Investment Pitches

Pitch Summary:
UGI Corp (UGI) is a well-run gas and electric utility in Western Pennsylvania and West Virginia. The company also owns a sizable, regulated pipeline business, a large propane distribution business in Europe, and Amerigas, the U.S.’s largest propane distributor. UGI has been redirecting cash flow to pay down debt at Amerigas and the utility holding company. We are pleased with the company’s improved financial position, green shoots at Amerigas and the upgrade to UGI’s long term EPS growth rate announced during fiscal Q4 earnings.

BSD Analysis:
UGI Corporation is currently executing a "back-to-basics" strategy, recently signing a definitive agreement to divest its LPG distribution businesses in Eastern Europe to DCC plc for approximately €48 million. This sale, expected to close in the first half of 2026, marks the near-completion of its portfolio optimization program aimed at reducing debt. Despite missing Q1 2026 EPS estimates (reported $1.26 vs. $1.50 expected), the company’s revenue rose 2.6% to $2.08 billion. Management is focusing 2026 efforts on its core regulated utility segments and strengthening the balance sheet to support long-term dividend continuity.

Pitch Summary:
InterDigital (IDCC) is a R&D organization that develops and acquires wireless communication and video patents. The company has a history of strong financial performance, opportunistically buys back shares, and pays a modest dividend. InterDigital has been successfully renewing its wireless licensing agreements (Apple in 2022, Samsung in 2023) and has a growing stream of recurring licensing revenues across consumer electronics, internet of things (IoT), and automotive customers. CEO Liren Chen joined the company in 2021 from Qualcomm and has been hiring other former Qualcomm managers. The company’s share price has increased over the past year due to growing revenue, profitability, and buybacks. We like the company’s long-term prospects but began trimming the Fund’s position this year on valuation.

BSD Analysis:
InterDigital starts 2026 by reinforcing its licensing moat through a new multi-year patent deal with LG Electronics, covering digital TVs and advanced display technologies. For the full year 2026, the company has issued a revenue outlook of $675 million to $775 million and a non-GAAP EPS target of $8.74 to $11.84. While Q4 2025 sales of $158 million reflected some seasonal lumpiness, management anticipates a significant rebound in Q1 2026 with revenue projected at $194 million to $200 million. The primary catalyst for the year is the expansion of its patent reach into the IoT and automotive sectors, diversifying income beyond traditional smartphone royalties.

Pitch Summary:
We made a significant reduction to our position in Fabrinet (FN). Fabrinet is the leading manufacturer of optical networking equipment and subcomponents. The company has been a large beneficiary of the explosion in data center spending and performed extremely well in 2025. We continue to love the company but worry about an AI capex bubble and acknowledge that the stock has become expensive. Fabrinet’s highest bandwidth products are finding increasing demand in data centers, especially those data centers used to train artificial intelligence models. In 2023, Fabrinet disclosed that Nvidia is a 10% customer. FN’s stock price has more than doubled since April on rising expectations for data center spending. We believe such spending, as capitalized in FN’s stock price, may have gotten ahead of itself and have been trimming. But the need for high bandwidth networking will continue, Fabrinet dominates its core telecom and data center markets and has prudently diversified into a handful of other niches that reward precise assembly at small scale. We believe Fabrinet will be a “compounder” for many years, and we continue to hold a position.

BSD Analysis:
Fabrinet enters 2026 as a powerhouse in the optical communications sector, recently reporting record-breaking Q2 results. For the quarter ended December 2025, the company surpassed expectations with a revenue of $1.13 billion (up 36% year-over-year) and a non-GAAP EPS of $3.36. Management has issued an optimistic Q3 2026 revenue guidance of $1.15 billion to $1.20 billion, driven by sustained demand in Datacom and High-Performance Computing (HPC). The investment case is further bolstered by a strong cash position of $961 million, allowing the firm to scale capacity for next-generation co-packaged optics (CPO). Analysts view Fabrinet as a premier "picks-and-shovels" play for the AI-driven infrastructure boom.

