Investment Pitches

Pitch Summary:
Long-time clients may recall our liquidation of Boeing in early January 2024 following the Alaska Airlines door plug incident. We exited at around $227.62. Following a management shakeup, however, with new leadership under former engineer Kelly Ortberg, we noticed the firm was working to bounce back from safety issues, production problems, and financial losses. The company focus had decisively shifted to quality, stabilizing aircraft output, and rebuilding trust. We viewed Boeing's commercial side as a turnaround story, accommodated by the steady income provided by the firm's defense business. WestEnd began accumulating shares in December 2024 at an average price of $175.47. With strong demand for air travel and a huge backlog of plane orders, delivering aircraft on time is crucial, in which Boeing has demonstrated significant improvement this year. While the latest tragic Air India crash slightly hit the stock, it has recovered as it became apparent that pilot error was the most likely cause. We remain confident that Boeing can further improve execution and take advantage of industry trends like reshoring and increased defense spending, while capitalizing on high demand from China after the country lifted its ban Boeing deliveries due to the temporary tariff truce.

BSD Analysis:
WestEnd presents Boeing as a compelling turnaround opportunity under new leadership, having re-entered the position at $175.47 after previously exiting at $227.62 following safety incidents. The manager emphasizes Boeing's strategic pivot toward quality and operational stability under CEO Kelly Ortberg, positioning the company to benefit from robust commercial aviation demand and a substantial order backlog. The investment thesis centers on Boeing's dual revenue streams from commercial aircraft and defense contracts, providing stability during the turnaround phase. Key catalysts include improved on-time delivery performance, resolution of China delivery restrictions following tariff negotiations, and broader industry tailwinds from reshoring initiatives and increased defense spending. The manager demonstrates confidence in Boeing's execution capabilities despite recent operational challenges, viewing current valuation levels as attractive for a recovery play. The pitch reflects a contrarian approach, betting on management's ability to restore operational excellence and capitalize on structural aerospace industry growth. Boeing's position as a critical supplier in both commercial and defense markets provides multiple avenues for value creation as the company stabilizes operations.

Pitch Summary:
We began accumulating shares of GE Aerospace in April of last year, with our current position established at an average cost of approximately $149 per share. Like Boeing, GE stands to benefit from powerful macro trends including reshoring, increased defense spending, and the global rebound in air travel. But unlike Boeing, GE is not a turnaround story. The company has already successfully repositioned itself as a focused aerospace leader. It's investing heavily in U.S. factories and suppliers to expand production capacity, improve supply chain resilience, and support reshoring initiatives. GE also plays a critical role in defense. On the commercial side, it powers the majority of widebody aircraft in North America and holds a dominant position in the narrow-body segment through its joint venture with Safran Aircraft Engines, CFM International. GE's high-margin engine MRO business is another bright spot, poised for growth as airlines extend the life of existing aircraft. In effect, GE benefits both from Boeing's recovery and from broader structural demand in aviation. We also see GE as an innovation leader—applying AI and digital tools to improve predictive maintenance, streamline inspections, and enhance manufacturing processes. Altogether, our investment in GE reflects confidence in a stable, future-focused company that's positioned at the center of global aerospace and industrial growth.

BSD Analysis:
WestEnd positions GE Aerospace as a high-quality aerospace leader, having established their position at approximately $149 per share beginning in April of the previous year. The manager distinguishes GE from turnaround stories like Boeing, emphasizing the company's successful transformation into a focused aerospace pure-play with established market leadership. The investment thesis centers on GE's dominant market positions, including powering the majority of North American widebody aircraft and holding strong narrow-body market share through the CFM International joint venture with Safran. WestEnd highlights the company's high-margin MRO business as a key growth driver, particularly as airlines extend aircraft lifecycles in the current environment. The manager emphasizes GE's strategic investments in U.S. manufacturing capacity and supply chain resilience, positioning the company to benefit from reshoring trends and increased defense spending. GE's innovation leadership in AI and digital tools for predictive maintenance and manufacturing optimization adds to the investment appeal. This position reflects WestEnd's confidence in GE's ability to capitalize on both Boeing's recovery and broader structural aviation demand while maintaining operational excellence and market leadership.

