Investment Pitches

Pitch Summary:
NVIDIA remains the linchpin of AI compute with a defensible moat spanning silicon, software (CUDA), and networking. Data-center revenue momentum and expanding customer breadth support elevated growth and cash generation. As-sold backlog and ecosystem lock-in reduce near-term downside, though capex normalization is a medium-term risk; continued platform innovation (Blackwell/GB200) is the catalyst.

BSD Analysis:
NVIDIA doesn’t just dominate AI — it is the AI cycle. The company has turned silicon into a religious experience for hyperscalers, with demand so overwhelming that even multi-billion-dollar capex budgets can’t keep up. Its CUDA software moat is practically impenetrable, locking customers into an ecosystem competitors can’t replicate without burning a decade and billions in R&D. The Grace Hopper platform and next-gen Blackwell architecture ensure NVIDIA stays a generation ahead in performance-per-dollar, which is the only metric that matters when training trillion-parameter models. Gross margins remain obscene, free cash flow is detonating upward, and every major cloud provider is building data centers around NVIDIA’s product roadmap, not the other way around. Valuation looks rich, but when a company controls the entire AI compute stack — chips, networking, software, and developer mindshare — normal valuation rules stop applying. NVIDIA isn’t just a semiconductor company anymore; it’s the toll operator for the entire AI economy.

Pitch Summary:
Astera sits in a sweet spot of the AI stack, alleviating data-center connectivity bottlenecks as hyperscaler deployments accelerate. Surging Scorpio adoption signals strong product-market fit and supports rapid operating leverage. With AI infrastructure still early, revenue visibility is rising; execution and competitive moat in PCIe/CXL connectivity are the swing factors.

BSD Analysis:
Astera Labs is one of the purest — and most underappreciated — plays on the exploding AI interconnect economy. Every hyperscaler is hitting bandwidth ceilings, and Astera’s CXL memory controllers and high-speed connectivity chips are becoming mandatory if you want to push GPU clusters past today’s constraints. The company is riding a tidal wave of AI infrastructure spend, yet the stock still trades like a small-cap semiconductor story rather than a mission-critical enabler of the next-gen data center. Margins have room to expand as volumes scale, and the company’s partnership network with the biggest cloud players gives it credibility startups usually need years to earn. Astera isn’t trying to beat NVIDIA — it’s selling the picks and shovels that make NVIDIA clusters usable at scale, which is often the better business model. With hyperscalers scrambling for memory bandwidth and coherent interconnect solutions, Astera’s runway is far longer than the market is pricing. This is an AI plumbing play with real torque.

Pitch Summary:
I fully exited the Cirata position during the quarter. The investment thesis required clear, repeatable growth in what it now calls “Data Integration,” which ultimately failed to materialize. While I credit management for executing well on controllable items, divesting non-core assets ($2.5m), refocusing the company, and cutting quarterly cash burn from $3.2m to $0.8m, the revenue engine never accelerated. Reported contract wins remain too small to validate the thesis. Consistent with my evolving approach to be less forgiving when business execution fails to meet expectations, I sold the position and realized the tax loss in applicable accounts.

BSD Analysis:
Cirata’s turnaround effort ultimately ran into the hard wall of insufficient demand, exposing a business model that never scaled at the pace required to validate the Data Integration thesis. Management executed well on controllable levers—cutting burn, divesting non-core assets, and refocusing operations—but contract wins remained too small and too sporadic to shift investor confidence. The company’s inability to generate repeatable, high-velocity bookings signaled weak product-market fit in a segment that rewards scale and switching costs. With revenue traction stalled and visibility limited, the equity story became increasingly dependent on hope rather than fundamentals. While operational cleanup created a leaner base, it wasn’t enough to overcome structural headwinds. Given the persistent growth gap and lack of catalysts, stepping aside preserves capital until the company can demonstrate consistent demand or a strategic reset.

Pitch Summary:
Fairfax’s fundamental performance remains impressive, despite the modest share price pullback in Q3, a natural consolidation following its significant multi-year run. The Q2 results, reported in July, underscored this strength, driving book value per share up 10.8% year-to-date to $1,158, supported by a disciplined 93.3% combined ratio and strong investment results. The company has established a significantly higher and more durable earnings baseline than before 2021. As I’ve noted previously, earnings quality has also markedly improved, with the majority of income now generated by predictable sources like interest, dividends from associates, and underwriting. This structure makes Fairfax significantly more resilient to the P/C insurance cycle than traditional peers As the hard market inevitably softens, it is helpful to remember Fairfax's strong track record of capital allocation. They focus on buying more of what they already own at good prices. Since 2021, they have deployed $6.5 billion into buybacks ($3.2B) and acquiring minority stakes in core subsidiaries ($3.3B). The buybacks alone cut the share count by 17% well below book value. This approach directly boosts per-share value by increasing earnings while reducing the share count. This discipline is also evident in their counter-cyclical management. They acquired aggressively during the 2014-2019 soft market when assets were cheap and pivoted to organic growth during the recent hard market when margins were high.

