Investment Pitches

Pitch Summary:
Advanced Energy Industries is a provider of power electronics conversion products. The stock extended a strong multi-quarter rally fueled by earnings revisions, AI-related infrastructure spending, and improving semiconductor capital expenditure trends. We maintain our position, as we believe the company's exposure to AI-driven semiconductor and data-center demand should continue to drive shareholder value.

BSD Analysis:
The fund maintains a bullish stance on Advanced Energy Industries, citing the company's strong positioning in the AI infrastructure boom. The manager highlights the stock's multi-quarter rally driven by earnings revisions and improving semiconductor capex trends. The investment thesis centers on the company's exposure to AI-driven semiconductor and data center demand, which represents a significant secular growth opportunity. The fund's decision to maintain the position suggests confidence in the sustainability of these trends. Advanced Energy's power conversion products are critical components in semiconductor manufacturing and data center infrastructure, positioning the company to benefit from continued AI investment. The manager's focus on AI-related infrastructure spending indicates they view this as a durable catalyst for the business.

Pitch Summary:
Progressive Corporation (Entry): We initiated a position in Progressive, a leading US personal and commercial auto insurer with top-tier market positions, a hybrid distribution model, and a strong track record of innovation and underwriting discipline. Despite derating from its September 2025 highs, Progressive reported strong fourth-quarter results with net income up 25%, policies in force growing 10% to 38.6 million, and a full-year combined ratio of ~88%. The company has a proven track record, most recently as the fastest to react to auto loss cost inflation in 2022 and subsequently able to start reducing rates and rapidly gain market share in 2023-24. At ~11x forward earnings, we see an opportunity to own a high-quality compounder with a proven underwriting discipline.

BSD Analysis:
Antipodes initiated a position in Progressive Corporation, viewing the recent derating as an opportunity to own a leading US auto insurer with superior operational capabilities. The company reported strong fourth-quarter results with 25% net income growth, 10% policy growth to 38.6 million policies, and a full-year combined ratio of approximately 88%. Progressive demonstrated exceptional underwriting discipline by being the fastest to react to auto loss cost inflation in 2022, then quickly reducing rates to gain market share in 2023-24. The company's hybrid distribution model and innovation track record provide competitive advantages in the personal and commercial auto insurance markets. At approximately 11x forward earnings, the fund sees an attractive entry point for a high-quality compounder with proven underwriting discipline and market leadership.

Pitch Summary:
Woodside Energy (Entry): The market has mispriced Woodside as a mature income stock, anchoring on near-term capital expenditure and LNG oversupply concerns. It is irrational to extrapolate today's free cash flow trough into the steady-state economics of a company on the cusp of a major production step-change. The Scarborough offshore gas project — a major brownfield expansion feeding into the existing Pluto LNG facility in Western Australia — is 94% complete and on track for first LNG cargo in Q4 2026. With ~75% of LNG volumes contracted for 2026–2028 and Capital Markets Day targets pointing to >20% free cash flow yield once capex rolls off by 2032, the re-rating opportunity is compelling. Current elevated oil prices provide a near-term earnings tailwind.

BSD Analysis:
Antipodes initiated a position in Woodside Energy, arguing the market has mispriced the company as a mature income stock while overlooking an imminent production transformation. The fund believes it's irrational to extrapolate current free cash flow troughs when the company is approaching a major production step-change. The Scarborough offshore gas project, a significant brownfield expansion feeding the existing Pluto LNG facility, is 94% complete with first LNG cargo expected in Q4 2026. Approximately 75% of LNG volumes are already contracted for 2026-2028, providing revenue visibility. Management's Capital Markets Day targets suggest a greater than 20% free cash flow yield once capital expenditure rolls off by 2032. Current elevated oil prices provide additional near-term earnings support, making the re-rating opportunity compelling as production ramps.

Pitch Summary:
NVIDIA (Entry): The opportunity in NVIDIA has been created from the market's extrapolation of near-term AI uncertainty, despite a structural demand inflection for the world's dominant AI infrastructure provider. On our estimates NVDA trades on a 2027 multiple of 13x. Management now guides at least $1 trillion in AI infrastructure demand through 2027 — double the $500bn signalled twelve months ago — and frames this as a floor with NVDA the main beneficiary underpinned by the CUDA installed base. Revenue is also diversifying beyond hyperscalers, with sovereign clouds, enterprise, and robotics growing while the SaaS-to-agentic transition represents a further enterprise IT monetisation opportunity.

