Investment Pitches

Pitch Summary:
Korea's Samsung Electronics is perhaps best known for its high-end OLED TVs, audio equipment, popular Galaxy smartphones, and wide array of home appliances. A part of the business that consumers don't see—memory chips—drives the bulk of the conglomerate's earnings, but it is also what has been weighing on the stock's valuation. A memory downcycle has impacted Samsung's profitability, while investors worry its competitors have an insurmountable lead in a specific type of high-end memory required for AI applications. We expect the characteristically cyclical memory market to ultimately normalize, as supply and demand come back into balance, while Samsung should maintain its dominance in conventional chips. With shares trading at a low double-digit earnings multiple despite 15% projected annual earnings growth, we believe investors are underappreciating Samsung's scale and financial strength, moderating growth capex, and dominant smartphone, display, and consumer electronic franchises, while overreacting to its technological gap with peers on next-generation memory chips. While memory is the main driver of Samsung's expected earnings improvement, roughly a third of the company's estimated normal earnings power—representing approximately $147bn in FY24 sales—is derived from its other segments. Its 58,000-employee, $20bn revenue subsidiary, Samsung Display, designs and manufactures OLED display panels for devices such as smartphones, laptops, and TVs. This business has a leading 50% global market share, and makes up ~10% of Samsung's companywide revenue. Samsung's semiconductor foundry business, though relatively subscale, is still the second largest chip manufacturer in the world behind TSMC, generating $18bn in annual sales. This business has been in the red for the past two years, though losses are expected to narrow by way of yields improving or capacity reductions, and we are only assuming breakeven profitability in our model. Samsung's mobile unit is a global juggernaut, responsible for 223 million smartphone sales last year (behind only Apple), translating to $7bn in operating profit. This segment, which we estimate makes up about 20% of normal operating income, has acted as an earnings ballast for the company, with stable volumes, low-double-digit margins that are rangebound, and steadily rising ASP driven by high-end popular models like its foldable Galaxy Z phone. Through its massive consumer electronics arm, Samsung sold 31 million PCs last year (fifth most sold globally), is a leading manufacturer of refrigerators, microwaves, washing machines, and other appliances, and is the largest TV-maker in the world—a position it has held for 19 consecutive years. Dynamic random access memory, or DRAM, is a type of memory that provides a CPU or GPU with fast access to temporary data storage for programs to run efficiently. It is a crucial component in increasingly powerful electronic devices, such as smartphones, PCs, tablets, and servers. Since 2007, DRAM demand has grown at a nearly 26% CAGR, with industrywide revenue reaching $100bn in 2024. DRAM typically makes up less than 10% of a system's total cost, but it is essential for modern CPUs to function, meaning volumes should continue to grow with computing power. The industry is structured as an attractive oligopoly, with Samsung's leading 39% market share followed by Korean peer SK Hynix and US-based Micron. These three companies collectively supply nearly 94% of the market. Samsung's historical dominance in conventional DRAM is a result of its scale and superior technology, affording it a discernable unit cost advantage over Hynix and Micron. High-bandwidth memory (HBM) is a type of non-conventional DRAM enabling extremely high-bandwidth data transfer needed for artificial intelligence and other emerging technologies. While not a major part of the memory stack today, HBM is expected to become an increasingly larger piece of the profit pool over time, making it an important growth driver. While it is a much smaller portion of their overall memory business, Samsung also maintains a leading ~29% market share position in NAND flash, a type of storage technology used in portable memory devices such as thumb drives and SD cards. The NAND industry is roughly half the size of DRAM, but it is similarly concentrated, with the largest 6 players controlling 90% of the supply. The surge in consumer spending during the early months of the COVID-19 pandemic was particularly acute for consumer electronics, with unit sales of notebooks and tablets up 44% and 81% respectively in the fourth quarter of 2020. Memory suppliers, assuming sustained peak demand, boosted capacity throughout 2021/22 just before end demand started to normalize; as a result, conventional DRAM prices collapsed, sinking industrywide profitability in 2023, and the market is still digesting the oversupply today. NAND, similarly affected by oversupply, also entered a downcycle, with prices falling nearly 50% year-over-year in 2023, exacerbating the profit decline in Samsung's core memory unit. Samsung shelled out billions of dollars to boost production of conventional, more lagging-edge memory chips whose demand was waning due to inventory destocking. For context, Samsung's DRAM capex between 2021 and 2023 accounted for 51% of total industry investment, while its DRAM sales only represented 43% of global industry revenue. Its cash return on DRAM, which incorporates both operating costs and capex, plummeted to 3% in 2023 after averaging over 30% pre-COVID. With the stock down roughly 50% from its early 2021 high, we significantly increased our stake in late 2024. Samsung's management is focusing on what they can control to improve profitability in their core memory business. The company is pulling back capex on wafer expansion and redirecting spending towards node migration and HBM capacity. This should result in a memory mix that's less exposed to lagging-edge nodes in oversupply, and more in line with Hynix and Micron's leading-edge skew. Investors have unsurprisingly been fixated on HBM, given its long-term growth potential and importance in powering the AI revolution. To that end, Samsung has thus far lagged both Hynix and Micron in qualifying for high-end HBM used in AI GPUs—specifically NVIDIA's—eliciting some concern from investors. Based on our research, we believe that Samsung's lack of qualification is more a result of being caught off guard by how quickly AI demand has exploded versus it having an insurmountable technology gap with peers on HBM chips. We therefore believe Samsung will ultimately participate in the anticipated demand wave, potentially capturing market share nearly proportional to its conventional DRAM share. It's also worth noting that Samsung has $63bn in net cash on its balance sheet, whereas its two competitors—Hynix and Micron—are both levered. The tech giant clearly has the financial wherewithal to return capital to shareholders, and management has been doing just that. Since 2018, when Samsung enhanced its capital return policy, the company has paid out nearly $67bn in cumulative dividends to shareholders, which equates to 34% of aggregate net income. Encouragingly, for the first time since 2017, Samsung started buying back its stock, and we expect the company to continue returning more of its war chest to shareholders going forward. It's easy to envision a more electrified, connected, and technologically advanced world in the near future. DRAM—particularly leading-edge nodes and, increasingly, HBM—will undeniably play a critical role in enabling such an environment. Memory content per device has steadily risen over the past two decades, with server DRAM exhibiting exponential growth (driven, in part, by AI servers), as computing power continues to expand. After a period of somewhat short-sighted overinvestment, Samsung is, in our view, well-positioned to capitalize on an anticipated memory upcycle. Regarding the U.S. tariff risk, smartphones, PCs, and other electronics - including memory chips themselves - are currently exempt from reciprocal levies, so the direct impact on Samsung is minimal. Regardless, we are closely monitoring the situation, and our model reflects a wider range of outcomes reflecting U.S. trade policy uncertainty. Even in the unlikely scenario that Samsung proves to be structurally behind its peers at the leading edge in HBM, and the company's historical competitive dynamic in conventional DRAM deteriorates, resulting in commodity-like returns in perpetuity—none of which we've seen any evidence of—we believe the stock is fairly valued today, implying the HBM downside scenario is largely priced in. In a concentrated, three-player market, we believe the gains from DRAM growth should largely accrue to Samsung in the years ahead, which the market, by ascribing a 8.2x multiple on our estimate of normal earnings, isn't appreciating, in our view.

