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

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

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

Disney’s strategy is focused on four key areas:

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

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Chart Of The Week

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

Three Notable Items

“2026 Berkshire Hathaway Annual Meeting”

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

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

“Brown-Forman and Pernod Ricard Terminate Discussions”

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

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

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

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

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

TSOH Updates

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

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

Have a great weekend!

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

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

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

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

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

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

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Chart Of The Week

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

Three Notable Items

“QVC Lost the Home Shoppers to Social Media Influencers”

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

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

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

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

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

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

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

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

TSOH Updates

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

Have a great weekend!

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

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

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

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“This is a difficult and challenging time for Nike… Our domestic footwear market is changing… Our long-held position is that our greatest asset is the NIKE trademark, which is increasingly taking its place as one of the great marks in the world. It is from this base that we attack the challenges facing us… Like many of our athletes who have faced adversity and won, we are fighting back… We believe that we can and will do better.”

Phil Knight, 1984 Nike Shareholder Letter

I have maintained a skeptical view on Nike (NKE) shares for the better part of the past four years. That conclusion was informed by the valuation, financial targets that were increasingly disconnected from the financial realities of the business, and a belief that this disconnect encouraged decisions which were subsequently putting the long-term health of the Nike brand into question.

Thus far, this skepticism has been the right call. While the stock price is a crude measure, it helps frame the magnitude of Nike’s fading optimism among market participants: at ~$44 per share, the stock has declined by ~75% from the highs. It is trading at levels that were first reached in 2014.

A few years ago, management targeted double digit revenue growth and high-teens EBIT margins. As I’ll detail momentarily, today’s valuation now requires clearing a much lower bar. And while the competitive landscape has undoubtedly become tougher over the past decade, Nike management is tackling the key issues they needed to address (internal and external). Under the leadership of CEO Elliott Hill, one thing is clear: Nike is fighting back.

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“Given some of the decisions made in the past year, along with an improving trajectory in credit, I am optimistic about what lies ahead for Ally. As it relates to the current attractiveness of the stock, note that CFO Russ Hutchinson has bought ~$1 million on the open market in recent months [he added another ~$500k in January 2026]… If the deposit gathering franchise meets my long-term expectations, along with sound credit underwriting and meaningful capital returns (particularly if the shares trade, on average, at less than 10x forward earnings), I think the stock will generate attractive returns over time.”

ALLY has seen a solid resurgence of late: the stock is up ~40% over the past year and has doubled since YE 2022 (TSR). This recent price increase has still lagged its strong earnings recovery, with Q1 FY26 TTM adjusted EPS up ~70% to ~$4.3 per share. (On an annual basis, I estimate FY26e EPS at ~$5.3 per share - up ~125% from the FY24 EPS trough of ~$2.4 per share.)

Said differently, despite a nice run to ~$44 per share, it still trades at 8x – 9x forward on FY26e EPS - and I think an EPS CAGR of ~15% is likely over the ensuing two years, to >$7 per share in FY28e. On the EPS drivers, note that Ally bought back ~$150 million of stock during Q1 FY26, the first time they’ve repurchased shares in more than three years; this will likely be a meaningful tailwind to the TSR algorithm through FY28e. (In addition, revised capital requirement proposals could lead to a ~100 basis point lift in Ally’s CET1 relative to the 2023 proposal, providing room for balance sheet flexibility.)

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Chart Of The Week

As discussed in Monday’s update, impressive near term financial results have not assuaged Mr. Market’s concerns about Netflix’s exposure to changes in the media / entertainment industry. One data point that encapsulates this concern is Netflix’s declining TV streaming market share (engagement) in the U.S., during a period where YouTube has been trending in the other direction. While there are nuances to appreciate here, this highlights a key concern weighing on the stock, with the EV/EBIT multiple contracting to ~25x forward.

Three Notable Items

“Greg Abel Has Been Leading Berkshire for 100 Days. Things Are Already Changing.”

