Investment Pitches

Pitch Summary:
Kitron is a Nordic electronics manufacturing services (EMS) provider specializing in high-mix, low-volume products in several industries with strong long-term outlooks, including defense and aerospace, industrials, and electrification. These sectors are particularly attractive within the EMS space, offering higher margins and more durable customer relationships. This is due to the more complex requirements and longer lifecycles associated with their products. The company has an impressive track record, achieving a 16% CAGR in revenue growth since 2014 and expanding EBIT margins from under 2% to high-single digits. This transformation coincides with the appointment of CEO Peter Nilsson in 2014. Under Nilsson's leadership, Kitron shifted its focus toward higher-growth segments, divested low-margin businesses such as its offshore segment, and improved cost efficiency by relocating manufacturing to low-cost countries and expanding automation in its processes. Looking ahead, we believe Kitron is well-positioned to continue its growth trajectory. The company's Defense and Aerospace segment is especially promising, with a record (and growing) backlog driven by increased geopolitical tensions and Europe's ongoing rearmament efforts. We expect this segment to grow 20-30% annually through 2030. Kitron's other key segments – Connectivity, Electrification, and Industrial – are cyclical but have strong structural growth trends. While last year saw a downturn, the company believes it will begin to see a recovery beginning in the second half of this year. Although Kitron's shares currently trade at a multiple of 20x P/E, much of the business is at cycle troughs. The company has strong visibility on its revenues, driven by existing customer relationships, and has set ambitious 2029 targets, projecting earnings power of NOK 4.50+ by that year. This implies a sub-10x P/E multiple before any share repurchases or additional growth from M&A. For context, U.S. peers with similar growth and margin profiles, such as Plexus (PLXS), have historically traded on multiples exceeding 18x P/E.

BSD Analysis:
The manager presents a strong bull case for Kitron as a specialized Nordic EMS provider with superior positioning in high-margin, long-lifecycle sectors. The company has demonstrated exceptional execution under CEO Peter Nilsson since 2014, achieving 16% revenue CAGR while expanding EBIT margins from sub-2% to high-single digits through strategic portfolio optimization and operational improvements. The defense and aerospace segment offers particularly compelling growth prospects, with 20-30% annual growth expected through 2030 driven by European rearmament trends and geopolitical tensions. While the current 20x P/E multiple appears elevated, the manager argues most segments are at cyclical troughs with strong recovery visibility. The company's 2029 earnings target of NOK 4.50+ implies attractive forward valuation of sub-10x P/E, representing significant discount to U.S. peers like Plexus which trade above 18x P/E. The investment combines cyclical recovery potential with structural growth in defense and electrification markets.

Pitch Summary:
Friedrich Vorwerk is a leading German infrastructure services provider, often described as a smaller European counterpart to U.S.-listed Quanta Services. Specializing in the installation of gas pipelines and high-voltage power transmission lines, the company commands a dominant market position in Germany, with an estimated 20–35% share across its core segments. Although Vorwerk is less than 5% the size of Quanta by market capitalization, it is the largest player in its niche in Germany. The company went public in 2021 and initially faced execution challenges on several large-scale contracts. Over the past two years, however, Vorwerk has demonstrated a marked turnaround – securing major new contracts, achieving solid growth, and strong profitability. The opportunity for Vorwerk seems only to be growing as several top-down initiatives will require the company's services. Germany is undergoing a multi-decade energy transformation requiring tens of billions of euros in infrastructure investment. This began in earnest with efforts to reinforce the national grid following the Ukraine war and is expected to accelerate in the years ahead. Vorwerk already boasts a robust €1.2 billion order backlog, with half stemming from a major power transmission project, but there are easily another €10 billion worth of projects on the horizon, with long-term prospects far exceeding that. In addition to power grid expansion, there are several other high-growth areas where Vorwerk is well-positioned: • Hydrogen Infrastructure: The German government is targeting €20–30 billion in hydrogen pipeline and facility investment. • Natural Gas Pipelines: Demand remains strong, with several €200–500 million projects in view and a total market opportunity potentially exceeding €10 billion over the next decade. • Carbon Capture & Storage (CCS): The potential here is significant as Germany looks to build out carbon pipeline networks to transport CO2 from emission-intensive factories to remote sequestration sites. From a valuation perspective, Vorwerk currently trades at around 9-10x forward EV/EBITDA or mid- to high-teens on a P/E basis. Given the potential to significantly accelerate growth, we believe these multiples appear too low, particularly when compared to Quanta Services. A re-rating to Quanta-like valuation levels, combined with earnings growth, could easily result in 50% or greater upside to the stock. We also find the company attractive as a focused European domestic play, driven by substantial government support for a genuine infrastructure need.

BSD Analysis:
The manager presents a compelling bull case for Friedrich Vorwerk as a dominant German infrastructure services provider positioned to benefit from Germany's multi-decade energy transformation. The company has successfully executed a turnaround following initial public market challenges, demonstrating improved execution and profitability. With a robust €1.2 billion order backlog and visibility into €10+ billion of future projects, Vorwerk offers significant revenue visibility in high-growth areas including hydrogen infrastructure, natural gas pipelines, and carbon capture networks. The valuation appears attractive at 9-10x forward EV/EBITDA compared to U.S. peer Quanta Services, suggesting potential for multiple expansion. The investment thesis is underpinned by substantial German government infrastructure spending commitments and the company's dominant 20-35% market share position. The manager sees 50%+ upside potential through a combination of earnings growth and valuation re-rating. This represents a focused play on European infrastructure modernization with strong government tailwinds.