BSD Analysis:
Pzena presents a compelling contrarian case for Samsung Electronics, viewing the current memory downcycle as a temporary headwind masking the company's structural advantages. The manager emphasizes Samsung's dominant market position across multiple segments, including a 39% share in DRAM memory, 50% in OLED displays, and leadership in smartphones and consumer electronics. Samsung's diversified revenue base provides earnings stability, with non-memory segments contributing roughly one-third of normal earnings power. The firm believes Samsung's perceived lag in high-bandwidth memory (HBM) for AI applications is overstated, arguing the company was simply caught off-guard by rapid AI demand rather than facing insurmountable technological gaps. Samsung's fortress balance sheet with $63bn in net cash provides significant financial flexibility for capital returns and strategic investments. The manager sees attractive risk-reward at current valuations, with shares trading at 8.2x normal earnings despite 15% projected annual earnings growth, suggesting the market is overreacting to cyclical headwinds while underappreciating Samsung's scale, diversification, and long-term positioning in the growing memory market.

BSD Analysis:
Ensemble Capital positions IDEX as a potential next-generation serial acquirer comparable to successful companies like TransDigm and Heico. The fund's investment thesis rests on IDEX's three-decade track record of disciplined acquisitions in niche industrial markets, generating 15% annualized returns since its 1989 IPO versus 10.5% for the S&P 500. The company's strategy focuses on acquiring #1 or #2 market share businesses in small, fragmented markets selling mission-critical components where failure costs are high, creating natural switching costs and pricing power. IDEX's decentralized management approach allows subsidiary general managers operational autonomy while applying the company's proven 80/20 optimization system inherited from successful acquirers like Danaher and Illinois Tool Works. With over $600 million in free cash flow and capacity for additional debt, IDEX has significant capital deployment potential for larger acquisitions. The company's diversified portfolio across healthcare, industrial, and fire safety markets provides stability, while its focus on higher-growth areas like medical applications and optical devices positions it for continued expansion. Management's minimum 25% EBITDA margin targets and disciplined return thresholds demonstrate capital allocation discipline that has driven consistent outperformance.

