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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At a TED conference in July 2018, Netflix co-founder Reed Hastings was asked about the company’s unlikely, but ultimately successful, pivot from DVD’s to streaming: “We had one advantage: We were born on DVD, and we knew that was temporary. Nobody thought we would be mailing discs for 100 years. So, we had a lot of paranoia about what was coming next. That was part of our founding ethos: worrying about what’s coming next.”

That paranoia bred meaningful action, with two notable examples being the January 2007 launch of the streaming service and the January 2016 move to truly go global (simultaneous launch in 130+ additional countries). With a clearly defined strategy, a long-term mindset, and a willingness to adjust tactics as appropriate to do so, Netflix has spent 20 years surfing a massive wave and investing aggressively to strengthen its global leadership position.

One constant throughout has been concerns about the sustainability of Netflix’s lead (questions about the attractiveness of its business model were long asked as well, but those voices have died down as annual operating income increased from ~$400 million to ~$16.2 billion over the past decade).

Most recently, these concerns arose in 2018 / 2019 with the launch of DTC services from legacy U.S. media companies, in 2022 due to paid subscriber losses, and now in 2026 with heightened competition from short form video, YouTube, and the FAST services (Tubi, The Roku Channel, etc.), which is pressuring engagement and may stymie sub growth and monetization.

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From “Running On Clouds” (July 2024):

“We’re at a moment where large and well established brands, most notably Nike, have lost some standing relative to emerging competitors… Under Armour is a cautionary tale of what On Holdings (ONON) must avoid to live up to their long-term ambitions for the brand… [Revenue growth targets] cannot take precedence over sustained brand health. This is a difficult balancing act, one that we have seen industry peers struggle to navigate.”

In the two years since the initiation was published, On has kept making progress in its key category - running shoes - which accounts for >80% of its revenues. This is the primary driver of FY26e revenues of ~3.5 billion Swiss francs (CHF), or ~$4.3 billion at current exchange rates – nearly 5x larger than On’s revenue base five years earlier. Over that same period, annual Footwear revenues at Nike increased by ~5% cumulative, to ~$29.5 billion.

In the most recent quarter, On reported mid-20’s (%) constant currency revenue growth, led by strength in Asia-Pacific (APAC) and mid-50’s (%) CC revenue growth in the Apparel category - as co-CEO Caspar Coppetti put it on the quarterly call, “continuing our strategy of growing from toe to head”.

APAC, led by China, is becoming an increasingly important geography for On: as shown below, the region accounted for more than 20% of On’s Q1 FY26 revenue mix, compared to a mid-single digit percentage in FY22.

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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 “Comcast: A Long-Awaited Pivot”)

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Three Notable Items

“Brown-Forman Announces President & CEO Lawson Whiting to Retire”

Another interesting development at Brown-Forman, particularly given the M&A discussions earlier this year. As I noted in the January 2025 initiation, this comment from Whiting’s first shareholder letter has stuck with me: “We are committed to the long‑term independence of Brown‑Forman as a leader in the spirits industry.” I’m curious if industry developments over the past 5+ years have changed how the Brown family, and by extension the incoming CEO, weigh the importance of Brown-Forman’s continued independence.

“Whiting informed the board earlier Monday of his intention to retire, according to board chairman Marshall Farrer, who said the move was entirely Whiting’s decision. There is no set timeline for replacing Whiting. Whiting was Brown-Forman’s second consecutive leader who didn’t come from the Brown family, Farrer said… The Brown family holds a majority of its voting rights.”

“At 17, She Sued Meta and Google, and Won. She’s Ready to Tell Her Story”

This Bloomberg article focuses on the growing legal challenges Alphabet and Meta face from digital addiction claims. Naturally, this discussion has broader implications in a world where people spend much of their lives online (for example, as it relates to OSBs and iGaming). From the perspective of an investor, I believe mega cap tech companies face a non-zero chance of material harm via litigation, regulatory changes, and / or targeted taxation.

“Most nights, Kaley sits on her new couch in her new home, scrolling social media in the dark, her face aglow from the phone screen. The irony isn’t lost on her - that she was plaintiff zero in the social media addiction litigation and she can’t stop scrolling.”