Pitch Summary:
Camtek is an Israel-headquartered maker of metrology and inspection equipment used in the production of integrated circuits (chips). The company's products are used to measure, inspect and confirm that chips are functioning as they should before they are sold to customers. Camtek's customers use its technology to evaluate a variety of chips, including graphical processing units (GPUs) for AI applications. One of Camtek's specialties is its high-performance 3-D inspection equipment. It uses white light to more accurately measure "bump heights," the height of the contacts on the chip packages. Solid connections are essential to reliable chip performance. The secular growth in demand for chips is being driven by AI, the Internet of Things, edge computing, cloud computing and EVs. Manufacturing chips for these uses requires a greater need for metrology and inspection equipment to confirm quality and to increase production yields. The potential market for Camtek's equipment is estimated to be $1.3 billion and growing in the high single digits annually. We believe Camtek can grow revenue 15% to 20% a year long term while maintaining its 20% to 25% operating margins in the process.

BSD Analysis:
Brown Capital presents a compelling bull case for Camtek as a new addition to the portfolio, highlighting the company's specialized position in semiconductor metrology and inspection equipment. The manager emphasizes Camtek's technological differentiation through high-performance 3D inspection equipment using white light technology to measure critical "bump heights" on chip packages, which is essential for reliable chip performance, particularly in AI GPU applications. The investment thesis is underpinned by powerful secular growth drivers including AI, Internet of Things, edge computing, cloud computing, and electric vehicles, all requiring higher-quality chips and thus greater inspection needs. Brown Capital's rigorous 15-month research process, including facility visits and management meetings in Israel, demonstrates thorough due diligence before initiating the position. The company operates in an attractive $1.3 billion addressable market growing in the high single digits annually, with Brown Capital projecting 15-20% annual revenue growth while maintaining healthy 20-25% operating margins. The manager's confidence in Camtek's ability to capitalize on the increasing complexity and quality requirements in semiconductor manufacturing makes this a strategic addition to capture the AI and technology infrastructure buildout.

Pitch Summary:
AutoStore is a Norway-based robotics and software company and the pioneer of cubic storage automation. This capability allows customers higher throughput in their physical plants by using one quarter of the original space to store items vs. open-air warehouses. AutoStore is a cubic-storage automation leader with more than 1,450 total installations in 54 countries. With a customer payback period of one to three years and costs of labor rising, AutoStore allows its 1,050 customers the ability to efficiently cope with changing logistical and market needs. The market is rapidly adopting automated storage and retrieval systems (AS-RS) but the current penetration of AS-RS at the company level is just 15% globally. AutoStore's customer base shows the broad appeal of automation as customers span industries including retail, e-commerce, grocery, third-party logistics, industrial, automotive, healthcare and even airlines. The company has built its dominant position and technological advantage by making investments for more than 20 years in people, robots and software. During the quarter, AutoStore reported first quarter earnings results. Order intake grew 11% year over year to $183 million, but actual revenue for the quarter was down 7% to $138 million. Recall that we initiated a position in AutoStore in the first quarter of 2023, and the company experienced its slowdown two quarters later. Despite the short-term concerns, we see strong long-term growth in warehouse automation, primarily through the expansion of e-commerce. We think AutoStore remains strategically positioned to capitalize on this growth.

BSD Analysis:
Brown Capital maintains a bullish long-term view on AutoStore despite near-term revenue headwinds, emphasizing the company's pioneering position in cubic storage automation technology. The manager highlights AutoStore's compelling value proposition, enabling customers to achieve higher throughput using 75% less space than traditional warehouses with attractive 1-3 year payback periods amid rising labor costs. With over 1,450 installations across 54 countries serving 1,050 customers, AutoStore has established market leadership in a sector with only 15% global penetration, suggesting substantial runway for growth. The company's diversified customer base spans retail, e-commerce, grocery, logistics, automotive, healthcare, and airlines, demonstrating broad automation appeal across industries. While Q1 2024 results showed mixed signals with 11% order intake growth to $183 million offset by 7% revenue decline to $138 million, Brown Capital views this as temporary cyclical weakness. The firm initiated the position in Q1 2023 and has weathered the subsequent slowdown, maintaining conviction in the structural growth drivers of warehouse automation and e-commerce expansion. AutoStore's 20+ year investment in technology, people, and software has created sustainable competitive advantages in this emerging market.

Pitch Summary:
Carl Zeiss Meditec is a German medical-technology company focused on ophthalmology and microsurgery, which represent about three-quarters and one-quarter of its revenue, respectively. Carl Zeiss is a market leader in various ophthalmic segments, resulting from innovative products, a customer-centric culture and an ability to establish and sustain longstanding relationships with healthcare professionals in new and existing markets. Disorders of the eye, such as glaucoma, cataracts and macular degeneration, often correlate with age. An aging global population and rising per-capita income are two demographic factors in the company's favor. During the quarter, management preannounced earnings, lowering guidance for the remainder of the fiscal year (ending September). Specifically, top line guidance for the remainder of the fiscal year was cut 5% to 7%, leading to flat year-over-year revenue growth for the total fiscal year 2024. More importantly, operating margins (before one-time charges) were cut to 10% to 13%, down from the previous estimate of 17%. The market reaction was strong, with the stock down 43% for the quarter, and costing the portfolio more than 150 basis points in performance, almost three times the next largest portfolio detractor. In our call with the CFO after the pre-announcement, management reiterated that the softness in orders in the U.S. is because of interest rates, which are causing customers to delay making investments. In addition, in China, the summer refractory season is off to a slow start. Given that China has a higher mix of higher-margin consumables, the impact of the slowdown on margins is more dramatic. Based on management's market checks, they are comfortable that this is not a result of a loss of market share. Management believes that with a rebound in orders and revenue, operating leverage remains in the business such that 20% operating margins should return. We still believe in our long-term thesis for Carl Zeiss, but are monitoring its progress closely.

