Investment Pitches

Pitch Summary:
Software AG (Germany), a software and services technology company, was the top contributor to the Fund's performance. On April 21, Silver Lake announced a deal to acquire a 25% shareholding in Software AG from the Software AG foundation for EUR 30 per share and announced a tender offer at the same price for all remaining shares. This was accepted by the board and eventually increased to EUR 32 per share. Silver Lake now owns more than 60% of the company's voting shares. While the EUR 32 per share price represented an over 60% premium relative to the share price before the announcement and a significant return for investors, the price is well below our estimate of intrinsic value and was consequently a disappointment to us. Unfortunately, the supervisory and management boards of Software AG declined to allow a competitive bid process that might have benefitted shareholders more and allowed Silver Lake to succeed with an opportunistic offer.

BSD Analysis:
The manager views Software AG as undervalued despite the successful takeover by Silver Lake at EUR 32 per share. While the acquisition price represented a 60% premium to pre-announcement levels and generated significant returns, the manager believes it was well below intrinsic value. The disappointment stems from the board's refusal to allow a competitive bidding process, which could have driven a higher price. Silver Lake's opportunistic acquisition of over 60% voting control suggests the private equity firm recognized substantial value in the enterprise software company. The manager's thesis appears validated by private market interest, though they feel shareholders were shortchanged by the board's handling of the process. This represents a successful but incomplete value realization story.

Pitch Summary:
Fears about biotech funding and the sell-off in the broader life sciences area created an opportunity for us to invest in IQVIA during the quarter. IQVIA is a leading provider of clinical trials and health care technology and analytics formed through the merger of Quintiles and IMS Health in 2016. We believe that IQVIA is positioned at the heart of trends toward advanced therapeutics and personalized medicine and that it is the most levered clinical research organization (CRO) to decentralized clinical trials requiring digital capabilities. We think that IQVIA has additional growth opportunities from delivering real-world evidence to biopharma companies and other health care providers using data and software to meet regulatory and reimbursement mandates. CEO Ari Bousbib has a strong track record on operations and capital allocation and significant skin in the game through his large equity holdings in the company. We were pleased to be able to add IQVIA to the portfolio near a trough multiple of less than 15x our estimate of normal earnings.

BSD Analysis:
Oakmark capitalized on biotech funding concerns and life sciences sector weakness to initiate a position in IQVIA at attractive valuations. The company, formed from the merger of Quintiles and IMS Health, is uniquely positioned to benefit from trends toward advanced therapeutics and personalized medicine. IQVIA's leadership in decentralized clinical trials and digital capabilities provides significant competitive advantages in the evolving CRO landscape. The company's data and software capabilities create additional growth opportunities through real-world evidence delivery to meet regulatory requirements. CEO Ari Bousbib's operational track record and substantial equity ownership align management interests with shareholders. At less than 15x normalized earnings, the entry valuation appears compelling for a market-leading franchise with strong secular growth drivers and expanding addressable markets.

Pitch Summary:
Danaher is a global leader in life sciences that maintains a portfolio of businesses primarily focused on bioprocessing, life science tools, genomics and diagnostics. In our view, Danaher has an excellent track record of creating shareholder value through smart capital allocation and world-class operational execution. The firm's Danaher Business System employs a rigorous, process-driven approach to operational improvement that's helped accelerate organic growth and expand margins through multiple leadership regimes. Danaher's business mix has shifted dramatically in recent years after a series of transformative acquisitions and divestitures. We believe these portfolio moves leave the company attractively positioned in some of the industry's fastest growing, most profitable niches. The upgraded portfolio contains premiere assets levered to secular growth areas, like biologics, molecular diagnostics, and genomics, that support many years of high-single-digit revenue growth and margin expansion. Near-term headwinds related to the pandemic are overshadowing this attractive long-term outlook. Danaher sells diagnostic tests and critical inputs needed for manufacturing Covid-19 vaccines. Robust demand for these products during the pandemic boosted the stock price in 2020 and 2021. As Covid-19 demand normalized, Danaher experienced sales headwinds and channel destocking on these products, which pressured the stock. We believe these near-term headwinds will ultimately prove short-lived. Danaher now trades at a discounted valuation relative to peers and private market transactions, which provided an attractive entry point to invest in this high-quality, resilient business.

