Investment Pitches

Pitch Summary:
the progress made by McKesson and Cencora, giving us confidence that their positions are sustainable. Aside: when we analyse companies we do so in the pursuit of “intrinsic value growth”. In practise, this means we look for two things: demonstrable growth in bottom line financial metrics like EPS and cash flow, alongside strengthening in competitive positioning. Our confidence in the interplay of these two factors for McKesson and Cencora is why we allow ourselves to own both in an otherwise highly diversified portfolio. To further benefit from their market positions, both businesses have invested in specialisation – from specific delivery processes for hard to handle biotech compounds, through to technology solutions for their customers and suppliers. Recent EPS growth has been ahead of the very long-term average of 15%-17%, itself more than ample given the valuation. According to our estimates, these stocks will grow more rapidly than at least half of the “Mag 7” companies, trade at more than twice the starting free cash flow yield and are more defensive in nature.

BSD Analysis:
McKesson and Cencora stand out as two of the most durable compounders in U.S. healthcare, combining consistent EPS and cash-flow growth with steadily strengthening competitive positions. Both companies operate at a scale that is nearly impossible to replicate, and their recent push into specialized distribution — from ultra-cold biotech logistics to tech-enabled workflow solutions — deepens customer stickiness and widens their moats. These businesses sit at the center of the pharmaceutical supply chain, serving a market that grows reliably regardless of economic cycles, giving them a defensive profile that many “Mag 7” names can’t match. Their recent EPS growth has run ahead of the already impressive 15–17% long-term average, and internal investment is increasingly focused on areas with higher margins and fewer competitors. Despite this combination of growth and defensiveness, both stocks trade at valuations that imply far less dynamism while offering more than double the free-cash-flow yields of the mega-cap tech cohort. Their scale, regulatory expertise, and specialization efforts ensure that competitive positions continue to strengthen rather than merely hold steady. Taken together, McKesson and Cencora offer a rare setup: above-market growth, expanding moats, and valuations still anchored in skepticism rather than optimism.

Pitch Summary:
the progress made by McKesson and Cencora, giving us confidence that their positions are sustainable. Aside: when we analyse companies we do so in the pursuit of “intrinsic value growth”. In practise, this means we look for two things: demonstrable growth in bottom line financial metrics like EPS and cash flow, alongside strengthening in competitive positioning. Our confidence in the interplay of these two factors for McKesson and Cencora is why we allow ourselves to own both in an otherwise highly diversified portfolio. To further benefit from their market positions, both businesses have invested in specialisation – from specific delivery processes for hard to handle biotech compounds, through to technology solutions for their customers and suppliers. Recent EPS growth has been ahead of the very long-term average of 15%-17%, itself more than ample given the valuation. According to our estimates, these stocks will grow more rapidly than at least half of the “Mag 7” companies, trade at more than twice the starting free cash flow yield and are more defensive in nature.

BSD Analysis:
McKesson and Cencora are the two dominant pharmaceutical distributors in the U.S., and both have demonstrated precisely the kind of intrinsic value growth—rising earnings power paired with strengthening competitive moats—that long-term investors should prize. Their scale, logistical sophistication, and regulatory know-how form barriers to entry that remain effectively insurmountable, and both companies have reinforced these advantages through deep specialization in complex distribution categories such as high-touch biotech compounds and temperature-controlled therapies. These specialized services have strengthened customer stickiness and expanded margin opportunities beyond traditional distribution. Recent EPS growth has run ahead of their already impressive long-term trend of fifteen to seventeen percent annually, a rate that comfortably exceeds what many of the marquee “Mag 7” tech companies are likely to achieve from today’s base. Despite this, both McKesson and Cencora trade at valuations that imply far lower growth, while offering more than double the free-cash-flow yields of the mega-cap tech cohort. Their scale advantages, defensive end markets, and ongoing investments in technology and service depth make their competitive positions increasingly durable. With rising cash flows, expanding moats, and compelling valuations, McKesson and Cencora remain two of the highest-quality compounders in U.S. healthcare.

Pitch Summary:
Argan’s share price appreciated significantly as it emerged as a major beneficiary of accelerating AI power infrastructure investment. The fund cited strong execution and demand for turnkey energy projects amid U.S. grid constraints.

BSD Analysis:
Fawkes highlights Argan as a pure-play infrastructure contractor levered to AI-driven electricity expansion. With backlog visibility exceeding 2x annual revenue and solid balance sheet strength, Argan’s earnings trajectory is supported by secular power capacity additions.