Pitch Summary:
New Jersey Resources (NJR) is a regulated gas utility serving Morris, Ocean and Monmouth counties in New Jersey. New Jersey has a favorable utility regulation environment – NJR gets a 9.6% allowed ROE and realizes practical cost reimbursement mechanisms that show up in the GAAP financials. The company has a culture of disciplined but ambitious capital allocation at the holding company level and has diversified into clean energy, FERC-regulated storage and pipelines and energy services and trading. NJR earns a mid-double digit ROE, strong for a utility holding company. All in, NJR has a history of high single digit EPS growth on top of its 50%+ dividend payout ratio. Yet its forward P/E multiple has declined from 20x to 15x. We believe this is another case of an overlooked, boring stock and think shares in NJR are attractive.

BSD Analysis:
New Jersey Resources enters fiscal 2026 with a significant guidance raise, following a standout first quarter where net financial earnings (NFE) reached $1.17 per share, beating the $1.01 estimate. Management has increased its full-year fiscal 2026 net financial EPS guidance to a range of $3.28 to $3.43, citing strong performance in its Energy Services segment fueled by natural gas price volatility. The company has unveiled a massive $5 billion capital plan through 2030, with over 60% allocated to its regulated utility, New Jersey Natural Gas. Key 2026 catalysts include the expansion of storage and transportation assets, such as the Leaf River caverns, and a steady 7% to 9% long-term NFE growth target. Investors view NJR as a resilient defensive play, supported by a 3.6% dividend yield and a diversified platform that smooths out traditional utility seasonality.

Pitch Summary:
RLI is a specialty insurer with a diversity of niche lines including school busses, Hawaii homeowners and construction surety. The company has best in class financial metrics including consistent combined ratios under 90% and a return on equity (ROE) approaching 20%, despite being over capitalized. RLI has a unique risk culture that compensates everyone from underwriters to executives based on long-term profitability net of adverse developments. Practically, this means that the company won’t commit capital or grow in unprofitable markets. RLI is probably the best managed insurer that we know and we first bought shares in 2011. Because of its well-deserved reputation for quality, RLI has always traded at a premium valuation. But its trading multiples have come down over the last five years and RLI now trades for roughly 20x forward earnings. Near term earnings growth will slow as the company pulls back in a soft market. But the company has experienced soft markets before, notably 2015–2017 when premiums grew at a 2.4% average rate and the company traded for ~30x earnings.

BSD Analysis:
RLI Corp. is navigating a "valuation compression" phase in early 2026, recently upgraded by Jefferies from Underperform to Hold as its price-to-book ratio fell to approximately 2.8x. Despite a 17% stock decline over the past year, the specialty insurer remains highly profitable, beating Q4 2025 earnings expectations with an EPS of $0.94 against a $0.81 forecast. For 2026, the investment narrative is anchored by its disciplined underwriting, which achieved a commendable 82.6 combined ratio in the most recent quarter. Management recently declared a $2.00 per share special dividend, returning $183.7 million to stockholders and continuing its 50-year streak of dividend payments. While analysts forecast a potential cyclical decline in earnings for the broader market, RLI's excess capital position is expected to support sustained capital returns through 2027.

Pitch Summary:
TD Synnex (SNX) is the world’s largest IT distributor. The company was formed by the merger of Tech Data and Synnex in 2021 – we first bought TD in 2010 (it was taken private in 2020) and SNX in 2012. 20 years ago, IT distribution meant delivering PCs, servers and networking equipment from warehouses to customers. But SNX used its position as a middleman to add value to both sides of the equation, acting as an outsourced sales force for its OEM suppliers while providing bundling, consultation and other value-added services to its customers. SNX evolved with the times selling increasing amounts of software, security, cloud and now AI products. Still, this is a relatively old school, low margin / high volume business with a large element of working capital management. What is interesting to us is that SNX trades at roughly 10x forward earnings, towards the low end of its historical range. The business continues to evolve but the basics are roughly the same as they were ten years ago. If anything, the business has gotten incrementally better – higher margins, higher returns on capital, more scale, consolidation among the large players and more international opportunity. After digesting Covid era excess spending, recent results have been strong. And the company has a long history of growth and strong returns for shareholders. But there’s no near term event or catalyst and our best guess is that SNX suffers from the limited constituency of long term owners in the SMID space.

