Thank you for reading my work and for trusting me enough to support Sycamore Capital with your hard-earned money. Whether you joined recently or have been here from the beginning, I have never taken that confidence and trust for granted.

With that said, I’ve decided it’s time to step back and turn off paid subscriptions. I won’t be publishing any more paid articles, and you’ll receive a prorated refund based on your subscription price and the time remaining in your subscription. If you subscribed or renewed recently, your refund will be larger; if you’re nearing your next renewal, it will be smaller. Hopefully that makes sense.

I really enjoy markets and investing. But with the recent arrival of our sixth child, homeschooling our older children, and a full-time job, I’ve come to recognize that I don’t have the capacity to give this newsletter the attention I want it to have.

My goal has always been to offer thoughtful research, differentiated insights, and worthwhile investment ideas. That takes considerable time and it occupies significantly more than the hours spent researching and writing. I find myself thinking about the next article, reading one more thing, or working through an investment idea in the small spaces between everything else.

I need more of that time and mental space for my faith, my relationship with my wife, and raising our children. When it comes to these things, I am all in. And while I was trying to build this for extra income for my family, it has become clear that the time spent is more valuable than any money that may come from this effort.

I’m not sure how much investing-related writing I’ll do going forward. I may return to something like this someday, but I don’t foresee that happening anytime soon.

If you’re curious, I am still long The Trade Desk, S&P Global, Angel Studios, and PoolCorp. I recently sold Academy Sports + Outdoors at nearly $60 /sh. I significantly added to my S&P Global position this past month around $390 /sh.

That’s all for me. Thank you again for taking a chance on me and supporting my work. I’m deeply grateful.

Happy Feast day of St. John Paul II.

Matt

Sycamore is for informational purposes only. Read my full disclaimer here.

In my August monthly update, I laid out the read through for Academy following Dick’s Sporting Goods’ brutal earnings reaction. DKS stock lost 30% of its value the day of that report, driven almost entirely by softness in footwear. Remember that Dick’s bought out Foot Locker in September 2025. Footwear now makes up 40% of Dick’s business.

My take at the time was that Academy would likely see some of that same footwear softness, but shouldn’t feel nearly the same pain as footwear is Academy’s smallest category at ~20% of sales. And Academy’s more discount oriented model is simply better built to absorb a promotional environment.

The other differentiator going into the earnings report was the wide valuation gap between DKS and ASO. DKS was trading for 14x forward earnings and a 2.4% FCF yield. ASO was trading for 6.5x earnings and 10.5% FCF yield.

Shares of ASO were +14% on the day of the report and continued to run, topping out at around +25%, before giving up about half of those gains over the last week or so. The profit taking has no doubt been driven by spiking Treasury yields (19-year high) with continued upward pressure.

The stock is now back trading in the high $40s and not far from when I last wrote about ASO.

Given how far and fast the stock has moved lately, I wanted to reevaluate the opportunity ahead and the position in the portfolio.

In this report, I will look at the following:

1. In-depth quarterly review

2. The challenges that remain + consumer backdrop

3. Valuation and model update

4. Sycamore’s take

1. In-depth quarterly review

Net sales were +3% to $1.65B, with YTD sales +4.7% to $3.09B. Adjusted diluted EPS came in at $2.31, +19.1% Y/Y and well ahead of the $2.09 consensus. Gross margin expanded sharply to 40.4% of sales from 36.0% a year ago, although this was driven by one-time tariff refunds.

A few standout items from the earnings call:

E-commerce sales were +12.8%, with digital penetration +110 bps Y/Y. Through the first half of the year, e-commerce is +14%. This has become a reliable growth engine for the business and a very encouraging sign.

Free cash flow generation was excellent. Adjusted FCF came in at $237.6M YTD, up 85.5% Y/Y. Management raised full year guide to $300-$350M, up from the $250-$300M range given back in June, and capex guidance held steady.

New stores comped positive mid single digits, and the 63 stores opened since fiscal 2022 have already generated $1.1B in cumulative sales. Academy opened 3 stores in the quarter and plans 11 more in Q3 alone. I’ve said it many times, but a reminder that these units are self-funded.

Academy repurchased $82.1M of stock in Q2, bringing first-half repurchases to $182.1M, +82.3% Y/Y. The board declared another $0.15 per share dividend. In Q2, shares outstanding shrunk 6.1% Y/Y. This is the playbook here: open new stores from operating cash flow, return the majority (~85%) of FCF back to shareholders through meaty buybacks and an increasing dividend.

On brand and merchandising, management continued to add credibility to the assortment. Academy also continued building out its shooting sports footprint (another key differentiator compared to DKS who exited the category entirely between 2018-2020). Hoka footwear will be launching online and in 15 stores this fall, among other new brand rollouts and expansions. Analysts have been asking for years when Hoka would come to Academy and they’re finally delivering.

Lastly, management raised full year adjusted EPS guidance to $6.50-$6.90, up from $6.40-$6.80. This was primarily driven by increased buybacks as the sales and comp outlook were held steady.

2. The challenges that remain + consumer backdrop

Despite all the positives, same store sales comps were still negative, down 0.4%. CEO Steve Lawrence clearly pointed out that consumer spending is pressured, particularly among lower income households, which really is their core customer (more on this below).

The margin and EPS strength in the quarter benefited from tariff refunds. This looks great when updating the financial model below but are non-recurring. And while Academy’s footwear exposure is small relative to Dick’s, it’s still 20%, so a more promotional footwear environment industry wide is still a real dynamic to watch heading into the holidays.

The biggest issue for Academy is the lower income consumer remains under pressure, and I don’t see an obvious catalyst for that easing soon. Here’s the backdrop for consumers:

• 10-year Treasury yields hit a 19-year high

• Oil ripped past $100 /barrel

• Gas prices are at $4.33 /gallon nationally, +38% Y/Y

• Reignited inflation fears driving fed rate hike with pressure to the upside for more

Academy highlighted households with annual income $100K+ were strong for them in the quarter, with traffic up high single digits, which is a great sign. However, traffic from sub-$50K households declined by high single digits, worse than the previous quarter.

This business, at least for now, still lives and dies with the lower income cohort, and it appears that is getting worse.

Top-line should continue to be helped by new unit expansion and new brand/product launches, but same store sales may continue to be pressured. I worry that management’s guide for flat to +2% on the same store sales comp may be too optimistic.

3. Valuation and model update

When I initiated this position, the whole thesis rested on the fundamentals of a “still relevant” business growing units and trading at 6.5x. This earnings multiple was a decent discount to its historical median of 8x.

That gap closed quickly post earnings but has since come back below the median by ~8%. The stock still trades with a rosy 9.5% FCF yield.

For a full look at the P&L model, click here.

4. Sycamore’s take

I really like Academy for the following:

• clean balance sheet

• self funded unit growth

• meaty buyback

• management is coming of age a bit

• at the end of the day it is just a cheap stock relative to the market and to its own history

I mostly like what I’m seeing in the business, but dislike just about everything I’m seeing in the macro. If we see the stock back above the median multiple I would likely take the profit, all else equal. For now, it is such a small position (~1.4% of the portfolio) I am fine holding it. At this point, it serves more as a tracker position for me.

I would only consider adding to the position with the stock back around $40 or below.

Thanks for reading!

Matthew Blake
Founder & CIO | Sycamore Capital Management, LLC

Disclaimer: Sycamore Capital Management, LLC (referred to in some materials as “Sycamore” or “Sycamore Capital”) is a research and publishing platform provided for informational purposes only. Nothing published by Sycamore Capital Management, LLC or its author constitutes investment advice or a recommendation to buy, sell, or hold any security. The company is not a registered investment advisor and does not manage client assets or offer personalized financial advice. All opinions expressed are solely those of the author, and any securities referenced reflect personal holdings at the time of publication unless otherwise stated. Readers are solely responsible for their own investment decisions and are encouraged to conduct independent research and consult with a licensed financial advisor before acting on any information provided.

Sycamore is for informational purposes only. Read my full disclaimer here.

I am thrilled to finally release a new series I am calling the Sycamore Watchlist. I have been wanting to do this for over a year and it is finally here.

The hope is to give you insight into names on my watchlist and walk through the opportunity using the same lens I apply to every business I evaluate for the Sycamore portfolio.

A big part of that is qualitative analysis. In August, I published a report on my three pillars of what I look for in a quality business, namely:

1. A fortress balance sheet

2. Strong free cash flow generation

3. Business model durability

You can read that report here:

With that framework in hand, here are three small caps I’ve recently added to the Sycamore watchlist that are currently in a deep drawdown.

Subscribe now

1. Doximity (DOCS)

Market Cap: $4.7B
Price: $26
52-Week High: $76.51
1Yr Drawdown: 65%

Doximity has been crushed as revenue growth has slowed and investors have reset expectations for what was once a premium growth business. But the underlying company remains interesting.

Doximity operates the largest digital network for U.S. medical professionals, with more than 85% of U.S. physicians on the platform, along with a growing share of nurse practitioners, physician assistants and nine out of every 10 medical students.

At its core is a verified professional network and newsfeed, layered with workflow tools clinicians use daily. These are things like HIPAA-compliant faxing, secure messaging, and Dialer for telehealth. The company has also pushed into AI, with tools like Doximity Ask for clinical research and Scribe for note-taking during visits.

Doximity monetizes the network further through Marketing Solutions (pharmaceutical and health system advertising), hiring and recruiting tools, and telehealth infrastructure sold to hospitals.

The free network is the distribution and the workflow, AI, marketing and hiring tools are how it gets monetized.

Why is DOCS down so much?

This is really a growth reset story. Doximity was previously valued as a premium growth business, but revenue growth has slowed meaningfully. Here is the trend:

• FY2023: +22.0%

• FY2024: +13.5%

• FY2025: +20.0%

• FY2026: +13.1%

The company most recent reported quarter (Q1 FY2027) came in at just 7% Y/Y revenue growth and full-year guidance calling for mid-single-digit growth.

The market is also factoring slowing net revenue retention, rising stock-based comp, and ultimately how much runway for growth runway is left in a business with more than 85% of U.S. physicians already using the product.

For now, whether or not new AI and workflow products can re-accelerate growth is yet to be seen.

Fortress Balance Sheet

Doximity has roughly $688M of cash and marketable securities and no debt, putting it firmly in the fortress category from my Three Pillars piece.

Nearly 15% of the market cap is in cash and securities. A clean balance sheet lets management make the best decision for the business for the long-term and gives it flexibility.

Doximity used that flexibility to purchase $91.6M of stock during the most recent quarter, a reduction of ~2.4% of the shares outstanding in one quarter alone.

Free Cash Flow Generation

This is the most impressive part of Doximity.

In FY2026 the company boasted an extremely impressive FCF margin of 50.6% with a trailing FCF yield of ~6.4%. Forward FCF yield is a similar 6.3%.

The business is capital-light. In the most recent quarter, Doximity generated $42M of operating cash flow and spent just $2.4M on capex (property, equipment and internal-use software development combined), producing $39.6M of FCF.

That said, as growth has slowed so has FCF. Q1 FCF declined 34% Y/Y, while stock-based comp rose substantially. But even with some normalization, Doximity remains highly cash generative.

Business Model Durability

Doximity already has more than 85% of U.S. physicians on its platform, and that creates a very difficult network to replicate. More physicians make the platform more useful to other physicians, more attractive to healthcare systems and more valuable to pharmaceutical companies trying to reach specific medical audiences.

It’s a legitimate flywheel.

The long-tail secular opportunity here is physician productivity. Doctors spend enormous amounts of time on documentation, information retrieval and administrative work.

Doximity is increasingly building tools to ease that burden, as shown above. In the most recent quarter, workflow active prescribers grew >30% Y/Y, while AI Search queries increased >25% sequentially.

If the platform succeeds by saving physicians time, improving access to clinical information and reducing administrative burden, there is genuine alignment between Doximity, its users/doctors, the healthcare system, and patients.

Doximity already owns the network and distribution, so in my opinion, the physician productivity KPIs are what to watch for going forward.

Share

2. The Boston Beer Company (SAM)

Market Cap: $1.7B
Price: $171
52-Week High: $264.46
1Yr Drawdown: 35%

While Boston Beer is in a 35% drawdown over the past year, its long-term chart is significantly more ugly. Spanning the past decade, the stock is actually in an 87% drawdown. Wow.

It has spent the past several years coming back to earth after one of the great pandemic-era stock runs. Shares now trade around $171, dramatically below the $1,200+ levels reached in the 2021 heights.

The company behind Samuel Adams, Twisted Tea, Truly, Angry Orchard, Dogfish Head and Sun Cruiser is debt-free and cash generative. The problem is that Boston Beer isn’t growing.

So, is this a durable consumer brand portfolio temporarily out of favor, or a business fighting secular decline?

Why is SAM down so much?

Boston Beer’s problem is primarily volume weakness. In Q2 2026, depletions fell 6%, shipments fell 4.5%, and revenue declined 3.3%. YTD, depletions are down 5% and revenue is down 3.8%. Management expects full-year shipments and depletions to decline somewhere between the low-single digits and mid-single digits.

The weakness is broad as Twisted Tea, Truly, Samuel Adams, Hard Mountain Dew and Dogfish Head all posted lower shipment volume in the last quarter, partially offset by growth from Sun Cruiser and Angry Orchard.

Boston Beer rode enormous growth from Truly during the hard seltzer boom, but that category matured and became super competitive. Meanwhile, beer consumption broadly faces changing consumer preferences, and even Twisted Tea, one of Boston Beer’s strongest growth assets, has recently softened.

The market is trying to figure out whether Boston Beer can return to sustainable volume growth, or whether this is now a shrinking collection of brands managed for cash.

Fortress Balance Sheet

At the end of Q2, the company had $265.5M of cash and zero debt. The cash position has increased despite continued share repurchases.

That matters tremendously for a business currently experiencing declining volumes. Management can keep spending behind brands, developing new products, improving the supply chain, repurchasing stock, etc. while the core business hopefully works through a difficult period.

The company repurchased roughly $54M of shares between the beginning of the year and July 17, with approximately $174M remaining under its current board authorization (~10% of shares oustanding).

Free Cash Flow Generation

For the full-year 2025, the company produced $270M of operating cash flow, spent $55M on capex, and generated $216M of free cash flow, an ~11% FCF margin (levels not seen since 2016-17 timeframe).

Their forward FCF yield currently sits around 4.1%.

There are reasons for caution though as volume is declining. To manage this, they are spending more aggressively on advertising and promotion, at the same time tariffs and commodity costs are pressuring the cost structure.

To quantify this, advertising, promotional and selling expense increased >16% in the most recent quarter while revenue declined.

Still, the company is generating cash while investing. Despite weak revenue, gross margin actually improved to 50.4% in Q2, +60 bps Y/Y on supply-chain improvements, product mix, procurement savings and pricing.

