Investment Pitches

Pitch Summary:
Kurabo Industries ("Kurabo") was the largest detractor over the month, reducing performance by -122bps as its shares returned -15%. Kurabo, established in 1888 as a textile manufacturer, has diversified its operations over the years to include chemicals, advanced technology, food and services, and real estate. Kurabo Industries has a history of stable revenues and has doubled its operating margin to c.6% in recent years. To recap, in 2025 Kurabo made several positive announcements in line with AVI's engagement suggestions. These included closing down its largest textile plant, with the legacy textiles business having been a drag on operating profits, as well as a new medium-term plan with increased commitment to shareholder returns, which included a 4.0% DOE target and Y20.0bn buyback plans. Kurabo was another AJOT portfolio name to report Q3 earnings in February 2026. Cumulative operating income for the financial year ending March 2026 was down by -10% YoY as revenue declined by -6%, while full-year operating income was revised upward modestly, but is still expected to be down -18% YoY due to one-off textile restructuring costs. Since the earnings announcement on 9th February 2026, the shares have returned -19%. In early March 2026, Kurabo announced that 481,000 shares had been repurchased at a cost of Y3.7bn as part of its buyback program from November 2025 to September 2026 for a maximum of c.6% of shares outstanding or Y7.0bn total repurchase cost, making the program c.50% complete. Added to the portfolio in January 2024, the company accounted for 7.5% of AJOT's NAV at month-end as a top 5 holding. The investment has so far generated an ROI of +54% for an IRR of +56% (in JPY).

BSD Analysis:
Despite recent share price weakness, AVI maintains a constructive view on Kurabo Industries based on successful operational restructuring and capital allocation improvements driven by their engagement efforts. The investment thesis centers on the company's transformation from a legacy textile manufacturer to a diversified industrial conglomerate with improved profitability, having doubled operating margins to approximately 6% in recent years. AVI's engagement strategy has yielded tangible results, including the closure of the largest textile plant that was dragging on profitability and implementation of a new medium-term plan featuring a 4.0% dividend on equity target and ¥20 billion buyback program. While near-term earnings face headwinds from one-off textile restructuring costs, leading to an 18% year-over-year operating income decline, the underlying business transformation remains on track. The active share repurchase program demonstrates management's commitment to shareholder returns, with ¥3.7 billion already deployed representing 50% completion of the total ¥7 billion authorization. Despite recent volatility, the position has generated exceptional returns with 54% ROI and 56% IRR since January 2024, representing a significant 7.5% NAV allocation as a top-five holding. The temporary earnings pressure from restructuring costs masks the underlying operational improvements and enhanced capital efficiency that support the long-term investment case.

Pitch Summary:
Wakamoto Pharmaceutical ("Wakamoto") was the second largest contributor, adding +7bps as its share price returned +6%. Wakamoto is a specialty pharma company manufacturing ethical and over-the-counter drugs, with strengths in gastrointestinal remedies and ophthalmic therapeutics in Japan. Its portfolio includes long-established self-medication brands such as Strong Wakamoto alongside ophthalmic prescription, diagnostic and supplement products, with growing overseas sales of unique and patented formulas. Rohto Pharmaceutical, which accounts for 4.1% of AJOT's NAV, is the largest shareholder in Wakamoto, with over 11% of the voting rights. Combined across client funds, AVI controls more than 11% of the voting rights. Having generated an operating loss in the previous two financial years, in early February, Wakamoto released its cumulative Q3 earnings for the financial year ending March 2026, with operating income turning positive and a forecast 2% operating margin for the full year. In the day following the earnings announcement, the share price rose by +10%. In late-February 2026, as part of the medium-term plan through March 2028, it was announced that President Arata Igarashi would step down from the role and move to the role of Chairman effective April 2026. Since this announcement, the shares have returned +9% to March-end, while the benchmark has returned -8%. Added to the portfolio in February 2025, at month-end Wakamoto accounted for 1.3% of AJOT's NAV. To date, the investment has generated an ROI and IRR of +17% (in JPY).