This WSJ article about Greg Abel’s first 100 days as CEO of Berkshire Hathaway has a few interesting tidbits, including commentary on his working relationship with Ajit Jain, as well as efforts to address the challenges at BNSF and BHE (discussed in my recent Berkshire update, “Transition”).

“Abel has spent the past year giving priority to learning Berkshire’s insurance business and visiting with Ajit Jain, the brains behind the operation. Jain is expected to continue heading insurance at Berkshire, though the company has developed a succession plan for him, too. ‘He’s probably going to be at the company for as long as he can,’ Buffett said in an interview. Berkshire’s new CEO has also emphasized spending time with leaders at subsidiary companies, particularly with BNSF Railway, its railroad business, and Berkshire Hathaway Energy (BHE), where he was CEO for many years.”

“Disney Debuts Giant Screen Brand for Cinemas to Rival Imax”

While I question whether the structure of this collaboration will be effective, this news speaks to the desire of the large movie theater chains to develop alternative PLF solutions (see the historic IMAX / in-house PLF data that I discussed in the IMAX initiation). With that said, consumers continue to vote with their wallets: IMAX reached a record high share of the global box office in 2025, continued evidence the brand / product is seen as being in a class of its own. (As Gelfond argues, “We have nothing in common with the PLFs.”)

“Disney is partnering with movie theater chains on a new large-format screen certification [‘Infinity Vision’] that will roll out in time for ‘Avengers: Doomsday’ in December 2026… Close to 5,500 screens globally - about three times the number of Imax venues - would meet the standards for the new label... The founding of ‘Infinity Vision’ is in part the result of the fact that ‘Doomsday’ doesn’t have exclusive access to Imax’s screens when it opens the weekend of December 18th. Imax has an agreement to screen ‘Dune: Part Three’ the same weekend. Disney contributes more to Imax’s revenue than any other Hollywood distributor… Theater chains began holding conversations last year about establishing an industry-wide certification for their premium screens… Operators would still be able to offer their own big-screen [PLF] brands.”

“Interview: Kinsale Capital CEO, Michael Kehoe”

This was an informative interview with Kinsale founder and CEO Mike Kehoe. As it relates to Kinsale’s long-term competitive position in E&S, this quote from Simon Wilson, CEO of Markel Insurance, has stuck with me: “[Markel] has this fabulous business at the center… and we almost took it for granted that we’ll continue to win… Kinsale went right into wholesale and specialty E&S and started writing at a mid-70’s combined ratio. We took our eye off of the ball in our bread and butter business.” It’s early days, but I assume Wilson is focused on doing what he can to slow / reverse that development.

“If you’re opening a restaurant, your core competency is the cooking, the recipes, and the ambience. What is the core competency of an insurance company? It’s segmenting and pricing risk, it’s underwriting… Why on earth are you outsourcing what you should be striving to improve all the time? It undermines the value of the company… I just wonder why many insurance companies feel like outsourcing their core competency is a great idea.”

TSOH Updates

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

Monday’s research report 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.

“My greatest fear at Netflix has been that we wouldn’t make the leap from success in DVDs to success in streaming. Most companies that are great at something, like AOL dialup or Borders bookstores, do not become great at new things people want (streaming for us) because they are afraid to hurt their initial business. Eventually these companies realize their error of not focusing enough on the new thing, and then they fight desperately and hopelessly to recover. Companies rarely die from moving too fast, and they frequently die from moving too slowly.”

- Reed Hastings (2011)

My confidence in Netflix’s competitive standing and long-term financial trajectory, along with its changing valuation / volatile stock price, has informed my position sizing throughout the course of my NFLX investment over the past four years. At one time, it was a mid-teens percentage of the portfolio; it has since declined to a much lower weighting (~6% as of the latest update) as a result of trimming and stock price weakness off the June 2025 highs.

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Chart Of The Week

As discussed in yesterday’s update, Chipotle’s comps have decelerated to levels only seen during the pandemic and the 2015 / 2016 health safety issues. In turn, margins have come under pressure, earnings estimates have been reduced, and the stock has been cut in half. Chipotle is one of many fast food / fast casual chains navigating near term pressure and a lower stock price; I suspect that a few attractive long-term opportunities lie among them.

