Investment Pitches

Pitch Summary:
Enbridge is an example of a multi-decade successful Canadian dividend paying stock that we owned until 2021 which now has major challenges. The core pipeline business remains profitable but the return on new projects is suspect given the potential for cost overruns. They have a lot of debt, and their debt continues to increase even as profitability is stalled. They have also had to issue new amounts of equity over the past few years which is dilutive for investors and adds a further strain on the dividend. Additionally, traditional oil and natural gas pipeline infrastructure faces ever-increasing regulatory and social license headwinds.

BSD Analysis:
Avenue Investment Management expresses a bearish outlook on Enbridge, a former holding they exited in 2021 due to deteriorating fundamentals. While acknowledging the core pipeline business remains profitable, the manager highlights concerning trends including questionable returns on new projects amid inflationary cost pressures. The company's increasing debt load coupled with stagnant profitability creates a problematic leverage dynamic. Recent equity issuances are viewed as dilutive to shareholders and put additional pressure on dividend sustainability. Beyond financial concerns, Avenue notes the growing regulatory and social license challenges facing traditional oil and gas pipeline infrastructure. This analysis reflects their disciplined approach to traditional dividend-paying stocks when fundamental deterioration outweighs yield attraction. The pitch demonstrates Avenue's willingness to exit long-term successful positions when the risk-reward profile shifts unfavorably.

Pitch Summary:
Apple for example, which we owned until a few years ago, now trades at 40 times earnings. This would imply that the company, even with a $3 trillion market capitalization, is growing earnings per share rapidly. However, revenue and earnings are both down over the last 12 months. As well, Apple now manufactures most of their products in China, as the US and China trade tensions continues to escalate. It is not that Apple's success cannot continue; it is just an assessment that there is now a significant amount of risk to the stock price.

BSD Analysis:
Avenue Investment Management presents a bearish view on Apple, highlighting significant valuation concerns despite the company's quality business fundamentals. The manager notes Apple trades at 40x earnings with a $3 trillion market cap, yet both revenue and earnings have declined over the past 12 months, creating a disconnect between valuation and performance. The geographic concentration risk is emphasized, with most manufacturing operations in China amid escalating US-China trade tensions. Avenue previously owned the stock but exited a few years ago as valuations became stretched. The manager acknowledges Apple's potential for continued success but views the current risk-reward profile as unfavorable. This analysis reflects Avenue's quality investing approach of avoiding even good businesses when they become too expensive. The pitch exemplifies their disciplined valuation framework and risk management philosophy.