BSD Analysis:
Oakmark views Danaher as a high-quality life sciences leader trading at an attractive discount due to temporary COVID-related headwinds. The company's Danaher Business System has consistently driven operational improvements and margin expansion across leadership changes. Recent portfolio transformation through strategic acquisitions and divestitures has positioned the company in fast-growing, profitable niches including biologics, molecular diagnostics, and genomics. While COVID vaccine-related demand created a temporary boost followed by normalization pressures, the managers believe this masks the underlying secular growth potential. The company's exposure to high-single-digit revenue growth markets and margin expansion opportunities supports long-term value creation. Trading at a discount to peers and private market valuations, Danaher represents an opportunistic entry into a resilient, well-managed franchise with strong competitive positioning.

Pitch Summary:
Corebridge Financial is a life and retirement company that was partially spun off from American International Group (AIG) through an initial public offering in September 2022. Corebridge has extensive, long-standing relationships with many of the largest financial institutions to sell various retirement products. It is one of the largest retirement service providers to the education market through VALIC Financial Advisors. It also operates a high-performing, seasoned life insurance business. The market is valuing the company as a variable annuity provider despite its much more diversified and stable earnings stream. Part of the discount is due to the lack of liquidity and an overhang from AIG's significant ownership, which will eventually be brought to market. Trading at around five times our estimate of normalized distributable cash flow, the stock is highly attractive to us, and we are willing to wait for the ownership overhang to resolve itself.

BSD Analysis:
Oakmark initiated a position in Corebridge Financial, viewing it as an undervalued spin-off opportunity from AIG. The managers believe the market is incorrectly valuing the company solely as a variable annuity provider, overlooking its diversified revenue streams from retirement services and life insurance. The company benefits from established relationships with major financial institutions and holds a dominant position in the education retirement market through VALIC. At approximately 5x normalized distributable cash flow, the valuation appears compelling despite near-term liquidity concerns from AIG's ownership overhang. The managers are confident this discount will resolve as AIG reduces its stake over time. The investment thesis centers on the market's misunderstanding of the business model and temporary valuation pressure from the spin-off structure.

Pitch Summary:
Recruit Holdings provides human resource services, including job matching platforms, recruitment and staffing services and marketing services. Recruit Holdings owns Indeed, a leading global job site that generates what we view as highly attractive unit economics while saving customers time and money. We believe the business is under-monetized today and will capture improved economics going forward as it moves further down the funnel toward the hiring transaction. While Indeed dominates the headlines and valuation, we find the domestic advertising and recruiting businesses are strong growers that generate substantial cash and maintain leading market positions. In our view, near-term uncertainty in the U.S. labor markets has provided a rare opportunity to buy one of Japan's highest quality companies with a unique, entrepreneurial and profit-focused culture.

BSD Analysis:
The manager views Recruit Holdings as an undervalued opportunity to acquire a high-quality Japanese company with significant monetization potential. The investment thesis centers on Indeed's dominant global position in job matching, which generates attractive unit economics while providing clear value to customers through time and cost savings. The manager believes Indeed is currently under-monetized and sees substantial upside as the platform moves deeper into the hiring transaction funnel, capturing more value from successful job placements. Beyond Indeed's headline appeal, the domestic Japanese advertising and recruiting businesses provide strong cash generation and maintain leading market positions with solid growth trajectories. The company's entrepreneurial culture and profit-focused management approach distinguish it within the Japanese corporate landscape. Current U.S. labor market uncertainty has created a temporary valuation discount, providing an attractive entry point for a structurally advantaged business. The combination of global platform dominance, monetization runway, and strong domestic operations supports the long-term investment case.