Pitch Summary:
Ferrari: Ferrari has had a very successful run since we first bought shares in the company in 2017. It has been one of our most successful investments since, with shares rising over five times, and understandably so given how phenomenal this business is and how well it has been managed. Initially spun out of Fiat (now Stellantis) in 2015, it was a rare jewel within the parent company, where its value was hidden among more standard and premium cars sold under brands such as Fiat, Alpha Romeo, Maserati, Chrysler, Jeep, and others. Under the leadership of the astute business manager Sergio Marchionne, who had run Fiat since 2004, Ferrari came to be recognized as the undervalued and unique asset that it was within its parent. It was being run below its potential, perhaps because of over-conservatism in reverence to its legacy – a legacy of offering products that were highly desired by many and undersupplied to only a limited set of privileged customers, who built up their relationship with Ferrari buying nearly two-thirds of its annual output. This allowed them to continue getting access to the most desirable, collectible models Ferrari built in the future. "Build one less car than the market demand" is a quote attributed to founder Enzo Ferrari, yet where that line stands is more art than science. Conservatism on the supply/demand balance is generally a healthy strategy in protecting the value and exclusivity of the brand. But being too conservative results in too much unrealized value left on the table. After the company went public in 2015, it reported revenue of just under €3 billion for the year while shipping less than 8,000 cars at an average selling price (ASP) of €270,000 per car. EBITDA margins were 25%. Importantly, by our calculation, its return on invested capital (ROIC) was over 100%. Ferrari was demonstrating economics more in line with digital and luxury businesses and deserving of a much higher valuation, more like a Hermes or Apple, rather than a typical auto company. In 2024, the company expects to generate over €6.7 billion in revenue in 2024 with EBITDA margins exceeding 38%. We expect over 14,000 cars to be shipped with an ASP over €400,000 – that is an ASP increase of €100,000 over the past 5 years! There were two important things we recognized that the market did not appear to fully back in 2017 that made this an attractive investment for us. When we did our first deep dive into the business in 2016, we estimated there were 2-3 million potential high net worth customers who could afford to buy a Ferrari. Consequently, selling less than 8,000 cars meant a customer capture percentage of less than 0.1% in any given year. Even this year, when the company will likely sell 14,000 cars, we believe it is still selling to less than 0.1% of its potential market. That seemed a very conservative ratio, albeit limited by the appeal of its 2-door, 2-seat ultra-high performance sports car form factor. But we came to believe that Ferrari could increase its appeal to a broader set of customers (increase demand) by widening its form factors to 4-door cars and SUVs. In addition, its ASP had only risen at a slightly higher than inflation rate of 4% per year over the prior decade. And the company had long wait lists at those prices that sometimes surpassed 18 months. Meanwhile, the wealth of customers in this segment grows at something like 5-10% per year from returns on their assets and businesses. We realized there was a growing gap between the wealth of their customer base and the pricing that Ferrari captured. For a material proportion of the customer base, Ferrari's appeal as a Veblen good, means that the more people who could afford one, the less desirable the product because its value comes from its differentiation from the ordinary. A Veblen good is one where demand increases with price precisely because they are so hard or expensive to attain. Ferrari's current CEO Benedetto Vigna has succinctly described Veblen good's relevance to Ferrari saying: "The client is giving a value to our cars because they are unique, because they are limited, because they are exclusive. We could make more, but that does not make sense. We will offend our clients." Our view was that Ferrari would be required to raise prices at a rate that kept pace with their customers' wealth to continue delivering to customers the Veblen expectations of the product, with shareholders disproportionately benefiting from the increased pricing growth. It was clear to us that there was a large gap between market expectations priced into Ferrari's stock and the higher fair value implied by our analysis. Interestingly the large gap persisted for years even after Ferrari began to confirm our thesis when it revealed its 2022 financial targets at the 2018 Investor meeting. Under Sergio Marchionne, Ferrari began to push the envelope on volumes but in an intelligent manner that included leveraging its core assets to build new form factors that would expand the appeal of its cars to new customers. For example, the Ferrari Roma has been a much bigger hit with women than the traditional style of the 488, F8, or 812. The recently launched Purosangue appears to have every sign of success with those that might have the means to buy a Ferrari but would rather it come with the utility of four doors that can also bring three passengers and some gear along for a weekend. Ferrari also rolled out the SF90 and 296 GTB/GTS plug-in hybrid models that appealed to a younger segment of its market while making strides towards the global trend of cleaner emissions, but without sacrificing the performance and driving dynamics of Ferrari. These hybrids are likely to also do well in the Chinese market over time, a large fast-growing market for high net worth (HNW) individuals. These new form factors have increased the appeal of Ferrari across new HNW customer segments without necessarily oversupplying Ferraris within each model line thereby preserving its exclusivity. We see evidence of this from the fact that nearly all models are sold out through 2025 with average selling prices approaching a record €400,000. This also confirms our initial thesis that Ferrari's customers would accept higher prices while driving margins and profits benefiting shareholders. With the launch of the Icona design-oriented collector cars such as the SP1, SP2 and SP3, Ferrari was able to effectively sell high value limited cars more often per decade than when it was strictly reserved for hypercars like the LaFerrari, the Enzo, or the F40. These cars sold for more than €1MM, while the SP3 now surpasses €2MM. Ferrari also opened up the €500,000+ pricing tier with its higher priced SF90 and Purosangue for the normal production, non-collector cars, which sell in higher volumes further supporting the brand's higher pricing strategy. The result of this more aggressive (and in our view more customer aligned) pricing strategy has resulted in faster revenue growth and higher margins. The market has taken notice in recent quarters and for the first time substantially closed the gap we persistently saw with our own fair value estimates. In conclusion, we believe that management at Ferrari has built one of the strongest luxury brands and customer bases in the world with a complimentary robust business model that uniquely plays to these strengths. They have indeed succeeded in polishing the rough diamond that Fiat spun out 8 years ago. Having recognized the jewel of a business that it was early on, as shareholders we were richly rewarded as the company executed a value enhancing strategy and as the market came to recognize its pricing and earnings power over time.