Pitch Summary:
AppFolio Leading vertical market software. An Operating System for Property Management. A property manager with 1,000 units will have to: Employ 2-3 accountants, Collect 1,000 individual rent payments a month, Provide accurate monthly reporting to each property owner, Handle >500 maintenance requests per month, Requiring 3-4 maintenance workers (outsourced or insourced), Manage ~25 move-outs per month, assuming a 3-year average tenancy, Find new tenants for 25 units per month, Requiring 2-3 leasing agents (outsourced or insourced), Screen new tenants for ~25 units per month, Move-in ~25 new tenants per month. ~79m broadly addressable units in the US. Includes 51m rental properties and 28 million community association units. Focus on ~27m upmarket rental units, i.e., portfolios of 1,500 units or more. AppFolio will end FY23 with ~8m units. ~300k property managers in the US. AppFolio will end FY23 with ~20k property managers. Vast majority still rely on expensive old and clunky software or spreadsheets. Very high switching costs provide the means to build market power. Stable recurring revenue base, due to low churn. Pricing power that sustains gross margins. A large reinvestment opportunity, based on incremental customer value. Unit growth (market share). Revenue/unit growth (share of wallet). Real stewardship by true long-term and aligned owners. Reinvestment at high returns or cash returned to shareholders. Sense of urgency and long-term approach. AppFolio is a mission-critical operating system used daily by the entire staff of a property management company. Switching would require significant retraining and lead to productivity loss. AppFolio is an accounting system of record and accounts receivable tool. Switching without losing valuable data would be difficult and potentially lead to a disruption of tenant payments. AppFolio is a co-ordination tool used by property managers to interact with tenants, vendors, and owners. The software significantly improves the experience for all constituents of the ecosystem by reducing friction, improving transparency, and customer experience. We estimate >75% of the revenues are not paid by managers, who select the software. AppFolio can control two levers of its growth: Winning new customers; thereby increasing the total number of units on their platform, Creating more operational efficiency for their customers; thereby growing ARPU. Both depend on customer satisfaction, which AppFolio fosters by: Always listening to their customers (embodied by the founders before launching a product), Co-developing all new features in close collaboration with their customers, Prioritizing customer success from the point of implementation. Given the high incremental margins on new units and incremental ARPU, the investment in R&D and customer success present a very compelling long-term reinvestment opportunity. Most property management is outsourced by the owner of the property. Property managers charge a percentage fee on gross rent and charge certain costs back to the property. This includes maintenance work, materials, and frequently the cost of software. AppFolio revenues as split by the payor: Investors, Owners, and Property Managers 52%, Vendors and Residents 48%. ~50% of revenues are not paid by the property manager choosing the software. Of the remaining ~50% of revenues, a large portion is passed on to the property owners. Therefore, >75% of the overall spend is not paid by the manager. AppFolio has benefitted significantly from the ownership of IGSB. IGSB (today IGSB & PFC) First invested in AppFolio's 2008 Series B, Bought more shares at IPO, Has 3/8 board seats, Today own ~22% of shares outstanding and ~47% of the vote. This has allowed AppFolio management to: Sacrifice short-term profitability to invest in upmarket growth (taking GAAP EBIT margins from 10% in 2018 to -15% in 2022, and >0% in 2023), Divest non-core assets and focus on the best long-term opportunity (real estate), Ensured shareholder dilution was minimized, 20% per year with ~100% FCF conversion. We view this as an attractive long-term risk/return opportunity: Strong market power, Clear reinvestment opportunity, Great owners/stewards of capital.

BSD Analysis:
Zeno presents AppFolio as a dominant vertical market software provider serving the property management industry with mission-critical operating system functionality. The investment thesis centers on three key pillars: market power through high switching costs, significant reinvestment opportunities via unit growth and ARPU expansion, and exceptional stewardship from long-term aligned ownership. The company benefits from a large addressable market of 79 million units in the US, with AppFolio currently managing 8 million units across 20,000 property managers. The business model demonstrates strong economics with over 75% of revenues paid by parties other than the decision-maker, creating favorable pricing dynamics. Historical performance has been exceptional, with revenues growing at 30% CAGR since IPO and shares compounding at 38% CAGR since 2015. Management's focus on long-term value creation is evidenced by their willingness to sacrifice near-term profitability for upmarket growth investments. At current valuation of 30x underlying earnings with 20%+ growth and 100% FCF conversion, Zeno views this as an attractive long-term opportunity despite the high headline multiple.

Pitch Summary:
Our one new position is wine and beer maker Constellation Brands (NYQQ: STZ). They will get caught up in the tariffs, but it's an extremely well-run company that sells a product that has historically been recession resistant. In other words, they produce a consumer staple that traditionally goes up in times of uncertainty. Interestingly, Berkshire Hathaway disclosed—after our own acquisition—that they had also purchased over $1B of stock in Constellation, which we regard as validation of our own evaluation of the position.