BSD Analysis:
Brown Capital maintains a cautious but constructive view on Carl Zeiss Meditec despite significant near-term headwinds that resulted in a 43% quarterly decline and 150 basis points of portfolio drag. The manager acknowledges the company's strong market leadership position in ophthalmology and microsurgery, supported by innovative products and long-standing customer relationships in markets benefiting from aging demographics and rising incomes. However, the investment case has been challenged by management's dramatic guidance cuts, reducing fiscal 2024 revenue growth to flat and operating margins to 10-13% from a previous 17% estimate. Management attributes the weakness to interest rate-driven customer delays in the US and a slow start to China's summer refractory season, which particularly impacts higher-margin consumables. While management maintains this reflects cyclical rather than structural market share loss, Brown Capital has adopted a monitoring stance. The firm continues to believe in the long-term thesis and management's assertion that 20% operating margins can return with revenue recovery, but the significant guidance miss has introduced execution risk to the investment case.

Pitch Summary:
AJ Bell is a U.K.-based asset-management platform serving both Independent Financial Advisors and do-it-yourself retail investors in the U.K. AJ Bell's online investment platforms facilitate the management of self-invested personal pensions and individual savings accounts by providing tools for the planning, integrating and monitoring of investments such as funds, shares, investment trusts and exchange traded funds. Alternatives to AJ Bell include U.K.-based Hargreaves Lansdown and U.S.-based Charles Schwab. In the decades to come, nearly £2 trillion in retirement assets may find their way onto platforms such as AJ Bell. This trend toward platforms is also underpinned by a shift from defined benefit plans to defined contribution plans. Once a customer moves to the AJ Bell platform, the customer typically stays 20 years. With around 8% market share, AJ Bell has plenty of room to take share in a market that should grow for decades to come. During the quarter, AJ Bell reported earnings for the half year ended March 2024. Top line growth came in at 27% year over year, and profit margin before taxes improved to 46.8% vs 40.4% year over year. AJ Bell attributed its revenue growth to an almost 6% growth in new platform customers to 503,000, and greater income thanks to the higher interest rate environment. The company's financial performance was above market expectations, translating into a total return of 27% for the June quarter. AJ Bell's assets under administration (AUA) are £80.3 billion, just 8% of a £1 trillion platform market in the U.K. We continue to like AJ Bell's market position and growth prospects.

BSD Analysis:
Brown Capital presents a strong bull case for AJ Bell based on the company's positioning in the structural shift toward investment platforms in the UK retirement market. The manager highlights the massive addressable market opportunity, with nearly £2 trillion in retirement assets expected to migrate to platforms like AJ Bell over the coming decades, driven by the transition from defined benefit to defined contribution pension plans. AJ Bell's competitive advantages include exceptional customer retention (20-year average tenure) and significant market share expansion potential from its current 8% share of the £1 trillion UK platform market. The company delivered impressive H1 2024 results with 27% revenue growth and margin expansion to 46.8% from 40.4%, driven by 6% customer growth to 503,000 users and benefits from higher interest rates. The 27% quarterly return reflects strong execution above market expectations. With £80.3 billion in assets under administration representing only 8% market penetration, Brown Capital sees substantial runway for continued growth in this defensive, fee-based business model.

Pitch Summary:
Novo Nordisk is a Denmark-based, global pharmaceutical company focused on diabetes and obesity, which comprise 93% of the company's revenue. We believe the company typifies an EGC, as it is dominant and innovative, and doing something that is mission-critical in a large and growing global market. Being one of the most significant players in diabetes care gives Novo Nordisk the focus and resources necessary to develop modern insulins such as extended-release Tresiba and fast-acting NovaLog. These advancements improve patient outcomes, making the insulin franchise more resistant to pricing pressure. The key to the company's recent growth, however, is the new medicines in the glucagon-like peptide-1 (GLP-1) class of therapies that essentially mimic a hormone that lets the brain know when one has had enough to eat. Novo Nordisk is the global market leader in the GLP-1 segment, with a 55% market share and the blockbuster obesity-care drug Wegovy. Wegovy delays gastric emptying (the time it takes for food to leave the stomach), contributing to a feeling of satiety. GLP-1 drugs are showing promise of promoting overall health. One study showed adults taking Wegovy lost an average of 14.9% of their body weight. The SELECT study showed a 20% reduction in major adverse cardiovascular events in obese adults taking Ozempic, another GLP-1 drug from Novo Nordisk approved for diabetics. The FLOW study showed that Novo Nordisk GLP-1 treatments stalled the progression of chronic kidney disease. These are large, growing end markets. The obesity market alone reached $24 billion in 2023, according to iQVIA, more than seven times the estimated market size just three years ago. Furthermore, the obesity market is now forecasted to reach $131 billion by 2028. During the June quarter, the company reported strong first quarter sales growth of 22.5% year over year and operating profit growth of 27.3% year over year. The company also raised its sales guidance for the fiscal year to 19% to 27% in constant currency. Operating profit growth is now expected to be 22% to 30% in constant currency. We have owned Novo Nordisk for more than a decade now in our International All Company strategy, and it's remarkable to see the growth of these drugs. Ozempic, the company's semaglutide compound in its GLP-1 family of products, began to generate revenue in 2018. Wegovy, the same compound but for obesity care, began generating revenue in 2021. For the first quarter earnings reported, Ozempic and Wegovy now represent almost 57% of the company's revenue and more than 100% of the company's growth. We remain excited about the company's innovations to improve overall patient health.

