Investment Pitches

Pitch Summary:
Skyworks is a leading designer and manufacturer of RF semiconductors used in smartphones and other wireless applications, including automotive and IoT. While the company benefits from increasing RF content per device, near-term capital was reallocated to more discounted opportunities. Vulcan continues to view Skyworks as a high-quality business with strong competitive positioning but sold the position as valuation became less compelling relative to alternatives. The firm continues to monitor Skyworks and noted that a potential acquisition involving Qorvo could create renewed upside.

BSD Analysis:
Skyworks’ moat is RF engineering expertise embedded deep inside smartphones, where qualification cycles create friction. The problem is concentration—Apple still dictates a disproportionate share of outcomes. Margins expand quickly in handset upcycles and collapse just as fast when volumes soften. Diversification into automotive and IoT helps, but progress is incremental. Pricing power is limited because OEMs are sophisticated and alternatives exist. Inventory corrections and customer mix swings dominate earnings visibility. The bull case is renewed handset growth plus content gains per device. The bear case is prolonged smartphone stagnation with margin compression. Skyworks is a high-quality supplier trapped in a brutally cyclical end market.

Pitch Summary:
TransUnion is one of the three major U.S. credit bureaus, operating in an oligopolistic industry with high barriers to entry. The company collects and analyzes consumer credit data from over 95,000 institutions and has expanded into adjacent offerings such as insurance analytics, fraud detection, identity verification, and marketing solutions. Historically, TransUnion has grown organically at high single digits with operating margins around 30%. The company has been deleveraging its balance sheet and increasing its emphasis on share repurchases. Vulcan has followed TransUnion for many years and believes it is competitively entrenched with durable free cash flow generation and long-term growth potential.

BSD Analysis:
TransUnion’s moat is regulatory entrenchment combined with workflow necessity—credit systems don’t function without it. The real asset is not the data itself, but permissioned access and deep integration into lending, insurance, and identity checks. Pricing power is subtle because customers pass costs through rather than resist them. Cyclicality hits volumes during credit slowdowns, but relevance never disappears. Growth increasingly comes from analytics, fraud, and verification rather than pure credit reporting. Reputational risk from breaches caps the multiple, even if it doesn’t break the business. Competition exists, but displacement is structurally unlikely. The bull case is steady infrastructure-style compounding. TransUnion survives because the system is built around it, not because it innovates fastest.

Pitch Summary:
CarMax is the largest used car retailer in the U.S. and also operates one of the largest wholesale vehicle auction businesses alongside a captive finance arm. Performance has been pressured by macro headwinds including elevated interest rates, tight used-car supply, higher vehicle prices, and increased competition, particularly from Carvana. Vulcan believes these pressures are cyclical rather than structural and that CarMax’s scale, omnichannel model, brand trust, and vertical integration provide durable competitive advantages. Management is implementing operational changes to improve volumes, reduce costs, and restore profitability. Vulcan expects earnings recovery as industry conditions normalize and highlights ongoing share repurchases at a discount to intrinsic value.

BSD Analysis:
CarMax is the dominant national platform in used-car retail, built on trust, scale, and logistics rather than pricing gimmicks. Volume swings with interest rates and credit availability, but the underlying demand for used vehicles never disappears. CarMax’s sourcing, reconditioning, and distribution network is extremely hard to replicate profitably. Online and omni-channel integration improves inventory turns and lowers friction without sacrificing margins. Investors fixate on near-term affordability pressure and extrapolate cyclical weakness too far. The aging U.S. vehicle fleet provides a long-term tailwind as replacement demand builds. Financing volatility creates earnings noise, not structural damage. When rates normalize, operating leverage snaps back quickly. This is retail infrastructure for mobility, not a car lot with a website.

Pitch Summary:
Ryan Specialty Holdings, Inc. is a commercial excess and surplus insurance broker with a delegated authority business. The company was founded by Pat Ryan in 2010, who also founded Aon and led it for over four decades. Roughly 55% of revenue is generated from brokerage and 45% from delegated authority businesses, which write policies on behalf of insurance carriers without retaining balance sheet risk. The excess and surplus market has grown at an 11% CAGR over the last 25 years versus 4% for the admitted market, and Vulcan believes this outperformance will persist. Recent pricing softness in commercial property has pressured sentiment and share price, but Vulcan views this as a short-term cyclical issue, creating an opportunity to own a high-quality compounder below intrinsic value.