BSD Analysis:
AVI's investment in Wakamoto Pharmaceutical represents a successful turnaround story, with the company achieving its first operating profit since fiscal 2023 after two years of losses. The bull thesis centers on the company's return to profitability with a forecasted 2% operating margin for the full year, marking a significant operational inflection point. Wakamoto's diversified pharmaceutical portfolio spans established OTC brands like Strong Wakamoto and growing ophthalmic therapeutics, providing multiple revenue streams and defensive characteristics. The company's international expansion through overseas sales of proprietary and patented formulations offers additional growth potential beyond the domestic Japanese market. Strategic governance changes, including President Igarashi's transition to Chairman as part of the medium-term plan through March 2028, suggest management's commitment to operational improvements. AVI's combined 11% voting control across client funds, alongside Rohto Pharmaceutical's 11% stake, provides meaningful influence over strategic direction. The investment has delivered solid returns with 17% ROI and IRR since addition in February 2025, though it remains a smaller 1.3% NAV position with potential for expansion.

Pitch Summary:
Broadmedia was the largest contributor over the month, adding +19bps to performance as the shares returned +3%. As a reminder, Broadmedia is mainly engaged in online education and IT services. It is a leading player in Japan running online-learning secondary schools with the brand name "Renaissance High School Group," allowing students to learn at their own pace remotely and to focus on their individual learning interests. Broadmedia's IT service business distributes Akamai Technologies' software and solutions to domestic clients. Since the completion of AJOT's tender offer for c.10% of the shares, which took AVI's combined ownership in Broadmedia to 40% of the voting rights, the share price has risen by +21% to March-end. In early February, Broadmedia released its cumulative earnings to Q3 of the financial year ending March 2026, with operating income rising by +40% YoY as revenue fell modestly by -1%. The company also announced further streamlining of its business portfolio through the sale of its non-core fishing-related media operation, a key engagement focus for the AVI team. Positively, management guidance for the full-year forecast implies strong Q4 performance that would take full-year operating income and revenue growth to +56% and +6%, respectively. Following the earnings announcement, the shares have returned +11% to March-end vs the benchmark's +1% return. Broadmedia serves as an example of AVI's constructive and creative approach to value enhancement in Japanese small-cap companies. AVI expects Broadmedia to continue driving business growth supported by rising demand in online education and IT services sectors. Added to the portfolio in April 2024, Broadmedia is now a top 5 holding in AJOT, accounting for 6.9% of NAV at month-end. The investment has generated a +26% ROI for an IRR of +30% to month-end (in JPY).

BSD Analysis:
AVI presents a compelling bull case for Broadmedia, highlighting the company's dominant position in Japan's online education market through its Renaissance High School Group brand. The investment thesis centers on strong operational momentum, with Q3 operating income surging 40% year-over-year despite modest revenue decline, demonstrating improving operational efficiency. Management's strategic focus on core competencies is evident through the divestiture of non-core fishing-related media operations, aligning with AVI's engagement objectives. The full-year guidance implies exceptional Q4 performance, projecting 56% operating income growth and 6% revenue growth for the complete fiscal year. AVI's significant 40% voting control following the tender offer provides substantial influence to drive value creation initiatives. The secular growth tailwinds in online education and IT services, particularly Akamai's software distribution business, support the long-term investment rationale. Since addition to the portfolio in April 2024, the position has delivered impressive returns with 26% ROI and 30% IRR, now representing 6.9% of NAV as a top-five holding.

Pitch Summary:
One of the other new holdings established was Nomura Research Institute, following a sharp pullback in its share price and a positive meeting with management on our recent research trip to Japan. The company operates as a leading IT solutions provider and consultancy, primarily serving financial, retail and manufacturing clients in Japan. We believe that the business will benefit from both revenue growth and cost optimisation opportunities arising from the accelerating implementation of AI within both customer workflows and its own operations. Furthermore, customer adoption of AI should also drive an acceleration in consultancy and implementation revenues, while the fixed-price nature of the IT Solutions business will benefit from the company's own AI adoption internally. We anticipate that the upcoming capital markets day will provide greater clarity on the medium-term growth outlook and progress of its international restructuring initiatives.

BSD Analysis:
Bell Asset Management established a new position in Nomura Research Institute following a sharp share price pullback and positive management meetings during their Japan research trip. The manager views the leading IT solutions provider and consultancy as well-positioned to benefit from AI implementation trends. They expect the company to capture revenue growth and cost optimization opportunities as AI accelerates within both customer workflows and NRI's own operations. Customer AI adoption should drive increased consultancy and implementation revenues, while the fixed-price nature of IT Solutions should benefit from internal AI adoption improving margins. The manager anticipates the upcoming capital markets day will provide clarity on medium-term growth prospects and international restructuring progress, suggesting they see significant upside potential in this Japanese IT services leader.

