Investment Pitches

Pitch Summary:
Medtronic is a leading medical device company developing therapeutic devices for chronic diseases. It is an innovative organization, often reaching market first with differentiated technology across pacemakers, heart valves, insulin pumps and surgical tools. New CEO Geoff Martha has refocused the company after years of depressed returns following the expensive Covidien acquisition, bringing fresh leadership and concentrating R&D on highest-growth areas like renal denervation for hypertension and pulsed field ablation for atrial fibrillation. The planned spin-off of the diabetes business fits with management's effort to focus on highest-margin growth drivers where Medtronic has core competencies. Through disciplined capital allocation and operating efficiencies, Medtronic should leverage 5-6% organic growth into high single or low double-digit earnings growth. With an earnings yield of 5%, the shares appear undervalued.

BSD Analysis:
The manager views Medtronic as a turnaround story under new leadership, with CEO Geoff Martha addressing legacy issues from the Covidien acquisition. The company's innovation track record in reaching market first with differentiated technology across multiple therapeutic areas demonstrates R&D capabilities and competitive positioning. The strategic refocus on highest-growth areas like renal denervation and pulsed field ablation suggests improved capital allocation toward areas of competitive advantage. The planned diabetes business spin-off aligns with portfolio optimization, allowing management to concentrate on highest-margin growth drivers. The operating leverage potential is attractive, with 5-6% organic growth expected to translate into high single or low double-digit earnings growth through improved efficiencies. At a 5% earnings yield, the valuation appears reasonable for a leading medical device company with renewed strategic focus and operational improvements under new management.

Pitch Summary:
H World Group, China's largest private hotel operator with over 12,000 hotels and one million rooms, operates a pioneering "manachised" model that delivers exceptional unit economics. Under this structure, H World retains operational control by appointing each hotel's general manager, while franchisees carry operating costs and property owners fund development. This model generates 22% operating margins for H World, with franchisees having three- to five-year payback periods and the lowest development and operating costs per room in the market. The company's competitive moat comes from supply chain scale, a loyalty program generating 60% direct bookings and proprietary technology that enables self-service hotels to operate with minimal staff. H World targets two million rooms in the medium term, representing low-teens annual growth as China's branded hotel penetration increases from 40% toward the 70% seen in developed markets. The company is capturing share from inefficient state-owned chains and repositioning toward higher-margin midscale and upscale segments to meet demand from China's emerging middle class. The valuation is striking: the stock trades near 2020 levels, while revenue and operating earnings have doubled. H World generates over $1 billion in EBITDA, comparable to Hyatt and InterContinental, yet carries an enterprise value below $12 billion versus $19-23 billion for those peers.

BSD Analysis:
The manager identifies H World's "manachised" model as a differentiated business structure that optimizes unit economics across stakeholders. The 22% operating margins demonstrate the model's effectiveness, while franchisee payback periods of 3-5 years ensure sustainable growth. The competitive moat appears robust, combining supply chain scale, direct booking capabilities through loyalty programs, and proprietary technology enabling operational efficiency. The growth runway is compelling, with China's branded hotel penetration at 40% versus 70% in developed markets, supporting the target of doubling rooms to two million. The strategic shift toward higher-margin midscale and upscale segments aligns with China's emerging middle class consumption patterns. The valuation disconnect is particularly striking, with H World generating comparable EBITDA to global peers Hyatt and InterContinental while trading at roughly half their enterprise values. The stock's proximity to 2020 levels despite doubled financial metrics suggests significant undervaluation relative to operational progress.

Pitch Summary:
BYD, the global leader in electric and hybrid vehicles, delivered 4.3 million units in 2024, not far from Tesla's 1.8 million and Toyota's 10 million, a remarkable acceleration from just 600,000 units in 2021. The company's competitive advantage stems from something rare in the automotive industry: deep vertical integration. While traditional manufacturers rely on fragmented supplier networks, BYD designs and manufactures key components in-house, from batteries to semiconductors. This isn't just about control; it's about fundamental cost advantage. As the world's largest mobile battery maker before entering autos, founder Wang Chuan-Fu envisioned EVs as "batteries on wheels" and built the company to exploit the structural simplicity of electric drivetrains, which require fewer than 50 components versus 1,200+ in internal combustion engines. The result is a 15-25% cost advantage over legacy automakers, allowing BYD to offer compelling value while maintaining margins not far from Toyota levels. The company commands 35% of China's EV market and 30% of its battery market, with successful expansion underway in South Asia and Latin America. Europe is next. The stock trades at over 7% normalized earnings yield despite double-digit growth potential, as the stock price consolidated while price competition temporarily pressures margins.