BSD Analysis:
TD SYNNEX enters 2026 with a "Strong Buy" consensus rating and robust momentum following a record fiscal year 2025. The company recently reported a 10% year-over-year revenue increase to $17.4 billion for the fourth quarter, driven by double-digit growth in its Endpoint Solutions and a significant surge in its Hyve infrastructure business. For the first quarter of fiscal 2026, management has issued an optimistic guidance of $15.1 billion to $15.9 billion in revenue and non-GAAP EPS of $3.00 to $3.50. Strategic pillars for 2026 center on "AI-ready" infrastructure and digital platform enhancements, including an AI assistant in their PartnerFirst portal. While the firm anticipates a seasonal cash outflow in Q1, it remains committed to its medium-term framework of 95% free cash flow conversion. Analysts maintain an average price target of $179.89, viewing the company as a primary beneficiary of the global enterprise IT modernization cycle.

Pitch Summary:
Fabrinet also contributed during the quarter. Fabrinet is a contract manufacturer of laser-based communication hardware. The company’s optical transceivers are notable for their ability to maintain precise thermal control and alignment of internal components during high-speed transmission of data. Fabrinet is seeing increased demand as data centers upgrade their networks to faster and lower-latency communication standards capable of handling complex AI workloads. Favorable trends in telecommunications end markets have added to investor optimism.

BSD Analysis:
Fabrinet enters 2026 as a pivotal "picks-and-shovels" play for the AI optical interconnect market, recently reporting Q2 2026 revenue of $1.13 billion (up 35.9% YoY). While the company beat revenue estimates, shares faced a 7% pullback in early February due to concerns over a slight margin compression to 9.7%. For the full year 2026, analysts project EPS of $9.40, with management guiding Q3 EPS to a range of $3.45 to $3.60. The investment case remains centered on its deep relationship with NVIDIA and the surge in 800G optical transceiver manufacturing. Despite a high trailing P/E of 42.6x, top-rated analysts at Susquehanna and Barclays recently raised price targets to $570 and $548 respectively, citing the structural undersupply of advanced optical packaging capacity.

Pitch Summary:
Vietnam-based FPT Digital Retail JSC was another of the strategy’s top contributors. The company is the leading operator of a chain of pharmacies in Vietnam. FPT Digital Retail has invested heavily to outpace its competitors, who have struggled recently and have pulled back on growth. We see the company as having reached scale velocity—the ability to expand rapidly while staying on course and improving profitability. We think the company could experience positive earnings growth over the next several years.

BSD Analysis:
FPT Retail has issued a bullish 2026 business plan, targeting a 27% profit increase to VND 1.55 trillion ($59.73 million) following a record-breaking 2025. The company’s primary growth engine is the Long Chau pharmacy chain, which now accounts for 68% of total revenue and plans to add 340 new stores this year to reach a total of 2,737 outlets. For 2026, FPT Retail is also expanding its vaccination centers to 263 sites, leveraging a high-efficiency model with an estimated 12-month payback period per center. The electronics arm, FPT Shop, has returned to profitability and is shifting 65% of its stores to a higher-margin "electronics-focused" format by year-end. Investors view FRT as the premier retail play in Vietnam, successfully capturing market share as the pharmaceutical industry shifts toward high-quality, authentic retail chains.

Pitch Summary:
Discovery Ltd., a South Africa-based insurance company operating in the health-care, life-insurance, short-term insurance, banking and wellness markets, was a top contributor to strategy performance for the quarter. The company’s entrepreneurial suite of financial products is based on a loyalty model with shared benefits and cross-correlated variables. Clients earn loyalty rewards for making healthy lifestyle choices such as going to the gym and driving safely. The company has invested heavily in its offering and has at this point laid the groundwork and infrastructure for its operations going forward. Customer growth data emerging from Discovery’s new bank venture in particular has been positive. We see the company as well positioned to reap the benefits of its investment in its business over the next several years.

BSD Analysis:
Discovery Limited enters 2026 coming off a "transformational" FY2025, where headline earnings per share rose by up to 32%. The group has successfully consolidated its global operations, with Vitality UK and Vitality Global profits jumping over 67% following a major structural reorganization. For 2026, Discovery is targeting a 15%–20% return on equity, supported by Discovery Bank, which reached profitability ahead of schedule and currently serves over 1.2 million clients. A major 2026 milestone is the mass deployment of Vitality AI, intended to hyper-personalize insurance premiums and wellness incentives. Management maintains a disciplined 60%–70% cash conversion rate and has committed to a five-times dividend cover, positioning the stock as a high-quality "behavioral finance" leader in the emerging markets sector.