BSD Analysis:
Antipodes initiated a position in NVIDIA, viewing the market's focus on near-term AI uncertainty as creating an opportunity in the dominant AI infrastructure provider. The fund estimates NVIDIA trades at 13x 2027 earnings, which appears attractive given the structural demand inflection. Management has doubled its AI infrastructure demand guidance to at least $1 trillion through 2027, up from $500 billion signaled twelve months prior, with NVIDIA positioned as the primary beneficiary through its CUDA ecosystem moat. Revenue diversification beyond hyperscalers into sovereign clouds, enterprise, and robotics provides additional growth vectors. The transition from SaaS to agentic AI models represents another enterprise IT monetization opportunity. The fund believes the market is undervaluing NVIDIA's dominant position in the AI infrastructure buildout despite temporary uncertainty.

Pitch Summary:
Walt Disney (Entry): The market is extrapolating the structural decline of linear TV across the whole business, ignoring two segments performing strongly. Disney's streaming segment posted operating income of US$450 million in fiscal Q1 2026, up 72% year-over-year, while the Experiences segment generated record quarterly revenue of US$10 billion, alongside US$3.3 billion in operating income. We believe there is a meaningful valuation gap that should close once the margin inflection becomes visible in FY26. ESPN's direct-to-consumer transition provides additional optionality that the market is currently discounting, and a US$7 billion share buyback (roughly 3.8% of shares) for FY2026 signals management confidence in the undervaluation.

BSD Analysis:
Antipodes Partners initiated a position in Disney, arguing the market is overly focused on linear TV decline while overlooking strong performance in streaming and experiences. The streaming segment achieved 72% year-over-year operating income growth to $450 million, while the experiences division generated record quarterly revenue of $10 billion with $3.3 billion in operating income. The fund believes a valuation gap exists that should close as margin inflection becomes visible in FY26. ESPN's direct-to-consumer transition provides additional upside optionality currently being discounted. Management's confidence is evidenced by a $7 billion share buyback program representing roughly 3.8% of shares outstanding. The thesis centers on the market's myopic focus on declining linear TV revenues while undervaluing Disney's successful streaming transformation and robust theme park business.

Pitch Summary:
Infineon (Entry): A power semiconductor leader at the intersection of electrification, software-defined vehicles, and AI-data centre power infrastructure. Infineon holds ~13.5% market share in automotive semiconductors, but is the clear number one in automotive and power semiconductors globally. The company is leveraging this leadership position into the rapidly scaling AI data centre opportunity, with revenues rising from ~€700 million in FY2025 towards €2.5 billion in FY2027 based on known design wins. Automotive market caution has kept the stock under pressure while a growing portion of earnings is shifting toward secular AI infrastructure demand.

BSD Analysis:
Antipodes initiated a position in Infineon, viewing it as a power semiconductor leader positioned at the intersection of multiple secular growth trends including electrification, software-defined vehicles, and AI data center infrastructure. The company holds approximately 13.5% market share in automotive semiconductors and is the global leader in automotive and power semiconductors. Infineon is successfully leveraging this leadership into the rapidly scaling AI data center opportunity, with revenues projected to grow from approximately €700 million in FY2025 to €2.5 billion in FY2027 based on secured design wins. The fund believes automotive market caution has created an attractive entry point while a growing portion of earnings shifts toward secular AI infrastructure demand. The investment thesis centers on Infineon's dominant market position in power semiconductors benefiting from multiple structural growth drivers.

Pitch Summary:
Fujifilm Holdings Corp (Entry): One of the most compelling transformation stories in global markets. Healthcare sales exceeded ¥1 trillion for the first time, and the biologics CDMO business delivered 26% year-over-year sales growth in H1 FY2025, supported by major capacity additions in Denmark and North Carolina. FY2025 was reported as record high net income for the fifth consecutive year, with group operating profit margins exceeding 10% for the first time. Despite this, the stock trades at a material discount to life sciences peers, with the market continuing to anchor to the legacy film and imaging heritage.

BSD Analysis:
Antipodes views Fujifilm as one of the most compelling transformation stories globally, successfully transitioning from legacy film to healthcare. Healthcare sales surpassed ¥1 trillion for the first time, with the biologics CDMO business achieving impressive 26% year-over-year growth in H1 FY2025, supported by significant capacity expansions in Denmark and North Carolina. The company reported record net income for the fifth consecutive year with group operating margins exceeding 10% for the first time. Despite this fundamental transformation and strong financial performance, the stock trades at a material discount to life sciences peers as the market continues to anchor valuations to the legacy film and imaging business. The fund believes this valuation disconnect presents an attractive opportunity as Fujifilm's healthcare transformation gains momentum and scale.