BSD Analysis:
The manager initiates a new bullish position in Constellation Brands, emphasizing the defensive characteristics of alcoholic beverages as recession-resistant consumer staples. The investment thesis centers on the company's exceptional management quality and historical performance of alcohol products during economic uncertainty periods. While acknowledging potential tariff impacts, the manager views the company's defensive product portfolio as providing protection during economic downturns. The investment rationale is significantly strengthened by Berkshire Hathaway's subsequent $1 billion investment, which the manager interprets as validation of their investment analysis. The timing suggests a contrarian approach, buying a quality defensive name during market volatility when consumer staples typically outperform. The manager views Constellation's products as benefiting from increased consumption during times of economic stress and uncertainty. This represents a defensive value investment in a well-managed company with recession-resistant fundamentals.

Pitch Summary:
It may also be worth noting our small, pre-existing position with electric vehicle maker Rivian Automotive Inc. (NSQQ: RIVN), given Tesla's (NSQQ: TSLA) plummeting value. Rivian offers an ideal scenario in which all production is domestic. The owner, R.J. Scaringe, is a shrewd leader who thinks long-term, and the company offers an attractive balance sheet. They also have a partnership with Volkswagen to develop "next generation software-defined vehicle (SDV) platforms" to be used in vehicles made by both companies. Rivian is well positioned here, offering a good tech-stack built internally. In fact, they are almost as much of a 'car operating system' company as they are a traditional auto manufacturer. They are in a great spot to pick up some of the customers Tesla seems to be bleeding. Certainly, Rivian has a customer base fanatical about its product and willing to sing its praises. They are not making money quite yet, but their upcoming 2026 R2 car model shows real promise. In fact, we suspect it may turn out to be a gamechanger, debuting at nearly half the price (starting around $45,000) as Rivian's other, high-end models and competitive with Tesla's lower tier models.

BSD Analysis:
The manager presents a bullish thesis for Rivian, emphasizing its domestic production advantage in the current tariff environment and positioning as a Tesla alternative. The investment rationale highlights CEO R.J. Scaringe's long-term strategic thinking and the company's attractive balance sheet structure. Key competitive advantages include the Volkswagen partnership for software-defined vehicle platforms and internally developed technology stack that positions Rivian as much a software company as traditional automaker. The manager views Rivian as well-positioned to capture market share from Tesla's declining customer base, supported by a fanatical customer following. The upcoming 2026 R2 model represents a potential catalyst, priced at $45,000 to compete directly with Tesla's lower-tier offerings at nearly half the cost of Rivian's current high-end models. While acknowledging current unprofitability, the manager sees the R2 as a potential gamechanger for the company's financial trajectory. This represents a growth investment in electric vehicle market share capture.

Pitch Summary:
We are also holding onto a series of new oil and gas investments we discussed in our previous letter: Tidewater (NYQQ: TDW), Valaris (NYQQ: VAL), and Schlumberger NV (NYQQ: SLB). We see a capital cycle at in play with our new acquisitions positioned favorably compared to some of their chief competitors. Shell (NYSS: SHELL), for example, was a major threat in previous cycles but has since redirected capex that would have gone to offshore drilling into domestic production. Unfortunately, a lot of those domestic fields just aren't what they once were, leaving Shell looking like a depleting asset. Of our new acquisitions, two have gone through significant restructuring of their balance sheets, improving their competitive posture. They're in a typically deep downturn from a cyclical standpoint, but they are poised to do disproportionately well when the cycle returns.

BSD Analysis:
The manager presents a bullish cyclical thesis for SLB (formerly Schlumberger), positioning it to benefit from favorable capital cycle dynamics in oil and gas services. The investment rationale emphasizes competitive positioning advantages as major competitors have redirected capital away from offshore drilling toward less attractive domestic production assets. The manager highlights that SLB has undergone significant balance sheet restructuring, improving its competitive posture during the current cyclical downturn. The thesis suggests the company is well-positioned for disproportionate outperformance when the energy services cycle recovers from current trough levels. This represents a contrarian value investment approach, buying during deep cyclical weakness with expectations of outsized returns during recovery. The manager views current market conditions as creating attractive entry points for energy services companies. The investment reflects confidence in cyclical recovery dynamics and SLB's improved financial structure.

