Investment Pitches

Pitch Summary:
Kokusai Electric benefited from improving semiconductor capital expenditure expectations. The company’s strong position in deposition equipment supports long-term growth as chip complexity increases. We see cyclical recovery layered on top of structural demand from advanced manufacturing.

BSD Analysis:
Kokusai Electric supplies deposition equipment critical to advanced semiconductor manufacturing. Complexity at smaller nodes increases demand for its tools. Semiconductor cycles delay orders but don’t erase roadmaps. Customer relationships are deeply embedded and sticky. Investors fear capex slowdowns reflexively. Yet leading-edge investment is non-negotiable. Margins reflect process know-how, not commodity hardware. This is bottleneck exposure in chipmaking. Bottlenecks command pricing.

Pitch Summary:
Dollar General detracted as margin pressures persisted due to shrink and higher labor costs. Management is investing in store standards, supply chain efficiency and pricing to restore profitability. We believe the company’s scale and value proposition remain compelling in a challenging consumer environment.

BSD Analysis:
Dollar General is built for economic stress, not prosperity, and that’s exactly when it shines. Its rural footprint and convenience moat are hard to replicate profitably. Margin pressure from shrink and labor exposed execution flaws. But demand for value retail doesn’t disappear. Investors punish short-term missteps aggressively. Store productivity improvements drive recovery more than growth. Inflation keeps trade-down behavior alive. This is a defensive retailer fixing execution. When fixed, it works.

Pitch Summary:
Meta was a strong contributor as advertising demand stabilized and engagement across its platforms improved. Cost discipline has supported margin recovery while investment in AI is enhancing ad targeting and content recommendation. We believe Meta’s scale, data advantage and AI capabilities position it well for sustained earnings growth.

BSD Analysis:
Meta is an advertising juggernaut that reminded the market how fast margins snap back when spending discipline shows up. Engagement across its platforms remains massive and sticky. AI improves ad targeting and pricing power rather than threatening the model. Reels monetization has turned from headwind to tailwind. The metaverse spend still divides opinion, but core cash flow funds it comfortably. Regulatory pressure persists but hasn’t changed user behavior. Investors still anchor to old narratives. Meta thrives when attention is scarce. This is platform dominance with a controversy discount.

Pitch Summary:
Sea Limited underperformed as the company increased investment to support growth at Shopee. Management believes prioritizing scale and customer engagement is appropriate given the long runway in core markets. Revenue growth remains strong across e-commerce and fintech, and the balance sheet supports continued investment. We remain confident in Sea’s ability to compound value over the long term.

BSD Analysis:
Sea survived its growth-at-all-costs era and emerged leaner, more disciplined, and still relevant. Shopee dominates Southeast Asian e-commerce with improving unit economics. Digital entertainment adds volatility but also upside when hits land. Fintech is the next margin driver as monetization deepens. Investors remember the burn more than the reset. Cost control restored credibility. Emerging market penetration remains low. When growth confidence returns, rerating is violent. This is growth rebuilt under pressure.

Pitch Summary:
MediaTek is Taiwan’s leading chip designer, forming a duopoly in the smartphone market with Qualcomm. Stable pricing and cash generation support the business, while artificial intelligence growth potential through its partnership with Google is underappreciated by the market. The company offers significant AI revenue potential beyond its core smartphone franchise.

BSD Analysis:
MediaTek’s moat is cost-efficient design at scale, especially in smartphones and connectivity where performance-per-dollar wins markets. The company thrives by being the fast follower that commercializes technology reliably rather than chasing bleeding-edge prestige. Concentration risk is real—handsets still dominate volumes and cyclicality hits hard when OEM demand slows. Competition with Qualcomm is constant, but MediaTek has proven it can take share in mid-to-high tiers. AI and automotive add growth narratives, yet they won’t offset handset cycles overnight. Margins expand in upcycles and compress just as quickly when inventories build. The bull case is continued share gains and diversification into higher-value chips. The bear case is prolonged handset weakness and pricing pressure. MediaTek is an execution-led compounder riding a brutally cyclical end market.