Pitch Summary:
China Resources Beer (Entry): We started a position in China's dominant beer producer, at ~13x 2026 earnings, a valuation we believe materially underestimates the earnings trajectory. The investment case rests on three drivers: premiumisation (Heineken's ~20% volume growth in 2025 confirms the "drink less, drink better" trend is structural); operational efficiency (CR Beer's capacity rationalisation and cost discipline are driving meaningful margin expansion); and shareholder returns (dividend per share up 34%, with a ~70% payout ratio targeted over the next three years). Early 2026 data supports the thesis, with the company reporting positive volume and average selling price growth in the first two months of the year.

BSD Analysis:
Antipodes initiated a position in China Resources Beer at approximately 13x 2026 earnings, viewing the valuation as materially underestimating the earnings trajectory. The investment thesis centers on three key drivers: premiumization trends evidenced by Heineken's 20% volume growth confirming the structural "drink less, drink better" consumer behavior; operational efficiency gains through capacity rationalization and cost discipline driving margin expansion; and enhanced shareholder returns with dividend per share increasing 34% and a targeted 70% payout ratio over three years. Early 2026 performance data validates the thesis with positive volume and average selling price growth in the first two months. The fund believes the market underappreciates the combination of premiumization tailwinds, operational improvements, and capital allocation discipline in China's dominant beer market.

Pitch Summary:
NVIDIA (Entry): The opportunity in NVIDIA has been created from the market's extrapolation of near-term AI uncertainty, despite a structural demand inflection for the world's dominant AI infrastructure provider. On our estimates NVDA trades on a 2027 multiple of 13x. Management now guides at least $1 trillion in AI infrastructure demand through 2027 — double the $500bn signalled twelve months ago — and frames this as a floor with NVDA the main beneficiary underpinned by the CUDA installed base. Revenue is also diversifying beyond hyperscalers, with sovereign clouds, enterprise, and robotics growing while the SaaS-to-agentic transition represents a further enterprise IT monetisation opportunity.

BSD Analysis:
Antipodes entered NVIDIA citing market overreaction to near-term AI uncertainty despite the company's dominant position in AI infrastructure. The fund estimates NVDA trades at an attractive 13x 2027 earnings multiple. Management has doubled its AI infrastructure demand guidance to at least $1 trillion through 2027, positioning this as a conservative floor with NVIDIA as the primary beneficiary through its CUDA ecosystem moat. Revenue diversification beyond hyperscalers into sovereign clouds, enterprise, and robotics provides additional growth vectors. The transition from traditional SaaS to agentic AI represents a significant enterprise IT monetization opportunity. The investment thesis rests on NVIDIA's structural competitive advantages in AI infrastructure during a period of unprecedented demand growth, with the market temporarily focused on short-term uncertainties rather than long-term fundamentals.

Pitch Summary:
Walt Disney (Entry): The market is extrapolating the structural decline of linear TV across the whole business, ignoring two segments performing strongly. Disney's streaming segment posted operating income of US$450 million in fiscal Q1 2026, up 72% year-over-year, while the Experiences segment generated record quarterly revenue of US$10 billion, alongside US$3.3 billion in operating income. We believe there is a meaningful valuation gap that should close once the margin inflection becomes visible in FY26. ESPN's direct-to-consumer transition provides additional optionality that the market is currently discounting, and a US$7 billion share buyback (roughly 3.8% of shares) for FY2026 signals management confidence in the undervaluation.

BSD Analysis:
Antipodes initiated a position in Disney, arguing the market is overly focused on linear TV decline while ignoring strong performance in streaming and experiences. The streaming segment achieved 72% year-over-year operating income growth to $450 million, while experiences generated record quarterly revenue of $10 billion with $3.3 billion in operating income. The fund believes a valuation gap exists that should close as margin inflection becomes visible in FY26. ESPN's direct-to-consumer transition provides additional upside optionality currently being discounted. Management's confidence is evidenced by a substantial $7 billion share buyback program representing 3.8% of shares outstanding. The thesis centers on the market's myopic focus on declining linear TV overshadowing Disney's successful diversification into profitable streaming and robust experiences business.