Pitch Summary:
We are also holding onto a series of new oil and gas investments we discussed in our previous letter: Tidewater (NYQQ: TDW), Valaris (NYQQ: VAL), and Schlumberger NV (NYQQ: SLB). We see a capital cycle at in play with our new acquisitions positioned favorably compared to some of their chief competitors. Shell (NYSS: SHELL), for example, was a major threat in previous cycles but has since redirected capex that would have gone to offshore drilling into domestic production. Unfortunately, a lot of those domestic fields just aren't what they once were, leaving Shell looking like a depleting asset. Of our new acquisitions, two have gone through significant restructuring of their balance sheets, improving their competitive posture. They're in a typically deep downturn from a cyclical standpoint, but they are poised to do disproportionately well when the cycle returns.

BSD Analysis:
The manager maintains a bullish position on Valaris, emphasizing favorable capital cycle positioning in the offshore drilling sector. The investment thesis highlights competitive advantages as major competitors have shifted capital allocation away from offshore drilling toward less attractive domestic production assets. The manager notes Valaris has undergone significant balance sheet restructuring, strengthening its competitive position during the current cyclical downturn. The rationale suggests the company is well-positioned for outsized returns when the offshore drilling cycle recovers from current trough levels. This represents a contrarian value investment, buying during deep cyclical weakness with expectations of disproportionate upside during recovery. The manager views current market conditions as creating attractive entry points for offshore drilling contractors. The investment reflects confidence in cyclical recovery dynamics and Valaris's improved financial structure.

Pitch Summary:
We are also holding onto a series of new oil and gas investments we discussed in our previous letter: Tidewater (NYQQ: TDW), Valaris (NYQQ: VAL), and Schlumberger NV (NYQQ: SLB). We see a capital cycle at in play with our new acquisitions positioned favorably compared to some of their chief competitors. Shell (NYSS: SHELL), for example, was a major threat in previous cycles but has since redirected capex that would have gone to offshore drilling into domestic production. Unfortunately, a lot of those domestic fields just aren't what they once were, leaving Shell looking like a depleting asset. Of our new acquisitions, two have gone through significant restructuring of their balance sheets, improving their competitive posture. They're in a typically deep downturn from a cyclical standpoint, but they are poised to do disproportionately well when the cycle returns.

BSD Analysis:
The manager presents a bullish cyclical investment thesis for Tidewater, positioning it as benefiting from favorable capital cycle dynamics in offshore drilling services. The investment rationale centers on competitive positioning advantages as major competitors like Shell have redirected capital away from offshore drilling toward depleting domestic production assets. The manager highlights Tidewater's balance sheet restructuring as improving its competitive posture during the current cyclical downturn. The thesis suggests the company is well-positioned for disproportionate outperformance when the offshore drilling cycle recovers. The investment reflects a contrarian approach, buying during a deep cyclical trough with expectations of significant upside during cycle recovery. The manager views current market conditions as creating an attractive entry point for offshore service vessel operators. This represents a value-oriented bet on cyclical recovery in the offshore energy services sector.

Pitch Summary:
First, we remain committed to our positions in Google/Alphabet (NSQQ: GOOGL) and Amazon (NSQQ: AMZN). Even before all the market madness, we already had an affinity for capital-light businesses, which are relatively less vulnerable to tariffs than the heavy industrial portions of the economy. While Amazon and Google will face secondary impacts (e.g., weakening consumer demand in a recessionary environment), they operate under models that can squeeze out efficiency and reward innovations that can help lower prices for consumers. Everyone will be impacted, but we are comfortable with where Amazon and Google remain within a long-term framework.