Pitch Summary:
Rockwell Automation is another "picks and shovels" investment in the Industrials sector—an established company well-positioned to benefit from reshoring trends, increased defense spending, and the broader adoption of automation and AI in manufacturing. As the economy grows, we expect more industries to invest in faster, smarter, and more reliable production systems, which directly supports demand for Rockwell's offerings. Its portfolio of automation technologies—including sensors, software, and control systems—helps make domestic manufacturing more efficient and cost-effective. In the defense space, Rockwell also supplies critical systems used in military production facilities. Unlike Boeing, Rockwell is not a turnaround story. It is already a key enabler of advanced manufacturing and a leader in industrial AI, offering solutions for predictive maintenance, quality control, and digital twins that optimize factory operations with leaner workforces. We saw compelling demonstrations of Rockwell's technology at Nvidia's GTC conference in March, which reinforced our investment thesis. We began accumulating shares of Rockwell in early March at an average price of approximately $271 per share.

BSD Analysis:
WestEnd presents Rockwell Automation as a high-quality "picks and shovels" play in the industrial automation space, establishing their position at approximately $271 per share in March. The manager emphasizes Rockwell's established market leadership in industrial AI and automation technologies, distinguishing it from turnaround stories like Boeing by highlighting its current operational excellence. The investment thesis centers on Rockwell's ability to capitalize on multiple secular trends including reshoring, increased defense spending, and the broader adoption of AI-driven manufacturing solutions. WestEnd views the company's comprehensive portfolio of sensors, software, and control systems as essential infrastructure for modern domestic manufacturing efficiency. The manager highlights Rockwell's advanced capabilities in predictive maintenance, quality control, and digital twin technologies that enable optimized factory operations with reduced workforce requirements. The validation of their investment thesis through compelling technology demonstrations at Nvidia's GTC conference adds conviction to the position. This investment reflects WestEnd's confidence in the structural shift toward automated, AI-enabled manufacturing and Rockwell's positioning as a key beneficiary of these trends.

Pitch Summary:
Given our conviction in Boeing's recovery, we also sought out complementary opportunities—"picks and shovels" plays—that could benefit from Boeing's resurgence. Howmet Aerospace stood out. Beyond its direct connection to Boeing, Howmet is well positioned to benefit from broader sector tailwinds, including rising demand in aerospace and defense and the growing emphasis on building resilient domestic supply chains. As a key supplier of critical components for both commercial and military aircraft, Howmet plays an essential role in supporting next-generation manufacturing. Its expertise in advanced materials and precision engineering makes it a go-to partner for aerospace companies raising quality standards and adopting new technologies. We began building a position in Howmet in early March at an average cost of $130 per share.

BSD Analysis:
WestEnd positions Howmet Aerospace as a strategic "picks and shovels" play to complement their Boeing investment, establishing the position at $130 per share in March. The manager highlights Howmet's critical role as a supplier of advanced components for both commercial and military aircraft, emphasizing the company's expertise in advanced materials and precision engineering. The investment thesis centers on Howmet's ability to benefit from multiple aerospace sector tailwinds, including rising defense spending, commercial aviation recovery, and the strategic shift toward building resilient domestic supply chains. WestEnd views Howmet as well-positioned to capitalize on next-generation manufacturing trends and quality improvements across the aerospace industry. The company's dual exposure to commercial and defense markets provides diversification while maintaining strong sector focus. The manager emphasizes Howmet's role as a preferred partner for aerospace companies adopting new technologies and raising quality standards. This investment reflects WestEnd's conviction in the broader aerospace recovery theme while providing exposure to a more diversified supplier model compared to direct aircraft manufacturer investments.

Pitch Summary:
Long-time clients may recall our liquidation of Boeing in early January 2024 following the Alaska Airlines door plug incident. We exited at around $227.62. Following a management shakeup, however, with new leadership under former engineer Kelly Ortberg, we noticed the firm was working to bounce back from safety issues, production problems, and financial losses. The company focus had decisively shifted to quality, stabilizing aircraft output, and rebuilding trust. We viewed Boeing's commercial side as a turnaround story, accommodated by the steady income provided by the firm's defense business. WestEnd began accumulating shares in December 2024 at an average price of $175.47. With strong demand for air travel and a huge backlog of plane orders, delivering aircraft on time is crucial, in which Boeing has demonstrated significant improvement this year. While the latest tragic Air India crash slightly hit the stock, it has recovered as it became apparent that pilot error was the most likely cause. We remain confident that Boeing can further improve execution and take advantage of industry trends like reshoring and increased defense spending, while capitalizing on high demand from China after the country lifted its ban Boeing deliveries due to the temporary tariff truce.