BSD Analysis:
Ryan’s moat is specialization in complex risks where expertise beats scale. Distribution economics are attractive in hard markets, but soften when capital floods in. Growth is acquisition-driven, which raises integration and pricing discipline risk. Client relationships are sticky, but not immune to repricing. The bull case is continued E&S market expansion. The bear case is rate softening exposing acquisition multiples. Ryan compounds if underwriting discipline persists. It breaks if growth outruns prudence.

Pitch Summary:
Experian’s shares were -1% in 2025 and LSEG’s were -20%. They are therefore illustrative of companies that have held back the Strategy’s returns this year. Consistent with much of the rest of the portfolio, operating results remain solid. Both companies will almost certainly report double-digit growth in earnings for 2025, and the companies have met or exceeded investors’ expectations for the year. The challenges have not so much been financial but hypothetical – focussed on AI’s potential to change competitive dynamics in their industry.

BSD Analysis:
Experian’s moat is permissioned data embedded deeply into lending, identity, and fraud workflows. The real asset is not raw data, but trust, regulatory approval, and integration into decision systems. Pricing power is quiet because customers pass costs through rather than renegotiate. Growth comes from analytics, verification, and emerging market credit penetration. Breach risk is reputational, not existential—but it caps multiples. Cyclicality affects volumes, not relevance. The bull case is steady expansion of data-driven decisioning across industries. The bear case is valuation compression during credit slowdowns. Experian is infrastructure pretending to be analytics.

Pitch Summary:
Experian’s shares were -1% in 2025 and LSEG’s were -20%. They are therefore illustrative of companies that have held back the Strategy’s returns this year. Consistent with much of the rest of the portfolio, operating results remain solid. Both companies will almost certainly report double-digit growth in earnings for 2025, and the companies have met or exceeded investors’ expectations for the year. The challenges have not so much been financial but hypothetical – focussed on AI’s potential to change competitive dynamics in their industry.

BSD Analysis:
LSEG’s moat is market plumbing: benchmarks, clearing, data, and post-trade services that the financial system cannot casually replace. The real crown jewel is data and analytics, not trading venues, which shifts the model toward recurring, high-margin revenue. Integration of Refinitiv raised execution risk, but also cemented LSEG as a data-first exchange operator. Switching costs are structural—contracts, regulation, and workflow dependence do the locking in. Growth is steady rather than explosive, but visibility is excellent. Capital allocation discipline matters because acquisitions define long-term returns. The bull case is continued data monetization layered onto indispensable infrastructure. The bear case is slower growth exposing leverage taken to build the moat. LSEG compounds by owning the rails, not the traffic.

Pitch Summary:
In Diageo’s case we were wrong to expect revenues and earnings to be more resilient than they have proven to be. The consumption trends suggest that changing drinking habits are exerting more pressure on the company’s results than we originally thought. Diageo is a highly profitable business with a lot of embedded value; not only a unique collection of iconic brands, but an asset base heavily invested for a higher level of growth. Our continued ownership reflects a refreshed investment case centred on Diageo’s opportunity to simplify operations, focus investment, and improve returns on capital.

BSD Analysis:
Diageo’s moat is brand power layered on global distribution—people don’t substitute away from Johnnie Walker or Guinness easily. Pricing power is real, but it works best gradually; push too hard and volumes remind you elasticity exists. Emerging markets drive long-term growth, yet they also introduce FX volatility and political noise. Premiumization flatters margins until consumer wallets tighten, then mix shifts show up fast. Innovation matters less than brand stewardship and route-to-market discipline. Inventory management and distributor relationships quietly determine short-term results more than marketing campaigns. The bull case is steady global spirits growth with disciplined price realization and cash returns. The bear case is demand softness exposing how much growth was price-led rather than volume-led. Diageo compounds when it respects pacing—spirits reward patience, not aggression.