BSD Analysis:
The manager maintains a bullish position on Amazon, highlighting its capital-light business characteristics as protection against tariff-related economic disruption. The investment thesis emphasizes Amazon's ability to drive operational efficiency and innovation that benefits consumers through lower prices during economic stress. While recognizing potential headwinds from weakening consumer demand in a recessionary scenario, the manager expresses confidence in Amazon's long-term competitive positioning. The rationale focuses on the company's scalable business model advantages over capital-intensive industries facing direct tariff impacts. The manager views Amazon as structurally better positioned than heavy industrial businesses to navigate the current economic environment. This represents a conviction hold during market uncertainty, reflecting belief in the platform's defensive qualities. The pitch suggests Amazon's operational flexibility provides resilience against macroeconomic volatility.

Pitch Summary:
First, we remain committed to our positions in Google/Alphabet (NSQQ: GOOGL) and Amazon (NSQQ: AMZN). Even before all the market madness, we already had an affinity for capital-light businesses, which are relatively less vulnerable to tariffs than the heavy industrial portions of the economy. While Amazon and Google will face secondary impacts (e.g., weakening consumer demand in a recessionary environment), they operate under models that can squeeze out efficiency and reward innovations that can help lower prices for consumers. Everyone will be impacted, but we are comfortable with where Amazon and Google remain within a long-term framework.

BSD Analysis:
The manager maintains a bullish stance on Alphabet, emphasizing the company's capital-light business model as a defensive characteristic against tariff-induced economic headwinds. The thesis centers on Alphabet's operational efficiency and innovation capabilities that enable cost reduction for consumers during economic stress. While acknowledging potential secondary impacts from weakening consumer demand in a recessionary environment, the manager expresses confidence in the company's long-term positioning. The investment rationale focuses on structural advantages of tech platforms over heavy industrial businesses in the current tariff environment. The manager views Alphabet as well-positioned to weather economic uncertainty through its scalable business model. This represents a conviction hold during market volatility, reflecting belief in the company's resilient fundamentals. The pitch suggests Alphabet's defensive qualities make it suitable for uncertain macroeconomic conditions.

Pitch Summary:
A clear, engaging view of the auto industry's "inevitable" and accelerating electric transition. Our own research continues to suggest that EV penetration will rise meaningfully over the next cycle, and we continue to see firms like Rivian (NSQQ: RIVN), a relatively recent addition to our portfolio, as well positioned to capitalize on that shift.

BSD Analysis:
The manager presents a bullish thesis on Rivian based on the inevitable transition to electric vehicles and accelerating EV adoption. The investment is positioned as a play on the structural shift toward electrification in the automotive industry. The manager indicates this is a relatively recent portfolio addition, suggesting conviction in the timing of the EV transition. The thesis relies on Rivian's positioning to capitalize on rising EV penetration over the next cycle. However, the pitch lacks specific fundamental analysis such as valuation metrics, competitive positioning details, or financial performance indicators. The investment appears to be a thematic play on the broader EV trend rather than company-specific fundamentals. The manager's confidence is supported by their own research suggesting meaningful EV penetration growth ahead.

Pitch Summary:
A good example of the former is Qatar Gas Transport, the sole distributor of Qatari liquified natural gas exports, whose vessels are chartered on long-term fixed-rate contracts, with growth optionality from Qatar's North Field expansion project.

BSD Analysis:
The manager views Qatar Gas Transport as an attractive defensive investment with compelling growth optionality tied to Qatar's North Field expansion. The company's monopolistic position as the sole distributor of Qatari LNG exports provides significant competitive moats and pricing power. The long-term fixed-rate charter contracts offer predictable cash flows and downside protection, making this an ideal defensive holding during uncertain market conditions. The North Field expansion project represents substantial growth potential, as Qatar aims to increase LNG production capacity significantly over the coming years. This combination of defensive characteristics with growth optionality aligns well with the fund's strategy of buying quality businesses with earnings upside potential. The LNG shipping sector benefits from structural supply-demand imbalances and Qatar's dominant position in global LNG markets. The investment thesis balances capital preservation with participation in the global energy transition toward cleaner fossil fuels.