BSD Analysis:
WestEnd presents Boeing as a compelling turnaround story under new leadership, having re-entered the position at $175.47 after previously exiting at $227.62 following safety concerns. The manager emphasizes Boeing's strategic pivot toward quality and operational stability under CEO Kelly Ortberg, positioning the company to benefit from robust commercial aviation demand and a substantial order backlog. The investment thesis centers on Boeing's ability to capitalize on macro tailwinds including reshoring initiatives, increased defense spending, and recovering air travel demand, particularly from China following the lifting of delivery restrictions. WestEnd views the combination of Boeing's commercial recovery potential and stable defense business income as providing a balanced risk-reward profile. The manager demonstrates confidence in Boeing's operational improvements and execution capabilities, while acknowledging the company's progress in addressing previous production and safety challenges. This position reflects WestEnd's conviction in aerospace sector fundamentals and Boeing's ability to regain market leadership. The timing of re-entry appears strategic, capitalizing on depressed valuations while positioning for the anticipated recovery cycle.

Pitch Summary:
Argan Inc. (AGX) operates in the industrial construction industry building natural gas powerplants. The retirement of coal-fired power plants is driving a multi-year cycle of new natural gas fired power plant construction. Tightening environmental regulation, favorable economics and the rise of artificial intelligence (AI) have propelled Argan stock to all-time highs. Argan builds these powerplants for utility companies like Vistra and Duke Energy. There are shortages of power across the country where companies like Microsoft and Meta are building new AI data centers. These data centers consume extreme amounts of power which the current grid capacity is not suited for. We estimate the company is on a path to reach $1 billion in revenue and $100 million in EBITDA as this buildout happens. The company has a current project backlog of $800 million with visibility of growth to $2 billion. Argan holds $430 million in cash, no debt and is highly profitable. Additionally, they recently increased their quarterly dividend to $0.375 for an annual dividend yield of 1.5%.

BSD Analysis:
The manager presents Argan as a compelling play on the intersection of energy transition and AI infrastructure demand. The investment thesis is built on multiple converging trends: coal plant retirements, environmental regulations, and surging power demand from AI data centers built by tech giants like Microsoft and Meta. The company's strong financial position with $430 million cash, zero debt, and high profitability provides a solid foundation. The manager projects significant revenue growth potential from the current $800 million backlog to $2 billion, targeting $1 billion in revenue and $100 million EBITDA. The recent dividend increase to 1.5% yield adds income appeal. Argan's positioning as an indirect AI beneficiary through power infrastructure is particularly attractive given the structural power shortages facing data center expansion. The stock has reached all-time highs, reflecting the strong fundamentals and multi-year growth runway.

Pitch Summary:
Zeta Global Holdings Corp. (ZETA) which we identified in early 2022, has been a top performer up over 255% year to date. We trimmed the Zeta position earlier this year as it reached an overly larger portion of investor portfolios. We continue to hold Zeta as a large weighting as we believe they can continue to take market share in the advertising industry. Zeta is a marketing technology software company which benefits from multiple market tailwinds in the advertising industry. Zeta's software platform combined with artificial intelligence helps companies' market more efficiently by targeting ads based on specific demographics. The Zeta marketing platform helps customers deliver advertisements through all channels such as email, social media, web, chat, connected TV and video. Zeta is unique in that their platform doesn't use cookies. This reduces risk from a regulatory and customer standpoint as they are not impacted by these issues. Consequently, they can take market share from competitors like Adobe, Salesforce, and Oracle who have all made legacy acquisitions to enter the space (valuations of 8-20x EV/Revenues). Oracle announced they would be exiting the advertising business on their Q4 2024 earnings call, creating an incremental revenue opportunity for Zeta. Despite broader softness in software spending, Zeta remains unaffected, citing a healthy demand environment. The company was founded by former Apple CEO, John Scully, and the management team has a strong track record of performance (the company has beat their revenue guidance for 11 consecutive quarters since their IPO in 2021). As marketing budgets tighten, Zeta is well positioned to take share and potentially benefit from the weakening macro environment. In early September, the company increased their third quarter 2024 guidance to at least $255 million in revenue, representing year over year growth of at least 35%. This accelerated from Q2 growth of 33% and Q1 growth of 24%. We went into detail on the factors influencing their growth in our previous two quarterly letters, and since then the thesis has begun to play out. Since then, the valuation gap between Zeta and their competitors is beginning to close. Zeta competes with Braze Inc. (5x EV/Revenues) and Klaviyo Inc. (9.6x EV/Revenues) who both have similar revenue growth rates yet are far less profitable than Zeta (7.1x EV/Revenues). We believe Zeta can ultimately trade at a premium valuation to both peers.