BSD Analysis:
Ensemble Capital presents a compelling bull case for Ferrari based on the company's exceptional transformation since its 2015 IPO. The fund's thesis centers on Ferrari's ability to operate as a luxury Veblen good where higher prices actually increase demand among ultra-high net worth customers. The manager highlights Ferrari's remarkable financial evolution from €3 billion revenue with 25% EBITDA margins in 2015 to expected €6.7 billion revenue with 38% EBITDA margins in 2024, while increasing average selling prices from €270,000 to over €400,000. The investment case is strengthened by Ferrari's strategic expansion into new form factors like the Purosangue SUV and Roma, which broaden customer appeal without diluting brand exclusivity. Management's disciplined approach to maintaining scarcity while capturing more value from a growing wealthy customer base has resulted in over 100% return on invested capital. The fund emphasizes Ferrari's unique positioning as a luxury brand with digital-like economics rather than a traditional automaker, justifying premium valuations similar to Hermès or Apple. With all models sold out through 2025 and successful launches of million-euro collector cars, Ferrari demonstrates sustainable pricing power in an expanding market of high net worth individuals.

Pitch Summary:
Bunzl, the UK based distributor, sells a broad range of "goods not for resale" including packaging for grocers, cleaning equipment in canteens and health and safety equipment in warehouses. The key competitive advantage for Bunzl is the ability to be a one stop shop for all products in one delivery reducing customers costs and complexity, whilst also reducing the need for customers to hold inventory. Bunzl's end markets are growing over time, at 2-3% per annum, weighed down by exposure to retail end markets. Despite this, the company has consistently delivered per-share growth in revenue, profits, and dividends of 8–9% per year over the past two decades. This has been driven by a disciplined and repeatable acquisition strategy focused on very fragmented markets across many countries. With a pipeline of around 1,000 potential targets, Bunzl still sees ample room for continued consolidation-led growth. Bunzl generated around £600m of free cash flow last year, equivalent to a free cash flow yield of almost 8%. Historically Bunzl traded on a 5-6% free cash flow yield, implying upside of around 45%.

BSD Analysis:
Overstone identifies Bunzl as an attractive consolidation play in the fragmented distribution market for non-food consumables. The company's competitive moat stems from its one-stop-shop model, reducing customer costs and inventory requirements across packaging, cleaning, and safety products. Despite modest 2-3% end market growth constrained by retail exposure, Bunzl has delivered impressive 8-9% annual per-share growth over two decades through disciplined acquisitions. The manager highlights a substantial pipeline of 1,000 potential targets, suggesting continued consolidation opportunities in fragmented markets globally. At an 8% free cash flow yield versus historical 5-6% levels, the valuation appears compelling with 45% implied upside. The £600m annual free cash generation provides substantial firepower for continued acquisitions while supporting dividend growth. This represents a quality compounder trading at an attractive valuation with clear visibility into future growth drivers.

Pitch Summary:
Kyocera, a Japanese conglomerate, possess all the qualities and vices that we have come to expect from Japanese companies. It is a conglomerate structure with industrial assets that span semiconductor components, printing solutions, pneumatic tools, and mobile phones. It also maintains a pristine balance sheet and significant cross-shareholdings, most notably in KDDI, the Japanese telecom firm. The company appears to be at an inflection point. While it has acknowledged the need for reform, the market remains sceptical. A significant restructuring is underway, which is unsurprising considering the difficulties facing Kyocera's core operations. The biggest risk is a return to past habits of poor capital allocation and a disregard for shareholders. However, the current valuation —0.7x price to book— broadly reflects this outcome and ignores the potential for change. Our fair value of 1x price to book implies over 40% upside.

BSD Analysis:
Overstone presents a classic Japanese turnaround story with Kyocera, betting on corporate reform at an attractive valuation. The manager acknowledges the company's conglomerate structure spanning semiconductors, printing, tools, and mobile phones, while highlighting its strong balance sheet and strategic KDDI stake. The investment thesis centers on a significant restructuring currently underway, with management finally acknowledging the need for reform after years of poor capital allocation. At 0.7x price-to-book, the valuation appears to price in continued underperformance while ignoring transformation potential. The manager's 1x P/B fair value target implies over 40% upside, suggesting the market is overly pessimistic about the company's ability to change. This represents a classic value play on Japanese corporate governance improvement, though execution risk remains substantial given the company's historical track record.