Pitch Summary:
Bloom Energy was cited as a key participant in AI infrastructure electrification, having signed multiple high-profile deals to supply solid oxide fuel cells to utilities and hyperscalers. The fund noted Bloom’s positioning within the emerging “behind-the-meter” generation theme to address grid strain.

BSD Analysis:
Fawkes views Bloom Energy as a structural play on decentralized energy resilience. Its scalable solid oxide systems align with AI datacenter expansion, enabling modular deployment and lower emissions. With revenue growth exceeding 20% YoY and expanding gross margins, Bloom remains well-placed for long-term adoption across the digital infrastructure ecosystem.

Pitch Summary:
The fund identified Liberty Energy as a top emerging beneficiary of the U.S. AI-driven electricity shortage. Its access to gas generation assets allows it to deploy behind-the-meter power solutions rapidly. Fawkes Capital emphasized Liberty’s ability to bypass multi-year manufacturing delays and scale power infrastructure to meet hyperscaler and datacenter demand.

BSD Analysis:
Fawkes’ thesis on Liberty Energy highlights its underappreciated role as a near-term winner from America’s AI energy crunch. With early access to gas turbines, flexible fracking supply, and strong project pipeline visibility, Liberty is strategically positioned to capitalize on the accelerating demand for distributed generation. Trading below 8x EBITDA, the company’s structural edge in speed-to-market and recurring power contracts suggests material valuation upside.

Pitch Summary:
Fawkes Capital’s conviction in antimony exposure paid off as Felix Gold rallied sharply on increased market recognition of its underlying reserves. The fund exited the position post-rally, locking in gains.

BSD Analysis:
Fawkes’ tactical play on Felix Gold reflects opportunistic exposure to critical minerals amid supply chain realignment. With rising demand for antimony in defense and energy storage applications, Felix’s resource base offered asymmetric upside. Early profit-taking highlights the fund’s disciplined risk management and rotation toward liquidity preservation.

Pitch Summary:
Alphabet was among the fund’s largest contributors, as rising recognition for its leadership in artificial intelligence drove advertising price growth despite moderating click-through rates. The company’s focus on high-quality shopping leads offset potential headwinds from AI chatbot disruption. The manager emphasized that AI-related infrastructure investment is being funded through internal cash flow rather than excessive leverage, signaling a sustainable growth trajectory.

BSD Analysis:
Fawkes Capital underscores Alphabet’s structural advantage in AI due to its deep learning infrastructure and multi-platform integration. The company’s dominant market position, robust balance sheet, and monetization of high-intent search categories underpin resilient free cash flow generation. Trading around 22x forward earnings with consistent double-digit revenue growth, Alphabet remains a long-duration AI compounder with pricing power and margin stability.

Pitch Summary:
Cintas, while not specifically named as a new addition, exemplifies the type of “leader in its industry” that dominates Turtle Creek’s portfolio composition. The managers emphasized their preference for large, durable businesses with market leadership and predictable earnings growth, traits that align closely with Cintas’ profile.

BSD Analysis:
Cintas is exactly the kind of dominant, quietly compounding business that fits the Turtle Creek playbook of owning industry leaders with highly predictable earnings. The company controls an outsized share of the uniform rental and facility services market, a niche that benefits from high switching costs, recurring contract revenue, and steady mid-single-digit organic growth. Its operational discipline and route density give Cintas meaningful scale advantages, enabling consistent margin expansion and dependable free cash flow generation year after year. Even in softer economic environments, demand for workplace safety, hygiene, and compliance services tends to hold up well, reinforcing the firm’s defensive characteristics. Management has an exceptional track record of efficient capital allocation, deploying cash into bolt-on acquisitions, automation, and steady share repurchases. Over time, this has driven an enviable compounding machine with one of the most consistent earnings trajectories in the S&P 500. Cintas exemplifies the durability and leadership that Turtle Creek targets, making it a model case of the firm’s preference for large, proven businesses with long runways for predictable value creation.

Pitch Summary:
Kinsale Capital was highlighted as one of the “best-run but not largest” companies in the portfolio. The fund emphasized its disciplined underwriting, founder-led culture, and technology-driven cost advantage, which sustain strong profitability in a fragmented market. Turtle Creek believes Kinsale exemplifies a “highly intelligent organization” capable of compounding value for decades.