BSD Analysis:
The manager presents a compelling bull case for Zeta Global, emphasizing the company's strong competitive positioning in the marketing technology space. The investment thesis centers on Zeta's cookie-free advertising platform, which provides a regulatory advantage over legacy competitors like Adobe, Salesforce, and Oracle. The manager highlights accelerating revenue growth from 24% in Q1 to 35% in Q3 2024, demonstrating strong execution despite broader software spending weakness. Oracle's exit from the advertising business creates additional market share opportunities. The valuation appears attractive at 7.1x EV/Revenue compared to less profitable peers Braze (5x) and Klaviyo (9.6x). Strong management execution is evidenced by 11 consecutive quarters of beating revenue guidance since the 2021 IPO. The position has generated exceptional returns of 255% year-to-date, though the manager has prudently trimmed to manage concentration risk.

Pitch Summary:
The strategy's returns also benefited from a sizeable position we have been building in Saudi Telecom Co. (STC), Saudi Arabia's leading telecommunications provider. Our thesis on STC has been largely driven by valuation, which has been developing since the Public Investment Fund (PIF) offloaded a 6% stake in STC in December 2021. This event stoked fears of future sell-downs in the stock from the PIF, which currently owns 64% of the company. While we cannot be sure that the PIF will not sell more shares of STC in the future, we found that valuations were becoming increasingly attractive for such a dominant business, with free cash flow yields exceeding 10% for 2023. Our thesis received a strong boost from STC collecting nearly $4bn of outstanding receivables from government clients in the fourth quarter of 2022, which represented 8% of its market capitalisation at the time. We met with STC's management at an investment conference in Dubai and were encouraged by their efforts to improve disclosure and transparency for the investor community.

BSD Analysis:
The manager presents a value-driven investment thesis for STC based on attractive valuations and improving fundamentals. The stock became compelling following PIF's 6% stake sale in December 2021, which created an overhang that depressed valuations despite the company's dominant market position. With free cash flow yields exceeding 10% for 2023, STC offers exceptional cash generation relative to its market value. The collection of nearly $4 billion in government receivables in Q4 2022 significantly strengthened the balance sheet and represented 8% of market capitalization, demonstrating the company's ability to monetize its government relationships. Management's commitment to improved disclosure and transparency, as evidenced during the Dubai investment conference, suggests better corporate governance practices. The manager is building a sizeable position, indicating high conviction in the turnaround story. STC's dominant position in Saudi telecommunications, combined with attractive valuation metrics and improving cash flow dynamics, creates a compelling value opportunity in the communication services sector.

Pitch Summary:
For example, National Co. for Learning and Education (NCLE), a prominent Saudi K-12 school operator, reported year-on-year revenue and net income growth of 48% and 50%, respectively, in its last quarterly reporting period. Our team spent a day touring various NCLE-operated schools with the CEO in Riyadh and we were thoroughly impressed with the quality of the staff, facilities, and unique culture preserved by management dating back to NCLE's roots as a family-run enterprise.

BSD Analysis:
The manager presents a compelling bull case for NCLE based on exceptional financial performance and operational excellence. The company delivered impressive growth metrics with 48% revenue growth and 50% net income growth year-over-year, demonstrating strong execution in the Saudi education market. The manager's on-site due diligence, including facility tours with the CEO, reinforced confidence in the company's operational quality and management capabilities. NCLE's family-run heritage appears to have created a distinctive corporate culture that differentiates it from competitors. The position benefited from meaningful valuation multiple expansion during the quarter, suggesting market recognition of the company's strong fundamentals. The Saudi education sector appears well-positioned given the Kingdom's demographic trends and Vision 2030 initiatives. NCLE's combination of strong growth, quality operations, and cultural differentiation makes it an attractive long-term investment in the Saudi consumer discretionary space.

