Investment Pitches

Pitch Summary:
WAT underperformed on the announcement that it will acquire Becton Dickinson’s Biosciences and Diagnostics divisions. While we take a skeptical view toward transformational M&A, we do see the strategic logic of the deal, and we have confidence in management’s ability to execute on commercial improvements and cost synergies. We continue to have a favorable view of WAT’s core business and the management team.

BSD Analysis:
The fund remains constructive on Waters despite M&A-related uncertainty. The acquisition broadens end-market exposure and long-term growth capacity. Solid margins, recurring revenue, and strong ROIC underpin resilience.

Pitch Summary:
NEU was a strong performer in the quarter, mainly due to three factors. First, low oil prices cut input costs faster than revenue, driving improved profitability. Second, a timely defense acquisition allowed NEU to ramp up production amid global conflicts. Finally, the market is positively viewing the company's use of cash flow to repay debt.

BSD Analysis:
The fund’s thesis emphasizes NEU’s margin expansion via cost discipline and opportunistic acquisitions. Trading around 10x EBITDA, NEU’s stable additive demand and conservative balance sheet support continued earnings strength.

Pitch Summary:
SGI was a top performer as it continues to gain incremental share in the bedding market, despite the weakness in the endmarket. The integration of Mattress Firm is progressing ahead of schedule, causing an improvement in the outlook. We believe the business combination has the potential to unlock meaningful value. Our investment thesis is supported by robust free cash flow generation, strong brand equity, and solid management execution.

BSD Analysis:
The manager highlights SGI’s vertical integration and synergies from the Mattress Firm merger. Free cash flow strength, brand scale, and cost efficiencies underpin a solid recovery path. With valuation around 9x EBITDA, margin expansion and integration benefits offer attractive upside.

Pitch Summary:
AWI shares outperformed in the quarter due to beating expectations, driven by favorable positioning in key verticals and strong operating leverage. We continue to like AWI for its consistent execution, strong financials, leading market share and persistent moats through its exclusivity agreements and warranties.

BSD Analysis:
The fund maintains a bullish view on AWI, citing operational leverage, consistent execution, and oligopolistic industry structure. Trading around 14x forward EBITDA, AWI benefits from pricing power and disciplined capital allocation. Strong cash generation and limited competition sustain long-term upside.

Pitch Summary:
Equitable Holdings, Inc. (EQH) – EQH a leading U.S. financial services company helping clients achieve retirement and wealth goals through three core businesses: Equitable (retirement and protection strategies), AllianceBernstein (global asset management), and Equitable Advisors (financial and wealth planning). Together, these franchises manage over $1 trillion in client assets. EQH operates with an asset-light model that generates strong free cash flow, which it uses to repurchase shares and grow dividends. Over the past five years, the share count has declined about 8% annually, while the dividend has compounded at a 7% growth rate, currently yielding 2.1%. A recent reinsurance transaction with Venerable released nearly $2 billion of excess capital to the holding company, reducing risk while validating reserves. As EQH continues shifting toward higher-quality, fee-based retirement and asset management businesses, we believe the market will reward it with a higher valuation multiple, reflecting its stronger growth profile, enhanced capital return, and lower risk structure.

BSD Analysis:
EQH’s strategic reinsurance transaction unlocked capital and lowered risk, boosting FCF and buyback capacity. With a 9% FCF yield and growing dividend, EQH trades at a deep discount to peers. Its transition to fee-based revenue should drive re-rating as capital intensity falls and profitability improves.

Pitch Summary:
Alphabet Inc. (GOOG) – GOOG was a top performer following strong core business results and the accelerated adoption of its AI offerings. Favorable news on outstanding legal cases also helped. Management is effectively executing cost-saving initiatives while diversifying revenue through Cloud and subscriptions. We remain attracted to its massive ecosystem scale, sound capital allocation, and clean balance sheet.

BSD Analysis:
GOOG’s AI monetization and cloud momentum are accelerating revenue diversification. With disciplined cost management and expanding FCF margins, Alphabet remains an attractive long-term compounder trading at ~22x forward earnings. Legal overhang resolution further supports multiple expansion.

Pitch Summary:
UnitedHealth Group (UNH) – UNH is the largest and most diversified health insurer in the U.S., anchored by two complementary platforms: UnitedHealthcare and Optum. This integrated model gives UNH unmatched scale and insight into healthcare costs, enabling both efficiency and improved outcomes. Its vast provider networks, local dominance, and data-driven capabilities form durable competitive advantages and high barriers to entry. Long-term growth is supported by powerful demographics, as the aging U.S. population drives steady Medicare Advantage enrollment—a core UNH strength. While near-term elevated medical costs have pressured margins and weighed on the stock, we view these headwinds as temporary. UNH is already repricing future plans to reflect higher costs, supporting a gradual return to historical margin levels. With a recurring revenue base, diversified earnings, and financial strength, UNH offers attractive downside protection. At today’s valuation, we see a compelling opportunity to own a structural growth leader with resilient cash flows.