Three Notable Items

“Peloton’s Leader Thinks He Can Coach It Back to Health”

In Q2 FY19, Peloton had ~362,000 CF subscribers; seven years later (as of Q2 FY26), the tally is ~2,661,000, with the sub base up ~33% p.a. over that period. The issue, which explains why the stock price has plummeted >95% from the highs, has been the roller coaster ride along the way (and strategic decisions made under the leadership of co-founder John Foley). At recent prices, a successful investment required little more than expense efficiency and subscription stabilization; growth, if realized, would be icing on the cake.

“If we look at the subscriber dynamics, we’re not that far off from where we were at the absolute peak of the pandemic - which is remarkable because no one could exercise any way other than at home… That was an unrealistic valuation for the company [when the market cap reached ~$50 billion in mid-2021]. I would argue that the valuation we have now is also unrealistic.”

“Pershing Square Holdings Annual Investor Meeting”

The Pershing Square Holdings annual meeting featured commentary from the investment team on a number of companies in the TSOH investable universe, including Chipotle, Meta, and Nike. I’m interested in their thought process and portfolio decision-making given our similar investment styles.

“Nike was a mistake… We did not understand how much the prior CEO had really damaged the business, and how heavy the turnaround was going to be. Our EPS estimates continued to come down. We decided the turnaround would take a lot longer and that we did not have as much confidence that it would achieve the high levels that we initially thought… We moved on… Nike was an investment we lost ~30% on during our year and a half of ownership.”

“Sazerac Offered to Buy Brown-Forman for Around $15 Billion”

The latest development at Brown-Forman: a $32 per share offer from Sazerac, with Pernod Ricard confirming deal talks are “ongoing”. For context, Brown-Forman repurchased ~$800 million of its stock over the past three years at an average price of ~$38 per share – inclusive of ~$400 million in FY24 at an average price of ~$58 per share. If there’s a deal to be made here, I would be quite surprised if it was at the price of ~$32 per share.

“Sazerac recently approached the Jack Daniel’s maker about a potential deal. The interest comes as Brown-Forman has been in deal talks with French spirits-maker Pernod Ricard. Sazerac offered $32 a share, the people said. Brown-Forman’s shares were trading above $28 midday Wednesday, having run up roughly 25% since the reports of the takeover interest began.”

TSOH Updates

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

Monday’s post will be an update on Netflix (NFLX), which reported Q1 FY26 results yesterday afternoon. I’ll dig into the recent financials, along with some updated thoughts on the path ahead for the global leader in DTC SVOD following their failed attempt to buy Warner Bros. (to me, the better outcome).

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.

“Chipotle has been a major success story during its 15-year run as a public company. Long-term shareholders who have weathered volatile periods - in terms of the stock price and the business results - have been handsomely rewarded for their patience. If history is any indication, we’ll see another rough stretch at some point; if that happens again, I will be ready to act.”

That rough stretch has arrived.

Chipotle reported -1.7% comps in FY25, led by a 2.9% decline in comp transactions; that was inclusive of -2.5% comps in Q4, with transactions -3.2%. Outside of the pandemic and the 2015 / 2016 health safety issues, these are the weakest comps at Chipotle in the past two decades – with guidance (roughly flat comps) assuming similar lackluster results in FY26.

In addition, CEO Brian Niccol, who joined the company to much fanfare in 2018, left in August 2024 to accept the top job at Starbucks. He was replaced by COO Scott Boatwright, who joined Chipotle in 2017. The stock, which reached a high of ~$69 per share in June 2024, has since been cut in half.

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Chart Of The Week

As discussed in Monday’s update, Crocs is a brand that has weathered two decades of calls for its inevitable demise (albeit with bumps along the way). Despite these worries, the brand has managed to deliver high-single digit annualized unit volume growth over the past ten years. While management has some issues to navigate at Crocs and at HeyDude, adept execution - if achieved - would likely result in a rewarding 2-3 years ahead for investors.