BSD Analysis:
Fairfax is what happens when an old-school insurance conglomerate is run by someone who actually understands capital allocation instead of just collecting premiums and praying. Prem Watsa has built a balance sheet that can take a punch, and the company’s mix of underwriting discipline and investment opportunism gives it a playbook most insurers simply aren’t equipped to copy. The underwriting side has tightened up dramatically in recent years, with combined ratios consistently proving that Fairfax can write business profitably without relying on investment income as a crutch. Meanwhile, the investment portfolio — long criticized for being too conservative — has quietly repositioned into higher-yielding, opportunistic credit and equity exposures that thrive in a higher-rate world. Book value compounding is accelerating, yet Fairfax still trades at a valuation that suggests it’s stuck in its 2010s identity crisis. If rates stay elevated and underwriting remains tight, Fairfax has the rare potential to deliver insurance-like downside protection with private-equity-like upside torque.

Pitch Summary:
The investment thesis for Cogent still hinges on substantial revenue growth from wavelength services. The company is targeting approximately 500 installations per month, with an average monthly revenue per wave of $2,000, implying a potential revenue run rate of roughly $144 million (500 installations x 12 months x $24k/year) at a very high contribution margin of over 90%. While we are seeing positive signs, wavelength revenue grew 27% sequentially (and 147% year-over-year) to a $36 million run-rate, the headline pace of reported installations, at 147, was still far below the targeted 500/month run-rate needed to validate the thesis. But a closer look at the numbers reveals that Cogent also installed and billed for approximately 330 additional wave connections, which were not yet reflected in the reported revenue. The sum of these two figures, approximately 477, gets very close to the target. CEO David Schaeffer attributes the recent miss not to a lack of demand, highlighting a strong funnel and zero pre-install cancellations, but to a lag in customer acceptance. He argues that customers, conditioned by competitors’ multi-month delays, are “caught off guard” by Cogent’s ability to deliver within 30 days (vs. months for competitors). This creates a temporary gap between installation and revenue recognition as Cogent builds credibility in this new market and convinces customers to change long-held procurement habits. The market has clearly not reacted well to this short-term execution risk. This was combined with the average performance of the rest of the business (strong performance of the IPv4 business, but weaker headline numbers for other divisions due to the final stages of “grooming” low-margin connections from the Sprint acquisition). The next quarter will be important as Cogent must now show actual evidence of execution

BSD Analysis:
The investment thesis for Cogent Communications Holdings (CCOI) hinges entirely on the successful scaling of its wavelength services, which possess a target 90% contribution margin. While near-term revenue recognition lags mask the operational progress, the company's installation data suggests momentum is building to validate the thesis. Management highlights a strong funnel and zero pre-install cancellations, arguing that customer acceptance delays are the temporary friction point. This conversion rate from installed connections to recognized revenue is the critical execution catalyst to watch for in the coming quarters. If conversion accelerates, the company's EBITDA should inflect sharply, aiming for the target annual run-rate of approximately $144 million in wavelength revenue. However, investors must monitor risks from the ongoing integration and "grooming" of low-margin connections from the Sprint acquisition that could drag on near-term results. Success in this high-margin vertical would amplify Cogent's intrinsic value and drive a significant re-rating of the equity.

Pitch Summary:
TVK is a key manufacturer of steel storage tanks, transport trailers, and related processing equipment. They serve a wide array of durable, essential end-markets, including agriculture, energy distribution, and construction. The stock’s decline following its August earnings report was not entirely surprising; given the strong run it has had over the last year, any perceived “miss” was bound to cause a pullback as short-term holders locked in gains. The third-quarter results did miss expectations. While headline revenues grew due to recent acquisitions, “same-store sales” of the base portfolio businesses actually declined by 2%. Management pointed to several factors for this softness, including reduced demand for certain storage tanks and energy equipment, as well as uncertainty created by recent tariffs. Net income and free cash flow, however, declined 8% and 38% respectively, driven mainly by a significant increase in finance costs. Terravest has had a very active M&A year, including the acquisition of LBT, Simplex, Tankcon, and its largest to date, Entrans. The increased debt taken on to fund this spree has led to financing costs rising 195% in the quarter. Terravest should reduce its relative funding costs as it integrates these new businesses and ramps sales through cross-selling and organic growth. The Entrans acquisition, its largest to date, meaningfully expands TVK’s US footprint and opens up new, high-growth areas, such as defense contracts and a newly developed liquid hydrogen trailer product line. TerraVest’s core business serves durable end markets, providing a relatively stable platform for its high-ROI M&A strategy. Given its relatively small size, TVK can find ample opportunities to reinvest capital and continue compounding for a long time to come.