Pitch Summary:
As long-term shareholders in Toyota Industries, the global leading supplier of forklifts and auto air-con compressors, we have seen meaningful progress towards unlocking shareholder value, while also encountering the pitfalls associated with weak corporate governance. Since first investing in the business in 2020, we have flagged the unrealized value in the company's mix of businesses, alongside its heavily over-capitalized balance sheet. Indeed, at the time of initiation, the value of Toyota Industries' cross-shareholdings exceeded its market capitalization. We have made cautious assumptions around capital allocation in our modelling of the company. While acknowledging the Toyota Group's undue influence, the company's exceptional balance sheet value supported the skew of outcomes. Over several years, we have actively engaged with the company to encourage improvements in governance practices. It was encouraging to see recent steps in the right direction, including the reduction of group cross-shareholdings and the initiation of a multi-year program of share buybacks. However, there is still considerable progress to be made. In April 2025, media rumors first emerged that the Toyota Group wanted to privatize Toyota Industries for around ¥20,000 per share, a 40% premium to its market price at the time. The share price shot up on the news. We spoke to the company and flagged that we felt this offer undervalued the business. In June 2025, the formal announcement of a tender offer from the Toyota Group at ¥16,300 per share was released. While 23% above the undisturbed share price (and well above our purchase price), we believe this offer grossly undervalues Toyota Industries. On a simple, sum-of-the-parts valuation, the implied multiple for the strong underlying businesses of less than 4x EBIT is unjustifiably low, even without including the potentially significant real estate value (which remains undisclosed) or any control premium. We have not been alone in pointing this out to the company.

BSD Analysis:
Mondrian presents a compelling value thesis on Toyota Industries, highlighting significant undervaluation despite recent takeover interest from the Toyota Group. The manager's bull case centers on the company's exceptional balance sheet strength, with cross-shareholdings that historically exceeded market capitalization at initiation in 2020. The investment thesis is supported by the company's dominant market position as a global leader in forklifts and automotive air conditioning compressors, combined with meaningful progress in corporate governance reforms including cross-shareholding reductions and share buyback programs. The manager's rejection of the Toyota Group's ¥16,300 per share tender offer demonstrates conviction in their valuation methodology, arguing that the implied 4x EBIT multiple grossly undervalues the underlying businesses. The sum-of-the-parts analysis suggests significant upside potential, particularly when considering undisclosed real estate assets and control premiums. While corporate governance challenges persist within the Toyota Group structure, the manager views this as a catalyst for unlocking shareholder value as Japan's corporate reform momentum continues to build. The investment represents a classic value opportunity with strong downside protection from balance sheet strength and multiple expansion potential from governance improvements.

Pitch Summary:
Geron is a biotechnology company with a commercialized drug launching to treat blood cancer. Its product is newly entering a sizable market with broad applicability for patients who cycle through a variety of treatments throughout the course of the disease, allowing for a potentially larger revenue opportunity than currently appreciated by the market.

BSD Analysis:
ClearBridge initiated a position in Geron, viewing it as an undervalued biotechnology company with a newly commercialized blood cancer treatment. The investment thesis centers on the company's product entering a sizable addressable market with significant commercial potential. A key aspect of the opportunity is the broad applicability of Geron's treatment for patients who cycle through multiple therapies during their disease progression, creating multiple treatment opportunities per patient. The managers believe the market is underappreciating the revenue potential, suggesting the stock may be undervalued relative to the commercial opportunity. Blood cancer treatments often command premium pricing due to their life-saving nature and limited treatment options. The cycling nature of cancer treatments means patients may use Geron's product multiple times throughout their treatment journey, potentially creating recurring revenue streams. Given the specialized nature of oncology treatments and the regulatory barriers in biotechnology, Geron's commercialized product provides a competitive moat and significant revenue potential in the growing oncology market.

Pitch Summary:
Hims & Hers is a health care IT services company providing a consumer telehealth platform across a variety of men's and women's health categories, including weight loss, dermatology and mental health. With an integrated experience, strong brand recognition and a convenient stigma-free value proposition to consumers, the company is seeing robust revenue growth while improving profitability.