Pitch Summary:
Salmar is a leading Norwegian salmon farmer in an industry growing at a high single-digit rate, driven by changing global eating habits. Lower production costs from superior farming locations support higher margins. As smaller competitors face cost and regulatory pressures, Salmar is well placed to consolidate the market.

BSD Analysis:
SalMar is one of the highest-quality operators in global salmon farming, but quality doesn’t immunize you from politics. The real moat is biological execution—low cost per kilo, scale, and operational discipline across the value chain. Demand for salmon is structurally strong, yet supply is tightly regulated, turning government policy into the dominant variable. The Norwegian resource rent tax permanently reset investor perception of risk and return. Offshore and expansion projects add optionality, but they also introduce biological and capex uncertainty. Pricing cycles still matter, even in a constrained supply world. The bull case is disciplined execution plus global protein demand. The bear case is policy creep and cost inflation eating away the advantage. SalMar is a best-in-class operator in an industry where the state is the ultimate shareholder.

Pitch Summary:
Tokyo Electron is a semiconductor production equipment company whose tools are used across multiple stages of the manufacturing process. Structural trends, including rising semiconductor complexity and proliferation across end markets, support long-term demand. Recent share price weakness driven by short-term cyclical concerns presented an attractive entry point. Scale and R&D capabilities reinforce Tokyo Electron’s entrenched competitive position.

BSD Analysis:
Tokyo Electron sells the tools that make advanced semiconductors possible. Its exposure to deposition and etch grows as nodes shrink and complexity explodes. Semiconductor cycles delay orders but don’t erase technology roadmaps. Customer relationships are deeply embedded and sticky. Margins reflect IP intensity, not brute manufacturing. Investors fear capex slowdowns. But advanced-node investment is non-negotiable. TEL sits upstream of every AI roadmap. Bottleneck economics win here.

Pitch Summary:
Lundin Mining is a Canadian-listed copper-focused miner with low-cost assets and strong production growth potential. Family-led governance underpins a solid operating track record and financial position. With constrained supply and structurally rising demand, the current valuation does not reflect the company’s quality.

BSD Analysis:
Lundin Mining is a copper-heavy miner positioned squarely in the electrification narrative. Asset quality matters more than spot prices, and Lundin’s portfolio delivers longevity. Capital discipline separates it from value-destructive peers. Copper demand growth is structural, not speculative. Investors focus on near-term price swings. Meanwhile, replacement supply remains scarce. Balance sheet flexibility allows opportunistic growth. When copper tightens, quality producers rerate first. This is mining with restraint.

Pitch Summary:
The shares of DSV rebounded after a year dominated by geopolitical pressure on global trade. Third-quarter results exceeded expectations, with margin improvement across divisions and upgraded guidance on synergies from the DB Schenker acquisition. Management accelerated the integration timeline, with most savings now expected within two years. This de-risked execution and improved confidence in long-term earnings growth.

BSD Analysis:
DSV is a logistics compounder built on ruthless execution and consolidation discipline. Asset-light freight forwarding gives it flexibility competitors envy. Acquisitions are integrated cleanly, expanding margins rather than diluting them. Freight cycles hurt volumes, but market share gains persist. Customers stick because DSV removes complexity from global supply chains. Investors often trade shipping sentiment instead of business quality. As global trade normalizes, operating leverage reappears quickly. Cost control is cultural, not cyclical. This is logistics run like private equity.

Pitch Summary:
Samsung Electronics passed qualification with Nvidia for its High Bandwidth Memory 3 Extended (HBM3E) chips, a key milestone after earlier challenges in high-bandwidth memory. It is also in advanced discussions to supply the next-generation product, which is expected to be available in 2026. A broader memory up-cycle supported performance, with DRAM and NAND prices rising as inventories normalized. With a strong balance sheet and exposure across the semiconductor value chain, Samsung is well-positioned to benefit from structurally rising artificial intelligence-driven demand.

