“The shift to test the ‘stretchability’ of the brand is a notable change. I also suspect it reflects a management team that witnessed the huge growth of brands like Jellycat and Labubu over the past five years and wants in on the party… On the one hand, this may be an opportunity for incremental growth. On the other, it can also be seen as an attempt, or a need, for change.”

In the late 2025 update, I discussed efforts to expand beyond the company’s namesake offering. There were two primary ways this stretchability was being tested in the marketplace: prestuffed versus make your own, and building a broader retail sales presence beyond Build-A-Bear branded workshops.

A key question was whether consumers would follow the brand down this new road – and recent results have presented some reasons for caution.

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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 “Is Ralph Lauren Still Relevant?”)

Three Notable Items

“Bumble in $1.3 Billion Deal With Ithaca Holdings”

While I’ve spent less time writing about online dating in recent quarters, I continue to monitor industry developments. This week, Bumble agreed to be taken private in an all-cash deal for ~$1.3 billion ($6.05 per share) - a nice bump from the ~$2.5 per share that the stock traded at a few weeks ago, but also ~90% below the 2021 highs. Note that the company repurchased ~$370 million of stock during 2023 and 2024 at an average cost of ~$9.75 per share – a roughly 60% premium to the deal price that management just agreed to.

“The deal marks a dramatic turn for Bumble, which was valued at $14 billion when it went public. The app was founded in 2014 by Wolfe Herd, a former Tinder cofounder, on the premise that only women could make the first move on the app. But Bumble, like many of its dating-app peers, suffered user declines as young people have grown fatigued with online dating.”

“How Zuckerberg is building superintelligence”

An interview on the Cheeky Pint podcast with Mark Zuckerberg and Alexander Wang, focused on Muse and model development at MSL.

Zuck: “This is a big step forward. With Muse Spark, we were very happy with the performance we were able to deliver as we were getting up to this point, but this is the beginning of MSL being at the frontier. These models are quite competitive with the best models that are out there.”

“Netflix Eliminates About 1,000 Jobs in Biggest Cuts Since 2022”

In advance of next week’s Q3 FY26 earnings report, Netflix announced job cuts impacting ~6% of its workforce. The culprit is underwhelming growth, with management struggling at the moment to find meaningful remedies, particularly to address relatively lackluster engagement trends. Personally, I find the current period reminiscent of Netflix’s challenges in 1H 2022. (The company announced last night that Peter Rice has replaced Bela Bajaria.)

“Co-Chief Executives Greg Peters and Ted Sarandos said in an email to employees Wednesday that the bulk of cuts would be in the streaming giant’s product, tech, legal and HR teams. ‘Our mission - to entertain the world - is ambitious, and delivering on it requires us to be disciplined about where we prioritize our people and resources,’ they told employees.”

TSOH Updates

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

Monday’s research report will be an update on Build-A-Bear (BBW) – a company that has seen its stock price fall roughly two-thirds from the early 2026 highs, and which currently trades at less than 5x FY26e EV/EBIT.

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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.

“As my coverage of companies in the alcohol industry has expanded, I’ve developed more appreciation for changing competitive dynamics and shifting consumer preferences, along with how different companies are responding to those developments. One consistent theme is the critical importance of capital allocation and M&A. I’m wary of those engaging in a seemingly endless number of divestitures and acquisitions, with little reason to believe this activity has, or will, generate material value for owners (see Brown-Forman). Securing the U.S. rights to Modelo, Corona, and other Mexican beer brands was clearly a fantastic deal by Constellation – but more recent examples in cannabis and craft beer led to significant value destruction… My focus as I learn more about STZ will be to develop a clearer sense for future capital allocation decisions. To give a recent example, I’d prefer fewer deals like Sea Smoke; to me, it signals a lack of focus on what moves the needle.”

When that initiation was published, STZ was a ~$140 stock trading at ~13x NTM EV/EBIT – a meaningful reduction from the multiple Mr. Market had previously deemed appropriate for the business. It has remained challenged subsequently: as of Wednesday’s close, STZ is a ~$127 stock trading at ~11x NTM EV/EBIT. It was a “cheap” stock a year ago, and it’s a bit cheaper today.

And yet, while the stock price hasn’t cooperated for the past 5+ years, I think that the recent business results are presenting reason for some optimism.