Pitch Summary:
Western Digital Corp. (WDC) 4.750% Senior Unsecured Bonds due 2026 - Western Digital is a $30 billion enterprise value global leader in data storage solutions, manufacturing both hard disk drives (HDD) and NAND/flash-based solid-state drives (SSD). The company entered the SSD market through its $19 billion acquisition of SanDisk in 2016—a deal that ultimately underperformed expectations. After years of operational challenges and mounting activist investor pressure, Western Digital announced a plan in 2023 to spin off the SanDisk business. Due to the complexity of separating the businesses, regulatory hurdles, and operational integration, there was limited visibility on the transaction's completion until late 2024, when meaningful progress emerged and we initiated our investment thesis. Our analysis concluded that the SSD segment was the primary driver of historical operating losses. SSD is a more volatile, consumer-exposed business with cyclical pricing and capital-intensive manufacturing. In contrast, the legacy HDD business is less cyclical, benefits from growing enterprise demand, and historically generated 20%+ returns on invested capital prior to the SanDisk acquisition. We believe that, post-spin-off, Western Digital will emerge as a higher-margin, more stable business with improved credit quality—potentially upgrading from BB to investment grade. As part of the spin-off, SanDisk raised its own debt and paid a $1.45 bn dividend to Western Digital, enabling further de-leveraging, as part of a $2.0 bn leveraged loan financing (which we looked at and passed on). We began accumulating Western Digital's 4.750% Senior Unsecured Bonds due 2026—its nearest maturity—in late 4Q24 and continued through 1Q25 at prices below par. Our average yield-to-maturity was approximately 5.3%, consistent with our short-term high yield strategy. On March 13, Western Digital announced a partial redemption of 78% of the 2026 bonds at par, effective April 14. This early repayment significantly accelerated our return realization and increased our expected total return by 210 basis points due to our discount purchases.

BSD Analysis:
CrossingBridge presents a compelling credit thesis on Western Digital's corporate bonds, centered on the company's strategic spin-off of its underperforming SanDisk SSD business. The manager's analysis identifies the SSD segment as the primary drag on profitability, characterized by volatile consumer exposure and capital-intensive manufacturing. Post-separation, Western Digital's legacy HDD business is expected to benefit from stable enterprise demand and historically strong 20%+ returns on invested capital. The spin-off structure provided immediate deleveraging benefits through a $1.45 billion dividend from SanDisk's debt financing. CrossingBridge's tactical execution was exemplary, accumulating bonds below par at a 5.3% yield-to-maturity before Western Digital announced an early redemption at par. This timing generated an additional 210 basis points of return, demonstrating the value of credit-focused fundamental analysis combined with opportunistic entry points.

Pitch Summary:
Warner Music Group. Last year, we published a report on Universal Music Group, a competitor to Warner Music Group, highlighting the power labels have in the music industry. Warner Music Group has a similar hold on the industry with artists like Prince, Madonna, and Ed Sheeran. While platforms like Spotify and Apple Music offer a platform for music listeners, record labels control the content on those platforms and, as a result, bring home the lion's share of the industry's profits.

BSD Analysis:
Broyhill's investment in Warner Music Group reflects their conviction in the structural advantages of major record labels within the music industry ecosystem. The manager leverages their previous research on Universal Music Group to identify similar value creation opportunities at Warner, emphasizing the oligopolistic nature of the music label industry. Warner's roster of iconic artists including Prince, Madonna, and Ed Sheeran provides durable competitive moats through exclusive content ownership and long-term revenue streams. While streaming platforms like Spotify and Apple Music facilitate distribution, Broyhill correctly identifies that content owners capture the majority of industry economics. This represents a classic example of identifying where value accrues in a value chain, with record labels maintaining pricing power over distribution platforms. The investment thesis centers on Warner's ability to monetize its content library across multiple channels while benefiting from the secular growth in music streaming globally.

Pitch Summary:
Shares of Fidelity National Information Services continued a steady ascent since their recent bottom in October 2023, returning 24% in Q1. In February, FIS completed the sale of a majority stake in Worldpay to GTCR and began using the proceeds to pay down debt and buy back shares. The stock rallied after the company's most recent earnings report when management increased its buyback goal for 2024. Fidelity's self-help story is playing out nicely.

BSD Analysis:
Broyhill views FIS as a successful self-help story with management executing a clear value creation strategy through portfolio optimization and capital allocation. The sale of a majority stake in Worldpay to GTCR represents strategic focus, allowing FIS to monetize a non-core asset while reducing complexity. Management's disciplined use of proceeds for debt reduction and share buybacks demonstrates commitment to strengthening the balance sheet and returning capital to shareholders. The increased 2024 buyback target signals management confidence in the business trajectory and their ability to generate excess cash flow. The 24% quarterly return reflects market recognition of the turnaround progress since the October 2023 trough. FIS appears to be successfully navigating the transition from a sprawling conglomerate to a more focused, higher-quality financial technology provider. The combination of operational improvements and aggressive capital returns creates a compelling value proposition for shareholders.

