Investment Pitches

Pitch Summary:
TG Therapeutics is a commercial stage biotechnology company focused on multiple sclerosis (MS), a significant chronic disease end market. Its lead product, Briumvi, has the potential to grow its market share significantly within the largest drug class in the $8 billion MS market.

BSD Analysis:
The manager initiated a position in TG Therapeutics, a commercial-stage biotech company with focus on multiple sclerosis treatment. The investment thesis centers on the company's lead product Briumvi, which operates in the largest drug class within the substantial $8 billion MS market. The manager sees significant potential for Briumvi to capture meaningful market share in this large and established therapeutic area. Multiple sclerosis represents a significant chronic disease market with substantial unmet medical needs. The commercial-stage nature of TG Therapeutics reduces execution risk compared to earlier-stage biotech investments. This position was added as part of the manager's active new idea generation during 2024, representing confidence in the company's competitive positioning within the MS treatment landscape.

Pitch Summary:
Oscar Health is a managed care organization focused on the commercial Affordable Care Act exchange market. While there is modest regulatory uncertainty in its end markets, Oscar has the potential for market share gains, geographic footprint expansion and significant margin improvement as it scales.

BSD Analysis:
The manager initiated a new position in Oscar Health, a managed care organization operating in the commercial ACA exchange market. Despite acknowledging modest regulatory uncertainty in the company's end markets, the investment thesis centers on three key growth drivers. First, Oscar has potential for market share gains within the ACA exchange market. Second, the company can expand its geographic footprint to capture additional market opportunities. Third, Oscar is positioned for significant margin improvement as it achieves greater scale in its operations. The manager appears confident in Oscar's ability to execute on these growth opportunities despite the regulatory headwinds. This represents a new investment idea added during an active year of portfolio repositioning.

Pitch Summary:
One standout was Bloom Energy, a provider of alternative energy products, which announced a significant partnership with a major utility to provide fuel cells to power AI data centers, crystalizing its potential exposure to an fast-growing source of power demand.

BSD Analysis:
The manager highlights Bloom Energy as a standout performer in the quarter, driven by a significant partnership announcement with a major utility. The company provides alternative energy products, specifically fuel cells, to power AI data centers. This positions Bloom Energy to benefit from the rapidly growing power demand associated with AI infrastructure buildout. The partnership crystallizes the company's exposure to this fast-growing market segment. The manager views this as a positive development that contributed to strong relative performance in the industrials sector. The investment thesis appears centered on Bloom Energy's ability to capitalize on the increasing power requirements of AI data centers through its fuel cell technology.

Pitch Summary:
One in particular, Money Partners Group (TSE: 8732.T), increased 94% from our purchase price when it was bought out by one of its competitors, Gaitame.com Co, at ¥474 per share in the fourth quarter. The gain on the sale provided a return contribution of 1.5% for the year.

BSD Analysis:
The manager achieved a successful exit from Money Partners Group, realizing a 94% gain when the Japanese financial services company was acquired by competitor Gaitame.com Co at ¥474 per share. This represents a classic merger arbitrage or takeover scenario where the fund benefited from corporate consolidation in Japan's competitive FX trading industry. The position contributed 1.5% to annual returns, demonstrating effective stock selection in the Japanese small-cap financial services sector. The buyout validates the manager's thesis on the company's strategic value and highlights opportunities in Japan's fragmented fintech landscape. The acquisition premium suggests Money Partners had attractive technology platforms or market positioning that made it a compelling target. This successful exit partially offset broader portfolio underperformance and showcases the manager's ability to identify takeover candidates in niche financial services markets. The timing of the exit in Q4 2024 provided crucial positive contribution during an otherwise challenging period for the fund's core holdings strategy.

Pitch Summary:
ASML is a leading supplier of photolithography equipment used in semiconductor manufacturing, enabling the production of microchips at ever-smaller line widths. The company's cutting-edge technologies, particularly extreme ultraviolet (EUV) lithography, play a critical role in producing the most advanced chips for applications like smartphones, data centers, and AI. ASML's systems are vital for the semiconductor industry, helping to push the boundaries of Moore's Law and drive innovation in electronics. Weakness in ASML's stock was due to their 3Q24 earnings announcement, in which the company posted a weak quarter while also cutting forward guidance. Fears surrounding lithography demand, the China/US trade war, and problems at the major fab plants sent the stock tumbling.

