Investment Pitches

Pitch Summary:
IAC – Digital holding company IAC was a top contributor in the quarter and for the first half, after having been among the largest detractors in 2022. Underlying holding MGM has continued to deliver great results, reporting double digit profit growth while being one of our largest share repurchasers. Controlled companies Angi and Dotdash Meredith have stabilized following positive management changes at Angi and further business integration at Dotdash Meredith. Angi reported year-over-year (YOY) revenue declines but positive YOY operating cash flow (OCF). Dotdash reiterated guidance for the second half with expected growth in revenues and OCF as it rolls off more challenging 2021 YOY comparables. IAC bought back more shares in the quarter than it has in many years, while also buying more Turo shares at good prices, and it still has net cash at the parent level.

BSD Analysis:
IAC represents a turnaround story for Southeastern, recovering from being a major detractor in 2022 to becoming a top contributor in both Q2 and the first half of 2023. The digital holding company's underlying assets are showing operational improvements, with MGM delivering double-digit profit growth and aggressive share repurchases. Management changes at Angi and business integration at Dotdash Meredith have stabilized these previously troubled subsidiaries. While Angi still faces revenue headwinds, the positive operating cash flow generation indicates improving operational efficiency. Dotdash Meredith is positioned for growth as it cycles through difficult 2021 comparisons. IAC's capital allocation has become more aggressive, with significant share buybacks and strategic investments in Turo at attractive prices. The company maintains financial flexibility with net cash at the parent level, providing optionality for future value creation.

Pitch Summary:
Live Nation - Live Nation Entertainment, a new purchase this year, was the top contributor in the quarter and a top performer for the first half. We had the opportunity to buy Live Nation on the back of the well-publicized controversy faced by Ticketmaster after the botched Taylor Swift tour pre-sale event in November, which lead to short-term fan and political pressure. The industry continues to have great demand tailwinds for the long term. Even after a strong 2022, concerts further accelerated in 2023, driving the positive stock price performance in the quarter. We have prior knowledge of Live Nation from our time owning various Liberty Media entities and are encouraged on future capital allocation that Liberty is still on the case as a 30%+ owner.

BSD Analysis:
Southeastern Asset Management initiated a position in Live Nation Entertainment following the Ticketmaster controversy around the Taylor Swift tour pre-sale debacle, viewing the negative sentiment as a buying opportunity. The fund managers believe the live entertainment industry has strong long-term demand tailwinds, with concert activity accelerating in 2023 despite already strong 2022 performance. The investment thesis is supported by the fund's previous experience with Liberty Media entities, providing institutional knowledge of the business model. Liberty Media's 30%+ ownership stake provides additional confidence in future capital allocation decisions. The position was the top contributor for both the quarter and first half, validating the contrarian entry point. The managers appear confident in the structural growth of live entertainment demand. This represents a classic value investment approach of buying quality businesses during temporary controversies.

Pitch Summary:
Warner Bros Discovery – Media conglomerate Warner Bros Discovery was a top detractor in the quarter but remained a top contributor for the first half. After a strong first quarter, the stock price faltered in the face of near-term uncertainty around the re-launch of streaming service Max. Additionally, the big budget movie The Flash has not been a success. Finally, there was well-publicized drama around CNN management, with CNN CEO Chris Licht leaving the company after only one year, which we believe was a positive resolution. The company remains dramatically undervalued today, and management continues to make positive operational progress to drive free cash flow (FCF) growth. We believe this company has seen the worst so will be less leveraged and more strategically positioned in the quarters and years to come. Its underlying holdings are high quality businesses that will drive FCF per share growth while also being attractive acquisition candidates.

BSD Analysis:
Southeastern maintains strong conviction in Warner Bros Discovery despite recent headwinds, viewing current challenges as temporary obstacles rather than structural problems. The fund acknowledges near-term uncertainties around the Max streaming relaunch and disappointing performance of The Flash, but emphasizes these are execution issues rather than fundamental business problems. The resolution of CNN management drama with Chris Licht's departure is viewed as a positive development that removes operational distraction. The investment thesis centers on the company being "dramatically undervalued" with management making operational progress toward free cash flow growth. Southeastern believes the worst operational and financial challenges are behind the company, positioning it for improved leverage metrics and strategic flexibility. The underlying content assets are characterized as high-quality businesses that should drive per-share FCF growth while remaining attractive acquisition targets. This represents a classic post-merger value play where integration challenges create temporary valuation discounts that should resolve as operational improvements materialize.