Three Notable Items

“Nike Can’t Fix Its China Problem”

I have long been focused on Nike’s competitive position in China, starting with the July 2022 initiation: “If you let the numbers tell the story, you’d likely conclude Nike faces a real threat from [regional competitors].” Those concerns have since proven prescient; China is a major headwind to Nike’s turnaround efforts, particularly given its margin trajectory in the region.

“Long a key growth driver - and Nike’s biggest market outside North America - China has become a thorn in its turnaround efforts as Nike faces fiercer local competition and cooling consumer demand. In a scheduled all-hands staff meeting to discuss the latest results, CEO Elliott Hill sought to rally employees. ‘We have got to respond. I’m so tired, and I know you are, too, of talking about fixing this business,’ Hill said, according to a meeting transcript.”

“Gambling.com Group Announces Senior Management Transition”

As discussed in the GAMB initiation, I think there has been a disconnect between management’s professed confidence in the legacy business and their capital allocation. That cautious view was somewhat validated by the latest results, with a >30% reduction in the number of new depositing customers (NDCs) added during Q4 FY25 – by far the worst YoY result the company has reported to date. The timing of this CEO change, which follows some public disclosures by Gillespie about the level of insider buying at the company, raises more questions about what lies ahead for Gambling.com.

“Gambling.com announced that Chairman, CEO and Co-Founder Charles Gillespie will be appointed Executive Chairman of the Board and that current COO and Co-Founder Kevin McCrystle will succeed Mr. Gillespie as CEO. Mr. McCrystle also currently serves on GAMB’s Board of Directors and he is based at the Company’s U.S. headquarters in Charlotte, North Carolina.”

“The $40 Billion Game of Youth Sports Has Only One Winner: Dick’s Sporting Goods”

I remain interested in athletic apparel and athletic equipment retailing, with Dick’s Sporting Goods standing in a clear leadership position. (Academy Sports + Outdoors and Hibbett are also of interest to me, with the latter acquired by JD Sports in 2024.) With ‘House of Sport’, Dick’s is discovering whether they’ve found a revitalized retail format that can live up to Ed Stack’s vision: “We need to build the concept that kills Dick’s Sporting Goods.”

“When parents open their wallets at Dick’s, they find a reason to keep coming back. When annual spending cracks $500, they earn access to the premium tier of the loyalty program and exclusive benefits like deals and early product releases. There are now more than 8 million shoppers with this elite Dick’s status and they account for 50% of the company’s total sales… The first Dick’s ‘House of Sport’ location opened five years ago. Now there are 35.”

TSOH Updates

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

Monday’s report will be an initiation on Planet Fitness (PLNT), a company that led the growth of U.S. HVLP gyms over the past 10+ years – and with it, has seen its stock price climb ~4.5x since the IPO. Does the recent price weakness (stock down 30%+ YTD) present an opportunity, or are heightened competitive intensity and C-suite instability indicative of cracks in the story?

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.

“Over time, Crocs established an interesting position in footwear: they sell a relatively low cost product behind a brand name synonymous with the subcategory, which provides some protection from cheaper alternatives. In addition, they’ve had success with influencer collaborations and Jibbitz… Crocs has long faced the threat of competition, counterfeits, and the risk of becoming a fad / one-hit wonder; in my research, those risks were highlighted in nearly every article, with publication dates ranging from 2005 to 2025.”

While critics have long described Crocs clogs as “ugly”, that characterization hasn’t applied to the company’s financial results over the past 5-10 years: the brand sold ~129 million pairs of shoes in FY25, with unit volumes growing at an ~8% annualized clip over the past decade. Along with a low-single digit annualized increase in average selling prices (ASPs), from ~$19 in FY15 to ~$25 in FY25, the Crocs brand generated ~$3.3 billion in FY25 revenues – roughly three times larger than the ~$1.1 billion that it generated back in FY15 (~12% CAGR). In addition, Jibbitz revenues have kept climbing, to more than $250 million in FY25 – a ~7x increase from pre-pandemic levels.