BSD Analysis:
The manager highlights BYD's exceptional vertical integration as a sustainable competitive advantage in the EV industry. The company's evolution from battery manufacturer to automotive leader demonstrates strategic foresight, with founder Wang Chuan-Fu's vision of EVs as "batteries on wheels" proving prescient. The 15-25% cost advantage over legacy automakers stems from structural simplicity and in-house component manufacturing, creating pricing flexibility while maintaining healthy margins. BYD's rapid scale expansion from 600,000 to 4.3 million units in three years showcases execution capability and market acceptance. The 35% China EV market share and 30% battery market share provide strong domestic positioning, while international expansion into South Asia and Latin America demonstrates growth optionality. At over 7% normalized earnings yield with double-digit growth potential, the valuation appears attractive despite temporary margin pressure from price competition. The manager views current weakness as a consolidation opportunity rather than fundamental deterioration.

Pitch Summary:
Alibaba is one of China's digital infrastructure backbones, a $150 billion revenue company that has evolved from Jack Ma's startup into the dominant force in Chinese e-commerce and cloud computing. The company commands 45% of China's e-commerce market through Taobao and Tmall, platforms that connect 10 million merchants with one billion customers. After years of competitive pressure from JD.com and Pinduoduo, Alibaba's market position has stabilized, and its scale enables high-margin operations while taking less from merchants than competitors. The regulatory environment has shifted dramatically since 2023, with Beijing moving from crackdown to active support, explicitly endorsing Alibaba's aggressive capital return plans of 117 billion CNY in 2025 backed by 500 billion CNY in net cash. What makes Alibaba particularly compelling is how its cloud business is accelerating. Holding an estimated 30% of China's cloud market, the company seamlessly integrates its Qwen LLM into the e-commerce ecosystem, attracting businesses to its cloud infrastructure while delivering practical AI applications. With 100,000 corporate clients already using Qwen, and China's cloud penetration still far below Western markets, the runway is substantial. The stock trades at an 8% earnings yield despite this combination of stable e-commerce cash generation and high-growth cloud potential.

BSD Analysis:
The manager presents a compelling bull case for Alibaba centered on its dominant market position and AI-driven cloud acceleration. With 45% market share in Chinese e-commerce and stabilized competitive dynamics, Alibaba has demonstrated pricing power and operational leverage. The regulatory shift from crackdown to support, evidenced by Beijing's endorsement of aggressive capital returns, removes a key overhang. The cloud business acceleration is particularly noteworthy, with Qwen LLM integration creating synergies between e-commerce and infrastructure services. At 100,000 corporate clients and 30% cloud market share, the company is well-positioned to capitalize on China's lower cloud penetration versus Western markets. The 8% earnings yield valuation appears attractive given the combination of stable cash generation and high-growth cloud potential. The manager's timing appears strategic, acquiring shares after years of regulatory pressure created valuation opportunities.

Pitch Summary:
Medtronic is a leading medical device company developing therapeutic devices for chronic diseases. It is an innovative organization, often reaching market first with differentiated technology across pacemakers, heart valves, insulin pumps and surgical tools. New CEO Geoff Martha has refocused the company after years of depressed returns following the expensive Covidien acquisition, bringing fresh leadership and concentrating R&D on highest-growth areas like renal denervation for hypertension and pulsed field ablation for atrial fibrillation. The planned spin-off of the diabetes business fits with management's effort to focus on highest-margin growth drivers where Medtronic has core competencies. Through disciplined capital allocation and operating efficiencies, Medtronic should leverage 5-6% organic growth into high single or low double-digit earnings growth. With an earnings yield of 5%, the shares appear undervalued.