Pitch Summary:
Bank Mandiri is the largest bank in Indonesia by branch count and maintains the country's highest current account and savings account (CASA) market share. In our view, Indonesia is an attractive banking market due to low-cost deposits and high yields, high growth aided by favorable demographics, and an absence of government penalties and fines. In addition, we believe Bank Mandiri's management can deliver impressive financial performance as it has already accomplished credit quality improvements, app launches that have led to declining branches and headcount, and net interest margin (NIM) expansion. Bank Mandiri's launch of banking apps Kopra (wholesale) and Livin' 2.0 (retail) were more successful than expected and generated sustainably positive effects on multiple key performance indicators. We also believe the recent NIM expansion is likely to continue due to management's focus on aggressive loan re-pricing and low appetite for time deposit funding and that higher interest rates and NIM expansion will reveal return-on-equity that has structurally expanded due to cost efficiencies. Finally, Bank Mandiri, along with other state-owned enterprise banks, accounts for about half of the CASA market share for the Indonesian banking system and produces substantial dividends important to the federal budget, leading to alignment with key government ministries.

BSD Analysis:
The manager presents a compelling bull case for Bank Mandiri based on its dominant market position and successful digital transformation initiatives. As Indonesia's largest bank by branch count with the highest CASA market share, the company benefits from structural advantages in an attractive banking market characterized by favorable demographics and high growth potential. Management's execution on digital banking apps Kopra and Livin' 2.0 has exceeded expectations, driving operational efficiencies through reduced branch and headcount requirements while improving key performance metrics. The ongoing net interest margin expansion, supported by aggressive loan re-pricing and disciplined deposit funding strategy, positions the bank to benefit from higher interest rate environments. Cost efficiencies from digitalization are expected to reveal structurally improved return-on-equity metrics. The bank's state-owned enterprise status and significant dividend contributions to the federal budget create strategic alignment with government interests, providing additional stability. Indonesia's banking market fundamentals, including low-cost deposits and absence of regulatory penalties, support the long-term investment thesis.

Pitch Summary:
Alibaba Group (China) was the top detractor for the quarter. Sentiment in Chinese equities has degraded after the initial excitement from China's reopening earlier in the year. Incremental macroeconomic data coming out of China indicates that the Covid-19 re-opening bounce is fading, and the economy is struggling to sustain healthy growth. Political tensions between the U.S. and China are also weighing on investor sentiment. As the largest e-commerce platform in China, Alibaba's share price has been caught up in this storm. The company has also continued to face intense competition from the likes of short video players and traditional e-commerce companies. Indeed, Alibaba has lost market share, which we expect will continue. Despite these negative factors, Alibaba remains an extremely important platform in China and continues to generate significant free cash flow. In the most recent completed fiscal year, the company generated $25B of free cash flow, which is 12% of the current market capitalization. Today, its core commerce business trades at approximately 5x EBITA, a valuation we deem much too cheap, even with the headwinds noted above. But valuation alone is often not enough to unlock value. Alibaba's management team is proactively working on behalf of minority shareholders. The company has been aggressive with share repurchases and with the recent formation of a capital management committee. Our conversations with the company indicate there is a high probability that more shareholder returns will be coming. In addition, the company recently announced a major restructuring that will effectively break up the company and separately list various businesses within Alibaba. Today, the market is assigning little to no value to these businesses and having a market quote may force investors to give Alibaba value for these assets. Irrespective of whether the restructuring works or not, we appreciate management's efforts to help unlock value in what, we see, is clearly an undervalued stock.

BSD Analysis:
The manager maintains a bullish stance on Alibaba despite acknowledging significant headwinds including market share losses and macroeconomic challenges in China. The investment thesis centers on compelling valuation metrics, with the core commerce business trading at just 5x EBITA and generating $25 billion in free cash flow representing 12% of market capitalization. Management's proactive shareholder-friendly initiatives provide multiple catalysts for value realization, including aggressive share repurchases and the formation of a capital management committee. The announced corporate restructuring to separately list various business units could unlock significant hidden value currently unrecognized by the market. While the manager acknowledges ongoing competitive pressures and market share erosion, they view Alibaba's dominant platform position in China as defensible. The combination of extreme valuation discount, strong cash generation, and management's commitment to shareholder returns creates an asymmetric risk-reward profile. Political tensions and economic headwinds are viewed as temporary factors overshadowing the company's fundamental value.