The problem, as depicted above, is that the pace of Crocs brand revenue growth slowed meaningfully in FY25, to +1% YoY; in addition, management expects a similarly tepid growth rate in FY26. Paired with ongoing struggles at HeyDude, we’re presented with the central debate for investors: is today’s mid-single digit P/E a compelling opportunity, or is CROX a value trap?

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Chart Of The Week

As I discussed on Monday, the transformation of Fever-Tree’s geographic exposure and product mix continued in FY25; it will accelerate further in FY26 as the strategic partnership with Molson Coors transitions to an offensive posture (“roughly doubling” U.S. marketing support). In combination with the meaningful decline in exposure to UK Tonics - now ~20% of Fever-Tree’s business - I believe we’re set to see a meaningful revenue reacceleration.

Three Notable Items

“Pernod Ricard in Talks to Combine With Brown-Forman”

As I’ve noted in my research on Brown-Forman, a key question is whether the interests of the controlling family and minority shareholders are truly aligned. These discussion with Pernod, along with the hasty $400 million share repurchase completed in late 2025, are notable developments.

“Pernod, based in Paris, oversees a portfolio of 200 spirits brands, including Jameson Irish whiskey and Beefeater London gin, and has a market value of around $17 billion. Brown-Forman is best known for its whiskeys; it has a market value of around $12 billion… The deal being considered includes a significant stock component, and the families behind the two companies would likely each retain significant stakes in any deal, they added.”

“Amazon’s Rural Delivery Push Slams Into Walmart”

While this article is focused on competitive dynamics between Amazon and Walmart, it sheds light on the competitive landscape for cost-effective and convenient (timely) order deliveries in rural areas. To me, it helps illuminate the value of Dollar General’s unique store footprint, which enables them to sustainably offer delivery speeds in DG markets others will struggle to match.

“The company’s USPS contract isn’t public, but in 2015 Bernstein analysts estimated that the U.S. postal service was delivering some 40% of Amazon packages for about $2 apiece, about half what UPS and FedEx charged at the time. UPS currently imposes a $16.50 surcharge for residential deliveries in many rural areas… Amazon wanted a cheaper alternative, hence outsourcing rural deliveries to small businesses hungry for a side gig.”

“Reed Hastings: How Netflix missed out on Warner Bros.”

I was somewhat alarmed by the price tag when Netflix inked the Warner Bros. deal, because I believed it transferred too much value to the seller from synergies / improvements that were unique to Netflix’s ability to effectively monetize the assets. That was followed by concerns that Netflix may end up paying 10% - 20% more if (when) dragged into a bidding war. In the end, management made what I believe was the right decision: they told WBD in early December this was their “best and final proposal”, and they meant it.

Hastings: “I generally have not been a fan of M&A… but the particular deal we struck [for Warner Bros.] was at a good price, and I was very excited about getting it done. Paramount decided to pay more, and our co-CEO’s, Ted [Sarandos] and Greg [Peters], decided to not take the bid up any higher… A lot of M&A doesn’t work out, but some work out fantastically.”

TSOH Updates

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

Monday’s post will be an update on Crocs (CROX), a company that I initiated coverage on in October 2025. The shares have struggled of late, with CROX trading at a mid-single digit P/E on FY26e. I’ll dig into recent trends at the namesake brand, along with an update on the HeyDude turnaround efforts.

As always, any resulting portfolio changes will be disclosed to TSOH paid subscribers before the trades are executed (100% portfolio transparency).

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.

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 2026 Portfolio Changes:

Portfolio Change - 02/09/2026

Portfolio Change - 03/11/2026

Portfolio Change - 03/25/2026

Top TSOH Posts, Q1 2026:

In Zuck We Trust?

“Trying To Be Realistic”

“How Is This Possible?”