Pitch Summary:
Among the new additions was TE Connectivity, a global leader in electrical connectors. One of the primary tailwinds for the company has recently been its increased market share in the critical components that distribute power, signal, and data across electric vehicles, factory robots and hyperscale AI server racks. This positioning is expected to support a sustained period of double-digit revenue growth, alongside margin expansion over the medium-term. The company also consistently generates significant free cash flow and boasts a very shareholder-friendly management team, illustrated earlier this year when the board approved a 10% quarterly dividend hike alongside a substantial $3 billion expansion to its share repurchase program. We currently model strong upside looking forward, driven by a combination of earnings upgrades and potential for valuation multiple expansion.

BSD Analysis:
Bell Asset Management initiated a new position in TE Connectivity, viewing the electrical connector leader as well-positioned for secular growth trends. The manager highlights the company's increased market share in critical components for electric vehicles, factory robots, and hyperscale AI server racks as key growth drivers. This positioning is expected to deliver sustained double-digit revenue growth with margin expansion over the medium term. The company's strong cash generation capabilities and shareholder-friendly capital allocation are emphasized, including a recent 10% quarterly dividend increase and $3 billion share repurchase program expansion. The manager models strong upside potential driven by both earnings upgrades and valuation multiple expansion, suggesting confidence in the company's ability to capitalize on electrification, automation, and AI infrastructure trends.

Pitch Summary:
In contrast, Boot Barn was among the most notable detractors over the month. The escalation in geopolitical tensions drove a broad sell-off across Consumer Discretionary, reflecting both risk aversion and rising concerns around household spending as fuel costs increased and inflation expectations moved higher. As a SMID-cap, high-growth apparel retailer, Boot Barn was particularly exposed to these dynamics. Despite this near-term pressure, we retain conviction in the company's ability to deliver low single-digit same-store sales growth while continuing its strong store rollout strategy, supporting sustained top-line expansion. While some macro risk factors have increased, we see the risk-reward as attractive at this level following the valuation de-rating and therefore remain comfortable holding the name in the portfolio.

BSD Analysis:
Despite Boot Barn being a notable detractor during March, Bell Asset Management maintains conviction in the retailer's long-term prospects. The manager acknowledges the stock was pressured by geopolitical tensions and broader Consumer Discretionary weakness, driven by risk aversion and concerns about household spending amid rising fuel costs and inflation expectations. As a SMID-cap, high-growth apparel retailer, Boot Barn was particularly vulnerable to these macro headwinds. However, the manager retains confidence in the company's fundamental growth strategy, expecting low single-digit same-store sales growth combined with continued store expansion to drive sustained top-line growth. Following the valuation de-rating, they view the risk-reward profile as attractive at current levels and remain comfortable maintaining the position despite near-term macro pressures.

Pitch Summary:
In terms of individual holdings, one of the most prominent performers for the quarter was Deutsche Boerse. The name was supported by improving investor sentiment as a pickup in market volatility drove increased trading activity, particularly within its high-margin derivatives franchise (Eurex), positioning the company for potential near-term earnings upside. The business continues to benefit from structurally attractive growth drivers, including higher clearing volumes, sustained demand for risk management products and the ongoing migration toward centrally cleared markets. In addition, its data and analytics segment provides a stable, recurring revenue base that enhances earnings visibility. Despite these strengths, the stock entered the period at a relatively undemanding valuation for a business of this quality, which, combined with rising expectations for earnings upgrades, supported a re-rating. Overall, Deutsche Boerse offers an attractive mix of defensive recurring revenues and cyclical upside from increased market activity. We continue to hold the name in the portfolio, although have trimmed some profits following the outperformance.

BSD Analysis:
Bell Asset Management maintains a bullish stance on Deutsche Boerse, highlighting the company's strong performance during volatile market conditions. The manager emphasizes the structural growth drivers including higher clearing volumes, sustained demand for risk management products, and the ongoing migration toward centrally cleared markets. The high-margin derivatives franchise (Eurex) is positioned to benefit from increased trading activity during volatile periods. The data and analytics segment provides stable recurring revenues that enhance earnings visibility and defensive characteristics. The manager notes the stock was attractively valued relative to its quality, supporting a valuation re-rating as earnings expectations improved. While they've trimmed some profits following outperformance, they continue to hold the position, viewing it as offering an attractive combination of defensive recurring revenues and cyclical upside potential.