BSD Analysis:
Ithaka expresses a bearish view on ASML despite recognizing the company's critical role in semiconductor manufacturing and technological leadership. The fund acknowledges ASML's dominant position in photolithography equipment and its cutting-edge EUV technology that enables production of the most advanced chips for smartphones, data centers, and AI applications. ASML's systems are essential for pushing Moore's Law boundaries and driving electronics innovation, highlighting the company's strategic importance in the semiconductor ecosystem. However, fundamental execution challenges overshadowed the company's technological advantages, with weak third-quarter results and reduced forward guidance creating significant investor concern. Multiple headwinds including declining lithography demand, China/US trade war tensions, and operational problems at major fabrication plants created a perfect storm for the stock. The combination of cyclical demand weakness and geopolitical risks threatens ASML's near-term growth prospects despite its long-term technological moat. The fund's bearish stance reflects concerns about ASML's ability to navigate current industry headwinds and geopolitical tensions that could impact its critical China business and overall demand environment.

Pitch Summary:
Uber Technologies employs a marketplace-based technology platform used to match drivers and their vehicles with individuals, products, and packages moving from point A to point B. The company offers its ~6M independent contractors (drivers) access to its 130M monthly active users (riders), providing both parties real-time access to logistics services. Uber's business consists of three segments: Mobility, Delivery, and Freight. These businesses combined for ~$140B in annual bookings across 9.5B trips in 2023. Uber's stock suffered from the perceived risks autonomous vehicles would pose to the company's base business. This fear intensified when Donald Trump won the 2024 election, as investors anticipated that one of Trump's key allies, Tesla CEO Elon Musk, would leverage his burgeoning influence to accelerate the implementation of national autonomous driving regulations.

BSD Analysis:
Ithaka expresses bearish sentiment on Uber due to autonomous vehicle disruption risks, despite acknowledging the company's strong marketplace fundamentals. The fund recognizes Uber's impressive scale with 6 million drivers serving 130 million monthly active users across a diversified platform spanning Mobility, Delivery, and Freight segments generating $140 billion in annual bookings. The platform's network effects and scale advantages across 9.5 billion annual trips demonstrate significant competitive moats and market leadership. However, the fund highlights substantial regulatory and competitive risks from autonomous vehicles that could fundamentally disrupt Uber's driver-based business model. The Trump election victory amplified these concerns, with investors fearing that Elon Musk's influence could accelerate autonomous driving regulations that would benefit Tesla and other AV companies at Uber's expense. While Uber's current business model shows strong fundamentals and growth, the potential for regulatory changes favoring autonomous vehicles creates significant uncertainty around the company's long-term competitive positioning. The fund's bearish stance reflects concerns about Uber's ability to adapt to or compete with autonomous vehicle technology that could eliminate the need for human drivers.

Pitch Summary:
Advanced Micro Devices is a global leader in designing and manufacturing high-performance semiconductor products, including processors, graphics cards, and chipsets. The company develops CPUs and GPUs for a wide range of applications, such as gaming, data centers, AI, and high-performance computing. AMD's competitive edge lies in its advanced CPU and GPU architectures, such as its "Zen" and "RDNA" designs, which offer exceptional performance and energy efficiency. AMD's stock fell, despite releasing a solid 3Q24 report/guide, due to a number of moving parts that implied the forward quarter's EPS number will be 8% below Street expectations. Additionally, investors were disappointed management did not provide a specific target for the company's growing GPU business for 2025.

BSD Analysis:
Ithaka expresses a bearish near-term view on AMD despite acknowledging the company's strong competitive positioning and technological capabilities. The fund recognizes AMD's leadership in high-performance semiconductors and its advanced Zen and RDNA architectures that deliver superior performance and energy efficiency across gaming, data centers, AI, and high-performance computing applications. However, forward-looking concerns overshadow current fundamentals, with guidance implying next quarter's EPS will fall 8% below Street expectations despite a solid third-quarter report. Management's failure to provide specific 2025 targets for the growing GPU business disappointed investors and created uncertainty around the company's AI and data center growth trajectory. The disconnect between solid current performance and weak forward guidance suggests potential headwinds in AMD's key growth markets. While AMD maintains strong competitive positioning with its advanced architectures, execution challenges and guidance disappointments indicate near-term volatility and potential margin pressure. The fund's bearish stance reflects concerns about AMD's ability to meet elevated investor expectations in the rapidly evolving semiconductor landscape.