Berkshire Hathaway: Transition

Peloton: Clipping In

As in 2025, Mr. Market started 2026 on a cautious note: the index declined by nearly 5% in the quarter, with the entirety of those losses coming in March.

Today, as was the case a year ago, there’s much concern about macro and geopolitical risks. We’ll see in the coming months whether the S&P 500 keeps sliding lower, or if the market stages another impressive recovery (after falling by ~5% in Q1 2025, the S&P 500 ended up with an ~18% gain for the year).

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Despite navigating the transition to the Molson Coors distribution system, Fever-Tree reported another year of solid results in U.S. mixers, with its retail value share in tonics (Nielsen Total US xAOC) climbing to ~28% in 2025, up from a low-teens share pre-pandemic. While we don’t have financial data for smaller competitors, I think a recent product launch from Q Mixers – “Q Refreshers” – may be indicative of pressure faced within their core range.

With that said, Fever-Tree continues its own brand extension beyond the core tonics and ginger SKUs, in the U.S. and around the world (most notably thus far in the UK). Group results over the past 5+ years were defined by the need to overcome headwinds from UK Tonics – a business which accounted for >50% of FEVR’s FY18 revenues, and which declined at a high-single digit annualized rate over the next seven years (~£121 million to ~£75 million).

The good news is UK Tonics have since shrunk to just ~20% of Fever-Tree’s revenue base. (In FY25, UK Tonics revenues declined ~6%, with UK Non-Tonics up ~6%.) The rest of the pie is a ~£300 million business that grew revenues at a mid-teens annualized clip over the past seven years, primarily due to the expansion of the non-Tonics range – starting with gingers, then followed by premium sodas / soft drinks, cocktail mixers, and non-alc RTD’s.

My investment is a bet on the long-term runway for the other ~80%.

This assumes long-term opportunities for the Fever-Tree brand will not be narrowly constrained to tonics or mixers; they are in pursuit of a much larger beverage TAM, and with good reason to believe that success is an attainable long-term objective. If I’m right about this, I believe that the equity is currently priced to generate attractive returns for investors over the next 3-5 years.

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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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Capital Allocation and Alignment

First, following minimal repurchase activity over the past two years – $2.9 billion in 2024 and zilch in 2025 – Berkshire recommenced repurchases in early March. While I expect repurchase activity to remain opportunistic, in terms of the level of aggressiveness at any time, I also suspect we are witnessing the transition to a more persistent level of spend, a pressure release valve on a cash pile that now exceeds $370 billion. Said differently, I think they are becoming less stringent on the price / intrinsic value gap for any repurchases – and I think that’s sensible given the difficulty that they’re having in finding a great use for the next ~$10 billion, let alone ~$100 billion.

Second, Greg recently purchased ~$15.3 million of Berkshire Hathaway Class A common stock, which will be roughly equal to his 2026e after-tax compensation. As he discussed on CNBC, he is committing to annual purchases of Berkshire stock equal to ~100% of his after-tax compensation:

“Absolute alignment with our shareholders is critical; the goal was to continue to demonstrate alignment with owners… I’m committed to doing this every year, as long as I’m CEO… I’ve never been given a share of Berkshire. Our shareholders use their after-tax dollars to buy Berkshire; I’ll do the same.”

As is typical of Berkshire, this is a straightforward way to clearly operate in alignment with long-term owners; it’s not necessary to have byzantine proxy filings with a long list of KPIs that inevitably result in massive equity awards to the C-suite executives. Ideally, more companies and more leaders throughout corporate America would follow the example set by Berkshire and by Greg.

Berkshire Hathaway Energy (BHE)

In June 2022, Berkshire acquired Greg Abel’s remaining ~1% stake in BHE for ~$870 million, or an implied valuation of ~$87 billion. Less than two and a half years later, in late 2024, Berkshire acquired an ~8% stake in BHE held by the descendants of Walter Scott Jr. for ~$4 billion, or an implied valuation of ~$49 billion – down more than 40% compared to mid-2022. (Following the transactions for the remaining ~8%, Berkshire owned 100% of BHE.)

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