BSD Analysis:
TerraVest looks like a classic small-cap industrial that just hit a speed bump, but underneath the noise it’s still one of the most quietly effective compounders in Canadian manufacturing. The market fixated on a revenue “miss” driven by softer tank and energy-equipment demand, completely ignoring that TerraVest has been stitching together a high-ROI M&A machine that most mid-caps can’t replicate. Yes, financing costs spiked — that’s what happens when you buy four companies in a year — but the payoff comes as integration ramps, cross-selling kicks in, and the U.S. footprint expands through the Entrans acquisition. Entrans alone opens the door to defense contracts and the emerging liquid-hydrogen trailer market, both of which could be multi-year growth engines the market isn’t modeling. The balance sheet isn’t pristine in the short term, but TerraVest has historically delevered quickly once acquired assets start contributing, and management has proven it knows how to turn niche manufacturing into cash. At current multiples, the stock is priced like a tired roll-up despite having a long runway of small-cap targets and mission-critical end markets. If TerraVest executes even half as well as it has over the last decade, the recent sell-off will look like a gift.

Pitch Summary:
Melrose Industries continues its evolution into a pure-play aerospace leader. My thesis has been that the market is overly skeptical of the company’s ability to generate cash, focusing on temporary drags from its restructuring while overlooking the powerful, long-term earnings profile of its underlying assets. The company’s recent first-half results offered the first real evidence that this cash flow inflection is now underway. For the first half of 2025, Melrose reported a 29% increase in operating profit and, most importantly, a £91 million year-over-year improvement in free cash flow, beating consensus expectations. This performance was driven by strong execution; management completed its multi-year defense contract, repricing it 6 months ahead of schedule, a key step toward improving margins in its Structures division. With the broader restructuring program set to conclude by year-end, a major cash drag is being eliminated, paving the way for structurally higher cash generation from 2026 onwards. The crown jewel remains the Engines division, with its unmatched portfolio of 19 Risk and Revenue Sharing Partnerships (RRSPs) that entitle it to ~70% of global flying hours. While the market has been fixated on the cash burn from two GTF engine programs, these are on track to turn cash-positive by 2028, at which point the entire portfolio becomes a powerful, multi-decade annuity stream. The recent results reinforce my conviction in the future cash generation.

BSD Analysis:
Melrose Industries (MRO) is an aerospace pure-play that is swiftly moving across a critical cash flow inflection point, transitioning from a deep restructuring phase to a high-quality compounder. The market is overly skeptical, focusing on temporary restructuring costs and GTF engine remediation rather than the underlying long-term earnings durability. The crown jewel is the Engines division, which is entitled to an annuity stream from its 19 Risk and Revenue Sharing Partnerships (RRSPs), covering approximately 70% of global flight hours. With 17 of 19 RRSPs already generating cash and the remaining two expected to turn cash positive by 2028, Melrose is entering a multi-decade period of harvesting high-margin aftermarket revenue. Management's guidance projects substantial financial step-ups, aiming for £600 million+ of annual free cash flow by 2029 and adjusted diluted EPS CAGR of over 20%. Early execution, including ahead-of-schedule contract repricing, validates the company's ability to drive margin expansion and close the valuation gap with aerospace peers.

Pitch Summary:
The Brookfield machine continues to compound intrinsic value, delivering robust Q2 results across its diversified platform. Distributable earnings (DE) before realizations grew 13% year-over-year, driven by nearly $100 billion in capital inflows over the last twelve months, demonstrating the strength of its ecosystem spanning real assets, insurance, and credit. At its recent Investor Day, management once again laid out an ambitious plan targeting a 25% annualized growth in DE per share through 2030. This plan anticipates generating $53 billion in free cash flow, leaving $25 billion in excess cash available for opportunistic buybacks and M&A. Management is aggressively scaling the Wealth Solutions platform and investing insurance float, now calling itself an “investment-led insurance organization.” This makes sense as Brookfield's long-dated, stable life insurance liabilities align well with its expertise in investing in long-duration, essential real assets like infrastructure and renewables. This matching of duration and risk profile enhances capital efficiency and supports the scaling of BAM’s funds without materially altering the overall risk profile. Management is also leaning heavily into the multi-trillion-dollar capital requirements for AI infrastructure. In an environment where “AI” attracts significant hype and speculative investment, Brookfield’s approach is distinctly de-risked. They are building essential infrastructure such as data centers and the renewable power required to run them, underpinned by long-term commitments from the financially strong hyperscalers, such as a 3,000 MW hydroelectric framework with Google and a 10.5 GW renewable agreement with Microsoft.