Pitch Summary:
A holding was also established in MercadoLibre, the "Amazon of Latin America". MercadoLibre is a vast enterprise, shipping over US$85bn (3bn items) worth of goods each year to over 120 million customers. Both volumes and revenues have increased tenfold over the past six years, while the income statement and cash flow inflected into sustained profitability. We have long admired this company and its excellent founder-led management team, but the shares only occasionally provide an opportune window to enter a position. We had watched its success attract renewed competition last year and anticipated margins to come under pressure. With margin forecasts now reset to appropriate levels, we used the recent share price weakness to begin a position in a company where we forecast earnings will more than triple in the five years ahead.

BSD Analysis:
Bell Asset Management established a new position in MercadoLibre, capitalizing on share price weakness after margin expectations were reset due to increased competition. The manager emphasizes the company's massive scale, shipping over $85 billion worth of goods (3 billion items) annually to over 120 million customers across Latin America. The investment thesis highlights the company's exceptional growth trajectory, with volumes and revenues increasing tenfold over six years while achieving sustained profitability inflection. The manager has long admired the founder-led management team but waited for an opportune entry point. Recent competitive pressures led to margin compression, but the manager views this as temporary and used the resulting share price weakness as an attractive entry opportunity. The bull case centers on forecasted earnings more than tripling over the next five years, suggesting significant upside potential from current levels. This represents a long-term growth opportunity in the dominant Latin American e-commerce platform.

Pitch Summary:
We also initiated a position in Nomura Research Institute following a sharp pullback in its share price and a positive meeting with management on our recent research trip to Japan. The company operates as a leading IT solutions provider and consultancy, primarily serving financial, retail and manufacturing clients in Japan. We believe that the business will benefit from both revenue growth and cost optimisation opportunities arising from the accelerating implementation of AI within both customer workflows and its own operations. Furthermore, customer adoption of AI should also drive an acceleration in consultancy and implementation revenues, while the fixed-price nature of the IT Solutions business will benefit from the company's own AI adoption internally. We anticipate that the upcoming capital markets day will provide greater clarity on the medium-term growth outlook and progress of its international restructuring initiatives.

BSD Analysis:
Bell Asset Management initiated a position in Nomura Research Institute following a sharp share price decline and positive management meetings during their Japan research trip. The manager views the company as a leading IT solutions provider and consultancy serving financial, retail, and manufacturing clients in Japan, well-positioned to benefit from AI adoption trends. The investment thesis centers on dual AI benefits: revenue growth from customer AI implementation services and cost optimization from internal AI adoption. The fixed-price nature of the IT Solutions business creates margin expansion opportunities as the company leverages AI to improve operational efficiency. Customer AI adoption should drive acceleration in higher-margin consultancy and implementation revenues, creating a favorable revenue mix shift. The manager anticipates the upcoming capital markets day will provide clarity on medium-term growth prospects and international restructuring progress. This represents an opportunistic entry into a quality Japanese IT services company trading at attractive levels following the pullback.

Pitch Summary:
Among the new additions was TE Connectivity, a global leader in electrical connectors. One of the primary tailwinds for the company has recently been its increased market share in the critical components that distribute power, signal, and data across electric vehicles, factory robots and hyperscale AI server racks. This positioning is expected to support a sustained period of double-digit revenue growth, alongside margin expansion over the medium-term. The company also consistently generates significant free cash flow and boasts a shareholder-friendly management team, illustrated earlier this year when the board approved a 10% quarterly dividend hike alongside a substantial $3 billion expansion to its share repurchase program. We currently model meaningful upside looking forward, driven by a combination of earnings upgrades and potential for valuation multiple expansion.