Pitch Summary:
Millicom – Latin American wireless and cable company Millicom was the top detractor in the quarter but remains a meaningful positive contributor for the year. The company announced a disappointing quarter of organic revenue and EBITDA declines driven by its Guatemala business. In June, Millicom confirmed it had ended potential takeover discussions with private equity company Apollo Global, which the market had rewarded in the first quarter and disliked in the last month. We were not counting on an Apollo buyout as an outcome, and our appraisal was not impacted by the news. Much more compellingly, French billionaire Xavier Niel, founder of French broadband Internet provider Iliad, grew his stake to almost 25% in the quarter and said in a public statement, "We remain fully convinced that Millicom's potential is untapped and under-utilized, particularly when it comes to hidden infrastructure and asset value. We have a clear view on how opportunities can be unlocked, and are ready to bring our industrial experience, passion and perspectives to the Millicom board." While we have been disappointed in certain operational missteps and capital allocation decisions at the company, we think that Niel's positive presence will make the future different than the recent past.

BSD Analysis:
Southeastern maintains conviction in Millicom despite near-term operational challenges, viewing the recent weakness as temporary setbacks rather than fundamental deterioration. The fund acknowledges disappointing revenue and EBITDA declines in Guatemala but emphasizes that their investment thesis was never dependent on the Apollo Global takeover speculation. The key catalyst is Xavier Niel's increased stake to nearly 25% and his public commitment to unlocking value through his telecommunications expertise. Niel's track record with Iliad and his specific focus on "hidden infrastructure and asset value" aligns with Southeastern's value investing approach. The fund recognizes past operational missteps and capital allocation issues but believes Niel's involvement will drive meaningful change. This represents a classic activist-influenced value play where an experienced industry operator can unlock latent value in underperforming assets. The Latin American telecommunications market provides long-term growth opportunities despite current headwinds. The fund's patience with operational improvements while benefiting from potential strategic changes reflects their long-term investment horizon.

Pitch Summary:
IAC – Digital holding company IAC was a top contributor in the quarter and in the first half, after having been among the largest detractors in 2022. Underlying holding MGM has continued to deliver great results, reporting double digit profit growth while being one of our largest share repurchasers. Controlled companies Angi and Dotdash Meredith have stabilized following positive management changes at Angi and further business integration at Dotdash Meredith. Angi reported year-over-year (YOY) revenue declines but positive YOY operating cash flow (OCF). Dotdash reiterated guidance for the second half with expected growth in revenues and OCF as it rolls off more challenging 2021 YOY comparables. IAC bought back more shares in the quarter than it has in many years, while also buying more Turo shares at good prices, and it still has net cash at the parent level.

BSD Analysis:
IAC represents a turnaround story for Southeastern, recovering from being a major detractor in 2022 to becoming a top contributor in the first half of 2023. The investment thesis centers on the stabilization and improvement of IAC's portfolio companies following management changes and operational improvements. MGM continues to drive value with double-digit profit growth and aggressive share repurchases, while Angi has achieved positive operating cash flow despite revenue declines. Dotdash Meredith is positioned for growth in the second half as it cycles through difficult 2021 comparables. The fund highlights IAC's strong capital allocation, including significant share buybacks and strategic investments in Turo at attractive prices. The company maintains net cash at the parent level, providing financial flexibility. This represents a classic holding company discount play where the sum of the parts exceeds the market valuation. The operational improvements across subsidiaries and active capital allocation suggest the discount should narrow over time.