“Derek Pilecki on Finding Edge in Financials”

I enjoyed this interview with Derek Pilecki, PM of Gator Capital Management. In particular, I was interested to hear his evolving views on position sizing.

“I used to run 25 names, that has crept up to about 40 names – and my returns have actually gone up, which seems kind of backwards… Everybody says, ‘I don’t want to be invested in your 25th best idea’, but it’s really hard to rank your ideas… Rarely is my best idea my best performing stock… New positions normally go into the portfolio at a ~4% weighting, and I don’t add to positions often; when I do, I like to add when I’m up on the position rather than when I’m down. I think positions can become less risky at higher prices.”

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.

From “A Transformational Moment” (November 2025):

“I would likely act if I became more confident Comcast management is open to monetizing NBCUniversal (NBCU) and unlocking significant per share value. In my view, the assets could command a price tag that would equate to a large majority of the market cap [at $25 per share]… If there’s growing indication that a deal is being considered, it’s likely I’d buy Comcast.”

I sold Comcast in November 2023 for two key reasons: (1) sustained deterioration in the core Cable franchise, to a degree that led me to believe my thesis for that business was no longer valid; and (2) a lack of evidence management recognized and was appropriately reacting to the realities of what was happening, with a similar dour view on dithering at NBCUniversal.

The roots on the second point go back much further. The following is from “Peacock: From DTC To DOA?”, which I published in May 2021: “I don’t think that management is serious about making the tough decisions that are necessary for any shot at real success in the global DTC business… [But] as time passes, the odds of a big strategic change - particularly at NBCUniversal - seems to be declining. There’s a lack of urgency from management.”

That brings us to Comcast’s big announcement: on June 29th, management outlined their intention to separate into two publicly traded companies, Comcast Cable and NBCU / Sky. Considering that Comcast management has shot down speculation around an NBCU spin as recently as January 2026, this news is a material and unexpected change to the Comcast story.

Interestingly, while the stock price surged more than 20% on the morning of the separation announcement, it has since given back all of those gains.

On Friday afternoon, CMCSA closed at ~$24 per share – down about 60% from the peak levels that the stock reached in mid-2021 (~$58 per share).

Is Mr. Market’s apathy presenting a compelling investment 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 “Nike: Conditioning Phase”)

Three Notable Items

“Pat Dorsey: The Nuances of Investing in Moats”

I’ve long been a fan of investor Pat Dorsey; for one reason, he helped me to appreciate things about Meta’s business that led to an investment in 2018. (“If God invented an advertising platform, it would be called Facebook.”) In this interview, Dorsey discusses his investment philosophy, along with lessons learned over the years about businesses, moats, and management teams.

Assessing management teams: “My biggest goal is to look for humility; it’s much easier to find management teams who are unlikely to blow up than those who are likely to do amazing things. I’m mainly focused on avoiding that left tail… One of the common attributes of [fraud or hubris] is people who aren’t willing to listen; voices in the room are saying ‘this is not a good idea’, and they don’t listen… How do [leaders] talk about their team and the people around them? How do they self-reflect on what might have gone differently?”

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“The latest in our company transformation”

This is paradoxical given that Microsoft has reported constant currency revenue growth of 10% or higher in 35 of the past 36 quarters, yet there’s a clear strategic adjustment underway at the company to address shifting business models and competitive dynamics. This memo, from Chief People Officer Amy Coleman, sheds light on the internal transformation of Microsoft.

“The way technology is built, deployed, and used is transforming faster than at any point in my time here [Coleman joined Microsoft in 2009]. Customers’ needs are shifting, the business models that serve them are shifting, and that means the work itself – what we do, where we focus, and how we’re organized – has to transform too. Companies don’t get to choose whether their industry changes; they only get to choose whether they change with it.”

“PepsiCo’s CEO Is Navigating GLP-1s and Inflation”

A brief WSJ interview with PepsiCo CEO Ramon Laguarta. As it relates to the TSOH investable universe, I think the industry evolution covered in this discussion is relevant for companies like Fever-Tree, Celsius, and Monster.