BSD Analysis:
ClearBridge added Hims & Hers as a new position, attracted by the company's comprehensive telehealth platform serving both men's and women's health needs. The investment thesis is built on the company's integrated experience across multiple health categories including weight loss, dermatology, and mental health. Key competitive advantages include strong brand recognition and a convenient, stigma-free value proposition that appeals to consumers seeking discreet healthcare solutions. The managers highlight the company's robust revenue growth trajectory while simultaneously improving profitability, indicating strong unit economics and operational leverage. The telehealth market has experienced significant growth, particularly in areas where consumers prefer privacy and convenience over traditional healthcare delivery. Hims & Hers' focus on sensitive health categories creates a defensible market position, as patients value the discretion and accessibility of the platform. The combination of revenue growth and improving profitability suggests the company is successfully scaling its business model and capturing market share in the expanding telehealth sector.

Pitch Summary:
Archrock is a production-driven compression service provider supporting natural gas production. There are multiple catalysts driving a secularly positive trajectory for natural gas demand and Archrock operates in a consolidated, capacity-constrained market providing critical services supporting production.

BSD Analysis:
ClearBridge initiated a position in Archrock, viewing it as a beneficiary of secular growth in natural gas demand with multiple positive catalysts. The investment thesis centers on Archrock's role as a production-driven compression service provider that supports natural gas production infrastructure. The managers identify multiple catalysts driving a secularly positive trajectory for natural gas demand, likely including LNG exports, industrial demand, and power generation needs. A key competitive advantage is Archrock's position in a consolidated, capacity-constrained market where the company provides critical services essential to natural gas production. This market structure suggests pricing power and stable demand for Archrock's services. The capacity constraints in the compression services market create barriers to entry and support favorable industry dynamics. Given the essential nature of compression services in natural gas production and the secular growth drivers for natural gas demand, Archrock appears well-positioned to benefit from increased utilization and potentially higher pricing for its services.

Pitch Summary:
Rocket Lab USA is a manufacturer of spacecraft and satellite components as well as a service provider for satellite launch services, primarily focused today on smaller payloads. With an innovative founder-led management team competing in an enormous market with significant growth in commercial, government and classified applications, we see significant growth potential.

BSD Analysis:
ClearBridge added Rocket Lab USA as a new position, attracted by the company's dual business model as both a spacecraft manufacturer and satellite launch service provider. The investment thesis is built on the company's focus on smaller payloads in the rapidly expanding space economy. The managers highlight the innovative founder-led management team as a key competitive advantage, suggesting strong execution capabilities and vision. The addressable market is described as enormous with significant growth opportunities across commercial, government, and classified applications, indicating multiple revenue streams and end markets. The space industry is experiencing unprecedented growth driven by satellite constellation deployments, government space initiatives, and commercial space applications. Rocket Lab's positioning in the small payload segment allows it to capture market share in a less competitive niche compared to heavy-lift launch providers. The company's integrated approach of manufacturing spacecraft components while also providing launch services creates potential synergies and recurring revenue opportunities.

Pitch Summary:
Glaukos is a medical device company focused primarily on treating ophthalmological conditions such as glaucoma and corneal health. With several commercialized products and an innovative track record, the company is in the process of launching a potential blockbuster product, iDose, which is a drug-device combination with a variety of administration/efficacy advantages in treating glaucoma.

BSD Analysis:
ClearBridge initiated a position in Glaukos, viewing it as an innovative medical device company with strong commercial potential in ophthalmology. The investment thesis centers on the company's pipeline of commercialized products and its track record of innovation in treating glaucoma and corneal health conditions. The key catalyst is the launch of iDose, described as a potential blockbuster product that combines drug and device technology. This drug-device combination offers significant administration and efficacy advantages over existing glaucoma treatments, positioning Glaukos to capture meaningful market share. The managers appear confident in the company's ability to execute on this product launch and capitalize on the large addressable market for glaucoma treatments. Given the specialized nature of ophthalmological devices and the regulatory barriers to entry, Glaukos appears well-positioned to benefit from its innovative product portfolio.