That’s a setup where if volumes stabilize, and especially return to growth, FCF accelerates quickly.

Business Model Durability

There is some flywheel here. Strong brands earn shelf space and distributor attention, better distribution creates more consumer exposure, and successful innovation can leverage an existing wholesaler network. That’s real, but it’s only sustainable through continuous marketing, innovation and relevance. The flywheel has to keep being pushed versus automatic reinforcement. (hence the increased sales/marketing expense despite declining revenue).

Alcohol is an enormous market, but I don’t see an obvious secular growth tailwind behind traditional beer. SAM has responded by moving into faster-growing adjacent categories like hard tea, cider and ready-to-drink beverages.

Twisted Tea was the standout success for years, and Sun Cruiser represents another attempt to find the next category winner. That means the thesis increasingly depends on product innovation rather than simply riding an expanding market, which is a weaker setup than I typically prefer.

There’s also a generational headwind developing here. The data on gen z alcohol consumption will be an interesting data point to track in the coming years.

On end-user alignment, this piece is fairly neutral. Boston Beer wins by making beverages consumers actively choose to purchase, so there isn’t an obvious misalignment, but there isn’t a structural societal benefit that deepens the quality argument either.

Unless you have six children under the age of 10, and then you understand the value of a cold one at the end of the day.

Boston Beer has proven it can create major brands and I wouldn’t be surprised if they are able to find another one down the road, so I am keeping close watch on this one as the valuation continues to come down.

3. Peloton Interactive (PTON)

This one came at the request of a good friend and paid subscriber, and I’m happy to feature it.

My first public stance on this company came at a bachelor party in late 2019. It was late at night (early in the morning) and I was maybe on my first or second Boston lager. I can’t remember.

A couple of guys much smarter than me were pumping the stock post-IPO and arguing the stock was going higher. Without knowing much about the company beyond the fact that it had recently started selling a $4,000 treadmill (at the time), I took the other side of their thesis, for the sake of argument.

Since approximately that night, the stock is down more than 90%. Here is where things stand today.

Market cap: $2.4B
Price: $5.40
52-Week High: $9.20
1Yr Drawdown: 42%

Since the pandemic boom highs, the stock has lost 97% of its market cap.

The company became a pandemic darling as consumers rushed to buy at-home connected fitness equipment. But management never stopped adding inventory. Once things began normalizing they had built up a massive glut. At one point sitting on over $1B worth of bikes in inventory.

Management mistook pandemic demand for permanent growth.

The next several years were spent unwinding the inventory, cutting costs, restructuring operations and repairing the balance sheet. Perhaps though, that repair effort is finally showing up in the numbers.

Why is PTON still languishing?

Subscriptions are down and trending lower, while church is increasing.

First, paid Connected Fitness subscriptions:

• FY2024: 2.976M

• FY2025: 2.800M

• FY2026: 2.553M

That’s a 14.2% decline over the past two years.

Average monthly Connected Fitness churn

• FY2024: 1.4%

• FY2025: 1.6%

• FY2026: 1.7%

Revenue reflects the same problem.

• FY2024: $2.701B

• FY2025: 2.491B

• FY2026: $2.446B

So although Peloton has dramatically improved profitability and cash flow, investors are still asking whether the company can eventually stabilize or grow its membership base, which is its sole path to long-term growth. And likely, stock appreciation.

Fortress Balance Sheet

At June 30, Peloton held roughly $1.21B of cash against $1.3B of total debt, for net debt of ~$93M. A year earlier, net debt was ~$460M. Management has made significant improvement.

Liquidity backs this up. Peloton’s current ratio sits at 2.84x and its quick ratio at 2.58x, both comfortably healthy. Leverage looks similarly strong on an EBITDA basis, with total debt running about 2.8x Adjusted EBITDA and net debt at just 0.3x.

They still have a ways to go but the combination of positive cash generation and rapidly falling net leverage is encouraging and manageable.

Free Cash Flow Generation

Here is the trajectory of Peloton’s FCF:

• FY2024: -$86M

• FY2025: $324M

• FY2026: $378M

FY26 operating cash flow was $388M, against just $9.9M of capex. Currently, the business is running a FCF margin of ~15%.

FCF yield is extremely high, which either means the stock is meaningfully mispriced, or the market is saying the cash flows are not durable. The latter is without doubt being driven by the shrinking subscriber base.

Business Model Durability

Given the stability of the first two pillars, this is where the money is made on this one. If the business model is durable, then this could be a slam dunk. If not, it’s a trap.

Peloton’s original business model had a very clear flywheel. The hardware got you in, the subscription and content kept you engaged, and that engagement reinforced the value of the product. The more someone used Peloton, the more embedded they became in the ecosystem, the community, the instructors, and the routine itself.

The newer strategy is different. Peloton is increasingly broadening the brand beyond its own hardware and positioning itself as a larger wellness platform, with apps and content available to users whether or not they own a Bike or Tread or Row.

I don’t see a flywheel in this, just a broader distribution strategy.

Peloton can reach far more people by removing the hardware requirement, but it is not obvious that those users then feed back into what I would consider the lock-in part of the ecosystem (hardware). I see this go to market strategy as higher competition with lower barrier to entry

Both approaches do share one important characteristic though, which I do value. Strong alignment between the business and the customer. If Peloton wins, it is because members are actually using the product, staying engaged, and getting value from it (i.e. getting healthy/ier).

The market itself is large and attractive, with real secular tailwinds behind fitness, wellness, and technology-enabled exercise.

What I’m unsure on the approach. Part of what made Peloton work originally was the exclusive-club mentality. An expensive bike signaled real commitment and created a sense of community around the instructors, leaderboards, and shared experience.

Opening the ecosystem to anyone trades some of that exclusivity for reach. That is a reasonable bet on a much larger TAM, but it also risks weakening one of the things that made Peloton unique in a world with thousands of fitness/wellness apps and products.

Thanks for reading!

Matthew Blake
Founder & CIO | Sycamore Capital Management, LLC

Disclaimer: Sycamore Capital Management, LLC (referred to in some materials as “Sycamore” or “Sycamore Capital”) is a research and publishing platform provided for informational purposes only. Nothing published by Sycamore Capital Management, LLC or its author constitutes investment advice or a recommendation to buy, sell, or hold any security. The company is not a registered investment advisor and does not manage client assets or offer personalized financial advice. All opinions expressed are solely those of the author, and any securities referenced reflect personal holdings at the time of publication unless otherwise stated. Readers are solely responsible for their own investment decisions and are encouraged to conduct independent research and consult with a licensed financial advisor before acting on any information provided.

Sycamore is for informational purposes only. Read my full disclaimer here.

Back in February, I wrote about Sprouts under the title “Fresh, Organic, and Mispriced.”

The stock was in a 62% drawdown, the business was self-funding a long runway of unit growth, and I argued Sprouts was a better business than Whole Foods when Amazon acquired it, yet it was trading at a discount to that takeout multiple.

Said simply, the thesis was that the superior business shouldn’t trade at a discount to the inferior one.

That thesis has played out. The stock has re-rated off the lows and is trading in-line to a slight premium over the past couple of months. Sycamore’s position in the stock has appreciated by over 20% since my initial post in February.

So, where does the stock go from here?

Pressure test

Q2 was a mixed print. Total sales grew +5% to $2.33B, driven almost entirely by new stores, while comparable-store sales were -1%, in line with guidance. EPS came in at $1.37, two cents ahead of estimates. But the Q3 guidance came in light with EPS of $1.20-$1.24, below the $1.29 consensus.

Management also lowered the same store sales comp guide to the lower end of their expected range for the coming quarter. When pressed for an explanation of this on the call, CEO Jack Sinclair said:

Underneath that, Konat said existing customers are taking trips less frequently and spreading their purchases out more. Less trips + lighter baskets.

Management now describes the lower-engaged and lower-income shopper as the company’s biggest near-term opportunity.

I don’t buy that at all. I actually think it’s the opposite.

I see that segment as the company’s biggest risk for the next 2-4 quarters. The lower income shopper is under pressure, and that is unlikely to ease as I personally don’t expect much progress on the geopolitical front in Iran (read: gas prices) or with rates or with grocery prices. The pressure on rates is certainly to the upside for now.

If this lower income and lower engaged customer doesn’t pick up, the company is relying solely on new locations to sustain the status quo.

When management was asked about the lighter traffic than they expected in the quarter, they said the following:

I left the call feeling pretty uneasy with the lack of handle on their customer that management openly admitted to.

Given the circumstances, I felt NTM top-line expectations should come in a bit, but consensus has remained the same. If anything they’ve gone up a touch.

I think that’s the wrong direction and puts some near-term pressure on the stock to the downside if they aren’t able to manage the challenges being faced.

CEO Transition

This past week, Sprouts announced a leadership succession. Starting January 4, 2027, Jack Sinclair moves from CEO to executive chairman, and Nick Konat, president and COO, assumes CEO role and joins the board.

This appears to be a clean and well-telegraphed succession rather than a surprise shake-up. Konat has been at Sprouts since 2022, running operations, marketing, merchandising, supply chain, and innovation

The board is framing it as continuity rather than a change in direction.

That makes sense and seems very reasonable, but I’d rather see this transition happen after Sprouts’ customer has stabilized, not in the middle of a stretch where management itself sounds so unsure of things going forward.

Selling now

The growth story here seems to still be intact. Q3 will be the single largest month of new store openings in company history. New store sales comps are positive and management is very bullish on their model and that it can work in any geography.

They’re probably right.

Guidance does imply comps get better as the year goes on. But that’s mostly a function of easier Y/Y comps, not a business that’s reaccelerating. Fewer trips and lighter baskets are still the underlying story.

Given the macro environment, management’s lack of handle on their own customer, sticky top-line estimates despite headwinds, and I think the pressure is to the downside in the near-term.

The discount I wrote about back in February to the Whole Foods take out price is now gone. I wouldn’t be surprised to see the stock back in the $60’s at some point over the next six months.

Given all the things mentioned above, and now layering on the new CEO transition announced this past week, I went ahead and cleared the remainder of my position at $80.50 /sh. It was just a 3% position at time of sale.

I still really like this business and believe in the model and growth story, and would look to add the stock back to the portfolio if given the opportunity again in the $60’s.

Thanks for reading!

Matthew Blake
Founder & CIO | Sycamore Capital Management, LLC

Disclaimer: Sycamore Capital Management, LLC (referred to in some materials as “Sycamore” or “Sycamore Capital”) is a research and publishing platform provided for informational purposes only. Nothing published by Sycamore Capital Management, LLC or its author constitutes investment advice or a recommendation to buy, sell, or hold any security. The company is not a registered investment advisor and does not manage client assets or offer personalized financial advice. All opinions expressed are solely those of the author, and any securities referenced reflect personal holdings at the time of publication unless otherwise stated. Readers are solely responsible for their own investment decisions and are encouraged to conduct independent research and consult with a licensed financial advisor before acting on any information provided.

Sycamore is for informational purposes only. Read my full disclaimer here.

Monthly Commentary

A Busy Month

August proved out to be a busy month. I was able to get four company specific reports published. If you missed any of them, you can check them out here:

Angel Studios (ANGX)

I published a couple of different reports on Angel. Highlighting the incredible growth the company is experiencing right now along with my 5-year bear/base/bull model. In this I model out subscriber growth, revenue build, and valuation tables.

All for the purpose of showing you why Angel is my highest conviction pick to make a multi-year, multibagger run.

The Trade Desk (TTD)

Following the company’s shocking (in a bad way) Q2 earnings results, I did a personal deep dive and gut check into what is going on here. This report is the fruit of that thought exercise. As far as I can tell, it doesn’t seem my conclusion is consensus.

Academy Sports + Outdoors (ASO)

I picked up coverage of Academy again. My first post on Substack in August 2023 was a report on this company. This report came on the three year anniversary of that post and also happened to be my 100th report in total.

As the title indicates, Academy three years on is still as relevant today as it has ever been. In fact, company fundamentals are inflecting positive, all while management runs a clean balance sheet, is self-funding 7% annual unit growth, and buying back 9% of the outstanding shares per year.

Oh yeah, and the stock trades for 6.5x earnings and an almost 11% free cash flow yield.

In addition to the company specific research, I published a general investing report on the three factors I look for when evaluating a quality business. You can read that one here:

In general, I continue working hard and made great progress throughout August on reaching my personal goal of becoming a Substack bestseller. Over the course of August, I netted eight new paid members. Welcome and thank you!

And most importantly, at long last, our sixth child (and first girl) made her grand arrival in the middle of the month!

Subscribe now

Thanks for reading, and for paid subscribers, the rest of this report contains the following:

1. Current holdings (including position weights and cost basis)

2. Transactions in August

3. Portfolio company specific commentary

Current holdings

Transactions in August

Increased:

• SPGI - increased by 92.3% at $406.75 /sh

• ANGX - increased by 18.5% at $3.95 /sh

Decreased:

• POOL - decreased by 39.4% at $207.39 /sh

• SFM - decreased by 50.4% at $86.75 /sh

Added:

• ASO - initiated 1.2% position at $43.96 /sh

Portfolio company specific commentary

The Trade Desk

The pain continues on, but green shoots are emerging. The c-suite overhaul is all but complete with what seem to be really outstanding hires. I am very confident in the team that has been assembled.

TTD launched Kokai Zuma, a platform refresh that includes the launch of a lot of new features, tools, and AI capability and compatibility. TTD built the new agentic layer, called Koa Agents, on an interoperability framework called Open Agentic Kit, which is designed to work with multiple AI models, rather than being locked into one frontier model partner.

Not only this, but according to the company, the AI capabilities are also compatible with other vendors. What this appears to mean is that TTD agents do not only work inside the TTD sandbox, but can connect outside of it to bring external agentic ad spend flows in.

Lastly, on August 31, the FTC filed a lawsuit against Amazon, alleging the company manipulated price on its ad auctions over a seven year period and reaped >$20B of revenue for itself. Here is a quote from the exclusive WSJ article:

Google in 2025. Amazon in 2026. Brutal. As I have said many times and will continue saying, TTD is a structural necessity to the industry due to its objective and independent nature.

So much for the supposed Amazon 1% adtech fee. While this likely doesn’t really shift ad spend overnight, it is a very significant narrative change.

S&P Global

Following the recent earnings report and my commentary I made in the last monthly update, towards the beginning of the month I made the decision to trim back my positions in Sprouts Farmers Market and PoolCorp (heavily exposed to the consumer) and doubled my position here.

This is a very high quality business, with emphasis on the Ratings and Indices franchises. These will continue growing well with a strong potential for upside in the Ratings business thanks to insatiable appetite by the hyperscalers for capital to fund the AI buildout.