BSD Analysis:
Kinsale Capital stands out as one of the most impressively run specialty insurers in the U.S., combining disciplined underwriting with a founder-led culture that prioritizes long-term profitability over near-term premium growth. Operating in the excess-and-surplus market—a fragmented, under-digitized niche—Kinsale has built a durable cost advantage by developing its own proprietary technology platform, enabling faster, more accurate risk selection than legacy competitors. That efficiency shows up directly in its consistently industry-leading combined ratios, which reflect both cautious underwriting and a willingness to walk away from business when pricing turns irrational. The company’s high-return, asset-light model allows it to compound book value at exceptional rates, with minimal reliance on investment income. Kinsale’s management team is known for its analytical rigor and shareholder alignment, reinforcing a culture that treats underwriting discipline as a non-negotiable. With a long runway in a market still dominated by slow-moving incumbents, the company is well positioned to continue scaling while preserving underwriting integrity. For investors seeking a smaller, more agile compounder capable of multi-decade value creation, Kinsale fits the bill almost perfectly.

Pitch Summary:
WillScot was cited as a top-five position, recognized as a dominant player in modular space solutions. The company has consolidated a fragmented industry and benefits from pricing power, scale efficiencies, and recurring demand from construction and industrial clients. Turtle Creek noted that it continued adding to its position during price weakness, confident in management’s long-term value creation.

BSD Analysis:
WillScot has emerged as the clear industry leader in modular space solutions, a niche that has quietly become an attractive recurring-demand business as construction, energy, and industrial clients increasingly rely on flexible, temporary infrastructure. Through years of disciplined consolidation, the company has rolled up a once-fragmented market and now enjoys meaningful pricing power, superior asset utilization, and scale-driven cost advantages that smaller rivals simply can’t match. Its fleet management model creates a steady stream of rental revenue with strong incremental margins, allowing the company to compound free cash flow even in choppy economic environments. Management has consistently demonstrated an ability to integrate acquisitions, raise returns on invested capital, and extract operating benefits from scale. Despite occasional share-price pullbacks, the underlying fundamentals remain compelling, supported by stable demand, disciplined capital allocation, and an improving competitive moat. Turtle Creek’s willingness to add on weakness underscores its conviction that WillScot still has ample room to grow both earnings and intrinsic value. Over the long term, the company looks positioned to continue delivering durable, high-quality compounding.

Pitch Summary:
CRH contributed positively as infrastructure stimulus and housing resilience supported earnings. The firm benefits from secular infrastructure investment in the U.S. and Europe, underpinned by fiscal tailwinds. Its pricing discipline and capital allocation focus have improved returns on invested capital, with share buybacks and dividend growth reinforcing shareholder value.

BSD Analysis:
CRH is the high-quality, infrastructure compounder that benefits from structural demand and is relentlessly expanding its margins. As the largest producer of aggregates and asphalt in North America, the company is the essential partner for massive public and non-residential construction projects, underpinned by fiscal tailwinds like the $1.2 trillion Infrastructure Investment and Jobs Act. Management is laser-focused on efficiency, targeting an average annual Adjusted EBITDA margin between 22% and 24% by 2030 and aiming for 100%+ Free Cash Flow conversion. This profitability, alongside its disciplined pricing discipline and ROIC exceeding 10%, underpins a strong capital return policy of buybacks and dividends. Trading at an attractive 11x forward earnings and with $40 billion of financial capacity over the next five years, CRH is an undervalued industrial poised to deliver double-digit total returns.

Pitch Summary:
NVIDIA was one of Third Point’s largest contributors this quarter, benefiting from sustained AI compute demand. Despite concerns over AI efficiency improvements, the reality has been the opposite—reasoning-based models like OpenAI’s o1 and o3 have increased compute intensity by orders of magnitude. NVIDIA’s GPUs and AI platforms remain mission-critical as AI workloads multiply across industries.

BSD Analysis:
NVIDIA is the unassailable, high-margin kingmaker of the AI revolution, converting its technological dominance into a grotesque amount of cash flow. The core competitive moat is the CUDA software ecosystem, which locks in every hyperscaler and AI lab, creating switching costs so high they are virtually unbreachable. The company's Data Center revenue is compounding at double-digit rates and its GAAP Gross Margins sit near 73.4%—a software-like profitability that screams monopoly pricing power. Bears continue to scream "AI bubble" and fret over the 44x normalized P/E multiple, but this is fully justified by the 97.8% Return on Invested Capital and multi-year backlog from partners like OpenAI. The ongoing explosion in training and inference workloads, which demand ever-increasing compute intensity, ensures NVIDIA's dominant position is the only one investors need to own.

Pitch Summary:
Third Point’s investments in semiconductor leaders, including TSMC, benefited from accelerating AI infrastructure spending and persistent compute shortages. TSMC remains central to global chip production, with expanding capacity at advanced 3nm and 2nm nodes. The company’s exposure to high-margin AI processors and strategic partnerships with NVIDIA and Apple reinforce its competitive position.