Pitch Summary:
Shares of Avantor gained 12% in Q1. We initiated a position in Avantor, a life sciences and tools company, in November 2023. After the company's private equity-backed management team made a significant acquisition pre-COVID and increased leverage to 7-8x, the business hit a wall. Now, with each of these headwinds set to reverse, we expect the business to make a comeback, yet management and the Street have been hesitant to forecast a recovery. Several analysts on the company's most recent earnings call questioned whether the 2024 guide was too conservative. Their inquiries were met with the diplomatic: "Our initial guidance is based on a continuation of trends from the last several quarters, giving us upside if recovery does materialize within the year." We've invested across enough similar setups to know that waiting around for tangible evidence of a recovery is a sure way to miss the recovery. And while the market waited, we continued building our position in the stock.

BSD Analysis:
Broyhill presents a compelling turnaround thesis on Avantor, positioning it as a classic contrarian value opportunity in life sciences tools. The manager identifies the core issue as excessive leverage (7-8x) from a pre-COVID acquisition that created operational headwinds when market conditions deteriorated. With these headwinds now reversing, Broyhill sees significant upside potential that both management and Wall Street analysts are underestimating. The conservative 2024 guidance provides meaningful upside optionality if recovery materializes, creating an asymmetric risk-reward profile. Broyhill's experience with similar turnaround situations gives them confidence to build positions before tangible evidence emerges, capitalizing on market skepticism. The 12% quarterly gain suggests early validation of their thesis, though the manager continues accumulating shares while the broader market remains cautious. This represents a classic special situation where operational improvements and deleveraging could drive substantial returns.

Pitch Summary:
Shares of Fiserv gained 20% in Q1. This is the second quarter in a row where Fiserv has earned the title of top contributor. Clover volume continues to gain momentum, translating to operating leverage on the company's fixed cost base and robust free cash flow generation. Fiserv recently reported its fifth straight quarter of buybacks over $1 billion. We expect Fiserv to continue making smaller bolt-on acquisitions and returning excess cash to shareholders.

BSD Analysis:
Broyhill maintains a bullish stance on Fiserv, highlighting the company's strong operational momentum and capital allocation strategy. The manager emphasizes Fiserv's Clover payment platform as a key growth driver, with increasing volume translating to meaningful operating leverage given the company's fixed cost structure. The consistent $1+ billion quarterly share buyback program demonstrates management's commitment to returning capital to shareholders while maintaining financial flexibility. Fiserv's strategy of pursuing smaller bolt-on acquisitions suggests disciplined growth initiatives that can enhance their technology platform without overleveraging the balance sheet. The 20% quarterly gain reflects market recognition of the company's execution on both organic growth and capital returns. The manager's confidence in continued outperformance is supported by the sustainable nature of Fiserv's competitive advantages in payment processing. This represents a classic quality compounder with strong free cash flow generation and shareholder-friendly management.

Pitch Summary:
Increased: Ingevity Corporation (NGVT) – We added to NGVT on weakness, as we believe the sum of the parts is attractive. While the performance chemicals division has been weak, we believe the performance materials division should be strong driven by more restrictive global emission standards for vehicles.

BSD Analysis:
The London Company added to NGVT during a period of weakness, viewing the selloff as an opportunity to acquire shares at attractive valuations. The manager employs a sum-of-the-parts analysis that suggests the current market price undervalues NGVT's business segments. While acknowledging weakness in the performance chemicals division, the firm expects the performance materials segment to drive growth through exposure to increasingly stringent global vehicle emission standards. Regulatory tailwinds from environmental regulations create sustained demand for NGVT's emission control technologies and materials. The company's specialized products serve critical functions in automotive emission systems, providing defensive characteristics and pricing power. The London Company appears confident that the performance materials division's strength will offset challenges in performance chemicals over time. This contrarian approach reflects the firm's value-oriented investment philosophy of buying quality companies during temporary weakness when fundamental drivers remain intact.

Pitch Summary:
Increased: UniFirst Corporation (UNF) – We added to UNF as we believe there is a high likelihood of margin improvement along with solid revenue growth in the years ahead. Separately, Cintas has made an offer to buy UNF at a higher price and could increase the bid in the future.

BSD Analysis:
The London Company increased its UNF position based on expectations for operational improvements and potential M&A upside. The manager anticipates margin expansion opportunities alongside solid revenue growth, suggesting UNF can improve profitability while maintaining market share in the uniform rental industry. The investment thesis benefits from both fundamental improvement potential and takeover speculation, as Cintas has made a formal acquisition offer at a premium to market prices. The possibility of Cintas increasing its bid provides additional upside protection and validates UNF's strategic value within the industry consolidation theme. UNF's position in the fragmented uniform rental market makes it an attractive acquisition target for larger competitors seeking scale advantages and market expansion. The combination of operational improvement potential and M&A optionality creates a compelling risk-adjusted return profile. The London Company appears confident that UNF's fundamental business trends support higher valuations regardless of takeover outcomes.