The company’s data and analytics business is seeing rapid adoption and growth of their AI offerings. These are not simple AI wrappers on their current products, but they are partnering with some of the biggest companies in the world to build custom AI products around their proprietary data.

In the most recent quarter, the number of customers using SPGI's AI products surpassed 500, up more than 70% Q/Q, with API call volume up roughly 5x over the same span. There is no reason to believe that will not continue. My assumption is you will actually see this accelerate. And if Salesforce is now garnering AI beneficiary status, S&P is a slam dunk to do the same.

Angel Studios

In August, the company added 127,500 new paid subs to the Angel Guild and growing 4.5% M/M. That’s about $21M of new ARR in August alone. They have added 376,500 QTD, or ~$61.5M of new ARR.

This is tracking to be the largest single quarter for Angel Guild growth as a public company yet.

This is also a set up into the last four months of the year, where they will have five theatrical releases. These releases have historically served as great introductions to the Angel Guild. My point is, given their improved marketing spend efforts, five theatrical releases, and the holidays, Q4 should also be another big quarter.

Keep in mind, my 2027 and 2031 projections I released earlier in August all assume a 3.2M paid subscriber base on January 1. It’s too early to call it, but it seems to me this will come in too conservative. I will wait to update those models until we are closer to the end of the year (likely November/December).

PoolCorp & Sprouts Farmers Market

As mentioned, I made the decision to trim back my exposure in both these names. This is primarily driven by the exposure to the consumer. I have no clue what the Fed will do over the next twelve months, but for now, the market is leaning toward a hike, not a cut. This isn't a great set up for new home starts (and pool permits) for POOL or discretionary spending on grocery for Sprouts.

I am working on a report for Sprouts, but the earnings call recently wasn’t exactly encouraging. Management seemed a bit dumbfounded by the current market dynamics and the effects it is having on their business. The stock still reacted positively by ~15% following the earnings, so I used that opportunity to cut my position in half.

Academy Sports & Outdoors

Not much to add here beyond my recent report on the company linked above except for the read through from Dick’s earnings. DKS stock lost around 30% of its value the day of their report.

The interesting thing about the report is that core Dick’s is growing nicely, with same store sales comps at +4.9%. The trouble they are having is with footwear, driven by their recent acquisition of Foot Locker. They cited unexpected softness and a moe promotional environment.

The problem for Dick’s is that footwear now makes up 40% of their business, the largest segment. For Academy, it is their smallest, at around 20%.

I expect softness in the footwear segment for Academy as well when they report on September 9, but it shouldn’t have nearly the same negative impact. Academy is the more discount oriented retailer, so it should be better positioned to lean into/absorb the promotional activity.

Before the post-earnings collapse, DKS was trading at 17x earnings, compared to ASO at 6.5x. That valuation in retail is much harder to absorb unexpected softness. ASO is much better positioned, as a business and on valuation.

Thanks for reading!

Matthew Blake
Founder & CIO | Sycamore Capital Management, LLC

Disclaimer: Sycamore Capital Management, LLC (referred to in some materials as “Sycamore” or “Sycamore Capital”) is a research and publishing platform provided for informational purposes only. Nothing published by Sycamore Capital Management, LLC or its author constitutes investment advice or a recommendation to buy, sell, or hold any security. The company is not a registered investment advisor and does not manage client assets or offer personalized financial advice. All opinions expressed are solely those of the author, and any securities referenced reflect personal holdings at the time of publication unless otherwise stated. Readers are solely responsible for their own investment decisions and are encouraged to conduct independent research and consult with a licensed financial advisor before acting on any information provided.

Sycamore is for informational purposes only. Read my full disclosure here.

Three years ago this week I published my first post on Substack. I wrote about a business I knew well and was building a big position in at the time.

Academy Sports & Outdoors.

The post had a 100% open rate. It also was only sent to three subscribers (friends).

I thought I would revisit ASO for my three year anniversary of writing on Substack and my 100th post.

Here was my intro to that original post, which I thought was still fitting today:

The business has continued to grow over the past three years, has continued cannibalizing itself through large share repurchases, and is still as relevant today as it was then.

The biggest difference is that the stock was trading for ~$55 /share then and just ~$44 /share today.

In this post, I will cover the following:

1. Company fundamentals

2. Store growth

3. Capital allocation

4. Financial model and valuation

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1. Company fundamentals

Academy made a monster run during the Covid years benefiting greatly from the stimulus checks + lockdowns. That pushed sales and margins to record highs around 2021 to 2022.

Since then, it’s been a challenging multi-year decline while the company tried to find a bottom. Here’s how it broke down year by year:

• FY2022: sales of $6.395B, -5.6% Y/Y, and same-store sales comps -6.4%

• FY2023: sales of $6.159B, -3.7% Y/Y, and SSS comps -6.5%

• FY2024: sales of $5.933B, -3.7% Y/Y, and SSS comps -5.1%

• FY2025 sales of $6.053B, +2.0% Y/Y, and SSS comps -1.5%

In the most recent quarter, Q1 of FY2026, the company reported sales growth of +6.7% and comps +2.9%. Growth came from both more shoppers and higher spending per visit. On the call management referred to the quarter as the inflection the business had been searching for.

The FY 2026 guidance implies improvement for the full year compared to the prior year. Net sales of $6.23B–$6.36B, +3–5% Y/Y and comps flat to +2%.

As always with ASO, guidance excludes any share buybacks. This is an important factor. More on this below in the capital allocation section of the report.

An encouraging signal has been the stickiness of gross margin despite volatility in sales growth.

For more detail on company fundamentals, see below for the full financial model.

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2. Store growth

The company has been in the process of executing on a multi-year growth plan to add new locations and new markets.

Since the plans launch, Academy has opened 63 new locations since 2022.

The plan for FY2026 is for 20-25 additional locations added. This year’s openings are majority infill within legacy/existing markets, which management says perform stronger out of the gate. The remainder of new locations will be entering and building out new markets.

Management's long-range framework maps store store base growth from the low-to-mid 300’s today toward ~450 over the next five years with whitespace for 800+ stores nationwide. This is supported by the fact that ~80% of the U.S. population does not live within 10 miles of an Academy.

In the most recent earnings call, management highlighted same store sales comp trends in new locations at positive high single digits.

However, the most important part of this growth story is that it is self-funded.

For FY2025, the company generated $435M in operating cash flow, spent $172M on capex, primarily to open 24 new locations, and generated $263M of free cash.

As stated, the strength in the operating model provides the company the opportunity to invest in strong unit growth AND return significant capital to shareholders at the same time.

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3. Capital allocation

You can’t fully appreciate the opportunity with Academy until you understand their capital allocation policy.

Debt

To begin, the company runs a very clean and essentially unlevered balance sheet.

Long-term debt stood at $480.3M as of the end of Q1 FY2026, with $337.8M of cash on hand. Net leverage sits at just 0.2x on a net debt/adjusted EBITDA basis. This is among the cleanest balance sheets in retail.

All of Academy’s debt is a single senior secured note with a 2031 maturity date.

Dividend

Academy initiated a dividend in 2022 and has raised it every year since.

The annualized dividend rate of $0.60 works out to a yield of ~1.3% as of today, on a payout ratio of just 9.5%. Annual increases have a very long runway ahead.

Buybacks

The bulk of returns to shareholders have come through share buybacks. In fact, the company has bought back $1.7B worth of its own stock since IPO in the fall of 2020.

The Y/Y share count reduction has gone as such:

• FY2022: -11.0%

• FY2023: -7.7%

• FY2024: -5.7%

• FY2025: -6.9%

In summary, Academy is running a clean balance sheet, self-funding unit growth of ~7% per year, increasing its dividend by 19% per year, and reducing share count by 8% per year.

4. Financial model and valuation

I built out a financial model for the entirety of ASO’s lifespan as a public company.

Click here to access the entire financial model. I will continue to add more to this model as we go along, as well as build out a bear/base/bull valuation table.

With regards to the valuation of the company, the stock is certainly cheap on an absolute basis. Trading at just below 7x the next twelve months of earnings.

It is also cheap on a relative basis, given it is currently trading below its historical median of around 8x, and notably lower than its closest comp, Dick’s Sporting Goods at 13x.

I argued three years ago in my first article that as ASO scaled, they would garner a comparable multiple to DKS. That has not materialized. I think this has been driven primarily by the multi-year decline and trough of sales and earnings growth, but also by the nature of the business. Academy has typically focused on serving the value customer, whereas Dick’s has always served the higher-income cohort. That has worked very well for them over the past few years and has been a headwind for ASO.

There are a few things that need to be seen for ASO to garner a DKS-type multiple:

• sustained top-line growth and continued same store sales comp growth

• continued store expansion on their way to their full potential of 800+ stores

• continued share buybacks, strengthening the case for shareholder returns

These three factors make for a very powerful combination, and if working together, would no doubt drive fundamentals and multiple expansion.

For now, I have taken a small starter position, ~1% of the portfolio, more so as incentive to keep close watch of how things are developing. To begin building a larger position, my buy point is 6x forward earnings or less. At current estimates, that's a sub-$40 stock.

With regards to free cash flow, the stock trades at a very reasonable 9.5x multiple and an attractive yield of 10.5%. Free cash generation should continue to grow nicely as the company continues to scale.

Given this high of a FCF yield in the retail sector, you would probably assume a business in distress. That is not the case here. Growth is inflecting positive on top of a self-funded store base growth story, a very strong balance sheet, and significant capital return to shareholders.

Compare this to Dick’s at only 2.4%.

Retail can be a very challenging place to invest so I’m wading in lightly and willing to be patient in hopes for the really fat pitch. But I do really like this story for a longer-term hold.

Thanks for reading!

Matthew Blake
Founder & CIO | Sycamore Capital Management, LLC

Disclaimer: Sycamore Capital Management, LLC (referred to in some materials as “Sycamore” or “Sycamore Capital”) is a research and publishing platform provided for informational purposes only. Nothing published by Sycamore Capital Management, LLC or its author constitutes investment advice or a recommendation to buy, sell, or hold any security. The company is not a registered investment advisor and does not manage client assets or offer personalized financial advice. All opinions expressed are solely those of the author, and any securities referenced reflect personal holdings at the time of publication unless otherwise stated. Readers are solely responsible for their own investment decisions and are encouraged to conduct independent research and consult with a licensed financial advisor before acting on any information provided.

I have been doing a lot of work around Angel’s growth and what that means for the business and the stock over the next five years.

Below, I have built an in-depth 5-year revenue and valuation model with bear/base/bull assumptions.

The beauty of trying to model this out is that the company is sharing with us their growth data in real-time. I track it daily, and as far as I know, am the only person doing this and publishing it here for investors.

The first three months of data suggests Angel is growing their paid subscriber base at a faster rate than Netflix when at a comparable scale.

In my opinion, this is just the beginning of Angel’s powerful flywheel starting to work. For reference to their business model, you can access previous reports from the Sycamore library (shared below). I continue to add research and insights on Angel as we go along.

Here is what I have published thus far:

In the United States alone, there are 117M households paying for at least one streaming service with the average household paying for four. I believe Angel’s values-based offering resonates with more of these households than people realize, and certainly with more than Wall Street realizes.

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I have stated before that Angel is my highest conviction pick to make a multi-year multibagger run and the analysis below shows why I believe this.

Even with significantly decelerating Angel Guild growth over the next five years, and assuming no multiple expansion, this stock could still be a multibagger.

But if the base or bull scenario plays out, and you get some multiple expansion on top of it, that's where we're talking a 5 or 10-bagger in the making. The base and bull scenarios only demand Angel achieve 10-15% market penetration of the 117M US households mentioned above. I'm also assuming zero international growth, even though that's a large long-term opportunity on its own.

That seems possible and plausible.

It appears I’m not the only one who is bullish on the opportunity at the current price. Here are the insider purchases over the past few weeks.

Since the April lows of $2.05, the stock is up ~115% as of this writing.

Below, you’ll find my full five-year bear/base/bull models that include subscriber growth paths, revenue build behind each scenario, and implied share price and return at different multiples. It also includes a look at what this could mean if Angel ever earns a Netflix-style multiple.

This is the framework I’m using to build my own position in the company. My own skin in the game, as always.

Full access is available to paid subscribers for only $70 /year.

Shared Assumptions

General Commentary

Many of the shared assumptions are based on today’s data. I don’t see a ton of value in trying to forecast fully diluted shares or net debt changes over the next half decade.

I also decided to keep ARPM flat over that time. Currently, ARPM has been coming down incrementally a couple pennies Q/Q. This is from discounting to drive continued growth. I think that will continue to be the case until Angel decides to do a broad price increase. I would assume they will do this at some point in time, but really hard to model that in given the uncertainty of when it would take place or the magnitude of it.

2031E Bear

Data

Commentary

I don’t see a reason, other than some unforeseen event or scandal or balance sheet mishap, that the Angel Guild doesn’t continue to grow at least to some degree. The platform is getting better, the content is becoming higher quality, the flywheel effect should help all the way around.

That said, for the bear scenario, I assumed a significant deceleration in growth from nearly 100% recently reported, to being halved every year until it hits 0% by year five.

In my opinion, this would truly represent a bear scenario. This platform should grow for a long time, much longer than 4-5 years before flatlining.

Even still, applying the same 1x multiple we are near today, the stock would still give us a 55.6% return over the next five years. A 9.3% annualized rate of return. Not bad for growth going to zero and the multiple staying flat.

2031E Base

Data

Commentary

For the base case, I wanted to start by building in conservatism. Again starting with a 50% growth rate for 2027 and then linearly stepping down the rate of growth to a floor of 15%. This would be well below the rate of growth Netflix experienced in the first five years they launched their streaming service, which according to my research was in the ballpark of 30% annualized. So, let’s just assume Angel is half as good for the base case.

I assume a 10% rate of growth on misc. revenue, which seems reasonable given the minimal data and comps we have for this. But I would assume theatrical and licensing should grow better than this if things continue to grow well.

Given the slower but continued growth, I think a 2x multiple is reasonable to see in 2031, which would be a 400%+ return over the next five years.

As you can see, even with significantly decelerating Guild growth and moderate multiple expansion, you still have line of sight to a 5-bagger.

2031E Bull

Data

Commentary

This is obviously a fun one. Let’s assume growth in 2027 of 50% and decelerating to the Netflix comp of 30% in year 5. Add in 15% misc. revenue growth. Now give it a 3x multiple on strong growth and you get your near 10-bagger.

I don’t assign a ton of value to this scenario as things would really have to continue going right for a long time. But it’s fun visualizing the upside possibilities.

Click here for full access to the data.

That’s all for now. Next post on Angel likely a closer look at their revenue/royalty sharing model.

Thanks for reading!

