Investor Audibles Q2 2025: LVS Advisory, Brasada Capital, Kathmandu Capital

Episode Summary

Executive Summary: The transcript compiles three investor letters emphasizing long-term, value-driven investing amid volatility. LVS argues Curtis-Wright is undervalued due to defense, aviation, and nuclear tailwinds, while biotech liquidations offer cash-return opportunities. Brasada stresses that volatility is not risk, highlighting West Pharmaceutical and Uber as temporary sell-offs masking durable quality. Kathmandu Capital focuses on international value opportunities, cautious macro positioning, and several country- or sector-specific bets such as ACM Research, OMAB, and Ubiquiti.

Main Topics: LVS Advisory: Curtis-Wright growth thesis (Priority: 5/5): CW is framed as a high-quality industrial monopoly-like supplier with embedded positions in aerospace, defense, and nuclear. The thesis rests on continued defense demand, commercial aviation growth, naval spending, foreign military sales, and especially underappreciated nuclear greenfield and SMR optionality. LVS Advisory: Biotech liquidations as an event-driven trade (Priority: 4/5): The letter argues that biotech firms with failed programs often trade below net cash value, creating a setup where investors can buy discounted cash and wait for liquidation or asset return announcements. Brasada Capital: volatility vs. true risk (Priority: 5/5): The letter argues that market volatility should be separated from permanent capital loss. It uses Mr. Market and fundamental analysis to explain why temporary sell-offs create attractive entry points. Brasada Capital: West Pharmaceutical Services (Priority: 4/5): West is presented as a durable, high-moat healthcare supplier whose stock fell on temporary issues like SmartDose margin dilution and CGM contract exits, while long-term demand from biologics, Annex I, and GLP-1s remains intact. Brasada Capital: Uber and autonomous vehicles (Priority: 4/5): Uber is described as a network-effect marketplace with strong economics. The AV concern is viewed as overstated in the near term and potentially positive long term if AV providers partner with Uber’s platform. Kathmandu Capital: macro caution and international value (Priority: 5/5): Kathmandu expresses concern about U.S. fiscal fragility, tariffs, inflation, and market valuation, while favoring businesses outside the U.S. with strong balance sheets and clearer revenue visibility. Kathmandu Capital: selective stock ideas and portfolio positioning (Priority: 4/5): The fund discusses positions in NAGA, GigaCloud, Ubiquiti, ACM Research, OMAB, Kaspi, and Vusion, emphasizing asymmetry, secular tailwinds, and valuation gaps.

Key Arguments: Curtis-Wright benefits from durable, multi-decade tailwinds in defense electronics, commercial aviation, naval defense, and nuclear power, with nuclear greenfield projects and SMRs offering significant upside optionality. The market is underestimating CW’s commercial nuclear growth, especially because guidance excludes unpredictable greenfield projects, creating potential for upside surprises. Biotech liquidations can be profitable when weak drug candidates are abandoned and companies return excess cash to shareholders, even if the underlying assets are poor. Risk should be defined as permanent loss of capital, not price volatility; short-term market swings often create mispricings for disciplined investors. West Pharmaceutical’s sell-off reflects temporary operational issues rather than structural impairment, while its moat and exposure to biologics, regulation, and GLP-1 drugs support long-term growth. Uber’s AV risk is likely delayed and may ultimately expand Uber’s market by making rides cheaper and broadening adoption; AV operators may prefer Uber’s network rather than building their own marketplace. U.S. macro conditions appear fragile due to high debt, inflation pressures, tariff uncertainty, and geopolitical risk, so international diversification and balance-sheet quality matter more. ACM Research offers a China semiconductor localization opportunity with potential valuation rerating, especially given the U.S.-listed vs. Shanghai-listed share price gap. OMAB is attractive because airports are regional monopolies with regulated cash flows, and Mexico’s nearshoring trend may support traffic growth. Kaspi, Vusion, Ubiquiti, and GigaCloud are framed as idiosyncratic opportunities with secular or cyclical upside despite short-term uncertainty.

Data Points: LVS growth portfolio return (H1 2025): 15.8% - Net of fees and expenses LVS event-driven portfolio return (H1 2025): 3.6% - Net of fees and expenses S&P 500 return (H1 2025): 6.2% - Benchmark comparison in LVS letter High-yield bond index return (H1 2025): 4.8% - Benchmark comparison in LVS letter CW earnings tied to aerospace and defense: ~80% - LVS letter describing Curtis-Wright revenue mix CW historical organic revenue growth: ~5% over 10 years - LVS letter citing long-term operating performance CW historical EPS growth: ~14% over 10 years - LVS letter citing long-term operating performance Nuclear plants with life-extension applications: Over 80% in North America - LVS letter supporting maintenance demand thesis Idos Therapeutics cash vs. market cap: $12/share cash vs. $7.60/share stock price - Biotech liquidation case study Idos purchase price: $7.71/share - LVS portfolio action after failed phase 2 study Idos stock reaction: +30% to over $10/share - Following liquidation announcement West Pharmaceutical sell-off: Nearly 40% - Brasada letter after guidance concerns West lower-margin business at risk: ~7% - Brasada view that core business remains intact Uber ride-sharing gross bookings exposure: 25% of gross bookings - Brasada discussion of AV risk concentration Uber monthly users: More than 170 million - Brasada business description Uber operates in: Over 70 countries - Brasada global platform scale Kathmandu quarterly gross return: 17.2% - Second quarter 2025 Kathmandu quarterly net return: 16.64% - Second quarter 2025 Kathmandu since-inception gross return: 6.2% - Performance since inception Kathmandu since-inception net return: 1.44% - Performance since inception Portfolio shifted to cash: ~35% - Kathmandu reduced risk earlier in the quarter U.S. debt-to-GDP ratio: 120% - Kathmandu macro commentary U.S. dollar decline: ~10% vs. major currencies - Kathmandu macro commentary OMAB free cash flow margin: 41% - Kathmandu thesis on airport business ACMR China market share: 14% - Kathmandu thesis on wafer cleaning market ACMR target share by 2030: 25% - Kathmandu growth assumption ACMR incremental revenue potential: $7 billion - If share reaches target by 2030 China semiconductor consumption: 35% of global consumption - Kathmandu rationale for localization theme China domestic semiconductor production: 7% - Kathmandu rationale for localization theme WFE cleaning market size in China: ~$2 billion - Kathmandu ACMR thesis OMAB airport concessions: 13 airports - Kathmandu portfolio company overview OMAB concession length: 50 years, with possible 50-year extension - Kathmandu business structure description Vusion Walmart share sale: 650,000 shares - Kathmandu notes on float increase

Pivotal Quotes: "True investment risk is not the temporary ebb and flow of market prices, but the probability of permanent loss of capital." — David Shahrastani / Brasada Capital Management: Core definition of risk used to frame the market volatility discussion "We are willing to underwrite that call option at Curtis Wright." — LVS Advisory: Summarizes the firm’s willingness to bet on CW’s under-modeled nuclear greenfield upside "Risk should not be confused with volatility." — Brasada Capital Management: Central theme of the letter explaining why sell-offs can be opportunities

Implications: Listeners are encouraged to focus on durable business quality, cash flows, and valuation gaps rather than headlines. The letters suggest opportunity in underappreciated niche compounders, event-driven cash-return situations, and international diversification amid macro uncertainty.