Pitch Summary:
The greatest mistake is clearly Fiserv. Over more than a decade of ownership, our research suggested Fiserv’s 39-year record for annual double-digit compounded earnings growth was sustainable. This assumption was challenged abruptly by the company’s third quarter results. These revealed the company had underinvested and pursued sales tactics that were too aggressive, leading to a sudden reset in earnings and a change in management. This came as a shock and we immediately exited the investment.

BSD Analysis:
Fiserv is the plumbing behind payments and banking. Switching costs are enormous once integrated. Growth is steady, revenue quality elite. Merchant acquiring and core banking reinforce each other. Margin expansion comes from mix shift. Investors ignore it for flashier fintech. Digital payments deepen relevance. This is unavoidable infrastructure. Boring compounds.

Pitch Summary:
We also initiated a position in Marvell Technology which is a fabless semiconductor company that supplies technology necessary to move, store, process and secure data across various end-markets such as data centers, enterprise networks and telecommunications infrastructure. Today, Marvell has a robust R&D program with leading intellectual property across custom chip design and networking connectivity in and around the data center. We believe the risk/reward looks compelling and we elected to start a position on the stock’s recent pullback.

BSD Analysis:
Marvell supplies connectivity silicon into data centers and networking. AI drives bandwidth demand. Customer concentration adds volatility. Product mix is improving margins. Investors trade cycle timing aggressively. Design wins translate slowly but durably. Scale matters in custom silicon. This is infrastructure silicon, not consumer tech. Data moves everything.

Pitch Summary:
During the quarter, we initiated a new position in Cintas Corp (CTAS). Cintas is the nation’s largest uniform rental and facility services provider serving around 1 million customers. The company pursues organic growth while also targeting periodic acquisitions which can lead to increased capacity or cost synergies. The recurring nature of the firm’s core revenue stream funds a robust capital return program through share buyback and shareholder dividends, which Cintas has raised every year since going public 42 years ago. We are attracted to the company’s strong execution, potential for continued growth in the future, return profile, and current valuation leading us to initiate a new position in the stock.

BSD Analysis:
Cintas monetizes uniform and facility service contracts that clients rarely rebid aggressively. Route density creates cost advantages. Demand is recurring and non-discretionary. Pricing power exists through service quality. Investors overlook boring services. Cash flow is resilient across cycles. Acquisitions extend footprint. This is industrial services compounding quietly. Uniforms don’t churn.

Pitch Summary:
Alphabet Inc. (GOOG) was the strategy’s top performer for the period as the stock benefitted from a narrative shift that moved the company from the “AI loser” category over to the “AI winner” bucket. We elected to trim the position as the stock reached all-time highs. The shift in sentiment reflected improved confidence in Alphabet’s AI strategy and monetization potential. Strong execution across core businesses supported performance during the quarter.

BSD Analysis:
Alphabet is still one of the most powerful cash-generating businesses ever built, but AI has turned monetization from assumption into active risk management. Search dominance remains intact, yet the shift from links to answers threatens ad density even if user engagement holds. The real moat is distribution—Chrome, Android, YouTube, default placement—not being first in model benchmarks. Cloud adds strategic relevance but drags capital intensity and margin optics. Buybacks soften EPS volatility but don’t resolve the underlying transition. Regulation acts as a slow, permanent tax on valuation rather than an existential threat. Optionality across YouTube, AI tools, and Other Bets is real but unevenly monetized. The bull case is successful AI monetization layered onto unmatched scale. Alphabet wins only if it evolves without cannibalizing the engine that funds everything else.

Pitch Summary:
Mondi was the weakest holding in the portfolio during the quarter after its Q3 trading update triggered a sharp sell-off. The update revealed a more pronounced slowdown in packaging demand than the market had anticipated, reflecting softer economic conditions. Management highlighted a renewed focus on cash generation, capex restraint, and shareholder returns while positioning the business for an eventual cyclical recovery. Despite the near-term pressure, the company maintains strong market positions and operational scale.