BSD Analysis:
Samsung is a tech conglomerate where memory cycles dominate sentiment and obscure long-term value. Semiconductor earnings swing violently, but scale and balance sheet strength ensure survival through downturns. Foundry and advanced packaging remain strategic even if profitability lags. Consumer electronics add cash flow but little excitement. Investors treat Samsung like a commodity chipmaker. In reality, it’s one of the few players that can fund capex through cycles. AI and memory intensity reset the earnings ceiling over time. When cycles turn, Samsung snaps back hard. This is optionality on patience.

Pitch Summary:
After a strong run, shares in TME corrected sharply in the fourth quarter. Third-quarter results showed solid revenue growth, with non-subscription revenue rising 51% year-on-year, driven by concerts and merchandise. However, concerns emerged that this mix shift toward lower-margin revenues could dilute profitability, alongside rising competition and guidance for subscription growth to slow in 2026. The correction appears largely valuation-driven. We continue to view TME as a high-quality compounder with significant long-term monetization potential.

BSD Analysis:
Tencent Music is no longer just a streaming app — it’s the dominant music monetization platform in China. The shift from social entertainment gimmicks toward subscriptions has improved revenue quality materially. ARPU continues to rise as users accept paying for premium content and experiences. Regulatory pressure crushed excesses but also removed weaker competitors. Licensing scale and label relationships create a moat that newcomers can’t replicate. Investors still price in permanent policy risk. Yet music demand is culturally embedded and resilient. Margins benefit as cost discipline replaces growth-at-any-cost. This is a cleaned-up monopoly trading at a trust discount.

Pitch Summary:
Our investment thesis is that Visional represents an inexpensive bet on the continued modernisation of Japan’s labour market. The structural shift toward mid-career hiring is accelerating as labour shortages intensify and lifetime employment norms break down. BizReach’s competitive advantages position it to continue to gain market share, supported by strong network effects, pricing power, and a founder-led culture with significant ownership. At 31 December 2025, Visional traded at 20x estimated forward earnings, but adjusting for excess cash and loss-making segments, BizReach itself trades at approximately 15x earnings despite expected mid-teens growth. We further see its unprofitable segments as call options rather than permanent drags on profitability.

BSD Analysis:
Visional’s moat is workflow embedment in conservative Japanese corporate processes, particularly through HR and logistics platforms. Customer stickiness is high because Japanese enterprises move slowly and value continuity. Growth is steady, but structurally capped by domestic demographics and limited international reach. Expansion into adjacent services adds optionality but risks diluting focus. Margins depend on software mix versus services intensity. Competition exists, but incumbency advantage is real in Japan. The bull case is incremental digitization of legacy workflows with disciplined execution. The bear case is saturation in core verticals with limited new growth vectors. Visional is a local compounder—durable, but not exportable at scale.

Pitch Summary:
While we do not consider short-term share price declines alone to constitute an investment mistake, when they are accompanied by material revisions to our medium-term earnings estimates they warrant closer scrutiny. This was the case with our second-largest detractor for the period, Trex. Trex is a US-listed supplier of outdoor composite decking and is currently experiencing an extended downturn in repair-and-remodel demand. In addition to a weaker-than-expected sales trajectory, in November the company unexpectedly announced incremental investment in sales and marketing for FY26 which will meaningfully impact profit margins. Taken together, these factors suggested a sufficiently significant change in industry dynamics for us to re-evaluate our investment, and we consequently opted to exit our position during the period.