Pitch Summary:
Initiated: Atkore Inc (ATKR) – ATKR dominates the electrical conduit market with 35% market share, offering bundled products – conduits, PVC, HDPE pipes, and other electrical raceway products. ATKR benefits from oligopolistic industry dynamics with only 2 competitors possessing comparable scale, translating to scale advantages. It operates mainly in U.S. non-residential construction and is levered to trends like electrification and data center growth. The company has improved margins (5% to -11% normalized) and ROIC (>14%) through diversification and proactive pricing strategies. ATKR requires minimal capex and generates strong cash flow. Most of the cash generated is used for effective share repurchases, a small dividend, and acquisitions. ATKR has retired more than 45% of outstanding shares since 2017.

BSD Analysis:
The London Company initiated a position in ATKR based on the company's dominant market position and attractive industry structure. With 35% market share in electrical conduits and only two comparable competitors, ATKR operates in an oligopolistic market that provides pricing power and sustainable competitive advantages. The company's bundled product offering across conduits, PVC, and HDPE pipes creates customer stickiness and cross-selling opportunities. ATKR is well-positioned to benefit from secular growth trends including electrification and data center expansion, which drive increased demand for electrical infrastructure. Management has successfully improved margins from 5% to 11% normalized levels while achieving ROIC above 14% through strategic diversification and pricing discipline. The asset-light business model requires minimal capital expenditure while generating strong free cash flows. Exceptional capital allocation includes aggressive share repurchases that have reduced the share count by over 45% since 2017, demonstrating management's commitment to shareholder value creation.

Pitch Summary:
Revolve Group, Inc (RVLV) – RVLV sold off heavily in the first quarter as tariff developments pressured sentiment. The company reported notable sales and margin momentum. We remain confident in the company due to its premium-priced retailer status, high full-price sell-through rate, and proven ability to pass through tariffs in 2019. Additionally, RVLV's self-help initiatives targeting operating expenses should help offset any gross margin challenges.

BSD Analysis:
The London Company views RVLV's Q1 selloff as a sentiment-driven overreaction to tariff concerns rather than fundamental deterioration. The manager highlights the company's recent operational momentum with notable improvements in both sales and margins, demonstrating underlying business strength. RVLV's premium positioning in the fashion retail market provides pricing power and customer loyalty that supports margin protection during challenging periods. The high full-price sell-through rate indicates strong demand for RVLV's curated product selection and effective inventory management. Historical precedent from 2019 demonstrates RVLV's ability to successfully pass through tariff costs to consumers without significant demand destruction. The company's self-help initiatives focused on operating expense reduction provide additional margin protection and operational efficiency improvements. The London Company appears confident that RVLV's premium brand positioning and operational improvements will enable the company to navigate tariff headwinds while maintaining profitability and market share.

Pitch Summary:
Moelis & Co. Class A (MC) – MC shares were weak, reflecting uncertainty in the market, impacting the M&A environment. We continue to like MC's debt-free balance sheet, strong shareholder focus, and willingness to reinvest in the business.

BSD Analysis:
The London Company maintains a bullish view on MC despite recent weakness driven by M&A market uncertainty and challenging transaction volumes. The manager emphasizes MC's strong balance sheet position with zero debt, providing financial flexibility and downside protection during volatile periods. The firm's shareholder-focused capital allocation approach demonstrates management's commitment to creating value for investors through dividends and share repurchases. MC's willingness to reinvest in the business during downturns positions the company to capture market share when M&A activity recovers. As an independent investment bank, MC benefits from its boutique model that allows for higher fee margins and closer client relationships compared to bulge bracket competitors. The debt-free structure enables MC to maintain operations and talent during market downturns without financial stress. The London Company appears confident that MC's fundamental strengths will drive outperformance when M&A markets normalize and transaction activity increases.

Pitch Summary:
DoubleVerify Holdings, Inc. (DV) – DV shares were weak due to customer-specific issues, as pullbacks from major global brand clients with large ad budgets heavily impacted growth. We remain optimistic about DV's near-term stabilization, driven by a high-profile product launch earlier this year and emerging cross-sell opportunities, bolstered by its strong competitive position in a favorable market structure that supports profitable long-term growth.

BSD Analysis:
The London Company acknowledges DV's recent weakness stemming from customer concentration risk, as major global brand clients reduced advertising spending significantly. Despite near-term headwinds, the manager maintains a bullish stance based on several catalysts for recovery. A high-profile product launch earlier in 2025 positions DV to capture market share and drive revenue growth as advertising markets stabilize. Emerging cross-sell opportunities within the existing client base provide additional revenue expansion potential without requiring new customer acquisition. The firm emphasizes DV's strong competitive positioning within the digital advertising verification market, which benefits from favorable industry dynamics. The market structure supports profitable long-term growth as advertisers increasingly demand transparency and measurement in digital campaigns. The London Company appears confident that current customer-specific issues are temporary and that DV's fundamental competitive advantages will drive outperformance as market conditions improve.

