Investment Pitches

Pitch Summary:
Shares of payment services provider Global Payments (GPN) also declined during the quarter for reasons similar to Fiserv. The company’s busy quarter, which included an asset acquisition, an asset divestiture and a pre-announcement, presented some execution risk and did little to convince the market of the company’s sustainable long-term growth profile.

BSD Analysis:
Global Payments is executing a massive pure-play pivot to become the dominant global software and payment processing provider for integrated merchants, commanding a major discount during its transitional phase. The core investment thesis is the elimination of the complex conglomerate discount through the strategic divestiture of non-core assets and the integration of its acquired Worldpay stake. This streamlines the company into a high-margin, software-led vertical for restaurants, sports, and specialized retail. GPN's strong operating margin expansion and massive FCF generation are the foundation for future growth and M&A, making it a powerful bet on the accelerating consolidation of the global merchant acquiring market.

Pitch Summary:
That said, the quarter was not without its challenges. Our position in Fiserv (FI) which lost over 20% during the quarter, as the market grew concerned about the company’s ability to grow without acquiring additional assets. The increasingly difficult setup — the market had been expecting the company’s transaction processing platform Clover to show accelerating growth, but management commentary suggested subdued growth — caused investors to rethink the prevailing market narrative.

BSD Analysis:
Fiserv is the silent infrastructure giant of the U.S. financial system, commanding a near-monopolistic position in the highly sticky bank core processing market where switching costs are virtually insurmountable. The investment thesis is a pure-play on superior Free Cash Flow (FCF) generation, driven by long-term service contracts and a relentless focus on operational efficiency. The company is actively shedding its legacy image by aggressively cross-selling its high-growth, cloud-enabled Clover Merchant Solutions into its vast network of bank clients, accelerating organic revenue growth. FISV's disciplined capital return program, fueled by multi-billion-dollar FCF, ensures that its valuation discount will be closed through systematic share repurchases.

Pitch Summary:
Shares of fintech pioneer Robinhood (HOOD) surged well over 100% during the quarter as the company’s innovation and impressive new product cadence dazzled the market. The company continued to be a major beneficiary of more-positive regulation related to the cryptocurrency space, and its continued development of new products such as equity and options trading resulted in a strong position resembling a one-stop shop for financial services.

BSD Analysis:
Robinhood is the unapologetic digital predator of financial services, having successfully leveraged the meme-stock frenzy to build a powerful user acquisition engine that is now achieving sustained, explosive profitability. The investment thesis centers on the structural pivot from a cyclical brokerage to a diversified, high-margin financial ecosystem, evidenced by 11 business lines now generating $100M+ in annualized revenue, including the acquisition of Bitstamp. The accelerated adoption of Robinhood Gold is the critical monetization key, turning low-value users into high-margin subscription and net interest income streams. Furthermore, the rapid growth in Prediction Markets is a calculated, high-velocity play to capture the massive wallet share of the internet generation.

Pitch Summary:
Software database company Oracle’s (ORCL) quarterly results surprised to the upside, and the company ended the quarter by announcing a massive cloud deal that could generate up to $30 billion in annual revenue over the next few years. All in, shares re-rated over 50% during the quarter. The company remains early in its accelerating growth inflection and is benefitting from a number of tailwinds across cloud, database and applications.

BSD Analysis:
Oracle is a deep value AI infrastructure play that the market dramatically misprices, focusing too heavily on its legacy database business while ignoring the explosive growth of its Oracle Cloud Infrastructure (OCI) division. The contrarian thesis is built on OCI’s unique ability to attract high-value, high-compute AI customers—including Google, NVIDIA, and OpenAI—by offering bare-metal GPU instances at superior price-for-performance economics. The company's massive backlog and continued Cerner integration solidify its vertical dominance in the sticky healthcare software sector. ORCL is effectively selling the picks and shovels of the AI gold rush, offering a leveraged way to play the computing boom at a discount to AWS and Azure, driving an aggressive multiple re-rating as its cloud revenues inflect.