BSD Analysis:
Brown Capital presents a compelling bull case for Novo Nordisk centered on the company's dominant position in the rapidly expanding GLP-1 obesity and diabetes treatment market. The manager highlights Novo's 55% market share in GLP-1 therapies, with blockbuster drugs Ozempic and Wegovy now representing 57% of total revenue and driving over 100% of company growth. The investment thesis is supported by exceptional market dynamics, with the obesity treatment market expanding from $3.4 billion to $24 billion in just three years and projected to reach $131 billion by 2028. Recent clinical studies demonstrate the drugs' efficacy beyond weight loss, showing 20% reduction in cardiovascular events and kidney disease progression benefits. The company delivered strong Q1 2024 results with 22.5% sales growth and 27.3% operating profit growth, prompting management to raise full-year guidance to 19-27% sales growth. Brown Capital's decade-long holding period demonstrates conviction in the company's sustainable competitive advantages and innovation pipeline. The manager views Novo as an exceptional growth company with mission-critical products in large, expanding addressable markets.

Pitch Summary:
As Latin America's dominant e-commerce and digital payments platform, MercadoLibre (MELI) exemplifies the kind of company we seek in times of global uncertainty. It also underscores two of our three pillars of downside protection, namely global diversification and disciplined security selection. Operating across Brazil, Argentina, Mexico, and other key economies, MELI's end-to-end logistics network and expanding fintech ecosystem offer more than just growth — they offer insulation from North American and Sino-centric trade dynamics. In an era where geopolitical alignment increasingly dictates market access and supply chain security, MELI stands out as: • Vertically integrated and locally embedded —reducing exposure to global supply chain chokepoints. • A digital infrastructure enabler —facilitating commerce, payments, and lending in underpenetrated markets. • A rare case of pricing power and operational scalability in a structurally growing region that is less entangled in U.S.-China tensions. • Our position in MELI reflects our belief that global diversification is not just about geography —it's about economic systems that are functionally decoupled from the dominant risks.

BSD Analysis:
Tall Oak Capital presents MercadoLibre as a strategic defensive play amid rising global trade tensions and deglobalization trends. The fund manager emphasizes MELI's unique positioning as Latin America's dominant e-commerce and fintech platform, operating across multiple key economies including Brazil, Argentina, and Mexico. The investment thesis centers on the company's vertical integration and local market embeddedness, which provides insulation from global supply chain disruptions that are increasingly affecting North American and China-centric trade flows. The manager highlights MELI's role as a digital infrastructure enabler in underpenetrated markets, facilitating commerce, payments, and lending services with significant pricing power and operational scalability. This positioning aligns with Tall Oak's broader investment philosophy of seeking companies that offer functional decoupling from dominant geopolitical risks while maintaining exposure to structurally growing regions. The pitch reflects the fund's emphasis on global diversification and disciplined security selection as core pillars of downside protection in an uncertain macroeconomic environment.

Pitch Summary:
Grifols, based in Spain, produces plasma-based products to treat rare, chronic and life-threatening diseases. The plasma industry has only a few major participants. Grifols is a leading player in the industry with the most blood-collection sites and is arguably the most vertically integrated company. Scale and innovation matter in this industry, as the cost of processing plasma for just one product is not economical, so additional products must be derived from each donation of plasma. This provides Grifols a defendable position in a growing market, as Grifols's products cover seven therapeutic areas ranging from immunodeficiency disease to chronic obstructive pulmonary disease or COPD, as well as Alzheimer's and other diseases. Coincidentally, Grifols also faced a short report this quarter, this one from Gotham City in January. The report raised questions about Grifols' financial leverage and corporate governance. Grifols' leverage (at 6.4x net debt to EBITDA as of fiscal year end 2023) is certainly high for the International All Company portfolio. We think this leverage is due to a combination of operating problems post-pandemic in plasma collection and the company's Biotest acquisition in 2022. We held meetings with management to understand and monitor the progress in addressing the operating challenges. Moreover, the company announced the divestiture of a non-core asset in China for $1.8 billion to decrease leverage to 4x by the end of 2024. On corporate governance, as long-term shareholders, we observed the recently announced separation of the CEO and Chairman roles and Grifols family members stepping down from co-CEO roles as steps in the right direction of improving corporate governance.

BSD Analysis:
Brown Capital Management presents a balanced view of Grifols, acknowledging both the company's strong competitive position and significant financial challenges. The manager emphasizes Grifols' leadership in the concentrated plasma industry, with the most blood-collection sites and vertical integration providing scale advantages in processing plasma across seven therapeutic areas including immunodeficiency, COPD, and Alzheimer's disease. The investment thesis rests on the economic necessity of deriving multiple products from each plasma donation, creating defendable market positions in growing therapeutic markets. However, the fund expresses concern about elevated leverage at 6.4x net debt to EBITDA, attributing this to post-pandemic operational challenges and the 2022 Biotest acquisition. Management's plan to reduce leverage to 4x through a $1.8 billion Chinese asset divestiture provides a clear deleveraging pathway. The team conducted direct management meetings to monitor operational improvements and views recent corporate governance changes, including CEO/Chairman separation and family member departures from co-CEO roles, as positive developments. While Gotham City's short report raised valid leverage and governance concerns, the fund appears cautiously optimistic about management's remediation efforts.