BSD Analysis:
Mondi is a global packaging and paper producer operating at the intersection of sustainability, logistics, and consumer staples. Packaging demand doesn’t disappear in downturns; it just shifts formats, which gives Mondi a resilient volume base. Pricing cycles dominate near-term earnings, but long-term demand for flexible and paper-based packaging keeps expanding. Energy and input costs create margin volatility, yet scale and integration allow partial pass-through over time. Investors extrapolate cyclical weakness as if it were structural decline. Portfolio simplification and capital discipline have improved earnings quality. Sustainability regulations quietly favor Mondi’s materials over plastic alternatives. Cash generation normalizes quickly when pricing stabilizes. This is materials cyclicality with a structural relevance that the market consistently underestimates.

Pitch Summary:
NatWest was one of the strongest contributors to fund performance during the quarter, supported by results that came in ahead of consensus expectations. Management upgraded guidance going into the new year, reflecting resilient net interest margins and improving cost discipline. The bank continues to benefit from its strong domestic franchise and growing digital capabilities. Investors responded positively to improved earnings visibility and capital generation.

BSD Analysis:
NatWest is a UK retail bank benefiting from normalized rates. Capital levels support buybacks and dividends. Credit quality remains better than feared. Investors punish UK exposure reflexively. Cost control is improving. Government legacy overhang fades slowly. This is domestic banking math, not growth fantasy. Yield anchors the case.

Pitch Summary:
Man Group was the strongest performer in the portfolio during the quarter, with shares rising sharply following its Q3 trading statement released in mid-October. The update announced strong net inflows and record assets under management, acting as a major positive catalyst after a period of weak sentiment. The company benefited from increased demand for diversified investment strategies amid higher market volatility. Strong balance sheet discipline and scalable operating leverage supported confidence in earnings durability.

BSD Analysis:
Man Group’s moat is quantitative expertise and diversification across strategies, not brand flash. Performance drives flows, and flows drive valuation—there’s no hiding from track records. Fee pressure is real as passive and low-cost alternatives crowd the space. Operating leverage works when AUM grows and punishes quickly when it doesn’t. The balance sheet is strong, but earnings are sentiment-sensitive. The bull case is sustained alpha generation restoring inflows. The bear case is underperformance leading to AUM bleed. Man Group is a credibility business first and a scale business second. In asset management, results are the product.

Pitch Summary:
The L&G Europe ex-UK Equity ETF delivered a return of 6.07% over the quarter as portfolios diversified away from the US. Performance was driven primarily by strength in financials and energy. Banks benefited from resilient net interest margins and improving credit outlooks, while energy stocks were supported by firmer commodity prices and disciplined capital returns. Together, these sectors underpinned the ETF’s strong absolute performance.

BSD Analysis:
This ETF’s “moat” is cost efficiency and diversification, not alpha generation. Performance is driven by European macro, sector mix, and FX rather than manager skill. Financials, industrials, and exporters dominate outcomes. Cyclicality is high given Europe’s sensitivity to rates and energy prices. There is no downside protection beyond broad diversification. The bull case is European re-rating on improved growth and political stability. The bear case is structural underperformance versus the US. This is exposure, not conviction. It works when Europe works.

Pitch Summary:
Chrysalis was broadly stable in October and December, but weakened in November as uncertainty around the trust’s strategic direction and a pause in new investments weighed on sentiment, alongside softer NAV marks, against the backdrop of a solid year overall. We remain constructive on Chrysalis, which is trading at a 30% discount to NAV. For our UK funds, the UK Budget was keenly anticipated and introduced a range of new taxes and increases, with most measures backloaded. This should help keep near-term inflation broadly stable, giving the Bank of England scope to cut rates if appropriate. While supportive for UK equities, the Budget offers limited near-term growth impetus. Nonetheless, UK equities remain attractively valued on fundamentals, particularly as US markets are priced at elevated multiples. Some of this value was recognised in the quarter, with our UK funds up between 5–7%.

BSD Analysis:
Pantheon Capital Growth Trust offers public-market access to late-stage private growth assets with all the opacity that implies. The moat is manager access and selection, not liquidity or control. NAV marks lag reality, especially in volatile private markets. Discounts to NAV can persist regardless of underlying performance. Concentration in a handful of assets magnifies outcome risk. The bull case is successful exits that reprice NAV and narrow the discount. The bear case is valuation stagnation plus widening discounts. This is sentiment-driven investing dressed as diversification. Timing matters more than fundamentals.