BSD Analysis:
Trex’s moat is category ownership in composite decking, where brand, distribution, and installed base matter more than raw material advantage. Composite penetration is still growing, but it remains discretionary spend tied to housing and remodeling cycles. Pricing power exists because Trex sets the reference point for “premium composite,” yet elasticity shows up quickly in downturns. The cost advantage from recycled inputs helps margins, but doesn’t override demand volatility. Competition is increasing as peers invest aggressively to close the quality gap. Innovation matters, but channel execution and shelf space matter more. The bull case is renewed housing activity with continued share gains from wood. The bear case is prolonged remodeling weakness compressing volumes and pricing. Trex is a category leader—but still a consumer cyclical wearing a sustainability halo.

Pitch Summary:
Over the same period, Auto Trader, a UK-listed automotive classifieds platform, was the Fund’s largest detractor. This reflected a combination of short-term factors unrelated to its half-year earnings release in November, which was a positive surprise. These included the rollout of its new Deal Builder product in late 2025, which triggered backlash from a small but vocal portion of its UK dealer base and threats of coordinated cancellations. While actual cancellations were well under 1% of its customer base, and management undertook rapid and extensive outreach efforts with dealers, this episode likely weighed on investor sentiment. We believe broader investor concern around the AI-related disruption risk outlined above was also a significant contributing factor.

BSD Analysis:
Auto Trader is the dominant UK digital marketplace for new and used cars, operating as a tollbooth on vehicle transactions. Dealers view the platform as essential, giving Auto Trader exceptional pricing power even in weak auto markets. Revenue growth is driven more by ARPA increases than listing volumes. The company has successfully layered data, finance, and advertising products onto its core listings business. Margins and cash flow are among the best in European internet platforms. Cyclicality affects sentiment but rarely fundamentals. Auto Trader is a best-in-class marketplace monopoly with durable economics.

Pitch Summary:
Medpace was the Fund’s largest contributor in H1 FY26, having been among its largest detractors over the prior 12 months. Medpace is a US-listed clinical research organisation focused on small biotechnology companies. The pharmaceutical sector has been in a period of cyclical weakness since mid-2024, driven by the impending loss of exclusivity on several major drugs, pricing pressure from the Inflation Reduction Act, heightened political scrutiny, and a weak biotech funding environment following the COVID-era boom amid higher interest rates. After four consecutive quarters of elevated project cancellations, Medpace delivered a strong inflection in fundamentals, reporting very robust net bookings growth in Q2 and Q3 FY25, alongside stronger-than-expected guidance for FY26.

BSD Analysis:
Medpace is a specialized contract research organization known for tight operational control and superior trial execution. Its focus on mid-sized biopharma clients creates stickier relationships and higher margins than broader CRO peers. Backlog visibility is strong, even as biotech funding cycles introduce noise. Medpace’s founder-led culture emphasizes discipline over growth-at-all-costs. Margins are best-in-class due to internal staffing and limited outsourcing. The trade-off is slower top-line growth during biotech downturns. Medpace is a high-quality CRO that prioritizes profitability and execution.

Pitch Summary:
Consider the Fund’s investment in PTC, a US-based software provider whose products are used by large industrial companies to design and manufacture complex products, including in the aerospace and defence industries. Designs must conform to precise engineering specifications and physical constraints – think of the components that go into an aircraft – with no scope for ambiguity or hallucination. AI is not a substitute for this business logic. Instead, we believe entrenched software providers like PTC will continue to benefit from their incumbency, data gravity, and deep business process knowledge, and are likely to be AI beneficiaries, acting as gateways for customers to supplement existing software with AI functionality. Any productivity gains are likely to be shared, even if this ultimately results in job losses.

BSD Analysis:
PTC sits at the intersection of industrial software, product lifecycle management, and the digital thread connecting design to manufacturing. Its Windchill and Creo platforms are deeply embedded in customers’ engineering workflows, creating high switching costs. The real upside comes from ThingWorx and Arena, which extend PTC into IoT, SaaS PLM, and product compliance. Subscription transition has improved revenue visibility and margin durability. Demand is tied to long-cycle industrial capex rather than consumer sentiment. Execution has been disciplined, with steady ARR growth and strong cash flow. PTC is a quiet compounder powering the industrial digitalization wave.