Pitch Summary:
Temenos is a Switzerland-headquartered provider of banking software. The banking industry spends an estimated $64 billion a year on operating software for functions such as core banking, front office, compliance and fund administration. Presently, less than 30% of that spending goes to third-party software providers like Temenos. Temenos' cloud-based solution is a marked improvement to banks' legacy proprietary software, which can be 20 or 30 years old. We believe banking industry margin pressures and the need to innovate will drive further third-party software adoption by banks. Despite being an industry leader, Temenos has a footprint in only 30% of the global tier-one and tier-two banks and less than 5% share of wallet of its existing customers. In February, Hindenburg Research published a short report on Temenos, pointing to frustrated customer testimonials, aggressive accounting practices such as backdating contracts, and a lack of disclosure in partner relationships. We had multiple touchpoints with the company and engaged our expert network to verify what we heard. While we share the short seller's concerns regarding partner relationships—which we believe the company is actively working to improve—we understand clients' negative feedback as attributable to the complexity of a typical implementation.

BSD Analysis:
Brown Capital Management maintains a cautious stance on Temenos following Hindenburg Research's short report, which raised concerns about accounting practices and customer relationships. The manager acknowledges the compelling market opportunity, with the banking industry spending $64 billion annually on operating software while only 30% goes to third-party providers like Temenos. The investment thesis centers on banks' need to modernize legacy systems that are 20-30 years old, driven by margin pressures and innovation requirements. Despite being an industry leader, Temenos has significant runway for growth with presence in only 30% of tier-one and tier-two banks and less than 5% wallet share among existing customers. However, the fund expresses measured concern about partner relationship issues highlighted by the short seller, though management appears to be addressing these problems. The team conducted extensive due diligence through company meetings and expert networks, concluding that customer implementation complexity rather than fundamental business issues explains negative feedback. While the long-term digitization trend supports the thesis, near-term execution challenges and governance concerns warrant careful monitoring.

Pitch Summary:
ASML is a Netherlands-based semiconductor-manufacturing equipment maker focused on lithography hardware, software and services. Lithography is a process of projecting light through a blueprint of the pattern that will be printed to make chips. The light hits a silicon wafer and shows where to etch and make a metallurgical deposition. The company has a monopoly position in leading-edge extreme ultra-violet (EUV) lithography, which is about half of ASML's business. The precise optical and movement complexity of this technology lessens the likelihood of competition in the foreseeable future. ASML's product has an average selling price of more than $150 million USD equivalent and requires two Boeing 747 planes to transport the equipment to a customer. The previous generation of ASML's deep ultra-violet (DUV) lithography is selling at record levels and is expected to remain strong, as it is often used in conjunction with EUV. During the quarter, the company reported strong fourth quarter system bookings of €9.2 billion, compared to €6.3 billion a year ago. We believe ASML is mission-critical in the advancement of semiconductors, including new markets like HBM (high-bandwidth memory or stacked DRAM), which is used in advanced GPUs for training AI models.

BSD Analysis:
Brown Capital Management presents a strong bull case for ASML based on the company's monopolistic position in extreme ultraviolet (EUV) lithography technology, which represents approximately half of its business. The manager emphasizes ASML's technological moat, noting the precise optical and movement complexity that creates significant barriers to competition in the foreseeable future. The investment thesis is supported by the mission-critical nature of ASML's equipment in semiconductor manufacturing, with average selling prices exceeding $150 million per unit and requiring specialized transportation via two Boeing 747 aircraft. Recent financial performance demonstrates strong momentum, with Q4 system bookings of €9.2 billion representing 46% growth year-over-year. The fund highlights ASML's exposure to emerging high-growth markets, particularly high-bandwidth memory (HBM) used in AI training GPUs, positioning the company to benefit from artificial intelligence infrastructure buildout. Additionally, the legacy deep ultraviolet (DUV) lithography business continues performing at record levels, often used in conjunction with EUV systems. The combination of monopolistic market position, technological complexity, and exposure to AI-driven semiconductor demand creates a compelling long-term growth opportunity.

