloo “departed the Company”. His successor, Brett Patterson, joined in February 2026 following a brief stint as the CEO of Miller’s Ale House. In addition, Portillo’s has turned over a number of other top jobs in the past year, most notably the CFO, the Chief Development Officer, and the Board Chair. (Alongside the Board Chair transition, both representatives from Berkshire Partners left the board.)

Second, the stock price slide that started back in 2021 has continued, which comes amidst a more difficult backdrop for the restaurant industry: PTLO closed on Friday at $5.0 per share, down ~75% over the past three years.

The combination of those two developments informs the third: Portillo’s is in the middle of a strategic reset, particularly as it relates to new unit growth in markets like Texas. As Patterson said on the Q2 FY26 call, “We just built too many units too quickly. In Dallas, we built 12 in three and a half years. In Houston, we built six restaurants in 16 months… That’s not something we will repeat going forward… The locations and sites that we’ve opened in those markets, they don’t model appropriately right now for sales and returns… The build costs we went into those market with are prohibitive to generating a reasonable return based on [current] sales.” (As of yearend FY25, Portillo’s had 19 Texas locations, or nearly 20% of its total restaurant count. This is a state where Portillo’s opened its first location in 2023.)

Naturally, this conclusion is informing slower unit growth expectations: as opposed to the ~10 net new units per year that Portillo’s added during FY23 – FY25, next year’s plan contemplates just five new locations. As a reminder, prior management was targeting annualized net new unit growth of 12% - 15%; anything close to that level of growth is clearly off the table at this time.

One thing that hasn’t changed is management’s focus on smaller restaurants and lower build costs, as exemplified by their recent ~3,100 square foot DFW airport location. For context, that’s about half the square footage of their ~6,250 square foot “Restaurant of the Future” 1.0 store prototype, and it sounds like their intention will be to go smaller with the 2.0 store prototype.

As a public company, Portillo’s has kept moving down the path towards smaller, cheaper, and ultimately less distinctive restaurants, with the recent addition of further time and distance between new openings (informed by their struggles in Texas). Management explained their evolution on average restaurant size at the 2026 ICR conference: “We’ve learned over the years we don’t need to build restaurants in new markets at the same size as we have in Chicago… Over time, as Portillo’s grew in popularity, the restaurants got bigger and bigger. For example, we opened the Canal & Taylor restaurant in 2016 at 9,000 square feet, which does $20 million - but we [mistakenly] took that same approach to new markets... and got ourselves too big outside Chicago. We have been working on that problem now for several years.”

I’m of two minds about the strategic shift underway.

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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 “Roblox: Accepting Uncertainty”)

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Three Notable Items

“Walmart Reports Q2 2027 Quarterly Results”

Walmart reported relatively soft quarterly results, most notably their weakest U.S. same store sales growth in more than six years; that was despite >500 basis points of e-commerce comp contribution, with expedited deliveries (in <3 hours) accounting for nearly 40% of store-fulfilled orders. I’ll have more to say on this in the coming weeks when Dollar General and Dollar Tree report.

CEO John Furner: “Our price gaps to conventional U.S. grocers are strong, and they continue to widen. The share gains we see from this channel have persisted, alongside the drug and dollar formats... Fast delivery in the U.S. grew 48% in Q2. Speed matters, and we have a significant competitive advantage. Our physical footprint, fulfillment infrastructure, and local delivery capabilities allow us to move closer to customers while maintaining an attractive cost structure. We’ve now expanded under 30-minute delivery into 38 U.S. markets... Ecommerce sales now represent more than 23% of our sales mix in Walmart U.S., which is double the level from five years ago.”

“How a pesky Jordan copycat dribbled around Nike in China”

A story in the FT about Qiaodan, a relatively small Chinese sportswear company whose name translates to “Jordan” (as in Michael Jordan). In addition to the company’s interesting history, the story speaks more broadly to the competitive threat that Nike and its peers face from China’s domestic sports brands (something I’ve been talking about at TSOH for many years).

