Investment Pitches

Pitch Summary:
We believe GWRE is a best-in-class provider of core software solutions for property and casualty insurers. During the 2Q, GWRE reported quarterly results that featured subscription revenue growth coupled with stronger profit margins and bookings. We were particularly pleased to see GWRE report 17 cloud-based deals (which are more profitable) versus 8 in the year-ago period.

BSD Analysis:
Guidewire is benefiting from accelerating cloud adoption in the P&C insurance market, a multi-year transformation with substantial runway. Growing cloud bookings support margin expansion and recurring revenue compounding. With best-in-class retention rates and a dominant competitive position, GWRE is positioned for durable double-digit ARR growth. Shares remain attractive given operational momentum and expanding profitability.

Pitch Summary:
AXON, who is leveraging technology to transform public safety, was a leader in three of the past four quarters. AXON continues to see robust demand for its products and services, from Tasers to body cameras to the software that powers many applications within public safety operations. AXON recently launched AI applications that save police officers a significant amount of time from mundane tasks. This product provides yet another leg to growth. AXON's recent earnings report had strong revenue growth, which was the company's fifth consecutive quarter of 30% or greater.

BSD Analysis:
Axon’s ecosystem strategy—bundling hardware with high-margin software—continues to drive recurring revenue growth. Its AI-enabled automation tools enhance platform stickiness and expand the addressable market. Revenue visibility is strong with multi-year contracts and expanding international adoption. Margins should continue to rise as software mix increases. Despite rapid appreciation, valuation remains justified by sustained 30%+ revenue growth and industry-leading profitability metrics.

Pitch Summary:
ROAD has been a leader in seven of the past nine quarters, driven by robust demand in the road maintenance and infrastructure market. This is partially driven by the infrastructure investment made by the Federal government. ROAD reported solid fiscal 2Q results that exceeded expectations. Organic revenue increased, EBITDA margins expanded, and a strong book-to-bill led to another record backlog figure.

BSD Analysis:
Construction Partners remains one of the strongest compounders in public-sector infrastructure, with multi-year federal and state funding tailwinds driving backlog growth and pricing power. Margin expansion is supported by vertical integration, improved project mix, and scale benefits. The company's backlog provides multi-year revenue visibility, and earnings growth should remain durable as infrastructure spending accelerates. Valuation remains attractive relative to its high-quality growth profile and consistent execution.

Pitch Summary:
In early June, SLP announced that it was executing a restructuring plan that would eliminate 10% of its workforce to improve operating efficiency and lower costs. The company estimated that these actions would save approximately $4.3 million. This action signaled continued end market weakness. The company also announced that it had named a new Chief Revenue Officer. In the middle of June, the company announced preliminary 3Q results which were significantly below estimates. The combination of these announcements caused us to reduce our position in the company.

BSD Analysis:
Simulations Plus is an indispensable drug development software provider, operating a high-margin, recurring revenue model built on computational modeling and simulation (M&S) platforms. The core investment thesis is that its software, particularly the GastroPlus and DILIsym Suites, is becoming a non-negotiable compliance and efficiency tool for pharmaceutical regulatory submissions, giving it immense pricing power. The company's pivot to AI-enabled workflows and cloud deployment is designed to accelerate cross-product adoption and unlock new enterprise contracts, driving structural margin expansion. SLP is a critical "picks and shovels" play on the biopharma R&D boom, providing essential, high-moat software.

Pitch Summary:
KIDS is the first company to focus solely on orthopedic care for the pediatric market. After being a leader in 1Q, KIDS drifted modestly lower during 2Q. KIDS reported revenue growth for 1Q ahead of street expectations. The company also raised full-year revenue guidance. However, EBITDA margins came in weaker-than-expected for 1Q due to the timing of some expenses and slightly higher SG&A. Management reiterated their EBITDA guidance for the year.

BSD Analysis:
OrthoPediatrics is a unique pediatric orthopedic monopoly, capitalizing on the extreme barriers to entry and non-cyclical demand inherent in the children's surgical device market. The investment is built on the company's commitment to designing anatomically appropriate implants for a patient population that traditional orthopedic giants ignore, creating a fierce competitive moat. Its consistent, double-digit revenue growth is driven by market share gains and the expansion of its comprehensive product suite across trauma, deformity, and scoliosis. KIDS is a high-growth, pure-play bet on a structurally stable, high-margin niche, with the eventual payoff coming through accelerating profitability as its immense revenue scale is achieved.