Pitch Summary:
Live Nation – Live Nation Entertainment, a new purchase this year, was the top contributor in the quarter and a top performer for the first half. We had the opportunity to buy Live Nation on the back of the well-publicized controversy faced by Ticketmaster after the botched Taylor Swift tour pre-sale event in November, which lead to short-term fan and political pressure. The industry continues to have great demand tailwinds for the long term. Even after a strong 2022, concerts further accelerated in 2023, driving the positive stock price performance in the quarter. We have prior knowledge of Live Nation from our time owning various Liberty Media entities and are encouraged on future capital allocation that Liberty is still on the case as a 30%+ owner.

BSD Analysis:
Southeastern Asset Management initiated a position in Live Nation Entertainment following the Ticketmaster controversy around the Taylor Swift tour pre-sale debacle, viewing the temporary negative sentiment as a buying opportunity. The fund managers highlight strong structural demand tailwinds for the live entertainment industry and note that concert activity accelerated in 2023 despite already strong 2022 performance. The investment thesis is supported by the fund's previous experience with Liberty Media entities, providing institutional knowledge of the business model. Liberty Media's continued 30%+ ownership stake provides confidence in future capital allocation decisions. The position generated strong returns in Q2 2023, validating the contrarian entry point. The fund views the temporary political and fan pressure as short-term noise against a backdrop of robust long-term industry fundamentals. This represents a classic value investment approach of buying quality businesses during periods of temporary distress.

Pitch Summary:
We also increased our position in Kansai Paint, a global paint and coating manufacturer with market leading positions in Japan and India. This is a high-quality industry staple business with no substitutes and strong pricing power in an oligopolistic market. Our management team, under the able leadership of Mori Kunishi-san, has been focused for the last three years on unwinding the complexity of the business by divesting sub-scale operations at value accretive prices, selling crossholdings and owned real estate, and using the proceeds to buy back discounted Kansai Paint shares. We are excited to see the organization shift from a hierarchy to meritocracy, and focus on margins, return on equity and free cash flow generation.

BSD Analysis:
Southeastern increased their position in Kansai Paint, highlighting the company's transformation under CEO Mori Kunishi-san's leadership over the past three years. The paint manufacturer benefits from oligopolistic market dynamics with strong pricing power and essential product characteristics that provide defensive growth qualities. Management's strategic focus on portfolio simplification through divestiture of sub-scale operations and monetization of non-core assets demonstrates disciplined capital allocation. The proceeds from these value-accretive sales have been used for share buybacks, creating additional shareholder value. The organizational shift from hierarchy to meritocracy should drive improved operational efficiency and performance-based decision making. Kansai Paint's market-leading positions in Japan and India provide exposure to stable developed markets and high-growth emerging markets. The company's focus on margins, ROE, and free cash flow generation aligns with Southeastern's value-oriented investment approach. The paint and coatings industry benefits from recurring demand and limited substitution risk.

Pitch Summary:
We also bought Man Wah, one of the leading functional sofa manufacturers in China, a company that we know well and own in our Asia Pacific strategy. Man Wah is the largest recliner sofa maker in China with more than 50% market share in a highly fragmented market. Its share price has been punished amid Chinese real estate weakness, but under the leadership of owner operator Man Li Wong (who owns >60% of the business), the company has continued to take share and build scale that further strengthens its low-cost advantage over peers. Man Wah has a 6% dividend yield and has been buying back its shares at an 8x price to earnings (P/E).

BSD Analysis:
Southeastern initiated a position in Man Wah, viewing the Chinese furniture manufacturer as an attractive opportunity created by real estate sector weakness. The company dominates the recliner sofa market in China with over 50% market share in a fragmented industry, providing significant competitive advantages and pricing power. Owner-operator Man Li Wong's 60%+ ownership stake ensures strong alignment with shareholders and long-term value creation focus. The company's continued market share gains during challenging conditions demonstrate the strength of its business model and cost advantages. At 8x P/E with a 6% dividend yield, the valuation appears compelling for a market-leading business with defensive characteristics. Active share buybacks at these levels indicate management's confidence in intrinsic value. The fund's familiarity with the company through their Asia Pacific strategy provides additional conviction in the investment thesis. Man Wah's scale advantages should enable continued market share expansion as the Chinese furniture market eventually recovers.