“Consumers are changing their expectations on every calorie they put in their body. Everything we are doing - adding protein to our snacks and beverages, adding fiber, functional hydration, caffeine - all those are benefits consumers expect… Taste is a table stake; then we need to provide other benefits.”

TSOH Updates

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

Monday’s post will be an update on Comcast (CMCSA).

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 “Nike: Fighting Back” (April 2026):

“While the near term picture is dominated by a barrage of financial pressures – the Classics pullback, China struggles, tariffs, etc. – I think these insiders have bought Nike shares because they believe the long-term trajectory for the business and the brand is much improved given the changes that have been implemented under Elliott Hill’s leadership over the past 18 months…”

From a financial perspective, FY26 was a terrible year for Nike.

Revenues of ~$46.4 billion were nearly $5 billion lower than three years earlier, adjusted EBIT margins were down by half compared to the trailing ten-year average, and adjusted EPS fell to levels first eclipsed in FY15.

But today’s results are largely reflective of yesterday’s mistakes.

I believe that Nike is heading in the right direction under CEO Elliott Hill’s leadership, but it has required meaningful change. One notable development has been the >$4 billion revenue reduction from their classics footwear franchises, with roughly half of that impact realized in FY26; this resulted in minimal Footwear revenue growth for Nike over the past five years, a product category that historically drove mid-to-high single digit per annum (%) gains.

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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 2026 Portfolio Changes:

Portfolio Change - 04/30/2026

Q2 2026 Top TSOH Research:

Planet Fitness: Maxing Out? (04/13/26)

Peloton: From Defense To Offense (05/11/26)

Vital Farms: The Price Of Growth (05/25/26)

Dollar General: Miles and Margins (06/08/26)

The “Too Hard” Pile (06/25/26)

Following a ~5% drop during the first quarter, Mr. Market found reason for renewed optimism: the S&P 500 erased all of its Q1 declines, with a nearly 10% year to date (YTD) return through 1H 2026. What that headline index return overlooks is volatility and pockets of pressure beneath the surface, particularly for the companies and industries not among the AI winners.

Recently, I’ve thought about how I can refine my investment approach to balance short-term opportunism with a long-term mindset, i.e. my willingness to be aggressive in taking position sizes up / down in response to sizable short-term stock price moves. As we look to recent TSOH investment decisions - most notably Dollar Tree (DLTR) in 2H 2024 and Peloton (PTON) in 1H 2026 - they provide indication of the direction I plan to keep moving towards: a more aggressive tactical posture on those infrequent occasions where the short-term and long-term opportunity align to justify a big swing.

In the months after my initial investment in DLTR and PTON (preceded by a period of years where I watched their development from the sidelines), both companies saw their stock price trade >50% below where they’d been at in the prior 12 months. At that time, my sense was that each stock presented a unique opportunity to take the position sizing meaningfully higher, even to a level that exceeded where I’d likely hold it at long-term (a higher weighting than I’d likely be at if I was restricted from tweaking its sizing for 3-5 years).

In the end, I chose to make a somewhat measured allocation to both stocks; DLTR was increased to a ~12% weighting in November 2024, and PTON was increased to an ~8% weighting in March 2026. While still in the relatively early stage of each investment, particularly on PTON, we can see with the benefit of hindsight that more aggressive action would’ve been rewarded.

I was confident at the time of each investment that such an outcome was not only possible, but even probable. I waited a long time for a fat pitch that I thought was worth swinging at – and while I didn’t completely miss on either opportunity, I failed to fully capitalize on what proved to be a lucrative setup.

Personally, I find that developing the conviction to swing big is only half the battle; the other hurdle is determining which positions to trim / sell to fund the incremental buy. This requires a strong sense for opportunity costs. Over the years, I think I’ve developed a better sense for how to properly weigh the attractiveness of certain unique situations at a point in time - the Dollar Tree and Peloton examples. What I’m less confident about is how to do this more broadly, particularly on the relative attractiveness of the smallest positions.

