Investment Pitches

Pitch Summary:
Montage Technology. The company reported surging revenue and net profit growth, and our research indicated that it has continued to enlarge its presence in the scale-up networking market, while maintaining stable growth in its interface integrated circuit business.

BSD Analysis:
The managers highlight Montage’s expanding footprint in data center and networking semiconductors. Strong revenue acceleration, new product ramps, and leadership in DDR5 and interface ICs drive upside. Structural exposure to AI and hyperscale compute adds multi-year tailwinds.

Pitch Summary:
Delta Electronics. Positive earnings surprises and strong performance in electric vehicles and data centers lifted shares. The company raised earnings forecasts, reflecting confidence in its growth trajectory. We believe Delta, a key supplier of AI power, is benefiting from global electrification trends and AI infrastructure expansion.

BSD Analysis:
The fund views Delta as a top EM industrial beneficiary of the electrification and AI power cycles. Its leadership in EV components and data-center energy systems underpins double-digit growth. Strong balance sheet and 15x P/E suggest attractive valuation.

Pitch Summary:
Arkema underperformed as continued weakness in its Coatings and Intermediates segments pressured margins. The company also underwent a leadership change, which added uncertainty regarding integration of recent acquisitions amid soft global demand.

BSD Analysis:
Pzena’s bearish note reflects margin compression risks and weak near-term visibility. While Arkema’s focus on high-value specialty materials remains intact, execution risk around recent M&A and cost inflation weigh on sentiment. Valuation near 7x EBITDA limits downside, but reacceleration in end markets will be required for meaningful recovery.

Pitch Summary:
Daimler Truck detracted from performance after lowering sales volume guidance amid concerns about a newly announced 25% U.S. tariff on heavy-duty truck imports. The company faces near-term headwinds from demand softness and tariff exposure, offsetting otherwise resilient operations.

BSD Analysis:
Pzena acknowledges Daimler Truck’s cyclical exposure but sees long-term potential as electrification and hydrogen adoption progress. Near-term valuation pressure from tariffs may obscure mid-cycle earnings power. The company’s dividend discipline, strong European market share, and structural cost savings provide a floor to downside risk. Longer-term, its eTruck and fuel-cell segments could reaccelerate growth beyond 2026.

Pitch Summary:
TDK gained during the quarter as product innovation and portfolio optimization supported strong performance. The company’s adoption of silicon anode batteries and expanding demand for AI-driven hard disk storage contributed to renewed investor enthusiasm.

BSD Analysis:
Pzena’s thesis underscores TDK’s transformation from a legacy electronics supplier into a critical enabler of AI hardware infrastructure. Its leadership in silicon anode batteries and data storage aligns with secular AI and EV adoption trends. With EV/EBITDA below 8x and FCF yields near 7%, valuation remains compelling. Sustained innovation in battery chemistry and industrial sensors positions TDK for multi-year margin expansion.

Pitch Summary:
Alibaba was a top contributor in Pzena’s International Value ADR portfolio for the third quarter of 2025. The market grew more optimistic about Alibaba’s cloud and AI divisions, following robust growth reports in both segments. The company also stabilized its share in e-commerce and regained momentum in quick commerce. These improvements, alongside disciplined cost management, positioned Alibaba as a central beneficiary of China’s digital recovery.

BSD Analysis:
Pzena’s bullish stance on Alibaba reflects its view that the company’s diversified revenue base—particularly cloud computing and AI—is now reasserting dominance following regulatory headwinds. Cloud growth above 20% y/y and early monetization of AI tools provide meaningful catalysts for multiple expansion. Trading near 10x forward EPS and with over $60B in net cash, Alibaba’s valuation is deeply discounted versus global peers. Key catalysts include continued AI integration, domestic consumption rebound, and potential restructuring of Ant Group.

Pitch Summary:
Astronics was a top contributor to micro-cap performance. The company benefited from strong order activity across its aerospace and defense segments as air travel and defense spending recovered.

BSD Analysis:
Astronics is well-positioned to capitalize on the aerospace upcycle and defense modernization, supported by an $800M+ backlog and improving supply chains. Its core electrical power and lighting systems remain critical to aircraft production growth, while defense contracts add stability. EBITDA margins are trending toward 10%, and leverage has declined significantly. With secular tailwinds in avionics and power management, the company’s valuation at 9x forward EBITDA remains attractive for continued re-rating.

Pitch Summary:
Bloom Energy contributed positively to returns as investors recognized the company’s potential in AI and data center-related energy infrastructure. Its modular fuel cell systems address rising demand for efficient, resilient power solutions.

BSD Analysis:
Bloom’s differentiated fuel cell technology provides scalable energy efficiency advantages versus traditional backup generators, making it integral to AI data center power reliability. Backlog grew 22% YoY, and margins expanded 300bps, aided by higher production volumes. The company’s shift toward higher-value commercial deployments and partnerships with hyperscalers bolster its growth profile. Trading near 2.5x forward sales, Bloom offers asymmetric upside as energy resilience becomes mission-critical for digital infrastructure.

Pitch Summary:
Xometry was a top contributor to small-cap performance. The company leverages AI and data analytics to connect buyers and suppliers of custom manufacturing services efficiently. Strong growth in order volumes and improving margins highlight execution strength.

BSD Analysis:
Xometry’s AI-enabled marketplace continues to gain traction in reshoring and precision manufacturing trends. With 35% revenue growth, improving gross margins from 27% to 33%, and positive FCF trajectory, the firm is moving toward operating leverage inflection. Its supply chain digitization platform scales with industrial automation and nearshoring. Partnerships with major OEMs and AI-based quoting tools enhance competitive differentiation. While valuation is rich, structural adoption tailwinds and execution consistency support long-term upside.

Pitch Summary:
Robinhood was a new addition during the quarter as part of the portfolio’s overweight in financials. The company has strengthened fundamentals with rising net interest income and higher user engagement across its trading and crypto businesses.

BSD Analysis:
Robinhood’s product expansion strategy—into credit cards, retirement accounts, and 24-hour trading—has diversified its revenue base beyond transaction volumes. Net interest income rose 25% sequentially as cash sorting initiatives improved yields. Crypto activity remains volatile but profitable, with management targeting consistent GAAP profitability in 2025. The platform’s 11M+ monthly active users demonstrate strong engagement, aided by UI innovation and cross-selling. Trading at 6x forward sales with zero debt, HOOD’s scalability and ecosystem expansion could drive long-term re-rating.

Pitch Summary:
GE Vernova was added during the quarter as part of the fund’s overweight in industrials tied to secular growth themes like power generation and AI infrastructure buildout. Management’s restructuring progress supports improved efficiency and margin profile.

BSD Analysis:
GE Vernova’s separation from GE Aerospace enables focused capital allocation toward electrification and grid resilience. With over $100B in backlog, it stands to benefit from global decarbonization initiatives, grid modernization, and AI data center energy demand. EBITDA margins are expanding as renewable project execution improves and supply chains stabilize. The company’s exposure to clean power and digital grid management makes it a structural play on energy transition. Valuation remains undemanding versus peers like Siemens Energy and Schneider Electric, suggesting further re-rating potential as earnings normalize.