BSD Analysis:
The manager views Medtronic as a turnaround story under new leadership with attractive valuation. CEO Geoff Martha's strategic refocus following the problematic Covidien acquisition addresses previous execution issues while concentrating resources on high-growth areas like renal denervation and pulsed field ablation. The diabetes business spin-off should improve focus on core competencies and highest-margin opportunities. Medtronic's innovation track record and first-to-market capabilities across multiple device categories provide competitive advantages in chronic disease treatment. The manager expects operational leverage to convert 5-6% organic growth into high single or low double-digit earnings growth through disciplined capital allocation. At a 5% earnings yield, the valuation appears attractive for a leading medical device franchise undergoing strategic repositioning.

Pitch Summary:
H World Group, China's largest private hotel operator with over 12,000 hotels and one million rooms, operates a pioneering "manachised" model that delivers exceptional unit economics. Under this structure, H World retains operational control by appointing each hotel's general manager, while franchisees carry operating costs and property owners fund development. This model generates 22% operating margins for H World, with franchisees having three- to five-year payback periods and the lowest development and operating costs per room in the market. The company's competitive moat comes from supply chain scale, a loyalty program generating 60% direct bookings and proprietary technology that enables self-service hotels to operate with minimal staff. H World targets two million rooms in the medium term, representing low-teens annual growth as China's branded hotel penetration increases from 40% toward the 70% seen in developed markets. The company is capturing share from inefficient state-owned chains and repositioning toward higher-margin midscale and upscale segments to meet demand from China's emerging middle class. The valuation is striking: the stock trades near 2020 levels, while revenue and operating earnings have doubled. H World generates over $1 billion in EBITDA, comparable to Hyatt and InterContinental, yet carries an enterprise value below $12 billion versus $19-23 billion for those peers.

BSD Analysis:
The manager presents H World as an undervalued leader in China's hotel consolidation story with a superior business model. The "manachised" structure delivers exceptional unit economics with 22% operating margins while providing franchisees attractive 3-5 year payback periods. Competitive advantages include supply chain scale, 60% direct bookings through loyalty programs, and proprietary technology enabling efficient operations. The growth runway appears substantial with targets of two million rooms as China's branded penetration increases from 40% to 70%. The valuation disconnect is compelling - trading near 2020 levels despite doubled revenue and earnings, with $1 billion EBITDA at sub-$12 billion enterprise value versus $19-23 billion for comparable Western peers. The manager capitalizes on market pessimism toward Chinese assets while fundamentals strengthen through market share gains and margin expansion.

Pitch Summary:
BYD, the global leader in electric and hybrid vehicles, delivered 4.3 million units in 2024, not far from Tesla's 1.8 million and Toyota's 10 million, a remarkable acceleration from just 600,000 units in 2021. The company's competitive advantage stems from something rare in the automotive industry: deep vertical integration. While traditional manufacturers rely on fragmented supplier networks, BYD designs and manufactures key components in-house, from batteries to semiconductors. This isn't just about control; it's about fundamental cost advantage. As the world's largest mobile battery maker before entering autos, founder Wang Chuan-Fu envisioned EVs as "batteries on wheels" and built the company to exploit the structural simplicity of electric drivetrains, which require fewer than 50 components versus 1,200+ in internal combustion engines. The result is a 15-25% cost advantage over legacy automakers, allowing BYD to offer compelling value while maintaining margins not far from Toyota levels. The company commands 35% of China's EV market and 30% of its battery market, with successful expansion underway in South Asia and Latin America. Europe is next. The stock trades at over 7% normalized earnings yield despite double-digit growth potential, as the stock price consolidated while price competition temporarily pressures margins.

BSD Analysis:
The manager highlights BYD's exceptional vertical integration as a sustainable competitive advantage in the rapidly evolving EV market. The company's evolution from battery manufacturer to automotive leader demonstrates strategic foresight, with 4.3 million units delivered representing massive scale acceleration. The 15-25% cost advantage over legacy automakers through in-house component manufacturing creates significant pricing flexibility and margin protection. Market leadership in China (35% EV share, 30% battery share) provides a strong foundation for international expansion into South Asia, Latin America, and Europe. At over 7% normalized earnings yield with double-digit growth potential, the valuation appears compelling despite temporary margin pressure from price competition. The manager's thesis centers on BYD's structural cost advantages and global expansion opportunity in the electrification transition.