Pitch Summary:
Headquartered in Houston, Texas, Chevron is one of the world's largest integrated energy companies, with operations spanning upstream exploration and production, downstream refining and marketing, and chemicals. The company traces its roots back to the 1911 breakup of Standard Oil and today produces approximately 4 million barrels of oil equivalent per day. While Chevron operates across the full value chain, roughly 85% of earnings are generated from upstream operations, reflecting its oil-leveraged portfolio. This upstream concentration is intentional and supported by a portfolio of low-cost, long-lived assets. The asset base includes deepwater production in the Gulf of America and Guyana, a large and advantaged Permian Basin position, long-lived conventional production in Kazakhstan, and liquefied natural gas projects in Australia. Chevron also maintains a presence in Venezuela, though it remains a relatively small part of the portfolio. Under CEO Mike Wirth (appointed in 2018), Chevron has emphasized capital discipline, portfolio optimization and shareholder returns. This strategy has included both targeted acquisitions and meaningful divestitures to improve the portfolio. Consistent with this approach, Chevron completed the acquisition of Hess in 2025, increasing its exposure to the Stabroek Block offshore Guyana—one of the lowest-cost and highest-return oil developments globally. This transaction enhances Chevron's long-term production visibility and strengthens the quality of its upstream portfolio with a high-margin, long-duration asset base. Some of the quality characteristics we have identified for Chevron include: A low-cost, oil-leveraged upstream portfolio anchored by advantaged positions in the Permian Basin and Guyana; A royalty-advantaged Permian position, where approximately 75% of acreage carries low or no royalty burden, providing structural cost advantages and attractive returns; A diversified downstream and chemicals portfolio, which provides cash flow resilience across commodity cycles; Demonstrated capital discipline under current leadership, including measured acquisitions (Noble, PDC, Hess) and continued portfolio optimization. At current levels, we believe shares reflect conservative commodity assumptions and do not fully capture the company's normalized earnings power and strengthening FREE cash flow profile as major capital projects transition from investment to production and capital spending moderates. Combined with a competitive dividend yield and ongoing share repurchases, we believe Chevron offers attractive total return potential over our three- to- five-year investment horizon. Catalysts we have identified for Chevron, which we believe could drive appreciation over our three- to- five-year investment horizon, include: Completion and ramp-up of the Tengiz expansion in Kazakhstan, materially increasing FREE cash flow following a multi-year capital investment phase; Successful integration of Hess, expanding Chevron's ownership in the high-return Guyana Stabroek development and strengthening long-term production visibility; Permian Basin development transitioning toward a capital-efficient, cash-generative phase, supported by advantaged mineral ownership and reduced unit costs; Continued operating discipline under CEO Mike Wirth, including structural cost control and moderated capital intensity; Ongoing capital returns to shareholders through dividend growth and share repurchases.

BSD Analysis:
The manager presents a comprehensive bull case for Chevron based on portfolio quality, capital discipline, and multiple value catalysts. The investment thesis centers on Chevron's oil-leveraged upstream portfolio generating 85% of earnings from low-cost, long-lived assets including advantaged Permian Basin and Guyana positions. The 2025 Hess acquisition significantly enhances the portfolio by adding exposure to the Stabroek Block, one of the world's lowest-cost, highest-return oil developments. Key competitive advantages include a royalty-advantaged Permian position with 75% of acreage carrying minimal royalty burdens, providing structural cost advantages. The manager views current valuation as conservative, not reflecting normalized earnings power as major capital projects transition from investment to production phase. Multiple catalysts support the three-to-five-year outlook: Tengiz expansion completion in Kazakhstan, Hess integration benefits, Permian Basin transitioning to capital-efficient cash generation, and continued shareholder returns under CEO Mike Wirth's disciplined approach. The combination of strengthening free cash flow profile, competitive dividend yield, and ongoing share repurchases creates attractive total return potential.

Pitch Summary:
Qualcomm, a leading semiconductor and communications technology company, was one of the largest detractors for the quarter. Despite delivering record revenues during the period, the company guided to lower near-term results due to memory-related supply constraints. Results were impacted by higher memory prices, driven in part by strong demand for AI-related data center applications. This is constraining smartphone production despite otherwise healthy underlying demand and leading handset manufacturers to adopt more cautious production and inventory strategies, reducing near-term chip orders for Qualcomm. We view these headwinds as cyclical rather than structural. Qualcomm has retained its high market share in handsets, even as large clients (most notably Apple) continue to pursue insourcing initiatives, which we believe is a testament to its history of productive research & development (R&D) spending and technological leadership. Qualcomm also continues to execute its long-term strategy of evolving from a handset-centric company into a broader connected computing platform. Automotive, Internet of Things (IoT) and newer initiatives, such as AI-enabled PCs and edge inference processors, represent a growing portion of the company, with management targeting roughly half of chip revenue from non-handset applications by the end of the decade. We believe Qualcomm's technologies will continue to benefit as connectivity expands across devices and as AI workloads increasingly shift from the cloud to on-device (the edge), supporting its ability to generate strong FREE cash flow over time.