Pitch Summary:
This is a painful but necessary decision, as it often means parting ways with companies (and management teams) we admire, but which we can no longer justify owning at current valuations. A good example here is National Company for Learning and Education, a K-12 owner/operator with a market capitalisation of $1.2 billion based on an operating income of less than $30 million.

BSD Analysis:
The manager has taken a disciplined approach to exit National Company for Learning and Education despite admiring the company and management team, citing valuation concerns as the primary driver. With a market capitalization of $1.2 billion against operating income of less than $30 million, the company trades at over 40x operating income, which the fund deems unsustainable. This represents a classic value discipline decision where fundamental metrics no longer support the investment case despite qualitative strengths. The manager's willingness to exit reflects adherence to valuation discipline over emotional attachment to quality businesses. The K-12 education sector may have benefited from Vision 2030 themes, but the valuation has reached levels that assume near-perfect execution of blue-sky scenarios. This exit demonstrates the fund's commitment to risk management and capital preservation when valuations become disconnected from fundamentals.

Pitch Summary:
The best example of this is Abdullah Al Othaim Markets, the discount grocery retailer that is capturing significant share of its ~$40 billion market by doubling down on its value-for-money proposition to take advantage of weakening competition, a shift in shopping behavior to more value-for-money options, and the general growth in population in the central region, to which Al Othaim is over-indexed.

BSD Analysis:
The manager presents a compelling bull case for Abdullah Al Othaim Markets based on market share capture dynamics in Saudi Arabia's $40 billion grocery market. The investment thesis centers on the company's strategic positioning to benefit from multiple tailwinds: weakening competitive landscape, consumer behavioral shifts toward value-oriented shopping, and demographic growth in their core geographic market. The fund views this as a high-conviction position despite elevated near-term multiples, believing the company will grow into its valuation over time. The manager's willingness to maintain exposure reflects confidence in the structural growth opportunity and the company's execution capabilities. This represents a classic growth-at-a-reasonable-price strategy where current valuation concerns are offset by strong fundamental drivers. The demographic and competitive positioning provides a multi-year runway for market share gains and earnings growth.

Pitch Summary:
In IT services, uncertain macroeconomic conditions in the US and Europe are causing corporate customers to delay new projects. We expect this slowdown to be short-lived, so when shares of Argentina-based Globant fell to attractive levels, we took the opportunity to initiate a new position. Over the past few years, with extra incentive provided by the pandemic, businesses have embarked on major digital-transformation initiatives to facilitate better interactions with their customers, trade partners, and employees. Globant, through its highly skilled yet competitively priced global talent pool based primarily in Latin America and Asia, is helping customers improve their digital interactions. One such customer is Disney, whose popular Disney+ streaming-TV service Globant played a key role in developing and launching. There are several IT services companies that provide similar offerings, but Globant differentiates itself in how it delivers these services. Unlike most of its peers, the company's teams are organized according to their area of technical expertise rather than the industries of the customers they serve. Its business units, which it calls 'digital studios,' span data and artificial intelligence, the metaverse, cybersecurity, and cloud operations, as opposed to, say, health care or hospitality. This structure allows Globant's studios to transfer their deep technical knowledge across different client industries. We expect strong earnings growth over the next decade, due to both rising corporate demand for digital solutions and Globant's ability to win market share. The company's strong balance sheet—it maintains a net-cash position—also enables it to invest in new tech capabilities and geographic markets.