BSD Analysis:
Bell Asset Management initiated a new position in TE Connectivity, positioning it as a key beneficiary of multiple secular growth trends including electric vehicles, industrial automation, and AI infrastructure. The manager highlights the company's increased market share in critical components for power, signal, and data distribution across these high-growth end markets. The investment thesis centers on sustained double-digit revenue growth and margin expansion driven by exposure to electric vehicles, factory robots, and hyperscale AI server racks. Strong capital allocation and shareholder returns are emphasized, with management demonstrating commitment through a 10% quarterly dividend increase and $3 billion share repurchase program expansion. The company's consistent free cash flow generation provides financial flexibility and supports the shareholder-friendly approach. The manager models meaningful upside through both earnings upgrades and potential valuation multiple expansion, suggesting the stock is attractively valued relative to its growth prospects and secular positioning.

Pitch Summary:
In contrast, Boot Barn was among the most notable detractors over the month. The escalation in geopolitical tensions drove a broad sell-off across Consumer Discretionary, reflecting both risk aversion and rising concerns around household spending as fuel costs increased and inflation expectations moved higher. As a SMID-cap, high-growth apparel retailer, Boot Barn was particularly exposed to these dynamics. Despite this near-term pressure, we retain conviction in the company's ability to deliver low single-digit same-store sales growth while continuing its strong store rollout strategy, supporting sustained top-line expansion. While some macro risk factors have increased, we see the risk-reward as attractive at this level following the valuation de-rating and therefore remain comfortable holding the name in the portfolio.

BSD Analysis:
Bell Asset Management maintains a bullish stance on Boot Barn despite recent underperformance, viewing the sell-off as a temporary macro-driven dislocation rather than fundamental deterioration. The manager acknowledges the company's vulnerability as a SMID-cap, high-growth apparel retailer during periods of consumer discretionary weakness and rising inflation concerns. However, the investment thesis remains intact, centered on the company's ability to deliver low single-digit same-store sales growth while executing a strong store rollout strategy for sustained top-line expansion. The manager views the current valuation de-rating as creating an attractive risk-reward opportunity, suggesting the market has overreacted to macro headwinds. The decision to maintain the position reflects confidence in Boot Barn's long-term growth trajectory and execution capabilities despite near-term macro pressures. This represents a contrarian value opportunity in a quality growth retailer trading at depressed levels.

Pitch Summary:
In terms of individual holdings, one of the most prominent performers for the quarter was Deutsche Boerse. The name was supported by improving investor sentiment as a pickup in market volatility drove increased trading activity, particularly within its high-margin derivatives franchise (Eurex), positioning the company for potential near-term earnings upside. The business continues to benefit from structurally attractive growth drivers, including higher clearing volumes, sustained demand for risk management products and the ongoing migration toward centrally cleared markets. In addition, its data and analytics segment provides a stable, recurring revenue base that enhances earnings visibility. Despite these strengths, the stock entered the period at a relatively undemanding valuation for a business of this quality, which, combined with rising expectations for earnings upgrades, supported a re-rating. Overall, Deutsche Boerse offers an attractive mix of defensive recurring revenues and cyclical upside from increased market activity. We continue to hold the name in the portfolio, although have trimmed some profits following the outperformance.

BSD Analysis:
Bell Asset Management presents a compelling bull case for Deutsche Börse, highlighting the company's strong positioning during periods of market volatility. The manager emphasizes the high-margin derivatives franchise (Eurex) as a key driver of near-term earnings upside, benefiting from increased trading activity. The investment thesis centers on structural growth drivers including higher clearing volumes, sustained demand for risk management products, and the ongoing migration toward centrally cleared markets. The data and analytics segment provides stable recurring revenues that enhance earnings visibility and defensive characteristics. The manager notes the stock was trading at an undemanding valuation relative to its quality, creating an attractive entry point that has since led to re-rating. The combination of defensive recurring revenues and cyclical upside from market activity volatility makes this an attractive risk-adjusted opportunity, though the manager has taken some profits following outperformance.

Pitch Summary:
Agilysys is a hospitality-focused software provider that delivers cloud-native solutions spanning property management, point-of-sale, inventory and procurement, and guest engagement to hotels, resorts, casinos, cruise lines, and other hospitality venues worldwide. The investment thesis rests on the company's ongoing transition toward a subscription-based recurring revenue model, its deepening relationships with marquee customers, and the long runway for technology modernization across the hospitality industry. During the quarter, shares detracted from performance after the company's fiscal third-quarter earnings report revealed a shortfall in profitability relative to expectations despite continued revenue strength and raised full-year revenue guidance. The earnings miss triggered a sharp sell-off, compounded by a broader pullback across the software space as investors rotated away from higher-valuation growth names amid mounting macroeconomic uncertainty. Despite the near-term sell-off, we believe the fundamental story remains intact — subscription revenue continues to grow at an impressive pace, the company's customer pipeline is expanding, and its position as a purpose-built platform for a large and underpenetrated addressable market continues to differentiate it from more generalized enterprise software peers, in our view.