“Since its founding 26 years ago, Qiaodan has spent a significant chunk of that time embroiled in a legal dispute with Michael Jordan, who appears to have inspired its branding. However, in 2020, Qiaodan was ultimately found only to have infringed an element of Jordan’s prior name rights. The sportswear company — which has expanded into running trainers and yoga gear — is now a fully fledged nationwide retailer, with about 6,000 stores, most of them under franchise arrangements. In a store in the lower-tier city of Yueyang, its Air Jordan-style high-top trainers sell for Rmb339 (~$50).”

“AI Music Startup Suno Bets Anyone Can Be a Rock Star”

A Bloomberg profile about Suno, the company who’s mission is to build “The AI Music App”. My interest here is less about Suno specifically, and more about the growing importance of UGC and AI-generated content across various forms of entertainment (video, music, gaming, etc.). I suspect the changes that we’ve seen in recent years are just the tip of the iceberg.

“Paying users can train Suno on their voices, so their creations can sound like they’re singing them. More than 100 million people have used the product since 2023, and over 2 million people shell out as much as $30 a month for it. Co-founder Mikey Shulman says Suno will do for music what Instagram did for photography… This led to huge increases in downloads, making Suno the most popular music app in Apple’s store for a few weeks, surpassing Spotify.”

TSOH Updates

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

Monday’s research report will be an update on Portillo’s (PTLO).

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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From “Disruption In The Other Direction” (February 2026):

“Despite outperforming any reasonable expectations from five years ago on DAU growth, bookings growth, etc., Roblox generated >$4 billion of FY22 – FY25 cumulative net losses. I think Roblox would benefit from a clearer long-term financial road map, i.e. an update to the framework outlined at the 2023 Investor Day. Not only would it help investors to bridge the divide between today’s impressive platform KPIs and long-term profitability, which would likely dampen its stock price volatility, but it would also set some guardrails for management to ensure priorities remain appropriately balanced. (Note that Netflix started providing a margin framework for streaming in 2013.)”

In Q4 FY19, Roblox had ~19 million global DAUs, with total TTM engagement on the platform of ~13.7 billion hours. What happened at Roblox over the ensuing six years (through YE FY25) was nothing short of phenomenal.

First, the company was a major beneficiary of the pandemic, with DAUs and platform hours more than tripling over the next three years (FY20 – FY22), to ~59 million and ~49.3 billion, respectively. What happened in the subsequent three years (FY23 – FY25) was even more impressive: another leg of huge growth after digesting that much enlarged base of users and hours. By YE FY25, Roblox had ~144 million DAUs with ~123.9 billion hours of TTM engagement. The following graphic, from Matt Ball’s “The State of Video Gaming in 2026”, contextualizes this expansion within the broader gaming industry. To put this data into words, Roblox took substantial engagement share (hours played) in gaming over the past 5-10 years, such that its engagement is greater than Fortnite, PlayStation, and Steam combined.

The latest move higher for global DAUs has made the pandemic-fueled growth of 2020 look rather pedestrian. As you can see below, Roblox added ~59 million net DAU’s in 2025 (TTM Q4 FY25), which is nearly 4x greater than the ~18 million net DAU’s that the platform added throughout 2020.

While the company is embarking on a period of tougher results, which I’ll discuss in more detail below, I think the above data lends support to the following comment from CEO Dave Baszucki: “We believe that we are navigating a period of normalization following a year of massive growth.”

In the near term, the financial KPI that best captures this normalization is YoY bookings. The company’s Q2 FY26 results disappointed, and now they expect a mid-teens YoY decline in bookings in Q3 FY26; as depicted below, this is pressure on bookings growth that they haven’t experienced before.

The stock, which traded above $140 per share in September 2025, closed on Wednesday at ~$39 per share - their second ~75%+ stock price decline in five years as a public company. As I’ve noted at various times since the April 2022 Roblox initiation, I think management’s inability and / or unwillingness to adopt a clearer set of long-term financial objectives for investors has invited outsized stock price volatility… which is something management should not be indifferent to given heavy reliance of SBC to compensate employees.

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From “Airbnb: Room To Breathe” (May 2026): “I think that Mr. Market will be more patient as long as solid growth and profitability is sustained in the core business, giving management room to breathe and to lay a solid foundation in those newer businesses (as CEO Brian Chesky says, to go from one to ten to many). A reacceleration in GBV growth is an encouraging sign of the sizable opportunities that lie ahead. I think the risk/reward on Airbnb stock remains attractive at current levels [at the time, ABNB traded at ~$130 per share].”