Going forward, I envision a portfolio with about ten stocks that have a weighting near my ~5% minimum initial sizing, with another group of 2 - 4 holdings where the stars have aligned to justify a 10%+ weighting at a point in time. This isn’t too far removed from my current approach to portfolio construction, but it reflects a growing desire to be more aggressive and tactical. I need to make some compromises in the first bucket - through a smaller number of holdings and / or fewer that climb much above a ~5% weighting – to be a source of tactical aggression in the second bucket.

This speaks to a fundamental belief of mine, an idea examined in “The ‘Too Hard’ Pile”: I don’t swing very often – but when I do, the level of conviction expressed through position sizing must correspond to the rarity of those decisions, even if it’s more short-term / tactical in nature. The next time that I take a big swing, you should expect the position sizing to reflect this view.

Here’s the update portfolio weightings as of Friday’s close:

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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 “Ollie’s: A Good Stock Cheap?”)

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Three Notable Items

“Comcast Plans Company Split as Competition Escalates”

I have waited more than five years for Comcast to pursue a strategic change of this kind at NBCUniversal (NBCU), but it’s better late than never. Kudos to Brian Roberts and the team for demonstrating needed urgency and focus.

“Comcast executives began discussing the split in recent weeks as it became clear that greater flexibility would help the company navigate the increasingly challenging broadband and media markets.”

“Consumers Shun Mid-Sized Packs Amid Price Squeeze”

An article about Nestle’s learnings on bifurcation in consumer behavior as it relates to pack sizes. Broadly, I think this speaks to the need for consumer value proposition segmentation by manufacturers and retailers; for TSOH, that comment is particularly applicable for retailers like Dollar Tree / Ollie’s on one end of the spectrum, and BJ’s / Costco on the other end of the spectrum.

“Top executives at the maker of KitKat chocolate and Nescafe coffee have noticed consumers, pinched by inflation, are opting for either smaller portions or mega-sized value packs. ‘In tough times, purchasing polarizes. The bit in the middle always gets squeezed.’ The value of large sizes is particularly attractive at the moment. For everyday treats, there is still demand - but more interest in smaller packs. Mid-sized formats are getting the cold shoulder.”

“Meta Is Planning a Cloud Business to Sell AI Computing Power”

My initial takeaway from this announcement is to note the evolving strategies and blurring lines in mega cap tech; that isn’t new, but it keeps proceeding in one direction. In combination with unfathomably large CapEx spending, I think these have become tougher investment decisions, with a meaningfully different risk / reward profile than five years ago (in terms of the long-term business results). For me, it has impacted how I think about position sizing.

“Meta, which has been rushing to secure expensive data centers and other infrastructure to fuel its own artificial intelligence ambitions, is forming a business to generate revenue from excess computing power sold to outside customers, according to people familiar with the matter.”

TSOH Updates

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

Monday’s TSOH post will be the Q2 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.

“Mark Butler rang the register when Ollie’s completed its first sale back in Mechanicsburg in July 1982, and he rang the opening bell in New York City 33 years later when the company went public in July 2015… This seems like a uniquely tough situation as it relates to ‘key man risk’ (given the execution risk inherent to retail generally, and in the closeout business specifically).”

John Swygert, who became CEO upon Butler’s passing in late 2019, remained in that role for six years. In February 2025, Eric van der Valk, who was hired as the company’s COO in May 2021, replaced Swygert as CEO. (Before joining Ollie’s, van der Valk was the COO of Christmas Tree Shops.)

While we’re less than 18 months into van der Valk’s tenure, Mr. Market’s assessment of Ollie’s future has meaningfully worsened of late: OLLI, which traded at ~$133 per share at the end of 2024, closed on Friday afternoon at ~$72 per share (it’s back to price levels that were first reached in 2018).

This performance seems somewhat at odds with the financial results.

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Chart Of The Week (from “The ‘Too Hard’ Pile”)

Three Notable Items

“Dollar Tree Announces Secondary Block Trade by Selling Stockholders and Share Buyback”

An interesting development: Mantle Ridge is preparing to sell the vast majority of its Dollar Tree stake (as a reminder, I’ve previously covered the history of Mantle Ridge’s involvement at DLTR). In addition, subject to the completion of the Mantle Ridge block trade, Dollar Tree will repurchase $500 million of stock, bringing year to date repurchases to at least $1.2 billion.

