Investment Pitches

Pitch Summary:
Oracle contributed 74bps to quarterly performance after shocking markets with a US$455bn backlog — a 230% QoQ increase — primarily from multi-year AI cloud infrastructure contracts. Oracle’s pivot from legacy databases to infrastructure-as-a-service now places it as a credible AI hyperscaler, with guidance projecting IaaS revenue growth from US$10bn to US$144bn within five years. The backlog, anchored by OpenAI and other undisclosed hyperscale clients, represents non-cancellable contracts underpinning years of revenue visibility. Larry Ellison remains confident that Oracle can triple earnings as it builds an AI cloud business rivaling Amazon Web Services.

BSD Analysis:
Oracle’s AI cloud is winning legitimate workloads thanks to a networking architecture and GPU density that hyperscalers underestimated. Database modernization remains sticky, recurring, and deeply embedded, giving Oracle one of the most defensible revenue bases in enterprise tech. Cerner is no longer a disaster; it's stabilizing and clearing a major narrative hurdle. The stock still trades at a legacy-tech discount despite accelerating cloud growth. Oracle has quietly executed one of the most underestimated pivots in big software. If cloud momentum continues, valuation normalization is inevitable. A stealth AI-infra winner hiding inside an “old tech” label.

Pitch Summary:
Equinix Inc., a data center operator, was eliminated from the portfolio. The company has unique assets in urban areas critical for reducing latency, especially as AI applications become more prevalent. However, as new locations open in second- and third-tier cities, Equinix has not been able to monetize these assets as we had expected. We believe there will be a better opportunity to own the stock in the future.

BSD Analysis:
Equinix remains the global interconnection giant, a mission-critical platform for cloud on-ramps, AI architectures, and enterprise hybrid workloads. Pricing power is strong, churn is low, and the REIT model generates predictable, high-quality cash flow. AI-driven data-center demand is only beginning to show up in bookings. EQIX isn’t cheap, but its competitive moat is enormous and widening. For digital infrastructure exposure, Equinix is as good as it gets.

Pitch Summary:
Advanced Micro Devices Inc. (AMD), a US semiconductor company, was also added to the portfolio. The total addressable market for AI chips is vast and in need of a second supplier to complement NVIDIA. We believe AMD is now positioned to supply a competitive, and possibly superior, chip for inference on a price/performance basis. Additionally, its next-generation chip for AI training should be a viable option to supplement NVIDIA supply.

BSD Analysis:
AMD has finally arrived as a credible second force in AI compute — MI300 traction is real, hyperscaler qualification is broadening, and software maturity is improving faster than skeptics predicted. EPYC continues to take share in data-center CPUs thanks to power efficiency and total-cost-of-ownership advantages. Gross margins are set to expand as the mix shifts toward AI accelerators. Execution must stay sharp, but AMD’s positioning in AI and HPC is the strongest it has ever been.

Pitch Summary:
During the quarter, we made several changes to the portfolio. We initiated a position in Vulcan Materials Co., one of two major aggregates companies in the US. Vulcan holds a dominant position in many regions, allowing for high market share and pricing power, which is exercised through annual price increases. With abundant infrastructure projects in the US, public contracts are accelerating and offsetting weakness in residential construction.

BSD Analysis:
Vulcan is perfectly positioned for the U.S. infrastructure supercycle — aggregates scarcity and high transport costs create massive local pricing power. Volumes are steady, pricing is strong, and margin expansion is accelerating as state and federal projects ramp. Vulcan’s balance sheet is clean, and the business model is almost impossible to disrupt. With visibility stretching years out, VMC remains one of the most attractive long-duration industrials.

Pitch Summary:
Intuit, operator of TurboTax and QuickBooks, faced several headwinds in 2025, though its business fundamentals remain solid. During the quarter, the stock declined when OpenAI announced a new, more advanced large language model, which the market perceived as a threat to application software broadly. We have not seen evidence that this poses a near- or medium-term threat to Intuit’s business; in fact, it may present new opportunities. Key growth drivers, such as the shift to take market share from the assisted tax preparation category and also penetration into the mid-market accounting market, are going extremely well despite downbeat market sentiment due to unfounded AI threats.

BSD Analysis:
Intuit dominates SMB financial software with QuickBooks, owns the tax category with TurboTax, and continues to build a massive ecosystem through Mailchimp and AI-assisted workflows. Network effects are strengthening as customers add more modules. Margins are expanding, cash generation is monstrous, and retention is exceptional. Intuit transitions from “software provider” to “financial operating system” more each year. A high-confidence compounder with few real challengers.

Pitch Summary:
ICE, which operates wide moat commodity exchanges, mainly futures and options for energy, as well as a mortgage technology business, fell out of favor during the quarter. Trading volumes slowed in several areas, particularly energy, which offset strength in equities. However, we focus on the long-term structural aspects of the energy market that favor sustained commodity volatility, supporting long-term volume growth. We believe ICE maintains a defendable, industry-leading position across multiple business lines with the potential for favorable long-term trends.