Pitch Summary:
Tech titan Microsoft (MSFT) reported quarterly results that surprised to the upside, especially as compared with results reported by cloud-computing peers, and its shares surged over 30% during the period. Also during the quarter, the company unveiled several AI improvements that were well-received by the developer community, especially due to its continued partnership with AI pioneer OpenAI. With a strong presence across all layers of the compute stack, including applications, platform and infrastructure, the largest software company in the world is well positioned to capitalize on a number of compelling trends related to AI, cloud computing and enterprise productivity.

BSD Analysis:
Microsoft 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.

Pitch Summary:
Shares of fellow semiconductor giant Broadcom (AVGO) also outperformed during the quarter, as customer demand for the company’s custom accelerator chips remained insatiable… The company is on pace for 10 consecutive quarters of AI-related semiconductor growth and expects continued strong demand to persist.

BSD Analysis:
Broadcom is the pan-industrial oligopoly king, executing a highly disciplined strategy of acquiring high-quality, scarce technology assets and immediately applying its rigorous management playbook to strip costs and generate outsized Free Cash Flow (FCF). The investment thesis is a leveraged play on FCF and capital return, driven by the structural stability of its semiconductor and software divisions. The successful integration of VMware is the critical catalyst, positioning AVGO as a key player in the hybrid cloud infrastructure space and providing an immediate, significant boost to its already robust FCF per share. For investors, AVGO is a predictable, high-yield compounder that uses its dominant market position to return capital through an aggressive dividend and buyback policy.

Pitch Summary:
Shares of core holding NVIDIA (NVDA) surged during the quarter, after the company reported strong quarterly results driven by very strong demand for the company’s next-generation Blackwell architecture. The new Blackwell chips deliver compelling performance improvements, with up to 30x faster inference capabilities as compared with prior generations and, importantly, are much more energy efficient. The company also proved resilient against a backdrop of increasing geopolitical tension, as sovereign deals announced in parts of the world such as the Middle East and Taiwan helped to offset headwinds that resulted from U.S. export restrictions on China sales.

BSD Analysis:
NVIDIA remains the central beneficiary of the AI hardware buildout, with Blackwell offering category-defining performance and efficiency advantages. Demand visibility extends through multiple years as hyperscalers and sovereign buyers commit to high-volume deployments. Gross margins should remain elevated given tight supply and a premium product mix. Despite geopolitical risk and export controls, diversified end markets and sovereign deals mitigate volatility. Valuation is rich but justified by unmatched scale, software lock-in and multi-year EPS compounding.

Pitch Summary:
A new position in Microchip Technology, which raised its outlook and received a number of analyst upgrades, was an additional contributor of note. While the fund already owned the company’s convertible securities, we also added a position in the company’s common stock during the quarter.

With respect to the addition of Microchip Technology, Inc. stock, we saw an opportunity in a company whose stock was depressed but where the underlying business (analog semiconductors) had likely bottomed. The market soon came around to our viewpoint, and the shares finished June well above their earlier low.

BSD Analysis:
Microchip is a cyclical semiconductor compounder with a fortress-like industrial moat, currently in the final, painful stages of an inventory correction cycle that provides a clear-cut entry point. The investment thesis hinges on the company’s indispensable role in the electrification and industrial automation megatrends, driven by its high-margin, sticky portfolio of microcontrollers and analog solutions. Management’s aggressive execution of a nine-point recovery plan, including factory closures and deep inventory reduction, is a necessary, albeit costly, measure designed to restore non-GAAP gross margins to its 65% long-term target. With sequential revenue growth returning ahead of expectations and strong order momentum in the high-demand aerospace and defense segment, the stock is poised to benefit from massive operating leverage as factory utilization normalizes. Buying MCHP today is a high-conviction bet on the structural strength of its durable end-markets, which will rapidly convert cyclical trough multiples into substantial gains as the inventory headwind fully dissipates in 2026.

Pitch Summary:
Guidewire is a market leader in next-generation property and casualty (P&C) insurance software. A few years ago, Guidewire transitioned from a licensed software business model to a subscription-based cloud service. Historically, as companies emerge from these (often messy) transitions, their profit growth tends to accelerate. We believe Guidewire is at this inflection point. The company has consistently performed in line with our thesis, driving a durable and compelling profit cycle. While we remain optimistic about Guidewire’s growth prospects, we have been reducing our position due to the company's increasing market capitalization, which is approaching the upper limits of our small-cap mandate.