Pitch Summary:
BMW (Germany) was the top contributor to the Fund's performance for the quarter after releasing a strong set of fiscal first-quarter results. BMW demonstrated continued positive momentum in price/mix, reflecting improved product mix, disciplined pricing, and BMW's premium positioning. BMW is also showing excellent progress in its electrification strategy. Its battery-electric vehicles have increased by 112% year-over-year to 11% of volumes. Management reiterated its targets of 15% of volumes by 2023 as well as long-term guidance of over 50% by 2030. Although overall volumes declined slightly in the first quarter, this was largely due to a 6.6% decline in China. Management expressed significant confidence that volume performance will improve as the market cycles Covid-19 effects as well as in the company's long-term premium position for both battery-electric and internal combustion vehicles. BMW delivered a 12.1% EBIT margin in the automotive segment. While already robust, this understates the underlying performance because of the accounting related to the company's purchase of an additional stake in its Chinese joint venture last year. We continue to appreciate BMW's forward-thinking management team, strong balance sheet, focus on technology and flexible approach, allowing it to be one of the best-positioned original equipment manufacturers to meet the challenges facing the automotive industry.

BSD Analysis:
The manager presents a compelling bull case for BMW based on strong operational execution and strategic positioning. The company demonstrated impressive pricing power and product mix optimization in Q1, while achieving a robust 12.1% EBIT margin in automotive operations. BMW's electrification strategy is gaining significant traction with 112% year-over-year growth in battery-electric vehicle sales, positioning the company well for the industry transition. Management's confidence in volume recovery as China normalizes post-COVID, combined with their premium market positioning across both electric and traditional vehicles, supports the investment thesis. The manager particularly values BMW's management quality, strong balance sheet, and technological focus as competitive advantages. The company appears well-positioned among traditional automakers to navigate industry disruption while maintaining profitability. BMW's flexible approach to electrification and premium positioning provide defensive characteristics in a challenging automotive landscape.

Pitch Summary:
ConocoPhillips is one of the largest and most efficient exploration and production companies in the country. The company has an extensive resource base of high-quality drilling inventory in the U.S. and various international locations as well as a growing liquified natural gas business. In our view, the depth and quality of ConocoPhillips's inventory is a competitive differentiator that is not fully captured in today's share price. Over the next 10 years, we believe ConocoPhillips will be able to return more than 100% of its current market cap to shareholders via dividends and share repurchases while growing its production at a mid-single-digit annual pace. We believe ConocoPhillips is also among the best managed companies in the oil and gas industry and we are impressed by its history of accretive capital allocation under CEO Ryan Lance. The stock has meaningfully underperformed the broader market year-to-date and is an attractive addition to our portfolio.

BSD Analysis:
Oakmark's thesis on ConocoPhillips centers on the company's superior asset quality and management execution in the energy sector. The fund managers highlight the company's extensive high-quality drilling inventory across U.S. and international locations, plus a growing LNG business, as competitive advantages not reflected in the current valuation. The investment case is particularly compelling given their projection that ConocoPhillips can return over 100% of its current market cap to shareholders over the next decade through dividends and buybacks while maintaining mid-single-digit production growth. This exceptional capital return profile, combined with what they view as best-in-class management under CEO Ryan Lance, creates an attractive risk-adjusted opportunity. The fund added the position during a period of energy sector weakness, capitalizing on the stock's year-to-date underperformance relative to broader markets. The timing appears strategic, as traditional value metrics may not fully capture the company's free cash flow generation potential in the current commodity environment.