Pitch Summary:
Alibaba is one of China's digital infrastructure backbones, a $150 billion revenue company that has evolved from Jack Ma's startup into the dominant force in Chinese e-commerce and cloud computing. The company commands 45% of China's e-commerce market through Taobao and Tmall, platforms that connect 10 million merchants with one billion customers. After years of competitive pressure from JD.com and Pinduoduo, Alibaba's market position has stabilized, and its scale enables high-margin operations while taking less from merchants than competitors. The regulatory environment has shifted dramatically since 2023, with Beijing moving from crackdown to active support, explicitly endorsing Alibaba's aggressive capital return plans of 117 billion CNY in 2025 backed by 500 billion CNY in net cash. What makes Alibaba particularly compelling is how its cloud business is accelerating. Holding an estimated 30% of China's cloud market, the company seamlessly integrates its Qwen LLM into the e-commerce ecosystem, attracting businesses to its cloud infrastructure while delivering practical AI applications. With 100,000 corporate clients already using Qwen, and China's cloud penetration still far below Western markets, the runway is substantial. The stock trades at an 8% earnings yield despite this combination of stable e-commerce cash generation and high-growth cloud potential.

BSD Analysis:
The manager presents a compelling bull case for Alibaba centered on its dominant market position and AI-driven cloud acceleration. With 45% market share in Chinese e-commerce and stabilizing competitive dynamics, Alibaba has demonstrated pricing power and operational leverage. The regulatory shift from crackdown to support, evidenced by Beijing's endorsement of aggressive capital returns, removes a key overhang. The cloud business acceleration through Qwen LLM integration represents a significant catalyst, with 100,000 corporate clients already adopted and substantial runway given China's low cloud penetration versus Western markets. At an 8% earnings yield, the valuation appears attractive for a company combining stable e-commerce cash flows with high-growth cloud potential. The manager's timing appears opportunistic, capitalizing on market pessimism while fundamentals improve.

Pitch Summary:
The company posted total revenue comfortably ahead of expectations as results show strength across the board. AI and cloud are leading the charge, driven by an acceleration of growth to 39% for Azure and the remaining performance obligation (RPO) rose 35%, both in constant currency terms. Those strong growth trends indicate that artificial intelligence is driving a new wave of demand and that momentum is building on the commercial side as businesses rush to digitalize and adopt AI-powered services. Microsoft is the key port of call for many. But not only that. Also, the 365 consumer and personal computing side (including Windows and Xbox) enjoyed accelerating growth showing Microsoft's appeal across its sprawling business. Consumer Products and consumer cloud services grew 21%, driven by 9% more subscribers. Even the legacy-division More Personal Computing grew revenues by 9% and operating income by 33% (in CC), driven by advertising (up 20%) and gaming. While investors have been concerned about Microsoft's ploughing billions into data centers and AI infrastructure, those results show that those investments are paying off, and that Microsoft is firing on all cylinders. While we have trimmed our positions mildly, we maintain our overweight and it remains our largest position.

BSD Analysis:
The manager maintains a strong bullish position on Microsoft despite trimming the holding for risk management purposes. The investment thesis is supported by broad-based strength across Microsoft's diversified business segments, with particular momentum in AI and cloud services. Azure's acceleration to 39% growth and 35% increase in remaining performance obligations demonstrate strong enterprise demand for AI-powered services, positioning Microsoft as the primary beneficiary of corporate digital transformation. Beyond cloud services, Microsoft shows impressive growth across consumer products (21% growth, 9% subscriber increase) and even legacy divisions like Personal Computing (9% revenue growth, 33% operating income growth). The manager views Microsoft's massive data center and AI infrastructure investments as validated by these strong results, demonstrating the company's ability to monetize its AI capabilities effectively. Microsoft remains the fund's largest position, reflecting confidence in its comprehensive AI and cloud platform strategy.

Pitch Summary:
The visit to BYD, the global leader in full-electric and hybrid vehicles, in China confirmed our investment case in full. The foundation of BYD's success lies in its deeply vertically integrated supply chain. BYD designs and manufactures key components in-house, enabling speed, control, and significant cost efficiencies. This combined with BYD's expertise in electronics and batteries (its origin as the world's largest mobile battery maker), gives it a unique edge in both performance and cost structure. With an estimated 15–25% cost advantage over legacy OEMs, BYD offers high-quality, competitively priced vehicles while sustaining gross margins comparable to best-in-class manufacturers like Toyota. In a segment where scale, integration, and battery tech determine winners, BYD stands out as the most complete and defensible EV platform globally. The stock price of the company undervalues the growth potential of the franchise.