BSD Analysis:
ICE is a multi-core compounding engine — exchanges, clearing, data, and now mortgage-tech — with recurring revenue and pricing power that make earnings extraordinarily resilient. Mortgage market normalization will be the next margin tailwind. The company’s ability to turn data assets into subscription products is unmatched. Despite its stability and growth, ICE trades at a modest multiple. This remains one of the most reliable long-term performers in financial infrastructure.

Pitch Summary:
Reece reported disappointing results as revenue fell 1% despite adding 39 new branches and making several small acquisitions. Profit declined 24%, and the dividend was reduced by 29%. The U.S. expansion continues to weigh on returns, with ROE dropping below 8% from 19% a decade ago. Management also cited issues with a former acquisition partner who, after a non-compete period, launched a competing business and lured away key staff. The fund reduced exposure due to ongoing competitive and operational headwinds.

BSD Analysis:
Reece’s profitability remains under pressure from underperforming U.S. operations and heightened competition. Despite a long record of quality management, recent returns on incremental capital are poor. Shares trade around 20x depressed earnings, but catalysts for margin recovery are limited in the near term.

Pitch Summary:
AUB Group delivered a 17% profit increase on a 12.7% rise in revenue, with all divisions performing well. Management expects another 10% profit increase next year. The firm’s long-term track record is exemplary: shares have risen ninefold since 2009, delivering ~15% annualized returns. Despite strong results, shares declined during the quarter, which the fund viewed as unwarranted. AUB remains a consistent compounder benefiting from stable recurring revenue and disciplined execution.

BSD Analysis:
AUB’s scalable broker network and consistent earnings compounding justify its premium valuation. With a 10–12% growth outlook and strong cash conversion, the business continues to deliver predictable results. Trading around 22x forward earnings, the stock remains attractive for long-term investors seeking steady compounding and dividend growth.

Pitch Summary:
PWR reported a weak result as the company transitioned to its expanded facility. Revenue fell 7% to $130 million and profits declined 50% to $12.4 million, prompting a 70% dividend reduction. Delays connecting to the electricity grid added temporary costs, but these issues have now been resolved. With the new factory operational, PWR has significantly expanded manufacturing capacity to support future growth in aerospace and defense markets. Management expects improved execution and a stronger performance over the next few years as the strategic transition completes.

BSD Analysis:
PWR is positioned for recovery as its capacity expansion unlocks operational leverage. The firm’s precision cooling expertise provides strong competitive advantages across motorsport, aerospace, and defense. Near-term earnings are depressed, but margins and growth should recover as utilization improves. The stock trades near 25x normalized earnings, fair for a quality engineering leader with secular defense tailwinds.

Pitch Summary:
Lovisa reported revenues increased by 14% to nearly $800 million as it added 131 stores to its network, bringing the total to 1,031. Profits were up 4% despite higher operating costs, while dividends were reduced. The company’s international expansion continues at pace, with the Australia-Pacific region now only contributing about 25% of revenue. Management is exploring the acquisition of U.S. store sites from bankrupt competitor Claire’s, a strategy it has successfully executed before in Europe. The company’s international store footprint has grown tenfold over the past decade and still has room to expand further.

BSD Analysis:
Lovisa remains a high-growth global retailer with strong unit economics and a proven rollout model. The brand’s agility in capitalizing on competitor distress (e.g., Claire’s U.S. sites) highlights its disciplined execution. With ROE above 50% and margins steady despite cost pressures, valuation (~30x forward earnings) remains supported by long-term global growth visibility.

Pitch Summary:
Robinhood continues expanding beyond trading into banking, savings, and credit, transforming into a full-service financial platform. Its subscription-based model and strong customer engagement among young investors support recurring revenue growth and diversification.

BSD Analysis:
Robinhood is transitioning from a hyper-growth trading app into a more diversified financial platform, with interest income, options activity, and retirement accounts driving revenue durability. Engagement remains strong, and product velocity has improved meaningfully. The company is lean, cash-flow positive, and still expanding into new asset classes. Regulatory risk persists, but balance-sheet strength and user monetization trends offset much of the downside. With a loyal user base and expanding offerings, Robinhood has a clearer path to becoming a mid-cap fintech compounder.

Pitch Summary:
Disney’s Q3 results reflected continued turnaround progress with total revenue up 2% and operating income up 8%. Streaming subscribers reached 183 million, and free cash flow expanded to $11.5 billion. Integration of Hulu and the launch of ESPN’s direct-to-consumer service underpin long-term cash generation potential.