The solid growth that was required to appease Mr. Market has materialized: Airbnb reported strong 1H FY26 results, and with their Q3 FY26 guidance implying ~17% YoY TTM GBV growth in the coming quarter – a meaningful acceleration from the ~10% YoY growth that was reported in 1H FY25.

The Q2 results reflected broad-based geographic strength, most notably the acceleration to mid-teens YoY growth in North America, helped by the World Cup. Management didn’t directly quantify its impact, only saying it resulted in “millions of guest arrivals”, which compares to a total of ~148 million nights & experiences booked during Q2 FY26. As you can see below, North America revenues were up ~16% YoY, or roughly ten points higher than the average over the preceding two years. Given that the U.S. accounted for ~40% of Airbnb’s FY25 revenues, a ten point lift in the region would imply a roughly four point benefit to consolidated revenue growth, all else equal. If so, that would also suggest a tough comp for the business as we get to Q2 FY27.

For what it’s worth, someone in my network told me Airbnb disclosed on the follow-up call that the World Cup contributed less than one point to YoY room nights growth. I don’t know if that’s accurate or not; what I do know is that management shouldn’t be sharing such information behind closed doors. I’ve reached out to IR on this, and will let you know as I gather more information.

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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 “Peloton: Subscriber Squeeze”)

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Three Notable Items

“On Reports Q2 FY26 Results”

On’s Q2 FY26 results included a reduction to revenue guidance, which was met with a decidedly negative response by Mr. Market (the stock price fell ~20%). The quarter included another deceleration in the Americas constant currency revenue growth rate, one KPI that I’m focused on. More broadly, it seems we’re at an interesting moment in the company’s long-term evolution: managing topline growth and inventory / distribution in a promotional market environment while keeping clear focus on their premium brand positioning.

On co-CEO David Allemann: “In wholesale, some of our everyday running franchises tracked below our ambitions in a highly promotional multi-brand marketplace, particularly in the Americas. This is something we are not pleased with, but our response is where the premium standard proves itself. We have been intentional and disciplined on managing sell-in to the channel. We choose not to build in-channel inventory that could compromise our full price integrity.”

“Rockstar founder builds Celsius stake, wants to take over as CEO”

An interesting development at Celsius, particularly given that Rockstar (in UCAN) was added to their energy drink portfolio following the latest evolution of their PepsiCo relationship. CELH shares, which reached ~$67 per share in October 2025, have seen their price fall >50% from the 52-week highs.

“Russ Savage, founder of Rockstar, has purchased millions of shares of Celsius and is calling for the ouster of CEO John Fieldly... Savage controls more than 12 million shares of Celsius [~4.7% stake]. While Savage has been quietly advising Celsius to change its cost structure and marketing strategy for over a year, he now says new leadership is needed. ‘The CEO, COO, brand manager, and marketing manager all need to be fired,’ Savage told CNBC.”

“Netflix, Disney, And Investing In Media In 2026”

Earlier this week, I joined Ryan Henderson and Brett Schafer of the Chit Chat Money (CCM) podcast to discuss Disney, Netflix, and the broader media industry. If you are interested in this topic, I would also recommend revisiting the February 2022 podcast that I recorded with Ryan and Brett about Netflix.

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.

From “Peloton: Clipping In” (February 2026):

“A successful investment, should Peloton remain a standalone company, requires improved trends that support financial stability in the subscription business… The market is doubtful about stabilization, a conclusion clearly supported by the worsening trends of the past two years. While the road to better sub trends is uncertain, we have a much improved balance sheet and an attractive valuation [~$4.6 per share]. In my mind, it is time to take action.”

PTON stumbled out of the gates on that initial purchase (at a ~6% weighting), with the stock down ~20% over the next month. I thought this was overly punitive, so I bought more: in mid-March, I took PTON to an ~8% weighting at ~$3.7 per share. That marked a near term bottom: despite the lackluster response to the Q4 FY26 results, the stock is still up >50% from the lows. (As a reminder, I also trimmed PTON on July 23rd to fund the NFLX addition.)