Pitch Summary:
German-listed specialty chemical company LANXESS was the top absolute and relative detractor after announcing a higher-than-expected profit warning in the quarter. The company has faced a triple whammy of industry-wide destocking, exposure to delayed demand recovery in China and increased energy prices last year, leading to a stock of high-cost inventory that needed to be cleared. We believe the scale of the warning reflects management taking all the pain upfront to ensure it was a "one and done" warning, with potential for the company to surprise on the upside in the second half. We are not relying upon a recovery in the second half, as there are signs of returning to a more normalized demand environment by the first half 2024.

BSD Analysis:
Despite LANXESS being the quarter's top detractor, Southeastern maintains a constructive view on the German specialty chemicals company. The fund interprets the significant profit warning as management taking a kitchen-sink approach to clear all near-term headwinds, including industry destocking, China demand weakness, and high-cost inventory from elevated energy prices. This comprehensive reset positions the company for potential upside surprises as conditions normalize. The fund's patient approach reflects confidence that LANXESS will benefit from demand recovery by H1 2024, even without relying on immediate improvements. The specialty chemicals industry typically experiences cyclical downturns followed by strong recoveries as inventory levels normalize and end-market demand returns. LANXESS's market position in high-value specialty products should enable margin recovery once the current headwinds subside. The fund's continued holding suggests they view current valuations as attractive relative to normalized earnings power.

Pitch Summary:
French hospitality business Accor was another top performer in the quarter and YTD. Accor is a leading global hotel operator in Europe, Asia and Latin America. The business lagged its North American peers given a slower post-Covid recovery in its key markets but today is reporting revenue-per-average-room (REVPAR) above pre-Covid levels, with strong pricing power and high occupancy rates. During Covid, management internally restructured the business, taking out €200 million in structural cost savings and reorganizing the business into luxury and lifestyle (trophy assets with well-established brands and a strong pipeline) and mid-scale and economy (a cash-generative franchise business). In the quarter, Accor released separate financials for each of these businesses, allowing the market to properly weigh the value of the two underlying businesses.

BSD Analysis:
Southeastern presents a compelling bull case for Accor based on the company's successful post-COVID operational recovery and strategic restructuring. The hotel operator has achieved REVPAR above pre-pandemic levels while demonstrating strong pricing power and high occupancy rates across its global portfolio. Management's proactive restructuring during COVID resulted in €200 million in permanent cost savings and a clearer business segmentation between luxury/lifestyle and mid-scale/economy operations. The separate financial reporting for each division should help investors better understand the value proposition of both the high-end trophy assets and the cash-generative franchise model. Accor's geographic diversification across Europe, Asia, and Latin America provides multiple recovery catalysts as travel normalizes. The company's strong operational metrics suggest it has emerged from the pandemic as a more efficient and focused organization. The fund views current valuations as attractive given the improved cost structure and revenue recovery trajectory.

Pitch Summary:
Diversified Spanish testing inspection and certification (TIC) business Applus was the top contributor in the quarter and for the first half. In June, private equity firm Apollo Global made a $1.33 billion bid for the entire business, and there is rumored interest from additional private equity buyers for the company. Throughout our ownership period, we have been engaged with management and the board to encourage getting the value recognized, and the company bought back 10% of the market cap in the past year. Although we believe the Apollo bid undervalues Applus, the private equity interest highlights the strategic nature of this high-quality business within a structural growth industry. We remain closely engaged in this dynamic situation.

BSD Analysis:
Southeastern maintains a bullish stance on Applus Services, viewing the Apollo Global $1.33 billion takeover bid as validation of the company's strategic value within the testing, inspection and certification industry. The fund manager believes the bid undervalues the business, suggesting significant upside potential. The company's aggressive capital allocation through share buybacks (10% of market cap repurchased) demonstrates management's confidence in intrinsic value. Multiple private equity interest indicates the business operates in a structurally attractive industry with predictable cash flows. The fund's active engagement with management and board reflects their conviction in driving value recognition. The TIC industry benefits from regulatory tailwinds and essential service characteristics that provide defensive growth qualities. Southeastern's continued involvement in the takeover process suggests they may hold out for a higher bid or alternative value realization strategies.