Pitch Summary:
MercadoLibre, Inc., operator of the largest e-commerce marketplace in Latin America, also detracted from performance. The company operates an online e-commerce, payments and credit system in 18 Latin American countries. During the quarter, MercadoLibre announced earnings that missed investor expectations. The company has responded to concerns linked to heightened competition from companies like Amazon by investing further in its business. This spending put pressure on margins and lowered profitability, which drove the stock’s price down. We continue to like MercadoLibre because of its position as the leader in e-commerce in Latin America. The company has made inroads as a finance fintech player in Brazil, Mexico and Argentina and is also expanding in Colombia and Chile.

BSD Analysis:
MercadoLibre is positioned as a dominant "retail and fintech" ecosystem in 2026, with the Latin American e-commerce market projected to reach $215.3 billion this year. The company’s top line continues to grow at over 35% annually, supported by Mercado Pago, which is now the leading fintech platform by active users in Mexico and Chile. For 2026, the strategic focus has shifted to Retail Media, a segment projected to triple to $5 billion by 2028, and the pursuit of a full digital banking license in Latin America. While near-term margins have faced pressure from heavy logistics investments, analysts view the current range-bound stock price as a buying opportunity, with an average target of $2,805. Key catalysts for 2026 include the deepening penetration of AI-driven credit underwriting and the continued expansion of its 21-million-policy insurtech business.

Pitch Summary:
The second-largest detractor from performance was Baltic Classifieds Group PLC. Headquartered in Lithuania, the company operates leading online classified portals across categories such as automotive, real estate and jobs. A sharp rise in capital expenditures at a major online real-estate platform in the U.K. raised concerns that other operators may be forced into similar spending cycles, potentially eroding the asset-light, high-margin model that has historically defined online portals. Investors also began to worry that virtual artificial intelligence (AI) agents could eventually bypass these portals, searching directly across websites and sidestepping transaction fees. This potential disruption to Baltic’s business model has not yet materialized, and company fundamentals remain favorable in our view. Even so, we reduced the strategy’s position given the higher level of uncertainty.

BSD Analysis:
Baltic Classifieds Group (BCG) enters 2026 following an "outstanding" first half of the 2026 financial year, reporting a 20% revenue jump in its flagship Real Estate segment. Management successfully implemented significant pricing and packaging changes in late 2025, which drove a 25% increase in monthly revenue per active real estate ad despite lower listing volumes. For the full year 2026, analysts maintain a bullish outlook with a median price target of GBX 316.50, representing a 26.8% potential upside. The company maintains an elite EBITDA margin of 78%, though a recent JPMorgan downgrade to "Neutral" has triggered a consolidation phase near the 200p level. Investors view BCG as a premier regional "compounder," utilizing high free cash flow ($44.9 million) for consistent share buybacks and a stable 1.6% dividend yield.

Pitch Summary:
Singapore-based Sea Ltd., ADR was the strategy’s largest detractor from performance. The company operates three main business segments: e-commerce (Shopee), digital payments/finance (SeaMoney) and digital entertainment/gaming (Garena). While Sea Ltd.’s fundamentals remain strong, investor concern related to the impact of rising competition on future profitability hurt the stock’s price. We remain positive on the company because of its strong fundamentals and long-term opportunities.

BSD Analysis:
Sea Limited enters 2026 as a high-conviction growth play, with analyst consensus recently upgraded to a "Moderate Buy" and a mean price target of $192.61, implying a 70% upside. The company is forecast to grow annual earnings by 26.8% and revenue by 15.2%, driven by the explosive profitability of Shopee’s advertising business, which recently saw a 70% revenue surge. While the stock has experienced short-term volatility (down 13% year-to-date as of February 2026), its digital finance arm, Monee, is emerging as a massive secondary engine, with loan balances growing nearly 70% outside the Shopee ecosystem. Management is prioritizing high-margin VIP programs and fulfillment efficiencies to defend its Southeast Asian dominance. For 2026, the primary debate centers on sustaining recent EBITDA growth (+68% YoY) against rising tax expenses and competitive pressures from global e-commerce entrants.