BSD Analysis:
The manager maintains a bullish stance on Agilysys despite near-term earnings disappointment, emphasizing the intact fundamental story and long-term growth drivers. The company's transition to a subscription-based recurring revenue model in the hospitality software market represents a significant opportunity given the large and underpenetrated addressable market. Key strengths include deepening relationships with marquee customers and a long runway for technology modernization across the hospitality industry. While profitability fell short of expectations despite strong revenue growth and raised guidance, the manager highlights continued impressive subscription revenue growth and an expanding customer pipeline. The purpose-built platform for hospitality venues differentiates Agilysys from generalized enterprise software competitors. The sell-off was exacerbated by broader software sector rotation amid macroeconomic uncertainty, creating potential opportunity for long-term investors.

Pitch Summary:
GeneDx is a specialty genomics laboratory focused on delivering complex genetic tests, including whole exome and genome sequencing, to diagnose pediatric rare diseases. The company possesses a comprehensive and proprietary database of genetic data that enables it to deliver superior diagnostic yields relative to competitors and alternative testing modalities, creating a meaningful competitive advantage in a highly specialized market. During the quarter, shares detracted from performance driven by two primary factors. First, while the company reported fiscal fourth-quarter revenue above analyst estimates, the magnitude of the upside was lower than investors anticipated as average selling prices per test remained steady on a sequential basis. Second, the launch of a competing genomics assay by a well-known diagnostics peer introduced concerns around potential market share erosion in the rare disease testing space. Despite these headwinds, we believe GeneDx's established market access and the depth of its genomic database represent a durable competitive moat.

BSD Analysis:
The manager maintains conviction in GeneDx despite near-term performance headwinds, highlighting the company's competitive advantages in rare disease genetic testing. GeneDx's comprehensive and proprietary genetic database enables superior diagnostic yields compared to competitors, creating a meaningful moat in the highly specialized pediatric rare disease market. While shares detracted from performance due to modest revenue upside versus expectations and competitive concerns from a new genomics assay launch, the manager emphasizes the durability of the company's competitive position. The established market access and depth of the genomic database are viewed as sustainable competitive advantages. The specialized nature of rare disease testing and the critical importance of diagnostic accuracy create high barriers to entry and customer switching costs.

Pitch Summary:
Repligen is a life sciences company that develops and provides advanced bioprocessing technologies and systems used in the manufacture of biologic drugs, including monoclonal antibodies and cell and gene therapies. The company's products, including filtration, chromatography, process analytics, and proteins, play a critical role in the purification stage of biologics manufacturing, helping ensure that drug products meet rigorous safety and efficacy standards. We believe Repligen is a high-quality compounder operating in a structurally attractive market, as the growing complexity and volume of biologic drug development drive sustained demand for increasingly sophisticated manufacturing tools. During the quarter, shares detracted from performance driven by a broader rotation away from the life sciences tools industry, while full-year revenue guidance that investors viewed as conservative at the low end further weighed on sentiment. Despite the near-term pressure, we continue to believe Repligen's market-leading portfolio and deep integration into customers' manufacturing workflows position the company well for durable long-term growth.

BSD Analysis:
The manager maintains a bullish long-term view on Repligen despite near-term headwinds, emphasizing the company's position as a high-quality compounder in a structurally attractive market. Repligen's advanced bioprocessing technologies are critical for manufacturing biologic drugs, including monoclonal antibodies and cell and gene therapies, with products spanning filtration, chromatography, process analytics, and proteins. The investment thesis centers on the growing complexity and volume of biologic drug development driving sustained demand for sophisticated manufacturing tools. While shares detracted from performance due to broader sector rotation and conservative guidance, the manager believes the company's market-leading portfolio and deep customer integration create durable competitive advantages. The critical role of Repligen's products in ensuring drug safety and efficacy standards creates high switching costs and recurring demand patterns.