Pitch Summary:
We exited Vimeo and long-term position Lumen in the quarter, both of which were disappointing investments that resulted in a permanent capital loss in the portfolio. We sold our remaining equity position in Lumen, after reducing our position in the first quarter when it became clearer the new management team under CEO Kate Johnson would not pursue a strategic path to monetizing Lumen's consumer business. At their first analyst day in early June, new management presented disappointingly weak financial targets and significant further spending without a clear path to revenue growth. Throughout our holding period, we saw bond market pricing holding up and supporting our case for the strength of Lumen's balance sheet, but in the second quarter, this reversed with bond prices becoming overly distressed. We lowered our appraisal as our outlook for the company deteriorated, leading to a full exit in our equity position in the quarter. However, the incredibly depressed bond prices created a unique opportunity to own Lumen bonds that are backed by hard assets (property plant and equipment to which the company assigns a $150 billion replacement cost) and offer equity-like returns. The bonds are not as dependent on the people part of the case and offer a compelling opportunity to implicitly pay a 3x EBITDA multiple for assets with a materially better risk-reward profile.

BSD Analysis:
Longleaf Partners completely exited their Lumen equity position due to deteriorating fundamentals and disappointing strategic direction under new CEO Kate Johnson. The fund's thesis was undermined when management abandoned plans to monetize the consumer business and presented weak financial targets at their analyst day without a clear revenue growth strategy. The combination of continued spending increases and lack of strategic focus led to a significant downward revision in the fund's appraisal. However, the equity exit enabled a tactical shift into Lumen bonds, which the fund views as offering superior risk-adjusted returns backed by substantial hard assets valued at $150 billion replacement cost. The bond investment removes dependence on management execution while providing equity-like return potential at an attractive 3x EBITDA multiple. This strategic pivot demonstrates Longleaf's flexibility in restructuring positions when the original investment thesis breaks down. The bond position offers downside protection through asset backing while maintaining upside participation in any operational improvements.

Pitch Summary:
Founded in 1984 by Jim Koch, Boston Beer today includes original beer brand Samuel Adams, Twisted Tea (which has become the largest part of the value), regional craft beers like Dogfish Head, Angry Orchard cider and Truly Seltzer, where it is the number two player in its category. Boston Beer's share price soared to over $1,200 per share amid a great "seltzer boom" in 2020, which ultimately proved to be a fad, providing us an opportunity to invest in this great business that has compounded over time at a double-digit compound annual growth rate (CAGR).

BSD Analysis:
Longleaf Partners views Boston Beer as an attractive value opportunity following the collapse of the hard seltzer boom that drove shares to unsustainable levels above $1,200 in 2020. The fund recognizes the company's diversified portfolio strength, with Twisted Tea emerging as the primary value driver alongside established brands like Samuel Adams and craft acquisitions including Dogfish Head. Boston Beer's historical track record of double-digit compound annual growth demonstrates management's ability to build and acquire successful beverage brands across multiple categories. The seltzer market correction, which the fund correctly identified as a fad, has created an opportunity to invest in a quality business at a significant discount to previous peaks. The company's number two position in hard seltzer through Truly, combined with its leadership in craft beer and growing presence in flavored malt beverages, provides multiple growth avenues. Longleaf's decision to add to the position during the quarter reflects confidence in the long-term value creation potential despite near-term category headwinds.

Pitch Summary:
Lanxess – German-listed specialty chemical company Lanxess was the top detractor after announcing a higher-than-expected profit warning in the quarter. The company has faced a triple whammy of industry-wide destocking, exposure to delayed demand recovery in China and costs related to cleaning up the operations of the business. We believe the scale of the warning reflects management taking all the pain upfront to ensure it was a "one and done" warning. We exited the position post-quarter end to fund new positions, as it no longer qualified as a top-20 holding for the Fund.