Matthew Blake
Founder & CIO | Sycamore Capital Management, LLC

Disclaimer: Sycamore Capital Management, LLC (referred to in some materials as “Sycamore” or “Sycamore Capital”) is a research and publishing platform provided for informational purposes only. Nothing published by Sycamore Capital Management, LLC or its author constitutes investment advice or a recommendation to buy, sell, or hold any security. The company is not a registered investment advisor and does not manage client assets or offer personalized financial advice. All opinions expressed are solely those of the author, and any securities referenced reflect personal holdings at the time of publication unless otherwise stated. Readers are solely responsible for their own investment decisions and are encouraged to conduct independent research and consult with a licensed financial advisor before acting on any information provided.

Sycamore is for informational purposes only. Read my full disclosure here.

As you might already know, The Trade Desk reported their Q2 earnings on Thursday, August 6.

I have been following this company since it IPO’d in 2016. Never have I been more disoriented by an earnings release. A company that has been so consistent, for so long, missed the top-line number by ~5% and missed Q3 consensus guidance by ~24%.

It was a punch to the gut.

I have been bullish on the The Trade Desk as the stock has collapsed over the past year, and have been entirely wrong. To my own dismay.

So with that framing and the stock at an 8-year low, here are some minimally edited speculative meanderings about what is going on here. Please note, these are my personal speculations.

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What We Know

Macro challenges: management keeps making this the primary cause of the decline. 25% of total revenue comes from CPG and auto companies. Both have been hit hard by a soft consumer (especially lower income), inflation, higher rates, tariffs, tariff uncertainty, war in the Middle East, fuel costs, and more. Some CPG companies have confirmed this pressure in their own earnings calls. CEO Jeff Green said about half of this category is actually still growing well, while the other half is challenged. Much more on this below.

Competition: we’re really just talking about Amazon here. That said though, TTD and Amazon have fundamentally different objectives as DSP’s. But Amazon is seemingly winning more dollars through cheaper reach, has been more focused on programmatic guaranteed deals and bundling of their own first-party shopper data. TTD has always been premium and will always maintain the effort to be premium (cost and outcome). That said, management suggested that some of TTD’s largest customers, through headwinds, are favoring cheaper reach right now.

Leadership challenges and turnover: companies go through structural change, especially at inflection points. TTD is at their ultimate inflection point. But it has taken time and has been drawn out. This has likely created significant internal uncertainty as leadership has almost been entirely reshuffled and the company has seen turnover across the board. This disrupts relationships for account managers, business development, product upgrades and launches, partnerships, and more. The spot with the most turnover has been the CFO seat. Obviously a company of this size and scale desperately needs an experienced and steady CFO presence. I was encouraged that Olmstead can be that guy after hearing him on the call for the first time.

Platform problems with Kokai: it has been well documented that Kokai had a rough rollout. If you go back to the first leg down this company suffered in February 2025, it had to do primarily with the botched rollout. It seems that not only was the rollout botched, but the platform in general was never really well received. There is plenty of commentary out there, of which I have read ad nauseam, that suggests it is not as smooth and intuitive as you would expect. It is possible this has also hurt spend growth on the platform, as buyers themselves are favoring other platforms out of convenience. Green has been adamant that Kokai is wonderful, but finally capitulated to some degree on the earnings call when he said they would be launching a massive overhaul of the platform to make it simpler and easier to use. This launch will come within the next month, he said.

Building for the long term: while many companies out there are optimizing for this quarter’s result and next quarter’s guidance, TTD is clearly not doing that. Not only have they said over and over that they are not and will not do that, but you can see it on their balance sheet. They are sitting on $1.5B of cash, equivalents, and short term investments, roughly 25% of the entire market cap. If they were optimizing for today they would be spending to maintain organic growth and/or to acquire for inorganic growth. They simply are not doing that.

I think they would also be capitulating on price, and it doesn’t appear they are doing that either. I have always argued the take-rate here is safe and have thus far been correct, despite many sell-side analyst and Substack analysts saying it’s a risk. Here is what Green had to say about it on the call:

It has been a perfect storm of challenges. But I do think there is one more factor at play to consider…

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A Publicis Problem?

How did the darling of adtech, the most premium DSP in the industry, collapse so badly?

There has to be an explanation beyond macro challenges and internal execution issues, etc, etc. 2022 brought plenty of its own macro headwinds, inflation, rising rates, Russia/Ukraine war, and growth decelerated from 43% down to 32%. But it decelerated. It didn’t fall off a cliff.

This time, TTD is guiding to a revenue decline. For me, the only way to explain the Q2 miss and the 24% miss on Q3 guidance, is Publicis.

As already mentioned, the business in general is humming along, growing double digits except for half of the CPG/Auto clients. Together these categories make up 25% of the business, so the troubled half works out to about 12% of total revenue (thanks for pointing this out ).

If total company growth is sitting at 3% in Q2, and the healthy 88% of the business is genuinely growing double digits, the math only works if that troubled 12% is shrinking by something like 45-50% Y/Y to drag the total revenue number down to 3%.

A whole cohort of business got cut in half.

It was well documented through the fallout in the spring that Publicis was TTD’s largest customer, representing somewhere between 10-15% of total revenue, with some sell-side analysts citing 12% exactly (if memory serves me correctly).

Not only this, but Publicis’ own client roster highlights many of the largest CPG/auto names in the world. P&G, Nestle, L’Oreal, PepsiCo, Unilever, Toyota, Nissan, Volkswagen. These are (were?) all clients of TTD via the Publicis partnership.

Publicis seems to meaningfully represent the category that is getting hammered for TTD and also represents the exact percentage of troubled revenue as a whole. We’re all well versed by now of the TTD/Publicis dispute from March where the holding company accused TTD of wrongly applying certain fees to their clients and took them off their recommended list. This played out through the entirety of Q2 and was resolved in late June although neither TTD nor Publicis really provided any detail, other than that TTD was back to being on the recommended list heading into Q3.

So here’s my question: are the CPG/Auto pains really a Publicis pain? I’m speculating here, but has TTD lost half of its business with Publicis following the March fallout? It seems like it might be so.

Here are three thoughts to try and draw this out further:

1.) In early March, CEO Jeff Green made a $150M purchase of TTD stock for an average price per share of ~$25. He is currently underwater ~50%. At the time, the macro challenges/softness were known, the technology challenges were known, the c-suite turnover challenges were known. So what was Green doing!? What didn’t he know then? Two weeks to the day after Green’s buying spree, one of the largest insider purchases in capital markets history, the Publicis problem hit the PR machine.

2.) Right before the Q2 earnings release, Green went on the debut episode of WPP Media’s (major holdco) new podcast. He sat down with CEO Brian Lesser to declare that TTD is all in (as they have always been) on holdco/agency partnerships. That’s not a coincidence to me. Green and Lesser are friends and Lesser made it a point to call out how great their partnership with TTD is, saying:

Is Green trying to smooth over holdco relationships knowing the carnage coming for his stock? Is Lesser taking a shot at one of their largest competitors?

3.) The other players in the public programmatic market are not collapsing. Viant Technology, a DSP and TTD’s closest public comp, grew revenue 34% Y/Y in Q2 and is guiding to 27% growth in Q3. Amazon’s advertising business, not a perfect comp but instructive, grew 26% in Q2. Not only are they growing extremely well, but growth in Q2 accelerated Y/Y for both.

Again, these aren’t perfect comps, as the companies have different customers, some lean more heavily on programmatic guaranteed deals (cheaper reach), etc. But if the whole ecosystem were under macro pressure the way TTD describes it, you’d expect the pain to show up at least a little more broadly. Instead it’s concentrated in one place.

And if the problem at TTD is one customer, perhaps that spend would go elsewhere? And it looks like that just might be the case based on their accelerating Q2 growth.

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So what?

I don’t think TTD is a broken business. I don’t think the DSP model is a broken model. I think TTD has a broken relationship with its largest customer. It’s the only way I can possibly make sense of all this.

But to be honest, as a shareholder, it’s actually encouraging. I believe nearly 90% of the business is growing double digits, but 10% of the business is down 50% and maybe getting worse. But at least, if I’m correct in all this speculation, we can point to a particular problem. At least there is a floor on this indescribable downturn versus an unknown collapse into further unknown.

Will the Publicis relationship come back now that the holdco is recommending TTD again? It’s too soon to tell and we have to live with that uncertainty.

But for now, TTD is certainly making their effort to say things are just fine as they published the following case study this past week in partnership with Spotify and Publicis.

What gives!!

Full case study report here.

Thanks for reading!

Matthew Blake
Founder & CIO | Sycamore Capital Management, LLC

Disclaimer: Sycamore Capital Management, LLC (referred to in some materials as “Sycamore” or “Sycamore Capital”) is a research and publishing platform provided for informational purposes only. Nothing published by Sycamore Capital Management, LLC or its author constitutes investment advice or a recommendation to buy, sell, or hold any security. The company is not a registered investment advisor and does not manage client assets or offer personalized financial advice. All opinions expressed are solely those of the author, and any securities referenced reflect personal holdings at the time of publication unless otherwise stated. Readers are solely responsible for their own investment decisions and are encouraged to conduct independent research and consult with a licensed financial advisor before acting on any information provided.

Sycamore is for informational purposes only. Read my full disclosure here.

Angel Studios posted an impressive Q2 result with Angel Guild revenue growing 93.8%. And through the first 6 weeks of Q3, Guild membership continues to grow like wildfire, currently compounding at a monthly rate of over 6%.

The stock reacted positively following the earnings call, but has since declined by ~15%. Nonetheless, the stock is up 70% off the April low. The business, in general, is deeply misunderstood by the vast majority of people if they even know who Angel is to begin with. To me, this signals opportunity.

As I noted in my last company report on Angel, management decided to begin publishing their growth in real-time via their website. It seems that very few are paying attention to this. I track the data daily and it is very encouraging. See below for full access to this data.

The company still has progress to make, as they are relying on debt facilities to fund operations and growth. That said, in first half of 2026 they generated positive operating cash flow of $18.8M, a sharp reversal from the $20.4M of cash used in the same period last year. Total notes payable went from $102.3M in Q1 to $74.4M at the end of Q2, a net decline of $27.9M. While meaningfully adding new subscribers, with Guild membership up 99.2% Y/Y.

At the same time, they've simultaneously reduced costs on a Y/Y basis, cutting Guild selling and marketing expense to 52.8% of Guild revenue in Q2 2026, down from 71.6% a year earlier. And the company has narrowed its adjusted EBITDA loss to $11.7M from $17.5M Y/Y.

Things are moving in the right direction.

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This isn’t a prediction by any means and they are not out of the woods yet, but based on the growth, the market opportunity, and the current valuation, Angel is my highest conviction pick to make a multi-year, multi-bagger run.

Below you will find my full revenue and valuation model updated for 2027 estimates, as well as daily Angel Guild member growth data.

Below are screenshots from that document.

Click here for full access.

Note: I have built in conservative estimates for 2027, including:

• Guild growth at 2.3% per month, a significant decrease from current growth rates that are >6%.

• All other income at $100M, less than FY2025 and current run-rate for 2026. This should come in higher in 2027 than previous years given the company plans at least 10 theatrical releases with the possibility of increasing that to 12.

• Cash positions and net debt do not account for the company’s Bitcoin treasury holdings, which includes 303 BTC.

Key Assumptions

Revenue Build

Valuation

Active Paying Guild Members

Sycamore’s Bet

I have continued adding to my position in August, averaging up as I believe the story has materially improved given cost improvements and rapid growth of the Guild now being published in real-time.

ANGX now makes up a little over 13% of the portfolio with an average cost per share of $3.52.

For the record, I do not believe Angel should be rewarded with a much higher multiple than they have today, around 1x my 2027 estimates (1x-2x seems fair to me at this stage). And certainly not in the ballpark of Netflix’s 7x. I am showing the Netflix comp as a long-term view of where this could go if they are able to scale and execute.

The company has a lot to prove, and I personally think they can do it. In the meantime, expect significant volatility.

Thanks for reading!

Matthew Blake
Founder & CIO | Sycamore Capital Management, LLC

Disclaimer: Sycamore Capital Management, LLC (referred to in some materials as “Sycamore” or “Sycamore Capital”) is a research and publishing platform provided for informational purposes only. Nothing published by Sycamore Capital Management, LLC or its author constitutes investment advice or a recommendation to buy, sell, or hold any security. The company is not a registered investment advisor and does not manage client assets or offer personalized financial advice. All opinions expressed are solely those of the author, and any securities referenced reflect personal holdings at the time of publication unless otherwise stated. Readers are solely responsible for their own investment decisions and are encouraged to conduct independent research and consult with a licensed financial advisor before acting on any information provided.

Nvidia in the Fall of 2022, being my most preeminent example.

I have been an investor since 2008, six years professionally and 12 years outside of the industry. In that time I have inadvertently come up with my own check-list of how to define quality when evaluating a business.

To be clear, I don’t use this as an exhaustive list of factors, nor do I only invest in companies that check every box.

Sometimes the greatest opportunities for alpha are in businesses that fail one or more of these factors but inflect or will soon inflect positively. That said, this isn’t a checklist for when to buy or not, but simply factors that I evaluate first to point me in the right direction.

The three-part framework I use before I invest a single dollar is this:

1. A fortress balance sheet

2. Free cash flow generation

3. Business model durability

1. A fortress balance sheet

A fortress balance sheet isn’t always as simple as being debt free. It’s more about optionality. A clean balance sheet gives a company the ability to make the best decision for the company at any given time.

Excess amounts of debt may force management into a short-sighted or damaging decision.

An obvious point, but I’ll make it anyway, is that a company with no debt cannot go bankrupt. The business with no debt can ride out any challenge of any duration. As a concentrated investor, that is the ultimate peace of mind. And that is why it is first on my list.

The number I typically look at first to get a sense for the situation is net debt/EBITDA. This is (total debt - cash) / trailing operating earnings. It tells you how many years of earnings it would take to pay off the debt.

While I prefer businesses that carry no debt, here is a breakdown of how I evaluate those who do:

• No debt to net cash: fortress

• 1.5x or less: fortress to very strong. This is usually where dominant, capital-light businesses tend to live. Can stretch this up to 2x

• 2x to 4x: pretty standard for a healthy, investment-grade capital-intensive business

• 4x to 6x: stress. Usually speculative-grade

• 6x or more: something is wrong

This should be evaluated in context of the sector you are in. A regulated utility running 4x on steady cash flows is fine. However, a cyclical consumer discretionary at the same level is not (thinking of a few names here right now!).

Also keep in mind that the ratio may look better or worse based on fluctuations in EBITDA and not total debt. It's an imperfect number, and EBITDA has its critics to be sure, but it's a fast way to get oriented before digging into debt structure and cash flow.

The second number I look at is interest coverage, which is EBIT / interest expense. It tells you how much cushion exists between operating profit and annual debt payments. Higher the better.