BSD Analysis:
The manager views Qualcomm's recent underperformance as a cyclical headwind rather than a structural challenge, maintaining confidence in the long-term investment thesis. Despite record revenues, near-term guidance weakness stems from memory supply constraints and elevated prices driven by AI data center demand, causing smartphone manufacturers to reduce production and inventory levels. The manager emphasizes Qualcomm's resilient market position, having maintained high handset market share despite Apple's insourcing efforts, demonstrating the value of its R&D investments and technological leadership. The key long-term catalyst is Qualcomm's strategic transformation from a handset-centric business to a diversified connected computing platform. Management targets approximately 50% of chip revenue from non-handset applications by decade-end, including automotive, IoT, AI-enabled PCs, and edge inference processors. This diversification strategy positions Qualcomm to benefit from expanding device connectivity and the shift of AI workloads from cloud to edge computing, supporting sustainable free cash flow generation across multiple end markets.

Pitch Summary:
MonotaRO, the Japanese business-to-business (B2B) e-commerce platform, was the largest detractor during the quarter. While results remained strong, the stock price was pressured by softer order trends in the enterprise business and a moderation in new customer additions following a period of unusually strong growth. Sentiment was also pressured by the company's exposure to small and medium-sized enterprises in manufacturing and construction, cyclical and cost-sensitive end markets, particularly amid elevated input costs. Despite these near-term headwinds, profitability remained stable, with margin expansion supported by procurement efficiencies, reduced promotional discounting and higher royalty income. Enterprise business also grew more than 20% through newly connected corporations, expanding to approximately one-third of sales, highlighting its increasing importance within the business and reinforcing a key catalyst we originally identified. Management also announced a ¥10 billion share repurchase program, supporting shareholder returns and reflecting continued discipline in capital allocation. Over the longer term, we believe MonotaRO remains well positioned to continue gaining share in Japan's fragmented and underpenetrated MRO market. The company's broad assortment, operating scale and growing enterprise presence, in our view, support a business that is becoming more embedded in customer procurement workflows over time.

BSD Analysis:
Despite near-term headwinds, the manager maintains a constructive long-term view on MonotaRO's market position and growth prospects. The thesis acknowledges cyclical pressures from exposure to cost-sensitive SMEs in manufacturing and construction, but emphasizes the company's structural advantages in Japan's fragmented MRO market. Key positive developments include stable profitability with margin expansion driven by procurement efficiencies and reduced promotional spending, plus over 20% enterprise business growth reaching one-third of total sales. The ¥10 billion share buyback demonstrates management's confidence and disciplined capital allocation. The manager views temporary softness in order trends and customer additions as cyclical rather than structural, given MonotaRO's broad product assortment, operating scale, and increasing enterprise penetration. The long-term investment case centers on the company becoming more embedded in customer procurement workflows, supporting sustainable market share gains in an underpenetrated market. This positions MonotaRO to benefit from Japan's digital transformation in B2B commerce.

Pitch Summary:
Otsuka Holdings, a leading Japanese healthcare company, was also a top contributor to performance during the quarter. We have long admired the company's robust and diversified product portfolio, which we believe is well positioned to gain market share in various applications such as depression, schizophrenia and oncology. As awareness of major depressive disorders has continued to increase, Otsuka's leading products, including Rexulti and Abilify Maintena, have exhibited strong prescription growth. In oncology, the heightened attention around colorectal cancer, which has spiked in adults under 55, has led to gains for the company's leading cancer drug, Lonsurf. Furthermore, the company continues to invest in its "Next 8" pipeline, which complements its existing portfolio and supports its next phase of growth. Management has also continued to invest in external innovation, as demonstrated by its recently announced agreement to acquire Transcend Therapeutics, which strengthens its position in psychiatric and neurological disorders, including adding a late-stage candidate targeting post-traumatic stress disorder (PTSD). As the company continues to reinvest in innovation while simultaneously returning value to shareholders, as exemplified by its most recent ¥50 billion share buyback program, we remain confident that Otsuka will continue to deliver attractive long-term returns over time.