Pitch Summary:
From the front-lines of warzones to Fortune 500 enterprises, Palantir Technologies builds software to address high-level action items, respond to defense and security concerns, and improve organizational efficiency. The company offers a number of software products from data analysis and curation (Palantir Gotham and Foundry) to a cloud-based operations software (Apollo). The company rose to popularity, in part, due to several government contracts (~55% of revenues) arising from recent and continuous global conflicts. In addition to creating generative AI defense solutions for governments across the globe, commercial customers (~45% of revenues) have flocked to the company's security and data analysis solutions to monitor and analyze business data and protect sensitive information. The stock's meteoric rise in the quarter was due to a strong earnings report that beat Street expectations as well as investor excitement with regard to the company's ability to further monetize its AI product across its growing customer base.

BSD Analysis:
Ithaka presents a bullish case for Palantir based on its unique positioning in mission-critical data analytics and strong AI monetization potential. The fund emphasizes Palantir's diversified revenue base with government contracts representing 55% of revenues and commercial customers comprising 45%, providing balanced exposure to both stable government spending and growing commercial demand. The company's software suite spanning data analysis (Gotham and Foundry) to cloud operations (Apollo) demonstrates comprehensive platform capabilities for complex data challenges. Strong quarterly earnings that beat Street expectations indicate effective execution and growing market traction. The fund highlights significant investor excitement around Palantir's AI product monetization capabilities across its expanding customer base, suggesting substantial growth runway. Palantir's focus on generative AI defense solutions for governments and security/data analysis for commercial enterprises positions the company at the intersection of critical secular trends including AI adoption, cybersecurity, and data analytics. The stock's "meteoric rise" reflects both fundamental performance and market recognition of Palantir's strategic positioning in high-value, mission-critical applications where switching costs are typically high.

Pitch Summary:
Founded in 1994, Amazon has evolved from its early roots as an online bookstore to become one of the world's largest e-commerce retailers. At the end of 2023 Amazon stood poised to capture ~40% of all US e-commerce sales, representing five times more share than the next closest competitor. In addition to e-commerce, Amazon Web Services ("AWS") has become the market leader in outsourced cloud infrastructure. Further, Amazon Advertising is garnering significant share in digital advertising, particularly product placement ads, thanks to consumers beginning their product searches on Amazon's site. Amazon's stock appreciated on the back of a strong 3Q earnings report that beat on the top line, saw significant earnings growth relative to expectations ($1.43 actual vs $1.15 expected), and exhibited continued operating margin improvement.

BSD Analysis:
Ithaka maintains a bullish stance on Amazon, emphasizing the company's dominant market position across multiple high-growth segments. The fund highlights Amazon's commanding 40% share of US e-commerce, representing five times the market share of its nearest competitor, demonstrating significant competitive advantages and market leadership. AWS's position as the market leader in cloud infrastructure provides substantial recurring revenue and margin expansion opportunities. The emergence of Amazon Advertising as a significant player in digital advertising, particularly through product placement, showcases the company's ability to monetize its vast customer base and shopping intent data. Strong third-quarter earnings performance with significant EPS beats ($1.43 vs $1.15 expected) and continued operating margin improvement indicate effective operational execution and scalability. The combination of e-commerce dominance, cloud leadership, and advertising growth creates multiple revenue streams and cross-selling opportunities. Amazon's diversified business model and continued margin expansion suggest the company is successfully transitioning from growth-at-all-costs to profitable growth across its key segments.

Pitch Summary:
Founded in 2004, ServiceNow has become the leading provider of cloud-based software solutions that define, structure, manage and automate workflow services for global enterprises. ServiceNow pioneered the use of the cloud to deliver IT service management ("ITSM") applications. These applications allow users to manage incidents and to plan new IT projects, provision clouds, manage application performance and build applications themselves. The company has since expanded beyond the ITSM market to provide workflow solutions for IT operations management, customer support, human resources, security operations and other enterprise departments where a patchwork of semi-automated processes have been used with varying success in the past. ServiceNow's stock rose during the quarter, driven by strong fundamental performance and growing investor recognition of the company's dominant position in monetizing AI workloads.

BSD Analysis:
Ithaka presents a bullish case for ServiceNow based on its market-leading position in enterprise workflow automation and strong AI monetization capabilities. The fund highlights ServiceNow's evolution from an IT service management pioneer to a comprehensive enterprise workflow platform spanning multiple departments. The company's expansion beyond ITSM into HR, security, and customer support demonstrates successful platform diversification and market expansion. Strong quarterly performance and growing investor recognition of AI monetization potential suggest ServiceNow is well-positioned to capitalize on enterprise digital transformation trends. The fund's emphasis on the company's "dominant position" in AI workloads indicates confidence in ServiceNow's competitive moat and growth trajectory. ServiceNow's cloud-native architecture and workflow automation capabilities position it favorably as enterprises seek to streamline operations and integrate AI solutions. The stock's positive performance during the quarter reflects both fundamental execution and market recognition of the company's strategic positioning in the enterprise software landscape.