Pitch Summary:
Novo Nordisk is a Denmark-based, global pharmaceutical company largely focused on diabetes and obesity, which together comprise 93% of company revenue. The company typifies an EGC, as it is dominant and innovative, and doing something that is mission-critical in a large and growing global market. Being the most significant player in diabetes care gives Novo Nordisk the focus and resources necessary to develop modern insulins such as extended-release Tresiba and fast-acting NovaLog. These advancements improve patient outcomes, making the insulin franchise more resistant to pricing pressure. The key to the company's recent growth, however, is the glucagon-like peptide-1 (GLP-1) class of therapies that essentially mimic a hormone that lets the brain know when one has had enough to eat. Novo Nordisk is the global market leader in the GLP-1 segment, with a 55% market share and the blockbuster drug Wegovy. Wegovy delays gastric emptying (the time it takes for food to leave the stomach), contributing to a feeling of satiety. GLP-1 drugs are showing promise of promoting overall health. One study showed that adults taking Wegovy lost an average of 14.9% of their body weight. The SELECT study showed a 20% reduction in major adverse cardiovascular events in obese adults taking Ozempic, another GLP-1 drug. The FLOW study showed that Novo Nordisk GLP-1 treatments stalled the progression of chronic kidney disease. These are large, growing end markets. The obesity market alone was estimated to be $24 billion in 2023 by iQVIA, more than seven times the estimated market size just three years ago. Furthermore, the obesity market is forecasted to double to $50 billion by 2028. During the March quarter, the company reported strong fourth-quarter sales growth of 43% year over year and operating profit growth of 66% year over year, at constant currency. The company expects to grow sales 18%-26% and operating profits at 21%-29% as the supply of GLP-1 drugs improves. In March, the company shared its early and mid-stage pipelines, bolstering the diabetes and obesity area while adding opportunities in cardiovascular disease and broader cardiometabolic disorders. We remain excited about the company's innovations to improve overall patient health.

BSD Analysis:
Brown Capital Management presents a compelling bull case for Novo Nordisk, emphasizing the company's dominant position in diabetes care and breakthrough success in obesity treatment through GLP-1 therapies. The manager highlights Novo Nordisk's 55% market share in the rapidly expanding GLP-1 segment, anchored by blockbuster drug Wegovy, which has demonstrated impressive clinical outcomes including 14.9% average weight loss and 20% reduction in cardiovascular events. The investment thesis centers on the massive market opportunity, with the obesity market expanding from $3.4 billion to $24 billion in just three years and projected to reach $50 billion by 2028. Recent financial performance validates this growth trajectory, with 43% sales growth and 66% operating profit growth year-over-year. The company's vertically integrated approach from insulin development to GLP-1 innovation creates sustainable competitive advantages and pricing power. Management's pipeline expansion into cardiovascular and cardiometabolic disorders suggests significant runway for continued growth beyond the core diabetes and obesity franchises. The fund views Novo Nordisk as an exemplary Exceptional Growth Company with mission-critical products in large, expanding markets.

Pitch Summary:
TSMC is the world's leading semiconductor foundry. It manufactures chips for fabless firms like Apple, Nvidia, Qualcomm, AMD, and Broadcom. It is in a category of one. Its closest peers, Intel and Samsung, lack its scale, process technology leadership, and 100% focus on serving third-party chip designers. TSMC's production capacity is almost four times that of Intel. We invested in TSMC last year when the company had its worst revenue growth since the 2008 financial crisis. TSMC faced declining revenue across much of its portfolio, as maturing smartphone sales, declining PC sales, and inventory adjustments across much of the economy weighed on results. While enduring industry headwinds, TSMC continued to gain market share and generate solid margins and returns on capital. Instead of parsing through every little indicator of channel inventory to time the precise cycle wiggles, our analysis is focused on the normalized earnings power of the company over the next 5-10 years. The smartphone market is mature and will have modest expansion from here. However, TSMC has large opportunities in growth markets such as AI and automotive silicon. The company's earnings also have less risk than fabless semiconductor firms because TSMC is not dependent on a particular technology or market. TSMC is a toll on the entire industry; winners among its customers should largely offset losers. Moreover, we believe higher industry profitability may lead management to exercise more pricing power than it has historically.

BSD Analysis:
Eagle Capital's TSMC investment exemplifies their contrarian approach to investing in dominant market leaders during cyclical troughs. The fund recognized TSMC's "category of one" competitive position, with production capacity four times larger than Intel and unmatched process technology leadership serving fabless chip designers. Eagle's timing was opportunistic, investing during TSMC's worst revenue growth since 2008 when smartphone maturity and inventory adjustments created temporary headwinds. The investment thesis focuses on TSMC's normalized long-term earnings power rather than near-term cyclical fluctuations. Eagle identifies significant growth opportunities in AI and automotive silicon markets that should offset smartphone market maturity. The "toll road" business model provides inherent diversification, as TSMC benefits from overall industry growth regardless of individual customer success or failure. Eagle expects TSMC to exercise greater pricing power as industry profitability improves, leveraging its monopolistic market position. The combination of market share gains during the downturn, exposure to high-growth end markets, and potential pricing power expansion creates multiple drivers for long-term value creation. TSMC's capital-intensive foundry model creates substantial barriers to entry, protecting its competitive advantages.

Pitch Summary:
We invested in SAP last year because it is in the early stages of transitioning its massive installed base of Enterprise Resource Planning ("ERP") customers to its modern cloud-available product, S/4HANA. Cloud transitions are long, expensive, and uneven. Initially, revenue growth declines while costs increase. And then forecasting the pace of transition is difficult because customers move at uneven rates. While any given year may be lumpy, we believe the overwhelming share of the company's installed base will migrate, driving higher monetization through pricing and bundle attachments. This should drive above-trend revenue growth against a cost structure that grows more modestly. SAP has operating margins in the low 20s, compared with margins in the 40s for comparable best-in-class firms. Strong topline growth and high incremental margins mean bottom-line earnings should increase by a multiple over the next decade.