BSD Analysis:
Guidewire’s successful cloud transition positions it for accelerating subscription revenue, expanding margins and stronger free-cash-flow conversion. As the P&C industry modernizes, Guidewire holds a dominant competitive position with high switching costs. While valuation has risen with market-cap growth, fundamentals support continued compounding. Key risks include long enterprise sales cycles.

Pitch Summary:
Stevanato is a leading provider of specialty glass and plastic packaging to the health care industry, as well as the leading machinery supplier to glass vial makers and fill and finish facilities. We believe a mix shift from bulk products to higher margin sterilized products and the overall growth of biologic drugs will drive attractive earnings growth. We increased our position as we gained greater confidence that the worst of the COVID-related inventory overstocking challenges had passed. Moving forward, we believe the company's and industry's profit cycle drivers are more likely to demonstrate the durable growth characteristics that originally attracted us to this stock.

BSD Analysis:
Stevanato stands to benefit from structural growth in biologics and a mix shift toward high-margin sterile packaging, supporting multi-year EBITDA expansion. Inventory normalization removes a key overhang, and valuation remains attractive versus global life-science tools peers. Key risks include customer concentration and regulatory delays.

Pitch Summary:
ServiceTitan is the leading vertical software provider for the trades (e.g., plumbing, HVAC, electrical), an area that has historically been underserved by technology. The company is focused on residential and commercial services that manage the full workflow—from lead generation to payment. Revenue comes from subscriptions and usage-based payment processing. We see multiple opportunities for growth, including acquiring new customers, upselling existing customers and expanding into more trades. ServiceTitan has been delivering in line with our thesis, particularly during its initial quarters as a public company amid a highly uncertain market environment. We took advantage of stock weakness following a secondary issuance after the IPO lockup to increase our position from the GardenSM to the CropSM.

BSD Analysis:
ServiceTitan’s vertical-software dominance gives it strong pricing power and long-term ARR visibility. Expansion into adjacent trades and payments monetization enhances LTV/CAC. Shares remain expensive versus horizontal SaaS peers, but growth durability and operating leverage warrant the premium. Key risks include execution on scaling enterprise features.

Pitch Summary:
Birkenstock is a heritage casual footwear brand known for its portfolio of primarily open-toe and open-heel products. It operates a hybrid distribution model across both wholesale and direct-to-consumer channels and executes a supply-constrained strategy that drives high levels of full-price sell-through. This disciplined approach has historically supported measured and sustainable growth. We believe the brand’s enduring franchise value and supply-led model position it well for steady unit expansion and rising average selling prices—together driving attractive long-term revenue growth. We initiated a GardenSM position in Birkenstock toward the end of Q1 2025, as the stock weakened in anticipation of potential tariff impacts and an increasingly uncertain consumer spending environment. We continued to build our position during the “Liberation Day” selloff, as we believe there is a durable set of company-specific profit cycle drivers, including product cycle innovation, increasing geographic distribution and a time- and cyclical-tested brand.

BSD Analysis:
Birkenstock’s supply-led model supports strong gross margins and consistent ASP expansion, while brand durability enables resilient demand even through macro volatility. The company trades at a consumer-discretionary multiple that could rerate higher as DTC mix rises. Key catalysts include product innovation, global expansion and tighter supply discipline. Risks include tariff exposure and consumer softness.

Pitch Summary:
Madrigal Pharmaceuticals is a commercial-stage biotechnology company focused on treating metabolic dysfunction-associated steatohepatitis (MASH), a serious liver disease with high unmet medical need. Madrigal’s lead drug, RezdiffraTM, is the first and only FDA-approved medication to target liver fibrosis, demonstrating high efficacy with minimal side effects. Given the significant failure rates of previous treatments for this condition, we are confident in the company's ability to maintain a competitive edge and further differentiate itself in the market. Additionally, there is potential to expand its application to more advanced stages of liver fibrosis.