Pitch Summary:
Siemens Energy combines a world-class electrical power generation business, a world-class electricity transmission business, and an onshore and offshore wind turbine business that is attempting a turnaround. The company spun out of Siemens in September 2020. After many years of weak electricity demand in OECD countries, Siemens Energy is benefiting from a cyclical boom in demand.

BSD Analysis:
The manager views Siemens Energy as well-positioned to benefit from a cyclical upturn in electricity demand after years of weakness in OECD markets. The company operates two world-class businesses in power generation and transmission, providing essential infrastructure for electrical grids globally. Additionally, the wind turbine division represents a turnaround opportunity within the broader renewable energy transition. Since spinning out from Siemens in September 2020, the company has operated independently during a period of increasing focus on energy security and grid modernization. The cyclical demand recovery likely benefits from multiple drivers including electrification trends, data center growth, and infrastructure replacement needs. The manager's confidence appears to stem from Siemens Energy's market-leading positions in critical energy infrastructure combined with favorable demand dynamics. The wind business turnaround potential adds upside optionality to the core power generation and transmission franchises.

Pitch Summary:
Nilorn designs and delivers tags and labels for European clothing brands. The company combines just-in-time delivery with quality design that can elevate the customer's products in the eyes of the end consumer. Management uses free cash flow to grow the business and pay a dividend. The company has historically earned good returns on capital. Nilorn currently trades at an attractive upside-to-downside ratio.

BSD Analysis:
The manager views Nilörn as a specialized niche player in the European fashion supply chain with attractive business characteristics. The company provides essential branding elements including tags and labels that help clothing brands differentiate their products and enhance consumer perception. The just-in-time delivery model creates operational efficiency while the design capabilities add value beyond basic manufacturing. This combination likely creates customer stickiness and pricing power in what could otherwise be a commoditized business. The company's historical track record of generating good returns on capital demonstrates effective asset utilization and profitable operations. Management's balanced capital allocation approach, using free cash flow for both growth investments and dividend payments, suggests disciplined financial stewardship. The current valuation provides what the manager sees as an asymmetric risk-reward opportunity in a stable, cash-generative business serving the European fashion market.

Pitch Summary:
Frontdoor sells home service plans to homeowners. The company contracts with HVAC and other contractors and dispatches them when customers have problems with one of their major home appliances and systems (furnace, air conditioning, refrigerator, electrical system, etc). Frontdoor spun out of ServiceMaster in October 2018. Frontdoor serves about 2% of U.S. homes, and uses its free cash flow to grow organically, pay down debt, repurchase shares, and acquire complementary businesses.

BSD Analysis:
The manager views Frontdoor as a well-positioned business in the home service protection market with significant room for expansion. The company operates a capital-light model by contracting with service providers rather than employing technicians directly, creating scalable operations with attractive unit economics. Serving only 2% of U.S. homes indicates substantial market penetration opportunity in a large addressable market. The business generates strong free cash flow that management deploys across multiple value-creating initiatives including organic growth, debt reduction, share repurchases, and strategic acquisitions. Since spinning out from ServiceMaster in 2018, Frontdoor has established itself as an independent operator in the recurring revenue home services space. The manager's confidence likely stems from the defensive characteristics of the business model, where homeowners rely on essential system repairs regardless of economic conditions, combined with the significant growth runway in an underpenetrated market.

Pitch Summary:
VF Corp manages apparel brands, including Dickies, The North Face, Timberland, and Vans. Under its prior CEO, the company's poor capital allocation (including overpaying for Supreme and maintaining a too-high dividend after spinning out Kontoor) forced it to pause its model of using excess free cash flow to acquire good brands and manage them well. The company has now cut its dividend (twice) to a reasonable level and brought on a new CEO who has a track record of successfully turning around businesses. I believe that the company has good brands, the skills to manage them well, and a management team that is righting the ship. VF Corp currently trades at an attractive upside-to-downside ratio.