BSD Analysis:
The manager's bull thesis for Otsuka Holdings is built on the company's diversified pharmaceutical portfolio and strong positioning in high-growth therapeutic areas. The investment case is anchored by robust prescription growth for key psychiatric drugs Rexulti and Abilify Maintena, benefiting from increased awareness of major depressive disorders. The oncology franchise is gaining momentum with Lonsurf capitalizing on rising colorectal cancer incidence in younger adults, representing a significant market opportunity. The "Next 8" pipeline provides visibility into future growth drivers, while the Transcend Therapeutics acquisition adds a late-stage PTSD candidate, expanding the company's neuropsychiatric portfolio. Management's balanced capital allocation approach, combining R&D investment with shareholder returns through a ¥50 billion buyback program, demonstrates financial discipline. The manager views Otsuka as well-positioned to gain market share across multiple therapeutic areas while maintaining strong innovation capabilities through both internal development and strategic acquisitions.

Pitch Summary:
TotalEnergies, one of the world's largest energy companies, was the top contributor for the quarter. While oil prices increased during the period, driven by geopolitical tensions in the Middle East and disruptions to supply through the Strait of Hormuz, our focus remains on the company's underlying operational execution across its diversified energy platform. As the fourth-largest major energy player in the world, the company operates across upstream, downstream, liquefied natural gas (LNG), and integrated power and renewable energy businesses. Within its upstream segment, TotalEnergies continues to deliver accretive growth, with new projects generating higher cash flow per barrel than its legacy portfolio, supporting both production growth and improving profitability. In the LNG segment, the company has started production in Angola, which will supply Europe and Asia with roughly 2 million tons of LNG per year, and has also signed an agreement with Glenfarne, the lead developer of the Alaska LNG project, to offtake 2 million tons of LNG annually for the next 20 years. We view LNG as a key structural driver of long-term growth, particularly given increasing demand for energy security in Asia and Europe. Lastly, within renewables, TotalEnergies and Masdar, an Abu Dhabi clean energy leader, formed a joint venture to accelerate renewable energy growth through onshore solar, wind and battery storage projects across Asia. In the U.S., the company has signed a long-term Power Purchase Agreement to provide 1 GW of solar capacity to power Google's data centers in Texas for 15 years. These initiatives reflect the company's strategy to build a more diversified and resilient energy platform over time. Overall, we believe TotalEnergies' combination of disciplined capital allocation, low-cost operations and integrated business model positions it to generate attractive FREE cash flow across commodity cycles, with recent operational progress reinforcing its long-term investment case.

BSD Analysis:
The manager presents a compelling bull case for TotalEnergies based on operational excellence and strategic diversification across the energy value chain. The thesis centers on the company's ability to generate superior cash flows through new upstream projects that outperform legacy assets, while building a more resilient business model through LNG and renewable energy expansion. Key catalysts include the Angola LNG project supplying 2 million tons annually to Europe and Asia, a 20-year Alaska LNG offtake agreement, and strategic partnerships like the Masdar joint venture for renewable development across Asia. The Google data center power agreement demonstrates the company's ability to secure long-term contracted revenue streams in renewables. The manager emphasizes TotalEnergies' disciplined capital allocation and integrated business model as competitive advantages that should drive attractive free cash flow generation across commodity cycles. This diversification strategy positions the company to benefit from both traditional energy demand and the energy transition, reducing cyclical volatility while maintaining exposure to energy security themes.

Pitch Summary:
Headquartered in Chicago, Illinois, Motorola Solutions (Motorola) is a global leader in mission-critical communications and security solutions. The company designs and deploys land mobile radio (LMR) networks, video security systems and command center software used by more than 100,000 public safety and enterprise customers in over 100 countries. At its core, Motorola provides the communication backbone used by police officers, firefighters and emergency responders. When first responders communicate during natural disasters or other emergencies, they are often operating on Motorola's private radio networks—systems specifically engineered to remain operational when commercial cellular networks fail or become congested. Motorola generates approximately three-quarters of its revenue from its legacy LMR business, which includes radio devices, network infrastructure and related services. The remaining revenue is derived from video surveillance, body-worn cameras, access control systems and command center software that integrates voice, video and data into unified workflows. The company primarily serves government agencies, with relationships that often span multiple decades and are supported by long-term service contracts and predictable refresh cycles.