BSD Analysis:
Longleaf Partners exited their Lanxess position following a significant profit warning that exceeded expectations, reflecting multiple operational and market challenges facing the German specialty chemicals company. The fund identified a "triple whammy" of headwinds including industry-wide destocking trends, delayed demand recovery in the crucial Chinese market, and substantial costs associated with operational restructuring. While management's comprehensive approach to addressing issues upfront suggests potential for future stability, the magnitude of the warning indicated more severe underlying problems than initially anticipated. The fund's decision to exit post-quarter reflects their disciplined approach to portfolio management, reallocating capital from underperforming positions to more attractive opportunities. Lanxess's exposure to cyclical end markets and Chinese demand made it particularly vulnerable to current macro headwinds. The position no longer met Longleaf's criteria for a top-20 holding, demonstrating their commitment to maintaining a concentrated portfolio of their highest-conviction ideas.

Pitch Summary:
Anywhere Real Estate – Real Estate brokerage franchisor Anywhere was another solid performer in the quarter and for the first half, benefitting from "green shoots" in the seemingly bottomed-out US housing market. Management has maintained strong cost control, and even at this depressed level, Anywhere is producing net positive free cash flow (FCF) today with the potential for strong future franchise fee growth.

BSD Analysis:
Longleaf Partners maintains a constructive view on Anywhere Real Estate, positioning the company to benefit from early signs of recovery in the US housing market. The fund identifies "green shoots" suggesting the housing market has reached a bottom, which should drive improved transaction volumes and franchise fee income for Anywhere's brokerage network. Management's disciplined cost control measures have enabled the company to generate positive free cash flow even during this challenging market environment, demonstrating operational resilience. The fund sees significant operating leverage potential as housing market conditions normalize, with franchise fees likely to accelerate as transaction volumes recover. Anywhere's diversified brand portfolio, including premium names like Sotheby's International Realty, provides multiple revenue streams and market positioning advantages. The company's ability to maintain profitability during a housing downturn positions it well for substantial earnings growth during a recovery. This cyclical recovery play aligns with Longleaf's value investing approach of buying quality businesses during temporary market dislocations.

Pitch Summary:
Liberty Braves Group – Liberty Braves Group, which owns the Atlanta Braves baseball team and real estate around the stadium, was another top contributor in the quarter. Liberty is on track to spin out this tracking stock as a standalone company in the third quarter, which is likely to result in a price re-rating, as we have seen in numerous other Liberty tracking stock investments over our history. The baseball team is off to a strong start this season, and the Braves sold out of season ticket inventory for the first time in franchise history and drew their largest home opening crowd in Truist Park history. Our appraisal has steadily grown, and we believe the Braves could be an interesting take-out candidate once it trades as a standalone business.

BSD Analysis:
Longleaf Partners views Liberty Braves Group as a compelling value opportunity driven by an upcoming catalyst and strong operational performance. The fund anticipates a significant price re-rating following the planned third-quarter spinout as a standalone company, based on their historical experience with Liberty tracking stock transactions. The Braves' exceptional operational metrics, including selling out season tickets for the first time in franchise history and record-breaking attendance, demonstrate the franchise's strong market position and revenue-generating potential. The combination of real estate assets around the stadium and the baseball team creates a unique asset base with multiple value drivers. Longleaf's steadily growing appraisal reflects improving fundamentals and asset values. The fund believes the standalone structure will unlock value by providing greater transparency and potentially attracting strategic acquirers interested in sports franchises. This investment exemplifies Longleaf's strategy of identifying undervalued assets with clear catalysts for value realization.

Pitch Summary:
Oscar Health - Health insurance and software platform Oscar Health was again the top performer in the quarter and for the first half. New CEO Mark Bertolini brings significant operational expertise, as well as a strong endorsement value to the business, given his long-term track record as CEO of Aetna. As discussed last quarter, his compensation package aligns his interests with shareholders. He is already executing on improved cost control and operational efficiency that should translate into improved results in the next 6-12 months. In the quarter, the company affirmed near-term results are on track.