BSD Analysis:
UNH’s integrated model and Optum’s analytics moat provide sustainable growth. Temporary medical cost inflation is being repriced into 2026 contracts, restoring margin visibility. With 13% EPS CAGR, consistent buybacks, and a 1.5% yield, UNH remains the premier managed care compounder at an undemanding multiple.

Pitch Summary:
TE Connectivity Ltd. (TEL) – TEL was a top performer as it is benefiting from AI spending plus delivering stronger margins despite a mixed demand environment in other end markets. Its diversified portfolio, high-value products, and market leadership, combined with disciplined capital allocation through dividends and buybacks, position it for sustained growth and margin expansion.

BSD Analysis:
TEL’s broad exposure to automotive electrification and data connectivity underpins multi-year growth. Despite cyclical headwinds, strong pricing and cost control drive resilience. With steady dividend increases and repurchases, TEL’s valuation at ~16x forward earnings remains appealing for a quality industrial tech leader.

Pitch Summary:
Corning Inc. (GLW) – GLW continues to outperform expectations, led by strong demand in its Optical Communications segment, particularly its GenAI-related products. Increasing data speed and bandwidth requirements, both inside and outside data centers, are boosting demand. The uptick in topline has driven meaningful operating leverage. We believe GLW's diversified portfolio of innovative, value-added products is well-positioned to capitalize on secular growth trends.

BSD Analysis:
GLW benefits from structural data infrastructure demand tied to AI and cloud expansion. The Optical segment’s strength drives leverage and margin growth. Trading at ~15x forward earnings with strong dividend coverage, Corning offers a defensive way to participate in the data connectivity cycle.

Pitch Summary:
Graham Holdings Co. (GHC) – GHC outperformed the benchmark on strong 2Q results, led by solid growth in Kaplan Education and the continued expansion of its Healthcare segment. The stock likely benefited from the perceived easing of broadcast TV M&A regulation, which could enable future station monetization or local consolidation. We remain positive on the GHC family's fiduciary leadership, strong balance sheet, and track record of returning capital to shareholders.

BSD Analysis:
GHC’s operational breadth across education, healthcare, and broadcasting provides stability and optionality. The easing of media ownership rules could unlock asset value. With a debt-free balance sheet and robust FCF, GHC remains a defensive compounder trading at a discount to NAV.

Pitch Summary:
Ingevity Corporation (NGVT) – NGVT outperformed its benchmark after showing a significant margin recovery in recent earnings, exceeding low expectations. It cleared major headwinds in its Performance Chemicals segment, fueling y/y gains. The strategic portfolio shifts are driving meaningful profit recovery for the next few years. While much of the business is experiencing a cyclical downturn, the overall mix of revenue is improving, as Performance Materials makes up a larger portion of the pie.

BSD Analysis:
NGVT’s successful margin recovery and portfolio optimization reinforce management execution. Rising contribution from Performance Materials stabilizes cash flows amid a soft macro backdrop. The firm trades near 8x forward EBITDA with improving leverage metrics and a constructive demand outlook for sustainable materials.

Pitch Summary:
Armstrong World Industries, Inc. (AWI) – AWI shares outperformed in the quarter due to beating expectations, driven by better than expected volumes, favorable positioning in key verticals, and strong operating leverage. We continue to like AWI for its consistent execution, strong financials, leading market share and persistent moats through its exclusivity agreements and warranties.

BSD Analysis:
AWI’s strong quarterly beat reflects resilient commercial construction demand and improving mix. With pricing power and disciplined cost management, margin expansion continues. The firm’s market leadership and capital discipline position it well to benefit from office-to-mixed-use conversions and long-term renovation trends. Shares trade at ~13x forward earnings, a modest valuation for a steady compounder.

Pitch Summary:
Glencore was a contributor during the quarter. The U.K.-listed and Swiss-headquartered diversified metals and mining company’s stock price rose as copper prices reached near-record highs in September. This momentum allowed Glencore to overcome relatively lackluster first-half of 2025 results. We met with the management team, which has expressed confidence that industry conditions, specifically in the copper market, will grow more favorable, and that Glencore is well-positioned to execute going forward. We continue to believe this is a well-run business with leading positions in attractive commodities markets.