I share this for two reasons: first, it highlights how volatile this stock has been of late, which is somewhat surprising to me given their much improved balance sheet; and second, it highlights my willingness to be tactical on position sizing in response to that first point (as discussed in the “Q2 2026 Portfolio Update”). I will respond to the opportunities presented, even if that appears closer to short-term trading; I want to capitalize on large stock price moves, while maintaining appropriate attention to long-term considerations.

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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 “Microsoft: Control Your Destiny”)

Three Notable Items

“Crocs Has a Trick for Dodging Taxes: a Tiny Office in Malta”

A New York Times report examining the tax optimization strategies employed by companies like Crocs, a risk I discussed in “The HeyDude Hangover” (multiple intra-entity transactions related to IP rights).

“Accounting firms present the Maltese maneuvers as legal... But the lack of a business purpose beyond dodging taxes could make them vulnerable to challenges by the IRS… By charging interest on loans among its own subsidiaries, Crocs shifts profits out of countries where it actually sells shoes and into Malta. The arrangement reduced its 2023 tax bill by $218.6 million.”

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“Roblox Reports Second Quarter 2026 Financial Results”

I’ll have more on Roblox in the coming weeks, but suffice to say that Mr. Market is disappointed with the swift change in their bookings trajectory: the stock price, which crossed $140 per share in September 2025, has since fallen by ~75% from the 52 week high. As I’ve discussed for a few years now, management’s unwillingness to outline a clearer path to long-term profitability has invited outsized stock price volatility – and despite a more than 3x increase in TTM bookings over the past five years, we again find RBLX trading meaningfully below where it did after the March 2021 direct listing.

RBLX Q2 FY26 letter: “Our conviction in the ability to deliver 20%+ compounded top line growth over the long term has not changed. As we’ve said before, the trajectory of this growth will be non-linear due to the inherent variability of our business and the timing of investment necessary to scale… We are accelerating our previously announced transition to quarterly-only guidance by one quarter, issuing guidance for Q3 FY26, but not the full year. Given our long-term focus we do not believe annual guidance is a helpful tool for investors. For Q3 2026, we expect revenue to increase by 4% to 10% year-over-year, and bookings to decline 14% to 18% year-over-year.”

“Lululemon Is At War With Itself”

A profile from Bloomberg Businessweek examining recent challenges and changes underway at the athleisure brand, including a new CEO hire (former Nike exec Heidi O’Neill) and an ongoing tussle with founder Chip Wilson.

“Lululemon now finds itself in a troubled spot similar to Nike, stumbling at the moment a new generation of competitors has swooped in. Alo has more than 200 stores, and it had a $10 billion valuation as of several years ago, according to PitchBook; Vuori was recently valued at $5.5 billion and operates about 150 stores. Target, Old Navy, and other retail chains have become formidable competitors at the lower end, so much so that Old Navy is contemplating spinning out standalone stores for its athleisure lines.”

TSOH Updates

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

Monday’s post 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.

“I’m unconvinced by the claim that Meta management is changing their behavior to satisfy the near term interests of Mr. Market… My suspicion, based on what they did during an even more difficult period in 2022, would suggest the opposite (in that case, effectively leaning further into short-term financial pain, as opposed to making a compromise on FRL losses)… There’s a somewhat unique (outsized) need with Meta to trust management’s ability to make sound long-term decisions. That has been the case for many years – and thus far, long-term investors who held steady, who have implicitly said ‘in Zuck we trust’, have been well rewarded for doing so. Time will tell if that remains true as the level of investment once again reaches new heights.”

In September 2022, a few weeks prior to Meta reporting a 4% revenue decline in Q3 FY22, CNBC published an article highlighting a list of challenges at the company: “Facebook scrambles to escape stock’s death spiral as users flee and sales drop... I’m not sure there’s a core business that works anymore... They are not winning the next generation [of users].”

The timing of that article corresponds to the middle of the chart below, i.e. when TTM revenues started moving in the wrong direction after a long period of impressive growth. As I wrote at the time, my take on Meta’s core business was more optimistic than the sentiment expressed in that CNBC article: “While the short-term presents significant challenges, Meta is among the few competitors well positioned to navigate through this environment. The timing on both internal and external headwinds are uncertain, but I remain confident that Meta will emerge as a stronger business on the other side.”