BSD Analysis:
Longleaf Partners maintains a bullish stance on Oscar Health, highlighting the transformative leadership of new CEO Mark Bertolini, former Aetna CEO, whose operational expertise and aligned compensation structure position the company for improved performance. The fund emphasizes Bertolini's immediate focus on cost control and operational efficiency initiatives that are expected to drive meaningful results within 6-12 months. Oscar's strong quarterly performance as the top contributor reflects management's execution on these operational improvements. The company's affirmation of near-term results being on track provides additional confidence in the turnaround trajectory. The fund views Bertolini's appointment as a significant endorsement of the business model, given his proven track record in health insurance operations. This management-driven value creation story aligns with Longleaf's investment philosophy of backing capable leadership teams. The combination of operational improvements and strong recent performance suggests Oscar is well-positioned for continued outperformance.

Pitch Summary:
Plexus (PLXS): The company provides outsourced electronic manufacturing services from 28 facilities globally. It focuses on industrial, health care/life sciences, and aerospace and defense end markets and targets customer products which are complex and involve demanding regulatory environments. ROIC is a prominent metric in management's incentive compensation which speaks to business quality. After a couple years of supply chain turbulence, customers will likely refocus on outsourcing plans and that will drive new business. An uptick in its new business funnel suggests this is underway, which is an early indicator of future earnings growth.

BSD Analysis:
The manager initiated a position in Plexus based on improving business fundamentals and attractive end-market exposure. The company operates 28 facilities globally, providing outsourced electronic manufacturing services to customers in industrial, healthcare/life sciences, and aerospace/defense markets. Plexus targets complex products in demanding regulatory environments, which creates competitive moats and pricing power. Management's focus on ROIC as a key incentive metric demonstrates commitment to capital discipline and business quality. Following years of supply chain disruption, customers are expected to refocus on outsourcing strategies, which should drive new business for Plexus. The uptick in the company's new business funnel provides an early indicator of future earnings growth, suggesting the outsourcing cycle is beginning to recover. This combination of quality end markets, regulatory complexity, capital discipline, and improving business momentum supports the investment thesis.

Pitch Summary:
Mr Cooper (COOP): COOP is one of the largest mortgage servicing providers in the US. Rising residential mortgage rates benefit COOP by extending servicing duration – it's highly unlikely a low-rate mortgage will refinance to a higher rate mortgage, which helps generate tremendous free cash flow for the company. Currently trading at an inexpensive valuation, COOP has repurchased nearly 25% of its outstanding shares, dropping the share count from ~91 million to under ~70 million.

BSD Analysis:
The manager initiated a position in Mr Cooper based on a compelling interest rate environment thesis and attractive valuation. As one of the largest mortgage servicing providers in the US, COOP benefits significantly from rising mortgage rates, which extend servicing duration by reducing refinancing activity. This creates a powerful cash flow dynamic, as borrowers are unlikely to refinance from low-rate mortgages to higher-rate mortgages. The extended servicing duration generates tremendous free cash flow for the company. Management has been aggressively returning capital to shareholders, repurchasing nearly 25% of outstanding shares and reducing the share count from approximately 91 million to under 70 million. Trading at an inexpensive valuation despite these favorable dynamics, COOP represents an attractive opportunity to benefit from the higher rate environment while gaining exposure to aggressive capital return.

Pitch Summary:
Enovis (ENOV): Enovis is a medical technology company that should see steady margin improvement through a shift to the higher margin, faster growing Reconstructive segment in addition to cost reduction from easing inflationary pressures. New product introductions and attractive exposure to ambulatory surgery centers should drive above-market growth. Additional bolt-on M&A should be supported by their strong balance sheet and proven business processes.

BSD Analysis:
The manager initiated a position in Enovis based on multiple margin expansion drivers and growth catalysts. The company is positioned to benefit from a strategic shift toward its higher-margin, faster-growing Reconstructive segment, which should improve overall profitability. Easing inflationary pressures provide an additional margin tailwind through cost reduction. Enovis's new product pipeline and exposure to the growing ambulatory surgery center market should drive above-market growth rates. The company's strong balance sheet and proven business processes position it well for value-accretive bolt-on acquisitions, providing additional growth optionality. The combination of margin expansion through segment mix shift, cost deflation, innovation-driven growth, and M&A capabilities creates a compelling multi-faceted investment thesis for this medical technology company.