BSD Analysis:
Harris expects upside from Glencore’s copper leverage and disciplined capital returns. Trading at ~5x EV/EBITDA, the miner offers strong free cash flow, dividend yield >7%, and exposure to electrification demand.

Pitch Summary:
Alibaba Group was a contributor during the quarter. The China-headquartered technology conglomerate’s stock price rose significantly following earnings that reflected rapid Chinese AI growth. Its Cloud segment posted healthy revenue growth, and management indicated that this momentum is expected to continue in the coming quarters. Additionally, Alibaba has solid traction in both its International and Instant Commerce businesses. We continue to believe the company is well-positioned for long-term growth, having been one of the early investors in Chinese AI. Over time, we believe it can leverage its advanced capabilities and leading market position to unlock further value.

BSD Analysis:
Harris maintains a bullish view on Alibaba given accelerating AI commercialization and robust cloud margins. Trading at ~9x forward earnings, the firm’s buybacks and sum-of-the-parts discount enhance upside.

Pitch Summary:
Trex’s R&R skew provides relative defensiveness versus new-build cyclicality, while category share gains in composite decking support above-market growth. As mix shifts to premium boards and accessories, margins should expand with scale. Balance sheet flexibility enables ongoing capacity and channel investments. A recovery in housing turnover is the key catalyst; watch resin costs and promotional intensity.

BSD Analysis:
composite decking, repair & remodel, housing cycle, market share, margins

Pitch Summary:
Medpace’s bookings resilience and exposure to small-biotech R&D support sustained double-digit top-line growth, with operating leverage driving expanding margins. The CRO model’s cash conversion is typically strong, supporting buybacks and selective capacity additions. Valuation remains reasonable versus faster-growing peers, and improving biotech funding sentiment adds upside optionality. Watch capacity utilization and pricing as leading indicators for 2026 pipeline visibility.

BSD Analysis:
CRO, bookings growth, biotech funding, operating leverage, cash conversion

Pitch Summary:
The fund outperformed its benchmark due to additive U.S. equity and covered call selection, as well as selection within high-quality fixed income. There were numerous tactical changes amid a rapidly evolving environment. Overall equity exposure increased, particularly through additions to international equities. Some U.S. duration exposure was reduced in favor of German bunds and adjusted currency positions. The primary driver of the fund’s outperformance was positive equity selection. An active tilt toward cyclical and growth exposures within U.S. equities and covered calls proved beneficial amid improved trade sentiment, resilient economic data, and further artificial intelligence (AI) optimism. High-quality fixed income selection contributed, particularly investment grade corporate bond selection and an off-benchmark allocation to collateralized loan obligations.

BSD Analysis:
BSD views this as a moderately bullish positioning emphasizing income with growth participation. The fund’s tilt toward cyclical equities and selective fixed income plays fits the environment of moderating inflation and policy easing. MSCI and other financial analytics firms benefit from increasing passive inflows and pricing power in index products. With MSCI at ~35x forward earnings, valuation remains high but justified by mid-teens EPS growth. Credit spreads are tight, suggesting cautious credit beta exposure is prudent.

Pitch Summary:
Dino Polska, the Polish discount food retailer, underperformed after management downgraded its full-year like-for-like sales guidance on the back of poor weather and weakening consumer confidence.

BSD Analysis:
Dino Polska’s downgrade reflects weaker consumer sentiment and slowing LFL sales, but fundamentals remain strong with double-digit store expansion and high ROIC. Trading at ~22x P/E, valuation is rich for a decelerating growth profile. Near-term pressure from food inflation and cost pass-through limits upside until consumption stabilizes.

Pitch Summary:
Jungheinrich, the German producer of green forklift trucks, declined after the firm announced a restructuring programme and gave a more cautious view on end-market conditions.

BSD Analysis:
Jungheinrich faces near-term margin pressure amid restructuring and softer industrial demand. The pivot toward electrified forklifts aligns with sustainability trends, but cyclical exposure to European capex and logistics sectors remains a drag. With EV forklift penetration rising and a 12x EV/EBITDA multiple, valuation is moderate but earnings momentum weak.

Pitch Summary:
CTS Eventim, the German online events ticketing company, fell after a disappointing second-quarter update. Higher integration costs from a recent acquisition and losses from several inherited festivals under the same deal led to an earnings miss.

BSD Analysis:
CTS Eventim’s weak quarter highlights the risks of integration and exposure to discretionary entertainment demand. Despite its dominant market share in Europe and digital ticketing strength, higher costs and inherited festival losses pressure short-term margins. Valuation at ~20x forward P/E leaves limited upside without earnings recovery. Structural tailwinds from post-COVID live event demand persist, but execution risk and inflation-sensitive consumer spending weigh.