BSD Analysis:
Eagle Capital's SAP investment represents a sophisticated play on enterprise software transformation and margin expansion potential. The fund recognizes that SAP's cloud transition from legacy ERP to S/4HANA, while creating near-term revenue volatility, positions the company for substantial long-term value creation. Eagle's thesis centers on the inevitability of customer migration from the massive installed base, which should drive higher monetization through improved pricing and bundle attachment rates. The investment timing appears strategic, as Eagle invested during the early stages when transition costs are highest and revenue growth is most pressured. The margin expansion opportunity is particularly compelling, with SAP currently operating at low-20s margins compared to 40%+ for best-in-class software peers. Eagle expects the combination of above-trend revenue growth and modest cost structure expansion to create significant operating leverage. The cloud transition should enable SAP to capture more value per customer while improving recurring revenue predictability. Eagle's conviction in "multiple" earnings growth over the next decade reflects their confidence in both the transition execution and the substantial margin normalization opportunity ahead.

Pitch Summary:
Woodward's problems were in the other direction. Demand for aerospace parts plummeted during the pandemic. When business returned, Woodward and its suppliers couldn't rehire the required workforce. Woodward's new CEO, who joined in mid-2022, was transparent with investors about the company's issues. Customer order fulfillment was inconsistent, price/cost was upside down, manufacturing efficiency was uneven, and input costs were elevated. The market didn't like the message. Each of these issues required hard work but was discrete and solvable. Moreover, the best time to improve a great business is after a stumble. It is harder to enact change during good times. Over the past 18 months, the company has made steady progress. We expect Woodward to produce record margins and earnings this year. Because of the company's share gains on next-generation commercial aircraft, we expect it to grow revenue and earnings above industry peers for the next decade.

BSD Analysis:
Eagle Capital's Woodward investment demonstrates their expertise in identifying operational turnarounds within high-quality aerospace businesses. The fund recognized that Woodward's post-pandemic challenges—workforce shortages, manufacturing inefficiencies, and cost inflation—were discrete, solvable problems rather than structural issues. Eagle appreciated the new CEO's transparency about operational difficulties, viewing this as a positive indicator of management quality and realistic problem-solving approach. The investment thesis centers on Woodward's strategic positioning in next-generation commercial aircraft, where the company has gained market share that should drive above-industry growth for the next decade. Eagle's timing proved astute, as they invested during the operational trough when improvement initiatives could be most effectively implemented. The expectation of record margins and earnings reflects the operational leverage inherent in aerospace manufacturing once efficiency is restored. Woodward's specialized aerospace and industrial control solutions create a defensible market position, while the multi-year aircraft production cycle provides earnings visibility. The combination of operational recovery, market share gains, and long-term aerospace growth trends creates a compelling value creation opportunity.

Pitch Summary:
In Amazon's case, management overestimated demand for e-commerce following Covid. The company increased its capacity by far too much, leading to a period of underutilization and inefficiency. The silver lining is that Amazon's investment dug an even deeper moat around its business, which should pay off over the long term. The company's stock declined by almost 50% in 2022. Investors worried that Amazon's retail business was lousy and would never make much money. Many commentators criticized the new CEO, Andy Jassy, for the failed strategy he was leading. This was an irrational stance since he had come from Amazon Web Services, the part of the business running well, and had inherited these retail issues. Meanwhile, management diligently approached the problem with a multiyear view. Our analysis convinced us it was fixable, and the changes would drive even greater future profitability. Internally, we speculated that this might be the largest earnings upgrade cycle in the history of capitalism. (It turns out that the trophy was reserved for Nvidia.) Now, earnings are booming. Amazon's consensus EPS expectations for 2024 are up almost 80% from a year ago, and we believe there are years of margin improvement still to come.

BSD Analysis:
Eagle Capital's Amazon investment exemplifies their ability to identify temporary execution issues masking long-term competitive advantages. The fund recognized that Amazon's post-COVID capacity overbuilding, while painful short-term, actually strengthened the company's competitive moat and infrastructure capabilities. Eagle correctly identified that market criticism of CEO Andy Jassy was misplaced, given his successful AWS background and the inherited nature of the retail capacity issues. The 50% stock decline in 2022 created an attractive entry point for a business with fixable operational problems. Eagle's conviction was validated by an 80% increase in 2024 consensus EPS expectations, demonstrating the magnitude of the earnings recovery cycle. The investment thesis centers on Amazon's systematic approach to operational efficiency improvements and the multi-year margin expansion opportunity ahead. Eagle's internal speculation about this being "the largest earnings upgrade cycle in the history of capitalism" reflects their confidence in Amazon's earnings power normalization. The combination of strengthened infrastructure, improved operational efficiency, and years of remaining margin improvement creates a compelling long-term value creation story.

Pitch Summary:
We recently invested in Humana, a large managed care organization. Humana's principal business is Medicare Advantage, where it is the second-largest provider with roughly 18% market share. In the decade from 2013-2022, the company's stock compounded at 23.4% annually, dramatically outperforming the S&P 500 at 12.6%. Cumulatively, this translated to growth of 718% compared to 229%. The strong performance was driven by a superior business model, penetration growth of Medicare Advantage, and benign industrywide cost/price dynamics. Over the past year, Humana's stock declined drastically. Many in the industry, including Humana, mispriced their business and have been on the wrong side of cost/price inflation. There are a few reasons for this: a post-pandemic catch-up in medical procedures, a tighter reimbursement approach from the Centers for Medicare and Medicaid Services ("CMS"), and excessive animal spirits from industry participants hoping to gain market share. Consensus 2024 earnings expectations for Humana, a once-predictable business, have fallen by 50%. 2024 earnings are based on bidding decisions made in June 2023, customer election decisions in late 2023, and healthcare utilization over 2024. The business model means the company commits to a level of service before its costs are set. These lags in the system are the primary reason margins are so depressed. Moreover, because there are regulatory limits on annual benefit changes, we expect 2025 earnings will also be weak, albeit less so. We believe industry conditions are near trough, with many players operating at a loss. While 2024-25 is hard to forecast precisely, we should be in the early innings of a multi-year recovery in margins and earnings for Humana. Moreover, our range-of-outcomes is tighter in 2028 than in 2025, an attractive setup for our strategy.

