Investment Pitches

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.

Pitch Summary:
IQVIA Holdings was a contributor during the quarter. The U.S.-headquartered provider of advanced analytics, solutions, and clinical research services saw its stock price appreciate after having delivered solid second-quarter results amidst a challenging pharma environment. The results reaffirmed our thesis that the technology and analytics solutions (TAS) segment is underappreciated and poised for future growth. Further the R&D solutions business showed signs of gaining share, with its win rate improving significantly. We believe forward-looking indicators are encouraging and think the company can extract further value as it leverages next-gen trends.

BSD Analysis:
IQVIA is one of the few names in healthcare where the market keeps sleeping on the obvious: this is a data and analytics empire masquerading as a CRO. The TAS segment — the part everyone used to shrug off — is now driving the real re-rating, with sticky software, high-margin analytics, and AI-driven insights that pharma clients can’t live without. Meanwhile, the R&D solutions business is finally regaining share, with win rates improving as smaller CROs fail to keep up with scale, compliance, and digital capabilities. At roughly 14x EV/EBITDA, the stock trades like a slow-growth outsourcing shop despite having structural tailwinds from decentralized trials, AI-enabled protocol design, and rising data complexity across the industry. Margin expansion is already underway, and recurring software revenue provides durability that most CROs can only dream of. IQVIA isn’t just participating in next-gen pharma — it’s becoming the infrastructure layer behind it.

Pitch Summary:
Alphabet was a contributor during the quarter. The technology conglomerate’s stock price appreciated following a favorable ruling in the Google Search antitrust case and second-quarter earnings that exceeded expectations across the board. Innovations in the Google Search experience are driving both engagement and revenue benefits. Moreover, Cloud growth is accelerating thanks to robust demand for AI workloads. We continue to believe Alphabet is undervalued on a sum-of-the-parts basis and see potential for the company’s AI leadership to drive further upside across the portfolio.

BSD Analysis:
Alphabet is the rare tech giant that keeps proving the market’s paranoia wrong. Everyone screamed that AI would cannibalize Search, yet engagement is rising and monetization hasn’t cracked — if anything, Google’s AI Overviews are making the moat harder to breach. Cloud is finally acting like a real business, stacking a $100B+ backlog and printing margins while rivals fight over infrastructure scraps. The CAPEX surge looks scary on paper, but Alphabet is vertically integrating the AI cost stack in a way that competitors simply can’t match — TPUs, models, distribution, the whole thing. Meanwhile, YouTube and Android quietly keep throwing off high-margin cash, and buybacks are reducing the share count at a velocity Wall Street pretends not to notice. With a forward P/E in the low 20s, Alphabet is priced like a mature ad business while behaving like a scalable AI infrastructure powerhouse. This is still one of the cleanest long-duration compounding stories in mega-cap tech — no matter how hard the market tries to overthink it.

Pitch Summary:
Warner Bros Discovery (WBD) was a contributor during the quarter. The media company’s stock price surged by 29% in a single trading session in September – its best day on record – amid reports that it is an acquisition target for Paramount-Skydance. In our view, this merger could generate meaningful cost synergies and create a scaled competitor with a deep and unmatched content library. We continue to closely monitor WBD’s evolving outlook and believe its long-term prospects remain attractive, backed by solid recent earnings, renewed distribution deals and growing momentum in its Streaming segment.

BSD Analysis:
Warner Bros. Discovery is still trading like a messy post-merger soap opera, but the fundamentals are quietly getting a lot less chaotic. The Paramount-Skydance takeover chatter was a reminder that WBD’s content library is one of the few with real strategic scarcity value — something the market routinely forgets until a rumor drops and the stock rips 25% in a day. Yes, leverage is high, but management has been grinding it down quarter after quarter, and the earnings momentum in streaming suggests the narrative around perpetual losses is past its peak. The company’s distribution renewals and tighter cost structure are finally showing up where it matters: cash flow. At ~7x EV/EBITDA, WBD is priced for perpetual dysfunction, yet the upside scenario — cost synergies from a potential merger, improved streaming economics, and stabilization in linear — is very much alive. If sentiment ever snaps back or consolidation becomes unavoidable, this thing has far more torque than the market is pricing in.