The most recent publicly released data point from S&P Global Market Intelligence that I could find, from Q1 2025, showed the median investment-grade US (non-financial) company covered its interest 6.07x, versus 2.62x for non-investment-grade companies. That is a quality gap.

Next I take a look at the current ratio and quick ratio. This defines short-term liquidity and the immediate solvency of the business.

Current ratio (current assets/current liabilities):

• Below 1.0x: warning sign. The business doesn’t have enough short-term assets to cover what it owes in the next year

• 1.2x to 2.0x: healthy range for most businesses

• Above 3.0x: can start to point to inefficiency as cash or inventory are sitting idle

Quick ratio, or the acid test (current assets - inventory) / current liabilities:

• Below 1.0x: the business would need to sell inventory to cover its near-term obligations

• 1.0x or above: liquid assets alone (cash and receivables) can cover short-term liabilities without touching inventory

Not all debt is the same and it’s important to understand the type of debt on the balance sheet. Short-term versus long-term. Fixed rate versus floating rate.

Long-dated, low-coupon, fixed-rate debt is cheap capital with lower existential risk. A company dependent on short-term floating paper is on the brink of crisis.

Sometimes the name of the game is staying alive, and as a concentrated investor, I have to be comfortable with the balance sheet before anything else. Financial strength and stability is a prerequisite for quality.

In the hierarchy of bankruptcy proceedings, equity holders are the last to get paid out in a liquidation event. This means stockholders usually exit bankruptcy with nothing.

I learned this the hard way early in my investing career. In the Spring of 2010 I went all-in on one cheap stock. I didn’t understand at the time that it was cheap because it was weeks away from being insolvent. Within three weeks of buying the stock the company filed Chapter 11 and I was forced to sell my position at a >90% loss.

Thanks, US Concrete!

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2. Free cash flow generation

The importance of free cash flow in a business cannot be overstated. It is the lifeblood of the business. Like a fortress balance sheet, cash flow provides optionality and the ability to recover from external or internal challenges.

I prefer looking at the growth and durability of free cash flows over net income.

GAAP earnings run through accrual accounting, which gives management latitude regarding when to recognize revenue, what to capitalize versus expense, how long to depreciate an asset, what charges get labeled as one-time or recurring, etc.

Free cash flow (operating cash flow - capex) on the other hand is much harder to manufacture. The business is either generating cash or it isn’t.

When it comes to evaluating free cash flow, I look at three ratios:

• FCF margin (FCF/revenue): how efficiently revenue turns into cash. For example, on a 15% FCF margin, $1 of revenue equals 15 cents of FCF

• FCF conversion (FCF/net income): how much of reported profit shows up as actual cash. If it's near or above 100%, that's a good sign. It means earnings are showing up as cash and not just numbers on paper. Low conversion over extended periods of time could be the company is reporting profits faster than it's collecting cash.

• FCF yield (FCF/market cap): above ~5% is generally attractive for a quality business. Too low means you are paying a high price for minimal cash flows. Excessively high could mean the market is pricing in an impending decline, or it could mean a quality business is being mispriced.

As it goes with a fortress balance sheet, healthy free cash flows give a business optionality and is a defining mark of quality.

If you want to source stock ideas with strong levels of FCF and FCF yield, check out the Pacer “Cash Cows” ETF series. (No, I don’t get a commission on this!)

3. Business model durability

Of the three categories, this one is the most subjective.

There are certainly more objective things you can look for like market share ownership, switching costs, tangible and intangible assets, cost advantages, etc. All things I would consider.

But first and foremost, to me, the best business models in the world are the following:

• Self-reinforcing

• Operating in a large and growing market with secular tailwinds

• Structurally benefits the industry it operates, and more importantly, the end user

Self-reinforcing

Said another way, this is a business model with a flywheel. Where growth feeds itself instead of needing to be pushed from the outside every time.

The idea goes like this: some initial advantage, more customers, more data, lower costs, whatever it is, makes one part of the business better. That improvement makes other parts of the business better. That improvement then loops back and makes the original advantage stronger. With each rotation of the loop the business builds upon itself.

You may also hear this referred to as a virtuous cycle or network effects.

The company doesn’t have to keep reinventing growth. Growth becomes a byproduct of the business simply operating.

Large and growing market with secular tailwinds

I want to invest in businesses operating in markets that are expanding over long periods of time. A great operator in a shrinking market will eventually run into the limits of its industry.

By secular tailwinds, I mean growth driven by forces largely outside the company’s control. For this think demographic shifts, technological adoption, regulatory changes, or long-term changes in consumer behavior. These types of tailwinds create demand regardless of what the company is doing to help itself.

Structurally benefits the industry, and more importantly, the end user

The businesses I trust most are the ones where their own growth makes the ecosystem around them better off, not worse. There are companies out there that when they win, they extract more value from their partners than they provide.

Even more so, and this isn’t necessarily a moral stance (although it could be), but generally I like finding businesses that benefit the common good of society and specifically, the human person that uses the product or service. There are too many companies in the public markets that when they thrive, their customer suffers.

To me, finding alignment between the interests of the business and the interests of its customers is an integral mark of quality.

Putting it together

If I can find a business with a fortress balance sheet, is cash generative through cycles, and has a durable business model then I am confident I am on a good track.

Identifying quality by starting with these three pillars has served me well. Oftentimes, the best opportunities are found in high-quality businesses that are currently out of favor with the market.

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Thanks for reading!

Matthew Blake
Founder & CIO | Sycamore Capital Management, LLC

Disclaimer: Sycamore Capital Management, LLC (referred to in some materials as “Sycamore” or “Sycamore Capital”) is a research and publishing platform provided for informational purposes only. Nothing published by Sycamore Capital Management, LLC or its author constitutes investment advice or a recommendation to buy, sell, or hold any security. The company is not a registered investment advisor and does not manage client assets or offer personalized financial advice. All opinions expressed are solely those of the author, and any securities referenced reflect personal holdings at the time of publication unless otherwise stated. Readers are solely responsible for their own investment decisions and are encouraged to conduct independent research and consult with a licensed financial advisor before acting on any information provided.

Sycamore is for informational purposes only. Read my full disclosure here.

Monthly Commentary

Domain Expertise

In July, we saw glimpses of what the sell AI infrastructure, buy software rotation could one day look like.

When it comes to owning software businesses during this time, the primary thing to look for is domain expertise. Which software companies out there know their corner of the market far better than anyone else? I believe the software portion of my portfolio, which is badly hurting my returns right now, will one day be big AI winners, and thus, portfolio winners. At this point, it’s a matter of enduring more than anything else.

Thoma Bravo is the largest private equity firm focused on the software sector. And if you’ve been listening to what Orlando Bravo has been saying, it has been on this. The firm is hunting for businesses whose stocks are deeply out of favor because of indiscriminate selling, while the business itself is as strong as ever. Bravo believes there are jewels in the public markets right now because they have decades of domain expertise built into their products and services.

He defines domain expertise as the following:

• the number one player in its category

• a management team with real domain depth

• visible momentum using AI to accelerate growth rather than get disrupted by it

Despite the short term pain I’m feeling right now, I have continued to position my portfolio for this outcome. More commentary on this below.

Situational Awareness

I have been fascinated by the commentary regarding Leopold Aschenbrenner across Substack as the month came to a close. Everyone is dunking on the guy for blowing up his fund that he grew from a few hundred million in AUM just two years ago to a peak of $45B according to some reports.

Here are my two takeaways:

1. He hasn’t completely blown up his fund (or at least not yet). He started the year with ~$4B in AUM and according to the WSJ, he is still posting a gain YTD of >80%. That’s massive! He has completely de-levered and is now running a $7B investment fund. Obviously $45B is better than $7B, but my point is he still has a very meaningful fund to manage.

2. I have seen several hot takes on this topic that have placed the blame on a lack of diversification. I couldn’t disagree more. This has nothing to do with concentration/diversification and everything to do with leverage. Leopold was running 4 turns of leverage. Terrifying! Go read about Long-Term Capital Management and other actual blow ups and they are all the same. Always leverage. Never concentration.

That said, I am not condoning his careless investing style. I certainly don’t invest that way, nor would I ever give him money to manage. However, I’m not going to dunk on him. Given his performance + the size of his fund, he has probably made ~$1B in management and performance fees (using the 2/20 model) in just two years.

Meanwhile, I’ve got a Substack over here with 39 paying subscribers and $4K of ARR (not to pat myself on the back!).

Speaking of that…

Sycamore on Substack

July was my busiest month yet, with five reports published. If you missed any of them, you can check them out here:

My personal goal for the year is to get Sycamore a little orange Substack bestseller badge. For that, I continue working and have a ways to go. That said, I thought it’d be fun to make a progress bar out of it.

As always, I encourage you to upgrade to paid, not because of a single idea or success or momentum trade, but for long-term compounding. I have always said the north star of Sycamore is the multi-year CAGR and it remains so. Below is a chart of the growth of $10,000 based on Sycamore’s return profile comped to the S&P 500 since the start of 2020.

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This year has been a challenging one, but the long-term trend is intact. And our best days are still ahead.

Thanks for reading, and for paid subscribers, the rest of this report contains the following:

1. Current holdings (including new position weights and cost basis)

2. Transactions in July

3. Company specific commentary

Current holdings

Transactions in July

Increased:

• TTD - increased by 4.7% at $17.57 /sh

Sold:

• NOK - sold out at $10.13 /sh

• MBGL - sold out at $20.38 /sh

  • Mobility Global came into the portfolio as a stock dividend following the spin out of S&P Global.

Company specific commentary

The Trade Desk

CEO Jeff Green, was interviewed on the Made Together podcast hosted by WPP Media CEO Brian Lesser. Of all that was discussed in the short 20-minute episode, there was one overwhelming highlight regarding WPP’s relationship with TTD.

While Publicis and Omnicom created massive headwinds (and stock declines) for TTD, the CEO of WPP Media (a direct competitor to both firms), came out and praised the company, saying:

I found these comments fascinating given the Publicis dispute has since been resolved and the Omnicom audits turned up nothing damaging, which I have been saying would be the case since it started. It is amazing how much noise there is in this little corner of the tech world and how much that noise moves this stock.

Here is the full episode, which I recommend watching.

I see The Trade Desk as the ultimate domain expertise software business in the ad tech space.

The company sits on an enormous, proprietary dataset built from over a decade of real-time bidding activity, impression level data, and advertiser spend behavior across the open internet. On top of that data, TTD has built deep relationships with agencies and now more so with brands directly. These relationships don't get displaced overnight. Additionally, the workflow is complex. Programmatic buying involves breadth of inventory access, layers of bidding logic, identity resolution, supply path optimization, fraud detection, brand safety filtering, and real-time optimization, all happening in milliseconds.

And in reference to Orlando Bravo’s checklist, Jeff Green is the exemplar of “management with real domain depth.”

The company reports on Thursday, August 6. Hold your breath.

PoolCorp

Nothing to really add here following my updated report last week on the company. I would consider adding to my position below $180.

Angel Studios

July was a solid month for the stock posting a gain of 10.6%. The Guild grew rapidly in July, adding 244,165 net new paid Guild members. That’s ~$40.1M of annual recurring revenue added in July alone. Remember, this is a company with a $750M market cap.

Angel reports earnings on Wednesday, August 5. Real question here is are they keeping their costs in control.

Sprouts Farmers Market

The company posted solid results despite a challenging macro/consumer environment. The market clearly liked the report with the stock up as much as 14% on the news.

I am working on an updated report for this one and that will be published in August.

S&P Global

This is a steady machine. In the recent quarter, Ratings and Indices posted record quarters. And there’s no reason to believe this trajectory is going to change any time soon.

Their AI offerings are being adopted at an accelerating pace. The number of customers adopting AI offerings increased more than 70% Q/Q. I certainly believe AI will be an accelerant to this business as S&P has substantial domain expertise and clearly checks all three domain expertise boxes discussed above.

Thanks for reading!

Matthew Blake
Founder & CIO | Sycamore Capital Management, LLC

Disclaimer: Sycamore Capital Management, LLC (referred to in some materials as “Sycamore” or “Sycamore Capital”) is a research and publishing platform provided for informational purposes only. Nothing published by Sycamore Capital Management, LLC or its author constitutes investment advice or a recommendation to buy, sell, or hold any security. The company is not a registered investment advisor and does not manage client assets or offer personalized financial advice. All opinions expressed are solely those of the author, and any securities referenced reflect personal holdings at the time of publication unless otherwise stated. Readers are solely responsible for their own investment decisions and are encouraged to conduct independent research and consult with a licensed financial advisor before acting on any information provided.

Previously, I wrote about PoolCorp in January, trying to understand its business model and competitive positioning. If you’re new to this business, I’d suggest starting with that report. You can read it here:

I like this business a lot and even more so as the stock trades to the lower-end of its historical median valuation multiple.

In this report, I will review the following:

1. Earnings, commentary, and valuation

2. The new CEO

3. Insider activity

4. Sycamore’s take

Earnings, commentary, and valuation

Revenue

First and foremost, the thing I am paying attention to most is revenue growth. The company experienced an extraordinary pull-forward in demand through the Covid years. Digesting this and getting top-line back on track is the first order of business.

In the most recent quarter (Q2 2026), net sales were $1.82B, up 2.2% Y/Y.

In the chart below, you can see the trend over the past five years. From the Covid pull-forward growth collapse, to stabilization and recovery, to now back to positive growth.

It’s great to see to see top-line inflect positive. The company has guided for low single digit growth for the full-year. This is being driven primarily by price as volume was flat in the quarter, but for now we’ll take it however we can get it. Two thirds of the business is driven by recurring maintenance. The non-discretionary nature of this revenue also means they are able to pass-through rising costs, which you’re seeing the benefit of here.

Margins

Gross margin was 29.7%, down 30 bps from 30.0% a year ago. The decline was attributed to elevated inbound freight costs, along with unfavorable customer mix as larger customers grew faster than smaller ones. The freight costs are outside of management’s control. And faster growth from larger customers is a long-term positive.

The margin compression was partially offset by gains in private label and exclusive product sales. Management said freight-related cost actions begin early in Q3, and that full margin recovery may take until 2027.

Net income margin held up better than gross margin. Reported net income was $188.1M, a margin of roughly 10.3%, and adjusted net income was $195.7M, a margin of roughly 10.7%, both essentially in line Y/Y.