BSD Analysis:
The manager presents a compelling bull case for BYD following an on-site company visit that validated the investment thesis. The core argument centers on BYD's vertically integrated supply chain, which provides significant competitive advantages in the electric vehicle market. BYD's heritage as the world's largest mobile battery manufacturer gives it unique expertise in electronics and battery technology, translating to superior cost structure and performance. The company maintains an estimated 15-25% cost advantage over legacy automakers while achieving gross margins comparable to industry leaders like Toyota. In the rapidly evolving EV landscape where scale, integration, and battery technology are key differentiators, BYD's comprehensive platform appears most defensible globally. The manager believes the current stock price fails to reflect the company's substantial growth potential, making it an attractive investment opportunity in the electric vehicle transition.

Pitch Summary:
The latest quarterly results demonstrated again the lead of the company in the Ad-business and the success of it's business strategy. The Ad business continued to impress with revenues up 21% Y/Y. Going forward, Meta continues to see their ability to grow their revenue through a combination of driving up engagement and enhancing monetization driven thanks to improvements to their content recommendation systems that resulted in a 5% increase in time spent on Facebook, and 6% on Instagram. In particular, video time spent remains strong, with Instagram video time up 20% Y/Y globally. Clearly, Meta is leading the pack in advertising thanks to it's investments in AI and the improvements in ad-creation and management as well as growing user engagement. Given the latest results, we lifted our five-year revenue growth expectations from 10-12% to above 15% driven by faster user growth, increased time spent on the platforms and an improvement in ad performance/pricing. While next year PE rose from 21x to 28x since our entry into Meta, the growth outlook has improved significantly over that period, which leaves Meta with solid upside despite the outperformance since, according to our model.

BSD Analysis:
The manager maintains a bullish stance on Meta based on the company's dominant position in digital advertising and successful AI-driven engagement improvements. The investment thesis is supported by strong quarterly results showing 21% year-over-year advertising revenue growth and meaningful increases in user engagement across platforms. Meta's AI investments are driving tangible improvements in content recommendation systems, resulting in 5% higher time spent on Facebook and 6% on Instagram, with video consumption particularly strong at 20% growth. The fund has upgraded its five-year revenue growth expectations from 10-12% to above 15%, driven by accelerating user growth, increased platform engagement, and improved ad performance. Despite the stock's valuation expansion from 21x to 28x PE since initial investment, the manager believes the significantly improved growth outlook justifies current levels and provides continued upside potential.

Pitch Summary:
We visited ASML and some of it's key business partners in the Netherlands in September. We meet with Investor Relations and Peter Vanoppen who heads development of High NA EUV, the next generation technology for producing the most advanced chips. High NA EUV is key for ASML's future growth, and the level and speed of adoption was a major concern for analysts and a major headwind for the stock in recent quarters. We came away from the discussion with Mr. Vanoppen with the view that is very well on track regarding reliability and demand, and as importantly, it is further ahead than EUV was at the same stage of the development resp. market introduction. High NA EUV will be adopted because of it's cost advantage, lower production risks and higher flexibility. If players stay for too long with EUV they lose the flexibility (productivity) from High NA EUV and might miss the ability to compete for the next generation of high-end chips. For the upcoming 2NM-chips there will already be some limitations from using EUV. This means at some point customers will hit a brick wall and then will need to move to High NA EUV. While there is hardly any doubt about the direction of travel, timing is more open and depends on many factors. Regarding competitive market position we came away from the visit strongly convinced that the competitive position of ASML is almost unassailable, at least for the next 10-15 years. While ASML thinks that Chinese competitors will eventually develop Lithography technology like EUV, that alone won't make them competitive in the high end because they would have to develop the entire eco-system of suppliers, which is almost impossible in the quality needed. Finally, the strive for shrink will continue and ASML has a clear roadmap of how to support that until at least 2040. More importantly, as far as we can see, ASML's High NA EUV (and potentially Hyper NA EUV) will be the key technologies to achieve that. Hence, we see sustained double digit growth for ASML for a long time.