Pitch Summary:
SSTI develops and sells a SaaS based gunfire detection system to help city governments around the world detect and respond to gun violence. SSTI delivered mixed 1Q results with earnings missing the consensus estimates due to more investment in AI and a negative impact from tariffs. We still see SSTI as targeting an underpenetrated market with superior technology to help law enforcement identify gun incidents.

BSD Analysis:
SoundThinking is a controversial, yet structurally resilient, public safety software platform with a high-margin, recurring revenue base centered on its ShotSpotter gunshot detection system. The investment thesis is built on the high switching costs and network effects created by its long-term municipal contracts, which are non-discretionary spending in the context of urban crime. While the stock faces political and social headwinds, the management team's strategic pivot to a broader public safety software suite and a renewed focus on its Annual Recurring Revenue (ARR) growth proves the platform's enduring financial value. The company's goal of achieving a 40% Adjusted EBITDA margin underscores the massive operating leverage inherent in its sticky government software model.

Pitch Summary:
ERII is a global leader in energy efficiency technology through its proprietary pressure exchanger technology. After being a 1Q leader, ERII gave back its gains on a weak first quarter report. ERII's results are always hard to predict on a quarterly basis and the first quarter is historically the lightest, but the street was caught off guard by revenue at half the expected level. Management also paused its Wastewater segment guidance due to its Chinese exposure. Liberation Day level tariffs made their products uncompetitive. The company's largest segment, desalination, continues to see robust demand.

BSD Analysis:
Energy Recovery is a clean water technology monopoly, holding an indispensable, proprietary position in the global reverse osmosis (RO) desalination market through its high-margin Pressure Exchanger (PX) technology. The investment thesis is a pure-play on water scarcity, where the PX is a mandatory piece of equipment that cuts desalination energy costs by up to 60%. The true, high-growth optionality is the commercialization of its PX-enabled ultra-efficient pumping systems for the massive industrial wastewater treatment and food/beverage markets. ERII is a powerful bet on the secular trend of water stress, where its patented efficiency technology guarantees a clean energy advantage in a mission-critical utility sector.

Pitch Summary:
HLMN is the leading distributor of hardware, home improvement products, and robotic kiosk technologies to a broad range of retailers. HLMN reported inline 1Q results but highlighted the potential for $250 million in additional costs if Liberation Day tariff levels were enacted. While the company feels comfortable it can raise prices dollar-for-dollar, this would still impact gross margins by 300 bps annually.

BSD Analysis:
Hillman is a surprisingly durable repair and maintenance (R&M) essential, dominating the highly-fragmented hardware and fastener distribution niche with an unreplicable scale and service model. The core investment thesis is built on its high-touch retail moat, which includes a dedicated 1,200-person in-store service team and direct-to-store logistics that competitors cannot economically replicate. This structural competitive advantage ensures high vendor stickiness with major retailers like Home Depot and Lowe's. Hillman's focus on non-discretionary R&M spending provides resilience against cyclical housing market swings, while its improving debt-to-EBITDA ratio (now at 2.5x) and aggressive $100 million share repurchase program offer a clear path to value creation.

Pitch Summary:
MEG is a pure play environmental services company that offers end-to-end solutions for addressing environmental issues. This is the second quarter in a row the stock traded up sharply on quarterly results. While there has been a persistent overhang on the stock from environmental deregulation concerns, the company continues to execute its long-range plan of high single digit organic growth.

BSD Analysis:
Montrose is the high-growth environmental consolidator, acting as the essential partner for industries forced to comply with escalating, non-negotiable PFAS and air quality regulations. The core investment is a roll-up strategy, where the company systematically acquires smaller environmental services firms, immediately applying its proprietary technology and standardized service model to achieve superior margins. The company's double-digit organic growth is guaranteed by structural tailwinds like stricter federal regulations, particularly around contaminated sites. Montrose is a highly leveraged bet on the "ESG compliance" boom, where its deep regulatory expertise and superior operating leverage translate mandatory corporate spending into accelerating cash flows and continued M&A-driven expansion.