BSD Analysis:
Brookfield continues to operate as one of the most sophisticated compounding machines in global alternatives, with fee-bearing capital, insurance float, and opportunistic M&A all reinforcing a self-funding growth engine. The firm’s distributable earnings algorithm—driven by nearly $100B in annual fundraising and disciplined deployment—gives it visibility few asset managers can match. Its AI-infrastructure push is notably de-risked versus hype-driven peers, anchored by long-duration contracts with investment-grade hyperscalers who need power, data centers, and renewables—not speculative equity bets. Management’s 2030 plan, targeting 25% DE-per-share growth, is backed by $53B in expected free cash flow and $25B of excess capital earmarked for buybacks and acquisitions, giving the company multiple levers to drive per-share value. The insurance platform is scaling quickly and efficiently, matching long-dated liabilities with Brookfield’s core expertise in real assets. Despite this setup, the stock still trades at a discount to its intrinsic growth rate, weighed down by macro noise. With capital rotation into hard assets and AI-linked infrastructure accelerating, Brookfield looks primed for a multi-year rerating as investors recognize the durability of its model.

Pitch Summary:
Alphabet’s shares rose this quarter, partly driven by the resolution of a major regulatory overhang. On September 2nd, Judge Mehta issued the remedies decision in the DOJ antitrust case concerning Search. The outcome was far less severe than feared, as the court rejected the most draconian measures, including the structural divestiture of Chrome or Android and a broad ban on distribution payments. While Google is now restricted from paying for exclusive default placement (e.g., with Apple), it can still compensate partners for non-exclusive default status. The enacted remedies, which include tailored data sharing and syndication on commercial terms, appear manageable. With one major legal overhang out of the way (another case on the Ad tech monopoly remains outstanding), focus can now return to Alphabet’s fundamentals, particularly its strong positioning in Artificial Intelligence. Google’s advantage lies in its vertically integrated stack, spanning proprietary infrastructure (TPUs), leading models (Gemini), and scaled global distribution platforms (Search, Android). This full-stack approach allows for optimization and efficiency that competitors cannot easily match; for example, Google claims it has twice the power efficiency of competitors and a 33x efficiency in inference, demonstrating its progress in managing the cost of AI deployment. AI is enhancing Search utility through features like AI Overviews and Lens, driving increased user engagement. Additionally, Google Cloud is rapidly gaining traction, now exceeding a $50 billion annual run rate (growing 32% YoY) with a $106 billion backlog, as enterprises choose Google for its differentiated AI capabilities. This leadership is evident in Google's support for 9 of the top 10 AI labs and its processing roughly 4x the token volume of other providers. The company continues to deliver strong financial performance, with 14% revenue growth and strong operating margins in the last quarter, allowing it to fund an aggressive $85 billion capex plan for AI infrastructure

BSD Analysis:
Alphabet Inc. (GOOGL) remains a long-duration AI compounder underpinned by a resilient, diversified business model. The company's unique, vertically integrated AI stack—spanning custom Tensor Processing Units (TPUs), the Gemini model, and ubiquitous distribution via Search/Android/Chrome—creates a deep, durable competitive advantage. This full-stack approach allows Alphabet to achieve superior cost and power efficiency in serving AI workloads, enabling faster iteration of its models and margin stability even with rising capital expenditure. The core Search and Advertising segment, a high-margin powerhouse, is directly benefiting from AI integration through features like AI Overviews and Gemini, which enhance query volume and monetization. Meanwhile, Google Cloud's growth is accelerating, driven by massive demand for AI infrastructure, evidenced by a $155 billion backlog of multi-year contracts. Trading at roughly 22x forward earnings with consistent double-digit revenue growth and robust free cash flow generation, Alphabet remains a compelling investment despite its recent rally, offering an attractive risk/reward profile.

Pitch Summary:
WPP PLC (WPP LN) is one of the world's largest ad agency holding companies. WPP shares came under pressure on worse than expected results that resulted in a dividend cut. While the Company has struggled recently, WPP introduced a new CEO during the quarter who brings a wealth of experience in digital transformation and artificial intelligence, capabilities which will be key to the Company’s turnaround plans.