BSD Analysis:
The fund manager presents a compelling bull case for Globant as a differentiated IT services provider positioned to capitalize on long-term digital transformation trends. The manager views current macroeconomic headwinds as temporary, creating an attractive entry point for a high-quality business with secular growth drivers. Globant's unique organizational structure around technical expertise rather than industry verticals creates competitive advantages through knowledge transfer across client sectors. The company's 'digital studios' spanning AI, metaverse, cybersecurity, and cloud operations position it at the forefront of emerging technologies. High-profile client relationships like Disney's streaming service development validate Globant's capabilities and market positioning. The company's cost-competitive global talent pool in Latin America and Asia provides margin advantages while maintaining technical excellence. Management's net-cash balance sheet position enables strategic investments in new capabilities and geographic expansion without financial constraints. The manager expects strong earnings growth over the next decade driven by both rising corporate digital demand and Globant's market share gains. This combination of differentiated positioning, financial strength, and secular growth trends supports the bullish investment thesis.

Pitch Summary:
We opted to buy Kaspi.kz, a high-quality business in Kazakhstan on the forefront of this fintech revolution. Kaspi delivered cash flow return on equity in excess of 60% in each of the past three years. Its digital ecosystem encompasses payments solutions, an e-commerce marketplace, and retail lending, all of which reside on its 'super-app.' It is not only Kazakhstan's largest digital-payments provider (with a 67% market share) but also the largest e-commerce company and largest unsecured retail lender. On the payments side, Kaspi offers low-priced end-to-end functionality that doesn't rely on Visa or Mastercard. The company has also implemented strong risk-management systems. For example, as consumers send payments or transact on its e-commerce marketplace, Kaspi collects data that it pairs with traditional credit-bureau information to assess a prospective borrower's creditworthiness. Its average consumer-loan maturity period is also relatively low at seven months, which helps the company react quickly to risk signals. Over the past five years, profits increased at a compounded rate of 33% (in US dollars), and we expect rapid growth to continue alongside rising penetration of digital payments and e-commerce in Kazakhstan. To further monetize its user base and boost growth, the company has been adding new services such as travel bookings and online grocery shopping.

BSD Analysis:
The fund manager presents an exceptionally strong bull case for Kaspi.kz as a dominant fintech platform capitalizing on Kazakhstan's digital transformation. The company's extraordinary financial performance, with cash flow return on equity exceeding 60% for three consecutive years, demonstrates exceptional capital efficiency and profitability. Kaspi's comprehensive super-app ecosystem creates powerful network effects, combining payments (67% market share), e-commerce leadership, and retail lending dominance in a single platform. The company's independence from traditional payment networks like Visa and Mastercard provides competitive advantages and higher margins. Management has implemented sophisticated risk management systems that leverage transaction data for credit assessment, while maintaining conservative loan maturities of seven months for rapid risk adjustment. The impressive 33% compound annual profit growth over five years validates the business model's scalability and market opportunity. Kaspi's expansion into adjacent services like travel and grocery demonstrates platform monetization potential as digital adoption accelerates across Kazakhstan. This positions the company as a prime beneficiary of the ongoing fintech revolution in emerging markets.

Pitch Summary:
Maruti Suzuki, which makes nearly half of India's cars, is another holding that's similarly committed to its financial strength. Even though Maruti is investing steadily for growth in a market that is still in the early stages of car adoption, management has built a balance-sheet fortress full of cash. Hypothetically, the company would be able to keep its offices and plants open and survive for almost a decade without selling a single car. This financial strength is enabled by a lean expense structure and a capital-expenditure strategy that has generated positive free cash flow in all but two of the past 20 years, even through several industry downturns. Maruti's managers are prudent spenders, preferring to enter into contracts with Japan's Suzuki and Toyota to produce certain new car models (including electric vehicles) rather than taking on the cost of those plants itself. This allows Maruti to instead focus on marketing and selling the vehicles, all the while gaining manufacturing experience through its partners, so that it may be in a better position to make EV investments on its own once the technologies mature and demand picks up.

