The Best Ideas I Found in Q2 2025 Investor Letters (Part VI)
From the letters of Bonhoeffer Fund ( (Keith Smith) & Arquitos Capital (Steven Kiel)
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Commentaries on
Argent Industrial (ART.JO)
Liquidia Therapeutics ( LQDA 0.00%↑ )
ENDI Corp (ENDI)
Argent Industrial (ART.JO) – Bonhoeffer Fund
Argent Industrial is a South African–listed steel design and manufacturing group that has quietly built a track record as a disciplined serial acquirer in niche metal-bending markets. The company produces a wide range of branded products—from security shutters and scaffolding to fuel storage systems and aircraft refueling equipment—and distributes steel and aluminum locally. Its operations span South Africa, the UK, Canada, and the U.S., with most profits coming from higher-margin branded steel products.
The playbook is straightforward: Argent acquires small, family-owned businesses at ~5.5x earnings, integrates them, and realizes synergies that push the effective multiple down to 3.5–5x. These firms are typically below private equity’s radar, reducing competitive pressure. Cash flows from acquisitions are then recycled into further deals, debt reduction, or buybacks. Since 2016, Argent has completed 14 acquisitions, lifting cash flow from R122m to R331m—a CAGR of ~18%—with incremental ROIC running near 36%.
Governance shifted meaningfully in 2018 when a new large shareholder pushed the company toward international expansion and away from South Africa–only exposure. Returns on equity have since doubled to ~14%, supported by margin gains, better asset utilization, and a now net-cash balance sheet. Insiders own roughly 6% of shares, and the board itself has skin in the game with ~8% ownership.
Despite this record, the market assigns little value to Argent’s M&A engine. The stock trades at ~5x earnings versus 16x for comparable industrial peers. Bonhoeffer estimates that even a conservative 15% EPS growth assumption implies a fair value of R100/share in the near term (270% upside). Over a five-year horizon, continued acquisitions and operational leverage could push value toward R240/share, implying a 55% IRR.
The risks are typical for a roll-up: a thinner acquisition pipeline, weaker end markets, or buybacks becoming less accretive at higher share prices. But with disciplined management, strong insider alignment, and a proven model, Argent Industrial looks like a classic case of a small-cap compounder hiding in plain sight.
Liquidia Therapeutics (LQDA) & ENDI Corp (ENDI) – Arquitos Capital
LQDA
Liquidia has long been defined by legal battles and regulatory delays, but the story finally shifted this quarter. The company secured FDA approval for Yutrepia, its inhaled treprostinil therapy for pulmonary arterial hypertension, and launched in late May. Initial prescription numbers from June came in well above expectations, signaling both strong demand and effective execution by management’s sales force.
Despite this milestone, the stock whipsawed: from $19 in early June to $12.46 by quarter-end, before rebounding near $18. The drop was driven by fears of a future competitor—Insmed—whose once-daily inhaled drug (TPIP) showed strong Phase 2 results. Yet analysts flagged trial design quirks that may have exaggerated those outcomes, and TPIP still faces a long road of Phase 3 trials and FDA approval. By then, Liquidia expects to have advanced its own next-generation therapy, L606.
ENDI
ENDI continues to look like a hidden asset play anchored by its CrossingBridge subsidiary. AUM at CrossingBridge has climbed from $3.4B at the start of 2025 to over $4B by June. Earlier this year, ENDI sold a 25% stake in the business at a $104M valuation—yet today’s $85M market cap values its 75% share at less than half that.
Adjusting for ENDI’s $52M in cash and investments (net of $10M debt), the market is ascribing only ~$43M to a growing asset that sophisticated buyers recently valued far higher when AUM was smaller. The disconnect is striking.
Steven sees continued operational momentum—CrossingBridge is compounding assets, ENDI retains a net cash position, and the market is still failing to price in even the value of its partial sale. With this kind of mismatch between fundamentals and quoted price, the gap to fair value remains wide, and widening in ENDI’s favor.