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sustained deterioration in the core Cable franchise, to a degree that led me to believe my thesis for that business was no longer valid; and (2) a lack of evidence management recognized and was appropriately reacting to the realities of what was happening, with a similar dour view on dithering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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“The past three years presented a slew of challenges for Dollar General, which led to material changes in their unit growth strategy, capital allocation priorities, and operational focus. What we’re left with on the back end is a company more effectively serving the needs of customers, as evidenced by traffic-driven comps growth. In addition, DG continues to narrow its product focus through SKU rationalization, optimizing the range to strike the balance between convenience and value… This is the right long-term strategy, one that positions DG to add value for customers, to simplify store / supply chain operations for employees, and to generate healthy returns for owners… I remain willing to increase my DG allocation if price action pushes my hand; [at] <$120, five-year return expectations would increase to ~15% per annum.”

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

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

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

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

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Three Notable Items

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

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

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

“An Interview with Satya Nadella About Finding Core Competencies”

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

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

“Costco Reports Q3 FY26 Results”

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

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

TSOH Updates

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

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

Have a great weekend!

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

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

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

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

Three Notable Items

“VALUExBRK 2026”

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

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

“Meta launches Instagram, Facebook, and WhatsApp Subscriptions”

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

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

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

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

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

TSOH Updates

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

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

Subscribe now

Have a great weekend!

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

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

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

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

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

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

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

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

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

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

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

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Three Notable Items

“Roblox Announces Inaugural Share Repurchase Program”

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

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

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

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

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

“Berkshire Hathaway Rekindles Its Tortured Love Affair With Airlines”

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

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

TSOH Updates

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

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

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

Have a great weekend!

Subscribe now

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.