Pitch Summary:
Another contributor was RBC Bearings, Inc. (RBC), a global manufacturer of highly engineered, precision bearings, components and systems for critical aerospace, defense and industrial applications. There is no change to our thesis on this longtime holding. In our view, the company’s management continues to execute at a high level and has done a phenomenal job improving the companies it acquires. We believe RBC is poised for another year of steady growth in 2026.

BSD Analysis:
RBC Bearings enters 2026 on the back of a record-breaking performance, with Q3 revenue hitting $461.6 million, a 17% year-over-year increase. The company is experiencing a powerful "super-cycle" in its Aerospace/Defense segment, which grew 41.5% and now carries a massive $2.1 billion backlog. For 2026, management is focusing on integrating the VACCO acquisition and increasing production capacity to meet the surging demand from the defense and commercial aviation sectors. While the Industrial segment remains steady with 3% growth, the overall adjusted EBITDA margin has expanded to 32.4%. Analysts view RBC as a premier play on the global aerospace recovery, noting its high-barrier-to-entry engineering expertise and robust free cash flow margin of 21.5%.

Pitch Summary:
WEG SA was also a top contributor. This Brazil-based company supplies electric motors, transformers, generators, control panels and other equipment used to produce and transmit electric power from wind and other sources. Recent gains in the stock appear to reflect improved investor sentiment toward companies standing to benefit as the expansion of AI data centers raises demand for electrical equipment. In addition, we expect new manufacturing capacity scheduled for 2026 will underpin stronger top-line growth in 2027.

BSD Analysis:
WEG SA enters 2026 as a global benchmark for industrial electrification and sustainable efficiency, recently projecting a 13% EPS growth for the year. The company is successfully leveraging an "AI-first" approach to product development, which has increased its innovation velocity by over 50%. For 2026, the company expects revenue in the range of $2.70 billion to $2.76 billion, with a focus on its "Fleet Plus" mobility solutions and renewable energy equipment. Management is implementing $50 million in cost-savings initiatives to maintain margin stability despite macroeconomic uncertainty in its core South American markets. Investors view WEG as a high-quality "all-weather" industrial compounder, capable of delivering consistent free cash flow through varied economic cycles.

Pitch Summary:
Shift4 Payments, Inc. (FOUR) also detracted. A longtime holding in many of our small cap funds, Shift4 is a U.S. company that provides payment processing solutions for hospitality, retail and e-commerce businesses. Fundamentals for the company remain solid, in our view. But the stock was down after a competitor reported disappointing results, raising concerns for the industry. While there are concerns that consumer spending could soften and affect some of Shift4’s end markets, we still like the firm’s long-term growth potential.

BSD Analysis:
Shift4 Payments has entered 2026 with a simplified corporate structure after removing its super-voting stock and eliminating tax receivable obligations to its founder. The company is delivering strong operational results, with recent EPS growth of 40% outpacing its 27% revenue growth, indicating significant margin expansion. For 2026, the investment narrative is centered on the integration of Global Blue and the scaling of its international presence in the sports and entertainment verticals. While a 13% return on equity highlights improved efficiency, the stock remains volatile due to market concerns regarding rising leverage and the complexity of its acquisition-led growth strategy. Management’s focus for the year is on demonstrating "consistent profitability" as it matures into a mid-cap fintech leader.

Pitch Summary:
Another detractor was Trex Co., Inc. (TREX), a manufacturer of high-performance, low-maintenance composite decking, railing, and related outdoor living products. The stock was down sharply in November after management reported third quarter earnings that were short of investors’ expectations. In addition, management offered disappointing guidance for the fourth quarter, pointing to a weaker housing market and softer consumer spending on home improvement as the reasons. While the company is facing some current challenges, we still view Trex as a high-quality business. We’re doing more research on the company, but we still like its position as the largest company in a market that is largely a duopoly.

BSD Analysis:
Trex Company is navigating a complex 2026 as it balances dominant market share with a cooling North American Repair & Remodel (R&R) market. Management recently lowered its 2025 outlook and flagged potential 2026 gross margin headwinds due to product mix shifts and higher depreciation from capacity expansions. To protect profitability, the company is trimming production and normalizing inventory levels while leaning into its new "Refuge" ignition-resistant decking line. Despite these near-term cyclical pressures, Trex maintains a 50%–60% share of the composite decking category and a debt-free balance sheet. Analysts maintain a neutral-to-bullish stance, betting that the company’s recent price-corrective phase provides a favorable entry point for the eventual recovery in residential outdoor living demand.