BSD Analysis:
The manager presents a compelling bull case for Motorola Solutions based on its dominant position in mission-critical communications with extremely high switching costs and predictable revenue streams. The investment thesis centers on the company's entrenched market leadership in Project 25 land mobile radio systems, where reliability and resiliency are non-negotiable for public safety customers. Key competitive advantages include deeply embedded customer relationships spanning decades, long-term service contracts, and specialized regulatory expertise that creates significant barriers to entry. The manager highlights several catalysts including a continued mix shift toward higher-margin software and services, cloud migration and SaaS adoption in command center offerings, and integration of the Silvus Technologies acquisition expanding capabilities in defense and unmanned systems. The company's mission-critical nature provides exceptional cash flow visibility and pricing power, while the shift toward software and recurring revenue should drive margin expansion and enhanced shareholder returns over the investment horizon.

Pitch Summary:
Headquartered in Houston, Texas, Chevron is one of the world's largest integrated energy companies, with operations spanning upstream exploration and production, downstream refining and marketing, and chemicals. The company traces its roots back to the 1911 breakup of Standard Oil and today produces approximately 4 million barrels of oil equivalent per day. While Chevron operates across the full value chain, roughly 85% of earnings are generated from upstream operations, reflecting its oil-leveraged portfolio. This upstream concentration is intentional and supported by a portfolio of low-cost, long-lived assets. The asset base includes deepwater production in the Gulf of America and Guyana, a large and advantaged Permian Basin position, long-lived conventional production in Kazakhstan, and liquefied natural gas projects in Australia. Chevron also maintains a presence in Venezuela, though it remains a relatively small part of its portfolio. Under CEO Mike Wirth (appointed in 2018), Chevron has emphasized capital discipline, portfolio optimization and shareholder returns. This strategy has included both targeted acquisitions and meaningful divestitures to improve the portfolio. Consistent with this approach, Chevron completed the acquisition of Hess in 2025, increasing its exposure to the Stabroek Block offshore Guyana—one of the lowest-cost and highest-return oil developments globally. This transaction enhances Chevron's long-term production visibility and strengthens the quality of its upstream portfolio with a high-margin, long-duration asset base.

BSD Analysis:
The manager presents a compelling bull case for Chevron based on its high-quality, low-cost asset portfolio and disciplined capital allocation under CEO Mike Wirth. The investment thesis centers on Chevron's advantaged upstream positions, particularly in the Permian Basin and Guyana's Stabroek Block following the Hess acquisition. Key quality characteristics include a royalty-advantaged Permian position with 75% of acreage carrying low or no royalty burden, providing structural cost advantages. The manager highlights several catalysts including the Tengiz expansion completion in Kazakhstan, successful Hess integration expanding Guyana exposure, and the Permian transitioning to a capital-efficient phase. Chevron's diversified downstream operations provide cash flow resilience across commodity cycles. The manager views current valuation as attractive, not fully reflecting normalized earnings power as major projects transition from investment to production phase, supported by competitive dividend yield and ongoing share repurchases.

Pitch Summary:
Qualcomm, a leading semiconductor and communications technology company, was one of the largest detractors for the quarter. Despite delivering record revenues during the period, the company guided to lower near-term results due to memory-related supply constraints. Results were impacted by higher memory prices, driven in part by strong demand for AI-related data center applications. This is constraining smartphone production despite otherwise healthy underlying demand and leading handset manufacturers to adopt more cautious production and inventory strategies, reducing near-term chip orders for Qualcomm. We view these headwinds as cyclical rather than structural. Qualcomm has retained its high market share in handsets, even as large clients (most notably Apple) continue to pursue insourcing initiatives, which we believe is a testament to its history of productive research and development (R&D) spending and technological leadership. Qualcomm also continues to execute on its long-term strategy of evolving from a handset-centric company into a broader connected computing platform. Automotive, Internet of Things (IoT) and newer initiatives, such as AI-enabled PCs and edge inference processors, represent a growing portion of the company, with management targeting roughly half of chip revenue from non-handset applications by the end of the decade. We believe Qualcomm's technologies will continue to benefit as connectivity expands across devices and as AI workloads increasingly shift from the cloud to on-device (the edge), supporting its ability to generate strong FREE cash flow over time.