BSD Analysis:
WPP is in the middle of a long-overdue reset as it pivots from legacy agency sprawl toward AI-enabled, data-driven marketing solutions. The new CEO brings a much-needed mandate for digital transformation, and early restructuring steps suggest a willingness to confront structural inefficiencies that prior leadership sidestepped. Near-term earnings remain pressured by muted ad spending and heavy investment, but the market’s reaction appears to over-discount execution risk while ignoring WPP’s global scale, client stickiness, and consolidated media buying power. AI automation is already reshaping workflows, offering a path to margin stabilization and, over time, expansion—something the market has yet to price in. Trading at roughly 8× forward EV/EBITDA with a reset dividend, expectations are washed out, creating room for a cleaner narrative as transformation gains traction. If management delivers even modest proof points on efficiency and integrated tech adoption, WPP has meaningful rerating potential as the industry’s mix shifts toward AI-first creative and performance marketing.

Pitch Summary:
In an environment of persistently high prices for basic essentials, value is front and center in the minds of consumers. Warehouse clubs like BJ’s have a track record of market share gains, particularly from grocery stores, due to a structural per unit pricing advantage of typically 25%. Such a price gap is possible due to characteristics of the warehouse club model, which involve concentrated supplier buying power, high inventory turns, efficient in-store labor, and membership-funded margins. The model facilitates a powerful flywheel effect: Membership fees and efficient in-store operations fund consistently low prices, which drive higher volumes and create buyer leverage, further enhancing member value and fueling continued membership growth. BJ’s appears to be at an inflection point with membership momentum, an accelerated new store rollout, and a proven management team. The BJ’s membership base today, as measured by tenured renewal rate and higher tier membership penetration, is in a strong position. In addition, the company has refined its new store formula and plans to open 25 to 30 new clubs over the next two years, representing the fastest rate of openings in the company’s history. BJ’s has carefully crafted its new store playbook, and the current approach is working as new stores generate comparable club sales at two to three times the rate of the legacy footprint. Finally, BJ’s CEO Bob Eddy and the management team have demonstrated skill and discipline as capital allocators, consistently balancing reinvestment in member value and store growth with debt reduction and share repurchases. Overall, membership momentum combined with high performing new store openings and proven management should drive a compelling financial picture of strong comparable club sales, impressive free cash flow generation, and cost leverage.

BSD Analysis:
BJ’s continues to execute a classic warehouse-club playbook built on structural price advantage, high-turn inventory, and a membership model that quietly compounds in the background. The company is hitting an inflection point in member momentum, with higher-tier penetration and renewal rates signaling a stickier, more valuable customer base. Its refined new-store formula is working, with recent openings delivering outsized comps—proof the model still travels well. While investors worry about a stretched consumer, BJ’s value proposition widens in exactly this kind of environment, driving share gains from traditional grocers who simply can’t match its unit economics. Management has consistently balanced reinvestment with disciplined capital allocation, reinforcing a long-term earnings and FCF runway. With accelerating store growth and deepening membership economics, BJ’s looks positioned to compound steadily while the market continues to underappreciate the durability of its model.

Pitch Summary:
ITT is a diversified industrial company with three segments, led by Motion Technologies, which contains ITT’s market-leading brake pad business with margins and returns well above competitors. Motion Technologies has very high share in electric vehicles and Chinese automakers, translating to above-market growth as both categories win greater share in the global automotive market. The Industrial Process segment includes ITT’s pumps and valves businesses, where ITT has also gained market share in both customized pump solutions as well as attractive aftermarket revenues. Industrial Process’s growth will be further driven by a new innovative motor with patented embedded variable drive functionality that significantly increases power efficiency (an increasingly important focus area for many customers including energy and chemical companies). The Connect and Control Technologies segment includes ITT’s electrical connectors and cable assemblies, primarily for the aerospace and defense end markets. Connect and Control Technologies has renegotiated decade-long supply agreements to aerospace customers at significantly higher prices starting in 2026 and has exposure to growing new aircraft builds and global defense spending. CEO Luca Savi and CFO Emmanuel Caprais have proven to be excellent operators and capital allocators, with further mergers and acquisitions building on a successful track record to supplement the CEO’s “healthy paranoia for continuous improvement”. Over the next five years, ITT expects to deliver double-digit annual organic earnings growth with further upside from successful capital allocation.

BSD Analysis:
ITT is one of those industrial names that looks “boring” right up until you realize it’s quietly levered to three of the strongest secular themes in the entire sector: EV adoption, aerospace expansion, and industrial efficiency upgrades. Motion Technologies is a cash-printing machine with dominant share in premium brake pads — especially in EVs and Chinese OEMs — giving ITT pricing power that most auto suppliers would kill for. The Industrial Process segment is stepping into a multi-year tailwind as customers wake up to the cost savings from its high-efficiency pumps and valves, while the new embedded-drive motor platform could be a legitimate margin lever. Then there’s Connect & Control, which is about to see a multi-year boost from renegotiated aerospace contracts at much higher prices — something the market hasn’t fully priced in. Management’s “healthy paranoia” is not just a cute quote; it shows up in high-ROI capital allocation and enviable ROIC levels. Trading around ~18x forward earnings with double-digit EPS growth ahead, ITT looks more like a stealth compounder than a cyclical industrial.