Pitch Summary:
Cognex is a global leader in machine vision technology, providing vision systems, sensors, and software that enable manufacturers and logistics operators to automate inspection, guidance, and identification tasks across factory and warehouse environments. We find the company compelling given its dominant market position, expanding addressable market driven by automation and AI-enabled inspection, and a growing recurring revenue base. We believe its new, more commercially minded CEO is driving meaningful change, exiting low-return businesses and optimizing the company toward higher-margin, higher-return opportunities. The company has also diversified from three core end markets to five, reducing its historical cyclicality and earnings volatility. During the quarter, shares contributed positively to performance after the company delivered fourth-quarter results that exceeded expectations, with an industrial recovery in semiconductor-related end markets materializing ahead of schedule. Management also announced a significant cost reduction initiative that they believe should drive considerable margin expansion over the coming year.

BSD Analysis:
The manager presents a compelling turnaround story for Cognex Corporation under new leadership focused on operational excellence and portfolio optimization. The company's dominant position in machine vision technology is benefiting from secular trends in automation and AI-enabled inspection across manufacturing and logistics. Key improvements include strategic portfolio rationalization with exits from low-return businesses and focus on higher-margin opportunities. The diversification from three to five core end markets has reduced historical cyclicality and earnings volatility, creating a more stable business model. Recent results exceeded expectations with an earlier-than-expected industrial recovery in semiconductor-related markets. Management's significant cost reduction initiative is expected to drive considerable margin expansion. The growing recurring revenue base and expanding addressable market driven by automation trends support the long-term growth thesis.

Pitch Summary:
Nebius Group is a specialized AI infrastructure company that provides a full-stack platform, including GPU-accelerated cloud computing, to help enterprises build, train, and deploy large-scale artificial intelligence models. The company has positioned itself as a leading next-generation cloud provider purpose-built for machine learning and high-performance computing workloads. We believe the company is anchored by its vertically integrated approach, which combines proprietary data center design with in-house software to deliver superior performance and lower operating costs compared to traditional GPU cloud providers. During the quarter, shares contributed positively to performance driven by several reinforcing catalysts. The company announced a landmark multi-year infrastructure agreement with a major AI hyperscaler, significantly expanding its contracted backlog and validating its platform at scale. Additionally, fiscal fourth-quarter results were exceptionally strong, with revenue increasing dramatically year over year as demand for dedicated AI compute capacity accelerated. Profitability also reached a meaningful milestone, as the company reported positive adjusted earnings at the group level for the first time, reflecting strong pricing power and growing operating leverage within the core AI cloud business. We believe Nebius's differentiated infrastructure model and rapidly expanding customer base position the company to capitalize on the sustained buildout of AI computing capacity.

BSD Analysis:
The manager presents a strong bull case for Nebius Group as a pure-play AI infrastructure provider with significant competitive advantages. The company's vertically integrated approach combining proprietary data center design with in-house software creates superior performance and cost advantages versus traditional GPU cloud providers. Key catalysts include a landmark multi-year agreement with a major AI hyperscaler that significantly expanded contracted backlog and validated the platform at scale. The company achieved a critical profitability milestone with positive adjusted earnings for the first time, demonstrating strong pricing power and operating leverage. Revenue growth has been dramatic year-over-year as demand for dedicated AI compute capacity accelerates. The manager believes Nebius is well-positioned to capitalize on the sustained buildout of AI computing infrastructure given its differentiated model and rapidly expanding customer base.

Pitch Summary:
RBC Bearings is a leading manufacturer of highly engineered precision bearings and components that are essential to the operation of machines, aircraft, and mechanical systems across a wide range of applications. The company's products reduce friction, minimize wear, facilitate power transmission, and control pressure and flow — all critical functions in demanding operating environments. RBC focuses on technically complex, regulated markets that require sophisticated design, testing, and manufacturing capabilities, and the company holds a market-leading position with sole-source status on the vast majority of its products, providing a strong competitive moat. During the quarter, shares contributed positively to performance as the company benefited from multiple converging tailwinds, including an acceleration in commercial aircraft production, continued strength in the aerospace aftermarket, increased global defense spending, an early cyclical recovery in industrial end markets, and growing demand from the space sector. In our view, the company is executing well, with expanding profitability and strong free cash flow generation reinforcing our confidence in the durability of the long-term growth trajectory.