Pitch Summary:
Zoetis is the global leader in animal health with more than $8 billion in annual revenue from the discovery, manufacture, and commercialization of animal health medicines, vaccines and diagnostic products serving both livestock and companion animals. The company has a $50 billion addressable market today with its traditional market segments growing 6%-8% annually, driven by the secular drivers of a growing global population, increased protein consumption and growing middle class spending on pets. ZTS expects double-digit growth from its nascent markets, including immunotherapies as an alternative to antibiotics in food-producing animals, through its partnership with Colorado State University, nutrition-focused animal health enhanced by its acquisition of Platinum Performance, and detection capabilities through its acquisition of point-of-care diagnostics provider Abaxis in 2018. The company has a durable and diversified revenue stream with a portfolio containing 12 blockbuster drugs in the market, each generating more than $100 million in annual revenue and having an average market lifespan of about 29 years, which together represent about 40% of revenue. ZTS has shifted towards higher-margin products, driving gross margin improvements and consistent growth of net income faster than revenue. The company's high operating margin (39% for 2022) allows it to invest in growth and return capital to shareholders. In 2022, the company spent $1.1 billion on research and development and capital expenditures while returning $2.2 billion to shareholders through buybacks and dividends. Over the long term, we expect the company to generate at least low-to-mid-teens EPS growth and mid-teens-plus shareholder returns.

BSD Analysis:
RiverPark added Zoetis as a new position, recognizing the company's dominant position in the global animal health market with over $8 billion in annual revenue. The investment thesis is built on powerful secular tailwinds including global population growth, rising protein consumption, and increased pet spending from an expanding middle class, driving 6-8% annual growth in traditional segments. The fund is particularly excited about double-digit growth opportunities in emerging areas like immunotherapies, nutrition-focused products, and point-of-care diagnostics through strategic acquisitions. Zoetis demonstrates exceptional business quality with 12 blockbuster drugs averaging 29-year market lifespans, providing durable revenue visibility and representing 40% of total revenue. The company's impressive 39% operating margins in 2022 enabled significant R&D investment ($1.1 billion) while returning $2.2 billion to shareholders, showcasing strong capital allocation discipline. Management's strategic shift toward higher-margin products has driven consistent margin expansion and accelerating earnings growth. With a $50 billion addressable market and multiple growth vectors, RiverPark expects low-to-mid-teens EPS growth and mid-teens-plus shareholder returns over the long term.

Pitch Summary:
Costco, founded in 1983, is the world's third-largest retailer with 850 stores, $240 billion in revenue and 68 million members spread across North America, Europe, Asia, and the Southern Pacific Region. The company is known for its strong value proposition driven by high-quality low-cost offerings including a well-regarded private-label brand. Costco regularly ranks at the top of customer surveys related to brand trust, product price and quality, and all-around experience. Historically, 90% of the company's shoppers renew their memberships, which generate more than 50% of operating income. Through expanding market share, new store openings, increasing member productivity, and omnichannel expansion, we believe the company can grow revenues annually in the high single digit percentage range. This revenue growth should yield steadily growing margins and EPS growth in the low-to-mid-teens, which should drive shareholder returns in the same range.

BSD Analysis:
RiverPark initiated a position in Costco, highlighting the retailer's dominant market position as the world's third-largest retailer with exceptional customer loyalty metrics. The fund emphasizes Costco's membership-driven business model, which generates over 50% of operating income with a remarkable 90% renewal rate, creating predictable recurring revenue streams. The investment thesis centers on multiple growth drivers including market share expansion, new store openings, and omnichannel initiatives that should drive high single-digit revenue growth. Management expects this top-line growth to translate into margin expansion and low-to-mid-teens EPS growth, supported by the company's strong value proposition and premium private-label offerings. The fund views Costco's consistent ranking at the top of customer satisfaction surveys as evidence of its durable competitive moat. With 68 million members across multiple continents, Costco offers exposure to both developed and emerging market retail growth. The combination of defensive characteristics through its staples exposure and growth potential through geographic and digital expansion makes this an attractive core holding for the portfolio.