Pitch Summary:
Bruker declined -18.4% during the quarter through the date of our exit. Bruker is a leading provider of high-performance scientific instruments, analytical and diagnostic solutions, and related services. BBH Mid Cap has long admired Bruker’s innovative track record that has allowed the company to consistently grow its revenue alongside operational excellence that has facilitated strong margin expansion and earnings growth. Bruker is diversified across a wide variety of end markets including academic, government, biopharma, industrial, and semiconductor. However, this diversification has provided no safe harbor from academic and government life science funding cuts and prolonged tariff uncertainty. These include restrictions on federal research funding to colleges and universities; efforts to cut the National Institutes of Health (NIH) and National Science Foundation (NSF) budgets and limit the pace of grant disbursements; tariffs on China, the EU, and Switzerland; and policy to re-shape the biopharma industry via sector-specific pharmaceutical tariffs and most-favored-nation drug pricing. While the impact was initially contained to direct funding cuts among academic customers in the US (approximately 10% of revenues), more recently we have seen a sharp slowdown in activity across Europe and China, and in industrial and biopharma end markets. Given continued policy uncertainty, both at the country and healthcare sector level, we have chosen to step aside at this time while we await a stabilization of the policy landscape and to redeploy proceeds to readily available opportunities.

BSD Analysis:
Bruker Corporation (BRKR) is a scientific instrument provider temporarily exposed to cyclical macro policy and funding headwinds in its end markets. The recent stock sell-off of -18.4% largely reflects external pressures, including delays in academic and government life science funding and prolonged tariff uncertainty on China and the EU. Despite these challenges, which are impacting revenue visibility, the core investment proposition remains structurally intact. Bruker maintains robust fundamentals, including EBITDA margins above 20% and modest leverage, which demonstrate operational excellence and resilience. The company's diverse exposure across biopharma, academia, and industrial markets positions it for a recovery as R&D spending normalizes globally. Trading at roughly 17x forward earnings, the stock offers asymmetric upside and a strong rationale for a re-rating once policy clarity and demand trends improve.

Pitch Summary:
Globant declined -37.5% during the quarter through the date of our exit. Globant is the second-largest pure-play digital software engineering vendor with a focus on front-end, custom-designed software engineering applications that are mission critical to its customers. Globant has been a strong outperformer in recent years, with double-digit revenue growth throughout 2023 and 2024. Revenue growth was well ahead of peers during this period, supported by industry-leading AI studios that help large enterprises implement and leverage AI capabilities. However, Globant has been significantly impacted by tariffs, especially among its Latin American customers, who have reduced or paused IT spending against a weak macroeconomic backdrop in the region. North American customers have also experienced a deceleration. While Globant’s AI studios continue to grow at a double-digit rate, this has not been enough to offset slowing growth elsewhere, and market sentiment has also soured out of concern that AI could compress revenues due to efficiency gains and the prevalence of new AI coding tools. Despite our frustration with the repeated cuts to guidance this year, we believe the preponderance of evidence is that Globant’s business model is not permanently impaired. While its growth has slowed to low single digits for 2025, Globant’s margins and cash flows have held up and the balance sheet remains strong with a net leverage ratio of 0.5x. However, given the decline in the share price and lack of near-term catalysts, we believe it was opportune to exit our position to harvest the tax loss for the Fund.

BSD Analysis:
Globant didn’t suddenly become a bad business — it just got caught in the macro crossfire while running one of the most forward-leaning AI consulting engines in the industry. The market punished the stock as if tariffs and LatAm budget freezes somehow erased its core value proposition, even though Globant’s AI studios are still posting double-digit growth and winning enterprise deals the rest of the industry can’t touch. Yes, guidance cuts hurt, but the balance sheet is pristine, margins held up, and the company’s ability to scale high-margin digital engineering work hasn’t gone anywhere. At ~18x forward earnings, Globant is priced like a generic IT outsourcer despite having a premium brand, deep enterprise relationships, and a track record of outgrowing peers by miles. The current slowdown looks cyclical, not structural — a narrative the market will eventually have to correct. Once macro headwinds ease and enterprise tech budgets normalize, Globant has the operating leverage and pricing power to snap back far faster than consensus is modeling.

