YB new stock pitches (Fri, Mar 20)

Baron Opportunity Fund initiated a new position in On Holding AG (ONON), a premium performance sportswear brand founded in 2010 that is one of the fastest-growing scaled athletic wear companies in the world, specializing in footwear while gaining market share in the athletic footwear category. The company generates 60% of revenue through wholesale at premium retail stores and 40% through direct-to-consumer channels including branded stores and its website, with geographic distribution of approximately 60% in North America, 25% in Europe, and 15% in Asia Pacific. On is expected to grow revenues faster than 20% for many years while expanding margins, driven by expanding brand awareness leading to market share gains in its core running shoe category as it expands its geographic footprint, with additional growth opportunities in newer shoe categories such as tennis, training, and outdoor, as well as significant opportunity in the apparel category. The company benefits from strong brand loyalty, commitment to sustainability, focus on innovation, and a highly complementary multi-channel distribution strategy, with the expectation that On will continue to reinvest into its business at high rates of return as it remains early in its lifecycle while expanding its product line and distribution network.

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IKT: Developing gut-masked imatinib prodrug for PAH. Imatinib clinically validated in PAH via multiple RCTs; Novartis discontinued due to brain bleeds (only w/ anticoagulants, no longer used) & limited IP. AVTE's inhaled version failed; IKT doses systemically (should work). 500mg prodrug bioequivalent to 400mg imatinib. GOSS Ph3 readout Feb'26 for seralutinib (inhaled, higher fail risk). IKT trades $550M FD vs GOSS $2B pre-Ph3. PT $7.3/sh assuming 50% PoS, $1.5-3B peak sales (10-20% of 60K US PAH pts). Interim PVR readout ~2.5yrs, 6MWD ~3.5yrs. Risk: GI tox not fully solved, 3yr+ catalyst desert.

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Sprout Social ($SPT), a social media management software provider with $450 million in annual revenue and 30,000 customers, trades at approximately 1x revenue in a deeply out-of-favor software sector, with CEO Ryan Barretto and board member Aaron Rankin each recently purchasing $1 million of stock at $10-11 per share. The company's super-voting Class B shares will automatically convert to single-vote Class A shares on December 17, 2026, reducing co-founders' voting control from 45% to under 9%, potentially opening the door to activist pressure or strategic M&A. Recent peer group transactions—SEMRush acquired by Adobe at 3.5x revenue and Yext receiving a CEO buyout offer at 2.5x revenue—support a potential takeout valuation of $15-22 per share (2-3x revenue), representing 60-135% upside from current levels. The company has grown revenue from low teens growth rates (down from 30% in 2023) and expanded operating margins from 1.4% in 2023 to 10% in 2025, though lacks clear long-term margin and growth targets. Bull cases include Sprout's unified native architecture advantage over Sprinklr's aggregated platform, integrated suite spanning social listening, analytics, customer care and influencer marketing, differentiated Salesforce partnership following Salesforce's social product sunset, and API-level access plus deep social network integrations that defend against AI agent disruption from LLM providers. Key risks include potential AI disruption to traditional software platforms despite API barriers, SMB customer exposure with higher churn rates (though management has shifted focus toward enterprise since 2022), and broader investor concerns that social software is lower-priority versus mission-critical categories like cybersecurity and ERP, with public peers Sprinklr and Yext reporting flat to low-single-digit growth and SEMRush decelerating from 22% to 15% growth.

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