Pitch Summary:
Zoetis is the global leader in animal health with more than $8 billion in annual revenue from the discovery, manufacture, and commercialization of animal health medicines, vaccines and diagnostic products serving both livestock and companion animals. The company has a $50 billion addressable market today with its traditional market segments growing 6%-8% annually, driven by the secular drivers of a growing global population, increased protein consumption and growing middle class spending on pets. ZTS expects double-digit growth from its nascent markets, including immunotherapies as an alternative to antibiotics in food-producing animals, through its partnership with Colorado State University, nutrition-focused animal health enhanced by its acquisition of Platinum Performance, and detection capabilities through its acquisition of point-of-care diagnostics provider Abaxis in 2018. The company has a durable and diversified revenue stream with a portfolio containing 12 blockbuster drugs in the market, each generating more than $100 million in annual revenue and having an average market lifespan of about 29 years, which together represent about 40% of revenue. ZTS has shifted towards higher-margin products, driving gross margin improvements and consistent growth of net income faster than revenue. The company's high operating margin (39% for 2022) allows it to invest in growth and return capital to shareholders. In 2022, the company spent $1.1 billion on research and development and capital expenditures while returning $2.2 billion to shareholders through buybacks and dividends. Over the long term, we expect the company to generate at least low-to-mid-teens EPS growth and mid-teens-plus shareholder returns.

BSD Analysis:
RiverPark established a new position in Zoetis, the global leader in animal health with over $8 billion in annual revenue. The investment thesis is built on multiple secular growth drivers including global population growth, increased protein consumption, and rising middle-class pet spending, supporting 6-8% annual growth in traditional markets. The fund is particularly bullish on nascent high-growth opportunities including immunotherapies, nutrition-focused products, and diagnostics, which should deliver double-digit growth rates. Zoetis demonstrates exceptional business quality with 12 blockbuster drugs averaging 29-year market lifespans and generating 40% of revenue, providing durable cash flows. The company's 39% operating margins in 2022 enabled significant capital allocation flexibility, spending $1.1 billion on R&D and capex while returning $2.2 billion to shareholders. Management's strategic shift toward higher-margin products is driving margin expansion and accelerating earnings growth relative to revenue growth. RiverPark expects this combination of secular tailwinds, portfolio durability, and operational leverage to generate low-to-mid-teens EPS growth and mid-teens-plus shareholder returns over the long term.

Pitch Summary:
Costco, founded in 1983, is the world's third-largest retailer with 850 stores, $240 billion in revenue and 68 million members spread across North America, Europe, Asia, and the Southern Pacific Region. The company is known for its strong value proposition driven by high-quality low-cost offerings including a well-regarded private-label brand. Costco regularly ranks at the top of customer surveys related to brand trust, product price and quality, and all-around experience. Historically, 90% of the company's shoppers renew their memberships, which generate more than 50% of operating income. Through expanding market share, new store openings, increasing member productivity, and omnichannel expansion, we believe the company can grow revenues annually in the high single digit percentage range. This revenue growth should yield steadily growing margins and EPS growth in the low-to-mid-teens, which should drive shareholder returns in the same range.

BSD Analysis:
RiverPark initiated a position in Costco, highlighting the retailer's dominant market position as the world's third-largest retailer with exceptional customer loyalty metrics. The fund emphasizes Costco's membership-driven business model, where 90% renewal rates generate over 50% of operating income, creating a highly predictable revenue stream. The investment thesis centers on multiple growth drivers including market share expansion, new store openings, and omnichannel initiatives that should deliver high single-digit revenue growth. Management expects this top-line growth to translate into margin expansion and low-to-mid-teens EPS growth. The pitch underscores Costco's competitive moat through its value proposition of high-quality, low-cost offerings and strong private-label brand, consistently ranking at the top of customer satisfaction surveys. This combination of defensive characteristics and growth potential positions Costco as an attractive long-term holding with expected shareholder returns matching EPS growth in the low-to-mid-teens range.

Pitch Summary:
One of our favorite names in India is Westlife Foodworld Limited. This is McDonalds in India. It has a multi-decade growth story we adore. We think it will be a much bigger company in the years ahead. India, like Japan, might be due for a pause, but any pause in the market, we see as a buying opportunity. We have a list of follows we have teed up to buy in India.