Pitch Summary:
Rocket Companies undertook transformative acquisitions of Redfin and Mr. Cooper during 2025, creating a vertically integrated housing and mortgage platform. The transactions simplify the corporate structure, enhance customer capture across the homeownership lifecycle and generate significant cost and revenue synergies. Management expects improved operating leverage and scale advantages as mortgage volumes normalize. SCC views the restructuring and acquisitions as materially improving Rocket’s long-term competitive position.

BSD Analysis:
Rocket is a technology-enabled mortgage originator whose fate is tied to rates, not brand perception. Market share gains have persisted even as industry volumes collapsed, which matters more than near-term profits. Operating leverage is brutal in both directions, amplifying cycles investors hate. Technology improves cost efficiency but can’t manufacture demand. Investors confuse housing cyclicality with platform weakness. When refinancing returns, earnings snap back violently. Purchase mortgages provide a longer-term stabilizer than skeptics admit. This is not fintech disruption — it’s mortgage math at scale. Timing is the risk, not relevance.

Pitch Summary:
SandRidge remained a core energy holding despite muted share performance, reflecting SCC’s view that declining industry investment and inflationary pressures support long-term commodity prices. Management has aggressively cut costs, optimized well inventory and improved free cash flow conversion. Strategic acreage acquisitions and exposure to natural gas provide additional upside if energy prices rise. SCC views SD as a disciplined capital allocator with strong downside protection.

BSD Analysis:
SandRidge is a stripped-down E&P whose “moat” is really capital discipline after years of value destruction. The asset base is mature, which limits growth but makes cash flow more predictable when prices cooperate. Returns hinge almost entirely on commodity prices and management restraint, not geology upside. The balance sheet matters more than the drilling inventory. Shareholder returns are attractive when capital is returned instead of reinvested. The risk is familiar: higher prices tempt growth spending that erodes discipline. The bull case is harvest-mode cash generation with buybacks and dividends. The bear case is commodity weakness exposing the lack of growth optionality. SandRidge works only if management resists the urge to get ambitious.

Pitch Summary:
Instacart delivered steady operating performance in 2025, with double-digit growth in orders and gross transaction value alongside expanding profitability. While the stock underperformed the broader market, SCC emphasized the durability of Instacart’s convenience-driven value proposition and the virtuous cycle between shopper experience and platform efficiency. Concerns around competition and regulatory scrutiny weighed on sentiment but did not impair fundamentals. SCC believes long-term adoption of online grocery remains underappreciated.

BSD Analysis:
Instacart’s moat is grocery integration and scale, not consumer brand love. Retailer relationships matter more than app downloads because grocers control inventory and pricing. The business generates real cash flow, but growth is capped by grocery economics and low-margin categories. Advertising is the profit engine, not delivery fees. Competition exists, but replacing Instacart’s integrations is operationally painful for retailers. The risk is disintermediation as grocers bring capabilities in-house. The bull case is steady ad monetization layered onto stable order volumes. The bear case is margin compression as retailers push back. Instacart is infrastructure masquerading as a consumer app—and should be valued accordingly.

Pitch Summary:
Genworth Financial continued to represent a core value holding, offering indirect ownership of its majority stake in mortgage insurer Enact Holdings at a discount. The market continues to ascribe little to no value to Genworth’s life and long-term care businesses, despite meaningful optionality from litigation proceeds and potential restructuring. Share repurchases accelerated following activist pressure, improving per-share value. SCC views GNW as a sum-of-the-parts opportunity with multiple paths to value realization.

BSD Analysis:
Genworth is a balance-sheet and legacy-liability story, not a growth narrative. The moat—if it exists—is regulatory complexity that traps competitors and capital alike. Long-term care insurance liabilities dominate investor perception and valuation. Execution progress matters, but credibility has been eroded over years of restructuring and deferrals. Asset value exists, yet realization is slow and politically constrained. The bull case is gradual liability runoff and capital release that the market hasn’t fully priced in. The bear case is adverse actuarial surprises resetting the story again. Genworth is a patience test where time, not growth, is the investment thesis.