BSD Analysis:
The manager views VF Corp as a turnaround opportunity where new leadership is addressing previous management's capital allocation mistakes. The company owns valuable consumer brands including The North Face, Vans, Timberland, and Dickies, which the manager believes have enduring market positions. Previous management's errors included overpaying for Supreme and maintaining an unsustainable dividend after the Kontoor spinoff, which disrupted the company's successful acquisition and brand management strategy. The new CEO brings a proven track record of business turnarounds and has already taken corrective actions including dividend cuts to restore financial flexibility. The manager's thesis centers on VF Corp's underlying brand management capabilities and the potential to return to profitable growth under improved leadership. The current valuation reflects the operational challenges while offering attractive upside potential as the turnaround progresses.

Pitch Summary:
We bought our position in TriNet because it is an excellent business with a long runway for growth, and we paid an attractive price after it reported weak results.

BSD Analysis:
The manager initiated a position in TriNet following weak quarterly results that created an attractive entry point for what he characterizes as an excellent business with substantial growth potential. TriNet operates in the professional employer organization (PEO) space, providing comprehensive HR solutions to small and medium-sized businesses. The PEO model benefits from recurring revenue characteristics and scalable operations as client companies grow. The manager's confidence in the long-term growth runway likely reflects the ongoing trend of SMBs outsourcing complex HR functions to specialized providers. The timing of the purchase after disappointing results suggests the manager views the weakness as temporary rather than structural. The investment thesis appears to center on TriNet's market position in a growing addressable market, combined with the opportunity to purchase shares at a discount following short-term performance challenges.

Pitch Summary:
Enhabit provides healthcare and hospice services in patients' homes. The company serves patients covered by Medicare, Medicare Advantage, private Insurance and Medicaid – with reimbursement rates declining in that order, from the higher levels paid by Medicare to the lower levels paid by Medicaid. Enhabit was spun out of Encompass Health in July 2022. Historically, the business earned high returns on capital and grew both organically and through acquisitions. The company has struggled since the spinoff, with declining revenues and higher costs, which drove it to repeatedly seek covenant relief from its lenders. Enhabit currently trades at an attractive upside-to-downside ratio.

BSD Analysis:
The manager sees Enhabit as a distressed value opportunity in the home healthcare space, where the company provides essential services to patients across various insurance coverage types. The business model historically generated high returns on capital and grew through both organic expansion and strategic acquisitions before encountering post-spinoff challenges. Since separating from Encompass Health in July 2022, Enhabit has faced operational headwinds including revenue declines and cost pressures that required multiple covenant relief negotiations with lenders. Despite these near-term difficulties, the manager believes the fundamental healthcare delivery model remains sound, particularly given demographic trends favoring home-based care. The current distressed valuation creates what the manager views as an asymmetric risk-reward opportunity. The investment thesis likely depends on management's ability to stabilize operations and return to the historically profitable growth trajectory.

Pitch Summary:
As another example, I would have expected both VF Corp and Advance Auto to have performed well last year, as the company's situations are similar, and both made good progress on their turnarounds. But VF Corp dropped, before rebounding strongly and ending the year up, while Advance Auto dropped for most of the year. Advance Auto Parts is a store-based retailer of aftermarket automotive parts and supplies. This includes batteries, windshield wipers and fluid, air filters, motor oil, etc. The company has historically earned decent (approaching 20%) returns on tangible capital. The company is attempting a turnaround, and has fixed its balance sheet and is improving operations. Advance Auto currently trades at an attractive upside-to-downside ratio.

BSD Analysis:
The manager views Advance Auto Parts as a turnaround story with improving fundamentals that the market has yet to fully recognize. The company operates in the automotive aftermarket, selling essential maintenance items like batteries, filters, and motor oil through physical retail locations. Historically, the business generated strong returns on tangible capital approaching 20%, indicating the underlying business model's profitability potential. Management has successfully addressed balance sheet issues and is making operational improvements as part of the turnaround effort. Despite these positive developments, the stock underperformed in 2024, creating what the manager sees as an attractive risk-adjusted opportunity. The manager draws parallels to VF Corp's successful turnaround trajectory, suggesting similar potential for Advance Auto Parts. The current valuation provides compelling upside-to-downside characteristics given the operational progress.