Dollar Tree CEO Mike Creedon: “This share repurchase reflects our commitment to disciplined capital allocation and our confidence in the long-term outlook for Dollar Tree. Our priority remains investing in initiatives that drive sustainable growth across the business, while maintaining a strong balance sheet and thoughtfully returning excess capital to shareholders.”

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“Value Investing Legend Seth Klarman: Masters in Business”

A recent interview with Seth Klarman, which touches on a range of topics including the history of Baupost Group, investment lessons he learned over the decades, and how he’s navigating today’s AI-driven market environment.

On holding cash: “I would accept that I almost certainly made a mistake. Holding cash to that extent - there were times we had 30% cash or higher - was something that I viewed as valuable optionality. The problem is that optionality has not paid off very well for big swaths of time, particularly since 2008… We haven’t really had a serious downturn in almost two decades.”

“Distilling Whiskey’s Future”

A discussion with Greg Hughes, the CEO of Suntory Global Spirits (the company behind American whiskey brands like Jim Beam and Maker’s Mark). With sustained end market pressure in the alcohol / spirits industry, and a supply glut that may impact premiumization and net pricing, I’m interested to see how companies like Brown-Forman will evolve in the years ahead - in terms of their strategy, but also as it relates to M&A / staying independent.

“You thought you were a genius in this industry [from 2010 – 2019] because you had a ~6% p.a. category revenue tailwind driven by premiumization, which caused margins to expand. You have an industry that built inventories and developed CapEx / OpEx around a growth algorithm of 6% - 8% topline growth with really good margins. It will resettle, after the transition, probably to ~3% global growth and still pretty good margins… If you’re a whiskey lover, then this is going to be the golden age of whiskey… I think you will see downward pressure on pricing as people have surplus inventory to move.”

TSOH Updates

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

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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.

Warren responded with the following:

“Well, I didn’t buy railroad companies for a long time either… I’ve probably read the IBM annual report every year for 50 years. This year I read it and I got a different slant on IBM, which I proceeded to do some checking on. I just read it through a different lens… We went to our companies to see how their IT departments functioned and why they made the decisions they made, and I just came away with a different view of the position IBM holds within IT departments, why they hold it, its stickiness, and a whole bunch of things.”

Six months later, at the 2012 annual meeting, Warren and Charlie were asked whether the IBM purchase reflected a willingness to invest in other large tech companies, with the question specifically mentioning Google and Apple.

This was their response:

Buffett: “Well, Google and Apple are extraordinary companies, and they are huge companies with fantastic returns on capital. They look very tough to dislodge where they have their strengths. I would not be at all surprised to see them be worth a lot more money ten years from now, but I wouldn’t want to buy either one of them. I don’t get to the level of conviction that would cause me to buy - but I sure as hell wouldn’t short them either.”

Munger: “I think we can fairly say other people will always understand those two companies better than we do. We have the reverse of an edge, and we’re not looking for that. I don’t think that the same thing is true in IBM; I think IBM is easier for us to understand.”

Buffett: “The chances of being way wrong on IBM are probably less, at least for us, than being way wrong on Google or Apple. That doesn’t mean the latter two companies aren’t going to do, say, far better than IBM. We wouldn’t have predicted what would happen with Apple ten years ago, and it’s very hard for me to predict what will happen in the next ten years. They have come up with these brilliant products, but there are other people trying to come up with brilliant products, and I just don’t know how to evaluate people out there working in big companies or in garages, trying to think of something that will change the world the way [Apple] changed it.”

Munger: “And what do we know about computer science?”

Charlie added the following comment at the 2013 annual meeting: “We think BNSF will have a competitive advantage fifteen years from now, and with a high degree of confidence. We would never have that degree of confidence about Apple, no matter what their financial statements showed. It’s too hard.”

At the time, these statements seemed pretty unambiguous.

And then, just a few years later, they changed their minds.