End market commentary

• Building materials grew 4%, with continued share gains aided by the national Pool Trend showroom rollout (notable given continued softness in new pool construction

  • New pool construction remained muted. U.S. pool permits are tracking down low-single-digits year to date

• Europe grew 11%, the strongest of any region, on improving sentiment (the CEO also cited extreme heat in Europe on the conference call as well)

• Seasonal (non-year-round) U.S. markets grew 6%

• Equipment sales were up 3% on price and repair-related demand

• Chemical sales were down 2% on price deflation

• Year-round Sun Belt markets (California, Texas, Arizona) were down mid-single-digits. Florida was down 1%, with the Horizon irrigation/landscape business cited as a drag (CEO also suggested some pull-forward from Q1 and if you back that out, not a concern)

• Retail customer sales were down 1%. Pinch A Penny franchise sales were flat

• Maintenance and aftermarket demand continued to be described as the steadiest category, tied to the installed base of existing pools (the main thesis for this business)

Digital platform

Pool360 reached a record 18% of sales in the quarter, up from ~16% from Q2 2025 and ~14% two years prior. The steady growth is a strong signal of customer lock-in. This is a trend/metric I watch closely.

Valuation

The multiple continues to be contracted. Perhaps warranted for now while the market waits to see if top-line can continue its upward trajectory, margins are now being squeezed until 2027, and the new CEO is hand-tied while he focuses on execution during the peak selling season before making any meaningful changes.

I think sets up a good opportunity for long-term oriented investors who are okay buying into a bit of uncertainty. Especially as growth has stabilized and recovered, the multiple has continued to contract over the past three quarters anyways.

The new CEO

Peter Arvan stepped down as CEO and from the board on May 4, 2026, after nine years in the role. The company assured investors that it did not stem from any disagreement over operations or policies. Instead, framing it as the outcome of ongoing succession planning.

John Watwood was named President and CEO effective the same day as Arvan’s departure.

Background

Watwood joined PoolCorp as EVP in January 2026, only four months before being named CEO. He has 20+ years of experience in industrial and specialty distribution. Most recently he served as SVP of Sales and Operations at Motion Industries (Genuine Parts Company subsidiary). Earlier in his career he held roles at Applied Industrial Technologies and SMC.

His progression at Motion Industries over 17 years included:

• Fluid power specialist (joined 2008)

• Branch manager roles in Mississippi and Tennessee

• Division VP/General Manager (2014)

• Group Senior VP, Southeast Group (2019)

• Senior VP of Sales and Operations for US & Canada (2025)

He holds an MBA from the University of North Alabama and a BS in industrial distribution/marketing from the University of Alabama at Birmingham.

During his four months prior to his promotion, it is understood that Watwood spent the majority of his time in PoolCorp sales centers where he met extensively with customers and suppliers. Given his swift promo he obviously made an impression.

Stated priorities

Watwood’s stated priorities as outlined on his first call as CEO:

1. Sales excellence: investing in sales team talent, training, and the digital platform

2. Pricing and supply chain discipline: running category-specific pricing playbooks and expanding private label/proprietary products

3. Operational execution: consistency across all 455 sales centers, emphasis on ramping recently opened greenfield locations

4. Disciplined M&A: tuck-in acquisitions with clear operational, cultural, and financial fit, rather than large transformational deals

Watwood noted that structural changes will wait until after the current selling season. What seems to be clear is that the board specifically brought in someone with a track record of driving operational efficiency, which fits PoolCorp's position as the largest distributor in the space by sales center count. Perhaps the read through is that the bigger opportunity now is running that footprint more efficiently rather than expanding it. This checks out given his listed priorities.

Insider activity

In the eight or so weeks leading up to and through the CEO transition, there was a series of insider stock purchases. Director and former CEO Manuel Perez de la Mesa made three open-market purchases totaling ~$4.7M:

• 5,000 shares near $205 /sh in mid-March

• 10,000 shares near $190/ sh on May 7 (just after the CEO announcement)

• 10,000 shares near $176/ sh on May 13

Additionally, directors John Stokely (now Executive Chairman) and James Hope also bought shares in the same early-May window totaling close to $200K worth of stock.

I guess the takeaway is that the board approves of their own work!

Sycamore’s take

With top-line growth stabilized and the stock trading near the lower end of its historical multiple range, the risk/reward here looks attractive for long-term oriented investors, provided you're comfortable underwriting some near-term uncertainty on margin and new CEO execution.

POOL is a current holding in the Sycamore portfolio. Position sizing and cost basis is detailed in the monthly Sycamore portfolio updates for paid subscribers.

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Thanks for reading!

Matthew Blake
Founder & CIO | Sycamore Capital Management, LLC

Disclaimer: Sycamore Capital Management, LLC (referred to in some materials as “Sycamore” or “Sycamore Capital”) is a research and publishing platform provided for informational purposes only. Nothing published by Sycamore Capital Management, LLC or its author constitutes investment advice or a recommendation to buy, sell, or hold any security. The company is not a registered investment advisor and does not manage client assets or offer personalized financial advice. All opinions expressed are solely those of the author, and any securities referenced reflect personal holdings at the time of publication unless otherwise stated. Readers are solely responsible for their own investment decisions and are encouraged to conduct independent research and consult with a licensed financial advisor before acting on any information provided.

It’s a company that has been on my watchlist for years, but have never owned. Despite its asset base, the balance sheet is moving in the wrong direction, capital allocation is spread too thin, and the guest and labor relationships that drive operations are challenged.

In this report, I will analyze the business across a multitude of factors:

1. How Vail actually makes money

2. Irreplaceable assets

3. The cracks in the operating model

4. The balance sheet and capital allocation

5. Sycamore’s take

How Vail actually makes money

Vail reports three segments, Mountain, Lodging, and Real Estate, which were roughly 89%, 11%, and 0% of net revenue in fiscal 2025. Mountain relly drives the entire business and is the only segment I will focus on for this report.

Inside Mountain you get lift revenue (the big one), plus ski school, dining, and retail/rental. Lodging is luxury hotels and condos primarily under the RockResorts brand. Real Estate is relatively small, driven by the timing of land sales and development gains. In fiscal 2025 total net revenue was $2.96B, +2.7% Y/Y, with Resort Reported EBITDA of $844.1M.

Epic Pass

The Epic Pass was launched by Rob Katz in 2008 and was the innovation that changed the industry. Instead of selling expensive single-day lift tickets and living or dying by the weather each weekend, sell a season-long, multi-mountain pass up front and collect the cash before any snowfall or lack thereof occurs.

The purpose is twofold. First, it converts a weather-dependent and consumer discretionary business into subscription-style revenue. Management has disclosed that pass holders who commit ahead of the season make up about 75% of Vail’s annual visitation, which is why the company has been able to manage through bad weather years (more on this below). Second, it creates a network effect where the more marquee mountains Vail bolts onto the pass, the more valuable it becomes.

For the 2026/27 season a full Epic Pass starts at $1,089 for adults. This price is on the lower end comped to their closest competitor Alterra, which charges $1,399. Without a doubt, Vail's target customer sits at the high end of the consumer economy.

Irreplaceable assets

Vail is really the gold standard when it comes to its asset base. Altogether, they own and operate 42 destination mountain resorts and regional ski areas. This is made up of names like Vail Mountain, Breckenridge, Park City, Whistler Blackcomb, Keystone, Beaver Creek, Heavenly (my personal favorite), Stowe, andmore.

Additionally, there is a portfolio of drive-to regional areas near big cities that feed the destination resorts. This is similar to the MGM/Caesars/Boyd model for the casino business, which is introduce the masses via regional properties and then funnel them to Vegas. For us in MN, for example, its bring us into the brand via Afton Alps and then eventually move us upstream to Beaver Creek, etc.

Counting long-term partner resorts, the Epic Pass grants access to more than 90 resorts worldwide. You cannot build another Whistler or Vail. The scarcity and uniqueness of the asset is the moat and this is the part of the business I find most attractive as a long-term oriented investor/owner.

The cracks in the operating model

Overwhelm

Vail sells roughly 2.3 million epic passes a year. That is a lot of regular visitors funneling onto a fixed number of lifts. This volume, which is the primary driver of revenue growth and profitability, is perhaps also beginning to degrade the product.

Customer complaints of multi-hour lift lines have been sarcastically dubbed “Epic lines” at the flagship mountains. Congestion throughout the resorts are well documented. But this is only the first problem, and it leads to the second and more important issue of workers becoming disgruntled (overworked and underpaid).

An example of this played out in December 2024. The Park City ski patrol, about 200 workers, went on strike for 12 days over the holidays, the busiest and most profitable window of the year. Patrollers were making $21/hour in a town where average home prices approach $2M. By January 2, 2025, Park City was operating at less than 20% capacity, with only 24 of 41 lifts running and 80 of 350 trails open. It was a national-headline PR disaster.

It ultimately led to starting wages increasing by ~10%, experienced patrollers up ~20%, and the most tenured snow-safety specialists receiving ~30% raises under a new three-year contract. The deeper problem for Vail is that this becomes the template for the rest of the network. But as I’ll share later, I believe this is more of a capital allocation problem than anything else.

Snow drought

Fiscal 2026 has been brutal. The western US, and the Rockies in particular, had one of the worst snow droughts on record. Q3 fiscal 2026 (the core season quarter ended April 30, 2026) saw total skier visits fall 15.5%, resort net revenue drop 7%, and net income fall 19.3% Y/Y.

As a result, management cut full-year fiscal 2026 guidance for Resort Reported EBITDA to $735M-$755M, well below the original $842M-$898M. Resort EBITDA margin compressed from 50.0% to 48.7%.

That said, because of the epic pass model, effective ticket price actually rose 12%.

But the leading indicator for this business is flashing red. Per the June 8 release, pass product units sold through May 26, 2026 for the upcoming 2026/27 season were down ~10%, days sold down ~8%, and sales dollars down ~5%.

The balance sheet and capital allocation

But here is why, in my opinion, all of the challenges the company is currently facing matter the most. Management’s decision making regarding the balance sheet and their capital allocation is severely exacerbating the problems.

Leverage is moving in the wrong direction while the operations falter and weather is unfavorable. Net debt as of April 30, 2026 was $2.65B. Net debt was 3.5x TTM total reported EBITDA. In the year prior that ratio was 2.6x. The increase in the ratio is being driven by two factors: 1.) a decrease in EBITDA and 2.) an increase in gross debt, partly from a $500M issue of 5.625% senior notes due 2030 in July 2025.

This is the crux of my concern. Vail is a cyclical, weather-vulnerable business carrying mid-3x leverage in the midst of operational challenges. The business needs to allocate their capital with ultra efficacy and has no room for error. And in my opinion, this is where management is failing the most.

Capital allocation is spread too thin. Vail is simultaneously funding the following:

• Core mountain capex of roughly $215M-$220M a year and growing ~8.5% per 2026 guidance

• Dividend payments of approx. $320M a year (more on this below)

• Ongoing buybacks to the tune of $270M in fiscal 2025

• Periodic overseas acquisitions (Andermatt-Sedrun, Crans-Montana)

Meanwhile free cash flow for fiscal 2025 was only ~$319.7M, down 15.4% Y/Y.

The dividend payments are $2.22 per quarter, $8.88 annualized, for a yield of roughly 6% as of this writing. That’s a really attractive yield, except for the fact that it is unsustainable. That’s a 118% payout ratio against FY2025 diluted EPS of $7.53.

If you think that’s bad, it gets worse. In the recent Q3 FY2026 earnings call, management cut full-year guidance to $3.56-$4.50 EPS, which means the payout ratio against earnings balloons to somewhere between 197% and 250%.

A high yield paired with rising leverage and a payout ratio well over 100% isn't the signature of quality. This is being compounded by share repurchases averaging well above the current stock price and being funded with debt.

So then why is an over-leveraged mid-cap that should be focused on efficient operations and long-term growth doing this? I’m dumbfounded.

Sycamore’s take

Vail could be a great business given their asset base. I really want to own the stock for the long-term. You don’t just put up a ski resort. These are unique and irreplaceable assets. I have skied Heavenly in Tahoe and Stowe in Vermont and they are incredible. But I can’t buy the stock right now. Too much leverage and a complete lack of financial discipline.

That said, the stock is on the cheaper side relative to history. MTN trades at an EV/EBITDA of roughly 10x versus a 5-year median around 11.5x, about a 15% discount.

What I am watching for

Kill the dividend! It’s currently unsustainable and a giant waste of cash. Vail Resorts is sitting in zero retirees brokerage accounts right now. They own Coca-Cola, Hershey, and Procter & Gamble for dividends, not Vail!

Vail should be hyper-focused on the following and in this order:

1. Deleveraging the balance sheet (1x in an ideal world)

2. Reinvesting back into the business via mountain/resort capex (make the guest experience incredible and clean up the staffing issues)

3. Further acquisitions to continue growing the network (grow units and amplify Epic Pass value)

Kill the dividend and I would potentially be a buyer of the sell-off sure to follow.

Thanks for reading!

Matthew Blake
Founder & CIO | Sycamore Capital Management, LLC

Disclaimer: Sycamore Capital Management, LLC (referred to in some materials as “Sycamore” or “Sycamore Capital”) is a research and publishing platform provided for informational purposes only. Nothing published by Sycamore Capital Management, LLC or its author constitutes investment advice or a recommendation to buy, sell, or hold any security. The company is not a registered investment advisor and does not manage client assets or offer personalized financial advice. All opinions expressed are solely those of the author, and any securities referenced reflect personal holdings at the time of publication unless otherwise stated. Readers are solely responsible for their own investment decisions and are encouraged to conduct independent research and consult with a licensed financial advisor before acting on any information provided.

I wanted to provide an update one year on from my report and now two years since the closing of the merger. Some of my original questions have answers now while new ones have emerged.

Financial and Operational Scorecard

EBITDA guidance was cut and they still missed. A year ago, management was guiding to $1.08B-$1.12B in adjusted EBITDA for 2025. In September that number was reduced to $860M-$910M, and then reduced again in November. The actual result was $792M, a significant miss of the original forecast. This is a problem for a company whose entire deleveraging plan depends on EBITDA growth outrunning debt paydown.

Leverage got worse. Net debt sits at roughly $5.3B. Against $792M of trailing EBITDA, that’s north of 6x, worse than the 5.6x I wrote about last summer, and further from the “3.0x by 2026” target management had originally pitched as part of the merger rationale. Tellingly, the language from the CFO at the time shifted too. On the Q4 2025 call, the goal was described as getting leverage “below 4x on a sustained basis,” a much softer target than the original goal.

Attendance is still a swing factor. I said a year ago that attendance was the real tell for whether this business could grow into its debt. FY2025 attendance came in at 47.4M guests, flat to slightly down versus the ~48M I cited last year, and still below pre-pandemic norms across the legacy Six Flags parks specifically. The Cedar Fair side of the business continues to outperform the legacy Six Flags parks, which remains an open question I don’t think management has fully answered yet (more below).

Q1 2026 showed genuine operating improvement. All that said, the most recent quarter was a real step forward. Revenue grew 12% to $225.6M, the adjusted EBITDA loss narrowed by $48M Y/Y, attendance was +4%, per-capita spending +6%, and the company cut $50M (12%) out of operating costs. Liquidity nearly doubled to $462M. If this trend holds through the peak summer quarters, which is when the business makes its money, it would be the first signal that the combined portfolio is starting to work (bringing Six Flags parks up to Cedar Fair’s operating standards).