BSD Analysis:
Madrigal’s leadership in MASH positions it for rapid revenue scaling as the first approved therapy in a massive underserved market. Rezdiffra’s efficacy profile supports significant pricing power and potential label expansion. While the valuation is elevated, biotech comps suggest further upside if early launch metrics exceed expectations. Key risks include reimbursement dynamics and competitive entrants.

Pitch Summary:
Wingstop, a quick-service restaurant franchisor specializing in fresh, made-to-order chicken wings, sandwiches and sides, is a stock we have owned before and harvested due to our valuation discipline. It is in the early stages of expanding both domestically and internationally, supported by favorable franchisee economics and growing brand awareness. After a few consecutive quarters of same-store sales missing heightened expectations, the stock was overly punished. This created a compelling opportunity for us to reinvest in a highly unique franchise with a solid long-term profit cycle growth profile, not only from domestic and international restaurant openings but also from menu innovation, national branding, partnerships with delivery providers and a value-focused bundling strategy that continues to resonate with customers.

BSD Analysis:
Wingstop’s franchise model drives high returns on capital, and recent share-price weakness created a more attractive entry relative to its long-term mid-teens unit growth outlook. Digital ordering, menu innovation, and international expansion support durable same-store growth. The business commands a premium multiple, but strong free cash flow and brand momentum justify bullish expectations. Risks include chicken wing cost volatility.

Pitch Summary:
Notable buys in the quarter included BWX Technologies. BWX Technologies designs and manufactures nuclear reactor vessels and components for the US Navy and commercial markets. It has the only Nuclear Regulatory Commission Category 1-licensed facilities permitted to handle, store and process highly enriched uranium in the US. This exclusivity gives it a dominant position across both business segments. It maintains a monopoly on nuclear reactors and fuel for US submarines and aircraft carriers, and it offers a differentiated portfolio of heavy nuclear components. The build schedule for US Navy submarines and aircraft carriers provides long-term visible growth, which we expect to be enhanced by upcoming investments by Canada into refurbishing, expanding and building nuclear power plants. In addition, the Trump administration’s stated desire to accelerate US nuclear energy development could become a catalyst for growth.

BSD Analysis:
BWXT is a structurally advantaged defense-nuclear supplier with monopoly positions that provide multi-year revenue visibility and high barriers to entry. Its NRC Category-1 facilities and locked-in Navy build schedules underpin strong backlog and margin durability. The commercial nuclear renaissance and potential policy catalysts add optional upside. While BWXT trades at a premium defense-multiple, its predictable free cash flow and strategic importance justify the valuation.

Pitch Summary:
Clearwater provides automated investment accounting, compliance and risk reporting for insurance companies, corporations and asset managers. Its key differentiator is a master security identifier list that consolidates data from multiple sources, driving best-in-class accuracy, integration, reporting and analytics. Clearwater’s cloud-based software streamlines investment accounting, freeing clients to focus on higher value activities such as asset allocation and investment selection. We moved Clearwater back into the GardenSM from the CropSM given its decision to significantly expand the size and scope of its M&A strategy. As a public company, Clearwater has yet to demonstrate the ability to successfully acquire and integrate larger scale M&A transactions. Therefore, we need to see evidence of success before considering a return to a CropSM capital campaign.

BSD Analysis:
Clearwater’s powerful data architecture and recurring SaaS model underpin strong gross margins and retention, but the shift toward larger-scale M&A introduces integration risk that could pressure near-term execution. The company trades at a growth-software multiple supported by double-digit ARR expansion, but investors will require proof of successful acquisition integration to re-rate higher. Long-term secular demand for automated investment accounting remains intact. Key risks include M&A missteps and competition from legacy vendors.

Pitch Summary:
iRhythm develops and markets the Zio, a wearable patch that monitors irregular heartbeats. Its advanced technology is well positioned for broad adoption as doctors and insurers push for earlier detection of atrial fibrillation to prevent strokes. Shares climbed after strong earnings, with 20% revenue growth and gross margins rising to 69% thanks to scaling and efficiency gains. Management also raised its forward guidance.