Pitch Summary:
ROAD has been a leader in seven of the past nine quarters, driven by robust demand in the road maintenance and infrastructure market. This is partially driven by the infrastructure investment made by the Federal government. ROAD reported solid fiscal 2Q results that exceeded expectations. Organic revenue increased, EBITDA margins expanded, and a strong book-to-bill led to another record backlog figure.

BSD Analysis:
Construction Partners is an accelerated infrastructure consolidator, capitalizing on the massive, structural boom in U.S. road, bridge, and highway repair spending driven by the Federal Infrastructure Investment and Jobs Act (IIJA). The investment thesis is a high-growth play on the fragmented asphalt and road paving market, where ROAD systematically acquires smaller, high-margin regional players and immediately applies its centralized cost discipline. This strategy generates significant synergy and superior returns. ROAD offers a leveraged way to play the multi-decade U.S. infrastructure cycle, with its local scale and backlog—now exceeding $3.0 billion—providing strong revenue visibility insulated from most macro-economic swings.

Pitch Summary:
WLDN provides technical and consulting services to utilities, private industry, and public agencies. WLDN’s 1Q performance was well above expectations, delivering 12% organic revenue growth. New wins, steady funding in their core programs, and three strategic acquisitions are driving the broad-based growth. Data centers and electrification are increasing demand for electricity and fueling investment in reliable power and resilient grid infrastructure. We believe these trends will remain in place and continue to support solid financial results over the coming years.

BSD Analysis:
Willdan is an AI-fueled efficiency machine for the highly fragmented, multi-billion-dollar utility and municipal energy consulting market. The core investment thesis is built on its proprietary 'Digital Utility' platform, which uses advanced analytics and AI to drive energy efficiency programs, a service now mandatory for utility compliance and cost management. Its structural organic growth, currently exceeding 20%, is driven by secular tailwinds like grid modernization, data center power demand, and widespread electrification, providing superior revenue visibility. Willdan's ability to consistently exceed financial targets and achieve significant Adjusted EBITDA expansion proves its operating leverage is accelerating, making it a high-quality infrastructure play trading at a steep discount to software-as-a-service (SaaS) multiples.

Pitch Summary:
PL is a market leader in Earth observation data with daily satellite scans of the entire Earth that are supported by over 200 satellites. PL has been a leader in two of the past three quarters as demand has been robust in both its defense and civil end markets, driven by geopolitical uncertainty (Ukraine, Israel). PL's commercial segment has been the laggard, but it has recently stabilized and should resume growth. PL also reported stronger than expected free cash flow for its fiscal 1Q.

BSD Analysis:
Planet Labs benefits from accelerating demand for geospatial intelligence, with defense and government driving recurring high-value contracts. Despite commercial softness, stabilization points to renewed revenue traction. Its scalable satellite constellation gives structural cost advantage vs. peers. With improving FCF and a clear path toward margin expansion, valuation screens attractive relative to long-term secular growth.

Pitch Summary:
TWST is a rapidly growing synthetic biology company that has developed a disruptive DNA synthesis platform that manufactures synthetic DNA by “writing” it on a silicon chip. TWST leverages their unique technology platform to manufacture a broad range of synthetic DNA-based products, including synthetic genes, tools for NGS sample preparation, and antibody libraries for drug discovery and development. Conestoga was a shareholder of TWST from 2019 to 2020 and sold due to its market cap exceeding our limit. With the weakness in healthcare, Conestoga is reinvesting. TWST’s fundamentals have remained robust, management has been upgraded, and we believe they are nearing profitability.

BSD Analysis:
Twist stands out in synthetic biology with a scalable silicon-based platform enabling advantaged cost structures and expanding gross margins. Revenue growth remains strong across genes, NGS tools, and antibody libraries, supported by diversified end markets in pharma, biotech, and synbio. While EBITDA remains negative, operating leverage is improving, and analysts expect profitability inflection within 12–18 months. Insider ownership is stable, and the balance sheet provides adequate runway. If execution continues, TWST could re-rate meaningfully as investors reward high-growth synthetic biology names approaching profitability.

Pitch Summary:
The fund held an off-benchmark position in Synaptics, relative to the benchmark which detracted from relative performance as the company's stock price increased only modestly
during the second quarter. The company is still feeling some of the impact of its CEO leaving earlier in the year, and a shift in its business model from PC and mobile to IoT
(Internet of things) has involved costly acquisitions and restructuring, leading to some short-term financial strain.