The stock is a roller coaster. FUN traded as low as $12.51 earlier this year, before recovering to where it trades today for around $17-$18. This is ~60% lower than where the stock was trading when I published the report last year.

Answering My Own Questions

I ended last year’s report with a few open questions. Here are some thoughts on those:

“Can a consumer-facing company with this much leverage execute its way out?” Certainly not within a year. The operational playbook (cost cuts, per-cap growth, disciplined capex toward flagship parks) is showing up in the numbers. But EBITDA delivery has lagged and leverage is higher today than it was when I first raised the concern. The company has a long way to go regarding the balance sheet but the operational improvements is a good start.

“Do they act proactively on asset sales, or wait until the balance sheet forces their hand?” This one has a clear answer, and it was more decisive than I expected. In March 2026, Six Flags agreed to sell seven parks to EPR Properties for $331M in cash. These parks included:

• Valleyfair

• Worlds of Fun

• Michigan’s Adventure

• Schlitterbahn Waterpark Galveston

• Six Flags St. Louis

• Six Flags Great Escape

• La Ronde

That’s a much bigger and faster move than the single-park Bowie, MD closure I referenced last year, and it’s a direct validation of the Eldorado/Caesars comparison: sell the long tail to protect the core. Management has noted that roughly 90% of EBITDA comes from just 15 parks, so there’s likely room for further trimming if the market or the balance sheet demands it. That said, management made clear on the most recent earnings call that is not a priority right now.

“What is it about the legacy Six Flags parks that isn’t resonating versus Cedar Fair’s?” Management hasn’t been able to give a fully satisfying answer. The stated strategy is shifting investment away from thrill-ride-only capex and toward food, family offerings, and a more well-rounded guest experience. This is probably the right strategy given the diversity of Cedar Fair parks and the overall positive customer experience. I’d put this at the top of my watch list for the upcoming earnings cycle.

In the remainder of this report, I will look at the new developments that have come about over the past year and how I am thinking about this business for the Sycamore portfolio.

New Developments of the Past Year

An activist showed up and made an impact. Jana Partners built a ~9% stake in Nov/Dec 2025 and, in March 2026, publicly pushed the board to replace leadership and explore a full sale of the company. They responded quickly. Richard Haddrill was appointed Executive Chairman, and a wave of new hires followed, including Ash Walia as CFO (June 2026), Mark Pauls as COO (July 2026), plus a new Chief Marketing Officer and Chief Legal Officer. It was effectively a full C-suite reset in the span of a few months.

Prior to this, the company itself made a change at the CEO position, hiring John Reilly in December 2025. Jana Partners obviously liked this move.

Refinancing at a cost. In January 2026, the company priced $1B of new senior notes due 2032 at 8.625% to refinance the 2027 maturities. Pushing out the maturity wall makes sense, but the coupon is a reminder of what it costs to re-fi a 6x levered consumer discretionary business.

Marketing swung for the fences. The Travis Kelce brand partnership, announced this spring, is a bet on star power to reposition the brand. Worth watching to see if it moves the needle on the family/millennial demographic management says it’s chasing. This was a follow-on to his investment alongside the Jana Partners bet. Which for the record, according to filings, they paid $22.72 /sh for the 9% stake.

Sycamore’s Bet

I do like that the operations seem to be improving. The coming quarter will help continue to shed light on these improvements. I also like that the company is now willing to sell assets aggressively rather than defensively. I think they should continue to optimize the portfolio to focus on winning properties and improve the balance sheet. The activist-driven leadership overhaul and push to sell the company is a positive.

But the issues at Six Flags parks are still a question mark and the leverage situation has gotten worse, which is why the stock is down another 60% from when I wrote on this name last year. The market is pricing in real execution and leverage risk.

I almost pulled the trigger when the stock fell below $15 earlier this year, but was a bit gunshy. As of now, still no position for me. If I decide to play this, it would likely be with a small allocation and with long-dated call options at or near the money. That way I limit your downside if this thing files chapter 11 and I maximize my upside if they get taken out at a premium. And if things materially improve operationally and financially, I have the ability to buy the equity.

I’ll keep this one on the watchlist and plan to revisit again once we see how the summer quarters land.

Matthew Blake
Founder & CIO | Sycamore Capital Management, LLC

Disclosure: Sycamore Capital Management, LLC (referred to in some materials as “Sycamore” or “Sycamore Capital”) is a research and publishing platform provided for informational purposes only. Nothing published by Sycamore Capital Management, LLC or its author constitutes investment advice or a recommendation to buy, sell, or hold any security. The company is not a registered investment advisor and does not manage client assets or offer personalized financial advice. All opinions expressed are solely those of the author, and any securities referenced reflect personal holdings at the time of publication unless otherwise stated. Readers are solely responsible for their own investment decisions and are encouraged to conduct independent research and consult with a licensed financial advisor before acting on any information provided.

I’ve written before, and so has , that S&P has the potential to be a massive AI winner. The company sits on an extraordinary proprietary data moat that will feed AI engines and drive rapid advancement in its own business and products. As I’ve said several times, S&P isn’t simply aggregating data. In large part, they’re the originators of it. If the AI software winners are those with domain expertise, look no further than S&P.

I think this is a solid and reasonable thesis. But I think S&P is an AI beneficiary in another way that’s just starting to gain traction: the Ratings business.

Follow the Debt

The hyperscalers (Microsoft, Amazon, Alphabet, Meta, Oracle) are spending ~$650B on capex this year, and roughly 3/4 of that is for AI infrastructure buildout. These are companies that used to fund everything out of free cash flow. However, they can’t afford that anymore. The buildout is too big, too fast, and too capital-intensive even for balance sheets like theirs.

So they’re issuing debt. And a lot of it.

• Meta sold a record $30B bond in October 2025, the largest single high-grade corporate bond deal ever, with a $125B order book, explicitly to fund AI and data center capex.

• Alphabet raised $25B in November 2025, then another ~$25 to $32B in February 2026, including a 100-year sterling bond.

• Amazon issued roughly $54B in March 2026, then came back with a “surprise” $25B deal just recently in early July.

• Oracle has issued $18B and $25B in back-to-back deals, and is guiding to $45 to $50B more in debt and equity this year.

Add it up and the Big Five issued $121B of bonds in 2025, against a five-year average of just $28B /year. By early June 2026, they’d already issued $159B, 47% more than all of 2025.

If you want to see this in real-time, S&P's monthly billed issuance data shows growth continuing every month in 2026, peaking at 43% in April.

Wall Street doesn’t see this slowing down. Vontobel's (a Swiss bank) head of global corporate bonds, Christian Hantel, is modeling $300B of AI-related issuance a year, and $1.5T over five years. Morgan Stanley expects the hyperscalers alone to issue $250 to $300B in 2026.

Why This Matters for SPGI

None of that debt gets issued without a rating. S&P Global Ratings is a tollbooth for essentially all of it, collecting a fee based on issuance size, plus ongoing surveillance fees for as long as the bonds are outstanding.

S&P's Ratings business generated $4.72B of S&P's $15.34B in 2025 revenue, ~31% of total revenue, and it's one of the company's most profitable segments, with an adjusted operating margin of 68% last quarter.

These giant corporate bonds are already showing up in the numbers. On the Q1 call, CEO Martina Cheung acknowledged that hyperscaler AI infrastructure issuance was coming in larger and faster than S&P had built into its own forecasts.

These newly issued bonds are above and beyond the $15T+ debt maturity wall coming due over the next six years, a separate structural tailwind for the Ratings business that S&P’s own research highlights as growing significantly year after year.

Is This Actually Moving the Needle?

S&P rates roughly $4.3T of billed issuance a year across investment grade, high yield, loans, structured finance, and government debt. The Big Five’s $121 to $159B of hyperscaler bonds is somewhere around 3-4% of that total.

But two things make it more consequential than that headline number suggests. First, it’s concentrated almost entirely in investment grade corporate issuance, where it’s a much bigger slice, closer to 6-8% of IG volume, and IG is the category management now points to as the swing factor behind billed issuance growth.

Second, and more importantly, management has quantified the marginal impact directly on the Q4 2025 call. S&P suggested if a meaningful share of the roughly $650B in 2026 hyperscaler capex gets funded with debt, that alone could add a couple of percentage points of upside to its bond issuance growth forecasts. In a business guiding to low-to-mid single digit growth, a couple of points of incremental upside from one category of issuer is not trivial.

Thus, hyperscaler debt isn’t the whole Ratings story, but it’s a real, quantifiable, and growing AI-related swing factor in the midst of a narrative that AI is an S&P killer.

It’s also part of the AI trade that doesn’t require S&P to build anything, license anything, or convince anyone to adopt a new product. In other words, it's an AI tailwind that requires next to no incremental investment, quite contrary to the hyperscalers and the many others pouring capital into the buildout itself.

Sycamore’s Take

SPGI trades around $438, down 11% YTD, and for 23x forward earnings, about 20% below its historical average. All this for a business that has been unnecessarily lumped into the AI loser basket despite a widening structural driver behind one of its best segments.

This thesis isn't the flashy kind of AI story, no triple-digit quarterly growth, and no new product to point to. But i is a real, durable driver sitting inside an already phenomenal business, and I don't think it's priced in yet.

The stock currently makes up a ~6% weighting in the Sycamore portfolio, with an average cost basis of $393.63, adjusted for the Mobility spin-off.

Thanks for reading!

Matthew Blake
Founder & CIO | Sycamore Capital Management, LLC

Disclaimer: Sycamore Capital Management, LLC (referred to in some materials as “Sycamore” or “Sycamore Capital”) is a research and publishing platform provided for informational purposes only. Nothing published by Sycamore Capital Management, LLC or its author constitutes investment advice or a recommendation to buy, sell, or hold any security. The company is not a registered investment advisor and does not manage client assets or offer personalized financial advice. All opinions expressed are solely those of the author, and any securities referenced reflect personal holdings at the time of publication unless otherwise stated. Readers are solely responsible for their own investment decisions and are encouraged to conduct independent research and consult with a licensed financial advisor before acting on any information provided.

Let the audience decide

At other streaming platforms (think Netflix, etc.), a handful of executives greenlight projects and decide what to distribute. Said another way, a select few decide what you want to watch.

At Angel, the audience decides. Fans join the Guild for a monthly or annual fee and as a result gain access to watch “Torches,” concept clips or completed films, and vote on whether Angel should distribute them. Only titles that clear the Guild’s voting threshold move into due diligence and distribution.

Please note, Angel is a distribution/streaming platform. It is not a production studio. It amazes me that still no one seems to understand this.

Anyways, the bar is high on gaining distribution from the Guild. In one documented stretch, filmmakers submitted over 900 projects and only 13 made it through.

This not only empowers the audience, but gives the company a very valuable insight on what might work on the platform or in theaters. It is no surprise that you keep seeing headlines following an Angel theatrical release that shows the market is caught off guard by its success. They know what will work because the Guild members tell them ahead of time.

For this to really work though, you need scale, and Angel is getting there. With 2M+ members, the model is working. The Guild predicts winners.

Hollywood has again and again been surprised by Angel’s success, especially as it relates to theatrical releases. Here are a few examples:

• Sound of Freedom ($251M)

• King of Kings ($84M)

• David ($88M)

• Solo Mio ($26M)

• and most recently, Young Washington’s $20M+ opening weekend.

This model doesn’t guarantee success, but it sure gives the company an edge, de-risking their downside. That said, one example of a total flop, despite the Guild’s greenlight, was Animal Farm. It was a $35M budget film that grossed $6.2M worldwide in the box office. But fear not, this wasn’t Angels’ budget, they simply distributed the film.

Nonetheless, this model feeds itself. The larger the Guild gets, the smarter it becomes. And this begins feeding a powerful flywheel.

The flywheel

Angel’s executives describe the Guild’s effect on the business as a flywheel, and the mechanics back that up:

1. The Guild grows and as it grows it becomes smarter, greenlighting the distribution of more films that work on the platform and in theaters.

2. This further drives more people to the platform and grows the royalty pool to pay creators.

3. The larger the royalty pool, the more quality content that wants to be distributed via Angel.

4. The more quality content, the more the Guild grows…

5. And on and on.

This is why the Guild isn't just a marketing gimmick, it's the mechanism the whole business runs on.

One note: Angel shares profits generously with creators (roughly 50% of streaming profits on exclusive titles and a majority of distribution profits). Cumulative filmmaker revenue-share reached $228M at year-end 2025 and $255M as of March 31, 2026. A growing royalty pool attracts filmmakers.

The Guild by the numbers

As you can see the Guild drives the entire business model. As it relates to revenue, the Guild is the recurring-revenue backbone. It represented 65% of full-year 2025 revenue and 72% of Q1 2026 revenue. This continues to accelerate.

Membership has scaled from about 550,000 at the end of 2024 to 2.7M+ in July 2026.

The company recently began publishing this North Star metric to its website updated regularly (about every 30 minutes or so based on observation). Below is a screenshot of some of the data and how I am tracking it, but click this link for the full sheet.

Currently, the Guild is growing paid users >14% M/M.

Notably, in addition to the sheer growth, is that average revenue per member (ARPM) has stayed remarkably stable through this expansion, hovering between $13.67-$13.70 over the past year. Based on current membership count, the Guild alone is posting $448M of recurring annualized revenue.

Sycamore’s Bet

Angel is betting that a fan-voted distribution engine can out-market and out-de-risk its streaming platform peers. It’s early days, but so far the operating numbers back that up: explosive revenue growth, massive Guild growth with stable ARPM, and a string of box-office wins “no one” saw coming.

The stock is starting to work, +40% over the past month, and I think this is just the beginning of a potential multibagger run. For the record, that’s not a phrase I use lightly or often, as many do on Substack.

The stock currently trades at ~1.7x EV/revenue, a low multiple but arguably warranted given the company’s scale, lack of profitability, liquidity and dilution concerns, and green management.

However, as the company continues to grow and fundamentals improve, the stock should work on fundamentals alone. Pair that with multiple expansion (Netflix, for reference, has traded between 6-12x revenue over the past two years) and you have a real multi-bagger setup.

Nothing’s guaranteed as there are plenty of flags to watch, but I’m placing my bet on this business model and story. I’ve sized it as a larger position in the portfolio, ~11% weighting as of this writing with cost basis at $3.46 /sh. I don’t think Wall St. has a clue how much appetite their is for a platform like this to exist. Stay tuned!

Thanks for reading and subscribing!