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As noted in the Financial Times, the company had its fair share of challenges: “Ralph Lauren has faced competition from online competitors and fast fashion names like Zara and H&M that copy runway styles for a fraction of the cost and cycle through fashions at a rapid pace. The New York-based chain has seen same-store sales (SSS), a key metric, fall nine consecutive quarters.”

Louvet stated it more succinctly:

“Is Ralph Lauren still relevant, or has the brand’s time passed?”

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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 the Q3 2026 Portfolio Update)

Three Notable Items

“Charlie Munger’s Interview with Todd Combs”

A transcript from a 2022 conversation between Charlie Munger and Todd Combs. Thank you to Shane Parrish of Farnam Street for sharing it publicly.

Munger: “Warren used to say, ‘You really don’t need to be very smart to be a successful investor’, and I think he was right. It’s good to have the extra mental horsepower Henry Singleton had. That is helpful, but it’s perfectly possible to do splendidly well if you have the right temperament… I’m not a polymath. I’m a guy who has taken a moderate obsession and a long attention span and turned them into pretty good results. Of course, having a long attention span will help you a lot if you are reasonably smart.”

“Welcome to Skydance! Movies, TV ... and Massive Debt”

Paramount Skydance has completed the acquisition of Warner Bros. Discovery. One critical issue, as was the case with the prior transaction to create WBD, is that Skydance emerges from this transaction with massive financial leverage, which is particularly problematic given uncertainty about the long-term trajectory for the linear TV business. Time will tell whether management has appropriately prepared themselves for these headwinds, or if they will soon encounter the same stumbling blocks as their predecessors.

“Disney jacked up the price of Disney+ and Hulu over the past 3-4 years, while keeping the bundled price much more compelling; over time, they’ve basically walked you up to a combined price by raising the individual prices so aggressively… What I suspect will happen is a similar progression, where the HBO Max and Paramount+ prices go up far faster than normal, while the price for the bundle of the two goes up very slowly.”

“Big booze is reinventing itself”

A podcast from The Economist discussing how different companies are responding to changes in the alcoholic drinks industry. I’ll have more to say about this topic on Thursday in an update on Constellation Brands (STZ).

Carlsberg CEO Jacob Aarup-Andersen: “When we have the full-scale portfolio, including soft drinks, we actually increase the value and the resilience of our beer portfolio. Why? Because we become much more relevant to our customers - the big retailers, the big pop chains, etc. - and we become more relevant to the consumer because we cater to all occasions… I think that’s key. The average consumer globally consumes around eight cups of liquid every day. In emerging markets, they will purchase one to two of those eight cups. In developed markets, they will purchase four to five of those eight cups. They will definitely purchase more beverages in ten years than they do today. We are not exiting beer or alcohol, but we are making sure we have a portfolio that caters to all consumer needs… We see it being synergistic from the purchase of the can down to the consumer moment.”

TSOH Updates

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

Monday’s research report will examine the turnaround of Ralph Lauren (RL).

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 or in any fiduciary capacity.

As noted in today’s report, I have decided to make a portfolio change.

These trades will be executed after the market opens at 9:30 at ET.

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Q2 ’21, Q3 ’21, Q4 ’21, Q1 ‘22, Q2 ‘22, Q3 ‘22, Q4 ‘22, Q1 ‘23, Q2 ‘23, Q3 ‘23, Q4 ‘23, Q1 ‘24, Q2 ‘24, Q3 ‘24, Q4 ‘24, Q1 ‘25, Q2 ‘25, Q3 ‘25, Q4 ‘25, Q1 ‘26, Q2 ‘26

Q3 2026 Portfolio Changes:

Portfolio Change - 07/23/2026

Portfolio Change - 08/20/2026

Portfolio Change - 09/28/2026

Q3 2026 Top TSOH Research:

“On Holdings: Maintaining Pace” (07/20/26)

“Peloton: Subscriber Squeeze” (08/10/26)

“Portillo’s: Strategic Reset” (08/24/26)

“Celsius: The Pepsi Put” (09/07/26)

This chart seems a fitting summary of the current market environment.

Despite the S&P 500 being up low double digits YTD, and trading just shy of its all-time high (ATH), the majority of its constituents are trading >20% below their ATHs, with more than one-quarter trading >40% below their ATHs. The index remains a daunting competitor, with many of the companies within it struggling to keep pace. (As noted by Liz Ann Sonders, less than 10% of the S&P 500 constituents have outperformed the index over the past year.)