BSD Analysis:
The manager presents a highly bullish case for ASML based on extensive primary research, including a company visit and meetings with key executives. The investment thesis centers on ASML's next-generation High NA EUV technology, which offers superior cost advantages, lower production risks, and enhanced flexibility compared to current EUV systems. The fund's research indicates High NA EUV adoption is inevitable as semiconductor manufacturers approach physical limitations with existing technology, particularly for upcoming 2nm chip production. ASML's competitive moat appears virtually unassailable for the next 10-15 years, as potential Chinese competitors would need to develop an entire supplier ecosystem to match ASML's quality standards. With a clear technology roadmap extending to 2040 and High NA EUV positioned as the critical enabler for continued semiconductor shrinkage, the manager expects sustained double-digit growth for ASML over the long term.

Pitch Summary:
Oracle reported exceptional Q1 FY26 results that included an unprecedented upgrade to cloud infrastructure growth guidance. Oracle's stock surged ~40% the next day —rare for a company of this scale—driven by transformational cloud business projections. The upgraded trajectory could make Oracle Cloud (OCI) equal or larger than Google Cloud Platform by FY29-30, representing a dramatic shift from Oracle's traditional database business to major cloud and AI infrastructure provider. The explosive growth is underpinned by massive contract wins, particularly in AI training and inferencing. Oracle signed four multi-billion-dollar contracts with three clients in Q1, including what analysts believe is a $30B annual contract with OpenAI. Remaining Performance Obligations (RPO) surged 359% to $455B, providing unprecedented visibility for future revenue streams of OCI. Given the massive upgrade of guidance and the unprecedented visibility that the large increase in RPO provides, we are substantially lifting our already optimistic EPS estimates for 2030. More importantly, Oracle has rapidly evolved from a traditional software company to a major cloud hyperscaler and AI infrastructure provider, with three original committed contracts supporting a growth trajectory that few companies of Oracle's size have achieved. As a result, investors increasingly place Oracle in the same category as the so-called "Magnificent 7", rightly so, we think. Therefore, we maintain a large overweight position in Oracle.

BSD Analysis:
The manager presents an exceptionally bullish case for Oracle's transformation into a major cloud and AI infrastructure provider. The investment thesis is anchored by Oracle's explosive Q1 FY26 results, featuring unprecedented cloud infrastructure growth guidance and massive contract wins totaling billions in annual recurring revenue. The highlight is a reported $30B annual contract with OpenAI, demonstrating Oracle's competitive positioning in AI training and inference workloads. With RPO surging 359% to $455B, Oracle has secured unprecedented revenue visibility that supports aggressive growth projections. The manager believes Oracle Cloud Infrastructure could rival Google Cloud Platform by FY29-30, representing a dramatic business model transformation. This evolution from traditional database vendor to cloud hyperscaler justifies Oracle's inclusion among the "Magnificent 7" technology leaders, supporting the fund's large overweight position despite recent strong performance.

Pitch Summary:
Their recent upgrade of their long-term outlook provides growing evidence that Broadcom is progressively gaining share with their three XPU customers as they increase adoption with each new generation of those chips. As importantly, the strong commitment of the 4th big customer validates our initial investment case of Broadcom being THE prime beneficiary of the ramping up of AI-infrastructure due to the progress made in AI-Chips (XPUs), in networking and the strong position in corporate network software and infrastructure that are crucial to accommodate AI in corporate networks and companies in a broader context. Thanks to the breath of it's offering and the already deep integration in it's customers' IT stack, Broadcom is, in our view, better positioned than Nvidia to benefit from the next wave of AI rollouts. Given the strength in last few quarterly reports and the shift in the long-term growth drivers, we substantially increased our long-term estimates for Owner's Earnings. Our still somewhat conservative estimates leave more room for future upgrades.