BSD Analysis:
TSMC continues to cement its position as the foundational enabler of the AI hardware stack, commanding dominant share in the most advanced logic nodes and advanced packaging technologies. Demand for 3nm and CoWoS capacity remains supply-constrained, with AI accelerators, high-performance compute, and custom silicon driving multi-year backlog visibility. Margins are expanding as high-value nodes and packaging take a larger mix, reinforcing TSMC’s unrivaled scale and yield advantage. Geographic diversification is progressing, but without sacrificing cost structure or execution discipline—preserving the company’s industry-leading profitability. The market still underestimates the structural uplift from AI, edge compute, and domain-specific accelerators, all of which rely on TSMC’s process leadership. With long-duration growth visibility and a valuation nowhere near peak-cycle froth, TSMC remains one of the strongest compounding assets in global tech.

Pitch Summary:
Ebara’s semiconductor division now contributes over half of company profits, primarily through its CMP tools used for wafer planarization in advanced semiconductor manufacturing. As chip structures become more complex—such as the transition to gate-all-around and hybrid bonding—CMP intensity rises sharply. Ebara’s expertise in metal CMP positions it to gain market share from Applied Materials, which dominates oxide CMP. Despite its high-quality technology, Ebara trades at a substantial discount to peers due to lagging margins and an overextended cost base. Third Point is engaging with management to improve governance, margins, and shareholder returns.

BSD Analysis:
Ebara is executing cleanly across its core businesses—precision machinery, fluid machinery, and environmental solutions—with semiconductor vacuum pumps acting as the primary engine of growth. The company’s exposure to leading-edge foundry expansions gives it leverage to the AI and advanced-node boom, and order momentum remains strong across Asia and the U.S. Operational discipline and mix improvements are driving margin expansion, particularly as the pump business scales into a more profitable phase of the cycle. The environmental equipment segment provides steady, non-cyclical cash flow that helps smooth earnings volatility. Despite cyclical fears tied to wafer-fab equipment, Ebara’s long-term demand setup is structurally stronger than the market appreciates. With a clean balance sheet and expanding global footprint, Ebara screens as a durable industrial-tech compounder.

Pitch Summary:
SK Hynix is part of a global oligopoly in DRAM memory alongside Samsung and Micron. AI workloads have been driving substantial growth in high-bandwidth memory (HBM), where Hynix leads with over 50% market share. While traditional DRAM markets are cyclical, HBM’s complexity and design integration create sticky customer relationships and enhance through-cycle returns. HBM made up just 5% of bits in 2024 but accounted for 20% of DRAM revenue, and that share continues to grow as compute demand accelerates. Despite technological leadership, SK Hynix trades at only 7x 2026 P/E, a steep discount to peers. Through holding company SK Square, investors can gain exposure at an even deeper discount (~3.5x P/E).

BSD Analysis:
SK Hynix remains one of the clearest beneficiaries of the AI memory supercycle, with leadership in HBM that has shifted the power dynamic across the memory industry. The company’s deep partnership ecosystem with leading accelerator vendors and hyperscalers gives it unmatched visibility as HBM3 and HBM3E adoption explodes. DRAM fundamentals continue to strengthen as supply discipline holds and pricing inflects, while NAND is showing early signs of recovery. Margins are inflecting sharply with HBM mix expansion, putting Hynix on track for peak profitability as AI architectures drive memory intensity higher. Despite these tailwinds, valuation still underestimates the structural uplift from AI-centric memory. With HBM capacity tight into 2025–26, SK Hynix remains one of the most attractive high-torque plays in semis.

Pitch Summary:
Azelis underperformed during the quarter but remains a key position given its ability to consolidate a fragmented market through disciplined M&A. Its cash-generative model and strong customer relationships provide resilience.

BSD Analysis:
Azelis is quickly becoming one of the most compelling specialty-chemicals distributors globally, benefiting from a scalable M&A flywheel and deep technical expertise that reinforces customer stickiness. Its asset-light model and high-touch formulation support create strong recurring revenue and attractive incremental margins. Recent acquisitions broaden both geographic reach and end-market exposure, with integration discipline improving with each successive deal. Despite macro headwinds in chemicals, Azelis has maintained pricing power and expanded wallet share, showcasing the durability of its model. Investors still underestimate the compounding potential inherent in its network effects and specialized know-how. As volumes normalize and the deal pipeline reopens, Azelis is well positioned for a multi-year period of double-digit EBITDA growth and steady multiple expansion.

Pitch Summary:
Nebius Group’s convertible bonds performed strongly as enthusiasm for AI-fueled growth lifted related equities. The company completed a $3.2 billion two-tranche offering, positioning itself as a rising player in cloud-based AI infrastructure. The manager noted that demand was bolstered by robust investor appetite for exposure to scalable data processing and machine learning applications.