Pitch Summary:
Shift4 declined -21.9% during the quarter, ending with a weight of 4.4%. Shift4 is an integrated payments processor, specializing in the hospitality vertical, including restaurants, lodging, and leisure. In the quarter, the company slightly missed consensus estimates on volumes, EBITDA, and EPS while slightly beating consensus on net revenue and free cash flow. Excluding the recent acquisition of tax-free shopping solutions provider Global Blue, annual guidance for net revenue was raised while the rest of the standalone guidance was reaffirmed. Guidance, including the acquisition of Global Blue, was below consensus estimates for volumes. Global Blue was accounted for under IFRS, and we believe this made it difficult for some sell-side analysts to update their models and led to confusion about the underlying performance of Shift4. However, we note that Shift4 continues to expect over 20% organic net revenue growth this year, and management believes the company is tracking toward the high-end of its intermediate term guidance issued in January.

BSD Analysis:
Shift4 is a high-velocity payments platform taking share from slower, legacy processors that can’t keep up with its integrated tech stack. Despite occasional reporting noise and accounting confusion from recent deals, the underlying machine is clearly accelerating, with organic net-revenue growth north of 20% and a merchant base that keeps widening every quarter. The company’s vertically integrated model delivers better unit economics than peers, giving it room to expand margins even as it invests aggressively in new verticals. Market skepticism around model complexity has created an opening, leaving the stock trading at a discount that doesn’t square with its profitability or growth trajectory. Management’s track record on integrations and execution suggests the market is underestimating how much cash this business can throw off as it scales. With rising enterprise adoption and a long runway to consolidate share, FOUR looks like a mispriced compounder hiding in plain sight.

Pitch Summary:
Advanced Drainage returned 20.9% during the quarter, ending with a weight of 4.0%. Advanced Drainage is the leading manufacturer of thermoplastic pipe and allied products for stormwater and wastewater management applications. Despite difficult end markets, Advance Drainage has executed well and delivered better than expected sales and earnings and reiterated fiscal 2026 guidance. Although organic growth was down slightly in the quarter due to wet weather and continued interest rate headwinds, the company outgrew most of its end markets. Aside from infrastructure, the company’s sales grew in all end markets. Its higher margin leach field, stormwater, and wastewater categories grew faster than its core pipe products. For example, Advanced Drainage saw double-digit organic growth in sales of on-site wastewater tanks driven by material conversion to plastic. Demand was also supported by strength in the multifamily residential market, where the company saw double-digit growth of key products like retention/detention chambers, water quality products, and stormwater capture structures. Water quality remains a key growth area for the company and this category has grown at high-teens CAGR over the last three years.

BSD Analysis:
Advanced Drainage Systems (WMS) is a structurally resilient infrastructure play uniquely positioned to benefit from secular tailwinds in water management. As the largest manufacturer of thermoplastic pipe and stormwater solutions in North America, WMS operates with a dominant market share of roughly 45% in its core drainage pipe systems market. The company's material conversion strategy continues to displace traditional materials like concrete and steel, leveraging the superior durability and sustainability of its recycled plastic products. With high-margin segments like its Infiltrator onsite wastewater and Allied Products increasing as a mix of sales, WMS has demonstrated resilient margins even amid macro headwinds like higher interest rates. Trading around 17x forward earnings with strong margins near 25% EBITDA and ROIC above 20%, the valuation is compelling given its leadership in storm and wastewater, secular demand from new regulations, and multi-platform growth. Furthermore, the company maintains a low leverage ratio of just 1.1 times Adjusted EBITDA and strong liquidity, providing ample balance sheet flexibility for capital allocation.

Pitch Summary:
Arista returned 42.4% during the quarter, ending as our fifth-largest position with a weight of 4.9%. Arista is the leading provider of data center switches to cloud network and AI customers. Arista is executing extremely well and reported strong second quarter results, with revenue, margins, earnings per share (EPS), and qualitative commentary, all above expectations. In addition, Arista raised revenue guidance for all of 2025 to 25%, up from 17% previously, and provided initial conservative guidance of 14% growth in 2026. Arista also announced they will exceed targets for both their AI and Campus product solutions in 2025. At the recent investor day, CEO Jayshree Ullal was not shy about noting advantages vs. rivals and future opportunities ahead. AI revenue, targeted at $1.5 billion this year, is expected to be $2.75 billion next year, growing 60% to 70%, which means AI will be about 25% of revenue. Looking beyond 2026, Arista gave a target of “mid-teen” growth through 2029. This is similar to their long-term guidance three years ago, which they significantly exceeded at a 27% CAGR.