Pitch Summary:
Somnigroup International (SGI) – SGI continues to perform well despite weak industry demand. The approval of the Mattress Firm deal during the quarter is a major development, offering long-term benefits through vertical integration and enhancing its competitive position. Valuation remains compelling and our investment thesis is supported by robust free cash flow generation, strong brand equity, and solid management execution.

BSD Analysis:
The London Company maintains conviction in SGI despite challenging industry conditions, highlighting the company's ability to outperform weak sector demand. The Mattress Firm acquisition approval represents a transformative strategic development that creates vertical integration benefits and strengthens SGI's competitive moat. This deal enhances the company's distribution capabilities and market positioning within the fragmented mattress industry. The manager emphasizes SGI's strong fundamental profile, including robust free cash flow generation that provides financial flexibility and supports shareholder returns. Strong brand equity serves as a competitive differentiator, enabling pricing power and customer loyalty in a commoditized market. Management execution quality appears solid, successfully navigating industry headwinds while pursuing strategic growth initiatives. The compelling valuation provides an attractive risk-adjusted return opportunity, though the firm has begun trimming the position as SGI's market cap exceeds small-cap parameters.

Pitch Summary:
Hanover Insurance Group, Inc. (THG) – THG outperformed in the quarter due to strong 4Q24 earnings and 2025 outlook. The thesis is playing out as the company is trending towards high-teens ROE as margins normalize following a flurry of underwriting actions. We like the underwriting-focused culture, niche competitive positioning, and astute management team.

BSD Analysis:
The London Company's THG investment thesis is materializing as the insurer executes on margin normalization following strategic underwriting actions. The manager expects THG to achieve high-teens return on equity as the company's disciplined underwriting approach drives profitability improvements. Strong Q4 2024 earnings and positive 2025 guidance validate the investment case and demonstrate management's execution capabilities. The firm values THG's underwriting-focused culture, which prioritizes profitability over growth, creating sustainable competitive advantages. The company's niche market positioning provides pricing power and reduces competitive pressures compared to broader market insurers. Management quality appears to be a key differentiator, with the team demonstrating strategic acumen in navigating challenging market conditions. The London Company views THG as well-positioned to deliver superior returns through disciplined capital allocation and operational excellence.

Pitch Summary:
ACI Worldwide, Inc. (ACIW) – ACIW yielded resiliency in a down market. The business is quite stable, with a high rate of recurring revenues and -12-month visibility on revenues due to the backlog. The organic growth rate of the company continues to persist at structurally higher rates. ACIW is a cash generative business that has recently seen improved cash conversion and subsequently we have benefitted from increased shareholder returns.

BSD Analysis:
The London Company highlights ACIW's defensive characteristics and stable business model as key investment drivers. The manager emphasizes the company's high recurring revenue base and 12-month revenue visibility from backlog, providing predictable cash flows. The thesis centers on ACIW's ability to maintain structurally higher organic growth rates while generating strong cash flows. Recent improvements in cash conversion have enabled enhanced shareholder returns through increased capital allocation. The manager views ACIW as a resilient holding that can outperform during market downturns due to its stable, recurring revenue model. The pitch suggests confidence in the company's ability to continue delivering consistent performance regardless of broader market conditions. This defensive positioning aligns with The London Company's quality-focused investment approach in small-cap equities.

Pitch Summary:
Initiated: Saia, Inc. (SAIA) – The company is a leading less-than-truckload (LTL) carrier, providing freight transportation services across the U.S. Operating in a consolidating industry, SAIA is the sixth largest player in the market and has a non-unionized workforce. With some weaker players (Yellow and UPS) out of the market, industry dynamics should improve. SAIA's strategy emphasizes on-time delivery, low claims, network expansion, and value pricing—helping set it apart. Operating margins are attractive at over 15% and the balance sheet is strong with almost no net debt. We believe SAIA's outlook is positive, fueled by onshoring trends, ecommerce growth, and industry pricing stability. Its valuation is reasonable, with room for multiple expansion as estimates rise. Downside protection comes from a robust network and premium service levels.

BSD Analysis:
The London Company initiated a position in Saia based on favorable industry consolidation dynamics and the company's competitive positioning as the sixth largest LTL carrier. The manager highlights SAIA's non-unionized workforce advantage and benefits from weaker competitors like Yellow and UPS exiting the market. The investment thesis centers on operational excellence through on-time delivery, low claims, and value pricing strategy. With operating margins exceeding 15% and minimal net debt, SAIA demonstrates strong financial metrics. The manager sees multiple growth catalysts including onshoring trends, e-commerce expansion, and industry pricing stability. The valuation appears reasonable with potential for multiple expansion as earnings estimates increase. Downside protection is provided by SAIA's robust network infrastructure and premium service differentiation.