BSD Analysis:
Eagle Capital's investment in Humana represents a classic contrarian play on a temporarily distressed market leader. The fund recognizes that Humana's 50% earnings decline reflects structural timing mismatches rather than fundamental deterioration, as the company must commit to service levels before costs are determined. With industry conditions at trough levels and many competitors operating at losses, Eagle sees the early stages of a multi-year margin recovery cycle. The investment thesis hinges on Humana's dominant #2 position in Medicare Advantage with 18% market share and its historically superior business model that generated 23.4% annual returns from 2013-2022. Eagle's duration-focused approach allows them to look past the 2024-2025 earnings weakness to a clearer 2028 outlook. The regulatory constraints on annual benefit changes create predictable recovery timing, while the post-pandemic normalization of medical procedures should stabilize utilization patterns. This represents a high-conviction bet on cyclical recovery in a defensive healthcare subsector.

Pitch Summary:
Financials sector exposure enhanced pool returns notably, driven by TMX Group Ltd. (TMX). TMX's segments experienced a resurgence in equity and derivative market activity, benefiting from sustained market volatility. The potential uptick in capital formation activity continues to present further upside for TMX, reinforcing its position as a valuable contributor to the pool. TMX continued to demonstrate robust revenue generation, supported by heightened activity in equity and derivative markets. Persistent market volatility, along with potential increases in capital formation, remains a favorable tailwind for TMX, further enhancing its contribution to the pool.

BSD Analysis:
Barometer Capital presents a compelling bull case for TMX Group, positioning the exchange operator as a direct beneficiary of increased market volatility and trading activity. The manager's thesis centers on TMX's ability to generate robust revenue growth from heightened equity and derivative market activity, which has experienced a notable resurgence during the quarter. The investment rationale is particularly attractive given TMX's operating leverage to market volatility - as trading volumes increase, the company benefits from higher transaction fees without proportional increases in costs. Barometer highlights the potential for additional upside from capital formation activity, suggesting TMX could benefit from increased IPO and secondary offering activity as markets stabilize. The manager's repeated positive mentions across multiple fund strategies indicate TMX serves as a core holding for financials exposure. The "sustained market volatility" theme aligns well with the broader market environment described in the letter, positioning TMX as a defensive play that actually benefits from market uncertainty. This creates an attractive risk-reward profile where TMX can deliver strong performance regardless of market direction, as long as volatility remains elevated.

Pitch Summary:
Additionally, Howmet Aerospace continued its trend of robust performance, benefiting from persistent disruptions in commercial aircraft and engine production that have driven demand for its aftermarket parts and service, thereby providing ongoing positive contributions to pool performance.

BSD Analysis:
Barometer Capital maintains a bullish stance on Howmet Aerospace, positioning the company as a beneficiary of ongoing supply chain disruptions in the commercial aviation industry. The manager's thesis centers on HWM's aftermarket parts and service business, which has experienced increased demand due to persistent production bottlenecks at major aircraft and engine manufacturers. This dynamic creates a favorable operating environment for Howmet, as airlines and maintenance providers seek alternative sources for critical components and services. The "continued trend of robust performance" suggests this is not a one-time benefit but rather a sustained competitive advantage driven by industry-wide supply constraints. Barometer's positive performance attribution indicates the stock has delivered consistent returns, validating the investment thesis. The aftermarket focus is particularly attractive given its typically higher margins and more predictable revenue streams compared to original equipment manufacturing. This positioning allows Howmet to capitalize on aviation industry recovery while benefiting from supply chain inefficiencies that may persist for an extended period. The manager's confidence in "ongoing positive contributions" suggests this trend has significant runway ahead.

Pitch Summary:
Embraer significantly boosted returns following major contract announcements, including its largest-ever executive jet order from Flexjet, valued up to $7 billion for 182 aircraft, and a pivotal order from ANA Holdings for 15 E190-E2 jets—the company's first E2 sale in Japan. These substantial contracts considerably increased Embraer's backlog and reinforced market confidence in its commercial and executive jet segments.

BSD Analysis:
Barometer Capital presents a strong bull case for Embraer based on significant contract wins that materially enhanced the company's backlog and market position. The manager highlights two transformational deals: a record-breaking $7 billion executive jet order from Flexjet for 182 aircraft, representing Embraer's largest-ever executive jet contract, and a strategic breakthrough with ANA Holdings for 15 E190-E2 jets, marking the company's first E2 sale in Japan. These contracts demonstrate Embraer's competitive strength in both the executive and commercial aviation segments, with the Japan deal particularly significant as it opens a new geographic market for the E2 platform. The substantial increase in backlog provides enhanced revenue visibility and validates Embraer's product positioning against larger competitors like Boeing and Airbus in the regional jet market. Barometer's positive performance attribution suggests these contract announcements drove meaningful stock appreciation during Q1 2025. The manager's emphasis on "reinforced market confidence" indicates these wins may catalyze further orders and improve Embraer's competitive positioning. This represents a classic growth story driven by operational execution and market expansion.