BSD Analysis:
Nebius Group presents a high-growth, AI infrastructure play, strategically capitalizing on the surging demand for cloud computing and enterprise data analytics. The company recently completed a $3.2 billion two-tranche offering, positioning itself as a rising player in the competitive, cloud-based AI infrastructure market. Investor demand for its convertible bonds has performed strongly, benefiting from robust appetite for exposure to scalable data processing and machine learning applications. Nebius' model is underpinned by an expanding client base and a foundation of recurring revenues, underscoring strong business fundamentals. The convertible bond structure is particularly appealing as it offers attractive convexity-providing a fixed-income floor while allowing for equity upside participation amidst accelerating AI momentum. Lazard sees the company's focus on blending cloud and data analytics as a key driver of its structural growth story.

Pitch Summary:
The newly issued AeroVironment (AVAV) 0% convertible bond due 2030 was a top contributor, trading significantly above par following its debut. Strong investor demand was driven by the company’s expanding defense backlog, particularly in tactical missile systems and unmanned aerial vehicles used in Ukraine and NATO operations. The manager cited the firm’s balance sheet strength and exposure to accelerating defense spending as key positives.

BSD Analysis:
AeroVironment is emerging as one of the clearest pure-play beneficiaries of the global shift toward unmanned systems and next-generation tactical weapons. Defense budgets are tilting decisively toward drones, loitering munitions, and autonomous targeting—areas where AVAV already has entrenched program-of-record positions and expanding backlog visibility. The company’s recent surge in orders tied to Ukraine, NATO modernization, and U.S. tactical missile systems highlights a demand cycle that looks far from peaking. Margin expansion is supported by scale, mix shift toward higher-value systems, and the operational leverage that comes from multi-year defense procurement cycles. The 0% convertible issuance trading above par reflects investor conviction in AVAV’s growth trajectory and downside protection. With geopolitical tensions elevating and defense planners prioritizing speed, precision, and attritable assets, AVAV’s portfolio puts it at the center of one of the industry’s most durable secular growth runways.

Pitch Summary:
The fund identified Liberty Energy as a top emerging beneficiary of the U.S. AI-driven electricity shortage. Its access to gas generation assets allows it to deploy behind-the-meter power solutions rapidly. Fawkes Capital emphasized Liberty’s ability to bypass multi-year manufacturing delays and scale power infrastructure to meet hyperscaler and datacenter demand.

BSD Analysis:
Liberty Energy is emerging as a key beneficiary of America’s accelerating power bottleneck, with its behind-the-meter gas generation strategy giving it a structural speed advantage over traditional grid solutions. The company’s early access to gas turbines and vertically integrated frac services enables rapid deployment of power capacity for hyperscalers, a market where demand visibility continues to strengthen. Financially, Liberty trades at a discounted multiple relative to its growth profile, with EBITDA still under-recognized given the long-duration nature of distributed generation contracts. Margin expansion is supported by improved fleet utilization, recurring power-as-a-service revenues, and disciplined capital allocation. Balance sheet strength and high free cash flow conversion give the company room to scale additional projects without overleveraging. As AI-driven electricity needs surge, Liberty’s unique ability to bypass multi-year permitting and manufacturing delays positions it for sustained multi-year upside.

Pitch Summary:
Alphabet was among the fund’s largest contributors, as rising recognition for its leadership in artificial intelligence drove advertising price growth despite moderating click-through rates. The company’s focus on high-quality shopping leads offset potential headwinds from AI chatbot disruption. The manager emphasized that AI-related infrastructure investment is being funded through internal cash flow rather than excessive leverage, signaling a sustainable growth trajectory.

BSD Analysis:
Alphabet’s diversified AI stack—spanning proprietary TPUs, leading-edge models, and globally scaled distribution—positions it as one of the most advantaged platforms in the new compute cycle. Search remains a cash-flow engine with durable pricing power, and early data shows AI Overviews are enhancing engagement rather than cannibalizing core queries. Cloud continues to inflect with accelerating enterprise adoption, a $100B+ backlog, and expanding operating margins driven by AI workloads. With forward P/E in the low-20s and double-digit revenue growth, valuation remains attractive relative to its structural cash-generation profile. Capex intensity is rising, but returns on this investment should compound as Alphabet vertically integrates more of the AI cost stack. Additional upside stems from YouTube monetization, expanding subscription revenues, and ongoing share repurchases that support per-share value creation. Overall, Alphabet remains a long-duration compounder with multiple high-visibility growth drivers across AI, cloud infrastructure, and advertising.