BSD Analysis:
Arista has become the unofficial arms dealer of the AI data-center boom, and the numbers back it up. Hyperscalers like AWS and Meta are shoveling capex into high-bandwidth networks, and Arista is capturing the lion’s share while legacy vendors are still arguing over product roadmaps. The company’s AI revenue targets keep getting blown out, which tells you management is running a tighter, more aggressive playbook than the market expected. With net cash, 30%+ forward P/E, and eye-popping EPS growth, the stock isn’t cheap — but neither is being the only scale vendor actually delivering what AI workloads require. Software mix continues to climb, turning what used to be a hardware story into a margin-expanding cash machine. Competitors talk about AI opportunity; Arista is already booking it, scaling it, and raising guidance on it. If the AI infrastructure cycle runs anywhere close to current expectations, Arista is positioned as one of the cleanest, highest-torque compounders in the entire networking universe.

Pitch Summary:
Salesforce was a detractor during the quarter. The U.S.-headquartered customer relationship management company’s stock price declined despite reporting earnings that we viewed as solid. Data Cloud and Agentforce performed well, in our view, and management continued to repurchase shares. In our view, there is room for continued growth as the company leverages its unique position to help businesses deploy AI and continues to restructure its sales organization.

BSD Analysis:
Salesforce is getting treated like an overgrown SaaS dinosaur just as it’s quietly rewiring itself into an AI-first productivity engine. The market punished the stock for a “slowdown” that still came with solid earnings, relentless buybacks, and accelerating traction in Data Cloud and Agentforce — the exact products that will drive the next monetization wave. The company’s recurring revenue base gives it one of the most durable cash machines in enterprise software, yet the valuation has compressed to ~24x forward earnings as if the growth story is dead. It’s not. Salesforce is one of the few platforms with the data, distribution, and embedded workflows to actually make AI useful for large enterprises—not just flashy demos. Margins have structurally reset higher after the 2023 overhaul, and further automation should push them even higher. Once sentiment normalizes and AI-driven upsell cycles kick in, Salesforce has far more operating leverage and rerating potential than the current narrative gives it credit for.

Pitch Summary:
Molina Healthcare was a detractor during the quarter. The U.S.-headquartered managed care company’s stock price declined after it reported challenging second-quarter results and reduced full year earnings per share guidance. This negative revision was caused by cost pressure in the company’s Medicaid and Marketplace businesses. While today’s valuation seems to imply that the headwinds impacting Molina are structural, we believe they’re attributable to temporary factors and expect a meaningful earnings recovery in the coming years.

BSD Analysis:
Molina Healthcare (MOH) is currently trading with a profoundly depressed valuation, presenting a classic asymmetric opportunity in the managed care space. Its current P/E ratio of under 9x is a staggering discount to its 10-year historical average of over 20x and to its peers, a clear sign of market pessimism. This extreme valuation compression is largely due to a cyclical "dislocation between premium rates and medical cost trends," driven by elevated utilization across Medicaid and the Marketplace. Management is confident this is a temporary imbalance, anticipating margin restoration through significant 2026 rate repricing and a planned reduction in Marketplace exposure. Furthermore, the company maintains a structurally strong capital position and consistently superior margins in Medicaid compared to the broader market, mitigating downside risk. Analysts peg the intrinsic value substantially higher, suggesting massive upside as rate catch-up and operational discipline translate into a dramatic EPS recovery.

Pitch Summary:
Keurig Dr Pepper was a detractor during the quarter. The U.S. beverage company’s stock fell after announcing the acquisition of JDE Peet’s, which owns a collection of global coffee brands. Once the combination is complete, Keurig Dr Pepper plans to split into two separate entities. One entity will specialize in coffee, while the other focuses on soft drinks. Separating the coffee and soft drink segments makes strategic sense, as synergy estimates appear conservative, and the multiple paid for JDE Peet’s was undemanding. In our view, investors reacted harshly to this announcement because the two-step transaction adds complexity, increases debt, and unexpectedly raises exposure to the coffee category. We believe the sell-off was overdone since Keurig Dr Pepper’s fundamentals remain healthy, the organization has a proven track record of deleveraging after prior deals, and the upcoming separation will expose the significant sum-of-the-parts discount.

BSD Analysis:
Keurig Dr Pepper is getting punished for daring to do something strategic instead of sleepwalking like the rest of the beverage sector. The JDE Peet’s acquisition and subsequent split look messy on paper, but the coffee-and-soda separation actually unlocks a sum-of-the-parts discount that’s been hanging around KDP’s neck for years. Investors freaked out over debt and complexity, ignoring the company’s long track record of deleveraging every time it does a deal — and usually faster than expected. The synergy estimates look conservative, and the market’s knee-jerk reaction basically handed patient investors a mispriced entry point. At ~18x forward earnings with a 3% yield, you’re paying a grocery-store valuation for a business that’s about to get cleaner, more focused, and more transparent. Once the split clarifies the economics of each unit, KDP’s rerating potential is a lot higher than the current sentiment would admit.