BSD Analysis:
The manager presents a compelling bull case for Broadcom as a prime AI infrastructure beneficiary. The thesis centers on Broadcom's diversified AI exposure through XPU chips, networking solutions, and corporate software infrastructure. The fund highlights Broadcom's competitive advantage over Nvidia due to its broader product portfolio and deeper customer integration. Recent customer wins, including a fourth major client commitment, validate the investment thesis and support upgraded long-term earnings projections. The manager's decision to increase position size following strong quarterly results demonstrates conviction in the company's AI-driven growth trajectory. Broadcom's integrated approach to AI infrastructure positions it well for the next wave of enterprise AI adoption.

Pitch Summary:
U-Haul also detracted from performance for the quarter and for the year. The company continues to invest its cashflow to build out its self-storage business. Self-storage real estate investment trust (REIT) analysts are accustomed to evaluating the economics of this part of the business with initial capital investment followed by low occupancy until a location matures and produces strong recurring revenue at higher occupancy. Because U-Haul also has a truck rental business, the company does not cleanly fit into a sector category, and it is not widely followed by analysts. We appreciate the disciplined capital allocation that U-Haul's leaders continue to demonstrate.

BSD Analysis:
Yacktman maintains a bullish stance on U-Haul despite recent underperformance, viewing the company's strategic investment in self-storage expansion as a value-creating long-term initiative. The fund recognizes that U-Haul's dual business model creates analytical complexity that leads to limited Wall Street coverage and potential mispricing opportunities. Management's disciplined approach to reinvesting cash flows into self-storage development follows a proven REIT playbook of initial capital deployment, gradual occupancy ramp-up, and eventual high-margin recurring revenue generation. Yacktman appreciates that the market may not fully understand or properly value this transformation given U-Haul's hybrid business model spanning truck rentals and real estate. The fund views the current weakness as temporary, reflecting the investment phase rather than fundamental business deterioration. This investment aligns with Yacktman's preference for companies with strong capital allocation discipline and management teams focused on long-term value creation rather than short-term earnings optimization.

Pitch Summary:
Bolloré was a detractor for the quarter but the underlying thesis is very much intact. Just a few years ago, Bolloré was a complicated conglomerate that had high leverage, an African port and logistics company, a European freight forwarding company, ownership in Vivendi SE, and ownership in Universal Music Group N.V. Today, the company has simplified its holdings to Vivendi and Universal Music Group plus significant net cash on the balance sheet from the sale of non-media assets. Universal Music group continues to be a strong component of value, and it is expected to be listed in the U.S. later this year or early next year. We believe that Bolloré's net asset value (NAV) is worth mid-teens, and with the current share price in the mid-single digits, the investment represents an extremely attractive value. Meanwhile, the company continues to make moves to further simplify its structure.

BSD Analysis:
Yacktman maintains conviction in Bollore despite recent underperformance, viewing the company as a compelling sum-of-the-parts value opportunity trading at a significant discount to net asset value. The fund appreciates the dramatic transformation from a complex, leveraged conglomerate with diverse African logistics and European freight operations to a simplified media-focused investment vehicle. The portfolio now centers on high-quality assets including Vivendi and Universal Music Group, with a strengthened balance sheet featuring significant net cash from strategic divestitures. Yacktman sees particular value in Universal Music Group, anticipating its U.S. listing as a potential catalyst for value realization. The manager estimates Bollore's NAV in the mid-teens while shares trade in the mid-single digits, representing substantial upside potential. The ongoing structural simplification efforts provide additional confidence in management's commitment to unlocking shareholder value. This investment exemplifies Yacktman's expertise in identifying undervalued transformation stories where market complexity obscures underlying asset value.

Pitch Summary:
Samsung has been a solid contributor to performance after having detracted from results last year. The company announced its first design win with Nvidia for high bandwidth memory (HBM) chips this quarter. Samsung was late to the artificial intelligence (AI) party, and this milestone validates its position in the HBM chip market. Memory chips can be found in a vast array of end products, from data center servers to automobiles and refrigerators. There is a finite production capacity for dynamic random-access memory (DRAM) and a small number of players who can provide these components. Samsung remains a leader in semiconductor fabrication and benefits from its locations that are not in Taiwan (South Korea and Texas). Samsung is also enjoying tailwinds from the continued regulatory improvements in South Korea, a trend that we believe will continue to unfold as governance and market access improve.