In 2016, Warren started buying Apple, following an initial investment in the company for Berkshire by Ted Weschler. By 2018, at which point Warren had finished buying, Berkshire’s cost basis was $36 billion. The stock delivered a >40% CAGR over the next 4.5 years (Q1 ‘19 - Q2 ‘23), leading to a position with a peak quarter-end market value of ~$178 billion, or >7x larger than the value of the Coca-Cola position – an investment that dates back to 1988, and a stock Warren has never sold a single share of. (That hasn’t been the case with Apple: the number of shares held has been cut ~75% since YE 2021.)

To summarize, Apple was a company / stock that Warren and Charlie clearly suggested was an unlikely candidate for investment – and then it became by far the largest equity position in Berkshire’s history, measured by its cost basis or its market value. (In Q2 2023, when the position value was nearly $180 billion, it accounted for more than 50% of Berkshire’s equity portfolio.)

And while I’ll spare you the comparable history on Google (Alphabet), we may be seeing similar developments, with the market value of Berkshire’s position in the company now up around $30 billion. No matter how Alphabet turns out, one thing is certain: Apple was a massive home run, and Berkshire investors should be very thankful Warren and Charlie changed their minds.

This example reveals an important lesson for fellow investors: the limitation of an overly restrictive and static “too hard” pile, specifically the risk of missing attractive investments within one’s circle of competence. (I touched on this in the Q4 2025 Portfolio Update, i.e. the need for soul searching among value investors like myself in productively responding to a changing world.)

Generally speaking, I think a “too hard” pile is a useful idea, particularly to help novice investors contextualize the border of their circle of competence. To use Peter Lynch’s phrasing, the first requirement in successful investing is “to know what you own”. But where the concept of a “too hard” pile risks becoming a net negative is when its application becomes overly rigid, to the point when the practitioner may not just be indifferent, but even starts to feel reassured, when they are unwilling to put in the time and effort to even try to understand companies and industries that could further develop their circle.

In security selection, one characteristic that’s highly correlated to inclusion in the “too hard” pile is a business in an industry subject to rapid change. The issue is when that determination becomes overly simplistic and static – for example, concluding that every company in the tech industry should be tossed in the pile - without due consideration for the risks and opportunities that come with change. (That consideration may also be accounted for through portfolio construction and position sizing.) Companies and industries are always changing; business managers and investors who don’t recognize that are likely to learn it eventually. As Warren noted at the 2014 meeting, “change goes on all the time, and it’s going on with all of our businesses.”

Over the past 10-20 years, tech companies like Amazon, Google, Meta, and Netflix have shown the importance of understanding this idea – in terms of capitalizing on opportunities, but also in avoiding risks that arise with change. These companies created massive value for shareholders over the past 10+ years, while simultaneously being involved in the disruption of high-quality companies and industries that were previously deemed resistant to change.

The general bias of value investors like myself is to be wary of and resistant to companies involved in driving change, while hoping to find undervalued securities among the legacy companies having that change imposed upon them. What can we do to nudge ourselves to a less restrictive opportunity set / “too hard” pile, while staying true to the tenets of our investment philosophy?

First, it’s critical to avoid being closed minded and dismissive in the initial analysis, to get lulled into a largely predetermined conclusion by pointing to “expensive” near-term valuation metrics without truly doing the research. Personally, that’s exactly what I did when I first looked at Netflix in the early-to-mid-2010s; it’s a decision that not only caused me to miss a potential NFLX investment, but I’d also argue it led me to not fully appreciate the challenges Disney would face in embarking on their DTC / OTT transition in the late 2010s (i.e. I may have concluded the right decision was to sell Disney if I truly understood the journey Netflix had been on over the prior decade).

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

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

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

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

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

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Three Notable Items

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

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

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

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

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

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

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

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

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

TSOH Updates

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

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

Have a great weekend!

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

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

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

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

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

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

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

Three Notable Items

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

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

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

“Peloton Invests in the Future of Pilates”

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

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

“Nike can’t just do it any more”

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

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

TSOH Updates

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

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

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

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Have a great weekend!

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

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

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

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