I follow or own many companies that would land on the right hand side of the above chart. I ran the ATH data for the 17 companies in the TSOH portfolio, along with 13 other non-portfolio holdings (selected based on the companies I’ve written about most recently). Here’s the data for those select 30 stocks – first, the comparable TSOH drawdown chart to the above S&P 500 data, followed by the percentage change from the ATHs for the 30 companies:

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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 “Deckers: Clown Shoes To Compounder”)

Three Notable Items

“Mark Zuckerberg on Muse, New Audio-Only Glasses and Killer AI”

An interview with Zuck following Meta Connect 2026. I was interested to hear him discuss Muse, an AI tool I’ve been glued to throughout the week (to pick one example, Muse helped me save about $350 per year on a GEICO auto policy with unchanged coverages). Zuck has received plenty of flack over the past five years for the non-core / FRL investments, but it feels like Meta is at a point where some efforts are converging and can bear meaningful fruit.

“I think everyone in the future will have a personal agent that can basically do things for them. It will understand their goals, their context, and get things done for them… You give it a goal, and it can just go work on things for you… You’re basically going to have an extremely capable assistant who can understand the things you care about and help get basic things you don’t want to deal with out of the way so you can focus on the things you want.”

“Ted Sarandos on Next Stage of Growth for Netflix”

A wide ranging discussion with Netflix co-CEO Ted Sarandos at Bloomberg Screentime 2026. In particular, I was interested to hear Sarandos’ comments about the evolution of their gaming strategy, the Warner Bros. deal, and competition from FAST services like The Roku Channel (TRC) and Tubi.

11^th minute: “Mobile gaming was a gateway to cloud gaming; we’re much more interested in what you can do on your TV using your phone as a remote. In a post-console world, there’s going to be all kinds of opportunities for gaming on the TV – and we want to be early to invest in that.”

“How Arc’teryx Turned Climbing Gear Into a Luxury Status Symbol”

An interesting feature in the Wall Street Journal about the mountaineering brand founded by a group of climbers in Vancouver, Canada that has grown its revenue base from ~$500 million in 2020 to more than $2 billion in 2024.

“The highly technical products are designed for climbers, but the rapid brand growth has also been fueled by ‘gorpcore,’ a fashion trend where technical gear is worn as high-end streetwear… This commitment to form and function comes with a hefty price tag, with the Alpha SV jacket in the U.S. retailing for ~$900… The company has 48 repair centers [ReBIRD], aimed at helping to keep products in use longer; it’s a central part of the identity of the brand.”

TSOH Updates

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

Monday’s research report will be the Q3 2026 Portfolio Update.

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 started in 1973 in Santa Barbara, California, when two college buddies started selling flip flops - originally known as “Driftwood Dans”, but the name was later changed to “deckas”, a slang phrase that referred to the stacked appearance of their sandals. A decade later, in 1985, the company licensed a sport sandal called Teva that had been created by a Colorado river rafter. Those two products carried the company to a 1993 IPO, and would eventually lead the way to two transformative acquisitions in the company’s history: the 1995 deal for UGG, which makes sheepskin boots, and the 2012 deal for HOKA, which makes maximalist running shoes. (HOKA co-founder Jean-Luc Diard: “The Deckers partnership brought two things for HOKA. First, it was a group in the footwear business, so they could bring [benefits with suppliers and production]. Second, it didn’t have a running brand in the portfolio… It was a four-year plan, with stages of additional capital investment so everyone could use that experience in learning how to work together.”)

As you can see below, those two brands account for the vast majority of Deckers revenue base. Notably, the HOKA brand, which has reported ~5x revenue growth since FY21, is on track to rival UGG’s size for the first time.

The rise of brands like HOKA and On, which has coincided with a lesser position for incumbents like Nike, has been a well-covered theme at TSOH Investment Research. It’s a story we’ve also watched from the angle of retailers like Dick’s Sporting Goods and Academy Sports + Outdoors.

What makes today’s DECK initiation timely is the carnage in the space.

Each of those companies has seen its stock price decline meaningfully from its all-time highs, with significant underperformance versus the S&P 500 over the past year; they also trade at wide discounts to their historic valuations.

Some see what has happened in recent years and argue the space is uninvestable (too much fad / fashion risk). I think that’s a broad brush which may close people’s eyes to compelling opportunities – with Deckers itself a great example over the past 10-20 years: DECK has been nearly a 30-bagger over the past two decades (~18.5% CAGR), leaving the S&P 500 in the dust.