Pitch Summary:
Meanwhile, we initiated positions in CVS, Inditex and TE Connectivity. Poor execution at Aetna, CVS's health insurance business, and declining retail profits precipitated a decline in the shares which created an attractive entry point. We anticipate that underwriting improvements for its Medicare Advantage program will yield considerable profit growth over the next few years, which should lead to a re-rating in the stock.

BSD Analysis:
The managers initiated a position in CVS Health following a significant decline driven by poor execution at Aetna and declining retail profits. They view this as an attractive entry point for a quality healthcare services company. The investment thesis centers on anticipated underwriting improvements in CVS's Medicare Advantage program, which they expect to drive considerable profit growth over the next few years. This operational improvement should lead to multiple expansion and stock re-rating. The position represents a contrarian bet on management's ability to fix execution issues at the health insurance business. The timing appears opportunistic, capitalizing on temporary operational challenges rather than structural problems. CVS offers exposure to the growing Medicare Advantage market with potential for margin expansion as underwriting discipline improves.

Pitch Summary:
With that as the backdrop, we did make a sale early this quarter as Axon's valuation had gotten ahead of itself. The stock's IRR for our day one investors was over 80% annually. A good chunk of that was due to multiple expansion so the valuation piece of the Infuse formula has been severely handicapped. The forward expected returns simply aren't good enough compared to some other opportunities so we trimmed significantly.

BSD Analysis:
The manager executed a disciplined sell decision on Axon after achieving exceptional returns of over 80% annually for day-one investors. The position was trimmed significantly due to valuation concerns, with much of the gains attributed to multiple expansion rather than fundamental improvement. The manager's decision reflects a systematic approach to portfolio management, prioritizing forward-looking expected returns over past performance. While Axon has clearly been a successful investment, the current valuation no longer meets the fund's risk-adjusted return requirements. The sale demonstrates the manager's commitment to the 'Infuse formula' which appears to emphasize attractive valuations as a key component. This disciplined approach to taking profits when valuations become stretched is consistent with long-term wealth preservation strategies. The decision also aligns with the manager's broader philosophy of optimizing after-tax returns while maintaining portfolio discipline.

Pitch Summary:
Headquartered in Mountain View, California and founded by Larry Page and Sergey Brin, Alphabet is one of the world's most dominant and innovative technology companies. Best known as the parent company of Google, Alphabet generates most of its revenue from digital advertising, particularly search. Google currently holds an estimated 87% market share in U.S. search and nearly 90% globally, underpinning a highly profitable ad business that accounts for roughly 75% of Alphabet's total revenue. While Google was founded in 1998 and became public in 2004, Alphabet was created in 2015 to provide greater transparency and operational independence across its varied business lines. Beyond its core, the company has increasingly diversified into accelerating products, including Google Cloud and YouTube's suite of subscription services (YouTube Premium, YouTube TV and YouTube Music). Today, Google Services (Search, YouTube, Chrome, Android and the Play Store) makes up ~87% of total revenue, while Google Cloud represents ~13%. Alphabet also invests in longer-term innovation through its Other Bets segment, which includes autonomous driving (Waymo), life sciences (Verily) and advanced AI research (DeepMind).

BSD Analysis:
Aristotle Capital views Alphabet as significantly undervalued at less than 12x normalized earnings, emphasizing the company's dominant market position with 87% U.S. search share and nearly 90% globally. The manager highlights Alphabet's integrated ecosystem across Search, YouTube, Android, Chrome, and Gmail that supports user retention and advertising efficiency. Key growth drivers include Google Cloud's emerging profitability and meaningful scaling, YouTube's $45+ billion revenue run-rate expanding through both ad-supported and subscription models, and sustained leadership in digital advertising. The investment thesis centers on three primary catalysts: continued dominance in search reinforced by unmatched first-party data, improving Google Cloud profitability and market share gains against AWS and Microsoft Azure, and YouTube TV's trajectory to become the largest U.S. pay-TV provider by 2026. The manager views Alphabet's AI expertise through the Gemini model family as a potential 'free option' that could enhance monetization across Ads, Search, and Cloud, though this upside is not explicitly included in valuation estimates.