Pitch Summary:
Naturally, as investors seek out winners, they’re quick to jettison companies they fear may be come “AI Victims”, too. No doubt, this technology will ultimately change the way businesses operate. However, we think it’s premature to declare just who the “losers” may be. For instance, this year we have built a new position in Accenture, a provider of IT consulting and managed services, including additional purchases in the recent quarter. Accenture is rapidly retooling its own operations to incorporate AI technology, and we believe this will play a critical role in the evolution of their clients’ technology stacks as well. This quarter, we also began building a new position in CDW, a value-added reseller of technology solutions to small and medium-sized enterprises, education and government clients. In 2020, CDW helped clients rapidly adapt their organizations for the challenges of remote work. Five years later, the next hardware cycle will also likely include clients asking CDW specialists how to enable their platforms to take advantage of AI. In both cases, these opportunities are not yet reflected in earnings, but for patient investors we think that creates attractive entry points.

BSD Analysis:
CDW is well positioned to benefit from the next enterprise hardware and infrastructure refresh cycle driven by AI adoption across SMB, education, and public-sector customers. As organizations upgrade networking, storage, and endpoint devices to support AI workloads, CDW’s vendor relationships and value-added engineering services should translate into accelerating gross profit dollars even if unit volumes remain uneven. The company’s scale, purchasing leverage, and deep account penetration support resilient margins, while operating efficiency and incentives from major OEM partners reinforce profitability. CDW’s balance sheet strength allows for steady buybacks, maintaining attractive per-share growth even during slower cycles. With ROIC consistently above peers and a sticky, long-tenured customer base, the firm continues to command a justified valuation premium within the IT channel. Catalysts ahead include backlog rebuilding, AI-related infrastructure orders, and increased wallet share as customers consolidate spending with fewer, higher-quality resellers. Overall, CDW offers a compelling downstream AI exposure with durable cash generation and defensible competitive advantages.

Pitch Summary:
Naturally, as investors seek out winners, they’re quick to jettison companies they fear may be come “AI Victims”, too. No doubt, this technology will ultimately change the way businesses operate. However, we think it’s premature to declare just who the “losers” may be. For instance, this year we have built a new position in Accenture, a provider of IT consulting and managed services, including additional purchases in the recent quarter. Accenture is rapidly retooling its own operations to incorporate AI technology, and we believe this will play a critical role in the evolution of their clients’ technology stacks as well. This quarter, we also began building a new position in CDW, a value-added reseller of technology solutions to small and medium-sized enterprises, education and government clients. In 2020, CDW helped clients rapidly adapt their organizations for the challenges of remote work. Five years later, the next hardware cycle will also likely include clients asking CDW specialists how to enable their platforms to take advantage of AI. In both cases, these opportunities are not yet reflected in earnings, but for patient investors we think that creates attractive entry points.

BSD Analysis:
Accenture remains one of the most strategically positioned companies in global IT services, benefiting from surging enterprise demand for AI-enabled transformation. Its scale, brand trust, and end-to-end capabilities—spanning strategy, systems integration, cloud migration, and managed services—create high client stickiness and recurring revenue visibility. Margin expansion should continue as automation, offshore leverage, and AI tooling drive higher delivery efficiency across its massive workforce. The company’s balance sheet strength, combined with consistent free cash flow generation, supports ongoing buybacks and a steadily rising dividend. With AI-related bookings already accelerating, Accenture is well placed to capture multi-year reinvestment cycles across data, cloud, and digital operations. Trading at a reasonable premium to IT services peers, the valuation is justified by double-digit EPS growth, improving utilization, and a rich pipeline of AI modernization work. Overall, the company offers a durable compounding profile with both cyclical resilience and structural growth catalysts tied to enterprise AI adoption.

Pitch Summary:
V.F. Corporation's Q2 2026 results exceeded expectations, yet the stock sold off due to conservative guidance. The company's strong performance, particularly from brands like The North Face and Timberland, and strategic moves such as the divestiture of Dickies to reduce debt, suggest a promising turnaround. Despite market skepticism, the stock presents a compelling risk/reward opportunity.

BSD Analysis:
V.F. Corporation's recent earnings beat on both revenue and EPS, with strong contributions from The North Face and Timberland. The divestiture of Dickies is a strategic move to deleverage the balance sheet, which should improve financial stability. While guidance appears conservative, it may be a strategic understatement to manage market expectations. The company's focus on expanding product lines and improving operational efficiency indicates potential for future growth. Despite macroeconomic uncertainties, such as tariffs and consumer spending, V.F. Corp.'s valuation appears attractive, trading below private market values for its brands. The company's efforts to streamline operations and focus on core brands could lead to significant upside in the coming years.