As noted above, Deckers growth over the past decade was led by HOKA. The brand was founded in 2009 by two former executives of French sports equipment company Salomon. The idea, as one running blogger put it in the early 2010s, was a shoe with an oversized midsole and a wide body, utilizing maximalist design already applied to other sports equipment like powder skis, golf clubs (drivers), mountain bike tires, and tennis rackets. (“‘HOKA ONE ONE’ originates from the Maori language, meaning ‘to fly over the earth’.”)

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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 “On Holdings: Maintaining Pace” (July 2026):

“Mr. Market has some concerns about the sustainability of their current financial trajectory. Personally, I am somewhat less pessimistic about On than I think this rating implies. I see a premium athletic brand that etched out a unique position in the industry, at least at its current size… If I walk away from [On’s 2026 Investor Day] with more appreciation for where this business can go over the next five to ten years, I will be open to changing my conclusion.”

The Investor Day in question was held last week in Zurich, with the company setting medium-term financial targets through FY29, announcing their first share repurchase authorization, and detailing their plans to expand into golf and soccer (welcome aboard Mbappé). For a stock that has spent most of 2026 heading in the wrong direction, the >10% pop in response was a notable change in direction; with that said, it’s still down ~35% year to date.

The Mbappé signing is a fitting place to start, because I think it captures the broader strategic vision for On. As management noted at the Investor Day, “We are entering because at the premium end of the sport there is still space left open for radical innovation on the pitch... A few incumbents own the architecture of the category, and they compete head-to-head. We will play a different game… Our innovation engine has given us an entry ticket nobody else holds. I’m quoting Sydney Schertenleib – ‘I’ve never felt the ball like this before’. That’s what Sydney said after her very first practice in an early concept of our upcoming performance football boot. This is the disruptive power of LightSpray. On a football boot, LightSpray does something that no other boot has done: it puts almost nothing between the foot and the ball.”

It’s clear that On’s initial efforts in soccer will be focused on top of the line premium cleats with a LightSpray upper (they currently offer two different styles of LightSpray men’s shoes – the Cloudmonster 3 Hyper for $280 and the Cloudboom Strike 2 for $310). They have no interest in competing with lower end (~$100) soccer cleats sold by Nike and Adidas, let alone the endless list of brands sold through sites like Amazon for even less. On enters the market with a clear focus on selling to a select group of soccer players who are willing to pay a premium for the highest quality boot they can make.

This should sound familiar, because it mirrors what they’ve done in running, tennis, etc. As co-founder Caspar Coppetti has said about On’s early days, “Passionate runners were investing more into their gear every year. They were willing to pay for progress. They were the most valuable customers in the running category, but no brand catered to them exclusively. That was the moment where it all made sense to us. We would disrupt running with innovation, and we would only sell at the premium end of the market.”

Critically, On consistently acts in a way that reinforces it’s premium brand image. To paraphrase management, operating in that manner is simple in principle, yet demanding in practice, and powerful because it compounds.

As management noted, On has the industry’s lowest discount rates and the highest average selling prices (“since 2023, we have taken ASPs from $145 to $170”). On the latter figure, they also noted their U.S. wholesale ASPs are ~40% higher than their peer average. In a more mature category for On like Running, the company’s pricing architecture has evolved to cover a broader range of price points, with success driving “better” / “best” SKU adoption:

“Generally speaking, we will not take prices down. That is off the table. But we have different playbooks of price points we design to. In performance, what we’ve seen is that the aperture is opening up. For example, we’ve seen a really strong response to Cloudmonster 3, which comes in three versions - regular Cloudmonster [~$190], Cloudmonster Hyper [~$220] and LightSpray Cloudmonster Hyper [~$280]. A very large share of Monster, 40% - 50%, is from those higher-priced versions, much more than we expected. We’ve actually been chasing the units to go after that… In performance, we want to open up the aperture: an initial price point probably around $160, then something at $200+, and then something that’s closer to $300.”

Naturally, this strategy has its limitations, particularly in terms of market size. As quantified at Investor Day, the premium sportswear segment is ~$150 billion (125 billion CHF), and it accounts for roughly one-third of the global sportswear market. Said differently, there’s the other ~65% of the market that On does not – and per management’s vision, will never – compete within.