Matthew Blake
Founder & CIO | Sycamore Capital Management, LLC

Disclaimer: Sycamore Capital Management, LLC (referred to in some materials as “Sycamore” or “Sycamore Capital”) is a research and publishing platform provided for informational purposes only. Nothing published by Sycamore Capital Management, LLC or its author constitutes investment advice or a recommendation to buy, sell, or hold any security. The company is not a registered investment advisor and does not manage client assets or offer personalized financial advice. All opinions expressed are solely those of the author, and any securities referenced reflect personal holdings at the time of publication unless otherwise stated. Readers are solely responsible for their own investment decisions and are encouraged to conduct independent research and consult with a licensed financial advisor before acting on any information provided.

Building a newsletter business in the age of AI is hard. Substack is so saturated with research and opinions and self-proclaimed experts that it feels nearly impossible to differentiate yourself. I will never tell you I am an expert on a subject matter. Even after spending many years studying theology, philosophy, and business, I am no expert on any of them.

But here’s my opinion on two differentiators that matter:

1.) Personalism. That’s right, good old fashion human persons connecting with other human persons. Using your real name, talking about your real life, and being honest about your real wins and losses.

2.) Performance. In the investment business, and especially because of AI, this is a primary differentiator. As I said, everyone’s an expert on everything, at least that’s what they think, so the second piece of separating yourself from the homogenization is to post great investment results. Frustratingly, it has been a difficult 11 months for me.

The good news is this is what Sycamore has always been. Personal, honest and transparent. I have had a heck of a 6-year run posting a 25.1% CAGR over that time, but man the last 11 months have been brutal.

I have been incredibly disappointed in my performance during that time, especially as I have also been trying to build this as a legitimate paid newsletter. And several have encouraged me to reconsider my strategy as it has been crushing my near-term results.

Nonetheless, I believe my best days are ahead of me so I will keep concentrating into my best ideas. And if my best days are not ahead of me, that’s okay as well. “The Lord gives and the Lord takes away, blessed be the name of the Lord” (Job 1:21).

Anyways, with all that said, here are some thoughts on two of my current positions.

The Trade Desk: Building Tailwinds

June was a terrible month for the stock, but actually a great month for the business. Tailwinds are building.

• Publicis relationship repaired: After Publicis pulled its recommendation of TTD in March over fee-transparency dispute (to which I called BS on from the start), the two sides settled on June 12 and Publicis formally reinstated TTD to its recommended DSP list on June 15 removing a major headwind. Publicis is the largest holdco. Keep in mind the stock was trading around $28 /sh when this news hit and the stock has been in a tailspin ever since. This headwind is now a tailwind and the stock is trading around $19 /sh. I am a buyer sub-$20.

• Samsung home screen inventory deal: Samsung Ads announced June 10 that it’s opening its premium Smart TV home screen inventory to programmatic buying for the first time, with The Trade Desk named as one of the first two DSP partners. Google DV360 is the other partner, which is no problem in terms of competition because that platform exists to buy YouTube almost exclusively. Rollout begins globally in Q3 2026. This is new, high-value CTV inventory that hasn’t been programmatically accessible before. Samsung ships ~45M TVs annually, it’s a big opp.

• Amazon Ads facing FTC scrutiny: Bloomberg reported June 16 that the FTC has drafted a potential complaint against Amazon over allegedly misleading advertisers, with possible penalties in the billions and multiple state AGs involved. TTD stock will move in a big way if this does end up hitting.

• Leadership stabilizing: TTD named Nate Olmstead (former CFO of Penguin Solutions and Logitech) as permanent CFO on June 1, effective July 9. The company also brought on Sarah Gavin as CMO and she started June 15. Additionally, on June 11, the board added media veteran David Haddad.

• Political ad spending incoming: The 2026 midterms are on track to be the most expensive in history, with AdImpact projecting roughly $10.8B in total political ad spend. Connected TV is the only channel expected to grow versus 2024, forecast to hit about $2.5B. TTD is well-positioned to capture a share of that spend as it ramps into Q3/Q4.

• Will the world cup be a boost for Q2 numbers or Q3 guide? Yet to be seen.

Lot’s of tailwinds building for a stock that is completely broken.

PoolCorp: Great Rotation Beneficiary

PoolCorp has been out of favor for no fault of their own, but the stock worked well in June, up 18.5%.

My baseline assumption here (and in a couple other names I own - more on that below) is that the boring cash generative businesses are benefiting from the AI infrastructure pullback/profit taking. This tracks with the broader “Great Rotation” playing out in the market this quarter, with flows moving out of chips and into staples/healthcare/homebuilders.

At the same time this has been going on, the company removed the CEO and was dropped from the S&P 500, and yet the stock has pretty much been up and to the right every day. The stock also looks pretty de-risked at this point after the 2025 and first-half 2026 drawdown, which may be part of why the bad news hasn’t stuck.

It was my intention to continue adding to this name but I’m holding at this point in time and would consider adding below $185 if given the opportunity.

Performance Update

Very bad.

Below is my full portfolio and updates from an active June.

Current Holdings (as of June 30)

Transactions in June

Increased:

• ANGX - increased by 45.9% at $3.03 /sh

• SPGI - increased by 4.0% at $396.18 /sh

• TTD - increased by 10.0% at $18.28 /sh

Added:

• NOK - initiated with a 0.7% position at $13.74

Sold:

• RACE - sold out at $348.73 /sh

• VIK - sold out at $100.11 /sh

Additional Commentary

Nokia

Added a very small position in NOK. Just want to learn more. I’ll never do the work if I don’t have some level of skin in the game.

Viking Holdings

I sold Viking. I didn’t really want to, but the stock is on fire and now trades near 30x forward earnings. This is a premium business and demands a premium multiple. But I have to use the shorthand here to value the business and it is currently trading at a 50% premium to its median multiple as a public company. I could be cutting this off too early, but I’m happy to book a +43% gain in a matter of months.

Ferrari

I sold the stock because frankly, I just don’t understand this business. Obviously, I get the basic business model, but after reading copious amounts of commentary following the Luce launch (their electric vehicle), it made me realize just how much I don’t understand the luxury car market. I’d rather allocate to something I understand better or believe more in.

That’s a wrap. Thanks for reading and being a paid subscriber, really appreciate it! Now, let’s start turning this ship around!

Matthew Blake
Founder & CIO | Sycamore Capital Management, LLC

Disclaimer: Sycamore Capital Management, LLC (referred to in some materials as “Sycamore” or “Sycamore Capital”) is a research and publishing platform provided for informational purposes only. Nothing published by Sycamore Capital Management, LLC or its author constitutes investment advice or a recommendation to buy, sell, or hold any security. The company is not a registered investment advisor and does not manage client assets or offer personalized financial advice. All opinions expressed are solely those of the author, and any securities referenced reflect personal holdings at the time of publication unless otherwise stated. Readers are solely responsible for their own investment decisions and are encouraged to conduct independent research and consult with a licensed financial advisor before acting on any information provided.

May was far from a quiet month in the portfolio, but it was quiet for Sycamore. Below I share my current holdings, the two positions I added to during May, and a brief recap of the two surprise leadership transitions at portfolio company’s.

Current Holdings

Transactions in May

Increased:

• ANGX - increased by 4.1% at $2.65 /sh

• POOL - increased by 42.0% at $183.39 /sh

Viking Holdings (VIK)

Founder Torstein Hagen is stepping back to Executive Chairman, handing the CEO role to longtime executive Leah Talactac, with Linh Banh moving into the CFO seat. This is a years-in-the-making plan rather than a sudden change, but it’s still notable as Viking’s brand and strategy have been closely identified with Hagen personally. This is the company’s first real test of leadership without him at the helm and so far the market has reacted very positively.

The transition lands on a strong backdrop. Q1 revenue rose 17.5% Y/Y, adjusted EBITDA jumped ~44% to $105M. The booking curve is very strong and notable with 92% booked for 2026 and already 38% booked for 2027. See the chart for context.

PoolCorp (POOL)

On May 4, the board named John Watwood President and CEO, effective immediately, with Peter Arvan stepping down as CEO and from the board the same day; Chair John Stokely became Executive Chair, and the planned May 12 Investor Day was postponed. Importantly, full-year guidance was reaffirmed. Watwood is an industrial-distribution operator who joined as EVP in January, and this seems to be an accelerated-but-orderly transition rather than an emergency. The new CEO did release a short slideshow of what he sees with the company. Bottom line, the strategy is stay the course but optimize where possible.

Thanks for reading. Sorry for the long delay in getting this sent out. The family went on a three-day camping trip in Wisconsin. Three days of camping takes three days of prep, three days of camping, and three days of recovery. So basically it has taken up most of my June so far. :)

Matthew Blake
Founder & CIO | Sycamore Capital Management, LLC

Disclaimer: Sycamore Capital Management, LLC (referred to in some materials as “Sycamore” or “Sycamore Capital”) is a research and publishing platform provided for informational purposes only. Nothing published by Sycamore Capital Management, LLC or its author constitutes investment advice or a recommendation to buy, sell, or hold any security. The company is not a registered investment advisor and does not manage client assets or offer personalized financial advice. All opinions expressed are solely those of the author, and any securities referenced reflect personal holdings at the time of publication unless otherwise stated. Readers are solely responsible for their own investment decisions and are encouraged to conduct independent research and consult with a licensed financial advisor before acting on any information provided.

I want to share some important changes I am making as I approach the one-year anniversary of launching my paid newsletter on July 1.

First, I want to say I am extremely grateful to every one of you who has followed along and supported my work, even from the free tier. Over 1,700 of you have subscribed and that means a great deal. I love investing and have deep conviction in my ideas and the long-term arc of my portfolio. It is a lot of fun to write and share with all of you.

Not only this, but the extra income from paid subscribers (nearly 50 of you!) has been a great support to my family as we continue to grow. As many of you know, our sixth child (and first girl!) will be born in August.

With all that said, I will maintain a paid service going forward, but with some important changes that I think make this a great time to consider joining:

1.) I will be lowering the price to $70/year or $8/month. This is the most accessible Sycamore has ever been. For those who have been on the fence, I hope this removes some of the barrier. We’re talking 19 cents per day.

What do you get as a paid subscriber? On average 1-2 posts per month, including portfolio updates, specific stock ideas and investment theses on individual securities, and a new addition this year in Catholic values investing content (more on this below).

As I have always said, Sycamore should be read over the course of an entire year, not for just one month. The portfolio currently consists of seven high-conviction ideas.

Why the lower price? I simply haven’t been able to publish as much and as often as I would like. And given how stretched thin I am across family life and full-time work, it feels right to adjust the price to match the pace. Obviously, I could pummel you with AI generated content, but I don’t want to do that, nor do you want to read or pay for that.

2.) On that new theme, as you may or may not know, I am a devoted Catholic. I have spent six years of my life doing missionary work to complement six years in equity research and wealth management. I am back in the mission field (going on 3 years now) and am passionate about Catholic values investing and the faith itself. I hope in this next year of publishing to write on this topic from time to time.

Catholic values investing is simply the effort to integrate Catholic social teaching and the moral life into the context of business and investing. It’s a pretty nascent category that needs a lot of voices to begin working on if it is to become a comprehensive solution for investors. Over time, I hope to eventually be one of those voices. If this resonates with you, I’d especially love to have you along.

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Despite some disappointing performance over the past 10 months, I have deep conviction in the businesses I own and the long-term arc of the Sycamore portfolio. I’m excited about where this goes in year two, and grateful you’re along for it, and I hope some of you decide to come along as a paid subscriber.

Thank you for subscribing!

Matthew Blake
Founder & CIO | Sycamore Capital Management, LLC

Disclaimer: Sycamore Capital Management, LLC (referred to in some materials as “Sycamore” or “Sycamore Capital”) is a research and publishing platform provided for informational purposes only. Nothing published by Sycamore Capital Management, LLC or its author constitutes investment advice or a recommendation to buy, sell, or hold any security. The company is not a registered investment advisor and does not manage client assets or offer personalized financial advice. All opinions expressed are solely those of the author, and any securities referenced reflect personal holdings at the time of publication unless otherwise stated. Readers are solely responsible for their own investment decisions and are encouraged to conduct independent research and consult with a licensed financial advisor before acting on any information provided.

I want to share some important changes I am making as I approach the one-year anniversary of launching my paid newsletter on July 1.

I first want to say I am extremely grateful to every one of you who have believed in me and supported my work. I love investing and have deep conviction in my ideas and the long-term arc of my portfolio. It is a lot of fun to write and share with all of you, nearly 50 paid subscribers and over 1,700 free.

Not only this, but the extra income to my family has been a great support as we continue to grow. As many of you know, our sixth child (and first girl!) will be born in August.

With all that said, I will maintain a paid service going forward, but with a couple of important changes:

1.) I will be lowering the price to $70 /year. That’s a significant discount for many of you who have joined from the beginning. Because of this, and if you plan to stick around (I hope so!), I would encourage you to cancel your original and re-subscribe at the lower price point before you auto-renew.

Why am I doing this? I simply haven’t been able to publish as much and as often as I would like. And given how stretched thin I am across family life and full-time work, it feels right to adjust the price to match the pace. Obviously, I could pummel you with AI generated content, but I don’t want to do that, nor do you want to read/pay for that.

Going forward I still plan to post at least one time per month, but some months may be more and others less. As I have always said, Sycamore should be read over the course of an entire year, not for just one month. Content will remain the same with one new theme.

2.) As you may or may not know, I am a devoted Catholic. I have spent six years of my life doing missionary work to complement six years in equity research and wealth management. I am back in the mission field (going on three years now) and am passionate about Catholic values investing and the faith itself. I hope in this next year of publishing to write on this topic from time to time.

Catholic values investing is simply the effort to integrate Catholic social teaching and the moral life into the context of business and investing. It’s a pretty nascent category that needs a lot of voices to begin working on if it is to become a comprehensive solution for investors. Over time, I hope to eventually be one of those voices.

Despite some of the modest changes and disappointing performance over the past 10 months, I hope you stick around for the conviction I have in the businesses I do own. As said, I still believe in the long-term arc of these stocks and the portfolio as a whole. I'm excited about where this goes in year two, and grateful you're along for it!

I don’t often share photos of my family online, but here’s the most recent one we have all together as we anticipate our 10-year anniversary and arrival of kiddo #6 this summer.

Thank you for subscribing!

Matthew Blake
Founder & CIO | Sycamore Capital Management, LLC

Disclaimer: Sycamore Capital Management, LLC (referred to in some materials as “Sycamore” or “Sycamore Capital”) is a research and publishing platform provided for informational purposes only. Nothing published by Sycamore Capital Management, LLC or its author constitutes investment advice or a recommendation to buy, sell, or hold any security. The company is not a registered investment advisor and does not manage client assets or offer personalized financial advice. All opinions expressed are solely those of the author, and any securities referenced reflect personal holdings at the time of publication unless otherwise stated. Readers are solely responsible for their own investment decisions and are encouraged to conduct independent research and consult with a licensed financial advisor before acting on any information provided.