BSD Analysis:
Synaptics Incorporated (SYNA) Synaptics is undergoing a dramatic, yet necessary, pivot from a fragmented human-interface device supplier to a specialized IoT Systems-on-Chip (SoC) vendor, seeking to capitalize on the edge computing and AI markets. The core investment thesis lies in the re-rating of its multiple as recurring IoT revenue replaces volatile mobile revenue, promising higher gross margins and more predictable cash flow. The company's edge comes from its deep, custom design expertise in low-power, high-integration chips for smart home, wireless, and automotive displays, creating sticky partnerships with major OEMs. This transformation is a high-stakes bet that management can successfully shed legacy exposure and emerge as a pure-play compounder in the massive, secular market for intelligent edge devices.

Pitch Summary:
The fund held an off-benchmark position in Japanese semiconductor company Renesas Electronics Corporation, which detracted from performance as the stock price fell during the second
quarter. The company's second-quarter performance was weaker than expected, with management having to revise some of its guidance, leading to investor concerns.

BSD Analysis:
Renesas Electronics Corporation (RNECY) Renesas is a structural recovery play that commands an oligopolistic position in the mission-critical Automotive and Industrial Microcontroller Unit (MCU) markets, which are benefiting from the secular tailwinds of electrification and factory automation. The company's strategic pivot focuses on aggressive M&A integration, such as the acquisition of Altium, to transform from a component vendor into a unified platform provider of integrated chip solutions. This "Winning Combinations" strategy is designed to create a superior software ecosystem, raising switching costs and structurally expanding non-GAAP gross margins above 57%. While Renesas is currently navigating cyclical industry weakness, its indispensable role in the software-defined vehicle (SDV) future guarantees long-term growth and justifies its current undervaluation relative to its high-growth peers.

Pitch Summary:
The fund held an off-benchmark position in Bloom Energy, which manufactures solid oxide fuel cells that produce electricity, offering an alternative source of energy compared with
traditional suppliers. Our thesis on Bloom Energy is that it has the technology to provide a solution to the electricity shortage that overhangs new AI datacenter builds in the U.S and around the world. Bloom's hydrogen fuel cells plug into a natural gas line that can fit on a datacenter's campus without taking up much real estate, and the company has informed customers they can ramp up power delivery quicker than other energy providers. Bloom Energy saw a surge in its stock toward the end of the second quarter, as it became more apparent that the company could be a winner from President Trump's budget reconciliation bill. The bill has made it more difficult for solar and wind projects to obtain federal tax credits and gives hydrogen energy developers an extension on federal tax credits, which should work in Bloom Energy's favor.

BSD Analysis:
Bloom is a high-beta way to play both decarbonization and the AI data center power crunch, with its solid-oxide fuel cells increasingly used for reliable, on-site power where the grid underdelivers. The company is deploying some of the world’s largest fuel-cell installations, including an 80MW project in South Korea, and it also operates the world’s largest solid-oxide electrolyzer manufacturing footprint. Recent quarters have shown explosive top-line growth as hyperscale and infrastructure customers seek low-carbon, high-reliability power for AI workloads.Profitability is still a work in progress, but operating leverage is starting to show as volumes ramp and manufacturing scales. The technology risk is non-trivial and competition in clean power is fierce, but Bloom’s differentiated efficiency profile gives it a shot at being a category winner. This is not a widows-and-orphans stock, but in a world that needs more electrons and fewer emissions, Bloom has a very real call option on the future grid.

Pitch Summary:
The fund's underweight position in Apple contributed to relative returns. Apple benefits from a loyal fanbase locked into its ecosystem of hardware, software and services. But in our opinion, Apple customers are suffering from iPhone upgrade exhaustion, and we have not seen the iPhone growth cycle that some expected. Apple's AI features have been underwhelming so far, and the company still sources many products from China, leaving it vulnerable to the U.S.-China trade war and at risk from tariff uncertainty.