BSD Analysis:
The manager expresses strong enthusiasm for Westlife Foodworld, the McDonald's franchisee in India, highlighting it as one of their favorite Indian holdings. The investment thesis is built on India's long-term demographic and economic growth story, providing a multi-decade runway for restaurant expansion. The manager believes the company will become significantly larger over time as India's middle class expands and consumption patterns evolve. They view any market weakness in India as a buying opportunity rather than a concern, demonstrating high conviction in the structural growth story. The position aligns with their broader India strategy of owning high-quality companies with exceptional long-duration growth prospects. The manager sees India as having some of the world's best companies in the small and mid-cap space.

Pitch Summary:
A favorite right now in Japan is Lifull Company. This is basically the Zillow of Japan. Japan still has a lot of development potential in the online marketing and services of real estate. In addition, real estate in Japan is a bargain for foreign investors at present, and Japan has some of the most liberal property ownership laws in the world. We think business will be strong for Lifull and the stock is cheap. It is one of many great niche micro caps on offer in Japan.

BSD Analysis:
The manager expresses strong conviction in Lifull Company, positioning it as a compelling play on Japan's underdeveloped online real estate market. The investment thesis centers on significant growth potential in digital real estate services, with Japan lagging other developed markets in online property marketing and transactions. The manager draws a direct comparison to Zillow, suggesting substantial runway for market share expansion. Additional tailwinds include attractive Japanese real estate valuations for foreign investors and Japan's liberal property ownership laws, which should drive increased transaction volumes. The stock is viewed as attractively valued despite the growth opportunity. This represents their broader Japan strategy of finding quality micro-cap companies in inefficient market segments with strong secular growth drivers.

Pitch Summary:
Some of our worst-performing holdings in Q2 2023 were China Tourism Group Duty Free, Li Ning Co Ltd, and Anta Sports Products Ltd. These holdings suffered from the obvious reason that virtually everything in China went down on political banter and what has been perceived as a disappointing post-Covid opening. Our positions in China are mainly tied to economic reopening—the same trades we have seen work in many other countries as they have abandoned lockdowns. We continue to believe that in a twist on Paul Revere's words, the Chinese are coming (to services), but those stocks just did not do well this quarter.

BSD Analysis:
The manager maintains a bullish view on China Tourism Group Duty Free despite significant Q2 underperformance, attributing the weakness to broader China sentiment and political concerns rather than fundamental deterioration. The investment thesis is built around China's economic reopening and the recovery in travel and tourism services. The manager believes the disappointing post-COVID opening is temporary and that Chinese consumers will return to services spending, including duty-free shopping. This position represents a play on the normalization of travel patterns and discretionary spending by Chinese consumers. The holding aligns with their broader China strategy focused on domestic consumption and services recovery. However, they acknowledge the challenging near-term environment while maintaining conviction in the longer-term reopening theme.

Pitch Summary:
Some of our worst-performing holdings in Q2 2023 were China Tourism Group Duty Free, Li Ning Co Ltd, and Anta Sports Products Ltd. These holdings suffered from the obvious reason that virtually everything in China went down on political banter and what has been perceived as a disappointing post-Covid opening. Our positions in China are mainly tied to economic reopening—the same trades we have seen work in many other countries as they have abandoned lockdowns. We continue to believe that in a twist on Paul Revere's words, the Chinese are coming (to services), but those stocks just did not do well this quarter. We believe Nike and Lulu lemon's recent reports showed strong improvement in China and offer us a window into the Chinese recovery. We are hoping to see something similar as our domestic Chinese sporting goods companies report. We have added slightly to Li Ning and Anta, but we remain underweight China with a tilt to services and opening, as China's economic prosperity has to morph to the Western developed model of consumption to a greater degree.

BSD Analysis:
The manager views Anta Sports as another compelling China reopening play despite Q2 underperformance, similar to their Li Ning position. The investment rationale focuses on China's transition to a consumption-based economy and the recovery in domestic services spending. The manager takes encouragement from strong China results reported by international brands like Nike and Lululemon, expecting similar trends to benefit domestic Chinese sporting goods companies. They have increased their Anta position during the recent weakness, showing conviction in the long-term thesis. The holding represents exposure to Chinese consumers' return to discretionary spending on athletic apparel and footwear. While maintaining an overall underweight to China, they focus on companies positioned for the domestic consumption recovery and services sector growth.