BSD Analysis:
Yacktman presents a compelling turnaround story for Samsung Electronics, highlighting the company's recovery from previous underperformance through strategic positioning in the AI semiconductor market. The fund emphasizes Samsung's recent design win with Nvidia for high bandwidth memory chips as validation of its competitive position in the critical HBM market. The manager appreciates Samsung's geographic diversification advantage with fabrication facilities in South Korea and Texas, reducing Taiwan concentration risk that affects many semiconductor peers. The investment thesis is strengthened by structural supply constraints in DRAM production and Samsung's leadership position among the limited number of capable suppliers. Additionally, Yacktman sees ongoing regulatory improvements in South Korea as a positive catalyst for enhanced corporate governance and market access. The fund views Samsung as well-positioned to benefit from the AI infrastructure buildout while offering attractive risk-adjusted returns. This represents a classic Yacktman value play where the market has underappreciated the company's strategic positioning and fundamental improvements.

Pitch Summary:
Dexcom is a medical device company that helped pioneer the design and development of continuous glucose monitoring systems (CGMs). The company has been under pressure since posting unexpectedly bad results in the second quarter of 2024, despite improving or at least stabilizing revenues and operating profits since then. Recently, there have been concerns over accuracy issues with Dexcom's latest generation G7 continuous glucose monitor. The company is addressing the issue, but so far it's unclear whether these issues have impaired the brand and caused a loss of market share.

BSD Analysis:
The manager expresses concerns about DexCom despite its pioneering position in continuous glucose monitoring systems. The company has faced pressure since disappointing Q2 2024 results, and while revenues and operating profits have stabilized, growth momentum appears challenged. Recent accuracy issues with the latest generation G7 monitor represent a significant concern for a medical device company where precision is critical. The uncertainty around whether these issues have damaged the brand or caused market share loss creates ongoing risk for the investment thesis. CGM systems require high accuracy and reliability for diabetes management, making product quality issues particularly damaging. Competition in the CGM market has intensified, potentially limiting DexCom's ability to recover from these setbacks. This appears to be a quality company facing execution challenges and competitive pressures in a critical product cycle.

Pitch Summary:
Fair Isaac is a leading analytics and software company best known for its FICO credit score, widely used in consumer lending decisions. The stock sold off after the Federal Housing Finance Agency announced that lenders would be allowed to use competing credit-scoring products to determine a customer's credit-worthiness. Despite the challenge to FICO's longstanding dominance in mortgage credit scoring, management just made Fair Isaac's largest single-quarter stock buyback in history and raised guidance. We remain optimistic about the value of the company's data and its ability to monetize it.

BSD Analysis:
Despite regulatory challenges to FICO's mortgage credit scoring dominance, the manager remains bullish based on the company's data value and monetization capabilities. The Federal Housing Finance Agency's decision to allow competing credit-scoring products represents a meaningful threat to FICO's longstanding market position. However, management's confidence is demonstrated through the largest single-quarter stock buyback in company history and raised guidance. The FICO credit score remains deeply embedded in the financial system beyond just mortgages, providing defensive characteristics. The company's extensive data assets and analytics capabilities offer multiple monetization opportunities across various industries and use cases. The stock selloff may have created an attractive entry point for a high-quality franchise with strong competitive moats. This appears to be a temporary setback for a company with valuable data assets and multiple growth avenues.

Pitch Summary:
Wingstop is a franchisor and restaurant operator that specializes in cooked-to-order chicken wings in a fast-casual setting. The stock declined as its core lower-income consumer base remained under pressure. Against this backdrop, investors now expect a weaker upcoming quarterly report and a longer path before the company returns to positive comparable store sales.

BSD Analysis:
The manager expresses a bearish view on Wingstop due to pressure on its core lower-income consumer base and expectations for continued weakness. The company's reliance on lower-income consumers makes it vulnerable to economic pressures and reduced discretionary spending on dining out. Investors are anticipating a weaker quarterly report, suggesting near-term headwinds are expected to persist. The expectation for a longer path to positive comparable store sales indicates structural challenges rather than temporary weakness. Fast-casual dining faces increased competition and delivery cost pressures that can impact margins. The focus on chicken wings may limit menu diversification options compared to broader fast-casual concepts. This appears to be a consumer discretionary play facing headwinds from economic pressure on its target demographic and challenging industry dynamics.