When asked about the trade-off that this will present over time, particularly if the brand aspires to sustain outsized topline growth in the decade ahead, co-CEO Caspar Coppetti said the following:

“I just don’t think that holds true [tight growth / margin trade-off]. The premium playbook has been applied in other industries – say, consumer electronics, what Apple has done. They are high margin, the highest price point, and the highest market share. What it comes down to, and I think it’s what your question is leading to, is discipline. We’re educating our consumer not to expect a sale from us, and we’re going to fulfill that promise. As long as we stay the course on the premium playbook, there isn’t an either / or tension; it’s actually reinforcing.” (And when it goes wrong, losing control of promotional intensity creates material brand risk, as seen at Nike under John Donahoe.)

As I discussed in July, I think On management deserves a lot of credit for continuing to do an effective job of nurturing the long-term development of their premium sports brand, while also delivering strong financials. In the face of a near-term environment with heightened competitive intensity and some unforeseen external developments (U.S. tariffs), they’ve delivered compelling results that exceeded the trajectory envisioned at their 2023 Investor Day.

From a financial perspective, the past three years (FY23 – FY26e) have been quite rewarding: a mid-20’s revenue CAGR, with nearly 500 basis points of adjusted EBITDA margin expansion. The vision for the next three years, as outlined at Investor Day, is similarly impressive: high-teens annualized constant currency net sales growth and adjusted EBITDA margins expanding another ~200 basis points to at least 22%. In addition, the Board authorized an inaugural share repurchase program, for up to $1 billion through the end of 2029, which is equal to ~10% of the market cap. (The following charts are in dollars; as noted at Investor Day, management is preparing to move to U.S. dollar reporting in 2027, which aligns with their share price currency.)

On’s growth strategy includes a few key levers: first, broad global expansion, with low-teens growth in America outpaced by ~20%+ growth in EMEA and APAC; second, a significant expansion of their Apparel business, with revenues climbing from ~$200 million in FY25 to ~$900 million in FY29e; and third, the Lifestyle business, led by Cloudtilt (“Cloudtilt is one of the industry’s fastest-growing sneaker franchises, and the precursor of more to come”).

As noted earlier, Mr. Market’s optimism has faded over the past few years, with ONON closing on Friday at ~$30 per share – down ~50% from the early 2025 highs. With ~336 million diluted shares, the company has a market cap of ~$10 billion and an enterprise value of ~$8.6 billion. As you can see below, the EV/EBIT multiple Mr. Market has typically deemed appropriate for On was 30x, 40x, or even 60x; today, it trades at ~14x FY26e EV/EBIT. (Relative to the ~$1 billion of FY29e EBIT shown earlier, the stock is at ~8.5x EV/EBIT.)

Mr. Market is suddenly feeling much less optimistic, a statement that applies to peers like Deckers and Nike, as well as major retail partners like Dick’s Sporting Goods. In my view, while I certainly appreciate that more cautious sentiment given On’s growing size and the constraints of their premium-only model, I think the runway for this business will extend well beyond what the valuation now implies. This brand has staying power and room for growth.

Conclusion

As noted in the opening quote, I came into Investor Day with an openness to changing my conclusion depending on the clarity of the vision presented. Personally, I think management hit all the right notes, and I’m confident they will continue to etch out a unique path by remaining committed to their premium playbook. In addition, the stock took on further water in recent months amidst broader industry pressures, pushing On’s valuation lower.

In summary, I think now is a good time to initiate an ONON position.

I’ll send the portfolio change email before the market opens (at 9am ET).

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.

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 “Going Through Some Pain”)

Three Notable Items

“Ralph Lauren’s Patrice Louvet On Magic, Logic, & Saying No”

An interview with Ralph Lauren’s CEO focused on the company’s turnaround efforts over the past decade. As we think about the long-term evolution of companies like Nike, I think Louvet shares valuable insights for investors.

19^th minute: “We had overextended the brand. We were overextended in off-price, and we had a department store presence that was very significant. We were in a lot of places where we, frankly, were not proud of being there. My filter for the team was two things: first, are we proud of the way we show up; and second, is it financially attractive? If the answer is no to either, then we need to make an intervention to address the issue, or get out. We left about $1 billion of revenue on the table [from pulling back on distribution]. I was confident it was the right thing to do. I had done something similar when I ran the fragrance business at P&G, where I saw the benefits in terms of brand desirability… In hindsight, I wish we had done even more… It would be foolish to think we can create the desirability we’re looking to create if we look good in our Chicago store, but in other locations the brand image is different. The consumer needs to have a consistent, holistic experience for the brand.”