Pitch Summary:
The largest detractor from strategy performance in the fourth quarter was BayCurrent Consulting, Inc., a Japan-based IT consultant. Fundamentals for BayCurrent remain strong: quarterly earnings grew 78% over the same period last year. We believe the stock simply gave back some ground after substantial gains in the prior 12 months. In recent months, we’ve been trimming the position to lock in earlier gains, but our thesis on the company remains the same. Companies in Japan are behind the curve when it comes to digitalizing their businesses. As a local consultant specializing in digitalization, we believe BayCurrent is uniquely positioned to help them catch up.

BSD Analysis:
BayCurrent Consulting enters 2026 maintaining its high-growth trajectory, recently reporting Q3 revenue of ¥37.5 billion, a 21% year-over-year increase. The company is successfully navigating the Japan digital transformation (DX) boom, with its consultant headcount growing by nearly 14% to support a robust pipeline of AI and strategy projects. For the full fiscal year ending March 2026, management has guided for revenue of ¥143 billion and a net profit margin of roughly 26%. While the stock trades at a premium P/E multiple of 30.7x, its Medium-Term Business Plan targets a 20% CAGR through 2029, aiming for a revenue milestone of ¥250 billion. Investors view the firm as a premier play on the structural modernization of Japanese enterprise IT, supported by industry-leading EBITDA margins in the 30%–40% range.

Pitch Summary:
Netflix remains our largest investment in the portfolio and was held at an 18% weight at the start of Q4. The stock declined 21.8% in Q4 primarily due to its announced $83 billion acquisition of Warner Brother Discovery. As a reminder, we purchased a 6% position in Netflix in 2022 at an average cost of $28.31. Netflix became our largest holding because our thesis was proven correct and the stock price soared (we never added or trimmed after 2022). I kept the stock in our portfolio because I saw more potential upside. Netflix has become the global category killer in scripted entertainment and is rapidly eroding market share from linear TV. I believe the company will continue to take share as it reinvests in live entertainment, sports content, video games, and advertising capabilities. Prior to the acquisition of Warner Brothers (which surprised us), I perceived the key risks to the thesis to be competition from short form video (TikTok) and user-generated content (YouTube). However, I also view short form video and user-generated content as potential expansion opportunities down the road. In fact, Netflix recently added podcasts to its platform, which is tangential to much of the content that is popular on YouTube. Simply put, Netflix has done an excellent job executing on growth initiatives in the past, and I trust management to navigate future changes in the entertainment industry. Netflix’s stock is roughly 40% below its mid-2025 levels due to investor concern that the company is overpaying for Warner Brother Discovery. I am neutral on the Warner deal. I don’t believe Netflix needed to acquire a major studio but was simply being opportunistic when Warner went up for sale. Warner boasts one of the strongest content libraries and film production operations in the industry. Netflix could certainly find ways to get more value out of those assets. This is also a once in a generation opportunity to acquire an entertainment asset of this size and quality. I don’t love the price tag or debt associated but believe that Netflix is large enough to absorb the costs. I also believe that owning these content assets will allow Netflix to accelerate its growth plans. The stock trades for roughly 20x its forward expected earnings. This is incredibly cheap given that earnings are expected to compound at a 20%+ annual rate over the next 3 years without any help from acquisitions. Therefore, I view this as a win/win situation from the current price. Netflix’s stock should perform well with or without the Warner deal over the next 3 years and beyond.

BSD Analysis:
Netflix enters 2026 with a bold $51 billion revenue forecast, representing a 14% year-over-year increase from its record 2025 performance. Management has set an operating margin target of 31.5%, signaling a focus on profitability even as it pursues the transformative acquisition of Warner Bros. Studios and HBO. A primary 2026 catalyst is the anticipated doubling of ad-supported revenue to roughly $3 billion, as the ad-tier subscriber base continues to grow at a double-digit quarterly pace. The strategic roadmap also includes aggressive expansion into live events and cloud-first gaming to diversify the content moat beyond traditional streaming. While the Warner Bros. deal introduces approximately 0.5 percentage points of margin drag in the near term, analysts view it as a strategic accelerant for long-term IP dominance.