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“Microsoft’s ability to find attractive growth opportunities is clearer today than it has been at any time since my initial investment in 2011. With strategic vision and execution, both of which Satya Nadella has delivered in spades since becoming CEO in 2014, the company should be able to sustain a level of [revenue and EPS] growth that seemed unfathomable a decade ago.”

As Microsoft closed out FY16, the growing importance of the company’s Cloud business was on full display: while it had only recently surpassed 10% of their revenue base, it had grown ~50% over the prior year, to a run rate of $12 billion. While the company had already established a near-term goal for the Cloud business - $20 billion run rate revenues by FY18 – it was clear from CFO Amy Hood’s commentary that the Cloud vision was much larger than the results expected over the next 2-3 years: “The first thing Satya and I focus on is how much of our business are we continuing to shift to annuity and, specifically, to cloud. We structure all of our motions - how we engineer, how we do our go-to-market, how we think about sales engagement, and how we invest - fundamentally toward the long-term structural cloud transition.”

Microsoft surpassed that near-term goal goal for the Cloud business (>$20 billion run rate by YE FY18) and never looked back: the business grew at a ~35% annualized rate over the past decade, to ~$237 billion at YE FY26. An astounding decade for Microsoft’s business, with the stock compounding at a ~25% annualized rate over the past ten years, primarily reflected their leadership position in Cloud. (As discussed in “It’s Always About The People”, success for Microsoft was far from assured in the early 2010’s.)

While Microsoft’s impressive top-line growth rates have been sustained in recent periods, with the company reporting double-digit constant currency revenue growth in each quarter for the past nine years except one, there’s been one notable difference of late: a significant CapEx ramp. (For more on this topic, I recommend revisiting “CapEx Conundrum” from August 2024.)

As shown below, Microsoft’s CapEx intensity throughout much of the past decade was in the 10% - 15% range. That changed significantly in the past two years, with CapEx intensity expected to exceed ~50% of revenues in FY27e. In dollars, the business went from annual CapEx outlays measured in tens of billions of dollars, to a number that may exceed $200 billion this year.

The challenge this presents is assessing the effectiveness of this massive investment (ROIIC); there’s a timing mismatch between the inputs and outputs, and there are evolving competitive dynamics between legacy mega cap tech companies and emerging competitors. Stated simply, there’s been a lot of uncertainty on how this was all likely to play out. That unease was evident in Microsoft’s stock price slide, which at recent lows was down more than 30% from the highs. Microsoft’s Q4 FY26 results, along with the call commentary, provided some needed reinforcement on their long-term strategy and the foundation underlying its competitive advantages.

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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 “Ally Financial: The Next Vintage”)

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Three Notable Items

“Tractor Supply Q2 2026 Financial Results”

Tractor Supply’s latest results came with across the board cuts to FY26 guidance - on SSS, revenues, EBIT margins, and EPS - along with the decision to withdraw their long-term financial framework (slide 120). As I discussed in “Old Dog, New Tricks?”, this is shaping up to be the fourth consecutive year of underwhelming results, with the stock down ~50% from the highs. At ~16x forward, Tractor Supply is trading well below the P/E multiple Mr. Market typically applied to the business over the past decade.

One final note: in the April 2023 initiation, I questioned the effectiveness of Tractor Supply’s M&A strategy, with emphasis on the 2016 Petsense deal. This quarter provided further validation for those concerns: the company is preparing to close 75 Petsense stores, or nearly 40% of the banner count.

Tractor Supply CEO Hal Lawton: “Generating modest positive comp sales is not where Tractor Supply should perform over the long term. We’re not satisfied with our business, and we’re taking decisive actions to improve it. Tractor Supply has successfully navigated changing economic environments for nearly 90 years, and we remain confident in the durability of our business model. We operate in end markets that are currently experiencing several discrete headwinds.”

“Anyone’s Guess”

A feature in “The Economist” highlighting the broadening reach of prediction markets like Kalshi and Polymarket, a direct competitive threat to OSBs like Flutter (Fanduel) and DraftKings. More broadly, the report explores issues like suspicious activity / insider trading and bet settlement / rule ambiguity.