Pitch Summary:
For example, GetBusy continues to grow its revenues without diluting shareholders, which makes its shares more valuable over time. Since 2018, the company has doubled revenues, while the share count is up less than 5%. This is a barely-profitable, U.K.-listed microcap. It pays no dividend and its growth rate is not high enough to excite interest. It is an ugly duckling, and ended 2024 selling for 1.5x revenues. I think that it is significantly undervalued—which is why we added to our position—but I do not know when the company will trade for a more reasonable multiple. I believe it is worth our wait because GetBusy continues to grow, and I think we will earn good returns on our investment – first from revenue growth and second from a higher multiple. GetBusy provides online document exchange systems—primarily for accountants. GetBusy spun out of Reckon in August 2017, and has continued to grow since then. GetBusy does not earn money, investing through higher expenses to grow its existing businesses and attempting to launch new products. The underlying businesses are profitable and sustainable in the U.K. and U.S.

BSD Analysis:
The manager identifies GetBusy as a classic value opportunity trading at just 1.5x revenues despite doubling revenues since 2018 with minimal share dilution. The company operates in the document management software space serving accountants, a niche market with recurring revenue characteristics. While currently barely profitable due to growth investments, the underlying business units are profitable and sustainable across both UK and US markets. The manager appreciates the disciplined approach to shareholder dilution, with share count increasing less than 5% over six years of growth. The investment thesis relies on continued revenue growth combined with eventual multiple expansion as the market recognizes the company's progress. The manager acknowledges timing uncertainty but views the risk-reward profile as compelling given the low valuation and steady operational progress.

Pitch Summary:
We sold Kambi in the quarter, reinvesting the proceeds into Credit Acceptance. I grew uncomfortable with Kambi's business – which has an element of many small steps forward, then one big step back. Kambi provides an outsourced sportsbook to gaming company customers, and as those customers grow, they tend to bring this task in-house. While the company has succeeded in growing over time, it continues to lose its most successful clients as they grow and develop their own sportsbooks. Kambi is a great solution for small companies entering new markets, but if economies of scale in the gaming industry drive consolidation over time, Kambi would face difficulties. When I compared this to Credit Acceptance, another company that grows over time, I preferred that we own Credit Acceptance. Both are attractively priced, but I am more confident in Credit Acceptance's runway for growth. We received SEK 110.8 for our Kambi shares, and paid $449.61/share for Credit Acceptance. Credit Acceptance is a subprime auto lender, enabling subprime borrowers to buy vehicles from used car dealerships. The business has profitably gained share in a large and difficult market for more than two decades. Management allocates free cash flow to growing the business and repurchasing shares at attractive prices. Credit Acceptance currently trades at an attractive upside-to-downside ratio.

BSD Analysis:
The manager switched from Kambi to Credit Acceptance, demonstrating a preference for Credit Acceptance's superior growth runway and business model durability. Credit Acceptance operates in the subprime auto lending space, a challenging but profitable niche where the company has consistently gained market share over two decades. The business model benefits from management's disciplined capital allocation, using free cash flow for both organic growth and opportunistic share repurchases. Unlike Kambi's customer retention challenges, Credit Acceptance has demonstrated sustainable competitive advantages in serving subprime borrowers through dealer partnerships. The manager views the current valuation as offering an attractive risk-adjusted return profile. The company's track record of profitable growth in a difficult market segment suggests strong execution capabilities and defensible market positioning.

Pitch Summary:
The Fund also purchased TE Connectivity (TEL) in the Technology sector. TEL is a leading manufacturer of connectors and sensors that help protect the flow of power and data in end market applications. We believe it has a sustainable competitive advantage due to leading market share of the global connector market with a dominant position in automotive connectors, strong pricing power, high customer switching costs and intangible assets. TEL revenues didn't grow over the past two years and now appear to be on the cusp of inflecting higher as end markets recover, driven by new growth opportunities in electric and autonomous vehicles, renewable energy, factory automation, artificial intelligence, and cloud computing applications. As shown on the next page, TEL had a relative dividend yield of 1.4x the S&P 500, which was also at the high end of its historical range. The company has a strong balance sheet and has raised its dividend an average of 7% over the past five years. We expect more dividend increases going forward.

BSD Analysis:
Madison added TE Connectivity as a technology holding, timing the purchase at a cyclical inflection point after two years of flat revenue growth. The investment thesis is built on TEL's dominant market position in global connectors, particularly automotive applications, supported by strong pricing power and high customer switching costs. The manager sees multiple secular growth drivers converging including electric vehicles, autonomous driving, renewable energy, factory automation, AI, and cloud computing applications. The relative dividend yield of 1.4x the S&P 500 represents an attractive entry point at the high end of historical ranges. TEL's financial profile includes a strong balance sheet and superior dividend growth averaging 7% annually over five years, well above ROK's 5% growth rate. Madison expects continued dividend increases as these secular trends accelerate and drive revenue inflection higher from current trough levels.