Pitch Summary:
Now, as an example of a tough question currently being posed by the market, we submit Microsoft, a company we actually owned in the Contrarian Value Strategy from 2010 to 2020 and Source from the time your current PMs took over in 2015 to 2020. To begin, we hold management in the highest regards, particularly the CEO and CFO, who created tremendous value for us during our ownership. When we originally purchased Microsoft back in 2010, the valuation was less than 10x after -tax earnings after subtracting the cash on the balance sheet. The question we had to ask at the time was whether Microsoft was a melting ice cube, or could the company deliver an equity -type rate of return even if earnings never grew again. To our regret, we sold Microsoft too early, failing to appreciate how technological developments, particularly those of AI/cloud, would transform the business. In the five years following our sale, from 2020 through 2025, Microsoft grew its top line at a 12% compound annual growth rate (“CAGR”), and its bottom line even faster! But let’s now look at what one must believe to be constructive on the return prospect s at the current multiple of 30x+ earnings. Of course, 30x earnings on its own is not necessarily the wrong multiple if Microsoft can continue to grow at a double -digit rate over the coming five years, and market analysts have noted that the valuation look s inexpensive five years out even if revenue were only to grow at a more pedestrian CAGR of 10% during this period. Stepping back, we will note that Microsoft generated $293bn of revenue over the last twelve months. If revenue were indeed to grow at 10% CAGR over the next five years, Microsoft would theoretically generate $472bn in revenue in 2030, an increase of $178bn. The bulls will say this is achievable based on growth in the core business and an expanding total available market (“TAM”). However, to put the $178bn increase into perspective, Microsoft would need to add revenue greater than the aggregate sales of ER P leaders Oracle and SAP, who generated ~$100bn in combined sales over the past twelve months. The bulls may say that our thinking is too narrow; vibe coding will also allow Microsoft to serve as the foundation or platform upon which corporations will cre ate low -cost alternative solutions for CRM solutions (Salesforce: $40bn revenue), HR software (Workday: $9bn revenue), and new database products (Snowflake: $4.4bn revenue). Moreover, as the bulls believe, from a horizontal perspective, agentic AI will enable Microsoft to offer services to automate and manage digital workflows (ServiceNow: $12bn revenue) across industries. If that was not enough, the bulls will remind us that Microsoft has a consumer gaming franchise in Xbox that will grow over time (Nintendo: $12bn revenue).

BSD Analysis:
Microsoft continues to set the standard for enterprise technology by successfully monetizing the AI stack from infrastructure to the application layer. Azure’s growth remains exceptionally robust, consistently outperforming expectations as corporations shift more workloads to the cloud to leverage integrated Copilot features. Although capital expenditures have reached record highs to expand global data center capacity, the company’s massive commercial remaining performance obligations provide high visibility into future revenue. The software giant’s ability to bundle AI capabilities into its dominant Office 365 suite creates a powerful lock-in effect and significant pricing power. While some investors remain cautious about short-term margin compression due to infrastructure spend, Microsoft’s high return on invested capital and dominant market position make it a premier core holding.

Pitch Summary:
Vail Resorts operates mountain resorts and ski lodging, with the majority of revenue derived from US properties. It probably goes without saying that one can’t ski without snow. Unfavorable weather conditions throughout 2025 dragged on visitations and skier spending. In addition, rising labor and operational costs have further pressure d margins, and management has fail ed to reassure investors. We believe that Vail’s challenges are more cyclical than structural, and if/when snowfall averages revert, an undemanding valuation could help underpin an increase in the stock price.

BSD Analysis:
Vail Resorts is navigating a transitional 2026 season with a focus on margin improvement and closing the gap between its current share price and its significantly higher DCF fair value. While early-season losses tested the bullish narrative, the company is on track to achieve 100 million dollars in annualized cost efficiencies that are expected to push net margins beyond historical averages. High dividend yields and stable stockholder equity provide a defensive cushion for income-focused investors, even as the firm manages a higher debt load for resort upgrades. Analysts maintain a consensus Buy rating, anticipating a mid-teens recovery in earnings per share as visitation levels stabilize and technology investments enhance in-resort spending. For long-term holders, Vail offers unmatched scale in the premium mountain resort space and a proven ability to drive recurring revenue through its Epic Pass ecosystem.