“Peloton Is Revamping Its Treadmills”

As expected, Peloton has revamped its treadmill line, including a cheaper, foldable model with a list price of $2,195 (relative to the other Tread models, the Flex is much more price competitive with the NordicTrack T Series). In addition, the company is progressing on talks to refinance ~$800 million of debt. Both of these developments are important components to my thesis.

“The connected fitness company unveiled three new treadmills and new features for its Peloton IQ artificial intelligence platform with tools for runners, walkers and hikers. Peloton aims to widen its customer base, from people looking for a more affordable, space-saving treadmill to more experienced athletes looking for personalized coaching.”

“Bob Chapek Is So Not Over Getting Fired From Disney”

Former Disney CEO Bob Chapek is out with a tell-all book about his career at the company, which culminated in his late 2022 firing from The House Of Mouse. This discussion with Ben Fritz of the Wall Street Journal primarily highlights the difficulties Chapek faced in navigating his relationship with Bob Iger. While there are two sides to every story, I think that there’s some merit to Chapek’s version of the facts: as opposed to doing what he could to position his successor for long-term success, Iger undermined Chapek and was happy to see him go. Iger’s history with Disney exemplifies the various challenges a great CEO must be able to navigate. On the topic of succession, Iger has proven a good example of what not to do – and I would argue that he materially hurt The Walt Disney Company as a result of his self-serving actions. (This timing is surely coincidental, but Harvard Business Review also released an interview with Iger yesterday morning that touches on this topic.)

“If the cues I got from the opening press conference [in February 2020] weren’t enough, when he did the interview with Ben Smith [in April 2020] where he essentially reasserted himself as CEO - that was as big a sign as possible of an attempt to undermine me.” (From the April 2020 NYT article: “Mr. Iger has effectively returned to running the company. After a few weeks of letting Mr. Chapek take charge, Mr. Iger smoothly reasserted control.”)

TSOH Updates

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

Monday’s research will be an updated look at On Holdings (ONON).

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.

“One notable deal signal is the aforementioned ‘cheap’ price tag. At Foot Locker’s 2023 Investor Day, management detailed a long-term plan to reach >$800 million in FY26e EBIT; needless to say, if they were truly confident in that vision, they would not have sold the business for anywhere close to ~$2.4 billion. The more plausible answer is that Foot Locker’s financial struggles were expected to persist – and, from Dick’s perspective, that the expected future benefits are dependent upon their influence and ownership.”

In early 2025, the Dick’s investment thesis was a simple one: a management team with a clear long-term strategic vision for their business, along with straightforward capital allocation priorities. The company had meaningfully improved its unit economics, and was evolving its store footprint to the “House Of Sport” and “Field House” experiential prototypes. In addition, they’d repurchased ~$2.5 billion of stock in the preceding four years, which was meaningfully reducing the share count. It was a straightforward strategic vision, and the financial results suggested it was going according to plan.

Then they decided to change course.

In May 2025, they announced the ~$2.4 billion acquisition of Foot Locker. While management argued this was similar to deals like Galyan’s in the early 2000s, there were two key differences: first, it nearly quadrupled their total store count, and second, it gave them a significant international presence.

On the Foot Locker deal call, Chairman Ed Stack said they’d long considered this move: “It’s something we’ve looked at and thought about for a long time.”

It’s looking like they should’ve thought about it even more.

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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 “Fever-Tree: Beyond Tonics”)

Three Notable Items

“The Rise of Organized Retail Crime at Big Box Stores”

An interesting discussion on the Odd Lots podcast with Scott Glenn, Home Depot’s VP of Asset Protection. As I listened to this interview, I was reminded of something that Charlie Munger once said to Chris Davis about Costco’s membership model: “I was challenging Charlie on the idea that there was a certain number of customers who would go shop at Costco if they didn’t have to be a member… It would seem to me keeping customers out of your store who would otherwise be there is a mistake… One of Charlie’s insights was ‘Think about who you’re keeping out… That cohort will have 100% of your shoplifters and it will have 100% of your thieves… It’s the intelligent loss of sales… You think that more is better, but more isn’t necessarily better’.”