Pitch Summary:
Some of our worst-performing holdings in Q2 2023 were China Tourism Group Duty Free, Li Ning Co Ltd, and Anta Sports Products Ltd. These holdings suffered from the obvious reason that virtually everything in China went down on political banter and what has been perceived as a disappointing post-Covid opening. Our positions in China are mainly tied to economic reopening—the same trades we have seen work in many other countries as they have abandoned lockdowns. We continue to believe that in a twist on Paul Revere's words, the Chinese are coming (to services), but those stocks just did not do well this quarter. We believe Nike and Lulu lemon's recent reports showed strong improvement in China and offer us a window into the Chinese recovery. We are hoping to see something similar as our domestic Chinese sporting goods companies report. We have added slightly to Li Ning and Anta, but we remain underweight China with a tilt to services and opening, as China's economic prosperity has to morph to the Western developed model of consumption to a greater degree.

BSD Analysis:
The manager maintains a bullish stance on Li Ning despite poor Q2 performance, viewing the weakness as temporary and tied to broader China sentiment rather than company fundamentals. The investment thesis centers on China's economic reopening and transition toward a consumption-driven economy similar to Western developed markets. The manager draws confidence from Nike and Lululemon's strong China results, suggesting domestic Chinese sporting goods companies should see similar benefits. They have actually added to the Li Ning position during the weakness, demonstrating conviction in the reopening theme. The holding represents a play on Chinese consumers returning to services and discretionary spending. However, they maintain an underweight to China overall while focusing on companies positioned for the domestic consumption recovery.

Pitch Summary:
Some of our best-performing holdings in Q2 2023 were B3 SA (the Brazilian exchange), Ace Hardware Indonesia (beaten up on long Covid closures in Indonesia and now recovering), and Chroma Ate Inc. (a Taiwanese automated testing company that plays into semiconductor testing for AI-artificial intelligence). Many of our stocks in India also had a strong quarter. We think hardware technology is getting expensive now on the back of the AI theme. It was cheap at the end of last year.

BSD Analysis:
The manager highlights Chroma ATE as a strong Q2 performer, positioning it as a play on the artificial intelligence semiconductor testing market. The company provides automated testing equipment specifically for AI-related semiconductor applications, benefiting from the current AI investment boom. The manager notes that hardware technology stocks, including Chroma, have become more expensive following the AI theme's popularity, suggesting they bought when valuations were more attractive at the end of 2022. The Taiwan-based company is well-positioned to benefit from the ongoing AI infrastructure buildout requiring sophisticated testing equipment. However, the manager acknowledges that current valuations in the hardware technology space have become stretched due to AI enthusiasm.

Pitch Summary:
Some of our best-performing holdings in Q2 2023 were B3 SA (the Brazilian exchange), Ace Hardware Indonesia (beaten up on long Covid closures in Indonesia and now recovering), and Chroma Ate Inc. (a Taiwanese automated testing company that plays into semiconductor testing for AI-artificial intelligence). The portfolio is overweight the reshoring, nearshoring, multi-shoring, and friend-shoring theme. We believe a new globalization story is at play that largely benefits emerging markets countries, other than China. We continue to think this new globalization story is a great story and valuations support a long position.

BSD Analysis:
The manager positions Ace Hardware Indonesia as a recovery play following COVID-related store closures that previously pressured the stock. The investment represents a post-pandemic reopening theme in Indonesia, with the company now recovering from the operational disruptions. The holding aligns with their broader "new globalization" thesis, where supply chains are shifting away from China to benefit other emerging markets including Indonesia. The manager views Indonesia as a beneficiary of reshoring, nearshoring, and friend-shoring trends. Current valuations are seen as supportive for maintaining long positions in companies positioned to benefit from these structural shifts. The recovery narrative is strengthened by Indonesia's role in the evolving global supply chain landscape.