“Nearly 40% of American men aged 18 to 34 have placed a bet on a prediction market, along with more than 20% of young women. In June, Kalshi processed $33 billion in trades… Kalshi and Polymarket are fundraising at valuations of ~$40 billion and ~$15 billion, respectively.”

“Brown-Forman Board Issues Statement”

The latest development in the Brown-Forman story, which comes in response to Sazerac’s takeover proposal. The board concluded that the proposal is “not actionable” because it doesn’t align with the “vision for [the] future” of the controlling shareholders. At the same time, the business is struggling and the stock is at levels first eclipsed in 2013; I suspect prioritizing independence may be subject to debate among the family members if the right price tag and deal structure are presented (“stand ready to improve the terms of our offer”).

“Brown-Forman today announced that its Board of Directors has received an unsolicited proposal from Sazerac to acquire Brown-Forman, and, taking into consideration Wolf Pen Branch, LP’s view as noted below, has concluded that Sazerac’s proposal is not actionable.”

TSOH Updates

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

Monday’s post will be an update on Microsoft (MSFT).

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.

“The biggest concern on the Ally thesis has been credit quality, primarily due to the troublesome performance of the 2022 vintage. The good news is that the loan book turns fairly quickly… The large majority of what remains is from newer vintages (2023 – 2025), loans added to the auto book with 9%+ origination yields and which are more heavily weighted to Ally’s highest quality credit tier. In effect, the pain that preceded this period set the stage for improved underwriting conditions; Ally and its peers are reacting accordingly.”

That reaction - leaning into improved underwriting conditions - remains evident: Ally originated ~$13.3 billion of consumer auto loans during Q2 FY26, a ~21% increase from the year ago period. We see a similar trajectory at its peers, with Capital One’s Auto originations growing by a comparable rate in the quarter to ~$12.9 billion. In total, Q2 FY26 auto origination volumes ($) for Ally and Capital One were up >40% versus Q2 FY24.

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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 “Netflix: What’s Coming Next”)

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Three Notable Items

“Judge Temporarily Blocks Paramount-Warner Deal”

As it relates to last week’s discussion on the future of NBCUniversal, a concern of mine is that sustained regulatory pressure on the PSKY / WBD merger may discourage others from pursuing similar actions with NBCU.

“The 14-day restraining order means Paramount will fall short on its hopes to have the deal closed before the end of the month. If the court later grants the states a preliminary injunction, the companies would be barred from closing the merger while the antitrust lawsuit proceeds.”

“Why Microsoft’s $80 Billion Xbox Bet Backfired”

A short WSJ video detailing the challenges that Xbox has faced with its subscription service, Game Pass. Rethinking the role of the subscription service is part of a broader overhaul for Microsoft’s gaming business; as Xbox CEO Asha Sharma recently told employees, “Over the past five years, we spent over $20 billion on ongoing investments in our content, platform, and hardware subsidy, but our annual revenue has declined nearly half a billion during that time [ex ATVI]. Going forward, this cannot continue.”

“In 2025, with the next ‘Call of Duty’ game [‘Black Ops 7’], they raised the price of Game Pass Ultimate from $19.99 to $29.99… While executives projected Game Pass would reach ~77 million subscribers this year, it currently has less than half of that (~30 million)… Microsoft is changing course: in recent months, Xbox cut the price of Ultimate to $22.99, and they won’t release the next ‘Call of Duty’ game on Game Pass on day one.”

“How high can Red Bull fly?”

An Economist article about the global leader in the energy drinks business, which has been finding its way forward following the death of founder Dietrich Mateschitz in October 2022. For TSOH, while Monster has ran away from us (for now), Celsius has seen its stock price decline >50% since October 2025.

“Red Bull has continued to fly. Last year it sold 14 billion cans, up by 10% from 2024. It has 28% of the global market, ahead of main rival Monster with 17%... Red Bull spends around 30% of sales on marketing - more than $3.4 billion last year… The company eschews conventional advertising, instead making its own content through Red Bull Media House. It encompasses a TV network, film and TV studios, a record label and several magazines.”

TSOH Updates

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

Monday’s post will be an update on Ally Financial (ALLY).

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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