Pitch Summary:
Founded in 1940 and with headquarters in Pennsylvania, Air Products and Chemicals is a leading global supplier of industrial gases, including oxygen, nitrogen, helium, hydrogen and others. These essential gases serve critical roles across a wide range of industries, such as refining, chemicals, metals, electronics, manufacturing, healthcare, and food manufacturing and packaging. Air Products is the leading global supplier of hydrogen, with a robust distribution network across North America. Roughly 50% of the company's revenue is generated through onsite delivery. This method usually entails 15- to 20-year contracts where Air Products builds a facility at the customer's site or nearby (or delivers the gases through pipeline systems). These long-term contracts tend to include pass-through and take-or-pay provisions, which provide stability and predictability of cash flows. The company's merchant gases (roughly 35% of revenue) are delivered in bulk by tanker in either liquid or gas form, usually under five-year contracts, providing a steady but more variable revenue stream. Smaller quantities can also be delivered to customers, usually packaged in cylinders. (This business represents less than 15% of revenue.) Over the last several years, Air Products has pursued opportunities in clean hydrogen, including the construction of two megaprojects in Saudi Arabia (NEOM) and Louisiana. Unlike its traditional model, these projects were started without offtake agreements, a shift that raised concerns. Amid delays and rising costs, activist investor Mantle Ridge took a stake in the company, advocating for a more disciplined approach to capital allocation and succession planning. In response, Eduardo Menezes joined as CEO from Linde, where he led the company's EMEA operations. Mr. Menezes quickly refocused the company by divesting non-core assets and exiting three projects outside its industrial gases and hydrogen expertise. We view these changes positively, as they enhance strategic focus and align the company with its core strengths.

BSD Analysis:
Aristotle Capital initiated a position in Air Products following significant operational improvements under new CEO Eduardo Menezes, who joined from competitor Linde. The manager views the company as an attractive oligopoly with high barriers to entry, benefiting from mission-critical products and long-term contracts (15-20 years for onsite delivery with take-or-pay provisions). The investment thesis centers on Air Products' leading position in hydrogen supply and its robust North American distribution network, with 50% of revenue from stable onsite delivery contracts. Key catalysts include portfolio optimization through divestiture of non-core assets, refocused strategy on industrial gases and clean hydrogen, and completion of megaprojects in Saudi Arabia (NEOM) and Louisiana that should significantly enhance earnings. The manager estimates normalized capital expenditures at 18% of sales and projects 12% returns on contracted projects, purchasing shares at an attractive discount to intrinsic value. The 43-year dividend growth history demonstrates consistent cash flow generation capabilities.

Pitch Summary:
Sony, the global leader in video games, image sensors, music and movies, was the top contributor for the period. The company delivered strong quarterly results, driven primarily by its gaming and music businesses, and announced a new executive leadership structure. In gaming, Sony reported a record-high 129 million monthly active users, a 20% year-over-year increase in PlayStation Plus revenue and an expanding user base, as 40% of new PS5 console buyers were new to the platform. The Music segment also continued to benefit from global streaming tailwinds, delivering double-digit profit growth. In a significant leadership transition, Sony announced that, effective April 1, 2025, Hiroki Totoki, currently COO and CFO, would succeed Kenichiro Yoshida as CEO. Our original investment in Sony was grounded in the strategic transformation led by Yoshida-san, where Totoki-san was an instrumental partner in driving Sony's pivot away from commoditized businesses while spearheading investments in content IP and semiconductors. Looking ahead, we continue to see opportunity for Sony to capitalize on its unique position as both a content creator and platform owner. The company's ability to integrate gaming, music, anime and film and leverage IP across platforms (e.g., Crunchyroll and its recent partnership with Kadokawa) should position it well for long-term value creation.

BSD Analysis:
Aristotle Capital views Sony as a compelling investment driven by its unique position as both a content creator and platform owner across multiple entertainment verticals. The manager highlights strong operational momentum with record-high gaming metrics including 129 million monthly active users and 20% YoY PlayStation Plus revenue growth, while 40% of new PS5 buyers represent platform expansion. The music segment benefits from global streaming trends with double-digit profit growth. The upcoming CEO transition from Kenichiro Yoshida to Hiroki Totoki is viewed positively, as Totoki was instrumental in Sony's strategic transformation away from commoditized businesses toward content IP and semiconductors. Key catalysts include Sony's ability to leverage intellectual property across integrated platforms, including gaming, music, anime, and film. The manager emphasizes Sony's strategic partnerships with Crunchyroll and Kadokawa as examples of cross-platform IP monetization that should drive long-term value creation.