Pitch Summary:
Cenovus Energy is set to acquire MEG Energy, a move that is expected to create significant operational efficiencies and synergies due to the proximity of their operations. The acquisition is structured as a mix of cash and shares, and is likely to be accretive, allowing Cenovus to benefit from MEG's low-cost thermal oil deposits.

BSD Analysis:
The acquisition of MEG Energy by Cenovus Energy is strategically advantageous due to the geographic proximity of their operations, which allows for operational efficiencies and cost savings. The deal, which includes a mix of cash and shares, is expected to be accretive and enables Cenovus to leverage MEG's low-cost thermal oil deposits. The acquisition also reduces leverage post-transaction, providing flexibility for future share repurchases. While there are risks associated with integrating company cultures, Cenovus's familiarity with MEG's assets mitigates some of these risks. The acquisition positions Cenovus for continued dividend growth and long-term returns in the teens.

Pitch Summary:
The Schwab Emerging Markets Equity ETF (SCHE) is positioned as a low-cost option for exposure to emerging markets. However, its high concentration in a few large-cap tech companies, particularly in China and Taiwan, poses significant risks. While it offers a lower expense ratio compared to its competitor IEMG, the concentration risk and lower dividend yield make it less appealing as a core holding.

BSD Analysis:
SCHE's focus on large-cap tech companies like Taiwan Semiconductor Manufacturing, Tencent, and Alibaba results in a concentrated portfolio that is heavily reliant on the performance of these firms. This concentration, while potentially rewarding if these companies perform well, also exposes the fund to significant risks, particularly geopolitical tensions involving China and Taiwan. The fund's expense ratio is competitive at 0.07%, but this advantage is offset by lower dividend yields and performance compared to IEMG. Additionally, SCHE's lack of diversification across sectors and geographies increases its vulnerability to sector-specific shocks. Despite its cost advantages, SCHE's risk-adjusted performance does not justify switching from IEMG, especially given the transaction costs involved.

Pitch Summary:
Agilysys, Inc. has shown strong fiscal Q2 results with a significant post-earnings rally, driven by increased revenue expectations and strong cross-sell momentum. However, its high valuation multiples and potential macroeconomic risks in the travel sector suggest a balanced outlook.

BSD Analysis:
Agilysys has demonstrated robust cross-sell potential, particularly with its foodservice products, and is in the final stages of a significant deal with Marriott, which could be margin accretive. Despite these positives, the company faces challenges such as potential macroeconomic concerns affecting the travel sector and a gross margin gap compared to peers. The stock's valuation remains high, trading at rich multiples, which may already price in much of the anticipated upside. While the company's revenue growth and adjusted EBITDA margins are promising, the high valuation suggests caution. Investors may find better opportunities in other small- and mid-cap growth stocks.

Pitch Summary:
Power Solutions International has achieved remarkable growth, with its stock up 685% since July 2024. The company has returned to profitability and continues to exceed earnings expectations, driven by strong sales growth and strategic financial management.

BSD Analysis:
PSIX's focus on powertrain solutions for data centers and other industrial applications has fueled its impressive financial performance. The company's ability to reduce debt and secure additional financing demonstrates strong financial management. With consistent earnings beats and upward revisions in guidance, PSIX is well-positioned for continued growth. The stock's inclusion in major indexes further enhances its visibility and attractiveness to investors. Despite recent price retreats, the company's strong fundamentals support a bullish outlook.

Pitch Summary:
Sterling Infrastructure has demonstrated strong growth, with its stock price increasing over 210% in the past 18 months. The company has raised its 2025 EPS guidance and continues to expand its market presence, driven by demand in data center infrastructure.

BSD Analysis:
Sterling's strategic focus on e-infrastructure and transportation has resulted in significant revenue growth, with a 21% increase in the latest quarter. The company's ability to expand its footprint through acquisitions and partnerships positions it well for continued growth. Despite potential market volatility, Sterling's strong backlog and financial performance support a bullish outlook. The company's market cap has grown significantly, reflecting its successful execution of growth strategies.