BSD Analysis:
iRhythm’s strong top-line acceleration and improving margins reflect growing adoption of Zio and scaling benefits in diagnostics. With reimbursement visibility improving and digital cardiology gaining traction, iRhythm supports a premium valuation. The company’s recurring-revenue model and clinical differentiation provide durable competitive advantages. Key risks include regulatory scrutiny and competition in cardiac monitoring.

Pitch Summary:
MACOM designs and manufactures high-performance semiconductors. The company has been taking steps to accelerate top-line growth and expand margins by addressing smaller, long-duration product cycle markets in which it can provide a differentiated offering, especially in compound semis (those made from two or more elements). Demand remains strong across MACOM’s key end markets, including US and European defense, data center and even telecom—spanning both long-haul and satellite segments. Moreover, MACOM’s above-average semiconductor production footprint within the US likely reduces its exposure to potential industrywide disruptions related to any potential tariff risks.

BSD Analysis:
MACOM benefits from accelerating demand across defense, data-center and telecom markets, positioning it as a differentiated supplier in compound semiconductors. Its U.S.-based footprint mitigates geopolitical and tariff risks, supporting more stable margins. With increasing exposure to long-cycle markets, revenue visibility is improving, and MACOM trades at a reasonable EV/EBITDA relative to secular semiconductor peers. Continued design wins and margin expansion are likely catalysts. Key risks include supply-chain timing and sector cyclicality.

Pitch Summary:
Flex provides outsourced electronic manufacturing services to a diverse set of end markets. The company hired a new CEO in 2020, who has been driving a strategic pivot toward manufacturing high-growth, low-volume and high-value products in areas such as health care, industrial, automotive and cloud infrastructure. Today, these higher value items account for ~60% of revenues and continue to tick higher. We believe moving away from more cyclical consumer electronics markets toward secular growth areas, such as electric vehicles and medical devices, along with the nearshoring of supply chains, will lead to faster growth and higher margins. At the beginning of the quarter, there were concerns about a potential slowdown in the industrial economy and its implications for Flex’s profit cycle. However, when the company reported its Q4 2024 earnings, it became evident that overall demand remained strong. While some end markets showed signs of weakness, these were more than offset by strength in other areas. Additionally, Flex noted increased interest from both existing and new customers regarding available capacity, as businesses work to become nimbler in an increasingly uncertain tariff environment.

BSD Analysis:
Flex is the EMS giant evolving from low-margin assembly into a diversified, design-rich manufacturing partner in automotive, cloud, healthcare, and industrial tech. Its exposure to EV components, data-center hardware, and medical devices gives it far better resilience than classic contract manufacturers. Flex’s discipline, strong FCF, and portfolio focus (plus the Nextracker spin) show a company shifting into higher-value engineering services. This is a manufacturing infrastructure play tied to real secular growth.

Pitch Summary:
Chemed (CHE), engages in the provision of healthcare and maintenance services operating through two segments: VITAS and Roto-Rooter. The VITAS segment offers hospice and palliative care services to patients through a network of health care providers, social workers, clergy, and volunteers. The Roto-Rooter segment includes plumbing, drain cleaning, water restoration, and other related services to residential and commercial customers. The stock declined due to concerns surrounding the potential Medicare cap limits proposed in current legislation for its VITAS segment alongside weaker residential demand for its plumbing services segment. We continue to maintain our position, as we believe the slowing demand in the Roto-Rooter segment is transitory and the secular demand for hospice care remains strong.

BSD Analysis:
Chemed is the oddball two-headed monster that quietly outperforms entire sectors. VITAS dominates U.S. hospice care with unmatched scale, deep clinical capabilities, and the regulatory sophistication smaller operators simply can’t replicate — and demand is locked in by demographics, not macro swings. Meanwhile, Roto-Rooter is a recession-proof cash cannon: pipes don’t care about interest rates, and homeowners call now, not “when budgets improve.” Together, the businesses create a diversified, high-margin, high-recurrence cash flow profile that almost no mid-cap can match. Management is disciplined, capital allocation is consistently excellent, and Chemed’s long-term record of compounding is borderline elite. The market keeps scratching its head at the conglomerate structure — but the numbers speak for themselves. Chemed is quietly one of the most reliable compounders in healthcare and home services.