29^th minute: “In organized retail crime, ‘boosters’ are the people who do the stealing. They are recruited, they are given a list, and they are given the promise of money or drugs when they come back with the product. They go out and take the risk of stealing from the stores… They then take it to what we call the ’fence’, the consolidator of the product. It could be somebody’s garage, a warehouse facility, a flea market, you name it… The ‘fence’ then cleans the product [removing electronic tags, anything that identifies the retailer where the product was sold, etc.] and offers it for sale somewhere. More and more, that’s online. In the past, it included the Amazon’s and the eBay’s of the world, but since the ‘Inform Consumers Act’ was passed in 2023, we’ve seen less in those places; it has moved to peer-to-peer markets like Craigslist and Facebook Marketplace.”

“Acquired: Home Depot”

Keeping with the retail theme, Ben Gilbert and David Rosenthal of the Acquired podcast released an episode about the history of Home Depot. For those who are interested in more detail on the company’s turnaround efforts in the late 2000’s, revisit the TSOH initiation, “Home Depot: Intense Focus”.

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02:06:00: “What CEO Bob Nardelli missed was how important being entrepreneurial was to the company’s success… You don’t want to centralize decision-making that you can push closer to the customer… He was all about Six Sigma and operational excellence, a GE guy through and through – but operating Home Depot was not the same thing as manufacturing turbines at GE… Nardelli replaced huge swaths of the retail workforce with part-time, general labor. The whole philosophy of having knowledgeable people who can make a $0.25 washer sale that helps a customer fix their kitchen sink, which leads to something bigger down the line, was gone. ‘We’re going to bring in 16-year olds with part-time jobs just to ring the cash registers’… Before Nardelli, all the store managers were promoted up from store associates; he changes the criteria, preferring candidates with college degrees… And a couple of years into Nardelli’s tenure, customer satisfaction among HD shoppers falls to the lowest level of any major U.S. retailer.”

“30 Years of Berkshire Meetings in 60 Minutes”

Earlier this week, I joined David Barbato to talk about “Buffett & Munger Unscripted” and TSOH Investment Research. Companies discussed include Fever-Tree, Microsoft, Dollar Tree, Berkshire, and Comcast, among others. Thank you to David and to Micro Cap Club for having me on the podcast.

TSOH Updates

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

Monday’s research report will be an update on Dick’s Sporting Goods (DKS).

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 “Fever-Tree: A Pivotal Moment” (March 2026):

“Group results have been defined by headwinds in UK Tonics – a business which accounted for more than 50% of FY18 revenues, and which declined at a high-single digit annualized rate over the next seven years. The good news is that UK Tonics have since shrunk to only ~20% of Fever-Tree’s revenue base. The rest of the pie is a ~£300 million business that grew at a mid-teens annualized clip over the past seven years, primarily due to the expansion of the non-Tonics range – starting with gingers, followed by premium sodas / soft drinks, cocktail mixers, and non-alc RTD’s. My investment is a bet on their long-term runway in the other ~80%.”

Fever-Tree’s long-term value outside of its home market will largely be determined by the evolution of their U.S. business, managed in partnership with Molson Coors. In 1H FY26, the U.S. region delivered low-double digit constant currency revenue growth, with the brand’s retail value ($) share in ginger beers and tonics reaching record highs. As noted on the call, growth accelerated through the period, with Off-Trade sales growing 6% in Q1 and 11% in Q2, and with that growth rate climbing to the mid-teens in July and August (the first two months of Q3 FY26). I think this is the early innings: an acceleration to high-teens U.S. growth should materialize in 2H 2026, and I expect at least mid-teens p.a. growth to persist in the years ahead. (CFO Andy Branchflower: “You’re seeing a combined benefit of more doors, more shelf space, and an improving rate of sale… Each month, it’s building.”)

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While few stories rival the lore of Reed Hastings’ $40 late fee, Alarm.com CEO Steve Trundle was also fueled by a frustrating customer experience: “I had a home security system installed by one of the large national companies – and after three months, I was so disappointed with the experience that I found a couple of really talented people to work on some ideas. It took about four years for us to develop a working product, then we took it to market.”

Alarm.com was originally founded around the turn of the century within MicroStrategy, where Trundle was CTO. That changed in 2009, when the subsidiary was sold to a consortium of investors led by ABS Capital Partners for ~$28 million. Six years later, in July 2015, the company went public at $14 per share, or a valuation of ~$630 million (ticker “ALRM”). The stock, which peaked at ~$105 per share in late 2020, has struggled subsequently, closing on Friday at ~$55 per share (it has declined ~35% over the past five years).

For investors, the question is whether this slide portends more trouble ahead, or if it’s a false alarm that has created an attractive long-term opportunity.

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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 “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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