BSD Analysis:
Disney is finally showing signs of operational momentum, with streaming losses narrowing, parks thriving, and the content slate improving after years of inconsistency. Cost cuts and a tighter creative strategy are restoring margin credibility. The company’s IP engine remains unmatched, and upcoming streaming bundling should drive ARPU and retention. Yet the stock still trades as if Disney’s best days are behind it. With cleaner execution, asset monetization optionality, and improving free cash flow, DIS screens as a credible turnaround with long-term brand-driven upside.

Pitch Summary:
XLF provides targeted exposure to America’s financial sector—banks, insurance, capital markets, mortgage REITs, and consumer finance companies. It is a low-cost, passively managed fund with a 0.08% expense ratio. We increased our weighting here during periods of volatility because financials stand to benefit from a combination of declining interest rates, resilient credit quality, and a potential steepening of the yield curve. Analysts expect the sector’s Q3 earnings to grow roughly 10% on revenue growth of nearly 6%, and early reports have been encouraging. Holding XLF gives us diversified exposure to a sector that can compound earnings and dividends as the economy grows.
• The Bull Case for Financials

1. Yield-curve steepening – a margin tailwind. Banks borrow short and lend long. A steeper curve widens net-interest margins and directly boosts profitability. When cuts steepen the curve, they encourage credit creation and lending activity—an environment where financials thrive.

2. Revival of credit growth and lending activity. If lower rates stimulate loan demand or reduce credit-risk spreads, banks can see stronger lending volumes and higher interest and fee income. After a period of tight credit, easing can unlock deferred demand across both consumer and corporate borrowers.

3. Rotation toward value and cyclical leadership. Monetary easing often shifts market leadership from growth and quality toward more cyclical, credit-sensitive sectors—financials chief among them. While cuts alone don’t cause that rotation, they can sustain it once earnings momentum and sentiment improve.

4. Cuts are largely priced in – clarity matters more than surprise. Markets are forward-looking; by the time cuts arrive, they’re often already discounted. The benefit to financials comes less from the initial announcement and more from the clarity, confirmation, and follow-through that policy easing brings.

5. Supportive macro regime. Rate cuts don’t create bull markets in isolation, but they can enhance one already underway. When earnings, economic stability, and investor sentiment trend positively, cuts can amplify rather than initiate financial-sector performance.
Taken together, these dynamics support a constructive outlook for the sector. If the Fed’s forthcoming rate-cut cycle produces even modest yield-curve steepening and a pickup in credit formation, financials could see improving fundamentals at a time when valuations remain undemanding. For long-term investors, that asymmetry—steady dividends today with meaningful upside optionality tomorrow—makes XLF an attractive core holding.

BSD Analysis:
XLF provides broad exposure to financials, with performance tied to credit quality, net interest income, capital markets activity, and regulatory trends. The sector’s fundamentals remain stable: banks are well-capitalized, credit remains benign, and insurers are benefitting from pricing strength. Valuations remain below historical averages due to recession fears that have yet to materialize. XLF remains a low-cost way to capture a mean-reversion setup as rates stabilize and capital markets activity normalizes. The ETF offers durable dividend yield and leverage to cyclical recovery without idiosyncratic risk.

Pitch Summary:
Tesla is significantly overvalued at a $1.4 trillion valuation despite recent record vehicle deliveries and storage deployments. The company's growth is largely attributed to temporary factors such as the expiration of federal EV incentives, and its production has actually decreased year-over-year. Tesla's financials show a weak free cash flow yield of 0.4%, and its market share is declining.

BSD Analysis:
Tesla's recent quarter was bolstered by a one-time demand surge due to expiring tax credits, masking underlying issues such as declining production and stagnant sales growth since 2023. The company's 'Other Models' sales, including the Cybertruck, remain weak, indicating limited growth outside core models. Tesla's FSD and robot businesses, often cited as future growth drivers, are underperforming against competitors like Waymo and Figure AI. The company's market valuation is not justified by its current financial performance or growth prospects, leading to a strong sell recommendation.

Pitch Summary:
SCHD is positioned as an attractive investment for dividend-oriented investors due to its focus on undervalued stocks with high forward yields. Despite underperforming against the broader market and AI-driven stocks, SCHD offers a sustainable dividend yield and has a prudent portfolio reshuffling strategy.

BSD Analysis:
SCHD's strategy of focusing on value stocks and reshuffling its portfolio to emphasize companies with healthier cash flows and discounted valuations has proven effective. The ETF's recent 3-for-1 split and expanded dividend yield of 3.76% make it an appealing choice for income-focused investors. Compared to its peers, SCHD has delivered better performance in terms of dividend yield and payout growth. The ETF's diversified holdings across various sectors, including energy and consumer defensive, provide stability and reduce risks associated with individual stock dividend cuts. Despite the ongoing AI mania, SCHD's stable trading levels present a good opportunity for dollar cost averaging.