BSD Analysis:
The manager presents a compelling bull case for RBC Bearings based on its dominant market position and multiple growth catalysts. The company's sole-source status on the majority of its products creates a strong competitive moat in technically complex, regulated markets. The investment thesis is supported by several converging tailwinds including accelerating commercial aircraft production, robust aerospace aftermarket demand, increased global defense spending, and early cyclical recovery in industrial markets. The manager emphasizes the company's strong execution with expanding profitability and robust free cash flow generation. The diversified end-market exposure across aerospace, defense, industrial, and space sectors provides multiple avenues for growth. The technical complexity and regulatory requirements of RBC's markets create high barriers to entry and switching costs for customers.

Pitch Summary:
Nvidia is the world's leading designer of graphics processing units (GPUs) and accelerated computing platforms, providing the foundational hardware and software that power artificial intelligence training and inference across data centers, cloud infrastructure, and edge applications globally. The company's GPUs have become the de facto standard for AI workloads, and its expanding ecosystem of networking, software, and systems solutions has deepened its strategic importance to hyperscalers, enterprises, and sovereign AI initiatives worldwide. We believe Nvidia is a direct beneficiary of the AI infrastructure buildout given its dominant market position, unmatched product roadmap, and rapidly expanding addressable market. During the quarter, shares detracted from performance despite the company delivering record fiscal fourth-quarter results that exceeded expectations on both revenue and earnings, with strong forward guidance that pointed to continued acceleration. However, a sharp post-earnings sell-off reflected broader investor anxiety around the sustainability of AI capital spending, lingering questions about whether more cost-efficient AI models could reduce demand for high-end computing hardware, and a wider rotation out of mega-cap technology names. Despite the near-term volatility, we believe the structural demand for accelerated computing remains firmly intact.

BSD Analysis:
The manager maintains strong conviction in NVIDIA despite market volatility, emphasizing the company's dominant position in AI infrastructure. NVIDIA's GPUs have achieved de facto standard status for AI workloads, creating significant switching costs and competitive moats. The expanding ecosystem beyond hardware into networking, software, and systems solutions deepens customer relationships and increases addressable market. Record financial results with strong forward guidance demonstrate continued execution excellence and market demand. The post-earnings selloff appears driven by broader market concerns rather than company-specific fundamentals. The manager views questions about AI model efficiency as temporary headwinds rather than structural threats. The expanding addressable market across data centers, cloud, and edge applications provides multiple growth vectors. However, investors should monitor competitive threats and potential cyclical demand patterns in semiconductor markets.

Pitch Summary:
AppLovin is an advertising technology company offering a digital platform that helps mobile app developers market, monetize, and analyze their apps. We believe the company is experiencing a positive lifecycle change, driven by its AI-powered software engine. While currently focused on mobile gaming, AppLovin is expanding into other market segments. Its Demand Side Platform (DSP) supports ad placements, user acquisition, inventory matching, and performance analytics. Further, we believe AI is central to AppLovin's growth, driving a large majority of the company's revenue through its recommendation and targeting engine. In our view, AppLovin gains a competitive advantage, delivering higher-value app installs by leveraging data from its game portfolio and developer partners. We believe this scale and data advantage enhances its network effect, improving its technology and boosting market share in mobile gaming. As developers use the platform, the company collects data that continuously refines its algorithms. During the quarter, shares detracted from performance despite another strong earnings report that exceeded expectations on both revenue and profitability. Investor sentiment was pressured by short seller reports alleging questionable ad practices — claims we view as a misunderstanding of the company's business model — coupled with a broad selloff across the software space. Additionally, early channel checks on the company's e-commerce initiative have been mixed, with some advertisers reporting difficulty scaling spend on the platform. We remain constructive on the company's long-term trajectory.

BSD Analysis:
The manager presents a strong bull case for AppLovin based on its AI-powered advertising platform and network effects in mobile gaming. The company's AI-driven recommendation and targeting engine creates significant competitive advantages through superior user acquisition efficiency. The data flywheel from its game portfolio and developer partners continuously improves algorithm performance and market positioning. Strong earnings results exceeding expectations on both revenue and profitability demonstrate solid execution despite market volatility. The manager dismisses short seller concerns as misunderstandings of the business model, showing conviction in the investment thesis. However, mixed early results from the e-commerce expansion and scaling challenges highlight execution risks in new verticals. The broad software selloff created temporary headwinds but doesn't affect the underlying business fundamentals.