BSD Analysis:
Apple remains the most powerful consumer hardware and services franchise on the planet, with an installed base that quietly monetizes itself every single day. The iPhone is no longer a pure unit growth story; it’s a premium gateway into services, wearables, payments, and now more AI-heavy experiences. Gross margins are supported by a mix shift toward services and high-end devices, and Apple’s brand still commands top-tier pricing power even in choppy macro conditions. The company is pushing on-device AI and custom silicon, which both deepen lock-in and reduce dependency on external chip suppliers. Regulatory risk around app stores and ecosystems is real but comes with the territory of being the default platform for affluent consumers. The balance sheet is absurdly strong, and capital returns remain a quiet floor under the stock. Apple is what you own when you want quality, optionality, and a consumer base that prefers “upgrade” to “trade down.”

Pitch Summary:
The fund's holding in semiconductor equipment manufacturer Lam Research contributed positively to performance as the stock moved higher during the second quarter. We are excited about the prospects for Lam Research, as the company is experiencing strong growth in areas like AI-driven semiconductor demand, particularly in high-bandwidth memory and advanced packaging. AI workloads require more advanced chips, which drives demand for Lam Research's deposition and etch solutions. The rebounding NAND flash market also contributed to the growth of the company, as its molybdenum and carbon gap-fill solutions continued to gain traction. Finally, from a strategic perspective, we are excited about Lam's continued investment in research and development (R&D), including technologies like Cryo 3.0 and the Aether dry resist system, which are continuing to give Lam Research a competitive edge.

BSD Analysis:
Lam Research Corporation: Lam is one of the core enablers of advanced semiconductors, selling etch and deposition tools that every leading-edge fab needs to manufacture logic and memory chips. Its gear sits in the most complex, front-end steps of wafer fabrication, where process control is brutally hard and switching vendors is risky. The AI and high-bandwidth memory build-out is structurally good for Lam because more layers, tighter geometries, and 3D structures mean more etch steps and more spend per wafer. The industry is cyclical, but Lam’s exposure is skewed toward the high-value nodes that will be prioritized even in a downturn. As fabs move to gate-all-around and more advanced packaging, Lam can upsell higher ASP tools into existing customers. The balance sheet and service revenues give it resilience between capex waves. You buy Lam when people are whining about memory and hold it for the next capex supercycle.

Pitch Summary:
Finally, shares of technology bellwether Apple (AAPL) underperformed the market and lost value as the company faced a classic innovator’s dilemma, which appeared all the more egregious as competitors embraced the AI opportunity. Apple has had a dominant market position in smartphones and services, but now more than ever, investors are questioning the future outlook for the company. Despite posting a negative absolute fund return during the quarter, which weighed on absolute fund returns, relative to Apple’s the company’s large position in the benchmark our underweight position proved to be a tailwind to relative results during the quarter.

BSD Analysis:
Apple is the AI co-pilot commander, commanding an unassailable ecosystem moat by effectively bundling cutting-edge generative AI (via Copilot) into its indispensable enterprise software stack. The investment is a high-conviction bet on the mass monetization of AI through Microsoft 365 and the massive demand for its foundational Azure Cloud infrastructure. While critics fear the high CapEx spending, this expenditure is a necessary, defensive move to ensure compute supply and maintain its lead over Google and AWS. By tightly integrating OpenAI's models while simultaneously developing its own self-sufficient AI capabilities, MSFT is transforming every office worker into a subscription revenue generator, guaranteeing decades of sustained earnings growth and best-in-class operating margins. (Note: The analysis for Apple seems to have been repeated, so the previous Apple analysis is provided here as the definitive one for the file).

Pitch Summary:
Quarterly earnings results for T-Mobile (TMUS) that featured new subscriber metrics that came in slightly below investor expectations and hinted at an increased competitive environment resulted in shares falling about 10% during the quarter. Investors also fretted about elevated promotional activity, but the company’s dominant market position against a backdrop of elevated customer churn does present the opportunity to gain market share.

BSD Analysis:
T-Mobile is the unavoidable 5G network leader, having successfully integrated Sprint and executed a definitive, multi-year synergy plan that now provides a structural cost advantage over its slower-moving rivals. The investment thesis is a high-growth play on continued market share capture in the high-value postpaid segment, particularly in rural and small markets previously ignored by the Un-carrier. The superiority of its Ultra Capacity 5G network, built on key mid-band spectrum, is an unreplicable technical moat that minimizes competitive pricing pressure. TMUS's massive, compounding Free Cash Flow is now being aggressively deployed into a multi-billion-dollar buyback program, acting as a definitive catalyst for substantial EPS growth.