BSD Analysis:
The fund manager presents a strong bull case for Maruti Suzuki centered on exceptional financial strength and strategic capital allocation in India's emerging automotive market. The company's dominant market position, producing nearly half of India's cars, provides significant scale advantages in a market still in early adoption stages. Management has built an impressive cash fortress that could theoretically sustain operations for nearly a decade without revenue, demonstrating extraordinary financial discipline. The company's track record of generating positive free cash flow in 18 of the past 20 years, including through multiple industry downturns, validates management's operational excellence. The strategic partnership approach with Suzuki and Toyota for new model development, particularly electric vehicles, allows Maruti to gain manufacturing expertise while minimizing capital risk. This asset-light strategy positions the company to capitalize on EV opportunities once technologies mature and demand accelerates. The combination of market leadership, financial strength, and prudent capital allocation creates a compelling investment thesis in India's growing automotive sector.

Pitch Summary:
Localiza, Brazil's leader in the capital-intensive rental-car industry and a holding since early 2019, exemplifies the type of disciplined financial management we seek. In addition to benefiting from substantial scale in a market with few competitors, the company is focused on sustaining attractive returns on invested capital. Localiza has demonstrated it recognizes that managing a growth business sometimes means taking the foot off the gas pedal if returns on certain investments look unattractive. During the pandemic, used car prices rose significantly, driven by supply shortages and lower borrowing costs in markets such as Brazil, where the benchmark interest rate bottomed out at 2%. Like its peers, Localiza enjoyed a sudden windfall from selling its used cars during that time. But rather than deploying those supernormal profits to expand its fleet at inflated prices, Localiza's management waited for the car market to cool off. As a result of its discipline, the company should be able to increase earnings by nearly 50% this year and expand its fleet at much better prices.

BSD Analysis:
The fund manager presents a compelling bull case for Localiza based on disciplined capital allocation during volatile market conditions. The company demonstrated exceptional financial prudence during the pandemic by resisting the temptation to expand its fleet at inflated car prices, instead waiting for market normalization. This contrarian approach positions Localiza to capitalize on current market conditions with a projected 50% earnings increase. The manager emphasizes the company's substantial scale advantages in a concentrated Brazilian market with few competitors, combined with management's focus on maintaining attractive returns on invested capital. Localiza's ability to recognize when to pause growth investments demonstrates sophisticated capital discipline that should drive sustainable long-term returns. The company's market leadership position and proven management track record since 2019 support the bullish thesis. This disciplined approach contrasts favorably with competitors who expanded aggressively during the pandemic at poor economics.

BSD Analysis:
The manager initiated a new position in McKesson, attracted by the company's leading position in pharmaceutical distribution to retail drugstores, physician offices, and hospitals across the United States. McKesson operates the largest specialty drug and oncology distribution business in the US, which represents the fastest-growing and highest-margin segment of drug distribution. The company benefits from operating in a stable oligopoly structure with only two other major competitors, providing pricing stability and market share protection. Beyond core distribution, McKesson offers diversified revenue streams including technology and transaction processing services to drugstores, commercialization services to pharmaceutical manufacturers, and basic supply services to physician offices. The manager expects at least low double-digit earnings growth driven by a combination of organic operating earnings growth, accretive acquisitions, and ongoing share repurchase programs. The stable, cash-flow generative business model provides defensive characteristics while the specialty drug exposure offers growth upside in an aging demographic environment.

BSD Analysis:
The manager added to the Becton Dickinson position during the healthcare sector selloff, viewing the weakness as an attractive entry opportunity. The investment thesis is built on BD's strong competitive position with hospital customers, where the company commands pricing power due to its differentiated consumable offerings and high regulatory barriers that make replacement difficult. While the company has faced headwinds from COVID-related supply chain disruptions that impacted component procurement, the manager expects these constraints to ease and drive revenue growth in coming quarters. The operational improvement story includes margin expansion opportunities through better integration of previous acquisitions, operational efficiency gains, and SKU rationalization efforts. BD's defensive healthcare exposure and essential medical device offerings provide stability during economic uncertainty. The combination of pricing power, improving supply chain dynamics, operational leverage opportunities, and defensive end markets makes this an attractive value opportunity in the healthcare sector.