BSD Analysis:
The manager presents a bullish long-term view on Qualcomm despite near-term headwinds from memory supply constraints affecting smartphone production. The investment thesis centers on Qualcomm's successful diversification beyond handsets into automotive, IoT, and AI-enabled computing platforms. Despite competitive pressure from Apple's insourcing efforts, Qualcomm has maintained high market share, demonstrating the value of its R&D investments and technological leadership. Key catalysts include the company's strategic evolution toward a broader connected computing platform, with management targeting 50% of revenue from non-handset applications by decade-end. The manager views current challenges as cyclical rather than structural, emphasizing Qualcomm's positioning to benefit from edge AI adoption and expanding device connectivity. The company's strong free cash flow generation capability supports the long-term investment case as AI workloads shift from cloud to edge computing.

Pitch Summary:
Microsoft, the global leader in software and enterprise services, was the biggest detractor for the quarter. The decline was largely driven by a broad-based sell-off across software companies in early 2026 as investors weighed both the potential disruption from artificial intelligence and the near-term impact of elevated investment in AI infrastructure on margins and returns. Despite this, Microsoft delivered strong results, highlighted by continued strength in Azure, which grew 39% year over year, and ongoing demand across its cloud platform, where customer demand continues to exceed available capacity. We are also seeing increasing evidence of real-world adoption as Microsoft connects AI directly to systems of record and enterprise data—such as emails, documents and workflows—thereby embedding its tools more deeply into how organizations operate. While the recent sell-off reflects elevated uncertainty around the future of software, we view these concerns as overstated, particularly given Microsoft's uniquely integrated ecosystem. With widespread adoption of offerings such as Microsoft 365 Copilot and GitHub Copilot, and supported by robust FREE cash flow that enables continued investment at scale, we believe Microsoft remains well-positioned to benefit from the ongoing migration of enterprise workloads to the cloud, with AI further enhancing the value of its platform over time.

BSD Analysis:
The manager maintains a bullish stance on Microsoft despite recent underperformance, viewing the AI-driven sell-off as creating an attractive entry point. The investment thesis centers on Microsoft's dominant position in enterprise software and its successful integration of AI capabilities across its ecosystem. Azure's 39% growth demonstrates continued cloud migration momentum, while capacity constraints indicate strong underlying demand. The manager emphasizes Microsoft's unique competitive advantage in embedding AI directly into enterprise workflows through products like Microsoft 365 Copilot and GitHub Copilot. Key catalysts include the ongoing enterprise cloud migration, AI adoption driving platform value, and robust free cash flow enabling continued investment at scale. The manager views current concerns about AI disruption as overstated given Microsoft's integrated ecosystem and believes the company is well-positioned to benefit from long-term technology trends.

Pitch Summary:
Verizon, one of the largest telecommunications companies in the U.S., was a primary contributor during the period. After delivering its strongest customer growth in several years, Verizon now serves 96 million postpaid customers and 20 million prepaid connections, further cementing its leadership as the largest wireless carrier in the country. We believe this performance also reflects improving execution following the appointment of new CEO Dan Schulman in October 2025, as well as early signs of a broader strategic shift under his leadership. Furthermore, after completing its $20 billion acquisition of Frontier Communications, the company's fiber footprint has expanded to over 30 million homes and businesses. Management has emphasized that the company is at a "critical inflection point" and is repositioning the business toward more sustainable, value-driven growth, prioritizing disciplined investment in network excellence and improved customer experience to reduce churn rather than relying on price-led growth. We believe Verizon's continued investment in its network supports its ability to sustain its brand reputation and premium positioning over the long term. Verizon has raised its 2026 guidance, authorized a $25 billion share buyback program over the next three years, and recommitted to furthering its 20 consecutive years of annual dividend increases. While the company remains in the early stages of its transformation, we believe these actions, consistent with our catalysts of improving capital discipline and a more rational competitive environment, should support stronger long-term returns.

BSD Analysis:
The manager presents a bullish transformation story for Verizon under new CEO Dan Schulman, highlighting strong customer growth momentum and strategic repositioning. The investment thesis centers on the company's shift from price-led to value-driven growth, emphasizing network excellence and customer experience to reduce churn. The $20 billion Frontier acquisition significantly expands Verizon's fiber footprint to 30 million locations, providing a foundation for sustainable growth. Key catalysts include improved capital discipline, raised 2026 guidance, and a substantial $25 billion share buyback program over three years. The manager views Verizon as being at a critical inflection point where operational improvements and strategic focus should drive superior returns. The company's commitment to maintaining its 20-year dividend growth streak provides additional income appeal while the transformation unfolds.